FORM 10-Q Page 1 of 12
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 March 31, 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
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
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 May 1, 1994, the number of shares of common stock, $1.25 par value,
outstanding was 31,617,706 shares.
No exhibits are filed with this report and there is no exhibit index.
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-2- FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Consolidated Statements of Income and Retained Earnings
(Unaudited)
(In thousands, except per share amounts)
<CAPTION>
Three Months Ended
March 31,
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1994 1993
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<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $177 659 $155 472
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Operating expenses
Operation and maintenance 97 148 81 987
Depreciation and amortization 17 878 15 544
General taxes 18 747 16 789
State income taxes 1 108 1 132
Federal income taxes 5 963 4 739
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140 844 120 191
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Operating income 36 815 35 281
Allowance for other funds used during
construction 1 105 741
Other income 385 165
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38 305 36 187
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Income deductions
Interest 26 720 23 461
Allowance for borrowed funds used during
construction (741) (529)
Amortization of debt expenses 293 500
Preferred dividends of subsidiaries 972 1 133
Other deductions 631 1 461
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27 875 26 026
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Net income 10 430 10 161
Dividends on preferred stocks 996 1 002
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Net income to common stock $ 9 434 $ 9 159
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Average shares of common stock outstanding 31 305 31 044
Earnings per common share on average shares
outstanding $.30 $.30
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CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $578 593 $538 332
Add - net income 10 430 10 161
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589 023 548 493
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Deduct - dividends
Preferred stock 882 888
Preference stock 114 114
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-3- FORM 10-Q
Common stock - $.27 in 1994;
$.25 in 1993 8 439 7 759
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9 435 8 761
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Balance at end of period $579 588 $539 732
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-4- FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Consolidated Balance Sheet (Unaudited)
(In thousands)
<CAPTION>
March 31 December 31
1994 1993
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<S> <C> <C>
ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $2 457 354 $2 444 277
Utility plant acquisition adjustments 41 008 40 689
Other utility plant adjustments 234 246
Non-utility property, net of accumulated
depreciation 20 977 21 224
Excess of cost of investments in subsidiaries
over book equity at acquisition 22 732 22 709
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2 542 305 2 529 145
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Current assets
Cash and cash equivalents 46 536 52 979
Temporary investments-at cost plus accrued
interest 670 399
Customer accounts receivable 44 669 46 795
Allowance for uncollectible accounts (1 042) (1 107)
Unbilled revenues 56 883 57 298
Miscellaneous receivables 7 677 7 033
Materials and supplies 10 356 8 965
Deferred vacation pay 10 367 8 517
Other 8 477 8 776
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184 593 189 655
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Deferred debits and other long-term assets
Regulatory asset-income taxes recoverable
through rates 202 933 198 744
Deferred pension expense 15 163 13 437
Debt and preferred stock expense 15 610 15 552
Tank painting costs 7 664 7 906
Other 38 102 39 572
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279 472 275 211
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$3 006 370 $2 994 011
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-5- FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Consolidated Balance Sheet (Unaudited)
(In thousands)
<CAPTION>
March 31 December 31
1994 1993
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<S> <C> <C>
CAPITAL AND LIABILITIES
Capital
Common stock $ 39 264 $ 39 055
Paid-in capital 42 083 37 627
Retained earnings 579 588 578 593
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Common stockholders' equity 660 935 655 275
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 44 939 46 515
Preferred stocks of subsidiaries without
mandatory redemption requirements 6 301 6 302
Long-term debt
American Water Works Company, Inc. 131 000 131 000
Subsidiaries 1 121 770 1 056 404
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2 016 618 1 947 169
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Current liabilities
Bank debt 118 911 193 620
Current portion of long-term debt 10 394 5 405
Accounts payable 22 983 31 644
Taxes accrued, including federal income 19 847 11 798
Interest accrued 30 577 23 226
Accrued vacation pay 10 738 8 835
Other 20 754 27 852
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234 204 302 380
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Deferred credits and other long-term liabilities
Advances for construction 124 087 125 031
Deferred taxes 317 628 309 204
Regulatory liability-income taxes refundable
through rates 45 608 45 942
Deferred investment tax credits 41 325 41 644
Other 41 470 38 146
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570 118 559 967
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Contributions in aid of construction 185 430 184 495
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$3 006 370 $2 994 011
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-6- FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<CAPTION>
Three Months Ended
March 31,
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1994 1993
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 10 430 $ 10 161
Adjustments
Depreciation and amortization 17 878 15 544
Provision for deferred income taxes 3 664 2 790
Provision for losses on accounts receivable 740 632
Allowance for other funds used during construction (1 105) (741)
Employee benefits funding in excess of expense (321) 2 738
Deferred tank painting costs (41) (13)
Deferred rate case expense (303) (700)
Amortization of deferred charges 2 224 1 794
Other, net 203 (1 006)
Changes in assets and liabilities
Accounts receivable 677 1 720
Unbilled revenues 415 (264)
Other current assets (1 092) 1 286
Accounts payable (8 661) (9 915)
Taxes accrued, including federal income 8 049 5 051
Interest accrued 7 351 2 170
Other current liabilities (7 098) (4 911)
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Net cash from operating activities 33 010 26 336
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CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (32 003) (29 185)
Allowance for other funds used during construction 1 105 741
Proceeds from the disposition of property, plant,
and equipment 359 692
Removal costs from property, plant, and equipment
retirements (818) (718)
Funds restricted for construction activity 2 035 123
Temporary investments (271) 100
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Net cash used in investing activities (29 593) (28 247)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 70 600 57 500
Proceeds from common stock 4 019
Net borrowings (repayments) under line-of-credit
agreements (74 709) 16 406
Advances and contributions for construction, net
of refunds 1 660 3 686
Debt and stock issuance costs (1 051) (1 075)
Repayment of long-term debt (245) (86 088)
Redemption of preferred stocks (1 577) (306)
Dividends paid (8 557) (8 306)
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Net cash used in financing activities (9 860) (18 183)
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Net decrease in cash and cash equivalents (6 443) (20 094)
Cash and cash equivalents at beginning of period 52 979 29 113
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Cash and cash equivalents at end of period $ 46 536 $ 9 019
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-7- FORM 10-Q
Cash paid during the period for:
Interest, net of capitalized amount $ 19 773 $ 21 525
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Income taxes $ 1 518 $ 1 304
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Common stock issued in lieu of cash in connection with the Dividend
Reinvestment and Stock Purchase Plan and the Savings Plan for Employees
totalled $1,053 in 1994 and $455 in 1993. Dividends paid excludes $878 in
1994 and $455 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.
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-8- FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Information Accompanying Financial Statements (Unaudited)
(In thousands, except share and per share amounts)
<CAPTION>
March 31 December 31
1994 1993
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<S> <C> <C>
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
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The terms of the 8.50% preferred stock provide that all shares of the series
shall be redeemed on December 1, 2000.
March 31 December 31
1994 1993
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Common stockholders' equity
Common stock - $1.25 par value
Authorized - 100,000,000 shares
Outstanding - 31,410,854 shares at
March 31, 1994;
31,243,743 shares at December 31, 1993 $ 39 264 $ 39 055
Paid-in capital 42 083 37 627
Retained earnings 579 588 578 593
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$660 935 $655 275
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Thus far in 1994, 148,330 shares of common stock were issued in connection
with the Dividend Reinvestment and Stock Purchase Plan and 18,781 shares of
common stock were issued in connection with the Savings Plan for Employees.
At March 31, 1994, 30,461,581 common shares were reserved for issuance in
connection with the Stockholder Rights Plan, 1,471,103 common shares were
reserved for issuance in connection with the Dividend Reinvestment and Stock
Purchase Plan, 694,568 common shares were reserved for issuance in connection
with the Employees' Stock Ownership Plan, and 460,056 common shares were
reserved for issuance in connection with the Savings Plan for Employees.
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-9- FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1994
NOTE 1 -- Financial Statement Presentation
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The information presented in this Form 10-Q is unaudited. In the
opinion of management, the information reported reflects all adjustments,
consisting only 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.
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-10- FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of operations
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Operating revenues for the first quarter of 1994 increased by 14% over
those for the first quarter of 1993. The increase in revenues is due to the
August 31, 1993 acquisition of four midwestern water utilities, the result of
rate increases authorized for certain subsidiaries and higher sales volume.
The acquisition of the four companies last year was responsible for
approximately one-third of the increase in revenues.
During the first four months of 1994, five operating subsidiaries
received rate orders which are expected to provide approximately $5.6 million
in additional annual revenues. Six subsidiaries have rate increase
applications on file before regulatory agencies which, if granted in full,
would provide approximately $37.8 million in additional annual revenues.
The 53.3 billion gallons of water sold in the first quarter of 1994 was
13% higher than the 47 billion gallons sold in the first quarter of 1993.
The four acquired companies sold 3.8 billion gallons of water in the first
quarter of 1994.
Operating expenses for the first quarter of 1994 increased by 17% over
the same period last year. In addition to reflecting operating expenses
incurred by the acquired subsidiaries, harsh winter weather throughout most
of the eastern half of the country in 1994 increased the cost of providing
daily water service. Depreciation expense was higher due to growth in
utility plant in service. The growth in tax expense reflects higher general
taxes due to increased property values and gross receipts.
Income deductions, primarily interest, were 7% higher for the first
quarter of 1994 compared with the first quarter of 1993 due to an increase in
total debt.
Net income to common stock was $9.4 million for the first quarter of
1994 compared with $9.2 million for the same period in 1993.
Capital Resources and Liquidity
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During the balance of 1994, the Company plans to issue common stock
through its Dividend Reinvestment and Stock Purchase Plan, the Employees'
Stock Ownership Plan and the Savings Plan for Employees. Proceeds from the
issuance of common stock will provide for added investments in subsidiaries.
Four operating subsidiaries issued $70.6 million of long-term debt
during the first three months of 1994. In addition, the Company invested
$10.7 million in the common stock of one subsidiary. 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.
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-11- FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
None
B. Reports on Form 8-K
No report on Form 8-K has been filed by the registrant during the quarter
ended March 31, 1994.
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-12- FORM 10-Q
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN WATER WORKS COMPANY, INC.
Date May 11, 1994 George W. Johnstone
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George W. Johnstone, President and CEO
(Authorized Officer)
Date May 11, 1994 Robert D. Sievers
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Robert D. Sievers, Comptroller
(Chief Accounting Officer)
