FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1994
-------------
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 0-493
-----
CONSUMERS WATER COMPANY
(Exact name of registrant as specified in its Charter)
Maine 01-0049450
- - ------------------------------ ---------------------
- - --
(State or other jurisdiction of (I.R.S. Employer Identi-
incorporation or organization) identification number)
Three Canal Plaza, Portland, ME 04101
- - ------------------------------ ---------------------
- - --
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (207) 773-6438
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
--- --
The number of common shares of Consumers Water Company outstanding as of
August 1, 1994, was 8,168,584.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
PART I ITEM I
June 30, December 31,
1994 1993
----- -----
(Unaudited)
ASSETS
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Water utility plant, in service $378,408 $360,115
Less: Accumulated depreciation 65,968 63,579
---------- ---------
312,440 296,536
---------- ---------
Other subsidiaries 1,878 1,710
Less: Accumulated depreciation 987 881
---------- ---------
891 829
---------- ---------
Construction work in progress 18,075 20,180
---------- ---------
NET PROPERTY, PLANT AND EQUIPMENT 331,406 317,545
---------- ---------
ASSETS OF DISCONTINUED OPERATIONS
NET OF LIABILITIES 1,364 1,308
INVESTMENTS, AT COST 2,051 2,044
---------- ---------
CURRENT ASSETS:
Cash and cash equivalents 2,792 4,993
Accounts receivable, net of
reserves of $844 in
1994 and $798 in 1993 9,151 10,171
Unbilled revenue 10,101 6,649
Inventories 2,480 1,793
Prepayments and other 3,942 6,524
---------- ---------
TOTAL CURRENT ASSETS 28,466 30,130
---------- ---------
OTHER ASSETS:
Funds restricted for
construction activity 6,208 9,508
Deferred charges and other assets 11,809 11,122
---------- ---------
18,017 20,630
---------- ---------
$ 381,304 $ 371,657
=========== ==========
See attached notes.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands Except Per Share Amounts)
PART I ITEM I
June 30, December 31,
1994 1993
----- -----
(Unaudited)
SHAREHOLDERS' INVESTMENT
AND LIABILITIES
CAPITALIZATION:
Common Stock, $1 par value
Authorized: 15,000,000 shares
Issued: 8,162,471 shares in 1994 and
8,041,369 in 1993 $ 8,162 $ 8,041
Amounts in excess of par value 66,612 64,662
Reinvested earnings 23,165 24,235
------- --------
COMMON SHAREHOLDERS' INVESTMENT 97,939 96,938
------- --------
Preferred shareholders' investment 1,069 1,069
Minority interest 2,239 2,240
Long-term debt 123,226 124,050
------- --------
TOTAL CAPITALIZATION 224,473 224,297
------- --------
CONTRIBUTIONS IN AID OF CONSTRUCTION 56,048 54,045
------- --------
CURRENT LIABILITIES:
Notes payable 29,013 19,676
Sinking fund requirements and
current maturities 914 930
Accounts payable 4,615 6,052
Accrued taxes 4,820 6,662
Accrued interest 3,256 3,318
Accrued expenses and other 11,212 11,011
------- --------
TOTAL CURRENT LIABILITIES 53,830 47,649
------- --------
COMMITMENTS AND CONTINGENCIES
DEFERRED CREDITS:
Customers' advances for construction 21,718 21,338
Deferred income taxes 20,146 19,183
Unamortized investment tax credits 5,089 5,145
------- --------
46,953 45,666
------- --------
$381,304 $371,657
=========== ==========
BOOK VALUE PER SHARE OF COMMON STOCK $ 12.00 $ 12.05
=========== ==========
See attached notes.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
PART I ITEM I
Six Months Ended
June 30,
1994 1993
______ _____
REVENUE AND SALES:
Water utility operations $38,516 $37,766
Other operations 5,747 5,674
-------- --------
Operating revenue 44,263 43,440
-------- --------
COSTS AND EXPENSES:
Water utility operations 28,189 27,422
Other operations 5,614 5,912
-------- --------
Operating expenses 33,803 33,334
-------- --------
OPERATING INCOME 10,460 10,106
-------- --------
OTHER INCOME AND (EXPENSE):
Interest expense (5,999) (5,882)
Construction interest capitalized 781 274
Preferred dividends and minority
interest of subsidiaries (62) (72)
Other net 323 229
-------- --------
(4,957) (5,451)
-------- --------
EARNINGS BEFORE INCOME TAXES AND GAINS FROM
SALES OF PROPERTIES 5,503 4,655
Income Taxes 1,812 1,679
-------- --------
EARNINGS:
Before Gains from Sales of Properties 3,691 2,976
Gains from Sales of Properties - 873
-------- --------
Income from Continuing Operations 3,691 3,849
Loss from Discontinued Operations - (567)
-------- --------
NET INCOME $ 3,691 $ 3,282
=========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING #8,157 #7,204
EARNINGS PER COMMON SHARE:
Continuing Operations:
Before Gains from Sales $ 0.45 $ 0.41
Total $ 0.45 $ 0.53
Discontinued Operations $ - $ (0.08)
-------- --------
TOTAL $ 0.45 $ 0.45
=========== ==========
Dividends Declared per Common Share $ 0.58 $ 0.57
=========== ==========
See attached notes.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
PART I ITEM I
Three Months Ended
June 30,
1994 1993
------ ------
REVENUE AND SALES:
Water utility operations $20,271 $19,588
Other operations 3,176 2,915
-------- --------
Operating revenue 23,447 22,503
-------- --------
COSTS AND EXPENSES:
Water utility operations 14,065 13,882
Other operations 2,911 3,177
-------- --------
Operating expenses 16,976 17,059
-------- --------
OPERATING INCOME 6,471 5,444
-------- --------
OTHER INCOME AND (EXPENSE):
Interest expense (3,062) (2,929)
Construction interest capitalized 362 103
Preferred dividends and minority
interest of subsidiaries (37) (40)
Other net 179 107
-------- --------
(2,558) (2,759)
-------- --------
EARNINGS BEFORE INCOME TAXES
AND GAINS FROM SALES OF PROPERTIES 3,913 2,685
Income Taxes 1,353 953
-------- --------
EARNINGS:
Before Gains from Sales of
Properties 2,560 1,732
Gains from Sales of Properties - 6
-------- --------
Income from Continuing Operations 2,560 1,738
Loss from Discontinued Operations - (293)
-------- --------
NET INCOME $ 2,560 $ 1,445
=========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING #8,228 #7,233
EARNINGS PER COMMON SHARE:
Before Gains from Sales $ 0.31 $ 0.24
Total $ 0.31 $ 0.24
Discontinued Operations $ - $ (0.04)
-------- --------
TOTAL $ 0.31 $ 0.20
=========== ==========
Dividends Declared per Common Share $ 0.29 $ 0.285
=========== ==========
See attached notes.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(In Thousands)
(Unaudited)
PART I ITEM I
Six Months Ended
June 30,
1994 1993
----- -----
OPERATING ACTIVITIES:
NET INCOME $ 3,691 $ 3,282
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY OPERATING
ACTIVITIES:
Depreciation and amortization 4,342 3,977
Deferred income taxes and investment
tax credits 1,212 4,040
Gains on sales of properties - (874)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable and unbilled
revenue (2,432) (1,757)
(Increase) decrease in inventories (687) (47)
Decrease in prepaid expenses 2,582 1,598
Decrease in accounts payable and
accrued expenses (3,379) (811)
Change in other assets, net of
change in other liabilities (1,460) (4,324)
Change in other assets, net of
change in other liabilities of
continuing operations (56) (422)
-------- --------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 3,813 4,662
-------- --------
INVESTING ACTIVITIES:
Capital expenditures (16,971) (11,701)
Decrease in funds restricted
for construction activity 3,300 2,158
Increase (decrease) in construction
accounts payable 205 (582)
Net proceed from sales of properties - 2,024
-------- --------
NET CASH USED IN INVESTING
ACTIVITIES (13,466) (8,101)
-------- --------
(continued...)
CONSUMERS WATER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(In Thousands)
(Unaudited)
(continued)
PART I ITEM I
Six Months Ended
June 30,
1994 1993
----- -----
FINANCING ACTIVITIES:
Net borrowing of short-term debt 9,337 5,424
Proceeds from issuance of long-term
debt - 5,429
Repayments of long-term debt (840) (6,953)
Proceeds from issuance of stock 2,070 2,314
Advances and contributions in aid of
construction, net of repayments 1,916 1,836
Deferred taxes paid by developers on
advances and contributions in aid of
construction (305) (234)
Cash dividends paid (4,726) (4,142)
--------- ---------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 7,452 3,674
--------- ---------
Net increase (decrease) in cash
and cash equivalents (2,201) 235
Cash and cash equivalents at
beginning of year 4,993 1,768
--------- ---------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 2,792 $ 2,003
=========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION FROM CONTINUING OPERATIONS:
Cash paid during the period for:
Interest (net of amounts
capitalized) $ 5,158 $ 5,627
Income taxes $ 1,056 $ 1,600
NON-CASH INVESTING AND FINANCING
ACTIVITIES FOR THE YEAR:
Property advanced or contributed $ 466 $ 99
See attached notes.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 1994
PART I ITEM 1
A. PREPARATION OF FINANCIAL STATEMENTS
The condensed financial statements included herein have been
prepared by the registrant, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although the registrant
believes that the disclosures which are made are adequate to make
the information presented not misleading, particularly when read
in conjunction with the financial statements and notes thereto
included in the registrants' latest annual report on Form 10-K.
In management's opinion, the attached interim financial
statements reflect all adjustments which are necessary for a fair
statement of the results for the periods presented.
B. EARNINGS PER SHARE
Earnings per common share are based on the weighted average
number of shares and common share equivalents actually
outstanding during the period. The effect of employee stock
options which are included as common share equivalents is to
increase the number of shares outstanding by 2,251 in 1994 and
2,037 in 1993.
C. DISPOSITIONS
On January 13, 1993, the Company sold the Bourbonnais wastewater
collection operation of Consumers Illinois Water Company to the
Village of Bourbonnais for a gain net of taxes approximately
$847,000. The operation generated $1.1 million in revenues and
had 5,007 customers in 1992.
D. COMMITMENTS AND CONTINGENCIES
In March, 1993, an outside contractor spilled a small amount of
mercury while working at the Company's subsidiary, Ohio Water
Service's (OWS) water treatment plant. Several areas in and
around the plant were contaminated by the spill, although no
mercury has contaminated OWS's water supply. The cleanup has
been completed at a total cost of approximately $900,000. Ohio
Water is currently seeking recovery of these costs from the
contractor. Management believes that it is probable that Ohio
Water will recover cleanup costs from the contractor and/or the
contractor's insurers and, therefore, has deferred the costs
incurred in connection with the spill.
E. DISCONTINUED OPERATIONS
On October 6, 1993, the Company announced its intention to
dispose of its manufactured housing business, Burlington Homes of
New England, Inc. (Burlington), and to concentrate its efforts on
its water resource management business. A reserve of $5.3
million was established in 1993. Burlington had losses
aggregating $1.8 million from December 31, 1989, through
September 30, 1993. On July 8, 1994, substantially all the
assets of Burlington were sold. Management expects the reserve
taken in 1993 to be adequate to cover the loss from the sale.
The operating results of Burlington, prior to the date of
discontinuance, are shown under discontinued operations in the
Company's consolidated statements of income. All of the
financial statements of prior periods have been restated to
reflect the discontinuance of Burlington's operations.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
June 30, 1994
PART I - ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF
OPERATIONS
The following discussion and analysis sets forth certain factors relative to
the Company's financial condition at June 30, 1994 and the results of its
operations for the three months and six months then ended as compared to the
same periods of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
CONSTRUCTION PROGRAM
Capital construction expenditures in the first half of 1994 totaled $15.1
million, net of contributions and advances, the majority of which relates to
the Company's utility subsidiaries. Projects include $3.4 million spent on a
new water treatment plant in Pennsylvania estimated to cost $16 million when
completed in 1995, $1.2 million spent on a disinfection facility in Maine,
which was completed in May of 1994 at a total cost of $3.9 million, and other
smaller projects throughout the Company.
The Company expects capital expenditures for 1994 through 1996 to be
approximately $116 million, net of contributions and advances. Almost 45% of
these expenditures are required by the Safe Drinking Water Act (SDWA), the
Clean Water Act (CWA) and other regulations. The new $16 million treatment
plant and transmission main, which is under construction in Pennsylvania, is
required by State regulations under the SDWA.
The Company's water utility subsidiaries plan to file cases in their
respective jurisdictions for recovery of and return on capital used to fund
their capital expenditure programs. Costs which have been prudently incurred
in the judgement of the appropriate public utility commission have been, and
are expected to continue to be, recognized in rate setting. To support these
capital expenditures over the next three years, some subsidiaries will be
required to file for large percentage rate increases principally due to the
significant capital expenditures resulting from compliance with the SDWA and
the CWA.
FINANCING AND CAPITALIZATION
The table below shows the cash generated and used by the Company during the
first half of 1994.
Cash was generated from:
Dollars in millions
Net income, depreciation
and deferred taxes $9.2
Net increase in short-term debt 9.3
Common stock issued 2.1
Decrease in funds
restricted for
construction 3.3
--------
Total Cash Generated $ 18.5
========
Cash was used:
Repay longer-term debt $ (0.8)
Pay dividends (4.7)
Capital expenditures,
net of CIAC (15.1)
Net change in working
capital (5.4)
Other (0.1)
--------
Total Cash Used $ (26.1)
========
Cash decreased $2.2 million from year end, 1993, as the Company used the
remaining proceeds from the sale of Washington Court House in December, 1993.
This, along with the increase in short-term debt, helped fund capital
expenditures.
Financing and Capitalization
Water utilities will require higher equity ratios to maintain current debt
ratings due to the recognition by Standard & Poor's rating system of
additional risk of the SDWA requirements and the uncertainty of future
regulatory treatment of the cost of these
CONSUMERS WATER COMPANY AND SUBSIDIARIES
June 30, 1994
PART I - ITEM 2
(continued..)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF
OPERATIONS
requirements. This coupled with the size of the 1994 through 1996 capital
expenditure program makes it likely that the Company will return to the
equity market again in the next three years. Any cash flow not provided
through a stock issuance will, as usual, be financed with short-term lines of
credit until a subsidiary's short-term debt level is high enough to warrant
placement of long-term debt, generally, in the $4-6 million range. As of
December 31, 1993, the Company had unused lines of credit available of over
$82 million. In addition, the Company plans to continue to use tax-exempt,
long-term debt financing in appropriate situations. The $16 million project
in Pennsylvania mentioned above is being financed in large part with $14
million of 6.375% tax-exempt bonds issued on behalf of Roaring Creek Water
Company in October of 1993.
Discontinued Operations
On October 6, 1993, the Company announced its intention to dispose of its
manufactured housing business, Burlington Homes of New England, Inc., and to
concentrate its efforts on its water resource management business. A reserve
of $5.3 million was established in 1993. On July 8, 1994, substantially all
the assets of Burlington were sold. Management expects the reserve taken in
1993 to be adequate to cover the loss from the sale. The operating results
of Burlington, prior to the date of discontinuance, are shown under
discontinued operations in the Company's consolidated statements of income.
All of the financial statements of prior periods have been restated to
reflect the discontinuance of Burlington's operations.
Acquisitions and Dispositions
Over the past five years, the Company has acquired seven water systems.
Although the Company currently has no material acquisitions pending,
management anticipates continuing the acquisition policy of recent years.
Other
In March, 1993, an outside contractor spilled a small amount of mercury while
working at the Company's subsidiary Ohio Water's water treatment plants.
Several areas in and around the plant were contaminated by the spill,
although no mercury has contaminated OWS's water supply. The cleanup has
been completed at a total cost of approximately $900,000. Ohio Water has
received $100,000 from its insurer and is currently seeking recovery of all
the cleanup costs from the contractor. While there can be no assurances to
the ultimate outcome of Ohio Water's efforts to obtain such recovery,
Management believes that is probable that Ohio Water will recover cleanup
costs from the contractor and/or the contractor's insurer and, therefore, has
deferred the costs incurred in connection with the spill.
RESULTS OF OPERATIONS
FIRST HALF, 1994 VERSUS FIRST HALF, 1993
UTILITY REVENUE
Utilities revenues increased $750,000 or 2.0% compared to the first half of
1993 due to $1,186,000 in rate increases and $676,000 primarily from
increased consumption due to a dry spring throughout the Company's service
areas. These increases were offset by the loss of $1,112,000 in revenue from
the Washington Court House Division of Ohio Water Service Company, which was
sold in December, 1993. During 1994, the Company has settled nine rate cases
with total annual revenues of $4.4 million. Currently, there are two rate
cases pending in which nearly $3.5 million in additional revenue was sought.
The Company's water utility subsidiaries plan to file for additional cases in
1994 in three jurisdictions timed to seek recovery of and return on funds
used to finance its large capital expenditure programs.
UTILITY OPERATING EXPENSES
Water utility operating expenses increased approximately $767,000, or 2.8%.
Increased depreciation and property taxes due to increased plant balances,
and other normal expense increases were partially offset by the reduction in
expenses of $977,000 due to the sale of Washington Court House.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
June 30, 1994
PART I - ITEM 2
(continued..)
RESULTS OF OPERATIONS
FIRST HALF, 1994 VERSUS FIRST HALF, 1993 (CONT.)
OTHER OPERATIONS - REVENUE AND EXPENSE
Other operating revenue increased by $73,000, or 1.3%, due to increased sales
at C/P Utility Services. Other operating expenses are down $298,000, or
5.0%, compared to the first quarter of 1993, due to the partial reversal of
the additional accrual of $300,000 taken on the Company's self-insured health
plan in 1993. Health insurance claims have returned to normal levels in
1994, allowing this reversal.
OTHER
Construction interest capitalized is up $507,000 due to the new water
treatment plant being constructed in Pennsylvania and to an adjustment to the
capitalized interest of a major plant expansion in Ohio, which was completed
in 1993.
Income taxes are up $133,000 due to higher pre-tax income in 1994.
SECOND QUARTER, 1994 VERSUS SECOND QUARTER, 1993
UTILITY REVENUE
Utility revenues increased $683,000, or 3.4%, for the three months ended June
30, 1994, as compared to the same period in 1993, due primarily to $704,000
in rate increases and $562,000 in increased consumption due to a dry spring
throughout the Company's service areas. These increases were partially
offset by the loss of revenue from the Washington Court House division of
Ohio Water Service of $583,000 following its sale.
UTILITY OPERATING EXPENSES
Water utility operating expenses have increased approximately $183,000 in the
three months ended June 30, 1994, as compared to the same period in 1993.
Increased depreciation and property taxes due to increased plant balances and
increased health insurance costs were partially offset by the reduction in
expenses of $494,000 due to the sale of the Washington Court House division.
OTHER OPERATIONS - REVENUES EXPENSE
Other operating revenue increased by $261,000, or 9.0%, due to increased
sales at C/P Utilities. Other operating expenses are down $266,000, or 8.4%,
due to a partial reversal of the additional accrual of $300,000 taken on the
Company's self insured health insurance plan in June of 1993. Health
insurance claims have returned to normal levels in 1994, allowing this
reversal.
OTHER
Income taxes were up $400,000 due to higher pre-tax income in the second
quarter of 1994 compared to the second quarter of 1993.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
JUNE 30, 1994
PART II
ITEM 4.SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Election of Directors
At the Annual Meeting of Shareholders held in South Portland, Maine on
May 4, 1994, the shareholders of the Company elected the following directors
until the 1995 Annual Meeting and until their successors are elected and
qualified, each receiving the vote of the holders of the Company's
outstanding common and preferred shares, voting as one class, as follows:
-----SHARES VOTED---- BROKER
FOR AGAINST W/HELD NON-VOTES
Claudio Elia 6,342,165 --- 44,330 ---
David R. Hastings II 6,350,327 --- 36,167 ---
Peter L. Haynes 6,352,017 --- 34,477 ---
Jack S. Ketchum 6,352,343 --- 34,152 ---
John E. Menario 6,350,771 --- 35,724 ---
Jane E. Newman 6,342,387 --- 44,108 ---
John E. Palmer, Jr. 6,353,012 --- 33,483 ---
Elaine D. Rosen 6,342,316 --- 44,179 ---
William B. Russell 6,351,714 --- 44,179 ---
John H. Schiavi 6,349,879 --- 36,616 ---
John W. L. White 6,345,656 --- 40,839 ---
No existing director's term of office continued after the meeting.
There was no solicitation in opposition to management's nominees and all
nominees were elected without contest.
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Non-competition and Consulting Agreement between consumers Water
Company and John H. Schiavi dated March 28, 1983, incorporated by
reference to Exhibit 10.1 to Consumers Water Company's Annual Report on
Form 10-K for the year ended December 31, 1992.
10.2 Consumers Water Company 1988 Incentive Stock Option Plan, incorporated
by reference to Exhibit 10.2 to Consumers Water Company's Annual Report
on Form 10-K for the year ended December 31, 1993.
10.3 Consumers Water Company 1993 Incentive Stock Option Plan, incorporated
by reference to Appendix B to Definitive Proxy Statement Dated April 5,
1993.
10.4 Consumers Water Company 1992 Deferred Compensation Plan for Directors,
Plan A, incorporated by reference to Exhibit 10.5.2 to Consumers Water
Company's Annual Report on Form 10-K for th eyear ended December 31,
1991.
10.5 Consumers Water Company 1992 Deferred Compensation Plan for Directors,
Plan B, incorporated by reference to Exhibit 10.5.3 to Consumers Water
to Consumers Water Company's Annual Report on Form 10-K for the year
ended December 31, 1991.
10.6 Letter Agreement between Consumers Water Company and Anjou
International Company dated February 9, 1986, incorporated by reference
to Exhibit 10.6 to Consumers Water Company's Registration Statement on
Form S-2 (No. 33-41113), filed with the Securities and Exchange
Commission on June 11, 1991.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
JUNE 30, 1994
PART II
10.7 Assignment of Rights under February 7, 1986, Agreement between
Consumers Water Company and Anjou International Company to Compagnie
Generale des Eaux, dated November 12, 1987, incorporated by reference
to Exhibit 10.7 to Consumers Water Company's Annual Report on Form 10-K
for the year ended December 31, 1992.
10.8 Form of Indemnification Agreement entered in to between Consumers Water
Company and each of its current directors and executive officers, is
submitted herewith as Exhibit 10.8.
10.9 Employment Agreement between Peter L. Haynes and Consumers Water
Company dated July 13, 1992, incorporated by reference to Exhibit 10.11
to Consumers Water Company's Annual Report on Form 10-K for the year
ended December 31, 1992.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter ended June
30, 1994.
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.
CONSUMERS WATER COMPANY
(Registrant)
- - -----------------------------------------------------------------------------
Date Peter L. Haynes
Chief Executive Officer
- - -----------------------------------------------------------------------------
Date John F. Isacke
Chief Financial Officer
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.
CONSUMERS WATER COMPANY
(Registrant)
8/11/94 /s/ Peter L. Haynes
- - -----------------------------------------------------------------------------
Date Peter L. Haynes
Chief Executive Officer
08/11/94 /s/ John F. Isacke
- - -----------------------------------------------------------------------------
Date John F. Isacke
Chief Financial Officer
CONSUMERS WATER COMPANY AND SUBSIDIARIES
JUNE 30, 1994
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Page
- - ------------ ---------
10.1 Non-competition and Consulting Agreement between consumers Water
Company and John H. Schiavi dated March 28, 1983, incorporated by
reference to Exhibit 10.1 to Consumers Water Company's Annual
Report on Form 10-K for the year ended December 31, 1992.
10.2 Consumers Water Company 1988 Incentive Stock Option Plan,
incorporated by reference to Exhibit 10.2 to Consumers Water
Company's Annual Report on Form 10-K for the year ended December
31, 1993.
10.3 Consumers Water Company 1993 Incentive Stock Option Plan,
incorporated by reference to Appendix B to Definitive Proxy
Statement Dated April 5, 1993.
10.4 Consumers Water Company 1992 Deferred Compensation Plan for
Directors, Plan A, incorporated by reference to Exhibit 10.5.2 to
Consumers Water Company's Annual Report on Form 10-K for th eyear
ended December 31, 1991.
10.5 Consumers Water Company 1992 Deferred Compensation Plan for
Directors, Plan B, incorporated by reference to Exhibit 10.5.3 to
Consumers Water to Consumers Water Company's Annual Report on Form
10-K for the year ended December 31, 1991.
10.6 Letter Agreement between Consumers Water Company and Anjou
International Company dated February 9, 1986, incorporated by
reference to Exhibit 10.6 to Consumers Water Company's
Registration Statement on Form S-2 (No. 33-41113), filed with the
Securities and Exchange Commission on June 11, 1991.
10.7 Assignment of Rights under February 7, 1986, Agreement between
Consumers Water Company and Anjou International Company to
Compagnie Generale des Eaux, dated November 12, 1987, incorporated
by reference to Exhibit 10.7 to Consumers Water Company's Annual
Report on Form 10-K for the year ended December 31, 1992.
10.8 Form of Indemnification Agreement entered in to between Consumers
Water Company and each of its current directors and executive
officers, is submitted herewith as Exhibit
10.8...............................................................
10.9 Employment Agreement between Peter L. Haynes and Consumers Water
Company dated July 13, 1992, incorporated by reference to Exhibit
10.11 to Consumers Water Company's Annual Report on Form 10-K for
the year ended December 31, 1992.
INDEMNIFICATION AGREEMENT
This indemnification Agreement ("Agreement") is entered into by and
between Consumers Water Company, a Maine corporation (the "Company")
and__________________________________________________________________________
_______
("Indemnified Party") as of this ________ day of ___________ 19_____.
WHEREAS, Indemnified Party is presently (a member of the Board of
Directors)(and)(an executive officer) of the Company; and
WHEREAS, the shareholders of the Company have adopted a bylaw providing
the indemnification of executive officers and directors of the Company to the
maximum extent permitted by law; and
WHEREAS, such bylaw and Section 719 of the Maine Business Corporation
Act specifically provide that they are not exclusive, and thereby contemplate
that agreements may be entered into between the Company and directors and
executive officers of the Company with respect to indemnification of such
persons; and
WHEREAS, in accordance with the authorization provided by the Maine
Business Corporation Act, the Company has purchased and presently maintains a
policy or policies of Directors and Officers Liability Insurance ("D&O
Insurance"), covering certain liabilities which may be incurred by its
directors and officersin the performance of their service for the Company;
and
WHEREAS, the Company and Indemnified Party wish to eliminate certain
potential questions concerning the adequacy and reliability of the protection
afforded to directors and executive officers by the D&O Insurance and by the
Company's bylaws; and
WHEREAS, in order to induce Indemnified Party (to continue) to serve as
(a director)(and)(an executive officer) of the Company, the Company has
agreed to enter into this agreement with Indemnified Party.
NOW, THEREFORE, in consideration of Indemnified Party's future services
to the Company and for other good and valuable consideration the receipt and
adequacy of which is hereby acknowledged, the Company and Indemnified Party
hereby agree as follows:
1. Indemnity of Indemnified Party. Pursuant to the non exclusivity
provisions of Article XIV of the bylaws of the Company and Section 719 of the
Maine Business Corporation Act the Company hereby agrees to hold harmless and
indemnify Indemnified party to the full extent authorized or permitted by
Maine law, including without limitation, the provisions of Section of the
Business Corporation Act, or by any amendment thereof or other statutory
provisions authorizing or permitting such indemnification which is adopted
after the date hereof. without limiting the generality of the foregoing,
subject only to the provisions of paragraph 2 hereof, the Company hereby
agrees to hold harmless and indemnify Indemnified Party against expenses
(including attorney's fees), judgements, fines and amounts paid in settlement
actually and reasonably incurred by Indemnified Party in connection with any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative to which Indemnified Party is, was
or at any time becomes a party, or is threatened to be made a party, by
reason of the fact that Indemnified Party is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including, but not
limited to, claims of negligence on the part of the Indemnified Party.
2. Limitations on Additional Indemnity. No indemnity pursuant to
Section 1 hereof shall be paid by the Company and the Company shall not hold
harmless the Indemnified Party:
(a) On account of any suit in which judgement is rendered against
Indemnified Party for accounting of profits made from the purchase or
sale of securities of the Company owned or deemed to be beneficially
owned by Indemnified Party pursuant to the provisions of Section 16(b)
of the Securities Exchange act of 1934 and amendments thereto or
similar provisions of any federal or state statutory law;
(b) With respect to remunerating or any other repayment made to
Indemnified Party if it shall be determined by a final judgement or
other final adjudication that such remuneration or other payment was in
violation of law;
(c) On account of Indemnified Party's conduct which is finally
adjudged to be knowingly fraudulent, deliberately dishonest, or
intentional misconduct; or
(d) If a final decision by a Court having jurisdiction in the matter
shall determine that such indemnification or holding harmless is not
lawful.
3. Maintenance of Insurance and Self Insurance.
(a) The Company represents that it presently has in effect policies of D&O
Insurance in insurance companies and amounts as follows (the "Insurance
Policies"):
(Information to be supplied)
A $ deductible applies on claims for which the Company can
directly indemnify Indemnified Party.
Subject only to the provisions of paragraph 3(b) hereof, the Company
hereby agrees that, so long as Indemnified Party shall continue to serve as
(a director)(or)(an executive officer) of the Company (or shall continue at
the request of the Company to serve as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other
enterprise) and thereafter so long as Indemnified Party shall be subject to
any possible claim or threatened, pending or completed action, suit or
proceeding, whether civil, criminal or investigative, by reason of the fact
that Indemnified Party was (a director)(or)(an executive officer) of the
Company (or served in any of said capacities), the Company will purchase and
maintain in effect for the benefit of Indemnified Party one or more valid,
binding and enforceable policy or policies of D&O Insurance providing, in all
respects, coverage at least equal to that presently provided pursuant to the
Insurance Policies.
(b) The Company shall not be required to maintain said policy or
policies of D&O Insurance in effect if said insurance is not reasonably
available or if, in the reasonable business judgement of the then directors
of the Company, either (i) the premium cost for such insurance is
substantially disproportionate to the amount of coverage, or (ii) the
coverage provided by such insurance is so limited by exclusions or by the
increased deductible amounts that there is insufficient benefit from such
insurance.
(c) In the event the Company does not purchase and maintain in effect
said policy or policies of D&O Insurance pursuant to the provisions of
paragraph 3(b) hereof, the Company agrees to hold harmless and indemnify
Indemnified Party to the full extent of the coverage which would otherwise
have been provided for the benefit of Indemnified Party pursuant to the
Insurance Policies.
4. Continuation of Indemnity. All agreements and obligations of the
Company contained herein shall continue during the period Indemnified Party
is a director, officer, employee or agent of the Company (or is or was
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) and shall continue thereafter so long as Indemnified Party shall
be subject to any possible claim or threatened, pending or completed action,
suit or proceeding, whether civil, criminal or investigative, by reason of
the fact that Indemnified Party was (a director) (or)(an executive officer)
of the Company or serving in any other capacity referred to herein, and shall
inure to the benefit of heirs, executors, administrators and personal
representatives of Indemnified Party.
5. Notification and Defense of Claim. Promptly after receipt of
Indemnified Party of notice of the commencement of any action, suit or
proceeding, Indemnified Party will, if a claim in respect thereof is to be
made against the Company under this Agreement, notify the Company of the
commencement thereof; but the omission so to notify the Company will not
relieve it from any liability which it may have to Indemnified Party
otherwise than under this Agreement. With respect to any such action, suit
or proceeding as to which Indemnified Party notifies the Company of the
commencement thereof:
(a) The Company will be entitled to participate therein at its own
expense; and
(b) Except as otherwise provided below, to the extent that it may
wish, the company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel
satisfactory to Indemnified Party. After notice from the Company to
Indemnified Party of its election so to assume the defense thereto, the
Company will not be liable to Indemnified Party under this Agreement
for any legal or other expenses subsequently incurred by Indemnified
Party in connection with the defense thereof other than reasonable
costs of investigation or as otherwise provided below. Indemnified
Party shall have the right to employ his or her counsel in such action,
suit or proceeding but the fees and expenses of such counsel incurred
after notice from the Company of its assumption of the defense thereof
shall be at the expense of Indemnified Party unless (i) the employment
of counsel by Indemnified Party has been authorized by the Company (ii)
Indemnified Party shall have reasonably concluded that there may be a
conflict of interest between the Company and Indemnified Party in the
conduct of the defense of such action, or (iii) the Company shall not
in fact have employed counsel to assume the defense of such action, in
each of which cases the fees and expenses of counsel shall be at the
expense of the Company. The Company shall not be entitled to assume
the defense of any action, suit or proceeding brought by or on behalf o
the Company or as to which Indemnified Party shall have made the
conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify Indemnified Party
under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The Company shall not
settle any action or claim in any manner which would impose any penalty
or limitation on Indemnified Party without Indemnified Party's written
consent. Neither the Company nor Indemnified Party will unreasonably
withhold their consent to any proposed settlement.
6. Advances on Expenses. Expenses to the extent reasonably incurred in
connection with any action, suit or proceeding described in paragraph 1 above
shall be paid by the Company in advance of the final disposition of such
action, suit or proceeding, upon and after receipt by the Company of a
written request therefore accompanied by a written affirmation by Indemnified
Party of his or her good faith belief that his or her conduct with regard to
the actions or omissions at issue in the action, suit or proceeding was not
knowingly fraudulent, deliberately dishonest or willful misconduct.
Indemnified Party hereby agrees to repay any and all amounts so advanced by
the Company if it shall ultimately be determined that Indemnified Party is
not entitled to indemnification or to be held harmless on account of such
action, suit or proceeding. Indemnified Party also agrees that Indemnified
Party will reimburse the Company for all reasonable expenses paid by the
Company in defending any civil or criminal action, suit or proceeding against
Indemnified Party in the event and only to the extent that it shall be
ultimately determined that Indemnified Party is not entitled to be
indemnified or to be held harmless by the Company for such expenses under the
provisions of the Maine Business Corporation Act, the bylaws of the Company,
this Agreement or otherwise.
7. Nonexclusive Rights. The foregoing rights of indemnification and to
advances shall not be deemed exclusive of any other rights to which
Indemnified Party may be entitled under any of the Company's bylaws, any vote
of shareholders to disinterested directors, applicable law, or otherwise.
8. Enforcement.
(a) The Company confirms and agrees that it has entered into this
Agreement and assumed the obligations imposed on the Company hereby in order
to induce Indemnified Party to (serve)(continue) as (a director)(or)(an
executive officer) of the Company, and acknowledges that Indemnified Party is
relying upon this Agreement in (serving)(continuing) in such capacity.
(b) In the event Indemnified Party is required to bring any action to
enforce rights or to collect monies due under this Agreement and is
successful in such action, the Company shall reimburse Indemnified Party for
all of Indemnified Party's reasonable fees and expense (including attorney's
fees) in bringing and pursuing such action.
9. Separability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be valid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
10. Governing Law; Binding Effect; Amendment and Termination.
(a) This Agreement shall be interpreted and enforced in accordance
with the laws of the State of Maine.
(b) This Agreement shall be binding upon Indemnified Party and upon
the Company, its successors and assigns, and shall inure to be the benefit of
Indemnified Party, his or her heirs, personal representatives and assigns and
to the benefit of the Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of this
Agreement shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed the Agreement on
and as of the day and year first above written.
CONSUMERS WATER COMPANY
By: ______________________________________
__________________________________________
Indemnified Party
