<PAGE>
SECURITIES AND EXCHANGE COMMISSION
-------------------------------------
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ____________ to ___________
Commission File No. 1-8586
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UNITED WATER RESOURCES INC.
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(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2441477
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(State of incorporation) (I.R.S. Employer
Identification No.)
200 OLD HOOK ROAD, HARRINGTON PARK, N.J. 07640
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 201-784-9434
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock (No par value) New York Stock Exchange
Outstanding at February 28, 1994 -
20,494,184
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
------------- -------------
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
At February 28, 1994, the registrant's Common Stock, no par value, held by
non-affiliates had an aggregate market value of $289,480,349. See Item 13.
The following documents are incorporated by reference in this Form 10-K:
United Water Resources Inc. Annual Report to Shareholders for the year
ended December 31, 1993 as to Part II items 5, 6, 7 and 8 and Part IV item
14.
United Water Resources Inc. Proxy Statement to be filed in connection
with the Registrant's Annual Meeting tentatively to be held on June 2, 1994
as to Part III items 10, 11, 12, and 13.
<PAGE>
United Water Resources Inc.
PART I
------
ITEM 1. BUSINESS
- ------- --------
(A) GENERAL
-------
United Water Resources Inc. (United Water) was incorporated on
February 25, 1983. United Water is a New Jersey corporation with its principal
office at 200 Old Hook Road, Harrington Park, New Jersey 07640, telephone number
201-784-9434. The principal subsidiary of United Water, Hackensack Water
Company (Hackensack), was incorporated by an act of the New Jersey Legislature
in 1869. A number of local water companies have been merged into Hackensack
since its reorganization in 1880. Spring Valley Water Company Incorporated
(Spring Valley) was incorporated under the laws of New York in 1893 and is
wholly owned by Hackensack. Other wholly-owned subsidiaries of United Water
include Rivervale Realty Company, Inc. (Rivervale), which is engaged in real
estate acquisitions and development, leasing and sales, golf course operations
and consulting activities; Laboratory Resources, Inc. (Laboratory Resources), a
network of private laboratories that provide a variety of laboratory testing
services; and Mid-Atlantic Utilities Corporation (Mid-Atlantic), which seeks
high growth areas in need of public water or sewer systems and the management
necessary to maintain them and is involved with the service and installation of
meters. United Water also owns 50% of the common stock of the Dundee Water
Power and Land Company.
Hackensack and Spring Valley, engaged solely in the water service
business, provide water service to residential, commercial and industrial
customers and fire protection within their franchise territories. Hackensack
and Spring Valley are subject to regulation by the New Jersey Board of
Regulatory Commissioners (BRC) and the New York Public Service Commission (PSC),
respectively. At December 31, 1993, the distribution facility that provides
water service to these utilities is comprised of approximately 2,955 miles of
pipeline.
<PAGE>
United Water Resources Inc.
Hackensack supplies water service to 175,044 customers in 60 New
Jersey municipalities in most of Bergen County and in the northern part of
Hudson County. The total population served is about 750,000 persons (1990
Census).
Hackensack's principal source of water supply is the Hackensack River
and its tributary streams, with a watershed of 113 square miles above the dam at
Oradell, New Jersey, together with diversions into the Oradell Reservoir from an
additional 55 square miles of watershed on the Saddle River, Long Swamp Brook
and Sparkill Creek. The water supply of Hackensack is supplemented by ground
water supplies derived from wells and by the purchase of water from the systems
of Jersey City and the Passaic Valley Water Commission. Hackensack obtains
stream flow benefits from Spring Valley which owns and operates an impounding
reservoir, Lake DeForest, on the Hackensack River in Rockland County, New York.
In addition, Hackensack has available additional water supply from the Wanaque
South Project. The Wanaque South Project, which was completed in 1987, was the
joint undertaking of Hackensack and the North Jersey District Water Supply
Commission. Hackensack has a 50% interest in the utility plant of the project
and shares project operating expenses.
Spring Valley supplies water service to 59,508 customers in
substantially all of Rockland County, New York, outside of the Palisades
Interstate Park and the areas served by the water systems of the Villages of
Nyack and Suffern. Its service area extends from Tomkins Cove on the north,
south to the New Jersey state line and comprises about 121 square miles, with a
population of about 250,000 persons (1990 Census). Spring Valley's principal
source of supply is derived from wells and surface supplies, including Lake
DeForest Reservoir and Cedar Pond Brook.
<PAGE>
United Water Resources Inc.
Hackensack and Spring Valley have valid franchises authorizing them to
conduct their present operations in all or substantially all of the territories
in which services are rendered and to maintain their pipes in the streets and
highways of these territories. Hackensack and Spring Valley have the right to
secure their supplies of water from their present sources. All such franchises
and rights are subject to alteration, suspension or repeal by the States of New
Jersey and New York, respectively. Their properties are also subject to the
exercise of the right of eminent domain as provided by law. Neither Hackensack
nor Spring Valley engages in any significant operations outside its franchised
territories.
The business of Hackensack and Spring Valley is substantially free
from direct competition with other public utilities, municipalities and other
general public agencies. Both Hackensack and Spring Valley provide water that
meets or surpasses the minimum standards of the Federal Safe Drinking Water Act
of 1974, as amended.
Rivervale is a non-regulated business engaged in real estate
acquisitions and development, leasing and sales, golf course operations and
consulting activities. Rivervale owns raw and income producing properties in
Bergen and Essex Counties, New Jersey; and Orange, Westchester and Rockland
Counties, New York. Rivervale continues to seek and receive municipal and other
governmental approvals for several projects, both in New Jersey and New York.
Out of its total holdings of approximately 767 acres, various approvals have
been received for 198 acres of property in several parcels in northern New
Jersey and Rockland County, New York. Applications are pending for projects on
another 137 acres.
Laboratory Resources performs a wide range of environmental analyses
for consulting engineers, industry, public water suppliers, wastewater treatment
facilities and governmental agencies. In 1993, Laboratory Resources received
U.S. Army and Navy environmental cleanup certifications allowing them to enter
into a new growing market. In December 1993, Laboratory Resources was awarded a
$1 million Army base cleanup contract. Negotiations for other federal contracts
are in progress.
<PAGE>
United Water Resources Inc.
Mid-Atlantic owns and operates several small water and sewerage
utility systems. These include water supply, sewage collection and sewage
transmission companies providing service for approximately 2,752 customers in
Vernon Township and Mt. Arlington, New Jersey. Mid-Atlantic is subject to
regulation by the BRC. At December 31, 1993, its distribution facility is
comprised of approximately 26 miles of pipeline. Through the acquisitions of
several small companies, Mid-Atlantic expects to add approximately 900
additional customers early in 1994.
In 1993, Metering Services Inc. sold its high technology division and
retained the water meter installation division.
United Water and its subsidiaries employed 706 persons as of December
31, 1993.
<PAGE>
United Water Resources Inc.
(B) FINANCIAL INFORMATION ABOUT BUSINESS SEGMENTS
---------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
PARENT,
REAL OTHER OPERATIONS
(thousands of dollars) UTILITIES ESTATE AND ELIMINATIONS CONSOLIDATED
- ------------------------------- ---------------- --------- ----------------- ------------
<S> <C> <C> <C> <C>
1993
Operating revenues $154,497 $ 33,963 $11,958 $200,418
Income before income taxes 29,073 6,024 (2,539) 32,558
Depreciation 11,854 1,272 1,150 14,276
Capital expenditures 15,993 5,240 1,701 22,934
Identifiable assets $614,766 $106,342 $19,418 $740,526
- ------------------------------- -------- -------- ------- --------
1992
Operating revenues $143,300 $ 10,759 $10,810 $164,869
Income before income taxes 25,193 1,803 (3,158) 23,838
Depreciation 11,396 1,292 1,262 13,950
Capital expenditures 14,075 5,523 1,984 21,582
Identifiable assets $559,992 $123,244 $ 8,423 $691,659
- ------------------------------- -------- -------- ------- --------
1991
Operating revenues $146,393 $ 4,088 $11,269 $161,750
Income before income taxes 25,317 2,113 (2,876) 24,554
Depreciation 10,718 1,057 1,374 13,149
Capital expenditures 16,104 44,105 6,510 66,719
Identifiable assets $543,649 $117,699 $ 6,276 $667,624
- ------------------------------- -------- -------- ------- --------
(C) MERGER AGREEMENT
----------------
</TABLE>
In September 1993, United Water and GWC Corporation (GWC), a
Delaware water utility holding company, entered into a definitive agreement
and plan of merger (Merger Agreement), pursuant to which GWC will merge
with and into United Water. The Merger Agreement provides that 70% of each
holder's GWC common stock will be converted into the right to receive 1.2
shares of United Water common stock and the remaining 30% will be converted
at the election of the holder thereof into the right to receive either 1.2
shares United Water Series A Cumulative Convertible Preference Stock or an
equivalent amount in cash. At December 31, 1993, United Water and GWC had
20,216,000 and 11,066,600 shares of common stock outstanding, respectively.
In addition, the outstanding GWC Series A 7-5/8% Cumulative Preferred Stock
would be converted into shares of United Water preferred stock with equal
stated dividends and similar rights and designations.
<PAGE>
United Water Resources Inc.
The Merger Agreement contains various provisions with respect to
the conduct of each company's business pending consummation of the merger,
such as prohibiting increases in United Water's common stock quarterly
dividend above $.23 per share. Such provisions are not expected to have an
adverse effect on United Water and its subsidiaries or limit the ability of
United Water or its subsidiaries to operate in any material way.
Discussions contained in the following pages of this Report
(except where noted) pertain to United Water and its subsidiaries, and
projections or estimates contained therein do not reflect the pending
merger. For additional information on the merger, reference is made to
United Water's Form 8-K's dated September 16, 1993 and March 10, 1994,
which are filed as exhibits to this Report and incorporated herein by
reference. On March 10, 1994 United Water announced that the shareholders
of United Water and GWC overwhelmingly approved the companies' merger
agreement at independently conducted shareholder meetings held that day.
<PAGE>
United Water Resources Inc.
ITEM 2. PROPERTIES
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Hackensack owns and operates two impounding reservoirs, Oradell
(3,507 million gallon (MG) capacity) and Woodcliff Lake (871 MG capacity)
located in Bergen County, New Jersey and one impounding reservoir, Lake
Tappan (3,853 MG capacity), partially located in Bergen County, New Jersey
and partially located in Rockland County, New York. In addition,
Hackensack obtains stream flow benefits from Spring Valley, which owns and
operates an additional impounding reservoir, Lake DeForest (5,671 MG
capacity), on the Hackensack River in Rockland County. The Wanaque South
Project adds as much as 40 million gallons per day (MGD) to Hackensack's
water supply.
Hackensack and Spring Valley own and operate numerous wells
throughout their systems. Hackensack also owns and operates a treatment
and pumping plant at the Oradell Reservoir, which is comprised of raw and
filtered water pumping facilities and purification works. This plant has
raw and filtered water pumping capabilities in excess of 200 MGD. At
Secaucus, New Jersey, Hackensack owns and operates a treatment and pumping
plant for water supplied from the Jersey City aqueduct. This plant is
capable of treating 18 MGD. Spring Valley has a pumping and treatment
plant adjacent to Lake DeForest Reservoir, in the Town of Clarkstown, New
York, with a capability of 20 MGD. A small pumping station and pressure
filter plant, with a capacity of 1.5 MGD, located in the Town of Stony
Point, New York, treats water from Cedar Pond Brook.
Hackensack and Spring Valley own and maintain various reservoirs,
standpipes, elevated tanks, transmission and distribution mains, hydrants,
services and meters throughout the distribution system, including booster
pump stations. In connection with the Wanaque South Project, Hackensack
owns a 17-mile aqueduct from the Wanaque Reservoir to the Oradell
Reservoir, along with a booster pumping station. Hackensack also owns 50%
of the other elements of the Wanaque South Project, including an 11-mile
aqueduct and related pump stations, and has contracted rights to yields
derived from the Monksville Reservoir.
<PAGE>
United Water Resources Inc.
On January 6, 1987, Spring Valley received New York State
Department of Environmental Conservation (DEC) approval to build the
proposed Ambrey Project, an impounding reservoir and treatment plant.
However, construction of the project cannot begin until Spring Valley's
water demands have reached a certain "trigger point" as determined by
average daily water demands. On April 19, 1993, the Company requested the
DEC's permission to adjust the Ambrey trigger mechanism to reflect current
conditions and water demand characteristics. A decision on this matter is
pending.
Hackensack and Spring Valley own and occupy office buildings in
Harrington Park and Hackensack, New Jersey; and in West Nyack, New York,
respectively.
Rivervale owns approximately 767 acres of land and three (3)
major office buildings. Its properties are located in Bergen and Essex
Counties, New Jersey; and Orange, Westchester and Rockland Counties, New
York.
Laboratory Resources owns and operates three (3) commercial
testing laboratories in Teterboro, New Jersey; Brooklyn, Connecticut; and
Bethlehem, Pennsylvania.
Mid-Atlantic owns and operates public water supply, sewage
collection and sewage transmission companies in Morris and Sussex Counties,
New Jersey.
<PAGE>
United Water Resources Inc.
ITEM 3. LEGAL PROCEEDINGS
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On January 12, 1990, the New Jersey Board of Public Utilities
(BPU), predecessor of the Board of Regulatory Commissioners (BRC), and the
New Jersey Watershed Property Review Board (WRB) approved Hackensack's
transfer of approximately 290 acres of excess golf course land to
Rivervale. Thereafter, two environmental advocacy groups, the
Environmental Defense Fund (EDF) and Save the Watershed Action Network
(SWAN), filed a consolidated appeal with New Jersey's Appellate Division
contesting the approval. In June 1991, the Appellate Division remanded the
matter back to the BPU and the WRB for further proceedings. Thereafter,
Hackensack sought Certification to the Supreme Court of New Jersey.
However, on October 30, 1991, the Supreme Court decided that it would not
entertain that appeal.
On February 5, 1991, the BPU denied a petition by the EDF for an
enforcement order regarding development of the watershed lands, and in the
alternative, a petition for reconsideration of the December 17, 1984 BPU
decision approving transfer of approximately 717 acres from Hackensack to
Rivervale. The February 5 Order also established a buffer zone of 500 feet
for certain parcels of the property. On February 20, 1991, the EDF filed a
Notice of Appeal to the New Jersey Appellate Division contesting the
February 5 Order denying the reconsideration. Hackensack Water Company
subsequently filed a cross appeal contesting the February 5 Order, solely
as it related to the 500 foot buffer zone segment.
On June 3, 1993, Hackensack and Rivervale executed a stipulation
and agreement with EDF/SWAN, the Staff of the BRC and the New Jersey
Department of the Public Advocate's office settling the above litigation
subject to approval by the WRB and the BRC. The stipulation reinstates the
transfer of the Golf Course Lands to Rivervale while providing for
reacquisition by Hackensack of 355 acres transferred to Rivervale in 1984.
<PAGE>
United Water Resources Inc.
Based upon decisions rendered from the WRB on July 6, 1993 and
the BRC on August 5, 1993, several lawsuits were settled between Hackensack
and two environmental groups related to the land transfers that occurred in
1984 and 1990.
The settlement upheld the 1990 transfer from Hackensack to
Rivervale of approximately 290 acres of land that are unconditionally and
permanently deed restricted to golf course and country club uses. The
settlement also required Hackensack to reacquire 355 acres of land which
were transferred to Rivervale in 1984. This acreage was added to
Hackensack's reservoir protective holdings and rate base.
The transfer price of the acreage being returned to Hackensack's
plant accounts was valued at $26 million, reflecting development approvals
that occurred during the nine years that the land was held by Rivervale.
Approximately $11 million (which includes interest) in proceeds from the
1990 golf course transfer to Rivervale was deferred for refund to water
customers. To permanently reduce the rate impact of the reacquisition by
Hackensack of the 355 acres, $4 million of the proceeds was applied against
the utility plant accounts, resulting in a net increase in utility rate
base of $22 million. The remaining $7 million of the proceeds will be
applied as credits on customer bills to completely offset the impact of the
rate increase of approximately 3.1%, or $3.5 million, which became
effective October 12, 1993, in recognition of the increment to Hackensack's
rate base. It is anticipated that the credits on customer bills will be
made for approximately two years. Due to regulatory treatment, the effects
of the intercompany transaction were not eliminated in consolidation. As a
result of the settlement, Rivervale recognized sales proceeds of $26
million offset by costs of approximately $15.5 million associated with the
land.
In a separate matter, an appeal was filed with New Jersey's
Intermediate Appellate Court by the Division of Rate Counsel, Department of
the Public Advocate, from a 1990 BPU Order relating to the Petition of
Hackensack for approval of a grant of a ground lease to Sterling Drug
Capital Corporation, approving the long-term lease of certain Hackensack
property for use as part of a golf course. The appeal contested those
provisions of the Order directing that revenues realized from the lease be
shared equally
<PAGE>
United Water Resources Inc.
between Hackensack's shareholders and customers, and sought to have the
lease proceeds inure to the exclusive benefit of the customers. The matter
was argued before the Appellate Division and a decision was rendered on
February 11, 1993, affirming the 1990 BPU Order.
The Paterson Municipal Utilities Authority filed suit against the
Hackensack Water Company and the North Jersey District Water Supply
Commission. Summons and Complaint were served on August 8, 1990. The suit
was based on alleged ownership of various water rights in the Passaic River
owned by the Authority and which the Authority claimed were, or may have
been, affected by diversions from the Wanaque South Project, in which
Hackensack Water Company is an equal partner with the North Jersey District
Water Supply Commission. The Company's Motion for Summary Judgement,
dismissing the Complaint, was granted on July 23, 1992. On October 5,
1992, the Paterson Municipal Utilities Authority filed a Notice of Appeal.
The Appeal is pending.
The PSC, on February 20, 1985, authorized the sale and transfer
of 23 acres of land from Spring Valley to Rivervale. Subsequently, the PSC
initiated an administrative proceeding arising from an Order inquiring into
the price for the transfer of the land. In September 1990, the PSC
required Spring Valley to record a deferred credit that reduced rate base
by $1.2 million to reflect the appreciated value of the property as of the
date of sale of the land. In January of 1991, Spring Valley filed an
appeal regarding the PSC decision; however, on February 13, 1992, the
Appellate Division affirmed the action of the PSC. The effect of that
decision on United Water has been recognized by an after-tax charge against
income of $809,000 in 1991. The Company filed with the New York Court of
Appeals a Motion for Leave to Appeal, which was denied on September 17,
1992. The Company has submitted a proposal to the PSC to make a one-time
customer refund through billed credits of a portion of the deferred credit.
The Company anticipates a PSC decision on its request in April 1994.
On August 6, 1991, Rivervale Realty entered into a modification
agreement relating to the outstanding proceeds being held in escrow from
the sale of the Emerson Country Club. The modification
<PAGE>
United Water Resources Inc.
provided for additional collateral to secure the purchase, the loan of the
escrow monies in the amount of $13.1 million to the Buyer, and a release of
the remaining portion of the escrow funds in the amount of $4.4 million to
Rivervale. The release to the Buyer is secured by a note and mortgage on
the Country Club and certain other properties owned by the Buyer, together
with a guaranty from the Buyer's parent company, as additional security for
the substitution of collateral. The Buyer failed to make its scheduled
March 1992 and all subsequent payments, and as a result, the note was
placed in a non-accrual status. Rivervale has begun an action in
foreclosure, which the Buyer has challenged. By Superior Court Order dated
February 10, 1993 Rivervale was awarded possession of the course and
operated the facility during the 1993 season. On March 18, 1994 Rivervale
and Bird Hills entered into a stipulation of settlement whereby Rivervale
would pay Bird Hills $2 million in return for additional property acquired
by Bird Hills. The stipulation also requires Bird Hills to give up all
claims to the golf course parcel. The closing of the settlement is
tentatively scheduled for March 30, 1994.
Based upon advice from counsel, management believes Hackensack,
Spring Valley and Rivervale have meritorious defenses in all of the
aforementioned claims which remain pending and intends to contest them
vigorously. The likelihood that the ultimate resolution will have a
material effect upon the financial position or results of operations of
United Water or its subsidiaries is considered to be remote.
<PAGE>
United Water Resources Inc.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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During the fourth quarter of 1993, there were no matters
submitted to a vote of security holders.
<PAGE>
United Water Resources Inc.
PART II
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ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
------- -----------------------------------------------------------
STOCKHOLDER MATTERS
--------------------
United Water Resources' common stock is traded on the New York
Stock Exchange under the symbol UWR. The high and low sales prices for
United Water's common stock for 1993, 1992 and 1991 and the dividends paid
on the common stock each quarter were as follows:
<TABLE>
<CAPTION>
(dollars) STOCK PRICE DIVIDEND
- ----------- ------------------- --------
<S> <C> <C> <C> <C>
QUARTER HIGH LOW
------- ------ ------
1993 Fourth 15.750 14.000 .23
Third 15.750 14.750 .23
Second 15.875 14.750 .23
First 15.875 14.375 .23
------- ------ ------ --------
1992 Fourth 15.500 13.375 .23
Third 15.875 13.500 .23
Second 15.000 13.000 .23
First 16.625 13.250 .23
------- ------ ------ --------
1991 Fourth 16.625 14.000 .23
Third 15.250 13.375 .23
Second 15.375 12.750 .23
First 15.000 10.875 .22
------- ------ ------ --------
</TABLE>
The high and low stock prices from January 1 to February 28, 1994, were
14.750 and 13.750.
The number of holders of record of United Water's common stock as of
January 31, 1994 were 19,099.
<PAGE>
United Water Resources Inc.
<TABLE>
<CAPTION>
ITEM 6. SELECTED FINANCIAL DATA
- -------- -------------------------
Year Ended December 31,
-----------------------------------------------------------------
1993 1992 1991 1990 1989
(thousands, except per share data)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income Statement Data
- --------------------------
Operating revenues $200,418 $164,869 $161,750 $164,594 $133,370
Operating income 55,360 46,516 45,664 46,278 36,711
Net income 19,978 15,784 16,446 18,292 14,275
Net income per share 1.03 .87 .96 1.10 .86
Dividends paid per share $ .92 $ .92 $ .91 $ .88 $ .88
=================================================================================================
</TABLE>
Balance Sheet Data (at end of period)
- -------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Total assets $740,526 $691,659 $667,933 $636,781 $553,660
Long-term debt 276,753 294,169 301,730 251,062 253,644
Preferred stock without
mandatory redemption 9,000 9,000 9,000 9,000 9,000
Preferred stock with
mandatory redemption $ 23,840 $ 24,100 $ 9,360 $ 10,910 $ 12,510
</TABLE>
<PAGE>
United Water Resources Inc.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
------- -----------------------------------------------------------------
AND RESULTS OF OPERATIONS
----------------------------
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL REQUIREMENTS
United Water Resources' (United Water) existing utility
subsidiaries expect to spend $89 million on construction programs over the
next five years. Expenditures in 1994 and 1995 are projected to be $16.4
million and $18.1 million, respectively. These estimates are subject to
continuous review and actual expenditures may vary. The construction
programs include the installation of transmission and distribution
facilities.
The utilities plan to continue to fund their construction
programs primarily through internal cash generation. Additional funding,
as necessary, will be obtained through the sale of securities, available
credit lines, and capital infusions by United Water from its dividend
reinvestment and stock purchase plans. The amount and timing of the use of
these proceeds and of future financings will depend on actual construction
expenditures, the timeliness and adequacy of rate relief, the availability
and cost of capital, and the ability to meet interest and fixed charge
coverage requirements.
In 1991, United Water implemented two enhancements to its
dividend reinvestment and stock purchase plans. The first allows plan
participants to make additional cash investments in United Water shares at
a 5% discount from market price with no brokerage fees. The second
provides our utility customers with a 5% discount on their initial
investment. The amount received from all plans was: 1993-$20.5 million;
1992-$17.3 million; 1991-$9.7 million.
In July 1993, Hackensack Water Company (Hackensack) redeemed $10
million of its $20 million, 9-3/4% Series First Mortgage Bonds, due 2006.
Hackensack redeemed the remaining $10 million in January 1994. In 1993,
Hackensack filed a petition requesting the New Jersey Board of Regulatory
Commissioners' (BRC) approval to issue and sell $40 million of tax-exempt
refunding bonds.
<PAGE>
United Water Resources Inc.
Hackensack received BRC approval in February 1994 and plans to use the
proceeds of the issue to redeem $20 million 8-3/4% bonds and $20 million 8%
bonds in 1994. On March 22, 1994, Hackensack issued $20 million 5.80% 1994
Series A term bonds and $20 million 5.9% 1994 Series B term bonds, due
March 1, 2024.
In November 1993, Rivervale Realty Company (Rivervale) reduced
its existing $9.5 million Atrium building mortgage by $1.5 million and
refinanced the remaining $8.0 million with a floating rate term loan, due
2000. The interest rate will be established every 30 days and is based on
London Interbank Offered Rate (LIBOR) plus a premium (4.25% at December 31,
1993).
In December 1993, the New York State Environmental Facilities
Corporation (EFC) issued $12 million of 5.65% tax-exempt Water Facilities
Revenue Bonds (1993 Bonds) due in 2023 with optional redemption provisions
on behalf of Spring Valley Water Company Incorporated (Spring Valley). The
proceeds will be used to finance certain construction projects through
1995.
At December 31, 1993, United Water had available $57.5 million of
unused short-term bank lines of credit and $9 million in cash and temporary
investments.
MERGER
------
On September 15, 1993, United Water entered into a definitive
agreement to merge with GWC Corporation (GWC), a company based in
Wilmington, Delaware. GWC is the parent company of General Waterworks
Corporation (General Waterworks), a utility holding company. Under the
terms of the agreement, GWC will merge into United Water so that General
Waterworks will become a wholly-owned subsidiary of United Water through an
exchange of common stock, convertible preference stock, and cash for GWC
common stock. The total value of the transaction is approximately $196
million. Lyonnaise des Eaux-Dumez (Lyonnaise), the majority shareholder of
GWC, will receive 70% of its consideration in common stock of United Water
at a ratio of 1.2 shares of United Water to 1 share of GWC
<PAGE>
United Water Resources Inc.
and the remaining 30% in convertible preference stock. The minority
shareholders of GWC will receive 70% of their consideration in common stock
of United Water at a ratio of 1.2 shares of United Water to 1 share of GWC.
They will also have a choice of taking the remaining 30% in either (i) cash
equal to 1.2 times the average market price of United Water common stock on
the New York Stock Exchange for 20 trading days prior to the closing, or
(ii) an equivalent value of United Water convertible preference stock. The
merger is expected to be tax free to the extent common shareholders of GWC
receive common stock or preference stock of United Water.
On November 30, 1993, the boards of directors of United Water and
GWC voted to proceed with the proposed merger subject to various closing
conditions. These include approvals from the shareholders of both companies
and certain state regulatory agencies. A registration statement (S-4) and
joint proxy statement was filed with the Securities and Exchange Commission
on February 3, 1994. On March 10, 1994, special shareholder meetings of
both companies were held to vote on the merger proposal, resulting in the
shareholders of United Water and GWC overwhelmingly approving the
companies' merger agreement.
Lyonnaise, a French multi-national corporation and one of
Europe's largest water purveyors, currently owns approximately 82% of GWC
shares. Lyonnaise voted its shares for the merger in the same proportion
as the minority shareholders of GWC. Under the terms of the agreement,
Lyonnaise will own approximately 26% of the outstanding United Water shares
after the merger. Lyonnaise will enter into a 12-year Governance Agreement
with United Water which, subject to certain conditions, will govern the
relationship of the parties.
As a result of the merger, United Water will become the second
largest investor-owned water utility in the country. The service territory
will serve more than 2 million people in 14 states. Utility operating
revenues are anticipated to double and consolidated assets are expected to
exceed $1 billion.
<PAGE>
United Water Resources Inc.
RATE MATTERS
SPRING VALLEY
In 1990 and 1989, Spring Valley deferred revenues totaling
$505,000 and $1.2 million, respectively, related to reductions in pension
expense and federal income tax rates pursuant to a New York Public Service
Commission (PSC) order. As a result of the September 1990 rate application
settlement with the PSC, Spring Valley began to refund these revenues to
customers. In February 1993, Spring Valley implemented a September 1992
PSC decision which revised its tariff design and discontinued the
application of federal income tax revenue credits on customer bills.
Spring Valley is using unamortized revenue deferrals to recover the cost of
a customer conservation program which began in the second quarter of 1993
and is anticipated to conclude in 1995.
In July 1992, Spring Valley applied to the PSC for permission to
increase its annual revenues by $5 million, or 14.4%, to offset the effects
of continued investment in plant facilities and increases in operating
expenses. On May 12, 1993, the PSC rendered its decision. The PSC Opinion
No. 93-9 allowed Spring Valley an overall rate of return of 8.75% and a
return on equity of 10.5%. The opinion provided for an increase in annual
revenues of approximately $1.9 million, or 5.7%, which became effective on
May 30, 1993. The PSC also allowed Spring Valley to recover approximately
$850,000 of previously deferred expenses and required it to refund certain
revenue credits of approximately $1 million immediately. This action,
which resulted in a one-time increase in revenues and various expenses in
the second quarter of 1993, did not have a material effect on net income.
The PSC's decision also permitted Spring Valley to submit a second stage
filing after February 1, 1994 to recover increases in property taxes,
salaries and wages, and medical benefits that were not provided for in
their previous determination. In addition, in its second stage filing,
Spring Valley will seek rate recognition of its other postretirement
benefits on an accrual basis. In February 1994, Spring Valley filed a
request to
<PAGE>
United Water Resources Inc.
increase revenues by approximately $1.6 million, or 4.4%. Spring Valley
anticipates a PSC decision on its request in April 1994.
The PSC's May 1993 decision also directed Spring Valley to
institute a Revenue Reconciliation Clause (RRC), which requires Spring
Valley to reconcile billed revenues with the pro forma revenues that were
used to set rates. Any variances outside a 1% range are accrued or
deferred for subsequent recovery from or refund to customers. As a result
of the hot weather experienced during the summer of 1993, the RRC resulted
in the deferral of $1.4 million, which will be used to recover certain
deferred costs. The remaining balance will be refunded to Spring Valley
customers along with previous RRC credit balances over a three-year period
beginning in July 1994.
In 1990, the PSC modified its earlier decision regarding the 1985
transfer of 23 acres of land from Spring Valley to Rivervale. They ordered
Spring Valley to record a deferred credit that reduced rate base by $1.9
million. In 1991, Spring Valley filed an appeal with the New York State
Supreme Court-Appellate Division. In February 1992, a decision was
rendered on the appeal affirming the PSC order. The effect of that
decision on United Water has been recognized by an after-tax charge against
income of $809,000 in 1991. Spring Valley has submitted a proposal to the
PSC to make a one-time customer refund through bill credits of a portion of
the deferred credit. A PSC decision is anticipated in April 1994.
HACKENSACK WATER
Based upon decisions that were rendered by the New Jersey
Watershed Property Review Board on July 6, 1993, and the BRC on August 5,
1993, several lawsuits were settled between Hackensack and two
environmental groups related to the land transfers that occurred in 1984
and 1990.
The settlement upheld the 1990 transfer from Hackensack to
Rivervale of approximately 290 acres of land that are unconditionally and
permanently deed restricted to golf course and country club
<PAGE>
United Water Resources Inc.
uses. The settlement also required Hackensack to reacquire 355 acres of
land which were transferred to Rivervale in 1984. This acreage was added
to Hackensack's reservoir protective holdings and rate base.
The transfer price of the acreage being returned to Hackensack's
plant accounts was valued at $26 million, reflecting development approvals
that occurred during the nine years that the land was held by Rivervale.
Approximately $11 million (which includes interest) in proceeds from the
1990 golf course transfer to Rivervale was deferred for refund to
Hackensack customers. To permanently reduce the rate impact of the
reacquisition by Hackensack of the 355 acres, $4 million of the proceeds
was applied against the utility plant accounts resulting in a net increase
in utility rate base of $22 million. The remaining $7 million of the
proceeds are being applied as credits on customer bills to completely
offset the impact of the rate increase of approximately 3.1%, or $3.5
million, which became effective October 12, 1993, in recognition of the
increment to Hackensack's rate base. It is anticipated that the credits on
customer bills will be made for approximately two years. Due to regulatory
treatment, the effects of the intercompany transaction were not eliminated
in consolidation.
REAL ESTATE ACTIVITIES
The intercompany land transfer settlement discussed above had a
positive impact on Rivervale's revenues. Rivervale continues to receive
municipal and other governmental approvals for projects in New Jersey and
New York. Various approvals have been received pertaining to 198 acres of
property in several parcels in northern New Jersey and southern New York.
Rivervale is pursuing joint ventures, sales, or direct development
opportunities for selected properties in its portfolio. Applications are
pending for projects on another 137 acres.
Funding for Rivervale's real estate activities is anticipated to
be obtained from internally generated funds from the sales of properties,
rental income, revenues from golf course operations, consulting activities,
and borrowings and advances from United Water, as required. The timing and
<PAGE>
United Water Resources Inc.
magnitude of additional funding for development activities will depend upon
the attainment of necessary approvals and market conditions.
Rivervale currently projects spending $27 million over the next
five years for capital expenditures on its existing portfolio.
Expenditures in 1994 and 1995 are projected to be $4.8 million and $2.5
million, respectively. Funding for these expenditures is projected to be
available from internally generated cash.
RESULTS OF OPERATIONS
OVERVIEW
United Water's consolidated net income for 1993 of $20 million
increased 27% from $15.8 million in 1992. Net income per common share for
1993 was $1.03 versus 87 cents for the same period last year, despite a
6.9% rise in the average number of common shares outstanding. This
increase in consolidated net income is primarily attributable to the
settlement of litigation surrounding the land transfers as well as the
contribution from utility operations.
REVENUES
The increases (decreases) in revenues from the prior periods are
attributable to the following factors:
<TABLE>
<CAPTION>
OPERATING REVENUES 1993 VS. 1992 1992 VS. 1991
-------------- -----------------
<S> <C> <C> <C> <C>
(thousands of dollars)
- ---------------------------
Utilities:
Rate impact $ 1,952 1.2% $ 4,344 2.7%
Consumption 9,245 5.6% (7,437) (4.6%)
Real estate 23,204 14.1% 6,671 4.1%
Other operations 1,148 0.7% (459) (0.3%)
- --------------------------- ------- ---- ------- -----
$35,549 21.6% $ 3,119 1.9%
------- ---- ------- -----
</TABLE>
<PAGE>
United Water Resources Inc.
The rate impact of 1.2% in utility revenues in 1993 resulted from
a 5.7% Spring Valley rate increase in May 1993, a 3.1% Hackensack rate
increase in October 1993 and the recognition of approximately $1 million of
deferred revenue credits relating to Spring Valley's rate case.
The 5.6% consumption impact on utility revenues in 1993 is
attributable to the 6.8% and 4.6% increase in Hackensack's and Spring
Valley's consumption, respectively, due to an unusually warm and dry
summer. Pursuant to the PSC Revenue Reconciliation Clause, Spring Valley
deferred $1.4 million of revenues in 1993.
The $23.2 million or 14.1% increase in real estate revenues was
the result of a $26 million land transfer between Hackensack and Rivervale,
offset by reduced revenues of land sales to third parties.
Total revenues in 1992 were 1.9% above those in 1991, reflecting
the contribution of approximately $4.7 million from real estate sales and
$2 million from rental activities and reduced customer usage compared with
1991, when the utilities set new daily pumping records during a dry summer.
<PAGE>
United Water Resources Inc.
COSTS AND EXPENSES
The changes in operating expenses from the prior years were due
to the following:
<TABLE>
<CAPTION>
OPERATION AND MAINTENANCE EXPENSES 1993 VS. 1992 1992 VS. 1991
-------------- ----------------
<S> <C> <C> <C> <C>
(thousands of dollars)
- ------------------------------------
Operation $24,689 37.8% $ 2,043 3.2%
Maintenance 527 5.4% 755 8.3%
Operation and Maintenance 25,216 33.5% 2,798 3.9%
Depreciation 326 2.3% 801 6.1%
General taxes $ 1,163 4.0% $(1,332) (4.4%)
- ------------------------------------ ------- ---- ------- -----
</TABLE>
Operation and maintenance expenses increased $25.2 million or
33.5% from 1992. This increase is primarily due to expenses related to the
cost of the transferred real estate of $15.5 million, a $4.1 million
valuation reserve relating to Rivervale properties, and the recognition of
deferred expenses relating to the Spring Valley rate case of approximately
$850,000. Higher operational expenses due to greater system demands,
contracted labor costs, and higher salaries and wages also contributed to
this increase. The 3.9% increase in 1992 over 1991 was primarily
attributable to costs of property sold associated with real estate
activities.
Depreciation increased by 2.3% in 1993 and 6.1% in 1992. The
higher depreciation expense in both years was primarily due to additional
facilities placed in service and the application of higher utility
depreciation rates resulting from Hackensack's rate settlement, which was
effective in the second quarter of 1991, and the increase in Spring
Valley's composite rates from 2% to 2.2% in the second quarter of 1993.
General taxes increased $1.2 million, or 4%, over 1992, due
principally to higher revenue based taxes of 2.1% and an increase of 8.4%
in property related taxes. The decline in general taxes of $1.3 million,
or 4.4%, in 1992 from 1991 is mainly attributable to the 9.4% decrease in
revenue based taxes which was offset by a 13.7% increase in property
related taxes.
<PAGE>
United Water Resources Inc.
INTEREST AND OTHER
Consolidated interest expense decreased 1% in 1993 from 1992 and
2% from 1991, due to lower interest rates on short-term borrowings, the
reduction of long-term debt and an increase in short-term borrowings.
In 1992, the allowance for funds used during construction
decreased 32% from 1991 following the recognition of additional
expenditures related to utility plant being placed in service.
Other income in 1992 decreased 49% from 1991, due to a reduction
in interest rates, average temporary cash investments and funds held on
deposit.
INCOME TAXES
The effective income tax rates on income before preferred stock
dividends were 36% in 1993, 31.1% in 1992 and 31.3% in 1991. In 1993, the
provision for income taxes increased $4.5 million, or 56.2% over 1992, due
mainly to the effect of the land transfer, higher water sales, the Spring
Valley rate decision and the increase in the federal income tax rate. The
rate decision resulted in the recognition of deferred IRS audit adjustments
of $946,000 relating to the previously settled 1981 through 1988 IRS audit.
In 1992, the provision for income taxes decreased 1% from 1991 primarily as
the result of lower pre-tax earnings. An analysis of income taxes is
included in Note 10 to the financial statements.
EFFECTS OF INFLATION
Operating income from utility operations is normally not
materially affected by inflation because cost increases generally lead to
proportionate increases in revenues allowed through the regulatory process.
However, there is a lag in the recovery of higher expenses through the
regulatory process, and therefore, high inflation could have a detrimental
effect on the company until rate increases are received.
<PAGE>
United Water Resources Inc.
Conversely, lower inflation and lower interest rates tend to result in
reductions in the rates of return allowed by the utility commissions, as
has happened over the last several years.
<PAGE>
United Water Resources Inc.
ITEM 8. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND
------- ----------------------------------------------------
SUPPLEMENTARY DATA
-------------------
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Index to Financial Statements
(1) Financial Statements:
Report of Independent Accountants 29
Consolidated Balance Sheet at
December 31, 1993 and 1992 30
Statement of Consolidated Income for each of the
years ended December 31, 1993, 1992 and 1991 31
Statement of Consolidated Common Equity for each of
the years ended December 31, 1993, 1992 and 1991 31
Statement of Consolidated Cash Flows for each of the
years ended December 31, 1993, 1992 and 1991 32
Statement of Consolidated Capitalization at
December 31, 1993 and 1992 33
Notes to Consolidated Financial Statements 34
(2) Financial Statement Schedules:
For the three years ended December 31, 1993
II - Consolidated Amounts Receivable from Employees 64
V - Consolidated Property, Plant and Equipment 65
VI - Consolidated Accumulated Depreciation,
Depletion and Amortization of Property,
Plant and Equipment 68
VIII - Consolidated Valuation and Qualifying Accounts 70
IX - Consolidated Short Term Borrowings 71
X - Consolidated Supplementary Income Statement
Information 72
</TABLE>
All other schedules are omitted because they are not applicable, or the
required information is shown in the consolidated financial statements or
notes thereto. Financial statements of one 50%-owned company have been
omitted because the registrant's proportionate share of net income and
total assets of the company is less than 20% of the respective consolidated
amounts, and the investment in and the amount advanced to the company is
less than 20% of consolidated total assets.
<PAGE>
United Water Resources Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
United Water Resources
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of United Water Resources and its subsidiaries at December 31,
1993 and 1992, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1993, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Notes 8 and 10 to the consolidated financial
statements, the Company changed its method of accounting for postretirement
benefits other than pensions and income taxes, effective January 1, 1993.
PRICE WATERHOUSE
Hackensack, New Jersey
February 24, 1994
<PAGE>
CONSOLIDATED BALANCE SHEET
United Water Resources and Subsidiaries
<TABLE>
<CAPTION>
December 31,
(thousands of dollars) 1993 1992
- ----------------------------------------------------------------------- -------- --------
<S> <C> <C>
ASSETS
UTILITY PLANT, including $5,815 and $4,514 under construction $605,668 $569,364
LESS-accumulated depreciation 103,557 95,203
-------- --------
502,111 474,161
-------- --------
REAL ESTATE AND OTHER PROPERTIES, less accumulated depreciation of
$10,889 and $8,883 96,312 111,720
-------- --------
CURRENT ASSETS:
Cash and temporary cash investments 8,933 17,994
Construction funds 8,502 --
Accounts receivable, less allowance of $1,273 and $1,272 21,152 20,798
Unbilled revenues 9,392 8,719
Materials and supplies 2,422 2,542
Prepayments 8,213 6,456
-------- --------
58,614 56,509
-------- --------
DEFERRED CHARGES AND OTHER ASSETS:
Unamortized debt expense 15,276 15,395
Prepaid and deferred employee benefits 10,569 5,268
Recoverable income taxes 26,384 --
Other deferred charges and assets 31,260 28,606
-------- --------
83,489 49,269
-------- --------
$740,526 $691,659
======== ========
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock and retained earnings $202,110 $179,529
Preferred stock without mandatory redemption 9,000 9,000
Preferred stock with mandatory redemption 23,840 24,100
Long-term debt 276,753 294,169
-------- --------
511,703 506,798
-------- --------
CURRENT LIABILITIES:
Notes payable 15,500 19,000
Preferred stock and long-term debt due within one year 16,843 2,014
Accounts payable and other accruals 12,066 9,600
Accrued taxes 20,454 19,192
Accrued interest 6,590 7,095
Accrued customer benefits 6,771 11,191
-------- --------
78,224 68,092
-------- --------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes and investment tax credits 104,864 68,213
Customer advances for construction 9,319 11,352
Contributions in aid of construction 7,586 7,223
Other deferred credits and liabilities 28,830 29,981
-------- --------
150,599 116,769
-------- --------
$740,526 $691,659
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
STATEMENT OF CONSOLIDATED INCOME
United Water Resources and Subsidiaries
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
(thousands of dollars except per share data) 1993 1992 1991
- -------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
OPERATING REVENUES $200,418 $164,869 $161,750
-------- -------- --------
OPERATING EXPENSES:
Operation and maintenance 100,436 75,220 72,422
Depreciation 14,276 13,950 13,149
General taxes 30,346 29,183 30,515
-------- -------- --------
TOTAL OPERATING EXPENSES 145,058 118,353 116,086
-------- -------- --------
OPERATING INCOME 55,360 46,516 45,664
-------- -------- --------
INTEREST AND OTHER EXPENSES:
Interest expense, net of amount capitalized 22,023 22,186 22,597
Allowance for funds used during construction (617) (573) (845)
Preferred stock dividends of subsidiaries 2,338 2,088 1,351
Other income (942) (1,023) (1,993)
-------- -------- --------
TOTAL INTEREST AND OTHER EXPENSES 22,802 22,678 21,110
-------- -------- --------
INCOME BEFORE INCOME TAXES 32,558 23,838 24,554
-------- -------- --------
PROVISION FOR INCOME TAXES 12,580 8,054 8,112
-------- -------- --------
NET INCOME $ 19,978 $ 15,784 $ 16,442
======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING (thousands) 19,428 18,178 17,076
NET INCOME PER COMMON SHARE $ 1.03 $ .87 $ .96
- -----------------------------------------------------------------------------------
</TABLE>
STATEMENT OF CONSOLIDATED COMMON EQUITY
United Water Resources and Subsidiaries
<TABLE>
<CAPTION>
Common Stock
--------------------------------
NUMBER RETAINED
(thousands) OF SHARES AMOUNT EARNINGS
- --------------------------------------------------------- ---------- --------- ---------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1990 16,794 $ 90,967 $ 61,932
Dividend reinvestment and stock purchase plans 731 9,714 --
Repurchase of common stock (2) (19) --
Net income -- -- 16,442
Cash dividends paid on common stock, $.91 per share -- -- (15,518)
- --------------------------------------------------------- ------ -------- --------
BALANCE AT DECEMBER 31, 1991 17,523 100,662 62,856
Dividend reinvestment and stock purchase plans 1,275 17,286 --
Net income -- -- 15,784
Cash dividends paid on common stock, $.92 per share -- -- (16,760)
Preferred stock issuance expenses -- -- (299)
- --------------------------------------------------------- ------ -------- --------
BALANCE AT DECEMBER 31, 1992 18,798 117,948 61,581
Dividend reinvestment and stock purchase plans 1,418 20,508 --
Net income -- -- 19,978
Cash dividends paid on common stock, $.92 per share -- -- (17,905)
- --------------------------------------------------------- ------ -------- --------
BALANCE AT DECEMBER 31, 1993 20,216 $138,456 $ 63,654
- -------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
STATEMENT OF CONSOLIDATED CASH FLOWS
United Water Resources and Subsidiaries
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
(thousands of dollars) 1993 1992 1991
- ------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 19,978 $ 15,784 $ 16,442
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,476 14,765 13,717
Deferred income taxes and investment tax credits, net 36,651 6,065 (73)
Valuation reserve 4,111 -- --
Gain on land transfer (10,519) -- --
Allowance for funds used during construction (AFUDC) (617) (573) (845)
Changes in assets and liabilities:
Accounts receivable (354) 736 (5,155)
Unbilled revenues (673) 192 (870)
Prepayments (1,757) (1,197) 256
Prepaid and deferred employee benefits (5,301) (4,959) (309)
Recoverable income taxes (26,384) -- --
Accounts payable and other accruals 2,466 (730) (5,670)
Accrued taxes 1,262 (2,512) 3,824
Accrued interest (505) (17) 239
Accrued customer benefits (420) 129 140
Other, net (5,625) (1,704) 18,082
-------- -------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 27,789 25,979 39,778
-------- -------- --------
INVESTING ACTIVITIES:
Additions to utility plant (excludes AFUDC) (15,986) (14,066) (16,079)
Additions to real estate and other properties (6,948) (7,516) (50,640)
Investments in construction funds (8,502) -- 748
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES (31,436) (21,582) (65,971)
-------- -------- --------
FINANCING ACTIVITIES:
Change in notes payable (3,500) (1,250) (2,338)
Additional long-term debt 19,700 1,114 36,991
Reduction in preferred stock and long-term debt (22,547) (8,885) (13,853)
Issuance of common stock 20,508 17,286 9,714
Issuance of preferred stock -- 15,000 --
Repurchases of common stock -- -- (19)
Dividends on common stock (17,905) (16,760) (15,518)
Contributions and advances for construction (1,670) 372 (774)
-------- -------- --------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (5,414) 6,877 14,203
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS (9,061) 11,274 (11,990)
CASH AND TEMPORARY CASH INVESTMENTS AT BEGINNING OF YEAR 17,994 6,720 18,710
-------- -------- --------
CASH AND TEMPORARY CASH INVESTMENTS AT END OF YEAR $ 8,933 $ 17,994 $ 6,720
======== ======== ========
</TABLE>
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 21,328 $ 21,388 $ 21,790
Income taxes $ 2,915 $ 5,023 $ 6,215
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
STATEMENT OF CONSOLIDATED CAPITALIZATION
United Water Resources and Subsidiaries
<TABLE>
<CAPTION>
<S> <C> <C>
December 31,
(thousands of dollars) 1993 1992
- -------------------------------------------------------------------------- -------- --------
COMMON STOCK AND RETAINED EARNINGS:
Common stock, no par value--authorized 50,000,000 shares $155,085 $134,598
Less treasury shares, at cost (16,629) (16,650)
Retained earnings 63,654 61,581
-------- --------
TOTAL COMMON STOCK AND RETAINED EARNINGS 202,110 179,529
-------- --------
CUMULATIVE PREFERRED STOCK:
Hackensack Water Company, authorized 2,000,000 shares,
stated value--$100 per share, issuable in series:
4-1/2% Series, authorized and outstanding 30,000 shares 3,000 3,000
4.55% Series, authorized and outstanding 60,000 shares 6,000 6,000
-------- --------
TOTAL PREFERRED STOCK WITHOUT MANDATORY REDEMPTION 9,000 9,000
-------- --------
5% Series, authorized and currently outstanding 9,000 shares 840 900
7-3/8% Series, authorized and currently outstanding 150,000 shares 15,000 15,000
Spring Valley Water Company Incorporated, authorized 100,000 shares,
stated value--$100 per share, issuable in series:
$8.75 Series, authorized and currently outstanding 32,000 shares 3,000 3,200
$9.84 Series, authorized and currently outstanding 50,000 shares 5,000 5,000
-------- --------
TOTAL PREFERRED STOCK WITH MANDATORY REDEMPTION 23,840 24,100
-------- --------
TOTAL CUMULATIVE PREFERRED STOCK 32,840 33,100
-------- --------
LONG-TERM DEBT:
Hackensack Water Company
First mortgage bonds:
5-5/8% Series, due 1997 5,000 5,000
9-3/4% Series, due 2006 -- 20,000
8% Series, 1980 EDA Bonds, due 2010 20,000 20,000
7 to 8-3/4% Series, 1987 EDA Bonds, due 2017 50,000 50,000
6 to 7% Promissory notes, 1986 EDA Bonds, due 1997-2019 100,000 100,000
Spring Valley Water Company Incorporated
First mortgage bonds:
4.7% Series E, due 1994 -- 5,000
5-5/8% Series F, due 1997 4,000 4,000
9-3/8% Series G, due 2001, annual sinking fund of $300 2,100 2,400
8.30% Promissory notes, due 1998, annual payments of $550 2,750 3,300
7.70 to 8% Promissory notes, 1988 EFC Bonds, due 2018 27,000 27,000
5.65% Promissory notes, 1993 EFC Bonds, due 2023 12,000 --
United Water Resources
9.38% Promissory notes due 2019 25,000 25,000
Floating rate LIBOR-based term loan, due 1994 3,167 4,500
Laboratory Resources
Floating prime rate term loan, due 1997 260 380
Rivervale Realty Company
9.75 to 10.00%, mortgage notes due 2001-2006 17,776 27,589
Floating rate LIBOR-based term loan, due 2000 7,700 --
-------- --------
TOTAL LONG-TERM DEBT 276,753 294,169
-------- --------
TOTAL CAPITALIZATION $511,703 $506,798
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
United Water Resources Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The consolidated financial statements include the accounts of
United Water Resources and its wholly owned subsidiaries (United Water).
United Water's principal utility subsidiaries, Hackensack Water
Company (Hackensack) and Spring Valley Water Company Incorporated (Spring
Valley), are subject to regulation by the New Jersey Board of Regulatory
Commissioners (BRC) and the New York Public Service Commission (PSC),
respectively. Their accounting policies comply with the applicable uniform
systems of accounts prescribed by these regulatory commissions and conform
to generally accepted accounting principles as applied to rate regulated
public utilities, which allows, among other things, the recognition of
intercompany profit in situations where it is probable such profit will be
recovered in the ratemaking process.
UTILITY PLANT: Utility plant is recorded at cost, which includes
direct and indirect labor and material costs associated with construction
activities, related operating overheads and an allowance for funds used
during construction (AFUDC). AFUDC is not current cash income; it
represents the cost of borrowed funds used for construction purposes and a
reasonable rate on other funds used. The amount of AFUDC related to equity
funds was: 1993-$359,000; 1992-$275,000; 1991-$399,000.
Utility property retired or otherwise disposed of in the normal
course of business is charged to accumulated depreciation, with salvage
(net of removal cost) credited thereto, and no gain or loss is recognized.
The costs of property repairs, replacements and renewals of minor property
items are included in maintenance expense.
Utility plant includes Hackensack's 50% interest in the Wanaque
South Water Supply Project, which, at original cost, totaled $51 million at
December 31, 1993 and 1992. The net book value
<PAGE>
United Water Resources Inc.
at December 31, 1993 was $46 million and $46.8 million at December 31,
1992. Hackensack's share of project operating expenses is included in
United Water's consolidated operation and maintenance expenses.
REAL ESTATE: Real estate properties are carried at the lower of
cost, which includes original purchase price and direct development costs,
or net realizable value. Real estate taxes and interest costs are
capitalized during the development period. The amount of interest
capitalized in 1993 was $2.6 million and $3 million in 1992 and 1991. Real
estate operating revenues include rental income, proceeds from the
disposition of real estate properties and revenues from golf course
operations.
Proceeds and costs related to pending real estate transactions
which do not qualify as completed sales for accounting purposes have been
recorded under the deposit method. At December 31, 1993 and 1992, pending
proceeds of approximately $17 million have been recorded as deferred
credits.
UNAMORTIZED DEBT EXPENSE: Debt premium, debt discount and debt
expense are amortized to income over the lives of the applicable issues.
PREPAID AND DEFERRED EMPLOYEE BENEFITS: As of December 31, 1993,
the prepaid employee benefits include $5.9 million of prepaid pension costs
and $4.6 million of prepaid and deferred postretirement health care
benefits. Most of the postretirement costs relate to employees and
retirees of Hackensack and Spring Valley. Hackensack and Spring Valley
have been advised by the BRC and PSC, respectively, that they are allowed
to defer accrued postretirement health care costs in excess of amounts
included in rates. At December 31, 1993, $3.4 million was deferred for
recovery in future rates.
REVENUES: Hackensack records on its books the estimated amount
of accrued but unbilled revenues. Spring Valley does not accrue unbilled
revenues. Spring Valley currently has $3.8 million of unamortized revenue
deferrals which are available to offset other incremental deferred costs or
be refunded to customers over a three-year period. Pursuant to PSC orders,
Spring Valley refunded $2.3 million, $1.4 million, and $1.9 million of
these revenues to customers in 1993, 1992, and 1991, respectively. Spring
Valley also deferred revenues of $1.4 million, $392,000, and $1.9 million
in 1993, 1992, and 1991,
<PAGE>
United Water Resources Inc.
respectively. These deferrals were related to revenues in excess of
amounts allowed in rates, reductions in federal income taxes and reductions
in pension expenses.
DEPRECIATION: Depreciation of plant and real estate properties
is computed on the straight-line method based on the estimated service
lives of the properties. Utility plant depreciation rates are prescribed
by the regulatory commissions. The provisions for depreciation in 1993,
1992 and 1991 were equivalent to 2.2%, 2.2%, and 2.1%, respectively, of
average depreciable utility plant in service. For federal income tax
purposes, depreciation is computed using accelerated methods and, in
general, with shorter depreciable lives as permitted under the Internal
Revenue Code.
INCOME TAXES: United Water files a consolidated federal income
tax return. Effective January 1, 1993, the company adopted Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income
Taxes." SFAS No. 109 requires the company to adjust its recorded deferred
income tax balances to reflect an estimate of its future tax liability
based on temporary differences between the financial and tax basis of
assets and liabilities. This adjustment includes deferred taxes for
utility temporary differences not previously recognized. It also includes
the effect on the liability of changes in tax laws and rates. The adoption
of SFAS No. 109 resulted in the recording of a deferred tax liability and
recoverable income taxes of $20.2 million at January 1, 1993, which is
reflected on the balance sheet, with no material effect on net income. The
recoverable income taxes represent the probable future increase in revenues
that will be received through future ratemaking proceedings for the
recovery of these deferred taxes.
For 1992 and 1991, the provision for income taxes represents the
estimated amounts payable for the period and net deferred taxes relating to
differences between income for accounting and tax purposes for certain
items as discussed in Note 10. Deferred taxes were provided for timing
differences between financial and income tax reporting, except where not
allowed by regulation.
<PAGE>
United Water Resources Inc.
Investment tax credits arising from property additions are
deferred and amortized over the estimated service lives of the related
properties.
STATEMENT OF CASH FLOWS: United Water considers all highly
liquid investments with original maturities of three months or less to be
temporary cash investments.
<PAGE>
United Water Resources Inc.
NOTE 2 - SHORT-TERM BORROWING AGREEMENTS:
United Water has credit lines with several banks which allow for
aggregate short-term borrowings of up to $73 million. Borrowings under
these credit lines bear interest at a rate between the London Interbank
Offered Rate (LIBOR) and the prime lending rate. There was $15.5 million
outstanding on these lines at December 31, 1993, at interest rates ranging
from 3.5% to 4.4%.
United Water maintains balances and pays commitment fees under
arrangements with certain of these banks to compensate them for services
and to support these lines of credit. There are no legal restrictions
placed on the withdrawal or other use of these bank balances.
<PAGE>
United Water Resources Inc.
NOTE 3 - LONG-TERM DEBT:
Long-term debt repayable over the next five years is: 1994-$19.8
million; 1995-$1.6 million; $1996-$1.7 million; 1997-$12.6 million and
1998-$3.6 million. Substantially all of the utility plant is subject to
first mortgage liens.
In July 1993, Hackensack redeemed $10 million of its $20 million,
9-3/4% Series, First Mortgage Bonds, due 2006. Hackensack redeemed the
remaining $10 million in January 1994. In 1993, Hackensack filed a
petition requesting BRC approval to issue and sell $40 million of tax-
exempt refunding bonds. Hackensack received BRC approval in February 1994
and plans to use the proceeds of the issue to redeem $20 million 8-3/4%
bonds and $20 million 8% bonds in 1994. On March 22, 1994, Hackensack
issued $20 million 5.80% 1994 Series A term bonds and $20 million 5.90%
1994 Series B term bonds, due March 1, 2024.
In November 1993, Rivervale reduced its existing $9.5 million
Atrium building mortgage by $1.5 million and refinanced the remaining $8
million with a floating rate term loan due 2000. The interest rate will be
established every 30 days and is based on LIBOR plus a premium (4.25% at
December 31, 1993).
In December 1993, the New York State Environmental Facilities
Corporation (EFC) issued $12 million of 5.65%, tax-exempt, Water Facilities
Revenue Bonds (1993 Bonds) due 2023 with optional redemption provisions on
behalf of Spring Valley to finance construction programs through 1995. The
bonds are insured as to the payment of interest and principal by the AMBAC
Indemnity Corporation.
In February 1992, Laboratory Resources obtained a $600,000 loan
to finance leasehold improvements at its new facility. The loan bears
interest at a floating prime (6% at December 31, 1993) with a maturity date
of March 1997. Principal is payable in monthly installments.
<PAGE>
United Water Resources Inc.
In May 1991, United Water obtained a $5 million loan to finance
an investment in an unaffiliated New Jersey water company. The loan bears
interest at floating LIBOR (4.8125% at December 31, 1993) with a maturity
date of October 1994. Management expects to refinance this loan on a long-
term basis.
<PAGE>
United Water Resources Inc.
NOTE 4 - CONSTRUCTION EXPENDITURES:
The expenditures for the utilities' construction programs over
the next five years are expected to total $89 million. Construction
expenditures for 1994 and 1995 are estimated to be $16.4 million and $18.1
million, respectively. Rivervale currently projects spending $27 million
over the next five years for capital expenditures on its current portfolio.
Expenditures in 1994 and 1995 are projected to be $4.8 million and $2.5
million, respectively.
<PAGE>
United Water Resources Inc.
NOTE 5 - PREFERRED STOCK:
Cumulative preferred stock of utility subsidiaries with mandatory
redemption is subject to sinking fund requirements. These mandatory
requirements total $260,000 in each of the years 1994 through 1997, and
total $573,000 in 1998. In addition, optional sinking fund provisions can
be exercised and redemptions made at specific prices for all preferred
stock issues. Redemptions require payment of accrued and unpaid dividends
to the date fixed for redemption.
In March 1992, Hackensack issued $15 million of 7-3/8% cumulative
preferred stock, with a $2.1 million annual sinking fund requirement
beginning in 2001, for redemption of first mortgage bonds and to provide
funds for its ongoing capital programs. Optional redemption of this new
series begins in 1997.
Cumulative preferred stock has been redeemed as follows:
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
- ------------------------ ----- ----- ------
<S> <C> <C> <C>
5% Series $ 60 $ 60 $ 60
10-3/4% Series -- 620 1,340
$8.75 Series 200 200 200
- ------------------------ ----- ----- ------
$ 260 $ 880 $1,600
----- ----- ------
</TABLE>
<PAGE>
United Water Resources Inc.
NOTE 6 - INCENTIVE STOCK PLANS:
Under the Management Incentive Plan, the following options have
been granted to key employees:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
OPTIONS PER OPTION
---------- ----------------
<S> <C> <C>
Outstanding at
December 31, 1990 263,081 12.27 to 17.00
Granted 183,250 11.375
Exercised (6,408) 12.27
Cancelled or expired (89,678) 12.27 to 16.25
- -------------------------- ------- ----------------
Outstanding at
December 31, 1991 350,245 11.375 to 17.00
Granted 196,710 16.375
Exercised (72,867) 11.375 to 12.27
Cancelled or expired (34,576) 11.375 to 17.00
- -------------------------- ------- ----------------
Outstanding at
December 31, 1992 439,512 11.375 to 17.00
Granted 114,960 14.50 to 15.50
Exercised (18,654) 11.375 to 12.27
Cancelled or expired (1,255) 17.00
- -------------------------- ------- ----------------
Outstanding at
December 31, 1993 534,563 11.375 to 17.00
- -------------------------- ------- ----------------
</TABLE>
These options are currently exercisable and represent the only
stock options outstanding at December 31, 1993. A total of 1,140,625
shares are reserved for issuance under the plan.
In May 1993, the shareholders approved the creation of dividend
units to be issued in conjunction with stock options granted under the
plan. One dividend unit may be attached to an unexercised option to
purchase a share of common stock. This will entitle the option holder to
accrue the aggregate dividends actually payable on one share of common
stock while the dividend unit is in effect. The dividend units are
designed to create an incentive for option holders tied to the dividend
payments on the common stock. United Water recorded $47,000 in 1993 of
compensation expense with respect to this plan.
<PAGE>
United Water Resources Inc.
In May 1988, the shareholders approved a Restricted Stock Plan
for key employees. United Water issued 7,500 shares in 1993; 16,353 shares
in 1992; and 12,661 shares in 1991 in connection with the plan and such
shares are earned by the recipients over a 5-year period. United Water
recorded $301,000 in 1993, $241,000 in 1992 and $265,000 in 1991 of
compensation expense with respect to this plan.
<PAGE>
United Water Resources Inc.
NOTE 7 - SHAREHOLDER RIGHTS PLAN:
In July 1989, the board of directors of United Water approved a
Shareholder Rights Plan designed to protect shareholders against unfair and
unequal treatment in the event of a proposed takeover. It also guards
against partial tender offers and other hostile tactics to gain control of
United Water without paying all shareholders a fair price. Under the plan,
each share of United Water's common stock also represents one Series A
Participating Preferred Stock Purchase Right (Right) until the Rights
become exercisable. The Rights attach to all of United Water's common
stock outstanding as of August 1, 1989, or subsequently issued, and expire
on August 1, 1999.
The Rights would be exercisable only if a person or group
acquired 20% or more of United Water's common stock or announced a tender
offer that would lead to ownership by a person or group of 20% or more of
the common stock.
In certain cases where an acquirer purchased more than 20% of
United Water's common stock, the Rights would allow shareholders (other
than the acquirer) to purchase shares of United Water's common stock at 50%
of market price, diminishing the value of the acquirer's shares and
diluting the acquirer's equity position in United Water. If United Water
were acquired in a merger or other business combination transaction, under
certain circumstances the Rights could be used to purchase shares in the
acquirer at 50% of the market price. Subject to certain conditions, if a
person or group acquired 20% or more of United Water's common stock, United
Water's board of directors may exchange each Right held by shareholders
(other than the acquirer) for one share of common stock or 1/100 of a share
of Series A Participating Preferred Stock. If an acquirer successfully
purchased 80% of United Water's common stock after tendering for all of the
stock, the Rights would not operate. If holders of a majority of the
shares of United Water's common stock approved a proposed acquisition under
specified circumstances, the Rights would be redeemed at one cent each.
They could also be redeemed by United Water's board of directors for one
cent each at any time prior to the acquisition of 20% of the common stock
by an acquirer.
<PAGE>
United Water Resources Inc.
On September 15, 1993, United Water's Shareholder Rights Plan was
amended in connection with United Water's execution of a merger agreement
with GWC Corporation. The amendment generally excepts the majority
stockholder of GWC Corporation and its affiliates and associates from
triggering the Rights through the execution of the merger agreement, the
performance of the transactions contemplated therein or otherwise.
<PAGE>
United Water Resources Inc.
NOTE 8 - EMPLOYEE BENEFITS:
POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS:
In January 1993, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions." This new
standard requires that employers recognize these benefits on an accrual
basis rather than on a cash basis.
The company sponsors one non-contributory defined benefit
postretirement plan that covers hospitalization, major medical benefits,
and life insurance benefits for salaried and non-salaried employees. The
company is funding its postretirement health care benefits through
contributions to Voluntary Employees' Beneficiary Association (VEBA)
Trusts.
The following sets forth the plans' funded status reconciled with
the amounts recognized in the company's balance sheet as of December 31,
1993:
<TABLE>
<CAPTION>
(thousands of dollars)
<S> <C>
Accumulated postretirement benefit obligation (APBO)
Retirees $(14,242)
Fully eligible actives (8,482)
Other actives (12,307)
--------
Total (35,031)
Plan assets at fair value 4,724
--------
Funded status (30,307)
Unrecognized transition obligation 28,823
Unrecognized loss 2,585
--------
Prepaid postretirement benefit cost $ 1,101
========
</TABLE>
<PAGE>
United Water Resources Inc.
Net periodic postretirement benefit cost for the year ended
December 31, 1993 includes the following components:
<TABLE>
<CAPTION>
(thousands of dollars)
<S> <C>
Service cost $ 761
Interest cost 2,455
Actual return on plan assets (106)
Amortization of transition obligation 1,517
Net amortization and deferral (65)
------
Net periodic postretirement benefit cost $4,562
======
</TABLE>
The assumed discount rate is 7.75% and the expected rate of
return on plan assets is 8.25%, except for Hackensack's non-bargaining
plan, which has an expected after-tax yield on assets of 5%. The
associated health care cost trend rate used in measuring the postretirement
benefit obligation at December 31, 1993 was 14.2%, gradually declining to
5.5% in 2002 and thereafter. Increasing the assumed health care cost trend
rate by one percentage point in each year will increase the APBO as of
December 31, 1993 by $3.9 million to a total of $38.9 million and the
aggregate service and interest cost components of net periodic
postretirement benefit cost for 1993 by $896,000 to a total of $5.5
million. Hackensack and Spring Valley have been advised by the BRC and
PSC, respectively, that they are allowed to defer postretirement health
care costs in excess of those currently included in rates. At December 31,
1993, $3.4 million was deferred for recovery in future rates. Most of the
company's postretirement costs relate to employees and retirees of
Hackensack and Spring Valley. Therefore, adoption of SFAS No. 106 has not
had a material effect on consolidated net income.
DEFINED BENEFIT PENSION PLAN:
Most employees are covered by trusteed non-contributory defined
benefit pension plans under which benefits are based upon years of service
and the employee's compensation during the last five
<PAGE>
United Water Resources Inc.
years of employment. United Water's policy is to fund amounts accrued for
pension expense to the extent deductible for federal income tax purposes.
It is expected that no funding will be made for 1993.
Net periodic pension cost includes the following components at
year end:
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
-------- -------- ------
<S> <C> <C> <C>
Current year service cost $ 1,941 $ 2,166 $ 2,411
Interest cost 4,564 4,318 4,280
Actual return on plan assets (5,043) (1,865) (20,279)
Net amortization and deferral (3,535) (6,775) 14,033
------- ------- --------
Net periodic pension
expense/(income) $(2,073) $(2,156) $ 445
======== ======== =========
</TABLE>
The status of the funded plans at December 31, 1993 and 1992 was
as follows:
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992
-------- --------
Accumulated benefit obligation:
<S> <C> <C>
Vested $ 44,422 $ 38,379
Nonvested 3,493 3,579
-------- --------
$ 47,915 $ 41,958
======== ========
Fair value of plan assets (primarily
stocks and bonds, including $8.1 million
and $8.4 million, respectively, in
common stock of United Water Resources) $ 86,568 $ 83,969
Projected benefit obligation (PBO) 61,008 56,725
-------- --------
Plan assets in excess of PBO 25,560 27,244
Unrecognized prior service cost 639 575
Unrecognized net gain (13,593) (17,388)
Remaining unrecognized net gain
from applying the standard in 1987
(amortized over 18 years) (6,704) (7,330)
-------- --------
Prepaid pension cost recognized
in the Consolidated Balance
Sheet $ 5,902 $ 3,101
======== ========
</TABLE>
<PAGE>
United Water Resources Inc.
Significant actuarial assumptions used in the foregoing
calculations were as follows:
<TABLE>
<CAPTION>
1993 1992 1991
------ -------- ------
<S> <C> <C> <C>
Assumed discount rate 7.5% 7.75% 7.5%
Assumed range of compensation increase 4.5-5% 4.5-7.5% 5-7.5%
Expected long-term rate of return on
plan assets 8.75% 8.75% 8.75%
</TABLE>
Certain categories of employees are covered by non-funded
supplemental plans. The projected benefit obligations of these plans at
December 31, 1993, totaled $5.2 million. The unfunded accumulated benefit
obligation of $4.9 million has been recorded in other deferred credits and
liabilities and an intangible pension asset of $1.5 million recorded in
other deferred charges and assets at December 31, 1993.
United Water made contributions of $552,000, $562,000 and
$516,000 in 1993, 1992 and 1991, respectively, to a defined contribution
savings plan.
<PAGE>
United Water Resources Inc.
NOTE 9 - RATE MATTERS:
SPRING VALLEY:
In 1990 and 1989, Spring Valley deferred revenues totaling
$505,000 and $1.2 million, respectively, related to reductions in pension
expense and federal income tax rates pursuant to a PSC order. As a result
of the September 1990 rate application settlement with the PSC, Spring
Valley began to refund these revenues to customers. In February 1993,
Spring Valley implemented a September 1992 PSC decision which revised its
tariff design and discontinued the application of federal income tax
revenue credits on customer bills. Spring Valley is using unamortized
revenue deferrals to recover the cost of a customer conservation program
which began in the second quarter of 1993 and is anticipated to conclude in
1995.
In July 1992, Spring Valley applied to the PSC for permission to
increase its annual revenues by $5 million, or 14.4%, to offset the effects
of continued investment in plant facilities and increases in operating
expenses. On May 12, 1993, the PSC rendered its decision. The PSC Opinion
No. 93-9 allowed Spring Valley an overall rate of return of 8.75% and a
return on equity of 10.5%. The opinion provided for an increase in annual
revenues of approximately $1.9 million, or 5.7%, which became effective on
May 30, 1993. The PSC also allowed Spring Valley to recover approximately
$850,000 of previously deferred expenses and required it to refund certain
revenue credits of approximately $1 million immediately. This action,
which resulted in a one-time increase in revenues and various expenses in
the second quarter of 1993, did not have a material effect on net income.
The PSC's decision also permitted Spring Valley to submit a second stage
filing after February 1, 1994 to recover increases in property taxes,
salaries and wages, and medical benefits that were not provided for in
their previous determination. In addition, in its second stage filing,
Spring Valley will seek rate recognition of its other postretirement
benefits. In February 1994, Spring Valley filed a request to increase
revenues by
<PAGE>
United Water Resources Inc.
approximately $1.6 million, or 4.4%. Spring Valley anticipates a PSC
decision on its request in April 1994.
The PSC's May 1993 decision also directed Spring Valley to
institute a Revenue Reconciliation Clause (RRC), which requires Spring
Valley to reconcile billed revenues with the pro forma revenues that were
used to set rates. Any variances outside a 1% range are accrued or
deferred for subsequent recovery from or refund to customers. As a result
of the hot weather experienced during the summer of 1993, the RRC resulted
in the deferral of $1.4 million, which will be used to recover certain
deferred costs. The remaining balance will be refunded to Spring Valley
customers along with previous RRC credit balances over a three-year period
beginning in July 1994.
In 1990, the PSC modified its earlier decision regarding the 1985
transfer of 23 acres of land from Spring Valley to Rivervale. They ordered
Spring Valley to record a deferred credit that reduced rate base by $1.9
million. In 1991, Spring Valley filed an appeal with the New York State
Supreme Court-Appellate Division. In February 1992, a decision was rendered
on the appeal affirming the PSC order. The effect of that decision on
United Water has been recognized by an after-tax charge against income of
$809,000 in 1991. Spring Valley has submitted a proposal to the PSC to
make a one-time customer refund through bill credits of a portion of the
deferred credit. Spring Valley anticipates a PSC decision on its request
in April 1994.
HACKENSACK WATER:
Based upon decisions rendered by the New Jersey Watershed
Property Review Board on July 6, 1993, and the BRC on August 5, 1993,
several lawsuits were settled between Hackensack and two environmental
groups related to the land transfers that occurred in 1984 and 1990.
The settlement upheld the 1990 transfer from Hackensack to
Rivervale of approximately 290 acres of land that are unconditionally and
permanently deed restricted to golf course and country club
<PAGE>
United Water Resources Inc.
uses. The settlement also required Hackensack to reacquire 355 acres of
land which were transferred to Rivervale in 1984. This acreage was added
to Hackensack's reservoir protective holdings and rate base.
The transfer price of the acreage being returned to Hackensack's
plant accounts was valued at $26 million, reflecting development approvals
that occurred during the nine years that the land was held by Rivervale.
Approximately $11 million (which includes interest) in proceeds from the
1990 golf course transfer to Rivervale was deferred for refund to
Hackensack customers. To permanently reduce the rate impact of the
reacquisition by Hackensack of the 355 acres, $4 million of the proceeds
was applied against the utility plant accounts, resulting in a net increase
in utility rate base of $22 million. The remaining $7 million of the
proceeds will be applied as credits on customer bills to completely offset
the impact of the rate increase of approximately 3.1%, or $3.5 million,
which became effective October 12, 1993, in recognition of the increment to
Hackensack's rate base. It is anticipated that the credits on customer
bills will be made for approximately two years. Due to regulatory
treatment, the effects of the intercompany transaction were not eliminated
in consolidation.
<PAGE>
United Water Resources Inc.
NOTE 10 - INCOME TAXES:
NEW ACCOUNTING STANDARD:
In January 1993, the company implemented SFAS No. 109,
"Accounting for Income Taxes." SFAS No. 109 requires that United Water
adjust its recorded deferred income tax balances to reflect an estimate of
its future tax liability based on temporary differences between the
financial and tax basis of assets and liabilities. This adjustment
includes deferred taxes for utility temporary differences not previously
recognized. It also includes the effect on the liability of changes in tax
laws and rates.
The tax effect of this requirement will be considered in the
ratemaking process, resulting in the recognition of recoverable income
taxes. The adoption of SFAS No. 109 resulted in the recording of a
deferred tax liability and recoverable income taxes of $20.2 million at
January 1, 1993, which is reflected on the balance sheet, with no material
effect on net income. The recoverable income taxes represent the probable
future increase in revenues that will be received through future ratemaking
proceedings for the recovery of these deferred taxes.
The components of the total recoverable income taxes at December
31, 1993 are as follows:
<TABLE>
<CAPTION>
(thousands of dollars)
<S> <C>
Previously flowed through items
including AFUDC $39,180
Effect of statutory rate changes (6,849)
Deferred investment tax credit (5,947)
-------
Recoverable income taxes $26,384
=======
</TABLE>
<PAGE>
United Water Resources Inc.
Deferred tax liabilities (assets) and deferred investment tax credits are
comprised of the following at December 31, 1993:
<TABLE>
<CAPTION>
(thousands of dollars)
<S> <C>
Depreciable assets including AFUDC $ 70,059
Deferred real estate transactions 13,420
Capitalized real estate costs 4,113
Other liabilities 18,559
--------
Gross deferred tax liabilities 106,151
--------
Contributions and advances for
construction (4,248)
Alternative minimum tax credit
carry forwards (6,779)
Other assets (7,148)
--------
Gross deferred tax assets (18,175)
--------
Deferred investment tax credits 16,888
--------
Total deferred tax liability
and investment tax credits $104,864
========
</TABLE>
INCOME TAX PROVISION:
Federal income tax returns have been settled through 1988. An
appeal pertaining to a single issue from 1982 and 1985 was settled in
August 1993 without a material effect on net income. Federal income tax
returns for 1989, 1990 and 1991 are currently under examination by the
Internal Revenue Service. Management believes that the outcome of this
examination will not have a material effect upon the financial position of
United Water.
A reconciliation of income tax expense at the statutory federal
income tax rate to the actual income tax expense for the years ended
December 31, is as follows:
<PAGE>
United Water Resources Inc.
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
- ---------------------- --------- -------- --------
<S> <C> <C> <C>
Statutory tax rate 35% 34% 34%
Taxes at statutory rates on pretax
income before preferred stock
dividends of subsidiary $12,214 $8,815 $8,808
Deferred investment tax credit (298) (428) (419)
Other 664 (333) (277)
------- ------ ------
Provision for income taxes $12,580 $8,054 $8,112
======= ====== ======
</TABLE>
Income tax expense for the three years ended December 31 consisted of the
following:
<TABLE>
<CAPTION>
(thousands of dollars) 1993 1992 1991
- ---------------------- --------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ 1,562 $2,000 $ 8,312
State 751 (11) 9
------- ------ -------
$ 2,313 $1,989 $ 8,321
------- ------ -------
Deferred (prepaid):
Accelerated depreciation $ 5,144 $4,627 $ 4,698
Investment tax credits (298) (428) (419)
Contributions and advances for
construction 509 (375) 70
Real estate transactions 2,290 (564) (1,150)
Capitalized real estate costs 1,323 1,587 1,341
State taxes net of federal benefit (258) 144 179
Prepaid employee benefits 1,772 1,682 105
Alternative minimum tax (2,184) (781) (1,800)
Other 1,969 173 (3,233)
------- ------ -------
$10,267 $6,065 $ (209)
------- ------ -------
Provision for income taxes $12,580 $8,054 $ 8,112
======= ====== =======
</TABLE>
<PAGE>
United Water Resources Inc.
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair values of United Water's financial instruments
at December 31, 1993 and 1992, are as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
(thousands of dollars) AMOUNT VALUE
- ---------------------- -------- -----
<S> <C> <C>
1993
----
Notes receivable $ 5,000 $ 5,000
Long-term debt 276,753 304,017
Preferred stock with mandatory
redemption $ 23,840 $ 27,112
-------- --------
1992
----
Notes receivable $ 5,000 $ 5,000
Long-term debt 294,169 313,046
Preferred stock with mandatory
redemption $ 24,100 $ 25,095
-------- --------
</TABLE>
The fair values of financial instruments were determined by
obtaining a market valuation of each issue, taking into account current
interest rates at December 31, 1993 and 1992, and redemption premiums and
dates, where applicable.
The carrying amount of cash and short-term investments approximates
the fair value, due to the short maturity of those instruments.
<PAGE>
United Water Resources Inc.
NOTE 12 - LEASES:
Rivervale Realty Company owns several office buildings with a net
book value totaling $45.9 million (net of accumulated depreciation of $5.3
million) which it leases to tenants under various operating leases. The
following is a schedule, by year, of minimum future rentals on non-
cancelable operating leases as of December 31, 1993:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31: (thousands of dollars)
- -------------------------------------------------
<S> <C>
1994 $ 5,153
1995 5,018
1996 5,606
1997 5,640
1998 5,210
Thereafter 7,523
-------
Total minimum future rentals $34,150
=======
</TABLE>
<PAGE>
United Water Resources Inc.
QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(thousands except per share data) QUARTER
- --------------------------------- ----------------------------------
FIRST SECOND THIRD FOURTH
------- ------- ------- -------
<S> <C> <C> <C> <C>
1993
Operating revenues $35,895 $43,341 $78,225 $42,957
Operating income 6,930 12,567 24,791 11,072
Net income 706 3,924 11,206 4,142
Net income per common share $ .04 $ .20 $ .57 $ .21
------------------------------ ------- ------- ------- -------
1992
Operating revenues $36,636 $42,472 $44,703 $41,058
Operating income 7,704 12,166 15,295 11,351
Net income 1,525 4,119 6,156 3,984
Net income per common share $ .09 $ .23 $ .34 $ .21
------------------------------ ------- ------- ------- -------
1991
Operating revenues $32,434 $41,447 $48,616 $39,253
Operating income 5,787 11,537 17,690 10,650
Net income 858 4,377 8,129 3,078
Net income per common share $ .05 $ .26 $ .47 $ .18
------------------------------ ------- ------- ------- -------
</TABLE>
<PAGE>
United Water Resources Inc.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
------- -----------------------------------------------------------------
AND FINANCIAL DISCLOSURE
--------------------------
There were no changes or disagreements with accountants on
accounting and financial disclosure in 1993.
<PAGE>
United Water Resources Inc.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------- --------------------------------------------------------
ITEM 11. EXECUTIVE COMPENSATION
-------- -----------------------
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
-------- ---------------------------------------------------------
MANAGEMENT
----------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------- --------------------------------------------------
The information called for by Items 10 (including information
relating to delinquent filers under Section 16 of the Securities Exchange
Act of 1934), 11, 12 and 13 is omitted because the registrant will file
with the Securities and Exchange Commission, not later than 120 days after
the close of the year covered by this Form 10-K, a definitive proxy
statement pursuant to Regulation 14A involving the election of directors.
In determining which persons may be affiliates of the registrant
for the purpose of disclosing on the cover page of this Annual Report the
market value of voting shares held by non-affiliates, the registrant has
treated only the members of its Board of Directors as affiliates and has
excluded from the calculation all shares beneficially owned by them. No
determination has been made that any director or person connected with a
director is an affiliate or that any other person is not an affiliate. The
registrant specifically disclaims any intent to characterize any person as
being or not being an affiliate.
<PAGE>
United Water Resources Inc.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
-------- -------------------------------------------------------------
FORM 8-K
---------
The following documents are filed as part of this report:
(a) Financial Statements and Financial Statement Schedules
(see Item 8)
(b) Exhibits
4(a) Restated Certificate of Incorporation (Articles of
Incorporation) of United Water Resources Inc., dated July
14, 1987 (Filed as Exhibit 4(b) to Registration Statement
No. 33-20067.)
4(b) Certificate of Correction to Restated Certificate of
Incorporation of United Water Resources Inc., dated August
13, 1987 (Filed as Exhibit 4(c) to Registration Statement
No. 33-20067).
4(c) By-laws of United Water Resources (Filed as Exhibit 4(d) to
Registration Statement No. 33-41693).
4(d) Specimen of United Water Resources Common Stock (Filed as
Exhibit 4(d) to Registration Statement No. 2-90540).
4(e) United Water Resources Inc. and First Interstate Bank Ltd.,
Rights Agent, Rights Agreement, dated as of July 12, 1989
(Filed as Exhibit 4(c) to Registration Statement No. 33-
32672).
4(f) Note Agreements, dated as of September 1, 1989, between
United Water Resources Inc. and First Colony Life Insurance
Company and American Mayflower Life Insurance Company.
4(g) First Mortgage of Hackensack Water Company to Hudson Trust
Company dated March 1, 1946 (including all Supplemental
Indentures) (Filed as Exhibit 4(a) to Registration Statement
No. 2-82274).
4(h) Loan Agreement, dated as of November 15, 1986, between the
New Jersey Economic Development Authority and Hackensack
Water Company (Filed as Exhibit 4(g) to Form 10-K for year
ended December 31, 1986).
4(i) Loan Agreement, dated as of November 15, 1987, between the
New Jersey Economic Development Authority and Hackensack
Water Company (Filed as Exhibit 4(g) to Form 10-K for year
ended December 31, 1987).
<PAGE>
United Water Resources Inc.
4(j) Loan Agreement, dated as of December 1, 1988, between the
New York State Environmental Facilities Corporation and
Spring Valley Water Company (Filed as Exhibit 4(h) to Form
10-K for year ended December 31, 1988).
4(k) Loan Agreement, dated as of December 1, 1993, between the
New York State Environmental Facilities Corporation and
Spring Valley Water Company.
4(l) By-laws of United Water Resources dated as of March 10,
1994.
4(m) United Water Resources' Form 8-K's filed on September 16,
1993 and March 10, 1994.
13 United Water Resources' Annual Report to Shareholders for
the year ended December 31, 1993. Such Annual Report,
except for those portions expressly incorporated by
reference, is furnished for the information of the
Commission and is not deemed "filed" hereby.
21 Subsidiaries of registrant
23 Consent of Independent Accountants
28 New Indemnification Undertaking
Other than the aforementioned Exhibits 4(g) and 4(h), the
principal amount of debt outstanding under each instrument
defining the rights of holders of long-term debt of United Water
does not exceed 10% of the total assets of United Water and its
subsidiaries on a consolidated basis.
Upon request by the Securities and Exchange Commission, United
Water agrees to file any instrument with respect to long-term debt
which has not previously been filed because the total amount of
securities authorized thereunder does not exceed 10% of the total
assets of United Water and its subsidiaries on a consolidated
basis.
(c) Reports on Form 8-K filed in the fourth quarter of 1993:
None
<PAGE>
S I G N A T U R E S
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this annual
report to be signed on its behalf by the undersigned thereunto duly
authorized.
UNITED WATER RESOURCES INC.
-----------------------------
(Registrant)
March 10, 1994 By DONALD L. CORRELL
--------------------- -----------------------------------
Donald L. Correll
President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
Chairman of the
ROBERT A. GERBER Board of Directors March 10, 1994
--------------------------
(Robert A. Gerber)
Secretary
DOUGLAS W. HAWES and Director March 10, 1994
-------------------------
(Douglas W. Hawes)
Vice President
JOHN J. TURNER and Controller March 10, 1994
-------------------------
(John J. Turner)
<TABLE>
<CAPTION>
DIRECTORS
----------
<S> <C> <C> <C>
FRANK J. BORELLI 3/10/94 JON F. HANSON 3/10/94
- ----------------------------- ------- -------------------- -------
(Frank J. Borelli) Date (Jon F. Hanson) Date
LAWRENCE R. CODEY 3/10/94 GEORGE M. HASKEW, JR. 3/10/94
- ----------------------------- ------- ------------------------ -------
(Lawrence R. Codey) Date (George M. Haskew, Jr.) Date
DONALD L. CORRELL 3/10/94 DENNIS M. NEWNHAM 3/10/94
- ----------------------------- ------- ------------------------ -------
(Donald L. Correll) Date (Dennis M. Newnham) Date
PETER DEL COL 3/10/94 MARCIA L. WORTHING 3/10/94
- ----------------------------- ------- ------------------------ -------
(Peter Del Col) Date (Marcia L. Worthing) Date
ROBERT L. DUNCAN, JR. 3/10/94
- ----------------------------- -------
(Robert L. Duncan, Jr.) Date
</TABLE>
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES,
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES
OTHER THAN RELATED PARTIES
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
- ----------------------------
<S> <C>
Name of Debtor N/A
Balance at Beginning of Year --
Additions --
Deductions - Amounts Collected --
- Amounts Written Off --
Balance at Year End - Current --
- Non-Current --
YEAR ENDED DECEMBER 31, 1992
- ----------------------------
Name of Debtor N/A
Balance at Beginning of Year --
Additions --
Deductions - Amounts Collected --
- Amounts Written Off --
Balance at Year End - Current --
- Non-Current --
YEAR ENDED DECEMBER 31, 1991
- ----------------------------
Name of Debtor Hugh F. Hanson, Senior Vice President
Hackensack Water Co. (Former Executive)
Balance at Beginning of Year $169
Additions --
Deductions - Amounts Collected $169
- Amounts Written Off --
Balance at Year End - Current --
- Non-Current --
</TABLE>
This indebtedness was in the form of a non-interest bearing note in the
principal amount of $168,500 which is secured by a first mortgage on
residential property associated with Mr. Hanson's relocation to New Jersey.
The note matured in 1991.
<PAGE>
Page 1 of 3
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE V - CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1993
--------------------------------------------------------------------------
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE AT
JANUARY 1, AT COST AND DISPOSITIONS ADJUSTMENTS DECEMBER 31,
---------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
UTILITY PLANT:
WATER PLANT IN SERVICE:
Intangibles $ 310 $ 79 $ -- $ -- $ 389
Source of supply 112,103 11,949(1) 106 10,838(1) 134,784
Pumping 75,744 487 95 -- 76,136
Water purification 62,673 2,050 241 -- 64,482
Transmission and
distribution 286,414 11,009 852 (1,615)(2) 294,956
General and other 27,606 1,708 362 154 (3) 29,106
CONSTRUCTION WORK
IN PROGRESS 4,514 -- -- 1,301 (4) 5,815
-------- ------- ------ -------- --------
$569,364 $27,282 $1,656 $ 10,678 $605,668
======== ======= ====== ======== ========
REAL ESTATE AND OTHER PROPERTIES $120,603 $ 6,764 $1,218 $(18,949)(5) $107,200
======== ======= ====== ======== ========
</TABLE>
(1) Represents the purchase price of $26,000 of properties reconveyed to
Hackensack from Rivervale, the book value of $14,838 in other
adjustments and a ($4,000) adjustment transferred from amounts
refundable to customers in additions at cost.
(2) Contributions in aid of construction ($1,615) credited to plant as
required by the New York Public Service Commission.
(3) Spring Valley Water Company plant acquisition adjustment: $103;
Mid-Atlantic Utilities amortization of plant acquisition adjustment:
$51.
(4) Represents $39,421 of additional construction work in progress for the
year, less $38,120 transferred to plant in service.
(5) Represents a valuation adjustment for certain Rivervale Realty Inc.
properties ($4,111) and the book value of properties transferred to
Hackensack Water from Rivervale Realty ($14,838).
<PAGE>
Page 2 of 3
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE V - CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1992
-------------------------------------------------------------------
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE AT
JANUARY 1, AT COST AND DISPOSITIONS ADJUSTMENTS DECEMBER 31,
---------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
UTILITY PLANT:
WATER PLANT IN SERVICE:
Intangibles $ 310 $ -- $ -- $ -- $ 310
Source of supply 111,967 136 -- -- 112,103
Pumping 74,728 1,028 12 -- 75,744
Water purification 61,959 817 103 -- 62,673
Transmission and
distribution 275,133 12,460 603 (576)(1) 286,414
General and other 27,196 1,143 786 53 (2) 27,606
CONSTRUCTION WORK
IN PROGRESS 4,936 -- -- (422)(3) 4,514
-------- ------- ------ ------ --------
$556,229 $15,584 $1,504 $ (945) $569,364
======== ======= ====== ====== ========
REAL ESTATE PROPERTIES $115,526 $ 8,068 $2,991 $ -- $120,603
======== ======= ====== ====== ========
</TABLE>
(1) Contributions in aid of construction ($576) credited to plant as
required by the New York Public Service Commission.
(2) Amortization of Mid-Atlantic Utilities Corp. plant acquisition
adjustment.
(3) Represents $15,162 of additional construction work in progress for the
year less $15,584 transferred to plant in service.
<PAGE>
Page 3 of 3
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE V - CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1991
--------------------------------------------------------------------
BALANCE AT ADDITIONS RETIREMENTS OTHER BALANCE AT
JANUARY 1, AT COST AND DISPOSITIONS ADJUSTMENTS DECEMBER 31,
---------- --------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
UTILITY PLANT:
WATER PLANT IN SERVICE:
Intangibles $ 310 $ -- $ -- $ -- $ 310
Source of supply 111,809 479 321 -- 111,967
Pumping 77,146 218 2,636 -- 74,728
Water purification 65,397 3,451 6,889 -- 61,959
Transmission and
distribution 261,832 14,796 998 (497)(1) 275,133
General and other 26,532 731 220 153 (2) 27,196
CONSTRUCTION WORK
IN PROGRESS 7,343 -- -- (2,407)(3) 4,936
-------- ------- ------- ------ --------
$550,369 $19,675 $11,064 $(2,751) $556,229
======== ======= ======= ======= ========
REAL ESTATE PROPERTIES $ 64,554 $51,412 $ 220 $ (220)(4) $115,526
======== ======= ======= ======= ========
</TABLE>
(1) Contributions in aid of construction ($497) credited to plant as
required by the New York Public Service Commission.
(2) Amortization of Mid-Atlantic Utilities Corp. plant acquisition
adjustment.
(3) Represents $17,268 of additional construction work in progress for the
year, less $19,675 transferred to plant in service.
(4) Represents proceeds from the settlement of a lawsuit.
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE VI - CONSOLIDATED ACCUMULATED DEPRECIATION,
DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
ACCUMULATED DEPRECIATION, UTILITY PLANT:
Balance at beginning of period $ 95,203 $85,803 $87,722
Additions (1) 11,938 11,498 10,726
Retirements (2) (3,730) (2,109) (12,056)
Other 146* 11 (589)**
-------- ------- -------
Balance at end of period $103,557 $95,203 $85,803
======== ======= =======
(1) Additions charged to statement
of income $ 11,806 $11,349 $10,674
Amortization of property loss -- -- --
Additions which are redistributed
to various accounts 132 149 52
-------- ------- -------
TOTAL ADDITIONS AS REFLECTED ABOVE $ 11,938 $11,498 $10,726
======== ======= =======
(2) Gross retirements $ 1,418 $ 1,503 $11,064
Removal cost and salvage, net 2,312 606 992
-------- ------- -------
TOTAL RETIREMENTS AS REFLECTED ABOVE $ 3,730 $ 2,109 $12,056
======== ======= =======
DEPRECIATION EXPENSE CHARGED TO
STATEMENT OF INCOME:
Utility property $ 11,806 $11,349 $10,674
Real estate property 2,470 2,601 2,475
-------- ------- -------
TOTAL $ 14,276 $13,950 $13,149
======== ======= =======
</TABLE>
* Spring Valley abandonment loss $(11); accumulated depreciation of
acquired utility plant (Pothat Water Company) $(135).
** Pursuant to a rate order, Hackensack reversed its abandonment loss
recognized in prior years.
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE VI - CONSOLIDATED ACCUMULATED DEPRECIATION,
DEPLETION AND AMORTIZATION OF PROPERTY,
PLANT AND EQUIPMENT
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1993 1992 1991
--------- -------- --------
<S> <C> <C> <C>
ACCUMULATED DEPRECIATION, REAL ESTATE
PROPERTY:
Balance at beginning of period $ 8,883 $6,427 $3,951
Additions (1) 2,470 2,601 2,478
Retirements (2) (464) (145) (2)
------- ------ ------
Balance at end of period $10,889 $8,883 $6,427
======= ====== ======
(1) Additions charged to statement
of income $ 2,470 $2,601 $2,475
Amortization of intangibles -- -- --
Additions which are redistributed
to various accounts -- -- 3
------- ------ ------
TOTAL ADDITIONS AS REFLECTED ABOVE $ 2,470 $2,601 $2,478
======= ====== ======
(2) Gross retirements $ 464 $ 145 $ 2
------- ------ ------
TOTAL RETIREMENTS AS REFLECTED ABOVE $ 464 $ 145 $ 2
======= ====== ======
</TABLE>
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE VIII - CONSOLIDATED VALUATION AND
QUALIFYING ACCOUNTS
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS: -
Balance at beginning of period $1,272 $1,014 $ 872
------ ------ ------
ADDITIONS:
Charges to costs and expenses 1,278 1,435 1,057
------ ------ ------
DEDUCTIONS:
Accounts written off 1,460 1,366 1,137
Recoveries of accounts
written off (183) (189) (222)
------ ------ ------
1,277 1,177 915
------ ------ ------
BALANCE AT END OF PERIOD $1,273 $1,272 $1,014
====== ====== ======
</TABLE>
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE IX - CONSOLIDATED SHORT-TERM BORROWING
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Short-term debt outstanding at
December 31, $15,500 $19,000 $20,250
Weighted average interest rate
at December 31, 3.99% 4.28% 5.56%
Maximum amount of short-term
debt outstanding at any month-
end during the year $24,000 $22,350 $25,700
Average amount of short-term debt
outstanding during the year
based upon daily average balances $18,509 $12,618 $22,788
Weighted average interest rate
based upon average daily balances 3.92% 4.66% 6.94%
</TABLE>
<PAGE>
U N I T E D W A T E R R E S O U R C E S I N C.
SCHEDULE X - CONSOLIDATED SUPPLEMENTARY INCOME STATEMENT
INFORMATION
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
TAXES, OTHER THAN INCOME TAXES:
Real estate $ 6,798 $ 6,270 $ 5,515
Gross receipts,
franchise and excise 20,533 20,102 22,185
Payroll 2,245 2,119 2,037
Other 770 693 778
------- ------- -------
Total $30,346 $29,184 $30,515
======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 4.(L)
UNITED WATER RESOURCES INC.
BY-LAWS
ARTICLE I
OFFICES
The registered office of the Corporation, which shall be its principal
office, shall be established and maintained at 200 Old Hook Road, in the Borough
of Harrington Park, County of Bergen, in the State of New Jersey.
ARTICLE II
STOCKHOLDERS
Section 1. Annual Meetings. The annual meeting of the stockholders of the
Corporation for the election of directors and the transaction of such other
business as may properly come before the meeting shall be held at nine-thirty
o'clock in the forenoon of the second Monday of May in each year, or as soon
thereafter as convenient in the judgement of the Board of Directors.
Section 2. Special Meetings. Special meetings of the stockholders may be
called at any time by the Chairman of the Board, the President or a majority of
the members of the Board of Directors.
Section 3. Place of Meetings. All meetings of the stockholders may be
held at the principal office of the Corporation
<PAGE>
or at such other place within or without the State of New Jersey as may be
designated by the Board of Directors.
Section 4. Notice of Meetings. Written notice stating the date, time,
place of the meeting and the purpose thereof, shall be given by mail not less
than ten nor more than sixty days before the date of the meeting to each
stockholder of record entitled to vote at the meeting. Notice of any adjourned
meeting shall not be required to be given unless a new record date shall have
been fixed.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or stockholders entitled to
receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period not to exceed,
in any case, sixty days. If the stock transfer books shall be closed for the
purpose of determining stockholders entitled to notice of or to vote at a
meeting of stockholders, such books shall be closed for at least ten days
immediately preceding such meeting. In lieu of closing the stock transfer
books, the Board of Directors may fix in advance a date as the record date for
any determination of stockholders, such date in any case to be not more than
sixty days and, in case of a meeting of stockholders, not
<PAGE>
less than ten days prior to the date on which the particular action, requiring
such determination of stockholders, is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of stockholders
entitled to notice of or to vote at a meeting of stockholders, or stockholders
entitled to receive payment of a dividend, or stockholders for any other proper
purpose, the day next preceding the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend or authorizing the other action for the purpose of which
stockholders are determined is adopted, as the case may be, shall be the record
date for such determination of stockholders. In such case, such stockholders
and only such stockholders shall be stockholders of record on the date so
established and shall be entitled to such notice of, or to vote at, such
meeting, or to receive payment of such dividend or shall be the stockholders in
respect of whom such other action is to be taken, as the case may be,
notwithstanding any transfer of any stock on the books of the Corporation after
any such record date fixed as aforesaid. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided
herein, such determination shall apply to any adjournment thereof.
Section 6. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If
<PAGE>
less than a majority of the outstanding shares is represented at a meeting, a
majority of the shares so represented may adjourn the meeting from time to time
without further notice except as provided in Section 4 of this Article II. At
any such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. The stockholders present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of enough stockholders to leave less than a quorum.
Section 7. Proxies. At all meetings of stockholders, a stockholder may
vote in person or by proxy executed in writing by the stockholder or by his duly
authorized agent, except that a proxy may be given by a stockholder or his agent
by telegram or cable or its equivalent. Such proxy shall be filed with the
Secretary of the Corporation before or at the time of the meeting. No proxy
shall be valid after eleven months unless a longer time is provided therein, but
no proxy shall be valid after three years from the date of its execution.
Section 8. Voting. At each meeting of the stockholders, each holder of
record of common stock of the Corporation, the holders of which are entitled to
vote, shall be entitled to one vote for each share of such common stock
registered in his name on the books of the Corporation at the time of such
meeting, except as provided to
<PAGE>
the contrary by law and except where, pursuant to Section 5 of this Article II,
a date shall have been established as a record date for the determination of the
stockholders entitled to vote. Each holder of record of preferred stock of the
Corporation shall have such rights as to voting as may be set forth in or
established pursuant to the Restated Certificate of Incorporation of the
Corporation.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by the Board of Directors.
Section 2. Number, Term of Office and Qualifications. The Board of
Directors shall be divided into three classes, as nearly equal in number as
possible and known as Classes I, II and III. The total number of directors
shall be determined by resolution of the Board of Directors within the limits
fixed by the Restated Certificate of Incorporation but shall not be less than 3.
Each director (whether elected at an annual meeting or elected to fill a vacancy
or otherwise) shall hold office until his or her successor shall have been
elected, or until his or her death or until he or she shall resign in the manner
provided in Section 8 of this Article III or shall have been removed in
accordance with the provisions of the Restated Certificate of Incorporation. No
person shall stand for election or re-election as a director if he or she
<PAGE>
has attained the age of sixty-eight at the time of an annual meeting of
stockholders which is to consider the election of directors. Notwithstanding
the provisions of the preceding sentence, in the event that one (but not more
than one) person specified in Section 2.3 of the Amended and Restated Agreement
and Plan of Merger, dated as of September 15, 1993, between the Corporation and
GWC Corporation, shall have attained the age of sixty-eight at the time of the
1994 annual meeting of the stockholders of the Corporation, such person may at
said meeting stand for election or re-election as a director for one term (not
in excess of three years). In case of any increase in the authorized number of
directors, additional directors to fill the vacancies in the Board of Directors
caused by such increase shall be elected at any meeting of the Board of
Directors by resolution passed by a majority of the entire Board. Each director
shall be a bona fide holder of one or more shares of stock of the Corporation.
Section 3. Election of Directors. At each meeting of the stockholders for
the election of directors, the directors to be elected shall be chosen by a
plurality of the votes cast at such meeting by the stockholders entitled to vote
for the director or directors in question.
Section 4. Annual and Regular Meetings. Immediately after the annual
meeting of the stockholders, the annual meeting of the
<PAGE>
Board of Directors shall be held at the same place as the annual meeting of
stockholders, and notice of such meeting of the Board of Directors shall not be
required to be given. The Board of Directors from time to time may provide for
the holding of regular meetings and fix the time and place (which may be within
or without the State of New Jersey) thereof. Notice of regular meetings shall
not be required to be given.
Section 5. Special Meetings; Notice. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or by the
President at such time and place (which may be within or without the State of
New Jersey) as may be specified in the respective notices or waivers of notice
thereof. Notice of each special meeting shall be given to each director on
three days' notice if by mail and on one day's notice if by telegram or
telephone, in all cases directed to his residence or usual place of business.
Notice of any special meeting shall not be required to be given to any director
who shall attend such meeting in person, or to any director who shall waive
notice of such meeting in writing or by telegram, whether before or after the
time of such meeting; and any such meeting shall be a legal meeting without any
notice thereof having been given if all the directors shall be present thereat.
Section 6. Adjourned Meetings. Notice of an adjourned meeting of the
Board of Directors shall be given in accordance with
<PAGE>
Section 5 of this Article III to all directors absent from the meeting
adjourning (provided, however, that if the period of adjournment exceeds ten
days, such notice shall be given to all directors), subject to the provisions of
the last sentence of said Section 5.
Section 7. Quorum and Manner of Acting. At all meetings of the Board of
Directors a majority of the entire Board of Directors of the Corporation shall
be necessary and sufficient to constitute a quorum for the transaction of
business (except as otherwise specified in the Corporation's Restated
Certificate of Incorporation, its By-Laws or by statute). Except as otherwise
required by statute and by Section 2 of Article IV hereof, the act of a majority
of a quorum shall be the act of the Board of Directors. In the absence of a
quorum, a majority of the directors present may adjourn the meeting from time to
time until a quorum shall be present. In addition:
(a) any or all of the directors of the Corporation may participate in a
meeting of the Board of Directors by means of conference telephone or any
other means of communication by which all persons participating in the
meeting are able to hear each other; and
(b) any action required or permitted to be taken by the Board of
Directors at a meeting may be taken without a meeting if, prior or
subsequent to such action, all members of the Board of Directors consent
thereto in a writing filed with the
<PAGE>
minutes of proceedings of the Board of Directors.
Section 8. Resignations. Any director may resign at any time by giving
written notice of such resignation to the Board of Directors, to the Chairman of
the Board or to the President of the Corporation. Unless otherwise specified in
such written notice, such resignation shall take effect upon receipt thereof by
the Board of Directors or any such officer.
Section 9. Compensation. Pursuant to resolutions adopted from time to
time by the Board of Directors, the directors may be paid an annual retainer for
services rendered as directors and/or as members of any committee of the Board
of Directors in such amount as may be determined by the Board. In addition, by
resolution of the Board of Directors, the Directors may be allowed a fixed sum
and travelling expenses for attendance at each regular or special meeting of the
Board and/or any such committee; provided, however, that directors who are
employees of the Corporation or of any subsidiary of the Corporation shall not
be entitled to compensation in connection with services rendered as directors or
as members of any committee of the Board of Directors.
Section 10. Indemnification of Directors and Officers. Each of the
officers and directors of the Corporation, in the event of an action commenced
against him by reason of the fact that he is or was an officer or director of
the Corporation (or is or was serving
<PAGE>
in any capacity at the request of the Corporation in some other corporation,
organization or enterprise) shall be entitled to indemnification from the
Corporation to the full extent permitted by the laws of the State of New Jersey.
Such indemnification shall include, but not be limited to, the following:
(a) In the case of an action by or in the right of the Corporation, he
shall be entitled to indemnification against the reasonable expenses,
including attorney's fees, actually and necessarily incurred by him in
connection with the defense of such an action or any appeal therein,
provided, however, that no such indemnification shall lie where he is
adjudged to be liable for negligence or misconduct unless and only to the
extent that the Superior Court or the court in which such proceeding was
brought shall determine, upon application, that despite the adjudication of
liability he is fairly and reasonably entitled to indemnification for such
expenses in light of all the circumstances of the case.
(b) In the case of an action other than by or in the right of the
Corporation, he shall be entitled to indemnification against judgments,
fines, amounts paid in settlement, penalties and reasonable expenses,
including attorney's fees, actually and necessarily incurred by him as a
result of such action, or any appeal therein, if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Corporation and, in the case of a criminal action, in
addition, he had no reasonable cause to
<PAGE>
believe that his conduct was unlawful.
The Board of Directors shall determine, by act of a majority of a quorum of
directors who are not parties to the action in question, whether the requisite
standard of conduct has been met by the person or persons concerned. In the
event such a quorum is not available, the Board of Directors shall make such a
determination upon the written opinion of independent legal counsel that
indemnification is proper in the circumstances because the applicable standard
of conduct has been met by the person or persons concerned.
Expenses incurred in defending a proceeding may be paid by the Corporation
in advance of the final disposition of such proceeding, if authorized in the
manner provided by the laws of the State of New Jersey, upon receipt of an
undertaking by or on behalf of the officer or director to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
as provided by law.
Section 11. Reliance on Experts by Directors and Officers. In addition to
any rights or duties prescribed by statute, each director and officer of the
Corporation shall perform his duties as such in good faith, in a manner he
reasonably believes to be in the best interests of the Corporation, and with
such care as an ordinarily prudent person in the like position would use under
similar circumstances. In performing his duties, each director and officer
shall be entitled to rely on the opinion of counsel for the
<PAGE>
Corporation or upon written reports setting forth financial data concerning the
Corporation and prepared by an independent or certified public accountant or a
firm of such accountants or upon financial statements, books of account or
reports of the Corporation represented to him to be correct by the President,
the officer of the Corporation having charge of its books of account or the
person presiding at a meeting of the Board of Directors or at a meeting of any
committee of the Board designated pursuant to Section 1 of Article IV hereof. A
person who so performs his duties shall have no liability by reason of being or
having been a director or officer of the Corporation.
Section 12. Presumption of Assent. A director of the Corporation who
is present at a meeting of the Board of Directors, or any committee thereof, at
which corporate action on any corporate matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as secretary of the meeting before or promptly
after the adjournment thereof. Such right of dissent shall not apply to a
director who voted in favor of such action. A director who is absent from any
such meeting shall be presumed to have concurred in the action taken unless he
shall file his dissent with the Secretary of the Corporation within a reasonable
time after learning of such action.
<PAGE>
ARTICLE IV
EXECUTIVE AND OTHER COMMITTEES
Section 1. Appointment. The Board of Directors, by resolution
adopted by a majority of the entire Board, shall designate, annually, from among
its members an Executive Committee and such other committees of the Board as may
be necessary or desirable. In likewise, the Board of Directors shall designate,
annually, a Chairman of the Executive Committee and the Chairmen of any other
such committees. The Board may at any time abolish or revise the Executive
Committee or any such committee, redesignate the Chairmen thereof, remove a
member thereof or fill a vacancy therein by resolution similarly adopted.
Section 2. Powers. During the intervals between the meetings of the
Board of Directors, unless otherwise provided from time to time by resolution
passed by a majority of the entire Board, the Executive Committee shall have and
may exercise all powers of the Board of Directors in the management of the
business and affairs of the Corporation; provided, however, that neither the
Executive Committee nor any other committee of the Board shall have authority to
make, alter or repeal the By-Laws of the Corporation; declare or make payment of
a dividend of the Corporation; elect or remove any director or officer of the
Corporation; submit to the stockholders any action requiring stockholder
approval; or amend or repeal any resolution theretofore adopted by the Board of
Directors, which by
<PAGE>
its terms is amendable or repealable only by the Board. Each committee other
than the Executive Committee shall have and may exercise the powers delegated to
it by the Board of Directors.
Section 3. Meetings; Notices; Records. The Executive Committee and
all other committees of the Board may hold regular and special meetings at such
place or places (within or without the State of New Jersey) and at such time or
times as it shall determine from time to time. Notice of regular meetings shall
not be required to be given; provided, however, that when the time or place of
regular meetings shall be fixed or changed, notice of such action shall be given
promptly to each member who shall not have been present at the meeting at which
such action was taken, addressed to him at his residence or usual place of
business. Any member of the Executive Committee or of any other committee of
the Board may call a special meeting of such committee. Notice of each special
meeting shall be given to each member on three days' notice if by mail or on one
day's notice if by telegram or telephone, in all cases directed to his residence
or usual place of business. Notice of any special meeting need not be given to
any member who shall attend such meeting in person, or who shall waive notice
thereof in writing or by telegram, whether before or after the time of such
meeting; and any such meeting shall be a legal meeting without any notice
thereof having been given if all the members shall be present thereat. No
notice of any adjourned meeting need be given. The Executive Committee and all
other committees of the
<PAGE>
Board shall keep a record of their proceedings and shall report such proceedings
to the Board of Directors at the meeting thereof held next after the same have
been taken.
Section 4. Quorum and Manner of Acting. At all meetings of the
Executive Committee and any other committee of the Board, members consisting of
a majority of the total authorized membership of such committee shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and the act of a majority of a quorum shall be the act of the committee;
provided, however, that with respect to the Executive Committee and any other
committee of the Board:
(a) any or all of the members of the committee may participate in a
meeting of the committee by means of a conference telephone or any other
means of communication by which all persons participating in the meeting
are able to hear each other; and
(b) any action required or permitted to be taken by the committee at
a meeting may be taken without a meeting if, prior or subsequent to such
action, all members of the committee consent thereto in a writing filed
with the minutes of proceedings of the committee.
Section 5. Resignations. Any member of the Executive Committee or of
any other committee of the Board may resign at any time by giving written notice
of such resignation to either the
<PAGE>
Board of Directors, the Chairman of the Board or the President of the
Corporation. Unless otherwise specified in such written notice, such
resignation shall take effect upon its receipt.
ARTICLE V
OFFICERS
Section 1. Number. The officers of the Corporation shall be a
President, a Secretary, a Treasurer and such other officers as the Board may
deem necessary or appropriate.
Section 2. Election, Term of Office and Qualifications. Each officer
shall be elected by the Board of Directors annually at the annual meeting of the
Board, provided, however, that the Board shall have the authority to elect
persons to fill officer vacancies at any time, to create at any time any new
offices and to elect such persons to fill such offices as may be necessary or
appropriate. Each such officer shall hold office until his successor shall have
been duly elected and shall have qualified or until his earlier death,
resignation or removal. The Chairman of the Board and the President shall be
and remain directors of the Corporation during their terms in office. Any two
or more offices may be held by the same person, but no officer shall execute any
document in more than one capacity if required to be executed by two or more
officers.
<PAGE>
Section 3. Resignations. Any officer may resign at any time by
giving written notice of such resignation to either the Board of Directors, the
Chairman of the Board or the President of the Corporation. Unless otherwise
specified in such written notice, such resignation shall take effect upon
receipt thereof by the Board of Directors or any such officer.
Section 4. Removal. The officers of the Corporation may be removed,
either with or without cause, at any special meeting of the Board of Directors
called for that purpose, by the Board of Directors.
Section 5. Vacancies. A vacancy in any office by reason of death,
resignation, removal, disqualification or any other cause,
shall be filled for the unexpired term thereof in the manner provided in this
Article V for regular election to such office.
Section 6. The Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the Board of Directors and, subject to its
direction and control, shall be its representative and shall perform such duties
as from time to time may be assigned to him by the Board of Directors.
Section 7. The President. The President shall be the chief executive
officer of the Corporation. Subject to the direction of the Board of Directors,
he shall have general charge of the
<PAGE>
business and affairs of the Corporation and general supervision over its
officers and agent. He shall preside at all meetings of the stockholders and,
in the absence or disability of the Chairman of the Board, at all meetings of
the Board of Directors, and shall see that all orders and resolutions of the
Board of Directors and of the Executive Committee are carried into effect. He
shall perform such other duties as are given to him by these By-Laws or as from
time to time may be assigned to him by the Board of Directors.
Section 8. The Secretary. The Secretary shall, in general, perform
all duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
Section 9. The Treasurer. The Treasurer shall, in general, perform
all duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
Section 10. Salaries. The salaries of the officers of the
Corporation shall be fixed from time to time by the Board of Directors. No
officer shall be prevented from receiving such salary by reason of the fact that
he is also a director of the Corporation.
<PAGE>
ARTICLE VI
EXECUTION OF INSTRUMENTS, BORROWING OF
MONEY AND INSTRUMENTS OF THE CORPORATION
Section 1. Execution of Instruments. The Board of Directors may
authorize any officer or officers, agent or agents, to enter into any contract
or execute and deliver any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
Section 2. Loans. No loans, leases or evidences of indebtedness
shall be contracted on behalf of the Corporation or issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
Section 3. Checks, Drafts and Other Instruments. All checks, drafts
or other orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the Corporation shall be signed by such
officer or officers or agent or agents of the Corporation as shall from time to
time be authorized by the Board of Directors.
ARTICLE VII
SHARES OF STOCK
Section 1. Certificates of Stock. Certificates representing shares
of the Corporation shall be in such form as shall be determined by the Board of
Directors. Such certificates shall be
<PAGE>
signed by the Chairman of the Board or the President and by the Secretary, an
Assistant Secretary (if one shall have been elected) or the Treasurer and sealed
with the corporate seal or a facsimile thereof. Each certificate shall state
that the Corporation is organized under the laws of the State of New Jersey.
The signatures of such officers upon a certificate may be facsimiles if the
certificate is manually signed on behalf of a Transfer Agent or a Registrar,
other than the Corporation itself or one of its employees. Each certificate for
shares shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares, class, series, if any, and date of issue, shall be entered
on each stock certificate and in the stock transfer books of the Corporation.
All certificates surrendered to the Corporation for transfer shall be cancelled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except that in case
of a lost, stolen or destroyed certificate a new one may be issued therefor upon
such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
Section 2. Transfer of Stock. Transfers of shares of the stock of
the Corporation shall be made only on the books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of
<PAGE>
attorney duly executed and filed with the Secretary of the Corporation, and on
surrender for cancellation of the certificate for such shares. The person in
whose name shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
Section 3. Lost, Stolen or Destroyed Certificates. The Board of
Directors may determine the conditions upon which a new certificate of stock
will be issued in place of a certificate which is alleged to have been lost,
stolen or destroyed, and may, in its discretion, require the owner of such
certificate or his legal representative to give bond, with sufficient surety to
the Corporation to indemnify it against any and all losses or claims which arise
by reason of the issue of a new certificate in the place of the one so lost,
stolen or destroyed.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall bear the name of the Corporation and words
and figures denoting its organization under the laws of the State of New Jersey
and the year thereof and otherwise shall be in such forms as shall be approved,
from time to time, by the Board of Directors.
<PAGE>
ARTICLE IX
FISCAL YEAR
The fiscal year of the Corporation shall begin on the first day of
January in each year and shall end on the thirty-first day of the following
December.
ARTICLE X
AMENDMENTS
All By-Laws of the Corporation shall be subject to alteration or
repeal, and new By-Laws may be made, either (1) by the affirmative vote of at
least 80% of the holders of shares of stock of the Corporation, entitled to vote
generally for the election of directors, given at any annual meeting of the
stockholders or at any special meeting called for such purpose, or (2) by the
affirmative vote of at least a majority of the entire Board of Directors given
at any meeting called for such purpose.
I, Allan D. Shakley DO HEREBY CERTIFY that I am
Assistant Secretary of United Water Resources Inc., a New Jersey corporation and
that the foregoing is a true and complete copy of
the By-Laws of said Corporation with all amendments thereof to the date hereof.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the
seal of said Corporation this 10th day of March, 1994.
/s/ Allan D. Shakley
--------------------
[SEAL OF UNITED WATER RESOURCES APPEARS BELOW.]
<PAGE>
Exhibit 21
UNITED WATER RESOURCES INC.
SUBSIDIARIES
Subsidiaries of Registrant State of Incorporation
-------------------------- ----------------------
Hackensack Water Company New Jersey
Laboratory Resources, Inc. New Jersey
Rivervale Realty Co., Inc. New York
Dundee Water Power & Land Company (50% owned) New Jersey
Mid-Atlantic Utilities Corporation New Jersey
Hackensack Water Company Subsidiaries
-------------------------------------
Spring Valley Water Company Incorporated New York
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the
Prospectus constituting part of the Registration Statement on Form S-3 (No.
33-66420), the Prospectus constituting part of the Registration Statement
on Form S-3 (No. 33-10274) and the Registration Statement on Form S-8 (No.
33-64674) of United Water Resources of our report dated February 24, 1994,
appearing on page 29 of this Annual Report on Form 10-K.
PRICE WATERHOUSE
Hackensack, New Jersey
March 28, 1994
<PAGE>
Exhibit 28
NEW INDEMNIFICATION UNDERTAKING
---------------------------------
Pursuant to Item 512(h) of Regulation S-K, the following
undertaking is hereby incorporated into Part II (Item 9) of the
Registrant's Registration Statement on Form S-8 No. 33-32672. Insofar as
indemnification for liabilities arising under the Securities Act of 1933
may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
