-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S7i4/ITVvKcNO7onyBePndFuK5b4mBYD5KiATNTP4V4UYwGyIDY2KXEVEUfLkI3J odbj0XpM6R/QjtotgSiptA== 0000318819-98-000025.txt : 19980814 0000318819-98-000025.hdr.sgml : 19980814 ACCESSION NUMBER: 0000318819-98-000025 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN WATER WORKS CO INC CENTRAL INDEX KEY: 0000318819 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 510063696 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03437 FILM NUMBER: 98685156 BUSINESS ADDRESS: STREET 1: 1025 LAUREL OAK RD CITY: VOORHEES STATE: NJ ZIP: 08043 BUSINESS PHONE: 6093468200 MAIL ADDRESS: STREET 1: 1025 LAUREL OAK ROAD CITY: VOORHEES STATE: NJ ZIP: 08043 10-Q 1 FORM 10-Q Page 1 of 17 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 --------------------------------------------- OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------------------------- ----------------- Commission File Number 1-3437-2 -------------------------------------------------- AMERICAN WATER WORKS COMPANY, INC. - --------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 51-0063696 - ------------------------------- ----------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 1025 Laurel Oak Road, Voorhees, New Jersey 08043 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (609) 346-8200 - --------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - --------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- At August 1, 1998, the number of shares of common stock, $1.25 par value, outstanding was 80,367,099 shares. Page 2 FORM 10-Q PART I FINANCIAL INFORMATION ---------------------------- Item 1. Financial Statements ----------------------------- AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Statements of Income and Retained Earnings (Unaudited) (In thousands, except per share amounts) Three Months Ended June 30, 1998 1997 -------- -------- CONSOLIDATED INCOME Operating revenues $255,980 $237,915 -------- -------- Operating expenses Operation and maintenance 110,403 104,396 Depreciation and amortization 29,074 25,355 General taxes 22,882 21,590 -------- -------- 162,359 151,341 -------- -------- Operating income 93,621 86,574 Allowance for other funds used during construction 2,529 1,623 Other income 596 341 -------- -------- 96,746 88,538 -------- -------- Income deductions Interest 38,718 36,483 Allowance for borrowed funds used during construction (1,281) (1,119) Amortization of debt expense 447 395 Preferred dividends of subsidiaries 873 885 Other deductions 658 530 -------- -------- 39,415 37,174 -------- -------- Income before income taxes 57,331 51,364 Provision for income taxes 22,269 19,724 -------- -------- Net income 35,062 31,640 Dividends on preferred stocks 996 996 -------- -------- Net income to common stock $ 34,066 $ 30,644 ======== ======== Average shares of basic common stock outstanding 80,174 79,033 Basic and diluted earnings per common share on average shares outstanding $ 0.42 $ 0.39 ======== ======== Page 3 FORM 10-Q Three Months Ended June 30, 1998 1997 -------- -------- CONSOLIDATED RETAINED EARNINGS Balance at beginning of period $721,489 $664,305 Add - net income 35,062 31,640 -------- -------- 756,551 695,945 -------- -------- Deduct - dividends paid Preferred stock 882 882 Preference stock 114 114 Common stock - $.205 per share in 1998; $.19 per share in 1997 16,421 15,006 -------- -------- 17,417 16,002 -------- -------- Balance at end of period $739,134 $679,943 ======== ======== The accompanying notes are an integral part of these financial statements.
Page 4 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Statements of Income and Retained Earnings (Unaudited) (In thousands, except per share amounts) Six Months Ended June 30, 1998 1997 -------- -------- CONSOLIDATED INCOME Operating revenues $481,980 $451,272 -------- -------- Operating expenses Operation and maintenance 212,435 205,149 Depreciation and amortization 57,583 50,412 General taxes 46,425 44,234 -------- -------- 316,443 299,795 -------- -------- Operating income 165,537 151,477 Allowance for other funds used during construction 4,106 3,027 Other income 427 450 -------- -------- 170,070 154,954 -------- -------- Income deductions Interest 75,264 72,101 Allowance for borrowed funds used during construction (2,064) (1,820) Amortization of debt expense 873 787 Preferred dividends of subsidiaries 1,739 1,774 Other deductions 1,465 1,391 -------- -------- 77,277 74,233 -------- -------- Income before income taxes 92,793 80,721 Provision for income taxes 36,143 31,051 -------- -------- Net income 56,650 49,670 Dividends on preferred stocks 1,992 1,992 -------- -------- Net income to common stock $ 54,658 $ 47,678 ======== ======== Average shares of basic common stock outstanding 79,995 78,827 Basic and diluted earnings per common share on average shares outstanding $ 0.68 $ 0.60 ======== ======== Page 5 FORM 10-Q Six Months Ended June 30, 1998 1997 -------- -------- CONSOLIDATED RETAINED EARNINGS Balance at beginning of period $717,243 $662,183 Add - net income 56,650 49,670 -------- -------- 773,893 711,853 -------- -------- Deduct - dividends paid Preferred stock 1,764 1,764 Preference stock 228 228 Common stock - $.41 per share in 1998; $.38 per share in 1997 32,767 29,918 -------- -------- 34,759 31,910 -------- -------- Balance at end of period $739,134 $679,943 ======== ======== The accompanying notes are an integral part of these financial statements.
Page 6 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Balance Sheet (Unaudited) (In thousands) June 30 December 31 1998 1997 ----------- ----------- ASSETS Property, plant and equipment Utility plant - at original cost less accumulated depreciation $ 3,839,020 $ 3,713,390 Utility plant acquisition adjustments 55,339 58,976 Non-utility property, net of accumulated depreciation 31,768 32,942 Excess of cost of investments in subsidiaries over book equity at acquisition 24,347 22,745 ----------- ----------- 3,950,474 3,828,053 ----------- ----------- Current assets Cash and cash equivalents 24,334 12,661 Customer accounts receivable 68,375 67,318 Allowance for uncollectible accounts (1,404) (1,249) Unbilled revenues 68,686 55,750 Miscellaneous receivables 7,472 5,673 Materials and supplies 12,420 11,415 Deferred vacation pay 12,866 11,132 Other 10,240 10,158 ----------- ----------- 202,989 172,858 ----------- ----------- Regulatory and other long-term assets Regulatory asset - income taxes recoverable through rates 183,741 181,566 Debt and preferred stock expense 31,205 30,216 Deferred pension expense 24,316 22,163 Deferred postretirement benefit expense 11,868 11,372 Deferred treatment plant costs 7,404 7,690 Deferred water utility billings 2,930 4,013 Tank painting costs 11,299 10,531 Funds restricted for construction 5,785 5,340 Other 49,747 40,484 ----------- ----------- 328,295 313,375 ----------- ----------- $ 4,481,758 $ 4,314,286 =========== =========== Page 7 FORM 10-Q June 30 December 31 1998 1997 ----------- ----------- CAPITALIZATION AND LIABILITIES Capitalization Common stock $ 100,383 $ 99,607 Paid-in capital 343,735 326,382 Retained earnings 739,134 717,243 Unearned compensation (1,228) (816) ----------- ----------- Common stockholders' equity 1,182,024 1,142,416 Preferred stocks with mandatory redemption requirements 40,000 40,000 Preferred stocks without mandatory redemption requirements 11,673 11,673 Preferred stocks of subsidiaries with mandatory redemption requirements 39,075 39,734 Preferred stocks of subsidiaries without mandatory redemption requirements 6,255 6,256 Long-term debt American Water Works Company, Inc. 116,000 116,000 Subsidiaries 1,778,298 1,754,766 ----------- ----------- 3,173,325 3,110,845 ----------- ----------- Current liabilities Bank debt 230,410 134,762 Current portion of long-term debt 21,053 25,148 Accounts payable 27,507 42,766 Taxes accrued, including federal income 24,025 14,409 Interest accrued 34,491 33,404 Accrued vacation pay 12,996 11,239 Other 35,588 44,725 ----------- ----------- 386,070 306,453 ----------- ----------- Page 8 FORM 10-Q June 30 December 31 1998 1997 ----------- ----------- Regulatory and other long-term liabilities Advances for construction $ 129,328 $ 127,457 Deferred income taxes 431,338 418,248 Deferred investment tax credits 35,637 36,239 Accrued pension expense 41,240 41,079 Accrued postretirement benefit expense 10,034 10,034 Other 13,873 6,197 ----------- ----------- 661,450 639,254 ----------- ----------- Contributions in aid of construction 260,913 257,734 ----------- ----------- Commitments and contingencies 0 0 ----------- ----------- $ 4,481,758 $ 4,314,286 =========== =========== The accompanying notes are an integral part of these financial statements.
Page 9 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Consolidated Statement of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 1998 1997 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 56,650 $ 49,670 Adjustments Depreciation and amortization 57,583 50,412 Provision for deferred income taxes 11,622 12,994 Provision for losses on accounts receivable 2,838 3,495 Allowance for other funds used during construction (4,106) (3,027) Employee benefit expenses greater (less) than funding (1,518) 154 Employee stock plan expenses 3,903 3,411 Deferred tank painting costs (1,643) (984) Deferred rate case expense (493) (991) Amortization of deferred charges 4,354 4,266 Other, net (4,814) 1,881 Changes in assets and liabilities Accounts receivable (5,539) (5,567) Unbilled revenues (12,936) (9,164) Other current assets (1,087) (2,205) Accounts payable (15,259) (9,512) Taxes accrued, including federal income 9,616 11,686 Interest accrued 1,087 722 Other current liabilities (9,137) (8,866) -------- -------- Net cash from operating activities 91,121 98,375 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Construction expenditures (150,232) (142,332) Allowance for other funds used during construction 4,106 3,027 Utility system acquisitions (29,938) (125) Proceeds from the disposition of property, plant and equipment 1,213 507 Removal costs from property, plant and equipment retirements (3,006) (3,358) Funds restricted for construction activity (445) (8,834) -------- -------- Net cash used in investing activities (178,302) (151,115) -------- -------- Page 10 FORM 10-Q Six Months Ended June 30, 1998 1997 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt $ 33,901 $ 87,000 Proceeds from common stock 13,356 13,062 Net borrowings under line-of-credit agreements 95,648 9,351 Advances and contributions for construction, net of refunds 7,519 5,302 Debt issuance costs (1,687) (978) Repayment of long-term debt (14,464) (32,068) Redemption of preferred stocks (660) (544) Dividends paid (34,759) (31,910) -------- -------- Net cash from financing activities 98,854 49,215 -------- -------- Net increase (decrease) in cash and cash equivalents 11,673 (3,525) Cash and cash equivalents at beginning of period 12,661 12,974 -------- -------- Cash and cash equivalents at end of period $ 24,334 $ 9,449 ======== ======== Cash paid during the period for: Interest, net of capitalized amount $ 76,437 $ 72,661 ======== ======== Income taxes $ 19,731 $ 16,155 ======== ======== Common stock issued in lieu of cash in connection with the Employees' Stock Ownership Plan, the Savings Plan for Employees and the Long-Term Performance-Based Incentive Plan totaled $5,607 in 1998 and $2,607 in 1997. The accompanying notes are an integral part of these financial statements.
Page 11 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Information Accompanying Financial Statements (Unaudited) (In thousands, except share and per share amounts) June 30 December 31 1998 1997 ---------- ----------- Preferred stocks with mandatory redemption requirements Cumulative preferred stock - $25 par value Authorized - 1,770,000 shares 8.50% series (non-voting) - 1,600,000 shares outstanding $ 40,000 $ 40,000 ---------- ----------- Preferred stocks without mandatory redemption requirements Cumulative preferred stock - $25 par value 5% series (one-tenth of a vote per share) - 101,777 shares outstanding $ 2,544 $ 2,544 Cumulative preference stock - $25 par value Authorized - 750,000 shares 5% series (non-voting) - 365,158 shares outstanding 9,129 9,129 Cumulative preferential stock - $35 par value Authorized - 3,000,000 shares -- -- ---------- ----------- $ 11,673 $ 11,673 ========== =========== The terms of the 8.50% preferred stock provide that all shares of the series shall be redeemed on December 1, 2000. Common stockholders' equity Common stock - $1.25 par value Authorized - 300,000,000 shares Outstanding - 80,306,735 shares at June 30, 1998; 79,685,612 at December 31, 1997 $ 100,383 $ 99,607 Paid-in capital 343,735 326,382 Retained earnings 739,134 717,243 Unearned compensation (1,228) (816) ---------- ----------- $1,182,024 $ 1,142,416 ========== =========== During the first six months of 1998, 358,791 shares were issued in connection with the Dividend Reinvestment and Stock Purchase Plan, 95,499 shares were issued in connection with the Employees' Stock Ownership Plan, 96,383 shares were issued in connection with the Savings Plan for Employees and 70,450 shares were issued in connection with the Long-Term Performance-Based Incentive Plan. At June 30, 1998, common shares reserved for issuance in connection with the Company's stock plans were 60,923,162 shares for the Stockholder Rights Plan, 5,836,095 shares for the Dividend Reinvestment and Stock Purchase Plan, 707,559 shares for the Employees' Stock Ownership Plan, 895,638 shares for the Savings Plan for Employees and 327,135 shares for the Long-Term Performance-Based Incentive Plan. Page 12 FORM 10-Q AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES ----------------------------------------------------------- Notes to Consolidated Financial Statements (Unaudited) (Dollars in thousands, except per share amounts) NOTE 1 -- Financial Statement Presentation The information presented in this Form 10-Q is unaudited. In the opinion of management the information reported reflects all adjustments, consisting of normal recurring adjustments, which were necessary to a fair statement of the results for the periods reported. Certain reclassifications have been made to conform previously reported data to the current presentation. NOTE 2 -- Acquisition On April 1, 1998, the Company completed the previously announced acquisition of East Honolulu Community Services, Inc. ("EHCS"), a suburban Honolulu wastewater utility located on the eastern tip of Oahu, Hawaii. The system was acquired for $18.4 million from Maunalua Associates, Inc., a subsidiary of Kemper Corporation. EHCS provides wastewater service to a population of approximately 29,000 in the community of Hawaii Kai. For the latest fiscal year ended December 31, 1997, EHCS had unaudited revenues of $6.3 million, net income of $.8 million and total assets of $17.1 million. NOTE 3 -- New Accounting Standards In 1998, the Company will adopt two new accounting standards issued by the Financial Accounting Standards Board in June of 1997. Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," and SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information," neither of which will have any effect on the Company's financial position or results of operations as they require only changes to, or additions to, current disclosures. Also in 1998, the Company will adopt SFAS No. 132, "Employers' Disclosures about Pensions and Postretirement Benefits," which revises and standardizes employers' disclosures about pension and other postretirement benefit plans required by SFAS No. 87, "Employers' Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," but does not change the measurement or recognition of those plans. This new standard, issued in February 1998, is effective for fiscal years beginning after December 15, 1997. Page 13 FORM 10-Q PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - -------------------------------------------------------------------------- Results of Operations - --------------------- Operating revenues for the second quarter and the first six months of 1998 were higher than for the same periods of 1997 by 8% and 7%, respectively. The increases are primarily due to authorized rate increases for several subsidiaries in the latter part of 1997. During the first seven months of 1998, two utility subsidiaries received rate orders which are expected to provide approximately $1.7 million in additional annual revenues. Six subsidiaries have rate increase applications on file before regulatory agencies which, if granted in full, would provide approximately $46.1 million in additional annual revenues. Water sales volume during the second quarter of 1998 decreased 1% to 60.0 billion gallons from 60.5 billion gallons in the second quarter of 1997. The 115.3 billion gallons of sales volume for the first six months of 1998 was 1% less than the 116.4 billion gallons sold in the same period of 1997. Total operating expenses for the second quarter of 1998 increased 7% in comparison to those in the second quarter of 1997. The total operating expenses in the first six months of 1998 increased by 6% over the same period last year. Operation and maintenance expenses in the second quarter and first six months of 1998 increased 6% and 4%, respectively, when compared to the same periods in 1997. Depreciation expense was higher for the second quarter and first six months of 1998 when compared to the second quarter and first six months of 1997 due to growth in utility plant in service. General taxes increased in the second quarter and first six months of 1998 when compared to the same periods of 1997 reflecting higher property values and increased gross receipts. Income deductions, primarily interest, were 6% higher for the second quarter and 4% higher for the first six months when compared to the same periods in 1997. The increases can be attributed primarily to an increase in total debt to fund the construction of new water service assets. The total allowance for funds used during construction ("AFUDC") recorded in the second quarter and the first six months of 1998 increased 39% and 27%, respectively, when compared to the same periods in 1997. The increases were a result of construction of new water service assets. The utility subsidiaries record AFUDC to the extent permitted by the regulatory authorities. Page 14 FORM 10-Q PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (contd.) - -------------------------------------------------------------------------- Results of Operations (contd.) - ------------------------------ Income taxes increased in the second quarter and the first six months of 1998 when compared to the same periods in 1997. The increases can be attributed to increased earnings in 1998 and the reversal of flow-through differences primarily relating to depreciation. Net income to common stock was $34.1 million for the second quarter of 1998 compared with $30.6 million for the same period in 1997. Net income to common stock for the first six months of 1998 was $54.7 million compared with $47.7 million for the first six months of 1997. Capital Resources and Liquidity - ------------------------------- All shares of common stock issued during 1998 have been the result of stock issued in conjunction with the Dividend Reinvestment and Stock Purchase Plan, the Employees' Stock Ownership Plan, the Savings Plan for Employees, and the Long-Term Performance-Based Incentive Plan. During the balance of 1998, the Company plans to continue issuing common stock through its Dividend Reinvestment and Stock Purchase Plan and the Savings Plan for Employees. Proceeds from the issuance of common stock will fund additional equity investments in subsidiaries. Ten utility subsidiaries issued $95.2 million of long-term debt during the first seven months of 1998. The Company issued $120.0 million of long-term debt on July 15, 1998. In addition, the Company invested $92.9 million in the common stock of twelve subsidiaries during the first seven months of 1998. The proceeds from these financing arrangements have been used to fund construction programs and repay bank borrowings. It is anticipated that some subsidiaries will sell long-term debt to institutional investors and common stock to the Company during the remainder of 1998, with the proceeds used to repay bank loans and to fund construction projects. Year 2000 Issues - ---------------- Many computer systems in use today were designed and developed without regard to the impact of the upcoming century change. Computer programs and devices often use only two digits for the year to identify dates. As a result, computer systems may fail completely or create erroneous results unless corrective measures are taken. An inventory of all important computer programs and devices with embedded technology has been prepared for each utility subsidiary. Those inventories are being used to track the status of any necessary upgrades or replacements, and to log the results of testing by Company personnel to ensure that all important systems are in fact Year 2000 compliant. In some instances work on other information technology projects has been delayed because of Year 2000 remediation projects, but these delays are not expected to have a significant impact on the Company's operations. Because the Company is particularly dependent on its computerized financial, customer service and treatment plant automation systems, those systems are the primary areas in which Year 2000 efforts are focused. Page 15 FORM 10-Q PART I - FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (contd.) - -------------------------------------------------------------------------- Year 2000 Issues (cont.d) - ------------------------- The Company is currently implementing two new software packages for financial and customer service applications that are Year 2000 compliant. Although the decision to purchase and implement this software was based on an analysis of all of the Company's current and future systems requirements, once the decision was made these projects became critical parts of the Company's Year 2000 compliance plan. Implementation and testing of the financial system is expected to be completed by the end of 1998, while work on the customer service software project will continue into 1999. If the implementation of the new customer service software does not progress as expected over the next few months, the Company will postpone the implementation of the new software and instead make its current software Year 2000 compliant. In conjunction with these two projects, midrange and personal computers have been upgraded with hardware and operating systems that are Year 2000 compliant. Many of the Company's water treatment plants utilize automation systems that are controlled by personal computers. These systems are being tested and upgraded if necessary, and that work is expected to be completed by the end of 1998. In addition to the work being done on the Company's internal systems, interfaces used to exchange information with banks and other entities are being tested to ensure Year 2000 compliance. And where feasible, plans are being formulated to minimize the impact of problems outside parties may have in providing supplies and services. The cost of the new financial and customer service software, implementation consulting services, and the cost of upgrading and replacing computer equipment will be capitalized by the utility subsidiaries and included in future rate increase requests. The total cost of these capital projects is expected to be approximately $40 million, of which approximately $20 million has been incurred to date. Costs for specific Year 2000 remediation projects will be charged to expense unless they meet the requirements for deferral as regulatory assets. However, current period expenses are not expected to be materially different from the usual ongoing level of information systems related expenses. Forward Looking Information - --------------------------- This report, including management's discussion and analysis, contains certain forward looking statements regarding the Company's results of operations and financial position. These forward looking statements are based on current information and expectations, and are subject to risks and uncertainties which could cause the Company's actual results to differ materially from expected results. Page 16 FORM 10-Q PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K ----------------------------------------- A. Exhibits -------- Exhibit number (10), Material Contracts, is filed herewith electronically. Exhibit number (27), Financial Data Schedule, is filed herewith electronically. B. Reports on Form 8-K ------------------- No report on Form 8-K was filed by the registrant during the quarter ended June 30, 1998. Page 17 FORM 10-Q SIGNATURES - ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICAN WATER WORKS COMPANY, INC. Date August 13, 1998 J. James Barr - ---------------------- -------------------------------------- President and CEO (Authorized Officer) Date August 13, 1998 Robert D. Sievers - ---------------------- -------------------------------------- Comptroller (Chief Accounting Officer) EX-27 2
OPUR1 0000318819 R. D. SIEVERS 1,000 6-MOS DEC-31-1998 JUN-30-1998 PER-BOOK 3,839,020 111,454 202,989 278,548 49,747 4,481,758 100,383 342,507 739,134 1,182,024 79,075 17,928 1,894,298 230,410 0 0 21,053 0 0 0 1,056,970 4,481,758 481,980 36,143 316,443 352,586 129,394 2,520 131,914 75,264 56,650 1,992 54,658 32,767 72,112 91,121 0.68 0.68
EX-10 3 EXHIBIT 10 CONSULTING AGREEMENT THIS IS A CONSULTING AGREEMENT by and between Anthony P. Terracciano, an individual whose mailing address is 1123 3rd Avenue, Spring Lake, New Jersey 07762 ("Consultant") and American Water Works Company, Inc. ("the Company"), a Delaware corporation. BACKGROUND Consultant is currently a member of the Board of Directors of the Company (the "Board"). At the Board's request, Consultant has agreed to provide, working with the Board and the Company's President and Chief Executive Officer (the "CEO"), consulting services as the Company reviews its growth strategy. NOW, THEREFORE, in consideration of the covenants set forth herein, and intending to be legally bound hereby, the parties agree as follows: AGREEMENT 1. Retention. Subject to the terms and conditions hereinafter set forth, the Company hereby retains Consultant, and Consultant accepts that retention, to serve as a business consultant, for the term and at the compensation and benefits hereinafter stated. 2. Term. The initial term of this Agreement shall commence on May 7, 1998 and shall continue for a period of 12 months. The term of this Agreement may be extended thereafter by mutual agreement of the Consultant and the Board. 3. Duties. As a consultant to the Company, Consultant shall provide consulting and advisory services, from time to time, on behalf of the Company with respect to the Company's strategic growth planning. Consultant shall use his best efforts to be available to render consulting services at such times and locations as the Board or the CEO shall reasonably request. 4. Compensation. As compensation and consideration for such services and responsibilities under this Agreement, the Company agrees to pay Consultant and Consultant agrees to accept compensation of $250,000 annually. Such compensation shall be payable in equal, or as nearly equal as practicable, monthly installments during each month, beginning May 1, 1998 in which the Consultant provides services hereunder. The Company shall not be required to provide Consultant with any other payments or benefits for his services hereunder, provided that the services to be performed hereunder, and the compensation to be paid therefore, shall be in addition to Consultant's services and compensation as a member of the Board. 5. Reimbursement of Expenses. The Company agrees that, during the time Consultant is retained hereunder, Consultant shall be allowed reasonable business expenses in connection with the performance of his duties hereunder upon submission by Consultant of vouchers or itemized statements thereof prepared in compliance with such rules relating thereto as the Company may from time to time adopt and as may be required in order Page 2 EXHIBIT 10 to permit such payments as proper deductions to the Company under the Internal Revenue Code and the rules and regulations adopted pursuant thereto now or hereafter in effect. 6. Representations and Warranties. Consultant represents and warrants to the Company that his execution and performance of this Agreement will not conflict with, or result in a breach of, any other agreements to which he is a party or any employment relationships or other fiduciary duties he may have. Consultant will indemnify and hold harmless the Company from any claims, liabilities, damages, costs or expenses (including legal fees) resulting from third-party claims of any such conflict or breach. 7. Nondisclosure of Confidential Information. 7.1 Consultant shall not, during the term of this Agreement or at any time for a period of five years following termination of this Agreement, unless authorized to do so in writing by the Company, directly or indirectly disclose or permit to be known to, or used for the benefit of, any person, corporation or other entity (outside of the employ of the Company), or himself, any confidential information acquired by him during the course of or as an incident to his employment or retention by or association with the Company, whether or not pursuant to this Agreement. For the purposes of this Section 7, the term confidential information shall include, but not be limited to, all trade secrets, confidential or proprietary knowledge or information with respect to the conduct or details of the Company's business and other information about the Company's business not in the public domain. 7.2 All confidential information described in Section 7.1 shall be the exclusive property of the Company, and Consultant shall use his best efforts to prevent any publication or disclosure thereof. Upon termination of Consultant's services with the Company, Consultant shall return to the Company all documents, records, reports, writings and other similar documents containing confidential information, including copies thereof, then in his possession or control. 7.3 The provisions of this Section 7 shall survive the termination, for any reason, of this Agreement and shall continue for the period contemplated by this Section 7. 8. No Employee Relationship. Consultant and the Company agree that Consultant shall be treated for all purposes as an independent contractor and nothing hereunder shall be considered to create an employment relationship between Consultant and the Company. 9. Waiver of Breach. The waiver by the Company of a breach of any provision of this Agreement by Consultant shall not operate or be construed as a waiver of any other or subsequent breach by Consultant of such or any other provision. Page 3 EXHIBIT 10 10. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or be sent by certified mail addressed to Consultant at his address set forth in the first paragraph of this Agreement, and to the Company at 1025 Laurel Oak Road, Voorhees, NJ, 08043 ATTN: W. Timothy Pohl, Esq. or to such other address as either of such parties may designate in a written notice served upon the other party in the manner provided herein. Any such notice shall become effective upon being mailed or, in the case of delivery by hand, upon receipt. 11. Severability. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be held invalid or unenforceable by a court of competent jurisdiction, the remainder of this Agreement or the application of any such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. If any of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, scope, activity or subject, it shall be construed by limiting and reducing it, so as to be valid and enforceable to the extent compatible with the applicable law or the determination by a court of competent jurisdiction. 12. Governing Law. The implementation and interpretation of this Agreement shall be governed by and enforced in accordance with the laws of the State of New Jersey. 13. Binding Effect and Assignability. The rights and obligations of both parties under this Agreement shall inure to the benefit of and shall be binding upon their heirs, successors and assigns, but shall not be assigned without the written consent of both parties. 14. Entire Agreement. This instrument constitutes the entire agreement with respect to the subject matter hereof between the parties hereto and replaces and supersedes as of the date hereof any and all prior oral or written agreements and understandings between the parties hereto. This Agreement may only be modified by an agreement in writing executed by both Consultant and the Company. IN WITNESS WHEREOF, the undersigned have executed this Agreement. AMERICAN WATER WORKS COMPANY, INC. By: Marilyn Ware Lewis ---------------------------------- Chairman of the Board of Directors CONSULTANT: Anthony P. Terracciano ---------------------------------- Anthony P. Terracciano -----END PRIVACY-ENHANCED MESSAGE-----