FORM 10-Q Page 1 of 15
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, 1994
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-3437-2
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AMERICAN WATER WORKS COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0063696
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1025 Laurel Oak Road, Voorhees, New Jersey 08043
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(Address of principal executive offices) (Zip Code)
(609) 346-8200
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(Registrant's telephone number, including area code)
Not Applicable
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(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
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At August 1, 1994, the number of shares of common stock, $1.25 par value,
outstanding was 32,029,076 shares.
No exhibits are filed with this report and there is no exhibit index.
<PAGE> Page 2 FORM 10-Q
PART I FINANCIAL INFORMATION
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Item 1. Financial Statements
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AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statements of Income and Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Three Months Ended
June 30,
1994 1993
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<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $195,136 $179,935
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Operating expenses
Operation and maintenance 96,263 87,697
Depreciation and amortization 17,793 16,413
General taxes 18,036 16,724
State income taxes 2,102 2,103
Federal income taxes 12,242 11,466
-------- --------
146,436 134,403
-------- --------
Operating income 48,700 45,532
Allowance for other funds used during
construction 1,367 909
Other income 714 57
-------- --------
50,781 46,498
-------- --------
Income deductions
Interest 27,500 23,509
Allowance for borrowed funds used
during construction (1,033) (665)
Amortization of debt expense 308 416
Preferred dividends of subsidiaries 954 1,126
Other deductions 323 255
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28,052 24,641
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Net income 22,729 21,857
Dividends on preferred stocks 996 1,002
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Net income to common stock $ 21,733 $ 20,855
======== ========
Average shares of common stock outstanding 31,736 31,137
Earnings per common share on average shares
outstanding $ 0.68 $ 0.67
======== ========
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $579,588 $539,732
Add - net income 22,729 21,857
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602,317 561,589
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<PAGE> Page 3 FORM 10-Q
Three Months Ended
June 30,
1994 1993
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<S> <C> <C>
Deduct - dividends
Preferred stock $ 882 $ 888
Preference stock 114 114
Common stock - $.27 per share in 1994;
$.25 per share in 1993 8,537 7,785
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9,533 8,787
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Balance at end of period $592,784 $552,802
======== ========
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 4 FORM 10Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statements of Income and Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Six Months Ended
June 30,
1994 1993
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<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $372,795 $335,407
-------- --------
Operating expenses
Operation and maintenance 193,411 169,684
Depreciation and amortization 35,671 31,957
General taxes 36,783 33,513
State income taxes 3,210 3,235
Federal income taxes 18,205 16,205
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287,280 254,594
-------- --------
Operating income 85,515 80,813
Allowance for other funds used during
construction 2,472 1,650
Other income 1,099 222
-------- --------
89,086 82,685
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Income deductions
Interest 54,220 46,970
Allowance for borrowed funds used
during construction (1,774) (1,194)
Amortization of debt expense 601 916
Preferred dividends of subsidiaries 1,926 2,259
Other deductions 954 1,716
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55,927 50,667
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Net income 33,159 32,018
Dividends on preferred stocks 1,992 2,004
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Net income to common stock $ 31,167 $ 30,014
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Average shares of common stock outstanding 31,500 31,091
Earnings per common share on average shares
outstanding $ 0.99 $ 0.97
======== ========
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $578,593 $538,332
Add - net income 33,159 32,018
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611,752 570,350
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<PAGE> Page 5 FORM 10-Q
Six Months Ended
June 30,
1994 1993
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<S> <C> <C>
Deduct - dividends
Preferred stock $ 1,764 $ 1,776
Preference stock 228 228
Common stock - $.54 per share in 1994;
$.50 per share in 1993 16,976 15,544
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18,968 17,548
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Balance at end of period $592,784 $552,802
======== ========
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 6 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Balance Sheet (Unaudited)
(In thousands)
June 30 December 31
1994 1993
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ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $2,511,885 $2,444,277
Utility plant acquisition adjustments 42,013 40,689
Other utility plant adjustments 221 246
Non-utility property, net of accumulated
depreciation 21,878 21,224
Excess of cost of investments in
subsidiaries over book equity at
acquisition 22,761 22,709
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2,598,758 2,529,145
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Current assets
Cash and cash equivalents 20,919 52 979
Temporary investments - at cost plus
accrued interest 400 399
Customer accounts receivable 50,653 46,795
Allowance for uncollectible accounts (1,074) (1,107)
Unbilled revenues 67,232 57,298
Miscellaneous receivables 8,142 7,033
Materials and supplies 11,144 8,965
Deferred vacation pay 10,547 8,517
Other 11,623 8,776
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179,586 189,655
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Regulatory and other long-term assets
Regulatory asset - income taxes
recoverable through rates 205,623 198,744
Deferred pension expense 17,120 13,437
Debt and preferred stock expense 15,519 15,552
Tank painting costs 7,934 7,906
Other 36,622 39,572
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282,818 275,211
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$3,061,162 $2,994,011
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See accompanying notes to the financial statements.
<PAGE> Page 7 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Balance Sheet (Unaudited)
(In thousands)
June 30 December 31
1994 1993
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CAPITAL AND LIABILITIES
Capital
Common stock $ 39,915 $ 39,055
Paid-in capital 55,508 37,627
Retained earnings 592,784 578,593
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Common stockholders' equity 688,207 655,275
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 44,680 46,515
Preferred stocks of subsidiaries without
mandatory redemption requirements 6,295 6,302
Long-term debt
American Water Works Company, Inc. 131,000 131,000
Subsidiaries 1,132,414 1,056,404
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2,054,269 1,947,169
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Current liabilities
Bank debt 107,225 193,620
Current portion of long-term debt 13,187 5,405
Accounts payable 27,195 31,644
Taxes accrued, including federal income 20,108 11,798
Interest accrued 25,888 23,226
Accrued vacation pay 10,874 8,835
Other 31,937 27,852
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236,414 302,380
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Regulatory and other long-term liabilities
Customer advances for construction 126,960 125,031
Deferred taxes 323,830 309,204
Regulatory liability - income taxes
refundable through rates 45,271 45,942
Deferred investment tax credits 41,010 41,644
Other 44,999 38,146
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582,070 559,967
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Contributions in aid of construction 188,409 184,495
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$3,061,162 $2,994,011
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See accompanying notes to the financial statements.
<PAGE> Page 8 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<TABLE>
Six Months Ended
June 30,
1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 33,159 $ 32,018
Adjustments
Depreciation and amortization 35,671 31,957
Provision for deferred income taxes 7,028 6,101
Provision for losses on accounts receivable 1,676 1,511
Allowance for other funds used during
construction (2,472) (1,650)
Employee benefit funding in excess of
expenses (754) 5,610
Common stock contributions to employee
benefit plans 1,725 1,350
Other deferred revenues, net (30) (74)
Deferred tank painting costs (582) (513)
Deferred rate case expense (821) (1,683)
Amortization of deferred charges 4,162 4,015
Other, net (1,762) (2,038)
Changes in assets and liabilities
Accounts receivable (6,676) (8,568)
Unbilled revenues (9,934) (11,790)
Other current assets (5,026) (1,718)
Accounts payable (4,449) (10,291)
Taxes accrued, including federal income 8,310 2,474
Interest accrued 2,662 (880)
Other current liabilities 4,085 (4,727)
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Net cash from operating activities 65,972 41,104
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CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (101,211) (74,284)
Allowance for other funds used during
construction 2,472 1,650
Water system acquisition (3,057) 0
Proceeds from the disposition of property,
plant and equipment 991 1,111
Removal costs from property, plant and
equipment retirements (1,656) (1,745)
Funds restricted for construction activity 4,492 1,851
Other (1) (69)
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Net cash used in investing activities (97,970) (71,486)
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<PAGE> Page 9 FORM 10-Q
Six Months Ended
June 30,
1994 1993
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt $ 86,100 $151,500
Proceeds from preferred stock 0 1,000
Proceeds from common stock 15,474 1,016
Net borrowings (repayments)
under line-of-credit agreements (86,395) 6,747
Advances and contributions for construction,
net of refunds 7,391 7,200
Debt and stock issuance costs (1,455) (2,606)
Repayment of long-term debt (2,308) (111,180)
Redemption of preferred stocks (1,842) (1,033)
Dividends paid (17,027) (16,639)
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Net cash from financing activities (62) 36,005
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Net increase (decrease) in cash and
cash equivalents (32,060) 5,623
Cash and cash equivalents at beginning
of period 52,979 29,113
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Cash and cash equivalents at end of period $ 20,919 $ 34,736
======== ========
Cash paid during the period for:
Interest, net of capitalized amount $ 52,269 $ 48,400
======== ========
Income taxes $ 12,500 $ 10,613
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Common stock issued in lieu of cash in connection with the Dividend
Reinvestment and Stock Purchase Plan, Employees' Stock Ownership Plan and
the Savings Plan for Employees totaled $3,667 in 1994 and $2,259 in 1993.
Dividends paid excludes $1,941 in 1994 and $909 in 1993 of dividends
declared on common stock that were used to purchase shares of common stock
through the Dividend Reinvestment and Stock Purchase Plan.
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 10 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Information Accompanying Financial Statements (Unaudited)
(In thousands, except share and per share amounts)
June 30 December 31
1994 1993
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Capital Stock of American Water Works Company, Inc.
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
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$ 40,000 $ 40,000
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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 - $25 par value
Authorized - 750,000 shares
5% series (non-voting) - 365,158 shares
outstanding 9,129 9,129
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$ 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 - 100,000,000 shares
Outstanding - 31,932,187 shares at June 30, 1994; $ 39,915 $ 39,055
31,243,743 at December 31, 1993
Paid-in capital 55,508 37,627
Retained earnings 592,784 578,593
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$688,207 $655,275
======== ========
During the first six months of 1994, 565,928 shares of common stock were
issued in connection with the Dividend Reinvestment and Stock Purchase
Plan, 82,354 shares of common stock were issued in connection with the
Company's Employees' Stock Ownership Plan, and 40,162 shares were issued in
connection with the Savings Plan for Employees. At June 30, 1994,
30,461,581 common shares were reserved for issuance in connection with the
Stockholder Rights Plan, 1,053,505 common shares were reserved for issuance
in connection with the Dividend Reinvestment and Stock Purchase Plan,
612,214 shares were reserved for issuance in connection with the Employees'
Stock Ownership Plan and 438,675 common shares were reserved for issuance
in connection with the Savings Plan for Employees.
<PAGE> Page 11 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Notes to Consolidated Financial Statements (Unaudited)
June 30, 1994
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.
<PAGE> Page 12 FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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Results of Operations
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Operating revenues for the second quarter and the first six months of 1994
were higher than for the same periods of 1993 by 8% and 11%, respectively.
The increases are due to the August 31, 1993 acquisition of four Midwestern
water utilities, the result of rate increases authorized for certain
subsidiaries, and greater sales volume. Forty-two percent of the increase
in revenues for the six months ending June 30, 1994 is attributable to the
1993 acquisition. The acquisition of the four companies last year was
responsible for approximately one-half of the increase in revenues in the
second quarter.
During the first seven months of 1994, eight operating subsidiaries
received rate orders which are expected to provide approximately $13.7
million in additional annual revenues. Five subsidiaries have rate
increase applications on file before regulatory agencies which, if granted
in full, would provide approximately $27.8 million in additional revenues.
Water sales volume for the first six months of 1994 amounted to 109.7
billion gallons versus 98.6 billion gallons in 1993. The four acquired
Midwestern companies sold 7.6 billion gallons throughout the first six
months of 1994. The sales volume during the second quarter increased to
56.4 billion gallons from 51.6 billion gallons in 1993. The companies
acquired in 1993 accounted for 3.9 billion gallons of this increase in the
second quarter.
Operating expenses for the second quarter and the first six months of 1994
increased by 9% and 13%, respectively, over the same periods last year. In
addition to reflecting operating expenses incurred by the acquired
subsidiaries, the increase in operating expenses can be attributed to
higher employee, production, and depreciation expenses.
Income deductions, primarily interest, were 14% higher for the second
quarter and 10% higher for the first six months when compared to 1993.
This increase can be attributed primarily to an increase in debt.
Net income to common stock was $21.7 million for the second quarter of 1994
compared with $20.9 million for the same period in 1993. Net income to
common stock for the first six months of 1994 was $31.2 million compared
with $30.0 million for the first six months of 1993.
Capital Resources and Liquidity
- - --------------------------------
All shares of common stock issued during 1994 have been the result of stock
issued in conjunction with the Dividend Reinvestment and Stock Purchase
Plan, the Employees' Stock Ownership Plan, and the Savings Plan for
Employees.
During the balance of 1994, 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 provide for added investments in subsidiaries.
<PAGE> Page 13 FORM 10-Q
Five operating subsidiaries issued $86.1 million of long-term debt during
the first six months of 1994. In addition, the Company invested $37
million in the common stock of two subsidiaries. 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 1994, with the proceeds used to repay bank loans
and to fund construction projects.
