<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
-------------------------------------
WASHINGTON, D. C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission file number 1-858-6
-------------
United Water Resources Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2441477
- ----------------------------- --------------------------------
(State or other Jurisdiction I.R.S. Employer
of Incorporation) (Identification No.)
200 Old Hook Road, Harrington Park, New Jersey 07640
- --------------------------------------------------------------------------------
(Address of principal executive office) (zip code)
201-784-9434
(Registrant's telephone number, including area code)
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
--------- ---------
Common shares of stock outstanding as of April 30, 1995 31,671,356
-----------
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -------------------------------
UNITED WATER RESOURCES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
----------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
UTILITY PLANT, including $26,553 and $24,505 under construction $1,282,807 $1,272,446
LESS accumulated depreciation 241,148 235,962
---------- ----------
1,041,659 1,036,484
---------- ----------
UTILITY PLANT ACQUISITION ADJUSTMENT, NET 73,447 73,444
---------- ----------
REAL ESTATE AND OTHER INVESTMENTS, less accumulated
depreciation of $13,800 and $12,430 110,010 107,315
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents 8,117 9,840
Restricted cash 23,411 30,227
Accounts receivable and unbilled revenues, net 56,829 59,292
Prepaid and other current assets 14,487 13,425
---------- ----------
102,844 112,784
---------- ----------
DEFERRED CHARGES AND OTHER ASSETS:
Recoverable income taxes 47,927 48,295
Prepaid and deferred employee benefits 25,516 24,290
Unamortized debt expense 25,456 25,253
Other deferred charges and assets 29,708 29,562
---------- ----------
128,607 127,400
---------- ----------
$1,456,567 $1,457,427
========== ==========
CAPITALIZATION AND LIABILITIES
- ------------------------------
CAPITALIZATION:
Common stock and retained earnings $ 341,427 $ 350,495
Preferred stock without mandatory redemption 9,000 9,000
Preferred stock with mandatory redemption 54,684 54,696
Preference stock, convertible, with mandatory redemption 43,530 43,477
Long-term debt 527,475 505,204
---------- ----------
976,116 962,872
---------- ----------
CURRENT LIABILITIES:
Notes payable 58,750 76,450
Preferred stock and long-term debt due within one year 9,527 10,246
Accounts payable and other accruals 28,530 36,541
Accrued taxes 31,092 28,744
Accrued customer benefits 3,216 3,707
Accrued interest and other current liabilities 17,515 9,876
---------- ----------
148,630 165,564
---------- ----------
DEFERRED CREDITS AND OTHER LIABILITIES:
Deferred income taxes and investment tax credits 164,831 163,020
Customer advances for construction 29,436 30,459
Contributions in aid of construction 117,402 115,642
Other deferred credits and liabilities 20,152 19,870
---------- ----------
331,821 328,991
---------- ----------
$1,456,567 $1,457,427
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UNITED WATER RESOURCES INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED INCOME
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
--------------------------------------
1995 1994
----------------- ------------------
<S> <C> <C>
OPERATING REVENUES $71,405 $39,015
------- -------
OPERATING EXPENSES:
Operation and maintenance 37,643 20,963
Depreciation and amortization 7,623 3,611
General taxes 11,993 7,372
------- -------
TOTAL OPERATING EXPENSES 57,259 31,946
------- -------
OPERATING INCOME 14,146 7,069
------- -------
INTEREST AND OTHER EXPENSES:
Interest expense, net of amount capitalized 10,580 5,672
Allowance for funds used during construction (463) (127)
Preferred stock dividends of subsidiaries 578 583
Other income, net (188) (3,054)
------- -------
TOTAL INTEREST AND OTHER EXPENSES 10,507 3,074
------- -------
INCOME BEFORE INCOME TAXES 3,639 3,995
PROVISION FOR INCOME TAXES 1,610 1,628
------- -------
NET INCOME 2,029 2,367
Preferred and preference dividends 1,198 --
------- -------
NET INCOME APPLICABLE TO COMMON STOCK $ 831 $ 2,367
======= =======
AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS) 31,418 20,442
NET INCOME PER COMMON SHARE $.03 $.12
======= =======
DIVIDENDS PER COMMON SHARE $.23 $.23
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UNITED WATER RESOURCES INC. AND SUBSIDIARIES
STATEMENT OF CONSOLIDATED CASH FLOWS
(THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
--------------------------------------
1995 1994
------------------- -----------------
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 2,029 $ 2,367
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 7,814 4,190
Deferred income taxes and investment tax credits, net 1,811 2,926
Gain from release of security deposit on real estate settlement -- (2,811)
Allowance for funds used during construction (AFUDC) (463) (127)
Changes in assets and liabilities, net of effect of Merger:
Accounts receivable and unbilled revenues 2,463 450
Prepaid and other current assets (1,062) (96)
Prepaid and deferred employee benefits (1,226) (1,505)
Recoverable income taxes 368 165
Accounts payable and other accruals (8,766) (2,343)
Accrued taxes 2,640 82
Accrued interest and other current liabilities (16) (1,533)
Accrued customer benefits (491) (651)
Other, net (455) (717)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,646 397
-------- --------
INVESTING ACTIVITIES:
Additions to utility plant (excludes AFUDC) (11,515) (4,907)
Additions to real estate and other properties (2,407) (3,956)
Change in restricted cash 6,816 1,494
-------- --------
NET CASH USED IN INVESTING ACTIVITIES (7,106) (7,369)
-------- --------
FINANCING ACTIVITIES:
Change in notes payable (17,700) 11,820
Additional long-term debt 22,000 --
Reduction in preferred stock and long-term debt (858) (10,301)
Issuance of common stock 4,976 6,232
Dividends on common stock (7,220) (4,713)
Dividends on preferred and preference stock (1,198) --
Net contributions and advances for construction 737 305
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 737 3,343
NET DECREASE IN CASH AND CASH EQUIVALENTS (1,723) (3,629)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,840 8,933
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,117 $ 5,304
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest (net of amount capitalized) $ 10,594 $ 3,582
Income taxes 495 860
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
UNITED WATER RESOURCES INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
NOTE 1 - GENERAL
- ----------------
In the opinion of United Water Resources (United Water, or the Company),
the accompanying unaudited consolidated financial statements contain all
adjustments, which consist of normal recurring adjustments, necessary for the
fair presentation of the results for the interim periods. Additional footnote
disclosure concerning accounting policies and other matters are disclosed in the
Company's audited consolidated financial statements included in its 1994 Annual
Report on Form 10-K, which should be read in conjunction with these financial
statements.
In March 1995, the Company changed the names of many of its operating
subsidiaries. By adopting "United Water" in the names of its utility
subsidiaries, the Company will achieve a unified corporate identity and greater
national recognition. The new names of some of the larger operating
subsidiaries are United Water New Jersey (formerly Hackensack Water Company),
United Waterworks (formerly General Waterworks Corporation) and United Water New
York (formerly Spring Valley Water Company). The new names are used hereafter.
Due to the seasonal nature of the Company's operations, financial results
for interim periods are not necessarily indicative of the results for a twelve
month period.
NOTE 2 - SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION
- -----------------------------------------------------
On April 22, 1994, United Water and GWC Corporation (GWC) merged (the
Merger), with United Water as the surviving corporation. The acquisition was
accounted for as a purchase, and the financial results of the former
subsidiaries of GWC are included in the Company's financial results beginning
April 1, 1994. The following condensed income statement information for the
period ended March 31, 1995 and the pro forma income statement for the period
ended March 31, 1994 are presented for comparative purposes. The unaudited pro
forma March 31, 1994 income statement gives effect to the Merger as if it had
occurred at the beginning of that period. Pro forma results are not necessarily
indicative of what actually would have occurred had the acquisition been in
effect for the periods presented. In addition, the pro forma results are not
intended to be a projection of future results.
INCOME STATEMENT INFORMATION FOR THE THREE MONTHS ENDED:
<TABLE>
<CAPTION>
(unaudited)
MARCH 31,
-----------
1995 1994
-------- -----------
(actual) (pro forma)
<S> <C> <C>
Operating revenues $71,405 $68,211
Operating income 14,146 13,073
Net income applicable to common stock 831 2,201
Net income per common share $ 0.03 $ 0.07
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- ------- -----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
MERGER
- ------
On April 22, 1994, United Water completed the Merger with GWC, in which United
Water was the surviving corporation. GWC's principal assets included 100% of
the stock of General Waterworks Corporation (presently known as United
Waterworks), which owns regulated water and wastewater utilities operating in 14
states, and a 25% indirect investment in JMM Operational Services, Inc. (JMM).
JMM provides operations and management services to government and industry for
water and wastewater treatment facilities. The Merger was accounted for under
the purchase method and resulted in the recording of a utility plant acquisition
adjustment of $67 million. The financial results of the former subsidiaries of
GWC are included in the the Company's financial results beginning April 1, 1994.
GENERAL
- -------
United Water New Jersey and United Water New York (a subsidiary of United
Water New Jersey) provide public water supply services to more than one million
people in northern New Jersey and southern New York. United Waterworks provides
public water supply services to approximately one million people in 14 states.
Its major utility operations are located in Arkansas, Delaware, Florida, Idaho,
New Jersey, New Mexico, New York and Pennsylvania. In addition, two of its
utilities, in Florida and New Mexico, also provide wastewater collection and
treatment services, generally to their water customers. The water utility
business is cyclical in nature, as both revenues and earnings are higher in the
summer months when customer consumption is higher than in the cooler months.
United Properties Group (United Properties), United Water's real estate
subsidiary, is a non-regulated business engaged in real estate investment and
development activities, including commercial office and retail properties,
residential and commercial land development, golf course operations and
consulting services. It owns a portfolio of real estate located in New Jersey,
New York and Pennsylvania. United Properties also provides consulting and
advisory services in support of the real estate assets of the other United Water
companies.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Net capital expenditures are generally incurred by United Water's utility
subsidiaries in connection with the normal upgrading and expansion of existing
water and wastewater facilities and to comply with existing environmental
regulations. United Water considers its utility plant to be adequate and in
good condition. However, the Company is projecting higher levels of capital
expenditures during the next five years due to the addition of new, or expansion
of existing, water treatment and source of supply facilities by United
Waterworks' utility subsidiaries. These capital expenditures are necessary to
meet growth requirements and to comply with environmental laws and regulations.
Excluding the effects of inflation, the net capital expenditures of United
Water's utility subsidiaries are projected to aggregate $270 million over the
next five years, including $50.3 million and $60.7 million, respectively, in
1995 and 1996. This total includes $195 million for United Waterworks and $75
million for United Water New Jersey and United Water New York. The expenditures
related to compliance with environmental laws and regulations are estimated to
be approximately 25% of the projected net capital expenditures over the 1995-
1999 period. To the best of management's knowledge, the Company is in
compliance with all major environmental laws and regulations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
- -------------------------------
United Water anticipates that its future capital expenditures will be funded by
internally generated funds, external debt financings and the issuance of
additional common and preferred stock, including shares issued to existing
shareholders, bondholders, customers and employees under the Company's dividend
reinvestment and stock purchase plans. In addition, United Waterworks and United
Water New York are parties to a number of tax-exempt financings for the purpose
of funding capital expenditures. Funds are drawn down on these financings as
qualified capital expenditures are made. As of March 31, 1995, $23.4 million of
proceeds from these financings have not yet been disbursed to the Company and
are included in the consolidated balance sheet as restricted cash. The amount
and timing of the use of these proceeds and of future financings will depend on
actual capital 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.
United Waterworks owns a utility subsidiary which provides water and
wastewater services to customers in Rio Rancho, New Mexico. In December 1994,
the city of Rio Rancho (the City) filed an Application for Immediate Possession
of the Company's utility system in Rio Rancho. Hearings were held on the
Application, and on March 30, 1995 the court entered an Order For Immediate
Possession (the Order). The Order allows the City to take possession on June 30,
1995 upon depositing $53 million with the court. The City cannot take possession
until the deposit is made. In April 1995 the City and the Company's utility
subsidiary entered into an agreement in settlement of the condemnation action
whereby the City will pay the Company $69 million for its utility operations in
New Mexico plus the amount of net capital additions made to the water and
wastewater systems by the Company in 1995. Subject to court approval, the
Company expects the transfer to be completed by the third quarter of 1995.
United Water plans to utilize the proceeds to fund future capital expenditures
of its utilities. The absence of the Company's utility operations in Rio Rancho
will not have a material effect upon the consolidated financial position or
results of operations of the Company. In 1994, the Company's Rio Rancho utility
had revenues of $11.6 million.
There were a number of changes in the Company's long-term debt in the first
quarter of 1995. In January 1995, United Water New York issued $12 million of
8.98% senior notes, the proceeds of which were used to reduce short-term
borrowings.
In December 1994, United Waterworks entered into a medium-term note program
that will enable United Waterworks to issue up to $75 million of debt with terms
ranging from 9 months to 30 years. The interest rates will be set as notes are
issued under the program. In February 1995, United Waterworks issued the first
$10 million of notes under this program, at a rate of 8.84%, with the full
amount maturing in 2025, and redeemed outstanding notes payable.
United Properties currently expects to spend $43.4 million over the next five
years for capital expenditures on its existing real estate portfolio.
Expenditures in 1995 and 1996 are projected to be $3.6 million and $17.4
million, respectively. Funding for these expenditures is anticipated to come
from operations, including the sales of properties and the operation of existing
commercial properties and golf courses, and from the proceeds of new financings.
At March 31, 1995, United Water had cash and cash equivalents of $8.1 million
and unused short-term bank lines of credit of $139.7 million. Management
expects that unused credit lines currently available, cash flows from operations
and cash generated from the dividend reinvestment and stock purchase plans will
be sufficient to meet anticipated future operational needs.
<PAGE>
RATE MATTERS
- ------------
The profitability of United Water's regulated utilities is, to a large extent,
dependent upon adequate and timely rate relief. The Company anticipates that
the regulatory authorities that have jurisdiction over its utility operations
will allow the Company's regulated utilities to earn a reasonable return on
their utility investments.
In October 1993, a rate increase of approximately 3.1%, or $3.5 million,
became effective for United Water New Jersey, the Company's largest utility
subsidiary. This increase resulted from the settlement of a dispute involving a
transfer of land from United Water New Jersey to United Properties. The
increase had no effect on United Water's cash flows because offsetting credits
related to the settlement and included in accrued customer benefits are being
applied to customer bills until late 1995.
Twelve rate increases were awarded to the Company's regulated utilities during
1994, representing an aggregate annual rate revenue increase of $8.1 million.
An estimated $3.2 million of this amount was reflected in 1994's revenues while
the remaining $4.9 million of carryover impact of the rate awards received in
1994 is expected to increase revenues in 1995.
At the end of March 31, 1995, there were three rate cases pending in which the
Company has requested an aggregate annual rate increase of $7.2 million. Only a
portion of the rate increase, if received in 1995, will affect revenues in 1995.
Generally, the rate awards the Company's operating utilities actually receive
are less than the amounts requested. The Company expects to file additional
rate cases in 1995, but does not expect that those rate awards, if received in
1995, will have a significant impact on revenues in 1995.
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1995
- ---------------------------------------------------------
OVERVIEW
United Water's net income applicable to common stock for the first quarter of
1995 was $831,000, a decrease of 64.9% from $2.4 million in the comparable
period in 1994. Net income per common share for the first quarter of 1995 was 3
cents as compared to 12 cents for the same period last year. Historically, first
quarter earnings in the water industry are the lowest of the year because winter
and early spring are traditionally periods of lower consumption. However,
earnings for the first quarter of 1994 reflected the award of $2.8 million in
escrow monies to the Company's real estate subsidiary, United Properties Group,
following a foreclosure settlement. Earnings per share for the first quarter of
1995 decreased as compared to 1994 due to the absence of a comparable real
estate transaction.
REVENUES
The $32.4 million, or 83%, increase in revenues from the same period in 1994
was attributable to the following factors:
<TABLE>
<CAPTION>
OPERATING REVENUES
(thousands of dollars) Increase (Decrease)
- ---------------------- -------------------
<S> <C> <C>
Utilities:
Merger with GWC $30,357 77.8%
Rate awards 505 1.3%
Other (108) (0.3%)
Real estate (248) (0.6%)
Other operations 1,884 4.8%
------- -----
$32,390 83.0%
</TABLE>
The Merger increased revenues $30.4 million, or 77.8%, in the first
quarter of 1995 and was the major reason for the 83% increase in revenues in
1995 as compared to the same period in 1994. Due to the absence of real estate
sales in the first quarter of 1995, real estate revenues decreased as compared
to the same quarter in 1994. The increase in operating revenues from other
operations was attributable to a service contract with the city of Hoboken as
well as increases in environmental testing and meter installation contracts.
COSTS AND EXPENSES
The increase in operating expenses from the same period in 1994 is due
to the following:
<TABLE>
<CAPTION>
OPERATING EXPENSES
(thousands of dollars) Total Effect of Net of Merger
Increase Merger Increase
------------------ --------- -------------
<S> <C> <C> <C> <C> <C>
Operation and maintenance $16,680 79.6% $16,162 $518 2.5%
Depreciation and amortization 4,012 111.1% 3,704 308 8.5%
General taxes 4,621 62.7% 3,753 868 11.8%
------------------ --------- -------------
</TABLE>
The increase in operation and maintenance expenses, excluding the impact of
the Merger with GWC, represents the higher costs in 1995 related to the service
contract with the city of Hoboken and the additional environmental testing and
meter installation contracts.
General taxes increased by $868,000, or 11.8%, due to higher real estate and
franchise taxes.
<PAGE>
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1995 (CONTINUED)
- ---------------------------------------------------------
INTEREST AND OTHER
The increase in interest expense of $4.9 million, or 86.5%, was
predominantly due to the Merger. Other income decreased $2.9 million, or 93.8%,
primarily due to the award of $2.8 million in escrow monies to United Properties
following a foreclosure settlement in 1994.
INCOME TAXES
The effective income tax rates on income before preferred and preference
stock dividends were 38.2% and 35.6% in the first quarter of 1995 and 1994,
respectively. The increase in the effective tax rate is attributable to the
amortization of the purchase acquisition adjustment and additional state income
taxes.
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; therefore, high
inflation could have a detrimental effect on the Company until sufficient rate
increases are received. 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>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
In 1990, the Paterson Municipal Utilities Authority (PMUA) filed suit in the
Superior Court of New Jersey -Passaic County, against United Water New Jersey
and the North Jersey District Water Supply Commission. The suit was based on
PMUA's alleged ownership of various water rights in the Passaic River, which
rights the PMUA claimed were, or may have been, affected by diversions related
to the Wanaque South Project, a project owned equally by United Water New Jersey
and the North Jersey District Water Supply Commission. United Water New
Jersey's Motion for Summary Judgement, dismissing the Complaint, was granted by
the trial court in July 1992. In October 1992 the PMUA filed a Notice of Appeal
with the Appellate Division, and the Appellate Division affirmed the dismissal
in May 1994. The PMUA next appealed to the New Jersey Supreme Court, which
denied certification of this appeal in September 1994. Finally, the PMUA filed
a Petition for Certiorari to the United States Supreme Court in December 1994,
and in February 1995 the United States Supreme Court denied their petition.
Two suits were filed by Safas Corporation and New Regime Company against
United Water, Dundee Water Power & Land Co. (Dundee) and United Water New Jersey
in September and November 1994 in the Superior Court of New Jersey - Passaic
County. The suits allege that the plaintiffs suffered property damages as a
result of an alleged breach in a berm surrounding the Dundee Canal, allowing
water to escape. The Dundee Canal is the property of Dundee, a corporation of
which United Water owns 50% of the outstanding common stock. While an
assessment of the property damages being alleged has not yet been completed, it
is believed that such claims will be in excess of $500,000. Both of the
plaintiffs have voluntarily dismissed United Water and United Water New Jersey
from its action, having been provided satisfactory evidence by the Company
regarding its status as a shareholder in Dundee. The Company is of the opinion
that it, United Water New Jersey and Dundee have adequate insurance to cover
claims of this nature. United Water is undertaking a continuing investigation
of the claims in conjunction with the North Jersey District Water Supply
Commission, the other 50% co-owner of Dundee.
United Waterworks owns a utility subsidiary which provides water and
wastewater services to customers in Rio Rancho, New Mexico. The city of Rio
Rancho (the City) notified United Waterworks that it intends to acquire the
Company's utility operations in Rio Rancho, and on October 28, 1994 commenced
condemnation proceedings in the Thirteenth Judicial District, Sandoval County.
On December 15, 1994, the City filed an Application for Immediate Possession of
the Company's utility system in Rio Rancho. Hearings were held on the
Application, and on March 30, 1995 the court entered an Order For Immediate
Possession (the Order). The Order allows the City to take possession on June
30, 1995 upon depositing $53 million with the court. On April 19, 1995, the City
and the Company's utility subsidiary entered into a Stipulation in settlement of
the condemnation action. Under the Stipulation, the City will pay the Company
$69 million plus the amount of net capital additions made to the water and
wastewater systems by the Company in 1995. The City's obligations under the
Stipulation are subject to the satisfaction of certain conditions, including
receipt of court approval and a requirement that no legal proceedings shall
exist which could interfere with the City's ownership or operations of the
utility systems. The Company expects the transfer to be completed by the third
quarter of 1995.
United Water Delaware (formerly Wilmington Suburban Water Corporation), a
subsidiary of United Waterworks, is the subject of a Criminal Violation Notice
issued by the New Castle County, Delaware Department of Public Works (the
Notice). The Notice, dated April 15, 1992, describes the violation as being an
illegal placement of fill in a floodplain in contravention of the New Castle
County Zoning and Drainage Codes. United Water Delaware alleges that the
illegal fill was placed on land it owns by one or more third parties without
<PAGE>
LEGAL PROCEEDINGS (CONTINUED)
- -----------------
the knowledge or approval of United Water Delaware. The management of United
Water Delaware has responded to the Notice by engaging hydrogeological engineers
to investigate the feasibility of a mitigation and remediation plan which would
be consistent with the appropriate County Ordinances. Violation notice forms
also were issued to other similarly situated property owners, and United Water
Delaware has taken part in many discussions concerning the level of
participation by all such parties in a remediation. United Water Delaware has
met with the New Castle County authorities and presented a plan to partially
remediate the fill. An application for approval of this plan was submitted to
the New Castle County Department of Planning on April 4, 1995. It is expected
that the County will accept this proposal. Management believes that the
resolution of this matter will not have a material adverse effect upon the
financial position or results of operations of the Company.
On October 28, 1994, IU International Corporation (IU) filed suit in the
Superior Court of the State of Delaware against United Waterworks alleging
breach of contract and seeking reimbursement from United Waterworks of more than
$3 million, as well as interest thereon. IU's claim is based on certain tax
indemnifications that were part of a stock purchase agreement entered into by
IU, Lyonnaise American Holding, Inc., United Waterworks and GWC in connection
with the 1982 purchase of 50% of the outstanding common stock of United
Waterworks by LAH. United Waterworks is engaged in settlement negotiations with
IU, but no final settlement agreement has been executed by the parties.
Management believes that the resolution of this matter will not have a material
adverse effect upon the financial position or results of operations of the
Company.
United Water is not a party to any other litigation other than the routine
litigation incidental to the business of United Water. None of such litigation,
either individually or in the aggregate, is material to the business of United
Water.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ----------------------------------------------------
At the 1995 Annual Meeting of Shareholders of the Company held on May 8,
1995, four directors were re-elected to Class II of the Board of Directors and
the appointment of Price Waterhouse LLP as independent auditors for 1995 was
ratified by the following votes:
Name of Director Votes For Votes Against
- ---------------- --------- -------------
Peter Del Col 28,110,768 296,990
Jon F. Hanson 28,099,305 308,453
Marcia L. Worthing 28,111,442 296,316
Philippe Brongniart 28,064,982 342,776
Ratification of appointment of independent auditors for 1995:
FOR 28,088,880 AGAINST 205,013 ABSTENTIONS 113,865
<PAGE>
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED WATER RESOURCES INC.
------------------------------
(Registrant)
Date: May 12, 1995 By /s/ JOHN J. TURNER
------------ -------------------------------------
(Signature)
John J. Turner
Treasurer
DULY AUTHORIZED AND CHIEF
ACCOUNTING OFFICER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet, Statement of Consolidated Income and Statement of
Consolidated Cash Flows and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 1,041,659
<OTHER-PROPERTY-AND-INVEST> 110,010
<TOTAL-CURRENT-ASSETS> 102,844
<TOTAL-DEFERRED-CHARGES> 128,607
<OTHER-ASSETS> 73,447
<TOTAL-ASSETS> 1,456,567
<COMMON> 289,760
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 51,667
<TOTAL-COMMON-STOCKHOLDERS-EQ> 341,427
98,214
9,000
<LONG-TERM-DEBT-NET> 527,475
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 58,750
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 9,267
260
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 412,174
<TOT-CAPITALIZATION-AND-LIAB> 1,456,567
<GROSS-OPERATING-REVENUE> 71,405
<INCOME-TAX-EXPENSE> 1,610
<OTHER-OPERATING-EXPENSES> 57,259
<TOTAL-OPERATING-EXPENSES> 58,869
<OPERATING-INCOME-LOSS> 12,536
<OTHER-INCOME-NET> 73
<INCOME-BEFORE-INTEREST-EXPEN> 12,609
<TOTAL-INTEREST-EXPENSE> 10,580
<NET-INCOME> 2,029
1,198
<EARNINGS-AVAILABLE-FOR-COMM> 831
<COMMON-STOCK-DIVIDENDS> 7,220
<TOTAL-INTEREST-ON-BONDS> 11,797
<CASH-FLOW-OPERATIONS> 4,646
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
