SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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
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 8, 1997 was 8,870,663.
Consumers Water Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
PART I ITEM I
-------------
June 30, December 31,
1997 1996
----------------------------
(Unaudited)
ASSETS
- -------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Plant in service $484,808 $476,067
Less - Accumulated depreciation 88,786 83,833
----------------------------
396,022 392,234
Construction work in progress 12,321 12,567
----------------------------
Net property, plant and equipment 408,343 404,801
----------------------------
Assets of Discontinued Operations, Net 3,493 5,213
---------------------------
Investments, at cost 1,752 1,706
---------------------------
CURRENT ASSETS:
Cash and cash equivalents 2,366 1,775
Accounts receivable, net of reserves of
$944 in 1997 and $982 in 1996 9,159 8,971
Unbilled revenue 5,307 5,015
Inventories 2,145 2,054
Prepayments and other 4,265 6,848
---------------------------
Total current assets 23,242 24,663
---------------------------
OTHER ASSETS:
Funds restricted for construction activity 1,692 2,380
Deferred charges and other assets 16,598 17,219
---------------------------
18,290 19,599
---------------------------
$455,120 $455,982
===========================
SHAREHOLDERS' INVESTMENT AND LIABILITIES
- ----------------------------------------
CAPITALIZATION:
Common Stock, $1 par value
Authorized: 15,000,000 shares
Issued: 8,863,276 shares in 1997
and 8,732,202 in 1996 $8,863 $8,732
Amounts in excess of par value 77,780 75,686
Reinvested Earnings 18,890 21,597
---------------------------
105,533 106,015
---------------------------
Preferred shareholders' investment 1,048 1,054
Minority interest 2,352 2,352
Long-term debt 171,846 172,917
---------------------------
Total capitalization 280,779 282,338
---------------------------
Contributions in Aid of Construction 74,274 73,208
---------------------------
CURRENT LIABILITIES:
Notes payable 20,375 17,354
Sinking fund requirements and current
maturities 640 645
Accounts payable 2,745 5,871
Accrued taxes 6,829 8,103
Accrued interest 3,909 3,873
Dividends payable 2,667 2,629
Accrued expenses 10,376 10,395
---------------------------
Total current liabilities 47,541 48,870
---------------------------
COMMITMENTS AND CONTINGENCIES
- ------------------------------
DEFERRED CREDITS:
Customers' advances for construction 22,736 22,378
Deferred income taxes 25,180 24,506
Unamortized investment tax credits 4,610 4,682
---------------------------
52,526 51,566
---------------------------
$455,120 $455,982
===========================
Book Value Per Share of Common Stock $11.91 $12.14
===========================
The accompanying notes are an integral part of these consolidated financial
statements.
Consumers Water Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands Except Per Share Amounts)
(Unaudited)
For the six months ended June 30,
1997 1996
---------------------------------
Operating Revenue $47,149 $44,975
COSTS AND EXPENSES:
Operations and maintenance 21,187 21,184
Depreciation 5,679 4,970
Taxes other than income 6,297 5,970
-----------------------
Operating Expenses 33,163 32,124
-----------------------
Operating Income 13,986 12,851
-----------------------
OTHER INCOME AND (EXPENSE):
Interest expense (7,564) (7,133)
Construction interest capitalized 191 395
Preferred dividends and minority interest
of subsidiaries (70) (60)
Gains (losses) on sales of properties 16 (498)
Other 513 285
----------------------
(6,914) (7,011)
----------------------
Before Income Taxes 7,072 5,840
Income Taxes 2,552 2,106
----------------------
Income from Continuing Operations 4,520 3,734
----------------------
LOSS FROM DISCONTINUED OPERATIONS:
Before Discontinuance, Net of tax (387) (270)
Provision for Loss on Disposal of
Discontinued Operations, Net of tax (1,500) -
----------------------
Total from Discontinued Operations (1,887) (270)
----------------------
Net Income $2,633 $3,464
======================
Weighted Average Shares Outstanding 8,800 8,573
EARNINGS PER COMMON SHARE:
Continuing Operations - Total $0.51 $0.43
Discontinued Operations - ----------------------
Before Discontinuance ($0.04) ($0.03)
Loss from Disposal of Discontinued
Operations ($0.17) $0.00
----------------------
Total ($0.21) ($0.03)
----------------------
Total $0.30 $0.40
======================
Dividends Declared Per Common Share $0.60 $0.60
======================
The accompanying notes are an integral part of these consolidated financial
statements.
Consumers Water Company and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
For the three months ended June 30,
1997 1996
-----------------------------------
Operating Revenue $24,218 $23,073
COSTS AND EXPENSES:
Operations and maintenance 10,550 10,854
Depreciation 2,828 2,517
Taxes other than income 3,175 2,977
------------------------
Operating Expenses 16,553 16,348
------------------------
Operating Income 7,665 6,725
------------------------
OTHER INCOME AND (EXPENSE):
Interest expense (3,833) (3,592)
Construction interest capitalized 75 209
Preferred dividends and minority
interest of subsidiaries (41) (31)
Gains (losses) on sales of properties 16 (641)
Other 324 130
------------------------
(3,459) (3,925)
------------------------
Earnings From Continuing Operations
Before Income Taxes 4,206 2,800
Income Taxes 1,520 996
------------------------
Income from Continuing Operations 2,686 1,804
------------------------
LOSS FROM DISCONTINUED OPERATIONS:
Before Discontinuance, Net of Tax - (164)
Provision for Loss on Disposal of
Discontinued Operations, Net of Tax - -
------------------------
Total from Discontinued Operations - (164)
------------------------
Net Income $2,686 $1,640
========================
Weighted Average Shares Outstanding 8,831 8,599
EARNINGS PER COMMON SHARE:
Continuing Operations - Total $0.30 $0.21
Discontinued Operations - -----------------------
Before Discontinuance - ($0.02)
Loss from Disposal of Discontinued Operations - -
-----------------------
Total - ($0.02)
-----------------------
Total $0.30 $0.19
=======================
Dividends Declared Per Common Share $0.30 $0.30
=======================
The accompanying notes are an integral part of these consolidated financial
statements.
Consumers Water Company and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
For the six months ended June 30,
1997 1996
---------------------------------
OPERATING ACTIVITIES:
Net income $2,633 $3,464
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 6,604 5,661
Deferred income taxes and investment tax credits 630 446
(Gains) losses on sales of properties (16) 498
Changes in assets and liabilities:
Increase in accounts receivable and
unbilled revenue (480) (745)
Increase in inventories (91) (119)
Decrease in prepaid expenses 2,583 1,739
Decrease in accounts payable and
accrued expenses (2,162) (2,702)
Change in other assets, net of change in
other liabilities of continuing operations (377) (429)
Change in assets, net of change in liabilities
of discontinued operations 220 (310)
Loss on disposal of discontinued operations 1,500 -
--------------------
Total adjustments 8,411 4,039
--------------------
Net cash provided by operating activities 11,044 7,503
INVESTING ACTIVITIES:
Capital expenditures (9,746) (13,271)
Payment received on a note receivable - 1,330
(Increase) decrease in funds restricted for
construction activity 688 (8)
Decrease in construction accounts payable (2,221) (1,547)
Proceeds from sales of properties 18 144
-------------------
Net cash used in investing activities (11,261) (13,352)
-------------------
FINANCING ACTIVITIES:
Net borrowings of short-term debt 3,021 8,920
Repayment of long-term debt (1,076) (1,183)
Proceeds from issuance of stock 2,219 2,333
Advances and contributions in aid of
construction 2,197 3,016
Repayments of advances (223) (744)
Deferred taxes paid by developers on advances and
contributions in aid of construction (28) (315)
Cash dividends paid (5,302) (5,179)
------------------
Net cash provided by financing activities 808 6,848
------------------
Net increase in cash and cash equivalents 591 999
Cash and cash equivalents at beginning of year 1,775 2,417
------------------
Cash and cash equivalents at end of period $2,366 $3,416
==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
FROM CONTINUING OPERATIONS:
Cash paid during the period for:
Interest (net of amounts capitalized) $7,188 $6,494
Income taxes $689 $2,021
NON-CASH INVESTING AND FINANCING ACTIVIITES
FOR THE PERIOD:
Property advanced or contributed $550 $389
The accompanying notes are an integral part of these consolidated financial
statements.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1997
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. All adjustments made were of a normal
and recurring nature except for the discontinued operations described below.
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 not material.
C. GAINS AND LOSSES
Income from continuing operations includes gains (losses) net of taxes as
follows:
Three Months Six Months
1997 1996 1997 1996
Miscellaneous Land Sales 10,000 - 10,000 85,000
Reversal of Illinois Gain - - - <394,000>
----------------- ------------------
10,000 - 10,000 <309,000>
================= ==================
Per Share - - - <.04>
Miscellaneous land sales include small tracts of land sold in Ohio and
Pennsylvania.
In 1994, Consumers Illinois recorded a gain, net of taxes of $394,000 from the
sale of nine acres of land. In 1996, as part of a rate hearing, the Illinois
Commerce Commission ordered Consumers Illinois to return the gain from this
sale to customers through reduced rates. Therefore, the gain was reversed
in the second quarter of 1996. Consumers Illinois challenged this decision in
court. On July 8, 1997, the Appellate Court for the Third District of
Illinois reversed the Illinois Commerce Commission's decision to treat the
gain from the sale of land as an adjustment to water operating revenue. The
Court remanded the cause to the Illinois Commerce Commission for purposes of
modifying water rates to reflect the elimination of the adjustment and to
allow Consumers Illinois to file new rates that are consistent with the
Court's decision. The Illinois Commerce Commission has the right to appeal
the Court's order.
D. DISCONTINUED OPERATIONS
On April 29, 1997, the Company announced its intention to dispose of its
technical services company, Consumers Applied Technologies, Inc. The business
is being offered for sale. Estimated losses on the disposal equal $1.5
million, net of taxes of $543,000. This disposal is expected to be completed
within one year. The operating results of Consumers Applied Technologies
prior to the date of discontinuance are shown under Discontinued Operations on
the accompanying consolidated statements of income and all financial
statements of prior periods have been restated. Total sales for the
discontinued technical services company for the first half of 1997 and 1996
were $3,607,000 and $6,761,000, respectively. Net assets of the discontinued
operations approximate realizable value. A summary of the net assets of
discontinued operations follows:
June 30, December 31,
1997 1996
-------- -----------
Cash $295,000 $439,000
Receivables, net 3,711,000 5,125,000
Inventory 35,000 402,000
Income taxes receivable 2,700,000 2,032,000
Other current assets 125,000 371,000
Property, plant and equipment 75,000 480,000
---------- ----------
Total assets $6,941,000 $8,849,000
---------- ----------
Note payable $1,200,000 $1,200,000
Accounts payable 40,000 554,000
Accrued expenses 2,115,000 1,788,000
Other 93,000 94,000
---------- ----------
Total liabilities $3,448,000 $3,636,000
Net assets of ---------- ----------
discontinued operations $3,493,000 $5,213,000
========== ==========
E. RECLASSIFICATIONS
Certain amounts for 1996 have been reclassified to conform with the 1997
presentation.
CONSUMERS WATER COMPANY AND SUBSIDIARIES
June 30, 1997
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, 1997 and the results of its
operations for the six months and the three months then ended as compared to
the same period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
CONSTRUCTION PROGRAM
Capital construction expenditures totaled $7.8 million, net of contributions
and advances in the first half of 1997, substantially all of which relates to
the Company's utility subsidiaries. Projects included $1.2 million spent on
system improvements to a newly acquired system in Maine, which is expected to
cost $3.0 million in total when completed during 1997; and many smaller
projects around the Company.
The Company expects capital expenditures for 1997 through 1999 to be $89
million, net of contributions and advances. The capital construction budget
is down from its peak of $103 million for the 1995-1997 planning period as a
result of the completion of many of the improvements required by the Safe
Drinking Water Act (SDWA), the Clean Water Act (CWA), and other regulations.
With the reduced capital spending due to regulatory requirements, the Company
has increased its focus on replacing aging infrastructure.
The Company is engaged in a project that will replace a major plant at
Consumers Pennsylvania Water Company - Shenango Valley Division. The cost of
this project is estimated at $32 million when it is completed in 2000. This
will replace one of the Company's oldest water treatment plants. Current and
future water quality regulations along with future demand projections require
that the existing plant be retired and replaced with a new facility. The
design is substantially complete and construction is expected to commence by
the end of 1997. The Company expects to finance this project with tax exempt
debt and equity.
Several of the Company's water utility subsidiaries have filed or plan to file
rate 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 judgment of the appropriate public utility
commission have been, and are expected to continue to be, recognized in rate
setting. Given the large rate increases in recent years, Management expects
the current increased scrutiny of rate requests by state public utility
commissions, and delays in obtaining rate relief to continue, even with
decreasing capital construction budgets.
FINANCING AND CAPITALIZATION
Water utilities now require higher equity ratios than in the past to maintain
favorable debt ratings due to the recognition by Standard & Poor's rating
system of the additional risk of the SDWA requirements and the uncertainty of
future regulatory treatment of the cost of these requirements. This, coupled
with the size of the Company's capital expenditure program, makes it likely
that the Company will return to the equity market again in the next few years.
The Company anticipates continuing to fund its immediate cash flow needs 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. The Company's subsidiaries had unused lines of credit available at
June 30, 1997 of $64 million. In addition, the Company has three revolving
credit agreements totaling $35 million, including one for $10 million obtained
in March, 1997. Two of these agreements are committed until mid-1998. The
third agreement for $15 million is committed until mid-1999. At June 30,
1997, $16.1 million was outstanding on these agreements, which is recorded as
long-term debt on the balance sheet. These borrowings were used primarily to
provide equity infusions to the subsidiaries. In addition, the Company is
using funds generated through its Dividend Reinvestment Plan. The Dividend
Reinvestment Plan generated $1.8 million in new equity in the first half of
1997. In addition to the short-term debt, the Company's water utility
subsidiaries plan to continue to use tax-exempt, long-term debt financing in
appropriate situations. Retained earnings declined by $2.7 million in the
first half of 1997 as a result of dividends in excess of earnings.
DISCONTINUED OPERATIONS
On April 29, 1997, the Company announced its intention to dispose of its
technical services company, Consumers Applied Technologies, Inc. (CAT). CAT
recently completed a reorganization, which reduced the Company's involvement
in environmental services and certain other lines of business. In addition,
the Company had set certain performance criteria for the remaining business.
When it became apparent that those criteria would not be met, the decision was
made to discontinue operations. The business is being offered for sale.
Estimated losses on the disposal equal $1.5 million, net of taxes. The
operating results of Consumers Applied Technologies prior to the date of
discontinuance are shown under Discontinued Operations on the accompanying
consolidated statements of income and all financial statements of prior
periods have been restated.
ACQUISITIONS AND DISPOSITIONS
Over the past five years, the Company has acquired nine water systems.
Management anticipates continuing the acquisition policy of recent years.
The Company has sold five divisions with customers totaling approximately
15,000 under the threat of eminent domain since 1991. The gain on these sales
totaled over $7 million. The Town of Hudson, New Hampshire, has initiated
eminent domain proceedings to acquire the distribution system assets of
Consumers New Hampshire Water Company, which are located in Hudson. The
ultimate resolution of these proceedings is unknown. The assets subject to
this proceeding represent approximately 2% of the Company's utility plant in
service. The Company continues to work with the local communities in its
service areas in an effort to prevent future eminent domain proceedings.
OTHER
Income from continuing operations includes gains (losses) net of taxes as
follows:
Three Months Six Months
1997 1996 1997 1996
Miscellaneous Land Sales 10,000 - 10,000 85,000
Reversal of Illinois Gain - - - <394,000>
------------------- -------------------
10,000 - 10,000 <309,000>
=================== ===================
Per Share - - - <.04>
Miscellaneous land sales include small tracts of land sold in Ohio and
Pennsylvania
In 1994, Consumers Illinois recorded a gain, net of taxes of $394,000 from the
sale of nine acres of land. In 1996, as part of a rate hearing, the Illinois
Commerce Commission ordered Consumers Illinois to return the gain from this
sale to customers through reduced rates. Therefore, the gain was reversed
in the second quarter of 1996. Consumers Illinois challenged this decision in
court. On July 8, 1997, the Appellate Court for the Third District of
Illinois reversed the Illinois Commerce Commission's decision to treat the
gain from the sale of land as an adjustment to water operating revenue. The
Court remanded the cause to the Illinois Commerce Commission for purposes of
modifying water rates to refect the elimination of the adjustment and to allow
Consumers Illinois to file new rates that are consistent with the Court's
decision. The Illinois Commerce Commission has the right to appeal the
Court's order.
In 1985, the Company's subsidiary, Consumers Maine Water Company (Consumers
Maine), started construction of a transmission main to Fish and Hobbs ponds,
which are located in Hope, Maine, to increase the available water supply of
its Camden and Rockland Division. Due to local opposition related to the
uncertainty about the environmental impact of withdrawing water from these
ponds, the project was delayed. In 1989, final legislation was passed that
imposed a moratorium on the withdrawal of water from these ponds. The Maine
Public Utilities Commission (MPUC) ordered Consumers Maine to defer the costs
of the project, the legal costs of defending its water rights and carrying
costs until its first rate case after June 1, 1997. Consumers Maine currently
has $673,000 on its balance sheet related to this project and expects to file
a rate case with the MPUC in 1998 seeking recovery of these costs.
RESULTS OF OPERATIONS
First Half 1997, Compared to First Half, 1996
OPERATING REVENUE
Revenues increased $2,174,000 or 4.8% for the six months ended June 30, 1997
as compared to the same period in 1996 due primarily to rate incrases of
$1,733,000, revenues from newly acquired systems of $247,000 and increased
consumption of $198,000. Currently three additional rate cases filed with
annual revenue requests totalling $6.0 million. In addition, two more rate
cases are expected to be filed in 1997 with annual revenue requests totalling
$2.3 million.
OPERATING EXPENSES
Utility operating expenses increased $1,039,000 or 3.2%. Depreciation
increased $709,000 due to higher plant balances and higher depreciation rates.
Taxes other than income taxes, increased $327,000 predominantly due to
increases in property taxes due to higher plant balances.
Second Quarter, 1997 versus Second Quarter, 1996
OPERATING REVENUE
Operating revenues increased $1,145,000, or 5.0%, for the three months ended
June 30, 1997, as compared to the same period in 1996, due primarily to
$780,000 in rate increases, revenues from newly acquired systems of $174,000,
and increased consumption of $191,000.
OPERATING EXPENSES
Operating expenses increased $205,000 or 1.3% for the three months ended June
30, 1997, as compared to the same period in 1996. Depreciation increased
$311,000 due to higher plant balances and higher depreciation rates. Taxes
other than income has increased $198,000 predominantly due to increased
property taxes due to higher plant balances. Operations and maintenance
expense decreased $304,000. Pension expense has decreased approximately
$150,000 due to the investment performance of the pension fund investments.
The remainder of the decrease is due to a Company cost control initiative.
PART II
Item 1. Legal Proceedings.
Schiavi Homes Litigation. As noted in the Company's quarterly report on Form
10-Q for the quarter ended March 31, 1997, the United States First Circuit
Court of Appeals (the "First Circuit") affirmed the granting of summary
judgment to the Company, its current and former subsidiaries and its director,
John H. Schiavi, by the United States District Court for the District of
Maine (the "District Court") with respect to a complaint filed by the
Penobscot Indian Nation. The complaint filed by the Penobscot Indian Nation
alleged, among other things, that one or all of the defendants had defrauded
the Penobscot Indian Nation by breaching their duty of good faith and fair
dealing and by making misrepresentations in connection with the acquisition of
the assets of SHC Corporation, then a subsidiary of the Company, by a Maine
limited partnership in which the Penobscot Indian Nation held a limited
partnership interest. On or about August 1, 1997, the Penobscot Indian Nation
filed a petition for certiorari with the United States Supreme Court seeking a
review of the First Circuit's affirmation of the granting of summary judgment
to the Company and the other defendants and a finding that the First Circuit's
decision conflicts with applicable statutes and with prior Supreme Court
decisions. The granting of a petition for certiorari is discretionary with
the Supreme Court.
The suit brought by John L. Palmer, who is no relation to the Company's
director, John E. Palmer, Jr., seeking reimbursement of all of his legal fees
incurred in connection with the defense of claims raised by the Penobscot
Indian Nation is not affected by the petition for certiorari. In that
litigation, the parties have completed discovery and are waiting trial.
Illinois Regulatory Appeal. As previously reported in the Company's Form 10-K
for the year ended December 31, 1996, Consumers Illinois filed in the
Appellate Court for the Third District of Illinois (the "Court") a Notice of
Appeal and Petition for Review of an Order of the Illinois Commerce Commission
entered on May 8, 1996 (the "Order"). The Order required the transfer of the
net gain of approximately $394,000 resulting from the sale of land by
Consumers Illinois from the shareholders of Consumers Illinois to ratepayers
in the Consumers Illinois Kankakee District in the form of reduced rates over
a seven year period. The Notice of Appeal, dated July 17, 1996, was also
directed to the City of Kankakee, the Nutrasweet Group, Governor's State
University, and the Village of University Park, who had intervened in the
underlying rate case giving rise to the Order.
On July 8, 1997, the Court reversed the Illinois Commerce Commission's
decision to treat the gain from the sale of land as an adjustment to water
operating revenue. The Court remanded the case to the Illinois Commerce
Commission for purposes of modifying water rates to refect the elimination of
the adjustment and to allow Consumers Illinois to file for new rates
consistent with the Court's decision. The Illinois Commerce Commission has
the right to appeal the Court's order.
Management believes that these matters will not have a significant adverse
effect on the Company's future results of operations, financial position or
cash flows.
Item 4. Submission of Matters to Vote of Security Holders
(a) Election of Directors
At the Annual Meeting of Shareholders held in Portland, Maine on May 7,
1997, (the "Annual Meeting") the shareholders of the Company elected the
following directors until the 1998 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 WITHHELD NON-VOTES
Michel Avenas 5,296,779 --- 34,444 ---
Peter L. Haynes 5,298,344 --- 32,879 ---
Jack S. Ketchum 5,307,629 --- 23,594 ---
John E. Menario 5,300,740 --- 30,483 ---
Jane E. Newman 5,306,726 --- 24,497 ---
John E. Palmer, Jr. 5,306,653 --- 24,570 ---
William B. Russell 5,306,666 --- 24,557 ---
John H. Schiavi 5,306,515 --- 24,708 ---
Robert O. Viets 5,304,478 --- 26,745 ---
No existing director's term of office continued after the meeting. There was
no solicitation in opposition to managment's nominees and all nominees were
elected without contest.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule is submitted herewith as Exhibit 27.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter ended June 30, 1997.
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)
8/13/97 /s/ Peter L. Haynes
- ------------------------- -----------------------
Date Peter L. Haynes
Chief Executive Officer
8/13/97 /s/ John F. Isacke
- ------------------------- -----------------------
Date John F. Isacke
Chief Financial Officer
Exhibit Index
27. Financial Data Schedule is submitted herewith as Exhibit 27.
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<NET-INCOME> 2,633
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
