<PAGE> FORM 10-Q Page 1 of 16
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 September 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 1-3437-2
-----------------------------------------------------
AMERICAN WATER WORKS COMPANY, INC.
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0063696
- ------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1025 Laurel Oak Road, Voorhees, New Jersey 08043
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(609) 346-8200
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(Registrant's telephone number, including area code)
Not Applicable
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
At November 1, 1994, the number of shares of common stock, $1.25 par value,
outstanding was 32,451,204 shares.
No exhibits are filed with this report and there is no exhibit index.
<PAGE> Page 2 FORM 10-Q
PART I FINANCIAL INFORMATION
----------------------------
Item 1. Financial Statements
-----------------------------
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statements of Income and Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Three Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $209,844 $200,154
-------- --------
Operating expenses
Operation and maintenance 101,429 94,159
Depreciation and amortization 18,446 16,648
General taxes 18,382 17,202
State income taxes 2,769 2,530
Federal income taxes 14,290 17,213
-------- --------
155,316 147,752
-------- --------
Operating income 54,528 52,402
Allowance for other funds used during
construction 1,454 930
Other income 324 575
-------- --------
56,306 53,907
-------- --------
Income deductions
Interest 27,809 24,348
Allowance for borrowed funds used
during construction (1,175) (721)
Amortization of debt expense 319 311
Preferred dividends of subsidiaries 948 1,088
Other deductions 590 230
-------- --------
28,491 25,256
-------- --------
Net income 27,815 28,651
Dividends on preferred stocks 995 996
-------- --------
Net income to common stock $ 26,820 $ 27,655
======== ========
Average shares of common stock outstanding 32,118 31,167
Earnings per common share on average shares
outstanding $ 0.84 $ 0.88
======== ========
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $592,784 $552,802
Add - net income 27,815 28,651
-------- --------
620,599 581,453
-------- --------
<PAGE> Page 3 FORM 10-Q
Three Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
Deduct - dividends
Preferred stock $ 881 $ 882
Preference stock 114 114
Common stock - $.27 per share in 1994;
$.25 per share in 1993 8,648 7,790
-------- --------
9,643 8,786
-------- --------
Balance at end of period $610,956 $572,667
======== ========
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 4 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statements of Income and Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Nine Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
CONSOLIDATED INCOME
Operating revenues $582,639 $535,561
-------- --------
Operating expenses
Operation and maintenance 294,840 263,843
Depreciation and amortization 54,117 48,605
General taxes 55,165 50,715
State income taxes 5,979 5,765
Federal income taxes 32,495 33,418
-------- --------
442,596 402,346
-------- --------
Operating income 140,043 133,215
Allowance for other funds used during
construction 3,926 2,580
Other income 1,423 797
-------- --------
145,392 136,592
-------- --------
Income deductions
Interest 82,029 71,319
Allowance for borrowed funds used
during construction (2,949) (1,915)
Amortization of debt expense 920 1,227
Preferred dividends of subsidiaries 2,874 3,347
Other deductions 1,544 1,945
-------- --------
84,418 75,923
-------- --------
Net income 60,974 60,699
Dividends on preferred stocks 2,987 3,000
-------- --------
Net income to common stock $ 57,987 $ 57,669
======== ========
Average shares of common stock outstanding 31,715 31,117
Earnings per common share on average shares
outstanding $ 1.83 $ 1.85
======== ========
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $578,593 $538,332
Add - net income 60,974 60,669
-------- --------
639,567 599,001
-------- --------
<PAGE> Page 5 FORM 10-Q
Nine Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
Deduct - dividends
Preferred stock $ 2,645 $ 2,658
Preference stock 342 342
Common stock - $.81 per share in 1994;
$.75 per share in 1993 25,624 23,334
-------- --------
28,611 26,334
-------- --------
Balance at end of period $610,956 $572,667
======== ========
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 6 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
(In thousands)
September 30 December 31
1994 1993
---------- ----------
ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $2,561,835 $2,444,277
Utility plant acquisition adjustments 39,465 40,689
Other utility plant adjustments 209 246
Non-utility property, net of accumulated
depreciation 19,436 21,224
Excess of cost of investments in
subsidiaries over book equity at
acquisition 22,781 22,709
---------- ----------
2,643,726 2,529,145
---------- ----------
Current assets
Cash and cash equivalents 37,457 52,979
Temporary investments - at cost plus
accrued interest 897 399
Customer accounts receivable 54,565 46,795
Allowance for uncollectible accounts (1,120) (1,107)
Unbilled revenues 64,044 57,298
Miscellaneous receivables 5,418 7,033
Materials and supplies 10,453 8,965
Deferred vacation pay 9,622 8,517
Other 11,536 8,776
---------- ----------
192,872 189,655
---------- ----------
Regulatory and other long-term assets
Regulatory asset - income taxes
recoverable through rates 202,151 198,744
Deferred pension expense 17,869 13,437
Debt and preferred stock expense 16,157 15,552
Tank painting costs 8,371 7,906
Other 36,785 39,572
---------- ----------
281,333 275,211
---------- ----------
$3,117,931 $2,994,011
========== ==========
See accompanying notes to the financial statements.
<PAGE> Page 7 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
(In thousands)
<TABLE>
September 30 December 31
1994 1993
---------- ----------
<S> <C> <C>
CAPITAL AND LIABILITIES
Capital
Common stock $ 40,403 $ 39,055
Paid-in capital 67,905 37,627
Retained earnings 610,956 578,593
Unearned compensation (2,326)
---------- ----------
Common stockholders' equity 716,938 655,275
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 44,090 46,515
Preferred stocks of subsidiaries without
mandatory redemption requirements 6,288 6,302
Long-term debt
American Water Works Company, Inc. 131,000 131,000
Subsidiaries 1,121,609 1,056,404
---------- ----------
2,071,598 1,947,169
---------- ----------
Current liabilities
Bank debt 120,053 193,620
Current portion of long-term debt 33,119 5,405
Accounts payable 24,597 31,644
Taxes accrued, including federal income 19,101 11,798
Interest accrued 29,367 23,226
Accrued vacation pay 9,936 8,835
Other 32,036 27,852
---------- ----------
268,209 302,380
---------- ----------
<PAGE> Page 8 FORM 10-Q
September 30 December 30
1994 1993
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<S> <C> <C>
Regulatory and other long-term liabilities
Customer advances for construction $ 130,395 $ 125,031
Deferred taxes 323,932 309,204
Regulatory liability - income taxes
refundable through rates 43,852 45,942
Deferred investment tax credits 39,952 41,644
Other 47,284 38,146
---------- ----------
585,415 559,967
---------- ----------
Contributions in aid of construction 192,709 184,495
---------- ----------
$3,117,931 $2,994,011
========== ==========
See accompanying notes to the financial statements.
</TABLE>
<PAGE> Page 9 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<TABLE>
Nine Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 60,974 $ 60,669
Adjustments
Depreciation and amortization 54,117 48,605
Provision for deferred income taxes 10,752 6,143
Provision for losses on accounts receivable 2,800 2,530
Allowance for other funds used during
construction (3,926) (2,580)
Employee benefit funding in excess of
expenses (1,437) 2,436
Common stock contributions to employee
benefit plans 1,784 1,350
Deferred tank painting costs (1,270) (799)
Deferred rate case expense (1,521) (2,525)
Amortization of deferred charges 5,924 5,698
Other, net 2,661 (681)
Changes in assets and liabilities
Accounts receivable (8,942) (16,427)
Unbilled revenues (6,746) (8,517)
Other current assets (4,248) (451)
Accounts payable (7,047) (9,681)
Taxes accrued, including federal income 7,303 6,974
Interest accrued 6,141 7,584
Other current liabilities 4,184 (6,012)
-------- --------
Net cash from operating activities 121,503 94,316
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (169,167) (117,340)
Allowance for other funds used during
construction 3,926 2,580
Water system acquisition (4,457) (61,781)
Proceeds from the disposition of property,
plant and equipment 1,457 1,555
Removal costs from property, plant and
equipment retirements (3,306) (3,099)
Funds restricted for construction activity 5,031 (1,930)
Temporary investments (498) (5,650)
-------- --------
Net cash used in investing activities (167,014) (185,665)
-------- --------
<PAGE> Page 10 FORM 10-Q
Nine Months Ended
September 30,
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt $ 96,400 $159,715
Proceeds from preferred stock 0 1,000
Proceeds from common stock 24,507 1,015
Net borrowings (repayments)
under line-of-credit agreements (73,567) 77,066
Advances and contributions for construction,
net of refunds 15,810 13,406
Debt and stock issuance costs (1,566) (3,646)
Repayment of long-term debt (3,481) (117,565)
Redemption of preferred stocks (2,439) (3,772)
Dividends paid (25,675) (24,965)
-------- --------
Net cash from financing activities 29,989 102,254
-------- --------
Net increase (decrease) in cash and
cash equivalents (15,522) 10,905
Cash and cash equivalents at beginning
of period 52,979 29,113
-------- --------
Cash and cash equivalents at end of period $ 37,457 $ 40,018
======== ========
Cash paid during the period for:
Interest, net of capitalized amount $ 76,940 $ 64,669
======== ========
Income taxes $ 24,032 $ 22,805
======== ========
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 $4,720 in 1994 and $2,721 in 1993.
Dividends paid excludes $2,936 in 1994 and $1,369 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 11 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Information Accompanying Financial Statements (Unaudited)
(In thousands, except share and per share amounts)
September 30 December 31
1994 1993
-------- --------
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
-------- --------
$ 40,000 $ 40,000
======== ========
Preferred stocks without mandatory redemption requirements
Cumulative preferred stock - $25 par value
5% series (one-tenth of a vote per share)
- 101,777 shares outstanding $ 2,544 $ 2,544
Cumulative preference stock - $25 par value
Authorized - 750,000 shares
5% series (non-voting) - 365,158 shares
outstanding 9,129 9,129
-------- --------
$ 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 - 32,322,034 shares at
September 30, 1994;
31,243,743 at December 31, 1993 $ 40,403 $ 39,055
Paid-in capital 67,905 37,627
Retained earnings 610,956 578,593
Unearned compensation (2,326)
-------- --------
$716,938 $655,275
======== ========
During the first nine months of 1994, 940,977 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 54,960 shares were issued in
connection with the Savings Plan for Employees. At September 30, 1994,
30,461,581 common shares were reserved for issuance in connection with the
Stockholder Rights Plan, 678,456 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 423,877 common shares were reserved for issuance
in connection with the Savings Plan for Employees.
<PAGE> Page 12 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Notes to Consolidated Financial Statements (Unaudited)
September 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 13 FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------------
Results of Operations
- ---------------------
Operating revenues for the third quarter and the first nine months of 1994
were higher than for the same periods of 1993 by 5% and 9%, 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. The acquisition of the four
companies last year was responsible for approximately sixty-nine percent of
the increase in revenues in the third quarter. Forty-eight percent of the
increase in revenues for the nine months ending September 30, 1994 is
attributable to the 1993 acquisition.
During the first ten months of 1994, eight operating subsidiaries received
rate orders which are expected to provide approximately $14.1 million in
additional annual revenues. Six subsidiaries have rate increase
applications on file before regulatory agencies which, if granted in full,
would provide approximately $44.0 million in additional revenues.
Lower water sales in the Northeast due to more frequent rainfall than last
year were offset by increased sales in the West and Midwest, reflecting the
company's geographical diversity. The sales volume during the third
quarter increased to 68.4 billion gallons from 64.8 billion gallons in
1993. The acquisition of the four companies in 1993 accounted for 3.5
billion gallons of this increase in the third quarter. Water sales volume
for the first nine months of 1994 amounted to 178.0 billion gallons versus
163.4 billion gallons in 1993. The four acquired Midwestern companies
accounted for 11.2 billion gallons of this increase throughout the first
nine months of 1994.
Operating expenses for the third quarter and the first nine months of 1994
increased by 5% and 10%, 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 13% higher for the third
quarter and 11% higher for the first nine months when compared to 1993.
This increase can be attributed primarily to an increase in debt.
Net income to common stock was $26.8 million for the third quarter of 1994
compared with $27.7 million for the same period in 1993. Net income to
common stock for the first nine months of 1994 was $58.0 million compared
with $57.7 million for the first nine months of 1993.
<PAGE> Page 14 FORM 10-Q
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.
Six operating subsidiaries issued $96.4 million of long-term debt during
the first nine months of 1994. In addition, the Company invested $43.3
million in the common stock of three subsidiaries. The proceeds from these
financing arrangements have been used to fund construction programs and
repay bank borrowings. It is anticipated that one subsidiary will sell
long-term debt to a government entity and common stock to the Company
during the remainder of 1994, with the proceeds used to repay bank loans
and to fund construction projects.
<PAGE> Page 15 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 was filed by the registrant during the quarter
ended September 30, 1994.
<PAGE> Page 16 FORM 10-Q
SIGNATURES
- ----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN WATER WORKS COMPANY, INC.
Date November 9, 1994 /s/ George W. Johnstone
---------------- --------------------------------------
George W. Johnstone, President and CEO
(Authorized Officer)
Date November 9, 1994 /s/ Robert D. Sievers
---------------- --------------------------------------
Robert D. Sievers, Comptroller
(Chief Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000318819
<NAME> R. D. SIEVERS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 2,561,835
<OTHER-PROPERTY-AND-INVEST> 81,891
<TOTAL-CURRENT-ASSETS> 192,872
<TOTAL-DEFERRED-CHARGES> 244,548
<OTHER-ASSETS> 36,785
<TOTAL-ASSETS> 3,117,931
<COMMON> 40,403
<CAPITAL-SURPLUS-PAID-IN> 67,905
<RETAINED-EARNINGS> 610,956
<TOTAL-COMMON-STOCKHOLDERS-EQ> 716,938
84,090
17,961
<LONG-TERM-DEBT-NET> 1,252,609
<SHORT-TERM-NOTES> 120,053
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 33,119
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 893,161
<TOT-CAPITALIZATION-AND-LIAB> 3,117,931
<GROSS-OPERATING-REVENUE> 582,639
<INCOME-TAX-EXPENSE> 38,474
<OTHER-OPERATING-EXPENSES> 404,122
<TOTAL-OPERATING-EXPENSES> 442,596
<OPERATING-INCOME-LOSS> 140,043
<OTHER-INCOME-NET> 2,960
<INCOME-BEFORE-INTEREST-EXPEN> 142,643
<TOTAL-INTEREST-EXPENSE> 82,029
<NET-INCOME> 60,974
2,987
<EARNINGS-AVAILABLE-FOR-COMM> 57,987
<COMMON-STOCK-DIVIDENDS> 25,624
<TOTAL-INTEREST-ON-BONDS> 78,409
<CASH-FLOW-OPERATIONS> 121,503
<EPS-PRIMARY> 1.83
<EPS-DILUTED> 0
</TABLE>
