FORM 10-Q Page 1 of 17
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, 2000
---------------------------------------------
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
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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
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(Address of principal executive offices) (Zip Code)
(856) 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 May 1, 2000, the number of shares of common stock, $1.25 par value,
outstanding was 97,769,949 shares.
<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 Comprehensive Income
and of Retained Earnings (Unaudited)
(In thousands, except per share amounts)
<TABLE>
Three Months Ended
March 31,
2000 1999
-------- --------
<S> <C> <C>
CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
Operating revenues $307,759 $277,416
-------- --------
Operating expenses
Operation and maintenance 144,358 134,446
Depreciation and amortization 39,824 36,054
General taxes 33,129 31,988
-------- --------
Total operating expenses 217,311 202,488
-------- --------
Operating income 90,448 74,928
-------- --------
Other income (deductions)
Interest (46,746) (43,685)
Allowance for other funds used during
construction 2,706 3,244
Allowance for borrowed funds used
during construction 1,882 2,648
Amortization of debt expense (682) (644)
Preferred dividends of subsidiaries (798) (821)
Merger related costs -- (178)
Other, net (1,308) (1,222)
-------- --------
Total other income (deductions) (44,946) (40,658)
-------- --------
Income before income taxes 45,502 34,270
Provision for income taxes 18,419 13,848
-------- --------
Net income 27,083 20,422
Dividends on preferred stocks 996 996
-------- --------
Net income to common stock 26,087 19,426
-------- --------
Other comprehensive income
Unrealized gains on securities 13,181 26,781
Income taxes on other comprehensive income (5,385) (10,293)
-------- --------
Other comprehensive income, net 7,796 16,488
-------- --------
Comprehensive income $ 33,883 $ 35,914
======== ========
<PAGE> Page 3 FORM 10-Q
Three Months Ended
March 31,
2000 1999
---------- ----------
<S> <C> <C>
Average shares of basic common stock outstanding 97,479 95,906
Basic and diluted earnings per common share on
average shares outstanding $ 0.27 $ 0.20
========== ==========
CONSOLIDATED RETAINED EARNINGS
Balance at January 1 $1,001,029 $ 945,434
Add - net income 27,083 20,422
---------- ----------
1,028,112 965,856
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Deduct - dividends paid
Preferred stock 882 882
Preference stock 114 114
Common stock - $.225 per share in 2000;
$.215 per share in 1999 21,900 17,386
National Enterprises Inc. common stock -- 1,416
---------- ----------
22,896 19,798
---------- ----------
Balance at March 31 $1,005,216 $ 946,058
========== ==========
The results presented in 2000 and the restated results for 1999 reflect the
pooling of interests method of accounting to recognize the acquisition of
National Enterprises Inc.
The accompanying information and notes are an integral part of these
financial statements.
</TABLE>
<PAGE> Page 4 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Balance Sheet (Unaudited)
(In thousands)
<TABLE>
March 31 December 31
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $ 4,993,041 $ 4,939,408
Utility plant acquisition adjustments, net 70,723 51,697
Non-utility property, net of accumulated
depreciation 37,349 36,265
Excess of cost of investments in
subsidiaries over book equity at
acquisition, net 56,700 57,118
----------- -----------
Total property, plant and equipment 5,157,813 5,084,488
----------- -----------
Current assets
Cash and cash equivalents 38,407 43,100
Customer accounts receivable 83,388 91,353
Allowance for uncollectible accounts (2,611) (2,346)
Unbilled revenues 78,328 78,205
Miscellaneous receivables 9,075 10,936
Materials and supplies 21,512 20,058
Deferred vacation pay 13,707 10,902
Restricted funds 9,258 14,558
Other 15,059 11,915
----------- -----------
Total current assets 266,123 278,681
----------- -----------
Regulatory and other long-term assets
Regulatory asset - income taxes
recoverable through rates 215,502 214,349
Other investments 194,899 181,579
Debt and preferred stock expense 48,981 48,289
Deferred pension expense 32,817 32,872
Deferred postretirement benefit expense 10,497 10,264
Deferred treatment plant costs 5,545 5,811
Deferred tank painting costs 14,153 14,178
Restricted funds 7,795 6,557
Other 76,613 75,138
----------- -----------
Total regulatory and other long-term assets 606,802 589,037
----------- -----------
TOTAL ASSETS $ 6,030,738 $ 5,952,206
=========== ===========
<PAGE> Page 5 FORM 10-Q
March 31 December 31
2000 1999
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<S> <C> <C>
CAPITALIZATION AND LIABILITIES
Capitalization
Common stockholders' equity $1,657,413 $1,634,798
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 33,609 34,020
Preferred stocks of subsidiaries without
mandatory redemption requirements 8,118 8,118
Long-term debt
American Water Works Company, Inc. 211,000 211,000
Subsidiaries 2,210,236 2,182,097
----------- -----------
Total capitalization 4,172,049 4,121,706
----------- -----------
Current liabilities
Bank debt 235,630 239,864
Current portion of long-term debt 50,737 38,355
Accounts payable 40,498 67,064
Taxes accrued, including federal income 36,832 16,030
Interest accrued 50,974 43,672
Accrued vacation pay 14,364 11,532
Other 53,497 75,191
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Total current liabilities 482,532 491,708
----------- -----------
Regulatory and other long-term liabilities
Advances for construction 208,583 207,891
Deferred income taxes 632,034 610,460
Deferred investment tax credits 40,494 40,585
Accrued pension expense 64,504 63,095
Accrued postretirement benefit expense 15,335 12,471
Other 27,466 29,453
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Total regulatory and other long-term
liabilities 988,416 963,955
----------- -----------
Contributions in aid of construction 387,741 374,837
----------- -----------
Commitments and contingencies -- --
----------- -----------
TOTAL CAPITALIZATION AND LIABILITIES $ 6,030,738 $ 5,952,206
=========== ===========
The results presented in 2000 and the restated results for 1999 reflect the
pooling of interests method of accounting to recognize the acquisition of
National Enterprises Inc.
The accompanying information and notes are an integral part of these
financial statements.
</TABLE>
<PAGE> Page 6 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
<TABLE>
Three Months Ended
March 31,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 27,083 $ 20,422
Adjustments
Depreciation and amortization 39,824 36,054
Provision for deferred income taxes 6,340 8,265
Provision for losses on accounts receivable 2,163 1,197
Allowance for other funds used during
construction (2,706) (3,244)
Employee benefit expenses greater
than funding 4,579 5,100
Employee stock plan expenses 972 698
Deferred tank painting costs (118) (65)
Deferred rate case expense (319) (900)
Amortization of deferred charges 3,103 3,392
Other, net (6,178) (6,030)
Changes in assets and liabilities,net
Accounts receivable 8,288 5,323
Unbilled revenues 111 5,270
Other current assets (2,474) 162
Accounts payable (26,566) (24,607)
Taxes accrued, including federal income 20,391 10,261
Interest accrued 7,302 6,512
Other current liabilities (23,645) 2,023
-------- --------
Net cash from operating activities 58,150 69,833
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (67,321) (77,616)
Allowance for other funds used during
construction 2,706 3,244
Acquisitions (29,451) (826)
Proceeds from the disposition of property,
plant and equipment 400 794
Removal costs from property, plant and
equipment retirements (774) (495)
Restricted funds 4,062 (7,643)
-------- --------
Net cash used in investing activities (90,378) (82,542)
-------- --------
<PAGE> Page 7 FORM 10-Q
Three Months Ended
March 31,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt $ 41,945 $ 40,452
Proceeds from common stock 10,367 9,032
Purchase of common stock for treasury (704) (1,190)
Net borrowings (repayments) under
line-of-credit agreements (4,234) 25,467
Advances and contributions for construction,
net of refunds 6,384 5,677
Debt issuance costs (1,492) (161)
Repayment of long-term debt (1,424) (36,354)
Redemption of preferred stocks (411) (2,434)
Dividends paid (22,896) (19,798)
-------- --------
Net cash from financing activities 27,535 20,691
-------- --------
Net increase (decrease) in cash and
cash equivalents (4,693) 7,982
Cash and cash equivalents at January 1 43,100 39,877
-------- --------
Cash and cash equivalents at March 31 $ 38,407 $ 47,859
======== ========
Cash paid during the period for:
Interest, net of capitalized amount $ 40,552 $ 38,551
======== ========
Income taxes $ 7,154 $ 8,413
======== ========
Common stock issued in lieu of cash in connection with the Employees' Stock
Ownership Plan, the Savings Plan for Employees and the Long-Term
Performance-Based Incentive Plan totaled $1,488 in 2000 and $1,565 in 1999.
Common stock placed into treasury in connection with the Employees Stock
Ownership Plan and Long-Term Performance-Based Incentive Plan totaled $704 in
2000 and $3,675 in 1999.
The results presented in 2000 and the restated results for 1999 reflect the
pooling of interests method of accounting to recognize the acquisition of
National Enterprises Inc.
The accompanying information and notes are an integral part of these
financial statements.
</TABLE>
<PAGE> Page 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)
March 31 December 31
2000 1999
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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
========== ===========
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
Cumulative preferential stock - $35 par value
Authorized - 3,000,000 shares
(one-tenth of a vote per share) -- --
---------- -----------
$ 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 - 300,000,000 shares
Issued - 97,864,797 shares in 2000;
97,303,759 shares in 1999 $ 122,331 $ 121,630
Paid-in capital 435,851 424,434
Retained earnings 1,005,216 1,001,029
Accumulated other comprehensive income 100,257 92,461
Unearned compensation (1,838) (1,056)
Treasury stock at cost - 142,223 shares in
2000; 109,675 shares in 1999 (4,404) (3,700)
---------- -----------
$1,657,413 $ 1,634,798
========== ===========
At March 31, 2000, common shares authorized but not issued, reserved for
issuance in connection with the Company's stock plans were 80,865,863 shares
for the Stockholder Rights Plan, 3,751,444 shares for the Dividend
Reinvestment and Stock Purchase Plan, 565,493 shares for the Employees' Stock
Ownership Plan, 532,381 shares for the Savings Plan for Employees and 296,347
shares for the Long-Term Performance-Based Incentive Plan.
The results presented in 2000 and the restated results for 1999 reflect the
pooling of interests method of accounting to recognize the acquisition of
National Enterprises Inc.
<PAGE> Page 9 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
-----------------------------------------------------------
Notes to Consolidated Financial Statements (Unaudited)
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. The results
presented in 2000 and the restated results for 1999 reflect the pooling of
interests method of accounting to recognize the acquisition of National
Enterprises Inc.(NEI).
NOTE 2 -- Acquisitions
NATIONAL ENTERPRISES INC.
On June 25, 1999, the Company completed the acquisition of National
Enterprises Inc. (NEI), a privately owned company, in a transaction valued at
$700 million. The transaction was accomplished through a tax free exchange
of 14,937,000 shares of the Company's stock for all of the outstanding shares
of NEI and the assumption of $241 million of debt. Subsidiaries of NEI
provided water service to approximately 504,000 customers in Missouri,
Illinois, Indiana and New York. NEI also had passive investments in the
telecommunications industry owning 4,000,000 shares of ITC Deltacom and
600,000 shares of Powertel, as well as an interest in privately held ITC
Holdings.
This business combination has been accounted for as a pooling of interests
and, accordingly, the consolidated financial statements for periods prior to
the combination have been restated to include the accounts and results of
operations of NEI.
During the first quarter of 1999 the Company recorded a charge of $178
thousand, reflecting the one-time costs incurred in connection with the
merger. The merger related costs consist primarily of professional fees.
The merger related costs have been reported on a separate line in the
consolidated statement of income and comprehensive income.
The results of operations previously reported by the Company and the combined
amounts presented in the accompanying consolidated financial statements are
summarized in the following table:
Three Months Ended
March 30, 1999
<TABLE> ------------------
<S> <C>
Operating revenues
Company $237,002
NEI 40,414
--------
Combined $277,416
========
Net income
Company $ 19,685
NEI 737
--------
Combined $ 20,422
========
</TABLE>
<PAGE> Page 10 FORM 10-Q
CONTRACT MANAGEMENT BUSINESS
On December 31, 1999, the Company finalized the purchase of its joint venture
partner Anglian Water's interest in AmericanAnglian Environmental
Technologies for $32 million. This business, which now operates as American
Water Services (AWS), manages and operates 175 water and wastewater
facilities in seven states.
Effective January 1, 2000 the results of operations of AWS are being reported
on a consolidated basis. Previously, the results of the joint venture were
being accounted for under the equity method.
Note 3 -- Pending Acquisitions
WATER AND WASTEWATER ASSETS OF CITIZENS UTILITIES
On October 18, 1999, the Company announced it had agreed to purchase the
water and wastewater utility assets of Citizens Utilities Company (NYSE:CZN)
for $835 million in cash and debt. Citizens Utilities provides water and
wastewater service to 305,000 customers in Arizona, California, Illinois,
Indiana, Ohio and Pennsylvania. For the latest fiscal year ended December
31, 1999, the operations being acquired had revenues of $102 million. It is
anticipated that the transaction will be completed in the second half of
2000, following regulatory approvals and completion of other requirements.
SJW CORP.
On October 29, 1999, the Company announced an agreement had been reached to
acquire all the common stock of SJW Corp. (SJW) for approximately $390
million in cash, or $128 per share, and the assumption of $90 million in
debt. SJW is a publicly traded holding company (AMEX:SJW) headquartered in
San Jose, California. SJW, through its subsidiary San Jose Water Company,
provides water service to 216,000 customers in San Jose and nearby
communities.
SJW also owns 1,100,000 shares of California Water Service Group (NYSE:CWT)
and SJW Land Company, which owns a parking facility, commercial property and
undeveloped real estate in San Jose. For the latest fiscal year ended
December 31, 1999, SJW had revenues of $117 million, net income of $16
million and total assets of $372 million. It is expected that the
transaction, which will be accounted for as a purchase, will be completed in
the second half of 2000, following regulatory approvals and completion of
other requirements.
WATER UTILITY SUBSIDIARIES OF UNITED WATER RESOURCES INC.
On July 13, 1999, the Company announced it had agreed to acquire from United
Water Resources Inc. five water utilities in Missouri, Indiana, Illinois and
Virginia for approximately $49 million in cash. These water utilities
provide service to 35,000 customers. As of May 1, 2000 the acquisition of
four of these utilities were completed, and the remaining acquisition is
expected to be completed in the second quarter of 2000 upon the receipt of
regulatory approvals.
CITY OF COATESVILLE PENNSYLVANIA WATER AND WASTEWATER SYSTEMS
On February 15, 2000 the Company agreed to purchase the City of Coatesville
Authority's water and wastewater utility systems for $48 million. These
systems provide water service to more then 8,000 customers and wastewater
service to more than 4,000 customers. It is expected that the transaction
will be completed in the fourth quarter of 2000, following regulatory
approvals and completion of other requirements.
PAGE> Page 11 FORM 10-Q
NOTE 4 -- New Accounting Standard
In 2001, the Company will adopt Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS
133). This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS 133 was issued by the
Financial Accounting Standards Board in June of 1998 and requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
SFAS 133, as amended by SFAS 137 "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133,"
requires adoption on January 1, 2001. This new accounting standard is not
expected to have any effect on the Company's financial position or results of
operations as the Company has no significant derivative instruments or
hedging activities.
<PAGE> Page 12 FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------------
Results of Operations
- ---------------------
First quarter revenues increased 11% percent from $277.4 million in 1999 to
$307.8 million this year. The increase in revenues reflects a 2% increase in
water sales volume and rate increases authorized for various subsidiaries
during the last 12 months. In addition, the management fees from the
contract management business that are included in the consolidated results in
2000 increased revenues by 4%.
During the first three months of 2000, two utility subsidiaries received rate
orders which are expected to provide $1.8 million in additional annual
revenues. Six subsidiaries have rate increase applications on file before
regulatory agencies which, if granted in full, would provide approximately
$24.3 million in additional annual revenues. The largest of these, the
Company's Missouri-American subsidiary's rate case, has been filed requesting
$16.4 million in additional annual revenues.
Operating expenses were up 7 percent to $217.3 million in 2000 from $202.5
million in the first quarter of 1999. Excluding the expenses of the contract
management business, operation and maintenance expenses in the first three
months of 2000 were equal to those in the first three months of 1999. The
increases in depreciation expense and general taxes were related to the
Company's ongoing program of utility plant construction.
Interest expense rose by 7% to $46.7 million in the first quarter of 2000
compared to the first quarter of 1999, due to an increase in total debt to
fund construction of new water service assets. The total allowance for funds
used (equity and borrowed) during construction ("AFUDC") recorded in the first
quarter of 2000 was $4.6 million, compared to $5.9 million in the first
quarter of 1999. The utility subsidiaries record AFUDC to the extent
permitted by the regulatory authorities.
Income taxes increased in the first three months of 2000 when compared to the
first three months in 1999, as a result of increased earnings.
Net income to common stock was $26.1 million for the first quarter of 2000
compared with $19.4 million for the same period in 1999.
Other comprehensive income was $7.8 million in the first quarter of 2000
compared to $16.5 million in the same period in 1999. The Company's other
comprehensive income represents the after tax unrealized gain on passive
investments in two publicly traded telecommunications firms, ITC Deltacom and
Powertel.
Capital Resources and Liquidity
- -------------------------------
During the first three months of 2000, 463,360 shares of common stock were
issued in connection with the Dividend Reinvestment and Stock Purchase Plan,
32,134 shares were issued in connection with the Employees' Stock Ownership
Plan and 65,544 shares were issued in connection with the Savings Plan for
Employees.
<PAGE> Page 13 FORM 10-Q
During the balance of 2000, the Company plans to issue shares of common stock
through its Dividend Reinvestment and Stock Purchase Plan, the Employees'
Stock Ownership Plan, the Savings Plan for Employees and the Long-Term
Performance-Based Incentive Plan. Proceeds from the issuance of common stock
will fund additional equity investments in subsidiaries.
The Company placed 32,548 shares of common stock into treasury in the first
three months of 2000.
Six subsidiaries issued $41.9 million of long-term debt during the first
three months of 2000.
In the first three months of 2000, the Company invested $39.9 million in the
common stock of five subsidiaries. It is anticipated that some subsidiaries
will sell long-term debt to institutional investors and common stock to the
Company during the remainder of 2000, with the proceeds used to fund
construction programs, continue acquisitions and repay bank loans.
The Company and its subsidiaries are currently evaluating alternatives to
expand access to the capital markets. By aggregating the financing needs of
the Company and its subsidiaries into larger offerings, we will look to
access the public markets in addition to the traditional private market.
This should offer the prospect for more efficient execution in the capital
markets as well as the opportunity to achieve a lower cost of capital on
future financings.
The Company and its subsidiaries plan to fund construction programs, continue
acquisitions and repay bank borrowings and maturing bonds with the issuance
of approximately $160 million of long-term debt in 2000. In addition, during
2000 the Company will arrange acquisition financing of approximately $1.2
billion to fund the closing of the SJW and Citizens water and wastewater
sector acquisitions. Management intends to fund these transactions
permanently through a combination of long-term debt and preferred equity
securities. Excluding any short-term borrowings incurred in connection with
these pending transactions, the combined amount of bank borrowings and bonds
maturing within one year is expected to remain at approximately the current
level in 2000.
New Accounting Standards
- ------------------------
In 2001, the Company will adopt Statement of Financial Accounting Standards
No. 133 "Accounting for Derivative Instruments and Hedging Activities" (SFAS
133). This statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS 133 was issued by the
Financial Accounting Standards Board in June of 1998 and requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
SFAS 133, as amended by SFAS 137 "Accounting for Derivative Instruments and
Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133,"
requires adoption on January 1, 2001. This new accounting standard is not
expected to have any effect on the Company's financial position or results of
operations as the Company has no significant derivative instruments or
hedging activities.
PAGE> Page 14 FORM 10-Q
Forward Looking Information
- ---------------------------
Forward looking statements in this report, including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the U.S. Private Securities Litigation Reform Act
of 1995. These forward looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by such
forward looking statements. These factors include, among others, the
following: general economic and business conditions; competition; success of
operating initiatives, advertising and promotional efforts; existence of
adverse publicity or litigation; changes in business strategy or plans;
quality of management; availability, terms and development of capital;
business abilities and judgment of personnel; changes in, or the failure to
comply with governmental regulations; and other factors described in filings
of the Company with the SEC. The Company undertakes no obligation to
publicly update or revise any forward looking statement, whether as a result
of new information, future events or otherwise.
<PAGE> Page 15 FORM 10-Q
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
-------------------------------------------------------------
(a) The Company held its annual meeting of shareholders on May 4, 2000.
(c) Class I Directors (with a term expiring in 2003) were elected by
a vote of:
For Withheld
--- --------
William O. Albertini 87,937,642 574,272
Rhoda W. Cobb 87,942,968 574,272
Ray J. Groves 87,890,107 574,272
Ross A. Webber 87,896,074 574,272
Horace Wilkins, Jr. 87,882,557 574,272
The proposed 2000 Stock Award and Incentive Plan ("the Plan") was approved by
a vote of 77,672,467 for the proposal and 9,676,400 against, with 1,136,617
abstentions. The Plan, which became effective May 4, 2000, is contained in
Appendix A of the definitive Proxy Statement relating to the Registrant's
Annual Meeting of Shareholders on May 4, 2000, which was filed by the
Registrant with the Commission pursuant to Section 14(a) of the 1934 Act, and
is hereby specifically incorporated by reference thereto.
The appointment of PricewaterhouseCoopers LLP as the Company's independent
accountants for the year ending December 2000 was approved by a vote of
87,868,735 for the appointment and 375,606 against, with 241,142 abstentions.
<PAGE> Page 16 FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
A. Exhibits
--------
Exhibit Number Description
- -------------- -----------
10 Material Contracts
(a) 2000 Stock Award and Incentive Plan of the Registrant is
incorporated by reference as Appendix A of the
definitive Proxy Statement relating to the Registrant's
Annual Meeting of Shareholders on May 4, 2000.
(b) Amendment dated May 4, 2000 to Consulting Agreement
between Registrant and Anthony P. Terracciano, is filed
herewith.
27 Financial Data Schedule
Financial Data Schedule, is filed herewith
electronically.
B. Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the registrant during the quarter ended
March 31, 2000.
<PAGE> Page 17 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 May 15, 2000 \s\Ellen C. Wolf
- ---------------------- ------------------------------------------
Vice President and Chief Financial Officer
(Authorized Officer)
Date May 15, 2000 \s\Robert D. Sievers
- ---------------------- ------------------------------------------
Comptroller
(Chief Accounting Officer)
<TABLE> <S> <C>
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<NAME> R. D. SIEVERS
<S> <C>
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<PERIOD-END> MAR-31-2000
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73,609
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0
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FOURTH AMENDMENT TO CONSULTING AGREEMENT
This is the Fourth Amendment to the Consulting Agreement dated
May 7, 1998 by and between Anthony P. Terracciano, an individual whose mailing
address is 1123 3rd Avenue, Spring Lake, New Jersey 07762 ("Consultant") and
American Water Works Company, Inc. (the "Company"), a Delaware corporation.
BACKGROUND
Consultant and the Company entered into a consulting agreement dated
May 7, 1998. Consultant has provided the consulting and advisory services
requested to date by the Company. Consultant and the Company have agreed
to extend the term of the consulting agreement.
NOW, THEREFORE, intending to be legally bound hereby, the parties
agree to amend Section 2 of the Agreement in its entirety as follows:
2. Term. The term of this Agreement shall commence on May 7, 1998
and shall continue for a period of 36 months. The term of this Agreement
may be extended thereafter by mutual agreement of Consultant and the Board.
IN WITNESS WHEREOF, the undersigned have executed this Amendment.
AMERICAN WATER WORKS COMPANY, INC.
By: Marilyn Ware
Chairman of the Board of Directors
CONSULTANT:
Anthony P. Terracciano
May 4, 2000
