<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
SCHEDULE 13E-3
Rule 13e-3 Transaction Statement
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
----------------
UNITED WATER RESOURCES INC.
(Name of the Issuer)
UNITED WATER RESOURCES INC.
SUEZ LYONNAISE DES EAUX
LYONNAISE AMERICAN HOLDING, INC.
LAH ACQUISITION CO.
(Name of Persons Filing Statement)
Common Stock, No Par Value 0009131901
(Title of Class of Securities) (CUSIP Number of Class of Securities)
and
Series A Cumulative Convertible 193190 20 3
Preference Stock, No Par Value (CUSIP Number of Class of Securities)
(Title of Class of Securities)
William S. Lamb, Esq. Garry P. McCormack, Esq.
LeBoeuf, Lamb, Greene & MacRae, L.L.P. Piper & Marbury L.L.P.
125 West 55th Street 1251 Avenue of the Americas
New York, NY 10019-5389 New York, NY 10020-1104
Telephone: (212) 424-8000 Telephone: (212) 835-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and
Communications on Behalf of Persons Filing Statement)
----------------
This statement is filed in connection with (check the appropriate box):
a. [X] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the
Securities Exchange Act of 1934.
b. [_] The filing of a registration statement under the Securities Act of
1933.
c. [_] A tender offer.
d. [_] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies. [X]
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CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
Transaction Amount of
Valuation* Filing Fee
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<S> <C>
$983,564,824 $196,712.96
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</TABLE>
* For purposes of calculating fee only. This amount is based on (i)
27,199,081 (the number of common shares, excluding shares held by Lyonnaise
American Holding, Inc., outstanding and resulting from the conversion of
the Series A Cumulative Convertible Preference Stock, as of September 30,
1999) multiplied by $35.00 plus (ii) $31,596,989 (the net value of options
and their related accrued dividends), multiplied by 1/50th of one percent.
[X]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing. Schedule 14A, preliminary proxy
statement, filed by United Water Resources Inc. on October 6, 1999.
<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (this "Transaction
Statement") is being jointly filed by each of (i) United Water Resources Inc.,
a New Jersey corporation ("UWR"), (ii) Suez Lyonnaise des Eaux, a French
societe anonyme ("SLDE"), (iii) Lyonnaise American Holding, Inc., a Delaware
corporation and a wholly-owned subsidiary of SLDE ("LAH"), and (iv) LAH
Acquisition Co., a New Jersey corporation and a wholly-owned subsidiary of LAH
("LAH Acquisition"). UWR, LAH, LAH Acquisition and SLDE are parties to an
Agreement and Plan of Merger, dated as of August 20, 1999 (the "Merger
Agreement"), pursuant to which LAH Acquisition will be merged with and into
UWR and UWR will become a wholly-owned subsidiary of LAH. A copy of the Merger
Agreement has been filed with the SEC as Annex A to the preliminary proxy
statement of UWR (the "proxy statement"), which is filed as Exhibit D(1) to
this Transaction Statement.
SLDE, LAH and LAH Acquisition consider that the restrictions on LAH's and
its affiliates' actions with respect to UWR and its management contained in
the Governance Agreement, and other factors, provide a basis for concluding
that SLDE, LAH and LAH Acquisition are not affiliates of UWR and that the
filing of this Transaction Statement is not required. SLDE, LAH and LAH
Acquisition are nonetheless voluntarily filing this Transaction Statement
jointly with UWR.
The information contained in this Transaction Statement concerning UWR,
SLDE, LAH and LAH Acquisition was supplied by UWR, SLDE, LAH and LAH
Acquisition, respectively. No party to this Transaction Statement takes
responsibility for the accuracy of the information provided by any other party
to this Transaction Statement.
Unless otherwise indicated, all cross references below are to headings and
subheadings in the text of the proxy statment (without reference to the form
of proxy card, letter to stockholders or notice of meeting). The information
in the proxy statement is expressly incorporated in this Transaction Statement
by the references below, and such responses are qualified in their entirety by
reference to the information contained in the proxy statement.
CROSS REFERENCE SHEET SHOWING LOCATION IN PRELIMINARY PROXY STATEMENT OF
INFORMATION REQUIRED BY ITEMS IN SCHEDULE 13E-3
<TABLE>
<CAPTION>
Schedule 13E-3 Item Location in proxy statement
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<C> <S>
1. Issuer and Class of Security Subject to the
Transaction
Item 1(a) Cover Page; "SUMMARY--The
Companies" and "THE COMPANIES--
UWR."
Item 1(b) Cover Page; "SUMMARY--The UWR
Special Meeting" and "THE
SPECIAL MEETING--Record Date;
Voting Rights."
Item 1(c) "SUMMARY--Price of UWR Common
Stock and Dividends" and "PRICE
OF UWR COMMON STOCK AND DIVI-
DENDS."
Item 1(d) "SUMMARY--Price of UWR Common
Stock and Dividends" "The Merg-
er--Potential Conflicts of In-
terest of Certain Persons in the
Merger" and "SUMMARY--The Merger
Agreement."
Item 1(e) Not applicable.
Item 1(f) "THE COMPANIES--Recent Transac-
tions Between UWR, LAH and SLDE"
2. Identity and Background
Items 2 (a), (b), (c), (d) and (g) "SUMMARY--The Companies" and
"THE COMPANIES"
Item 2(e) Not Applicable.
Item 2(f) Not Applicable.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Schedule 13E-3 Item Location in proxy statement
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<C> <S>
3. Past Contacts, Transactions or Negotiations
Item 3(a) (1) "SUMMARY--The Merger;"
"THE MERGER--Potential
Conflicts of Interests
of Certain Persons in
the Merger" and "THE
COMPANIES--Recent Trans-
actions Between UWR, LAH
and SLDE."
Item 3(a) (2) "SUMMARY--The Merger;"
"THE MERGER--Potential
Conflicts of Interests
of Certain Persons in
the Merger" and "THE
COMPANIES--Recent Trans-
actions Between UWR, LAH
and SLDE."
Item 3(b) "SUMMARY--The Merger;"
"THE MERGER--Potential
Conflicts of Interests
of Certain Persons in
the Merger" and "THE
COMPANIES--Recent Trans-
actions Between UWR, LAH
and SLDE."
4. Terms of the Transaction
Items 4(a) and (b) "SUMMARY--The Merger;"
"SUMMARY--The Merger
Agreement;" "THE MERGER"
and "THE MERGER AGREE-
MENT"
5. Plans or Proposals of the Issuer or Affiliate
Items 5(a)-(g) "SUMMARY--The Merger;"
"THE MERGER--Overview"
and "THE MERGER--Certain
Effects of the Merger."
6. Source and Amounts of Funds or Other Consideration
Item 6(a), (b) and (c) Cover Page; "MERGER RE-
LATED FINANCING" and
"THE SPECIAL MEETING--
Cost of Solicitation of
Proxies."
Item 6(d) Not Applicable.
7. Purpose(s), Alternatives, Reasons and Effects
Items 7(a), (b) and (c) "SUMMARY--The Merger;
"THE MERGER--Background
of the Merger;" "THE
MERGER--Rothschild as
Financial Advisor to
SLDE and LAH;" "THE
MERGER--SLDE's and LAH's
Belief that the Merger
is Fair to UWR's
Unaffiliated
Stockholders;" "THE
MERGER--Reasons for the
Merger and
Recommendation of the
Board of Directors" and
"THE MERGER--Certain
Effects of the Merger."
Item 7(d) "SUMMARY--The Merger;"
"THE MERGER--Federal In-
come Tax Consequences;"
"THE MERGER--Certain Ef-
fects of The Merger;"
and "THE MERGER AGREE-
MENT--Effects of the
Merger."
8. Fairness of the Transaction
Item 8(a), (b), (c), (d), (e) and (f) "SUMMARY--The UWR Spe-
cial Meeting;" "THE SPE-
CIAL MEETING--Vote Re-
quired;" "THE MERGER--
Background of the Merg-
er;" "THE
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Schedule 13E-3 Item Location in proxy statement
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<C> <S>
MERGER--Reasons for the
Merger and Recommendation
of the Board of Direc-
tors;" "THE MERGER--SLDE's
and LAH's Belief That The
Merger Is Fair To UWR's
Unaffiliated Stockhold-
ers;" "THE MERGER--Opinion
of UWR's Financial Advi-
sor;" "THE MERGER--Certain
Effects of the Merger;"
"THE MERGER--Rothschild as
Financial Advisor to SLDE
and LAH;" "THE MERGER--Po-
tential Conflicts of In-
terest of Certain Persons
in the Merger" and "Opin-
ion of Morgan Stanley &
Co. Incorporated," dated
as of the date of the
proxy statement and an-
nexed to the proxy state-
ment as Annex B.
9. Reports, Opinions, Appraisals and Certain Negotiations
Items 9(a)-(c) "THE MERGER--Background of
the Merger;" "THE MERGER--
Reasons for the Merger and
Recommendation of the
Board of Directors;" "THE
MERGER--Opinion of UWR's
Financial Advisor;" "THE
MERGER--Certain Effects of
the Merger;" "THE MERGER--
Rothschild as Financial
Advisor to SLDE and LAH;"
"THE MERGER--Potential
Conflicts of Interest of
Certain Persons in the
Merger" and "Opinion of
Morgan Stanley & Co. In-
corporated," dated as of
the date of the proxy
statement and annexed to
the proxy statement as An-
nex B.
10. Interest in Securities of the Issuer
Item 10(a) "FIVE PERCENT OWNER OF UWR
COMMON STOCK" and "SECU-
RITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MAN-
AGEMENT."
Item 10(b) "FIVE PERCENT OWNER OF UWR
COMMON STOCK;" "PRICE OF
UWR COMMON STOCK AND DIVI-
DENDS;" "THE COMPANIES--
Recent Transactions Be-
tween UWR, LAH and SLDE"
and "SUMMARY--Price of UWR
Common Stock and Divi-
dends."
11. Contracts, Arrangements or Understandings with
Respect to the Issuer's Securities
"SUMMARY--The Merger;"
"SUMMARY--The Merger
Agreement;" "THE MERGER;"
"THE MERGER AGREEMENT;"
"THE COMPANIES--Recent
Transactions Between UWR,
LAH and SLDE;" "SECURITY
OWNERSHIP OF CERTAIN BENE-
FICIAL OWNERS AND MANAGE-
MENT" and "FIVE PERCENT
OWNER OF UWR COMMON
STOCK."
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Schedule 13E-3 Item Location in proxy statement
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<S> <C>
12. Present Intention and
Recommendation of Certain
Persons with Regard to the
Transaction
Items 12(a)-(b) "THE MERGER--Reasons for the Merger and
Recommendation of the UWR Board of Direc-
tors;" "QUESTIONS AND ANSWERS ABOUT THE
MERGER;" "THE MERGER--Rothschild as Finan-
cial Advisor to SLDE and LAH;" "THE MERG-
ER--SLDE's and LAH's Belief That The Merger
is Fair to UWR's Unaffiliated Stockhold-
ers;" "SUMMARY" and "THE MERGER--Background
of the Merger."
13. Other Provisions of the
Transaction
Item 13(a) "THE MERGER--Absence of Appraisal Rights"
Item 13(b) "THE MERGER AGREEMENT--Access to Informa-
tion" and "WHERE YOU CAN FIND MORE INFORMA-
TION."
Item 13(c) Not Applicable.
14. Financial Information
Item 14(a)(1) "SELECTED HISTORICAL AND FINANCIAL DATA"
and "Opinion of Morgan Stanley & Co.
Incorporated" dated as of the date of the
proxy statement, in, and annexed to the
proxy statement as Annex B.
Item 14(a)(2) "WHERE YOU CAN FIND MORE INFORMATION"
Item 14(a)(3) "WHERE YOU CAN FIND MORE INFORMATION"
Item 14(a)(4) "WHERE YOU CAN FIND MORE INFORMATION"
Item 14(b) Not Applicable.
15. Persons and Assets Employed,
Retained or Utilized
Item 15(a) "SUMMARY--The Merger;" "SUMMARY--The Merger
Agreement" "THE SPECIAL MEETING--Cost of
Solicitation of Proxies;" "THE MERGER--
Overview" and "The Merger--Certain Effects
of the Merger."
Item 15(b) "THE SPECIAL MEETING--Cost of Solicitation
of Proxies;" "THE MERGER--Background of the
Merger;" "THE MERGER--Reasons for the
Merger and Recommendation of the Board of
Directors;" "THE MERGER--Opinion of UWR's
Financial Advisor;" "THE MERGER--Rothschild
as Financial Advisor to SLDE and LAH;" "THE
MERGER AGREEMENT--Exchange of Stock
Certificates" and "Opinion of Morgan
Stanley &
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Schedule 13E-3 Item Location in proxy statement
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<S> <C>
Co. Incorporated," dated as of the date of
the proxy statement and annexed to the
proxy statement as Annex B.
16. Additional Information The proxy statement in its entirety.
17. Material to Be Filed as
Exhibits
Item 17(a) --Not applicable.
Item 17(b)(2) --Opinion of Morgan Stanley & Co.
Incorporated, dated as of the date of the
proxy statement, filed as Annex B to the
proxy statement and incorporated herein by
reference.
Item 17(c)(2) --Agreement and Plan of Merger by and among
United Water Resources Inc., Lyonnaise
American Holding, Inc., LAH Acquisition
Co. and Suez Lyonnaise des Eaux, dated as
of August 20, 1999, filed as Annex A to
the proxy statement incorporated herein by
reference.
Item 17(d)(1) --preliminary proxy statement of United
Water Resources Inc. and related Notice of
Special Meeting.
Item 17(d)(2) --Form of Proxy.
Item 17(e) --Not applicable.
Item 17(f) --Not applicable.
</TABLE>
5
<PAGE>
Item 1. Issuer and Class of Security Subject to the Transaction.
(a) The information set forth on the Cover Page of the proxy statement, and
in "SUMMARY--The Companies" and "THE COMPANIES--UWR" in the proxy statement is
hereby incorporated herein by reference.
(b) The information set forth on the Cover Page of the proxy statement and
in "SUMMARY--The UWR Special Meeting" and "THE SPECIAL MEETING--Record Date;
Voting Rights" in the proxy statement is hereby incorporated herein by
reference.
(c) The information set forth in "SUMMARY--Price of UWR Common Stock and
Dividends" and "PRICE OF UWR COMMON STOCK AND DIVIDENDS" in the proxy
statement is hereby incorporated herein by reference. There is currently no
established trading market for the series A preference stock.
(d) The information set forth in "SUMMARY--Price of UWR Common Stock and
Dividends" and "SUMMARY--The Merger Agreement" in the proxy statement is
hereby incorporated herein by reference. Other than restricted stock described
in "THE MERGER--Potential Conflicts of Interest of Certain Persons in the
Merger," there do not currently exist any restrictions on UWR's present or
future ability to pay dividends on the common stock or the series A preference
stock.
(e) Not applicable. None of UWR, SLDE, LAH or LAH Acquisition has made an
underwritten public offering of UWR common stock or series A preference stock
for cash during the past three years which was registered under the Securities
Act of 1933 or exempt from registration pursuant to Regulation A.
(f) The information set forth in "THE COMPANIES--Recent Transactions Between
UWR, LAH and SLDE" in the proxy statement is hereby incorporated herein by
reference. UWR has not made any purchases of its common stock or series A
preference stock since the commencement of its second full fiscal year
preceding the date of this Transaction Statement.
Item 2. Identity and Background.
(a)-(d),(g) This Schedule 13E-3 is being filed by UWR, SLDE, LAH and LAH
Acquisition. UWR is the issuer of the common stock which is the subject of the
Rule 13e-3 transaction. The information set forth in "SUMMARY--The Companies"
and "THE COMPANIES" in the proxy statement is hereby incorporated herein by
reference.
Set forth below are the (i) name, (ii) present principal occupation or
employment (iii) material occupations, offices or employments for the past
five years, and (iv) citizenship of each director of UWR. The current business
address for each individual listed below is United Water Resources Inc., 200
Old Hook Road, Harrington Park, NJ, 07640-1799. All directors of UWR also
serve as directors of United Water New Jersey and United Waterworks.
Present Principal Occupation or
Name Employment; Material Occupations, Offices
or Employments For the Past Five Years
Lawrence R. Codey, (e) Director of UWR since 1991. President and
Chief Operating Officer of Public Service
Electric & Gas Co. since 1991. Director,
Trust Company of New Jersey, Public
Service Enterprise Group, Inc., and
Sealed Air Corporation. United States
citizen
Donald L. Correll, (e) Chairman of UWR since 1994. Director,
Chief Executive Officer and President of
United Water since 1992. Director,
Interchange Financial Service
Corporation. United States citizen
6
<PAGE>
Name Present Principal Occupation or
Employment; Material Occupations, Offices
or Employments For the Past Five Years
Robert L. Duncan, Jr., (a)
Director of UWR since 1988. General
Counsel of American Management
Association International since July
1998. Member of the law firm of De Forest
& Duer through June 1998. United States
citizen
George F. Keane, (a),(c) Director of UWR since 1997. Chairman of
Trigen Energy Corp. since 1994. President
Emeritus and Senior Investment Advisor
for The Common Fund 1993 to 1996.
Director, Security Capital U.S. Real
Estate Shares, Global Pharmaceutical Co.,
and Universal Stainless & Alloy Products.
United States citizen
Thierry Bourbie, (c) Director of UWR since 1996. President of
the International Water Division of SLDE
since September 1996 and Director of
French Water Operations 1994 to 1996.
Chief Executive Officer and Chairman of
Lyd Informatique (SLDE Subsidiary) 1994
to 1996. Chief Executive Officer and
Chairman of Apic Syst (SLDE Subsidiary)
1991 to 1995. Director, AGBAR. French
citizen
Peter Del Col, (p) Director of UWR since 1983. Chairman of
Colson Services Corporation since January
1998 and President 1986 to 1998. Chairman
of FundQuest since 1994 and Partner,
Colson Investments since 1985. United
States citizen
Jon F. Hanson, (c),(e) Director of UWR since 1986. Chairman of
Hampshire Management Company since 1976.
Director, Orange and Rockland Utilities,
Inc., Prudential Insurance Company of
America, Consolidated Delivery and
Logistics, Fleet Trust Company and Neuman
Distributors, Inc. United States citizen
Marcia L. Worthing, (c),(p) Director of UWR since 1987. Executive
Vice President of Mullin & Associates
since November 1998. Senior Vice
President--Human Resources and Corporate
Affairs of Avon Products Inc. 1995 to
November 1998, and Senior Vice
President--Human Resources 1990 to 1995.
United States citizen
Edward E. Barr, (a),(e) Director of UWR since 1994. Chairman of
Sun Chemical Corporation since January
1998, and President and Chief Executive
Officer since 1987. President and Chief
Executive Officer of DIC American, Inc.
1988 to 1997. Director, Dainippon Ink and
Chemicals, Tokyo and First Union Corp.;
Trustee, Northwestern Mutual Insurance
Company. United States citizen
Charles Chaumin, (e),(p) Director of UWR since July 1998. Vice
President of the Americas of Lyonnaise
since September 1998. Vice President of
Aquas Argentina 1993 to September 1998.
French citizen
7
<PAGE>
Name Present Principal Occupation or
Employment; Material Occupations, Offices
or Employments For the Past Five Years
Frank J. Borelli, (c),(p)
Director of UWR since 1983. Director of
Marsh & McLennan Companies Inc. since
1988 and Senior Vice President and Chief
Financial Officer since 1984. Director,
Interpublic Group of Companies Inc.
United States citizen
Douglas W. Hawes, (e) Director of UWR since 1983. Secretary of
United Water since 1983. Of Counsel to
law firm of LeBoeuf, Lamb, Greene &
MacRae, L.L.P. since January 1999 and
Partner through 1998. United States
citizen
Dennis M. Newnham, (a),(p) Director of UWR since 1986. President and
Chief Executive Officer of The B.
Manischewitz Company, LLC since January
1999. President and Chief Executive
Officer of Tsumura International 1996 to
1999 and Adirondack Beverages Inc. 1995
to 1996. Venture capitalist consultant in
1994. Director, Nutramax Products Inc.
United States citizen
Mr. Chaumin, Mr. Correll, Mr. Del Col, Mr. Hanson and Mr. Keane also serve
as directors of United Properties Group. Mr. Correll serves as a director and
officer of certain other subsidiaries of UWR.
- --------
(a) Audit Committee member.
(c) Compensation Committee member.
(e) Executive Committee member.
(p) Pension Committee member.
Executive Officers of United Water
The following table sets forth the (i) name, (ii) principal occupation or
employment, (iii) material occupations, offices or employments for the past
five years and (iv) citizenship of each executive officer of UWR and its
subsidiaries who is not a director of UWR. The current business address for
each individual listed below is United Water Resources Inc., 200 Old Hook
Road, Harrington Park, NJ, 07640-1799.
Present Principal Occupation or
Name Employment; Material Occupations, Offices
or Employments For the Past Five Years
William D. Colford Vice-President--Support Services of
United Water M&S since November 1996.
Vice President--Administration 1994 to
1996. United States citizen
Frank J. DeMicco President of United Water New Jersey
since August 1996. Vice President--
Operations from 1992 to 1996. Senior Vice
President of United Water M&S since 1994.
United States citizen
Michael C.J. Fallon President of United Properties Group
since January 1993. Vice President of
United Water M&S since March 1998. United
States citizen
Walton F. Hill Vice President--Regulatory Business of
United Water M&S since August 1998. Vice
President-- Regulatory Law 1994 to 1998.
United States citizen
Robert J. Iacullo
Vice President of United Waterworks since
August 1998. Vice President--Regulatory
Business of United Water M&S 1996 to 1998
and Vice President--Rates 1994 to 1996.
United States citizen
8
<PAGE>
Name Present Principal Occupation or
Employment; Material Occupations, Offices
or Employments For the Past Five Years
Treasurer of United Water M&S since June
John T. Marino 1994. Treasurer of United Water in 1994.
United States citizen
John Martinowich Vice President--External Affairs and
Business Development of United Water M&S
since January 1998. Assistant Vice
President--External Affairs and Marketing
1994 to 1998. United States citizen
Richard B. McGlynn General Counsel of United Water since
August 1996. Vice President and General
Counsel of United Water M&S since 1995.
Partner of LeBoeuf, Lamb, Greene &
MacRae, L.L.P. in 1994. United States
citizen
Joseph Simunovich President and Chief of Staff of United
Water M&S since November 1998. President
since 1996 and Senior Vice President--
External Affairs and Marketing 1994 to
1996. United States citizen
John J. Turner Treasurer of United Water since June
1994. Vice President-Chief Financial
Officer of United Water M&S since
November 1998 and Vice President-Finance
and Controller 1994 to 1998. United
States citizen
W. Marie Zanavich Vice President-Chief Information Officer
of United Water M&S since December 1998.
Assistant Vice President and Chief
Information Officer 1994 to 1998. United
States citizen
Directors and Executive Officers of SLDE
Set forth below are the (i) name, (ii) present principal occupation or
employment, (iii) material occupations, positions, offices or employments for
the past five years and (iv) citizenship of each member of the Supervisory
Board and each executive officer of SLDE. The current business address for
each individual listed below is c/o SLDE, 1, rue d'Astorg, 75008 Paris,
France. Telephone: 011-33-1-40-06-64-00.
Present Principal Occupation or
Name Employment; Material Positions Held
During the Past Five Years; Citizenship
Jerome Monod Chairman of the Supervisory Board, SLDE
(1997-present); Chairman of the Board,
Lyonnaise des Eaux (1980-1997); Director
and Chairman, LAH (1980-present). French
citizen.
Jean Guy Gandois Vice Chairman of the Supervisory Board,
SLDE (1997-present); Chairman and CEO,
Pechiney (1986-1996); Chairman and CEO,
Cockerill Sambre (1987-1999); President,
French National Council of Employers
(1996-1997). French citizen.
Gerhard Cromme Chairman of the Executive Board, Thyssen
Krupp AG (1999-present); Chairman of the
Executive Board, Fried. Krupp AG Hoesch-
Krupp (1989-1999); Member of the
Supervisory Board, SLDE (1997-present).
German citizen.
Etienne Davignon
Chairman, Societe Generale de Belgique
(1985-present); Member of the Supervisory
Board, SLDE (1997-present). Belgian
citizen.
9
<PAGE>
Paul Desmarais, Jr. Chairman of the Board and Co-Chief
Executive, Power Corporation of Canada
(1998-present); Director, Power
Corporation of Canada (Canada); Member of
the Supervisory Board, SLDE (1998-
present); Director, PetroFina S.A.
(Belgium); Director, Tractebel S.A.
(Belgium); Director, Electrafina S.A.
(Belgium); Director, GWL Properties Inc.
(U.S.A.); Director, First Great-West Life
& Annuity Insurance Company (U.S.A.);
Director, Great-West Lifeco Inc.
(Canada); Director, Gold Circle Insurance
Company (Canada); Director, Gesca Ltd.
(Canada); Director, La Presse Ltd.
(Canada); Director, Les Journaux Trans-
Canada (1996) Inc. (Canada); Director and
Member of the International Council,
INSEAD; Chairman, Canadian Foundation for
International Management for INSEAD;
Chairman, McGill University Faculty of
Management International Advisory Board;
Chairman, HEC International Advisory
Committee. Canadian citizen.
Reto Domeniconi Member of the Supervisory Board, SLDE
(1997-present); Directeur General, Nestle
SA (1983-1996). Swiss citizen.
Lucien Douroux Chairman of the Supervisory Board, Credit
Agricole Indosuez (1999-present); Member
of the Supervisory Board, SLDE (1997-
present); Chief Executive Officer, Caisse
Nationale de Credit Agricole (1993-1999).
French citizen.
Pierre Faurre Chairman and Chief Executive Officer,
SAGEM (1987-present); Member of the
Supervisory Board, SLDE (1997-present).
French citizen.
Ricardo Fornesa Ribo Chief Executive Officer, Sociedad General
de Aguas de Barcelona, S.A. (1979-
present); Board Secretary and Assistant
to the President, Caixa d'Estalvis i
Pensions de Barcelona (1979-present);
Member of the Supervisory Board, SLDE
(1998-present); Director, Inmobiliara
Colonial (1992-present); Director, E.
Nacional Hidroelectrica del Ribagorzana
(ENHER) Electricity (1994-present);
Director, Cia. de Seguros Adeslas, S.A.
(1994-1998); Director, Cia de
Telecomunicaciones de Chile (1997-
present). Spanish citizen.
Albert Frere Chairman of the Board, Groupe Bruxelles
Lambert S.A. (1988-present); Chairman of
the Board, Petrofina S.A. (1990-present);
Chairman of the Board, Electrafina S.A.
(1982-present); Chairman of the Board,
Frere-Bourgeois S.A. (1970-present);
Chairman of the Board, Erbe S.A. (1975-
present); Deputy Chairman, Managing
Director, and Member of the Executive
Committee, Pargesa Holding S.A. (1981-
present); Deputy Chairman, Compagnie
Benelux Paribas S.A. (1973-present);
Deputy Chairman, Total Fina S.A. (1999-
present); Member of the Supervisory
Board, SLDE (1997-present); Director,
Coparex S.A.
10
<PAGE>
Name Present Principal Occupation or
Employment; Material Positions Held
During the Past Five Years; Citizenship
(1978-present); Director, Television
Francaise 1, S.A. (1996-present);
Director, L.V.M.H. S.A. (1997-present);
Director, Audiofina S.A. (1992-present);
Director, CLT/UFA (1987-present);
Honorary Member of the Council of
Regents, Banque Nationale de Belgique
S.A. (1995-present). Belgian citizen.
Frederick Holliday Chairman, Northumbrian Water Group (1993-
present); Chairman, The Go-Ahead Group
Plc (1997-present); Board Member, Brewin
Dolphin Plc (1996-present); Chairman,
Northern Venture Capital Fund (1985);
Member of the Supervisory Board, SLDE
(1997-present); Board Member, Shell UK
Limited (1980-1998); Board Member, Union
Railways (1993-1996); Board Member,
British Rail (1990-1993); Vice
Chancellor, Durham University (1980-
1990); Chairman, Northern Regional Board,
Lloyds Bank (1986-1989); President,
Freshwater Biological Association;
President, British Trust for Ornithology;
former Council Member, WaterAid; former
Chairman, Nature Conservancy Council;
past President, Scottish Marine
Biological Association. British citizen.
Philippe Jaffre Chairman and Chief Executive Officer, Elf
Aquitaine (1993-present); Member of the
Supervisory Board, SLDE (1997-present).
French citizen.
Jacques Lagarde Member of the Supervisory Board, SLDE
(1997-present); Executive Vice President,
the Gillette Company (1993-1998). United
States citizen.
Jean Peyrelevade Chairman, Credit Lyonnais (1993-present);
Member of the Supervisory Board, SLDE
(1997-present). French citizen.
Claude Pierre-Brossolette Chairman, Caisse de Refinancement
Hypothecaire (1995-present); Chairman,
Banque Eurofin (1995-1996); Member of the
Supervisory Board, SLDE (1997-present);
Director, Credit Lyonnais (1994-present);
Director, Compagnie des Signaux (1996-
present). French citizen.
Jean Syrota Chairman and Chief Executive, Compagnie
Generale des Matieres Nucleaires (COGEMA)
(1988-present); Director, TOTAL S.A.
(1993-present); Director, Framatome
(1989-present); Permanent Representative
of COGEMA, Usinor (1995-present);
Director, SAGEM (1996-present); Director,
CEA-Industrie (1993-present); Board
Member, CFC (1989-present); Board Member,
FBFC (1989-present); Member of the
Supervisory Board, SLDE (1997-present);
Director, ERAP (1998-present); Permanent
representative of COGEMA, EURODIF (1989-
1997). French citizen.
11
<PAGE>
Name Present Principal Occupation or
Employment; Material Positions Held
During the Past Five Years; Citizenship
Gerard Mestrallet President of the Executive Board and
Chief Executive Officer, SLDE (1997-
present); Chairman and Chief Executive
Officer, Compagnie de Suez (1995-1997);
Chief Executive Officer and Chairman of
the Management Committee, Societe
Generale de Belgique (1991-1995); Senior
Executive Vice President, Compagnie de
Suez (1991-1995). French citizen.
Philippe Brongniart Member of the Executive Board, SLDE
(1997-present); Executive Vice President,
Lyonnaise des Eaux (1993-1997); Director
and President, LAH (1993-present);
Director, H\\2\\O Acquisition Co. (1999-
present); President, LEO Holding Company
(1999-present). French citizen.
Francois Jaclot Executive Vice President and Member of
the Executive Board, SLDE (1997-present);
Senior Executive Vice President;
Compagnie de Suez (1996-1997); Managing
Partner, Demachy Worms & Compagnie (1994-
1995); Director, Societe Generale de
Belgique (1996-present); Director, GTM
(1998-present); Director, Sita (1998-
present); Director, Elyo (1998-present);
Director, TPS (1998-present); Director,
Banque Sofinco (1996-present); Director,
Suez Industrie (1996-present); Director,
M6 (1998-present); Director, Lyonnaise
Communications (1998-present); Director,
LEO Holding Company (1999-present).
French citizen.
Directors and Executive Officers of LAH
Set forth below are the (i) name, (ii) current business address, (iii)
present principal occupation or employment, (iv) material occupations,
positions, offices or employments for the past five years and (v) citizenship
of each director and executive officer of LAH.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Name and Current Business Material Positions Held During the Past Five
Address Years; Citizenship
------------------------- -------------------------------------------------
<C> <S>
Jerome Monod Director and Chairman, LAH (1980-present);
c/o Suez Lyonnaise des Eaux Chairman of the Supervisory Board, SLDE (1997-
1, rue d'Astorg present); Chairman of the Board, Lyonnaise des
75008 Paris, France Eaux (1980-1997). French citizen.
Philippe Brongniart Director and President of LAH (1993-present);
c/o Suez Lyonnaise des Eaux Member of the Executive Board, SLDE (1997-
1, rue d'Astorg present); Executive Vice President, Lyonnaise des
75008 Paris, France Eaux (1993-1997); Director, H\\2\\O Acquisition
Co. (1999-present); President, LEO Holding
Company (1999-present). French citizen.
Jean Michel Brault Director and Executive Vice President, LAH (1997-
c/o United Water Services present); Vice President-North America, SLDE
200 Old Hook Road (1994-present); Vice Chairman and Chief Executive
Harrington Park, New Jersey Officer, United Water Services LLC (1997-
07640-1799 present); Chairman and Chief Executive Officer,
United Water Services Canada L.P. (1997-present);
Chairman and Chief Executive Officer, United
Water Services Mexico LLC (1997-present);
Director and President, LAH Acquisition (1999-
present); Vice President--Business Development,
GTM International (SLDE subsidiary) (1992-1994).
French citizen.
</TABLE>
12
<PAGE>
<TABLE>
<C> <S>
Thierry Bourbie Director and Vice President, LAH (1998-present);
c/o Suez Lyonnaise des Eaux Director, United Water Resources Inc. (1996-
1, rue d'Astorg present); President of the International Water
75008 Paris, France Division, SLDE (1996-present); Director of French
Water Operations Lyonnaise des Eaux (1994-1996);
Chief Executive Officer and Chairman, Lyd
Informatique (SLDE subsidiary) (1994-1996); Chief
Executive Officer and Chairman, Apic Syst (SLDE
subsidiary) (1991-1995), Director, Sociedad
General de Aguas de Barcelona, S.A. French
citizen.
Joseph V. Boyle Director, LAH (1997-present); Vice President-
c/o United Water Services Finance and Treasurer, LAH (1994-present); Vice
200 Old Hook Road President, United Water Services LLC (1997-
Harrington Park, New Jersey present); Vice President, LAH Acquisition (1999-
07640-1799 present). United States citizen.
</TABLE>
Directors and Executive Officers of LAH Acquisition
Set forth below are the (i) name, (ii) current business address, (iii)
present principal occupation or employment, (iv) material occupations,
positions, offices or employments for the past five years and (v) citizenship
of each director and executive officer of LAH Acquisition.
<TABLE>
<CAPTION>
Present Principal Occupation or Employment;
Material Positions Held During the
Name and Current Business Past Five Years;
Address Citizenship
------------------------- -------------------------------------------------
<C> <S>
Gerard Payen Executive Vice President of the International
c/o Suez Lyonnaise des Eaux Water Division, SLDE (1997-present); Director,
1, rue d'Astorg LAH Acquisition (1999-present). French citizen.
75008 Paris, France
Charles Chaumin Vice President, North America, SLDE (1993-
c/o Suez Lyonnaise des Eaux present); Director, LAH Acquisition (1999-
1, rue d'Astorg present); Director, United Water Resources Inc.
75008 Paris, France (1998-present). French citizen.
Jean Michel Brault Director and Executive Vice President, LAH (1997-
c/o United Water Services present); Vice President-North America, SLDE
200 Old Hook Road (1994-present); Vice Chairman and Chief Executive
Harrington Park, New Jersey Officer, United Water Services LLC (1997-
07640-1799 present); Chairman and Chief Executive Officer,
United Water Services Canada L.P. (1997-present);
Chairman and Chief Executive Officer, United
Water Services Mexico LLC (1997-present);
Director and President, LAH Acquisition (1999-
present); Vice President--Business Development,
GTM International (SLDE subsidiary) (1992-1994).
French citizen.
Joseph V. Boyle Director, LAH (1997-present); Vice President-
c/o United Water Services Finance and Treasurer, LAH (1994-present); Vice
200 Old Hook Road President, United Water Services LLC (1997-
Harrington Park, New Jersey present); Vice President, LAH Acquisition (1999-
07640-1799 present). United States citizen.
</TABLE>
(e)(f) During the last five years, none of UWR, SLDE, LAH, LAH Acquisition,
or, to the best of their knowledge, any of the persons listed above in this
Item 2 has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or was a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any such person was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, federal
or state securities laws or finding any violation of such law.
13
<PAGE>
Item 3. Past Contacts, Transactions or Negotiations.
(a)(1) The information set forth in "SUMMARY--The Merger," "THE MERGER--
Potential Conflicts of Interests of Certain Persons in the Merger" and "THE
COMPANIES--Recent Transactions Between UWR, LAH and SLDE" in the proxy
statement is hereby incorporated herein by reference.
(a)(2) The information set forth in "SUMMARY--The Merger," "THE MERGER--
Potential Conflicts of Interests of Certain Persons in the Merger" and "THE
COMPANIES--Recent Transactions Between UWR, LAH and SLDE" in the proxy
statement is hereby incorporated herein by reference.
(b) The information set forth in "SUMMARY--The Merger," "THE MERGER--
Potential Conflicts of Interests of Certain Persons in the Merger" and "THE
COMPANIES--Recent Transactions Between UWR, LAH and SLDE" in the proxy
statement is hereby incorporated herein by reference.
Item 4. Terms of the Transaction.
(a) The information set forth in "SUMMARY--The Merger," "SUMMARY--The Merger
Agreement," "THE MERGER" and "THE MERGER AGREEMENT" in the proxy statement is
hereby incorporated herein by reference.
(b) The information set forth in "SUMMARY--The Merger," "SUMMARY--The Merger
Agreement," "THE MERGER" and "THE MERGER AGREEMENT" in the proxy statement is
hereby incorporated herein by reference.
Item 5. Plans or Proposals of UWR or Affiliate.
(a)-(g) The information set forth in "SUMMARY--The Merger;" "THE MERGER--
Overview" and "THE MERGER--Certain Effects of the Merger" in the proxy
statement is hereby incorporated herein by reference.
Item 6. Source and Amounts of Funds or Other Consideration.
(a)-(c) The information set forth on the Cover Page and in "MERGER RELATED
FINANCING" and "THE SPECIAL MEETING--Cost of Solicitation of Proxies" in the
proxy statement is hereby incorporated herein by reference.
(d) Not Applicable.
Item 7. Purpose(s), Alternatives, Reasons and Effects.
(a)-(c) The information set forth in "SUMMARY--The Merger; "THE MERGER--
Background of the Merger; "THE MERGER--Reasons for the Merger and
Recommendation of the Board of Directors," "THE MERGER--SLDE's and LAH's
Belief that the Merger is Fair to UWR's Unaffiliated Stockholders;" "THE
MERGER--Certain Effects of the Merger" and "THE MERGER--Rothschild as
Financial Advisor to SLDE and LAH" in the proxy statement is hereby
incorporated herein by reference.
(d) The information set forth in "SUMMARY--The Merger;" "THE MERGER--Federal
Income Tax Consequences;" "THE MERGER--Certain Effects of the Merger" and "THE
MERGER AGREEMENT--Effects of the Merger" in the proxy statement is hereby
incorporated herein by reference.
Item 8. Fairness of the Transaction.
(a)-(f) The information set forth in "SUMMARY--The UWR Special Merger;" "THE
SPECIAL MEETING--Vote Required;" "THE MERGER--Background of the Merger;" "THE
MERGER--Reasons for the Merger and Recommendation of the Board of Directors;"
"THE MERGER--SLDE's and LAH's Belief That The Merger is Fair To UWR's
Unaffiliated Stockholders;" "THE MERGER--Opinion of UWR's Financial
14
<PAGE>
Advisor;" "THE MERGER--Certain Effects of the Merger;" "THE MERGER--Rothschild
as Financial Advisor to SLDE and LAH;" "THE MERGER--Potential Conflicts of
Interest of Certain Persons in the Merger" and "ANNEX B--Opinion of Morgan
Stanley & Co. Incorporated" dated as of the date of the proxy statement in the
proxy statement is hereby incorporated herein by reference. See also Exhibits
B(6) and B(7)--Rothschild Inc.'s report dated June 1999, to SLDE and LAH,
entitled "Periodic Review of Strategic Alternatives in the U.S. Water Market",
and Rothschild Inc.'s report, dated August 1999, to SLDE and LAH, entitled
"Review of Strategic Alternatives," respectively, Exhibit B(1) "Opinion of
Morgan Stanley & Co. Incorporated" dated as of August 20, 1999, Exhibit B(3),
"Project Hoops" Financial Presentation by Morgan Stanley & Co. Incorporated,
dated August 19, 1999, at the UWR Fairness Committee Meeting, Exhibit B(4),
"Project Hoops" Financial Presentation by Morgan Stanley & Co. Incorporated,
dated August 2, 1999, at the UWR Board of Directors and Exhibit B(5), "Project
Hoops" Financial Presentation by Morgan Stanley & Co. Incorporated, dated July
8, 1999, at the UWR Board of Directors.
Item 9. Reports, Opinions, Appraisals and Certain Negotiations.
The information set forth in "THE MERGER--Background of the Merger;" "THE
MERGER--Reasons for the Merger and Recommendation of the Board of Directors;"
"THE MERGER--Opinion of UWR's Financial Advisor;" "THE MERGER--Certain Effects
of the Merger;" "THE MERGER--Rothschild as Financial Advisor to SLDE and LAH;"
"THE MERGER--Potential Conflicts of Interest of Certain Persons in the Merger"
and "ANNEX B--Opinion of Morgan Stanley & Co. Incorporated" dated as of the
date of the proxy statement in the proxy statement is hereby incorporated
herein by reference. See also Exhibits B(6) and B(7)--Rothschild Inc.'s report
dated June 1999, to SLDE and LAH, entitled "Periodic Review of Strategic
Alternatives in the U.S. Water Market" and Rothschild Inc.'s report, dated
August 1999, to SLDE and LAH, entitled "Review of Strategic Alternatives"
respectively, Exhibit B(1), "Opinion of Morgan Stanley & Co. Incorporated"
dated as of August 20, 1999, Exhibit B(3), "Project Hoops" Financial
Presentation by Morgan Stanley & Co. Incorporated, dated August 19, 1999, at
the UWR Fairness Committee Meeting, Exhibit B(4), "Project Hoops" Financial
Presentation by Morgan Stanley & Co. Incorporated, dated August 2, 1999, at
the UWR Board of Directors and Exhibit B(5), "Project Hoops" Financial
Presentation by Morgan Stanley & Co. Incorporated, dated July 8, 1999, at the
UWR Board of Directors.
Item 10. Interest in Securities of UWR.
(a) The information set forth in "FIVE PERCENT OWNER OF UWR COMMON STOCK"
and "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the
proxy statement is hereby incorporated herein by reference.
(b) The information set forth in "FIVE PRECENT OWNER OF UWR COMMON STOCK;"
"PRICE OF UWR COMMON STOCK AND DIVIDENDS" "THE COMPANIES--Recent Transactions
Between UWR, LAH and SLDE" and "SUMMARY--Price of UWR Common Stock and
Dividends" in the proxy statement is hereby incorporated herein by reference.
Item 11. Contracts, Arrangements or Understandings with Respect to UWR's
Securities.
The information set forth in "SUMMARY--The Merger" "SUMMARY--The Merger
Agreement;" "THE MERGER;" "THE MERGER AGREEMENT;" "THE COMPANIES--Recent
Transactions Between UWR, LAH and SLDE;" "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT" and "FIVE PERCENT OWNERSHIP OF UWR COMMON
STOCK" in the proxy statement is hereby incorporated herein by reference.
Item 12. Present Intention and Recommendation of Certain Persons with Regard
to the Transaction.
(a)-(b) The information set forth in "THE MERGER--Reasons for the Merger and
Recommendation of the UWR Board of Directors;" "QUESTIONS AND ANSWERS ABOUT
THE MERGER;" "THE MERGER--Rothschild as Financial Adviser to SLDE and LAH;"
"SUMMARY" and "THE MERGER--Background of the Merger" in the proxy statement is
hereby incorporated herein by reference.
15
<PAGE>
Item 13. Other Provisions of the Transaction.
(a) The information set forth in "THE MERGER--Absence of Appraisal Rights"
in the proxy statement is hereby incorporated herein by reference.
(b) The information set forth in "THE MERGER AGREEMENT--Access to
Information" and "WHERE YOU CAN FIND MORE INFORMATION" in the proxy statement
is hereby incorporated herein by reference.
(c) Not applicable.
Item 14. Financial Information.
(a)(1) The information set forth in "SELECTED HISTORICAL AND FINANCIAL DATA"
and "Opinion of Morgan Stanley & Co. Incorporated" dated as of the date of the
proxy statement, in, and annexed to, the proxy statement as Annex B is hereby
incorporated herein by reference. See also, Exhibit B(1) "Opinion of Morgan
Stanley & Co. Incorporated" dated as of August 20, 1999.
(a)(2) The information set forth in UWR's Form 10-Q for the quarterly period
ended June 30, 1999, as filed August 9, 1999, is incorporated herein by
reference.
(a)(3) The information set forth in UWR's Form 10-K for the fiscal year
ended December 31, 1998, as filed March 23, 1999, is incorporated herein by
reference.
(a)(4) The information set forth in UWR's Form 8-K, as filed August 27,
1999, is incorporated herein by reference.
(b) Not Applicable.
Item 15. Persons and Assets Employed, Retained or Utilized.
(a) The information set forth in "SUMMARY--The Merger;" "SUMMARY--The Merger
Agreement;" "THE SPECIAL MEETING--Cost of Solicitation of Proxies;" "THE
MERGER--Overview" and "THE MERGER--Certain Effects of the Merger" in the proxy
statement is hereby incorporated by reference.
(b) The information set forth in "THE SPECIAL MEETING--Cost of Solicitation
of Proxies;" "THE MERGER--Background of the Merger;" "THE MERGER--Reasons for
the Merger and Recommendation of the UWR Board of Directors;" "THE MERGER--
Opinion of UWR's Financial Advisor;" "THE MERGER--Rothschild as Financial
Advisor to SLDE and LAH;" "THE MERGER AGREEMENT--Exchange of Stock
Certificates" and "Opinion of Morgan Stanley & Co. Incorporated" dated as of
the date of the proxy statement, in, and annexed to, the proxy statement as
Annex B in the proxy statement is hereby incorporated by reference. See also
Exhibits B(4) and B(5)--Rothschild Inc.'s Report dated June 1999, to SLDE and
LAH, entitled "Periodic Review of Strategic Alternative in the U.S. Water
Market," and "Rothschild Inc.'s Report, dated August 1999, to SLDE and LAH,
entitled "Review of Strategic Alternatives," respectively, to this Transaction
Statement, and Exhibit B(1), "Opinion of Morgan Stanley & Co. Incorporated"
dated August 20,1999.
Item 16. Additional Information.
The information set forth in the proxy statment and the Annexes thereto and
the other Exhibits hereto are hereby incorporated herein by reference.
Item 17. Material to be Filed as Exhibits
<TABLE>
<C> <S>
Exhibit (a) --Not applicable.
Exhibit (b)(1) --Opinion of Morgan Stanley & Co. Incorporated, dated as of
August 20, 1999.
</TABLE>
16
<PAGE>
<TABLE>
<C> <S>
Exhibit (b)(2) --Opinion of Morgan Stanley & Co. Incorporated, dated as of the
date of the proxy statement, filed as Annex B to the proxy
statement and incorporated herein by reference.*
Exhibit (b)(3) --"Project Hoops" Presentation by Morgan Stanley & Co.
Incorporated, dated August 19, 1999, at the UWR Fairness
Committee Meeting.
Exhibit (b)(4) --"Project Hoops" Financial Presentation by Morgan Stanley &
Co. Incorporated, dated August 2, 1999, at the UWR Board of
Directors.
Exhibit (b)(5) --"Project Hoops" Financial Presentation by Morgan Stanley &
Co. Incorporated, dated July 8, 1999, at the UWR Board of
Directors.
Exhibit (b)(6) --Rothschild Inc.'s report dated June 1999, to SLDE and LAH,
entitled "Periodic Review of Strategic Alternatives in the
U.S. Water Market."
Exhibit (b)(7) --Rothschild Inc.'s report dated August 1999, to SLDE and LAH,
entitled "Review of Strategic Alternatives."
Exhibit (c)(1) --Governance Agreement between United Water Resources and
Lyonnaise American Holding Inc., dated April 22, 1994 (Filed
in Appendix A to Registration Statement No. 33-51703).
Exhibit (c)(2) --Agreement and Plan of Merger by and among United Water
Resources Inc., Lyonnaise American Holding, Inc., LAH
Acquisition Co. and Suez Lyonnaise des Eaux, dated as of
August 20, 1999, filed as Annex A to the proxy statement
incorporated herein by reference.
Exhibit (d)(1) --Preliminary proxy statement of United Water Resources Inc.
and related Notice of Special Meeting.
Exhibit (d)(2) --Form of Proxy.
Exhibit (e) --Not applicable.
Exhibit (f) --Not applicable.
</TABLE>
- ---------------------
* To be filed with proxy statement
17
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: October 5, 1999
United Water Resources Inc.
/s/
By___________________________________
Name: Donald L. Correll
Title: Chief Executive Officer
Suez Lyonnaise des Eaux
/s/
By___________________________________
Name: Jean Michel Brault
Title: Vice President--North
America
Lyonnaise American Holding, Inc.
/s/
By___________________________________
Name: Joseph V. Boyle
Title: Vice President--Finance
Lah Acquisition Co.
/s/
By___________________________________
Name: Jean Michel Brault
Title: President
18
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
Exhibit A --Not applicable.
Exhibit B(1) --Opinion of Morgan Stanley & Co. Incorporated, dated as of
August 20, 1999.
Exhibit B(2) --Opinion of Morgan Stanley & Co. Incorporated, dated as of the
date of the proxy statement, filed as Annex B to the proxy
statement incorporated herein by reference.*
Exhibit B(3) --"Project Hoops" Presentation by Morgan Stanley & Co.
Incorporated, dated August 19, 1999, at the UWR Fairness
Committee Meeting.
Exhibit B(4) --"Project Hoops" Financial Presentation by Morgan Stanley & Co.
Incorporated, dated August 2, 1999, at the UWR Board of
Directors.
Exhibit B(5) --"Project Hoops" Financial Presentation by Morgan Stanley & Co.
Incorporated, dated July 8, 1999, at the UWR Board of Directors.
Exhibit B(6) --Rothschild Inc.'s report dated June 1999, to SLDE and LAH,
entitled "Periodic Review of Strategic Alternatives in the U.S.
Water Market."
Exhibit B(7) --Rothschild Inc.'s report dated August 1999, to SLDE and LAH,
entitled "Review of Strategic Alternatives."
Exhibit C(1) --Governance Agreement between United Water Resources and
Lyonnaise American Holding Inc., dated April 22, 1994 (Filed in
Appendix A to Registration Statement No. 33-51703).
Exhibit C(2) --Agreement and Plan of Merger by and among United Water
Resources Inc., Lyonnaise American Holding, Inc., LAH
Acquisition Co. and Suez Lyonnaise des Eaux, dated as of August
20, 1999, filed as Annex A to the proxy statement incorporated
herein by reference.
Exhibit D(1) --Preliminary proxy statement of United Water Resources Inc. and
related Notice of Special Meeting.
Exhibit D(2) --Form of Proxy.
Exhibit E --Not applicable.
Exhibit F --Not applicable.
</TABLE>
- --------
* To be filed with the definitive proxy statement
19
<PAGE>
EXHIBIT B(1)
[Letterhead of Morgan Stanley & Co. Incorporated]
August 20, 1999
Board of Directors
United Water Resources
200 Old Hook Road
Harrington Park, NJ 07640-1799
Members of the Board:
We understand that United Water Resources Inc. ("UWR" or the "Company"),
Lyonnaise American Holding, Inc. ("LAH"), LAH Acquisition Co., a wholly owned
subsidiary of LAH ("LAH Acquisition Co.") and solely with respect to certain of
LAH's obligations, Suez Lyonnaise des Eaux, a French Societe Anonyme ("Suez"),
the parent of LAH, propose to enter into an Agreement and Plan of Merger,
substantially in the form of the draft dated August 20, 1999 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of LAH Acquisition Co. with and into UWR. Pursuant to the Merger, UWR will
become a wholly owned subsidiary of LAH and each outstanding share of common
stock, no par value per share (the "Common Stock"), of UWR, together with the
associated right to purchase shares of 5% Series A Cumulative Convertible
Preference Stock, no par value, of UWR (the "Series A Preference Stock"), other
than shares and rights held in treasury or held by LAH or any affiliate of LAH
and UWR, will be converted into the right to receive $35.00 per share in cash,
an additional dividend of $0.06 per share in each of the first three fiscal
quarters after announcement and a special dividend payable at closing of the
difference between $0.48 and the additional dividends paid, all as described in
the Merger Agreement (collectively the "Consideration"). Additionally, pursuant
to the Merger, each outstanding share of Series A Preference Stock, other than
shares held in treasury or held by LAH or any affiliate of LAH and UWR, shall
be converted into the right to receive $35.00 per share in cash multiplied by
the number of shares of Common Stock issuable upon the conversion of a share of
Series A Preference Stock. The terms and conditions of the Merger are more
fully set forth in the Merger Agreement. We further understand that
approximately 32% of the outstanding shares of the Common Stock is owned by LAH
and its affiliates.
You have asked for our opinion as to whether the Consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders other than LAH
and its affiliates.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of UWR;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning UWR prepared by the management of UWR;
(iii) reviewed certain financial projections prepared by the management
of UWR;
(iv) discussed the past and current operations and financial condition
and the prospects of UWR with senior executives of UWR;
(v) reviewed the proforma impact of the Merger on Suez's earnings per
share, consolidated capitalization and financial ratios;
(vi) reviewed the reported prices and trading activity for the Common
Stock;
(vii) compared the financial performance of UWR and the prices and
trading activity of the Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
B(1)-1
<PAGE>
(ix) participated in discussions and negotiations among representatives
of UWR, LAH and Suez and their financial and legal advisors;
(x) reviewed certain material agreements between UWR and LAH;
(xi) reviewed the draft Merger Agreement and certain related documents;
and
(x) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of UWR.
We have not made any independent valuation or appraisal of the assets or
liabilities of UWR. Our opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of UWR or any
of its assets, nor did we negotiate with any of the parties, other than LAH
and Suez.
We have acted as financial advisor to the Board of Directors of UWR in
connection with this transaction and will receive a fee for our services.
Morgan Stanley and its affiliates have provided and continue to provide
financial advisory and financing services to Suez and/or its affiliates and
have received and will receive fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of UWR, except that this opinion may be included in its entirety in
any filing made by UWR in respect of the transaction with the Securities and
Exchange Commission. In addition, Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of UWR should vote at the
shareholders' meetings held in connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Consideration to be received by the holders of shares of
Common Stock pursuant to the Merger Agreement is fair from a financial point
of view to such holders other than LAH and its affiliates.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/
By: ___________________________________
Daniel B. More
Managing Director
B(1)-2
<PAGE>
EXHIBIT B(3)
PROJECT HOOPS
Fairness Committee Meeting
August 19, 1999
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Table of Contents
SECTION I TRANSACTION OVERVIEW
SECTION II OVERVIEW OF KNICKS
SECTION III PRELIMINARY STANDALONE VALUATION
TAB A Valuation Summary
TAB B Discounted Cash Flow Valuation
TAB C Comparable Company Valuation
TAB D Precedent Transaction Valuation
SECTION IV PRO FORMA MERGER ANALYSIS
SECTION V DRAFT FAIRNESS OPINION LETTER
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Transaction Terms
Description: o Acquisition of Knicks
Form of Consideration: o Cash
Spurs Offer per Share: o $35.00
Increased Dividend: o $0.48 increase ($0.06 for 3 quarters and
$0.30 special dividend at closing)
Implied Knicks Equity Value: o $1,455 MM(1)
Management: o TBD
Other Terms: o Release of Spurs from current restrictions
to pursue business opportunities in the
U.S. while awaiting for approval of the
transaction
Transaction Protection Measures: o Termination fee: $42 million plus expenses
capped at $3 million
o No Solicitation Clause
o Strict Fiduciary Out
Board Approval: o Spurs and Knicks Board approvals required
Shareholder Approvals: o Shareholder Approval required for Knicks
Shareholders
Regulatory Approvals: o State Regulatory Approvals
o Hart - Scott - Rodino
Tax Treatment: o Taxable to Knicks shareholders
Accounting Treatment: o Purchase
Expected Closing: o 6-9 months
Note: (1) Based on 41.0 million fully diluted Knicks shares
outstanding as of 7/31/99.
B(3)-1
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Water Industry Precedent Transaction Multiples
(%) Premium to Prior Month Price
[GRAPHIC]
Median 42.9%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Spurs California NIPSCO/ Philadelphia Yorkshire/ Enron/ American
Water/ Indianapolis Suburban/ Aquarion Wessex Water
Dominguez Consumers Works/
Water National
Enterprises(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
58.1 52.7(2) 44.6 42.9 42.5 37.2 N.A.
- -----------------------------------------------------------------------------------------------
</TABLE>
(x) Equity Value/Tangible Book Value
[GRAPHIC]
Median 2.72x
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Spurs California NIPSCO/ Yorkshire/ Philadelphia American Enron/
Water/ Indianapolis Aquarion Suburban/ Water Wessex
Dominguez Consumers Works/
Water National
Enterprises(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
3.34 3.22 3.02 2.92 2.43 2.43 2.06
- -----------------------------------------------------------------------------------------------
</TABLE>
(x) Aggregate Value/LTM EBITDA
[GRAPHIC]
Median 10.2x
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Spurs California Philadelphia Yorkshire/ NIPSCO/ Enron/ American
Water/ Suburban/ Aquarion Indianapolis Wessex Water
Dominguez Consumers Works/
Water National
Enterprises(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
14.5 13.1 10.3 10.2 9.8 9.5 N.A.
- -----------------------------------------------------------------------------------------------
</TABLE>
(x) Equity Value/LTM Net Income
[GRAPHIC]
Median 23.6x
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Spurs California American NIPSCO/ Philadelphia Yorkshire/ Enron/
Water/ Water Indianapolis Suburban/ Aquarion Wessex
Dominguez Works/ Consumers
National Water
Enterprises(1)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
34.6 33.8 25.6 23.6 22.8 22.1 12.9
- -----------------------------------------------------------------------------------------------
</TABLE>
Notes: (1) National Enterprises was a privately owned company.
(2) Represents the premium prior to the initial California Water
announcements in November 1998.
B(3)-2
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Valuation Matrix (1) (2)
($MM, except per share data)
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Valuation Matrix(1)(2)
($MM, except per share data)
<TABLE>
<CAPTION>
Equity Value
----------------------------------------- Aggregate Value/LTM
Price Equity Aggregate LTM Book Tang. Book -----------------------------------
Per Share Value(2) Value(3) Earnings(4)(5) Value(5)(6) Value(5)(6) Sales(5) EBITDA(4)(5) EBIT(4)(5)
- --------- -------- -------- -------------- ----------- ----------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$42.1 $497.6 $436.0 $365.6 $153.9 $111.2
$19.00 $769 $1,546 18.3x 1.55x 1.76x 4.2x 10.0 13.9x
20.00 810 1,588 19.3 1.63 1.86 4.3 10.3 14.3
21.00 852 1,630 20.3 1.71 1.95 4.5 10.6 14.6
22.00 894 1,671 21.3 1.80 2.05 4.6 10.9 15.0
23.00 936 1,713 22.2 1.88 2.15 4.7 11.1 15.4
24.00 977 1,755 23.2 1.96 2.24 4.8 11.4 15.8
25.00 1,019 1,796 24.2 2.05 2.34 4.9 11.7 16.1
26.00 1,061 1,838 25.2 2.13 2.43 5.0 11.9 16.5
27.00 1,102 1,880 26.2 2.22 2.53 5.1 12.2 16.9
28.00 1,144 1,921 27.2 2.30 2.62 5.3 12.5 17.3
29.00 1,186 1,963 28.2 2.38 2.72 5.4 12.8 17.6
30.00 1,227 2,005 29.2 2.47 2.81 5.5 13.0 18.0
31.00 1,269 2,046 30.2 2.55 2.91 5.6 13.3 18.4
32.00 1,311 2,088 31.2 2.63 3.01 5.7 13.6 18.8
33.00 1,352 2,130 32.2 2.72 3.10 5.8 13.8 19.1
34.00 1,394 2,171 33.1 2.80 3.20 5.9 14.1 19.5
35.00 1,436 2,213 34.1 2.89 3.29 6.1 14.4 19.9
35.48 1,456 2,233 34.6 2.93 3.34 6.1 14.5 20.1
36.00 1,477 2,255 35.1 2.97 3.39 6.2 14.7 20.3
37.00 1,519 2,296 36.1 3.05 3.48 6.3 14.9 20.6
38.00 1,561 2,338 37.1 3.14 3.58 6.4 15.2 21.0
39.00 1,602 2,380 38.1 3.22 3.68 6.5 15.5 21.4
40.00 1,644 2,421 39.1 3.30 3.77 6.6 15.7 21.8
<CAPTION>
Premium/(Discount)
Price Premium/(Discount) to Prior 30-Day
Per Share to 8/12/99 Price Price
- --------- ---------------- -----
<S> <C> <C>
$23.06 $22.44
$19.00 (17.6) (15.3)
20.00 (13.3) (10.9)
21.00 (8.9) (6.4)
22.00 (4.6) (1.9)
23.00 (0.3) 2.5
24.00 4.1 7.0
25.00 8.4 11.4
26.00 12.7 15.9
27.00 17.1 20.3
28.00 21.4 24.8
29.00 25.7 29.2
30.00 30.1 33.7
31.00 34.4 38.2
32.00 38.8 42.6
33.00 43.1 47.1
34.00 47.4 51.5
35.00 51.8 56.0
35.48 53.8 58.1
36.00 56.1 60.4
37.00 60.4 64.9
38.00 64.8 69.4
39.00 69.1 73.8
40.00 73.4 78.3
</TABLE>
Notes:
- ----------
(1) Boxes represent the range of multiples paid in precedent transactions.
(2) Based on 38.8 million Knicks shares outstanding as of 7/31/99, 1.6 million
shares converted from preference stock and 1.3 million options at an
average exercise price of $18.35.
(3) Includes total debt and preferrred of $821 MM (excluding convertible
preference shares), net of $43 MM cash as of 6/30/99.
(4) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
(5) Financial statistics for the period ending 6/30/99.
(6) Includes the conversion of $26.1 million of convertible preference shares.
B(3)-3
<PAGE>
- --------------------------------------------------------------------------------
OVERVIEW OF KNICKS
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Market Overview (1)
($MM, except per share data)
--------------- -----------------
Knicks Spurs
--------------- -----------------
Market Price (08/18/99) $27.63 $172.67
52 Week Range $16.38 - $29.00 $126.99 - $196.50
Shares Outstanding (MM) (2) 41.0 149.1
Equity Market Value $1,133 $25,748
Tangible Book Value $436 $9,891
Market/Book Ratio 2.60x 2.60x
Total Debt and Preferred $821 $28,788
Total Market Capitalization $1,954 $54,537
Total Book Capitalization $1,257 $38,680
Total Debt / Book Capitalization 65.3% 74.4%
Total Debt / Market Capitalization 42.0% 52.8%
LTM Revenue $366 $34,924
Calendarized I/B/E/S EPS Estimates (3)
1999E $1.28 $7.26
2000E 1.35 8.20
2001E 1.42 9.39
Five Year Estimated EPS Growth 5.50% 14.60%
Implied P/E Ratios (I/B/E/S)
1999E 21.6x 23.8x
2000E 20.5x 21.1x
2001E 19.4x 18.4x
Indicated Dividend $0.96 $4.27
Indicated Dividend Yield 3.5% 2.5%
Indicated Dividend Payout Ratio
1999E 75.0% 58.8%
2000E 71.1% 52.1%
2001E 67.4% 45.4%
S&P Credit Rating A- A+
--------------- -----------------
Notes: (1) All financial information as of 6/30/99.
(2) Includes shares converted from preference stock.
(3) EPS estimates calendarized to fiscal year ending 12/31.
B(3)-4
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Analysis of Knicks Shareholdings
<TABLE>
<CAPTION>
Total Assets
Under Current Cumulative Report
Institution Equity Orientation Management Change Holdings %TSO %TSO Date
- ------------------------------------ --------------------------- ------------ -------- ---------- ----- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Suez Lyonnaise des Eaux S.A n/a n/a 0 13,322,159 32.5% 32.5% 6/01/99
The Adams Express Company n/a n/a 0 850,000 2.1% 34.5% 3/31/99
Deutsche Asset Management (US) Index, Growth, Value n/a 35,700 734,793 1.8% 36.3% 3/31/99
Dimensional Fund Advisors, Inc. Index, Value 13.2 (50,000) 592,595 1.4% 37.8% 6/30/99
Barclays Global Investors, N.A Growth, Value, Index, Quant. n/a (58,337) 528,077 1.3% 39.1% 3/31/99
T. Rowe Price Associates, Inc. Growth, Value 94.0 24,400 395,900 1.0% 40.0% 3/31/99
The Vanguard Group Growth, Value, Index 223.7 22,500 212,912 0.5% 40.6% 6/30/99
The Northern Trust Company Value, Growth 124.3 2,277 193,985 0.5% 41.0% 3/31/99
Columbia Management Company Growth, Value 18.5 (314,200) 191,200 0.5% 41.5% 3/31/99
Bank of America Investment Mgmt (MO) Value 42.7 (3,457) 186,996 0.5% 42.0% 6/30/99
STI Capital Management Growth, Index, Value 11.0 25,000 159,882 0.4% 42.3% 6/30/99
Mellon Private Asset Management Index, Value 25.4 (2,700) 140,468 0.3% 42.7% 6/30/99
Teacher Retirement System of Texas Value n/a 0 140,000 0.3% 43.0% 12/31/98
State Street Bank and Tr. Co. Boston Growth, Value 232.4 (2,500) 138,343 0.3% 43.4% 6/30/99
State Teachers Retirmnt Syst. - Ohio n/a n/a 0 136,300 0.3% 43.7% 3/31/99
TIAA-CREF Investment Management Inc. Growth, Index 63.3 0 128,300 0.3% 44.0% 6/30/99
American Express Financial Advisors Growth, Value, Index 128.0 108,840 108,840 0.3% 44.3% 6/30/99
Fidelity Management & Research Co. Growth, Value, Income 433.8 (51,800) 108,700 0.3% 44.5% 3/31/99
California State Teachers Retirement Index n/a 0 108,394 0.3% 44.8% 3/31/99
Chase Global Asset Management (NY) Growth n/a 8,900 91,443 0.2% 45.0% 6/30/99
Virginia Retirement System n/a n/a 0 85,600 0.2% 45.2% 6/30/99
California Public Employees Rtmnt Growth n/a 82,800 82,800 0.2% 45.4% 3/31/99
Merrill Lynch Asset Management (US) Value 212.9 2,140 75,640 0.2% 45.6% 6/30/99
Fraser Management Associates, Inc. Value 0.1 (600) 73,900 0.2% 45.8% 3/31/99
Old Kent Bank (MI) Value, Growth 10.4 0 71,600 0.2% 46.0% 3/31/99
NPI n/a n/a 0 66,100 0.2% 46.1% 11/30/98
Correll (Donald L.) n/a n/a 0 63,290 0.2% 46.3% 1/29/99
Prudential Investments Value, Growth 66.7 4,600 52,200 0.1% 46.4% 6/30/99
Alliance Capital Management L.P. Growth, Value 173.7 (1,500) 52,000 0.1% 46.5% 6/30/99
Deere & Company Pension Fund n/a n/a 0 50,900 0.1% 46.7% 6/30/99
First Capital Group Index, Value, Growth 54.7 (6,290) 49,666 0.1% 46.8% 3/31/99
Comerica Bank - Detroit Growth n/a 1,306 47,900 0.1% 46.9% 6/30/99
World Asset Management Index 9.9 (2,800) 46,600 0.1% 47.0% 3/31/99
Charles Schwab Investment Management n/a n/a 4,000 46,300 0.1% 47.1% 3/31/99
United States Trust Co. of New York Value n/a 2,006 45,492 0.1% 47.2% 6/30/99
Smith Barney Asset Management Growth, Value 13.0 (1,565) 39,710 0.1% 47.3% 6/30/99
Fahnestock Asset Management Growth, Value 0.7 (3,400) 39,700 0.1% 47.4% 12/31/98
Robert W. Baird & Co. Inc. Invt n/a n/a 3,500 39,300 0.1% 47.5% 3/31/99
Aid Association For Lutherans Growth n/a 16,700 37,700 0.1% 47.6% 6/30/99
Federated Investment Counseling, Inc Growth, Value 1.7 33,600 37,236 0.1% 47.7% 3/31/99
Top 40 Holders (120,880) 19,572,921 47.7%
Remaining 67 Holders (232,526) 717,722 1.7%
-------- ---------- -----
Total Holder Holdings (353,406) 20,290,643 49.5%
========
Other Holdings 20,728,902 50.5%
---------- -----
Total Fully-Diluted Shares Outstanding 41,019,545 100.0%
========== =====
</TABLE>
B(3)-5
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Indexed Price Performance
Last Twelve Months
[TABLE REPRESENTS LINE GRAPH]
US Regulated
Date Knicks Water Companies S&P 500
---- ------ --------------- -------
8/18/98 100.00 100.00 100.00
8/19/98 100.00 98.87 99.71
8/20/98 99.29 97.95 99.13
8/21/98 100.00 98.10 98.19
8/24/98 101.07 99.68 98.81
8/25/98 100.71 100.64 99.24
8/26/98 100.36 99.99 98.46
8/27/98 101.07 98.14 94.68
8/28/98 101.07 98.34 93.27
8/31/98 101.43 96.31 86.93
9/1/98 100.36 98.75 90.29
9/2/98 100.36 97.70 89.94
9/3/98 100.00 97.47 89.20
9/4/98 100.71 97.38 88.44
9/8/98 101.79 97.63 92.94
9/9/98 99.64 97.33 91.37
9/10/98 98.21 97.08 89.01
9/11/98 97.50 97.18 91.63
9/14/98 97.14 96.98 93.51
9/15/98 97.14 98.04 94.23
9/16/98 96.07 99.06 94.94
9/17/98 95.36 99.62 92.52
9/18/98 94.64 99.56 92.63
9/21/98 95.00 98.46 92.98
9/22/98 94.29 100.17 93.50
9/23/98 96.07 100.23 96.81
9/24/98 96.79 100.20 94.69
9/25/98 97.14 100.01 94.87
9/28/98 97.14 101.38 95.23
9/29/98 97.14 103.02 95.26
9/30/98 97.14 103.40 92.35
10/1/98 94.64 103.90 89.57
10/2/98 95.71 103.82 91.05
10/5/98 102.50 105.95 89.77
10/6/98 104.64 107.05 89.41
10/7/98 104.29 106.39 88.15
10/8/98 106.07 105.44 87.13
10/9/98 105.36 103.37 89.39
10/12/98 104.29 104.09 90.60
10/13/98 103.57 103.17 90.34
10/14/98 106.07 104.63 91.31
10/15/98 105.71 103.83 95.12
10/16/98 106.79 104.55 95.93
10/19/98 106.79 105.21 96.48
10/20/98 108.93 104.70 96.62
10/21/98 111.07 105.26 97.16
10/22/98 111.79 104.07 97.94
10/23/98 111.79 104.46 97.23
10/26/98 111.43 105.39 97.38
10/27/98 110.71 104.39 96.74
10/28/98 108.93 105.18 96.99
10/29/98 109.29 105.16 98.61
10/30/98 110.71 105.90 99.77
11/2/98 112.14 107.41 100.94
11/3/98 112.86 108.23 100.88
11/4/98 111.79 109.79 101.59
11/5/98 112.86 109.82 102.96
11/6/98 112.14 110.42 103.62
11/9/98 113.93 109.09 102.63
11/10/98 113.57 111.27 102.46
11/11/98 113.21 111.61 101.80
11/12/98 113.93 111.30 101.50
11/13/98 110.36 110.02 102.23
11/16/98 114.29 110.01 103.15
11/17/98 114.29 110.97 103.46
11/18/98 114.64 110.03 103.93
11/19/98 116.79 110.23 104.67
11/20/98 115.00 109.81 105.66
11/23/98 114.64 111.30 107.90
11/24/98 114.29 110.86 107.43
11/25/98 114.64 111.18 107.78
11/27/98 115.00 110.66 108.28
11/30/98 118.57 110.15 105.67
12/1/98 120.00 110.03 106.73
12/2/98 119.64 109.40 106.36
12/3/98 116.79 109.55 104.44
12/4/98 120.00 110.52 106.86
12/7/98 127.86 110.99 107.86
12/8/98 128.93 112.85 107.28
12/9/98 125.71 112.57 107.47
12/10/98 122.50 112.82 105.80
12/11/98 123.93 112.61 105.93
12/14/98 122.50 111.30 103.63
12/15/98 122.14 111.51 105.60
12/16/98 120.36 110.80 105.52
12/17/98 117.50 111.35 107.15
12/18/98 121.79 112.08 107.89
12/21/98 126.79 113.24 109.23
12/22/98 136.79 113.54 109.30
12/23/98 135.71 115.17 111.56
12/24/98 133.93 114.67 111.36
12/28/98 136.43 115.21 111.29
12/29/98 136.79 114.68 112.77
12/30/98 137.14 115.45 111.87
12/31/98 136.79 116.18 111.63
1/4/99 135.00 115.78 111.52
1/5/99 133.21 115.38 113.04
1/6/99 131.79 114.88 115.54
1/7/99 130.00 114.30 115.30
1/8/99 130.00 115.00 115.79
1/11/99 131.07 114.83 114.77
1/12/99 129.29 114.53 112.56
1/13/99 129.64 112.87 112.10
1/14/99 127.50 113.17 110.08
1/15/99 125.71 113.45 112.90
1/19/99 127.86 113.35 113.69
1/20/99 130.71 112.62 114.11
1/21/99 128.57 111.20 112.16
1/22/99 131.07 110.59 111.26
1/25/99 128.21 110.23 112.06
1/26/99 128.57 109.63 113.72
1/27/99 124.29 108.48 112.89
1/28/99 126.07 109.18 114.91
1/29/99 121.79 108.29 116.20
2/1/99 125.00 107.16 115.60
2/2/99 122.50 106.51 114.60
2/3/99 122.86 107.61 115.52
2/4/99 121.07 107.04 113.38
2/5/99 117.14 106.29 112.55
2/8/99 117.14 105.60 112.95
2/9/99 120.36 105.31 110.44
2/10/99 115.36 105.17 111.11
2/11/99 117.14 104.98 113.88
2/12/99 113.93 104.07 111.71
2/16/99 112.14 104.06 112.77
2/17/99 112.50 102.91 111.15
2/18/99 112.14 101.28 112.36
2/19/99 111.79 101.87 112.53
2/22/99 112.50 102.03 115.52
2/23/99 114.29 102.52 115.44
2/24/99 111.79 102.72 113.82
2/25/99 111.07 103.37 113.06
2/26/99 110.00 104.10 112.45
3/1/99 108.93 104.01 112.26
3/2/99 108.93 104.27 111.29
3/3/99 106.43 104.11 111.49
3/4/99 107.50 103.87 113.21
3/5/99 108.57 104.09 115.83
3/8/99 112.14 104.70 116.48
3/9/99 108.93 104.08 116.22
3/10/99 108.57 103.86 116.86
3/11/99 108.57 103.05 117.84
3/12/99 111.07 103.28 117.56
3/15/99 112.14 103.95 118.71
3/16/99 112.86 103.95 118.63
3/17/99 109.29 103.45 117.86
3/18/99 112.14 105.22 119.56
3/19/99 110.71 104.69 117.99
3/22/99 113.93 104.24 117.78
3/23/99 115.00 103.55 114.61
3/24/99 114.29 103.87 115.20
3/25/99 116.43 103.86 117.14
3/26/99 117.14 103.83 116.49
3/29/99 119.29 103.59 118.98
3/30/99 118.21 105.30 118.12
3/31/99 118.57 104.20 116.82
4/1/99 120.71 104.15 117.48
4/5/99 123.57 103.77 119.97
4/6/99 118.21 103.61 119.68
4/7/99 117.86 103.35 120.49
4/8/99 119.64 102.94 122.05
4/9/99 119.64 103.96 122.44
4/12/99 121.07 102.84 123.38
4/13/99 120.36 103.15 122.58
4/14/99 122.14 104.41 120.64
4/15/99 121.79 104.26 120.13
4/16/99 119.64 104.83 119.78
4/19/99 117.14 104.49 117.10
4/20/99 118.93 103.70 118.61
4/21/99 120.00 102.79 121.33
4/22/99 115.71 102.92 123.39
4/23/99 120.36 102.45 123.22
4/26/99 118.93 102.00 123.51
4/27/99 120.00 102.01 123.76
4/28/99 118.57 102.31 122.68
4/29/99 118.57 101.47 121.94
4/30/99 118.93 100.84 121.25
5/3/99 120.71 101.72 123.01
5/4/99 120.71 101.74 120.96
5/5/99 121.43 101.32 122.35
5/6/99 122.14 101.69 120.96
5/7/99 122.50 101.83 122.14
5/10/99 132.14 103.00 121.71
5/11/99 128.21 104.00 123.10
5/12/99 125.00 102.86 123.86
5/13/99 123.21 103.62 124.19
5/14/99 120.00 102.85 121.49
5/17/99 118.93 103.08 121.64
5/18/99 119.29 103.66 121.08
5/19/99 121.07 103.95 122.07
5/20/99 124.64 105.45 121.58
5/21/99 127.14 104.61 120.80
5/24/99 128.57 105.44 118.66
5/25/99 128.21 105.35 116.64
5/26/99 127.50 106.44 118.49
5/27/99 125.71 106.46 116.36
5/28/99 124.29 107.90 118.22
6/1/99 128.21 110.10 117.53
6/2/99 132.86 112.59 117.58
6/3/99 127.50 111.99 118.01
6/4/99 123.57 112.17 120.57
6/7/99 128.57 111.63 121.19
6/8/99 125.00 112.38 119.63
6/9/99 125.71 111.50 119.75
6/10/99 126.07 111.67 118.31
6/11/99 124.29 112.89 117.48
6/14/99 120.71 110.61 117.51
6/15/99 121.79 111.90 118.16
6/16/99 125.36 112.46 120.81
6/17/99 126.43 114.28 121.68
6/18/99 125.36 115.36 121.94
6/21/99 123.21 115.83 122.50
6/22/99 126.43 115.84 121.31
6/23/99 122.14 115.13 121.06
6/24/99 124.29 114.37 119.49
6/25/99 123.93 115.42 119.44
6/28/99 130.36 115.26 120.90
6/29/99 129.29 115.81 122.73
6/30/99 129.64 116.24 124.66
7/1/99 129.29 116.33 125.41
7/2/99 129.29 117.64 126.34
7/6/99 128.93 117.94 126.06
7/7/99 125.36 119.29 126.76
7/8/99 127.50 119.16 126.63
7/9/99 126.43 119.78 127.43
7/12/99 122.14 120.48 127.05
7/13/99 124.29 119.32 126.55
7/14/99 124.64 120.47 126.97
7/15/99 126.43 121.04 128.01
7/16/99 128.21 122.08 128.84
7/19/99 128.21 120.93 127.83
7/20/99 128.57 119.92 125.05
7/21/99 128.57 119.82 125.25
7/22/99 136.43 118.88 123.59
7/23/99 134.64 118.89 123.22
7/26/99 132.50 117.67 122.39
7/27/99 131.43 117.95 123.76
7/28/99 132.14 119.20 123.99
7/29/99 132.14 119.26 121.78
7/30/99 132.14 119.19 120.66
8/2/99 133.21 119.58 120.60
8/3/99 136.07 119.89 120.07
8/4/99 136.43 120.63 118.54
8/5/99 136.43 120.10 119.30
8/6/99 132.14 120.42 118.08
8/9/99 132.50 119.77 117.85
8/10/99 133.21 119.21 116.37
8/11/99 133.21 118.69 118.23
8/12/99 131.79 118.85 117.89
8/13/99 134.29 118.64 120.57
8/16/99 137.86 119.41 120.85
8/17/99 140.18 120.32 122.06
8/18/99 157.86 121.69 121.04
Last three Months
[TABLE REPRESENTS LINE GRAPH]
US Regulated
Date Knicks Water Companies S&P 500
---- ------ --------------- -------
5/18/99 100.00 100.00 100.00
5/19/99 101.50 100.28 100.82
5/20/99 104.49 101.73 100.41
5/21/99 106.59 100.92 99.77
5/24/99 107.78 101.72 98.00
5/25/99 107.49 101.64 96.33
5/26/99 106.89 102.68 97.86
5/27/99 105.39 102.71 96.11
5/28/99 104.19 104.09 97.64
6/1/99 107.49 106.22 97.07
6/2/99 111.38 108.62 97.11
6/3/99 106.89 108.04 97.47
6/4/99 103.59 108.22 99.58
6/7/99 107.78 107.69 100.09
6/8/99 104.79 108.42 98.80
6/9/99 105.39 107.57 98.90
6/10/99 105.69 107.73 97.71
6/11/99 104.19 108.91 97.02
6/14/99 101.20 106.71 97.05
6/15/99 102.10 107.96 97.59
6/16/99 105.09 108.49 99.78
6/17/99 105.99 110.25 100.49
6/18/99 105.09 111.29 100.71
6/21/99 103.29 111.75 101.18
6/22/99 105.99 111.75 100.19
6/23/99 102.40 111.07 99.98
6/24/99 104.19 110.33 98.68
6/25/99 103.89 111.35 98.65
6/28/99 109.28 111.20 99.85
6/29/99 108.38 111.73 101.36
6/30/99 108.68 112.14 102.95
7/1/99 108.38 112.23 103.57
7/2/99 108.38 113.49 104.34
7/6/99 108.08 113.78 104.11
7/7/99 105.09 115.08 104.69
7/8/99 106.89 114.96 104.58
7/9/99 105.99 115.55 105.25
7/12/99 102.40 116.23 104.93
7/13/99 104.19 115.11 104.52
7/14/99 104.49 116.22 104.86
7/15/99 105.99 116.77 105.72
7/16/99 107.49 117.77 106.41
7/19/99 107.49 116.67 105.57
7/20/99 107.78 115.70 103.28
7/21/99 107.78 115.60 103.45
7/22/99 114.37 114.69 102.07
7/23/99 112.87 114.69 101.77
7/26/99 111.08 113.52 101.08
7/27/99 110.18 113.79 102.21
7/28/99 110.78 115.00 102.41
7/29/99 110.78 115.06 100.58
7/30/99 110.78 114.99 99.66
8/2/99 111.68 115.36 99.60
8/3/99 114.07 115.66 99.16
8/4/99 114.37 116.37 97.90
8/5/99 114.37 115.87 98.53
8/6/99 110.78 116.17 97.52
8/9/99 111.08 115.55 97.34
8/10/99 111.68 115.00 96.11
8/11/99 111.68 114.50 97.65
8/12/99 110.48 114.66 97.36
8/13/99 112.57 114.45 99.58
8/16/99 115.57 115.20 99.81
8/17/99 117.51 116.07 100.81
8/18/99 132.34 117.40 99.96
Note: (1) Includes American Water Works, Philadelphia Suburban, E'Town Corp.,
California Water Service, American States Water, SJW Corp., Connecticut
Water Service, and Middlesex Water.
B(3)-6
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Last 12 Months Knicks Stock Price Performance
[TABLE REPRESENTS LINE GRAPH]
Knicks
Date Volume Price Annotations
---- ------ ----- -----------
8/18/98 41.1 $17.50
8/19/98 25.1 $17.50
8/20/98 28.2 $17.38
8/21/98 28.3 $17.50
8/24/98 37.1 $17.69
8/25/98 33.4 $17.63
8/26/98 21.6 $17.56
8/27/98 24.9 $17.69
8/28/98 24.5 $17.69 17.69
8/31/98 26.1 $17.75
9/1/98 46.5 $17.56
9/2/98 41.9 $17.56
9/3/98 39.2 $17.50
9/4/98 17.1 $17.63
9/8/98 28.4 $17.81
9/9/98 21.0 $17.44
9/10/98 73.0 $17.19
9/11/98 40.7 $17.06
9/14/98 24.7 $17.00
9/15/98 25.0 $17.00
9/16/98 13.3 $16.81
9/17/98 63.8 $16.69
9/18/98 75.1 $16.56
9/21/98 25.0 $16.63
9/22/98 63.8 $16.50
9/23/98 55.3 $16.81
9/24/98 29.4 $16.94
9/25/98 22.7 $17.00
9/28/98 39.4 $17.00
9/29/98 44.7 $17.00
9/30/98 10.7 $17.00
10/1/98 47.5 $16.56
10/2/98 27.9 $16.75
10/5/98 82.6 $17.94
10/6/98 48.9 $18.31
10/7/98 39.1 $18.25
10/8/98 47.7 $18.56
10/9/98 49.7 $18.44 18.44
10/12/98 12.4 $18.25
10/13/98 19.8 $18.13
10/14/98 19.6 $18.56
10/15/98 35.1 $18.50 18.5
10/16/98 31.1 $18.69
10/19/98 22.6 $18.69
10/20/98 29.0 $19.06
10/21/98 49.1 $19.44
10/22/98 60.9 $19.56
10/23/98 51.7 $19.56
10/26/98 25.7 $19.50
10/27/98 54.8 $19.38
10/28/98 17.0 $19.06
10/29/98 20.9 $19.13
10/30/98 80.9 $19.38
11/2/98 24.8 $19.63
11/3/98 26.5 $19.75
11/4/98 16.0 $19.56
11/5/98 21.5 $19.75 19.75
11/6/98 24.8 $19.63
11/9/98 33.5 $19.94
11/10/98 48.1 $19.88
11/11/98 35.6 $19.81
11/12/98 22.6 $19.94
11/13/98 34.7 $19.31
11/16/98 27.7 $20.00
11/17/98 26.6 $20.00
11/18/98 32.5 $20.06
11/19/98 33.8 $20.44
11/20/98 23.2 $20.13
11/23/98 29.3 $20.06
11/24/98 57.4 $20.00
11/25/98 21.7 $20.06
11/27/98 12.4 $20.13
11/30/98 31.4 $20.75
12/1/98 48.8 $21.00
12/2/98 37.6 $20.94
12/3/98 33.8 $20.44
12/4/98 28.6 $21.00
12/7/98 65.0 $22.38
12/8/98 97.9 $22.56
12/9/98 28.0 $22.00
12/10/98 46.7 $21.44
12/11/98 22.3 $21.69
12/14/98 24.7 $21.44
12/15/98 37.1 $21.38
12/16/98 15.0 $21.06
12/17/98 43.2 $20.56
12/18/98 43.3 $21.31
12/21/98 109.0 $22.19
12/22/98 101.6 $23.94
12/23/98 60.1 $23.75
12/24/98 26.3 $23.44
12/28/98 35.9 $23.88
12/29/98 25.9 $23.94
12/30/98 43.3 $24.00
12/31/98 31.9 $23.94
1/4/99 73.1 $23.63
1/5/99 87.4 $23.31
1/6/99 50.2 $23.06
1/7/99 47.0 $22.75
1/8/99 78.8 $22.75
1/11/99 58.5 $22.94
1/12/99 26.1 $22.63
1/13/99 51.5 $22.69
1/14/99 25.8 $22.31
1/15/99 31.0 $22.00
1/19/99 31.9 $22.38
1/20/99 24.6 $22.88
1/21/99 27.3 $22.50 22.5
1/22/99 19.3 $22.94
1/25/99 26.8 $22.44
1/26/99 14.6 $22.50
1/27/99 34.7 $21.75
1/28/99 16.8 $22.06
1/29/99 28.4 $21.31
2/1/99 33.8 $21.88
2/2/99 21.3 $21.44
2/3/99 25.2 $21.50
2/4/99 20.4 $21.19
2/5/99 26.0 $20.50
2/8/99 39.7 $20.50
2/9/99 42.1 $21.06
2/10/99 32.1 $20.19
2/11/99 32.2 $20.50
2/12/99 36.7 $19.94
2/16/99 35.4 $19.63
2/17/99 28.7 $19.69
2/18/99 30.8 $19.63
2/19/99 26.3 $19.56
2/22/99 24.5 $19.69
2/23/99 31.2 $20.00
2/24/99 50.3 $19.56
2/25/99 28.4 $19.44
2/26/99 52.9 $19.25
3/1/99 63.9 $19.06
3/2/99 50.3 $19.06
3/3/99 44.4 $18.63
3/4/99 47.9 $18.81
3/5/99 21.1 $19.00
3/8/99 18.9 $19.63
3/9/99 20.2 $19.06
3/10/99 44.4 $19.00
3/11/99 38.1 $19.00
3/12/99 29.6 $19.44
3/15/99 18.0 $19.63
3/16/99 46.5 $19.75
3/17/99 36.5 $19.13
3/18/99 34.3 $19.63
3/19/99 23.2 $19.38
3/22/99 35.0 $19.94
3/23/99 42.6 $20.13
3/24/99 21.4 $20.00
3/25/99 34.0 $20.38
3/26/99 21.1 $20.50
3/29/99 15.3 $20.88
3/30/99 29.3 $20.69
3/31/99 22.8 $20.75
4/1/99 31.7 $21.13
4/5/99 33.6 $21.63
4/6/99 24.8 $20.69
4/7/99 12.9 $20.63
4/8/99 43.5 $20.94
4/9/99 24.3 $20.94
4/12/99 43.0 $21.19
4/13/99 29.1 $21.06
4/14/99 35.3 $21.38
4/15/99 25.3 $21.31
4/16/99 42.4 $20.94 20.94
4/19/99 45.8 $20.50
4/20/99 45.5 $20.81
4/21/99 32.3 $21.00
4/22/99 44.5 $20.25
4/23/99 35.3 $21.06
4/26/99 14.0 $20.81
4/27/99 44.5 $21.00
4/28/99 21.6 $20.75
4/29/99 15.2 $20.75
4/30/99 21.3 $20.81
5/3/99 42.5 $21.13
5/4/99 19.0 $21.13
5/5/99 22.6 $21.25
5/6/99 17.5 $21.38
5/7/99 23.2 $21.44
5/10/99 49.8 $23.13
5/11/99 35.2 $22.44 22.44
5/12/99 24.2 $21.88
5/13/99 31.0 $21.56
5/14/99 12.3 $21.00
5/17/99 50.0 $20.81
5/18/99 29.8 $20.88
5/19/99 27.0 $21.19
5/20/99 50.9 $21.81
5/21/99 21.2 $22.25
5/24/99 35.6 $22.50
5/25/99 8.8 $22.44
5/26/99 17.9 $22.31
5/27/99 31.3 $22.00
5/28/99 35.3 $21.75
6/1/99 32.5 $22.44
6/2/99 114.9 $23.25
6/3/99 32.8 $22.31
6/4/99 18.5 $21.63
6/7/99 14.4 $22.50
6/8/99 30.4 $21.88
6/9/99 22.4 $22.00
6/10/99 20.8 $22.06
6/11/99 18.8 $21.75
6/14/99 22.0 $21.13
6/15/99 37.6 $21.31
6/16/99 21.0 $21.94
6/17/99 26.8 $22.13
6/18/99 58.2 $21.94
6/21/99 20.0 $21.56
6/22/99 24.6 $22.13
6/23/99 22.5 $21.38
6/24/99 18.2 $21.75
6/25/99 11.0 $21.69
6/28/99 50.0 $22.81
6/29/99 21.3 $22.63
6/30/99 49.1 $22.69
7/1/99 27.3 $22.63
7/2/99 28.4 $22.63
7/6/99 36.3 $22.56
7/7/99 77.7 $21.94
7/8/99 30.2 $22.31
7/9/99 15.7 $22.13
7/12/99 142.1 $21.38
7/13/99 14.5 $21.75 21.75
7/14/99 14.3 $21.81
7/15/99 44.4 $22.13 22.13
7/16/99 85.4 $22.44
7/19/99 15.7 $22.44
7/20/99 33.3 $22.50
7/21/99 45.5 $22.50
7/22/99 74.5 $23.88
7/23/99 24.3 $23.56
7/26/99 12.4 $23.19
7/27/99 59.3 $23.00
7/28/99 64.6 $23.13
7/29/99 37.8 $23.13
7/30/99 23.9 $23.13 23.13
8/2/99 26.9 $23.31
8/3/99 24.1 $23.81
8/4/99 30.1 $23.88
8/5/99 19.9 $23.88
8/6/99 49.8 $23.13
8/9/99 16.1 $23.19
8/10/99 30.3 $23.31
8/11/99 36.5 $23.31
8/12/99 43.0 $23.06
8/13/99 43.2 $23.50
8/16/99 50.0 $24.13
8/17/99 94.9 $24.53
8/18/99 562.1 $27.63 27.63
B(3)-7
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Analyst Commentary
<TABLE>
<CAPTION>
EPS Estimate($)
Stock --------------- Target 5-Yr
Company Analyst Recommendation Date Price($) FY99 FY00 Price($) CAGR
- ------------- --------- -------------- ------- -------- ----- ----- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I/B/E/S -- $1.28 $1.35 $ -- 5.5%
Zacks -- 1.27 1.35 N/A 5.0%
Merrill Lynch J. Lehman Accumulate 7/21/99 $22 7/16 1.26 1.40 $ 25 6.0%
HSBC P. Coy Accumulate 5/11/99 22 7/16 1.23 1.31 $22 - $24 N/A
A.G. Edwards T. Winter Maintain 4/16/99 20 7/8 1.25 1.33 N/A N/A
Value Line P. Roth N/A 2/5/99 22 1.30 1.50 N/A N/A
</TABLE>
o "We expect UWR to continue its moderate, steady growth for the foreseeable
future. We are currently estimating EPS will grow 5-7% in both 1999 and
2000, excluding future acquisition activity, primarily due to rate
increases and modest population/water usage growth in existing regions.
Additionally, improving returns from the contract operations business
should contribute significantly to earnings growth. Our $25 price
objective assumes a 5% discount to the average 1999E P/E multiple applied
to 2000E."
- Merrill Lynch
o "We also continue to maintain our Accumulate rating on the stock, although
it is approaching our target price range of $22-24."
- HSBC
o "We have maintained our 1999 and 2000 EPS estimates of $1.25 and $1.33,
respectively. We continue to recommend investors MAINTAIN POSITION in
shares of UWR until we gain confidence that UWS can materially add to
EPS."
- A.G. Edwards
o "These shares appear a tad rich at the moment. The stock price has
increased by more than 35% over the past year. Consequently, the equity's
3- to 5-year total return potential is not impressive, despite the
consistent earnings gains we predict out to 2001 - 2003."
- Value Line
B(3)-8
<PAGE>
- --------------------------------------------------------------------------------
PRELIMINARY STANDALONE VALUATION
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
VALUATION SUMMARY
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Preliminary Valuation Summary(1)
[THE FOLLOWING IS REPRESENTED BY A BAR GRAPH]
--------------------------------------------------------------
Last 12 Months Unaffected Trading Range $16.38 $25.00
--------------------------------------------------------------
Discounted Cash Flow Analysis 26.04 35.88
--------------------------------------------------------------
Comparable Companies Analysis 20.45 23.08
--------------------------------------------------------------
Comparable Companies Analysis with 40% Premium 28.64 32.32
--------------------------------------------------------------
Precendent Transactions Analysis 21.18 32.79
--------------------------------------------------------------
Equity Value Per Knicks Share(4)
Notes: (1) Valuation as of July 31, 1999.
(2) Based on share price of $23.06 as of 8/12/99.
(3) Discounted cash flow analysis includes a comparable company analysis
for services business and UK holdings.
(4) Assumes 41.0MM shares outstanding.
B(3)-9
<PAGE>
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW VALUATION
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Valuation Analysis by Business Segment(1)
Equity Value Per Knicks Share(2)
[GRAPHIC]
Spurs Offer
$35.40
Regulated Utility Knicks Water Northumbrian
and Knicks Properties Services Partnership Partnership Total
--------------------- -------------------- ----------- -----
$25.71 $2.29 $2.64 $30.64
o Discounted Cash Flows o 1.0x - 2.0x 99E Revenues
o WACC: 6.0% - 6.5%
o Perpetual Growth
Rate: 1.0% - 2.0%
Notes: (1) Valuation as of July 31, 1999.
(2) Assumes 41.0MM shares outstanding.
(3) Share price as of 8/12/99.
B(3)-10
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Discounted Cash Flow Analysis
Core Business Valuation as of July 31, 1999(1)
($MM, except per share data)
<TABLE>
<CAPTION>
Perpetual Growth Rate (%) 1.0 1.5
-------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Discount Rate 5.50% 6.25% 7.00% 5.50% 6.25% 7.00%
------ ------ ------ ------ ------ ------
Present Value of
Cash Flows - 1999 $41 $41 $41 $41 $41 $41
Cash Flows - 2000 to 2009 584 561 539 584 561 539
Terminus 1,307 1,044 852 1,478 1,160 934
Aggregate Value $1,932 $1,646 $1,433 $2,102 $1,762 $1,515
Cash (2) $43 43 43 $43 $43 $43
Preferred Stock (2) (31) (31) (31) (31) (31) (31)
Total Debt (2) (719) (719) (719) (719) (719) (719)
------ ------ ------ ------ ------ ------
Equity Value $1,224 $939 $725 $1,395 $1,055 $807
====== ====== ====== ====== ====== ======
Equity Value per Share (3) $29.85 $22.89 $17.68 $34.01 $25.71 $19.68
Premium (Discount) to Market (4) 29.4% (0.8)% (23.3)% 47.5% 11.5% (14.7)%
1999E P/E Implied 11.2x 8.6x 6.6x 12.8x 9.7x 7.4x
Price/Book 2.48x 1.90x 1.47x 2.83x 2.14x 1.64x
Terminal Value Analysis
% Value in Terminus 67.6% 63.4% 59.5% 70.3% 65.8% 61.7%
% Value in Cash Flows 32.4% 36.6% 40.5% 29.7% 34.2% 38.3%
Implied Terminal Aggregate Multiples
EBITDA 11.0x 9.5x 8.3x 12.5x 10.5x 9.1x
EBIT 14.7x 12.6x 11.1x 16.6x 14.0x 12.2x
Implied Terminal Equirt Multiples
Book Value 2.95x 2.40x 1.98x 3.47x 2.78x 2.27x
Net Income 22.4 x 18.2 x 15.0 x 26.3 x 21.0 x 17.2 x
<CAPTION>
Perpetual Growth Rate (%) 2.0
-----------------------------
<S> <C> <C> <C>
Discount Rate 5.50% 6.25% 7.00%
------ ------ ------
Present Value of
Cash Flows - 1999 $41 $41 $41
Cash Flows - 2000 to 2009 584 561 539
Terminus 1,697 1,303 1,033
Aggregate Value $2,322 $1,905 $1,613
Cash (2) $43 $43 $43
Preferred Stock (2) (31) (31) (31)
Total Debt (2) (719) (719) (719)
------ ------ ------
Equity Value $1,615 $1,197 $906
====== ====== ======
Equity Value per Share (3) $39.36 $29.19 $22.08
Premium (Discount) to Market (4) 70.7% 26.6% (4.3)%
1999E P/E Implied 14.8x 11.0x 8.3x
Price/Book 3.27x 2.43x 1.84x
Terminal Value Analysis
% Value in Terminus 73.1% 68.4% 64.0%
% Value in Cash Flows 26.9% 31.6% 36.0%
Implied Terminal Aggregate Multiples
EBITDA 14.3x 11.8x 10.1x
EBIT 19.1x 15.8x 13.4 x
Implied Terminal Equirt Multiples
Book Value 4.13x 3.24x 2.62x
Net Income 31.3 x 24.6 x 19.8 x
</TABLE>
Notes: (1) Excludes Knicks U.K., Knicks Services and Growth Initiatives.
(2) Balances as of 6/30/99. Total Debt excludes the amounts at the U.K.
and Services levels.
(3) Based on 41.0MM fully diluted shares.
(4) Based on 8/12/99 closing price of $23.06.
B(3)-11
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Water Services Valuation Analysis
($MM, except per share)
<TABLE>
<CAPTION>
Implied Value Range
-------------------------------------------- Knicks Knicks
1999 Operating Revenues Valuation Range Aggregate Equity(1) Ownership Share of Value
- ----------------------- ------------------- --------------------- ------------------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
USA $152.4 1.0 x - 2.0 x $152.4 - $304.7 $109.4 - $261.7 50.00% $54.7 - $130.9
Canada 1.9 1.0 x - 2.0 x 1.9 - 3.8 1.9 - 3.8 33.33% 0.6 - 1.3
Total $154.3 $154.3 - $308.5 $111.3 - $265.5 $55.3 - $132.1
</TABLE>
-----------------------------------------------------------
Equity Value Per Knicks Share $1.35 - $3.22
-----------------------------------------------------------
Notes:
(1) Aggregate Value less Net Debt at the operating company of $43MM as of
6/30/99 attributed to U.S. operations.
(2) Based on 41.0 MM fully diluted shares.
B(3)-12
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks UK Comparable Companies Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value(3) Implied Equity Value
----------------- -------------------------- ---------------------
Statistics Low High Low High Low High
---------- ------ ------ ----------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
- ---------------
LTM EBITDA(1) $377.2 7.5 x - 8.5 x $2,829.1 - $3,206.4 $1,900.6 - $2,277.8
LTM EBIT(1) $297.3 10.5 x - 11.5 x 3,121.8 - 3,419.1 2,193.3 - 2,490.6
Equity Value
- ------------
LTM Cash Flows(1)(2) $273.3 5.0 x 6.0 x 2,294.8 - 2,568.1 1,366.3 - 1,639.6
Tangible Book Value $1,451.4 1.1 x - 1.3 x 2,525.1 - 2,815.4 1,596.6 - 1,886.9
----------------------------------------------------------------------------------
Median $2,677.1 - $3,010.9 $1,748.6 - $2,082.3
Liquidity Discount 20% - 0% $1,398.9 $2,082.3
Knicks UK Interest 10% $139.9 $208.2
Less: Knicks UK Debt ($66.0) ($66.0)
Value of Knicks Interest $73.9 $142.2
Per Share(4) $1.80 $3.47
----------------------------------------------------------------------------------
</TABLE>
Notes:
(1) For the period ending 12/31/98.
(2) Cash Flow equals Net Income plus Depreciation & Amortization.
(3) Includes total debt and preferrred of $1,094MM, net of $166MM cash as of
12/31/98.
(4) Assumes 41.0MM diluted shares outstanding (based on 40.4MM basic shares
(including converted preference stock) outstanding as of 6/30/99 and 1.3MM
options at an average exercise price of $18.35).
B(3)-13
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Trading Statistics of Selected UK Regulated Water Companies(1)
<TABLE>
<CAPTION>
Equity Value Aggregate Value/LTM
----------------------------------- ----------------------
Net Income 5-Year
Company Equity Agg. ------------ Book LTM Cash Dividend Growth
Name Price Value Value FY1 FY2 Value Flow(2) Sales EBITDA EBIT Yield Rate
- --------------- ------ ------ ------ ----- ----- ----- -------- ----- ------ ---- ----- ----
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anglian Water $12.14 $3,132 $6,131 9.5x 14.0x 1.2x 5.2x 4.6x 7.9x 10.7x 5.7% N.A.
Thames Water 13.51 4,726 8,590 8.5 12.0 1.4 5.6 4.0 8.0 10.1 5.1 -4.7
Kelda Group(3) 6.67 2,608 4,765 8.1 11.6 1.0 4.7 4.4 7.4 11.1 5.4 -2.9
Severn Trent 13.65 4,631 7,847 9.1 14.0 1.2 6.4 3.8 8.3 10.9 5.1 N.A.
Pennon Group 17.91 2,438 3,843 13.3 16.1 1.7 9.1 5.5 10.7 14.3 4.1 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Median: 9.1x 14.Ox 1.2x 5.6x 4.4x 8.0x 1O.9x 5.1% -2.9%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) Share prices and I/B/E/S estimates as of 08/18/99.
(2) Cash flow equals Net Income plus Depreciation & Amortization.
(3) Formerly Yorkshire Water.
B(3)-14
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Factors Affecting Valuation
OFWAT
o Discussions on valuation for Knicks was overshadowed by OFWAT's
announcement of its Draft Determinations on July 27, 1999, which included
the U.K. water regulator's recommendation for water rates for the next
five years
o As shown in the chart below, Northumbrian was hit the hardest of all the
U.K. water companies both in terms of an initial hit to prices, as well as
an average price reduction over 5 years
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
Draft Price Reduction
---------------------
Average
2000-01 2001-02 2002-03 2003-04 2004-05 5 Years
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Anglian -11.1 0.0 1.0 2.2 2.5 -1.2
Dwr Cymru -13.8 -2.7 0.0 0.0 2.4 -3.0
North West -9.3 -2.0 0.0 0.0 2.0 -1.9
Northumbrian -25.5 -1.5 0.0 1.0 1.0 -5.6
Severn Trent -14.1 -1.0 -1.0 0.0 1.0 -3.2
South West -13.7 0.0 2.0 2.0 2.5 -1.6
Southern -15.6 0.0 0.0 0.0 0.0 -3.3
Thames -11.7 0.0 -1.0 -1.0 0.0 -2.8
Wessex -13.5 0.0 0.0 2.0 3.1 -1.9
Yorkshire -15.2 -2.0 0.0 0.0 1.0 -3.4
Average (weighted) -13.4 -1.0 -0.1 0.3 1.3 -2.7
- --------------------------------------------------------------------------------------------
</TABLE>
o The rate reductions are still only proposals and Northumbrian will still
be able to provide comments on the draft (which is to be finalized in
November). The Company can also pursue a mitigation of the rate reduction
through the Monopolies and Mergers Commission, as well as pursue internal
cost reductions/efficiencies
B(3)-15
<PAGE>
- --------------------------------------------------------------------------------
COMPARABLE COMPANY VALUATION
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Comparable Companies Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value(6) Implied Equity Value
------------------- -------------------------- --------------------
Statistics Low High Low High Low High
---------- ------ ------ -------- -------- ------ ------
Aggregate Value
- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
LTM EBITDA(1)(2) $153.9 10.0x - 11.0x $1,538.8 - $1,692.6 $761.4 - $915.3
LTM EBIT(1)(2) $111.2 13.0x - 14.0x 1,446.2 - 1,557.5 668.9 - 780.1
Equity Value
- ------------
FY 1999 Net Income(3) $52.1 18.0x - 19.0x 1,714.6 - 1,766.6 937.2 - 989.3
FY 2000 Net Income(3) $54.9 17.5x 18.5x 1,738.4 - 1,793.3 961.0 - 1,015.9
LTM Cash Flows(1)(2)(4) $84.7 10.5x 11.5x 1,666.5 - 1,751.2 889.2 - 973.9
Tangible Book Value(5) $436.0 1.8x - 2.0x 1,562.2 - 1,649.4 784.8 - 872.0
------------------------------------------------------------------------
Median $1,614.4 - $1,721.9 $837.0 - $944.6
Per Share(7) $20.45 $23.08
Premium (Discount) to Unaffected(8) -11.3% 0.1%
Median Plus 40% Control Premium $28.64 $32.32
------------------------------------------------------------------------
</TABLE>
Notes:
(1) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
(2) For the period ending 6/30/99.
(3) I/B/E/S estimates as of 8/12/99.
(4) Cash Flow equals Net Income plus Depreciation & Amortization.
(5) As of 6/30/99.
(6) Includes total debt and preferrred of $821MM, net of $43MM cash as of
6/30/99.
(7) Assumes 40.9 MM fully diluted shares outstanding.
(8) Based on unaffected share price of $23.06 as of 8/12/99.
B(3)-16
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Trading Statistics of Selected U.S. Regulated Water Companies(1)
<TABLE>
<CAPTION>
Equity Value Aggregate Value
---------------------------------------------------- ---------------
Net Income Book Value
Equity Agg. ---------------------- -------------- LTM Cash
Company Price Value Value LTM 1999E 2000E Full Tang. Flow(2) EBITDA EBIT
- ------- ----- ----- ----- --- ----- ----- ---- ----- ------- ------ ----
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Water Works $29.25 $2,825 $5,463 22.5x 17.7x 16.7x 1.86x 1.89x 11.2x 11.2x 15.1x
Philadelphia Suburban 22.00 899 1,375 20.5 20.2 18.5 2.53 2.53 12.3 10.3 13.2
E'Town Corp. 48.06 412 752 17.3 18.5 17.6 1.85 1.85 11.0 13.6 18.0
California Water Service 30.88 390 555 18.3 20.0 19.3 2.29 2.29 10.7 9.0 11.9
American States Water 32.13 288 455 16.6 17.8 17.4 1.85 1.85 9.3 8.3 11.1
SJW Corp 76.00 231 322 15.3 15.6 15.6 1.72 1.74 9.2 7.8 10.2
Connecticut Water Service 30.50 140 207 19.1 19.2 18.6 2.37 2.32 12.2 10.6 13.5
Middlesex Water 26.19 129 206 17.3 18.7 17.9 1.89 1.89 11.9 12.0 15.0
- -----------------------------------------------------------------------------------------------------------------------------------
Median 17.8x 18.6x 17.8x 1.87x 1.89x 11.1x 10.5x 13.3x
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
Knicks(3) $23.06 $938 $1,715 22.3x 18.0x 17.1x 1.89x 2.15x 11.1x 11.1x 15.4x
===================================================================================================================================
Long-Term
Div. Growth
Company Yield Rate
- ------- ----- ----
<S> <C> <C>
American Water Works 2.9% 6.0%
Philadelphia Suburban 3.3 6.0
E'Town Corp. 4.2 3.0
California Water Service 3.5 N.A.
American States Water 4.0 3.0
SJW Corp 3.2 N.A.
Connecticut Water Service 3.8 3.0
Middlesex Water 4.5 3.0
- --------------------------------------------
Median 3.7% 3.0%
============================================
- --------------------------------------------
Knicks(3) 3.5% 5.5%
============================================
</TABLE>
Notes:
(1) Share prices and I/B/E/S estimates as of 8/18/99.
(2) Cash flow equals Net Income plus Depreciation and Amortization
(3) Knicks unaffected price as of 8/12/99.
B(3)-17
<PAGE>
- --------------------------------------------------------------------------------
PRECEDENT TRANSACTION VALUATION
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Precedent Transactions Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value (6) Implied Equity Value
----------------- -------------------------- --------------------------
Statistics Low High Low High Low High
---------- --- ---- --- ---- --- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
LTM EBITDA(1)(4) $153.9 10.0x - 13.0x $1,538.8 - $2,000.4 $ 761.4 - $1,223.0
LTM EBIT(1)(4) $111.2 13.5x - 18.5x 1,501.8 - 2,058.1 724.5 - 1,280.7
Equity Value
LTM Net Income(1)(4) $ 42.1 23.0x - 34.0x 1,744.7 - 2,207.3 967.3 - 1,429.9
Tangible Book Value(5) $436.0 2.4x - 3.2x 1,823.8 - 2,172.6 1,046.4 - 1,395.2
------------------------------------------------------------------------
Median $1,641.7 - $2,115.3 $ 864.3 - $1,338.0
Per Share(2) $ 21.18 $ 32.79
Premium (Discount) to Unaffected(3) -8.1% 42.2%
========================================================================
</TABLE>
Notes:
(1) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
(2) Assumes 40.8 MM fully diluted shares outstanding.
(3) Based on unaffected share price of $23.06 as of 8/12/99.
(4) LTM for the period ending 6/30/99.
(5) As of 6/30/99
(6) Includes total debt and preferrred of $821MM, net of $43MM cash as of
6/30/99.
B(3)-18
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Water Industry Precedent Transactions
<TABLE>
<CAPTION>
Equity Value/L12M
------------------------------
Book Value
Date Equity Agg. Net -----------------
Announced Acquiror/Acquiree Value Value(1) Income Full Tangible
- --------- ----------------- ----- -------- ------ ---- --------
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C>
06/01/99 Yorkshire Water/ $444 $599 22.1 x 2.92 x 2.92 x
Aquarion
03/23/99 California Water/ 53 64 33.8 3.22 3.22
Dominguez
10/13/98 American Water Works/ 475 701 25.6 2.43 2.43
National Enterprises(3)
07/24/98 ENRON/ 2,266 2,810 12.9(4) 2.06 2.06
Wessex Water
06/29/98 Philadelphia Suburban/ 275 460 22.8 2.52 2.52
Consumers Water
12/19/96 NIPSCO/ 288 423 23.6 2.43 3.02
Indianapolis Water
-------------------------------------------------------
Mean: 25.6 x(5) 2.60 x 2.70 x
Median: 23.6(5) 2.48 2.72
=======================================================
<CAPTION>
Premium to Price
Aggregate Value/L12M ------------------
Date --------------------------------------- Prior Prior
Announced Customers Sales EBITDA EBIT Month Day
- --------- --------- ----- ------ ---- ----- -----
<S> <C> <C> <C> <C> <C> <C>
06/01/99 4,248 x 5.2 x 10.2 x 15.5 x 42.5 % 19.3 %
03/23/99 489 2.5 13.1 18.4 52.7(2) 32.5(2)
10/13/98 412 4.0 NA NA NA NA
07/24/98 781 6.4 9.5 12.4 37.2 28.0
06/29/98 687 4.3 10.3 13.9 42.9 26.0
12/19/96 1,802 2.9 9.8 13.2 44.6 23.1
-------------------------------------------------------------
1,403 x 4.2 x 10.6 x 14.7 x 44.0 % 25.8 %
734 4.1 10.2 13.9 42.9 26.0
=============================================================
</TABLE>
Notes:
- ----------
(1) Aggregate value equals equity value plus debt and preferred stock less
cash.
(2) Represents the premium prior to the initial California Water announcement
in November 1998.
(3) National Enterprises was a privately owned company.
(4) Net income based on UK GAAP.
(5) Mean and median exclude Enron/Wessex Water transaction.
B(3)-19
<PAGE>
- --------------------------------------------------------------------------------
PRO FORMA MERGER ANALYSIS
- --------------------------------------------------------------------------------
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Pro Forma Merger Assumptions
Transaction Structure: o 100% Cash
Accounting Treatment: o Purchase Accounting
Goodwill: o Two cases - amortized over 20 years and no
amortization
Transaction Date: o Pro Forma as of 12/31/99
Offer Price Per Share: o $35.00
Dividend: o Dividend increase of $0.06 per quarter for 3
quarters and $0.30 special dividend
Earnings Estimates: o Based on I/B/E/S median estimates
Synergies: o No synergies assumed. Breakeven synergies shown
Cost of Acquisition Debt: o Blended cost of funds of 7.5%
B(3)-20
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Accretion/Dilution Impact to Spurs
I/B/ES Projections to I/B/E/S to Projections
Includes Goodwill
- --------------------------------------------------------------------
[GRAPHIC]
2000 2001 2002 2003 2004
(1.6%) (2.5%) (1.9%) (1.4%) (0.9%)
- -------------------------- --------------------------------------
Pretax Breakeven Synergies $31.9 $57.0 $49.7 $41.1 $35.8
========================== ======================================
No Goodwill
- --------------------------------------------------------------------
[GRAPHIC]
2000 2001 2002 2003 2004
1.0% (0.3%) 0.0% 0.3% 0.4%
- -------------------------- --------------------------------------
Pretax Breakeven Synergies $0.0 $6.2 $0.0 $0.0 $0.0
========================== ======================================
B(3)-21
<PAGE>
- --------------------------------------------------------------------------------
DRAFT FAIRNESS OPINION LETTER
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B4
PROJECT HOOPS
================================================================================
Financial Presentation Materials for
the Board of Directors
August 2, 1999
MORGAN STANLEY DEAN WITTER
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Table of Contents
SECTION I EXECUTIVE SUMMARY
SECTION II STATUS OF CURRENT DISCUSSIONS
SECTION III PRELIMINARY STANDALONE VALUATION
TAB A Valuation Summary
TAB B Discounted Cash Flow Valuation
TAB C Comparable Company Valuation
TAB D Precedent Transaction Valuation
SECTION IV REVIEW OF POTENTIAL AUCTION PARTICIPANTS
APPENDIX A Transaction Case Studies
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
- --------------------------------------------------------------------------------
B(4)-Page 1
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Executive Summary
o Since the last Board meeting, Morgan Stanley has worked closely with the
Management of Knicks reviewing its 10-year financial plan and conducting
due diligence on the Company
o At the request of Knicks' Management, Morgan Stanley also initiated
conversations with Rothschild, Spurs financial advisor, to review
approaches to valuation
o Certain market factors have altered the landscape for the valuation of
Knicks, most notably the recent OFWAT (U.K. water regulator) announcement
on expected rates for the next five years
B(4)-Page 2
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Factors Affecting Valuation
<TABLE>
<S> <C> <C> <C>
- ------------------- --------------------------
Precedent + National Platform/
Transactions Unique Asset Base
- -------------------\ --------------------------
\
\ --------------------------
- ------------------- \ Entry into New
\ Market / Flexibility
Discounted \ + to Pursue Other
Cash Flow \ \ Opportunities
Analysis \ \ --------------------------
\ \
- ------------------- \ ----------------- -------------------------- -----------------
\
\ Standalone/ Market/ Regulatory = Valuation
Intrinsic + / - Environment Outcome
Value
/
/ ----------------- ------------------------- -----------------
/
- ------------------- / /
/ / --------------------------
Comparable / / Ongoing
Companies / - Partnership/
Analysis / Litigation
/ Overhang
- ------------------- / --------------------------
/
- -------------------/ --------------------------
Sum-of-the-Parts - OFWAT Draft
Analysis Decision
- ------------------- --------------------------
</TABLE>
B(4)-Page 3
<PAGE>
- --------------------------------------------------------------------------------
STATUS OF CURRENT DISCUSSIONS
- --------------------------------------------------------------------------------
B(4)-Page 4
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Status of Current Discussions
Description: o Acquisition of Knicks
Form of Consideration: o Cash
Spurs Indication: o $32.50 - $32.75
Implied Knicks Equity Value: o $1,324 - $1,334 MM (2)
Management: o TBD
Other Terms: o Release from restrictions to pursue
business opportunities in the U.S.
while awaiting for approval of the
transaction
Transaction Protection Measures: o Termination fee: TBD
o No Solicitation Clause
o Strict Fiduciary Out
Board Approval: o Spurs and Knicks Board approvals
required
Shareholder Approvals: o Shareholder Approval required for
Knicks Shareholders
Regulatory Approvals: o New Jersey Board of Public Utilities
o Hart - Scott - Rodino
Tax Treatment: o Taxable to Knicks shareholders
Accounting Treatment: o Purchase
Expected Closing: o 6-9 months
Notes: (2) Based on 38.5 million Knicks shares outstanding as of 5/31/99,
1.6 million shares converted from preference stock and 1.3
million options at an average exercise price of $18.35.
B(4)-Page 5
<PAGE>
- --------------------------------------------------------------------------------
PRELIMINARY STANDALONE VALUATION
- --------------------------------------------------------------------------------
B(4)-Page 6
<PAGE>
- --------------------------------------------------------------------------------
VALUATION SUMMARY
- --------------------------------------------------------------------------------
B(4)-Page 7
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Indexed Price Performance
Last Twelve Months
[LINE GRAPH]
7/30/98 100 100 100
7/31/98 98.67 98.66 98.05
8/3/98 97.34 97.61 97.33
8/4/98 94.35 96.57 93.8
8/5/98 94.68 96.89 94.62
8/6/98 96.68 98.44 95.33
8/7/98 96.68 99.26 95.32
8/10/98 95.35 98.4 94.77
8/11/98 95.02 97.95 93.53
8/12/98 94.68 99.24 94.86
8/13/98 94.68 98.95 94.05
8/14/98 94.35 99.98 92.98
8/17/98 94.02 100.32 94.81
8/18/98 93.02 102.14 96.35
8/19/98 93.02 100.99 96.07
8/20/98 92.36 100.05 95.51
8/21/98 93.02 100.2 94.6
8/24/98 94.02 101.81 95.2
8/25/98 93.69 102.79 95.62
8/26/98 93.36 102.13 94.86
8/27/98 94.02 100.24 91.22
8/28/98 94.02 100.45 89.87
8/31/98 94.35 98.37 83.76
9/1/98 93.36 100.87 86.99
9/2/98 93.36 99.79 86.66
9/3/98 93.02 99.55 85.94
9/4/98 93.69 99.47 85.21
9/8/98 94.68 99.72 89.55
9/9/98 92.69 99.42 88.04
9/10/98 91.36 99.16 85.76
9/11/98 90.7 99.26 88.29
9/14/98 90.37 99.06 90.09
9/15/98 90.37 100.14 90.79
9/16/98 89.37 101.18 91.47
9/17/98 88.7 101.75 89.14
9/18/98 88.04 101.69 89.25
9/21/98 88.37 100.57 89.58
9/22/98 87.71 102.32 90.09
9/23/98 89.37 102.38 93.28
9/24/98 90.03 102.34 91.23
9/25/98 90.37 102.15 91.41
9/28/98 90.37 103.56 91.75
9/29/98 90.37 105.22 91.78
9/30/98 90.37 105.62 88.98
10/1/98 88.04 106.13 86.3
10/2/98 89.04 106.05 87.72
10/5/98 95.35 108.22 86.49
10/6/98 97.34 109.35 86.14
10/7/98 97.01 108.67 84.93
10/8/98 98.67 107.7 83.94
10/9/98 98.01 105.59 86.13
10/12/98 97.01 106.32 87.29
10/13/98 96.35 105.39 87.04
10/14/98 98.67 106.87 87.98
10/15/98 98.34 106.05 91.65
10/16/98 99.34 106.79 92.43
10/19/98 99.34 107.47 92.95
10/20/98 101.33 106.95 93.09
10/21/98 103.32 107.52 93.61
10/22/98 103.99 106.3 94.36
10/23/98 103.99 106.7 93.68
10/26/98 103.65 107.65 93.82
10/27/98 102.99 106.63 93.21
10/28/98 101.33 107.44 93.45
10/29/98 101.66 107.41 95.01
10/30/98 102.99 108.17 96.13
11/2/98 104.32 109.71 97.26
11/3/98 104.98 110.55 97.19
11/4/98 103.99 112.15 97.88
11/5/98 104.98 112.17 99.2
11/6/98 104.32 112.79 99.83
11/9/98 105.98 111.43 98.88
11/10/98 105.65 113.65 98.71
11/11/98 105.32 114.01 98.08
11/12/98 105.98 113.68 97.79
11/13/98 102.66 112.38 98.49
11/16/98 106.31 112.37 99.38
11/17/98 106.31 113.35 99.68
11/18/98 106.64 112.39 100.13
11/19/98 108.64 112.59 100.85
11/20/98 106.98 112.16 101.8
11/23/98 106.64 113.69 103.96
11/24/98 106.31 113.23 103.5
11/25/98 106.64 113.56 103.84
11/27/98 106.98 113.03 104.32
11/30/98 110.3 112.51 101.81
12/1/98 111.63 112.39 102.83
12/2/98 111.3 111.74 102.48
12/3/98 108.64 111.89 100.63
12/4/98 111.63 112.89 102.96
12/7/98 118.94 113.37 103.92
12/8/98 119.93 115.27 103.36
12/9/98 116.94 114.99 103.55
12/10/98 113.95 115.23 101.93
12/11/98 115.28 115.02 102.06
12/14/98 113.95 113.69 99.85
12/15/98 113.62 113.9 101.74
12/16/98 111.96 113.17 101.66
12/17/98 109.3 113.74 103.24
12/18/98 113.29 114.48 103.94
12/21/98 117.94 115.66 105.24
12/22/98 127.24 115.97 105.3
12/23/98 126.25 117.64 107.49
12/24/98 124.58 117.13 107.29
12/28/98 126.91 117.68 107.22
12/29/98 127.24 117.14 108.65
12/30/98 127.57 117.93 107.79
12/31/98 127.24 118.67 107.55
1/4/99 125.58 118.26 107.45
1/5/99 123.92 117.85 108.91
1/6/99 122.59 117.35 111.32
1/7/99 120.93 116.75 111.09
1/8/99 120.93 117.46 111.56
1/11/99 121.93 117.29 110.58
1/12/99 120.27 116.99 108.45
1/13/99 120.6 115.28 108
1/14/99 118.6 115.6 106.06
1/15/99 116.94 115.88 108.78
1/19/99 118.94 115.78 109.54
1/20/99 121.59 115.03 109.95
1/21/99 119.6 113.59 108.07
1/22/99 121.93 112.96 107.2
1/25/99 119.27 112.6 107.96
1/26/99 119.6 111.98 109.57
1/27/99 115.61 110.81 108.77
1/28/99 117.28 111.52 110.71
1/29/99 113.29 110.61 111.96
2/1/99 116.28 109.45 111.38
2/2/99 113.95 108.79 110.42
2/3/99 114.29 109.91 111.3
2/4/99 112.62 109.34 109.23
2/5/99 108.97 108.57 108.44
2/8/99 108.97 107.86 108.82
2/9/99 111.96 107.57 106.4
2/10/99 107.31 107.42 107.05
2/11/99 108.97 107.23 109.72
2/12/99 105.98 106.3 107.63
2/16/99 104.32 106.29 108.65
2/17/99 104.65 105.11 107.09
2/18/99 104.32 103.45 108.25
2/19/99 103.99 104.05 108.42
2/22/99 104.65 104.22 111.3
2/23/99 106.31 104.72 111.22
2/24/99 103.99 104.92 109.66
2/25/99 103.32 105.59 108.93
2/26/99 102.33 106.34 108.35
3/1/99 101.33 106.24 108.16
3/2/99 101.33 106.5 107.22
3/3/99 99 106.34 107.42
3/4/99 100 106.1 109.07
3/5/99 101 106.32 111.59
3/8/99 104.32 106.95 112.23
3/9/99 101.33 106.31 111.98
3/10/99 101 106.09 112.59
3/11/99 101 105.26 113.54
3/12/99 103.32 105.49 113.27
3/15/99 104.32 106.17 114.38
3/16/99 104.98 106.17 114.3
3/17/99 101.66 105.67 113.55
3/18/99 104.32 107.47 115.19
3/19/99 102.99 106.93 113.68
3/22/99 105.98 106.47 113.48
3/23/99 106.98 105.77 110.43
3/24/99 106.31 106.09 110.99
3/25/99 108.31 106.09 112.86
3/26/99 108.97 106.06 112.24
3/29/99 110.96 105.81 114.63
3/30/99 109.97 107.55 113.81
3/31/99 110.3 106.44 112.55
4/1/99 112.29 106.39 113.19
4/5/99 114.95 105.99 115.59
4/6/99 109.97 105.83 115.31
4/7/99 109.63 105.57 116.09
4/8/99 111.3 105.14 117.59
4/9/99 111.3 106.18 117.97
4/12/99 112.62 105.04 118.87
4/13/99 111.96 105.36 118.1
4/14/99 113.62 106.65 116.23
4/15/99 113.29 106.49 115.74
4/16/99 111.3 107.08 115.4
4/19/99 108.97 106.73 112.82
4/20/99 110.63 105.92 114.28
4/21/99 111.63 104.99 116.9
4/22/99 107.64 105.12 118.89
4/23/99 111.96 104.65 118.71
4/26/99 110.63 104.19 118.99
4/27/99 111.63 104.2 119.24
4/28/99 110.3 104.51 118.2
4/29/99 110.3 103.65 117.49
4/30/99 110.63 103 116.82
5/3/99 112.29 103.9 118.52
5/4/99 112.29 103.92 116.54
5/5/99 112.96 103.49 117.88
5/6/99 113.62 103.87 116.54
5/7/99 113.95 104.01 117.68
5/10/99 122.92 105.21 117.27
5/11/99 119.27 106.23 118.61
5/12/99 116.28 105.07 119.34
5/13/99 114.62 105.84 119.65
5/14/99 111.63 105.06 117.05
5/17/99 110.63 105.29 117.2
5/18/99 110.96 105.88 116.66
5/19/99 112.62 106.17 117.61
5/20/99 115.95 107.7 117.14
5/21/99 118.27 106.85 116.39
5/24/99 119.6 107.7 114.32
5/25/99 119.27 107.61 112.38
5/26/99 118.6 108.72 114.16
5/27/99 116.94 108.74 112.11
5/28/99 115.61 110.21 113.9
6/1/99 119.27 112.46 113.24
6/2/99 123.59 115 113.29
6/3/99 118.6 114.39 113.7
6/4/99 114.95 114.58 116.17
6/7/99 119.6 114.02 116.76
6/8/99 116.28 114.79 115.26
6/9/99 116.94 113.89 115.37
6/10/99 117.28 114.06 113.99
6/11/99 115.61 115.31 113.18
6/14/99 112.29 112.98 113.22
6/15/99 113.29 114.3 113.84
6/16/99 116.61 114.87 116.4
6/17/99 117.61 116.73 117.23
6/18/99 116.61 117.84 117.49
6/21/99 114.62 118.31 118.03
6/22/99 117.61 118.32 116.88
6/23/99 113.62 117.59 116.63
6/24/99 115.61 116.82 115.12
6/25/99 115.28 117.89 115.08
6/28/99 121.26 117.73 116.48
6/29/99 120.27 118.29 118.24
6/30/99 120.6 118.73 120.1
7/1/99 120.27 118.83 120.82
7/2/99 120.27 120.16 121.72
7/6/99 119.93 120.47 121.45
7/7/99 116.61 121.84 122.13
7/8/99 118.6 121.72 122
7/9/99 117.61 122.35 122.78
7/12/99 113.62 123.06 122.41
7/13/99 115.61 121.87 121.93
7/14/99 115.95 123.05 122.33
7/15/99 117.61 123.63 123.33
7/16/99 119.27 124.69 124.13
7/19/99 119.27 123.52 123.16
7/20/99 119.6 122.49 120.49
7/21/99 119.6 122.39 120.68
7/22/99 126.91 121.43 119.08
7/23/99 125.25 121.43 118.72
7/26/99 123.26 120.19 117.92
7/27/99 122.26 120.47 119.24
7/28/99 122.92 121.75 119.46
7/29/99 122.92 121.82 117.33
7/30/99 122.92 121.75 116.25
Last Three Months
[LINE GRAPH]
4/30/99 100 100 100
5/3/99 101.5 100.87 101.46
5/4/99 101.5 100.89 99.76
5/5/99 102.1 100.48 100.91
5/6/99 102.7 100.84 99.77
5/7/99 103 100.98 100.74
5/10/99 111.11 102.14 100.38
5/11/99 107.81 103.13 101.53
5/12/99 105.11 102 102.16
5/13/99 103.6 102.76 102.43
5/14/99 100.9 101.99 100.2
5/17/99 100 102.22 100.32
5/18/99 100.3 102.79 99.86
5/19/99 101.8 103.08 100.68
5/20/99 104.8 104.56 100.27
5/21/99 106.91 103.74 99.63
5/24/99 108.11 104.56 97.86
5/25/99 107.81 104.47 96.2
5/26/99 107.21 105.55 97.72
5/27/99 105.71 105.57 95.97
5/28/99 104.5 107 97.5
6/1/99 107.81 109.18 96.94
6/2/99 111.71 111.65 96.98
6/3/99 107.21 111.05 97.33
6/4/99 103.9 111.23 99.44
6/7/99 108.11 110.69 99.95
6/8/99 105.11 111.44 98.66
6/9/99 105.71 110.57 98.76
6/10/99 106.01 110.73 97.58
6/11/99 104.5 111.95 96.89
6/14/99 101.5 109.68 96.92
6/15/99 102.4 110.97 97.45
6/16/99 105.41 111.52 99.64
6/17/99 106.31 113.33 100.35
6/18/99 105.41 114.4 100.57
6/21/99 103.6 114.86 101.04
6/22/99 106.31 114.87 100.05
6/23/99 102.7 114.16 99.84
6/24/99 104.5 113.41 98.55
6/25/99 104.2 114.45 98.51
6/28/99 109.61 114.3 99.71
6/29/99 108.71 114.84 101.22
6/30/99 109.01 115.26 102.81
7/1/99 108.71 115.36 103.43
7/2/99 108.71 116.65 104.2
7/6/99 108.41 116.95 103.97
7/7/99 105.41 118.29 104.54
7/8/99 107.21 118.17 104.44
7/9/99 106.31 118.78 105.1
7/12/99 102.7 119.47 104.79
7/13/99 104.5 118.32 104.37
7/14/99 104.8 119.47 104.72
7/15/99 106.31 120.02 105.58
7/16/99 107.81 121.06 106.26
7/19/99 107.81 119.92 105.43
7/20/99 108.11 118.92 103.14
7/21/99 108.11 118.82 103.3
7/22/99 114.71 117.89 101.93
7/23/99 113.21 117.89 101.63
7/26/99 111.41 116.69 100.94
7/27/99 110.51 116.96 102.07
7/28/99 111.11 118.2 102.26
7/29/99 111.11 118.27 100.44
7/30/99 111.11 118.2 99.52
Note: (1) Includes American Water Works, Philadelphia Suburban, E'Town Corp.,
California Water Service, American States Water, SJW Corp.,
Connecticut Water Service, and Middlesex Water.
B(4)-Page 8
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Last 12 Months Knicks Stock Price Performance
[LINE GRAPH]
7/30/98 31 18.81
7/31/98 17.4 18.56
8/3/98 42.1 18.31
8/4/98 28.2 17.75
8/5/98 44.8 17.81
8/6/98 17.8 18.19
8/7/98 53.4 18.19
8/10/98 14.7 17.94
8/11/98 45.1 17.88
8/12/98 91 17.81
8/13/98 28.1 17.81
8/14/98 15.6 17.75
8/17/98 20.5 17.69
8/18/98 41.1 17.5
8/19/98 25.1 17.5
8/20/98 28.2 17.38
8/21/98 28.3 17.5
8/24/98 37.1 17.69
8/25/98 33.4 17.63
8/26/98 21.6 17.56
8/27/98 24.9 17.69
8/28/98 24.5 17.69 17.69
8/31/98 26.1 17.75
9/1/98 46.5 17.56
9/2/98 41.9 17.56
9/3/98 39.2 17.5
9/4/98 17.1 17.63
9/8/98 28.4 17.81
9/9/98 21 17.44
9/10/98 73 17.19
9/11/98 40.7 17.06
9/14/98 24.7 17
9/15/98 25 17
9/16/98 13.3 16.81
9/17/98 63.8 16.69
9/18/98 75.1 16.56
9/21/98 25 16.63
9/22/98 63.8 16.5
9/23/98 55.3 16.81
9/24/98 29.4 16.94
9/25/98 22.7 17
9/28/98 39.4 17
9/29/98 44.7 17
9/30/98 10.7 17
10/1/98 47.5 16.56
10/2/98 27.9 16.75
10/5/98 82.6 17.94
10/6/98 48.9 18.31
10/7/98 39.1 18.25
10/8/98 47.7 18.56
10/9/98 49.7 18.44 18.44
10/12/98 12.4 18.25
10/13/98 19.8 18.13
10/14/98 19.6 18.56
10/15/98 35.1 18.5 18.5
10/16/98 31.1 18.69
10/19/98 22.6 18.69
10/20/98 29 19.06
10/21/98 49.1 19.44
10/22/98 60.9 19.56
10/23/98 51.7 19.56
10/26/98 25.7 19.5
10/27/98 54.8 19.38
10/28/98 17 19.06
10/29/98 20.9 19.13
10/30/98 80.9 19.38
11/2/98 24.8 19.63
11/3/98 26.5 19.75
11/4/98 16 19.56
11/5/98 21.5 19.75 19.75
11/6/98 24.8 19.63
11/9/98 33.5 19.94
11/10/98 48.1 19.88
11/11/98 35.6 19.81
11/12/98 22.6 19.94
11/13/98 34.7 19.31
11/16/98 27.7 20
11/17/98 26.6 20
11/18/98 32.5 20.06
11/19/98 33.8 20.44
11/20/98 23.2 20.13
11/23/98 29.3 20.06
11/24/98 57.4 20
11/25/98 21.7 20.06
11/27/98 12.4 20.13
11/30/98 31.4 20.75
12/1/98 48.8 21
12/2/98 37.6 20.94
12/3/98 33.8 20.44
12/4/98 28.6 21
12/7/98 65 22.38
12/8/98 97.9 22.56
12/9/98 28 22
12/10/98 46.7 21.44
12/11/98 22.3 21.69
12/14/98 24.7 21.44
12/15/98 37.1 21.38
12/16/98 15 21.06
12/17/98 43.2 20.56
12/18/98 43.3 21.31
12/21/98 109 22.19
12/22/98 101.6 23.94
12/23/98 60.1 23.75
12/24/98 26.3 23.44
12/28/98 35.9 23.88
12/29/98 25.9 23.94
12/30/98 43.3 24
12/31/98 31.9 23.94
1/4/99 73.1 23.63
1/5/99 87.4 23.31
1/6/99 50.2 23.06
1/7/99 47 22.75
1/8/99 78.8 22.75
1/11/99 58.5 22.94
1/12/99 26.1 22.63
1/13/99 51.5 22.69
1/14/99 25.8 22.31
1/15/99 31 22
1/19/99 31.9 22.38
1/20/99 24.6 22.88
1/21/99 27.3 22.5 22.5
1/22/99 19.3 22.94
1/25/99 26.8 22.44
1/26/99 14.6 22.5
1/27/99 34.7 21.75
1/28/99 16.8 22.06
1/29/99 28.4 21.31
2/1/99 33.8 21.88
2/2/99 21.3 21.44
2/3/99 25.2 21.5
2/4/99 20.4 21.19
2/5/99 26 20.5
2/8/99 39.7 20.5
2/9/99 42.1 21.06
2/10/99 32.1 20.19
2/11/99 32.2 20.5
2/12/99 36.7 19.94
2/16/99 35.4 19.63
2/17/99 28.7 19.69
2/18/99 30.8 19.63
2/19/99 26.3 19.56
2/22/99 24.5 19.69
2/23/99 31.2 20
2/24/99 50.3 19.56
2/25/99 28.4 19.44
2/26/99 52.9 19.25
3/1/99 63.9 19.06
3/2/99 50.3 19.06
3/3/99 44.4 18.63
3/4/99 47.9 18.81
3/5/99 21.1 19
3/8/99 18.9 19.63
3/9/99 20.2 19.06
3/10/99 44.4 19
3/11/99 38.1 19
3/12/99 29.6 19.44
3/15/99 18 19.63
3/16/99 46.5 19.75
3/17/99 36.5 19.13
3/18/99 34.3 19.63
3/19/99 23.2 19.38
3/22/99 35 19.94
3/23/99 42.6 20.13
3/24/99 21.4 20
3/25/99 34 20.38
3/26/99 21.1 20.5
3/29/99 15.3 20.88
3/30/99 29.3 20.69
3/31/99 22.8 20.75
4/1/99 31.7 21.13
4/5/99 33.6 21.63
4/6/99 24.8 20.69
4/7/99 12.9 20.63
4/8/99 43.5 20.94
4/9/99 24.3 20.94
4/12/99 43 21.19
4/13/99 29.1 21.06
4/14/99 35.3 21.38
4/15/99 25.3 21.31
4/16/99 42.4 20.94 20.94
4/19/99 45.8 20.5
4/20/99 45.5 20.81
4/21/99 32.3 21
4/22/99 44.5 20.25
4/23/99 35.3 21.06
4/26/99 14 20.81
4/27/99 44.5 21
4/28/99 21.6 20.75
4/29/99 15.2 20.75
4/30/99 21.3 20.81
5/3/99 42.5 21.13
5/4/99 19 21.13
5/5/99 22.6 21.25
5/6/99 17.5 21.38
5/7/99 23.2 21.44
5/10/99 49.8 23.13
5/11/99 35.2 22.44 22.44
5/12/99 24.2 21.88
5/13/99 31 21.56
5/14/99 12.3 21
5/17/99 50 20.81
5/18/99 29.8 20.88
5/19/99 27 21.19
5/20/99 50.9 21.81
5/21/99 21.2 22.25
5/24/99 35.6 22.5
5/25/99 8.8 22.44
5/26/99 17.9 22.31
5/27/99 31.3 22
5/28/99 35.3 21.75
6/1/99 32.5 22.44
6/2/99 114.9 23.25
6/3/99 32.8 22.31
6/4/99 18.5 21.63
6/7/99 14.4 22.5
6/8/99 30.4 21.88
6/9/99 22.4 22
6/10/99 20.8 22.06
6/11/99 18.8 21.75
6/14/99 22 21.13
6/15/99 37.6 21.31
6/16/99 21 21.94
6/17/99 26.8 22.13
6/18/99 58.2 21.94
6/21/99 20 21.56
6/22/99 24.6 22.13
6/23/99 22.5 21.38
6/24/99 18.2 21.75
6/25/99 11 21.69
6/28/99 50 22.81
6/29/99 21.3 22.63
6/30/99 49.1 22.69
7/1/99 27.3 22.63
7/2/99 28.4 22.63
7/6/99 36.3 22.56
7/7/99 77.7 21.94
7/8/99 30.2 22.31
7/9/99 15.7 22.13
7/12/99 142.1 21.38
7/13/99 14.5 21.75 21.75
7/14/99 14.3 21.81
7/15/99 44.4 22.13 22.13
7/16/99 85.4 22.44
7/19/99 15.7 22.44
7/20/99 33.3 22.5
7/21/99 45.5 22.5
7/22/99 74.5 23.88
7/23/99 24.3 23.56
7/26/99 12.4 23.19
7/27/99 59.3 23
7/28/99 64.6 23.13
7/29/99 37.8 23.13
7/30/99 23.9 23.13 23.13
B(4)-Page 9
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Preliminary Valuation Summary (1)
[BAR CHART]
- --------------------------------------------------------------------------------
Last 12 Months Trading Range 16.38 8.62
Discounted Cash Flow Analysis(3) 26.42 10.02
Comparable Companies Analysis 19.14 4
Comparable Company Analysis
with 40% Control Premium 26.79 4.21
Precedent Transactions Analysis 21.29 11.12
27.28 5.3 3.99
23.13 0.1
32.5 0.25
- --------------------------------------------------------------------------------
Equity Value Per Knicks Share (4)
Notes: (1) Valuation as of July 31, 1999.
(2) Based on share price of $23.13 as of 7/30/99.
(3) Discounted cash flow analysis includes a comparable company
analysis for services business and UK holdings.
(4) Assumes 40.7MM shares outstanding.
B(4)-Page 10
<PAGE>
- --------------------------------------------------------------------------------
DISCOUNTED CASH FLOW VALUATION
- --------------------------------------------------------------------------------
B(4)-Page 11
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Valuation Analysis by Business Segment(1)
Equity Value Per Knicks Share(2)
[BAR CHART]
- --------------------------------------------------------------------------------
Regulated 25.72
North 25.72 2.31
Knicks Water U.K 28.03 3.07
Total 31.1
23.13(3)
- --------------------------------------------------------------------------------
o Discounted Cash Flows
o WACC: 6.0% - 6.5%
o Perpetual Growth Rate: 1.0% - 2.0%
o 1.0x - 2.0x 99E Revenues
Notes: (1) Valuation as of July 31, 1999.
(2) Assumes 40.7MM shares outstanding.
(3) Share price as of 7/30/99.
B(4)-Page 12
<PAGE>
PROJECT HOOPS
Discounted Cash Flow Analysis
Core Business Valuation as of July 31, 1999 (1)
($MM, except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Perpetual Growth Rate (%) 1.0 1.5 2.0
Discount Rate 5.50% 6.25% 7.00% 5.50% 6.25% 7.00% 5.50% 6.25% 7.00%
Present Value of
Cash Flows - 1999 $ 41 $ 41 $ 41 $ 41 $ 41 $ 41 $ 41 $ 41 $ 41
Cash Flows - 2000 to 2009 584 561 539 584 561 539 584 561 539
Terminus 1,307 1,044 852 1,478 1,160 934 1,697 1,303 1,033
Aggregate Value $ 1,932 $ 1,646 $ 1,433 $ 2,102 $ 1,762 $ 1,515 $ 2,322 $ 1,905 $ 1,613
Cash (2) $ 44 $ 44 $ 44 $ 44 $ 44 $ 44 $ 44 $ 44 $ 44
Preferred Stock (2) (61) (61) (61) (61) (61) (61) (61) (61) (61)
Total Debt (2) (697) (697) (697) (697) (697) (697) (697) (697) (697)
Equity Value $ 1,218 $ 932 $ 718 $ 1,388 $ 1,048 $ 800 $ 1,608 $ 1,190 $ 899
Equity Value per Share (3) $ 29.89 $ 22.88 $ 17.63 $ 34.08 $ 25.72 $ 19.65 $ 39.47 $ 29.23 $ 22.07
Premium (Discount) to Market (4) 29.3% (1.1)% (23.7)% 47.4% 11.2% (15.0)% 70.7% 26.4% (4.6)%
1999E P/E Implied 11.1x 8.5x 6.6x 12.7x 9.6x 7.3x% 14.7x 10.9x 8.2x
Price/Book 2.90x 2.22x 1.71x 3.31x 2.50x 1.91x 3.84x 2.84x 2.14x
Terminal Value Analysis
% Value in Terminus 67.6% 63.4% 59.5% 70.3% 65.8% 61.7% 73.1% 68.4% 64.0%
% Value in Cash Flows 32.4% 36.6% 40.5% 29.7% 34.2% 38.3% 26.9% 31.6% 36.0%
Implied Terminal Aggregate Multiples
EBITDA 11.0x 9.5x 8.3x 12.5x 10.5x 9.1x 14.3x 11.8x 10.1x
EBIT 14.7x 12.6x 11.1x 16.6x 14.0x 12.2x 19.1x 15.8x 13.4x
Implied Terminal Equity Multiples
Book Value 2.95x 2.40x 1.98x 3.47x 2.78x 2.27x 4.13x 3.24x 2.62x
Net Income 22.4x 18.2x 15.0x 26.3x 21.0x 17.2x 31.3x 24.6x 19.8x
</TABLE>
1. Excludes Knicks U.K., Knicks Services and Growth Initiatives.
2. Balances as of 5/31/99. Total Debt excludes the amounts at the U.K. and
Services levels.
3. Based on 40.7MM fully diluted shares.
4. Based on 7/30/99 closing price of $23.13.
B(4)-Page 13
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Water Services Valuation Analysis
<TABLE>
<CAPTION>
Implied Value Range
1999 Operating Revenues Valuation Range Aggregate Equity (1) Knicks Ownership Knicks Share of Value
<S> <C> <C> <C> <C> <C> <C>
USA $152,364 1.0x - 2.0x 152,364 - 304,728 109,364 261,728 50.00% 54,682 - 130,864
Canada $ 1,901 1.0x - 2.0x 1,901 - 3,802 1,901 3,802 33.33% 634 - 1,267
Total $154,265 154,265 - 308,530 111,265 265,530 55,316 - 132,131
Equity Value per Knicks Share$1.36 - $3.25
</TABLE>
1. Aggregate Value less not debt a the operating company of $43MM as of
6/30/99 attributed to US operations.
B(4)-Page 14
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks UK Comparable Companies Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value (3) Implied Equity Value
Statistics Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
LTM EBITDA (1) $ 380.9 8.0x 9.0x 3,046.9 3,427.8 2,109.4 2,490.3
LTM EBIT (1) $ 300.2 11.0x 12.0x 3,302.0 3,602.2 2,364.6 2,644.7
Equity Value
LTM Cash Flows (1) (2) $ 275.9 6.0x 7.0x 2,592.9 2,868.8 1,655.4 1,931.3
Tangible Book Value $1,465.5 1.2x 1.4x 2,696.0 2,989.1 1,758.5 2,051.6
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Median $2,871.5 $3,208.4 $1,934.0 $2,270.9
Liquidity Discount 20% 0% $1,547.2 $2,270.9
Knicks UK Interest 10% $ 154.7 $ 227.1
Less: Knicks UK Debt ($ 66.0) ($ 66.0)
Value of Knicks Interest $ 88.7 $ 161.1
Per Share (4) $ 2.18 $ 3.96
</TABLE>
1. For the period ending 12/31/98.
2. Cash Flow equals Net Income plus Depreciation & Amortization.
3. Includes total debt and preferred of $1,105MM, net of $167MM cash as of
12/31/98.
4. Assumes 40.7MM diluted shares outstanding (based on 40.2MM basic shares
(including converted preference stock) outstanding as of 5/31/99 and 1.3MM
options at an average exercise price of $18.35).
B(4)-Page 15
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Trading Statistics of Selected UK Regulated Water Companies(1)
<TABLE>
<CAPTION>
Equity Value
Company Equity Agg. Net Income Book
Name Price Value Value FY1 FY2 Value
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C>
Anglian Water $12.09 $3,118 $6,145 9.1x 14.6x 1.2x
Thames Water 15.39 5,384 9,284 9.7 13.8 1.6
Yorkshire Water 7.17 2,804 4,981 8.7 12.4 1.1
Severn Trent 14.77 5,011 8,257 9.9 16.7 1.3
Pennon Group 17.44 2,359 3,777 12.8 16.9 1.6
Median: 9.7x 14.6x 1.3x
<CAPTION>
Aggregate Value/LTM 5-Year
Company LTM Cash Dividend Growth
Name Flow (2) Sales EBITDA EBIT Yield Rate
<S> <C> <C> <C> <C> <C> <C>
Anglian Water 5.1x 4.6x 7.9x 10.6x 5.7% 3.3%
Thames Water 6.4 4.3 8.6 10.8 4.5 1.3
Yorkshire Water 5 4.6 7.6 11.5 5.1 2.6
Severn Trent 6.8 3.9 8.6 11.4 4.7 4.3
Pennon Group 8.8 5.4 10.4 13.9 4.2 3.2
Median: 6.4x 4.6x 8.6x 11.4x 4.7% 3.2%
</TABLE>
1. Share prices and I/B/E/S estimates as of 07/30/99.
2. Cash flow equals Net Income plus Depreciation & Amoritization.
B(4)-Page 16
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Factors Affecting Valuation
OFWAT
o Discussions on valuation for Knicks was overshadowed by OFWAT's
announcement of its Draft Determinations on July 27, 1999, which included
the U.K. water regulator's recommendation for water rates for the next
five years
o As shown in the chart below, Northumbrian was hit the hardest of all the
U.K. water companies both in terms of an initial hit to prices, as well as
an average price reduction over 5 years
- --------------------------------------------------------------------------------
Draft Price Reduction
---------------------
Average
2000-01 2001-02 2002-03 2003-04 2004-05 5 Years
------- ------- ------- ------- ------- -------
Anglian -11.1 0.0 1.0 2.2 2.5 -1.2
Dwr Cymru -13.8 -2.7 0.0 0.0 2.4 -3.0
North West -9.3 -2.0 0.0 0.0 2.0 -1.9
Northumbrian -25.5 -1.5 0.0 1.0 1.0 -5.6
Severn Trent -14.1 -1.0 -1.0 0.0 1.0 -3.2
South West -13.7 0.0 2.0 2.0 2.5 -1.6
Southern -15.6 0.0 0.0 0.0 0.0 -3.3
Thames -11.7 0.0 -1.0 -1.0 0.0 -2.8
Wessex -13.5 0.0 0.0 2.0 3.1 -1.9
Yorkshire -15.2 -2.0 0.0 0.0 1.0 -3.4
Average (weighted) -13.4 -1.0 -0.1 0.3 1.3 -2.7
- --------------------------------------------------------------------------------
o The rate reductions are still only proposals and Northumbrian will still
be able to provide comments on the draft (which is to be finalized in
November). The Company can also pursue a mitigation of the rate reduction
through the Monopolies and Mergers Commission, as well as pursue internal
cost reductions/efficiencies
B(4)-Page 17
<PAGE>
- --------------------------------------------------------------------------------
COMPARABLE COMPANY VALUATION
- --------------------------------------------------------------------------------
B(4)-Page 18
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Comparable Companies Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value (6) Implied Equity Value
Statistics Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
LTM EBITDA (1) (2) $151.5 9.0x 11.0x 1,363.9 1,667.0 606.5 909.6
LTM EBIT (1) (2) $109.8 12.5x 13.5x 1,372.2 1,481.9 614.8 724.5
Equity Value
FY 1999 Net Income (3) $49.3 17.5x 18.5x 1,620.7 1,670.0 863.3 912.7
FY 2000 Net Income (3) $52.0 16.5x 17.5x 1,615.9 1,670.0 858.5 912.6
LTM Cash Flows (1) (2) (4) $83.4 9.5x 10.5x 1,549.7 1,633.1 792.3 875.7
Tangible Book Value (5) $423.9 1.8x 2.1x 1,520.4 1,647.5 763 890.1
Median $1,535.0 $1,657.2 $777.6 $899.8
Per Share (7) $19.14 $22.14
Premium (Discount) to Current (8) (17.2)% (4.2)%
Median Plus 40% Control Premium $26.79 $31.00
</TABLE>
1. Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
2. For the period ending 3/31/99.
3. I/B/E/S estimates as of 7/30/99.
4. Cash Flow equals Net Income plus Depreciation & Amortization.
5. As of 5/31/99.
6. Includes total debt and preferred of $802MM, net of $44MM cash as of
5/31/99.
7. Assumes 40.6MM diluted shares outstanding (based on 40.2MM basic shares
(including converted preference stock) outstanding as of 5/31/99 and 1.3MM
options at an average exercise price of $18.35).
8. Based on share price of $23.13 as of 7/30/99.
B(4)-Page 19
<PAGE>
PROJECT HOOPS
Trading Statistics of Selected Domestic Regulated Water Companies(1)
<TABLE>
<CAPTION>
Equity Value Aggregate Value/LTM
Equity Agg. Net Income Book Value LTM Cash
Company Name Price Value Value 1999E 2000E Full Tang. Flow(2) Sales EBITDA EBIT
($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Water Works $29.94 $2,429 $4,584 18.1x 17.1x 1.95x 1.99x 9.7x 4.5x 9.2x 12.2x
Philadelphia Suburban 22.88 933 1,387 21.0 19.2 2.68 2.68 23.5 9.1 13.5 16.0
E'Town Corp. 47.38 404 696 18.2 17.2 1.84 1.84 10.1 5.0 12.1 15.7
California Water Service 27.75 350 489 18.0 17.3 2.09 2.09 10.2 2.6 8.4 11.4
American States Water 30.06 269 430 17.0 16.4 1.74 1.74 9.3 2.8 8.4 11.3
SJW Corp. 80.56 245 327 16.7 16.5 1.87 1.89 9.4 3.0 8.4 11.2
Connecticut Water Service 28.25 128 194 17.8 17.2 2.22 2.22 11.7 5.1 12.6 17.0
Middlesex Water 25.88 127 192 18.4 17.7 1.90 1.90 12.6 4.3 10.9 13.4
Median 18.1x 17.2x 1.93x 1.95x 10.2x 4.4x 10.1x 12.8x
Knicks 23.13 942 1,700 18.1 17.1 1.94x 2.22x 10.8 4.7 11.2 15.5
<CAPTION>
5-Year
Dividend Growth
Company Name Yield Rate
<S> <C> <C>
American Water Works 2.9% 6.0%
Philadelphia Suburban 3.0 6.0
E'Town Corp. 4.3 3.0
California Water Service 3.9 3.0
American States Water 4.3 3.0
SJW Corp. 3.0 NA
Connecticut Water Service 4.2 3.0
Middlesex Water 4.5 3.0
Median 4.0% 3.0%
Knicks 4.2% 5.5%
</TABLE>
1. Share prices and I/B/E/S estimates as of 07/30/99.
2. Cash Flow equals Net Income plus Depreciation & Amoritization.
B(4)-Page 20
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Tangible Book Adjustment
Current Book Value for Knicks(1) $460.6
Conversion of Preference Shares(2) $24.8
Total Book Value $485.4
Book Value per Fully Diluted Share(3) $11.92
Goodwill(4) $61.5
Tangible Book (Book less Goodwill) $423.9
Tangible Book per Share(3) $10.41
Notes: (1) As of 5/31/99
(2) Conversion of $26.1 million of convertible preference shares
at 95% of par value
(3) Based on 38.5 million Knicks shares outstanding as of 5/31/99,
1.6 million shares converted from preference stock and 1.3
million options at an average exercise price of $18.35.
(4) As of 6/30/99
B(4)-Page 21
<PAGE>
- --------------------------------------------------------------------------------
PRECEDENT TRANSACTION VALUATION
- --------------------------------------------------------------------------------
B(4)-Page 22
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Precedent Transactions Valuation Analysis
<TABLE>
<CAPTION>
Multiple Range Implied Aggregate Value(6) Implied Equity
Statistics Low High Low High Low High
Aggregate Value
<S> <C> <C> <C> <C> <C> <C> <C>
LTM EBITDA(1)(4) $151.5 10.0 x 13.0 x 1,515.4 1,970.0 758.0 1,212.6
LTM EBIT(1)(4) $109.8 13.5 x 18.5 x 1,481.9 2,030.8 724.5 1,273.4
Equity Value
LTM Net Income(1)(4) $42.2 23.0 x 34.0 x 1,726.9 2,190.6 969.5 1,433.2
Tangible(5) $423.9 2.4 x 3.2 x 1,774.7 2,113.8 1,017.3 1,356.4
Median $1,621.1 $2,072.3 $863.8 $1,314.9
Per Share(2) $21.29 $32.41
Premium (Discount) to Current(3) -7.9% 40.1%
</TABLE>
1. Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
2. Assumes 40.6MM diluted shares outstanding (based on 40.2MM basic shares
(including converted preference stock) outstanding as of 5/31/99 at 1.3MM
options at an average exercise price of $18.35).
3. Based on share price of $23.13 as of 7/30/99.
4. LTM for the period ending 3/31/99 except LTM Net Income for the period
ending 6/30/99.
5. As of 5/31/99.
6. Includes total debt and preferred of $802MM, net of $44MM cash of 5/31/99.
B(4)-Page 23
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Recent Precedent Water Transactions
Selected Water Industry Precedent Transactions
<TABLE>
<CAPTION>
Equity Value/L12M
Date Equity Agg. Net Book Value
Announced Acquiror/Acquiree Value Value(1) Income Full Tangible
<S> <C> <C> <C> <C> <C> <C>
06/01/99 Yorkshire Water/ Aquarion $444 $599 22.1 x 2.92 x 2.92 x
03/23/99 California Water/ Dominguez 53 64 33.8 3.22 3.22
10/13/98 American Water Works/ National Enterprises(3) 475 701 25.6 2.43 2.43
07/24/98 ENRON/ Wessex Water 2,266 2,810 12.9 (4) 2.06 2.06
06/29/98 Philadelphia Suburban/ Consumers Water 275 460 22.8 2.52 2.52
12/19/96 NIPSCO/ Indianapolis Water 288 423 23.6 2.43 3.02
Mean: 25.6 x(5) 2.60 x 2.70 x
Median: 23.6 (5) 2.48 2.72
<CAPTION>
Premium to Price
Date Aggregate Value/L12M Prior Prior
Announced Acquiror/Acquiree Customers Sales EBITDA EBIT Month Day
<S> <C> <C> <C> <C> <C> <C> <C>
06/01/99 Yorkshire Water/ Aquarion 4,248 x 5.2 x 10.2 x 15.5 x 42.5 % 19.3 %
03/23/99 California Water/ Dominguez 489 2.5 13.1 18.4 52.7 (2) 32.5 (2)
10/13/98 American Water Works/ National Enterprises(3) 412 4.0 NA NA NA NA
07/24/98 ENRON/ Wessex Water 781 6.4 9.5 12.4 37.2 28.0
06/29/98 Philadelphia Suburban/ Consumers Water 687 4.3 10.3 13.9 42.9 26.0
12/19/96 NIPSCO/ Indianapolis Water 1,802 2.9 9.8 13.2 44.6 23.1
Mean: 1,403 x 4.2 x 10.6 x 14.7 x 44.0% 25.8%
Media 734 4.1 10.2 13.9 42.9 26.0
</TABLE>
1. Aggregate value equals equity value plus debt and preferred stock less
cash.
2. Represents the premium prior to the initial California Water announcement
in November 1998.
3. National Enterprises was a privately owned company.
4. Net income based on UK GAAP.
5. Mean and median exclude Enron/Wessex Water transaction.
B(4)-Page 24
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Water Industry Precedent Transaction Multiples
Premium to Prior Month Price
[BAR GRAPH]
California Water/Dominguez 52.7(2)
NIPSCO/Indianapolis 44.6
Spurs 44.4
Philadelphia Suburban/Consumers Water 42.9
Yorkshire/Aquarion 42.5
Enron/Wessex 37.2
American Water Works/National Enterprises N.A.
Median 42.9
Equity Value/Tangible Book Value
[BAR GRAPH]
California Water/Dominquez 3.22
Spurs 3.15
NIPSCO/Indianapolis 3.02
Yorkshire/Aquarion 2.92
Philadelphia Suburban/Consumers Water 2.43
American Water Works/National Enterprises 2.43
Enron/Wescet 2.06
Median 2.72x
Aggregate Value/L12M EBITDA
[BAR GRAPH]
Spurs 13.8
California Water/Dominquez 13.1
Philadelphia Suburban/Consumers Water 10.3
Yorkshire/Aquarion 10.2
NIPSCO/Indianapolis 9.8
Enron/Wescet 9.5
American Water Works/National Enterprises N.A.
Median 10.2x
Equity Value/L12M Net Income
[BAR GRAPH]
California Water/Dominquez 33.8
Spurs 31.6
American Water Works/National Enterprises 25.6
NIPSCO/Indianapolis 23.6
Philadelphia Suburban/Consumers Water 22.8
Yorkshire/Aquarion 22.1
Enron/Wescet 12.9
Median 23.6x
Notes: (1) National Enterprises was a privately owned company.
(2) Represents the premium prior to the initial California Water
announcements in November 1998.
B(4)-Page 25
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Valuation Matrix(1)(2)
($MM, except per share data)
<TABLE>
<CAPTION>
Price Equity Aggregate LTM Book Tang. Book
Per Share Value(2) Value(3) Earnings(4)(5) Value(5)(6) Value(5)(6)
<S> <C> <C> <C> <C> <C>
$ 23.13 $ 935 $1,692 $ 42.2 $ 485.4 $ 423.9
$ 19.00 $ 764 $1,522 18.1x 1.57x 1.80x
20.00 806 1,563 19.1 1.66 1.90
21.00 847 1,604 20.1 1.75 2.00
22.00 888 1,646 21.1 1.83 2.10
23.00 930 1,687 22.1 1.92 2.19
24.00 971 1,729 23.0 2.00 2.29
25.00 1,013 1,770 24.0 2.09 2.39
26.00 1,054 1,812 25.0 2.17 2.49
27.00 1,096 1,853 26.0 2.26 2.58
28.00 1,137 1,894 27.0 2.34 2.68
29.00 1,179 1,936 28.0 2.43 2.78
30.00 1,220 1,977 28.9 2.51 2.88
31.00 1,261 2,019 29.9 2.60 2.98
32.00 1,303 2,060 30.9 2.68 3.07
32.75 1,334 2,091 31.6 2.75 3.15
33.00 1,344 2,102 31.9 2.77 3.17
34.00 1,386 2,143 32.9 2.85 3.27
35.00 1,427 2,185 33.9 2.94 3.37
36.00 1,469 2,226 34.8 3.03 3.46
37.00 1,510 2,267 35.8 3.11 3.56
38.00 1,551 2,309 36.8 3.20 3.66
39.00 1,593 2,350 37.8 3.28 3.76
40.00 1,634 2,392 38.8 3.37 3.86
<CAPTION>
Premium/(Discount)
Price Aggregate Value/LTM Premium/(Discount) to Prior 30-Day
Per Share Sales(5) EBITDA(4)(5) EBIT(4)(5) to 7/30/99 Price Price
<S> <C> <C> <C> <C> <C>
$ 23.13 $ 365.6 $ 151.6 $ 109.8 $ 23.13 $ 22.69
$ 19.00 4.2x 10.0x 13.9x (17.8) (16.3)
20.00 4.3 10.3 14.2 (13.5) (11.8)
21.00 4.4 10.6 14.6 (9.2) (7.4)
22.00 4.5 10.9 15.0 (4.9) (3.0)
23.00 4.6 11.1 15.4 (0.5) 1.4
24.00 4.7 11.4 15.7 3.8 5.8
25.00 4.8 11.7 16.1 8.1 10.2
26.00 5.0 12.0 16.5 12.4 14.6
27.00 5.1 12.2 16.9 16.8 19.0
28.00 5.2 12.5 17.3 21.1 23.4
29.00 5.3 12.8 17.6 25.4 27.8
30.00 5.4 13.0 18.0 29.7 32.2
31.00 5.5 13.3 18.4 34.1 36.6
32.00 5.6 13.6 18.8 38.4 41.0
32.75 5.7 13.8 19.1 41.6 44.4
33.00 5.7 13.9 19.1 42.7 45.5
34.00 5.9 14.1 19.5 47.0 49.9
35.00 6.0 14.4 19.9 51.4 54.3
36.00 6.1 14.7 20.3 55.7 58.7
37.00 6.2 15.0 20.7 60.0 63.1
38.00 6.3 15.2 21.0 64.3 67.5
39.00 6.4 15.5 21.4 68.6 71.9
40.00 6.5 15.8 21.8 73.0 76.3
</TABLE>
1. Boxes represent the range of multiples paid in precedent transactions.
2. Based on 38.5 million Knicks shares outstanding as of 5/31/99, 1.6 million
shares converted from preference stock and 1.3 million options at an
average exercise price of $18.35.
3. Includes total debt anP preferred of $802 MM (excluding convertible
preference shares), net of $44 MM cash as of 5/31/99.
4. Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
4. Financial statistics for the period ending 3/31/99 for EBIT and EBITDA,
for the period ending 6/30/99 for Sales and Earnings and as of 5/31/99 for
Book Value and Tangible Book Value.
6. Includes the conversion of $26.1 million of convertible preference shares.
B(4)-Page 26
<PAGE>
- --------------------------------------------------------------------------------
REVIEW OF POTENTIAL AUCTION PARTICIPANTS
- --------------------------------------------------------------------------------
B(4)-Page 27
<PAGE>
PROJECT HOOPS
Review of Potential Auction Participants
Potential Domestic Participants
Market P/E
Company Cap(1) FY1 FY2
($MM)
American Water Works $2,429 18.1x 17.1x
Azurix 2,781 33.9 28.3
DQE(2)/Aquasource 3,020 15.1 13.2
Edison International 8,928 12.7 11.7
GPU 4,911 11.4 11.1
Minnesota Power & Light 1,377 13.2 12.6
NiSource 3,237 14.8 13.7
Sempra Energy 5,328 13.1 12.1
UtiliCorp United 2,177 13.6 12.5
Potential International Participants
Market P/E
Company Cap(1) FY1 FY2
($MM)
Aguas de Barcelona $ 2,131 21.5x 19.1x
Anglian Water 3,118 9.1 14.6
SAUR N/A N/A N/A
Severn Trent 5,011 9.9 16.7
Thames Water 5,380 9.7 13.8
Vivendi 42,513 28.1 24.6
Yorkshire Water(3)/Aquarion 2,795 8.7 12.4
1. Market statistics as of July 30, 1999.
2. Market statistics for DQE.
3. Market statistics for Yorkshire Water.
B(4)-Page 28
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Market Statistics of Selected Auction Participants(1)
($MM, except per share data)
<TABLE>
<CAPTION>
Knicks American Water Works Thames Water Yorkshire Water
<S> <C> <C> <C> <C>
Market Price (07/30/99) $23.13 $29.94 $15.39 $7.17
52 Week Range $16.38 - $25.00 $27.38 - $34.75 $13.84 - $20.15 $6.64 - $9.86
Shares Outstanding (MM)(2) 40.7 81.3 349.6 391.2
Equity Market Value $942 $2,435 $5,380 $2,804
Tangible Book Value $424 $1,247 $3,382 $2,512
Market/Book Ratio 2.22x 1.95x 1.59x 1.12x
Total Debt $771 $3,604 $4,015 $1,858
Total Market Capitalization $1,744 $6,133 $9,395 $4,662
Total Book Capitalization $1,226 $1,024 $2,147 $1,088
Total Debt / Book Capitalization 62.9% 72.9% 54.3% 42.5%
Total Debt / Market Capitalization 44.2% 58.8% 42.7% 39.8%
LTM Revenue $365 $1,024 $2,147 $1,088
Calendarized I/B/E/S EPS Estimates(3)
1999E $1.28 $1.65 $1.64 $0.84
2000E 1.35 1.75 1.60 0.84
2001E 1.42 1.86 1.63 0.86
Five Year Estimated EPS Growth 5.50% 6.00% 1.30% 2.60%
Implied P/E Ratios (I/B/E/S)
1999E 18.1x 18.1x 9.4x 8.6x
2000E 17.1x 17.1x 9.6x 8.6x
2001E 16.2x 16.1x 9.5x 8.3x
Indicated Dividend $0.96 $0.86 $0.69 $0.51
Indicated Dividend Yield 4.2% 2.9% 4.5% 7.1%
Indicated Dividend Payout Ratio
1999E 75.0% 52.1% 42.2% 60.5%
2000E 71.1% 49.1% 43.0% 60.3%
2001E 67.4% 46.4% 42.5% 58.8%
S&P Credit Rating A- A A+ A+(4)
</TABLE>
1. All financial information as of 3/31/99 except for Knicks, which is as of
6/30/99 for LTM revenues and 5/31/99 for balance sheet items.
2. Includes shares converted from preference stock.
3. EPS estimates calendarized to fiscal year ending 12/31.
4. Currently on credit watch for Aquarion acquisition.
B(4)-Page 29
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Pro Forma Merger/Acquisition Analysis
Knicks is acquired with 100% Cash
($MM, except per share data)
<TABLE>
<CAPTION>
American Water Works Thames Water
Offer Price Per Share $36.00 $38.00 $40.00 $36.00 $38.00 $40.00
<S> <C> <C> <C> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 % 56 % 64 % 73 %
Exchange Ratio NM x NM x NM x NM x NM x NM x
Primary Shares Issues (MM) 0.0 0.0 0.0 0.0 0.0 0.0
Pro Forma Acquiree Ownership 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
2000E P/E Paid 26.7 x 28.1 x 29.6 x 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2 $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (24.7)% (28.8)% (32.9)% (11.1)% (12.5)% (14.0)%
Calendarized Year 2001E (20.6) (24.4) (28.3) (10.3) (11.7) (13.1)
Calendarized Year 2002E (16.7) (20.4) (24.0) (9.4) (10.8) (12.2)
Calendarized Year 2003E (13.1) (16.6) (20.0) (8.5) (9.9) (11.3)
Calendarized Year 2004E (9.8) (13.1) (16.3) (7.7) (9.0) (10.3)
Pro Forma 2000 - 2004 CAGR 10.9 11.4 12.0 2.3 2.3 2.3
Synergies to Breakeven
Calendarized Year 2000E $56.7 $66.1 $75.4 $99.7 $112.3 $125.0
Calendarized Year 2001E 50.0 59.4 68.8 93.2 105.9 118.6
Calendarized Year 2002E 43.1 52.5 61.9 86.5 99.2 111.9
Calendarized Year 2003E 35.9 45.3 54.7 79.5 92.2 104.9
Calendarized Year 2004E 28.4 37.8 47.2 72.3 85.0 97.6
2000E Breakeven P/E Multiple 22.7 x 24.0 x 25.5 x 10.9 x 11.1 x 11.3 x
Pro Forma Cap. and Credit
Total Debt $5,797.0 $5,878.4 $5,959.9 $6,208.4 $6,289.9 $6,371.4
Preferred Stock 125.9 125.9 125.9 31.3 31.3 31.3
Common Equity 1,246.6 1,246.6 1,246.6 3,408.3 3,408.3 3,408.3
Adjusted Book Capitalization $7,169.4 $7,250.9 $7,332.4 $9,648.0 $9,729.5 $9,810.9
Total Debt / Adj. Book Cap. 80.9 % 81.1 % 81.3 % 64.3 % 64.6 % 64.9 %
EBIT / Gross Interest Exp. 1.5 x 1.4 x 1.4 x 2.3 x 2.2 x 2.1 x
Accounting
Method Purchase Purchase Purchase Purchase Purchase Purchase
Total Goodwill Created $980.9 $1,062.4 $1,143.8 $980.9 $1,062.4 $1,143.8
Goodwill Amortization 24.5 26.6 28.6 49.0 53.1 57.2
<CAPTION>
Yorkshire Water
Offer Price Per Share $36.00 $38.00 $40.00
<S> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 %
Exchange Ratio NM x NM x NM x
Primary Shares Issues (MM) 0.0 0.0 0.0
Pro Forma Acquiree Ownership 0.0 % 0.0 % 0.0 %
2000E P/E Paid 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (19.2)% (21.7)% (24.1)%
Calendarized Year 2001E (17.5) (19.9) (22.3)
Calendarized Year 2002E (15.8) (18.2) (20.5)
Calendarized Year 2003E (14.2) (16.5) (18.7)
Calendarized Year 2004E (12.6) (14.8) (17.0)
Pro Forma 2000 - 2004 CAGR 4.6 4.8 4.9
Synergies to Breakeven
Calendarized Year 2000E $99.7 $112.3 $125.0
Calendarized Year 2001E 93.2 105.9 118.6
Calendarized Year 2002E 86.5 99.2 111.9
Calendarized Year 2003E 79.5 92.2 104.9
Calendarized Year 2004E 72.3 85.0 97.6
2000E Breakeven P/E Multiple 10.8 x 11.1 x 11.5 x
Pro Forma Cap. and Credit
Total Debt $4,050.9 $4,132.4 $4,213.8
Preferred Stock 31.3 31.3 31.3
Common Equity 2,561.5 2,561.5 2,561.5
Adjusted Book Capitalization $6,643.7 $6,725.2 $6,806.6
Total Debt / Adj. Book Cap. 61.0 % 61.4 % 61.9 %
EBIT / Gross Interest Exp. 1.7 x 1.6 x 1.5 x
Accounting
Method Purchase Purchase Purchase
Total Goodwill Created $980.9 $1,062.4 $1,143.8
Goodwill Amortization 49.0 53.1 57.2
</TABLE>
Assumptions
Cost of debt: 7.5%
Opportunity coast of cash: 4.5%
No Synergies
EPS estimates calendarized to acquiror fiscal year
Goodwill amortized over 20 years in the UK and 40 years in the US
Knicks fully diluted shares outstanding: 40.7MM
Knicks indicated annual dividend: $0.96
American Water Works indicated annual dividend: $0.86
Thames Water indicated annual dividend: $0.69
Yorkshire Water indicated annual dividend: $0.51
B(4)-Page 30
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Pro Forma Merger/Acquisition Analysis
Knicks is acquired with 100% Cash, No Goodwill Assumed
($MM, except per share data)
<TABLE>
<CAPTION>
American Water Works Thames Water
Offer Price Per Share $36.00 $38.00 $40.00 $36.00 $38.00 $40.00
<S> <C> <C> <C> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 % 56 % 64 % 73 %
Exchange Ratio NM x NM x NM x NM x NM x NM x
Primary Shares Issues (MM) 0.0 0.0 0.0 0.0 0.0 0.0
Pro Forma Acquiree Ownership 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 %
2000E P/E Paid 26.7 x 28.1 x 29.6 x 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2 $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (7.5)% (10.1)% (12.8)% (2.3)% (3.0)% (3.7)%
Calendarized Year 2001E (4.3) (6.8) (9.3) (1.6) (2.2) (2.9)
Calendarized Year 2002E (1.4) (3.7) (6.1) (0.8) (1.5) (2.1)
Calendarized Year 2003E 1.3 (0.9) (3.1) 0.0 (0.7) (1.4)
Calendarized Year 2004E 3.8 1.7 (0.4) 0.7 0.1 (0.6)
Pro Forma 2000 - 2004 CAGR 9.1 9.3 9.6 2.1 2.1 2.1
Synergies to Breakeven
Calendarized Year 2000E $17.1 $23.2 $29.3 $20.6 $26.7 $32.8
Calendarized Year 2001E 10.5 16.6 22.7 14.1 20.2 26.3
Calendarized Year 2002E 3.6 9.7 15.8 7.4 13.5 19.6
Calendarized Year 2003E 0.0 2.5 8.6 0.4 6.6 12.7
Calendarized Year 2004E 0.0 0.0 1.1 0.0 0.0 5.4
2000E Breakeven P/E Multiple 18.5 x 19.0 x 19.6 x 9.9 x 10.0 x 10.1 x
Pro Forma Cap. and Credit
Total Debt $5,797.0 $5,878.4 $5,959.9 $6,208.4 $6,289.9 $6,371.4
Preferred Stock 125.9 125.9 125.9 31.3 31.3 31.3
Common Equity 1,246.6 1,246.6 1,246.6 3,408.3 3,408.3 3,408.3
Adjusted Book Capitalization $7,169.4 $7,250.9 $7,332.4 $9,648.0 $9,729.5 $9,810.9
Total Debt / Adj. Book Cap. 80.9 % 81.1 % 81.3 % 64.3 % 64.6 % 64.9 %
EBIT / Gross Interest Exp. 1.5 x 1.5 x 1.5 x 2.5 x 2.4 x 2.4 x
Accounting
Method Purchase Purchase Purchase Purchase Purchase Purchase
Total Goodwill Created $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
<CAPTION>
Yorkshire Water
Offer Price Per Share $36.00 $38.00 $40.00
<S> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 %
Exchange Ratio NM x NM x NM x
Primary Shares Issues (MM) 0.0 0.0 0.0
Pro Forma Acquiree Ownership 0.0 % 0.0 % 0.0 %
2000E P/E Paid 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (4.0)% (5.1)% (6.3)%
Calendarized Year 2001E (2.7) (3.8) (5.0)
Calendarized Year 2002E (1.4) (2.5) (3.6)
Calendarized Year 2003E (0.1) (1.2) (2.3)
Calendarized Year 2004E 1.2 0.1 (0.9)
Pro Forma 2000 - 2004 CAGR 3.9 4.0 4.0
Synergies to Breakeven
Calendarized Year 2000E $20.6 $26.7 $32.8
Calendarized Year 2001E 14.1 20.2 26.3
Calendarized Year 2002E 7.4 13.5 19.6
Calendarized Year 2003E 0.4 6.6 12.7
Calendarized Year 2004E 0.0 0.0 5.4
2000E Breakeven P/E Multiple 9.1 x 9.2 x 9.3 x
Pro Forma Cap. and Credit
Total Debt $4,050.9 $4,132.4 $4,213.8
Preferred Stock 31.3 31.3 31.3
Common Equity 2,561.5 2,561.5 2,561.5
Adjusted Book Capitalization $6,643.7 $6,725.2 $6,806.6
Total Debt / Adj. Book Cap. 61.0 % 61.4 % 61.9 %
EBIT / Gross Interest Exp. 1.9 x 1.9 x 1.8 x
Accounting
Method Purchase Purchase Purchase
Total Goodwill Created $0.0 $0.0 $0.0
Goodwill Amortization 0.0 0.0 0.0
</TABLE>
Assumptions
Cost of debt: 7.5%
Opportunity coast of cash: 4.5%
No Synergies
EPS estimates calendarized to acquiror fiscal year
Goodwill amortized over 20 years in the UK and 40 years in the US
Knicks fully diluted shares outstanding: 40.7MM
Knicks indicated annual dividend: $0.96
American Water Works indicated annual dividend: $0.86
Thames Water indicated annual dividend: $0.69
Yorkshire Water indicated annual dividend: $0.51
B(4)-Page 31
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Pro Forma Merger/Acquisition Analysis
Knicks is acquired with 50% Cash / 50% Stock
($MM, except per share data)
<TABLE>
<CAPTION>
American Water Works Thames Water
Offer Price Per Share $36.00 $38.00 $40.00 $36.00 $38.00 $40.00
<S> <C> <C> <C> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 % 56 % 64 % 73 %
Exchange Ratio 1.2025 x 1.2693 x 1.3361 x 2.3392 x 2.4691 x 2.5991 x
Primary Shares Issues (MM) 24.5 25.8 27.1 47.6 50.3 52.9
Pro Forma Acquiree Ownership 23.1 % 24.1 % 25.1 % 12.0 % 12.6 % 13.2 %
2000E P/E Paid 26.7 x 28.1 x 29.6 x 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2 $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (24.4)% (27.5)% (30.5)% (16.6)% (18.1)% (19.6)%
Calendarized Year 2001E (22.5) (25.5) (28.4) (16.1) (17.6) (19.0)
Calendarized Year 2002E (20.8) (23.7) (26.5) (15.5) (17.0) (18.5)
Calendarized Year 2003E (19.2) (22.0) (24.8) (15.0) (16.5) (17.9)
Calendarized Year 2004E (17.7) (20.4) (23.1) (14.4) (15.9) (17.3)
Pro Forma 2000 - 2004 CAGR 8.3 8.5 8.7 2.0 2.0 2.0
Synergies to Breakeven
Calendarized Year 2000E $72.9 $83.1 $93.3 $169.2 $185.6 $202.1
Calendarized Year 2001E 71.4 81.9 92.4 165.8 182.4 199.0
Calendarized Year 2002E 69.8 80.6 91.4 162.2 179.0 195.8
Calendarized Year 2003E 68.2 79.3 90.4 158.3 175.3 192.3
Calendarized Year 2004E 66.6 78.1 89.5 154.2 171.3 188.5
2000E Breakeven P/E Multiple 22.6 x 23.6 x 24.6 x 11.6 x 11.8 x 12.0 x
Pro Forma Cap. and Credit
Total Debt $5,085.8 $5,126.6 $5,167.3 $5,497.3 $5,538.0 $5,578.8
Preferred Stock 125.9 125.9 125.9 31.3 31.3 31.3
Common Equity 1,957.7 1,998.4 2,039.2 4,119.5 4,160.2 4,200.9
Adjusted Book Capitalization $7,169.4 $7,250.9 $7,332.4 $9,648.0 $9,729.5 $9,810.9
Total Debt / Adj. Book Cap. 70.9 % 70.7 % 70.5 % 57.0 % 56.9 % 56.9 %
EBIT / Gross Interest Exp. 1.8 x 1.7 x 1.7 x 2.9 x 2.8 x 2.7 x
Accounting
Method Purchase Purchase Purchase Purchase Purchase Purchase
Total Goodwill Created $980.9 $1,062.4 $1,143.8 $980.8 $1,062.4 $1,143.8
Goodwill Amortization 24.5 26.6 28.6 49.0 53.1 57.2
<CAPTION>
Yorkshire Water
Offer Price Per Share $36.00 $38.00 $40.00
<S> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 %
Exchange Ratio 5.0220 x 5.3010 x 5.5800 x
Primary Shares Issues (MM) 102.3 108.0 113.6
Pro Forma Acquiree Ownership 20.7 % 21.6 % 22.5 %
2000E P/E Paid 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (28.0)% (30.3)% (32.5)%
Calendarized Year 2001E (27.3) (29.6) (31.8)
Calendarized Year 2002E (26.5) (28.8) (31.1)
Calendarized Year 2003E (25.8) (28.1) (30.3)
Calendarized Year 2004E (25.0) (27.3) (29.6)
Pro Forma 2000 - 2004 CAGR 3.7 3.7 3.7
Synergies to Breakeven
Calendarized Year 2000E $183.3 $200.6 $217.8
Calendarized Year 2001E 183.1 200.8 218.5
Calendarized Year 2002E 182.7 200.8 218.9
Calendarized Year 2003E 182.2 200.7 219.2
Calendarized Year 2004E 181.4 200.3 219.3
2000E Breakeven P/E Multiple 12.1 x 12.5 x 12.9 x
Pro Forma Cap. and Credit
Total Debt $3,339.8 $3,380.5 $3,421.2
Preferred Stock 31.3 31.3 31.3
Common Equity 3,272.7 3,313.4 3,354.2
Adjusted Book Capitalization $6,643.7 $6,725.2 $6,806.6
Total Debt / Adj. Book Cap. 50.3 % 50.3 % 50.3 %
EBIT / Gross Interest Exp. 2.3 x 2.2 x 2.1 x
Accounting
Method Purchase Purchase Purchase
Total Goodwill Created $980.9 $1,062.4 $1,143.8
Goodwill Amortization 49.0 53.1 57.2
</TABLE>
Assumptions
Cost of debt: 7.5%
Opportunity coast of cash: 4.5%
No Synergies
EPS estimates calendarized to acquiror fiscal year
Goodwill amortized over 20 years in the UK and 40 years in the US
Knicks fully diluted shares outstanding: 40.7MM
Knicks indicated annual dividend: $0.96
American Water Works indicated annual dividend: $0.86
Thames Water indicated annual dividend: $0.69
Yorkshire Water indicated annual dividend: $0.51
B(4)-Page 32
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Pro Forma Merger/Acquisition Analysis
Knicks is acquired with 50% Cash/50% Stock, No Goodwill Assumed
($MM, except per share data)
<TABLE>
<CAPTION>
American Water Works Thames Water
Offer Price Per Share $36.00 $38.00 $40.00 $36.00 $38.00 $40.00
<S> <C> <C> <C> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 % 56 % 64 % 73 %
Exchange Ratio 1.2025 x 1.2693 x 1.3361 x 2.3392 x 2.4691 x 2.5991 x
Primary Shares Issues (MM) 24.5 25.8 27.2 47.6 50.3 52.9
Pro Forma Acquiree Ownership 23.1 % 24.1 % 25.1 % 12.0 % 12.6 % 13.2 %
2000E P/E Paid 26.7 x 28.1 x 29.6 x 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2 $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (11.2)% (13.3)% (15.4)% (8.8)% (9.8)% (10.6)%
Calendarized Year 2001E (10.1) (12.2) (14.2) (8.4) (9.3) (10.2)
Calendarized Year 2002E (9.0) (11.1) (13.1) (8.0) (8.9) (9.8)
Calendarized Year 2003E (8.1) (10.1) (12.1) (7.5) (8.4) (9.3)
Calendarized Year 2004E (7.2) (9.2) (11.2) (7.0) (7.9) (8.9)
Pro Forma 2000 - 2004 CAGR 7.2 7.2 7.3 1.8 1.8 1.8
Synergies to Breakeven
Calendarized Year 2000E $33.4 $40.3 $47.2 $90.1 $99.9 $109.8
Calendarized Year 2001E 31.8 39.0 46.2 86.7 96.8 106.8
Calendarized Year 2002E 30.3 37.8 45.3 83.1 93.3 103.5
Calendarized Year 2003E 28.7 36.5 44.3 79.2 89.6 100.0
Calendarized Year 2004E 27.1 35.2 43.4 75.1 85.7 96.2
2000E Breakeven P/E Multiple 19.3 x 19.7 x 20.2 x 10.6 x 10.7 x 10.8 x
Pro Forma Cap. and Credit
Total Debt $5,085.8 $5,126.6 $5,167.3 $5,497.3 $5,538.0 $5,578.8
Preferred Stock 125.9 125.9 125.9 31.3 31.3 31.3
Common Equity 1,957.7 1,998.4 2,039.2 4,119.5 4,160.2 4,200.9
Adjusted Book Capitalization $7,169.4 $7,250.9 $7,332.4 $9,648.0 $9,729.5 $9,810.9
Total Debt / Adj. Book Cap. 70.9 % 70.7 % 70.5 % 57.0 % 56.9 % 56.9 %
EBIT / Gross Interest Exp. 1.8 x 1.8 x 1.8 x 3.1 x 3.0 x 3.0 x
Accounting
Method Purchase Purchase Purchase Purchase Purchase Purchase
Total Goodwill Created $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Goodwill Amortization 0.0 0.0 0.0 0.0 0.0 0.0
<CAPTION>
Yorkshire Water
Offer Price Per Share $36.00 $38.00 $40.00
<S> <C> <C> <C>
Transaction Overview
Premium to Market ($23.13) 56 % 64 % 73 %
Exchange Ratio 5.0220 x 5.3010 x 5.5800 x
Primary Shares Issues (MM) 102.3 108.0 113.6
Pro Forma Acquiree Ownership 20.7 % 21.6 % 22.5 %
2000E P/E Paid 27.7 x 29.3 x 30.8 x
Market/Full Book Paid 3.0 x 3.2 x 3.4 x
Market/Tangible Book Paid 3.5 x 3.7 x 3.8 x
Equity Value $1,466.3 $1,547.8 $1,629.2
Aggregate Value 2,224.5 2,306.0 2,387.5
EPS Accretion (Dilution)
Calendarized Year 2000E (15.9)% (17.4)% (18.8)%
Calendarized Year 2001E (15.5) (16.9) (18.4)
Calendarized Year 2002E (15.0) (16.5) (18.0)
Calendarized Year 2003E (14.6) (16.1) (17.6)
Calendarized Year 2004E (14.1) (15.6) (17.1)
Pro Forma 2000 - 2004 CAGR 3.1 3.1 3.1
Synergies to Breakeven
Calendarized Year 2000E $104.2 $114.9 $125.6
Calendarized Year 2001E 104.0 115.1 126.2
Calendarized Year 2002E 103.6 115.1 126.7
Calendarized Year 2003E 103.0 115.0 126.9
Calendarized Year 2004E 102.3 114.7 127.0
2000E Breakeven P/E Multiple 10.4 x 10.6 x 10.7 x
Pro Forma Cap. and Credit
Total Debt $3,339.8 $3,380.5 $3,421.2
Preferred Stock 31.3 31.3 31.3
Common Equity 3,272.7 3,313.4 3,354.2
Adjusted Book Capitalization $6,643.7 $6,725.2 $6,806.6
Total Debt / Adj. Book Cap. 50.3 % 50.3 % 50.3 %
EBIT / Gross Interest Exp. 2.6 x 2.6 x 2.5 x
Accounting
Method Purchase Purchase Purchase
Total Goodwill Created $0.0 $0.0 $0.0
Goodwill Amortization 0.0 0.0 0.0
</TABLE>
Assumptions
Cost of debt: 7.5%
Opportunity coast of cash: 4.5%
No Synergies
EPS estimates calendarized to acquiror fiscal year
Goodwill amortized over 20 years in the UK and 40 years in the US
Knicks fully diluted shares outstanding: 40.7MM
Knicks indicated annual dividend: $0.96
American Water Works indicated annual dividend: $0.86
Thames Water indicated annual dividend: $0.69
Yorkshire Water indicated annual dividend: $0.51
B(4)-Page 33
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
American Water Works - Company Profile (1)
Company Description
o AWK provides service to more than 7 million customers in 22 states
o AWK is continuing its strategy of consolidating and managing both public
and private water and wastewater systems
o In early 1999, AWK acquired National Enterprises, which provides water
services to 1.7 million customers in Missouri, Illinois, Indiana and New
York
o The acquisition of National is expected to close in the third quarter of
1999 and should be accretive to earnings in 12-18 months
o The Company should succeed in its bid to operate and manage the water
works of Birmingham, AL which serve more than one-third of the state's
4.3MM population
Indexed Daily Price Analysis, 7/30/98 - 7/30/99
[LINE GRAPH]
Knicks AWK
07/30/1998 100 100
07/31/1998 98.67 98.36
08/03/1998 97.34 97.74
08/04/1998 94.35 95.48
08/05/1998 94.68 96.71
08/06/1998 96.68 98.97
08/07/1998 96.68 99.18
08/10/1998 95.35 97.74
08/11/1998 95.02 97.33
08/12/1998 94.68 99.79
08/13/1998 94.68 99.59
08/14/1998 94.35 101.44
08/17/1998 94.02 100.82
08/18/1998 93.02 101.85
08/19/1998 93.02 98.36
08/20/1998 92.36 96.1
08/21/1998 93.02 98.56
08/24/1998 94.02 101.03
08/25/1998 93.69 101.03
08/26/1998 93.36 98.97
08/27/1998 94.02 94.25
08/28/1998 94.02 94.66
08/31/1998 94.35 90.35
09/01/1998 93.36 92.4
09/02/1998 93.36 92.81
09/03/1998 93.02 90.55
09/04/1998 93.69 91.38
09/08/1998 94.68 92.81
09/09/1998 92.69 93.84
09/10/1998 91.36 91.79
09/11/1998 90.7 92.4
09/14/1998 90.37 94.25
09/15/1998 90.37 96.1
09/16/1998 89.37 98.97
09/17/1998 88.7 98.36
09/18/1998 88.04 98.97
09/21/1998 88.37 98.15
09/22/1998 87.71 99.79
09/23/1998 89.37 100.41
09/24/1998 90.03 98.36
09/25/1998 90.37 99.79
09/28/1998 90.37 101.44
09/29/1998 90.37 102.26
09/30/1998 90.37 103.08
10/01/1998 88.04 105.34
10/02/1998 89.04 106.37
10/05/1998 95.35 109.03
10/06/1998 97.34 109.65
10/07/1998 97.01 109.45
10/08/1998 98.67 110.06
10/09/1998 98.01 107.39
10/12/1998 97.01 108.42
10/13/1998 96.35 106.98
10/14/1998 98.67 107.8
10/15/1998 98.34 109.24
10/16/1998 99.34 109.24
10/19/1998 99.34 106.78
10/20/1998 101.33 103.29
10/21/1998 103.32 104.11
10/22/1998 103.99 102.87
10/23/1998 103.99 102.46
10/26/1998 103.65 103.29
10/27/1998 102.99 103.7
10/28/1998 101.33 104.72
10/29/1998 101.66 105.54
10/30/1998 102.99 104.93
11/02/1998 104.32 104.52
11/03/1998 104.98 105.34
11/04/1998 103.99 104.52
11/05/1998 104.98 105.95
11/06/1998 104.32 105.75
11/09/1998 105.98 106.57
11/10/1998 105.65 107.19
11/11/1998 105.32 107.19
11/12/1998 105.98 105.95
11/13/1998 102.66 106.78
11/16/1998 106.31 106.78
11/17/1998 106.31 107.8
11/18/1998 106.64 106.57
11/19/1998 108.64 105.54
11/20/1998 106.98 103.9
11/23/1998 106.64 104.52
11/24/1998 106.31 104.52
11/25/1998 106.64 104.93
11/27/1998 106.98 104.93
11/30/1998 110.3 101.64
12/01/1998 111.63 101.64
12/02/1998 111.3 102.67
12/03/1998 108.64 102.26
12/04/1998 111.63 102.87
12/07/1998 118.94 105.13
12/08/1998 119.93 105.34
12/09/1998 116.94 104.72
12/10/1998 113.95 103.7
12/11/1998 115.28 103.49
12/14/1998 113.95 101.23
12/15/1998 113.62 102.26
12/16/1998 111.96 103.49
12/17/1998 109.3 106.37
12/18/1998 113.29 105.13
12/21/1998 117.94 107.19
12/22/1998 127.24 105.34
12/23/1998 126.25 104.72
12/24/1998 124.58 103.49
12/28/1998 126.91 103.7
12/29/1998 127.24 104.31
12/30/1998 127.57 106.37
12/31/1998 127.24 110.88
01/04/1999 125.58 110.68
01/05/1999 123.92 110.68
01/06/1999 122.59 110.88
01/07/1999 120.93 109.86
01/08/1999 120.93 109.24
01/11/1999 121.93 108.42
01/12/1999 120.27 108.42
01/13/1999 120.6 108.62
01/14/1999 118.6 107.39
01/15/1999 116.94 107.6
01/19/1999 118.94 104.52
01/20/1999 121.59 102.87
01/21/1999 119.6 103.08
01/22/1999 121.93 104.93
01/25/1999 119.27 104.72
01/26/1999 119.6 103.7
01/27/1999 115.61 102.05
01/28/1999 117.28 101.44
01/29/1999 113.29 97.54
02/01/1999 116.28 98.56
02/02/1999 113.95 99.79
02/03/1999 114.29 101.03
02/04/1999 112.62 101.03
02/05/1999 108.97 100.41
02/08/1999 108.97 98.97
02/09/1999 111.96 98.77
02/10/1999 107.31 98.56
02/11/1999 108.97 98.36
02/12/1999 105.98 97.95
02/16/1999 104.32 99.18
02/17/1999 104.65 98.77
02/18/1999 104.32 99.59
02/19/1999 103.99 100.62
02/22/1999 104.65 101.03
02/23/1999 106.31 99.38
02/24/1999 103.99 100
02/25/1999 103.32 100
02/26/1999 102.33 99.38
03/01/1999 101.33 99.79
03/02/1999 101.33 100.41
03/03/1999 99 100
03/04/1999 100 100
03/05/1999 101 100.21
03/08/1999 104.32 98.97
03/09/1999 101.33 98.36
03/10/1999 101 96.71
03/11/1999 101 95.28
03/12/1999 103.32 96.1
03/15/1999 104.32 95.48
03/16/1999 104.98 94.46
03/17/1999 101.66 94.25
03/18/1999 104.32 96.1
03/19/1999 102.99 94.05
03/22/1999 105.98 95.07
03/23/1999 106.98 96.1
03/24/1999 106.31 95.69
03/25/1999 108.31 95.89
03/26/1999 108.97 95.48
03/29/1999 110.96 96.92
03/30/1999 109.97 95.48
03/31/1999 110.3 95.69
04/01/1999 112.29 96.3
04/05/1999 114.95 95.07
04/06/1999 109.97 95.07
04/07/1999 109.63 94.66
04/08/1999 111.3 94.25
04/09/1999 111.3 93.63
04/12/1999 112.62 93.84
04/13/1999 111.96 91.58
04/14/1999 113.62 92.81
04/15/1999 113.29 93.43
04/16/1999 111.3 93.02
04/19/1999 108.97 93.84
04/20/1999 110.63 93.84
04/21/1999 111.63 93.02
04/22/1999 107.64 92.4
04/23/1999 111.96 91.99
04/26/1999 110.63 92.4
04/27/1999 111.63 92.4
04/28/1999 110.3 92.4
04/29/1999 110.3 93.43
04/30/1999 110.63 93.43
05/03/1999 112.29 96.1
05/04/1999 112.29 96.71
05/05/1999 112.96 95.89
05/06/1999 113.62 95.28
05/07/1999 113.95 93.43
05/10/1999 122.92 93.43
05/11/1999 119.27 94.25
05/12/1999 116.28 95.07
05/13/1999 114.62 95.69
05/14/1999 111.63 92.81
05/17/1999 110.63 94.25
05/18/1999 110.96 94.46
05/19/1999 112.62 95.07
05/20/1999 115.95 98.15
05/21/1999 118.27 96.92
05/24/1999 119.6 98.56
05/25/1999 119.27 100.62
05/26/1999 118.6 99.38
05/27/1999 116.94 101.64
05/28/1999 115.61 101.85
06/01/1999 119.27 100
06/02/1999 123.59 101.03
06/03/1999 118.6 99.79
06/04/1999 114.95 100.62
06/07/1999 119.6 98.97
06/08/1999 116.28 98.36
06/09/1999 116.94 98.36
06/10/1999 117.28 97.95
06/11/1999 115.61 99.18
06/14/1999 112.29 97.13
06/15/1999 113.29 96.51
06/16/1999 116.61 96.92
06/17/1999 117.61 97.13
06/18/1999 116.61 97.33
06/21/1999 114.62 96.92
06/22/1999 117.61 99.59
06/23/1999 113.62 98.56
06/24/1999 115.61 95.28
06/25/1999 115.28 100.82
06/28/1999 121.26 101.23
06/29/1999 120.27 102.67
06/30/1999 120.6 101.03
07/01/1999 120.27 101.23
07/02/1999 120.27 103.08
07/06/1999 119.93 100.41
07/07/1999 116.61 101.44
07/08/1999 118.6 102.05
07/09/1999 117.61 101.23
07/12/1999 113.62 101.03
07/13/1999 115.61 100.41
07/14/1999 115.95 102.26
07/15/1999 117.61 102.26
07/16/1999 119.27 102.46
07/19/1999 119.27 101.64
07/20/1999 119.6 99.38
07/21/1999 119.6 99.18
07/22/1999 126.91 98.56
07/23/1999 125.25 100.21
07/26/1999 123.26 98.97
07/27/1999 122.26 99.79
07/28/1999 122.92 98.97
07/29/1999 122.92 98.15
07/30/1999 122.92 98.36
1998 Revenue Breakdown
[PIE CHART]
Residential Water Supply 56.5%
Commercial Water Supply 21.6%
Industrial Water Supply 6.6%
Public and Other Water Supply 13.1%
Wastewater Water Supply 2.0%
Total Revenues $ 1.02 Bn
Financial Overview ($US MM)
1998 1997
---- ----
Customers (000's) 1,942 1,900
Net Utility Plant $4,042 $3,713
Net Income 127 115
Book Capitalization 3,496 3,136
Debt/Book Capitalization(2) 61.7% 60.4%
Market Value $2,435
Price/1999 Earnings 18.7x
Notes: (1) Financial information based on 1998 Annual Report, market data
as of May 21, 1999.
(2) Does not include preferred stock.
B(4)-Page 34
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Thames Water - Company Profile (1)
Company Description
o Thames Water is the largest water and wastewater company in the U.K.,
serving 11.9 million domestic and commercial customers in London and the
Thames Valley
o International, Products and Services divisions provide a range of services
to an additional five million customers worldwide
o International generated US$304 MM in revenues in 1997/98, up 10% due to
build and operate contracts in Australia, China, Malaysia, Indonesia,
Puerto Rico, Thailand and Turkey
o Services consists of Thames Waste Management and Total Pipeline Services,
operating landfills and building water pipelines
o Products supplies a growing range of water and wastewater products
Indexed Daily Price Analysis, 7/30/98 - 7/30/99
[LINE GRAPH]
Knicks Thames
07/30/1998 100 100
07/31/1998 98.67 98.42
08/03/1998 97.34 96.27
08/04/1998 94.35 96.23
08/05/1998 94.68 96.25
08/06/1998 96.68 97.53
08/07/1998 96.68 98.03
08/10/1998 95.35 96.04
08/11/1998 95.02 96.28
08/12/1998 94.68 97.34
08/13/1998 94.68 95.42
08/14/1998 94.35 95.85
08/17/1998 94.02 92.74
08/18/1998 93.02 93.18
08/19/1998 93.02 93.58
08/20/1998 92.36 91.29
08/21/1998 93.02 90.6
08/24/1998 94.02 92.52
08/25/1998 93.69 93.58
08/26/1998 93.36 91.82
08/27/1998 94.02 92.91
08/28/1998 94.02 93.77
08/31/1998 94.35 94.49
09/01/1998 93.36 95.4
09/02/1998 93.36 96.15
09/03/1998 93.02 95.85
09/04/1998 93.69 95.56
09/08/1998 94.68 93.61
09/09/1998 92.69 95.62
09/10/1998 91.36 97.35
09/11/1998 90.7 98.66
09/14/1998 90.37 105.3
09/15/1998 90.37 98.5
09/16/1998 89.37 98.8
09/17/1998 88.7 99.41
09/18/1998 88.04 99.44
09/21/1998 88.37 99.1
09/22/1998 87.71 99.53
09/23/1998 89.37 98.78
09/24/1998 90.03 98.42
09/25/1998 90.37 99.92
09/28/1998 90.37 101.81
09/29/1998 90.37 104.2
09/30/1998 90.37 104.84
10/01/1998 88.04 104.89
10/02/1998 89.04 104.02
10/05/1998 95.35 101.62
10/06/1998 97.34 102.05
10/07/1998 97.01 101.33
10/08/1998 98.67 102.4
10/09/1998 98.01 103.14
10/12/1998 97.01 101.45
10/13/1998 96.35 97.19
10/14/1998 98.67 94.46
10/15/1998 98.34 90.04
10/16/1998 99.34 88.87
10/19/1998 99.34 88.44
10/20/1998 101.33 90.93
10/21/1998 103.32 91.89
10/22/1998 103.99 94.23
10/23/1998 103.99 93.74
10/26/1998 103.65 95.88
10/27/1998 102.99 94.11
10/28/1998 101.33 92.83
10/29/1998 101.66 95.87
10/30/1998 102.99 97.68
11/02/1998 104.32 98.42
11/03/1998 104.98 98.03
11/04/1998 103.99 97.26
11/05/1998 104.98 97.05
11/06/1998 104.32 96.97
11/09/1998 105.98 98.36
11/10/1998 105.65 102.03
11/11/1998 105.32 103.62
11/12/1998 105.98 103.98
11/13/1998 102.66 105.65
11/16/1998 106.31 104.6
11/17/1998 106.31 104.02
11/18/1998 106.64 101.66
11/19/1998 108.64 102.91
11/20/1998 106.98 102.29
11/23/1998 106.64 104.4
11/24/1998 106.31 103.82
11/25/1998 106.64 104.11
11/27/1998 106.98 103.72
11/30/1998 110.3 100.7
12/01/1998 111.63 100.83
12/02/1998 111.3 98.71
12/03/1998 108.64 101.86
12/04/1998 111.63 102.97
12/07/1998 118.94 104.37
12/08/1998 119.93 105.11
12/09/1998 116.94 104.47
12/10/1998 113.95 102.93
12/11/1998 115.28 104.13
12/14/1998 113.95 104.27
12/15/1998 113.62 105.03
12/16/1998 111.96 105.28
12/17/1998 109.3 105.09
12/18/1998 113.29 104.55
12/21/1998 117.94 104.33
12/22/1998 127.24 102.99
12/23/1998 126.25 103.39
12/24/1998 124.58 102.22
12/28/1998 126.91 102.28
12/29/1998 127.24 103.29
12/30/1998 127.57 101.14
12/31/1998 127.24 100.72
01/04/1999 125.58 99.26
01/05/1999 123.92 95.86
01/06/1999 122.59 95.99
01/07/1999 120.93 94.31
01/08/1999 120.93 94.81
01/11/1999 121.93 93.41
01/12/1999 120.27 91.24
01/13/1999 120.6 90.65
01/14/1999 118.6 91.21
01/15/1999 116.94 94.43
01/19/1999 118.94 93.41
01/20/1999 121.59 94.44
01/21/1999 119.6 95.39
01/22/1999 121.93 94.39
01/25/1999 119.27 94.05
01/26/1999 119.6 94.26
01/27/1999 115.61 93.92
01/28/1999 117.28 90.99
01/29/1999 113.29 91.92
02/01/1999 116.28 91.36
02/02/1999 113.95 90.02
02/03/1999 114.29 89.76
02/04/1999 112.62 91.22
02/05/1999 108.97 91.17
02/08/1999 108.97 94.46
02/09/1999 111.96 95.9
02/10/1999 107.31 92.95
02/11/1999 108.97 92.75
02/12/1999 105.98 92.63
02/16/1999 104.32 92.09
02/17/1999 104.65 91.53
02/18/1999 104.32 94.67
02/19/1999 103.99 91.78
02/22/1999 104.65 90.54
02/23/1999 106.31 89.65
02/24/1999 103.99 89.04
02/25/1999 103.32 87.98
02/26/1999 102.33 86.27
03/01/1999 101.33 85.14
03/02/1999 101.33 86.33
03/03/1999 99 87.03
03/04/1999 100 88.02
03/05/1999 101 88.04
03/08/1999 104.32 87.58
03/09/1999 101.33 83.98
03/10/1999 101 85.32
03/11/1999 101 81.95
03/12/1999 103.32 82.14
03/15/1999 104.32 80.41
03/16/1999 104.98 79.43
03/17/1999 101.66 79.43
03/18/1999 104.32 80.74
03/19/1999 102.99 80.53
03/22/1999 105.98 82.04
03/23/1999 106.98 80.38
03/24/1999 106.31 82.85
03/25/1999 108.31 82.55
03/26/1999 108.97 82.85
03/29/1999 110.96 83.07
03/30/1999 109.97 79.68
03/31/1999 110.3 79.88
04/01/1999 112.29 79.08
04/05/1999 114.95 78.89
04/06/1999 109.97 77.71
04/07/1999 109.63 76.81
04/08/1999 111.3 76.95
04/09/1999 111.3 77.42
04/12/1999 112.62 77.18
04/13/1999 111.96 77.53
04/14/1999 113.62 75.62
04/15/1999 113.29 77.7
04/16/1999 111.3 76.47
04/19/1999 108.97 75.56
04/20/1999 110.63 73.38
04/21/1999 111.63 74.08
04/22/1999 107.64 75.91
04/23/1999 111.96 75.67
04/26/1999 110.63 73.78
04/27/1999 111.63 74.87
04/28/1999 110.3 75.54
04/29/1999 110.3 73.2
04/30/1999 110.63 73.06
05/03/1999 112.29 73.06
05/04/1999 112.29 76.08
05/05/1999 112.96 77.69
05/06/1999 113.62 79.88
05/07/1999 113.95 80.46
05/10/1999 122.92 80.03
05/11/1999 119.27 78.94
05/12/1999 116.28 80.83
05/13/1999 114.62 81.4
05/14/1999 111.63 79.19
05/17/1999 110.63 78.54
05/18/1999 110.96 78.99
05/19/1999 112.62 80.44
05/20/1999 115.95 80.55
05/21/1999 118.27 77.3
05/24/1999 119.6 79.82
05/25/1999 119.27 78.57
05/26/1999 118.6 80.53
05/27/1999 116.94 80.82
05/28/1999 115.61 83.51
06/01/1999 119.27 85.47
06/02/1999 123.59 87.14
06/03/1999 118.6 87.83
06/04/1999 114.95 89.88
06/07/1999 119.6 89.59
06/08/1999 116.28 87.58
06/09/1999 116.94 86.38
06/10/1999 117.28 84.42
06/11/1999 115.61 88.41
06/14/1999 112.29 87.91
06/15/1999 113.29 86.06
06/16/1999 116.61 86.11
06/17/1999 117.61 85.04
06/18/1999 116.61 84.77
06/21/1999 114.62 84.87
06/22/1999 117.61 84.68
06/23/1999 113.62 84.19
06/24/1999 115.61 83.57
06/25/1999 115.28 86.22
06/28/1999 121.26 86.09
06/29/1999 120.27 85.65
06/30/1999 120.6 83.47
07/01/1999 120.27 85.28
07/02/1999 120.27 87.64
07/06/1999 119.93 90.97
07/07/1999 116.61 90.21
07/08/1999 118.6 90.36
07/09/1999 117.61 89.83
07/12/1999 113.62 88.38
07/13/1999 115.61 87.08
07/14/1999 115.95 87.76
07/15/1999 117.61 89.85
07/16/1999 119.27 89.68
07/19/1999 119.27 86.93
07/20/1999 119.6 87.93
07/21/1999 119.6 87.24
07/22/1999 126.91 87.57
07/23/1999 125.25 83.81
07/26/1999 123.26 83.38
07/27/1999 122.26 80.09
07/28/1999 122.92 77.09
07/29/1999 122.92 78.77
07/30/1999 122.92 81.01
1998 Revenue Breakdown
[PIE CHART]
Utilities 74.2%
International Division 12.6%
Products Division 5.3%
Services Division 5.9%
Insurance & Property Division 2.0%
Total Revenues $ 1.39 Bn
Financial Overview ($US MM)
1998 1997
---- ----
Fixed asset investments $6,049 $5,509
Net Income 202.4(3) 515.2
Book Capitalization 5,034 4,838
Debt/Book Capitalization(2) 31.3% 27.9%
Market Value $5,380
Price/1999 Earnings 8.7x
Notes: (1) Financial information based on 1998 Annual Report & Accounts,
market data as of May 21, 1999, all adjusted to US$ and based
on exchange rate at that date.
(2) Does not include preferred.
(3) Net of US$ 371MM windfall tax.
B(4)-Page 35
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Yorkshire Water - Company Profile (1)
Company Description
o Yorkshire Water, through its subsidiary Yorkshire Water Services (YWS),
provides drinking water and waste water services to over 4.5 million
people in the Yorkshire region of the U.K.
o In addition to the core water business Yorkshire has operations involved
in liquid waste, clinical waste, solid waste, analytical laboratory
services and specialist water treatment chemicals
o Yorkshire Environmental Services (YES), serves commercial and municipal
clients, processes clinical and healthcare waste and conducts
environmental analysis
o On June 1, 1999, Yorkshire announced the acquisition of Aquarion, the U.S.
water utility, for a gross aggregate value of $600 million.
Indexed Daily Price Analysis, 7/30/98 - 7/30/99
[LINE GRAPH]
UWR Yorkshire
07/30/1998 100 100
07/31/1998 98.67 100.23
08/03/1998 97.34 99.95
08/04/1998 94.35 104.5
08/05/1998 94.68 105.41
08/06/1998 96.68 105.57
08/07/1998 96.68 105.64
08/10/1998 95.35 107.88
08/11/1998 95.02 107.75
08/12/1998 94.68 107.9
08/13/1998 94.68 106.98
08/14/1998 94.35 106.3
08/17/1998 94.02 104.9
08/18/1998 93.02 102.95
08/19/1998 93.02 101.74
08/20/1998 92.36 101.94
08/21/1998 93.02 99.36
08/24/1998 94.02 99.46
08/25/1998 93.69 99.59
08/26/1998 93.36 98.67
08/27/1998 94.02 96.39
08/28/1998 94.02 96.29
08/31/1998 94.35 97.02
09/01/1998 93.36 95.3
09/02/1998 93.36 95.94
09/03/1998 93.02 96.3
09/04/1998 93.69 95.83
09/08/1998 94.68 97.43
09/09/1998 92.69 97.69
09/10/1998 91.36 99.65
09/11/1998 90.7 103.37
09/14/1998 90.37 106.18
09/15/1998 90.37 106.6
09/16/1998 89.37 106.22
09/17/1998 88.7 107.18
09/18/1998 88.04 110.58
09/21/1998 88.37 107.44
09/22/1998 87.71 106.41
09/23/1998 89.37 103.32
09/24/1998 90.03 102.44
09/25/1998 90.37 104.82
09/28/1998 90.37 106.67
09/29/1998 90.37 109.71
09/30/1998 90.37 113.06
10/01/1998 88.04 112.69
10/02/1998 89.04 113.42
10/05/1998 95.35 113.08
10/06/1998 97.34 112.36
10/07/1998 97.01 110.68
10/08/1998 98.67 110.38
10/09/1998 98.01 109.59
10/12/1998 97.01 107.14
10/13/1998 96.35 104.57
10/14/1998 98.67 103.16
10/15/1998 98.34 103.76
10/16/1998 99.34 104.27
10/19/1998 99.34 102.85
10/20/1998 101.33 103.13
10/21/1998 103.32 104.76
10/22/1998 103.99 106.21
10/23/1998 103.99 106.27
10/26/1998 103.65 105.06
10/27/1998 102.99 102.78
10/28/1998 101.33 102.62
10/29/1998 101.66 101.01
10/30/1998 102.99 103.82
11/02/1998 104.32 105.42
11/03/1998 104.98 103.71
11/04/1998 103.99 102.14
11/05/1998 104.98 102.25
11/06/1998 104.32 102.57
11/09/1998 105.98 104.88
11/10/1998 105.65 111.1
11/11/1998 105.32 113.63
11/12/1998 105.98 112.67
11/13/1998 102.66 112.42
11/16/1998 106.31 112.89
11/17/1998 106.31 112.31
11/18/1998 106.64 108.81
11/19/1998 108.64 108.45
11/20/1998 106.98 110.11
11/23/1998 106.64 110.66
11/24/1998 106.31 111.24
11/25/1998 106.64 110.17
11/27/1998 106.98 110.36
11/30/1998 110.3 109.11
12/01/1998 111.63 110.15
12/02/1998 111.3 112.01
12/03/1998 108.64 113.41
12/04/1998 111.63 112.77
12/07/1998 118.94 113.42
12/08/1998 119.93 114.16
12/09/1998 116.94 115.22
12/10/1998 113.95 114.43
12/11/1998 115.28 114.87
12/14/1998 113.95 115.41
12/15/1998 113.62 115.78
12/16/1998 111.96 117.11
12/17/1998 109.3 117.2
12/18/1998 113.29 116.05
12/21/1998 117.94 116.21
12/22/1998 127.24 114.88
12/23/1998 126.25 113.71
12/24/1998 124.58 112.89
12/28/1998 126.91 112.96
12/29/1998 127.24 112.77
12/30/1998 127.57 111.66
12/31/1998 127.24 111.19
01/04/1999 125.58 110.13
01/05/1999 123.92 108.44
01/06/1999 122.59 108.09
01/07/1999 120.93 107.26
01/08/1999 120.93 106.15
01/11/1999 121.93 105.15
01/12/1999 120.27 102.85
01/13/1999 120.6 102.05
01/14/1999 118.6 102.29
01/15/1999 116.94 103.01
01/19/1999 118.94 103.22
01/20/1999 121.59 102.62
01/21/1999 119.6 103.1
01/22/1999 121.93 102.75
01/25/1999 119.27 102.65
01/26/1999 119.6 102.48
01/27/1999 115.61 102.42
01/28/1999 117.28 101.06
01/29/1999 113.29 97.97
02/01/1999 116.28 96.44
02/02/1999 113.95 93.38
02/03/1999 114.29 92.63
02/04/1999 112.62 94.31
02/05/1999 108.97 94.54
02/08/1999 108.97 94.31
02/09/1999 111.96 94.64
02/10/1999 107.31 97.73
02/11/1999 108.97 98.51
02/12/1999 105.98 96.67
02/16/1999 104.32 94.15
02/17/1999 104.65 95.47
02/18/1999 104.32 94.35
02/19/1999 103.99 94.12
02/22/1999 104.65 93.33
02/23/1999 106.31 92.97
02/24/1999 103.99 91.96
02/25/1999 103.32 90.03
02/26/1999 102.33 88.36
03/01/1999 101.33 87.61
03/02/1999 101.33 87.66
03/03/1999 99 91.58
03/04/1999 100 92.86
03/05/1999 101 92.68
03/08/1999 104.32 90.91
03/09/1999 101.33 87.31
03/10/1999 101 85.53
03/11/1999 101 83.82
03/12/1999 103.32 84.59
03/15/1999 104.32 84.84
03/16/1999 104.98 83.8
03/17/1999 101.66 84.27
03/18/1999 104.32 84.39
03/19/1999 102.99 83.85
03/22/1999 105.98 83.98
03/23/1999 106.98 90.18
03/24/1999 106.31 92.31
03/25/1999 108.31 92.28
03/26/1999 108.97 91.61
03/29/1999 110.96 90.45
03/30/1999 109.97 86.86
03/31/1999 110.3 86.99
04/01/1999 112.29 86.78
04/05/1999 114.95 86.58
04/06/1999 109.97 85.97
04/07/1999 109.63 84.72
04/08/1999 111.3 86.32
04/09/1999 111.3 85.65
04/12/1999 112.62 85.75
04/13/1999 111.96 86.73
04/14/1999 113.62 87.27
04/15/1999 113.29 85.91
04/16/1999 111.3 84.74
04/19/1999 108.97 84.63
04/20/1999 110.63 83.97
04/21/1999 111.63 83.18
04/22/1999 107.64 85.27
04/23/1999 111.96 84.88
04/26/1999 110.63 84.87
04/27/1999 111.63 84.36
04/28/1999 110.3 84.98
04/29/1999 110.3 84.98
04/30/1999 110.63 84.92
05/03/1999 112.29 84.92
05/04/1999 112.29 86.43
05/05/1999 112.96 92.8
05/06/1999 113.62 94.8
05/07/1999 113.95 94.08
05/10/1999 122.92 92.54
05/11/1999 119.27 91.19
05/12/1999 116.28 90.96
05/13/1999 114.62 90.68
05/14/1999 111.63 89.22
05/17/1999 110.63 86.81
05/18/1999 110.96 86.35
05/19/1999 112.62 85.66
05/20/1999 115.95 84.95
05/21/1999 118.27 83.1
05/24/1999 119.6 82.69
05/25/1999 119.27 83.69
05/26/1999 118.6 83.55
05/27/1999 116.94 83.74
05/28/1999 115.61 85.09
06/01/1999 119.27 85.9
06/02/1999 123.59 85.47
06/03/1999 118.6 88.01
06/04/1999 114.95 86.17
06/07/1999 119.6 86.6
06/08/1999 116.28 86.81
06/09/1999 116.94 86.23
06/10/1999 117.28 84.2
06/11/1999 115.61 83.81
06/14/1999 112.29 84.79
06/15/1999 113.29 84.17
06/16/1999 116.61 83.45
06/17/1999 117.61 83.94
06/18/1999 116.61 84.39
06/21/1999 114.62 84.17
06/22/1999 117.61 83.75
06/23/1999 113.62 82.23
06/24/1999 115.61 82.82
06/25/1999 115.28 84.17
06/28/1999 121.26 83.89
06/29/1999 120.27 84.75
06/30/1999 120.6 84.66
07/01/1999 120.27 87.2
07/02/1999 120.27 88.68
07/06/1999 119.93 90.1
07/07/1999 116.61 91.86
07/08/1999 118.6 93.65
07/09/1999 117.61 94.1
07/12/1999 113.62 92.79
07/13/1999 115.61 90.27
07/14/1999 115.95 89.87
07/15/1999 117.61 89.29
07/16/1999 119.27 88.73
07/19/1999 119.27 90.91
07/20/1999 119.6 94.57
07/21/1999 119.6 94.71
07/22/1999 126.91 95.26
07/23/1999 125.25 95.24
07/26/1999 123.26 95.03
07/27/1999 122.26 88.66
07/28/1999 122.92 85.98
07/29/1999 122.92 86.32
07/30/1999 122.92 86.71
1998 Revenues
Water Services 86.0%
Other Activities 14.0%
Total Revenues $ 1.02 Bn
Financial Overview ($US MM)
1998 1997
---- ----
Net Asset Investment $3,947 $3,601
Net Income 70.0(3) 297.2
Book Capitalization 3,206 2,969
Debt/Book Capitalization(2) 28.8% 23.3%
Market Value
Price/1999 Earnings $2,804
8.2x
Notes: (1) Financial information based on 1998 Annual Report & Accounts,
market data as of May 21, 1999, all adjusted to $US and based
on exchange rate at that date.
(2) Does not include preferred.
(3) Net of $US 225.4 MM windfall tax.
B(4)-Page 36
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX
- --------------------------------------------------------------------------------
B(4)-Page 37
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Case Study: Yorkshire Water's Acquisition of Aquarion
Announced June 1, 1999
Business o Aquarion Company's principal business is public water
Descriptions supply. Through its BHC and Sea Cliff Water Company
subsidiaries, it is one of the largest investor-owned
water utilities in the U.S. and serves 141,000
customers, or a population of more than 500,000, in 30
Connecticut and Long Island, NY communities. Other
businesses include real estate through the sale of
surplus water company land, and contract management of
municipal water systems. Aquarion also owns a
timber-processing company
o Based in Leeds, England, Yorkshire Water plc has
annual revenues of $1.1 billion and operates in the
United Kingdom and Europe with approximately 4,500
employees. Its water- and sewerage-services businesses
provide drinking water to approximately 1.9 million
customers, or a population of 4.5 million, in the
county of Yorkshire, England. Yorkshire Water plc
provides 350 million gallons of water daily, treated
at 112 water-treatment facilities
Terms o The equity value of the transaction is approximately
$468 million in cash, net of assumed proceeds from
unexercised options, based on approximately 12.6
million fully diluted shares outstanding, plus the
assumption of $155 million in debt
o Including the options, the gross aggregate value of
the transaction is $600 million
Multiples Paid EV/LTM Earnings 22.1x AV/LTM EBITDA 10.2x
EV/Book Value 2.92x AV/LTM EBIT 15.5x
Buyer o Yorkshire stated its rationale about the transaction
Rationale because it strategically positions the Company for
growth in the northeast U.S. water market
B(4)-Page 38
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Case Study: California Water Service's Acquisition of Dominguez Services Corp.
Announced March 23, 1999
Business o California Water Service Group is the parent company
Descriptions of California Water Service Company and CWS Utility
Services. California Water Service Company is the
largest investor owned water utility in California and
the fourth largest in the country. It provides
high-quality water service to 1.5 million people in 59
California communities.
o Dominguez Service Corporation owns and operates
Dominguez Water Company ("DSC"). DSC provides water
service to almost 40,000 customers primarily in the
South Bay area of Los Angeles County. Through its
subsidiaries, DSC also has operations in the Antelope
Valley in northern Los Angeles County, the Kern River
Valley near Lake Isabella in Kern County and in the
Russian River area of northern California. Dominguez
also has a water rights trading business.
Terms o $33.75 fixed price per share, pooling of interests,
tax-free transaction
o $63.5 million acquisition in stock and assumed debt
o In November 1998, CWT agreed to exchange stock,
valuing Dominguez at $31.57 per share, and to take on
$10.5 million in debt. The increase from $31.57 to
$33.75 came one week after an unsolicited, competing
offer of $32.50 from American States Water
Multiples Paid EV/LTM Earnings 33.8x AV/LTM EBITDA 13.1x
EV/Book Value 3.22x AV/LTM EBIT 18.4x
Buyer o The combined company will have revenue of $22 million
Rationale and will provide water services to 1.64 million
people. The acquisition will allow California Water to
compete better in the key Los Angeles area by cutting
costs through consolidating the two systems and to
enter the water-rights trading business, a right
granted to Dominguez by the state
o Take advantage of the growth potential in California
and the western states
o Improve on the company's ability to make acquisitions
of private and municipal water companies
B(4)-Page 39
<PAGE>
Exhibit B5
[GRAPHIC]
PROJECT HOOPS
================================================================================
Presentation to the Board of Directors
July 8, 1999
MORGAN STANLEY DEAN WITTER
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Table of Contents
SECTION I EXECUTIVE SUMMARY
SECTION II OVERVIEW OF KNICKS
SECTION III MARKET PERCEPTION OF KNICKS
SECTION IV PRELIMINARY VALUATION ANALYSIS
TAB A "Rothschild" Valuation Analysis
TAB B "Business Segment" Valuation Analysis
SECTION V POTENTIAL PARTNERS
APPENDIX A Financial Model
APPENDIX B Utilities Consolidated Rate Awards
APPENDIX C U.S. Water Industry Environment
APPENDIX D Overview of Agreements with Spurs
<PAGE>
- --------------------------------------------------------------------------------
EXECUTIVE SUMMARY
- --------------------------------------------------------------------------------
B(5)-Page 1
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Executive Summary
o Water utility stocks are trading at historically high valuations on almost
every measure. These levels can be attributed to:
o Takeover speculation
o EPS growth through consolidation and privatization
o Favorable interest rate environment
o Defense appeal
o The factors driving consolidation include:
o Fragmented industry
o EPA standards
o Favorable regulation
o New players
o The current environment may provide sellers of water assets with a unique
window of opportunity to maximize net proceeds for their businesses
B(5)-Page 2
<PAGE>
- --------------------------------------------------------------------------------
OVERVIEW OF KNICKS
- --------------------------------------------------------------------------------
B(5)-Page 3
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Organizational Structure (1)
<TABLE>
<S> <C> <C> <C>
--------------
Knicks o 98A Net Income: $43.9MM
-------------- o 99E Net Income: $50.9MM
||
------------------------------------------------------------------------------------------------------
|| || || ||
- ----------------------------- ------------------------- --------------------------- --------------------------------
Knicks Properties Utilities Contract Operations Other
Group
- ----------------------------- ------------------------- --------------------------- --------------------------------
o Commercial rentals, land o 98A Net Income: $55.7MM o 98A Net Income: ($4.9)MM o Corporate financing,
development and sales, golf o 99E Net Income: $53.3MM o 99E Net Income: ($3.4)MM development and other expenses
course operations || || o Acquisition and divestiture
o 98A Net Income: $3.4MM ------------------------- --------------------- o 98A Net Income: ($10.3)MM
o 99E Net Income: $4.8MM || || || || o 99E Net Income: ($3.7)MM
|| || || ||
------------------------- ------------------------------ ---------------- ---------------------
U.S. Utilities Knicks Water KWR Contract KWS
U.K. Operations Consolidated
------------------------- ------------------------------ ---------------- ---------------------
o 98A Net Income: $42.4MM o An equal partner with o 98A Net Income: o 50/50 joint venture
o 99E Net Income: $41.2MM Spurs Europe in the ($0.9)MM with Spurs
|| Northumbrian Partnership (2) o 99E Net Income: o 98A Net Income:
|| o 98A Net Income: ($0.5)MM ($3.9)MM
|| $13.3MM o 99E Net Income:
|| o 99E Net Income: ($2.9)MM
|| $12.1MM
---------------------------------
|| ||
------------------------- -------------------------
New Jersey Waterworks
Operations Operations
------------------------- -------------------------
o 98A Net Income: $24.2MM o 98A Net Income: $18.3MM
o 99E Net Income: $22.6MM o 99E Net Income: $18.5MM
</TABLE>
Notes: (1) Source: Management's Internal Financial Report to the Board of
Directors, May 1999.
(2) Has a 20% interest in Northumbrian Water Group plc.
B(5)-Page 4
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks 1998 Actual Net Income Breakdown by Business Segment (1)
United Water 1998 Net Income Breakdown
[BAR CHART]
<TABLE>
<CAPTION>
U.S. Utilities Contract Operations
-------------- -------------------
United United UWR
New Jersey Waterworks Water Properties Contract UWS
Operations Operations U.K.(1) Group Operations Consolidated Other (2) Total
- --------- ---------- ------- ---------- ---------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$24,163 $18,267 $13,304 $3,372 ($937) ($3,931) ($10,309) $43,939
</TABLE>
Notes: (1) United Water U.K. is an equal partner with Suez Lyonnaise Des Eaux
Europe in the Northumbrian Partnership that has a 20% interest in
Northumbrian Water Group plc.
(2) Other includes corporate development and other expenses, acquisition
and divestiture, parent interest, preferred and preference
dividends.
(3) Knicks Water U.K. is an equal partner with Spurs Europe in the
Northumbrian Partnership that has a 20% interest in the Northumbrian
Water Group plc.
B(5)-Page 5
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Business Overview: Regulated Utilities
- --------------------------------------------------------------------------------
Regulated Service Territory
- --------------------------------------------------------------------------------
[GRAPHIC]
B(5)-Page 6
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Business Overview: Regulated Utilities
- --------------------------------------------------------------------------------
Description of Domestic Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
# of Customers at 1998A Date of Last
Major Utility Operations Dec. 31, 1998 1998 Revenues ROE Rate Case
- ------------------------ ----------------- ---------------------- ----- ---------
(000s) % (%)
<S> <C> <C> <C> <C> <C> <C>
Knicks New Jersey 179,000 28.3% $125,507 38.6% 14.5% 1/98
Knicks New York 64,000 16.1 43,108 13.2 10.1 4/97
Knicks Waterworks Subsidiaries
Knicks Florida 53,516 8.5 27,826 8.5 4.5 5/97
Knicks Idaho 59,310 9.4 22,662 7.0 8.6 7/98
Knicks Pennsylvania 47,437 7.5 21,361 6.6 12.5 1/99
Knicks New Rochelle 30,243 4.8 18,552 5.7 8.1 8/98
Knicks Delaware 32,784 5.2 17,195 5.3 9.1 5/98
Knicks Toms River 45,614 7.2 14,563 4.5 11.3 1/98
Knicks Arkansas 19,299 3.0 7,572 2.3 14.7 10/97
Subtotal 531,203 83.9 298,346 91.7
Other utility operations 101,680 16.1 27,129 8.3
------- ----- -------- -----
Total utility operations 632,883 100.0% $325,475 100.0%
</TABLE>
- --------------------------------------------------------------------------------
Description of Domestic Operations
B(5)-Page 7
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Business Overview: Contract Operations
- --------------------------------------------------------------------------------
Contract Operations Service Territories
- --------------------------------------------------------------------------------
[GRAPHIC]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Description
- --------------------------------------------------------------------------------
o Knicks Water Services provides contract operations and maintenance
services for water and wastewater facilities and is pursuing additional
contract operations. As a result, Knicks Water Services was awarded
several contracts. The largest awards include a ten-year contract to
operate the wastewater systems in Milwaukee, Wisconsin, and a 20-year
contract to operate the water system in Atlanta, Georgia, with a minority
partner. Knicks Water Services also operates a meter installation
subsidiary, United Metering, which it purchased from Knicks Water in
December 1997 for book value of $6.2 million
o In July 1997, the Company's subsidiaries, Knicks Water Canada and Knicks
Water Mexico, acquired a 30% and a 20% interest in KWS Canada and KWS
Mexico, respectively, which provide contract operations and maintenance
services for water and wastewater facilities. In December 1998, Knicks
Water purchased additional interests and now has a 33.3% and a 20.5%
interest in KWS Canada and KWS Mexico, respectively
- --------------------------------------------------------------------------------
B(5)-Page 8
<PAGE>
- --------------------------------------------------------------------------------
MARKET PERCEPTION OF KNICKS
- --------------------------------------------------------------------------------
B(5)-Page 9
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Overview
- --------------------------------------------------------------------------------
Market Statistics
- --------------------------------------------------------------------------------
Knicks Water Index S&P 500 Electric Utility Index
------ ----------- ------- ----------------------
YTD Total Return (4.7%) (3.5%) 8.3% (5.6%)
1998 Total Return 26.4% 26.6% 28.6% 15.4%
3-Year Return 114.1% 106.4% 110.9% 46.1%
Dividend Yield 4.2% 3.9% 1.4% 4.6%
P/E Ratio 1999E 18.0x 18.5x 25.0x 14.8x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Current Valuation Levels
- --------------------------------------------------------------------------------
o Despite recent share price weakness, water utility stocks are trading at
historically high valuations on almost every measure. These levels can be
attributed to:
o Takeover speculation
o EPS growth through consolidation and privatization
o Favorable interest rate environment
o Defense appeal
- --------------------------------------------------------------------------------
B(5)-Page 10
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Overview of Market Valuation Measures(1)
[GRAPHIC]
Water Index Price/ Water Index Yield/ Water Index Price/
Book Value 30-Yr. Treasury L12M Earnings
------------------ ------------------ ------------------
Historical 10 Year Range
102%-227% 103%-69% 12.1x-19.6x
-------------------------------------------------------------
Current 207 70% 19.6x
Knicks 195% 69% 18.3x
Mean 149% 83% 15.8%
Note: (1) As of June 28, 1999.
B(5)-Page 11
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Water Index Price to Book Value Ratio Vs. U.S. 30-year Treasury Yields
Daily From January 1, 1990 - June 28, 1999
[MOUNTAIN CHART]
Year U.S. 30-Year Treasury Yields U.S. Water Index Price/Book
Treasury Yields (%) Price To Book Value Ratio (x)
- -------- ---------------------------- -----------------------------
12/29/89 7.97 1.34
1/2/90 7.99 1.35
1/3/90 8.03 1.37
1/4/90 8.03 1.36
1/5/90 8.05 1.35
1/8/90 8.09 1.35
1/9/90 8.09 1.36
1/10/90 8.08 1.35
1/11/90 8.11 1.36
1/12/90 8.17 1.35
1/15/90 8.2 1.35
1/16/90 8.24 1.34
1/17/90 8.25 1.34
1/18/90 8.33 1.33
1/19/90 8.26 1.33
1/22/90 8.3 1.32
1/23/90 8.39 1.32
1/24/90 8.4 1.29
1/25/90 8.45 1.29
1/26/90 8.51 1.29
1/29/90 8.57 1.29
1/30/90 8.54 1.29
1/31/90 8.45 1.29
2/1/90 8.43 1.31
2/2/90 8.5 1.3
2/5/90 8.53 1.3
2/6/90 8.58 1.31
2/7/90 8.54 1.3
2/8/90 8.48 1.3
2/9/90 8.33 1.31
2/12/90 8.43 1.3
2/13/90 8.38 1.3
2/14/90 8.41 1.3
2/15/90 8.46 1.31
2/16/90 8.46 1.31
2/20/90 8.66 1.29
2/21/90 8.64 1.3
2/22/90 8.56 1.29
2/23/90 8.56 1.29
2/26/90 8.49 1.28
2/27/90 8.44 1.28
2/28/90 8.53 1.29
3/1/90 8.6 1.29
3/2/90 8.54 1.29
3/5/90 8.65 1.29
3/6/90 8.57 1.29
3/7/90 8.58 1.28
3/8/90 8.55 1.29
3/9/90 8.62 1.29
3/12/90 8.61 1.28
3/13/90 8.71 1.27
3/14/90 8.6 1.28
3/15/90 8.61 1.27
3/16/90 8.54 1.28
3/19/90 8.53 1.28
3/20/90 8.45 1.27
3/21/90 8.49 1.27
3/22/90 8.48 1.27
3/23/90 8.47 1.28
3/26/90 8.46 1.29
3/27/90 8.46 1.28
3/28/90 8.46 1.28
3/29/90 8.58 1.27
3/30/90 8.62 1.28
4/2/90 8.62 1.27
4/3/90 8.61 1.27
4/4/90 8.5 1.27
4/5/90 8.51 1.27
4/6/90 8.51 1.27
4/9/90 8.55 1.26
4/10/90 8.59 1.26
4/11/90 8.57 1.27
4/12/90 8.59 1.28
4/16/90 8.63 1.28
4/17/90 8.71 1.26
4/18/90 8.82 1.25
4/19/90 8.84 1.24
4/20/90 8.94 1.24
4/23/90 8.96 1.25
4/24/90 8.95 1.23
4/25/90 8.96 1.24
4/26/90 9.03 1.24
4/27/90 9.02 1.21
4/30/90 8.99 1.22
5/1/90 9.03 1.22
5/2/90 9.02 1.22
5/3/90 8.97 1.21
5/4/90 8.81 1.22
5/7/90 8.84 1.21
5/8/90 8.82 1.22
5/9/90 8.86 1.21
5/10/90 8.84 1.21
5/11/90 8.63 1.22
5/14/90 8.58 1.22
5/15/90 8.61 1.22
5/16/90 8.63 1.22
5/17/90 8.64 1.21
5/18/90 8.69 1.22
5/21/90 8.68 1.22
5/22/90 8.6 1.22
5/23/90 8.57 1.22
5/24/90 8.61 1.22
5/25/90 8.66 1.22
5/29/90 8.62 1.22
5/30/90 8.59 1.21
5/31/90 8.57 1.23
6/1/90 8.43 1.23
6/4/90 8.42 1.23
6/5/90 8.45 1.23
6/6/90 8.44 1.23
6/7/90 8.42 1.23
6/8/90 8.46 1.22
6/11/90 8.44 1.21
6/12/90 8.45 1.21
6/13/90 8.38 1.21
6/14/90 8.34 1.21
6/15/90 8.42 1.21
6/18/90 8.46 1.21
6/19/90 8.47 1.22
6/20/90 8.51 1.22
6/21/90 8.49 1.21
6/22/90 8.47 1.21
6/25/90 8.55 1.2
6/26/90 8.51 1.2
6/27/90 8.48 1.2
6/28/90 8.44 1.2
6/29/90 8.4 1.21
7/2/90 8.4 1.2
7/3/90 8.38 1.2
7/5/90 8.4 1.2
7/6/90 8.5 1.2
7/9/90 8.54 1.2
7/10/90 8.57 1.2
7/11/90 8.55 1.2
7/12/90 8.49 1.2
7/13/90 8.45 1.2
7/16/90 8.45 1.2
7/17/90 8.45 1.2
7/18/90 8.54 1.2
7/19/90 8.55 1.2
7/20/90 8.53 1.2
7/23/90 8.55 1.18
7/24/90 8.58 1.18
7/25/90 8.54 1.18
7/26/90 8.53 1.18
7/27/90 8.48 1.17
7/30/90 8.4 1.17
7/31/90 8.41 1.17
8/1/90 8.35 1.15
8/2/90 8.46 1.15
8/3/90 8.52 1.13
8/6/90 8.79 1.11
8/7/90 8.86 1.12
8/8/90 8.83 1.12
8/9/90 8.75 1.12
8/10/90 8.77 1.12
8/13/90 8.81 1.11
8/14/90 8.78 1.11
8/15/90 8.76 1.12
8/16/90 8.93 1.11
8/17/90 8.93 1.11
8/20/90 8.93 1.1
8/21/90 8.94 1.09
8/22/90 9.05 1.08
8/23/90 9.13 1.07
8/24/90 9.15 1.07
8/27/90 8.99 1.08
8/28/90 9.04 1.09
8/29/90 8.92 1.09
8/30/90 8.97 1.09
8/31/90 8.98 1.08
9/4/90 9.01 1.09
9/5/90 8.96 1.13
9/6/90 8.95 1.14
9/7/90 8.91 1.13
9/10/90 8.96 1.13
9/11/90 8.92 1.13
9/12/90 8.94 1.13
9/13/90 8.96 1.13
9/14/90 9.02 1.13
9/17/90 9.06 1.1
9/18/90 9.06 1.1
9/19/90 9 1.1
9/20/90 9.03 1.09
9/21/90 9.11 1.09
9/24/90 9.17 1.07
9/25/90 9.13 1.07
9/26/90 9.12 1.07
9/27/90 9.01 1.07
9/28/90 8.94 1.05
10/1/90 8.84 1.07
10/2/90 8.82 1.07
10/3/90 8.87 1.06
10/4/90 8.78 1.07
10/5/90 8.78 1.06
10/8/90 8.81 1.07
10/9/90 8.96 1.04
10/10/90 9.05 1.03
10/11/90 9.07 1.02
10/12/90 8.95 1.02
10/15/90 8.93 1.04
10/16/90 8.89 1.03
10/17/90 8.88 1.03
10/18/90 8.81 1.03
10/19/90 8.75 1.04
10/22/90 8.75 1.03
10/23/90 8.8 1.04
10/24/90 8.77 1.05
10/25/90 8.75 1.05
10/26/90 8.77 1.04
10/29/90 8.82 1.05
10/30/90 8.82 1.04
10/31/90 8.77 1.05
11/1/90 8.68 1.04
11/2/90 8.68 1.04
11/5/90 8.62 1.06
11/6/90 8.63 1.06
11/7/90 8.69 1.05
11/8/90 8.7 1.05
11/9/90 8.62 1.05
11/12/90 8.54 1.08
11/13/90 8.53 1.07
11/14/90 8.51 1.07
11/15/90 8.53 1.07
11/16/90 8.45 1.07
11/19/90 8.51 1.07
11/20/90 8.46 1.08
11/21/90 8.42 1.08
11/23/90 8.44 1.09
11/26/90 8.43 1.08
11/27/90 8.43 1.08
11/28/90 8.44 1.1
11/29/90 8.49 1.1
11/30/90 8.39 1.1
12/3/90 8.36 1.11
12/4/90 8.32 1.11
12/5/90 8.31 1.12
12/6/90 8.33 1.11
12/7/90 8.18 1.11
12/10/90 8.12 1.11
12/11/90 8.06 1.12
12/12/90 8.05 1.11
12/13/90 8.12 1.11
12/14/90 8.18 1.11
12/17/90 8.17 1.1
12/18/90 8.07 1.12
12/19/90 8.17 1.14
12/20/90 8.23 1.13
12/21/90 8.28 1.12
12/24/90 8.35 1.12
12/26/90 8.27 1.12
12/27/90 8.24 1.12
12/28/90 8.3 1.12
12/31/90 8.23 1.11
1/2/91 8.14 1.12
1/3/91 8.1 1.12
1/4/91 8.2 1.11
1/7/91 8.3 1.11
1/8/91 8.38 1.09
1/9/91 8.45 1.1
1/10/91 8.32 1.1
1/11/91 8.36 1.09
1/14/91 8.37 1.08
1/15/91 8.39 1.1
1/16/91 8.4 1.09
1/17/91 8.19 1.11
1/18/91 8.17 1.1
1/21/91 8.21 1.11
1/22/91 8.25 1.1
1/23/91 8.2 1.12
1/24/91 8.16 1.12
1/25/91 8.22 1.14
1/28/91 8.22 1.15
1/29/91 8.2 1.15
1/30/91 8.21 1.16
1/31/91 8.19 1.16
2/1/91 8.09 1.18
2/4/91 8.04 1.18
2/5/91 8.02 1.19
2/6/91 8 1.2
2/7/91 8.06 1.21
2/8/91 7.95 1.2
2/11/91 7.96 1.21
2/12/91 7.96 1.21
2/13/91 7.95 1.23
2/14/91 7.99 1.24
2/15/91 7.98 1.25
2/19/91 7.99 1.24
2/20/91 8.03 1.22
2/21/91 8.06 1.22
2/22/91 8.06 1.22
2/25/91 8.04 1.23
2/26/91 8.13 1.23
2/27/91 8.14 1.22
2/28/91 8.2 1.24
3/1/91 8.28 1.24
3/4/91 8.29 1.24
3/5/91 8.24 1.24
3/6/91 8.27 1.23
3/7/91 8.21 1.22
3/8/91 8.3 1.23
3/11/91 8.22 1.22
3/12/91 8.26 1.23
3/13/91 8.18 1.24
3/14/91 8.2 1.25
3/15/91 8.29 1.25
3/18/91 8.32 1.25
3/19/91 8.4 1.24
3/20/91 8.34 1.25
3/21/91 8.33 1.23
3/22/91 8.31 1.23
3/25/91 8.32 1.24
3/26/91 8.3 1.26
3/27/91 8.25 1.27
3/28/91 8.24 1.29
4/1/91 8.25 1.28
4/2/91 8.22 1.3
4/3/91 8.23 1.3
4/4/91 8.17 1.31
4/5/91 8.16 1.29
4/8/91 8.15 1.29
4/9/91 8.2 1.3
4/10/91 8.26 1.3
4/11/91 8.25 1.3
4/12/91 8.15 1.31
4/15/91 8.11 1.31
4/16/91 8.11 1.31
4/17/91 8.1 1.31
4/18/91 8.17 1.33
4/19/91 8.25 1.32
4/22/91 8.29 1.3
4/23/91 8.27 1.28
4/24/91 8.21 1.3
4/25/91 8.24 1.29
4/26/91 8.21 1.29
4/29/91 8.22 1.29
4/30/91 8.18 1.31
5/1/91 8.17 1.33
5/2/91 8.12 1.32
5/3/91 8.22 1.32
5/6/91 8.21 1.31
5/7/91 8.24 1.31
5/8/91 8.22 1.32
5/9/91 8.21 1.32
5/10/91 8.31 1.31
5/13/91 8.26 1.33
5/14/91 8.33 1.32
5/15/91 8.32 1.31
5/16/91 8.33 1.32
5/17/91 8.27 1.33
5/20/91 8.28 1.31
5/21/91 8.25 1.31
5/22/91 8.27 1.29
5/23/91 8.29 1.29
5/24/91 8.29 1.3
5/28/91 8.28 1.31
5/29/91 8.29 1.32
5/30/91 8.21 1.32
5/31/91 8.26 1.32
6/3/91 8.34 1.32
6/4/91 8.33 1.34
6/5/91 8.39 1.33
6/6/91 8.42 1.34
6/7/91 8.47 1.34
6/10/91 8.47 1.32
6/11/91 8.47 1.32
6/12/91 8.54 1.29
6/13/91 8.51 1.3
6/14/91 8.45 1.32
6/17/91 8.49 1.32
6/18/91 8.51 1.29
6/19/91 8.5 1.3
6/20/91 8.46 1.31
6/21/91 8.51 1.3
6/24/91 8.51 1.3
6/25/91 8.5 1.29
6/26/91 8.51 1.29
6/27/91 8.48 1.27
6/28/91 8.4 1.26
7/1/91 8.43 1.27
7/2/91 8.43 1.27
7/3/91 8.41 1.28
7/5/91 8.49 1.28
7/8/91 8.49 1.27
7/9/91 8.52 1.27
7/10/91 8.5 1.27
7/11/91 8.46 1.27
7/12/91 8.43 1.28
7/15/91 8.45 1.27
7/16/91 8.45 1.28
7/17/91 8.49 1.28
7/18/91 8.48 1.29
7/19/91 8.47 1.28
7/22/91 8.46 1.29
7/23/91 8.48 1.3
7/24/91 8.41 1.3
7/25/91 8.37 1.3
7/26/91 8.38 1.3
7/29/91 8.38 1.3
7/30/91 8.36 1.3
7/31/91 8.33 1.32
8/1/91 8.34 1.31
8/2/91 8.24 1.31
8/5/91 8.22 1.33
8/6/91 8.17 1.35
8/7/91 8.18 1.37
8/8/91 8.22 1.36
8/9/91 8.22 1.36
8/12/91 8.2 1.35
8/13/91 8.17 1.36
8/14/91 8.06 1.36
8/15/91 8.09 1.37
8/16/91 8.08 1.36
8/19/91 8.1 1.35
8/20/91 8.09 1.35
8/21/91 8.06 1.36
8/22/91 8.04 1.36
8/23/91 8.13 1.35
8/26/91 8.14 1.35
8/27/91 8.12 1.35
8/28/91 8.05 1.34
8/29/91 8 1.34
8/30/91 8.06 1.33
9/3/91 8.04 1.33
9/4/91 8.06 1.32
9/5/91 8.09 1.33
9/6/91 8.01 1.33
9/9/91 7.99 1.34
9/10/91 8.01 1.33
9/11/91 8.02 1.35
9/12/91 7.92 1.35
9/13/91 7.93 1.36
9/16/91 7.92 1.36
9/17/91 7.91 1.36
9/18/91 7.92 1.36
9/19/91 7.91 1.36
9/20/91 7.88 1.37
9/23/91 7.87 1.36
9/24/91 7.88 1.36
9/25/91 7.9 1.35
9/26/91 7.88 1.36
9/27/91 7.82 1.36
9/30/91 7.8 1.32
10/1/91 7.79 1.31
10/2/91 7.82 1.32
10/3/91 7.83 1.32
10/4/91 7.77 1.32
10/7/91 7.78 1.32
10/8/91 7.81 1.34
10/9/91 7.91 1.34
10/10/91 7.96 1.35
10/11/91 7.88 1.33
10/14/91 7.87 1.34
10/15/91 7.85 1.35
10/16/91 7.88 1.35
10/17/91 8.01 1.35
10/18/91 7.96 1.34
10/21/91 8.07 1.33
10/22/91 8.09 1.33
10/23/91 8.07 1.33
10/24/91 8.02 1.32
10/25/91 8.04 1.33
10/28/91 8.02 1.33
10/29/91 7.89 1.34
10/30/91 7.9 1.33
10/31/91 7.91 1.36
11/1/91 7.93 1.35
11/4/91 7.95 1.34
11/5/91 8.02 1.35
11/6/91 8 1.34
11/7/91 7.92 1.35
11/8/91 7.87 1.34
11/11/91 7.86 1.35
11/12/91 7.78 1.4
11/13/91 7.86 1.39
11/14/91 7.81 1.38
11/15/91 7.82 1.38
11/18/91 7.84 1.36
11/19/91 7.92 1.35
11/20/91 7.9 1.35
11/21/91 7.97 1.35
11/22/91 7.98 1.35
11/25/91 7.98 1.35
11/26/91 7.94 1.36
11/27/91 7.96 1.36
11/29/91 7.93 1.35
12/2/91 7.9 1.36
12/3/91 7.89 1.36
12/4/91 7.86 1.35
12/5/91 7.87 1.34
12/6/91 7.8 1.36
12/9/91 7.78 1.35
12/10/91 7.78 1.38
12/11/91 7.79 1.37
12/12/91 7.75 1.38
12/13/91 7.77 1.38
12/16/91 7.74 1.39
12/17/91 7.74 1.39
12/18/91 7.75 1.4
12/19/91 7.65 1.39
12/20/91 7.57 1.4
12/23/91 7.51 1.41
12/24/91 7.51 1.42
12/26/91 7.5 1.43
12/27/91 7.51 1.46
12/30/91 7.44 1.46
12/31/91 7.39 1.47
1/2/92 7.46 1.45
1/3/92 7.48 1.44
1/6/92 7.43 1.46
1/7/92 7.39 1.46
1/8/92 7.4 1.48
1/9/92 7.41 1.5
1/10/92 7.46 1.5
1/13/92 7.49 1.48
1/14/92 7.53 1.48
1/15/92 7.56 1.46
1/16/92 7.64 1.44
1/17/92 7.6 1.43
1/20/92 7.59 1.43
1/21/92 7.56 1.44
1/22/92 7.61 1.47
1/23/92 7.7 1.47
1/24/92 7.7 1.47
1/27/92 7.71 1.47
1/28/92 7.65 1.47
1/29/92 7.74 1.45
1/30/92 7.78 1.45
1/31/92 7.77 1.44
2/3/92 7.81 1.45
2/4/92 7.75 1.45
2/5/92 7.74 1.46
2/6/92 7.75 1.41
2/7/92 7.76 1.37
2/10/92 7.78 1.38
2/11/92 7.78 1.36
2/12/92 7.81 1.38
2/13/92 7.91 1.38
2/14/92 7.9 1.38
2/18/92 7.96 1.37
2/19/92 7.92 1.34
2/20/92 7.9 1.33
2/21/92 7.94 1.35
2/24/92 7.96 1.33
2/25/92 7.93 1.33
2/26/92 7.84 1.34
2/27/92 7.85 1.34
2/28/92 7.8 1.34
3/2/92 7.89 1.33
3/3/92 7.91 1.34
3/4/92 7.9 1.34
3/5/92 7.95 1.34
3/6/92 7.92 1.35
3/9/92 7.87 1.34
3/10/92 7.89 1.35
3/11/92 7.95 1.35
3/12/92 8.03 1.35
3/13/92 8.06 1.35
3/16/92 8.07 1.34
3/17/92 8.01 1.35
3/18/92 8 1.34
3/19/92 7.97 1.35
3/20/92 8.04 1.34
3/23/92 8.02 1.33
3/24/92 7.94 1.33
3/25/92 7.93 1.33
3/26/92 7.98 1.33
3/27/92 7.94 1.31
3/30/92 7.94 1.31
3/31/92 7.95 1.31
4/1/92 7.89 1.31
4/2/92 7.91 1.3
4/3/92 7.87 1.3
4/6/92 7.88 1.29
4/7/92 7.88 1.29
4/8/92 7.93 1.27
4/9/92 7.84 1.28
4/10/92 7.88 1.29
4/13/92 7.86 1.28
4/14/92 7.87 1.29
4/15/92 7.86 1.3
4/16/92 7.93 1.28
4/20/92 8.02 1.28
4/21/92 8.02 1.28
4/22/92 8.03 1.28
4/23/92 8.06 1.28
4/24/92 8.04 1.28
4/27/92 8.1 1.28
4/28/92 8.05 1.29
4/29/92 8.07 1.3
4/30/92 8.05 1.3
5/1/92 8.01 1.32
5/4/92 8.02 1.31
5/5/92 8.01 1.31
5/6/92 7.96 1.33
5/7/92 7.99 1.33
5/8/92 7.9 1.33
5/11/92 7.89 1.34
5/12/92 7.85 1.34
5/13/92 7.85 1.33
5/14/92 7.86 1.33
5/15/92 7.8 1.32
5/18/92 7.81 1.32
5/19/92 7.76 1.33
5/20/92 7.79 1.33
5/21/92 7.84 1.34
5/22/92 7.82 1.35
5/26/92 7.92 1.34
5/27/92 7.9 1.34
5/28/92 7.87 1.34
5/29/92 7.83 1.35
6/1/92 7.9 1.34
6/2/92 7.87 1.35
6/3/92 7.87 1.34
6/4/92 7.87 1.34
6/5/92 7.85 1.32
6/8/92 7.84 1.32
6/9/92 7.86 1.32
6/10/92 7.89 1.32
6/11/92 7.88 1.32
6/12/92 7.85 1.33
6/15/92 7.85 1.35
6/16/92 7.82 1.34
6/17/92 7.82 1.33
6/18/92 7.79 1.33
6/19/92 7.82 1.34
6/22/92 7.83 1.32
6/23/92 7.85 1.35
6/24/92 7.82 1.34
6/25/92 7.77 1.33
6/26/92 7.78 1.33
6/29/92 7.77 1.33
6/30/92 7.79 1.31
7/1/92 7.76 1.31
7/2/92 7.62 1.32
7/6/92 7.61 1.33
7/7/92 7.61 1.34
7/8/92 7.61 1.33
7/9/92 7.6 1.34
7/10/92 7.63 1.35
7/13/92 7.67 1.35
7/14/92 7.68 1.35
7/15/92 7.64 1.36
7/16/92 7.61 1.36
7/17/92 7.68 1.37
7/20/92 7.65 1.36
7/21/92 7.66 1.38
7/22/92 7.61 1.38
7/23/92 7.54 1.38
7/24/92 7.56 1.38
7/27/92 7.52 1.38
7/28/92 7.43 1.38
7/29/92 7.43 1.38
7/30/92 7.45 1.39
7/31/92 7.44 1.39
8/3/92 7.45 1.39
8/4/92 7.42 1.4
8/5/92 7.42 1.41
8/6/92 7.45 1.42
8/7/92 7.39 1.42
8/10/92 7.36 1.42
8/11/92 7.32 1.43
8/12/92 7.33 1.42
8/13/92 7.41 1.42
8/14/92 7.32 1.42
8/17/92 7.37 1.43
8/18/92 7.34 1.43
8/19/92 7.32 1.43
8/20/92 7.31 1.43
8/21/92 7.35 1.44
8/24/92 7.44 1.42
8/25/92 7.47 1.43
8/26/92 7.44 1.44
8/27/92 7.41 1.44
8/28/92 7.41 1.46
8/31/92 7.41 1.45
9/1/92 7.37 1.45
9/2/92 7.37 1.45
9/3/92 7.36 1.45
9/4/92 7.28 1.45
9/8/92 7.21 1.46
9/9/92 7.24 1.45
9/10/92 7.23 1.46
9/11/92 7.29 1.46
9/14/92 7.26 1.47
9/15/92 7.32 1.45
9/16/92 7.34 1.45
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9/21/92 7.35 1.44
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9/23/92 7.48 1.44
9/24/92 7.42 1.43
9/25/92 7.34 1.43
9/28/92 7.33 1.43
9/29/92 7.35 1.43
9/30/92 7.37 1.41
10/1/92 7.29 1.42
10/2/92 7.32 1.41
10/5/92 7.34 1.4
10/6/92 7.41 1.39
10/7/92 7.48 1.41
10/8/92 7.45 1.41
10/9/92 7.52 1.41
10/12/92 7.5 1.41
10/13/92 7.52 1.4
10/14/92 7.49 1.41
10/15/92 7.5 1.41
10/16/92 7.53 1.41
10/19/92 7.56 1.41
10/20/92 7.64 1.4
10/21/92 7.62 1.4
10/22/92 7.6 1.4
10/23/92 7.63 1.4
10/26/92 7.65 1.4
10/27/92 7.61 1.39
10/28/92 7.63 1.4
10/29/92 7.59 1.4
10/30/92 7.63 1.4
11/2/92 7.65 1.39
11/3/92 7.64 1.4
11/4/92 7.68 1.41
11/5/92 7.68 1.41
11/6/92 7.75 1.39
11/9/92 7.75 1.4
11/10/92 7.67 1.4
11/11/92 7.66 1.39
11/12/92 7.59 1.41
11/13/92 7.57 1.41
11/16/92 7.55 1.4
11/17/92 7.54 1.4
11/18/92 7.5 1.41
11/19/92 7.53 1.43
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11/25/92 7.53 1.42
11/27/92 7.59 1.42
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12/2/92 7.56 1.43
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12/4/92 7.5 1.43
12/7/92 7.44 1.45
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12/21/92 7.37 1.42
12/22/92 7.33 1.42
12/23/92 7.35 1.4
12/24/92 7.36 1.41
12/28/92 7.39 1.41
12/29/92 7.36 1.42
12/30/92 7.38 1.43
12/31/92 7.39 1.45
1/4/93 7.32 1.44
1/5/93 7.33 1.42
1/6/93 7.34 1.43
1/7/93 7.44 1.43
1/8/93 7.46 1.43
1/11/93 7.46 1.46
1/12/93 7.48 1.45
1/13/93 7.44 1.46
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1/15/93 7.34 1.45
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1/19/93 7.31 1.46
1/20/93 7.32 1.46
1/21/93 7.3 1.45
1/22/93 7.3 1.46
1/25/93 7.21 1.46
1/26/93 7.25 1.45
1/27/93 7.24 1.45
1/28/93 7.22 1.44
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2/1/93 7.2 1.46
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2/17/93 7.1 1.45
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2/22/93 6.95 1.46
2/23/93 6.83 1.49
2/24/93 6.88 1.49
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2/26/93 6.89 1.5
3/1/93 6.83 1.51
3/2/93 6.84 1.51
3/3/93 6.78 1.5
3/4/93 6.72 1.51
3/5/93 6.75 1.51
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3/9/93 6.73 1.52
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3/12/93 6.85 1.52
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3/18/93 6.8 1.51
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3/22/93 6.8 1.51
3/23/93 6.76 1.52
3/24/93 6.8 1.53
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9/16/93 6 1.65
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1/3/94 6.4 1.5
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9/21/95 6.56 1.29
9/22/95 6.59 1.29
9/25/95 6.58 1.3
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9/27/95 6.61 1.3
9/28/95 6.58 1.31
9/29/95 6.48 1.28
10/2/95 6.48 1.28
10/3/95 6.45 1.29
10/4/95 6.44 1.29
10/5/95 6.42 1.3
10/6/95 6.42 1.31
10/9/95 6.42 1.3
10/10/95 6.42 1.3
10/11/95 6.43 1.31
10/12/95 6.4 1.32
10/13/95 6.3 1.31
10/16/95 6.31 1.32
10/17/95 6.29 1.32
10/18/95 6.31 1.33
10/19/95 6.3 1.32
10/20/95 6.35 1.32
10/23/95 6.38 1.33
10/24/95 6.32 1.3
10/25/95 6.31 1.31
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10/27/95 6.34 1.31
10/30/95 6.35 1.31
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11/1/95 6.29 1.31
11/2/95 6.25 1.31
11/3/95 6.27 1.31
11/6/95 6.29 1.31
11/7/95 6.31 1.32
11/8/95 6.24 1.3
11/9/95 6.28 1.29
11/10/95 6.32 1.29
11/13/95 6.28 1.3
11/14/95 6.29 1.3
11/15/95 6.3 1.3
11/16/95 6.23 1.3
11/17/95 6.23 1.31
11/20/95 6.24 1.31
11/21/95 6.26 1.31
11/22/95 6.27 1.31
11/24/95 6.25 1.31
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11/28/95 6.23 1.31
11/29/95 6.21 1.32
11/30/95 6.13 1.32
12/1/95 6.09 1.33
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12/6/95 6.03 1.34
12/7/95 6.06 1.34
12/8/95 6.05 1.33
12/11/95 6.04 1.32
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12/13/95 6.06 1.33
12/14/95 6.08 1.35
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12/18/95 6.19 1.35
12/19/95 6.14 1.38
12/20/95 6.11 1.37
12/21/95 6.11 1.41
12/22/95 6.05 1.41
12/26/95 6.04 1.44
12/27/95 6 1.44
12/28/95 5.98 1.46
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1/2/96 5.97 1.46
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1/4/96 6.02 1.45
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1/10/96 6.16 1.42
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1/16/96 6.09 1.43
1/17/96 6 1.45
1/18/96 5.98 1.45
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1/29/96 6.08 1.45
1/30/96 6.03 1.46
1/31/96 6.03 1.47
2/1/96 6.08 1.47
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3/1/96 6.38 1.47
3/4/96 6.33 1.48
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3/8/96 6.69 1.45
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3/27/96 6.67 1.45
3/28/96 6.73 1.47
3/29/96 6.67 1.48
4/1/96 6.65 1.49
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4/8/96 6.88 1.47
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4/10/96 6.9 1.46
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4/12/96 6.81 1.46
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4/26/96 6.78 1.46
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5/1/96 6.9 1.45
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5/29/96 6.93 1.44
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6/3/96 7.01 1.44
6/4/96 7 1.45
6/5/96 6.95 1.44
6/6/96 6.9 1.44
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6/11/96 7.12 1.43
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6/17/96 7.06 1.45
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6/19/96 7.11 1.46
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6/21/96 7.1 1.45
6/24/96 7.08 1.46
6/25/96 7.05 1.45
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6/27/96 6.98 1.48
6/28/96 6.9 1.46
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7/5/96 7.18 1.44
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7/18/96 6.91 1.46
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7/22/96 7 1.46
7/23/96 6.97 1.45
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8/29/96 7.04 1.56
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9/16/96 6.94 1.56
9/17/96 7 1.55
9/18/96 7.01 1.54
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9/24/96 6.98 1.54
9/25/96 6.93 1.56
9/26/96 6.87 1.55
9/27/96 6.9 1.56
9/30/96 6.93 1.55
10/1/96 6.87 1.54
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10/7/96 6.78 1.55
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10/18/96 6.78 1.51
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10/25/96 6.81 1.52
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10/29/96 6.69 1.51
10/30/96 6.68 1.48
10/31/96 6.65 1.5
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11/4/96 6.66 1.5
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11/6/96 6.61 1.5
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11/25/96 6.41 1.52
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11/29/96 6.35 1.51
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12/5/96 6.49 1.52
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12/11/96 6.6 1.51
12/12/96 6.63 1.5
12/13/96 6.58 1.49
12/16/96 6.62 1.5
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12/18/96 6.68 1.5
12/19/96 6.6 1.5
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12/23/96 6.58 1.54
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1/2/97 6.75 1.53
1/3/97 6.73 1.56
1/6/97 6.76 1.56
1/7/97 6.8 1.56
1/8/97 6.82 1.56
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1/21/97 6.77 1.61
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1/24/97 6.88 1.65
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1/28/97 6.91 1.67
1/29/97 6.9 1.68
1/30/97 6.87 1.67
1/31/97 6.8 1.67
2/3/97 6.73 1.68
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2/26/97 6.8 1.7
2/27/97 6.81 1.68
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3/3/97 6.83 1.7
3/4/97 6.86 1.69
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3/6/97 6.87 1.67
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1/2/98 5.85 1.96
1/5/98 5.74 1.91
1/6/98 5.72 1.9
1/7/98 5.79 1.9
1/8/98 5.75 1.92
1/9/98 5.7 1.89
1/12/98 5.7 1.9
1/13/98 5.7 1.9
1/14/98 5.73 1.92
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1/16/98 5.8 1.97
1/20/98 5.83 2
1/21/98 5.8 1.99
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1/23/98 5.97 2.01
1/26/98 5.89 2.01
1/27/98 5.94 2
1/28/98 5.93 2
1/29/98 5.84 1.98
1/30/98 5.81 1.96
2/2/98 5.86 1.94
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2/18/98 5.84 2
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2/23/98 5.9 2.01
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2/25/98 5.92 2.06
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3/2/98 6.02 2.06
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3/4/98 6.04 2.04
3/5/98 6.07 1.99
3/6/98 6.02 2.02
3/9/98 5.96 2.02
3/10/98 5.96 2.03
3/11/98 5.93 2.04
3/12/98 5.87 2.05
3/13/98 5.89 2.05
3/16/98 5.85 2.04
3/17/98 5.88 2.02
3/18/98 5.9 2.04
3/19/98 5.9 2.04
3/20/98 5.88 2.04
3/23/98 5.88 2.06
3/24/98 5.88 2.11
3/25/98 5.93 2.09
3/26/98 5.95 2.05
3/27/98 5.95 2.05
3/30/98 5.98 2.06
3/31/98 5.94 2.05
4/1/98 5.9 2.06
4/2/98 5.84 2.11
4/3/98 5.77 2.1
4/6/98 5.82 2.07
4/7/98 5.84 2.06
4/8/98 5.9 2.07
4/9/98 5.87 2.05
4/13/98 5.93 2.03
4/14/98 5.91 2.05
4/15/98 5.88 2.03
4/16/98 5.87 1.99
4/17/98 5.87 1.99
4/20/98 5.92 1.98
4/21/98 5.95 1.94
4/22/98 5.96 1.94
4/23/98 5.97 1.92
4/24/98 5.94 1.88
4/27/98 6.06 1.88
4/28/98 6.06 1.89
4/29/98 6.07 1.93
4/30/98 5.95 1.96
5/1/98 5.94 1.98
5/4/98 5.94 1.99
5/5/98 5.97 1.97
5/6/98 5.94 1.95
5/7/98 5.94 1.95
5/8/98 5.97 1.97
5/11/98 6.04 1.94
5/12/98 5.96 1.95
5/13/98 5.94 1.94
5/14/98 5.97 1.94
5/15/98 5.97 1.93
5/18/98 5.91 1.92
5/19/98 5.93 1.92
5/20/98 5.89 1.91
5/21/98 5.92 1.91
5/22/98 5.9 1.92
5/26/98 5.85 1.85
5/27/98 5.82 1.84
5/28/98 5.83 1.88
5/29/98 5.8 1.89
6/1/98 5.78 1.88
6/2/98 5.8 1.91
6/3/98 5.79 1.91
6/4/98 5.81 1.9
6/5/98 5.79 1.93
6/8/98 5.79 1.97
6/9/98 5.79 1.99
6/10/98 5.7 1.96
6/11/98 5.65 1.96
6/12/98 5.65 1.96
6/15/98 5.6 1.97
6/16/98 5.65 1.97
6/17/98 5.74 2
6/18/98 5.69 1.98
6/19/98 5.67 1.93
6/22/98 5.66 1.95
6/23/98 5.64 1.96
6/24/98 5.65 1.96
6/25/98 5.65 1.95
6/26/98 5.64 1.96
6/29/98 5.65 1.98
6/30/98 5.62 1.99
7/1/98 5.63 1.99
7/2/98 5.6 2.03
7/6/98 5.57 2.01
7/7/98 5.59 2.01
7/8/98 5.62 2
7/9/98 5.6 2.04
7/10/98 5.62 2.03
7/13/98 5.67 2.02
7/14/98 5.71 2.03
7/15/98 5.7 2.04
7/16/98 5.72 2.06
7/17/98 5.74 2.06
7/20/98 5.71 2.08
7/21/98 5.67 2.05
7/22/98 5.68 2.01
7/23/98 5.66 1.98
7/24/98 5.68 1.99
7/27/98 5.7 1.96
7/28/98 5.74 1.93
7/29/98 5.76 1.93
7/30/98 5.72 1.96
7/31/98 5.72 1.94
8/3/98 5.66 1.93
8/4/98 5.65 1.9
8/5/98 5.65 1.91
8/6/98 5.67 1.95
8/7/98 5.62 1.96
8/10/98 5.62 1.95
8/11/98 5.59 1.93
8/12/98 5.61 1.99
8/13/98 5.64 1.99
8/14/98 5.54 2.02
8/17/98 5.55 2.02
8/18/98 5.55 2.05
8/19/98 5.56 2
8/20/98 5.51 1.95
8/21/98 5.46 1.98
8/24/98 5.47 2.02
8/25/98 5.43 2.04
8/26/98 5.42 2.03
8/27/98 5.38 1.97
8/28/98 5.35 1.99
8/31/98 5.3 1.94
9/1/98 5.33 2
9/2/98 5.34 1.98
9/3/98 5.3 1.96
9/4/98 5.28 1.97
9/8/98 5.34 2
9/9/98 5.27 1.99
9/10/98 5.18 1.96
9/11/98 5.23 1.98
9/14/98 5.23 1.97
9/15/98 5.26 2
9/16/98 5.21 2.02
9/17/98 5.18 2.01
9/18/98 5.14 2.05
9/21/98 5.12 2.03
9/22/98 5.15 2.08
9/23/98 5.16 2.09
9/24/98 5.15 2.05
9/25/98 5.13 2.06
9/28/98 5.15 2.09
9/29/98 5.1 2.09
9/30/98 4.98 2.03
10/1/98 4.89 2.05
10/2/98 4.85 2.04
10/5/98 4.71 2.1
10/6/98 4.74 2.12
10/7/98 4.82 2.09
10/8/98 4.99 2.07
10/9/98 5.1 2.02
10/12/98 5.1 2.05
10/13/98 5.1 2.03
10/14/98 4.99 2.04
10/15/98 5.02 2.05
10/16/98 4.96 2.06
10/19/98 4.98 2.05
10/20/98 5.05 2.03
10/21/98 5.06 2.03
10/22/98 5.12 2.02
10/23/98 5.16 2.01
10/26/98 5.13 2.02
10/27/98 5.08 2.01
10/28/98 5.13 2.02
10/29/98 5.09 2.02
10/30/98 5.15 2.04
11/2/98 5.23 2.05
11/3/98 5.22 2.08
11/4/98 5.32 2.08
11/5/98 5.34 2.1
11/6/98 5.37 2.1
11/9/98 5.28 2.1
11/10/98 5.27 2.14
11/11/98 5.27 2.14
11/12/98 5.24 2.13
11/13/98 5.25 2.11
11/16/98 5.27 2.11
11/17/98 5.29 2.12
11/18/98 5.24 2.1
11/19/98 5.25 2.09
11/20/98 5.22 2.07
11/23/98 5.25 2.08
11/24/98 5.22 2.08
11/25/98 5.18 2.08
11/27/98 5.16 2.08
11/30/98 5.07 2.05
12/1/98 5.05 2.06
12/2/98 5.02 2.06
12/3/98 5.01 2.06
12/4/98 5.04 2.08
12/7/98 5.04 2.13
12/8/98 4.99 2.15
12/9/98 4.96 2.15
12/10/98 4.96 2.13
12/11/98 5.01 2.14
12/14/98 4.99 2.1
12/15/98 5.03 2.11
12/16/98 5.01 2.1
12/17/98 5 2.12
12/18/98 5.01 2.14
12/21/98 5.06 2.18
12/22/98 5.12 2.2
12/23/98 5.19 2.21
12/24/98 5.22 2.19
12/28/98 5.16 2.21
12/29/98 5.12 2.21
12/30/98 5.08 2.25
12/31/98 5.08 2.27
1/4/99 5.15 2.25
1/5/99 5.2 2.23
1/6/99 5.17 2.22
1/7/99 5.22 2.2
1/8/99 5.26 2.21
1/11/99 5.28 2.19
1/12/99 5.22 2.18
1/13/99 5.15 2.17
1/14/99 5.06 2.15
1/15/99 5.11 2.14
1/19/99 5.14 2.12
1/20/99 5.17 2.11
1/21/99 5.15 2.09
1/22/99 5.08 2.11
1/25/99 5.11 2.09
1/26/99 5.12 2.08
1/27/99 5.13 2.04
1/28/99 5.11 2.04
1/29/99 5.09 2
2/1/99 5.18 2
2/2/99 5.24 2
2/3/99 5.25 2.02
2/4/99 5.3 2.01
2/5/99 5.34 2
2/8/99 5.34 1.97
2/9/99 5.32 1.98
2/10/99 5.34 1.96
2/11/99 5.34 1.96
2/12/99 5.43 1.93
2/16/99 5.35 1.94
2/17/99 5.31 1.93
2/18/99 5.36 1.93
2/19/99 5.38 1.94
2/22/99 5.35 1.95
2/23/99 5.42 1.92
2/24/99 5.5 1.91
2/25/99 5.61 1.91
2/26/99 5.56 1.9
3/1/99 5.67 1.9
3/2/99 5.63 1.91
3/3/99 5.68 1.91
3/4/99 5.69 1.91
3/5/99 5.61 1.91
3/8/99 5.59 1.92
3/9/99 5.54 1.9
3/10/99 5.56 1.89
3/11/99 5.56 1.85
3/12/99 5.53 1.87
3/15/99 5.5 1.86
3/16/99 5.47 1.84
3/17/99 5.5 1.84
3/18/99 5.49 1.87
3/19/99 5.53 1.86
3/22/99 5.56 1.9
3/23/99 5.56 1.9
3/24/99 5.53 1.88
3/25/99 5.58 1.89
3/26/99 5.6 1.9
3/29/99 5.64 1.9
3/30/99 5.58 1.9
3/31/99 5.62 1.96
4/1/99 5.67 1.96
4/5/99 5.59 1.96
4/6/99 5.52 1.95
4/7/99 5.51 1.95
4/8/99 5.43 1.95
4/9/99 5.45 2
4/12/99 5.45 1.98
4/13/99 5.49 1.96
4/14/99 5.5 2.01
4/15/99 5.52 2.01
4/16/99 5.56 2.02
4/19/99 5.54 2
4/20/99 5.51 2
4/21/99 5.51 2
4/22/99 5.6 1.98
4/23/99 5.59 1.97
4/26/99 5.57 1.95
4/27/99 5.55 1.94
4/28/99 5.57 1.92
4/29/99 5.52 1.93
4/30/99 5.67 1.92
5/3/99 5.66 1.96
5/4/99 5.72 1.97
5/5/99 5.7 1.95
5/6/99 5.79 1.94
5/7/99 5.81 1.93
5/10/99 5.78 1.99
5/11/99 5.84 1.98
5/12/99 5.83 1.97
5/13/99 5.74 1.98
5/14/99 5.91 1.95
5/17/99 5.9 1.96
5/18/99 5.89 1.96
5/19/99 5.8 1.97
5/20/99 5.82 2.04
5/21/99 5.77 2.01
5/24/99 5.76 2.03
5/25/99 5.76 2.03
5/26/99 5.79 2.02
5/27/99 5.84 2.02
5/28/99 5.84 2.04
6/1/99 5.92 2.07
6/2/99 5.93 2.1
6/3/99 5.94 2.07
6/4/99 5.96 2.07
6/7/99 5.96 2.07
6/8/99 5.99 2.06
6/9/99 6.01 2.05
6/10/99 6.04 2.05
6/11/99 6.14 2.05
6/14/99 6.1 2.01
6/15/99 6.1 2.03
6/16/99 6.07 2.05
6/17/99 5.95 2.06
6/28/99 5.97 2.07
6/21/99 6.03 2.07
6/22/99 6.06 2.09
6/23/99 6.12 2.08
6/24/99 6.16 2.05
6/25/99 6.15 2.09
6/28/99 6.1 2.11
B(5)-Page 12
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Performance
Daily From July 2, 1996 - July 2, 1999
- --------------------------------------------------------------------------------
Price / Volume Analysis
- --------------------------------------------------------------------------------
[LINE GRAPH]
Volume in
Date Thousands Share Price
- ---- --------- -----------
7/2/96 16 $13.13
7/3/96 7.5 13
7/5/96 22.1 13.13
7/8/96 44.7 13.38
7/9/96 39 13.38
7/10/96 31.9 13.38
7/11/96 51 13.38
7/12/96 30.4 13.63
7/15/96 49.7 13.25
7/16/96 38.6 13.38
7/17/96 23.4 13.38
7/18/96 7.4 13.25
7/19/96 24.2 13.38
7/22/96 13.6 13.25
7/23/96 28.4 13.25
7/24/96 3.7 13.13
7/25/96 13.9 13.25
7/26/96 17.8 13.25
7/29/96 18.8 13.13
7/30/96 32.4 13.25
7/31/96 15 13.25
8/1/96 35.2 13.63
8/2/96 114.4 13.5
8/5/96 92 13.75
8/6/96 50.2 14.25
8/7/96 60.2 14.63
8/8/96 44.1 14.5
8/9/96 17.8 14.38
8/12/96 70.9 14.25
8/13/96 48.5 14.25
8/14/96 98 14.38
8/15/96 78 14.38
8/16/96 22.6 14.5
8/19/96 71 15
8/20/96 71 15.13
8/21/96 62.2 15
8/22/96 124.5 15.5
8/23/96 31.9 15.38
8/26/96 57.2 15.63
8/27/96 120.1 15.88
8/28/96 90.3 16.25
8/29/96 196 16.25
8/30/96 96.7 16.38
9/3/96 43.8 16.13
9/4/96 63.6 16
9/5/96 71.8 16.38
9/6/96 72.1 16.5
9/9/96 33.5 16.25
9/10/96 102.6 17.13
9/11/96 204.4 16.75
9/12/96 47.1 16.75
9/13/96 38 16.63
9/16/96 40.6 16.5
9/17/96 51.8 16.25
9/18/96 22.5 16.25
9/19/96 27.8 15.88
9/20/96 35.1 16.25
9/23/96 47.3 16.38
9/24/96 36.2 16.63
9/25/96 25.4 16.75
9/26/96 24.4 16.25
9/27/96 21.7 16
9/30/96 24 16.38
10/1/96 39.7 16.38
10/2/96 35 15.88
10/3/96 26 15.75
10/4/96 47.7 16.13
10/7/96 25.3 16.25
10/8/96 32.3 16.25
10/9/96 37.4 15.75
10/10/96 35.8 15.88
10/11/96 10.5 16.25
10/14/96 14.9 15.88
10/15/96 23.4 15.88
10/16/96 44.6 15.75
10/17/96 27.4 15.88
10/18/96 6.9 15.88
10/21/96 30.8 15.63
10/22/96 19.4 15.63
10/23/96 10.7 15.75
10/24/96 2.9 15.88
10/25/96 8.8 15.75
10/28/96 15.4 15.5
10/29/96 21.9 15.25
10/30/96 7.6 15.25
10/31/96 19.7 15.5
11/1/96 6.5 15.25
11/4/96 21.3 15.63
11/5/96 21 16
11/6/96 19.5 16
11/7/96 15.2 16.25
11/8/96 25.1 16.13
11/11/96 7.8 16.13
11/12/96 12 15.88
11/13/96 7.7 15.75
11/14/96 20.1 15.38
11/15/96 157.4 15.63
11/18/96 15.1 15.88
11/19/96 13.9 15.88
11/20/96 6 15.5
11/21/96 21.3 15.13
11/22/96 21.3 15.25
11/25/96 27.8 15.63
11/26/96 18.8 15.5
11/27/96 14.5 15.25
11/29/96 10.8 15.25
12/2/96 18.2 15.13
12/3/96 25.1 15.63
12/4/96 26.3 15.63
12/5/96 39 15.5
12/6/96 14.2 15.13
12/9/96 29.3 15.38
12/10/96 11.2 15.38
12/11/96 14 15.25
12/12/96 20.4 14.88
12/13/96 10.3 14.75
12/16/96 10.8 15
12/17/96 11.9 15
12/18/96 21.9 15.25
12/19/96 24.5 15.38
12/20/96 13.6 15.5
12/23/96 18.3 15
12/24/96 5.9 15.25
12/26/96 38.6 15.38
12/27/96 7.2 15.38
12/30/96 20.5 15.63
12/31/96 16 15.5
1/2/97 34 15.38
1/3/97 26.3 15.5
1/6/97 41.2 15.75
1/7/97 15.6 15.63
1/8/97 55.3 15.13
1/9/97 27.8 15.38
1/10/97 61 15.88
1/13/97 36.4 16.25
1/14/97 49.4 16.38
1/15/97 106.9 16.5
1/16/97 26 16.38
1/17/97 35.9 16.88
1/20/97 21.7 16.75
1/21/97 34.3 16.63
1/22/97 27 16.38
1/23/97 42.1 16.38
1/24/97 29.9 16.5
1/27/97 46.5 16.5
1/28/97 32.8 16.75
1/29/97 48.5 17.13
1/30/97 90.2 17.25
1/31/97 58.7 17.5
2/3/97 69 17.75
2/4/97 16 17.75
2/5/97 79 17.25
2/6/97 15.5 17.13
2/7/97 9.5 17.38
2/10/97 65.9 17.38
2/11/97 24.7 17.5
2/12/97 38.4 17.38
2/13/97 41 17.75
2/14/97 22.2 17.75
2/18/97 47 17.75
2/19/97 50.6 17.88
2/20/97 103.9 18
2/21/97 41.7 18.13
2/24/97 131.5 18
2/25/97 20.5 18
2/26/97 28.5 17.25
2/27/97 104.4 17.38
2/28/97 52 18
3/3/97 76.4 18.25
3/4/97 54 18.38
3/5/97 32.7 18.13
3/6/97 12.7 17.75
3/7/97 14.8 17.5
3/10/97 114.8 16.88
3/11/97 28.9 16.88
3/12/97 15.9 16.63
3/13/97 21.5 16.25
3/14/97 28.2 16.5
3/17/97 11.7 16.13
3/18/97 25.2 16.75
3/19/97 7.5 16.5
3/20/97 11.3 16
3/21/97 20.4 16.13
3/24/97 18.3 16.63
3/25/97 16.2 16
3/26/97 29.5 16.13
3/27/97 61.7 17
3/31/97 59.3 17.13
4/1/97 73 17.38
4/2/97 140.1 17.5
4/3/97 45 17.13
4/4/97 24.3 16.88
4/7/97 38 17.38
4/8/97 37.7 17.25
4/9/97 29.8 17.88
4/10/97 14.2 17.38
4/11/97 9.8 17.13
4/14/97 15.9 17.25
4/15/97 46.5 17.5
4/16/97 25 17.13
4/17/97 11 16.88
4/18/97 52.6 17.38
4/21/97 16.2 17.75
4/22/97 13.3 17.63
4/23/97 11.4 17.38
4/24/97 17.9 17
4/25/97 18.1 16.63
4/28/97 10.8 16.75
4/29/97 4.6 16.5
4/30/97 24.1 16.38
5/1/97 15.1 16.63
5/2/97 28 17.63
5/5/97 25.9 18
5/6/97 38.2 18
5/7/97 23.3 17.88
5/8/97 34 18
5/9/97 19.9 18.13
5/12/97 25.7 18
5/13/97 40.4 18
5/14/97 27.9 18.13
5/15/97 23.6 18
5/16/97 23.4 18
5/19/97 42.9 18.38
5/20/97 21.3 18
5/21/97 7.4 18
5/22/97 25.3 17.88
5/23/97 39.6 18.13
5/27/97 18.3 18
5/28/97 16.6 18
5/29/97 48.8 18
5/30/97 49.3 18
6/2/97 88.7 17.5
6/3/97 107.7 17.38
6/4/97 50.5 17.63
6/5/97 20 17.38
6/6/97 13.5 17.63
6/9/97 11 17.88
6/10/97 13.2 17.38
6/11/97 5.3 17.63
6/12/97 8.5 17.25
6/13/97 14.7 17.75
6/16/97 22 17.38
6/17/97 17.2 17.5
6/18/97 10.5 17.75
6/19/97 81.3 17.63
6/20/97 60.3 17.38
6/23/97 56 17.25
6/24/97 38.7 17.88
6/25/97 36.7 17.75
6/26/97 87.2 17.56
6/27/97 22.9 17.5
6/30/97 233.8 19.38
7/1/97 75.9 18.81
7/2/97 83.9 18.38
7/3/97 64.8 17.88
7/7/97 92.3 17.63
7/8/97 82.2 17.25
7/9/97 43.8 17.31
7/10/97 40.6 17.44
7/11/97 8.9 17.38
7/14/97 95.3 17.75
7/15/97 30.6 18.31
7/16/97 62.8 19
7/17/97 40.2 19.25
7/18/97 30 19
7/21/97 66 19.06
7/22/97 49.3 19.25
7/23/97 127.2 19.63
7/24/97 65 19.63
7/25/97 63.4 19.63
7/28/97 30.2 19.19
7/29/97 13.4 19.06
7/30/97 13.6 19.25
7/31/97 20.6 19
8/1/97 24.6 19.25
8/4/97 7.8 19.19
8/5/97 32.7 19.19
8/6/97 47.2 19.25
8/7/97 20.8 19.19
8/8/97 16.3 19.06
8/11/97 44.8 18.94
8/12/97 21.5 18.56
8/13/97 30 17.75
8/14/97 44 17.63
8/15/97 18.1 17.44
8/18/97 53.1 17.25
8/19/97 25.2 17.19
8/20/97 38.5 17.13
8/21/97 33.3 17
8/22/97 40.8 17.19
8/25/97 46.4 17.25
8/26/97 44.2 18
8/27/97 24.6 18.38
8/28/97 19.4 18.63
8/29/97 58.1 17.88
9/2/97 21.1 18.31
9/3/97 29.8 18
9/4/97 82.5 17.56
9/5/97 44.1 18.63
9/8/97 39.2 18.69
9/9/97 21.6 18.75
9/10/97 22 18.75
9/11/97 19.7 18.69
9/12/97 22.7 19
9/15/97 10.7 18.81
9/16/97 27.2 19.06
9/17/97 15.3 18.81
9/18/97 10.5 18.75
9/19/97 17.4 18.63
9/22/97 19.1 18.56
9/23/97 20.8 18.94
9/24/97 13.3 18.38
9/25/97 34.8 18
9/26/97 32.7 18.19
9/29/97 17.9 18.56
9/30/97 30.2 18.63
10/1/97 12.3 18.81
10/2/97 14.2 19
10/3/97 24.2 18.56
10/6/97 15.1 18.88
10/7/97 16.3 18.75
10/8/97 11.3 18.81
10/9/97 18.3 19.06
10/10/97 45.7 19.06
10/13/97 16.1 19.06
10/14/97 13.9 19.06
10/15/97 10.2 19.13
10/16/97 15.9 18.69
10/17/97 38.8 18.19
10/20/97 16.9 18.25
10/21/97 9.6 18.25
10/22/97 15.4 18.25
10/23/97 16.1 18.06
10/24/97 12.9 18.31
10/27/97 25.2 17
10/28/97 72.7 16.88
10/29/97 41.7 16.88
10/30/97 51.2 16.44
10/31/97 32.9 16.56
11/3/97 33.3 17.06
11/4/97 19.2 17.06
11/5/97 3.9 17.06
11/6/97 18.7 17
11/7/97 19 17.19
11/10/97 10.4 17.38
11/11/97 19.6 17.31
11/12/97 15.7 17.06
11/13/97 27 17.13
11/14/97 20.8 17.63
11/17/97 15.6 17.56
11/18/97 6 17.5
11/19/97 24.3 17.63
11/20/97 21.8 17.88
11/21/97 7.2 17.56
11/24/97 16.6 17.56
11/25/97 11.3 17.63
11/26/97 9.8 17.94
11/28/97 10.9 18
12/1/97 30.9 18.56
12/2/97 17.1 18.56
12/3/97 14.4 18.69
12/4/97 11.8 18.44
12/5/97 11.4 18.44
12/8/97 22.5 18.63
12/9/97 14 18.75
12/10/97 28.8 18.75
12/11/97 16.9 18.94
12/12/97 27.1 19.06
12/15/97 23.9 19
12/16/97 60.1 18.63
12/17/97 15.5 18.63
12/18/97 14.7 18.75
12/19/97 28.4 18.81
12/22/97 18.5 19.06
12/23/97 11.5 19.19
12/24/97 11.8 19.06
12/26/97 26.2 18.81
12/29/97 5.7 18.94
12/30/97 39.7 19.5
12/31/97 15.3 19.56
1/2/98 23.6 19.13
1/5/98 18.6 18.75
1/6/98 25.5 18.81
1/7/98 36.2 18.94
1/8/98 23.3 18.63
1/9/98 31.1 18.88
1/12/98 14.9 18.56
1/13/98 20.4 18.75
1/14/98 84.9 18.69
1/15/98 78.3 18.56
1/16/98 58.4 18.5
1/20/98 50.4 18.5
1/21/98 12.6 18.31
1/22/98 22.1 18.5
1/23/98 10.2 18.5
1/26/98 19.3 18.31
1/27/98 41.1 18.25
1/28/98 24 18.38
1/29/98 28.6 18.69
1/30/98 466.3 18.13
2/2/98 30.5 18.69
2/3/98 49.5 19.06
2/4/98 60.2 19.88
2/5/98 15.2 19.56
2/6/98 28.2 19.81
2/9/98 117.2 19.56
2/10/98 20.8 19.31
2/11/98 38.8 18.75
2/12/98 38.3 19.19
2/13/98 62 19.56
2/17/98 20.7 19.44
2/18/98 41.6 19.25
2/19/98 49 19.56
2/20/98 37.3 19.13
2/23/98 40.9 19
2/24/98 40.1 19.31
2/25/98 28.7 19.5
2/26/98 13.9 19.31
2/27/98 18.6 19.63
3/2/98 29.7 19.44
3/3/98 13.3 19.31
3/4/98 3.2 19.13
3/5/98 38 18.94
3/6/98 23.6 19.06
3/9/98 25.1 19
3/10/98 19.8 19
3/11/98 31.6 18.56
3/12/98 23.3 18.38
3/13/98 46.4 18.06
3/16/98 29 18.38
3/17/98 25.2 18.19
3/18/98 56.1 17.94
3/19/98 38.9 18.06
3/20/98 36.7 18.31
3/23/98 18.6 18.13
3/24/98 13.6 18.44
3/25/98 20.5 18.25
3/26/98 53.4 18
3/27/98 52.3 17.88
3/30/98 61.8 17.88
3/31/98 12.9 18.06
4/1/98 38.4 18.31
4/2/98 59.8 18.13
4/3/98 67.3 18.06
4/6/98 45.1 18.06
4/7/98 53.5 18.25
4/8/98 27 18.13
4/9/98 30.1 18.25
4/13/98 46.1 18.38
4/14/98 57 18.25
4/15/98 12.4 18.06
4/16/98 24.6 17.94
4/17/98 22.7 17.94
4/20/98 51.4 17.63
4/21/98 31.8 17.63
4/22/98 51.4 17.5
4/23/98 37.5 16.88
4/24/98 30.8 16.81
4/27/98 38.4 16.81
4/28/98 24.7 17.13
4/29/98 20.7 17.19
4/30/98 36 17.31
5/1/98 12.9 17.19
5/4/98 44.6 17.44
5/5/98 39.7 17.44
5/6/98 45.5 17.38
5/7/98 16.1 17.25
5/8/98 31.3 17.38
5/11/98 32 17.25
5/12/98 75.1 17.06
5/13/98 67.1 16.63
5/14/98 40.6 16.5
5/15/98 66.5 16.56
5/18/98 28.6 16.13
5/19/98 29.2 16.31
5/20/98 29.7 16.31
5/21/98 55.5 16.25
5/22/98 57.2 16.5
5/26/98 33.2 16.13
5/27/98 75.3 15.94
5/28/98 28.2 16
5/29/98 54.5 16.06
6/1/98 54.7 16.25
6/2/98 37.4 16.38
6/3/98 16.4 16.5
6/4/98 15.9 16.75
6/5/98 26.6 16.94
6/8/98 37.2 17.19
6/9/98 38.9 18
6/10/98 41.2 18
6/11/98 24.2 17.75
6/12/98 14.3 17.63
6/15/98 23.4 17.88
6/16/98 17.8 17.88
6/17/98 36.6 17.75
6/18/98 23.1 17.38
6/19/98 47.7 17.56
6/22/98 6.8 17.69
6/23/98 9.3 17.69
6/24/98 8.2 17.56
6/25/98 50 17.44
6/26/98 80.4 17.63
6/29/98 89.3 17.88
6/30/98 105.8 18
7/1/98 45.6 18.38
7/2/98 24.6 18.5
7/6/98 37.7 18.38
7/7/98 30.7 18.75
7/8/98 13.9 18.63
7/9/98 22.2 18.94
7/10/98 10.8 18.88
7/13/98 12 18.88
7/14/98 16.7 18.88
7/15/98 27.2 18.88
7/16/98 35.6 19
7/17/98 20.9 19.13
7/20/98 59.3 19
7/21/98 45.2 18.75
7/22/98 72.4 17.88
7/23/98 28.6 18.25
7/24/98 17.7 18.5
7/27/98 33.6 18.63
7/28/98 14.2 18.5
7/29/98 36 18.5
7/30/98 31 18.81
7/31/98 17.4 18.56
8/3/98 42.1 18.31
8/4/98 28.2 17.75
8/5/98 44.8 17.81
8/6/98 17.8 18.19
8/7/98 53.4 18.19
8/10/98 14.7 17.94
8/11/98 45.1 17.88
8/12/98 91 17.81
8/13/98 28.1 17.81
8/14/98 15.6 17.75
8/17/98 20.5 17.69
8/18/98 41.1 17.5
8/19/98 25.1 17.5
8/20/98 28.2 17.38
8/21/98 28.3 17.5
8/24/98 37.1 17.69
8/25/98 33.4 17.63
8/26/98 21.6 17.56
8/27/98 24.9 17.69
8/28/98 24.5 17.69
8/31/98 26.1 17.75
9/1/98 46.5 17.56
9/2/98 41.9 17.56
9/3/98 39.2 17.5
9/4/98 17.1 17.63
9/8/98 28.4 17.81
9/9/98 21 17.44
9/10/98 73 17.19
9/11/98 40.7 17.06
9/14/98 24.7 17
9/15/98 25 17
9/16/98 13.3 16.81
9/17/98 63.8 16.69
9/18/98 75.1 16.56
9/21/98 25 16.63
9/22/98 63.8 16.5
9/23/98 55.3 16.81
9/24/98 29.4 16.94
9/25/98 22.7 17
9/28/98 39.4 17
9/29/98 44.7 17
9/30/98 10.7 17
10/1/98 47.5 16.56
10/2/98 27.9 16.75
10/5/98 82.6 17.94
10/6/98 48.9 18.31
10/7/98 39.1 18.25
10/8/98 47.7 18.56
10/9/98 49.7 18.44
10/12/98 12.4 18.25
10/13/98 19.8 18.13
10/14/98 19.6 18.56
10/15/98 35.1 18.5
10/16/98 31.1 18.69
10/19/98 22.6 18.69
10/20/98 29 19.06
10/21/98 49.1 19.44
10/22/98 60.9 19.56
10/23/98 51.7 19.56
10/26/98 25.7 19.5
10/27/98 54.8 19.38
10/28/98 17 19.06
10/29/98 20.9 19.13
10/30/98 80.9 19.38
11/2/98 24.8 19.63
11/3/98 26.5 19.75
11/4/98 16 19.56
11/5/98 21.5 19.75
11/6/98 24.8 19.63
11/9/98 33.5 19.94
11/10/98 48.1 19.88
11/11/98 35.6 19.81
11/12/98 22.6 19.94
11/13/98 34.7 19.31
11/16/98 27.7 20
11/17/98 26.6 20
11/18/98 32.5 20.06
11/19/98 33.8 20.44
11/20/98 23.2 20.13
11/23/98 29.3 20.06
11/24/98 57.4 20
11/25/98 21.7 20.06
11/27/98 12.4 20.13
11/30/98 31.4 20.75
12/1/98 48.8 21
12/2/98 37.6 20.94
12/3/98 33.8 20.44
12/4/98 28.6 21
12/7/98 65 22.38
12/8/98 97.9 22.56
12/9/98 28 22
12/10/98 46.7 21.44
12/11/98 22.3 21.69
12/14/98 24.7 21.44
12/15/98 37.1 21.38
12/16/98 15 21.06
12/17/98 43.2 20.56
12/18/98 43.3 21.31
12/21/98 109 22.19
12/22/98 101.6 23.94
12/23/98 60.1 23.75
12/24/98 26.3 23.44
12/28/98 35.9 23.88
12/29/98 25.9 23.94
12/30/98 43.3 24
12/31/98 31.9 23.94
1/4/99 73.1 23.63
1/5/99 87.4 23.31
1/6/99 50.2 23.06
1/7/99 47 22.75
1/8/99 78.8 22.75
1/11/99 58.5 22.94
1/12/99 26.1 22.63
1/13/99 51.5 22.69
1/14/99 25.8 22.31
1/15/99 31 22
1/19/99 31.9 22.38
1/20/99 24.6 22.88
1/21/99 27.3 22.5
1/22/99 19.3 22.94
1/25/99 26.8 22.44
1/26/99 14.6 22.5
1/27/99 34.7 21.75
1/28/99 16.8 22.06
1/29/99 28.4 21.31
2/1/99 33.8 21.88
2/2/99 21.3 21.44
2/3/99 25.2 21.5
2/4/99 20.4 21.19
2/5/99 26 20.5
2/8/99 39.7 20.5
2/9/99 42.1 21.06
2/10/99 32.1 20.19
2/11/99 32.2 20.5
2/12/99 36.7 19.94
2/16/99 35.4 19.63
2/17/99 28.7 19.69
2/18/99 30.8 19.63
2/19/99 26.3 19.56
2/22/99 24.5 19.69
2/23/99 31.2 20
2/24/99 50.3 19.56
2/25/99 28.4 19.44
2/26/99 52.9 19.25
3/1/99 63.9 19.06
3/2/99 50.3 19.06
3/3/99 44.4 18.63
3/4/99 47.9 18.81
3/5/99 21.1 19
3/8/99 18.9 19.63
3/9/99 20.2 19.06
3/10/99 44.4 19
3/11/99 38.1 19
3/12/99 29.6 19.44
3/15/99 18 19.63
3/16/99 46.5 19.75
3/17/99 36.5 19.13
3/18/99 34.3 19.63
3/19/99 23.2 19.38
3/22/99 35 19.94
3/23/99 42.6 20.13
3/24/99 21.4 20
3/25/99 34 20.38
3/26/99 21.1 20.5
3/29/99 15.3 20.88
3/30/99 29.3 20.69
3/31/99 22.8 20.75
4/1/99 31.7 21.13
4/5/99 33.6 21.63
4/6/99 24.8 20.69
4/7/99 12.9 20.63
4/8/99 43.5 20.94
4/9/99 24.3 20.94
4/12/99 43 21.19
4/13/99 29.1 21.06
4/14/99 35.3 21.38
4/15/99 25.3 21.31
4/16/99 42.4 20.94
4/19/99 45.8 20.5
4/20/99 45.5 20.81
4/21/99 32.3 21
4/22/99 44.5 20.25
4/23/99 35.3 21.06
4/26/99 14 20.81
4/27/99 44.5 21
4/28/99 21.6 20.75
4/29/99 15.2 20.75
4/30/99 21.3 20.81
5/3/99 42.5 21.13
5/4/99 19 21.13
5/5/99 22.6 21.25
5/6/99 17.5 21.38
5/7/99 23.2 21.44
5/10/99 49.8 23.13
5/11/99 35.2 22.44
5/12/99 24.2 21.88
5/13/99 31 21.56
5/14/99 12.3 21
5/17/99 50 20.81
5/18/99 29.8 20.88
5/19/99 27 21.19
5/20/99 50.9 21.81
5/21/99 21.2 22.25
5/24/99 35.6 22.5
5/25/99 8.8 22.44
5/26/99 17.9 22.31
5/27/99 31.3 22
5/28/99 35.3 21.75
6/1/99 32.5 22.44
6/2/99 114.9 23.25
6/3/99 32.8 22.31
6/4/99 18.5 21.63
6/7/99 14.4 22.5
6/8/99 30.4 21.88
6/9/99 22.4 22
6/10/99 20.8 22.06
6/11/99 18.8 21.75
6/14/99 22 21.13
6/15/99 37.6 21.31
6/16/99 21 21.94
6/17/99 26.8 22.13
6/18/99 58.2 21.94
6/21/99 20 21.56
6/22/99 24.6 22.13
6/23/99 22.5 21.38
6/24/99 18.2 21.75
6/25/99 11 21.69
6/28/99 50 22.81
6/29/99 21.3 22.63
6/30/99 49.1 22.69
7/1/99 27.3 22.63
7/2/99 28.4 22.63
- --------------------------------------------------------------------------------
Indexed Price Performance
- --------------------------------------------------------------------------------
[LINE GRAPH]
Date Knicks U.S. Water Index (1)
- ---- ------ --------------------
7/2/96 100 100
7/3/96 99.05 99.89
7/5/96 100 99.55
7/8/96 101.9 99.9
7/9/96 101.9 99.97
7/10/96 101.9 100.4
7/11/96 101.9 99.52
7/12/96 103.81 100.09
7/15/96 100.95 99.68
7/16/96 101.9 99.56
7/17/96 101.9 98.9
7/18/96 100.95 98.72
7/19/96 101.9 99.46
7/22/96 100.95 98.55
7/23/96 100.95 97.7
7/24/96 100 98.06
7/25/96 100.95 97.91
7/26/96 100.95 98.75
7/29/96 100 98.03
7/30/96 100.95 97.45
7/31/96 100.95 97.73
8/1/96 103.81 98.51
8/2/96 102.86 99.1
8/5/96 104.76 99.22
8/6/96 108.57 100
8/7/96 111.43 100.37
8/8/96 110.48 100.72
8/9/96 109.52 100.76
8/12/96 108.57 101.54
8/13/96 108.57 101.82
8/14/96 109.52 102.24
8/15/96 109.52 102.22
8/16/96 110.48 103.41
8/19/96 114.29 105.78
8/20/96 115.24 105.4
8/21/96 114.29 105.67
8/22/96 118.1 105.23
8/23/96 117.14 106
8/26/96 119.05 106.69
8/27/96 120.95 106.04
8/28/96 123.81 105.7
8/29/96 123.81 104.49
8/30/96 124.76 103.6
9/3/96 122.86 104.82
9/4/96 121.9 105.25
9/5/96 124.76 105.11
9/6/96 125.71 105.4
9/9/96 123.81 105.93
9/10/96 130.48 105.77
9/11/96 127.62 105.85
9/12/96 127.62 106.16
9/13/96 126.67 106.81
9/16/96 125.71 105.9
9/17/96 123.81 106
9/18/96 123.81 105.77
9/19/96 120.95 104.75
9/20/96 123.81 104.53
9/23/96 124.76 105.08
9/24/96 126.67 106.04
9/25/96 127.62 107.38
9/26/96 123.81 106.65
9/27/96 121.9 107.95
9/30/96 124.76 107.87
10/1/96 124.76 108.32
10/2/96 120.95 108.31
10/3/96 120 108.5
10/4/96 122.86 108.67
10/7/96 123.81 108.34
10/8/96 123.81 107.24
10/9/96 120 107.65
10/10/96 120.95 108.11
10/11/96 123.81 107.28
10/14/96 120.95 107.32
10/15/96 120.95 107.37
10/16/96 120 107.21
10/17/96 120.95 107.37
10/18/96 120.95 106.64
10/21/96 119.05 106.35
10/22/96 119.05 106.73
10/23/96 120 106.75
10/24/96 120.95 107.02
10/25/96 120 107.02
10/28/96 118.1 107.62
10/29/96 116.19 107.33
10/30/96 116.19 106.86
10/31/96 118.1 107.37
11/1/96 116.19 107.15
11/4/96 119.05 107.35
11/5/96 121.9 107.21
11/6/96 121.9 106.94
11/7/96 123.81 107.46
11/8/96 122.86 107.03
11/11/96 122.86 108.03
11/12/96 120.95 107.9
11/13/96 120 107.38
11/14/96 117.14 107.16
11/15/96 119.05 107.79
11/18/96 120.95 107.78
11/19/96 120.95 108.74
11/20/96 118.1 108.38
11/21/96 115.24 108.93
11/22/96 116.19 109.25
11/25/96 119.05 110.28
11/26/96 118.1 111.02
11/27/96 116.19 111.49
11/29/96 116.19 111.34
12/2/96 115.24 111.24
12/3/96 119.05 112.55
12/4/96 119.05 113.02
12/5/96 118.1 112.13
12/6/96 115.24 111.78
12/9/96 117.14 111.99
12/10/96 117.14 111.3
12/11/96 116.19 111.3
12/12/96 113.33 110.66
12/13/96 112.38 110.74
12/16/96 114.29 110.86
12/17/96 114.29 110.53
12/18/96 116.19 111.04
12/19/96 117.14 112.32
12/20/96 118.1 114.23
12/23/96 114.29 114.19
12/24/96 116.19 115.31
12/26/96 117.14 115.32
12/27/96 117.14 114.85
12/30/96 119.05 115.09
12/31/96 118.1 114.41
1/2/97 117.14 113.36
1/3/97 118.1 114.53
1/6/97 120 113.96
1/7/97 119.05 114.43
1/8/97 115.24 114.42
1/9/97 117.14 113.91
1/10/97 120.95 114.58
1/13/97 123.81 114.51
1/14/97 124.76 114.78
1/15/97 125.71 114.69
1/16/97 124.76 114.38
1/17/97 128.57 114.48
1/20/97 127.62 114.32
1/21/97 126.67 115.31
1/22/97 124.76 116.46
1/23/97 124.76 117.02
1/24/97 125.71 116.39
1/27/97 125.71 116.43
1/28/97 127.62 117.67
1/29/97 130.48 117.25
1/30/97 131.43 116.82
1/31/97 133.33 117.11
2/3/97 135.24 116.53
2/4/97 135.24 116.85
2/5/97 131.43 116.4
2/6/97 130.48 116.55
2/7/97 132.38 116.26
2/10/97 132.38 115.56
2/11/97 133.33 115.64
2/12/97 132.38 117.35
2/13/97 135.24 117.94
2/14/97 135.24 116.8
2/18/97 135.24 117.16
2/19/97 136.19 116.89
2/20/97 137.14 117.16
2/21/97 138.1 117.61
2/24/97 137.14 118.96
2/25/97 137.14 118.85
2/26/97 131.43 118.7
2/27/97 132.38 118.37
2/28/97 137.14 117.94
3/3/97 139.05 118.9
3/4/97 140 117.96
3/5/97 138.1 118
3/6/97 135.24 117.56
3/7/97 133.33 118.39
3/10/97 128.57 119.48
3/11/97 128.57 120.08
3/12/97 126.67 118.99
3/13/97 123.81 118.11
3/14/97 125.71 116.78
3/17/97 122.86 116.23
3/18/97 127.62 114.67
3/19/97 125.71 114.81
3/20/97 121.9 114.76
3/21/97 122.86 115.17
3/24/97 126.67 115.38
3/25/97 121.9 114.88
3/26/97 122.86 114.25
3/27/97 129.52 114.22
3/31/97 130.48 112.1
4/1/97 132.38 112.36
4/2/97 133.33 113.15
4/3/97 130.48 113.51
4/4/97 128.57 114.02
4/7/97 132.38 114.85
4/8/97 131.43 115.45
4/9/97 136.19 114.99
4/10/97 132.38 115.38
4/11/97 130.48 115.42
4/14/97 131.43 114.9
4/15/97 133.33 114.94
4/16/97 130.48 114.4
4/17/97 128.57 114.03
4/18/97 132.38 115.25
4/21/97 135.24 114.33
4/22/97 134.29 114.99
4/23/97 132.38 114.19
4/24/97 129.52 114.47
4/25/97 126.67 115.66
4/28/97 127.62 116.23
4/29/97 125.71 116.22
4/30/97 124.76 115.61
5/1/97 126.67 115.8
5/2/97 134.29 117.05
5/5/97 137.14 118.68
5/6/97 137.14 118.48
5/7/97 136.19 117.45
5/8/97 137.14 116.45
5/9/97 138.1 116.6
5/12/97 137.14 116.55
5/13/97 137.14 116.4
5/14/97 138.1 117.16
5/15/97 137.14 116.92
5/16/97 137.14 118.54
5/19/97 140 119.15
5/20/97 137.14 118.33
5/21/97 137.14 118.41
5/22/97 136.19 117.21
5/23/97 138.1 117.48
5/27/97 137.14 118.34
5/28/97 137.14 118.51
5/29/97 137.14 118.59
5/30/97 137.14 119.33
6/2/97 133.33 120.28
6/3/97 132.38 119.7
6/4/97 134.29 119.92
6/5/97 132.38 119.86
6/6/97 134.29 120.48
6/9/97 136.19 121.21
6/10/97 132.38 120.25
6/11/97 134.29 119.61
6/12/97 131.43 120.33
6/13/97 135.24 119.02
6/16/97 132.38 118.68
6/17/97 133.33 118.89
6/18/97 135.24 118.59
6/19/97 134.29 120.5
6/20/97 132.38 119.62
6/23/97 131.43 119.85
6/24/97 136.19 119.73
6/25/97 135.24 118.68
6/26/97 133.81 119.39
6/27/97 133.33 118.98
6/30/97 147.62 119.42
7/1/97 143.33 119.07
7/2/97 140 118.93
7/3/97 136.19 119.12
7/7/97 134.29 119.08
7/8/97 131.43 118.92
7/9/97 131.9 118.91
7/10/97 132.86 119.28
7/11/97 132.38 119.86
7/14/97 135.24 119.8
7/15/97 139.52 119.92
7/16/97 144.76 120.14
7/17/97 146.67 118.7
7/18/97 144.76 119.39
7/21/97 145.24 119.54
7/22/97 146.67 119.77
7/23/97 149.52 119.3
7/24/97 149.52 118.23
7/25/97 149.52 117.18
7/28/97 146.19 118.51
7/29/97 145.24 118.79
7/30/97 146.67 119.37
7/31/97 144.76 119.37
8/1/97 146.67 119.24
8/4/97 146.19 120.19
8/5/97 146.19 121.56
8/6/97 146.67 123.47
8/7/97 146.19 123.74
8/8/97 145.24 123.3
8/11/97 144.29 123.03
8/12/97 141.43 123.41
8/13/97 135.24 123.68
8/14/97 134.29 124.29
8/15/97 132.86 124.83
8/18/97 131.43 123.85
8/19/97 130.95 124.11
8/20/97 130.48 125.48
8/21/97 129.52 124.98
8/22/97 130.95 125.75
8/25/97 131.43 125.19
8/26/97 137.14 124.67
8/27/97 140 125.34
8/28/97 141.9 124.51
8/29/97 136.19 123.42
9/2/97 139.52 124.73
9/3/97 137.14 123.8
9/4/97 133.81 123.05
9/5/97 141.9 123.62
9/8/97 142.38 123.82
9/9/97 142.86 124.72
9/10/97 142.86 125.65
9/11/97 142.38 124.78
9/12/97 144.76 125.35
9/15/97 143.33 126.51
9/16/97 145.24 127.15
9/17/97 143.33 127.04
9/18/97 142.86 126.13
9/19/97 141.9 125.23
9/22/97 141.43 125.35
9/23/97 144.29 126.02
9/24/97 140 126.41
9/25/97 137.14 126
9/26/97 138.57 126.25
9/29/97 141.43 125.56
9/30/97 141.9 125.44
10/1/97 143.33 126.04
10/2/97 144.76 126.69
10/3/97 141.43 127.57
10/6/97 143.81 128.51
10/7/97 142.86 129.27
10/8/97 143.33 127.66
10/9/97 145.24 127.24
10/10/97 145.24 127.51
10/13/97 145.24 127.9
10/14/97 145.24 128.6
10/15/97 145.71 129.27
10/16/97 142.38 128.64
10/17/97 138.57 126.92
10/20/97 139.05 128.11
10/21/97 139.05 128.39
10/22/97 139.05 127.8
10/23/97 137.62 127.68
10/24/97 139.52 128.02
10/27/97 129.52 126.66
10/28/97 128.57 127.2
10/29/97 128.57 129.23
10/30/97 125.24 128.64
10/31/97 126.19 128.82
11/3/97 130 129.8
11/4/97 130 129.32
11/5/97 130 129.73
11/6/97 129.52 130.07
11/7/97 130.95 129.71
11/10/97 132.38 129.43
11/11/97 131.9 130.36
11/12/97 130 129.98
11/13/97 130.48 130.72
11/14/97 134.29 131.91
11/17/97 133.81 133.66
11/18/97 133.33 134.43
11/19/97 134.29 135.15
11/20/97 136.19 138.38
11/21/97 133.81 138.34
11/24/97 133.81 137.55
11/25/97 134.29 137.03
11/26/97 136.67 137.24
11/28/97 137.14 137.42
12/1/97 141.43 139.77
12/2/97 141.43 140.53
12/3/97 142.38 142.11
12/4/97 140.48 142.57
12/5/97 140.48 141.65
12/8/97 141.9 142.14
12/9/97 142.86 139.87
12/10/97 142.86 139.74
12/11/97 144.29 139.01
12/12/97 145.24 138.05
12/15/97 144.76 138.56
12/16/97 141.9 138.22
12/17/97 141.9 139.1
12/18/97 142.86 141.36
12/19/97 143.33 143.45
12/22/97 145.24 146.3
12/23/97 146.19 146.1
12/24/97 145.24 147.84
12/26/97 143.33 147.86
12/29/97 144.29 148.09
12/30/97 148.57 150.46
12/31/97 149.05 151.87
1/2/98 145.71 150.9
1/5/98 142.86 148.45
1/6/98 143.33 147.76
1/7/98 144.29 148.89
1/8/98 141.9 147.94
1/9/98 143.81 146.92
1/12/98 141.43 147.3
1/13/98 142.86 146.41
1/14/98 142.38 147.28
1/15/98 141.43 147.8
1/16/98 140.95 149.2
1/20/98 140.95 150.03
1/21/98 139.52 149.7
1/22/98 140.95 149.17
1/23/98 140.95 150.17
1/26/98 139.52 149.98
1/27/98 139.05 148.27
1/28/98 140 149.62
1/29/98 142.38 148.84
1/30/98 138.1 147.31
2/2/98 142.38 144.67
2/3/98 145.24 142.86
2/4/98 151.43 145.65
2/5/98 149.05 147.06
2/6/98 150.95 146.1
2/9/98 149.05 145.29
2/10/98 147.14 146.51
2/11/98 142.86 145.88
2/12/98 146.19 147.78
2/13/98 149.05 147.2
2/17/98 148.1 148.15
2/18/98 146.67 148.35
2/19/98 149.05 149.43
2/20/98 145.71 149.33
2/23/98 144.76 149.76
2/24/98 147.14 151.24
2/25/98 148.57 152.8
2/26/98 147.14 152.7
2/27/98 149.52 151.09
3/2/98 148.1 151.53
3/3/98 147.14 151.38
3/4/98 145.71 149.96
3/5/98 144.29 147.69
3/6/98 145.24 147.94
3/9/98 144.76 148.32
3/10/98 144.76 149.16
3/11/98 141.43 150.07
3/12/98 140 149.93
3/13/98 137.62 149.35
3/16/98 140 149.42
3/17/98 138.57 150.22
3/18/98 136.67 152.3
3/19/98 137.62 152.55
3/20/98 139.52 152.05
3/23/98 138.1 152.87
3/24/98 140.48 154.43
3/25/98 139.05 153.99
3/26/98 137.14 152.3
3/27/98 136.19 153.24
3/30/98 136.19 152.66
3/31/98 137.62 152.64
4/1/98 139.52 153.21
4/2/98 138.1 155.24
4/3/98 137.62 154.13
4/6/98 137.62 152.86
4/7/98 139.05 152.71
4/8/98 138.1 153.1
4/9/98 139.05 152.26
4/13/98 140 150.79
4/14/98 139.05 151.41
4/15/98 137.62 149.93
4/16/98 136.67 148.96
4/17/98 136.67 149.53
4/20/98 134.29 148.02
4/21/98 134.29 146.71
4/22/98 133.33 146.12
4/23/98 128.57 146.43
4/24/98 128.1 144.73
4/27/98 128.1 144.67
4/28/98 130.48 143.62
4/29/98 130.95 144.4
4/30/98 131.9 146.72
5/1/98 130.95 146.97
5/4/98 132.86 148.23
5/5/98 132.86 146.42
5/6/98 132.38 146.53
5/7/98 131.43 147.35
5/8/98 132.38 146.54
5/11/98 131.43 146.45
5/12/98 130 146.34
5/13/98 126.67 145.13
5/14/98 125.71 144.49
5/15/98 126.19 144.28
5/18/98 122.86 144.73
5/19/98 124.29 145.55
5/20/98 124.29 144.71
5/21/98 123.81 143.42
5/22/98 125.71 144.18
5/26/98 122.86 141.52
5/27/98 121.43 140.11
5/28/98 121.9 141.89
5/29/98 122.38 142.14
6/1/98 123.81 143
6/2/98 124.76 143.64
6/3/98 125.71 142.65
6/4/98 127.62 143.2
6/5/98 129.05 144.2
6/8/98 130.95 145.96
6/9/98 137.14 145.56
6/10/98 137.14 145.5
6/11/98 135.24 145.72
6/12/98 134.29 145
6/15/98 136.19 144.84
6/16/98 136.19 145
6/17/98 135.24 145.83
6/18/98 132.38 145.34
6/19/98 133.81 144.72
6/22/98 134.76 145.35
6/23/98 134.76 146.13
6/24/98 133.81 146.26
6/25/98 132.86 146.56
6/26/98 134.29 147.16
6/29/98 136.19 148.88
6/30/98 137.14 152.8
7/1/98 140 152.28
7/2/98 140.95 153.74
7/6/98 140 153.97
7/7/98 142.86 153.15
7/8/98 141.9 152.57
7/9/98 144.29 153.64
7/10/98 143.81 152.76
7/13/98 143.81 151.72
7/14/98 143.81 153.47
7/15/98 143.81 153.9
7/16/98 144.76 154.79
7/17/98 145.71 154.98
7/20/98 144.76 155.08
7/21/98 142.86 153.91
7/22/98 136.19 152.36
7/23/98 139.05 150.08
7/24/98 140.95 150.19
7/27/98 141.9 149.11
7/28/98 140.95 149.6
7/29/98 140.95 150.89
7/30/98 143.33 152.13
7/31/98 141.43 150.1
8/3/98 139.52 148.49
8/4/98 135.24 146.91
8/5/98 135.71 147.41
8/6/98 138.57 149.75
8/7/98 138.57 151
8/10/98 136.67 149.69
8/11/98 136.19 149.02
8/12/98 135.71 150.97
8/13/98 135.71 150.53
8/14/98 135.24 152.09
8/17/98 134.76 152.61
8/18/98 133.33 155.39
8/19/98 133.33 153.63
8/20/98 132.38 152.21
8/21/98 133.33 152.44
8/24/98 134.76 154.89
8/25/98 134.29 156.38
8/26/98 133.81 155.37
8/27/98 134.76 152.5
8/28/98 134.76 152.82
8/31/98 135.24 149.65
9/1/98 133.81 153.45
9/2/98 133.81 151.81
9/3/98 133.33 151.45
9/4/98 134.29 151.32
9/8/98 135.71 151.7
9/9/98 132.86 151.24
9/10/98 130.95 150.85
9/11/98 130 151.01
9/14/98 129.52 150.7
9/15/98 129.52 152.35
9/16/98 128.1 153.93
9/17/98 127.14 154.8
9/18/98 126.19 154.71
9/21/98 126.67 153
9/22/98 125.71 155.66
9/23/98 128.1 155.75
9/24/98 129.05 155.7
9/25/98 129.52 155.4
9/28/98 129.52 157.54
9/29/98 129.52 160.08
9/30/98 129.52 160.68
10/1/98 126.19 161.45
10/2/98 127.62 161.33
10/5/98 136.67 164.63
10/6/98 139.52 166.35
10/7/98 139.05 165.32
10/8/98 141.43 163.85
10/9/98 140.48 160.63
10/12/98 139.05 161.74
10/13/98 138.1 160.32
10/14/98 141.43 162.59
10/15/98 140.95 161.34
10/16/98 142.38 162.46
10/19/98 142.38 163.49
10/20/98 145.24 162.7
10/21/98 148.1 163.57
10/22/98 149.05 161.72
10/23/98 149.05 162.32
10/26/98 148.57 163.77
10/27/98 147.62 162.21
10/28/98 145.24 163.44
10/29/98 145.71 163.41
10/30/98 147.62 164.56
11/2/98 149.52 166.9
11/3/98 150.48 168.19
11/4/98 149.05 170.61
11/5/98 150.48 170.65
11/6/98 149.52 171.58
11/9/98 151.9 169.52
11/10/98 151.43 172.9
11/11/98 150.95 173.44
11/12/98 151.9 172.94
11/13/98 147.14 170.97
11/16/98 152.38 170.95
11/17/98 152.38 172.44
11/18/98 152.86 170.98
11/19/98 155.71 171.29
11/20/98 153.33 170.64
11/23/98 152.86 172.95
11/24/98 152.38 172.26
11/25/98 152.86 172.76
11/27/98 153.33 171.95
11/30/98 158.1 171.16
12/1/98 160 170.97
12/2/98 159.52 169.99
12/3/98 155.71 170.22
12/4/98 160 171.74
12/7/98 170.48 172.46
12/8/98 171.9 175.36
12/9/98 167.62 174.93
12/10/98 163.33 175.31
12/11/98 165.24 174.98
12/14/98 163.33 172.95
12/15/98 162.86 173.28
12/16/98 160.48 172.17
12/17/98 156.67 173.03
12/18/98 162.38 174.16
12/21/98 169.05 175.96
12/22/98 182.38 176.43
12/23/98 180.95 178.96
12/24/98 178.57 178.19
12/28/98 181.9 179.03
12/29/98 182.38 178.2
12/30/98 182.86 179.4
12/31/98 182.38 180.53
1/4/99 180 179.9
1/5/99 177.62 179.29
1/6/99 175.71 178.52
1/7/99 173.33 177.61
1/8/99 173.33 178.7
1/11/99 174.76 178.43
1/12/99 172.38 177.97
1/13/99 172.86 175.38
1/14/99 170 175.86
1/15/99 167.62 176.29
1/19/99 170.48 176.14
1/20/99 174.29 175
1/21/99 171.43 172.8
1/22/99 174.76 171.84
1/25/99 170.95 171.29
1/26/99 171.43 170.36
1/27/99 165.71 168.57
1/28/99 168.1 169.65
1/29/99 162.38 168.27
2/1/99 166.67 166.51
2/2/99 163.33 165.5
2/3/99 163.81 167.21
2/4/99 161.43 166.33
2/5/99 156.19 165.17
2/8/99 156.19 164.09
2/9/99 160.48 163.64
2/10/99 153.81 163.42
2/11/99 156.19 163.13
2/12/99 151.9 161.72
2/16/99 149.52 161.7
2/17/99 150 159.91
2/18/99 149.52 157.37
2/19/99 149.05 158.29
2/22/99 150 158.55
2/23/99 152.38 159.31
2/24/99 149.05 159.61
2/25/99 148.1 160.63
2/26/99 146.67 161.77
3/1/99 145.24 161.63
3/2/99 145.24 162.02
3/3/99 141.9 161.78
3/4/99 143.33 161.41
3/5/99 144.76 161.74
3/8/99 149.52 162.7
3/9/99 145.24 161.72
3/10/99 144.76 161.39
3/11/99 144.76 160.14
3/12/99 148.1 160.48
3/15/99 149.52 161.52
3/16/99 150.48 161.52
3/17/99 145.71 160.75
3/18/99 149.52 163.49
3/19/99 147.62 162.67
3/22/99 151.9 161.98
3/23/99 153.33 160.9
3/24/99 152.38 161.4
3/25/99 155.24 161.39
3/26/99 156.19 161.34
3/29/99 159.05 160.96
3/30/99 157.62 163.62
3/31/99 158.1 161.92
4/1/99 160.95 161.85
4/5/99 164.76 161.25
4/6/99 157.62 161
4/7/99 157.14 160.6
4/8/99 159.52 159.96
4/9/99 159.52 161.54
4/12/99 161.43 159.8
4/13/99 160.48 160.28
4/14/99 162.86 162.24
4/15/99 162.38 162.01
4/16/99 159.52 162.9
4/19/99 156.19 162.37
4/20/99 158.57 161.13
4/21/99 160 159.72
4/22/99 154.29 159.93
4/23/99 160.48 159.2
4/26/99 158.57 158.5
4/27/99 160 158.51
4/28/99 158.1 158.99
4/29/99 158.1 157.68
4/30/99 158.57 156.7
5/3/99 160.95 158.06
5/4/99 160.95 158.09
5/5/99 161.9 157.45
5/6/99 162.86 158.02
5/7/99 163.33 158.24
5/10/99 176.19 160.05
5/11/99 170.95 161.61
5/12/99 166.67 159.84
5/13/99 164.29 161.02
5/14/99 160 159.82
5/17/99 158.57 160.18
5/18/99 159.05 161.07
5/19/99 161.43 161.52
5/20/99 166.19 163.85
5/21/99 169.52 162.56
5/24/99 171.43 163.84
5/25/99 170.95 163.71
5/26/99 170 165.39
5/27/99 167.62 165.43
5/28/99 165.71 167.66
6/1/99 170.95 171.09
6/2/99 177.14 174.95
6/3/99 170 174.02
6/4/99 164.76 174.31
6/7/99 171.43 173.46
6/8/99 166.67 174.64
6/9/99 167.62 173.26
6/10/99 168.1 173.52
6/11/99 165.71 175.42
6/14/99 160.95 171.88
6/15/99 162.38 173.89
6/16/99 167.14 174.75
6/17/99 168.57 177.58
6/18/99 167.14 179.26
6/21/99 164.29 179.99
6/22/99 168.57 180
6/23/99 162.86 178.9
6/24/99 165.71 177.72
6/25/99 165.24 179.35
6/28/99 173.81 179.11
6/29/99 172.38 179.96
6/30/99 172.86 180.62
7/1/99 172.38 180.77
7/2/99 172.38 182.8
Note: (1) Includes American Water Works, Philadelphia Suburban, ETown Corp.,
California Water Service, American States Water, SJW Corp.,
Connecticut Water Service, and Middlesex Water.
B(5)-Page 13
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Investment Considerations
- --------------------------------------------------------------------------------
Strengths
- --------------------------------------------------------------------------------
o Diversified provider of water and wastewater services to over six million
people in 19 states, making it one of the largest investor-owned water
utilities in the U.S.
o Knicks also operates in Canada, Mexico, and has a significant
investment in a UK water utility (Northumbrian Water)
o The Company's geographic diversity somewhat mitigates the seasonal
nature of the industry's revenues and earnings due to variations in
water usage
o Knicks is different from other investor owned water utilities by its focus
on growth through contract operations, a market in which it has emerged as
the leader in winning new contracts (primarily marquee projects) in 1998,
such as a 10-to-20 year contract to operate Atlanta's water system
o The revenue generated by the management of water and wastewater
plants dwarfs all other segments of the water industry combined
o Revenues for the U.S. contract operations are projected to grow at
over 25% CAGR
o Knicks has achieved cost savings in the 20-50% range for the
municipalities it serves
- --------------------------------------------------------------------------------
Concerns
- --------------------------------------------------------------------------------
o Spurs ownership of 30% of Knicks
o Status of KWS joint venture if Knicks is sold to a 3rd party
o The KWS joint venture benefits from this relationship managerially,
operationally and financially
o The Contract Operations business is not currently profitable for Knicks
o Significant marketing and development costs associated with
bidding/securing contracts
o Bringing operations up to profitable levels often takes one-to-three
years
o Increased competition for marquee projects
o Knicks has less predictable earnings than some of its peers due to the
contract/project nature of the contract operations business that is
expected to be a significant driver of future growth
B(5)-Page 14
<PAGE>
- --------------------------------------------------------------------------------
PRELIMINARY VALUATION ANALYSIS
- --------------------------------------------------------------------------------
B(5)-Page 15
<PAGE>
- --------------------------------------------------------------------------------
"ROTHSCHILD" VALUATION ANALYSIS
- --------------------------------------------------------------------------------
B(5)-Page 16
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
"Rothschild" Preliminary Valuation Summary(1)
[BAR GRAPH]
Last 12 Months Trading Range $16.38 $ 8.62
Comparable Companies Analysis $19.53 $ 4.11
$22.95 $ 2.66
Precedent Transaction Analysis(4) $23.15 $11.97
$27.28 $ 5.3 $3.99
Current Share Price(2) $22.56
Equity Value Per Knicks Share(3)
Notes: (1) Valuation as of June 30, 1999.
(2) Based on share price of $22.56 as of 7/6/99.
(3) Assumes 38.5MM shares outstanding.
(4) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first
quarter of 1999.
B(5)-Page 17
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Water Industry Precedent Transaction Multiples
Premium to Prior Day Price
[BAR GRAPH]
California Water/Dominguez 32.5(2)
Enron/Wessex 28.0
Philadelphia Suburban/Consumers Water 26.0
NiSource/Indianapolis 23.1
Yorkshire/Aquarion 19.3
American Water Works/National Enterprises(1) N.A.
Mean 27.3%
Aggregate Value/L12M EBITDA
[BAR GRAPH]
California Water/Dominguez 12.0
Philadelphia Suburban/Consumers Water 10.3
Yorkshire/Aquarion 10.2
NiSource/Indianapolis 9.8
Enron/Wessex 9.5
American Water Works/National Enterprises(1) N.A.
Mean 10.7x
Equity Value/Book Value
[BAR GRAPH]
California Water/Dominguez 3.22
Yorkshire/Aquarion 2.92
Philadelphia Suburban/Consumers Water 2.52
American Water Works/National Enterprises(1) 2.43
NiSource/Indianapolis 2.43
Enron/Wessex 2.06
Mean 2.64x
Aggregate Value/L12M EBIT
[BAR GRAPH]
California Water/Dominguez 18.4
Yorkshire/Aquarion 15.5
Philadelphia Suburban/Consumers Water 13.9
NiSource/Indianapolis 13.2
Enron/Wessex 12.4
American Water Works/National Enterprises(1) N.A.
Mean 14.8x
Notes: (1) National Enterprises was a privately owned company.
(2) Represents the premium prior to the initial California Water
announcements in November 1998.
B(5)-Page 18
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Valuation Matrix (1) (2)
Excludes Income and Expenses Associated with Real Estate Investments
($MM, except per share data)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Equity Value
---------------------- Aggregate Value/LTM Premium/(Discount)
Price Equity Aggregate LTM Book ---------------------------------- Premium/(Discount) to Prior 30-Day
Per Share Value (2) Value (3) Earnings (4) Value Sales EBITDA (4) EBIT (4) to 7/6/99 Price Price
- --------- --------- --------- --------- --------- --------- --------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22.56 $869 $1,626 $43.7 $449.4 $360.0 $151.5 $109.8 $22.56 $21.63
$19.00 $732 $1,489 16.8x 1.63x 4.1x 9.8x 13.6x (15.8) (12.1)
20.00 770 1,527 17.6 1.71 4.2 10.1 13.9 (11.4) (7.5)
21.00 809 1,566 18.5 1.80 4.3 10.3 14.3 (6.9) (2.9)
22.00 847 1,604 19.4 1.88 4.5 10.6 14.6 (2.5) 1.7
23.00 886 1,643 20.3 1.97 4.6 10.8 15.0 1.9 6.4
24.00 924 1,681 21.2 2.06 4.7 11.1 15.3 6.4 11.0
25.00 963 1,720 22.0 2.14 4.8 11.3 15.7 10.8 15.6
26.00 1,001 1,758 22.9 2.23 4.9 11.6 16.0 15.2 20.2
27.00 1,040 1,797 23.8 2.31 5.0 11.9 16.4 19.7 24.9
28.00 1,078 1,835 24.7 2.40 5.1 12.1 16.7 24.1 29.5
29.00 1,117 1,874 25.6 2.48 5.2 12.4 17.1 28.5 34.1
30.00 1,155 1,912 26.5 2.57 5.3 12.6 17.4 33.0 38.7
31.00 1,194 1,951 27.3 2.66 5.4 12.9 17.8 37.4 43.4
32.00 1,232 1,989 28.2 2.74 5.5 13.1 18.1 41.8 48.0
33.00 1,271 2,028 29.1 2.83 5.6 13.4 18.5 46.3 52.6
34.00 1,309 2,066 30.0 2.91 5.7 13.6 18.8 50.7 57.2
35.00 1,348 2,105 30.9 3.00 5.8 13.9 19.2 55.1 61.8
36.00 1,386 2,143 31.7 3.08 6.0 14.1 19.5 59.6 66.5
37.00 1,425 2,182 32.6 3.17 6.1 14.4 19.9 64.0 71.1
38.00 1,463 2,220 33.5 3.26 6.2 14.7 20.2 68.4 75.7
39.00 1,502 2,259 34.4 3.34 6.3 14.9 20.6 72.9 80.3
40.00 1,540 2,297 35.3 3.43 6.4 15.2 20.9 77.3 85.0
41.00 1,579 2,336 36.2 3.51 6.5 15.4 21.3 81.7 89.6
42.00 1,617 2,374 37.0 3.60 6.6 15.7 21.6 86.1 94.2
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:
- ---------
(1) Boxes represent the range of multiples paid in precedent transactions.
(2) Based on Knicks 38.5 MM shares outstanding as of 3/31/99.
(3) Includes total debt $830 MM, net of $73 MM cash
(4) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
B(5)-Page 19
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Knicks Trading Valuation Matrix (1) (2)
Includes Income and Expenses Associated with Real Estate Investments
($MM, except per share data)
<TABLE>
<CAPTION>
Equity Value
----------------- Aggregate Value/LTM Premium/(Discount)
Price Equity Aggregate LTM Book ------------------------- Premium/(Discount) to Prior 30-Day
Per Share Value (2) Value (3) Earnings Value Sales EBITDA EBIT to 7/6/99 Price Price
- --------- --------- --------- -------- ----- ----- ------ ---- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22.56 $869 $1,626 $45.6 $449.4 $360.0 $157.4 $115.6 $22.56 $21.63
$19.00 $732 $1,489 16.0x 1.63x 4.1x 9.5x 12.9x (15.8) (12.1)
20.00 770 1,527 16.9 1.71 4.2 9.7 13.2 (11.4) (7.5)
21.00 809 1,566 17.7 1.80 4.3 9.9 13.5 (6.9) (2.9)
22.00 847 1,604 18.6 1.88 4.5 10.2 13.9 (2.5) 1.7
23.00 886 1,643 19.4 1.97 4.6 10.4 14.2 1.9 6.4
24.00 924 1,681 20.3 2.06 4.7 10.7 14.5 6.4 11.0
25.00 963 1,720 21.1 2.14 4.8 10.9 14.9 10.8 15.6
26.00 1,001 1,758 22.0 2.23 4.9 11.2 15.2 15.2 20.2
27.00 1,040 1,797 22.8 2.31 5.0 11.4 15.5 19.7 24.9
28.00 1,078 1,835 23.6 2.40 5.1 11.7 15.9 24.1 29.5
29.00 1,117 1,874 24.5 2.48 5.2 11.9 16.2 28.5 34.1
30.00 1,155 1,912 25.3 2.57 5.3 12.2 16.5 33.0 38.7
31.00 1,194 1,951 26.2 2.66 5.4 12.4 16.9 37.4 43.4
32.00 1,232 1,989 27.0 2.74 5.5 12.6 17.2 41.8 48.0
33.00 1,271 2,028 27.9 2.83 5.6 12.9 17.5 46.3 52.6
34.00 1,309 2,066 28.7 2.91 5.7 13.1 17.9 50.7 57.2
35.00 1,348 2,105 29.6 3.00 5.8 13.4 18.2 55.1 61.8
36.00 1,386 2,143 30.4 3.08 6.0 13.6 18.5 59.6 66.5
37.00 1,425 2,182 31.3 3.17 6.1 13.9 18.9 64.0 71.1
38.00 1,463 2,220 32.1 3.26 6.2 14.1 19.2 68.4 75.7
39.00 1,502 2,259 32.9 3.34 6.3 14.4 19.5 72.9 80.3
40.00 1,540 2,297 33.8 3.43 6.4 14.6 19.9 77.3 85.0
41.00 1,579 2,336 34.6 3.51 6.5 14.8 20.2 81.7 89.6
42.00 1,617 2,374 35.5 3.60 6.6 15.1 20.5 86.1 94.2
</TABLE>
Notes:
- ----------------
(1) Boxed Represents the range of multiples paid in precedent transactions.
(2) Based on Knicks 38.5 MM shares outstanding as of 3/31/99.
(3) Includes total debt $830 MM, net of $73 MM cash
B(5)-Page 20
<PAGE>
Project Hoops
Discounted Cash Flow Analysis
Does not include Knicks Water Services and Northumbrian Partnerships
Valuation as of 6/30/1999
($000, except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Perpetual Growth Rate (%) 1.00 1.50
Discount Rate 5.50% 6.25% 7.00% 5.50% 6.25% 7.00%
Present Value of
Cash Flows - FY 1999 $40,339 $40,268 $40,197 $40,339 $40,268 $40,197
Cash Flows - FY 2000 to FY 2003 219,257 214,893 210,656 219,257 214,893 210,656
Terminus 1,677,128 1,397,377 1,188,782 1,896,109 1,552,115 1,303,273
Aggregate Value $1,936,725 $1,652,537 $1,439,635 $2,155,706 $1,807,276 $1,554,126
Cash(1) 56,506 56,506 56,506 56,506 56,506 56,506
Preferred Stock(1) 57,935 57,935 57,935 57,935 57,935 57,935
Total Debt(1) 742,559 742,559 742,559 742,559 742,559 742,559
Equity Value $1,192,737 $908,549 $695,647 $1,411,718 $1,063,288 $810,138
Price Per Share(2) $30.97 $23.59 $18.06 $36.66 $27.61 $21.04
Premium/(Discount) to Current Price(4) 37.3 % 4.6 % -19.9 % 62.5 % 22.4 % -6.8 %
Market/Book Paid(1)(3) 2.95 x 2.25 x 1.72 x 3.49 x 2.63 x 2.00 x
1999E P/E Implied(5) 31.5 x 24.0 x 18.4 x 37.3 x 28.1 x 21.4 x
Terminal Value Analysis
% Value in Terminus 86.6 % 84.6 % 82.6 % 88.0 % 85.9 % 83.9 %
% Value in Cash Flows 13.4 % 15.4 % 17.4 % 12.0 % 14.1 % 16.1 %
Implied Terminal Aggregate Multiples
EBITDA(5) 11.2 x 9.6 x 8.4 x 12.6 x 10.6 x 9.2 x
EBIT(5) 14.8 x 12.7 x 11.1 x 16.7 x 14.1 x 12.2 x
Implied Terminal Equity Multiples
Equity Book(3) 3.05 x 2.32 x 1.77 x 3.72 x 2.81 x 2.14 x
P/E(5) 19.3 x 14.7 x 11.2 x 23.6 x 17.8 x 13.6 x
<CAPTION>
<S> <C> <C> <C>
Perpetual Growth Rate (%) 2.00
Discount Rate 5.50% 6.25% 7.00%
Present Value of
Cash Flows - FY 1999 $40,339 $40,268 $40,197
Cash Flows - FY 2000 to FY 2003 219,257 214,893 210,656
Terminus 2,177,657 1,743,262 1,440,662
Aggregate Value $2,437,254 $1,998,423 $1,691,516
Cash(1) 56,506 56,506 56,506
Preferred Stock(1) 57,935 57,935 57,935
Total Debt(1) 742,559 742,559 742,559
Equity Value $1,693,266 $1,254,435 $947,528
Price Per Share(2) $43.97 $32.58 $24.61
Premium/(Discount) to Current Price(4) 94.9 % 44.4 % 9.1 %
Market/Book Paid(1)(3) 4.19 x 3.10 x 2.34 x
1999E P/E Implied(5) 44.7 x 33.2 x 25.0 x
Terminal Value Analysis
% Value in Terminus 89.3 % 87.2 % 85.2 %
% Value in Cash Flows 10.7 % 12.8 % 14.8 %
Implied Terminal Aggregate Multiples
EBITDA(5) 14.5 x 12.0 x 10.2 x
EBIT(5) 19.2 x 15.8 x 13.5 x
Implied Terminal Equity Multiples
Equity Book(3) 4.59 x 3.41 x 2.58 x
P/E(5) 29.1 x 21.6 x 16.4 x
</TABLE>
Notes:
1. Cash, Preferred Stock and Debt based on 1999 year-end projections.
2. Assumes number of diluted shares outstanding equals 38.508MM.
3. Assumes book value equals $10.50/share.
4. Current share price of $22.56 as of 7/6/99.
5. Equity earnings from Knicks Water U.K. and Knicks Water Services are
excluded.
B(5)-Page 21
<PAGE>
Project Hoops
Knicks Water Services and Northumbrian Partnership Valuation Analysis
Knicks Water Services
<TABLE>
<CAPTION>
Knicks'
FY 1999 Operating Revenues Valuation Range Implied Equity Value Ownership Knicks' Share of Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
USA $152,364 1.0x - 2.0x 152,364 - 304,728 50.00% 76,182 - 152,364
Canada $1,901 1.0x - 2.0x 1,901 - 3,802 33.33% 634 - 1,267
Total $154,265 154,265 - 308,530 76,816 - 153,631
Equity Value Per Knicks Share $1.99 - $3.99
<CAPTION>
Northumbrian Partnership
Net Income Valuation Range(1) Implied Equity Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FY 1998 $13,304 9.5x - 10.5x 126,388 - 139,692
Equity Value Per Knicks Share $3.28 - $3.63
</TABLE>
Note:
1. Based on the average of 98A P/E of the following U.K. water utilities:
Thames (10.6x), Severn Trent (10.8x), Anglian Water (8.0x) and Yorkshire
(9.6x).
B(5)-Page 22
<PAGE>
- --------------------------------------------------------------------------------
POTENTIAL PARTNERS
- --------------------------------------------------------------------------------
B(5)-Page 23
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Overview of Potential Business Combination Candidates
- --------------------------------------------------------------------------------
Publicly Traded Water Companies
- --------------------------------------------------------------------------------
Company Market Cap(1) 1999E P/E(2)
------- ------------- ------------
($MM)
American Water Works $2,480 18.5x
Philadelphia Suburban $ 923 20.8x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Domestic Electric Utility Companies
- --------------------------------------------------------------------------------
Company Market Cap(1) 1999E P/E(2)
------- ------------- ------------
($MM)
GPU $5,310 12.6x
NiSource $3,276 15.0x
DQE $3,096 15.5x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
International Water Companies
- --------------------------------------------------------------------------------
Company Market Cap(1) 1999E P/E(2)
------- ------------- ------------
($MM)
Vivendi $45,700 31.2x
Spurs $27,000 25.8x
Thames $6,000 11.2x
Severn Trent $5,300 10.8x
Anglian Water $3,100 9.1x
Yorkshire (Aquarion) $2,900 9.3x
Azurix $2,518 29.1x(3)
Agbar $2,400 25.3x
- --------------------------------------------------------------------------------
Notes: (1) As of July 6, 1999.
(2) Based on research projections as of July 6, 1999.
(3) Based on 1998A Earnings.
B(5)-Page 24
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL MODEL
- --------------------------------------------------------------------------------
B(5)-Page 25
<PAGE>
Project Hoops
Consolidated Income Statement
<TABLE>
<CAPTION>
Actual Projected
1996 1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues 332,045 351,409 356,210 367,040 364,503 379,361
Growth Rate 5.8% 1.4% 3.0% -0.7% 4.1%
Operations and Maintenance (155,878) (168,947) (168,387) (175,860) (162,385) (167,574)
Gross Profit 176,167 182,462 187,823 191,180 202,118 211,787
Gross Profit Margin 53.1% 51.9% 52.7% 52.1% 55.5% 55.8%
Other Income/Expenses
Investments and Acquisitions 0 0 0 5,894 8,255 9,165
Equity Earnings of Subsidiaries 4,617 10,647 11,451 9,940 3,228 5,012
General Taxes (49,616) (52,124) (50,273) (54,784) (53,541) (54,707)
AFUDC 3,355 3,397 4,567 2,289 3,142 1,950
Other (net) 12,455 (7,805) 1,959 7,962 366 51
Total Other Income/Expenses (29,189) (45,885) (32,296) (31,699) (38,550) (38,529)
EBITDA 146,978 136,577 155,527 159,481 163,568 173,258
EBITDA Margin 44.3% 38.9% 43.7% 43.5% 44.9% 45.7%
Growth Rate -7.1% 13.9% 2.5% 2.6% 5.9%
Depreciation and Amortization (30,852) (34,694) (39,950) (44,491) (41,771) (43,367)
EBIT 116,126 101,883 115,577 114,990 121,797 129,891
EBIT Margin 35.0% 29.0% 32.4% 31.3% 33.4% 34.2%
Growth Rate -12.3% 13.4% -0.5% 5.9% 6.6%
Interest and Other Charges
Interest on Long Term Debt (44,951) (45,372) (45,917) (39,521) (35,223) (35,547)
Implied Interest Rate (as % of Average Long Term Debt) 6.1% 5.3% 5.1%
Other Interest Expense 0 0 0 (4,749) (5,935) (6,405)
Total Interest and Other Charges (44,951) (45,372) (45,917) (44,270) (41,158) (41,952)
<CAPTION>
Projected 1998-2003
2002 2003 CAGR
<S> <C> <C>
Operating Revenues 396,693 408,516 2.8%
Growth Rate 4.6% 3.0%
Operations and Maintenance (172,616) (175,502)
Gross Profit 224,077 233,014 4.4%
Gross Profit Margin 56.5% 57.0%
Other Income/Expenses
Investments and Acquisitions 9,263 8,645
Equity Earnings of Subsidiaries 5,077 8,920
General Taxes (56,188) (57,644)
AFUDC 1,733 1,722
Other (net) 2 21
Total Other Income/Expenses (40,113) (38,336)
EBITDA 183,964 194,678 4.6%
EBITDA Margin 46.4% 47.7%
Growth Rate 6.2% 5.8%
Depreciation and Amortization (44,539) (45,502)
EBIT 139,425 149,176 5.2%
EBIT Margin 35.1% 36.5%
Growth Rate 7.3% 7.0%
Interest and Other Charges
Interest on Long Term Debt (36,113) (36,037)
Implied Interest Rate (as % of Average Long Term Debt) 4.9% 4.9%
Other Interest Expense (6,537) (6,248)
Total Interest and Other Charges (42,650) (42,285)
</TABLE>
Project Hoops
Consolidated Income Statement
<TABLE>
<CAPTION>
Actual Projected
1996 1997 1998 1999 2000 2001
<S> <C> <C> <C> <C> <C> <C>
Earnings Before Taxes and Preferred Dividends 71,175 56,511 69,660 70,720 80,639 87,939
Provision for Income Taxes (25,878) (20,579) (19,450) (18,799) (23,502) (26,251)
Implied Tax Rate 36.4% 36.4% 27.9% 26.6% 29.1% 29.9%
Net Income 45,297 35,932 50,210 51,921 57,137 61,688
Preferred and Preference Stock Dividends (6,890) (6,601) (6,281) (4,886) (2,867) (2,143)
Implied Yield (as % of Average Preferred Stock) 6.6% 6.0% 6.0%
Net Income Applicable to Common Stock 38,407 29,331 43,929 47,035 54,270 59,545
Net Income Margin 11.6% 8.3% 12.3% 12.8% 14.9% 15.7%
Growth Rate -23.6% 49.8% 7.1% 15.4% 9.7%
Average Shares Outstanding 33,707 35,492 37,028 38,578 39,331 39,854
Earnings Per Share $1.14 $0.83 $1.19 $1.22 $1.38 $1.49
Dividends Per Share $0.96 $1.00 $1.04
Payout Ratio 78.8% 72.5% 69.6%
<CAPTION>
Projected 1998-2003
2002 2003 CAGR
<S> <C> <C>
Earnings Before Taxes and Preferred Dividends 96,775 106,891 8.9%
Provision for Income Taxes (29,918) (33,683)
Implied Tax Rate 30.9% 31.5%
Net Income 66,857 73,208 7.8%
Preferred and Preference Stock Dividends (1,841) (1,537)
Implied Yield (as % of Average Preferred Stock) 6.0% 7.3%
Net Income Applicable to Common Stock 65,016 71,671 10.3%
Net Income Margin 16.4% 17.5%
Growth Rate 9.2% 10.2%
Average Shares Outstanding 40,379 41,178
Earnings Per Share $1.61 $1.74
Dividends Per Share $1.08 $1.12
Payout Ratio 67.1% 64.3%
</TABLE>
B(5)-Page 26
<PAGE>
Project Hoops
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Actual Projected
1998 1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and Restricted Cash 56,506 56,506 56,506 56,506 56,506 56,506
Other Current Assets 240,728 271,823 293,608 315,709 337,554 357,711
Total Current Assets 297,234 328,329 350,114 372,215 394,060 414,217
Utility Plant 1,613,295 1,681,845 1,751,544 1,814,988 1,867,917 1,915,759
Less: Accumulated Depreciation (339,635) (385,108) (428,923) (474,573) (521,686) (569,973)
Net Utility Plant 1,273,660 1,296,737 1,322,621 1,340,415 1,346,231 1,345,786
Real Estate and Other Investments 81,630 36,333 51,000 50,986 50,016 43,270
Equity Investments 116,598 130,933 190,941 227,403 277,958 292,433
Total Assets 1,769,122 1,792,332 1,914,676 1,991,019 2,068,265 2,095,706
Liabilities
Drawdown Existing Tax Exempt Debt 0 14,688 30,681 44,745 44,745 44,745
Short Term Debt 99,195 97,192 142,400 146,210 151,341 149,092
Deferred Income Taxes & ITCs 195,368 210,781 222,322 233,546 244,803 256,020
Other Current Liabilities 276,279 276,279 276,279 276,279 276,279 276,279
Total Current Liabilities 570,842 598,940 671,682 700,780 717,168 726,136
Long Term Debt 652,969 645,367 690,176 714,427 748,937 736,872
Preferred Stock 58,748 31,523 15,950 15,377 14,804 14,231
Preference Stock 30,534 26,412 22,036 17,631 13,195 0
Shareholders' Equity 456,029 490,090 514,832 542,804 574,161 618,467
Total Liabilities and Shareholders' Equity 1,769,122 1,792,332 1,914,676 1,991,019 2,068,265 2,095,706
Difference 0 0 0 0 0 0
Capital Structure
</TABLE>
Project Hoops
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Actual Projected
1998 1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C> <C>
Short Term Debt 99,195 97,192 142,400 146,210 151,341 149,092
Long Term Debt 652,969 645,367 690,176 714,427 748,937 736,872
Preferred Stock 58,748 31,523 15,950 15,377 14,804 14,231
Preference Stock 30,534 26,412 22,036 17,631 13,195 0
Shareholders' Equity 456,029 490,090 514,832 542,804 574,161 618,467
Total Capitalization 1,297,475 1,290,584 1,385,394 1,436,449 1,502,438 1,518,662
% Debt 58.0% 57.5% 60.1% 59.9% 59.9% 58.3%
% Preferred Stock 4.5% 2.4% 1.2% 1.1% 1.0% 0.9%
% Shareholders' Equity + Preference Stock 37.5% 40.0% 38.8% 39.0% 39.1% 40.7%
</TABLE>
B(5)-Page 27
<PAGE>
Project Hoops
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Projected
1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C>
Net Income Before Preferred Dividends 51,921 57,137 61,688 66,857 73,208
Depreciation and Amortization 45,473 43,815 45,650 47,113 48,287
Deferred Income Tax & ITCs 15,413 11,541 11,224 11,257 11,217
AFUDC (2,289) (3,142) (1,950) (1,733) (1,722)
Proceeds from Sale of Properties 68,132 4,514 1,614 2,070 7,846
Equity Earnings of Subsidiaries (6,940) (3,228) (5,012) (5,077) (8,920)
Changes in Working Capital (31,095) (21,785) (22,101) (21,845) (20,157)
Cash Flows From Operating Activities 140,615 88,852 91,113 98,642 109,759
Additions to Utility Plant (Excluding AFUDC) (66,261) (66,557) (61,494) (51,196) (46,120)
Investment in Subsidiaries (7,395) (56,780) (31,450) (45,478) (5,555)
Other Investments (22,835) (19,181) (1,600) (1,100) (1,100)
Cash Flows From Investing Activities (96,491) (142,518) (94,544) (97,774) (52,775)
Drawdown Existing Tax Exempt Debt 14,688 15,993 14,064 0 0
Issuance of Long Term Debt 36,628 47,959 29,683 39,814 3,058
Reduction in Long Term Debt (44,230) (3,150) (5,432) (5,304) (15,123)
Issuance of Bank Notes 12,218 45,424 23,768 22,980 4,339
Reduction in Bank Notes (14,221) (216) (19,958) (17,849) (6,588)
Issuance of Preferred Stock 0 0 0 0 0
Reduction in Preferred Stock (31,347) (19,949) (4,978) (5,009) (13,768)
Preferred Dividends (4,886) (2,867) (2,143) (1,841) (1,537)
Issuance of Common Stock 24,080 9,803 9,875 9,950 18,755
Reduction in Common Stock 0 0 0 0 0
Common Dividends (37,054) (39,331) (41,448) (43,609) (46,120)
Cash Flows From Financing Activities (44,124) 53,666 3,431 (868) (56,984)
Net Change in Cash 0 0 0 0 0
</TABLE>
B(5)-Page 28
<PAGE>
Project Hoops
Unlevered Free Cash Flow Calculation
Does not include Knicks Water Services and Northumbrian Partnerships
<TABLE>
<CAPTION>
Projected
1999 2000 2001 2002 2003 Terminal Year
<S> <C> <C> <C> <C> <C> <C>
Net Income Before Preferred Dividends 51,921 57,137 61,688 66,857 73,208 73,208
Depreciation and Amortization 45,473 43,815 45,650 47,113 48,287 48,287
Deferred Income Tax & ITCs 15,413 11,541 11,224 11,257 11,217 0
AFUDC (2,289) (3,142) (1,950) (1,733) (1,722) (1,722)
Proceeds from Sale of Properties 68,132 4,514 1,614 2,070 7,846 0
Equity Earnings of Subsidiaries (9,195) (4,802) (5,624) (5,279) (7,877) (7,877)
Changes in Working Capital (31,095) (21,785) (22,101) (21,845) (20,157) 0
Cash Flows From Operating Activities 138,360 87,278 90,501 98,440 110,802 111,896
Additions to Utility Plant (Excluding AFUDC) (66,261) (66,557) (61,494) (51,196) (46,120) (48,287)
CapEx as % of Depreciation and Amortization 145.7% 151.9% 134.7% 108.7% 95.5% 100.0%
Investments in Subsidiaries 0 0 0 0 0 0
Other Investments (22,835) (19,181) (1,600) (1,100) (1,100) 0
Cash Flows From Investing Activities (89,096) (85,738) (63,094) (52,296) (47,220) (48,287)
Free Cash Flows 49,264 1,540 27,407 46,144 63,582 63,609
Pre-Tax Interest Expense on Long Term Debt 39,521 35,223 35,547 36,113 36,037 36,037
Other Interest Expense 4,749 5,935 6,405 6,537 6,248 6,248
Total Pre-Tax Interest Expense 44,270 41,158 41,952 42,650 42,285 42,285
Implied Tax Rate 26.6% 29.1% 29.9% 30.9% 31.5% 31.5%
Total After-Tax Interest Expense 32,502 29,163 29,429 29,465 28,960 28,960
Unlevered Free Cash Flows 81,766 30,703 56,836 75,609 92,542 92,569
</TABLE>
B(5)-Page 29
<PAGE>
Project Hoops
Comparable Companies Valuation Analysis
<TABLE>
<CAPTION>
Comparable Multiple Range Implied Aggregate Value Implied Equity Value
Statistics ($MM) Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
FY 1999 EBITDA $159.5 8.5x 11.0x 1,355.6 1,754.3 611.6 1,010.3
FY 1999 EBIT $115.0 12.0x 13.5x 1,379.9 1,552.4 635.9 808.4
Equity Value
FY 1999 Net Income $47.0 16.5x 17.5x 1,520.1 1,567.1 776.1 823.1
FY 2000 Net Income $54.3 16.0x 17.0x 1,612.3 1,666.6 868.3 922.6
FY 1999 Dividend Yield $37.1 4.4% 4.0% 1,586.1 1,670.3 842.1 926.4
FY 1998 Cash Flows(4) $83.9 9.0x 11.0x 1,498.9 1,666.7 754.9 922.7
Book Value as of 12/31/1998 $456.0 1.7x 2.1x 1,519.2 1,701.6 775.2 957.7
Mean $1,496.0 $1,654.1 $752.0 $910.2
Per Share(2) $19.53 $23.64
Premium (Discount) to Current(3) -13.4% 4.8%
Median $1,519.2 $1,666.7 $775.2 $922.7
Per Share(2) $20.13 $23.96
Premium (Discount) to Current(3) -10.8% 6.2%
</TABLE>
Notes:
(1) Based on 1999 year end projections.
(2) Assumes shares outstanding equal 38.5MM.
(3) Based on share price of $22.56 as of 7/6/99.
(4) Cash Flow = Net Income + Depreciation & Amortization.
B(5)-Page 30
<PAGE>
Project Hoops
Trading Statistics of Selected Domestic Regulated Water Companies(1)
<TABLE>
<CAPTION>
Equity Value
Company Name Price Equity Value Aggregate Value 1999E P/E 2000E P/E Book Value L12M Cash Flow(2)
7/6/99 ($MM) ($MM)
<S> <C> <C> <C> <C> <C> <C> <C>
American Water Works $30.56 $2,480 $4,635 18.5x 17.5x 2.0x 9.9x
Philadelphia Suburban 22.63 923 1,187 20.8 19.0 3.9 21.2
E'Town Corp. 47.00 401 693 17.7 17.1 1.8 10.1
California Water Service 27.00 341 480 17.3 16.9 2.0 9.9
American States Water 30.13 270 431 16.9 16.3 1.7 9.4
SJW Corp. 80.00 244 326 16.6 16.4 1.7 9.4
Connecticut Water Service 27.75 126 191 17.5 16.9 2.2 11.5
Middlesex Water 25.25 124 189 18.0 17.3 1.9 12.3
Median: 17.6x 17.0x 1.9x 10.0x
Knicks 22.56 869 1,626 17.8 16.8 1.9 9.9
<CAPTION>
Aggregate Value/L12M
Company Name Sales EBITDA EBIT Dividend Yield 5 Yr. IBES CAGR
<S> <C> <C> <C> <C> <C>
American Water Works 4.5x 9.3x 12.4x 2.8% 6.5%
Philadelphia Suburban 7.8 14.6 18.2 3.0 6.0
E'Town Corp. 5.0 12.1 15.6 4.3 3.0
California Water Service 2.5 8.3 11.1 4.0 3.0
American States Water 2.8 8.4 11.3 4.2 3.0
SJW Corp. 3.0 8.4 11.2 3.0 NA
Connecticut Water Service 5.0 12.5 16.8 4.2 3.0
Middlesex Water 4.2 10.7 13.2 4.6 3.0
Median: 4.4x 10.0x 12.8x 4.1% 3.0%
Knicks 4.5 10.7 14.8 4.3 5.5
</TABLE>
Notes:
(1) Share prices and I/B/E/S estimates as of 07/06/99.
(2) Cash flow = net income + depreciation & amortization.
B(5)-Page 31
<PAGE>
Project Hoops
Precedent Transactions Valuation Analysis
<TABLE>
<CAPTION>
Comparable Multiple Range Implied Aggregate Value Implied Equity Value
Statistics Low High Low High Low High
<S> <C> <C> <C> <C> <C> <C> <C>
Aggregate Value
LTM EBITDA(1)(4) $151.5 10.0x 13.0x 1,515.4 1,970.0 758.3 1,212.9
LTM EBIT(1)(4) $109.8 13.5x 18.5x 1,481.9 2,030.8 724.8 1,273.6
Equity Value
LTM Net Income(1)(4) $43.7 23.0x 34.0x 1,761.5 2,241.9 1,004.4 1,484.7
Book Value as of 3/31/1999 $449.4 2.4x 3.2x 1,835.8 2,195.3 1,078.7 1,438.2
Mean $1,648.7 $2,109.5 $891.5 $1,352.4
Per Share(2) $23.15 $35.12
Premium (Discount) to Current(3) 2.3% 55.2%
Median $1,638.5 $2,113.1 $881.3 $1,355.9
Per Share(2) $22.89 $35.21
Premium (Discount) to Current(3) 1.2% 55.6%
</TABLE>
Notes:
(1) Excludes the gain on sale of Harrison Plaza of $5.8MM in the first quarter
of 1999.
(2) Assumes shares outstanding equal 38.5MM.
(3) Based on share price of $22.63 as of 7/2/99.
(4) LTM as of 3/31/1999.
B(5)-Page 32
<PAGE>
Project Hoops
Selected Water Industry Precedent Transactions
<TABLE>
<CAPTION>
Equity Value/L12M
Date Equity Aggregate Net Book Aggregate Value/L12M
Announced Acquiror/Acquiree Value Value(1) Income Value Customers Revenue EBITDA EBIT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
06/01/99 Yorkshire Water/ $444.0 $599.0 24.9x 2.92x 4,248.2x 5.6x 11.3x 18.1x
Aquarion
(Excludes Real Estate Earnings)
06/01/99 Yorkshire Water/ 444.0 599.0 22.1 2.92 4,248.2 5.2 10.2 15.5
Acquarion
(Includes Real Estate Earnings)
03/23/99 California Water/ 53.0 63.5 33.8 3.22 488.5 2.5 13.1 18.4
Dominguez
10/13/98 American Water Works/ 475.0 701.0 25.6 2.43 412.4 4.0 NA NA
National Enterprises(3)
07/24/98 ENRON/ 2,266.0 2,810.0 12.9 (4) 2.06 780.5 6.4 9.5 12.4
Wessex Water
06/29/98 Philadelphia Suburban/ 275.2 460.0 22.8 2.52 686.6 4.3 10.3 13.9
Consumers Water
12/19/96 NiSource/ 288.0 423.4 23.6 2.43 1,801.7 2.9 9.8 13.2
Indianapolis Water
Mean: 25.6x (5) 2.60x 1,403.0x 4.2x 10.6x 14.7x
Median: 23.6 (5) 2.48 733.5 4.1 10.2 13.9
<CAPTION>
Premium to Unaffected Price
Date One Month Prior
Announced Acquiror/Acquiree Prior Day
<S> <C> <C> <C>
06/01/99 Yorkshire Water/ 42.5% 19.3%
Aquarion
(Excludes Real Estate Earnings)
06/01/99 Yorkshire Water/ 42.5 19.3
Acquarion
(Includes Real Estate Earnings)
03/23/99 California Water/ 52.7 (2) 32.5 (2)
Dominguez
10/13/98 American Water Works/ NA NA
National Enterprises(3)
07/24/98 ENRON/ 37.2 28.0
Wessex Water
06/29/98 Philadelphia Suburban/ 42.9 26.0
Consumers Water
12/19/96 NiSource/ 44.6 23.1
Indianapolis Water
Mean: 44.0% 25.8%
Median: 42.9 26.0
</TABLE>
Notes:
(1) Aggregate value equals equity value plus debt and preferred stock less
cash.
(2) Represents the premium prior to the initial California Water announcement
in November 1998.
(3) National Enterprises was a privately owned company.
(4) Net income based on UK GAAP.
(5) Mean and median exclude Enron/Wessex Water transaction.
B(5)-Page 33
<PAGE>
- --------------------------------------------------------------------------------
UTILITIES CONSOLIDATED RATE AWARDS
- --------------------------------------------------------------------------------
B(5)-Page 34
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Utilities Consolidated Rate Awards
<TABLE>
<CAPTION>
Actual Annual Reward
-----------------------
Rate Awards Dated Filed Effective Date Allowed ROE Amount % Increase
- ---------------------------------------- ----------- -------------- ----------- ------ ----------
Annual Increase Allowed 1999 ($000s)
<S> <C> <C> <C> <C> <C>
Knicks Owego 03/31/98 01/01/99 10.00% 21 2.26%
Knicks Virginia 05/22/97 01/14/99 10.10% 59 7.38%
Knicks Southgate 11/17/98 02/17/99 N/A 7 0.40%
Knicks Pennsylvania - STAS - Annual Rec. 03/31/99 04/10/99 N/A 397 1.85%
Knicks Bethel - STATS - Annual Rec. 03/31/99 04/10/99 9.57% (6) -0.65%
Knicks New York 03/30/98 05/01/99 10.30% 856 2.00%
Knicks Florida-water 05/18/98 05/21/99 9.57% 1,042 11.48%
Knicks Florida-waste water 05/18/98 05/21/99 N/A 322 1.97%
Knicks Delaware-'96 case 08/27/96 07/01/99 10.75% 687 15.00%
------
Total annual rate awards to date $3,385
Quarterly Increase Allowed 1999
Knicks Pennsylvania - DSIC 12/14/98 01/01/99 N/A 54 0.28%
Knicks Pennsylvania - STAS 01/11/99 01/21/99 N/A 52 0.24%
Knicks Pennsylvania - DSIC 04/01/99 04/10/99 N/A 54 0.28%
Knicks Pennsylvania - DSIC 06/16/99 07/01/99 N/A 59 0.29%
------
Total quarterly rate awards to date $219
Carryover from 1998
Knicks Pennsylvania 05/02/97 02/03/98 11.00% $2,140 11.04%
Knicks Pennsylvania - DSIC 03/19/98 04/01/98 N/A 32 0.17%
Knicks Pennsylvania - DSIC 06/16/98 07/01/98 N/A 41 0.21%
Knicks Pennsylvania - DSIC 09/15/98 10/01/98 N/A 30 0.15%
Knicks Pennsylvania - STAS 05/21/98 06/01/98 N/A (23) -0.11%
Knicks Idaho 11/03/97 07/06/98 10.75% 1,916 8.72%
Knicks Indiana (4 cases) 11/03/97 07/08/98 8.54% 1,041 18.34%
Knicks Sloatsburg/Pothat 06/04/98 07/18/98 N/A 29 8.76%
Knicks New Rochelle - purchase water 05/15/98 08/24/98 N/A 453 2.61%
Knicks New Rochelle - 3rd stage 07/31/98 11/19/98 N/A 491 2.81%
Knicks New Rochelle - rev rec 01/16/98 11/01/98 N/A 81 0.46%
Knicks Delaware '98 case 03/11/98 5/11/98 2,385 N/A
------
Total carryover from 1998 $8,616
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Actual Annual Reward
-----------------------
Pending Awards Dated Filed Est. Effective Date Requested ROE Amount % Increase
<S> <C> <C> <C> <C> <C>
UW New Rochelle - rev rec
UW Rhode Island 01/13/99 11/19/99 N/A 137 0.72%
UW Missouri 04/02/99 11/15/99 11.20% 492 23.84%
Total revenue requested 02/02/99 01/02/00 11.20% 1,157 36.52%
------
$1,786
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
B(5)-Page 35
<PAGE>
- --------------------------------------------------------------------------------
U.S. WATER INDUSTRY ENVIRONMENT
- --------------------------------------------------------------------------------
B(5)-Page 36
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Overview
o Water Utilities in the United States generated approximately $26 billion
in revenues in 1997. This is expected to grow at an average annual rate of
5% reaching $29.9 billion by 2000 according to the Environmental Business
Journal
o Only about $4 billion of water utility revenues are currently under
private ownership
o Additionally, wastewater treatment or Publicly Owned Treatment Works
(POTW's) generated $24 billion in annual revenues (less than $0.5 billion
is privately owned)
o The primary growth driver is increased capital expenditures by utilities,
the basis of rate increases
o Domestic water companies spend anywhere from 15% to 50% of their
annual capital budgets to remain in compliance with the Safe
Drinking Water Act, the Clean Water Act and various state laws
o The regulated water utility industry faces little or no competition for
water services within their geographic areas and most utilities avoid
diversification outside of their core water business
o Privatization and outsourcing of municipal operations is gaining
popularity within the United States. However, this market is still in its
infancy, as noted by the low penetration rates of private competitors in
the market
o This market represents enormous potential growth opportunities for
privately owned water utilities or new entrants through consolidation
opportunities and some level of privatization or contract operations
B(5)-Page 37
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Factors Driving Consolidation
- --------------------------------------------------------------------------------
Fragmented Industry
o The industry is extremely fragmented with roughly 90% of the
nation's 58,000 water systems serving only 10% of the nation's
population, the majority of which are small tax payer-owned systems
run by municipalities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EPA Standards
o The U.S. Environmental Protection Agency (EPA) estimated that the
nation must invest a minimum of $138.4 billion over the next 20
years to install, upgrade, or replace infrastructure to ensure the
provision of safe drinking water
o Much of the nation's water infrastructure has been neglected
and as EPA standards rise, contaminant detection technology
improves and capital needs mount, the incentives to
consolidate and privatize will continue to rise
o The Safe Drinking Water Act Amendments of 1996 require water
utilities to disclose contaminant levels in water to
customers. This will expose the poorly operated water systems
to customers which could open up the doors to acquisitions
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Favorable Regulation
o To encourage consolidation, which creates economies of scale and
eliminates smaller troubled systems, many state utility commissions
are beginning to allow goodwill into rate base
o New legislation, Senate Bill 1268, effective January 1, 1998,
authorized the California Public Utility Commission to allow an
investor-owned water utility to earn a return on the purchase price
of a water system up to its replacement value minus depreciation
o Similar treatment under certain circumstances is allowed in Texas,
Pennsylvania, Indiana, Ohio and New York
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
New Players
o New and larger players desiring to play the industry will likely
need to acquire the resources and management to pursue growth
opportunities
o Electric utilities, flush with cash from the sale of generating
plants and pursuing utility distribution strategies, could find the
purchase of a water utility synergistic. Larger water utilities
seeking to expand geographic area or improve critical mass could be
interested in purchasing another publicly traded water utility
- --------------------------------------------------------------------------------
B(5)-Page 38
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Increasing Involvement of U.S. Electric Utilities in the Sector
o Electric utilities are facing the prospect of increased competition and an
uncertain operating environment and are looking to replace recurring
revenues
o DQE is looking to expand and diversify its customer base through the
acquisition of small to mid-size water and wastewater companies
([less than] 3,000 customers)
o Electric utilities flush with cash from the sale of generating plants and
pursuing utility distribution strategies, could find the purchase of a
water utility synergistic
o GPU has publicly stated its interest in the water utility sector
following its asset divestitive
o U.S. electric utilities pursing a convergence strategy may consider
acquiring a water utility to gain access to new customers or maintain
existing customers through cross-selling of electricity to water utility
customers
o NiSource/IWCR
o Overlapping service territories could produce synergies in terms of
billing, service and meter reading which could significantly reduce
operating costs
o Sierra Pacific
o Large U.S. electrics have the financial strength to aggressively pursue an
acquisition strategy in the water industry
o An electric utility could easily pay a significant premium for a
water company in order to capture a new earnings stream with little
impact on its financial statements
B(5)-Page 39
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Selected Recent Precedent Transaction
<TABLE>
<CAPTION>
Date Acquisition Comments
- --------- ------------------- --------------------------------------------------------------------------------
<S> <C> <C>
06/01/99 Yorkshire Water/ o Represents one of the highest price to book ratios paid for a water
Aquarion company
o Demonstrates interest in the U.S. water industry especially by
international companies looking for a foothold in the U.S.
03/23/99 California Water/ o Represents the highest price (as a multiple of Book Value) to date for a
(11/13/98) Dominguez water company
o First acquisition to test California's Senate Bill 1268, which allows
goodwill to be included in rate base and highlights the potential cost
savings that can be achieved by integrating contiguous water systems
o If the CPUC approves the rate base adjustment, an acceleration of
consolidation activity in California is anticipated
10/13/98 American Water Works/ o NEI is privately owned and the parent of Continental Water Company whose
National Enterprises subsidiaries service a population of 1.7MM people in Missouri, Illinois,
Indiana, and New York
o The acquisition reinforces AWK's position as the dominant national
acquiror of water systems. The Company has completed 70 acquisitions in
the 1990s and 19 in 1998, and has 23 pending
o NIPSCO was an unsuccessful bidder for NEI
07/24/98 Enron/ o ENE sees the world water market as a $300Bn annual revenue business in the
Wessex Water early stages of privatizing -- with only two large international players
(Vivendi and Suez Lyonnaise Des Eaux)
o ENE intends to leverage its existing expertise in privatizing and
developing international electric and gas projects with Wessex's expertise
to bid on upcoming privatizations
o ENE may need to purchase a U.S. water utility to gain the resources and
reputation necessary to be a formidable domestic player
06/29/98 Philadelphia Suburban/ o The CONW acquisition marks PCS's entrance to the national arena and
Consumers Water provides the platform to pursue acquisitions in four additional states
o The announcement was the first combination of publicly traded water
utilities in years and likely foreshadows future similar combinations
</TABLE>
B(5)-Page 40
<PAGE>
- --------------------------------------------------------------------------------
OVERVIEW OF AGREEMENT WITH SPURS
- --------------------------------------------------------------------------------
B(5)-Page 41
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Obligations of Spurs in the Event Knicks Determines to Sell to a Third Party(1)
o Spurs prohibited from making an offer to acquire Knicks without the prior
approval of the Knicks board
o However, if the Knicks board determines to auction the company off or
otherwise sell, Spurs would have a right to make an offer
o Once an offer of a third party is accepted by the Knicks board, Spurs must
support a transaction recommended by a majority of the Knicks directors
if:
o 75% of the votes cast by all other holders of Knicks common stock
vote in favor
o The votes of Spurs are required for approval
o Provided, however, Spurs is not obligated to vote for any proposal that
would, in the opinion of an independent banking firm, agreed upon by
Knicks and Spurs, be reasonably likely to have a material adverse effect
on the fair market value of its shares of Knicks
Note: (1) Based on Leboeuf's review of the contracts.
B(5)-Page 42
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Ability of Knicks to Sell to a Third Party(1)
o New Jersey law requires a vote of a majority of shares outstanding in a
merger transaction
o Even a third party cash offer is likely to be effected by a cash merger
thus obliging all Knicks shareholders (including Spurs) to accept cash if
the merger is approved by a majority of the Knicks shares
o Thus even if Spurs had the right (which is questionable) and exercised it,
to vote its shares against the cash merger, if 78% of the other shares
outstanding were cast for the merger it would be approved and binding on
Spurs
o Spurs appears to have the right to solicit proxies against a third party
merger transaction
Note: (1) Based on Leboeuf's review of the contracts.
B(5)-Page 43
<PAGE>
PROJECT HOOPS
- --------------------------------------------------------------------------------
Status of KWS Joint Venture If Knicks Sold to a Third Party(1)
o The master JV agreement dated July 14, 1997, does not prohibit or require
consent for a change of control of a party, e.g., via merger
o There is, however, a provision for voluntary transfers to other parties
o In practical terms, if a third party acquires Knicks, either that party
through Knicks or Spurs could on 60 days notice offer to sell its 50%
interest in KWS at a price based on an initial appraisal by a banker or
accountant
o The party receiving the offer has 30 days to accept or reject
o If the party rejects the offer, the offeror can send a put notice at the
initial price unless that price is contested by the other party and the
offeror shall be entitled to be paid by KWS for its share at that price
o If the price is contested it will be settled by arbitration
o Thus either party can exit the KWS joint venture at a value fixed by a
agreement or arbitration
o However, there is no mechanism for buying out a party that has not offered
to be bought out
Note: (1) Based on Leboeuf's review of the contracts.
B(5)-Page 44
<PAGE>
EXHIBIT B(6)
Strictly Private and Confidential
Presentation To
[LOGO]
Suez Lyonnaise des Eaux
Periodic Review of Strategic Alternatives
in the U.S. Water Market
(Current Intentions Remain Unchanged)
[GRAPHIC] ROTHSCHILD [GRAPHIC]
JUNE 1999
<PAGE>
================================================================================
Contents
Section Page
1. Introduction 1
2. Overview of Alternatives 3
3. Maintain Status Quo 4
4. Sell Interest in Union 5
5. Seek to Acquire Union 6
6. Seek to Renegotiate Governance and other Agreements 7
7. Maintain Status Quo and Acquire Other Regulated Assets 8
8. Summary 9
Exhibits
A 1 Year Relative Stock Price Performance
B Movement in Listed Company Stock Prices Since
Yorkshire/ Aquarion Announcement
[LOGO]
======================================================== Suez Lyonnaise des Eaux
<PAGE>
================================================================================
1. Introduction
. This document has been prepared by Rothschild in order to draw together
earlier work and analysis and to present a review, for discussion purposes,
of Suez Lyonnaise's strategic alternatives with respect to its investments
in the U.S. water market
. A consolidation of the market is underway, which allows for Suez to
implement its strategy, as outlined in February 1998
. The acquisition of Aquarion established a new benchmark for acquisitions:
3x book value. Potential target expectations appear to be ignoring a more
rational earnings and ROE based valuation approach
. While Suez Lyonnaise is presently undertaking a review of its strategic
options, it is understood that Suez Lyonnaise's current intentions with
respect to its investment in Union have remained unchanged
. The changes outlined on page 2 suggest that: 1) the water industry is
consolidating rapidly; 2) there are several well financed consolidators
(Azurix, the English water companies, etc.) at work; 3) price levels for
transactions are high (3x book) and providing impetus to the movement; 4)
there is a consequent need to focus on Suez's key strategic priorities -
the position of Union and perhaps one or two other complementary
opportunities (California)
[LOGO]
======================================================== Suez Lyonnaise des Eaux
B(6)-Page 1
<PAGE>
================================================================================
1. Introduction (continued)
The strategic review has been prompted by several recent key events that
have altered the dynamics of the U.S. water industry:
. European competitors of Suez Lyonnaise are attempting to enter the
U.S. water market by acquisition of regulated water utilities as
platforms for further growth
. U.S. investor owned electric and gas utilities such as DQE (parent of
Aqua Source) and GPU are actively approaching and participating in
auctions to acquire listed water companies
. Azurix The has completed its initial public offering and is now a
major competitive threat in the O&M market
. Yorkshire Water's acquisition of Aquarion and California Water's
acquisition of Dominguez have set benchmark valuation expectations at
3.0x book value for target companies; these expectations are not based
on a short-term analysis of return on equity and other profitability
measures, but on a strategic long-term approach to building a U.S.
presence
. The listed California water companies are all now believed to be `in
play'; it is likely that all privately-owned water companies other
than American Waterworks and Philadelphia Suburban are at least
considering a potential sale. A rapid consolidation is expected in the
next year or two
. Vivendi's acquisition of US Filter has given to a Suez Lyonnaise rival
a leading position as a supplier of water related equipment in the
U.S. market for both municipal and industrial markets
. The next phase of water services outsourcing in the U.S. is expected
to involve longer contracts with the managing entity funding certain
capital expenditures. The contracts will become more competitively bid
and more capital intensive to run
. Suez Lyonnaise needs to make acquisitions of both regulated and
non-regulated companies to remain one of the "top four players"
. Union's current leverage and high dividend payout have constrained its
strategic flexibility to make acquisitions in a market where the
companies with the lowest cost of capital are likely to establish the
leading positions
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2. Overview of alternatives
. The primary options with respect to Suez Lyonnaise's investment in Union
include:
. Maintain the status quo
. Maintain the status quo but find ways to help UWS grow more rapidly
. Sell the Union investment, either reinvesting the proceeds in another
regulated water utility or withdrawing from the U.S. regulated market
. Seek to acquire 100% control of Union
. Seek to renegotiate the governance and other agreements with Union
. Maintain the status quo and seek to acquire other regulated assets
together with Union
. These options are reviewed in more detail on the following pages
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3. Maintain Status Quo
. Retain current 33% investment in Union and 50% participation in UWS;
continue focus on unregulated market
. Refrain from further regulated acquisitions
- --------------------------------------------------------------------------------
Advantages
- --------------------------------------------------------------------------------
. No additional capital outlay except as required in UWS
. Retain ability to market UWS based on Union U.S. presence, expertise and
long history as public company
. Relationship with Union and UWS executives and employees not disturbed
. Avoid disturbance for major UWS clients - business as usual
- --------------------------------------------------------------------------------
Disadvantages
- --------------------------------------------------------------------------------
. Union capital constraints may impact ability of UWS to pursue capital
intensive O&M projects and acquisitions
. Union management unlikely to attack cost inefficiencies within Union
. Despite strong East Coast presence, lack of presence in other parts of U.S.
may constrain UWS in other regions, especially on the West Coast
. New entrants allowed to acquire other regulated companies as platform for
growth in the deregulated market without Suez Lyonnaise strategic response
. Union is already only the fourth largest U.S. water company by market
capitalization; its market share will likely slip further without growth by
acquisition. Could impact UWS marketing
. Suez Lyonnaise potentially exposed to a third party offer for Union
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4. Sell Interest in Union
. Seek to dispose of investment in Union
. Governance agreement severely limits ability of Suez Lyonnaise to extract a
strategic or bid premium: can only sell through public offering with Union
consent or trickle stock into the market; Union unlikely to consent to Suez
Lyonnaise approaching another strategic third party
. Suez Lyonnaise filing for secondary offering may provoke third party
strategic interest
- --------------------------------------------------------------------------------
Advantages
- --------------------------------------------------------------------------------
. Could generate proceeds of $350 million before tax (assuming sale at a
10% discount to market) and a substantial gain
. Could reinvest proceeds either in acquiring control of another regulated
entity or in unregulated sector
. Could retain interest in UWS and focus on unregulated sector; UWS still
benefits from relationship with Union
- --------------------------------------------------------------------------------
Disadvantges
- --------------------------------------------------------------------------------
. Difficult to obtain premium price unless third party appears
. Markets likely to view more as a strategic retreat
. Impact on UWS and Suez's future in deregulated markets
. Public offering of stock would be difficult: large size for water utility
market and Suez Lyonnaise withdrawal sends negative signal
. Any reinvestment will likely require payment of a strategic premium;
proceeds would be taxed and at discount to market price. Likely to be
dilutive to earnings overall
. Union market share likely to decline; could impact UWS marketing
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5. Seek to Acquire Union
. Union to agree to discussions regarding a potential acquisition of the
company
. Union will only engage in discussions if Suez Lyonnaise is willing to offer
a substantial price; Union will have no interest in being put `into play'
at an unattractive price
- --------------------------------------------------------------------------------
Advantages
- --------------------------------------------------------------------------------
. Secures control over Union and UWS
. Opportunity to seek operating efficiencies at Union
. Create greater flexibility and ability to pursue strategic imperatives in
U.S. market; no need to negotiate with Union as a capital constrained
partner
. Removes constraints of Governance, North American Rights and other
agreements with Union
. Creates platform for building leading U.S. water company, regulated and
unregulated
. Synergies available if acquire additional regulated assets
. Potentially reduces Union's cost of capital
. Removes uncertainty for Union's top management
- --------------------------------------------------------------------------------
Disadvantages
- --------------------------------------------------------------------------------
. Union will require a substantial price to be paid
. Significant investment of $800 million or more
. Likely to be slightly dilutive to earnings after goodwill though accretive
before goodwill
. Loss of Union listing and independent U.S. partner potentially a negative
for UWS marketing although LAH/UWS could be relisted at a later date if
this were felt important
. May provoke intervener offer for Union; less likely at price expected to be
required by Union
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6. Seek to Renegotiate Governance and Other Agreements
. Seek to reopen discussions with Union
. Union has stated that it has no interest in negotiations at present; Suez
Lyonnaise appears to have little leverage or grounds to provoke such a
renegotiation
- --------------------------------------------------------------------------------
Advantages
- --------------------------------------------------------------------------------
. Could seek to increase maximum investment percentage, circumstances and
manner in which Suez Lyonnaise could offer to acquire Union and non-compete
clauses
. Could seek a call on UWS if Union sold to a third party
. Would provide greater strategic flexibility in future
- --------------------------------------------------------------------------------
Disadvantages
- --------------------------------------------------------------------------------
. Not a realistic option in short to medium term as Union will not cooperate
. Without further strategic action, suffers from same disadvantages as
maintaining the status quo
. Could lead Union to look for a third party to acquire the company, to take
advantage of the market conditions
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7. Maintain Status Quo and Acquire Other Regulated Assets
. Maintain existing investments in Union and UWS
. Work with Union to acquire further regulated assets using the established
80/20 joint venture structure or some other structure to be agreed
- --------------------------------------------------------------------------------
Advantages
- --------------------------------------------------------------------------------
. Additional capital outlay only for strategic assets
. Maintain current Union relationships and avoid impacting significant,
existing UWS contracts
. Strategic acquisitions can enhance Suez Lyonnaise's U.S. market share and
standing
. West Coast acquisition could provide UWS with enhanced marketing position
in this strategic market
- --------------------------------------------------------------------------------
Disadvantages
- --------------------------------------------------------------------------------
. Union capital constraint and cost of capital reduce competitiveness of
acquisition offers in what will be competitive situations; risk of missing
out on strategic opportunities
. Need for management fee to be paid to Union reduces Suez Lyonnaise returns
. Union management unlikely to attack cost inefficiencies within Union
. Restrictions of Governance and other agreements remain and restrict
flexibility to take strategic actions
. Acquisition of other regulated assets likely to be dilutive to earnings
after goodwill in current market
. Suez Lyonnaise potentially exposed to third party offer for Union
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8. Summary
The following table summarizes the expected positive (+) and negative (-) impact
of the five alternatives
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Status Sell Acquire Renegotiate Status Quo
Quo Investment Union Agreements + Acquisitions
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Feasibility +++ +/(1)/ +/(2)/ --- ++
Future Strategic Flexibility neutral + +++ + neutral
Impact on UWS neutral neutral/- ++ neutral +
U.S. Market Share Implications - - +/- - ++
Earnings Dilution (After Goodwill) neutral - - neutral -
Ability to Extract Union Op. Efficiencies neutral - +++ neutral neutral
Competitiveness when Bidding for Assets - ++ +++ + -
Capital Commitment none none significant none significant
Pre-tax Proceeds from Sale ($m) 0 350 0 0 0
</TABLE>
(1) Likely exit is by large public offering which would be difficult without
large discount to market
(2) If invited to negotiate by Union
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EXHIBIT A: MARKET STATISTICS
1 - Year Relative Stock Price Performance
[LINE GRAPH]
Rothschild
Date UWR Index Water Index
10-Jun-1998 100.00 100.00
11-Jun-1998 98.61 99.81
12-Jun-1998 97.92 99.34
15-Jun-1998 99.31 99.14
16-Jun-1998 99.31 99.46
17-Jun-1998 98.61 99.89
18-Jun-1998 96.53 99.33
19-Jun-1998 97.57 99.22
22-Jun-1998 98.26 99.55
23-Jun-1998 98.26 99.94
24-Jun-1998 97.57 100.01
25-Jun-1998 96.88 100.12
26-Jun-1998 97.92 100.59
29-Jun-1998 99.31 101.56
30-Jun-1998 100.00 104.08
01-Jul-1998 102.08 104.52
02-Jul-1998 102.78 105.29
03-Jul-1998 102.78 105.29
06-Jul-1998 102.08 105.34
07-Jul-1998 104.17 104.98
08-Jul-1998 103.47 104.55
09-Jul-1998 105.21 105.09
10-Jul-1998 104.86 104.80
13-Jul-1998 104.86 104.28
14-Jul-1998 104.86 105.09
15-Jul-1998 104.86 105.32
16-Jul-1998 105.56 105.71
17-Jul-1998 106.25 105.60
20-Jul-1998 105.56 105.62
21-Jul-1998 104.17 104.24
22-Jul-1998 99.31 102.84
23-Jul-1998 101.39 101.95
24-Jul-1998 102.78 102.09
27-Jul-1998 103.47 101.47
28-Jul-1998 102.78 101.59
29-Jul-1998 102.78 102.26
30-Jul-1998 104.51 103.05
31-Jul-1998 103.13 101.70
03-Aug-1998 101.74 100.83
04-Aug-1998 98.61 99.42
05-Aug-1998 98.96 98.74
06-Aug-1998 101.04 100.79
07-Aug-1998 101.04 101.41
10-Aug-1998 99.65 101.27
11-Aug-1998 99.31 101.15
12-Aug-1998 98.96 102.21
13-Aug-1998 98.96 101.98
14-Aug-1998 98.61 103.03
17-Aug-1998 98.26 103.27
18-Aug-1998 97.22 104.67
19-Aug-1998 97.22 103.56
20-Aug-1998 96.53 102.85
21-Aug-1998 97.22 102.68
24-Aug-1998 98.26 104.31
25-Aug-1998 97.92 105.16
26-Aug-1998 97.57 104.51
27-Aug-1998 98.26 103.31
28-Aug-1998 98.26 103.40
31-Aug-1998 98.61 101.87
01-Sep-1998 97.57 104.08
02-Sep-1998 97.57 103.08
03-Sep-1998 97.22 102.75
04-Sep-1998 97.92 102.82
07-Sep-1998 97.92 102.82
08-Sep-1998 98.96 103.25
09-Sep-1998 96.88 102.74
10-Sep-1998 95.49 102.17
11-Sep-1998 94.79 101.62
14-Sep-1998 94.44 101.67
15-Sep-1998 94.44 102.29
16-Sep-1998 93.40 102.71
17-Sep-1998 92.71 103.13
18-Sep-1998 92.01 103.03
21-Sep-1998 92.36 102.48
22-Sep-1998 91.67 104.19
23-Sep-1998 93.40 104.34
24-Sep-1998 94.10 104.08
25-Sep-1998 94.44 103.58
28-Sep-1998 94.44 104.86
29-Sep-1998 94.44 105.96
30-Sep-1998 94.44 106.02
01-Oct-1998 92.01 106.20
02-Oct-1998 93.06 106.35
05-Oct-1998 99.65 109.02
06-Oct-1998 101.74 110.22
07-Oct-1998 101.39 109.26
08-Oct-1998 103.13 108.81
09-Oct-1998 102.43 106.85
12-Oct-1998 101.39 107.57
13-Oct-1998 100.69 106.66
14-Oct-1998 103.13 108.00
15-Oct-1998 102.78 107.54
16-Oct-1998 103.82 107.87
19-Oct-1998 103.82 109.08
20-Oct-1998 105.90 108.59
21-Oct-1998 107.99 111.20
22-Oct-1998 108.68 108.84
23-Oct-1998 108.68 109.41
26-Oct-1998 108.33 109.89
27-Oct-1998 107.64 109.01
28-Oct-1998 105.90 109.49
29-Oct-1998 106.25 109.24
30-Oct-1998 107.64 110.37
02-Nov-1998 109.03 111.92
03-Nov-1998 109.72 111.94
04-Nov-1998 108.68 113.21
05-Nov-1998 109.72 113.71
06-Nov-1998 109.03 114.16
09-Nov-1998 110.76 113.32
10-Nov-1998 110.42 115.31
11-Nov-1998 110.07 115.66
12-Nov-1998 110.76 114.91
13-Nov-1998 107.29 113.35
16-Nov-1998 111.11 114.17
17-Nov-1998 111.11 114.37
18-Nov-1998 111.46 113.85
19-Nov-1998 113.54 114.13
20-Nov-1998 111.81 114.44
23-Nov-1998 111.46 115.51
24-Nov-1998 111.11 115.26
25-Nov-1998 111.46 115.40
26-Nov-1998 111.46 115.40
27-Nov-1998 111.81 114.84
30-Nov-1998 115.28 115.00
01-Dec-1998 116.67 114.95
02-Dec-1998 116.32 114.21
03-Dec-1998 113.54 114.24
04-Dec-1998 116.67 115.33
07-Dec-1998 124.31 116.35
08-Dec-1998 125.35 118.04
09-Dec-1998 122.22 117.43
10-Dec-1998 119.10 117.07
11-Dec-1998 120.49 117.33
14-Dec-1998 119.10 116.17
15-Dec-1998 118.75 116.26
16-Dec-1998 117.01 115.09
17-Dec-1998 114.24 115.49
18-Dec-1998 118.40 116.55
21-Dec-1998 123.26 118.41
22-Dec-1998 132.99 120.41
23-Dec-1998 131.94 121.84
24-Dec-1998 130.21 121.31
25-Dec-1998 130.21 121.31
28-Dec-1998 132.64 121.98
29-Dec-1998 132.99 121.46
30-Dec-1998 133.33 121.90
31-Dec-1998 132.99 122.80
01-Jan-1999 132.99 122.80
04-Jan-1999 131.25 122.18
05-Jan-1999 129.51 121.48
06-Jan-1999 128.13 120.63
07-Jan-1999 126.39 120.00
08-Jan-1999 126.39 120.55
11-Jan-1999 127.43 120.69
12-Jan-1999 125.69 120.05
13-Jan-1999 126.04 118.53
14-Jan-1999 123.96 118.36
15-Jan-1999 122.22 118.15
18-Jan-1999 122.22 118.15
19-Jan-1999 124.31 118.41
20-Jan-1999 127.08 118.33
21-Jan-1999 125.00 117.27
22-Jan-1999 127.43 117.14
25-Jan-1999 124.65 116.58
26-Jan-1999 125.00 116.26
27-Jan-1999 120.83 114.80
28-Jan-1999 122.57 115.44
29-Jan-1999 118.40 114.25
01-Feb-1999 121.53 113.43
02-Feb-1999 119.10 112.15
03-Feb-1999 119.44 113.21
04-Feb-1999 117.71 111.30
05-Feb-1999 113.89 111.18
08-Feb-1999 113.89 111.29
09-Feb-1999 117.01 111.50
10-Feb-1999 112.15 110.63
11-Feb-1999 113.89 110.43
12-Feb-1999 110.76 108.92
15-Feb-1999 110.76 108.92
16-Feb-1999 109.03 108.87
17-Feb-1999 109.38 107.83
18-Feb-1999 109.03 106.44
19-Feb-1999 108.68 106.67
22-Feb-1999 109.38 106.81
23-Feb-1999 111.11 107.20
24-Feb-1999 108.68 106.98
25-Feb-1999 107.99 107.10
26-Feb-1999 106.94 107.92
01-Mar-1999 105.90 107.76
02-Mar-1999 105.90 108.02
03-Mar-1999 103.47 107.25
04-Mar-1999 104.51 106.85
05-Mar-1999 105.56 107.26
08-Mar-1999 109.03 107.84
09-Mar-1999 105.90 107.20
10-Mar-1999 105.56 107.03
11-Mar-1999 105.56 106.39
12-Mar-1999 107.99 106.77
15-Mar-1999 109.03 107.48
16-Mar-1999 109.72 107.42
17-Mar-1999 106.25 106.61
18-Mar-1999 109.03 108.56
19-Mar-1999 107.64 108.27
22-Mar-1999 110.76 108.12
23-Mar-1999 111.81 107.88
24-Mar-1999 111.11 107.79
25-Mar-1999 113.19 108.21
26-Mar-1999 113.89 108.80
29-Mar-1999 115.97 108.96
30-Mar-1999 114.93 110.07
31-Mar-1999 115.28 109.57
01-Apr-1999 117.36 108.95
02-Apr-1999 117.36 108.95
05-Apr-1999 120.14 108.29
06-Apr-1999 114.93 107.76
07-Apr-1999 114.58 108.13
08-Apr-1999 116.32 107.40
09-Apr-1999 116.32 108.43
12-Apr-1999 117.71 107.49
13-Apr-1999 117.01 107.40
14-Apr-1999 118.75 108.89
15-Apr-1999 118.40 108.54
16-Apr-1999 116.32 109.14
19-Apr-1999 113.89 108.46
20-Apr-1999 115.63 107.54
21-Apr-1999 116.67 107.86
22-Apr-1999 112.50 107.55
23-Apr-1999 117.01 107.52
26-Apr-1999 115.63 106.98
27-Apr-1999 116.67 107.03
28-Apr-1999 115.28 107.34
29-Apr-1999 115.28 106.41
30-Apr-1999 115.63 106.04
03-May-1999 117.36 106.82
04-May-1999 117.36 107.30
05-May-1999 118.06 107.46
06-May-1999 118.75 107.86
07-May-1999 119.10 107.96
10-May-1999 128.47 110.98
11-May-1999 124.65 111.15
12-May-1999 121.53 110.24
13-May-1999 119.79 110.99
14-May-1999 116.67 109.95
17-May-1999 115.63 110.31
18-May-1999 115.97 109.94
19-May-1999 117.71 110.81
20-May-1999 121.18 112.11
21-May-1999 123.61 111.63
24-May-1999 125.00 112.42
25-May-1999 124.65 112.22
26-May-1999 123.96 112.93
27-May-1999 122.22 112.97
28-May-1999 120.83 114.20
31-May-1999 120.83 114.20
01-Jun-1999 124.65 118.24
02-Jun-1999 129.17 121.65
03-Jun-1999 123.96 120.40
04-Jun-1999 120.14 120.20
07-Jun-1999 125.00 120.42
08-Jun-1999 121.53 120.69
09-Jun-1999 122.22 120.19
10-Jun-1999 122.57 120.16
11-Jun-1999 120.83 120.88
14-Jun-1999 117.36 119.02
15-Jun-1999 118.40 119.72
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EXHIBIT B
Movement in Listed Company Stock Prices
Since Yorkshire Water/Aquarion Announcement (June 1, 1999)
- --------------------------------------------------------------------------------
Price on Day
Before
Announcement Current Price
Company 5/28/99 6/14/99 Movement %
- --------------------------------------------------------------------------------
Southwest Water Co. $ 14.63 $ 17.38 18.8%
San Jose Water 65.50 76.00 16.0%
Aquarion Co. 31.06 34.31 10.5%
Middlesex Water Corp. 23.69 25.13 6.1%
American States Water Co. 26.69 27.69 3.7%
E' Town Corp. 42.81 43.38 1.3%
Connecticut Water Service 24.00 24.00 0.0%
Consumer Water Co. 31.44 31.44 0.0%
Dominguez Services Corp. 30.25 29.97 (0.9)%
Philadelphia Suburban Corp. 22.00 21.75 (1.1)%
California Water Services 26.00 25.63 (1.4)%
United Water Resources 21.75 21.13 (2.9)%
American Water Works 31.00 29.56 (4.6)%
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EXHIBIT B(7)
STRICTLY PRIVATE AND CONFIDENTIAL
[LOGO]
SUEZ LYONNAISE DES EAUX
REVIEW OF STRATEGIC ALTERNATIVES
REGARDING UNION
[GRAPHIC] ROTHSCHILD [GRAPHIC]
AUGUST 1999
<PAGE>
[GRAPHIC] ======================================================================
This document has been prepared by Rothschild at the request of Suez Lyonnaise
des Eaux ("SLDE") in order to provide an overview of the potential valuation of
Union in the context of an acquisition of Union by SLDE or a third party, or a
sale of SLDE's position in Union. The analysis contained herein is based on
publicly available information and limited additional information provided by
Union, Union's financial adviser and SLDE. Rothschild has not had an opportunity
to conduct due diligence on Union. No assurance can be given as to the accuracy
or otherwise of the information contained herein.
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[GRAPHIC] ======================================================================
CONTENTS
Section Page
1 Background 1
2. Union Financial Forecasts and Assumptions 2
3. Market Statistics 4
4. Valuation Summary 8
5. Potential Sale of Stake in Union 11
6. Pricing Matrix 12
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[GRAPHIC] ======================================================================
CONTENTS
Exhibits Page
I. Discounted Cash Flow Analysis 17
II. Comparable Companies Analysis 19
III. Comparable Acquisition Analysis 22
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I. BACKGROUND
o The U.S. water industry is undergoing a period of rapid consolidation which
is likely to enable two or three market leaders to capture a leading share
of the benefits of U.S. deregulation. Union has slipped into fourth place
following the merger of Philadelphia Suburban and Consumers and the IPO of
Azurix
o The U.S. market is one of the world's largest water markets. A leadership
position can enhance the opportunity of winning privatization business
worldwide
o The U.S. stock market appears to be giving premium ratings to the proactive
industry participants such as American Waterworks, Azurix and Philadelphia
Suburban
o The acquisition of Aquarion by Yorkshire Water has been widely viewed as
marking an acceleration of consolidation of the few remaining listed water
companies. A new valuation benchmark of 3.Ox book value has been set, at
least under current general market conditions
o SLDE owns 32% of Union on a fully diluted basis and has 4 board seats out
of 13
o Union's financial position and stock market rating at present prevent Union
from competing effectively for significant acquisitions on its own and
constrain Union's participation in joint ventures with SLDE
o SLDE's lower cost of capital would provide it with the opportunity to
compete more effectively in acquiring U.S. water assets
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2. UNION FINANCIAL FORECAST AND ASSUMPTIONS
o The financial forecasts used in this presentation have been provided by
Union and include the following key assumption presented to the Union
Board:
[] Annual revenue growth of 2.8% through 2003
[] Utility business EBITDA margins increase from 37.2% in 1999 to 42.9%
in 2003
[] Utility business EBIT margins increase from 25.0% in 1999 to 31.6% in
2003
[] Assumes $216 million in additional equity investments for 1999 - 2003
[] Pro forma sale of mid-western assets to AWK in 1999
[] Assumes cumulative cash proceeds from further divestments of $75
million in 2000 - 2003
[] Capex as a percentage of revenue decreases from 18% in 1999 to 11% in
2003
o The valuation statistics derived by Rothschild are based on 41.7 million
shares, which is the fully diluted number of shares outstanding after
conversion of all outstanding options and Series A preferred shares. After
conversion of its Series A preferred shares, SLDE will own a total of 13.3
million common shares, i.e. 31.9% of the fully diluted outstanding common
shares
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2. UNION FINANCIAL FORECASTS
(Dollars in Millions; Except Per Share Amounts)
<TABLE>
<CAPTION>
Projections (4)
-----------------------------------------------------------------------
1999 2000 2001 2002 2003
<S> <C> <C> <C> <C> <C>
Revenue $ 367.0 $364.5 $379.4 $396.7 $408.5
Growth % 3.0% -0.7% 4.1% 4.6% 3.0%
EBITDA (1) 164.5 (2) 168.5 178.4 189.3 200.2
Margin % 44.8% 46.2% 47.0% 47.7% 49.0%
Growth % 16.6% 2.5% 5.8% 6.1% 5.8%
EBIT (1) 120.0 (2) 126.8 135.0 144.7 154.7
Margin % 32.7% 34.8% 35.6% 36.5% 37.9%
Growth % 18.7% 5.6% 6.5% 7.2% 6.9%
Equity Earnings (3) 6.9 3.2 5.0 5.1 8.9
Growth % -41.3% -53.5% 55.3% 1.3% 75.7%
Net Income $ 47.1 (2) $ 54.3 $ 59.5 $ 65.0 $ 71.7
Growth % 7.3% 15.1% 9.7% 9.2% 10.2%
Earnings Per Share $ 1.22 $ 1.38 $ 1.49 $ 1.61 $ 1.74
Average Shares Outstanding 38.6 39.3 39.9 40.4 41.2
</TABLE>
(1) Includes earnings from affiliates, divestments, investments and
acquisitions and AFUDC
(2) Excludes estimated $6.0 million pretax charge for employee buyout and $5.8
million gain on the sale of real estate
(3) Net equity earnings from Northumbrian Water and UWS less interest on debt
associated with Northumbrian Water
(4) Based on information provided by Union
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[GRAPHIC] ======================================================================
3. MARKET STATISTICS
Total Enterprise Value
(figures in millions except per share values) Current Market Value
--------------------
Primary Shares Outstanding (7/31/99) 38.78
Exercised Options 1.26
Converted Series A Preferred 1.63
Fully Diluted Shares Outstanding 41.68
Price (8/17/99) $ 24.53
---------
Equity Market Value $ 1,022.4
Total Debt (6/30/99) 789.5
Preferred Equity (1) 31.3
Cash (2) (66.5)
Total Net Debt 754.2
---------
Enterprise Value $ 1,776.6
=========
(1) Assumes conversion of Series A preferred equity
(2) Includes options proceeds of $23.1 million on conversion of 1,260,332
options and $35.7 million of restricted cash
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3. MARKET STATISTICS
Key Ratios
1999E 2000E
--------- -----------
Enterprise Value Over:
Revenue 4.84x 4.87x
EBITDA (1) 10.8x 10.5x
EBIT (1) 14.8x 14.Ox
Earnings Per Share (2) $ 1.22 $ 1.38
EPS Growth 2.7% 12.9%
P/E 20.lx 17.8x
6/30/99 12/31/99
-------- -----------
Fully Diluted Book Value $ 520.7 (3) $ 539.6 (4)
Fully Diluted Book Value/Share 12.41 12.86
Price/Fully Diluted Book Value 1.98X 1.91x
(1) Includes earnings in US and UK affiliates, divestments, investments and
acquisitions and AFUDC. Excludes a $6.0 million pretax charge for employee
buyouts and a pretax gain of $5.8 million on the sale of real estate in
1999
(2) Exclusive of $6.0 million pretax charge for employee buyout and $5.8
million gain on sale of real estate
(3) As reported in 06/30/99 Union 10-Q. Also adjusted to reflect the full
conversion of Series A Preferred and the exercise of all options
(4) Based on projected book value as of 12/31/99 as reported in Union Board
materials. Also adjusted to reflect the full conversion of Series A
Preferred and the exercise of all options
[LOGO]
======================================================== Suez Lyonnaise des Eaux
B(7)-Page 5
<PAGE>
[GRAPIC]=======================================================================
3. MARKET STATISTICS
3- Year Relative Price Performance
[LINE GRAPH]
Date Rothschild Water Utility Index Union
16-Aug-1996 100.0000 100.0000
19-Aug-1996 101.9475 103.4483
20-Aug-1996 101.6465 104.3104
21-Aug-1996 101.2206 103.4483
22-Aug-1996 100.9280 106.8966
23-Aug-1996 101.3769 106.0345
26-Aug-1996 102.3113 107.7586
27-Aug-1996 101.9631 109.4828
28-Aug-1996 102.5409 112.0690
29-Aug-1996 102.0244 112.0690
30-Aug-1996 101.6880 112.9310
02-Sep-1996 101.6880 112.9310
03-Sep-1996 101.1994 111.2069
04-Sep-1996 101.5724 110.3448
05-Sep-1996 101.5844 112.9310
06-Sep-1996 101.8986 113.7931
09-Sep-1996 101.5133 112.0690
10-Sep-1996 101.6764 118.1035
11-Sep-1996 101.5790 115.5173
12-Sep-1996 102.4786 115.5173
13-Sep-1996 102.9994 114.6552
16-Sep-1996 101.7154 113.7931
17-Sep-1996 101.1383 112.0690
18-Sep-1996 100.3910 112.0690
19-Sep-1996 99.3260 109.4828
20-Sep-1996 99.1021 112.0690
23-Sep-1996 100.2272 112.9310
24-Sep-1996 100.2398 114.6552
25-Sep-1996 102.0107 115.5173
26-Sep-1996 101.0673 112.0690
27-Sep-1996 101.8697 110.3448
30-Sep-1996 103.1632 112.9310
01-Oct-1996 102.5915 112.9310
02-Oct-1996 102.6163 109.4828
03-Oct-1996 102.4312 108.6207
04-Oct-1996 102.9740 111.2069
07-Oct-1996 103.6542 112.0690
08-Oct-1996 102.3428 112.0690
09-Oct-1996 102.5528 108.6207
10-Oct-1996 102.2668 109.4828
11-Oct-1996 102.4049 112.0690
14-Oct-1996 101.6183 109.4828
15-Oct-1996 101.3342 109.4828
16-Oct-1996 101.3119 108.6207
17-Oct-1996 102.3184 109.4828
18-Oct-1996 100.7604 109.4828
21-Oct-1996 100.8544 107.7586
22-Oct-1996 101.2973 107.7586
23-Oct-1996 101.3040 108.6207
24-Oct-1996 101.2498 109.4828
25-Oct-1996 101.4403 108.6207
28-Oct-1996 100.6143 106.8966
29-Oct-1996 100.6640 105.1724
30-Oct-1996 99.1077 105.1724
31-Oct-1996 99.9670 106.8966
01-Nov-1996 99.3620 105.1724
04-Nov-1996 100.2207 107.7586
05-Nov-1996 99.8083 110.3448
06-Nov-1996 100.1131 110.3448
07-Nov-1996 100.6588 112.0690
08-Nov-1996 100.4245 111.2069
11-Nov-1996 100.5648 111.2069
12-Nov-1996 99.8153 109.4828
13-Nov-1996 98.9008 108.6207
14-Nov-1996 97.9838 106.0345
15-Nov-1996 98.4056 107.7586
18-Nov-1996 98.8538 109.4828
19-Nov-1996 99.6813 109.4828
20-Nov-1996 98.2114 106.8966
21-Nov-1996 98.9975 104.3104
22-Nov-1996 99.0413 105.1724
25-Nov-1996 101.0163 107.7586
26-Nov-1996 100.6432 106.8966
27-Nov-1996 100.9456 105.1724
28-Nov-1996 100.9456 105.1724
29-Nov-1996 100.5023 105.1724
02-Dec-1996 100.1455 104.3104
03-Dec-1996 101.5636 107.7586
04-Dec-1996 101.7719 107.7586
05-Dec-1996 101.5173 106.8966
06-Dec-1996 100.8736 104.3104
09-Dec-1996 101.0056 106.0345
10-Dec-1996 100.2276 106.0345
11-Dec-1996 100.1411 105.1724
12-Dec-1996 99.9483 102.5862
13-Dec-1996 99.1481 101.7241
16-Dec-1996 99.5411 103.4483
17-Dec-1996 98.8570 103.4483
18-Dec-1996 99.2500 105.1724
19-Dec-1996 99.5897 106.0345
20-Dec-1996 101.3201 106.8966
23-Dec-1996 102.0795 103.4483
24-Dec-1996 102.9510 105.1724
25-Dec-1996 102.9510 105.1724
26-Dec-1996 103.4823 106.0345
27-Dec-1996 103.8110 106.0345
30-Dec-1996 104.6003 107.7586
31-Dec-1996 104.2986 106.8966
01-Jan-1997 104.2986 106.8966
02-Jan-1997 102.9317 106.0345
03-Jan-1997 104.5909 106.8966
06-Jan-1997 104.9861 108.6207
07-Jan-1997 104.6822 107.7586
08-Jan-1997 104.6648 104.3104
09-Jan-1997 104.6651 106.0345
10-Jan-1997 104.8026 109.4828
13-Jan-1997 105.6819 112.0690
14-Jan-1997 106.5692 112.9310
15-Jan-1997 106.5203 113.7931
16-Jan-1997 106.1255 112.9310
17-Jan-1997 107.2567 116.3793
20-Jan-1997 107.0600 115.5173
21-Jan-1997 108.4023 114.6552
22-Jan-1997 110.3854 112.9310
23-Jan-1997 111.7186 112.9310
24-Jan-1997 110.7800 113.7931
27-Jan-1997 110.9730 113.7931
28-Jan-1997 112.1935 115.5173
29-Jan-1997 113.0068 118.1035
30-Jan-1997 112.5012 118.9655
31-Jan-1997 112.6307 120.6897
03-Feb-1997 112.7406 122.4138
04-Feb-1997 112.7750 122.4138
05-Feb-1997 112.4574 118.9655
06-Feb-1997 111.6746 118.1035
07-Feb-1997 113.0260 119.8276
10-Feb-1997 111.5753 119.8276
11-Feb-1997 111.7632 120.6897
12-Feb-1997 112.9567 119.8276
13-Feb-1997 113.8768 122.4138
14-Feb-1997 113.9297 122.4138
17-Feb-1997 113.9297 122.4138
18-Feb-1997 114.1082 122.4138
19-Feb-1997 114.5095 123.2759
20-Feb-1997 114.1405 124.1379
21-Feb-1997 115.2020 125.0000
24-Feb-1997 115.2191 124.1379
25-Feb-1997 115.0094 124.1379
26-Feb-1997 114.2553 118.9655
27-Feb-1997 112.9958 119.8276
28-Feb-1997 113.0154 124.1379
03-Mar-1997 114.2077 125.8621
04-Mar-1997 113.9417 126.7241
05-Mar-1997 113.6103 125.0000
06-Mar-1997 112.6520 122.4138
07-Mar-1997 114.1191 120.6897
10-Mar-1997 113.7374 116.3793
11-Mar-1997 113.0604 116.3793
12-Mar-1997 112.0643 114.6552
13-Mar-1997 110.3776 112.0690
14-Mar-1997 110.3637 113.7931
17-Mar-1997 110.1448 111.2069
18-Mar-1997 108.5024 115.5173
19-Mar-1997 107.9384 113.7931
20-Mar-1997 106.6313 110.3448
21-Mar-1997 107.4311 111.2069
24-Mar-1997 107.8187 114.6552
25-Mar-1997 106.8890 110.3448
26-Mar-1997 105.7490 111.2069
27-Mar-1997 105.6828 117.2414
28-Mar-1997 105.6828 117.2414
31-Mar-1997 103.0309 118.1035
01-Apr-1997 104.3673 119.8276
02-Apr-1997 105.6044 120.6897
03-Apr-1997 104.9974 118.1035
04-Apr-1997 104.5791 116.3793
07-Apr-1997 106.0685 119.8276
08-Apr-1997 106.3829 118.9655
09-Apr-1997 106.7625 123.2759
10-Apr-1997 106.2472 119.8276
11-Apr-1997 105.8521 118.1035
14-Apr-1997 105.3777 118.9655
15-Apr-1997 106.1840 120.6897
16-Apr-1997 105.8472 118.1035
17-Apr-1997 105.5198 116.3793
18-Apr-1997 106.8899 119.8276
21-Apr-1997 107.0331 122.4138
22-Apr-1997 107.8864 121.5517
23-Apr-1997 105.9821 119.8276
24-Apr-1997 105.4131 117.2414
25-Apr-1997 105.4947 114.6552
28-Apr-1997 106.4584 115.5173
29-Apr-1997 107.0461 113.7931
30-Apr-1997 106.0635 112.9310
01-May-1997 106.2961 114.6552
02-May-1997 108.6569 121.5517
05-May-1997 110.7604 124.1379
06-May-1997 109.1733 124.1379
07-May-1997 108.8339 123.2759
08-May-1997 107.9412 124.1379
09-May-1997 107.5615 125.0000
12-May-1997 107.6993 124.1379
13-May-1997 107.1026 124.1379
14-May-1997 107.7252 125.0000
15-May-1997 106.7673 124.1379
16-May-1997 109.2498 124.1379
19-May-1997 108.7579 126.7241
20-May-1997 108.6690 124.1379
21-May-1997 107.1788 124.1379
22-May-1997 106.8182 123.2759
23-May-1997 107.7731 125.0000
26-May-1997 107.7731 125.0000
27-May-1997 107.9531 124.1379
28-May-1997 107.1534 124.1379
29-May-1997 107.9551 124.1379
30-May-1997 108.7533 124.1379
02-Jun-1997 109.0044 120.6897
03-Jun-1997 108.2869 119.8276
04-Jun-1997 108.4904 121.5517
05-Jun-1997 109.1495 119.8276
06-Jun-1997 109.1803 121.5517
09-Jun-1997 109.7790 123.2759
10-Jun-1997 108.2247 119.8276
11-Jun-1997 108.7675 121.5517
12-Jun-1997 109.6196 118.9655
13-Jun-1997 109.6786 122.4138
16-Jun-1997 109.2947 119.8276
17-Jun-1997 109.2995 120.6897
18-Jun-1997 108.6950 122.4138
19-Jun-1997 109.8939 121.5517
20-Jun-1997 109.4783 119.8276
23-Jun-1997 109.3476 118.9655
24-Jun-1997 109.9870 123.2759
25-Jun-1997 109.1167 122.4138
26-Jun-1997 108.7285 121.1207
27-Jun-1997 108.8089 120.6897
30-Jun-1997 109.9133 133.6207
01-Jul-1997 110.2808 129.7414
02-Jul-1997 110.4153 126.7241
03-Jul-1997 110.1560 123.2759
04-Jul-1997 110.1560 123.2759
07-Jul-1997 110.1714 121.5517
08-Jul-1997 109.6546 118.9655
09-Jul-1997 109.4230 119.3966
10-Jul-1997 109.2672 120.2586
11-Jul-1997 109.0532 119.8276
14-Jul-1997 110.1366 122.4138
15-Jul-1997 110.2284 126.2931
16-Jul-1997 110.9457 131.0345
17-Jul-1997 109.9640 132.7586
18-Jul-1997 110.1925 131.0345
21-Jul-1997 109.9571 131.4655
22-Jul-1997 110.3289 132.7586
23-Jul-1997 111.2419 135.3448
24-Jul-1997 110.1781 135.3448
25-Jul-1997 110.0187 135.3448
28-Jul-1997 109.8307 132.3276
29-Jul-1997 109.8429 131.4655
30-Jul-1997 110.4036 132.7586
31-Jul-1997 109.9746 131.0345
01-Aug-1997 110.4350 132.7586
04-Aug-1997 110.5349 132.3276
05-Aug-1997 111.3811 132.3276
06-Aug-1997 113.0652 132.7586
07-Aug-1997 113.9722 132.3276
08-Aug-1997 112.7473 131.4655
11-Aug-1997 112.6974 130.6034
12-Aug-1997 112.3546 128.0172
13-Aug-1997 111.7739 122.4138
14-Aug-1997 111.9269 121.5517
15-Aug-1997 112.0779 120.2586
18-Aug-1997 111.5290 118.9655
19-Aug-1997 111.3014 118.5345
20-Aug-1997 112.2605 118.1035
21-Aug-1997 111.9000 117.2414
22-Aug-1997 112.6171 118.5345
25-Aug-1997 112.8409 118.9655
26-Aug-1997 112.9626 124.1379
27-Aug-1997 112.6254 126.7241
28-Aug-1997 111.8401 128.4483
29-Aug-1997 110.2621 123.2759
01-Sep-1997 110.2621 123.2759
02-Sep-1997 111.8501 126.2931
03-Sep-1997 111.1579 124.1379
04-Sep-1997 109.7473 121.1207
05-Sep-1997 110.9584 128.4483
08-Sep-1997 111.5929 128.8793
09-Sep-1997 112.5742 129.3103
10-Sep-1997 112.8241 129.3103
11-Sep-1997 112.0938 128.8793
12-Sep-1997 113.7485 131.0345
15-Sep-1997 113.2300 129.7414
16-Sep-1997 114.7999 131.4655
17-Sep-1997 114.0573 129.7414
18-Sep-1997 113.6609 129.3103
19-Sep-1997 112.8079 128.4483
22-Sep-1997 113.2783 128.0172
23-Sep-1997 114.2538 130.6034
24-Sep-1997 114.2296 126.7241
25-Sep-1997 113.4950 124.1379
26-Sep-1997 113.4487 125.4310
29-Sep-1997 113.7409 128.0172
30-Sep-1997 113.8188 128.4483
01-Oct-1997 115.1522 129.7414
02-Oct-1997 116.0167 131.0345
03-Oct-1997 116.3970 128.0172
06-Oct-1997 117.9324 130.1724
07-Oct-1997 119.4136 129.3103
08-Oct-1997 117.7686 129.7414
09-Oct-1997 117.4406 131.4655
10-Oct-1997 116.9252 131.4655
13-Oct-1997 117.4277 131.4655
14-Oct-1997 117.7548 131.4655
15-Oct-1997 118.7322 131.8966
16-Oct-1997 117.5571 128.8793
17-Oct-1997 115.0650 125.4310
20-Oct-1997 116.4475 125.8621
21-Oct-1997 115.9768 125.8621
22-Oct-1997 115.2503 125.8621
23-Oct-1997 114.3080 124.5690
24-Oct-1997 114.4688 126.2931
27-Oct-1997 110.8952 117.2414
28-Oct-1997 112.4072 116.3793
29-Oct-1997 114.9487 116.3793
30-Oct-1997 113.2682 113.3621
31-Oct-1997 114.5638 114.2241
03-Nov-1997 116.0058 117.6724
04-Nov-1997 115.5065 117.6724
05-Nov-1997 116.1872 117.6724
06-Nov-1997 116.3303 117.2414
07-Nov-1997 116.1746 118.5345
10-Nov-1997 118.1795 119.8276
11-Nov-1997 118.5486 119.3966
12-Nov-1997 119.1232 117.6724
13-Nov-1997 118.9182 118.1035
14-Nov-1997 122.2311 121.5517
17-Nov-1997 123.8649 121.1207
18-Nov-1997 123.4996 120.6897
19-Nov-1997 125.3879 121.5517
20-Nov-1997 130.4787 123.2759
21-Nov-1997 132.6291 121.1207
24-Nov-1997 131.5904 121.1207
25-Nov-1997 130.8251 121.5517
26-Nov-1997 131.3421 123.7069
27-Nov-1997 131.3421 123.7069
28-Nov-1997 132.5363 124.1379
01-Dec-1997 135.6965 128.0172
02-Dec-1997 135.3382 128.0172
03-Dec-1997 136.6005 128.8793
04-Dec-1997 134.5679 127.1552
05-Dec-1997 132.6431 127.1552
08-Dec-1997 132.3656 128.4483
09-Dec-1997 129.9953 129.3103
10-Dec-1997 127.7619 129.3103
11-Dec-1997 127.4249 130.6034
12-Dec-1997 127.0900 131.4655
15-Dec-1997 126.4460 131.0345
16-Dec-1997 125.6802 128.4483
17-Dec-1997 126.6875 128.4483
18-Dec-1997 129.1782 129.3103
19-Dec-1997 129.5690 129.7414
22-Dec-1997 131.6397 131.4655
23-Dec-1997 134.1200 132.3276
24-Dec-1997 134.4770 131.4655
25-Dec-1997 134.4770 131.4655
26-Dec-1997 134.0952 129.7414
29-Dec-1997 134.4176 130.6034
30-Dec-1997 136.0928 134.4828
31-Dec-1997 137.5579 134.9138
01-Jan-1998 137.5579 134.9138
02-Jan-1998 136.1035 131.8966
05-Jan-1998 132.7942 129.3103
06-Jan-1998 131.8573 129.7414
07-Jan-1998 132.1413 130.6034
08-Jan-1998 133.5851 128.4483
09-Jan-1998 131.4073 130.1724
12-Jan-1998 132.6588 128.0172
13-Jan-1998 132.3962 129.3103
14-Jan-1998 133.9382 128.8793
15-Jan-1998 134.4908 128.0172
16-Jan-1998 136.7262 127.5862
19-Jan-1998 136.7262 127.5862
20-Jan-1998 138.4087 127.5862
21-Jan-1998 137.0629 126.2931
22-Jan-1998 136.5720 127.5862
23-Jan-1998 137.4921 127.5862
26-Jan-1998 137.3589 126.2931
27-Jan-1998 137.0621 125.8621
28-Jan-1998 137.1476 126.7241
29-Jan-1998 136.3723 128.8793
30-Jan-1998 135.2955 125.0000
02-Feb-1998 135.0608 128.8793
03-Feb-1998 133.7625 131.4655
04-Feb-1998 137.0504 137.0690
05-Feb-1998 137.8551 134.9138
06-Feb-1998 137.5628 136.6379
09-Feb-1998 136.4857 134.9138
10-Feb-1998 136.3875 133.1897
11-Feb-1998 135.8687 129.3103
12-Feb-1998 137.2437 132.3276
13-Feb-1998 136.6784 134.9138
16-Feb-1998 136.6784 134.9138
17-Feb-1998 137.8524 134.0517
18-Feb-1998 139.0069 132.7586
19-Feb-1998 139.7916 134.9138
20-Feb-1998 140.2728 131.8966
23-Feb-1998 139.6322 131.0345
24-Feb-1998 140.7096 133.1897
25-Feb-1998 142.3829 134.4828
26-Feb-1998 142.5228 133.1897
27-Feb-1998 142.3731 135.3448
02-Mar-1998 142.8628 134.0517
03-Mar-1998 142.9136 133.1897
04-Mar-1998 141.7967 131.8966
05-Mar-1998 138.7762 130.6034
06-Mar-1998 140.8654 131.4655
09-Mar-1998 141.3955 131.0345
10-Mar-1998 142.2872 131.0345
11-Mar-1998 142.4665 128.0172
12-Mar-1998 143.4865 126.7241
13-Mar-1998 143.0000 124.5690
16-Mar-1998 142.5670 126.7241
17-Mar-1998 141.1894 125.4310
18-Mar-1998 142.8664 123.7069
19-Mar-1998 142.2700 124.5690
20-Mar-1998 142.2571 126.2931
23-Mar-1998 143.8600 125.0000
24-Mar-1998 146.9024 127.1552
25-Mar-1998 145.4818 125.8621
26-Mar-1998 143.0529 124.1379
27-Mar-1998 142.9720 123.2759
30-Mar-1998 143.4942 123.2759
31-Mar-1998 143.9225 124.5690
01-Apr-1998 145.0539 126.2931
02-Apr-1998 147.8270 125.0000
03-Apr-1998 147.5895 124.5690
06-Apr-1998 145.0449 124.5690
07-Apr-1998 144.6571 125.8621
08-Apr-1998 145.1583 125.0000
09-Apr-1998 143.8927 125.8621
10-Apr-1998 143.8927 125.8621
13-Apr-1998 142.8317 126.7241
14-Apr-1998 144.1966 125.8621
15-Apr-1998 142.5454 124.5690
16-Apr-1998 140.0703 123.7069
17-Apr-1998 140.2480 123.7069
20-Apr-1998 138.9622 121.5517
21-Apr-1998 137.0359 121.5517
22-Apr-1998 136.4225 120.6897
23-Apr-1998 134.7494 116.3793
24-Apr-1998 132.6469 115.9483
27-Apr-1998 132.5844 115.9483
28-Apr-1998 132.9207 118.1035
29-Apr-1998 135.6900 118.5345
30-Apr-1998 137.5952 119.3966
01-May-1998 138.4163 118.5345
04-May-1998 139.4929 120.2586
05-May-1998 137.8842 120.2586
06-May-1998 136.9069 119.8276
07-May-1998 136.4380 118.9655
08-May-1998 137.7550 119.8276
11-May-1998 136.4450 118.9655
12-May-1998 136.5833 117.6724
13-May-1998 136.2106 114.6552
14-May-1998 135.7576 113.7931
15-May-1998 135.4618 114.2241
18-May-1998 134.5245 111.2069
19-May-1998 135.1206 112.5000
20-May-1998 134.3518 112.5000
21-May-1998 134.1007 112.0690
22-May-1998 134.8054 113.7931
25-May-1998 134.8054 113.7931
26-May-1998 130.7437 111.2069
27-May-1998 130.1910 109.9138
28-May-1998 132.4329 110.3448
29-May-1998 132.9433 110.7759
01-Jun-1998 132.3493 112.0690
02-Jun-1998 134.7685 112.9310
03-Jun-1998 134.9726 113.7931
04-Jun-1998 134.4437 115.5173
05-Jun-1998 136.2268 116.8104
08-Jun-1998 138.6771 118.5345
09-Jun-1998 140.3631 124.1379
10-Jun-1998 138.6607 124.1379
11-Jun-1998 138.2296 122.4138
12-Jun-1998 138.3138 121.5517
15-Jun-1998 138.8489 123.2759
16-Jun-1998 138.9741 123.2759
17-Jun-1998 140.6914 122.4138
18-Jun-1998 139.5100 119.8276
19-Jun-1998 136.3772 121.1207
22-Jun-1998 137.9637 121.9828
23-Jun-1998 138.4156 121.9828
24-Jun-1998 138.9383 121.1207
25-Jun-1998 138.4193 120.2586
26-Jun-1998 138.7045 121.5517
29-Jun-1998 140.9967 123.2759
30-Jun-1998 144.0643 124.1379
01-Jul-1998 144.4785 126.7241
02-Jul-1998 146.6129 127.5862
03-Jul-1998 146.6129 127.5862
06-Jul-1998 145.9875 126.7241
07-Jul-1998 145.5862 129.3103
08-Jul-1998 144.9977 128.4483
09-Jul-1998 147.4186 130.6034
10-Jul-1998 146.7306 130.1724
13-Jul-1998 146.1527 130.1724
14-Jul-1998 147.1509 130.1724
15-Jul-1998 148.0212 130.1724
16-Jul-1998 149.3710 131.0345
17-Jul-1998 149.5496 131.8966
20-Jul-1998 150.4119 131.0345
21-Jul-1998 148.3420 129.3103
22-Jul-1998 145.4360 123.2759
23-Jul-1998 143.8139 125.8621
24-Jul-1998 144.2678 127.5862
27-Jul-1998 142.1000 128.4483
28-Jul-1998 140.6883 127.5862
29-Jul-1998 140.5191 127.5862
30-Jul-1998 142.8910 129.7414
31-Jul-1998 141.1624 128.0172
03-Aug-1998 139.9947 126.2931
04-Aug-1998 137.7333 122.4138
05-Aug-1998 138.5261 122.8448
06-Aug-1998 141.4252 125.4310
07-Aug-1998 142.1732 125.4310
10-Aug-1998 140.9793 123.7069
11-Aug-1998 139.9363 123.2759
12-Aug-1998 143.2168 122.8448
13-Aug-1998 143.1113 122.8448
14-Aug-1998 145.1513 122.4138
17-Aug-1998 145.3346 121.9828
18-Aug-1998 147.1823 120.6897
19-Aug-1998 143.5745 120.6897
20-Aug-1998 141.0524 119.8276
21-Aug-1998 142.7395 120.6897
24-Aug-1998 145.6835 121.9828
25-Aug-1998 146.5856 121.5517
26-Aug-1998 145.1246 121.1207
27-Aug-1998 141.1440 121.9828
28-Aug-1998 142.0034 121.9828
31-Aug-1998 138.3713 122.4138
01-Sep-1998 141.6467 121.1207
02-Sep-1998 141.0756 121.1207
03-Sep-1998 139.2474 120.6897
04-Sep-1998 139.8061 121.5517
07-Sep-1998 139.8061 121.5517
08-Sep-1998 141.4353 122.8448
09-Sep-1998 141.5305 120.2586
10-Sep-1998 139.4547 118.5345
11-Sep-1998 140.1936 117.6724
14-Sep-1998 140.5121 117.2414
15-Sep-1998 142.3428 117.2414
16-Sep-1998 143.7523 115.9483
17-Sep-1998 143.3705 115.0862
18-Sep-1998 144.8855 114.2241
21-Sep-1998 143.8403 114.6552
22-Sep-1998 146.0488 113.7931
23-Sep-1998 146.9355 115.9483
24-Sep-1998 145.2253 116.8104
25-Sep-1998 145.9039 117.2414
28-Sep-1998 147.8260 117.2414
29-Sep-1998 148.7150 117.2414
30-Sep-1998 149.2518 117.2414
01-Oct-1998 150.1673 114.2241
02-Oct-1998 150.1661 115.5173
05-Oct-1998 154.6162 123.7069
06-Oct-1998 155.8174 126.2931
07-Oct-1998 154.8951 125.8621
08-Oct-1998 153.8617 128.0172
09-Oct-1998 150.1045 127.1552
12-Oct-1998 151.7197 125.8621
13-Oct-1998 150.3106 125.0000
14-Oct-1998 151.9080 128.0172
15-Oct-1998 152.2322 127.5862
16-Oct-1998 153.0244 128.8793
19-Oct-1998 152.5327 128.8793
20-Oct-1998 150.7648 131.4655
21-Oct-1998 152.0227 134.0517
22-Oct-1998 150.8563 134.9138
23-Oct-1998 150.6622 134.9138
26-Oct-1998 151.4585 134.4828
27-Oct-1998 151.0230 133.6207
28-Oct-1998 151.4530 131.4655
29-Oct-1998 151.8006 131.8966
30-Oct-1998 152.5811 133.6207
02-Nov-1998 153.7263 135.3448
03-Nov-1998 154.9108 136.2069
04-Nov-1998 154.9186 134.9138
05-Nov-1998 156.4884 136.2069
06-Nov-1998 156.4339 135.3448
09-Nov-1998 156.5756 137.5000
10-Nov-1998 158.6559 137.0690
11-Nov-1998 158.5959 136.6379
12-Nov-1998 157.7233 137.5000
13-Nov-1998 156.7774 133.1897
16-Nov-1998 157.1157 137.9310
17-Nov-1998 157.9535 137.9310
18-Nov-1998 156.5758 138.3621
19-Nov-1998 156.1588 140.9483
20-Nov-1998 154.8078 138.7931
23-Nov-1998 155.6348 138.3621
24-Nov-1998 155.2657 137.9310
25-Nov-1998 155.5756 138.3621
26-Nov-1998 155.5756 138.3621
27-Nov-1998 155.4307 138.7931
30-Nov-1998 153.5349 143.1034
01-Dec-1998 153.7578 144.8276
02-Dec-1998 153.8300 144.3966
03-Dec-1998 153.5950 140.9483
04-Dec-1998 155.3280 144.8276
07-Dec-1998 158.6626 154.3103
08-Dec-1998 160.3490 155.6034
09-Dec-1998 159.7313 151.7241
10-Dec-1998 158.4792 147.8448
11-Dec-1998 158.4841 149.5690
14-Dec-1998 156.1789 147.8448
15-Dec-1998 156.6600 147.4138
16-Dec-1998 156.4309 145.2586
17-Dec-1998 158.0036 141.8103
18-Dec-1998 158.9819 146.9828
21-Dec-1998 161.9538 153.0172
22-Dec-1998 162.8736 165.0862
23-Dec-1998 163.3909 163.7931
24-Dec-1998 162.1304 161.6379
25-Dec-1998 162.1304 161.6379
28-Dec-1998 163.2603 164.6552
29-Dec-1998 163.7804 165.0862
30-Dec-1998 165.8881 165.5172
31-Dec-1998 168.9434 165.0862
01-Jan-1999 168.9434 165.0862
04-Jan-1999 167.8734 162.9310
05-Jan-1999 167.1355 160.7759
06-Jan-1999 166.3689 159.0517
07-Jan-1999 164.9880 156.8966
08-Jan-1999 165.2645 156.8966
11-Jan-1999 164.3229 158.1897
12-Jan-1999 164.0287 156.0345
13-Jan-1999 163.2007 156.4655
14-Jan-1999 161.9800 153.8793
15-Jan-1999 161.4527 151.7241
18-Jan-1999 161.4527 151.7241
19-Jan-1999 160.0869 154.3103
20-Jan-1999 158.9308 157.7586
21-Jan-1999 157.6644 155.1724
22-Jan-1999 158.7427 158.1897
25-Jan-1999 157.5561 154.7414
26-Jan-1999 156.5988 155.1724
27-Jan-1999 153.9039 150.0000
28-Jan-1999 153.9392 152.1552
29-Jan-1999 150.8372 146.9828
01-Feb-1999 151.3892 150.8621
02-Feb-1999 151.0979 147.8448
03-Feb-1999 152.6011 148.2759
04-Feb-1999 151.7783 146.1207
05-Feb-1999 150.6706 141.3793
08-Feb-1999 149.3663 141.3793
09-Feb-1999 149.5480 145.2586
10-Feb-1999 148.2087 139.2241
11-Feb-1999 148.3991 141.3793
12-Feb-1999 146.7673 137.5000
15-Feb-1999 146.7673 137.5000
16-Feb-1999 147.4916 135.3448
17-Feb-1999 146.4612 135.7759
18-Feb-1999 146.3273 135.3448
19-Feb-1999 147.2895 134.9138
22-Feb-1999 147.5532 135.7759
23-Feb-1999 146.1576 137.9310
24-Feb-1999 145.6331 134.9138
25-Feb-1999 145.7491 134.0517
26-Feb-1999 145.5700 132.7586
01-Mar-1999 145.3506 131.4655
02-Mar-1999 145.8580 131.4655
03-Mar-1999 145.2354 128.4483
04-Mar-1999 145.5000 129.7414
05-Mar-1999 146.1312 131.0345
08-Mar-1999 146.3591 135.3448
09-Mar-1999 145.3304 131.4655
10-Mar-1999 144.2030 131.0345
11-Mar-1999 144.2030 131.0345
12-Mar-1999 145.2888 134.0517
15-Mar-1999 145.2152 135.3448
16-Mar-1999 143.9614 136.2069
17-Mar-1999 143.6013 131.8966
18-Mar-1999 146.0153 135.3448
19-Mar-1999 144.6573 133.6207
22-Mar-1999 146.5666 137.5000
23-Mar-1999 147.0633 138.7931
24-Mar-1999 145.9466 137.9310
25-Mar-1999 146.3852 140.5172
26-Mar-1999 146.7200 141.3793
29-Mar-1999 147.2276 143.9655
30-Mar-1999 147.3241 142.6724
31-Mar-1999 147.4210 143.1034
01-Apr-1999 148.1950 145.6897
02-Apr-1999 148.1950 145.6897
05-Apr-1999 147.8209 149.1379
06-Apr-1999 146.7781 142.6724
07-Apr-1999 146.7182 142.2414
08-Apr-1999 146.6649 144.3966
09-Apr-1999 148.0376 144.3966
12-Apr-1999 147.6509 146.1207
13-Apr-1999 146.0912 145.2586
14-Apr-1999 148.6939 147.4138
15-Apr-1999 149.0131 146.9828
16-Apr-1999 148.9118 144.3966
19-Apr-1999 148.1867 141.3793
20-Apr-1999 148.2457 143.5345
21-Apr-1999 147.6710 144.8276
22-Apr-1999 146.3567 139.6552
23-Apr-1999 146.1344 145.2586
26-Apr-1999 145.2300 143.5345
27-Apr-1999 145.2723 144.8276
28-Apr-1999 144.6500 143.1034
29-Apr-1999 145.1069 143.1034
30-Apr-1999 144.6380 143.5345
03-May-1999 147.5212 145.6897
04-May-1999 148.0119 145.6897
05-May-1999 147.0153 146.5517
06-May-1999 146.4808 147.4138
07-May-1999 145.4372 147.8448
10-May-1999 148.6676 159.4828
11-May-1999 148.8295 154.7414
12-May-1999 147.9751 150.8621
13-May-1999 148.1643 148.7069
14-May-1999 145.4069 144.8276
17-May-1999 146.2953 143.5345
18-May-1999 146.6213 143.9655
19-May-1999 147.5932 146.1207
20-May-1999 152.0324 150.4310
21-May-1999 150.5862 153.4483
24-May-1999 152.1530 155.1724
25-May-1999 153.2106 154.7414
26-May-1999 152.3235 153.8793
27-May-1999 153.0800 151.7241
28-May-1999 153.7813 150.0000
31-May-1999 153.7813 150.0000
01-Jun-1999 154.7959 154.7414
02-Jun-1999 157.2500 160.3448
03-Jun-1999 154.9531 153.8793
04-Jun-1999 155.1324 149.1379
07-Jun-1999 154.7011 155.1724
08-Jun-1999 153.9272 150.8621
09-Jun-1999 153.7000 151.7241
10-Jun-1999 153.2568 152.1552
11-Jun-1999 153.9139 150.0000
14-Jun-1999 150.9629 145.6897
15-Jun-1999 151.4500 146.9828
16-Jun-1999 152.8591 151.2931
17-Jun-1999 154.1212 152.5862
18-Jun-1999 154.5647 151.2931
21-Jun-1999 154.2734 148.7069
22-Jun-1999 156.2028 152.5862
23-Jun-1999 154.8423 147.4138
24-Jun-1999 152.5639 150.0000
25-Jun-1999 156.4081 149.5690
28-Jun-1999 157.8720 157.3276
29-Jun-1999 159.0443 156.0345
30-Jun-1999 158.1538 156.4655
01-Jul-1999 158.2752 156.0345
02-Jul-1999 160.2171 156.0345
05-Jul-1999 160.2171 156.0345
06-Jul-1999 158.1446 155.6034
07-Jul-1999 158.5482 151.2931
08-Jul-1999 159.0689 153.8793
09-Jul-1999 158.8700 152.5862
12-Jul-1999 158.7674 147.4138
13-Jul-1999 158.2808 150.0000
14-Jul-1999 160.3765 150.4310
15-Jul-1999 161.5896 152.5862
16-Jul-1999 162.5293 154.7414
19-Jul-1999 160.7470 154.7414
20-Jul-1999 158.3692 155.1724
21-Jul-1999 157.9392 155.1724
22-Jul-1999 158.4255 164.6552
23-Jul-1999 159.2735 162.5000
26-Jul-1999 156.8845 159.9138
27-Jul-1999 157.0695 158.6207
28-Jul-1999 158.1794 159.4828
29-Jul-1999 157.8922 159.4828
30-Jul-1999 157.9343 159.4828
02-Aug-1999 158.0023 160.7759
03-Aug-1999 159.0134 164.2241
04-Aug-1999 158.4715 164.6552
05-Aug-1999 157.7232 164.6552
06-Aug-1999 157.4385 159.4828
09-Aug-1999 156.6303 159.9138
10-Aug-1999 156.4607 160.7759
11-Aug-1999 156.4291 160.7759
12-Aug-1999 155.7823 159.0517
13-Aug-1999 155.9952 162.0690
16-Aug-1999 157.0896 166.3793
17-Aug-1999 157.3347 169.1810
Union's stock has performed in line with its peers
Water Utility Index includes: American Water Works Co. (AWK), United Water
Resources (UWR), Philadelphia Suburban Corp (PSC), E' Town Corp (ETW),
California Water Services Co (CWT), Southern California Water/American States
Water Co (AWR), San Jose Water (SJW), Middlesex Water Corp (MSEX), Connecticut
Water Services Co (CTWS), Southwest Water Co (SWWC)
[GRAPHIC]
======================================================== Suez Lyonnaise des Eaux
B(7)-Page 6
<PAGE>
[GRAPHIC] ======================================================================
3. MARKET STATISTICS
[LINE GRAPH]
1- Year Price Volume Graph
$24.53 per share
on 8/17/99
Date Close Volume ------------------
18-Aug-1998 17.5000 41.1 Max $24.53
19-Aug-1998 17.5000 25.1 Min $16.50
20-Aug-1998 17.3750 28.2 Current $24.53
21-Aug-1998 17.5000 28.3 30 Day Avg $22.98
24-Aug-1998 17.6875 37.1 ------------------
25-Aug-1998 17.6250 33.4
26-Aug-1998 17.5625 21.6
27-Aug-1998 17.6875 24.9
28-Aug-1998 17.6875 24.5
31-Aug-1998 17.7500 26.1
01-Sep-1998 17.5625 46.5
02-Sep-1998 17.5625 41.9
03-Sep-1998 17.5000 39.2
04-Sep-1998 17.6250 17.1
08-Sep-1998 17.8125 28.4
09-Sep-1998 17.4375 21.0
10-Sep-1998 17.1875 73.0
11-Sep-1998 17.0625 40.7
14-Sep-1998 17.0000 24.7
15-Sep-1998 17.0000 25.0
16-Sep-1998 16.8125 13.3
17-Sep-1998 16.6875 63.8
18-Sep-1998 16.5625 75.1
21-Sep-1998 16.6250 25.0
22-Sep-1998 16.5000 63.8
23-Sep-1998 16.8125 55.3
24-Sep-1998 16.9375 29.4
25-Sep-1998 17.0000 22.7
28-Sep-1998 17.0000 39.4
29-Sep-1998 17.0000 44.7
30-Sep-1998 17.0000 10.7
01-Oct-1998 16.5625 47.5
02-Oct-1998 16.7500 27.9
05-Oct-1998 17.9375 82.6
06-Oct-1998 18.3125 48.9
07-Oct-1998 18.2500 39.1
08-Oct-1998 18.5625 47.7
09-Oct-1998 18.4375 49.7
12-Oct-1998 18.2500 12.4
13-Oct-1998 18.1250 19.8
14-Oct-1998 18.5625 19.6
15-Oct-1998 18.5000 35.1
16-Oct-1998 18.6875 31.1
19-Oct-1998 18.6875 22.6
20-Oct-1998 19.0625 29.0
21-Oct-1998 19.4375 49.1
22-Oct-1998 19.5625 60.9
23-Oct-1998 19.5625 51.7
26-Oct-1998 19.5000 25.7
27-Oct-1998 19.3750 54.8
28-Oct-1998 19.0625 17.0
29-Oct-1998 19.1250 20.9
30-Oct-1998 19.3750 80.9
02-Nov-1998 19.6250 24.8
03-Nov-1998 19.7500 26.5
04-Nov-1998 19.5625 16.0
05-Nov-1998 19.7500 21.5
06-Nov-1998 19.6250 24.8
09-Nov-1998 19.9375 33.5
10-Nov-1998 19.8750 48.1
11-Nov-1998 19.8125 35.6
12-Nov-1998 19.9375 22.6
13-Nov-1998 19.3125 34.7
16-Nov-1998 20.0000 27.7
17-Nov-1998 20.0000 26.6
18-Nov-1998 20.0625 32.5
19-Nov-1998 20.4375 33.8
20-Nov-1998 20.1250 23.2
23-Nov-1998 20.0625 29.3
24-Nov-1998 20.0000 57.4
25-Nov-1998 20.0625 21.7
27-Nov-1998 20.1250 12.4
30-Nov-1998 20.7500 31.4
01-Dec-1998 21.0000 48.8
02-Dec-1998 20.9375 37.6
03-Dec-1998 20.4375 33.8
04-Dec-1998 21.0000 28.6
07-Dec-1998 22.3750 65.0
08-Dec-1998 22.5625 97.9
09-Dec-1998 22.0000 28.0
10-Dec-1998 21.4375 46.7
11-Dec-1998 21.6875 22.3
14-Dec-1998 21.4375 24.7
15-Dec-1998 21.3750 37.1
16-Dec-1998 21.0625 15.0
17-Dec-1998 20.5625 43.2
18-Dec-1998 21.3125 43.3
21-Dec-1998 22.1875 109.0
22-Dec-1998 23.9375 101.6
23-Dec-1998 23.7500 60.1
24-Dec-1998 23.4375 26.3
28-Dec-1998 23.8750 35.9
29-Dec-1998 23.9375 25.9
30-Dec-1998 24.0000 43.3
31-Dec-1998 23.9375 31.9
04-Jan-1999 23.6250 73.1
05-Jan-1999 23.3125 87.4
06-Jan-1999 23.0625 50.2
07-Jan-1999 22.7500 47.0
08-Jan-1999 22.7500 78.8
11-Jan-1999 22.9375 58.5
12-Jan-1999 22.6250 26.1
13-Jan-1999 22.6875 51.5
14-Jan-1999 22.3125 25.8
15-Jan-1999 22.0000 31.0
19-Jan-1999 22.3750 31.9
20-Jan-1999 22.8750 24.6
21-Jan-1999 22.5000 27.3
22-Jan-1999 22.9375 19.3
25-Jan-1999 22.4375 26.8
26-Jan-1999 22.5000 14.6
27-Jan-1999 21.7500 34.7
28-Jan-1999 22.0625 16.8
29-Jan-1999 21.3125 28.4
01-Feb-1999 21.8750 33.8
02-Feb-1999 21.4375 21.3
03-Feb-1999 21.5000 25.2
04-Feb-1999 21.1875 20.4
05-Feb-1999 20.5000 26.0
08-Feb-1999 20.5000 39.7
09-Feb-1999 21.0625 42.1
10-Feb-1999 20.1875 32.1
11-Feb-1999 20.5000 32.2
12-Feb-1999 19.9375 36.7
16-Feb-1999 19.6250 35.4
17-Feb-1999 19.6875 28.7
18-Feb-1999 19.6250 30.8
19-Feb-1999 19.5625 26.3
22-Feb-1999 19.6875 24.5
23-Feb-1999 20.0000 31.2
24-Feb-1999 19.5625 50.3
25-Feb-1999 19.4375 28.4
26-Feb-1999 19.2500 52.9
01-Mar-1999 19.0625 63.9
02-Mar-1999 19.0625 50.3
03-Mar-1999 18.6250 44.4
04-Mar-1999 18.8125 47.9
05-Mar-1999 19.0000 21.1
08-Mar-1999 19.6250 18.9
09-Mar-1999 19.0625 20.2
10-Mar-1999 19.0000 44.4
11-Mar-1999 19.0000 38.1
12-Mar-1999 19.4375 29.6
15-Mar-1999 19.6250 18.0
16-Mar-1999 19.7500 46.5
17-Mar-1999 19.1250 36.5
18-Mar-1999 19.6250 34.3
19-Mar-1999 19.3750 23.2
22-Mar-1999 19.9375 35.0
23-Mar-1999 20.1250 42.6
24-Mar-1999 20.0000 21.4
25-Mar-1999 20.3750 34.0
26-Mar-1999 20.5000 21.1
29-Mar-1999 20.8750 15.3
30-Mar-1999 20.6875 29.3
31-Mar-1999 20.7500 22.8
01-Apr-1999 21.1250 31.7
05-Apr-1999 21.6250 33.6
06-Apr-1999 20.6875 24.8
07-Apr-1999 20.6250 12.9
08-Apr-1999 20.9375 43.5
09-Apr-1999 20.9375 24.3
12-Apr-1999 21.1875 43.0
13-Apr-1999 21.0625 29.1
14-Apr-1999 21.3750 35.3
15-Apr-1999 21.3125 25.3
16-Apr-1999 20.9375 42.4
19-Apr-1999 20.5000 45.8
20-Apr-1999 20.8125 45.5
21-Apr-1999 21.0000 32.3
22-Apr-1999 20.2500 44.5
23-Apr-1999 21.0625 35.3
26-Apr-1999 20.8125 14.0
27-Apr-1999 21.0000 44.5
28-Apr-1999 20.7500 21.6
29-Apr-1999 20.7500 15.2
30-Apr-1999 20.8125 21.3
03-May-1999 21.1250 42.5
04-May-1999 21.1250 19.0
05-May-1999 21.2500 22.6
06-May-1999 21.3750 17.5
07-May-1999 21.4375 23.2
10-May-1999 23.1250 49.8
11-May-1999 22.4375 35.2
12-May-1999 21.8750 24.2
13-May-1999 21.5625 31.0
14-May-1999 21.0000 12.3
17-May-1999 20.8125 50.0
18-May-1999 20.8750 29.8
19-May-1999 21.1875 27.0
20-May-1999 21.8125 50.9
21-May-1999 22.2500 21.2
24-May-1999 22.5000 35.6
25-May-1999 22.4375 8.8
26-May-1999 22.3125 17.9
27-May-1999 22.0000 31.3
28-May-1999 21.7500 35.3
01-Jun-1999 22.4375 32.5
02-Jun-1999 23.2500 114.9
03-Jun-1999 22.3125 32.8
04-Jun-1999 21.6250 18.5
07-Jun-1999 22.5000 14.4
08-Jun-1999 21.8750 30.4
09-Jun-1999 22.0000 22.4
10-Jun-1999 22.0625 20.8
11-Jun-1999 21.7500 18.8
14-Jun-1999 21.1250 22.0
15-Jun-1999 21.3125 37.6
16-Jun-1999 21.9375 21.0
17-Jun-1999 22.1250 26.8
18-Jun-1999 21.9375 58.2
21-Jun-1999 21.5625 20.0
22-Jun-1999 22.1250 24.6
23-Jun-1999 21.3750 22.5
24-Jun-1999 21.7500 18.2
25-Jun-1999 21.6875 11.0
28-Jun-1999 22.8125 50.0
29-Jun-1999 22.6250 21.3
30-Jun-1999 22.6875 49.1
01-Jul-1999 22.6250 27.3
02-Jul-1999 22.6250 28.4
06-Jul-1999 22.5625 36.3
07-Jul-1999 21.9375 77.7
08-Jul-1999 22.3125 30.2
09-Jul-1999 22.1250 15.7
12-Jul-1999 21.3750 142.1
13-Jul-1999 21.7500 14.5
14-Jul-1999 21.8125 14.3
15-Jul-1999 22.1250 44.4
16-Jul-1999 22.4375 85.4
19-Jul-1999 22.4375 15.7
20-Jul-1999 22.5000 33.3
21-Jul-1999 22.5000 45.5
22-Jul-1999 23.8750 74.5
23-Jul-1999 23.5625 24.3
26-Jul-1999 23.1875 12.4
27-Jul-1999 23.0000 59.3
28-Jul-1999 23.1250 64.6
29-Jul-1999 23.1250 37.8
30-Jul-1999 23.1250 23.9
02-Aug-1999 23.3125 26.9
03-Aug-1999 23.8125 24.1
04-Aug-1999 23.8750 30.1
05-Aug-1999 23.8750 19.9
06-Aug-1999 23.1250 49.8
09-Aug-1999 23.1875 16.1
10-Aug-1999 23.3125 30.3
11-Aug-1999 23.3125 36.5
12-Aug-1999 23.0625 43.0
13-Aug-1999 23.5000 43.2
16-Aug-1999 24.1250 50.0
17-Aug-1999 24.5313 94.9
5- Year Price Volume Graph
Date Volume Close -----------------
18-Aug-1994 5.2 13.7500 Max $24.53
19-Aug-1994 4.1 13.8750 Min $11.75
22-Aug-1994 11.3 13.6250 Current $24.53
23-Aug-1994 7.4 13.6250 -----------------
24-Aug-1994 4.6 13.6250
25-Aug-1994 7.3 13.6250
26-Aug-1994 5.4 13.6250
29-Aug-1994 10.8 13.6250
30-Aug-1994 8.4 13.7500
31-Aug-1994 9.6 13.5000
01-Sep-1994 10.8 13.5000
02-Sep-1994 17.9 13.5000
06-Sep-1994 12.1 13.6250
07-Sep-1994 16.1 13.6250
08-Sep-1994 5.9 13.6250
09-Sep-1994 13.7 13.6250
12-Sep-1994 32.5 13.7500
13-Sep-1994 12.0 13.5000
14-Sep-1994 10.9 13.6250
15-Sep-1994 8.8 13.7500
16-Sep-1994 18.1 13.7500
19-Sep-1994 6.2 13.7500
20-Sep-1994 17.4 13.5000
21-Sep-1994 5.2 13.5000
22-Sep-1994 9.3 13.6250
23-Sep-1994 6.1 13.6250
26-Sep-1994 11.3 13.3750
27-Sep-1994 6.3 13.3750
28-Sep-1994 7.0 13.5000
29-Sep-1994 14.0 13.5000
30-Sep-1994 5.8 13.5000
03-Oct-1994 6.2 13.5000
04-Oct-1994 9.6 13.3750
05-Oct-1994 4.7 13.5000
06-Oct-1994 4.0 13.5000
07-Oct-1994 12.1 13.5000
10-Oct-1994 6.4 13.3750
11-Oct-1994 15.2 13.1250
12-Oct-1994 8.8 13.1250
13-Oct-1994 6.5 13.2500
14-Oct-1994 17.7 13.2500
17-Oct-1994 7.7 13.2500
18-Oct-1994 11.0 13.3750
19-Oct-1994 5.7 13.2500
20-Oct-1994 15.1 13.1250
21-Oct-1994 10.9 13.1250
24-Oct-1994 13.1 13.0000
25-Oct-1994 5.3 13.2500
26-Oct-1994 13.9 13.2500
27-Oct-1994 13.2 13.5000
28-Oct-1994 16.8 13.6250
31-Oct-1994 9.6 13.7500
01-Nov-1994 7.4 13.7500
02-Nov-1994 3.7 13.7500
03-Nov-1994 12.2 13.7500
04-Nov-1994 11.8 13.7500
07-Nov-1994 16.3 13.7500
08-Nov-1994 33.5 13.6250
09-Nov-1994 8.5 13.6250
10-Nov-1994 8.3 13.6250
11-Nov-1994 5.2 13.5000
14-Nov-1994 7.6 13.5000
15-Nov-1994 10.0 13.3750
16-Nov-1994 60.4 12.7500
17-Nov-1994 22.3 12.5000
18-Nov-1994 12.2 12.5000
21-Nov-1994 18.5 12.6250
22-Nov-1994 20.1 13.1250
23-Nov-1994 14.1 13.0000
25-Nov-1994 2.1 12.7500
28-Nov-1994 23.1 13.1250
29-Nov-1994 44.8 13.1250
30-Nov-1994 5.6 13.0000
01-Dec-1994 14.9 12.8750
02-Dec-1994 10.1 12.7500
05-Dec-1994 17.5 12.8750
06-Dec-1994 32.6 13.1250
07-Dec-1994 11.1 13.1250
08-Dec-1994 8.5 12.8750
09-Dec-1994 33.0 12.3750
12-Dec-1994 12.7 12.8750
13-Dec-1994 20.6 13.3750
14-Dec-1994 21.7 13.3750
15-Dec-1994 27.3 14.0000
16-Dec-1994 34.9 13.7500
19-Dec-1994 8.8 13.1250
20-Dec-1994 56.4 13.0000
21-Dec-1994 13.8 13.0000
22-Dec-1994 20.9 12.7500
23-Dec-1994 36.7 12.8750
27-Dec-1994 9.3 12.8750
28-Dec-1994 20.6 12.8750
29-Dec-1994 33.6 12.8750
30-Dec-1994 21.2 12.6250
03-Jan-1995 10.2 12.5000
04-Jan-1995 23.4 12.8750
05-Jan-1995 7.9 13.2500
06-Jan-1995 45.8 13.2500
09-Jan-1995 4.6 13.1250
10-Jan-1995 12.3 13.1250
11-Jan-1995 16.0 12.7500
12-Jan-1995 26.9 12.7500
13-Jan-1995 7.7 12.8750
16-Jan-1995 12.3 13.2500
17-Jan-1995 19.9 13.2500
18-Jan-1995 17.0 13.3750
19-Jan-1995 15.8 13.3750
20-Jan-1995 4.0 13.1250
23-Jan-1995 10.9 13.2500
24-Jan-1995 9.0 13.1250
25-Jan-1995 15.4 13.2500
26-Jan-1995 19.1 13.3750
27-Jan-1995 17.2 13.2500
30-Jan-1995 10.0 13.1250
31-Jan-1995 16.1 13.3750
01-Feb-1995 13.2 13.6250
02-Feb-1995 12.2 13.6250
03-Feb-1995 21.0 13.8750
06-Feb-1995 17.9 13.7500
07-Feb-1995 10.7 13.8750
08-Feb-1995 4.8 14.0000
09-Feb-1995 18.4 14.0000
10-Feb-1995 12.5 13.8750
13-Feb-1995 17.6 13.7500
14-Feb-1995 15.1 13.6250
15-Feb-1995 12.8 13.7500
16-Feb-1995 12.8 13.6250
17-Feb-1995 18.1 13.7500
21-Feb-1995 6.5 13.6250
22-Feb-1995 5.8 13.6250
23-Feb-1995 11.3 13.6250
24-Feb-1995 18.8 13.3750
27-Feb-1995 14.6 13.0000
28-Feb-1995 16.8 13.6250
01-Mar-1995 11.1 13.3750
02-Mar-1995 26.7 13.6250
03-Mar-1995 17.5 13.7500
06-Mar-1995 6.4 13.7500
07-Mar-1995 20.9 13.6250
08-Mar-1995 38.4 13.5000
09-Mar-1995 5.4 13.3750
10-Mar-1995 35.2 13.6250
13-Mar-1995 7.2 13.3750
14-Mar-1995 21.4 13.5000
15-Mar-1995 26.1 13.0000
16-Mar-1995 12.1 13.1250
17-Mar-1995 38.3 13.1250
20-Mar-1995 26.9 13.2500
21-Mar-1995 17.1 13.2500
22-Mar-1995 9.1 13.2500
23-Mar-1995 8.5 13.3750
24-Mar-1995 17.6 13.2500
27-Mar-1995 38.8 13.3750
28-Mar-1995 11.7 13.3750
29-Mar-1995 15.1 13.6250
30-Mar-1995 6.9 13.5000
31-Mar-1995 8.6 13.6250
03-Apr-1995 54.0 13.8750
04-Apr-1995 13.3 14.0000
05-Apr-1995 24.0 13.8750
06-Apr-1995 21.6 14.0000
07-Apr-1995 34.2 14.0000
10-Apr-1995 11.0 13.8750
11-Apr-1995 15.0 13.8750
12-Apr-1995 7.5 13.5000
13-Apr-1995 21.8 13.3750
17-Apr-1995 21.0 13.3750
18-Apr-1995 34.2 13.3750
19-Apr-1995 34.2 13.2500
20-Apr-1995 13.2 13.3750
21-Apr-1995 22.8 13.2500
24-Apr-1995 26.4 13.1250
25-Apr-1995 37.9 13.3750
26-Apr-1995 11.5 13.5000
27-Apr-1995 12.7 13.5000
28-Apr-1995 12.4 13.3750
01-May-1995 56.0 13.2500
02-May-1995 13.0 13.2500
03-May-1995 35.4 13.5000
04-May-1995 14.7 13.2500
05-May-1995 20.1 13.2500
08-May-1995 9.2 13.5000
09-May-1995 13.8 13.2500
10-May-1995 12.4 13.3750
11-May-1995 20.0 13.3750
12-May-1995 7.9 13.2500
15-May-1995 22.8 13.1250
16-May-1995 21.3 13.1250
17-May-1995 10.8 13.2500
18-May-1995 23.3 13.2500
19-May-1995 15.0 13.2500
22-May-1995 13.7 13.2500
23-May-1995 7.5 13.2500
24-May-1995 6.8 13.1250
25-May-1995 64.2 13.1250
26-May-1995 5.3 13.1250
30-May-1995 11.6 13.0000
31-May-1995 44.8 13.2500
01-Jun-1995 33.2 13.5000
02-Jun-1995 31.1 13.3750
05-Jun-1995 36.2 13.5000
06-Jun-1995 13.5 13.2500
07-Jun-1995 4.4 13.3750
08-Jun-1995 5.2 13.3750
09-Jun-1995 9.2 13.5000
12-Jun-1995 18.1 13.5000
13-Jun-1995 3.9 13.6250
14-Jun-1995 23.6 13.7500
15-Jun-1995 16.3 13.3750
16-Jun-1995 11.7 13.3750
19-Jun-1995 12.8 13.3750
20-Jun-1995 9.8 13.2500
21-Jun-1995 42.0 13.3750
22-Jun-1995 18.4 13.3750
23-Jun-1995 9.0 13.3750
26-Jun-1995 11.3 13.5000
27-Jun-1995 19.8 13.2500
28-Jun-1995 12.2 13.1250
29-Jun-1995 41.6 13.2500
30-Jun-1995 57.6 13.2500
03-Jul-1995 7.3 13.2500
05-Jul-1995 15.8 13.3750
06-Jul-1995 13.5 13.3750
07-Jul-1995 29.4 13.3750
10-Jul-1995 47.7 13.3750
11-Jul-1995 58.2 13.3750
12-Jul-1995 14.4 13.5000
13-Jul-1995 24.3 13.3750
14-Jul-1995 24.2 13.5000
17-Jul-1995 32.7 13.2500
18-Jul-1995 7.3 13.5000
19-Jul-1995 18.5 13.2500
20-Jul-1995 10.9 13.1250
21-Jul-1995 12.4 13.2500
24-Jul-1995 13.2 13.2500
25-Jul-1995 12.4 13.2500
26-Jul-1995 11.3 13.2500
27-Jul-1995 5.7 13.2500
28-Jul-1995 23.6 13.2500
31-Jul-1995 18.5 13.3750
01-Aug-1995 12.3 13.3750
02-Aug-1995 29.5 13.3750
03-Aug-1995 19.3 13.3750
04-Aug-1995 15.6 13.3750
07-Aug-1995 13.5 13.5000
08-Aug-1995 21.9 13.2500
09-Aug-1995 11.9 13.2500
10-Aug-1995 7.1 13.3750
11-Aug-1995 19.9 13.2500
14-Aug-1995 13.2 13.2500
15-Aug-1995 20.7 13.1250
16-Aug-1995 26.9 13.1250
17-Aug-1995 20.2 13.1250
18-Aug-1995 11.1 13.1250
21-Aug-1995 16.9 13.1250
22-Aug-1995 50.6 13.0000
23-Aug-1995 21.4 13.1250
24-Aug-1995 24.2 12.8750
25-Aug-1995 20.1 12.7500
28-Aug-1995 24.3 12.7500
29-Aug-1995 20.2 12.8750
30-Aug-1995 12.8 12.8750
31-Aug-1995 7.7 13.0000
01-Sep-1995 6.7 13.0000
05-Sep-1995 15.1 12.8750
06-Sep-1995 41.2 13.0000
07-Sep-1995 31.3 12.8750
08-Sep-1995 20.6 13.0000
11-Sep-1995 21.8 12.7500
12-Sep-1995 49.7 12.7500
13-Sep-1995 23.1 12.7500
14-Sep-1995 17.4 12.7500
15-Sep-1995 32.2 12.7500
18-Sep-1995 64.3 12.7500
19-Sep-1995 20.1 12.8750
20-Sep-1995 26.6 12.7500
21-Sep-1995 14.0 12.8750
22-Sep-1995 14.9 12.7500
25-Sep-1995 13.1 12.8750
26-Sep-1995 23.8 12.7500
27-Sep-1995 15.4 12.7500
28-Sep-1995 21.3 12.8750
29-Sep-1995 16.0 12.6250
02-Oct-1995 40.2 12.5000
03-Oct-1995 27.5 12.6250
04-Oct-1995 36.8 12.5000
05-Oct-1995 15.4 12.7500
06-Oct-1995 19.1 12.8750
09-Oct-1995 24.7 12.6250
10-Oct-1995 25.8 12.7500
11-Oct-1995 18.6 12.7500
12-Oct-1995 17.8 12.7500
13-Oct-1995 26.8 12.8750
16-Oct-1995 17.1 12.7500
17-Oct-1995 20.9 12.6250
18-Oct-1995 21.4 12.6250
19-Oct-1995 17.9 12.7500
20-Oct-1995 21.2 12.6250
23-Oct-1995 29.3 12.6250
24-Oct-1995 34.0 12.6250
25-Oct-1995 16.9 12.6250
26-Oct-1995 20.5 12.5000
27-Oct-1995 30.5 12.5000
30-Oct-1995 59.4 12.5000
31-Oct-1995 26.7 12.6250
01-Nov-1995 17.2 12.7500
02-Nov-1995 37.5 12.6250
03-Nov-1995 20.3 12.6250
06-Nov-1995 19.2 12.8750
07-Nov-1995 26.1 13.0000
08-Nov-1995 19.1 12.8750
09-Nov-1995 19.2 12.7500
10-Nov-1995 18.6 12.6250
13-Nov-1995 18.8 12.5000
14-Nov-1995 23.7 12.5000
15-Nov-1995 649.5 12.3750
16-Nov-1995 7.1 12.3750
17-Nov-1995 22.3 12.3750
20-Nov-1995 44.2 12.1250
21-Nov-1995 23.4 12.0000
22-Nov-1995 30.7 12.1250
24-Nov-1995 7.0 12.1250
27-Nov-1995 44.4 11.7500
28-Nov-1995 38.0 12.0000
29-Nov-1995 37.2 12.0000
30-Nov-1995 19.7 12.1250
01-Dec-1995 23.4 12.2500
04-Dec-1995 29.4 12.6250
05-Dec-1995 44.6 12.1250
06-Dec-1995 37.3 12.0000
07-Dec-1995 43.0 11.8750
08-Dec-1995 57.0 12.0000
11-Dec-1995 53.4 11.7500
12-Dec-1995 37.8 12.0000
13-Dec-1995 51.8 12.2500
14-Dec-1995 31.1 12.6250
15-Dec-1995 37.6 12.2500
18-Dec-1995 77.4 11.8750
19-Dec-1995 38.4 12.3750
20-Dec-1995 31.3 12.3750
21-Dec-1995 23.8 12.7500
22-Dec-1995 17.1 12.8750
26-Dec-1995 33.5 12.3750
27-Dec-1995 16.2 12.3750
28-Dec-1995 31.5 12.2500
29-Dec-1995 86.9 12.0000
02-Jan-1996 21.6 12.3750
03-Jan-1996 28.5 12.6250
04-Jan-1996 33.5 12.2500
05-Jan-1996 35.8 12.6250
08-Jan-1996 10.6 12.6250
09-Jan-1996 33.1 12.7500
10-Jan-1996 34.1 12.6250
11-Jan-1996 21.7 12.5000
12-Jan-1996 26.6 12.6250
15-Jan-1996 20.0 12.5000
16-Jan-1996 34.3 12.8750
17-Jan-1996 44.6 12.7500
18-Jan-1996 63.8 13.0000
19-Jan-1996 59.8 13.0000
22-Jan-1996 22.8 12.8750
23-Jan-1996 39.3 12.7500
24-Jan-1996 21.9 13.1250
25-Jan-1996 14.8 12.7500
26-Jan-1996 22.9 12.8750
29-Jan-1996 30.0 12.8750
30-Jan-1996 27.0 13.1250
31-Jan-1996 25.4 12.8750
01-Feb-1996 27.5 12.8750
02-Feb-1996 17.6 13.1250
05-Feb-1996 17.5 13.1250
06-Feb-1996 17.1 13.1250
07-Feb-1996 24.5 13.0000
08-Feb-1996 33.1 12.8750
09-Feb-1996 26.4 13.0000
12-Feb-1996 38.0 13.0000
13-Feb-1996 12.6 12.8750
14-Feb-1996 28.8 12.7500
15-Feb-1996 40.4 12.3750
16-Feb-1996 27.8 12.6250
20-Feb-1996 39.5 12.7500
21-Feb-1996 17.7 12.6250
22-Feb-1996 9.4 12.6250
23-Feb-1996 20.7 12.5000
26-Feb-1996 13.9 12.7500
27-Feb-1996 7.8 12.6250
28-Feb-1996 14.0 12.6250
29-Feb-1996 35.9 12.8750
01-Mar-1996 37.0 13.0000
04-Mar-1996 22.3 13.0000
05-Mar-1996 29.1 12.8750
06-Mar-1996 19.2 13.0000
07-Mar-1996 12.9 13.1250
08-Mar-1996 13.9 12.8750
11-Mar-1996 20.7 13.1250
12-Mar-1996 38.9 13.0000
13-Mar-1996 12.7 13.0000
14-Mar-1996 37.9 12.8750
15-Mar-1996 7.6 12.8750
18-Mar-1996 15.4 13.0000
19-Mar-1996 43.0 12.8750
20-Mar-1996 37.3 12.8750
21-Mar-1996 17.6 13.0000
22-Mar-1996 49.1 12.7500
25-Mar-1996 32.4 13.1250
26-Mar-1996 28.2 12.8750
27-Mar-1996 5.5 13.0000
28-Mar-1996 15.0 13.0000
29-Mar-1996 60.0 13.1250
01-Apr-1996 30.9 13.0000
02-Apr-1996 29.3 13.1250
03-Apr-1996 20.6 13.0000
04-Apr-1996 26.1 13.0000
08-Apr-1996 24.5 12.8750
09-Apr-1996 24.6 13.0000
10-Apr-1996 20.1 12.8750
11-Apr-1996 32.7 12.7500
12-Apr-1996 16.2 12.7500
15-Apr-1996 21.9 12.7500
16-Apr-1996 8.2 12.7500
17-Apr-1996 27.3 12.8750
18-Apr-1996 52.1 12.5000
19-Apr-1996 30.2 12.6250
22-Apr-1996 12.3 12.5000
23-Apr-1996 35.2 12.3750
24-Apr-1996 14.2 12.6250
25-Apr-1996 13.9 12.3750
26-Apr-1996 14.6 12.5000
29-Apr-1996 13.3 12.5000
30-Apr-1996 25.0 12.5000
01-May-1996 37.9 12.6250
02-May-1996 29.1 12.5000
03-May-1996 23.3 12.5000
06-May-1996 9.2 12.3750
07-May-1996 12.7 12.2500
08-May-1996 29.7 12.5000
09-May-1996 73.1 13.3750
10-May-1996 32.7 13.0000
13-May-1996 26.2 13.1250
14-May-1996 597.8 13.1250
15-May-1996 321.8 13.0000
16-May-1996 48.5 13.1250
17-May-1996 107.1 13.3750
20-May-1996 111.7 13.2500
21-May-1996 34.9 13.1250
22-May-1996 90.5 13.3750
23-May-1996 43.9 13.5000
24-May-1996 55.1 13.3750
28-May-1996 53.1 13.5000
29-May-1996 41.1 13.0000
30-May-1996 43.0 13.2500
31-May-1996 6.5 13.3750
03-Jun-1996 13.5 13.2500
04-Jun-1996 23.6 13.2500
05-Jun-1996 22.3 13.0000
06-Jun-1996 20.0 13.0000
07-Jun-1996 23.3 13.0000
10-Jun-1996 17.0 12.8750
11-Jun-1996 30.7 12.7500
12-Jun-1996 37.9 13.3750
13-Jun-1996 65.1 13.1250
14-Jun-1996 69.0 13.2500
17-Jun-1996 22.6 13.3750
18-Jun-1996 16.0 13.1250
19-Jun-1996 22.1 13.3750
20-Jun-1996 22.3 13.2500
21-Jun-1996 21.3 13.1250
24-Jun-1996 19.2 13.1250
25-Jun-1996 45.0 12.8750
26-Jun-1996 53.6 12.7500
27-Jun-1996 53.2 12.6250
28-Jun-1996 111.7 12.8750
01-Jul-1996 47.3 13.2500
02-Jul-1996 16.0 13.1250
03-Jul-1996 7.5 13.0000
05-Jul-1996 22.1 13.1250
08-Jul-1996 44.7 13.3750
09-Jul-1996 39.0 13.3750
10-Jul-1996 31.9 13.3750
11-Jul-1996 51.0 13.3750
12-Jul-1996 30.4 13.6250
15-Jul-1996 49.7 13.2500
16-Jul-1996 38.6 13.3750
17-Jul-1996 23.4 13.3750
18-Jul-1996 7.4 13.2500
19-Jul-1996 24.2 13.3750
22-Jul-1996 13.6 13.2500
23-Jul-1996 28.4 13.2500
24-Jul-1996 3.7 13.1250
25-Jul-1996 13.9 13.2500
26-Jul-1996 17.8 13.2500
29-Jul-1996 18.8 13.1250
30-Jul-1996 32.4 13.2500
31-Jul-1996 15.0 13.2500
01-Aug-1996 35.2 13.6250
02-Aug-1996 114.4 13.5000
05-Aug-1996 92.0 13.7500
06-Aug-1996 50.2 14.2500
07-Aug-1996 60.2 14.6250
08-Aug-1996 44.1 14.5000
09-Aug-1996 17.8 14.3750
12-Aug-1996 70.9 14.2500
13-Aug-1996 48.5 14.2500
14-Aug-1996 98.0 14.3750
15-Aug-1996 78.0 14.3750
16-Aug-1996 22.6 14.5000
19-Aug-1996 71.0 15.0000
20-Aug-1996 71.0 15.1250
21-Aug-1996 62.2 15.0000
22-Aug-1996 124.5 15.5000
23-Aug-1996 31.9 15.3750
26-Aug-1996 57.2 15.6250
27-Aug-1996 120.1 15.8750
28-Aug-1996 90.3 16.2500
29-Aug-1996 196.0 16.2500
30-Aug-1996 96.7 16.3750
03-Sep-1996 43.8 16.1250
04-Sep-1996 63.6 16.0000
05-Sep-1996 71.8 16.3750
06-Sep-1996 72.1 16.5000
09-Sep-1996 33.5 16.2500
10-Sep-1996 102.6 17.1250
11-Sep-1996 204.4 16.7500
12-Sep-1996 47.1 16.7500
13-Sep-1996 38.0 16.6250
16-Sep-1996 40.6 16.5000
17-Sep-1996 51.8 16.2500
18-Sep-1996 22.5 16.2500
19-Sep-1996 27.8 15.8750
20-Sep-1996 35.1 16.2500
23-Sep-1996 47.3 16.3750
24-Sep-1996 36.2 16.6250
25-Sep-1996 25.4 16.7500
26-Sep-1996 24.4 16.2500
27-Sep-1996 21.7 16.0000
30-Sep-1996 24.0 16.3750
01-Oct-1996 39.7 16.3750
02-Oct-1996 35.0 15.8750
03-Oct-1996 26.0 15.7500
04-Oct-1996 47.7 16.1250
07-Oct-1996 25.3 16.2500
08-Oct-1996 32.3 16.2500
09-Oct-1996 37.4 15.7500
10-Oct-1996 35.8 15.8750
11-Oct-1996 10.5 16.2500
14-Oct-1996 14.9 15.8750
15-Oct-1996 23.4 15.8750
16-Oct-1996 44.6 15.7500
17-Oct-1996 27.4 15.8750
18-Oct-1996 6.9 15.8750
21-Oct-1996 30.8 15.6250
22-Oct-1996 19.4 15.6250
23-Oct-1996 10.7 15.7500
24-Oct-1996 2.9 15.8750
25-Oct-1996 8.8 15.7500
28-Oct-1996 15.4 15.5000
29-Oct-1996 21.9 15.2500
30-Oct-1996 7.6 15.2500
31-Oct-1996 19.7 15.5000
01-Nov-1996 6.5 15.2500
04-Nov-1996 21.3 15.6250
05-Nov-1996 21.0 16.0000
06-Nov-1996 19.5 16.0000
07-Nov-1996 15.2 16.2500
08-Nov-1996 25.1 16.1250
11-Nov-1996 7.8 16.1250
12-Nov-1996 12.0 15.8750
13-Nov-1996 7.7 15.7500
14-Nov-1996 20.1 15.3750
15-Nov-1996 157.4 15.6250
18-Nov-1996 15.1 15.8750
19-Nov-1996 13.9 15.8750
20-Nov-1996 6.0 15.5000
21-Nov-1996 21.3 15.1250
22-Nov-1996 21.3 15.2500
25-Nov-1996 27.8 15.6250
26-Nov-1996 18.8 15.5000
27-Nov-1996 14.5 15.2500
29-Nov-1996 10.8 15.2500
02-Dec-1996 18.2 15.1250
03-Dec-1996 25.1 15.6250
04-Dec-1996 26.3 15.6250
05-Dec-1996 39.0 15.5000
06-Dec-1996 14.2 15.1250
09-Dec-1996 29.3 15.3750
10-Dec-1996 11.2 15.3750
11-Dec-1996 14.0 15.2500
12-Dec-1996 20.4 14.8750
13-Dec-1996 10.3 14.7500
16-Dec-1996 10.8 15.0000
17-Dec-1996 11.9 15.0000
18-Dec-1996 21.9 15.2500
19-Dec-1996 24.5 15.3750
20-Dec-1996 13.6 15.5000
23-Dec-1996 18.3 15.0000
24-Dec-1996 5.9 15.2500
26-Dec-1996 38.6 15.3750
27-Dec-1996 7.2 15.3750
30-Dec-1996 20.5 15.6250
31-Dec-1996 16.0 15.5000
02-Jan-1997 34.0 15.3750
03-Jan-1997 26.3 15.5000
06-Jan-1997 41.2 15.7500
07-Jan-1997 15.6 15.6250
08-Jan-1997 55.3 15.1250
09-Jan-1997 27.8 15.3750
10-Jan-1997 61.0 15.8750
13-Jan-1997 36.4 16.2500
14-Jan-1997 49.4 16.3750
15-Jan-1997 106.9 16.5000
16-Jan-1997 26.0 16.3750
17-Jan-1997 35.9 16.8750
20-Jan-1997 21.7 16.7500
21-Jan-1997 34.3 16.6250
22-Jan-1997 27.0 16.3750
23-Jan-1997 42.1 16.3750
24-Jan-1997 29.9 16.5000
27-Jan-1997 46.5 16.5000
28-Jan-1997 32.8 16.7500
29-Jan-1997 48.5 17.1250
30-Jan-1997 90.2 17.2500
31-Jan-1997 58.7 17.5000
03-Feb-1997 69.0 17.7500
04-Feb-1997 16.0 17.7500
05-Feb-1997 79.0 17.2500
06-Feb-1997 15.5 17.1250
07-Feb-1997 9.5 17.3750
10-Feb-1997 65.9 17.3750
11-Feb-1997 24.7 17.5000
12-Feb-1997 38.4 17.3750
13-Feb-1997 41.0 17.7500
14-Feb-1997 22.2 17.7500
18-Feb-1997 47.0 17.7500
19-Feb-1997 50.6 17.8750
20-Feb-1997 103.9 18.0000
21-Feb-1997 41.7 18.1250
24-Feb-1997 131.5 18.0000
25-Feb-1997 20.5 18.0000
26-Feb-1997 28.5 17.2500
27-Feb-1997 104.4 17.3750
28-Feb-1997 52.0 18.0000
03-Mar-1997 76.4 18.2500
04-Mar-1997 54.0 18.3750
05-Mar-1997 32.7 18.1250
06-Mar-1997 12.7 17.7500
07-Mar-1997 14.8 17.5000
10-Mar-1997 114.8 16.8750
11-Mar-1997 28.9 16.8750
12-Mar-1997 15.9 16.6250
13-Mar-1997 21.5 16.2500
14-Mar-1997 28.2 16.5000
17-Mar-1997 11.7 16.1250
18-Mar-1997 25.2 16.7500
19-Mar-1997 7.5 16.5000
20-Mar-1997 11.3 16.0000
21-Mar-1997 20.4 16.1250
24-Mar-1997 18.3 16.6250
25-Mar-1997 16.2 16.0000
26-Mar-1997 29.5 16.1250
27-Mar-1997 61.7 17.0000
31-Mar-1997 59.3 17.1250
01-Apr-1997 73.0 17.3750
02-Apr-1997 140.1 17.5000
03-Apr-1997 45.0 17.1250
04-Apr-1997 24.3 16.8750
07-Apr-1997 38.0 17.3750
08-Apr-1997 37.7 17.2500
09-Apr-1997 29.8 17.8750
10-Apr-1997 14.2 17.3750
11-Apr-1997 9.8 17.1250
14-Apr-1997 15.9 17.2500
15-Apr-1997 46.5 17.5000
16-Apr-1997 25.0 17.1250
17-Apr-1997 11.0 16.8750
18-Apr-1997 52.6 17.3750
21-Apr-1997 16.2 17.7500
22-Apr-1997 13.3 17.6250
23-Apr-1997 11.4 17.3750
24-Apr-1997 17.9 17.0000
25-Apr-1997 18.1 16.6250
28-Apr-1997 10.8 16.7500
29-Apr-1997 4.6 16.5000
30-Apr-1997 24.1 16.3750
01-May-1997 15.1 16.6250
02-May-1997 28.0 17.6250
05-May-1997 25.9 18.0000
06-May-1997 38.2 18.0000
07-May-1997 23.3 17.8750
08-May-1997 34.0 18.0000
09-May-1997 19.9 18.1250
12-May-1997 25.7 18.0000
13-May-1997 40.4 18.0000
14-May-1997 27.9 18.1250
15-May-1997 23.6 18.0000
16-May-1997 23.4 18.0000
19-May-1997 42.9 18.3750
20-May-1997 21.3 18.0000
21-May-1997 7.4 18.0000
22-May-1997 25.3 17.8750
23-May-1997 39.6 18.1250
27-May-1997 18.3 18.0000
28-May-1997 16.6 18.0000
29-May-1997 48.8 18.0000
30-May-1997 49.3 18.0000
02-Jun-1997 88.7 17.5000
03-Jun-1997 107.7 17.3750
04-Jun-1997 50.5 17.6250
05-Jun-1997 20.0 17.3750
06-Jun-1997 13.5 17.6250
09-Jun-1997 11.0 17.8750
10-Jun-1997 13.2 17.3750
11-Jun-1997 5.3 17.6250
12-Jun-1997 8.5 17.2500
13-Jun-1997 14.7 17.7500
16-Jun-1997 22.0 17.3750
17-Jun-1997 17.2 17.5000
18-Jun-1997 10.5 17.7500
19-Jun-1997 81.3 17.6250
20-Jun-1997 60.3 17.3750
23-Jun-1997 56.0 17.2500
24-Jun-1997 38.7 17.8750
25-Jun-1997 36.7 17.7500
26-Jun-1997 87.2 17.5625
27-Jun-1997 22.9 17.5000
30-Jun-1997 233.8 19.3750
01-Jul-1997 75.9 18.8125
02-Jul-1997 83.9 18.3750
03-Jul-1997 64.8 17.8750
07-Jul-1997 92.3 17.6250
08-Jul-1997 82.2 17.2500
09-Jul-1997 43.8 17.3125
10-Jul-1997 40.6 17.4375
11-Jul-1997 8.9 17.3750
14-Jul-1997 95.3 17.7500
15-Jul-1997 30.6 18.3125
16-Jul-1997 62.8 19.0000
17-Jul-1997 40.2 19.2500
18-Jul-1997 30.0 19.0000
21-Jul-1997 66.0 19.0625
22-Jul-1997 49.3 19.2500
23-Jul-1997 127.2 19.6250
24-Jul-1997 65.0 19.6250
25-Jul-1997 63.4 19.6250
28-Jul-1997 30.2 19.1875
29-Jul-1997 13.4 19.0625
30-Jul-1997 13.6 19.2500
31-Jul-1997 20.6 19.0000
01-Aug-1997 24.6 19.2500
04-Aug-1997 7.8 19.1875
05-Aug-1997 32.7 19.1875
06-Aug-1997 47.2 19.2500
07-Aug-1997 20.8 19.1875
08-Aug-1997 16.3 19.0625
11-Aug-1997 44.8 18.9375
12-Aug-1997 21.5 18.5625
13-Aug-1997 30.0 17.7500
14-Aug-1997 44.0 17.6250
15-Aug-1997 18.1 17.4375
18-Aug-1997 53.1 17.2500
19-Aug-1997 25.2 17.1875
20-Aug-1997 38.5 17.1250
21-Aug-1997 33.3 17.0000
22-Aug-1997 40.8 17.1875
25-Aug-1997 46.4 17.2500
26-Aug-1997 44.2 18.0000
27-Aug-1997 24.6 18.3750
28-Aug-1997 19.4 18.6250
29-Aug-1997 58.1 17.8750
02-Sep-1997 21.1 18.3125
03-Sep-1997 29.8 18.0000
04-Sep-1997 82.5 17.5625
05-Sep-1997 44.1 18.6250
08-Sep-1997 39.2 18.6875
09-Sep-1997 21.6 18.7500
10-Sep-1997 22.0 18.7500
11-Sep-1997 19.7 18.6875
12-Sep-1997 22.7 19.0000
15-Sep-1997 10.7 18.8125
16-Sep-1997 27.2 19.0625
17-Sep-1997 15.3 18.8125
18-Sep-1997 10.5 18.7500
19-Sep-1997 17.4 18.6250
22-Sep-1997 19.1 18.5625
23-Sep-1997 20.8 18.9375
24-Sep-1997 13.3 18.3750
25-Sep-1997 34.8 18.0000
26-Sep-1997 32.7 18.1875
29-Sep-1997 17.9 18.5625
30-Sep-1997 30.2 18.6250
01-Oct-1997 12.3 18.8125
02-Oct-1997 14.2 19.0000
03-Oct-1997 24.2 18.5625
06-Oct-1997 15.1 18.8750
07-Oct-1997 16.3 18.7500
08-Oct-1997 11.3 18.8125
09-Oct-1997 18.3 19.0625
10-Oct-1997 45.7 19.0625
13-Oct-1997 16.1 19.0625
14-Oct-1997 13.9 19.0625
15-Oct-1997 10.2 19.1250
16-Oct-1997 15.9 18.6875
17-Oct-1997 38.8 18.1875
20-Oct-1997 16.9 18.2500
21-Oct-1997 9.6 18.2500
22-Oct-1997 15.4 18.2500
23-Oct-1997 16.1 18.0625
24-Oct-1997 12.9 18.3125
27-Oct-1997 25.2 17.0000
28-Oct-1997 72.7 16.8750
29-Oct-1997 41.7 16.8750
30-Oct-1997 51.2 16.4375
31-Oct-1997 32.9 16.5625
03-Nov-1997 33.3 17.0625
04-Nov-1997 19.2 17.0625
05-Nov-1997 3.9 17.0625
06-Nov-1997 18.7 17.0000
07-Nov-1997 19.0 17.1875
10-Nov-1997 10.4 17.3750
11-Nov-1997 19.6 17.3125
12-Nov-1997 15.7 17.0625
13-Nov-1997 27.0 17.1250
14-Nov-1997 20.8 17.6250
17-Nov-1997 15.6 17.5625
18-Nov-1997 6.0 17.5000
19-Nov-1997 24.3 17.6250
20-Nov-1997 21.8 17.8750
21-Nov-1997 7.2 17.5625
24-Nov-1997 16.6 17.5625
25-Nov-1997 11.3 17.6250
26-Nov-1997 9.8 17.9375
28-Nov-1997 10.9 18.0000
01-Dec-1997 30.9 18.5625
02-Dec-1997 17.1 18.5625
03-Dec-1997 14.4 18.6875
04-Dec-1997 11.8 18.4375
05-Dec-1997 11.4 18.4375
08-Dec-1997 22.5 18.6250
09-Dec-1997 14.0 18.7500
10-Dec-1997 28.8 18.7500
11-Dec-1997 16.9 18.9375
12-Dec-1997 27.1 19.0625
15-Dec-1997 23.9 19.0000
16-Dec-1997 60.1 18.6250
17-Dec-1997 15.5 18.6250
18-Dec-1997 14.7 18.7500
19-Dec-1997 28.4 18.8125
22-Dec-1997 18.5 19.0625
23-Dec-1997 11.5 19.1875
24-Dec-1997 11.8 19.0625
26-Dec-1997 26.2 18.8125
29-Dec-1997 5.7 18.9375
30-Dec-1997 39.7 19.5000
31-Dec-1997 15.3 19.5625
02-Jan-1998 23.6 19.1250
05-Jan-1998 18.6 18.7500
06-Jan-1998 25.5 18.8125
07-Jan-1998 36.2 18.9375
08-Jan-1998 23.3 18.6250
09-Jan-1998 31.1 18.8750
12-Jan-1998 14.9 18.5625
13-Jan-1998 20.4 18.7500
14-Jan-1998 84.9 18.6875
15-Jan-1998 78.3 18.5625
16-Jan-1998 58.4 18.5000
20-Jan-1998 50.4 18.5000
21-Jan-1998 12.6 18.3125
22-Jan-1998 22.1 18.5000
23-Jan-1998 10.2 18.5000
26-Jan-1998 19.3 18.3125
27-Jan-1998 41.1 18.2500
28-Jan-1998 24.0 18.3750
29-Jan-1998 28.6 18.6875
30-Jan-1998 466.3 18.1250
02-Feb-1998 30.5 18.6875
03-Feb-1998 49.5 19.0625
04-Feb-1998 60.2 19.8750
05-Feb-1998 15.2 19.5625
06-Feb-1998 28.2 19.8125
09-Feb-1998 117.2 19.5625
10-Feb-1998 20.8 19.3125
11-Feb-1998 38.8 18.7500
12-Feb-1998 38.3 19.1875
13-Feb-1998 62.0 19.5625
17-Feb-1998 20.7 19.4375
18-Feb-1998 41.6 19.2500
19-Feb-1998 49.0 19.5625
20-Feb-1998 37.3 19.1250
23-Feb-1998 40.9 19.0000
24-Feb-1998 40.1 19.3125
25-Feb-1998 28.7 19.5000
26-Feb-1998 13.9 19.3125
27-Feb-1998 18.6 19.6250
02-Mar-1998 29.7 19.4375
03-Mar-1998 13.3 19.3125
04-Mar-1998 3.2 19.1250
05-Mar-1998 38.0 18.9375
06-Mar-1998 23.6 19.0625
09-Mar-1998 25.1 19.0000
10-Mar-1998 19.8 19.0000
11-Mar-1998 31.6 18.5625
12-Mar-1998 23.3 18.3750
13-Mar-1998 46.4 18.0625
16-Mar-1998 29.0 18.3750
17-Mar-1998 25.2 18.1875
18-Mar-1998 56.1 17.9375
19-Mar-1998 38.9 18.0625
20-Mar-1998 36.7 18.3125
23-Mar-1998 18.6 18.1250
24-Mar-1998 13.6 18.4375
25-Mar-1998 20.5 18.2500
26-Mar-1998 53.4 18.0000
27-Mar-1998 52.3 17.8750
30-Mar-1998 61.8 17.8750
31-Mar-1998 12.9 18.0625
01-Apr-1998 38.4 18.3125
02-Apr-1998 59.8 18.1250
03-Apr-1998 67.3 18.0625
06-Apr-1998 45.1 18.0625
07-Apr-1998 53.5 18.2500
08-Apr-1998 27.0 18.1250
09-Apr-1998 30.1 18.2500
13-Apr-1998 46.1 18.3750
14-Apr-1998 57.0 18.2500
15-Apr-1998 12.4 18.0625
16-Apr-1998 24.6 17.9375
17-Apr-1998 22.7 17.9375
20-Apr-1998 51.4 17.6250
21-Apr-1998 31.8 17.6250
22-Apr-1998 51.4 17.5000
23-Apr-1998 37.5 16.8750
24-Apr-1998 30.8 16.8125
27-Apr-1998 38.4 16.8125
28-Apr-1998 24.7 17.1250
29-Apr-1998 20.7 17.1875
30-Apr-1998 36.0 17.3125
01-May-1998 12.9 17.1875
04-May-1998 44.6 17.4375
05-May-1998 39.7 17.4375
06-May-1998 45.5 17.3750
07-May-1998 16.1 17.2500
08-May-1998 31.3 17.3750
11-May-1998 32.0 17.2500
12-May-1998 75.1 17.0625
13-May-1998 67.1 16.6250
14-May-1998 40.6 16.5000
15-May-1998 66.5 16.5625
18-May-1998 28.6 16.1250
19-May-1998 29.2 16.3125
20-May-1998 29.7 16.3125
21-May-1998 55.5 16.2500
22-May-1998 57.2 16.5000
26-May-1998 33.2 16.1250
27-May-1998 75.3 15.9375
28-May-1998 28.2 16.0000
29-May-1998 54.5 16.0625
01-Jun-1998 54.7 16.2500
02-Jun-1998 37.4 16.3750
03-Jun-1998 16.4 16.5000
04-Jun-1998 15.9 16.7500
05-Jun-1998 26.6 16.9375
08-Jun-1998 37.2 17.1875
09-Jun-1998 38.9 18.0000
10-Jun-1998 41.2 18.0000
11-Jun-1998 24.2 17.7500
12-Jun-1998 14.3 17.6250
15-Jun-1998 23.4 17.8750
16-Jun-1998 17.8 17.8750
17-Jun-1998 36.6 17.7500
18-Jun-1998 23.1 17.3750
19-Jun-1998 47.7 17.5625
22-Jun-1998 6.8 17.6875
23-Jun-1998 9.3 17.6875
24-Jun-1998 8.2 17.5625
25-Jun-1998 50.0 17.4375
26-Jun-1998 80.4 17.6250
29-Jun-1998 89.3 17.8750
30-Jun-1998 105.8 18.0000
01-Jul-1998 45.6 18.3750
02-Jul-1998 24.6 18.5000
06-Jul-1998 37.7 18.3750
07-Jul-1998 30.7 18.7500
08-Jul-1998 13.9 18.6250
09-Jul-1998 22.2 18.9375
10-Jul-1998 10.8 18.8750
13-Jul-1998 12.0 18.8750
14-Jul-1998 16.7 18.8750
15-Jul-1998 27.2 18.8750
16-Jul-1998 35.6 19.0000
17-Jul-1998 20.9 19.1250
20-Jul-1998 59.3 19.0000
21-Jul-1998 45.2 18.7500
22-Jul-1998 72.4 17.8750
23-Jul-1998 28.6 18.2500
24-Jul-1998 17.7 18.5000
27-Jul-1998 33.6 18.6250
28-Jul-1998 14.2 18.5000
29-Jul-1998 36.0 18.5000
30-Jul-1998 31.0 18.8125
31-Jul-1998 17.4 18.5625
03-Aug-1998 42.1 18.3125
04-Aug-1998 28.2 17.7500
05-Aug-1998 44.8 17.8125
06-Aug-1998 17.8 18.1875
07-Aug-1998 53.4 18.1875
10-Aug-1998 14.7 17.9375
11-Aug-1998 45.1 17.8750
12-Aug-1998 91.0 17.8125
13-Aug-1998 28.1 17.8125
14-Aug-1998 15.6 17.7500
17-Aug-1998 20.5 17.6875
18-Aug-1998 41.1 17.5000
19-Aug-1998 25.1 17.5000
20-Aug-1998 28.2 17.3750
21-Aug-1998 28.3 17.5000
24-Aug-1998 37.1 17.6875
25-Aug-1998 33.4 17.6250
26-Aug-1998 21.6 17.5625
27-Aug-1998 24.9 17.6875
28-Aug-1998 24.5 17.6875
31-Aug-1998 26.1 17.7500
01-Sep-1998 46.5 17.5625
02-Sep-1998 41.9 17.5625
03-Sep-1998 39.2 17.5000
04-Sep-1998 17.1 17.6250
08-Sep-1998 28.4 17.8125
09-Sep-1998 21.0 17.4375
10-Sep-1998 73.0 17.1875
11-Sep-1998 40.7 17.0625
14-Sep-1998 24.7 17.0000
15-Sep-1998 25.0 17.0000
16-Sep-1998 13.3 16.8125
17-Sep-1998 63.8 16.6875
18-Sep-1998 75.1 16.5625
21-Sep-1998 25.0 16.6250
22-Sep-1998 63.8 16.5000
23-Sep-1998 55.3 16.8125
24-Sep-1998 29.4 16.9375
25-Sep-1998 22.7 17.0000
28-Sep-1998 39.4 17.0000
29-Sep-1998 44.7 17.0000
30-Sep-1998 10.7 17.0000
01-Oct-1998 47.5 16.5625
02-Oct-1998 27.9 16.7500
05-Oct-1998 82.6 17.9375
06-Oct-1998 48.9 18.3125
07-Oct-1998 39.1 18.2500
08-Oct-1998 47.7 18.5625
09-Oct-1998 49.7 18.4375
12-Oct-1998 12.4 18.2500
13-Oct-1998 19.8 18.1250
14-Oct-1998 19.6 18.5625
15-Oct-1998 35.1 18.5000
16-Oct-1998 31.1 18.6875
19-Oct-1998 22.6 18.6875
20-Oct-1998 29.0 19.0625
21-Oct-1998 49.1 19.4375
22-Oct-1998 60.9 19.5625
23-Oct-1998 51.7 19.5625
26-Oct-1998 25.7 19.5000
27-Oct-1998 54.8 19.3750
28-Oct-1998 17.0 19.0625
29-Oct-1998 20.9 19.1250
30-Oct-1998 80.9 19.3750
02-Nov-1998 24.8 19.6250
03-Nov-1998 26.5 19.7500
04-Nov-1998 16.0 19.5625
05-Nov-1998 21.5 19.7500
06-Nov-1998 24.8 19.6250
09-Nov-1998 33.5 19.9375
10-Nov-1998 48.1 19.8750
11-Nov-1998 35.6 19.8125
12-Nov-1998 22.6 19.9375
13-Nov-1998 34.7 19.3125
16-Nov-1998 27.7 20.0000
17-Nov-1998 26.6 20.0000
18-Nov-1998 32.5 20.0625
19-Nov-1998 33.8 20.4375
20-Nov-1998 23.2 20.1250
23-Nov-1998 29.3 20.0625
24-Nov-1998 57.4 20.0000
25-Nov-1998 21.7 20.0625
27-Nov-1998 12.4 20.1250
30-Nov-1998 31.4 20.7500
01-Dec-1998 48.8 21.0000
02-Dec-1998 37.6 20.9375
03-Dec-1998 33.8 20.4375
04-Dec-1998 28.6 21.0000
07-Dec-1998 65.0 22.3750
08-Dec-1998 97.9 22.5625
09-Dec-1998 28.0 22.0000
10-Dec-1998 46.7 21.4375
11-Dec-1998 22.3 21.6875
14-Dec-1998 24.7 21.4375
15-Dec-1998 37.1 21.3750
16-Dec-1998 15.0 21.0625
17-Dec-1998 43.2 20.5625
18-Dec-1998 43.3 21.3125
21-Dec-1998 109.0 22.1875
22-Dec-1998 101.6 23.9375
23-Dec-1998 60.1 23.7500
24-Dec-1998 26.3 23.4375
28-Dec-1998 35.9 23.8750
29-Dec-1998 25.9 23.9375
30-Dec-1998 43.3 24.0000
31-Dec-1998 31.9 23.9375
04-Jan-1999 73.1 23.6250
05-Jan-1999 87.4 23.3125
06-Jan-1999 50.2 23.0625
07-Jan-1999 47.0 22.7500
08-Jan-1999 78.8 22.7500
11-Jan-1999 58.5 22.9375
12-Jan-1999 26.1 22.6250
13-Jan-1999 51.5 22.6875
14-Jan-1999 25.8 22.3125
15-Jan-1999 31.0 22.0000
19-Jan-1999 31.9 22.3750
20-Jan-1999 24.6 22.8750
21-Jan-1999 27.3 22.5000
22-Jan-1999 19.3 22.9375
25-Jan-1999 26.8 22.4375
26-Jan-1999 14.6 22.5000
27-Jan-1999 34.7 21.7500
28-Jan-1999 16.8 22.0625
29-Jan-1999 28.4 21.3125
01-Feb-1999 33.8 21.8750
02-Feb-1999 21.3 21.4375
03-Feb-1999 25.2 21.5000
04-Feb-1999 20.4 21.1875
05-Feb-1999 26.0 20.5000
08-Feb-1999 39.7 20.5000
09-Feb-1999 42.1 21.0625
10-Feb-1999 32.1 20.1875
11-Feb-1999 32.2 20.5000
12-Feb-1999 36.7 19.9375
16-Feb-1999 35.4 19.6250
17-Feb-1999 28.7 19.6875
18-Feb-1999 30.8 19.6250
19-Feb-1999 26.3 19.5625
22-Feb-1999 24.5 19.6875
23-Feb-1999 31.2 20.0000
24-Feb-1999 50.3 19.5625
25-Feb-1999 28.4 19.4375
26-Feb-1999 52.9 19.2500
01-Mar-1999 63.9 19.0625
02-Mar-1999 50.3 19.0625
03-Mar-1999 44.4 18.6250
04-Mar-1999 47.9 18.8125
05-Mar-1999 21.1 19.0000
08-Mar-1999 18.9 19.6250
09-Mar-1999 20.2 19.0625
10-Mar-1999 44.4 19.0000
11-Mar-1999 38.1 19.0000
12-Mar-1999 29.6 19.4375
15-Mar-1999 18.0 19.6250
16-Mar-1999 46.5 19.7500
17-Mar-1999 36.5 19.1250
18-Mar-1999 34.3 19.6250
19-Mar-1999 23.2 19.3750
22-Mar-1999 35.0 19.9375
23-Mar-1999 42.6 20.1250
24-Mar-1999 21.4 20.0000
25-Mar-1999 34.0 20.3750
26-Mar-1999 21.1 20.5000
29-Mar-1999 15.3 20.8750
30-Mar-1999 29.3 20.6875
31-Mar-1999 22.8 20.7500
01-Apr-1999 31.7 21.1250
05-Apr-1999 33.6 21.6250
06-Apr-1999 24.8 20.6875
07-Apr-1999 12.9 20.6250
08-Apr-1999 43.5 20.9375
09-Apr-1999 24.3 20.9375
12-Apr-1999 43.0 21.1875
13-Apr-1999 29.1 21.0625
14-Apr-1999 35.3 21.3750
15-Apr-1999 25.3 21.3125
16-Apr-1999 42.4 20.9375
19-Apr-1999 45.8 20.5000
20-Apr-1999 45.5 20.8125
21-Apr-1999 32.3 21.0000
22-Apr-1999 44.5 20.2500
23-Apr-1999 35.3 21.0625
26-Apr-1999 14.0 20.8125
27-Apr-1999 44.5 21.0000
28-Apr-1999 21.6 20.7500
29-Apr-1999 15.2 20.7500
30-Apr-1999 21.3 20.8125
03-May-1999 42.5 21.1250
04-May-1999 19.0 21.1250
05-May-1999 22.6 21.2500
06-May-1999 17.5 21.3750
07-May-1999 23.2 21.4375
10-May-1999 49.8 23.1250
11-May-1999 35.2 22.4375
12-May-1999 24.2 21.8750
13-May-1999 31.0 21.5625
14-May-1999 12.3 21.0000
17-May-1999 50.0 20.8125
18-May-1999 29.8 20.8750
19-May-1999 27.0 21.1875
20-May-1999 50.9 21.8125
21-May-1999 21.2 22.2500
24-May-1999 35.6 22.5000
25-May-1999 8.8 22.4375
26-May-1999 17.9 22.3125
27-May-1999 31.3 22.0000
28-May-1999 35.3 21.7500
01-Jun-1999 32.5 22.4375
02-Jun-1999 114.9 23.2500
03-Jun-1999 32.8 22.3125
04-Jun-1999 18.5 21.6250
07-Jun-1999 14.4 22.5000
08-Jun-1999 30.4 21.8750
09-Jun-1999 22.4 22.0000
10-Jun-1999 20.8 22.0625
11-Jun-1999 18.8 21.7500
14-Jun-1999 22.0 21.1250
15-Jun-1999 37.6 21.3125
16-Jun-1999 21.0 21.9375
17-Jun-1999 26.8 22.1250
18-Jun-1999 58.2 21.9375
21-Jun-1999 20.0 21.5625
22-Jun-1999 24.6 22.1250
23-Jun-1999 22.5 21.3750
24-Jun-1999 18.2 21.7500
25-Jun-1999 11.0 21.6875
28-Jun-1999 50.0 22.8125
29-Jun-1999 21.3 22.6250
30-Jun-1999 49.1 22.6875
01-Jul-1999 27.3 22.6250
02-Jul-1999 28.4 22.6250
06-Jul-1999 36.3 22.5625
07-Jul-1999 77.7 21.9375
08-Jul-1999 30.2 22.3125
09-Jul-1999 15.7 22.1250
12-Jul-1999 142.1 21.3750
13-Jul-1999 14.5 21.7500
14-Jul-1999 14.3 21.8125
15-Jul-1999 44.4 22.1250
16-Jul-1999 85.4 22.4375
19-Jul-1999 15.7 22.4375
20-Jul-1999 33.3 22.5000
21-Jul-1999 45.5 22.5000
22-Jul-1999 74.5 23.8750
23-Jul-1999 24.3 23.5625
26-Jul-1999 12.4 23.1875
27-Jul-1999 59.3 23.0000
28-Jul-1999 64.6 23.1250
29-Jul-1999 37.8 23.1250
30-Jul-1999 23.9 23.1250
02-Aug-1999 26.9 23.3125
03-Aug-1999 24.1 23.8125
04-Aug-1999 30.1 23.8750
05-Aug-1999 19.9 23.8750
06-Aug-1999 49.8 23.1250
09-Aug-1999 16.1 23.1875
10-Aug-1999 30.3 23.3125
11-Aug-1999 36.5 23.3125
12-Aug-1999 43.0 23.0625
13-Aug-1999 43.2 23.5000
16-Aug-1999 50.0 24.1250
17-Aug-1999 94.9 24.5313
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4. Valuation Summary /(I)/
Total Equity Value ($ millions)
[LINE GRAPH]
<TABLE>
<CAPTION>
Equity Value Per Share
---------------------------- -------------------------
Low High Low High
<S> <C> <C> <C> <C> <C>
----------------
Comparable Companies with Premium /1/ /2/ $ 1,300.0 $ 1,495.0 $ 31.2 $ 35.9 $35.00 Per Share
Offer Value
Comparable Transactions $ 1,350.0 $ 1,475.0 $ 32.4 $ 35.4 ----------------
Discounted Cash Flow $ 1,376.0 $ 1,623.2 $ 33.0 $ 39.0
Sum of Parts $ 1,382.9 $ 1,546.1 $ 33.2 $ 37.1
Average Acquisition Premium (25% - 40%)/3/ $ 1,197.0 $ 1,340.0 $ 28.7 $ 32.2
</TABLE>
(1) Based on 41.7 million fully diluted shares outstanding as of 7/31/99
(2) Comparable companies: American Water Works Co. (AWK), Philadelphia Suburban
Corp (PSC), E' Town Corp (ETW), Middlesex Water Corp (MSEX), Connecticut
Water Services Co (CTWS). Premium of 30% assumed
(3) Based on 30 trading day average closing price of $22.98 prior to
announcement by Union that it is considering strategic alternatives
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4. VALUATION SUMMARY (I)
<TABLE>
<CAPTION>
Equity Value Per Share Value (2) Comments
---------------------------- ----------------------- --------------------------
Low High Low High
<S> <C> <C> <C> <C> <C>
Comparable Companies (1) $ 1,300.0 $ 1,495.0 $ 31.19 $35.87 22.6x - 26.Ox Union 2000 EPS
2.5x - 2.9x Fully Diluted Book Value
Comparable Transactions $ 1,350.0 $ 1,475.0 $ 32.39 $35.39 23.5x - 25.6x Union 2000 EPS
2.6x - 2.9x Fully Diluted Book Value
Discounted Cash Flow $ 1,376.0 $ 1,623.2 $ 33.02 $38.95 Based on 2008 Perpetuity Growth Rate
of 3.0% Discount Rate of 6.75% - 7.25%
Sum of Parts $ 1,382.9 $ 1,546.1 $ 33.18 $37.10 See following page
Average Acquisition Premium (3) $ 1,197.0 $ 1,340.0 $ 28.72 $32.15 Comparable Transactions
</TABLE>
(1) Includes a 30% acquisition premium
(2) Based on 41.7 million fully diluted shares outstanding as of 7/31/99
(3) Based on 30 trading day average closing price of $22.98 prior to
announcement by Union that it is considering strategic alternatives
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4. VALUATION SUMMARY
Sum of Parts Valuation Summary
<TABLE>
<CAPTION>
Equity Value Per Share Value(1)
------------------------ ------------------
Low High Low High
<S> <C> <C> <C> <C>
Water Utility Equity Value(5)
Comparable Companies at a 30% Premium $ 1,267.5 $ 1,397.5 $30.41 $33.53
Comparable Acquisitions 1,250.0 1,350.0 $29.99 $32.39
- ------------------------------------------------------------------------------------------------
Average Water Utility Equity Value 1,258.8 1,373.8 $30.20 $32.96
- ------------------------------------------------------------------------------------------------
Equity Investments
Northumbrian Water (10% Stake) (2) 118.0 136.1 $2.83 $3.27
UWS North America (3) 70.0 90.0 $1.68 $2.16
----------- ------- ------- ------
Total 188.0 226.1 $4.51 $5.43
Real Estate/Other Investments
Book Value 90.0 100.0 $2.16 $2.40
Holding Company Debt(4) 153.8 153.8 $3.69 $3.69
Sum of Parts Value
Water Utility Business 1,258.8 1,373.8 $30.20 $32.96
Equity Investments 188.0 226.1 $4.51 $5.43
Real Estate 90.0 100.0 $2.16 $2.40
Less: Holding Company Debt (153.8) (153.8) (3.69) (3.69)
- ------------------------------------------------------------------------------------------------
Sum of Parts Value $ 1,382.9 $ 1,546.1 $33.18 $37.10
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on 41.7 million fully diluted shares outstanding as of 7/31/99
(2) Forecast 2000 Northumbrian UK GAAP earnings contribution of $12.1 million
multiplied by a factor of 13.0x - 15.0x, based on the average P/E's for
UK water utility companies, adjusted for a 25% liquidity discount
(3) Equity value based on the net present value of expected UWS free cash flow
at discount rates of 9.0% - 11.0% including a perpetuity value derived
assuming a 5.0% growth rate
(4) Estimated as of 6/30/99
(5) Approximately 2.7x to 2.9x water utility book value of $461 million as of
5/31/99
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5. POTENTIAL SALE OF STAKE IN UNION
o If SLDE ultimately decides to sell its stake in Union there are two likely
scenarios through which the sale could be executed:
[] Sell shares to a third party acquiror of Union at a premium to current
market price
[] Sell shares through a secondary offering or a block sale with Union's
approval and support, receiving a discount to current market price
<TABLE>
<CAPTION>
Price Received Per Share
-------------------------------------------------------------------------------
Sell to Competitive Bidder $ 32.00 $ 33.00 $ 34.00 $ 35.00 $ 36.00 $ 37.00 $ 38.00
<S> <C> <C> <C> <C> <C> <C> <C>
Implied Premium to Current Price (1) 30.4% 34.5% 38.6% 42.7% 46.8% 50.8% 54.9%
Pretax Value Received by Leo for 31.9% Stake $ 425.2 $ 438.4 $ 451.7 $ 465.0 $ 478.3 $ 491.6 $ 504.9
Pretax Gain on Sale (2) 291.0 304.3 317.6 330.8 344.1 357.4 370.7
Taxes Paid (104.0) (108.7) (113.3) (118.0) (122.6) (127.3) (131.9)
After Tax Gain on Sale 187.0 195.6 204.3 212.9 221.5 230.2 239.8
After Tax Proceeds 321.2 329.8 338.4 347.1 355.7 364.3 373.0
</TABLE>
(1) Based on closing price of $24.53 on 8/17/99
(2) Based on a tax basis of $134.2 million
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6. PRICING MATRIX
Consolidated Union
<TABLE>
<CAPTION>
Share Market Plus: Enterprise Revenues EBITDA EBIT EPS (3)
------------------
Price Premium Value (1) Net Debt (2) Value 2000 2000(3) 2000(3) 1999E 2000E
- --------
30 day
average
- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22.98 (5) 0% $ 637 $ 530 $ 1,166 4.70x 10.2x 13.5x 18.8x 16.7x
$34.00 48% $ 965 $ 530 $ 1,495 6.02x 13.0x 17.3x 27.8x 24.6x
$34.50 50% $ 980 $ 530 $ 1,509 6.08x 13.1x 17.5x 28.2x 25.Ox
$35.00 52% $ 994 $ 530 $ 1,523 6.14x 13.3x 17.6x 28.6x 25.4x
$35.50 54% $ 1,007 $ 530 $ 1,537 6.19x 13.4x 17.8x 29.1x 25.7x
$36.00 57% $ 1,022 $ 530 $ 1,551 6.25x 13.5x 18.Ox 29.5x 26.1x
$36.50 59% $ 1,036 $ 530 $ 1,566 6.31x 13.6x 18.1x 29.9x 26.5x
$37.00 61% $ 1,050 $ 530 $ 1,580 6.36x 13.8x 18.3x 30.3x 26.8x
$37.50 63% $ 1,065 $ 530 $ 1,594 6.42x 13.9x 18.5x 30.7x 27.2x
$38.00 65% $ 1,079 $ 530 $ 1,609 6.48x 14.Ox 18.6x 31.1x 27.5x
---------------------------------------------------------------------------------
Union Operating Data $364.5 $168.5 $126.8 $1.22 $1.38
---------------------------------------------------------------------------------
</TABLE>
Share Book Value Per Share
------------------------
Price 6/30/99(4) 12/31/99 (4)
$22.98 (5) 1.85X 1.79x
$34.00 2.74x 2.64x
$34.50 2.78x 2.68x
$35.00 2.82x 2.72x
$35.50 2.86x 2.76x
$36.00 2.90x 2.80x
$36.50 2.94x 2.84x
$37.00 2.98x 2.88x
$37.50 3.02x 2.92x
$38.00 3.06x 2.96x
-------------------------------------------
Union Operating Data $12.41 $12.86
-------------------------------------------
Note: Values and operating data in the pricing matrix are inclusive of all
businesses
(1) Based on an acquisition of 68.1% of the 41.7 mm fully-diluted shares
outstanding, after converting options and Series A Preferred, as of 7/31/99
and less options proceeds
(2) Value based on portion purchased. Includes remaining preferred equity
(3) Includes equity investments, divestments, investments and acquisitions and
AFUDC. Excludes one-time pretax charge of $6.0 million for employee
buy-outs and $5.8 million gain on sale of real estate in 1Q
(4) Assumes the full conversion of Series A Preferreds and exercise of options
(5) Average price over last 30 trading days prior to announcement by Union that
it was considering strategic alternatives
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EXHIBIT I: DISCOUNTED CASH FLOW ANALYSIS
<TABLE>
<CAPTION>
UNION FORECAST
Year 0 Year 1 Year 2 Year 3 Year 4
1999 2000 2001 2002 2003
---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales 367.0 364.5 379.4 396.7 408.5
Growth % 3.0% -0.7% 4.1% 4.6% 3.0%
---------- --------- --------- -------- --------
EBITDA 136.4 148.6 157.1 167.9 175.4
EBITDA % 37.2% 40.8% 41.4% 42.3% 42.9%
Depreciation 44.5 41.8 43.4 44.5 45.5
D&A Sales % 12.1% 11.5% 11.4% 1.2% 11.1%
---------- --------- --------- -------- --------
EBIT 91.9 106.8 113.7 123.4 129.9
EBIT % ----- 25.0% 29.3% 30.0% 31.1% 31.8%
Taxes 36.5% 33.5 39.0 41.5 45.0 47.4
----- ---------- --------- --------- -------- --------
Tax Effected EBIT 58.4 67.8 72.2 78.3 82.5
Growth % -25.3% 16.2% 6.5% 8.5% 5.3%
Plus: Depreciation 44.5 41.8 43.4 44.5 45.5
---------- --------- --------- -------- --------
Tax Effected EBITDA 102.9 109.6 115.6 122.9 128.0
Divestments 40.0 34.7 26.7 13.3 8.0
Other (net) 2.1 0.4 0.1 0.0 0.0
Proceeds from Sale of Real Estate 28.1 4.5 1.6 2.1 7.8
Other Investments (22.8) (19.2) (1.6) (1.1) (1.1)
Less: Changes in Working Capital (26.2) (8.6) (7.8) (7.3) (6.0)
Plus: Deferred Taxes 15.4 11.5 11.2 11.3 11.2
Less: Net Capital Expenditure (66.3) (66.6) (61.5) (51.2) (46.1)
CAPEX/Sales % -18.1% - 18.3% - 16.2% - 12.9% -11.3%
CAPEX/D&A% 148.9% 159.3% 141.8% 114.9% 101.4%
---------- --------- --------- -------- --------
AFTER-TAX FREE CASH FLOW 73.2 66.4 84.2 90.0 101.8
Growth % 98.1% -9.3% 26.9% 6.8% 13.2%
</TABLE>
o Based on Union projections
o Excludes additional investments and acquisitions
o Deferred taxes and changes in working capital as projected by Union
o 12/31/99 valuation date
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EXHIBIT 1: DISCOUNTED CASH FLOW ANALYSIS
Present Value Calculations - Perpetuity Approach - PV as of 12/31/99
<TABLE>
<CAPTION>
A + B = C
PV of Terminal Value at Perpetual Discounted
Discount Free Cash Flow Growth Rate of Cash Flows Implied Enterprise Value
Rate 2.0% 2.5% 3.0% 99-03 2.0% 2.5% 3.0%
- ----------- ---------- ---------- ---------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
6.50% 1,514.9 1,712.6 1,966.8 290.2 1,805.1 2,002.8 2,257.0
6.75% 1,421.8 1,596.8 1,818.5 288.5 1,710.2 1,885.3 2,107.0
7.00% 1,338.1 1,494.0 1,689.0 186.7 1,624.8 1,780.8 1,975.7
7.25% 1,261.5 1,402.3 1,574.9 285.0 1,547.5 1,687.3 1,859.9
7.50% 1,194.0 1,319.8 1,473.6 283.3 1,477.3 1,603.1 1,756.9
</TABLE>
- - D = E F
Northumbrian
Less Implied Equity Value & UWS
Net Debt (1) 2.0% 2.5% 3.0% Value (2)
- ----------- ------- -------- -------- ----------
710.0 1,095.1 1,292.8 1,547.0 226.1
710.0 1,000.3 1,175.3 1,397.0 226.1
710.0 914.8 1,070.8 1,265.8 226.1
710.0 837.6 977.3 1,149.9 220.1
710.0 767.3 893.1 1,046.9 226.1
<TABLE>
= G H
Total Implied Union Equity Value Total Implied Union Equity Value
Discount Per Share (3)
Rates 2.0% 2.5% 3.0% 2.0% 2.5% 3.0%
- -------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
6.50% 1,321.3 1,519.0 1,773.2 $31.70 $36.45 $42.55
6.75% 1,226.4 1,401.4 1,623.2 $29.43 $33.63 $38.95
7.00% 1,141.0 1,296.9 1,491.9 $27.38 $31.12 $35.80
7.25% 1,063.7 1,203.4 1,376.0 $25.52 $28.88 $33.02
7.50% 993.4 1,119.3 1,273.1 $23.84 $26.86 $30.55
</TABLE>
(1) Based on projected net debt as of 12/13/99, and assuming conversion of all
options and Series A preferreds
(2) Rothschild estimate includes 25% liquidity discount for Northumbrian share
holding. No capital gain assumed to occur on the sale of Northumbrian
shares
(3) Based on 41.7 million fully-diluted shares outstanding
(4) Final year cash flow used for perpetuity calculation excludes proceeds from
divestitures and sale of real estate
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EXHIBIT 11: COMPARABLE COMPANIES ANALYSIS (CONSOLIDATED UNION)
<TABLE>
<CAPTION>
Market Value/
Sample Companies (1) Enterprise Value Market Value/ Price/ Book Value
----------------------------------- -------------------- ----------------------
Revenue EBITDA EBIT Net Income 1999E EPS 2000E EPS 6/30/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High 5.34 x 12.6 x 16.6 x 25.0 x 21.5x 18.4 x 2.53 x
Mean 4.99 x 10.9 x 14.6 x 20.4 x 19.1x 17.8 x 2.11 x
Median 5.31 x 10.9 x 14.4 x 20.2 x 18.9x 18.0 x 1.92 x
Low 4.42 x 9.7 x 13.1 x 16.8 x 17.6x 16.7 x 1.84 x
1999 Union Operating Data (2) $ 367.0 $ 164.5 $ 120.0 $ 47.1 $1.22 $1.38 $ 520.7 $ 539.6
Implied Enterprise Value
High $ 1,959.6 $ 2,068.8 $ 1,995.8 $ 1,934.4 $ 780.5 $ 779.7 $ 2,072.1 $ 2,119.9
Mean 1,831.5 1,791.9 1,748.0 1,716.2 777.6 778.8 1,852.9 1,892.7
Median 1,949.8 1,793.5 1,729.4 1,705.7 777.3 779.0 1,756.1 1,792.4
Low 1,623.4 1.590.7 1,572.2 1.548.2 775.8 777.3 1,713.2 1,747.9
Implied Equity Value
High $ 1,205.4 $ 1,314.6 $ 1,241.5 $ 1,180.2 $ 1,093.1 $ 1,060.7 $ 1,317.9 $ 1,365.7
Mean 1,077.3 1,037.6 993.7 961.9 975.0 1,023.1 1,098.7 1,138.5
Median 1,195.6 1,039.2 975.2 951.5 961.0 1,033.2 1,001.8 1,038.1
Low NM 836.5 818.0 793.9 898.6 959.1 958.9 993.7
Implied Price Per Share
High $28.92 $31.54 $29.79 $28.32 $26.23 $25.45 $31.62 $32.77
Mean $25.85 $24.90 $23.84 $23.08 $23.40 $24.55 $26.36 $27.32
Median $28.69 $24.94 $23.40 $22.83 $23.06 $24.79 $24.04 $24.91
Low NM $20.07 $19.63 $19.05 $21.56 $23.01 $23.01 $23.84
</TABLE>
(1) Comparable companies include: American Water Works, Philadelphia Suburban,
E Town, Middlesex and Connecticut Water Services
(2) Based on Union projections
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EXHIBIT II: COMPARABLE COMPANIES ANALYSIS
<TABLE>
<CAPTION>
Company (Ticker)/(Country) Stock Price (8/17/99) 52-Wk High Market Value of Equity
Business Description Shares (Primary) 52-Wk Low Net Debt
Shares (F/D) Div. Yield % Market Capitalization
<S> <C> <C> <C>
American Water Works Co (AWK) (a) $29.19 $34.75 $ 2,387.7
Provides professional services to affiliated 81.3 $27.38 2,293.6
water companies 81.8 2.95% $ 4,681.3
United Water Resources (UWR) $24.53 $25.00 $ 950.5
Provides wastewater services to over two million 38.7 $16.38 795.7
people in 13 states 38.7 3.91% $ 1,746.1
Philadephia Suburban Corp (PSC) (b) $21.47 $30.06 $ 881.9
Provides water to residential and commercial 40.8 $19.69 456.8
customers in suburban Philadephia 41.1 3.17% $ 1,338.7
E'Town Corp (ETW) $47.25 $48.25 $ 404.8
A holding company for Elizabethtown Water Corp 8.5 $35.25 333.9
and its subsidiary, Mount Holly Water Co 8.6 4.32% $ 738.7
California Water Services (CWT) $29.81 $33.13 $ 376.2
Provides water services to various communities in 12.6 $20.75 160.6
California 12.6 3.66% $ 536.8
Aquarion Co (WTR) $35.47 $35.13 $ 423.6
Water services in Connecticut and Long Island, 11.4 $21.38 156.8
New York and utility management 11.9 3.13% $ 580.4
American States Water Company (AWR) $31.34 $30.00 $ 280.8
Formerly Southern California Water Company (SCW) 9.0 $22.19 161.2
Purchases, produces, distributes and sells water 9.0 4.08% $ 442.0
San Jose Water (SJW) $77.50 $81.00 $ 236.0
Regulated California water utility providing water 3.0 $48.50 89.4
service in the San Jose area 3.0 3.10% $ 325.4
Middlesex Water Corp (MSEX) $26.25 $25.75 $ 128.9
Collects, treats and distributes water for residential 4.9 $19.25 70.0
and commercial customers 4.9 4.50% $ 198.9
Connecticut Water Services Co (CTWS) $30.25 $28.50 $ 137.5
Holding Company for Connecticut Water Company, 4.5 $19.00 65.9
which provides water amd fire protection in Connecticut 4.5 3.87% $ 203.5
Southwest Water Co (SWWC) $19.75 $18.00 $ 85.8
Full service water and wastewater management company 4.3 $10.50 35.2
4.3 1.62% $ 121.1
</TABLE>
<TABLE>
<CAPTION>
Company (Ticker)/(Country) LTM Revenue LTM EBITDA LTM EBIT LTM Net Income
Business Description MC/Rev MC/EBITDA MC/EBIT MVE/NI
GP Margin Margin Margin Margin
<S> <C> <C> <C> <C>
American Water Works Co (AWK) (a) $ 1,028.8 $ 479.9 $ 357.3 $ 121.2
Provides professional services to affiliated 4.55x 9.8x 13.1x 19.7x
water companies 55.8% 46.6% 34.7% 11.8%
United Water Resources (UWR) $ 360.0 $ 139.4 $ 96.3 $ 41.9
Provides wastewater services to over two million 4.85x * 12.5x * 18.1x * 22.7x *
people in 13 states 52.4% 38.7% 26.7% 11.6%
Philadephia Suburban Corp (PSC) (b) $ 251.4 $ 127.3 $ 97.0 $ 43.4
Provides water to residential and commercial 5.33x 10.5x 13.8x 20.3x
customers in suburban Philadephia 60.6% 50.7% 38.6% 17.2%
E'Town Corp (ETW) $ 139.1 $ 65.4 $ 52.5 $ 24.0
A holding company for Elizabethtown Water Corp 5.31x 11.3x 14.1x 16.8x
and its subsidiary, Mount Holly Water Co 65.1% 47.1% 37.7% 17.3%
California Water Services (CWT) $ 190.2 $ 56.5 $ 41.6 $ 19.2
Provides water services to various communities in 2.82x * 9.5x * 12.9x * 19.6x *
California 66.8% 29.7% 21.9% 10.1%
Aquarion Co (WTR) $ 116.0 $ 59.3 $ 44.6 $ 20.3
Water services in Connecticut and Long Island, 5.00x * 9.8x * 13.0x * 20.9x *
New York and utility management 72.7% 51.1% 38.5% 17.5%
American States Water Company (AWR) $ 154.2 $ 50.9 $ 37.5 $ 15.7
Formerly Southern California Water Company (SCW) 2.87x * 8.7x * 11.8x * 17.9x *
Purchases, produces, distributes and sells water 66.2% 33.0% 24.3% 10.2%
San Jose Water (SJW) $ 107.7 $ 38.9 $ 29.2 $ 14.6
Regulated California water utility providing water 3.02x * 8.4x * 11.2x * 16.1x *
service in the San Jose area 74.1% 36.1% 27.1% 13.6%
Middlesex Water Corp (MSEX) $ 45.0 $ 15.8 $ 12.0 $ 6.4
Collects, treats and distributes water for residential 4.42x 12.6x 16.6x 20.0x
and commercial customers 52.4% 35.2% 26.6% 14.3%
Connecticut Water Services Co (CTWS) $ 38.1 $ 17.6 $ 13.5 $ 6.7
Holding Company for Connecticut Water Company, 5.34x 11.5x 15.0x 20.5x
which provides water amd fire protection in Connecticut 63.3% 46.2% 35.5% 17.6%
Southwest Water Co (SWWC) $ 72.8 $ 12.5 $ 8.2 $ 3.4
Full Service water and wastewater management company 1.66x * 9.7x 14.7x 25.0x
26.7% 17.2% 11.3% 4.7%
</TABLE>
<TABLE>
<CAPTION>
Company (Ticker)/(Country) 1999 Est. EPS 2000 Est. EPS Book Value
Business Description 1999 P/E 2000 P/E MVE/BV
His. EPS Growth Proj. EPS Growth Intangible Assets
<S> <C> <C> <C>
American Water Works Co (AWK) (a) $ 1.65 $ 1.75 $ 1,246.6
Provides professional services to affiliated 17.6x 16.7x 1.92x
water companies 6.6% 6.5% --
United Water Resources (UWR) $ 1.28 $ 1.35 $ 452.6
Provides wastewater services to over two million 19.2x * 18.2x * 2.10x *
people in 13 states 1.7% 5.2% --
Philadephia Suburban Corp (PSC) (b) $ 1.09 $ 1.18 $ 348.4
Provides water to residential and commercial 19.8x 18.2x 2.53x
customers in suburban Philadephia 11.3% 11.1% --
E'Town Corp (ETW) $ 2.59 $ 2.70 $ 219.8
A holding company for Elizabethtown Water Corp 18.2x 17.5x 1.84x
and its subsidiary, Mount Holly Water Co 3.0% 3.0% --
California Water Services (CWT) $ 1.54 $ 1.60 $ 167.9
Provides water services to various communities in 19.4x * 18.6x * 2.24x *
California 1.4% 3.0% --
Aquarion Co (WTR) $ 1.52 $ 1.58 $ 148.3
Water services in Connecticut and Long Island, 23.3x * 22.5x * 2.86x *
New York and utility management 8.8% 3.0% --
American States Water Company (AWR) $ 1.79 $ 1.85 $ 153.4
Formerly Southern California Water Company (SCW) 17.5x * 16.9x * 1.83x *
Purchases, produces, distributes and sells water 1.2% 3.0% --
San Jose Water (SJW) $ 4.88 $ 4.88 $ 131.5
Regulated California water utility providing water 15.9x * 15.9x * 1.79x *
service in the San Jose area 4.6% 1.3% $ 2.0
Middlesex Water Corp (MSEX) $ 1.41 $ 1.46 $ 67.0
Collects, treats and distributes water for residential 18.7x 18.0x 1.92x
and commercial customers 0.3% 3.0% --
Connecticut Water Services Co (CTWS) $ 1.59 $ 1.64 $ 58.8
Holding Company for Connecticut Water Company, 19.1x 18.4x 2.34x
which provides water amd fire protection in Connecticut 2.9% 3.0% --
Southwest Water Co (SWWC) $ 0.92 $ 1.10 $ 35.5
Full Service water and wastewater management company 21.5x 18.0x 2.41x *
15.0% NA --
</TABLE>
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B(7)-Page 16
<PAGE>
[GRAPHIC] ======================================================================
EXHIBIT II. COMPARABLE COMPANIES ANALYSIS
<TABLE>
<CAPTION>
Summary Multiples*
------------------------------------------------------------------------------------------------
Market Capitalization/ MV of Equity/ Price/ MV of Equity/
------------------------------------- ----------------------------
Revenue EBITDA EBIT Net Income CY Est. FPS NY Est. EPS Book Value
------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
High 5.34 x 12.6 x 16.6 x 25.0 x 21.5 x 18.4 x 2.53 x
Mean 4.99 x 10.9 x 14.6 x 20.4 x 19.1 x 17.8 x 2.11 x
Median 5.31 x 10.9 x 14.4 x 20.2 x 18.9 x 18.0 x 1.92 x
Low 4.42 x 9.7 x 13.1 x 16.8 x 17.6 x 16.7 x 1.84 x
Standard Deviation 0.5 1.1 1.2 2.6 1.3 0.6 0.3
Count 5 6 6 6 6 6 5
<CAPTION>
Summary Margins & Growth Rates *
-------------------------------------------------------------------------------------------
Gross Profit EBITDA EBIT Net Income His. EPS Growth Proj. EPS Growth
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
High 74.1% 51.1% 38.6% 17.5% 15.01% 11.1%
Mean 59.6% 39.2% 29.4% 13.3% 5.2% 4.2%
Median 63.3% 38.7% 27.1% 13.6% 3.0% 3.0%
Low 26.7% 17.2% 11.3% 4.7% 0.3% 1.3%
Standard Deviation 13.1% 10.4% 8.6% 4.1% 4.7% 2.8%
Count 11 11 11 11 11 10
</TABLE>
Sources and Abbreviations
Shares (Primary = Primary Shares Outstanding
Shares (F/D) = Fully-Diluted Shares Outstanding (Treasury Method)
Market Value of Equity (MVE) = Fully-Diluted Shares Outstanding x Price per
Share
Net Debt = Total Debt + Minority Interests + Preferred Stock - Cash and
Equivalents
Market Capitalization (MC) = Market Value of Equity + Net Debt
Net Income = Net Income to Common Shareholders
NY Est. EPS = Next Fiscal Year Estimated Earnings per Share
Earnings Estimates: I/B/E/S Mean Estimates
P/E = Price to Earning Ratio
Book Value = Common Shareholder Equity
Historical EPS Growth Rate: (1 Year) Source: Bloomberg
Protected EPS Growth Rate: (1 Year) Source: I/B/E/S Mean Estimates
NM = Not Meaningful - Excludes Negative Figures
Footnotes
* Outliers Excluded From Summary Multiples
EBIT, EBITDA, Net Income and EPS calculations exclude extraordinary items,
discontinued operations and one-time charges.
(a) Fully diluted share includes 466,935 in 5% preferred
(b) Proforma for the March 10, 1999 merger with Consumers Water Company
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<PAGE>
[GRAPHIC] ======================================================================
EXHIBIT III: COMPARABLE ACQUISITION ANALYSIS
(CONSOLIDATED UNION)
<TABLE>
<CAPTION>
Market Value/
Comparable Transactions Enterprise Value Price/ Book Value
--------------------------------- Market Value/ -------------------- ---------------------
Revenue EBITDA EBIT Net Income 1999E EPS 2000E EPS 6/30/99 12/31/99
<S> <C> <C> <C> <C> <C>
High 5.10 x 14.2 x 20.8 x 28.3 x 2.99 x
Mean 3.21 x 10.6 x 15.2 x 23.8 x 2.67 x
Median 3.12 x 10.0 x 14.4 x 22.8 x 2.68 x
Low 1.03 x 9.0 x 13.2 x 21.4 x 2.38 x
1999 Union Operating Data (1) $ 367.0 $ 164.5 $ 120.0 $ 47.1 $1.22 $1.38 $ 520.7 $ 539.6
Implied Enterprise Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $1,873.3 $2,331.1 $2,490.2 $2,085.8 $2,182.3 $2,367.0 $2,311.0 $2,367.4
Mean 1,179.7 1,739.4 1,822.6 1,878.3 1,959.8 2,115.7 2,144.2 2,194.6
Median 1,146.6 1,647.9 1,733.8 1,828.8 1,906.6 2,055.7 2,151.1 2,201.7
LOW 379.7 1,481.6 1,587.5 1,762.9 1,836.0 1,975.9 1,991.7 2,036.5
Implied Equity Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $1,119.1 $1,576.9 $1,736.0 $1,331.6 $1,428.0 $1,612.7 $1,556.7 $1,613.1
Mean 425.4 985.2 1,068.3 1,124.1 1,205.5 1,361.4 1,390.0 1,440.3
Median 392.4 893.6 979.6 1,074.5 1,152.4 1,301.4 1,396.9 1,447.5
Low NM 727.3 833.3 1,008.7 1,081.8 1,221.7 1.237.4 1,282.3
Implied Price Per Share
<S> <C> <C> <C> <C> <C> <C> <C> <C>
High $27.05 $38.11 $41.96 $32.18 $34.52 $38.98 $37.63 $38.99
Mean $10.28 $23.81 $25.82 $27.17 $29.14 $32.91 $33.60 $34.81
Median $9.48 $21.60 $23.68 $25.97 $27.85 $31.46 $33.76 $34.99
Low NM $17.58 $20.14 $24.38 $26.15 $29.53 $29.91 $30.99
</TABLE>
(1) Based on Union projections
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<PAGE>
[GRAPHIC] ======================================================================
EXHIBIT III: COMPARABLE ACQUISITION ANALYSIS
<TABLE>
<CAPTION>
Equity Transaction Equity Value as Multiple of:
Announcement Acquiror/ Target value Value ----------------------------
Date Target Business ($millions) ($millions) Book Value Net Income
- ------------ ------------------------- ------------------ ----------- ----------- ---------- ----------
<C> <C> <S> <C> <C> <C> <C> <C>
1-Jun-99 Yorkshire Water/ Public water utility $439.0 $590.4 3.Ox 22.Ox
Aquarion Corp company with small
interests in timber
and real estate
26-Mar-99 Enron Corporation/ Water & sewer treatment $113.0 $120.0 2.8x 28.3x
Philip Services Corp.(1) operations
16-Nov-98 California Water Services/ Water utility holding $ 47.6 $58.1 2.9x 68.0x *
Dominguez Services company
13-Oct-98 American Water Works/ Water services to over $475.0 $700.0 2.4x 24.8x
National Enterprises Inc 1.7 million customers
in Missouri, Illinois,
Indiana and New York
30-Jun-98 Philadelphia Suburban Public water utility $269.0 $459.O 2.4x 22.8x
Corp/ Consumers Water Co water holding company
providing service in 6
states
16-Sep-96 NIPSCO Industries Inc/ Water utility holding $290.6 $423.3 2.5x 21.4x
IWC Resources company
------------------------------------------
Maximum 3.Ox 28.3x
Mean 2.7x 23.8x
Median 2.7x 22.8x
Minimum 2.4x 21.4x
------------------------------------------
<CAPTION>
Transaction Value as Multiple of:
Announcement Acquiror/ Target -------------------------------------------------
Date Target Business LTM EBIT LTM EBITDA LTM Sales '000 Customers
- ------------ ------------- -------------------- --------- ---------- --------- --------------
<S> <C> <S> <C> <C> <C> <C>
1-Jun-99 Yorkshire Water/ Public water utility 13.2x 10.1x 5.10x $4,187
Aquarion Corp company with small
interests in timber
and real estate
26-Mar-99 Enron Corporation/ Water & sewer treatment 15.Ox 9.2x 1.03x $2,667
Philip Services Corp.(1) operations
16-Nov-98 California Water Services/ Water utility holding 20.8x 14.2x 2.25x $1,534
Dominguez Services company
13-Oct-98 American Water Works/ Water services to over 14.9x 11.0x 3.95x $ 412*
National Enterprises Inc 1.7 million customers
in Missouri, Illinois,
Indiana and New York
30-Jun-98 Philadelphia Suburban Public water utility 14.Ox 9.9x 4.65x $1,978
Corp/ Consumers Water Co water holding company
providing service in 6
states
16-Sep-96 NIPSCO Industries Inc/ Water utility holding 13.2x 9.Ox 2.30x $1,801
IWC Resources company
------------------------------------------------------------
Maximum 20.8x 14.2x 5.10x 4,187
Mean 15.2x 10.6x 3.21x 2,433
Median 14.4x 10.0x 3.12x 1,978
Minimum 13.2x 9.Ox 1.03x 1,534
------------------------------------------------------------
</TABLE>
(1) Private company estimates, excluded from summary multiples.
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<PAGE>
Exhibit D(1)
[UNITED WATER RESOURCES INC. LETTERHEAD]
, 1999
Dear United Water Resources Inc. Stockholder:
The board of directors of UWR has entered into a merger agreement to merge
our company with a subsidiary of Lyonnaise American Holding, Inc., thereby
causing our company to become a wholly-owned subsidiary of LAH. LAH currently
holds approximately 30.1% of the outstanding shares of UWR common stock and is
a wholly-owned subsidiary of Suez Lyonnaise des Eaux.
We have scheduled a special meeting of the holders of the common stock and
5% series A cumulative convertible preference stock of United Water Resources,
Inc. to approve the merger agreement. This special meeting will be held at
[date, time and location of meeting].
At this important meeting, you will be asked to approve the acquisition by
Lyonnaise American Holding, Inc. of the shares of UWR common stock
(approximately 70%) which it does not already own through the merger of UWR
into a wholly-owned subsidiary of LAH. If the merger is completed, you will
receive
. $35.00 for each share of UWR common stock you own and
. $29.17 for each share of UWR series A preference stock you own
immediately prior to the effective date of the merger.
In addition, under the merger agreement your board of directors has the right
and intends to increase the regular quarterly dividend payable on UWR common
stock above its customary dividend rate by an aggregate of $0.48 during the
period between now and the completion of the merger. (Holders of UWR series A
preference stock will not receive this increased dividend.) As a result of the
merger and the increased special dividend during this period, you will receive
as consideration for the merger a total of $35.48 for each share of UWR common
stock that you own. The proposed consideration payable per share of UWR common
stock, $35.00 (which does not take into account the $0.48 increase in dividends
that shareholders will receive prior to the date that the merger becomes
effective), represents a premium of 52.3% over the $22.98 per share average
closing price of UWR common stock for the 30 trading days immediately preceding
UWR's announcement on August 18, 1999 that it was engaged in merger
negotiations. During this trading period, UWR common stock closed at a low of
$21.37 per share and a high of $24.53 per share.
The board of directors of UWR unanimously approved the merger and has
determined that the merger is advisable for, fair to, and in the best interests
of, the UWR stockholders not affiliated with LAH. Your board of directors
unanimously recommends that you vote "FOR" this transaction.
We cannot complete the merger without the approval of each of (i) two-thirds
of all of the outstanding shares of common stock of UWR not owned by Lyonnaise
American Holding, Inc., (ii) two-thirds of all of the outstanding shares of UWR
Series A Cumulative Convertible Preference Stock, and (iii) a majority of the
shares of common stock voting at the special meeting. As a result, your vote is
very important. Even if you plan to attend the special meeting, we urge you to
mark, sign and date the enclosed proxy and return it promptly. You may also
vote by telephone by calling the toll-free number on your proxy card. You have
the option of revoking the proxy at any time or to vote your shares personally
on request if you attend the meeting.
If you do not return the proxy card or vote by telephone and do not vote at
the meeting, it will have the same effect as if you voted AGAINST the
transaction. Your vote is important no matter how many shares you hold.
Yours very truly,
/s/ ____________________________________
Donald L. Correll
Chairman and Chief Executive Officer
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR MERITS
OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION
CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
<PAGE>
[UNITED WATER RESOURCES INC. LETTERHEAD]
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON ,
----------------
To the holders of the common stock and Series A Cumulative
Convertible Preference Stock of UNITED WATER RESOURCES INC.:
NOTICE IS HEREBY GIVEN that a special meeting of the holders of the common
stock and series A cumulative convertible preference stock of United Water
Resources Inc., a New Jersey corporation ("UWR"), will be held at [date, time
and location of meeting], for the following purpose, which is more fully
described in the accompanying proxy statement:
At the special meeting, you will be asked to consider and vote upon a
proposal to adopt the Agreement and Plan of Merger, dated as of August 20,
1999 (the "Merger Agreement"), by and among UWR, Lyonnaise American
Holding, Inc. ("LAH"), LAH Acquisition Co., ("LAH Acquisition") and Suez
Lyonnaise des Eaux ("SLDE"). If the stockholders of UWR adopt the Merger
Agreement and the merger is completed, LAH Acquisition Co. will be merged
with and into UWR, with
(i) each outstanding share of UWR common stock being converted into the
right to receive $35.00 in cash, without interest, and
(ii) each outstanding share of series A preference stock being
automatically converted into the right to receive $29.17 in cash, without
interest.
Adoption of the Merger Agreement requires the affirmative vote of each of
(i) two-thirds of all of the outstanding shares of UWR common stock not owned
by LAH or certain affiliates of LAH, (ii) two-thirds of all of the outstanding
shares of UWR's series A cumulative convertible preference stock, and (iii) a
majority of the shares of common stock voting at the special meeting.
Only holders of record of shares of common stock and series A preference
stock at the close of business on , 1999 are entitled to notice of, and to
vote at, the special meeting. A complete list of stockholders entitled to vote
at the special meeting will be available for examination, for proper purposes,
during ordinary business hours at UWR's corporate offices, 200 Old Hook Road,
Harrington Park, New Jersey 07640, during the 10 days prior to the special
meeting.
Under New Jersey law, stockholders of UWR do not have appraisal rights.
Therefore, if you vote against the merger, but the merger is eventually
approved, you will receive the $35.00 per share cash consideration payable in
the merger rather than an appraised value of the shares you hold.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ _________________________________
Douglas W. Hawes
Secretary
[Date of Proxy]
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION....................................... 1
FORWARD-LOOKING STATEMENTS................................................ 2
QUESTIONS AND ANSWERS ABOUT THE MERGER.................................... 3
SUMMARY................................................................... 6
The Companies........................................................... 6
The UWR Special Meeting................................................. 7
The Merger.............................................................. 8
The Merger Agreement.................................................... 9
Increased Dividends..................................................... 10
Selected Historical Financial Information............................... 11
Price of UWR Common Stock and Dividends................................. 12
THE SPECIAL MEETING....................................................... 13
Date, Time and Place.................................................... 13
Purpose of the Special Meeting.......................................... 13
Record Date; Voting Rights.............................................. 13
Vote Required........................................................... 13
Voting and Revocation of Proxies........................................ 14
Cost of Solicitation of Proxies......................................... 14
THE MERGER................................................................ 15
Overview................................................................ 15
Certain Effects of the Merger........................................... 15
Background of the Merger................................................ 16
Reasons for the Merger and Recommendation of the UWR Board of
Directors.............................................................. 19
Opinion of UWR's Financial Advisor...................................... 21
Financial Projections of UWR............................................ 26
SLDE's and LAH's Purpose for Engaging in the Merger and Belief That The
Merger is Fair to UWR's Unaffiliated Stockholders...................... 28
Rothschild as Financial Advisor to SLDE and LAH......................... 29
Potential Conflicts of Interest of Certain Persons in the Merger........ 31
Indemnification and Insurance........................................... 32
Federal Income Tax Consequences......................................... 33
Regulatory Matters...................................................... 33
Absence of Appraisal Rights............................................. 34
Recent Developments..................................................... 34
THE MERGER AGREEMENT...................................................... 35
Effective Time of the Merger............................................ 35
Effects of the Merger................................................... 35
Merger Consideration.................................................... 35
Exchange of Stock Certificates.......................................... 35
Representations and Warranties.......................................... 36
Conduct of Business Prior to the Effective Time......................... 37
Conditions to Consummation of the Merger................................ 39
No Solicitation of Transactions......................................... 39
Indemnification and Insurance........................................... 40
Workforce and Employee Benefit Matters.................................. 41
Access to Information................................................... 41
Modification of Existing Agreements..................................... 42
Termination............................................................. 42
Effect of Termination................................................... 43
Termination Fees and Expenses........................................... 43
Amendment and Waiver.................................................... 43
Assignment.............................................................. 43
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANIES............................................................ 44
UWR.................................................................... 44
SLDE................................................................... 45
LAH.................................................................... 45
LAH Acquisition........................................................ 45
Recent transactions between UWR, LAH and SLDE.......................... 46
SELECTED HISTORICAL AND FINANCIAL DATA................................... 48
PRICE OF UWR COMMON STOCK AND DIVIDENDS.................................. 49
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........... 50
FIVE PERCENT OWNER OF UWR COMMON STOCK................................... 51
MERGER RELATED FINANCING................................................. 52
OTHER MATTERS............................................................ 53
ANNEX A Agreement and Plan of Merger dated as of August 20, 1999
ANNEX B Opinion of Morgan Stanley & Co. Incorporated, dated as of the
date of the Proxy Statement*
</TABLE>
This preliminary proxy statement includes the opinion of Morgan Stanley
dated as of August 20, 1999. The definitive proxy statement will include an
opinion of Morgan Stanley dated as of the date of the definitive proxy, which
is anticipated to be substantially similar to the opinion dated August 20,
1999.
ii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
UWR files annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "SEC"). These
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the SEC at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549-1004 and at the following
regional offices of the SEC: New York Regional Office, 7 World Trade Center,
Suite 1300, New York, New York 10048 and Chicago Regional Office, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this information
can also be obtained by mail from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549-
1004 at prescribed rates or on the SEC's web site (http://www.sec.gov).
In addition, materials and information concerning UWR may also be inspected
at the offices of The New York Stock Exchange, Inc., 20 Broad Street, 7th
Floor, New York, New York 10005.
The SEC allows UWR to "incorporate by reference" information into this proxy
statement, which means that UWR can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this proxy
statement, except for any information superseded by information contained
directly in this proxy statement. This proxy statement incorporates by
reference the documents set forth below that were previously filed with the SEC
by UWR (SEC File No. 1-8586):
. UWR's Annual Report on Form 10-K for the fiscal year ended December 31,
1998.
. UWR's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1999.
. UWR's Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1999.
. UWR's Current Report on Form 8-K dated August 27, 1999.
. UWR's Current Report on Form 8-A dated August 27, 1999.
. the Prospectus Supplement dated August 31, 1999 filed pursuant to Rule
424 supplementing the Prospectus dated May 18, 1999 relating to UWR's
Dividend Reinvestment and Stock Purchase Plan.
These documents contain important information about UWR and its financial
condition. We also incorporate by reference any filing we will make with the
SEC under Section 13(a), 13(c), 13(e), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended, between the date of this proxy statement and the date
the special meeting is held. These other documents will be deemed to be
incorporated by reference in this proxy statement and to be a part of it from
the date they are filed with the SEC and will update and supersede any
information previously disclosed.
You should rely only on the information contained in or incorporated by
reference in this proxy statement in deciding how to vote on the Merger
Agreement. No person is authorized to give any information or to make any
representations in connection with the merger other than those contained in
this proxy statement and you should not rely on any such information or
representations given or made as having been authorized by UWR. The delivery of
this proxy statement does not imply under any circumstances that the affairs of
UWR or the information set forth herein are unchanged since the date of this
proxy statement.
1
<PAGE>
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
UWR has made forward-looking statements in this document (and in documents
that are incorporated by reference) that are subject to risks and
uncertainties. Forward-looking statements include the information concerning
possible or assumed future results of operations of UWR. Also, when we use
words such as "believes," "expects," "anticipates" or similar expressions, we
are making forward-looking statements. Stockholders should note that many
factors, some of which are discussed elsewhere in this document and in the
documents that we incorporate by reference, could affect the future financial
results of UWR and could cause those results to differ materially from those
expressed in our forward-looking statements contained or incorporated by
reference in this document. The factors that could cause actual results to
differ materially from those indicated by such forward-looking statements
include, but are not limited to, the following: preliminary information that
may be subject to further and/or continuing review and adjustment; regulatory
issues; changes in the economy; the impact of competition from other water
services companies; the management of UWR's operations; variations in prices of
materials used in the water services industry; growth opportunities for the
companies' regulated and non-regulated businesses; conditions of the capital
and equity markets; changes in the companies' accounting policies; abnormal
weather conditions; inflation; exposure to environmental issues and
liabilities; changes in environmental regulations; successful correction of any
material Year 2000 problem or, alternatively, successful implementation of a
contingency plan by the companies and any critical third party suppliers; and
the other risks and uncertainties described from time to time in the companies'
periodic reports filed with the SEC. UWR disclaims any obligation to update any
forward-looking statement.
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why did the UWR board of directors decide to accept LAH's offer to acquire
the rest of UWR's stock?
Your board of directors decided to accept LAH's offer because LAH offered a
price for those shares which your board of directors believes represents
significantly higher value for your shares than that which could be
achieved at this time through other strategies.
Q: Why did the UWR board of directors decide that merging with LAH was the best
method for maximizing stockholder value now?
The water industry in the United States is going through a period of rapid
consolidation. Your board of directors determined that because of UWR's
size and limited capital resources, it could not easily take advantage of
growth opportunities through acquisitions of significant water utilities or
services companies at the premiums that UWR would have to pay to grow
through acquisitions and, as a result, might not remain competitive in the
industry. In addition, your board determined that it may not be able to
participate in public private partnerships that UWR may pursue in the
future that require significant amounts of capital to be contributed by the
private party. Your board determined that UWR stockholders could best
benefit from the industry consolidation through a sale of UWR to, or a
business combination of UWR with, a larger industry leader. In reviewing
its alternatives, your board determined that LAH was willing to pay more
for the remaining approximately 70% of the UWR shares it did not own than
UWR was likely to receive in an auction or other sale of the company.
Q. What effect will the merger have on UWR's customers and employees?
Your board of directors believes that the merger will help position UWR to
become one of the world's premier water services companies by providing
strategic growth opportunities and access to cutting-edge technologies that
will benefit the company and its customers and employees in a manner that
UWR could not achieve on its own.
Q. What will I receive in the merger?
Holders of Common Stock
You will receive $35.00 in cash for each whole share of common stock held
by you. In addition, under the merger agreement your board of directors has
the right and intends to increase the quarterly dividend on UWR common
stock above its customary dividend rate by up to $0.06 per share per
quarter for each of the next three fiscal quarters beginning December 1,
1999, and pay a special dividend immediately prior to the merger in an
amount equal to the difference between $0.48 and the aggregate amount of
the additional quarterly dividends. When combined, the increased regular
quarterly dividends and special dividend will result in an aggregate
dividend increase of $0.48 per share that is held throughout this period.
Therefore, the total cash consideration you will receive for each share of
common stock, including the increased dividend, is $35.48 (fractional
shares of common stock will be paid a proportional amount). The proposed
consideration payable per share of UWR common stock, $35.00 (which does not
take into account the $0.48 increase in dividends that stockholders will
receive prior to the date that the merger becomes effective), represents a
premium of 52.3% over the $22.98 per share average closing price of UWR
common stock for the 30 trading days immediately preceding UWR's
announcement on August 18, 1999 that it was engaged in merger negotiations.
During this trading period, UWR common stock closed at a low of $21.37 per
share and a high of $24.53 per share.
Holders of Series A Preference Stock
For each share of series A preference stock held by you, you will receive
an amount in cash equal to $29.17. (This amount is equal to $35.00
multiplied by the .83333 shares of common stock into which each share of
series A preference stock is convertible.) Holders of series A preference
stock will not receive any additional dividend in connection with the
merger.
3
<PAGE>
Q: Does the merger have to be approved by the UWR stockholders?
Yes, the merger must be approved by each of (i) two-thirds of all of the
outstanding common shares of UWR not owned by LAH, (ii) two-thirds of all
of the outstanding shares of UWR series A preference stock, and (iii) a
majority of the shares of common stock voting at the special meeting. These
approvals will be sought at the special stockholders meeting to be held
[date, time and location of special meeting].
Q: Will I still be a stockholder of UWR following the merger?
No. In the merger, you will receive cash in exchange for your UWR shares.
Following the merger, UWR will be a wholly-owned subsidiary of LAH and its
shares will be delisted from the New York Stock Exchange.
Q. What do I need to do now?
Just mark, sign, date and mail your proxy card in the enclosed return
envelope as soon as possible. That way, your shares can be represented at
the UWR special meeting. You may also vote by telephone by calling the
toll-free number on your proxy card. If your shares are held in your
broker's street name, then follow the instructions they will provide. If
you intend to vote by telephone, do not return the proxy card.
The merger cannot be completed unless (i) two-thirds of all of the
outstanding common shares of UWR not owned by LAH, (ii) two-thirds of all
of the outstanding shares of UWR series A preference stock, and (iii) a
majority of the shares of common stock voting at the special meeting
approve the Merger Agreement. Failure to vote your shares will have the
same effect as a vote "AGAINST" the merger. Your vote is very important.
The board of directors of UWR recommends voting "FOR" approval of the
Merger Agreement.
Q: Should I send in my stock certificates now?
No. Do not send in your stock certificates now. If the merger is completed,
you will receive written instructions on how to exchange them.
Q. Will my broker vote my shares if my shares are held in my broker's street
name?
No. Your broker will not be able to vote your shares without instructions
from you. Therefore, you need to tell your broker how to vote your shares
by following the instructions provided by your broker.
If you do not instruct your broker on how to vote, it will have the same
effect as a vote "AGAINST" the merger.
Q. Can I change my vote after I have mailed in my signed and dated proxy card
or voted by telephone?
Yes. You may revoke your proxy at any time before your shares are voted (i)
by attending the special meeting and voting in person or (ii) by delivering
a duly executed proxy, dated later than the proxy previously delivered, to
the Secretary of UWR, 200 Old Hook Road, Harrington Park, New Jersey, 07640
or (iii) by telephone if you have previously voted by telephone. Unless
revoked in a manner set forth above, proxies in the form enclosed will be
voted at the special meeting in accordance with your instructions.
Q. What are the federal income tax consequences of the merger?
You will be taxed on your receipt of the cash given to you for your shares
to the extent that the amount you receive exceeds your tax basis in your
UWR stock. Please read the more detailed
description of the federal income tax consequences of the merger on pages
32--33.
Q. Do I have appraisal rights for my shares if the merger is completed?
No. An appraisal right permits stockholders to receive payment for their
shares in an amount determined by an independent appraisal rather than the
consideration which they otherwise would receive in the transaction. Under
New Jersey state law, UWR stockholders do not have appraisal rights in the
merger. Therefore, if you vote against the merger but the merger is
nonetheless approved by the requisite votes of the stockholders, you will
still receive the
4
<PAGE>
$35.00 per share cash consideration payable for common stock or $29.17
payable for series A preference stock rather than an appraised value of the
shares you hold.
Q. What regulatory approvals are needed for the merger?
The merger must be approved by the public utility commissions (or similar
regulators) in a number of the states in which UWR operates. Clearance
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 is also
necessary.
Q. What other matters will be voted on at the special meeting?
We do not expect any matters other than the approval of the merger to be
presented to stockholders for vote at the special meeting.
Q. When is the merger expected to be completed?
We are working to complete all aspects of the merger as quickly as
possible. We currently expect to complete the merger during the first half
of the year 2000.
Q. When will I receive my cash proceeds if the merger is approved and
completed?
After the effective time of the merger, instructions and forms will be
forwarded to you explaining how and when to tender your shares. The
exchange agent will remit your cash proceeds upon verification of this
documentation and receipt of your share certificates. No action is required
on your part to tender shares held in the UWR common stock plans such as
the Dividend Reinvestment and Stock Purchase Plans. Shares held in these
plans are in book entry form. The exchange agent will distribute to you the
cash proceeds for the book entry form shares based on your account balance
at the effective time of the merger without any further action by you.
Q. Whom should I call if I have any additional questions?
UWR stockholders may call Investor Relations at (800) 422-9817.
5
<PAGE>
SUMMARY
The following is a summary of selected information contained elsewhere in
this proxy statement and may not contain all of the information that is
important to you. To understand the merger fully and for a more complete
description of the terms of the merger, you should read carefully this entire
proxy statement and the other documents to which we have referred you. See
"Where You Can Find More Information" on p.1 of this proxy statement. For a
review of the actual terms of the merger, the Merger Agreement is attached to
this proxy statement as Annex A. In this document, the term UWR refers to
either UWR before the completion of the merger or UWR as the surviving
corporation in the merger, whichever the context requires. In addition, the
term "stockholder" of UWR refers to holders of UWR common stock and/or UWR
series A preference stock, whichever the context requires. We have included
page references parenthetically referring you to more complete descriptions of
the topics presented in the summary.
The Companies (Pages 44-47)
United Water Resources Inc. (UWR)
200 Old Hook Road
Harrington Park, New Jersey 07640
(201) 784-9434
UWR is a holding company primarily engaged in water-related businesses. As
the second largest investor-owned water services company in the United States,
UWR provides water and wastewater services through its regulated utilities and
nonregulated contract operations (some of which are owned jointly with LAH) to
over 7.5 million people in more than 400 communities in 19 states. UWR also has
investments in joint venture companies providing water services in Canada and
Mexico, in which LAH is a majority owner, and has an investment in a water
services company in the United Kingdom made in partnership with SLDE. In
addition, the company owns and manages real estate investments through a
wholly-owned subsidiary. UWR has been listed on the New York Stock Exchange
since 1889 and has paid cash dividends on its common stock continuously since
1886.
Suez Lyonnaise des Eaux (SLDE)
1, rue d'Astorg
75008 Paris
France
SLDE, a societe anonyme organized and existing under the laws of the
Republic of France, operates private infrastructure services in more than 120
countries, providing electricity and natural gas, waste services,
communications services, and water services and maintains interests in
construction and capital investments. SLDE was formed from the 1997 merger of
Compagnie de Suez (builder of the Suez Canal) and Lyonnaise des Eaux. SLDE's
registered office is located at 72 Avenue de la Liberte, 92022 Nanterre Cedex,
France, and the principal address of SLDE's water division is 18 Square Edouard
VII, 75316 Paris Cedex 09, France.
Lyonnaise American Holding, Inc. (LAH)
2000 First State Boulevard
Wilmington, Delaware 19804-0507
(201)767-2851
LAH is a Delaware corporation with its principal business as a holding
company of (i) its ownership interest in UWR, (ii) 50% of the voting interest
in United Water Services LLC, a Delaware limited liability company which
provides services in the water and wastewater industries to municipalities in
the United States, (iii) majority interests in United Water Services Canada
L.P., an Ontario, Canada limited partnership, and United Water Services Mexico
LLC, a Delaware limited liability company, which provide services in the water
6
<PAGE>
and wastewater industries to municipalities in Canada and Mexico, respectively,
and (iv) a 49% interest in Technologia y Servicios De Agua, S.A., a Mexican
company which provides certain water services to the city of Mexico City,
Mexico. All of the issued and outstanding shares of capital stock of LAH are
owned beneficially and of record by SLDE. The principal business mailing
address of LAH is c/o United Water Services LLC, 200 Old Hook Road, Harrington
Park, New Jersey 07640, and the address of its principal office is 2000 First
State Boulevard, Wilmington, Delaware 19804-0508.
LAH Acquisition Co. (LAH Acquisition)
c/o United Water Services LLC
200 Old Hook Road
Harrington Park, New Jersey 07640
LAH Acquisition is a wholly-owned special purpose subsidiary of LAH, formed
under the laws of the State of New Jersey solely for the purpose of the merger.
LAH Acquisition has not conducted any business other than in connection with
the Merger Agreement. All of the issued and outstanding shares of capital stock
of LAH Acquisition are owned beneficially and of record by LAH. The principal
business mailing address of LAH Acquisition Co. is c/o United Water Services
LLC, 200 Old Hook Road, Harrington Park, New Jersey 07640, and the address of
its principal office is 1013 Centre Road, Wilmington, Delaware 19805-1297.
The UWR Special Meeting (Pages 13-14)
Date, Time and Place. The special meeting of the holders of UWR common stock
and the UWR series A preference stock will be held together at [time, date and
location of meeting].
Purpose of the Special Meetings. The purpose of the special meetings is to
consider and vote on adoption of the Merger Agreement, pursuant to which, among
other things, UWR will become a wholly-owned subsidiary of LAH and the
stockholders of UWR will receive the cash consideration described in this
summary on page 34.
Voting Rights. The board of directors of UWR has fixed the close of business
on , as the record date for the determination of UWR stockholders
entitled to notice of, and to vote at, the special meeting. As of the record
date, UWR had [38,867,960] shares of common stock outstanding and [1,955,984]
shares of series A preference stock outstanding. Holders of shares of common
stock and series A preference stock are entitled to one vote for each share of
stock held of record at the close of business on , . See "THE
SPECIAL MEETING--Voting Rights."
Vote Required. The adoption of the Merger Agreement will require the
approval of each of (i) two-thirds of all of the outstanding shares of common
stock not owned by LAH or its affiliates, (ii) two-thirds of all of the
outstanding shares of series A preference stock, and (iii) a majority of the
shares of common stock voting at the special meeting. See "THE SPECIAL
MEETING--Vote Required" and "THE MERGER--Interests of Certain Persons in the
Merger."
The UWR board of directors Unanimously Recommends that UWR Stockholders Vote
"For" Approval of the Merger Agreement.
Stock Ownership of Management. On the record date, the directors and
executive officers of UWR and their affiliates beneficially owned [245,555]
shares of common stock (excluding unexercised options), or approximately 0.9%
of the voting power of the common stock outstanding on the record date. It is
expected that all current directors and executive officers of UWR will vote the
shares of common stock beneficially owned by them FOR the merger.
Stock Ownership of LAH. On the record date, LAH and its affiliates
beneficially owned [11,687,024] shares of common stock, or approximately 30.1%
of the voting power of the common stock outstanding on the
7
<PAGE>
record date, and [1,919,210] shares of series A preference stock, or
approximately 98.1% of the voting power of the series A preference stock
outstanding on the record date. It is expected that LAH and its affiliates will
vote the shares of common stock and series A preference stock owned by them FOR
the merger. However, because in addition to the approval of a majority of the
shares of common stock voting at the special meeting, the merger must be
approved by two-thirds of the outstanding shares of common stock not owned by
LAH or its affiliates, the vote by LAH of its common stock of UWR will not be
sufficient to determine the outcome at the special meeting of common
stockholders. Because LAH and its affiliates own more than two-thirds of the
outstanding series A preference stock, the vote by LAH and its affiliates of
their series A preference shares in favor of the merger will be sufficient to
provide the requisite vote at the special meeting of LAH's series A preference
stock.
Voting of Proxies. All shares of common stock and series A preference stock
represented by a properly executed proxy received in time for the special
meeting will be voted in the manner specified in the proxy. Proxies that do not
contain any instruction to vote for or against or to abstain from voting on a
particular matter will be voted in accordance with the recommendation of the
board of directors. See "THE SPECIAL MEETING--Voting and Revocation of
Proxies."
It is not expected that any matter other than that referred to herein will
be brought before the stockholders at the special meeting. If, however, other
matters are properly presented, the persons named as proxies will use their
best judgment in voting on these matters.
Adjournments; Revocability of Proxies. If the special meeting is adjourned,
approval of the Merger Agreement will be considered and voted upon by
stockholders at the reconvened meeting, if any.
You may revoke your proxy at any time before your shares are voted (i) by
attending the special meeting and voting in person or (ii) by delivering a
signed proxy relating to the merger, dated later than the proxy previously
delivered, to the Secretary of UWR, 200 Old Hook Road, Harrington Park, New
Jersey 07640 or (iii) by telephone if you have previously voted by telephone.
Solicitation of Proxies. The cost of soliciting proxies will be paid by UWR.
Arrangements will be made to furnish copies of proxy materials to fiduciaries,
custodians and brokerage houses for forwarding to beneficial owners of common
stock. UWR has retained Georgeson and Company Inc. to assist in the
solicitation of proxies. See "THE SPECIAL MEETING--Solicitation of Proxies."
Do not send your stock certificates with your proxy cards.
The Merger (Pages 15-34)
Overview. At the effective time of the merger, LAH Acquisition will be
merged with and into UWR and UWR will continue as the surviving corporation. In
the merger, all shares of UWR common stock and all shares of UWR series A
preference stock owned by UWR, LAH or any of their respective wholly-owned
subsidiaries will be canceled without consideration. All shares of UWR common
stock and UWR series A preference stock not owned by UWR, LAH or any of their
wholly-owned subsidiaries will be converted to the right to receive cash as
follows:
. Each share of UWR common stock will be converted into the right to
receive $35.00
. Each share of UWR series A preference stock will be converted into the
right to receive $29.17.
As a result of the merger, UWR will become a wholly-owned subsidiary of LAH.
8
<PAGE>
Background of, and Reasons for, the Merger.
You should review the factors considered by UWR's board of directors when
deciding whether to approve the merger set out on pages 15 through 34.
Recommendation of the UWR Board of Directors. Your board of directors, with
its LAH-affiliated members first abstaining and then joining in the vote, has
unanimously approved the merger and recommends that the stockholders of UWR
vote "FOR" the adoption of the Merger Agreement. For a discussion of the
factors considered by your board in reaching its decision, see "THE MERGER--
Background of the Merger" and "THE MERGER--Reasons for the Merger."
Opinion of UWR's Financial Advisor. Morgan Stanley & Co. Incorporated, UWR's
financial advisor, has delivered written opinions to your board that as of
August 20, 1999 and again on the date of this proxy statement, the merger
consideration is fair, from a financial point of view, to the holders of UWR
common stock, other than LAH. These opinions are not intended to be
recommendations to any UWR stockholder as to how to vote. We have attached a
copy of Morgan Stanley's opinion dated the date of this proxy statement as
Annex B to this proxy statement. You should read this opinion carefully in its
entirety. See "THE MERGER--Opinions of UWR's Financial Advisor."
Interests of Certain Persons in the Merger. In considering the
recommendation of your board of directors with respect to the merger, you
should be aware that certain directors and executive officers of UWR have
interests that may conflict with the interests of other stockholders in the
merger. Your board was aware of these potential conflicts and considered them
along with other matters in recommending that you vote to approve the merger.
Federal Income Tax Consequences. A portion of the amounts received by UWR
stockholders in exchange for their shares of UWR common stock and series A
preference stock will be taxable for U.S. federal income tax purposes and may
also be taxable under applicable state, local, foreign and other tax laws.
Stockholders are urged to consult their own tax advisers to determine the
particular tax consequences to them (including the application and effect of
any state, local or foreign income or other tax laws) resulting from the
merger.
Regulatory Matters. In order to complete the merger, we must receive certain
federal clearances and state regulatory approvals. While there is no guarantee
as to when, or whether, these regulatory approvals will be obtained, it is
expected that the necessary approvals will be obtained during the first half of
the year 2000.
Absence of Appraisal Rights. Stockholders of UWR do not have the right under
New Jersey law to obtain an appraised value for their shares in place of the
$35.00 per share cash payment for common stock or $29.17 payable for series A
preference stock provided in the Merger Agreement.
The Merger Agreement (Pages 35-43)
Effective Time and Effects of the Merger. The merger will take place as soon
as practicable, but in any event not later than the second business day after
the satisfaction or waiver of the conditions set forth in the Merger Agreement,
unless another date is agreed to by UWR and LAH. See "THE MERGER AGREEMENT--
Effective Time of the Merger" and "Effects of the Merger."
Merger Consideration. At the effective time of the merger, each issued and
outstanding share of UWR common stock (other than shares owned by UWR as
treasury stock or shares owned, directly or indirectly, by UWR, LAH or any of
their respective wholly-owned subsidiaries) shall be converted into the right
to receive $35.00, without interest.
9
<PAGE>
As of the effective time of the merger, each issued and outstanding share of
series A preference stock (other than shares owned, directly or indirectly, by
UWR, LAH or any of their respective wholly-owned subsidiaries) will be
converted into the right to receive $29.17 in cash, without interest. (This
amount is equal to $35.00 multiplied by the .83333 shares of common stock into
which each share of series A preference stock is convertible.)
Increased Dividends. Under the Merger Agreement, the UWR board has the right
and intends to increase the regular quarterly dividends payable on UWR common
stock for each of the three fiscal quarters beginning December 1, 1999 by up to
$0.06 per share. This would increase the regular quarterly dividend from $0.24
per quarter to up to $0.30 per quarter. In addition, and assuming that the
merger will be completed, the UWR board intends to pay a special dividend
immediately prior to the effective time of the merger equal to the difference
between $0.48 and the aggregate amount of additional quarterly dividends paid.
Representations and Warranties. The Merger Agreement contains
representations and warranties by UWR and LAH that are customary for a merger
of this kind. See "THE MERGER AGREEMENT--Representations and Warranties."
Conduct of Business Prior to the Effective Time. UWR has agreed that until
the merger is completed, it will carry on its businesses (including the
businesses of its subsidiaries) in substantially the same manner as previously
conducted. UWR has also agreed that, among other things, it will terminate the
issuance or distribution of shares under the UWR Dividend Reinvestment and
Stock Purchase Plan at the earliest possible date, limit its acquisitions of
other businesses, limit the sale of certain assets, continue current accounting
and tax practices and refrain from taking certain specified actions out of the
ordinary course of business without the consent of LAH. See "THE MERGER
AGREEMENT--Certain Pre-Closing Covenants."
Conditions to Closing. The obligations of UWR, LAH and LAH Acquisition to
consummate the merger are subject to a number of conditions, including
obtaining the required UWR stockholder approvals, obtaining the required
regulatory approvals and the absence of any injunction or other legal restraint
or prohibition preventing the consummation of the merger. See "THE MERGER
AGREEMENT--Conditions to the Consummation of the Merger."
Termination. The Merger Agreement may be terminated by UWR or LAH prior to
the merger becoming effective under certain circumstances, some of which would
require UWR to pay LAH a termination fee of $42 million. See "THE MERGER
AGREEMENT--Termination" and "THE MERGER AGREEMENT--Termination Fees and
Expenses."
Amendment. The Merger Agreement may be amended in writing by the parties at
any time before or after the UWR stockholders approve the merger and prior to
the effective time of the merger. However, after stockholder approval, no
amendment may be made which would alter or change the rights of UWR
stockholders, except for alterations or changes that could otherwise be adopted
by the board of directors without the further approval of UWR stockholders.
10
<PAGE>
Selected Historical Financial Information
The following table sets forth selected consolidated historical financial
data of UWR and has been derived from and should be read in conjunction with
the audited consolidated financial statements of UWR for each of the five years
ended December 31, 1998 and the unaudited interim consolidated financial
statements of UWR for the nine months ended September 30, 1999 and 1998,
including the respective notes thereto. In the opinion of management, all
adjustments, consisting of normal recurring accruals considered necessary for a
fair presentation have been included in the unaudited interim data. Interim
results for the nine months ended September 30, 1999 are not necessarily
indicative of results which may be expected for future periods, including the
year ended December 31, 1999.
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
----------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------------- ---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Operating revenues from
continuing operations.. $ 270,409 $ 356,210 $ 351,409 $ 332,045 $ 319,536 $ 284,767
Operating income........ 75,473 97,600 95,644 95,699 82,183 83,847
Income from continuing
operations............. 36,764 47,987 33,676 43,020 24,760 31,611
Preferred and preference
stock dividends........ 3,088 4,058 4,345 4,613 4,795 3,454
Net income from
continuing operations.. -- 33,676 43,929 29,331 38,407 19,965 28,157
Loss from discontinued
operations............. -- -- -- -- (4,397) (2,622) (270)
Net income.............. $ -- $ 33,676 $ 43,929 $ 29,331 $ 34,010 $ 17,343 $ 27,887
Basic earnings/(loss)
per share
From continuing
operations............ $ 0.91 $ 1.19 $ 0.83 $ 1.14 $ 0.62 $ 1.02
From discontinued
operations............ -- -- -- -- (0.05) (0.08) (0.01)
From disposal of
discontinued
operations............ -- -- -- -- (0.08) -- --
Basic earnings/(loss)
per share............. $ -- $ 0.91 $ 1.19 $ 0.83 $ 1.01 $ 0.54 $ 1.01
Weighted average common
shares outstanding.... 36,848 37,028 35,492 33,707 31,995 27,524
Diluted earnings/(loss)
per share
From continuing
operations............ $ 0.90 $ 1.17 $ 0.83 $ 1.12 $ 0.62 $ 1.02
From discontinued
operations............ -- -- -- -- (0.04) (0.08) (0.01)
From disposal of
discontinued
operations............ -- -- -- -- (0.08) -- --
Diluted earnings/(loss)
per share............. $ -- $ 0.90 $ 1.17 $ 0.83 $ 1.00 $ 0.54 $ 1.01
Weighted average common
shares outstanding.... 39,023 39,192 37,838 36,218 31,995 27,524
Dividends declared per
common share........... 0.69 0.93 0.92 0.92 0.92 0.92
Balance Sheet Data: (at
end of period)
Total assets........... 1,719,857 1,769,122 1,658,342 1,582,097 1,516,708 1,457,427
Long-term obligations.. 618,714 652,969 622,737 558,093 558,658 505,204
Stockholders' equity... 537,072 545,311 514,180 493,751 465,393 457,668
Book value per common
share.................. 11.95 12.05 11.53 11.33 10.90 11.20
</TABLE>
11
<PAGE>
Price of UWR Common Stock and Dividends
UWR's common stock is traded on the New York Stock Exchange under the symbol
"UWR." The high and low sales prices per quarter for UWR's common stock through
the third quarter of 1999, and for the years of 1998, 1997 and 1996 and the
dividends paid on the common stock in each quarter, were as follows:
<TABLE>
<CAPTION>
STOCK PRICE DIVIDEND
--------------- --------
QUARTER HIGH LOW
------- ------- -------
<S> <C> <C> <C>
1999
Fourth through [October 4, 1999].................. $33.000 $32.625 $
Third............................................. 32.938 20.750 .24
Second............................................ 23.688 20.000 .24
First............................................. 24.062 18.438 .24
1998
Fourth............................................ $25.000 $16.500 $.24
Third............................................. 19.250 16.375 .23
Second............................................ 18.438 15.750 .23
First............................................. 19.875 17.500 .23
1997
Fourth............................................ $19.750 $16.000 $.23
Third............................................. 19.813 17.000 .23
Second............................................ 19.375 16.375 .23
First............................................. 18.500 15.000 .23
1996
Fourth............................................ $16.625 $14.625 $.23
Third............................................. 17.500 12.750 .23
Second............................................ 13.500 12.000 .23
First............................................. 13.240 12.000 .23
</TABLE>
On August 17, 1999, the last trading day before public announcement that UWR
was engaged in merger negotiations, the last sale price of UWR common stock on
the New York Stock Exchange Composite Transactions Tape was $24.53 per share.
On [October 4,] 1999, the most recent practicable date prior to the printing
of this proxy statement, the last sale price of common stock as reported on the
New York Stock Exchange Composite Transactions Tape was $33.000 per share.
12
<PAGE>
THE SPECIAL MEETING
Date, Time and Place
The special meetings of the holders of UWR common stock and series A
preference stock to vote on adoption of the Merger Agreement will be held
together at [time, place and location of the special meeting].
Purpose of the Special Meeting
The purpose of the special meeting of UWR common stockholders and holders of
series A preference stock is to consider and vote upon a proposal to adopt the
Merger Agreement entered into among UWR, LAH, SLDE and LAH Acquisition, a
wholly-owned subsidiary of LAH.
Record Date; Voting Rights
The board of directors of UWR has fixed the close of business on ,
as the record date to determine who receives notice of and who may vote at
the special meeting. Only holders of record of shares of common stock and
series A preference stock at the close of business on the record date will be
entitled to notice of, and to vote at, the special meeting or any adjournment
or postponement thereof.
As of the record date, UWR had [38,867,960] shares of common stock
outstanding, which were held by [17,402] holders of record, and [1,955,984]
shares of series A preference stock outstanding, which were held by [27]
holders of record. Holders of shares of common stock are entitled to one vote
for each share of common stock held of record at the close of business on the
record date. Holders of shares of series A preference stock are entitled to one
vote for each share of series A preference stock held of record at the close of
business on the record date. The presence, in person or by valid proxy, of the
holders of a majority of all shares entitled to vote at the special meeting of
the common stockholders of UWR is necessary to constitute a quorum at the
special meeting of the common stockholders. The presence, in person or by valid
proxy, of the holders of a majority of all shares entitled to vote at the
special meeting of the series A preference stockholders of UWR is necessary to
constitute a quorum at the special meeting of the series A preference
stockholders. For purposes of determining the presence of a quorum, abstentions
and shares represented by a proxy from a broker or nominee indicating that no
instructions have been received from the beneficial owner or other person
entitled to vote the shares ("broker non-votes") will be counted as shares
present for quorum purposes. However, neither abstentions nor broker non-votes
will be counted as votes cast for purposes of determining whether the Merger
Agreement has received sufficient votes for approval and, therefore, will have
the effect of a vote against the proposal that stockholders adopt the Merger
Agreement.
If UWR does not receive by the time scheduled for the special meeting a
sufficient number of signed proxies to enable adoption of the Merger Agreement,
it may propose one or more adjournments or postponements of the special meeting
to permit continued solicitation of proxies. Adjournment or postponement of the
special meeting will be proposed only if the UWR board of directors believes
that additional time to solicit proxies may permit the receipt of sufficient
votes to adopt the Merger Agreement. Although UWR does not believe an
adjournment will be necessary, it is anticipated that any such adjournment or
postponement will be for a short period of time, but in no event for more than
30 days. Any stockholder may revoke his or her proxy during any period of
adjournment or postponement in the manner described below. If the special
meeting is adjourned for any purpose, at any subsequent reconvening of the
special meeting, all proxies will be voted in the same manner as such proxies
would have been voted at the original convening of the meeting (except for any
proxies which have been revoked or withdrawn), even though they may have been
voted on the same or any other matter at a previous meeting.
Vote Required
The affirmative vote of the holders of each of (i) two-thirds of all of the
outstanding shares of UWR common stock not owned by LAH or certain affiliates
of LAH, (ii) two-thirds of all of the outstanding shares of series A
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preference stock, and (iii) a majority of the shares of common stock voting at
the special meeting is required to adopt the Merger Agreement. As of September
30, 1999, directors and executive officers of UWR and their affiliates, as a
group, beneficially held 245,555 shares of common stock (excluding unexercised
options), representing less than 0.9% of the outstanding shares of common stock
entitled to vote at the UWR special meeting. The directors and executive
officers of UWR have indicated that they intend to vote such shares of common
stock in favor of the proposal that the stockholders of UWR adopt the Merger
Agreement.
On the record date, LAH and its affiliates beneficially owned [11,687,024]
shares of common stock, or approximately 30.1% of the voting power of the
common stock outstanding on the record date, and [1,919,210] shares of series A
preference stock, or approximately 98.1% of the voting power of the series A
preference stock outstanding on the record date. It is expected that LAH and
its affiliates will vote the shares of common stock and series A preference
stock owned by them FOR the merger. However, because, in addition to the
approval of a majority of the shares of common stock voting at the special
meeting, the merger must be approved by two-thirds of the outstanding shares of
common stock not owned by LAH or its affiliates, the vote by LAH of its common
stock of UWR will not be sufficient to determine the outcome at the special
meeting of common stockholders. Because LAH owns more than two-thirds of the
outstanding series A preference stock, a vote by LAH in favor of the merger,
will be sufficient to provide the requisite vote at the special meeting of
LAH's series A preference stock. LAH's sole stockholder has already approved
the Merger Agreement.
Voting and Revocation of Proxies
Proxies in the form accompanying this proxy statement are solicited by UWR's
board of directors. Shares of common stock and series A preference stock
represented by valid proxies, which have not been revoked, will be voted at the
special meeting in accordance with the instructions indicated on the proxies.
If no instructions are indicated, such proxies will be voted "FOR" adoption of
the Merger Agreement.
The UWR board of directors is not aware of any matters other than those
specifically stated in this proxy statement that are to be presented for action
at the special meeting. If any other matters are properly presented at the
special meeting for action, including the adjournment of the special meeting,
the persons named in the proxies will have discretion to vote on those matters
in accordance with their best judgment. Any adjournment of the special meeting
of the holders of UWR common stock will require the affirmative vote of the
holders of a majority of the shares of common stock represented at the special
meeting and any adjournment of the special meeting of the holders of UWR series
A preference stock will require the affirmative vote of the holders of a
majority of the shares of series A preference stock represented at the special
meeting (regardless of whether those shares of common stock or series A
preference stock constitute a quorum).
If you execute a proxy you have the power to revoke it at any time before it
is voted. You may revoke your proxy (i) by attending the special meeting and
voting in person or (ii) by delivering a new proxy dated later than your
earlier proxy, to the Secretary of UWR, 200 Old Hook Road, Harrington Park, New
Jersey 07640 or (iii) by telephone if you previously voted by telephone.
Cost of Solicitation of Proxies
UWR will bear the cost of the solicitation of proxies and the cost of
printing and mailing this proxy statement. Arrangements will also be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
solicitation material to the beneficial owners of shares held of record by such
persons at UWR's expense. In addition, UWR has retained Georgeson and Company
Inc. to assist in the solicitation of proxies for a fee of $8,000 and
reimbursement for out-of-pocket expenses.
Holders of UWR stock should not send their stock certificates with their
proxy cards. If the merger is consummated, we will inform you of the procedures
for the exchange of your UWR stock certificates for the cash consideration to
which you will be entitled. See "THE MERGER AGREEMENT--Exchange of
Certificates."
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THE MERGER
This section of the proxy statement, as well as the next section entitled
"The Merger Agreement," describes certain aspects of the merger. These sections
highlight key information about the merger and the Merger Agreement but they
may not include all the information that you would like to know. The Merger
Agreement is attached as Annex A to this proxy statement. We urge you to read
the Merger Agreement in its entirety.
Overview
On August 20, 1999, UWR, LAH, LAH Acquisition and SLDE entered into an
Agreement and Plan of Merger. This agreement is referred to in this proxy
statement as the "Merger Agreement." The Merger Agreement contemplates a merger
in which LAH Acquisition, a wholly-owned subsidiary of LAH, will merge into
UWR, with UWR as the surviving corporation. After the merger, UWR would
continue to conduct its businesses as a wholly-owned subsidiary of LAH.
The merger is subject to the approval of UWR stockholders. The affirmative
vote of each of two-thirds of all of the outstanding shares of UWR common stock
(other than shares owned by LAH or certain affiliates of LAH), (ii) and two-
thirds of all of the outstanding shares of series A preference stock, and (iii)
a majority of the shares of common stock voting at the special meeting is
required in order to consummate the merger. In addition, completion of the
merger is subject to obtaining approval under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and approval from a number of state
utility commissions.
In this proxy statement, we refer to the time when the merger is completed
as the "effective time" of the merger.
At the effective time of the merger, each issued and outstanding share of
UWR common stock (other than shares owned, directly or indirectly, by UWR, LAH
or any of their respective wholly-owned subsidiaries) will be converted into
the right to receive $35.00, without interest.
At the effective time of the merger, each issued and outstanding share of
series A preference stock (other than shares owned, directly or indirectly, by
UWR, LAH or any of their respective wholly-owned subsidiaries) will be
converted into the right to receive $29.17 in cash, without interest. (This
amount is equal to $35.00 multiplied by the .83333 shares of common stock into
which each share of series A preference stock is convertible.)
Certain Effects of the Merger
If the merger is consummated, the interest of LAH in UWR's net book value
and net earnings will equal 100% and LAH will be entitled to all benefits
resulting from such interest, including all income generated by UWR's
operations and any future increase in UWR's value. Similarly, LAH will also
bear the risk of losses generated by UWR's operations and any future decrease
in the value of UWR after the merger. From the effective time of the merger,
current stockholders of UWR will cease to have any equity interest in UWR, will
not have the opportunity to participate in the earnings and growth of UWR after
the merger and will not have any right to vote on corporate matters. Similarly,
stockholders will not face the risk of losses generated by UWR's operations or
decline in the value of UWR after the merger.
It is currently expected that, following the merger, the business and
operations of UWR will generally continue as they are currently being
conducted. LAH currently intends to cause UWR's operations to continue to be
run and managed by, among others, UWR's existing executive officers, and
expects that certain of the directors of UWR will continue to serve on the
board of directors of UWR, although LAH intends to review the composition of
the boards of directors (or similar governing bodies) of UWR and its
subsidiaries and to cause the election to such boards of directors (or similar
governing bodies) of certain of its representatives. LAH will continue to
evaluate all aspects of the business, operations, capitalization and management
of UWR prior to and after the consummation of the merger and will take such
further actions as it deems appropriate
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under the circumstances then existing. LAH is evaluating potential acquisitions
of other water and/or wastewater services businesses, with the participation of
UWR where permitted by applicable confidentiality agreements and the Merger
Agreement. These evaluations may lead to an extraordinary corporate
transaction. However, there can be no assurance that any such transactions or
acquisitions will occur.
Shares of UWR common stock are currently traded on the New York Stock
Exchange. Following the consummation of the merger, UWR common stock will no
longer be quoted on the New York Stock Exchange, and the registration of UWR
common stock under the Exchange Act will be terminated. Accordingly, after the
merger there will be no publicly traded equity securities of UWR outstanding,
and UWR will no longer be required to file periodic reports with the Securities
and Exchange Commission.
Following the merger, LAH expects that UWR's board of directors will review
UWR's policy of declaring regular quarterly dividends and may modify the amount
or the frequency of the dividends.
Following the merger, SLDE and LAH also expect to review the effect of the
merger on the ownership structure of UWR, LAH and their affiliates and may
simplify or otherwise modify the ownership of entities within the group.
Except as otherwise discussed in this proxy statement, LAH has no present
plans or proposals that would result in any extraordinary corporate
transaction, such as a merger, reorganization, liquidation involving UWR or any
of its subsidiaries, or sale or transfer of a material amount of assets of UWR
or any of its subsidiaries or in any other material changes to UWR's
capitalization, dividend policy, corporate structure, business or composition
of the board of directors or the management of UWR.
However, none of the above will affect existing non-LAH stockholders as they
will no longer hold an equity interest in UWR after the effective time of the
merger.
Background of the Merger
During the last several years, the UWR board explored the possibility of
participating in the general consolidation in the United States water industry
through a business combination with a similar sized water company or the
acquisition of a smaller water company. The board also considered making
acquisitions jointly with LAH. In both cases, the UWR board determined that the
premium UWR would have to pay would make a significant transaction dilutive to
its stockholders and would depress, rather than enhance, short and intermediate
term stockholder value.
At the end of the second quarter of 1999, in light of recent water service
industry business combinations and their potential impact on UWR, the UWR board
began to consider, among other strategic alternatives, enhancing stockholder
value through a business combination of its own with, or a sale to, a larger
company. The board considered pursuing a sale to LAH, which already owned
approximately 30% of UWR's shares, as well as a sale of UWR to, or a business
combination with, other companies.
On June 10, 1999, Donald L. Correll, UWR's chairman and chief executive
officer, met informally with certain UWR board members (specifically, Douglas
W. Hawes, Jon F. Hanson and Lawrence R. Codey) without the board's LAH-
affiliated members (specifically, Thierry Bourbie, Charles Chaumin and George
Keane) to discuss both the option of a sale to LAH and alternatives to such a
transaction. In order to explore such a path more fully, the board members
present and Mr. Correll determined to hire a financial advisor and agreed that
Mr. Correll would research and recommend a financial advisor to the board.
The members of the board present at the June 10, 1999 informal meeting and
Mr. Correll agreed that Mr. Correll should meet with LAH and SLDE to inform LAH
and SLDE of UWR's interest in pursuing opportunities for a business combination
with LAH or other industry leaders. On June 21, 1999, Mr. Correll met with
Gerard Mestrallet, President of the Executive Board and Chief Executive Officer
of SLDE; Francois Jaclot, Executive Vice President and member of the Executive
Board of SLDE; Philippe Brongniart, member of
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the Executive Board of SLDE and President of LAH; and Gerard Payen, Executive
Vice President of the Water Division of SLDE, to inform them of UWR's interest.
The UWR board met on July 8, 1999. At that meeting, Mr. Correll recommended
that the board retain Morgan Stanley & Co. Incorporated as its financial
advisor because of its general reputation and recent water services industry
experience conducting the auction of Aquarion Water Company, a water services
utility. The LAH-affiliated members of the board were then excused and the
remaining members of the board received a presentation from Morgan Stanley
regarding the potential value to UWR stockholders of a business combination
with, or a sale to, a larger industry participant, including a sale to LAH.
During its presentation, Morgan Stanley described its preliminary valuation
analysis of UWR to the board. As part of its preliminary valuation analysis,
Morgan Stanley performed a preliminary discounted cash flow analysis of UWR's
core utility business and real estate operations and separate multiple analyses
for UWR's interests in the water services business and the Northumbrian
Partnership and estimated the mid-point of the per share value for UWR at
$34.06. The valuation methodology employed by Morgan Stanley in performing this
preliminary analysis was similar to the methodology used in its discounted cash
flow analysis in connection with its August 20, 1999 opinion. Such valuation
methodology is described in greater detail below under "Opinion of UWR's
Financial Advisor." The valuation analysis performed by Morgan Stanley and
presented to the board at the meeting on July 8, 1999 was preliminary in nature
and was based on preliminary due diligence of UWR. The preliminary valuation
analysis performed by Morgan Stanley also assumed, based on information
provided by UWR, that the total number of issued and outstanding shares of UWR
on a fully diluted basis was 38.5 million. At the July 8th meeting, the board,
without its LAH-affiliated members, also received a presentation from its legal
advisors, LeBoeuf, Lamb, Greene & MacRae, L.L.P. regarding the board's legal
obligations in merger and acquisition transactions. The LAH-affiliated board
members then re-joined the meeting and the entire board ratified the engagement
of Morgan Stanley. The terms of Morgan Stanley's engagement were set out in a
letter dated as of July 2, 1999.
In addition, during the July 8, 1999 board meeting, Mr. Correll and certain
UWR directors without the board's LAH-affiliated members discussed with Morgan
Stanley and UWR's legal advisors the desirability of pursuing a business
combination with industry leaders other than LAH. Mr. Correll, the members of
the UWR board present, Morgan Stanley and UWR's legal advisors discussed the
procedures that the company could follow in an auction of the company. They
also discussed the possibility that an auction might result in a lower price
for UWR stockholders than the price that might possibly be obtained in a
negotiated transaction with LAH. This discussion focused on the possibility
that the interest of third parties seeking to purchase UWR might be adversely
affected by a combination of factors such as LAH's 30% ownership interest in
UWR, LAH's rights under the Governance Agreement between LAH and UWR and LAH's
(or its affiliates') interest in the joint ventures between UWR and LAH (or
their affiliates). The board recognized that each of these factors represented
a complexity that potentially could have an adverse effect on any attempt to
auction UWR to third parties.
Before the conclusion of the July 8 board meeting, the directors present
instructed Mr. Correll to commence discussions with LAH to determine whether it
would be possible to negotiate a transaction with LAH that was at least as
favorable to UWR and its stockholders as could be expected to be achieved with
an independent third party. The directors also indicated to Mr. Correll that if
a satisfactory transaction could not be negotiated with LAH, they would
consider the possibility of commencing negotiations with third parties through
an auction or otherwise.
On July 12, 1999, Gerard Payen and Charles Chaumin, Senior Vice President
for North America of the Water Division of SLDE, met with Mr. Correll, Michael
C.J. Fallon, Vice President of United Water Management and Services Inc., and
certain UWR directors to discuss the procedure for determining whether, among
other strategic alternatives, a sale to LAH would be advantageous to both
sides. Those present at the meeting determined that financial advisors for both
companies should meet separately with each other. UWR's and LAH's financial
advisors met on July 27, 1999 to discuss, among other possibilities, the terms
of a possible
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transaction between UWR and LAH. This meeting was followed by a meeting of the
executives of the two companies on July 28, 1999 to discuss the results of the
meeting between the financial advisors. At each of these meetings, LAH was
informed that if it appeared that satisfactory terms for a transaction could
not be reached with LAH, UWR intended to consider the possibility of commencing
discussions with other parties about a possible transaction.
On several occasions during the month of July, UWR proposed revisions to the
Governance Agreement that would have made it easier to conduct an auction of
UWR to third parties. UWR and LAH discussed the proposals but could not reach
agreement on any such revisions.
On August 2, 1999 the board of UWR met again and reviewed the status of
discussions between UWR and LAH. The LAH-affiliated board members were then
excused and the remaining board members discussed whether it would be desirable
to commence a formal auction of the company or approach other parties
individually in order to obtain the best the price for the company's
stockholders in a potential sale or business combination. During this meeting
Morgan Stanley presented a further preliminary valuation analysis of UWR to the
board. This preliminary valuation analysis had been amended from the July 8,
1999 presentation to reflect the fact that the total number of issued and
outstanding shares of UWR on a fully diluted basis was 41 million and not 38.5
million, as had been previously advised, and to reflect information relating to
the announcement by OFWAT (UK water regulator) of its Draft Determinations
(including its recommendation for water rates over the next five years) on July
27, 1999 and UWR management's assessment of the impact that such determinations
could likely have on the future earnings of Northumbrian. Again, as part of its
preliminary valuation analysis, Morgan Stanley performed a preliminary
discounted cash flow analysis of UWR's core utility business and real estate
operations and separate multiple analyses for UWR's interests in the water
services business and the Northumbrian Partnership and estimated per share
values for UWR ranging from $26.42 to $36.44. Morgan Stanley also performed a
preliminary comparable companies valuation analysis of UWR, and based upon this
analysis Morgan Stanley estimated the mid-point of the per share value for UWR
at $26.79, or $31.00 assuming a control premium of 40%. As part of its
preliminary valuation analysis, Morgan Stanley also compared publicly available
information of selected precedent transactions and based upon this analysis,
estimated per share values for UWR ranging from $21.29 to $32.41. The precedent
transactions selected by Morgan Stanley were the same transactions reviewed in
connection with its August 20, 1999 opinion. The valuation methodologies
employed by Morgan Stanley in performing its preliminary discounted cash flow
analysis, comparable companies valuation analysis and preliminary precedent
transaction analysis were similar to the methodologies used it its discounted
cash flow analysis, companies valuation analysis and preliminary precedent
transactions in connection with its August 20, 1999 opinion. Such valuation
methodologies are described in greater detail below under "Opinion of UWR's
Financial Advisor." The UWR board members present concluded that because of the
complexities presented by an auction, including the complexities discussed
above which result from LAH's existing ownership interest and the Governance
Agreement, an auction would not be in the best interests of the UWR
stockholders if a transaction could be negotiated with LAH that resulted in
stockholders receiving a price at least as high as the high-end of the range of
potential prices that UWR's financial advisors believed could be achieved in an
auction. The UWR board, with the LAH-affiliated board members abstaining,
authorized management to continue discussions with LAH and also authorized
management to commence discussions with parties other than LAH regarding
possible strategic alternatives for UWR when, and as, management deemed
appropriate.
Discussions between UWR and LAH continued throughout the first three weeks
of August 1999. On August 18, 1999 in response to a significant increase in the
trading values and volume of UWR stock, UWR announced that it was engaged in
discussions regarding a possible business combination but did not name LAH. On
August 18, 1999, SLDE released a statement indicating that its subsidiary, LAH,
was discussing a possible business combination with UWR. Final agreement on the
terms of a sale to LAH was reached on August 20, 1999.
At a special meeting held on August 20, 1999 the board of directors of UWR,
without the participation of its LAH-affiliated members, reviewed and
considered LAH's proposal. At this meeting, Morgan Stanley noted
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that, based on all measures that it believed relevant, the LAH offer provided
more value, from a financial point of view, to UWR stockholders than any other
recent, publicly announced transaction for acquisition of a comparable water
services company. UWR's legal advisors also updated the UWR board on the terms
of the proposed merger agreement with LAH and discussed other legal matters
relating to the transaction.
Following the board's review of the LAH proposal, the LAH-affiliated members
of the UWR board were invited to join the meeting. The offer by LAH to acquire
the company was then approved by the unanimous vote of the UWR board with the
LAH members abstaining and then by a second unanimous vote with the LAH members
voting in favor of the transaction.
Reasons for the Merger and Recommendation of the UWR Board of Directors
For the reasons discussed in more detail below, UWR believes that the
consideration to be paid in the merger exceeds the value for its stockholders
that UWR would be able to achieve in the foreseeable future if UWR remained an
independent company and exceeds the value that UWR stockholders would receive
if UWR were able to sell to, or do a business combination with, a company other
than LAH. As a result, the UWR board has unanimously (with its LAH-affiliated
members first abstaining and then joining in that approval) approved the Merger
Agreement and determined that the merger is advisable for, fair to and in the
best interests of UWR stockholders other than LAH. The UWR board unanimously
(with its LAH-affiliated members first abstaining and then joining in the
recommendation) recommends that the stockholders of UWR vote FOR adoption of
the Merger Agreement.
In determining that the merger maximizes stockholder value, the UWR board
consulted with UWR's legal and financial advisors and considered a number of
factors, including the following:
. The board's conclusion that UWR would not be able to achieve stockholder
value equal to the purchase price being paid by LAH either through its
current operations or through a business combination with a similar
sized water company or acquisitions of smaller water companies. The UWR
board believes that UWR is a well run company, and therefore, there is
limited opportunity to greatly enhance stockholder value through simply
continuing to operate its current businesses more efficiently or
effectively. In light of the premiums being paid for acquisitions in the
water industry, and UWR's experience through participation as a bidder
in auctions of other water companies, the UWR board believes that the
premium it would be required to pay to expand UWR through acquisitions
would be dilutive to its stockholders and would depress stockholder
value in the short and intermediate term. Furthermore, the UWR board is
not convinced that in the long term, the strategy of acquisitions would
necessarily result in a stock price that exceeds the price which could
be achieved now through sale of the company to LAH.
. Based on advice from Morgan Stanley, UWR's own experience in
participation in water company auctions and the consideration paid in
publicly announced transactions involving water companies, the board's
conclusion that, despite the fact that no auction had actually been
conducted, the price to be paid by LAH in the merger likely exceeds the
consideration that UWR stockholders could reasonably expect to receive
in a transaction with another party.
. LAH's and SLDE's commitment to the United States water services
business, as evidenced by SLDE's recent agreements to acquire Nalco
Chemical Company and Calgon Corporation and the success of the United
Water Services joint ventures with LAH, made it likely that LAH would
pay as much or more for UWR than any other buyer.
. The uncertainty as to the effect that LAH's ownership of approximately
30% of UWR's shares of common stock and LAH's rights under its
Governance Agreement with UWR and other agreements between LAH and UWR
would have on the price a third party would be willing to bid for UWR.
Pursuant to the terms of the Governance Agreement, UWR is required to
provide LAH with 30 days' prior notice before it agrees to enter into a
business combination with a third party. During that
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30 day period, LAH has the right to make an offer to UWR for acquisition
of UWR and the right to acquire additional UWR shares in the open
market. The UWR board believes, after consultation with its financial
and legal advisors, that LAH's share ownership in UWR and UWR's rights
and obligations under the Governance Agreement and other agreements with
LAH and its affiliates, such as the North American Rights Agreement
between LAH, UWR and other parties, the partnership agreement relating
to UWR's investment in the United Kingdom and agreements to provide
water services in Canada, Mexico and the United States through joint
venture companies in which LAH is part owner, could adversely affect the
price that a third party bidder would be willing to pay for UWR.
. The written opinion of Morgan Stanley dated August 20, 1999 to the
effect that, subject to, and based on, certain factors in its letter,
the consideration to be paid to UWR stockholders in the merger was fair,
from a financial point of view, to UWR stockholders not affiliated with
LAH and its affiliates. The board adopted the analyses and findings of
Morgan Stanley in making their determination that the merger was fair to
UWR's stockholders not affiliated with LAH and its affiliates. In
adopting Morgan Stanley's analysis the board relied on Morgan Stanley's
general reputation and recent water services industry experience and
also on the fact that the financial information Morgan Stanley used in
preparing its analysis was provided to Morgan Stanley by UWR's
management. For these reasons, the board concluded that it was
appropriate to rely on and consequently adopted Morgan Stanley's
analysis.
. Discussions with Morgan Stanley at the August 20, 1999 board meeting
that, based on relevant measures, the LAH offer exceeded the
consideration paid in recent comparable transactions.
. The fact that the price of $35.00 per common share being paid by LAH,
without regard to the increase in regular quarterly dividends which the
UWR board has the right to and intends to pay in contemplation of the
merger, represents a premium of approximately 52.3% over the $22.98 per
share average closing price of UWR common stock for the 30 trading days
immediately preceding UWR's announcement on August 18, 1999 that it was
engaged in merger negotiations.
. The UWR board's assessment that LAH has the financial capability to
consummate the merger and the agreement by SLDE to stand behind LAH's
financial obligations under the Merger Agreement.
. The fact that the Merger Agreement requires the approval of two-thirds
of UWR's common stockholders other than LAH, which allows for an
informed vote of UWR's public stockholders on the transaction.
. The terms and conditions of the Merger Agreement, including those
relating to the ability of the UWR board to consider unsolicited offers
from third parties prior to approval of the Merger Agreement by UWR
stockholders.
The UWR board of directors has also considered (1) the risk that the
benefits sought in the merger would not be obtained, (2) the risk that the
merger would not be consummated, (3) the effect of the public announcement of
the merger on UWR's sales, customer and supplier relationships, operating
results and ability to retain employees, and on the trading price of UWR
common stock, (4) the substantial management time and effort that will be
required to consummate the merger, (5) the impact of the merger on UWR
employees, (6) the possibility that certain provisions of the Merger Agreement
might have the effect of discouraging other persons potentially interested in
a combination with UWR from pursuing such an opportunity and (7) other
matters, including those described under "Forward Looking Statements". In the
judgment of the UWR board of directors, the potential benefits of the merger
outweigh these considerations.
In considering the fairness of the merger, the board did not consider the
liquidation value of UWR as a relevant factor because liquidation of the
assets of UWR would result in UWR paying taxes on the gain from the sale of
its assets. Therefore, the net proceeds from the sale of its assets would be
reduced by taxes and transaction costs before any distribution could be made
to UWR stockholders.
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The board believes the merger is fair to the UWR stockholders not affiliated
with LAH notwithstanding the fact that the price of $35.00 per common share
being paid by LAH is near, but does not exceed, the high end of the range of
discounted cash flow values calculated by Morgan Stanley. This is because the
board recognized that the $35.00 price per common share considerably exceeds
all other valuation methods used by Morgan Stanley.
The board believes the merger is procedurally fair to the UWR stockholders
not affiliated with LAH because (i) the merger must be approved by at least
two-thirds of the outstanding shares of UWR common stock not owned by LAH or
its affiliates, (ii) the merger was vigorously negotiated on an arms-length
basis by those directors not affiliated with LAH, and (iii) the board retained
Morgan Stanley as an independent financial advisor to assist it in evaluating
the merger.
The foregoing discussion of the information and factors considered by the
board of directors is not intended to be exhaustive but is believed to include
all material factors considered by the board of directors. In view of the
variety of factors considered in connection with its evaluation of the merger,
the board of directors did not find it practicable to, and did not, quantify or
otherwise attempt to assign relative weight to the specific factors considered
in reaching its determination. In addition, individual members of the board of
directors may have given different weights to different factors. In the course
of its deliberations, the board of directors did not establish a range of
values for UWR; however, based on the factors outlined above, the board of
directors, by a unanimous vote, with its LAH-affiliated members first
abstaining and then joining in the vote, determined that the Merger Agreement
and the merger are advisable for, fair to, and in the best interest of, UWR and
its stockholders not affiliated with LAH.
Opinion of UWR's Financial Advisor
On July 2, 1999, Morgan Stanley was engaged by UWR to provide financial
advisory services and a financial fairness opinion with respect to the
fairness, from a financial point of view, of the consideration to be received
by the holders of shares of UWR common stock other than LAH and its affiliates.
Morgan Stanley was selected by UWR's board of directors to act as UWR's
financial advisor based on Morgan Stanley's general qualifications, expertise,
reputation and its knowledge of the business and affairs of the water and
wastewater services industry. At a meeting of UWR's board of directors on
August 20, 1999, Morgan Stanley rendered its opinion, subsequently confirmed in
writing, that as of August 20, 1999, and based upon and subject to the various
considerations noted in the opinion, the consideration to be received by the
holders of shares of UWR common stock pursuant to the Merger Agreement was
fair, from a financial point of view, to the holders of shares of UWR common
stock other than LAH and its affiliates. Morgan Stanley subsequently confirmed
its opinion by delivering an updated opinion dated the date of this proxy
statement.
The opinion of Morgan Stanley dated the date of this proxy statement, which
sets forth, among other things, the assumptions made, procedures followed,
matters considered and limitations on the scope of review undertaken by Morgan
Stanley in rendering its opinion is attached as Annex B to this proxy
statement. The opinion is substantially similar to the opinion of Morgan
Stanley dated August 20, 1999. UWR stockholders are urged to, and should, read
the opinion carefully and in its entirety. Morgan Stanley's opinions are
directed to UWR's board of directors and addresses only the fairness from a
financial point of view of the consideration to be received by the holders of
shares of UWR common stock other than LAH and its affiliates pursuant to the
Merger Agreement, as of the date of the opinion. Morgan Stanley's opinions do
not address any other aspect of the merger and do not constitute a
recommendation to any holder of UWR common stock as to how to vote at the UWR
special meeting. The summary of the opinion of Morgan Stanley, which is set
forth in this proxy statement is qualified in its entirety by reference to the
full text of such opinion.
For purposes of its opinions, Morgan Stanley:
. reviewed certain publicly available financial statements and other
information of UWR;
. reviewed certain internal financial statements and other financial and
operating data concerning UWR prepared by the management of UWR;
21
<PAGE>
. reviewed certain financial projections prepared by the management of
UWR;
. discussed the past and current operations and financial condition and
the prospects of UWR with senior executives of UWR;
. reviewed the pro forma impact of the merger on SLDE's earnings per
share, consolidated capitalization and financial ratios;
. reviewed the reported prices and trading activity for UWR common stock;
. compared the financial performance of UWR and the prices and trading
activity of UWR common stock with that of certain other comparable
publicly-traded companies and their securities;
. reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
. participated in discussions and negotiations among representatives of
UWR, LAH and SLDE and their financial and legal advisors;
. reviewed certain material agreements between UWR and LAH;
. reviewed the draft Merger Agreement and certain related documents; and
. performed such other analyses and considered such other factors as
Morgan Stanley deemed appropriate.
In rendering its opinions, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by it for the purposes of its opinions. With respect to the internal
financial statements and other financial and operating data, including
financial projections, Morgan Stanley assumed that they were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the prospects of UWR. In addition, Morgan Stanley assumed that the
merger will be consummated in accordance with the terms set forth in the Merger
Agreement. Morgan Stanley has not made any independent valuation or appraisal
of the assets or liabilities of UWR. Morgan Stanley's opinions are necessarily
based on financial, economic, market and other conditions as in effect on and
the information made available to it as of the dates of its opinions.
The following is a brief summary of certain analyses performed by Morgan
Stanley in connection with its opinion dated August 20, 1999. Certain of these
summaries of financial analyses include information presented in a tabular
format. In order fully to understand the financial analyses used by
Morgan Stanley, the tables must be read together with the text of each summary.
The tables alone do not constitute a complete description of the financial
analyses.
Comparative Stock Price Performance. Morgan Stanley reviewed the recent
stock price performance of UWR and compared such performance with that of the
following indices:
. U.S. regulated water company index which included eight companies:
American Water Works Company, Inc., Philadelphia Suburban Corporation,
E'town Corporation, California Water Service Group, American States
Water Company, SJW Corp., Connecticut Water Service, Inc. and Middlesex
Water Company; and
. Standard & Poor's 500 Index.
22
<PAGE>
The following table presents the change in the stock prices for these
groups, as compared to the change in the stock prices of UWR common stock over
the period from August 18, 1998 to August 18, 1999 and the period from May 18,
1999 to August 18, 1999.
<TABLE>
<CAPTION>
Percentage Change Percentage Change
for the Period for the Period
8/18/98 to 5/18/99 to
8/18/99 8/18/99
----------------- -----------------
<S> <C> <C>
U.S. regulated water company index..... 21.7% 17.4%
Standard & Poor's 500 Index............ 21.0% 0.0%
UWR.................................... 57.9% 32.3%
</TABLE>
Comparable Public Company Analysis. As part of its analysis, Morgan Stanley
compared certain financial information of UWR with that of a group of publicly-
traded regulated water companies, (collectively, the "UWR Comparable
Companies"). The comparable companies selected for UWR were as follows:
UWR Comparable Companies
American States Water Company
American Water Works Company, Inc.
California Water Service Group
Connecticut Water Service, Inc.
E'town Corporation
Middlesex Water Company
Philadelphia Suburban Corporation
SJW Corp.
The table below presents, as of August 18, 1999, the representative range
for each of the ratios of price to forecasted fiscal 1999 and 2000 earnings,
stock price to tangible book value (value of UWR's equity plus the face amount
of outstanding debt and preferred stock) as of June 30, 1999, and price to the
latest twelve-month ("LTM") operating cash flow multiple, and the aggregate
value to LTM EBITDA multiple and the aggregate value to LTM EBIT multiple. The
earnings projections were based on earnings projections as reported by I/B/E/S
International Inc., a provider of financial information, as of August 18, 1999.
In the table below "LTM" means "lastest twelve-months", "EBITDA" means
"earnings before interest, tax, depreciation and amortization" and "EBIT" means
"earnings before interest and tax".
<TABLE>
<CAPTION>
Price to Price to Price to
Forecasted Forecasted Tangible Price to Aggregate Aggregate
1999 2000 Book Operating Value to Value to
Earnings Earnings Value Cash Flow LTM EBITDA LTM EBIT
----------- ----------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
UWR Comparable
Companies.............. 18.0 - 19.0 17.5 - 18.5 1.8 - 2.0 10.5 - 11.5 10.0 - 11.0 13.0 - 14.0
UWR..................... 18.0 17.1 2.2 11.1 11.1 15.4
</TABLE>
No company utilized in the comparable public company analysis as a
comparison is identical to UWR. In evaluating the companies, Morgan Stanley
made judgments and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of UWR, such as the impact of competition on the
business of UWR and the industry generally, industry growth and the absence of
any material adverse change in the financial condition and prospects of UWR or
the industry or in the financial markets in general. Mathematical analysis
(such as determining an average or a median) is not in itself a meaningful
method of using comparable public company data. Based on this analysis, Morgan
Stanley calculated per share values for UWR common stock ranging from $20.45 to
$23.08. This range was also multiplied by a 40% control premium to determine a
valuation range. Based on this premium, Morgan Stanley calculated per share
equity values for UWR ranging from $28.64 to $32.32. Morgan Stanley noted that
the unaffected closing per share price of UWR common stock on August 12, 1999
was $23.06.
23
<PAGE>
Discounted Cash Flow Analysis. Morgan Stanley performed a discounted cash
flow analysis of UWR's core utility business and real estate operations and
multiple analyses for its stakes in the water services business and the
Northumbrian Partnership. For UWR's core utility and real estate operations,
Morgan Stanley's discounted cash flow analysis was based on certain financial
projections provided by UWR's management for the period 1999 through 2009.
Unlevered free cash flow was calculated as net income available to common
stockholders plus the aggregate of preferred stock dividends, depreciation and
amortization, deferred taxes, and other noncash expenses and after-tax net
interest expense, less the sum of capital expenditures and investment in
noncash working capital. Morgan Stanley calculated terminal values by applying
a range of perpetual growth rate multiples to the unlevered free cash flow in
fiscal 2009 and the cash-flow streams and terminal values were then discounted
to the present using a range of discount rates representing an estimated range
of the weighted average cost of capital for UWR. The range of discount rates
utilized for the valuation of the core business was 5.50%-7.00%. The range of
perpetual growth rates applied for this exercise was 1.0% to 2.0%.
For UWR's stake in the water services business, Morgan Stanley applied
revenue multiples of 1.0x-2.0x to projected 1999 operating revenues of
$154.3MM. For UWR's stake in the Northumbrian Partnership, Morgan Stanley
examined a group of U.K. publicly-traded regulated water companies,
(collectively, the "UK Comparable Companies"). The comparable companies
selected for the Northumbrian Partnership were as follows:
UK Comparable Companies
Anglian Water plc
Thames Water plc
Kelda Group plc
Severn Trent plc
Pennon Group plc
The table below presents, as of August 18, 1999, the representative range
for each of the ratios of price to tangible book value multiple as of March 31,
1998, and stock price to LTM operating cash flow multiple, and the aggregate
value to LTM EBITDA and LTM EBIT multiples.
<TABLE>
<CAPTION>
Price to Aggregate
Tangible Price to Value to Aggregate
Book Operating LTM Value to
Value Cash Flow EBITDA LTM EBIT
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
UK Comparable Companies............ 1.1 - 1.3 5.0 - 6.0 7.5 - 8.5 10.5 - 11.5
</TABLE>
Based on these analyses, Morgan Stanley calculated per share values for UWR
ranging from $26.04 to $35.88.
Analysis of Selected Precedent Transactions. Using publicly available
information, Morgan Stanley considered six announced or completed transactions
in the regulated water industry, which were deemed to be comparable to the
merger. These transactions included:
. Yorkshire Water plc's acquisition of Aquarion Company
. California Water Service Group's acquisition of Dominguez Services
Corporation
. American Water Works Company Inc.'s acquisition of National Enterprises
. Enron Corp.'s acquisition of Wessex Water plc
. Philadelphia Suburban Corporation's acquisition of Consumers Water
Company
. Nipsco Industries Inc.'s acquisition of IWC Resources Corp.
Morgan Stanley compared certain publicly available financial and market
statistics of the above precedent transactions to the merger. The table below
presents, as of August 18, 1999, the representative range for each
24
<PAGE>
of the ratios of price to those implied by LTM earnings multiple, and price to
tangible book value multiple as of June 30, 1999, and the aggregate value to
LTM EBITDA and LTM EBIT multiples.
<TABLE>
<CAPTION>
Price to Price to Aggregate Aggregate
LTM Tangible Value to Value to
Earnings Book Value LTM EBITDA LTM EBIT
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Precedent Transactions...... 23.0 - 34.0 2.4 - 3.2 10.0 - 13.0 13.5 - 18.5
</TABLE>
Based on this analysis, Morgan Stanley calculated per share values for UWR
ranging from $21.18 to $32.79.
No transaction utilized as a comparison in the analysis of the above
selected precedent transactions is identical to the merger, and, accordingly,
an analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of UWR and other factors that would affect the acquisition
value of the companies to which it is being compared. In evaluating the above
precedent transactions, Morgan Stanley made judgments and assumptions with
regard to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
UWR, such as the impact of competition on UWR and the industry generally,
industry growth and the absence of any adverse material change in the financial
conditions and prospects of UWR or the industry or in the financial markets in
general. Mathematical analysis (such as determining the mean or median) is not,
in itself, a meaningful method of using precedent transactions data.
Pro Forma Analysis of the Merger. Morgan Stanley reviewed the pro forma
impact of the merger on SLDE's earnings per share ("EPS") for the fiscal years
ended 2000 through 2004. The analysis was performed assuming completion of the
merger at the beginning of this period, utilizing stand-alone I/B/E/S earnings
estimated for the fiscal years ended 2000 through 2004 for UWR and SLDE prior
to the inclusion of any synergies. Based on such analysis on an EPS basis, the
merger would be dilutive post-goodwill to SLDE for the period 2000 through 2004
and accretive pre-goodwill in 2000, dilutive in 2001 and accretive for the
period 2002 through 2004.
In connection with its opinion dated the date of this proxy statement,
Morgan Stanley reviewed its analysis used to render its August 20, 1999 opinion
by performing procedures to update certain analyses and by reviewing the
assumptions upon which such analyses were based and the factors considered in
connection with the August 20, 1999 opinion.
In connection with the review of the merger by UWR's board of directors,
Morgan Stanley performed a variety of financial and comparative analyses for
purposes of giving its fairness opinion. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to partial analysis or
summary description. In arriving at its opinions, Morgan Stanley considered the
results of all of its analyses as a whole and did not attribute any particular
weight to any analysis or factor considered by it. Furthermore, Morgan Stanley
believes that selecting any portion of its analyses, without considering all
analyses, would create an incomplete view of the process underlying its
opinions. In addition, Morgan Stanley may have given various analyses and
factors more or less weight than other analyses and factors, and may have
deemed various assumptions more or less probable than other assumptions, so
that the ranges of valuations resulting from any particular analysis described
above should not be taken to be Morgan Stanley's view of the actual value of
UWR.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of UWR and SLDE. Any
estimates contained in Morgan Stanley's analysis are not necessarily indicative
of future results or actual values, which may be significantly more or less
favorable than those suggested by such estimates. The analyses performed were
performed solely as part of Morgan Stanley's analysis of the fairness, from a
financial point of view, of the consideration to be received by the holders of
shares of UWR common stock, other than LAH and its affiliates, pursuant to the
Merger Agreement and were
25
<PAGE>
conducted in connection with the delivery of the Morgan Stanley opinions dated
August 20, 1999 and dated the date of this proxy statement to UWR's board of
directors. The analyses do not purport to be appraisals or to reflect the
prices at which UWR common stock might actually trade. The consideration
pursuant to the Merger Agreement and other terms of the Merger Agreement were
determined through arm's length negotiations between UWR and SLDE and were
approved by UWR's board of directors. Morgan Stanley provided advice to UWR
during such negotiations; however, Morgan Stanley did not recommend any
specific consideration to UWR or that any specific consideration constituted
the only appropriate consideration for the merger. In arriving at its opinions,
Morgan Stanley was not authorized to solicit, and did not solicit, interest
from any party with respect to the acquisition of UWR or any of its assets, nor
did Morgan Stanley negotiate with any parties, other than LAH and SLDE. Morgan
Stanley's opinion dated August 20, 1999 was one of many factors taken into
consideration by UWR's board of directors in making its decision to approve the
Merger Agreement and the transactions contemplated by it. Consequently, the
Morgan Stanley analyses described above should not be viewed as determinate of
the opinion of UWR's board of directors with respect to the value of UWR or to
whether or not the UWR board of directors would have been willing to agree to a
different consideration.
UWR's board of directors retained Morgan Stanley based upon Morgan Stanley's
qualifications, experience and expertise. Morgan Stanley is an internationally
recognized investment banking and advisory firm. Morgan Stanley, as part of its
investment banking and financial advisory business, is continuously involved in
the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the ordinary course of Morgan
Stanley's trading and brokerage activities, Morgan Stanley or its affiliates
may at any time hold long or short positions, may trade or otherwise effect
transactions for its own account or for the account of customers in the equity
or debt securities of UWR or SLDE.
Morgan Stanley has been retained by UWR to act as financial advisor to UWR
with respect to the merger. Pursuant to a letter agreement dated July 2, 1999
between UWR and Morgan Stanley, Morgan Stanley is entitled to (i) an advisory
fee of approximately $50,000 to $100,000 which is payable in the event the
transaction is not consummated and (ii) a transaction fee equal to
approximately $6,000,000, which is payable as follows: one-third upon
announcement of the transaction, one-third upon approval of the transaction by
UWR stockholders and one-third upon closing of the transaction. Any amounts
paid or payable to Morgan Stanley as advisory or announcement fees will be
credited against the transaction fee. UWR has also agreed to reimburse Morgan
Stanley for its expenses in performing its services. In addition, UWR has
agreed to indemnify Morgan Stanley and its affiliates, their respective
directors, officers, agents and each person, if any, controlling Morgan Stanley
or any of its affiliates against certain liabilities and expenses, including
certain liabilities under the federal securities laws, related to or arising
out of Morgan Stanley's engagement and any related transactions. In the past,
Morgan Stanley & Co. Incorporated and its affiliates have provided financial
advisory and financing services for SLDE and have received fees for the
rendering of these services.
Financial Projections of UWR
Following are certain financial projections provided by UWR management to
its board of directors including its LAH-affiliated members at its July 8, 1999
meeting. The projections were subsequently provided to Rothschild Inc. and
Morgan Stanley. The projected results for fiscal year 1999 set forth in the
projections were based upon actual results through March 1999 and management
forecasts for the remainder of fiscal 1999.
26
<PAGE>
UWR Consolidated Statement of Income
Years Ended December 31, 1998-2003
(thousands of dollars)
<TABLE>
<CAPTION>
Actual Projected
-------- --------------------------------------------
1998 1999 2000 2001 2002 2003
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating revenues....... $356,210 $367,040 $364,503 $379,361 $396,693 $408,516
-------- -------- -------- -------- -------- --------
Operating expenses and
taxes
Operations............. 147,090 153,322 139,909 145,087 150,153 153,099
Maintenance............ 21,297 22,538 22,476 22,487 22,463 22,403
Depreciation........... 39,950 44,491 41,771 43,367 44,539 45,502
General taxes.......... 50,273 54,784 53,541 54,707 56,188 57,644
-------- -------- -------- -------- -------- --------
Total operating
expenses and taxes.. 258,610 275,135 257,697 265,647 273,343 278,649
-------- -------- -------- -------- -------- --------
Operating income......... 97,600 91,905 106,806 113,714 123,350 129,867
Other income
Investments,
acquisitions &
divestments (net of
tax).................. -- 5,894 8,255 9,165 9,263 8,645
AFUDC.................. 4,567 2,289 3,142 1,950 1,733 1,722
Other, (net)........... 1,959 7,962 366 51 2 21
Equity earnings (net of
interest expense)..... 6,491 6,940 3,228 5,012 5,077 8,920
-------- -------- -------- -------- -------- --------
Total other income..... 13,017 23,085 14,990 16,178 16,075 19,308
-------- -------- -------- -------- -------- --------
Gross Income............. 110,617 114,990 121,796 129,892 139,424 149,175
-------- -------- -------- -------- -------- --------
Interest and other
charges
Interest on long-term
debt & amortization... 36,036 39,521 35,223 35,547 36,113 36,037
Other interest
expense............... 4,921 4,749 5,935 6,405 6,537 6,248
-------- -------- -------- -------- -------- --------
Total interest & other
charges............... 40,957 44,270 41,158 41,953 42,649 42,285
-------- -------- -------- -------- -------- --------
Profit before taxes &
preferred dividends..... 69,660 70,720 80,638 87,939 96,775 106,890
Provision for income
taxes................... 19,450 18,799 23,502 26,251 29,918 33,683
-------- -------- -------- -------- -------- --------
Net Income............... 50,210 51,921 57,136 61,688 66,857 73,207
-------- -------- -------- -------- -------- --------
Preferred and preference
stock dividends......... 6,281 4,886 2,867 2,143 1,841 1,537
-------- -------- -------- -------- -------- --------
Net income applied to
common stock............ $ 43,929 $ 47,035 $ 54,269 $ 59,545 $ 65,016 $ 71,670
======== ======== ======== ======== ======== ========
Average shares
outstanding............. 37,028 38,578 39,331 39,854 40,379 41,178
Earnings per share....... $1.19 $1.22 $1.38 $1.49 $1.61 $1.74
</TABLE>
UWR does not, as a matter of course, make public its forecasts or
projections as to the future sales, earnings or other income statement data,
cash flows or balance sheet and financial position information. The above
summary of these projections is included in this proxy statement solely because
the projections were made available to LAH and its affiliates and Morgan
Stanley. The projections do not reflect any of the effects of the merger or
other future adjustments that may be appropriate concerning UWR and its assets,
business, operations, properties, policies, corporate structure, capitalization
and management in light of the circumstances then existing.
During the period from July 8 through August 20, 1999, Morgan Stanley
conducted diligence on UWR and its affiliates and discussed various aspects of
UWR's business with its management. Based on these discussions, an adjusted set
of projections was prepared. For UWR's core utility business and real estate
27
<PAGE>
operations, Morgan Stanley's discounted cash flow analysis was based on the
adjusted projections. These adjusted projections differed from those dated as
of July 8, 1999, generally, in that the adjusted projections were extended
through the year 2009, they included updated information regarding projected
operating revenues and operating income (which did not differ materially from
the amounts included in the projections dated as of July 8, 1999) and they
eliminated anticipated income from investments, acquisitions and divestments
that was considered speculative.
Other than as described above, UWR has not updated the projections to
reflect changes that have occurred since their preparation. UWR believes the
assumptions were reasonable at the time the projections were prepared, given
the information known by its management at such time.
UWR did not prepare the projections with a view toward public disclosure or
compliance with published guidelines of the Securities and Exchange Commission
or the American Institute of Certified Public Accountants regarding forward
looking information or generally accepted accounting principles. UWR's
independent auditors, have not, and other independent accountants have not,
compiled, examined or performed any procedure with respect to the prospective
financial information contained in the projections, and they have not expressed
any opinion or given any form of assurance on the projections or their
achievability, and assume no responsibility for and disclaim any association
with, such prospective information. Furthermore the projections necessarily
make numerous assumptions, many of which are beyond the control of UWR and may
not prove to have been and may no longer be accurate. Additionally, this
information does not reflect revised prospects for UWR's businesses, changes in
the general business and economic conditions, or any other transaction or event
that has occurred or that may occur and that was not anticipated at the time
the projections were prepared. Accordingly, the projections are not necessarily
indicative of current value or future performance, which may be significantly
more favorable or less favorable than described below, and should not be
regarded as a representation that they will be achieved.
THE PROJECTIONS ARE NOT GUARANTEES OF PERFORMANCE. THEY INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THE FUTURE RESULTS OF UWR AND UWR'S VALUE MAY
MATERIALLY DIFFER FROM THE PROJECTIONS. MANY OF THE FACTORS THAT WILL DETERMINE
THESE RESULTS AND VALUES ARE BEYOND UWR'S ABILITY TO CONTROL OR PREDICT.
HOLDERS OF THE COMMON STOCK ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE
PROJECTIONS. THERE CAN BE NO ASSURANCE THAT THE PROJECTIONS WILL BE REALIZED OR
THAT UWR'S FUTURE FINANCIAL RESULTS WILL NOT MATERIALLY VARY FROM THE
PROJECTIONS. UWR DOES NOT INTEND TO UPDATE OR REVISE THE PROJECTIONS.
SLDE's and LAH's Purpose for Engaging in the Merger and Belief That The Merger
is Fair To UWR's Unaffiliated Stockholders
SLDE's and LAH's purpose for engaging in the merger is to acquire 100%
beneficial ownership of UWR. Each of SLDE, LAH and LAH Acquisition reasonably
believes that the merger is procedurally fair to UWR's unaffiliated
stockholders for the reasons disclosed by UWR and is fair, from a financial
point of view, to UWR's unaffiliated stockholders. This belief is based on,
among other things, SLDE's and LAH's experience in owning, managing, operating
and divesting water companies, including water companies in the United States,
and on its experience as a stockholder of UWR and as a joint venture partner
with UWR in United Water Services. This view is also based on the fact that the
terms and conditions of the merger, including the amount of the consideration
to be paid to UWR's unaffiliated stockholders, were arrived at through arm's
length negotiations between LAH and independent representatives of UWR. This
belief is further supported by the understanding of SLDE, LAH and LAH
Acquisition, based on discussions with and advice from their financial advisor,
Rothschild Inc., as well as other publicly available information, that the
consideration that the unaffiliated UWR stockholders will receive in the merger
is at least equivalent to the consideration paid by the acquirers in other
recent acquisitions of United States water companies, measured by relevant
valuation methods, and represents a substantial premium over the market price
of their shares prior to the announcement
28
<PAGE>
of the merger discussions between UWR and LAH. No director of SLDE, LAH or LAH
Acquisition dissented to or abstained from voting on the merger.
Rothschild as Financial Advisor to SLDE and LAH
Rothschild Inc. has served as financial advisor to SLDE and its wholly-owned
subsidiary LAH with respect to certain strategic alternatives regarding LAH's
investment in UWR. SLDE did not request that Rothschild provide any opinion as
to the fairness of the consideration to be received by holders of shares of UWR
common stock pursuant to the Merger Agreement. In addition, although
Rothschild, as financial advisor to SLDE and LAH, provided SLDE and LAH with
advice as to the amount of consideration to be paid by LAH in the merger, SLDE
did not request that Rothschild make any recommendation to the supervisory
board of SLDE in this regard, the amount of consideration to be paid by LAH in
the merger having been determined by SLDE's and LAH's senior management, in
consultation with Rothschild, through active negotiations with UWR.
In connection with its role as financial advisor, Rothschild, among other
things: (i) analyzed certain publicly available historical financial statements
and other historical information concerning UWR prepared by UWR; (ii) reviewed
the recent reported prices and trading activity for the common stock of UWR;
(iii) compared the financial performance of UWR and the prices and trading
activity of the common stock of UWR with that of certain other comparable
publicly traded companies and their securities; (iv) reviewed certain financial
projections for UWR that were based on both publicly available information and
confidential information prepared by UWR for its board, which includes certain
LAH-affiliated members, and which UWR made available to Rothschild, including
details of estimated and forecasted operating and financial performance of UWR;
(v) reviewed the terms of precedent transactions deemed relevant by Rothschild,
to the extent publicly available; (vi) reviewed the Merger Agreement, and
certain related documents; and (vii) conducted such other studies and analyses
as it deemed appropriate. Rothschild did not assume any responsibility for
conducting a physical inspection of the properties or facilities of UWR or for
making or obtaining any independent valuation or appraisal of the assets or
liabilities of UWR nor was Rothschild furnished with any such appraisals.
The following is a brief summary of the material financial and comparative
analyses Rothschild performed in connection with its advice to SLDE and LAH.
Comparable Publicly Traded Companies Analysis of UWR. Rothschild reviewed
and compared certain actual and projected financial, operating and stock market
information of companies in lines of business Rothschild believed to be
comparable to those of UWR. While there were no public companies with precisely
the same mix of business and financial condition as UWR, Rothschild believed
the most relevant comparable companies to UWR to be American Water Works
Corporation, Inc., Philadelphia Suburban Corporation, E' Town Company,
Middlesex Water Company and Connecticut Water Services, Inc. (for the purpose
of this section, the "Comparable Companies"). The results of Rothschild's
analysis are set forth below. For the purposes of this section, Enterprise
Value means equity market value (based on the closing market prices of the
Comparable Companies for the 12 months ending on August 17, 1999) plus net
debt. EBITDA means earnings before interest, taxes, depreciation and interest.
EBIT means earnings before interest and taxes; and LTM means latest twelve-
months.
Summary of Comparable Companies Analysis
<TABLE>
<CAPTION>
Multiple Range
-------- -------------
<S> <C>
Enterprise Value as a multiple of LTM revenues.................... 4.42x - 5.34x
Enterprise Value as a multiple of LTM EBITDA...................... 9.7x - 12.6x
Enterprise Value as a multiple of LTM EBIT........................ 13.1x - 16.6x
Market value as a multiple of LTM net income...................... 16.8x - 25.0x
Price as a multiple of estimated 1999 earnings per share.......... 17.6x - 21.5x
Price as a multiple of estimated 2000 earnings per share.......... 16.7x - 18.4x
Market value as a multiple of book value.......................... 1.84x - 2.53x
</TABLE>
29
<PAGE>
Based on the foregoing data, other data deemed relevant for the Comparable
Companies and the projections for UWR prepared by the management of UWR for its
board, Rothschild performed a public market valuation analysis. Assuming a 30%
change of control premium, this analysis indicated equity value reference
ranges of approximately $31.19 to $35.87 for each share of UWR common stock. As
noted above, no company used in the public market valuation analysis is
comparable to UWR. Accordingly, any analysis of the value of the shares of UWR
common stock based on the Comparable Companies involves complex considerations
and judgments concerning differences in potential financial and operating
characteristics of the Comparable Companies and other factors in relation to
the trading and acquisition values of the Comparable Companies.
Selected Precedent Transaction Analysis. Rothschild reviewed and analyzed
publicly available financial information relating to selected announced or
completed merger and acquisition transactions in the regulated water industry
between September 1996 and June 1999 (for the purposes of this section, the
"Water Industry Transactions"). Rothschild believes that the reasons for, and
the circumstances surrounding, each of the transactions analyzed were diverse
and the characteristics of such transactions involved were not directly
comparable to the merger or to UWR and that the merger and acquisition
transactions environment varies over time because of macroeconomic factors such
as interest rate and equity market fluctuations and microeconomic factors such
as industry results and growth expectations.
Based on the Water Industry Transactions and the operating projections for
UWR prepared by the management of UWR for its board, this analysis indicated
implied equity value reference ranges of approximately $32.39 to $35.39 per
share of UWR common stock. As noted above, no transaction reviewed was
identical to the merger and, accordingly, an assessment of the results of this
analysis necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of UWR and other factors
that would effect the acquisition value of the companies to which UWR was
compared.
Discounted Cash Flow Analysis of UWR. Based upon the projections for UWR
prepared by the management of UWR for its board, Rothschild considered that the
net present value of UWR's future consolidated cash flows and the present value
of the implied terminal value less net UWR debt indicated net present values
per share of UWR common stock ranging from approximately $33.02 to $38.95 on
the basis of mid-range assumptions of discount rates of 6.75% to 7.25% and a
2008 perpetuity growth rate of 3%.
Average Acquisition Premium Analysis. Rothschild analyzed the implied
consideration per share of UWR common stock based on the levels of premiums
paid in selected acquisition transactions (for purposes of this section, the
"Selected Transactions"). Rothschild believes that the reasons for, and
circumstances surrounding, each of the transactions analyzed were diverse and
the characteristics of such transactions and the companies involved were not
directly comparable to the merger or to UWR. Based on average premiums in
Selected Transactions ranging from 25% to 40%, in each case in relation to
trading prices on the trading day immediately prior to the respective public
announcements of such selected transactions, this analysis indicated a value
per share of UWR common stock ranging from $28.72 to $32.15 based on a 30 day
average closing price of $22.98 for the UWR common stock as of the date prior
to the announcement by UWR that it was considering strategic alternatives.
"Sum-of-the-Parts" Analysis for UWR. Rothschild also considered a pre-tax
"sum-of-the-parts" analysis for each segment of UWR. The segments analyzed were
as follows:
. UWR's water utility business
. UWR's equity investment in the Northumbrian Partnership
. UWR's equity investment in the United Water Services joint ventures
. UWR's real estate operations and other investments
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Summary of Sum-of-the-Parts Analysis
<TABLE>
<CAPTION>
Per Share
Value
--------------
Low High
------ ------
<S> <C> <C>
Water Utility Business......................................... $30.20 $32.96
Investment in Northumbrian Partnership......................... $ 2.83 $ 3.27
Investment in United Water Services............................ $ 1.68 $ 2.16
Real Estate and Other Investments.............................. $ 2.16 $ 2.40
Less UWR debt.................................................. $(3.69) $(3.69)
Sum-of-the-Parts Value......................................... $33.18 $37.10
</TABLE>
In connection with its role as financial advisor to SLDE, Rothschild
analyzed various other strategic options available with respect to LAH's stake
in UWR, including the sale of its stake to a strategic buyer, renegotiating the
agreements that govern the relationship between UWR and LAH and SLDE, and
maintaining the status quo.
Rothschild's analyses were based on information then available and the best
economic assumptions available to it at that time and various other factors.
Rothschild's views do not constitute an opinion as to a fair valuation of UWR
or the shares of UWR common stock, or the optimum price to be achieved by the
stockholders of UWR, nor do Rothschild's analyses purport to be a comprehensive
review of all options available to UWR. Since Rothschild's views described
above are inherently subject to uncertainty, none of SLDE, LAH, Rothschild or
any other person assumes responsibility for their accuracy or for reliance by
any stockholder of UWR upon them.
SLDE retained Rothschild to act as its advisor based upon Rothschild's
qualifications, experience and expertise. Rothschild is an internationally
recognized investment banking firm and, as a part of its investment banking
business, is engaged in the rendering of merger and acquisition advice, the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, private placements and valuations for
corporate and other purposes. Rothschild may actively trade the equity
securities of UWR for its own account and for the account of its customers and,
accordingly, may at any time hold a long or short position in such securities.
Except as described herein, neither SLDE nor LAH has obtained, or sought to
obtain, any report, opinion or appraisal from an outside party.
Potential Conflicts of Interest of Certain Persons in the Merger
In considering the recommendation of UWR's board of directors with respect
to the Merger Agreement, stockholders should be aware that certain directors
and executive officers of UWR have interests that may present them with
potential conflicts of interest in connection with the merger. UWR's board of
directors is aware of the conflicts described below and considered them along
with other matters in recommending that UWR stockholders vote to approve the
Merger Agreement.
UWR has issued to certain of its directors and executive officers options to
purchase shares of UWR common stock under its Management Incentive Plan and
shares of restricted common stock under its Directors' Restricted Stock Plans.
At the effective time of the merger, all holders of options to purchase UWR
common stock, will receive in exchange for the cancellation of their options a
cash payment per share equal to the excess of $35.00 over the applicable
exercise price. In addition, each outstanding share of restricted common stock
issued under the Directors' Restricted Stock Plans will become fully vested at
the effective time of the merger and will be simultaneously converted into the
right to receive a cash payment of $35.00 per share.
Approval of the merger by shareholders of UWR will constitute a change of
control of UWR under the employment agreements between UWR and several UWR
executive officers, including Messrs. Correll,
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Simunovich, DeMicco, McGlynn, and Fallon. The exact terms of the employment
agreements vary. Generally, however, the agreements entitle the executives to
severance payments and benefits if, following a change of control, UWR
terminates the executive's employment for other than cause or if the executive
terminates employment for good reason. Cause is generally defined in the
agreements to include actions, such as the executive's failure to perform his
or her duties, the willful engaging of the executive in misconduct, or the
executive's conviction of a felony, if such actions would cause material injury
to UWR. Good reason is defined in the agreements to include, among other
things, a reduction in the executive's base salary, an adverse change in the
executive's duties or responsibilities, and, in all but one of the agreements,
a change of the executive's place of employment to one that is more than 50
miles from where the executive is currently working. Additionally, Mr.
Correll's agreement provides that severance payments and benefits will be paid
following a termination or resignation for any reason during the six month
period following the consummation of a transaction that constitutes a change of
control and the agreements of Messrs. Simunovich, DeMicco and Fallon provide
that severance payments and benefits will be paid following a termination or
resignation for any reason during the thirteenth month following the
consummation of a transaction that constitutes a change of control. Severance
benefits provided under the agreements include the following:
. a payment equal to two or three hundred percent of the executive's
annual base salary and annual target bonus;
. continued participation for 18 or 24 months in employee benefit plans in
which the executive is entitled to participate, or the cash equivalent
if continued participation is not possible; and
. payment of the executive's nonqualified supplemental retirement plan
benefit, assuming for purposes of determining the benefit that it is
fully vested, and that the executive has attained at least age 55 with
at least 10 years of service under the plan.
The agreements also provide for an additional payment, if required, to make
the executives whole for any excise tax imposed by Section 4999 of the Internal
Revenue Code.
It is presently estimated that the value of the severance payments and
benefits, including the excise tax gross-up payments, to which the named
executive officers would become entitled under their employment agreements,
assuming for this purpose that each executive's employment was terminated for
one of the reasons set forth above following UWR shareholder approval of the
merger, would be as follows: Mr. Correll, $4,343,000; Mr. Simunovich,
$2,120,000; Mr. DeMicco, $1,880,000; Mr. McGlynn, $700,000; and Mr. Fallon,
$1,880,000.
Indemnification and Insurance
The Merger Agreement provides that after the effective time of the merger,
LAH, and UWR will, to the fullest extent permitted by applicable law, indemnify
each of the past and present officers and directors of the parties and their
subsidiaries, as well as anyone who becomes an officer or director after the
date of the Merger Agreement but prior to the effective time, against:
. liabilities and expenses (including attorneys' fees) arising out of
actions or omissions by such person at or prior to the effective time of
the merger and based on the fact that such person is or was a director
or officer of a party to the Merger Agreement or one of their
subsidiaries; and
. all such liabilities to the extent they arise out of the Merger
Agreement.
LAH is also required to maintain directors' and officers' liability
insurance policies for six years following the effective time of the merger for
the benefit of the persons currently covered by such policies of UWR or its
subsidiaries, although LAH is not, however, required to spend in any year more
than 200% of the annual aggregate premiums currently paid by UWR for such
insurance.
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<PAGE>
Federal Income Tax Consequences
The receipt of cash by each holder of shares of common stock and series A
preference stock pursuant to the Merger Agreement will be a taxable transaction
for U.S. federal income tax purposes and may also be a taxable transaction
under applicable state, local, foreign and other tax laws.
Generally, a stockholder of UWR who receives cash in exchange for shares of
UWR common stock or series A preference stock pursuant to the merger will, for
U.S. federal income tax purposes, recognize gain or loss equal to the
difference between the amount of cash received and such stockholder's adjusted
tax basis in the UWR common stock or series A preference stock exchanged. If
the UWR common stock or series A preference stock is held by a stockholder as a
capital asset, gain or loss recognized by the stockholder will be a long-term
capital gain or loss if the stockholder has held the common stock for more than
one year. In the case of a noncorporate taxpayer, the current maximum U.S.
federal income tax rate on net capital gains generally is 20%.
Payments of cash to a holder of shares of UWR common stock or series A
preference stock are generally subject to information reporting requirements.
"Backup" withholding at a rate of 31% will apply to such payments, unless the
holder furnishes its taxpayer identification number in the manner prescribed in
the applicable U.S. Treasury regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and meets
certain other conditions. Any amounts withheld under the backup withholding
rules will be allowed as a refund or credit against the holder's U.S. federal
income tax liability if the required information is furnished to the Internal
Revenue Service. Such "backup" withholding can be avoided if a stockholder
properly completes the letter of transmittal that the exchange agent will mail
to each stockholder as soon as reasonably practicable after the effective time
of the merger, and includes in such letter the stockholder's correct taxpayer
identification number.
The discussion set forth above as to the material federal income tax
consequences of the merger is based upon the provisions of the Internal Revenue
Code of 1986, as amended, applicable U.S. Treasury regulations, judicial
decisions and current administrative rulings, all as in effect on the date of
this proxy statement and all of which are subject to change at any time
possibly with retroactive effect. This discussion does not address any aspect
of state, local or foreign taxation. No rulings have been, or will be,
requested from the Internal Revenue Service with respect to any of the matters
discussed. There can be no assurance that future legislation, regulations,
administrative rulings or court decisions will not alter the tax consequences
described above.
This discussion does not purport to be a complete analysis or discussion of
all potential tax effects relevant to the merger. The foregoing discussion may
not be applicable with respect to certain shares received pursuant to the
exercise of employee stock options or otherwise as compensation or with respect
to holders of shares who are subject to special tax treatment under the U.S.
Internal Revenue Code of 1986, as amended, such as non-U.S. persons, life
insurance companies, tax-exempt organizations and financial institutions, and
may not apply to a holder of shares in light of that holder's individual
circumstances. Stockholders are urged to consult their own tax advisers to
determine the particular tax consequences of the merger to them (including the
application and effect of any state, local or foreign income and other tax
laws) of the merger.
Regulatory Matters
UWR has public utility subsidiaries which operate in thirteen states. While
certain of the relevant state statutes are subject to interpretation regarding
their applicability to this transaction, UWR believes that approvals of the
state public utility regulatory commissions in at least ten states are
required. These 10 states are Arkansas, Connecticut, Delaware, Florida,
Illinois, Missouri, New Jersey, New York, Pennsylvania and Virginia. Filings
for such approvals are expected to be made during the month of October 1999.
The Merger Agreement requires UWR to use all commercially reasonable efforts to
obtain the necessary approvals as soon
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<PAGE>
as practicable. While there can be no guarantee as to whether or when these
approvals will be finally obtained, UWR believes that all approvals will be
received during the first half of the year 2000.
Antitrust Regulation. Under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the related rules promulgated by the Federal
Trade Commission, the merger may not be consummated until notifications have
been given and certain information has been furnished to the Federal Trade
Commission and the Antitrust Division of the Department of Justice and the
applicable waiting period requirement has expired or been terminated. Each of
UWR and LAH expects to file a notification and report form under the Hart-
Scott-Rodino Act before December 31, 1999. The waiting period under the Hart-
Scott-Rodino Act will expire 30 days after these filings unless early
termination is granted by the Federal Trade Commission and the Department of
Justice or additional information is requested by them from either UWR or LAH.
If the merger is not consummated within one year after the expiration of the
Hart-Scott-Rodino Act waiting period, UWR and LAH will be required to re-file
under the Hart-Scott-Rodino Act. Satisfaction of the waiting period
requirement does not preclude the Department of Justice, the Federal Trade
Commission or any other party from challenging or seeking to delay or enjoin
the merger on antitrust or other grounds either before or after the effective
time. There can be no assurance that such a challenge, if made, would not be
successful. UWR and LAH believe that the merger would not violate federal
antitrust laws.
Absence of Appraisal Rights
The stockholders of UWR are not entitled to appraisal rights in connection
with the merger. Under New Jersey law, an appraisal right is the right to
dissent from the merger and obtain payment of an appraised value for your
shares in place of the cash consideration payable in the merger.
Recent Developments
As of the date of this proxy statement, two law suits have been filed
contesting the merger. These suits are (1) Herbert Behrens v. Donald L.
Correll et al., filed on August 25, 1999 in the Superior Court of New Jersey
Chancery Division, Bergen County, Docket No. C-260-99, and (2) Lawrence
Steinberg v. United Water Resources Inc. et al., filed on August 24, 1999 in
the Superior Court of New Jersey Chancery Division, Bergen County, Docket No.
C-256-99.
These suits allege, among other things, breach of fiduciary duty by UWR and
its directors because the merger was purportedly agreed to without an
appropriate evaluation of UWR's worth to an acquisition candidate.
Specifically, plaintiffs allege that UWR and its directors "have failed to
announce any active auction or open bidding procedure," and have not
"adequately ensured that no conflicts of interest exist or, . . . ensure [d]
that all conflicts would be resolved." Both suits seek, in addition to other
relief, an injunction preventing SLDE and LAH from acquiring UWR for the
consideration stated in the Merger Agreement. On October 26, 1999, the
Superior Court of New Jersey Chancery Division issued an Order of
Consolidation consolidating the two complaints. The Order of Consolidation
stipulates that the defendants shall answer the consolidated complaint 30 days
before the special meeting.
UWR believes that these suits are entirely without merit and intends to
vigorously defend against them.
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<PAGE>
THE MERGER AGREEMENT
The following is a description of certain provisions of the Merger
Agreement. The complete Merger Agreement appears as Annex A to this proxy
statement and is incorporated herein by reference. This description does not
purport to be complete and it may not include all of the information that
interests you. The description is qualified in its entirety by reference to the
Merger Agreement, and we recommend that you carefully read the Merger Agreement
in its entirety.
Effective Time of the Merger
The merger will take place only after receipt of all necessary stockholder
and regulatory approvals and the satisfaction or waiver of the conditions to
the merger. As required by the Merger Agreement, the parties must also file a
certificate of merger with the Secretary of State of New Jersey before the
merger can take effect. The merger will take effect at such time as the
certificate of merger is duly filed with the Secretary of State of New Jersey,
or on a subsequent date that the parties agree to and specify in the
certificate of merger.
Effects of the Merger
At the effective time of the merger, LAH Acquisition will merge with and
into UWR and UWR will be the surviving corporation. At such time, the separate
corporate existence of LAH Acquisition will cease, and UWR will become a
wholly-owned subsidiary of LAH.
The certificate of incorporation and by-laws of LAH Acquisition, immediately
prior to the effective time of the merger, will be the certificate of
incorporation and by-laws of UWR following the merger. The directors of LAH
Acquisition and the officers of UWR, immediately prior to the effective time of
the merger, will be the directors and officers of UWR following the merger.
The other effects of the merger will be as provided in the applicable
provisions of the New Jersey Business Corporation Act.
Merger Consideration
The Merger Agreement reflects an "all-cash transaction" in which each issued
and outstanding share of UWR common stock (other than shares owned, directly or
indirectly, by UWR, LAH or any of their respective wholly-owned subsidiaries)
will be converted at the effective time of the merger into the right to receive
the per share cash consideration of $35.00, without interest. Each issued and
outstanding share of series A preference stock (other than shares owned,
directly or indirectly, by UWR, LAH or any of their respective wholly-owned
subsidiaries) will be converted into a right to receive $29.17 in cash. This
amount is equal to the product of $35.00 multiplied by the 0.8333 shares of
common stock into which each share of series A preference stock is convertible
immediately prior to the effective time of the merger. All shares of common
stock and series A preference stock owned, directly or indirectly, by UWR or
LAH or any of their respective wholly-owned subsidiaries will be canceled
without consideration in the merger.
Exchange of Stock Certificates
Exchange Agent. Prior to the effective time of the merger, LAH will enter
into an agreement with a bank or trust company mutually acceptable to UWR and
LAH to serve as an exchange agent for the merger. At the effective time of the
merger, LAH will deposit cash with the exchange agent in an amount equal to:
. the aggregate cash consideration payable to all eligible holders of UWR
common stock and series A preference stock under the Merger Agreement;
plus
. the aggregate amount of any dividends on UWR common stock and series A
preference stock that have been declared but remain unpaid at the
effective time of the merger.
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<PAGE>
Exchange Procedures. Promptly after the effective time, LAH and UWR will
cause the exchange agent to mail the following materials to each person, other
than UWR, LAH and their wholly-owned subsidiaries, who at the effective time
held a certificate or certificates representing outstanding shares of UWR
common stock or series A preference stock:
. a letter of transmittal for use in submitting such share certificate to
the exchange agent for exchange; and
. instructions explaining what the stockholder must do to receive the per
share cash consideration in exchange for surrender of their share
certificates.
Upon surrender of a share certificate to the exchange agent for cancellation,
the holder of the certificate shall be entitled to receive in exchange therefor
the per share cash consideration and unpaid dividends due to that holder under
the terms of the Merger Agreement. From and after the effective time of the
merger, UWR's stock transfer books will be closed, and any certificates
presented for transfer will be canceled and exchanged for the per share cash
consideration in accordance with the Merger Agreement.
Lost, Stolen or Destroyed Certificates. The registered holder of a
certificate representing UWR common stock which has been lost, stolen or
destroyed can receive the merger consideration payable in exchange for those
shares by delivering to the exchange agent an affidavit stating that the
certificate has been lost, stolen or destroyed.
Representations and Warranties
UWR. In the Merger Agreement, UWR makes representations and warranties about
itself and its business in favor of LAH. These representations and warranties
relate to such matters as:
. the organization of UWR and its subsidiaries, their ability to conduct
their respective businesses and similar corporate matters;
. UWR's capital structure;
. the authorization, execution, delivery, performance and enforceability
of the Merger Agreement and the transactions contemplated by it;
. the absence of breach, violation or conflict with applicable laws,
regulations, organizational documents, agreements and other existing
obligations;
. regulatory approvals, licenses and permits;
. reports and financial statements filed with the SEC or appropriate state
public utilities commissions or health agencies, and the accuracy of the
information contained in those reports and financial statements;
. the absence of material adverse changes since June 30, 1999 and the non-
occurrence of certain events;
. pending and threatened litigation;
. the accuracy of information supplied for use in this proxy statement;
. tax matters;
. retirement and other employee benefit plans and matters relating to the
Employee Retirement Income Security Act of 1974, as amended;
. environmental compliance and liability;
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<PAGE>
. regulation of UWR and its subsidiaries as public utilities;
. the quality of the water supplied by UWR and its subsidiaries;
. the stockholder votes required in connection with the merger;
. the fairness opinions of Morgan Stanley;
. the taking of all action to eliminate any obligations under the Rights
Agreement, dated July 12, 1989, as amended, between UWR and Chase Mellon
Shareholders Services, LLC;
. the status of rights in real property held by UWR and its subsidiaries
and joint ventures;
. the status of UWR's and its subsidiaries' existing franchises,
easements, leases and license agreements that are necessary for UWR and
its subsidiaries' respective businesses;
. the adequacy of UWR's and its subsidiaries' insurance;
. UWR's and its subsidiaries' trademarks, patents and copyrights; and
. "Year 2000" matters.
LAH. In the Merger Agreement, LAH makes representations and warranties to
UWR about itself and its business. These representations and warranties relate
to such matters as:
. the organization of LAH, LAH Acquisition and LAH's subsidiaries, and
their ability to conduct their respective businesses and similar
corporate matters;
. the authorization, execution, delivery, performance and enforceability
of the Merger Agreement and the transactions contemplated by it;
. the absence of breach, violation or conflict and compliance with
applicable laws, regulations, organizational documents, agreements and
other existing obligations;
. regulatory approvals, licenses and permits;
. the accuracy of LAH's financial statements;
. the accuracy of information supplied for use in this proxy statement;
. LAH's ownership of UWR capital stock; and
. LAH's the ability to pay the consideration required to be paid under the
Merger Agreement and to consummate the merger.
Conduct of Business Prior to the Effective Time
UWR. In the Merger Agreement, UWR has agreed that during the period from the
date of the Merger Agreement until the effective time of the merger, except as
otherwise permitted in the Merger Agreement or by written consent of LAH, UWR
and its subsidiaries will, among other things:
. carry on their respective businesses (and those of UWR's joint ventures)
in the usual, regular and ordinary course consistent with past practice;
. preserve intact its present business organization and goodwill; keep
available the services of its present officers and employees as a group
(subject to prudent management of workforce needs); and maintain and
keep material properties in good repair;
. confer with representatives of LAH on a regular basis and notify LAH of
any material changes in its business;
. use all commercially reasonable efforts to obtain third-party consents
required by the Merger Agreement;
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<PAGE>
. maintain insurance coverage as is customary for companies in the water
utility industry; and
. maintain all existing governmental permits pursuant to which it
operates;
and will not:
. declare or pay any dividends on or make other distributions in respect
of any of its capital shares, other than:
- dividends by wholly-owned subsidiaries of UWR to UWR;
- dividends by a less than a wholly-owned subsidiary of UWR that are
consistent with past practice;
- stated dividends on series A preference stock;
- regular dividends on UWR common stock that, in any fiscal quarter,
do not exceed 100% of the dividends for the same quarter of the
previous fiscal year;
- the additional quarterly dividends, and the special dividend,
payable on UWR common stock the sum of which will equal $0.48 for
each common share.
. amend its certificate of incorporation or by-laws, or take any other
action which would reasonably be expected to prevent or materially
impede or interfere with the merger;
. make any changes in its accounting methods other than as required by
law, rule, regulation or generally accepted accounting principles;
. take any action that would, or is reasonably likely to, result in a
material breach of any provision of the Merger Agreement or in UWR's
representations or warranties being untrue;
. make acquisitions in excess of certain agreed amounts
. issue capital stock or other equity securities, other than certain
intracompany issuances of capital stock;
. make aggregate capital expenditures in excess of certain agreed amounts;
. dispose of any assets except in the ordinary course of business
consistent with past practice;
. incur or guarantee indebtedness for borrowed money in excess of certain
agreed amounts;
. subject to certain exceptions, make changes to, or adopt new, employee
benefit programs;
. discharge or settle any material liabilities, other than in the ordinary
course of business consistent with past practice;
. modify or terminate any material contract or, except in certain
circumstances, enter into any new material contract; or
. make any additional material investments or loans to any joint venture.
LAH. Pursuant to the Merger Agreement, LAH has agreed, as to itself and its
subsidiaries, that, during the period from the date of the Merger Agreement
until the effective time of the merger, except as otherwise permitted in the
Merger Agreement or with the written consent of UWR, LAH (and each of its
subsidiaries) will, among other things:
. use all commercially reasonable efforts to obtain any third-party
consents required in the Merger Agreement; and
. not take any action that would or is reasonably likely to result in a
material breach of any provision of the Merger Agreement or in LAH's
representations and warranties being untrue.
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Conditions to Consummation of the Merger
Conditions to Each Party's Obligations to Effect the Merger. Unless waived
in writing, the obligations of the parties to consummate the merger are subject
to satisfaction of the following conditions:
. the stockholders of UWR must have approved the Merger Agreement;
. no temporary restraining order or preliminary or permanent injunction,
or other order, ruling or action taken by a United States or French
federal or state court or authority shall exist which restrains, enjoins
or otherwise prohibits the merger, and no law, rule, regulation or order
has the effect of making completion of the merger illegal; and
. all required statutory approvals must have been obtained.
Conditions to the Obligations of LAH. The obligation of LAH to effect the
merger is also subject to satisfaction of the following conditions:
. UWR must have performed, in all material respects, those agreements and
covenants in the Merger Agreement required to be performed by UWR at or
prior to the effective time;
. the representations and warranties of UWR contained in the Merger
Agreement must be true and correct on and as of the date of the Merger
Agreement and on and as of the effective time of the merger (unless the
representation or warranty speaks only of a specific date other than the
date of the Merger Agreement or the effective time), unless the
inaccuracy could not be reasonably expected to result in a material
adverse effect on the business of UWR;
. UWR must have obtained certain third-party consents;
. LAH must have received a certificate from the chief financial officer of
UWR stating that the conditions to the effectiveness of the merger set
forth in the Merger Agreement have been satisfied; and
. no material adverse effect on the business of UWR may have occurred or
have become likely to occur.
Conditions to the Obligations of UWR. The obligation of UWR to effect the
merger is subject to satisfaction of the following conditions:
. LAH must have performed, in all material respects, those agreements and
covenants in the Merger Agreement required to be performed by LAH at or
prior to the effective time;
. the representations and warranties of LAH contained in the Merger
Agreement must be true and correct as of the date of the Merger
Agreement and as of the effective time of the merger (except for a
representation or warranty that speaks of a specific date other than the
date of the Merger Agreement or effective time) unless the inaccuracy
could not be reasonably expected to result in a material adverse effect
on the business of LAH; and
. UWR must have received a certificate from the chief financial officer of
LAH stating that the conditions to the effectiveness of the merger have
been satisfied.
No Solicitation of Transactions
The Merger Agreement provides that between the date thereof and the
effective time of the merger, UWR, its subsidiaries and its subsidiaries'
directors, officers, employees, agents and representatives will immediately
cease any discussions or negotiations with any parties that may be ongoing with
respect to certain alternative proposals to acquire the businesses of UWR and
its subsidiaries. Prior to the effective time of the merger, UWR will not, nor
will it permit its subsidiaries to (a) directly or indirectly initiate, solicit
or encourage any offer or proposal that constitutes or is reasonably likely to
lead to an alternative proposal or (b) directly or
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<PAGE>
indirectly engage in negotiations or provide confidential information or data
to any person relating to an alternative proposal. UWR must notify LAH of any
such inquiries, offers or proposals (including the terms and conditions of any
such proposal).
The Merger Agreement does not, however, prohibit UWR, prior to obtaining the
required approval of its stockholders, from (i) furnishing information to a
person making an unsolicited alternative proposal which did not result from a
breach of the Merger Agreement and (ii) participating in discussions with such
person regarding the alternative proposal, but only to the extent that:
. the board of directors of UWR reasonably concludes in good faith (after
consultation with its financial advisors) that the person or group
making the alternative proposal will have adequate sources of financing
to consummate the alternative proposal and that the alternative proposal
is more favorable to UWR stockholders than the merger;
. the board of directors of UWR determines in good faith, based on advice
of outside counsel, that it is necessary to do so to satisfy its
fiduciary duties to its stockholders; and
. such person or group has entered into a confidentiality agreement
containing terms no less favorable to UWR than the confidentiality
agreement entered into by UWR and LAH on July 26, 1999, and the other
agreements and arrangements governing UWR's relationship with LAH.
UWR will keep LAH informed on a timely and current basis on the status and
details (including amendments or proposed amendments) of any request for
information or alternative proposal. UWR will also immediately provide to LAH
any non-public information provided to any other person in connection with an
alternative proposal which was not previously provided to LAH.
The board of directors of UWR will not withdraw or modify, or propose to
withdraw or modify, in any manner adverse to LAH, LAH Acquisition or both, the
approval or recommendation of the board of directors of UWR of the Merger
Agreement unless the board of directors of UWR has:
. determined in good faith as a result of changed circumstances, and based
on the advice of outside counsel, that the board of directors' fiduciary
duties require the directors to withdraw or modify their approval or
recommendation; and
. provided to LAH a statement in writing in reasonable detail stating the
reasons for the withdrawal or modification.
Indemnification and Insurance
The Merger Agreement provides that after the effective time of the merger,
LAH and UWR will, to the fullest extent permitted by applicable law, indemnify
each past and present officer and director of the parties and their
subsidiaries, as well as anyone who becomes such an officer or director after
the date of the Merger Agreement but prior to the effective time, against:
. liabilities and expenses (including attorneys' fees) arising out of
actions or omissions made by such person at or prior to the effective
time of the merger and based on the fact that such person is or was a
director or officer of a party to the Merger Agreement or one of their
subsidiaries; and
. all such liabilities and expenses to the extent they arise out of the
Merger Agreement.
LAH is also required to maintain directors' and officers' liability
insurance policies for six years following the effective time for the benefit
of the persons currently covered by such policies of UWR or its subsidiaries,
although LAH is not required to spend in any year more than 200% of the annual
aggregate premiums currently paid by UWR for such insurance.
40
<PAGE>
Workforce and Employee Benefit Matters
The Merger Agreement provides that LAH, UWR and UWR's subsidiaries will
honor, without modification, all of their respective collective bargaining
agreements and other contracts and agreements that apply to their current or
former directors or employees, subject to any existing right to amend, modify,
suspend, revoke or terminate those contracts. The parties also agreed that any
workforce reductions carried out following the effective time of the merger by
LAH or UWR or their subsidiaries would be done in accordance with applicable
collective bargaining agreements as well as applicable laws.
Each of UWR's benefit plans (other than its stock plans) in effect at the
date of the Merger Agreement will be maintained in effect with respect to the
employees or former employees of UWR and any of its subsidiaries who are
covered immediately prior to the effective time of the merger until LAH or UWR
otherwise determine after the effective time. LAH or UWR or their subsidiaries
will provide to those eligible, for a period of not less than one year
following the effective time, benefits which are no less favorable in the
aggregate than those provided under UWR's benefit plans (with respect to
employees and former employees of UWR and its subsidiaries). Subject to certain
limitations, each participant in any such benefit plan will receive credit for
purposes of eligibility to participate, vesting and eligibility to receive
benefits under any benefit plan of UWR, its subsidiaries or its affiliates for
service credited for the corresponding purpose under such benefit plan. Nothing
in the Merger Agreement limits any right contained in any such benefit plan or
any applicable law to amend, modify, suspend, revoke or terminate any such
plan.
With respect to any welfare benefit plan established to replace any of UWR's
benefit plans which is a welfare benefit plan in which certain employees may be
eligible to participate after the effective time of the merger, other than
limitations, exclusions or waiting periods that are already in effect with
respect to such employees and that have not been satisfied as of the effective
time of the merger, such replacement plans will waive all limitations to pre-
existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements and provide each eligible employee with
credit for other co-payments and deductibles paid prior to the effective time
of the merger in satisfying any applicable deductible or out-of-pocket
requirements to the same calendar year under any welfare plans that such
employees are eligible to participate in after the effective time. With respect
to each UWR benefit plan or other plan, agreement or arrangement that provides
for benefits in the form of UWR common stock or options to purchase UWR common
stock, UWR and its subsidiaries and LAH and its subsidiaries will take all
actions necessary to provide that upon the effective time:
. each outstanding option to purchase a share of UWR common stock under
any UWR stock plan, whether or not then vested and exercisable, will be
canceled in exchange for a cash payment equal to the excess of the
$35.00 per share cash consideration over the exercise price of the
option, net of any applicable tax withholding, and
. each outstanding restricted share of UWR common stock granted under any
UWR stock plans will become fully vested as provided in the applicable
stock plan and will be simultaneously converted into the right to
receive the per share cash consideration of $35.00. Subject to making
such payments, UWR and its subsidiaries will take all actions needed to
terminate all stock plans.
Access to Information
Subject to LAH keeping non-public information confidential, UWR has agreed
in the Merger Agreement to, and to cause its subsidiaries to, afford LAH and
its representatives reasonable access during normal business hours to all its
properties, books, contracts, commitments and records and to furnish LAH with
each report, schedule and other document required by applicable federal or
state securities laws or filed with any other governmental entity and to
furnish LAH with all other information concerning its business, properties and
personnel as LAH may from time to time reasonably request.
41
<PAGE>
Modification of Existing Agreements
The terms and conditions of the Governance Agreement between LAH and UWR and
the North American Rights Agreement among LAH, UWR and other parties will
remain in full force and effect. However, so long as the Merger Agreement is in
effect, LAH has waived the requirement under the Governance Agreement that UWR
provide 30 days' prior notice before it agrees to enter into a business
combination with a third party. Further, so long as the Merger Agreement is in
effect, both UWR and LAH may acquire rate-regulated water and wastewater
utility business in the United States in accordance with the Merger Agreement,
notwithstanding any contrary provision in the North American Rights Agreement.
If the Merger Agreement is terminated for reasons attributable to LAH or SLDE,
UWR will have the right to acquire a 50% interest at full cost (including
interest and expenses) in any rate-regulated business acquired by LAH during
the time the Merger Agreement was effective. The Merger Agreement also grants
to the United Water Services joint ventures a right of first refusal with
respect to LAH's acquisition of non-regulated delegated services providers in
the United States, Canada and Mexico, notwithstanding any contrary provision in
the North American Rights Agreement. If the Merger Agreement is terminated for
reasons attributable to LAH or SLDE, the United Water Services joint ventures
will have the further right to buy from LAH any interests in delegated services
providers actually acquired by LAH at full cost (including interest and
expenses).
Termination
The Merger Agreement may be terminated at any time prior to the effective
time of the merger:
. by the mutual written consent of the boards of directors of UWR and LAH;
. by either UWR or LAH if:
- the effective time does not occur before August 20, 2000, except
that this right is not available to a party whose failure to fulfill
an obligation under the Merger Agreement is the cause of the
effective time failing to occur. If on August 20, 2000 certain
required approvals and/or consents have not been obtained, but all
other conditions to closing have been fulfilled or are then capable
of being met, then the August 20, 2000 deadline will be extended to
February 20, 2001;
- the merger is prohibited by any United States or French federal,
state or other law, order, rule or regulation or permanently
enjoined by any United States or French federal, state or other
court or governmental authority of competent jurisdiction; or
- the required approval of UWR stockholders is not obtained at a duly
held special meeting, including any adjournment of such meeting.
. by LAH if:
- UWR materially breaches the Merger Agreement in a manner that is
likely to result in a material adverse effect, and such breaches are
not cured within 20 days of receipt of written notice from LAH;
- the board of directors of UWR (a) withdraws, modifies or changes, in
any manner adverse to LAH, its approval or recommendation of the
Merger Agreement, (b) recommends to the stockholders an alternative
proposal or (c) resolves to take either such action; or
- a tender offer or exchange offer for 20% or more of the outstanding
shares of capital stock of UWR is commenced and the board of
directors of UWR fails to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender
offer or exchange offer by its stockholders); and
. by UWR if:
- its board of directors exercises its fiduciary duties to
stockholders in a manner consistent with certain provisions of the
Merger Agreement as described in the following section, "Effect of
Termination"; or
42
<PAGE>
- LAH materially breaches the Merger Agreement in a manner that is
likely to result in a material adverse effect, and such breach is
not cured within 20 days of receipt of written notice from UWR.
Effect of Termination
If the Merger Agreement is terminated, none of UWR, LAH, LAH Acquisition or
any of their respective representatives will have any liability except as
specifically provided in the Merger Agreement, and, subject to certain
exceptions, all rights and obligations of each party under the Merger Agreement
will cease to exist.
Termination Fees and Expenses
. If UWR terminates the Merger Agreement because its board of directors
determines that its fiduciary duty to its stockholders makes it
necessary to accept an alternative proposal (as described above), UWR
will pay to LAH a termination fee equal to $42 million plus any
documented expenses incurred by LAH in connection with the Merger
Agreement up to $3 million.
. LAH may terminate the Merger Agreement if (i) UWR's board of directors
withdraws or changes its approval or recommendation of the Agreement in
a manner adverse to LAH or resolves to do so, (ii) UWR's board of
directors recommends to stockholders an alternative proposal to UWR
stockholders or resolves to do so, or (iii) a tender offer or exchange
offer for 20% or more of the outstanding shares of capital stock of UWR
is commenced and the board of directors of UWR fails to recommend to its
stockholders against the tender offer or exchange offer. If LAH
terminates the Merger Agreement for any of those reasons, and UWR enters
into a definitive acquisition, merger or similar agreement to effect an
alternative proposal within two years of the date of termination, then
UWR must pay to LAH its documented expenses up to $3 million and the $42
million termination fee.
. IF UWR or LAH terminates the Merger Agreement because the UWR
stockholders do not approve the Merger Agreement, and at the time of
such failure, a third party has made a public announcement or
communicated to UWR or its stockholders concerning an alternative
proposal that has not been rejected by UWR and withdrawn or terminated
by the party making it, and if UWR enters into a definitive agreement to
effect an alternative proposal within two years of the date of the
termination, then UWR has agreed to pay LAH its documented expenses up
to $3 million plus the $42 million termination fee.
Amendment and Waiver
Amendment. UWR and LAH may amend the Merger Agreement by action taken by
their boards of directors at any time before the effective time. After the
stockholders of UWR have approved the merger, however, no amendment may be made
that:
. alters or changes the treatment of shares of UWR capital stock under the
Merger Agreement; or
. alters or changes the terms of the Merger Agreement that would, alone or
in the aggregate, materially alter the rights of holders of UWR capital
stock, except for alterations or changes that could otherwise be adopted
by the board of directors without the further approval of UWR
stockholders.
Waiver. At any time prior to the effective time, the parties may:
. extend the time for performance of acts or obligations of the other
parties;
. waive inaccuracies in the representations and warranties of the other
parties; and
. waive compliance with agreements or conditions contained in the Merger
Agreement, to the extent permitted by applicable law.
Assignment
LAH and LAH Acquisition may assign any or all of their rights and
obligations under the Merger Agreement to any wholly-owned subsidiary of LAH,
but the assigning party will remain responsible for the performance of the
assigned obligations if the assignee does not perform them.
43
<PAGE>
THE COMPANIES
UWR
200 Old Hook Road
Harrington Park, New Jersey 07640
UWR is a holding company primarily engaged in water-related businesses. As
the second-largest investor-owned water services company in the United States,
UWR provides water and wastewater services through its regulated utilities and
nonregulated contract operations (some of which are owned jointly with LAH) to
over 7.5 million people in more than 400 communities in 19 states. UWR also has
investments in water services in Canada and Mexico in which LAH is a majority
owner. In addition, UWR owns and manages real estate investments through a
wholly-owned subsidiary. UWR has been listed on the New York Stock Exchange
since 1889 and has paid cash dividends on its common stock continuously since
1886.
1. United Water New Jersey Inc.
United Water New Jersey Inc. is a wholly owned subsidiary that supplies
water service to over 179,000 customers in 60 municipalities in the
northeastern part of New Jersey, serving most of Bergen County and the northern
part of Hudson County. The total population served is about 750,000 persons.
2. United Waterworks Inc.
United Waterworks Inc. is a wholly owned subsidiary that provides water and
wastewater services to a total of approximately 360,000 customers in 13 states
through its regulated water and wastewater utility subsidiaries. The utility
subsidiaries and United Waterworks serve a total population of about 1,000,000.
3. United Properties Group, Incorporated
United Properties Group, Incorporated is a wholly owned subsidiary that,
with its subsidiaries, constitute a non-regulated business engaged in real
estate investment and development activities, including commercial office and
retail properties, residential and commercial land development and sales, golf
course operations and consulting services. United Properties owns and manages a
portfolio of real estate located in New Jersey, New York, Delaware, Idaho and
Florida. It also provides consulting and advisory services in support of the
real estate assets of the other United Water companies.
4. United Water Mid-Atlantic Inc.
A wholly-owned subsidiary of United Water Resources, United Water Mid-
Atlantic, through its subsidiaries, owns and operates several small water and
wastewater utility systems that provide water supply, wastewater connection and
wastewater transmission services to approximately 6,300 customers primarily in
Plainsboro, Vernon Township and Mt. Arlington, New Jersey.
5. United Water Operations Inc.
United Water Operations Inc. is a wholly-owned subsidiary that serves as a
holding company for United Water Resources Inc. operating ventures, including
those in Jersey City, Manalapan, and Hoboken, New Jersey.
6. United Water Management and Services Inc.
United Water Management and Services Inc. is a wholly-owned subsidiary that
provides management services to various United Water entities.
7. United Water USA Inc.
United Water USA Inc. is a wholly-owned, special purpose subsidiary that
owns a 50% stake in United Water Services LLC.
44
<PAGE>
8. United Water Canada Inc.
United Water Canada Inc. is wholly-owned, special purpose subsidiary that
owns a 33 1/3% stake in United Water Services Canada L.P.
9. United Water Mexico Inc.
United Water Mexico Inc. is wholly-owned, special purpose subsidiary that
owns a 20.5% stake in United Water Services Mexico L.L.C.
10. United Water UK Limited
United Water UK Limited is a wholly-owned subsidiary that is an equal
partner with Lyonnaise Europe plc in the Northumbrian Partnership (each with a
50% interest). The Northumbrian Partnership owns a 20% interest in Northumbrian
Water Group plc, a major water and wastewater company in the United Kingdom
that is a majority-owned affiliate of SLDE.
SLDE
1, rue d'Astorg
75008 Paris, France
SLDE, a societe anonyme organized and existing under the laws of the
Republic of France, operates infrastructure services in more than 120
countries, providing electricity and natural gas, waste services,
communications services and water services, and maintains interests in
construction and capital investments. SLDE was formed from the 1997 merger of
Compagnie de Suez (builder of the Suez Canal) and Lyonnaise des Eaux. SLDE's
registered office is located at 72 Avenue de la Liberte, 92022 Nanterre Cedex,
France and the principal address of SLDE's water division is 18 Square Edouard
VII, 75316 Paris Cedex 09, France.
LAH
2000 First State Boulevard
Wilmington, Delaware 19804-0507
LAH is a Delaware corporation with its principal business as a holding
company of (i) its ownership interest in UWR, (ii) 50% of United Water Services
LLC, a Delaware limited liability company which provides services in the water
and wastewater industries to municipalities in the United States, (iii)
majority interests in United Water Services Canada L.P., an Ontario, Canada
limited partnership, and United Water Services Mexico LLC, a Delaware limited
liability company, which provide services in the water and wastewater
industries to municipalities in Canada and Mexico, respectively, and (iv) a 49%
interest in Technologia y Servicios De Agua, S.A., a Mexican company which
provides certain water services to the city of Mexico City, Mexico. All of the
issued and outstanding shares of capital stock of LAH are owned beneficially
and of record by SLDE. The principal business mailing address of LAH is c/o
United Water Services LLC, 200 Old Hook Road, Harrington Park, New Jersey
07640, and the address of its principal office is 2000 First State Boulevard,
Wilmington, Delaware 19804-0508.
LAH Acquisition
c/o United Water Services LLC
200 Old Hook Road
Harrington Park, New Jersey 07640
LAH Acquisition is a wholly-owned special purpose subsidiary of LAH, formed
under the laws of the State of New Jersey solely for the purpose of the merger.
LAH Acquisition has not conducted any business
45
<PAGE>
other than in connection with the Merger Agreement. All of the issued and
outstanding shares of capital stock of LAH Acquisition are owned beneficially
and of record by LAH. The principal business mailing address of LAH Acquisition
is c/o United Water Services LLC, 200 Old Hook Road, Harrington Park, New
Jersey 07640, and the address of its principal office is 1013 Centre Road,
Wilmington, Delaware 19805-1297.
Recent Transactions Between UWR, LAH and SLDE
Purchases of UWR Stock by LAH and SLDE. Neither SLDE nor LAH Acquisition has
made any purchases of UWR common stock and none of SLDE, LAH nor LAH
Acquisition has made any purchases of Series A Preference Stock since January
1, 1997, the commencement of UWR's second full fiscal year preceding the date
of this proxy statement. All purchases of UWR common stock made by LAH during
such period were made by reinvesting cash dividends paid by UWR on the UWR
common stock pursuant to UWR's Dividend Reinvestment and Stock Purchase Plan
(the "DRIP Program"), as follows:
<TABLE>
<CAPTION>
No. of Price
Dollar Amount Shares Per
Date Reinvested Acquired Share
---- ------------- ------------ --------
<S> <C> <C> <C>
March 1, 1997............................... $2,188,606.86 123,388.6827 $17.7375
June 2, 1997................................ $2,285,181.16 127,574.6635 $17.9125
September 2, 1997........................... $2,314,523.33 128,853.0733 $17.9625
December 1, 1997............................ $2,344,159.54 135,158.3586 $17.3438
March 2, 1998............................... $2,375,245.96 124,603.0668 $19.0625
June 2, 1998................................ $2,466,804.83 148,379.2379 $16.6250
September 1, 1998........................... $2,500,932.06 140,649.5622 $17.7813
December 1, 1998............................ $2,643,424.13 134,056.0343 $19.7188
March 1, 1999............................... $2,675,597.58 131,357.6440 $20.3688
June 1, 1999................................ $2,774,001.09 128,686.3279 $21.5563
</TABLE>
During this period, LAH also acquired shares of UWR common stock through
conversion of shares of UWR's series A preference stock, as follows; (i) on
April 22, 1997, LAH converted 355,802 shares of series A preference stock into
296,500 shares of UWR common stock at the conversion ratio of 0.83333 shares of
UWR common stock for each share of series A preference stock; (ii) on April 22,
1998, LAH converted 328,177 shares of series A preference stock into 273,479
shares of UWR common stock at the conversion ratio of 0.83333 shares of UWR
common stock for each share of series A preference stock, and (iii) on April
22, 1999, LAH converted 334,390 shares of series A preference stock into
278,657 shares of UWR common stock at the conversion ratio of 0.83333 shares of
UWR common stock for each share of series A preference stock. No funds were
paid by LAH to effect the conversion of any such shares of series A preference
stock.
Certain Other Transactions. Since January 1, 1997 (the commencement of UWR's
second full fiscal year preceding the date of this proxy statement), the
following transactions have been entered into between SLDE, LAH, and their
subsidiaries and UWR.
On July 28, 1997, UWR, LAH, SLDE, Montgomery Watson Inc., and certain of
their existing and newly-formed subsidiaries completed a reorganization of the
parties' North American delegated services (non-regulated) water and wastewater
businesses. In the reorganization, (i) UWR and LAH converted an existing
partnership into United Water Services LLC, a Delaware limited liability
company in which each of LAH and UWR owns 50% of the voting interests and
Montgomery Watson owns a non-voting interest (which is convertible into a 10%
voting interest); (ii) LAH, UWR and Montgomery Watson contributed cash and
certain existing Canadian operations to United Water Services Canada L.P., a
newly-formed Ontario, Canada limited partnership, in exchange for ownership
interests of 60%, 30% and 10%, respectively, (iii) LAH, UWR and Montgomery
Watson contributed cash and certain existing Mexican operations to United Water
Services Mexico LLC, a newly-formed Delaware limited liability company, in
exchange for ownership interests of 70%, 20% and 10% respectively, (iv) United
Water Services LLC acquired Montgomery Watson's 50% stake in
46
<PAGE>
United Water Services Inc. (formerly known as JMM Operational Services Inc.),
as a result of which United Water Services Inc. became a wholly-owned
subsidiary of United Water Services LLC (prior to the restructuring, United
Water Services LLC owned a 50% interest in United Water Services Inc., and
Montgomery Watson owned the remaining 50% interest); and (v) the parties
entered into related agreements for, among other things, certain exclusive
dealings with the reorganized entities, the provision of technical and advisory
services to the reorganized entities and the use of UWR's trademarks by the
reorganized entities.
The agreed value of the parties' contributions to each of the reorganized
entities was as follows:
<TABLE>
<CAPTION>
United
United Water United
Water Services Water
Services Canada Services
LLC L.P. Mexico LLC
----------- ---------- ----------
<S> <C> <C> <C>
SLDE/LAH...................................... $30,667,500 $1,727,400 $2,389,800
UWR........................................... $30,667,500 $ 863,700 $ 682,800
Montgomery Watson............................. $ 6,815,000 $ 287,900 $ 342,400
</TABLE>
In December 1998, Montgomery Watson sold its interests in United Water
Services Canada L.P. and United Water Services Mexico LLC to LAH and UWR. As a
result United Water Services Canada L.P. is now owned 66.7% by LAH and 33.3% by
UWR while United Water Services Mexico LLC is now owned 79.5% by LAH and 20.5%
by UWR.
Certain of the municipalities with which the reorganized entities or their
subsidiaries have contracted to provide water and/or wastewater treatment
services required, as a condition to the awarding of the contract, that the
entity's performance be guaranteed by one or more of its corporate parents.
Each of UWR, LAH and Montgomery Watson has agreed to share liability for
payments made and costs incurred under these performance guarantees in
proportion to its ownership of the entity whose obligations are guaranteed.
In 1997, United Water Services LLC bought from UWR a 100% ownership interest
in United Metering Inc., a company that provides water meter installation and
maintenance services.
47
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION
The following table sets forth selected consolidated historical financial
data of UWR and has been derived from, and should be read in conjunction with,
the audited consolidated financial statements of UWR for each of the five years
ended December 31, 1998 and the unaudited interim consolidated financial
statements of UWR for the nine months ended September 30, 1999 and 1998,
including the respective notes thereto. In the opinion of management, all
adjustments, consisting of normal recurring accruals considered necessary for a
fair presentation have been included in the unaudited interim data. Interim
results for the nine months ended September 30, 1999 are not necessarily
indicative of results which may be expected for future periods, including the
year ended December 31, 1999.
<TABLE>
<CAPTION>
Nine months ended
September 30, Year ended December 31,
----------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------------- ---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated Income
Statement Data:
Operating revenues from
continuing operations.. $ 270,409 $ 356,210 $ 351,409 $ 332,045 $ 319,536 $ 284,767
Operating income........ 75,473 97,600 95,644 95,699 82,183 83,847
Income from continuing
operations............. 36,764 47,987 33,676 43,020 24,760 31,611
Preferred and preference
stock dividends........ 3,088 4,058 4,345 4,613 4,795 3,454
Net income from
continuing operations.. -- 33,676 43,929 29,331 38,407 19,965 28,157
Loss from discontinued
operations............. -- -- -- -- (4,397) (2,622) (270)
Net income.............. $ -- $ 33,676 $ 43,929 $ 29,331 $ 34,010 $ 17,343 $ 27,887
Basic earnings/(loss)
per share
From continuing
operations............ $ 0.91 $ 1.19 $ 0.83 $ 1.14 $ 0.62 $ 1.02
From discontinued
operations............ -- -- -- -- (0.05) (0.08) (0.01)
From disposal of
discontinued
operations............ -- -- -- -- (0.08) -- --
Basic earnings/(loss)
per share............. $ -- $ 0.91 $ 1.19 $ 0.83 $ 1.01 $ 0.54 $ 1.01
Weighted average common
shares outstanding.... 36,848 37,028 35,492 33,707 31,995 27,524
Diluted earnings/(loss)
per share
From continuing
operations............ $ 0.90 $ 1.17 $ 0.83 $ 1.12 $ 0.62 $ 1.02
From discontinued
operations............ -- -- -- -- (0.04) (0.08) (0.01)
From disposal of
discontinued
operations............ -- -- -- -- (0.08) -- --
Diluted earnings/(loss)
per share............. $ -- $ 0.90 $ 1.17 $ 0.83 $ 1.00 $ 0.54 $ 1.01
Weighted average common
shares outstanding.... 39,023 39,192 37,838 36,218 31,995 27,524
Dividends declared per
common share........... 0.69 0.93 0.92 0.92 0.92 0.92
Balance Sheet Data: (at
end of period)
Total assets........... 1,719,857 1,769,122 1,658,342 1,582,097 1,516,708 1,457,427
Long-term obligations.. 618,714 652,969 622,737 558,093 558,658 505,204
Stockholders' equity... 537,072 545,311 514,180 493,751 465,393 457,668
Book value per common
share.................. 11.95 12.05 11.53 11.33 10.90 11.20
</TABLE>
48
<PAGE>
PRICE OF UWR COMMON STOCK AND DIVIDENDS
UWR's common stock is traded on the New York Stock Exchange under the symbol
"UWR." The high and low sales prices per quarter for UWR's common stock through
the third quarter of 1999, and for the years of 1998, 1997 and 1996 and the
dividends paid on the common stock in each quarter, were as follows:
<TABLE>
<CAPTION>
STOCK PRICE DIVIDEND
--------------- --------
QUARTER HIGH LOW
------- ------- -------
<S> <C> <C> <C>
1999
Fourth through October 4, 1999.................... $33.000 $32.625 $
Third ............................................ 33.750 20.750 .24
Second............................................ 23.688 20.000 .24
First............................................. 24.062 18.438 .24
1998
Fourth............................................ $25.000 $16.500 $.24
Third............................................. 19.250 16.375 .23
Second............................................ 18.438 15.750 .23
First............................................. 19.875 17.500 .23
1997
Fourth............................................ $19.750 $16.000 $.23
Third............................................. 19.813 17.000 .23
Second............................................ 19.375 16.375 .23
First............................................. 18.500 15.000 .23
1996
Fourth............................................ $16.625 $14.625 $.23
Third............................................. 17.500 12.750 .23
Second............................................ 13.500 12.000 .23
First............................................. 13.240 12.000 .23
</TABLE>
On August 17, 1999, the last trading day before public announcement that UWR
was engaged in merger negotiations, the last sale price of UWR common stock on
the New York Stock Exchange Composite Transactions Tape was $24.53 per share.
On October 4, 1999, the most recent practicable date prior to the printing
of this proxy statement, the last sale price of common stock as reported on the
New York Stock Exchange Composite Transactions Tape was $33.000 per share.
49
<PAGE>
OWNERSHIP OF SECURITIES BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following information pertains to the common stock of UWR beneficially
owned, directly or indirectly, by each director and named executive officers
individually and by all directors and executive officers of UWR and its
subsidiaries as a group as of September 30, 1999.
<TABLE>
<CAPTION>
Number
of
Name of Beneficial Owner Shares (a)(d)
- ------------------------ -------
<S> <C>
Edward E. Barr................................................... 31,276(b)(e)
Frank J. Borelli................................................. 9,622
Thierry Bourbie.................................................. 4,551
Charles Chaumin.................................................. 3,181
Lawrence R. Codey................................................ 5,786
Donald L. Correll................................................ 225,932(c)
Peter Del Col.................................................... 12,862
Frank J. DeMicco................................................. 30,474(c)
Robert L. Duncan, Jr............................................. 5,361
Michael C. J. Fallon............................................. 28,871(c)
Jon F. Hanson.................................................... 37,887(b)(e)
Douglas W. Hawes................................................. 15,741
George F. Keane.................................................. 5,425
Richard B. McGlynn............................................... 47,892(c)
Dennis M. Newnham................................................ 6,547
Joseph Simunovich................................................ 76,271(c)
Marcia L. Worthing............................................... 10,243(e)
Directors and Executive Officers as a Group (24 persons)......... 782,619(b)(c)
</TABLE>
- -------
(a) None of the directors or executive officers of UWR owns equity securities
of UWR or any of its subsidiaries other than common stock. As of September
30, 1999, each director or executive officer beneficially owned less than
0.6% of the outstanding common stock of UWR and all of the directors and
executive officers as a group beneficially owned less than 2.0% of such
stock. Fractional shares have been rounded to the nearest whole share.
(b) Includes, in compliance with applicable regulations and interpretations,
shares of common stock held by the spouse or other relatives who share the
home, in custody for children or grandchildren of the persons indicated or
indirectly through a trust or similar arrangement in the following amounts:
J. Hanson (16,845); E. Barr (10,000); and all directors and executive
officers as a group (27,098). Such persons disclaim any beneficial
ownership of such shares.
(c) Includes shares of common stock which may be acquired pursuant to options
awarded under UWR's Management Incentive Plan in the following amounts: D.
Correll (124,040); F. DeMicco (28,700); M. Fallon (24,710); R. McGlynn
(45,590); J. Simunovich (70,960); and all directors and executive officers
as a group (498,890).
(d) Includes shares of restricted common stock granted pursuant to the
Directors' Restricted Stock Plans totalling 63,478 shares.
(e) Includes non-voting common stock equivalent units acquired in accordance
with the non-employee Directors' Deferred Compensation Unit Plan in the
following amounts: E. Barr (4,872); J. Hanson (14,993); and M. Worthing
(3,311).
Non-Employee Directors' Deferred Compensation Unit Plan
On January 1, 1996 the UWR board of directors replaced its existing
directors' deferred compensation plan with the United Water Resources and
Subsidiaries Non-Employee Directors' Deferred Compensation Unit Plan. The
purpose of the plan is to further UWR's long-term objectives by linking the
personal interests of participating directors to those of UWR stockholders. In
addition to converting all amounts previously deferred by directors under the
predecessor deferred compensation plan, the new plan allows each director to
defer the receipt of all or a portion of his or her annual retainer and meeting
fees in the form of non-voting common stock equivalent units, equal in value to
shares of UWR common stock. The value of each unit increases and decreases in
accordance with the fluctuations in value of UWR's common stock. Additionally,
dividend equivalent units accrue on the units as cash or stock dividends are
distributed with respect to UWR common stock. Thus, the ultimate value of the
directors' accounts depends on the performance of UWR common stock and the
dividends declared with respect to such stock. All amounts in a director's
account are distributed in the form of cash to the director, or his or her
beneficiary if the director is deceased, on the date previously specified in
the deferral election form completed by the director.
50
<PAGE>
FIVE PERCENT OWNER OF UWR COMMON STOCK
The following corporation is known to UWR to be the beneficial owner of more
than 5% of a class of UWR's voting securities. To the knowledge of UWR, no
other person is the holder of more than 5% of any class of UWR's voting
securities as of September 30, 1999.
<TABLE>
<CAPTION>
Name and Address Amount and Nature Percent
Title of Class of Beneficial Owner of Beneficial Ownership of Class
-------------- -------------------------------- ----------------------- --------
<S> <C> <C> <C>
Common Stock............ Lyonnaise American Holding, Inc. 11,687,024 shares 30.1%
2000 First State Boulevard
Wilmington, Delaware 19804-0507
</TABLE>
LAH, its parent company SLDE, and certain of their respective affiliates are
subject to the terms of a Governance Agreement, dated April 22, 1994, which,
among other things, prohibits, subject to certain exceptions, such parties from
acquiring additional UWR securities, commencing unsolicited tender or exchange
offers to acquire UWR's securities, making offers to acquire UWR's assets or
soliciting proxies against UWR's management and which requires their common
stock to be voted in accordance with the votes of the holders of 75% of the
common stock if any proposal obtains that vote. SLDE, LAH and UWR, pursuant to
the Merger Agreement, have modified the Governance Agreement in order to allow
for the acquisition of UWR common stock and series A preference stock
contemplated in the merger.
51
<PAGE>
MERGER RELATED FINANCING
It is estimated that the total amount of funds required by LAH to consummate
the acquisition of the capital stock of UWR not already owned by it is
approximately $1 billion. In the Merger Agreement, SLDE has agreed to cause LAH
and LAH Acquisition to have sufficient funds to consummate the merger at the
effective time and to meet their other financial obligations under the Merger
Agreement.
SLDE and LAH expect to fund the cost of the acquisition using currently
available cash resources and other existing and new capital resources, which
may include syndicated borrowing from banks, public issuance of debt and equity
securities and the private placement of debt securities. As of December 31,
1998, SLDE had cash and cash equivalents of approximately 2.8 billion euros
(approximately $3.3 billion), debt of approximately 21.5 billion euros
(approximately $25.4 billion) and stockholders equity of approximately 8.9
billion euros (approximately $10.5 billion).
It is estimated that the expenses incurred by the parties with respect to
the merger will be as follows:
<TABLE>
<CAPTION>
Item $
---- ---
<S> <C>
SEC Filing Fees.......................................................
Legal fees............................................................
Accounting fees.......................................................
Appraisal fees........................................................
Solicitation expenses.................................................
Printing costs........................................................
Other Miscellaneous expenses..........................................
</TABLE>
In accordance with the merger agreement, all costs and expenses in
connection with the merger will be paid by the party incurring such expenses.
52
<PAGE>
OTHER MATTERS
UWR presently does not intend to bring before its special meeting any
matters other than those specified and does not have any knowledge of any other
matters which may be brought up by other persons. However, if any other matters
not now known properly come before the UWR special meeting or any adjournments
thereof, the persons named in the enclosed form of proxy, including any
substitutes, will vote such proxies in accordance with their judgment on such
matters.
53
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
by and among
UNITED WATER RESOURCES INC.,
LYONNAISE AMERICAN HOLDING, INC.,
LAH ACQUISITION CO.
and
SUEZ LYONNAISE DES EAUX,
dated as of August 20, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE I
THE MERGER
Section 1.1 The Merger................................................ A-1
Section 1.2 Effective Time of the Merger.............................. A-1
Section 1.3 Effects of the Merger..................................... A-1
Certificate of Incorporation and By-laws of the Surviving
Section 1.4 Corporation............................................... A-1
Section 1.5 Directors and Officers of the Surviving Corporation....... A-1
Section 1.6 Further Actions........................................... A-2
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock..................... A-2
Section 2.2 Exchange of Certificates.................................. A-3
ARTICLE III
THE CLOSING
Section 3.1 Closing................................................... A-4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification............................ A-4
Section 4.2 Subsidiaries.............................................. A-5
Section 4.3 Capitalization............................................ A-5
Authority; Non-Contravention; Statutory Approvals;
Section 4.4 Compliance................................................ A-6
Section 4.5 Reports and Financial Statements.......................... A-7
Section 4.6 Absence of Certain Changes or Events...................... A-8
Section 4.7 Litigation................................................ A-8
Section 4.8 Proxy Statement Etc....................................... A-8
Section 4.9 Tax Matters............................................... A-9
Section 4.10 Employee Matters; ERISA................................... A-10
Section 4.11 Environmental Protection.................................. A-12
Section 4.12 Regulation as a Utility................................... A-14
Section 4.13 Water Quality............................................. A-14
Section 4.14 Vote Required............................................. A-14
Section 4.15 Opinion of Financial Advisor.............................. A-14
Section 4.16 The Company Rights Agreement.............................. A-14
Section 4.17 Real Property............................................. A-15
Section 4.18 Property Franchises....................................... A-15
Section 4.19 Insurance................................................. A-15
Section 4.20 Trademarks, Patents and Copyrights........................ A-15
Section 4.21 Year 2000................................................. A-16
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization and Qualification............................ A-16
Section 5.2 Authority; Non-Contravention; Statutory Approvals......... A-16
Section 5.3 Reports and Financial Statements.......................... A-17
Section 5.4 Proxy Statement........................................... A-17
Section 5.5 Ownership of Company Capital Stock........................ A-17
Section 5.6 Financing................................................. A-17
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company...................................... A-18
Section 6.2 Alternative Proposal...................................... A-22
Section 6.3 Covenants of Parent....................................... A-23
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information..................................... A-23
Section 7.2 Proxy Statement........................................... A-23
Section 7.3 Regulatory Matters........................................ A-24
Section 7.4 Stockholder Approval...................................... A-24
Section 7.5 Directors' and Officers' Indemnification.................. A-25
Section 7.6 Disclosure Schedules...................................... A-26
Section 7.7 Public Announcements...................................... A-26
Section 7.8 Certain Employee Agreements............................... A-26
Section 7.9 Employee Benefit Plans.................................... A-26
Section 7.10 The Company Stock Plans................................... A-27
Section 7.11 Expenses.................................................. A-27
Section 7.12 Further Assurances........................................ A-27
Section 7.13 Governance Agreement...................................... A-27
Section 7.14 North American Rights Agreement........................... A-28
Section 7.15 Notice and Cure........................................... A-30
ARTICLE VIII
CONDITIONS
Conditions to Each Party's Obligation to Effect the
Section 8.1 Merger.................................................... A-31
Section 8.2 Conditions to Obligation of Parent to Effect the Merger... A-31
Conditions to Obligation of the Company to Effect the
Section 8.3 Merger.................................................... A-32
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination............................................... A-32
Section 9.2 Effect of Termination..................................... A-34
Section 9.3 Termination Fee; Expenses................................. A-34
Section 9.4 Amendment................................................. A-34
Section 9.5 Waiver.................................................... A-35
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
Page
----
<C> <S> <C>
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties.... A-35
Section 10.2 Brokers................................................... A-35
Section 10.3 Notices................................................... A-35
Section 10.4 Miscellaneous............................................. A-36
Section 10.5 Interpretation............................................ A-37
Section 10.6 Counterparts; Effect...................................... A-37
Section 10.7 Parties in Interest....................................... A-37
Section 10.8 Waiver of Jury Trial and Certain Damages.................. A-37
Section 10.9 Enforcement............................................... A-37
Section 10.10 Severability.............................................. A-37
ARTICLE XI
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority................................ A-38
Section 11.2 Obligations of SLDE....................................... A-38
</TABLE>
A-iii
<PAGE>
This AGREEMENT AND PLAN OF MERGER dated as of August 20, 1999 (this
"Agreement") is made and entered into by and among United Water Resources Inc.,
a New Jersey corporation (the "Company"), Lyonnaise American Holding, Inc., a
Delaware corporation ("Parent"), LAH Acquisition Co., a New Jersey corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), and, solely with
respect to the provisions of Article XI, Suez Lyonnaise des Eaux, a French
societe anonyme ("SLDE");
WHEREAS, the boards of directors of the Company, Parent and Merger Sub have
approved and deemed it advisable and in the best interests of their respective
stockholders to consummate the transactions contemplated herein under which the
business of the Company and Parent would be combined by means of the merger of
Merger Sub with and into the Company, as a result of which the Company will
become a wholly owned subsidiary of Parent (the "Merger");
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties and agreements in connection with the Merger and to
prescribe various conditions to the Merger; and
WHEREAS, SLDE has agreed to the obligations contained in Article XI of this
Agreement.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time of the Merger (as defined in Section 1.2)
Merger Sub shall be merged with and into the Company in accordance with the
Business Corporation Act of the State of New Jersey (the "NJBCA"). Following
the Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall be the surviving corporation (the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of New
Jersey.
Section 1.2 Effective Time of the Merger. A certificate of merger (the
"Certificate of Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the office of the Secretary of State of
the State of New Jersey (the "Secretary of State") for filing, as provided in
Section 14A:10-4.1 of the NJBCA, on the Closing Date. The Merger shall become
effective at such time as the Certificate of Merger is duly filed with the
Secretary of State or at such subsequent time as Parent and the Company shall
agree and specify in the Certificate of Merger (the date and time the Merger
becomes effective being the "Effective Time").
Section 1.3 Effects of the Merger. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the NJBCA.
Section 1.4 Certificate of Incorporation and By-laws of the Surviving
Corporation. At the Effective Time, (i) the certificate of incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall become
the certificate of incorporation of the Surviving Corporation until thereafter
amended as provided by law and such certificate of incorporation and (ii) the
by-laws of Merger Sub as in effect immediately prior to the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter amended as
provided by law, the certificate of incorporation of the Surviving Corporation
and such by-laws.
Section 1.5 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub and the officers of the Company immediately prior to
the Effective Time shall, from and after the Effective Time, be
A-1
<PAGE>
the directors and officers, respectively, of the Surviving Corporation until
their successors shall have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the
Surviving Corporation's certificate of incorporation and by-laws.
Section 1.6 Further Actions. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Merger Sub, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company or Merger Sub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on Capital Stock. At the Effective Time by
virtue of the Merger and without any action on the part of any holder of any
capital stock of the Company or Merger Sub:
(a) Conversion of Merger Sub Stock. Each issued and outstanding share of
common stock, par value $1.00 per share, of Merger Sub shall be converted
into one fully paid and non-assessable share of common stock, no par value,
of the Surviving Corporation (the "Surviving Corporation Common Stock").
(b) Cancellation of Certain Company Stock. Each share of common stock,
no par value, of the Company (the "Company Common Stock"), together with
the associated Right (as defined in Section 4.16) to purchase Company
Preferred Stock pursuant to the Company Rights Agreement (as defined in
Section 4.16), and each share of 5% Series A Cumulative Convertible
Preference Stock, no par value, of the Company ("Series A Preference
Stock") that is owned by the Company as treasury stock and all shares of
Company Common Stock (and associated Rights) and Series A Preference Stock
that are owned, directly or indirectly, by the Company or Parent or any of
their respective wholly-owned subsidiaries shall be canceled and retired
and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock, together with the associated Rights, other
than shares and Rights canceled pursuant to Section 2.1(b) of this
Agreement, shall be converted into the right to receive $35.00 per share,
without interest (the "Per Share Cash Consideration"). Each share of
Company Common Stock and each associated Right converted in accordance with
this paragraph 2.1(c) shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist. Each holder
of a certificate formerly representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto, except the right
to receive the Per Share Cash Consideration to be issued in consideration
therefor upon surrender of such certificate in accordance with Section 2.2
and any dividends declared and unpaid as of the Effective Time.
(d) Conversion of Series A Preference Stock. Each issued and outstanding
share of Series A Preference Stock, other than shares canceled pursuant to
Section 2.1(b) of this Agreement, shall be converted automatically into the
right to receive an amount in cash equal to the product of the Per Share
Cash Consideration multiplied by the number of shares of Company Common
Stock into which such share of Series A Preference Stock is convertible
immediately prior to the Effective Time. Each share of Series A Preference
Stock converted in accordance with this paragraph 2.1(d) shall no longer be
outstanding and shall automatically be canceled and retired and shall cease
to exist. Each holder of a certificate formerly representing any such
shares of Series A Preference Stock shall cease to have any rights with
respect thereto, except the right to receive the Per Share Cash
Consideration to be issued in consideration therefor upon surrender of such
certificate in accordance with Section 2.2 and any dividends declared and
unpaid as of the Effective Time.
A-2
<PAGE>
Section 2.2 Exchange of Certificates. (a) Exchange Agent. At the
Effective Time, Parent shall deposit with a bank or trust company mutually
agreeable to Parent and the Company (the "Exchange Agent"), pursuant to an
agreement with the Exchange Agent in form and substance reasonably
acceptable to Parent and the Company, an amount in cash equal to the sum of
(i) the Per Share Cash Consideration multiplied by the number of shares of
Company Common Stock to be converted into the right to receive the Per
Share Cash Consideration as determined in Section 2.1(c) plus (ii) the Per
Share Cash Consideration multiplied by the number of shares of Company
Common Stock into which the Series A Preference Stock is convertible as
determined in Section 2.1(d) plus (iii) the amount of any dividends which
were declared in respect of Company Common Stock and the Series A
Preference Stock with a record date prior to the Effective Time and which
remain unpaid at the Effective Time (the "Unpaid Company Dividends"). Any
cash deposited with the Exchange Agent shall hereinafter be referred to as
the "Exchange Fund."
(b) Payment of Cash Consideration. Promptly after the Effective Time,
Parent and the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record as of the Effective Time of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock or Series A Preference Stock
(the "Certificates") that were converted into the right to receive the Per
Share Cash Consideration pursuant to Section 2.1: (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon actual delivery
of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent and the Surviving Corporation may
reasonably specify) and (ii) instructions for effecting the surrender of
the Certificates in exchange for the Per Share Cash Consideration. Upon
surrender of a Certificate to the Exchange Agent for cancellation, together
with a duly executed letter of transmittal and such other documents as the
Exchange Agent may require, the holder of such Certificate shall be
entitled to receive in exchange therefor a bank check for an amount equal
to the sum of (x) the Per Share Cash Consideration multiplied by (A) if
such Certificate evidenced one or more shares of Company Common Stock, the
number of shares of Company Common Stock evidenced thereby or (B) if such
Certificate evidenced one or more shares of Series A Preference Stock, the
number of shares of Company Common Stock into which the shares of Series A
Preference Stock evidenced thereby were convertible immediately prior to
the Effective Time plus, in either case, (y) any Unpaid Company Dividends
payable in respect of such shares (such sum being referred to as the "Cash
Consideration"). In no event shall the holder of any such surrendered
Certificates be entitled to receive interest on any cash to be received in
the Merger. If such check is to be issued in the name of a person other
than the person in whose name the Certificates surrendered for exchange
therefor are registered, it shall be a condition of the exchange that the
person requesting such exchange shall pay to the Exchange Agent any
transfer or other taxes required by reason of issuance of such check to a
person other than the registered holder of the Certificates surrendered, or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender
the Cash Consideration as contemplated by this Section 2.2. If for any
reason (including losses) the Exchange Agent is unable to pay the cash
amounts to which holders of the Certificates shall be entitled, Parent
shall in any event remain liable, and shall make available to the Surviving
Corporation additional funds, for the payment thereof.
(c) Closing of Transfer Books. From and after the Effective Time the
stock transfer books of the Company shall be closed and no transfer of any
capital stock of the Company shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged for the Cash Consideration as provided
in Section 2.1 and in this Section 2.2.
(d) Termination of Exchange Agent. All funds held by the Exchange Agent
in the Exchange Fund for payment to the holders of Certificates unclaimed
at the end of one year from the Effective Time shall be returned to the
Surviving Corporation, after which time any holder of Certificates who has
not theretofore complied with this Article II shall thereafter look as a
general creditor only to Parent for payment of the Cash Consideration to
which such holder may be due, subject to applicable law.
A-3
<PAGE>
(e) Investment of the Exchange Fund. The Exchange Agent shall invest any
cash included in the Exchange Fund only in one or more of the following
investments as directed by the Surviving Corporation from time to time: (i)
obligations of the United States government maturing not more than 90 days
after the date of purchase; (ii) certificates of deposit maturing not more
than 90 days after the date of purchase issued by a bank organized under
the laws of the United States or any state thereof having a combined
capital and surplus of at least $500,000,000; (iii) a money market fund
having assets of at least $3,000,000,000; or (iv) tax-exempt or corporate
debt obligations maturing not more than 90 days after the date of purchase
given the highest investment grade rating by Standard & Poor's and Moody's
Investor Service. Any interest and other income resulting from such
investments shall promptly be paid to the Surviving Corporation.
(f) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the
stockholder claiming such Certificate to be lost, stolen or destroyed and,
if required by the Surviving Corporation, the posting by such stockholder
of a bond in such reasonable amount as the Surviving Corporation may direct
as indemnity against any claim that may be made against it with respect to
such Certificate, the Exchange Agent will deliver in exchange for such
lost, stolen or destroyed Certificate the applicable Cash Consideration
with respect to the shares of Company Common Stock or Series A Preference
Stock formerly represented thereby.
(g) Escheat. The Surviving Corporation shall not be liable to any person
for funds delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Piper & Marbury L.L.P., 1251 Avenue of the Americas,
New York, New York, at 10:00 A.M., New York time, on the second business day
immediately following the date on which the last of the conditions set forth in
Article VIII hereof is fulfilled or waived (other than conditions that by their
nature are required to be performed on the Closing Date, but subject to
satisfaction of such conditions), or at such other time and date and place as
the Company and Parent shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
Section 4.1 Organization and Qualification. Except as set forth in
Section 4.1 of the Company Disclosure Schedule (as defined in Section
7.6(ii)), the Company and each subsidiary (as defined below) of the Company
is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or organization, has
all requisite corporate power and authority, and has been duly authorized
by all necessary approvals and orders, to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on its
business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a Company Material Adverse
Effect. As used in this Agreement, "Company Material Adverse Effect" means
any change, effect, condition or circumstance that is reasonably likely to
be materially adverse to the business, properties, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries,
taken as a whole, or the consummation of the transactions contemplated by
this Agreement, excluding (i) any occurrence affecting the United States
water supply and waste water services industry as a whole, (ii) any adverse
effect to the extent caused by
A-4
<PAGE>
an acquisition made by the Company in accordance with Section 6.1(d) and
(iii) any adverse effect to the extent caused by an acquisition made by
Parent in accordance with Section 7.14. As used in this Agreement, the term
"subsidiary" of a person shall mean any corporation or other entity
(including partnerships and other business associations) of which a
majority of the outstanding capital stock or other voting securities having
voting power under ordinary circumstances to elect directors or similar
members of the governing body of such corporation or entity shall at the
time be held, directly or indirectly, by such person. True, accurate and
complete copies of the certificate of incorporation and by-laws of the
Company (including any amendments thereto) as in effect on the date hereof
have been made available to Parent.
Section 4.2 Subsidiaries. Section 4.2 of the Company Disclosure Schedule
sets forth a description as of the date hereof, of (x) all "material
subsidiaries" of the Company as defined in Regulation S-X promulgated under
the Securities Act (as defined herein) and (y) all other subsidiaries and
joint ventures of the Company, including (i) the name of each such entity,
(ii) the state or jurisdiction of its incorporation or organization, (iii)
the Company's interest therein, and (iv) if known by the Company, the name
of any other person holding an interest therein and the interest held by
any and all such persons, and a brief description of the principal line or
lines of business conducted by each such entity. Except as set forth in
Section 4.2 of Company Disclosure Schedule, neither the Company nor any of
the Company's subsidiaries is a "public utility company" or a "holding
company" within the meaning of Section 2(a)(5) or 2(a)(7) of the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act") or a
"subsidiary company" or an "affiliate" within the meaning of Section
2(a)(8) or 2(a)(11) of the 1935 Act of any holding company which is
required to register as a holding company under the 1935 Act. Except as set
forth in Section 4.2 of the Company Disclosure Schedule, all of the issued
and outstanding shares of capital stock of each subsidiary of the Company
and, to the knowledge of the Company, each Company Joint Venture (as
defined below) are validly issued, fully paid, nonassessable and free of
preemptive rights, and are owned, directly or indirectly, by the Company
free and clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever and there are no
outstanding subscriptions, options, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating any such
subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of its capital stock or obligating it to grant,
extend or enter into any such agreement or commitment, except for any of
the foregoing that could not reasonably be expected to have a Company
Material Adverse Effect. As used in this Agreement, the term "joint
venture" of a person shall mean any corporation or other entity (including
partnerships and other business associations) that is not a subsidiary of
such person, in which such person or one or more of its subsidiaries owns
an equity interest, other than equity interests held for passive investment
purposes which are less than 10% of any class of the outstanding voting
securities or equity of any such entity, and the term "Company Joint
Venture" shall mean each joint venture in which the Company holds an equity
interest and in which neither Parent nor any of Parent's affiliates holds a
direct or indirect equity interest apart from their interest in the
Company.
Section 4.3 Capitalization. (a) Company Capitalization. The authorized
capital stock of the Company consists of (i) 100,000,000 shares of Company
Common Stock, (ii) 1,000,000 shares of preferred stock, no par value, of
the Company (the "Company Preferred Stock"), and (iii) 5,000,000 shares of
preference stock, no par value, of the Company (the "Company Preference
Stock") of which 3,983,976 shares are designated as Series A Preference
Stock and no shares are designated as 7 5/8% Series B Cumulative Preferred
Stock, no par value, of the Company ("Series B Preferred Stock"). As of the
close of business on July 17, 1999, there were issued and outstanding
38,810,209 shares of Company Common Stock, 1,956,596 shares of Series A
Preference Stock and no shares of Series B Preferred Stock. All of the
issued and outstanding shares of the capital stock of the Company are
validly issued, fully paid, nonassessable and free of preemptive rights.
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(b) Options, etc. Except as set forth in Section 4.3(b) of the Company
Disclosure Schedule, as of the date hereof, there are no outstanding
subscriptions, options (including employee stock options), calls,
contracts, voting trusts, proxies or other commitments, understandings,
restrictions, arrangements, rights (including the Rights) or warrants,
including any right of conversion or exchange under any outstanding
security, instrument or other agreement, obligating the Company or any of
the subsidiaries of the Company or, to the knowledge of the Company, any
Company Joint Venture to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of such person,
or obligating such person to grant, extend or enter into any such agreement
or commitment. The total number of outstanding options to purchase shares
of Company's capital stock (whether granted pursuant to Company Stock Plans
or otherwise) and the exercise price of each such option is set forth on
Section 4.3(b) of the Company Disclosure Schedule.
(c) Certain Contractual Obligations. There are no outstanding
contractual obligations of the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture to repurchase, redeem
or otherwise acquire any shares of such person's capital stock or to
provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any person other than to subsidiaries of the
Company in the ordinary course of business consistent with past practice or
as disclosed in Section 4.3(c) of the Company Disclosure Schedule.
Section 4.4 Authority; Non-
Contravention; Statutory Approvals; Compliance.
(a) Authority. The Company has all requisite corporate power and
authority (including approval of the Company's Board of Directors) to enter
into this Agreement, to perform its obligations hereunder and, subject to
obtaining the Company Stockholders' Approval (as defined in Section 4.14)
and the Company Required Statutory Approvals (as defined in Section
4.4(c)), to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and the consummation by the
Company of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject to
obtaining the Company Stockholders' Approval with respect to consummation
of the Merger. This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by the other signatories hereto, constitutes the valid and
binding obligation of the Company enforceable against it in accordance with
its terms.
(b) Non-Contravention. Except as set forth in Section 4.4(b) of the
Company Disclosure Schedule, the execution and delivery of this Agreement
by the Company does not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions contemplated
hereby will not, violate, conflict with, or result in a breach of any
provision of, or constitute a default (with or without notice or lapse of
time or both) under, or result in the termination or modification of, or
accelerate the performance required by, or result in a right of
termination, cancellation, or acceleration of any obligation or the loss of
a benefit under, or result in the creation of any lien, security interest,
charge or encumbrance ("Liens") upon any of the properties or assets of the
Company or any of the subsidiaries of the Company or, to the knowledge of
the Company, any of the Company Joint Ventures (any such violation,
conflict, breach, default, right of termination, modification, cancellation
or acceleration, loss or creation, a "Violation" with respect to the
Company (such term when used in Article V having a correlative meaning with
respect to Parent)) pursuant to any terms, conditions or provisions of (i)
the certificate of incorporation, by-laws or similar governing documents of
the Company or any of its subsidiaries or, to the knowledge of the Company,
any of the Company Joint Ventures, (ii) subject to obtaining the Company
Required Statutory Approvals and the receipt of the Company Stockholders'
Approval, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority
(as defined in Section 4.4(c)) applicable to the Company or any of its
subsidiaries or, to the knowledge of the Company, any of the Company Joint
Ventures, or any of their respective properties or assets or (iii) subject
to obtaining the third-party consents or other approvals set forth in
Section 4.4(b) of the Company Disclosure Schedule (the "Company Required
Consents") any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other
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instrument, obligation or agreement of any kind to which the Company or any
of its subsidiaries or, to the knowledge of the Company, any of the Company
Joint Ventures is a party or by which the Company or any of the Company's,
its subsidiaries' or any Company Joint Venture's properties or assets may
be bound or affected, excluding from the foregoing clauses (ii) and (iii)
such Violations as would not reasonably be likely to have, individually or
in the aggregate, a Company Material Adverse Effect.
(c) Statutory Approvals. No declaration, filing or registration with, or
notice to or authorization, consent or approval of, any court, federal,
state, local or foreign governmental or regulatory body (including a stock
exchange or other self-regulatory body) or authority, including state
public utility control or public service commissions and similar state
regulatory bodies (each, a "Governmental Authority") is necessary for the
execution and delivery of this Agreement by the Company, the performance of
the Company of its obligations hereunder or the consummation by the Company
of the transactions contemplated hereby, except as described in Section
4.4(c) of the Company Disclosure Schedule, the failure to obtain, make or
give which would reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect (the "Company Required
Statutory Approvals"), it being understood that references in this
Agreement to "obtaining" such Company Required Statutory Approvals shall
mean making such declarations, filings or registrations, giving such
notices, obtaining such authorizations, consents or approvals and having
such waiting periods expire as are necessary to avoid a violation of law.
(d) Compliance. Except as set forth in Section 4.4(d) or Section 4.11 of
the Company Disclosure Schedule, or as disclosed in the Company SEC Reports
(as defined in Section 4.5) filed prior to the date hereof, neither the
Company nor any of its subsidiaries nor, to the knowledge of the Company,
any Company Joint Venture is in violation of, is under investigation with
respect to any violation of, or has been given notice or been charged with
any violation of, any law, statute, order, rule, regulation, ordinance or
judgment of any Governmental Authority except for violations that,
individually or in the aggregate, do not have, and to the knowledge of the
Company, are not reasonably likely to have, a Company Material Adverse
Effect. Except as set forth in Section 4.4(d) of the Company Disclosure
Schedule or in Section 4.11 of the Company Disclosure Schedule, the Company
and its subsidiaries and, to the knowledge of the Company, the Company
Joint Ventures have all permits, licenses, franchises and other
governmental authorizations, consents and approvals necessary to conduct
their respective businesses as currently conducted in all respects, except
those which the failure to obtain would, in the aggregate, not have a
Company Material Adverse Effect. Except as set forth in Section 4.4(d) of
the Company Disclosure Schedule, the Company, each of its subsidiaries and,
to the knowledge of the Company, each Company Joint Venture is not in
breach or violation of or in default in the performance or observance of
any term or provision of, and no event has occurred which, with lapse of
time or action by a third party, could result in a default under, (i) its
certificate of incorporation or by-laws or similar organizational documents
or (ii) any material contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which it is a party or by which it is bound or to which any of its property
is subject, except for breaches, violations or defaults of any of the
foregoing items in clause (ii) that, individually or in the aggregate, do
not have, and are not reasonably likely to have, a Company Material Adverse
Effect.
Section 4.5 Reports and Financial Statements. The filings required to be
made by the Company and its subsidiaries under the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and applicable state public utility laws and
regulations have been filed with the Securities and Exchange Commission
(the "SEC"), or the appropriate state public utilities commission or health
agency, as the case may be, including all forms, statements, reports,
agreements (oral or written) and all documents, exhibits, amendments and
supplements appertaining thereto, and complied, as of their respective
dates, in all material respects with all applicable requirements of the
appropriate statute and the rules and regulations thereunder. The Company
has made available to Parent a true and complete copy of each report,
schedule, registration statement and definitive proxy statement filed by
the Company with the SEC since June 30, 1996 (as such documents have since
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the time of their filing been amended, the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim financial
statements of the Company included in the Company SEC Reports
(collectively, the "Company Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis ("GAAP") (except as may be indicated therein or in the
notes thereto and except with respect to unaudited statements as permitted
by Form 10-Q of the SEC) and fairly present the consolidated financial
position of the Company as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended. Except as
and to the extent set forth in the Company Financial Statements, neither
the Company nor any subsidiary of the Company or, to the knowledge of the
Company, any Company Joint Venture has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise) which would be
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, except for liabilities and
obligations that would not reasonably be likely to have, individually or in
the aggregate, a Company Material Adverse Effect.
Section 4.6 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports filed prior to the date hereof or as set forth in
Section 4.6 of the Company Disclosure Schedule, from June 30, 1999, the
Company and each of its subsidiaries have conducted their business only in
the ordinary course of business consistent with past practice and there has
not been, and no fact or condition exists which would, individually or in
the aggregate, have a Company Material Adverse Effect. Without limiting the
foregoing, from June 30, 1999 through the date of this Agreement, and
except as which individually or in the aggregate, does not have or, insofar
as reasonably can be foreseen, is not reasonably likely to have a Company
Material Adverse Effect, there has not been (i) any revaluation by the
Company or any of its subsidiaries or, to the knowledge of the Company, any
Company Joint Venture of any of their respective assets, including, but not
limited to, write-offs of accounts receivable, other than in the ordinary
course of businesses consistent with historical practices, (ii) any
material change by the Company, any of its subsidiaries or, to the
knowledge of the Company, any Company Joint Venture in its accounting
methods, principles or practices, or (iii) any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock
of the Company or any redemption, repurchase or other acquisition of any of
its securities (other than regular quarterly dividends on the shares of
Company Common Stock and regular dividends on the shares of Series A
Preference Stock).
Section 4.7 Litigation. Except as disclosed in the Company SEC Reports
filed prior to the date hereof or as set forth in Section 4.7, Section 4.9
or Section 4.11 of the Company Disclosure Schedule, (i) there are no
claims, suits, actions or proceedings, pending or, to the knowledge of the
Company, threatened, nor are there, to the knowledge of the Company, any
investigations or reviews pending or threatened against, relating to or
affecting the Company or any of its subsidiaries or any Company Joint
Venture and (ii) there are no judgments, decrees, injunctions, rules or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to the Company,
any of its subsidiaries or, to the knowledge of the Company, any Company
Joint Venture, except for any of the foregoing under clauses (i) and (ii)
that individually or in the aggregate would not reasonably be expected to
have a Company Material Adverse Effect.
Section 4.8 Proxy Statement Etc. The proxy statement, in definitive
form, relating to the Company Special Meeting (the "Proxy Statement") shall
not, at the dates mailed to stockholders and at the time of the Company
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein in light of the circumstances under which
they are made, not misleading. The Proxy Statement, insofar as it relates
to the Company or any subsidiary of the Company, shall comply as to form in
all material respects with the applicable provisions of the Securities Act
and the Exchange Act and the rules and regulations thereunder.
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Section 4.9 Tax Matters. "Taxes", as used in this Agreement, means any
federal, state, county, local or foreign taxes, charges, fees, levies or
other assessments, including all net income, gross income, sales and use,
ad valorem, transfer, gains, profits, excise, franchise, real and personal
property, gross receipts, capital stock, production, business and
occupation, disability, employment, alternative minimum, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any governmental entity, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes and any expenses
incurred in connection with the determination, settlement or litigation of
any tax liability. "Tax Return", as used in this Agreement, means a report
or similar statement, return or other information required to be supplied
to a governmental entity with respect to Taxes including, where permitted
or required, combined or consolidated returns for any group of entities
that includes the Company or any of its subsidiaries, or Parent or any of
its subsidiaries, as the case may be.
Except as set forth in Section 4.9 of the Company Disclosure Schedule:
(a) Timely Filing of Tax Returns. The Company and each of its
subsidiaries and, to the Company's knowledge, each Company Joint Venture
have filed (or there has been filed on its behalf) all material Tax Returns
required to be filed by each of them under applicable law. All such Tax
Returns were and are in all material respects true, complete and correct
and filed on a timely basis.
(b) Payment of Taxes. The Company and each of its subsidiaries and, to
the Company's knowledge, each Company Joint Venture have, within the time
and in the manner prescribed by law, paid all Taxes that are currently due
and payable except for those contested in good faith and for which adequate
reserves have been taken.
(c) Deferred Taxes. The Company and each of its subsidiaries and, to the
Company's knowledge, each Company Joint Venture have accounted for deferred
income taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the assets of the Company or
any of its subsidiaries or, to the Company's knowledge, any Company Joint
Venture except liens for Taxes not yet due.
(e) Withholding Taxes. The Company and each of its subsidiaries and, to
the Company's knowledge, each Company Joint Venture have complied in all
material respects with the provisions of the Code relating to the
withholding of Taxes, as well as similar provisions under any other laws,
and have, within the time and in the manner prescribed by law, withheld
from employee wages and paid over to the proper governmental authorities
all amounts required.
(f) Extensions of Time for Filing Tax Returns. Neither the Company nor
any of its subsidiaries nor, to the Company's knowledge, any Company Joint
Venture has requested any extension of time within which to file any Tax
Return which Tax Return has not since been filed.
(g) Waivers of Statute of Limitations. Neither the Company nor any of
its subsidiaries nor, to the Company's knowledge, any Company Joint Venture
has executed any outstanding waivers or comparable consents regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns.
(h) Expiration of Statute of Limitations. The statute of limitations for
the assessment of all Taxes has expired for all applicable Tax Returns of
the Company and each of its subsidiaries and, to the Company's knowledge,
each Company Joint Venture, or those Tax Returns have been examined by the
appropriate taxing authorities for all periods through the date hereof, and
no deficiency for any Taxes has been proposed, asserted or assessed against
the Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture that has not been resolved and paid in full.
(i) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending,
proposed or threatened with regard to any Taxes or Tax Returns of the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture.
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(j) Powers of Attorney. No power of attorney currently in force has been
granted by the Company or any of its subsidiaries or, to the Company's
knowledge, any Company Joint Venture concerning any Tax matter.
(k) Tax Rulings. Neither the Company nor any of its subsidiaries nor, to
the Company's knowledge, any Company Joint Venture has received a Tax
Ruling (as defined below) or entered into a Closing Agreement (as defined
below) with any taxing authority that would have a continuing adverse
effect after the Closing Date. "Tax Ruling", as used in this Agreement,
shall mean a written ruling of a taxing authority relating to Taxes.
"Closing Agreement", as used in this Agreement, shall mean a written and
legally binding agreement with a taxing authority relating to Taxes.
(l) Availability of Tax Returns. The Company has made or has used its
best efforts in making available to Parent complete and accurate copies of
(i) all Tax Returns, and any amendments thereto, filed by the Company or
any of its subsidiaries since December 31, 1997, (ii) all audit reports
received from any taxing authority relating to any Tax Return filed by the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture and (iii) any Closing Agreements entered into by the
Company or any of its subsidiaries or, to the Company's knowledge, any
Company Joint Venture with any taxing authority.
(m) Tax Sharing Agreements. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any Company Joint Venture is
a party to any agreement relating to allocating or sharing of Taxes.
(n) Code Section 280G. Section 4.9 of the Company Disclosure Schedule
contains a true and complete list of any agreement, contract or arrangement
to which the Company or any of its subsidiaries or, to Company's knowledge,
any Company Joint Venture, is a party that could result, on account of the
transactions contemplated hereunder, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section
280G of the Code.
(o) Liability for Others. Neither the Company nor any of its
subsidiaries nor, to the Company's knowledge, any Company Joint Venture has
any liability for Taxes of any person other than the Company, its
subsidiaries and, to the Company's knowledge, such Company Joint Ventures
(i) under Treasury Regulations Section 1.1502-6 (or any similar provision
of state, local or foreign law) as a transferee or successor, (ii) by
contract or (iii) otherwise.
(p) Code Section 897. To the Company's knowledge after due inquiry, no
foreign person owns or has owned, for purposes of Section 897 of the Code,
more than five percent of the total fair market value of the Company Common
Stock during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code, and, at all times during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code, the Company Common Stock has been
regularly traded in an established securities market within the meaning of
Treasury Regulation Section 1.897-1(m).
Section 4.10 Employee Matters; ERISA. Except as set forth in Section 4.10 of
the Company Disclosure Schedule:
(a) Benefit Plans. Section 4.10(a) of the Company Disclosure Schedule
contains a true and complete list of each material employee benefit plan
sponsored, contributed to or maintained by the Company or any of its
subsidiaries covering employees, former employees, directors or former
directors of the Company or any of its subsidiaries or their beneficiaries,
or providing benefits to such persons in respect of services provided to
any such entity, including, but not limited to, any employee benefit plans
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and any severance or change in
control agreement between the Company or any of its subsidiaries and any
current or former employee or director thereof pursuant to which benefits
may become payable (collectively, the "Company Benefit Plans"). No Company
Benefit Plan is a "multiemployer plan" as defined in Section 3(37) of
ERISA. There are no trades or businesses which, together with the Company
and its subsidiaries, would be treated as a "single employer" within the
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meaning of Section 414 of the Code or Section 4001(a)(14) of ERISA ("ERISA
Affiliates"), except as set forth on Section 4.10(a) of the Company
Disclosure Schedule. Except as disclosed in Section 4.10(a) of the Company
Disclosure Schedule, no ERISA Affiliates sponsor, maintain or contribute to
any employee benefit plan subject to Title IV of ERISA or Section 412 of
the Code.
(b) Contributions. All material contributions and other payments
required to be made for any period through the date to which this
representation speaks, by the Company or any of its subsidiaries to any
Company Benefit Plan (or to any person pursuant to the terms thereof) have
been timely made or paid in full or, to the extent not required to be made
or paid on or before the date to which this representation speaks have been
reflected in the Company Financial Statements.
(c) Qualification; Compliance. Each of the Company Benefit Plans
intended to be "qualified" within the meaning of Section 401(a) of the Code
has received from the Internal Revenue Service (the "IRS") a determination
letter that the plan is qualified with respect to all applicable provisions
of the Code for which the applicable remedial amendment period has expired
or an application for such a determination, which was filed before the
expiration of the applicable remedial amendment period, is pending, and, to
the knowledge of the Company, no circumstances exist that could reasonably
be expected to result in the revocation of any such determination, and each
trust forming a part of any such plan is exempt from federal income tax
pursuant to Section 501(a) of the Code. The Company and each of its
subsidiaries is in compliance with, and each of the Company Benefit Plans
is and has been operated in compliance with, the terms of such plans and
all applicable laws, rules and regulations governing such plan, including,
without limitation, ERISA and the Code, except where failure to so comply
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect. There are no pending or, to the knowledge
of the Company, threatened claims under or in respect of any Company
Benefit Plan by or on behalf of any employee, former employee, director,
former director, or beneficiary thereof, or otherwise involving any Company
Benefit Plan (other than routine claims for benefits).
(d) Title IV Liabilities. No event has occurred and, to the knowledge of
the Company, there exists no condition or set of circumstances, that could
subject or potentially subject the Company or any of its subsidiaries to
any liability arising under or based upon any provision of Title IV of
ERISA (whether to a governmental agency, a multiemployer plan or to any
other person or entity) which could reasonably be expected to have a
Company Material Adverse Effect.
(e) Documents Made Available. The Company has made available to Parent a
true and correct copy of each collective bargaining agreement to which the
Company or any of its subsidiaries is a party or under which the Company or
any of its subsidiaries has obligations and, with respect to each Company
Benefit Plan, where applicable, (i) such plan and the most recent summary
plan description, (ii) the most recent annual report filed with the IRS,
(iii) each related trust agreement or insurance contract, (iv) the most
recent determination of the IRS with respect to the qualified status of
such Company Benefit Plan, and (v) the most recent actuarial report or
valuation.
(f) Labor Agreements. Except as disclosed in Section 4.10(f) of the
Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is a party to any collective bargaining agreement or other
labor agreement with any union or labor organization. To the best knowledge
of the Company, there is no current union representation question involving
employees of the Company or any of its subsidiaries, nor does the Company
know of any activity or proceeding of any labor organization (or
representative thereof) or employee group to organize any such employees.
Except as disclosed in the Company SEC Reports filed prior to the date
hereof or in Section 4.10(f) of the Company Disclosure Schedule, (i) there
is no unfair labor practice, employment discrimination or other material
complaint against the Company or any of its subsidiaries pending or, to the
best knowledge of the Company, threatened, (ii) there is no strike or
lockout or material dispute, slowdown or work stoppage pending, or to the
best knowledge of the Company, threatened, against or involving the
Company, and (iii) there is no proceeding, claim, suit, action or
governmental investigation pending or, to the best knowledge of the
Company, threatened, in
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respect of which any director, officer, employee or agent (or, except as
disclosed in Section 4.10(f) of the Company Disclosure Schedule, any former
director, officer, employee or agent) of the Company or any of its
subsidiaries are or may be entitled to claim indemnification from the
Company or such subsidiary pursuant to their respective certificates of
incorporation or by-laws or as provided in the indemnification agreements
listed in Section 4.10(f) of the Company Disclosure Schedule.
(g) Except as required by law or as would not reasonably be likely to
have, individually or in the aggregate, a Company Material Adverse Effect,
no Company Benefit Plan provides retiree medical or retiree life insurance
benefits to any person except as disclosed in Section 4.10(g) of the
Company Disclosure Schedule. The accumulated post-retirement benefit
obligation of the Company and its subsidiaries (as determined under FASB
Statement No. 106) as of December 31, 1998 does not exceed $6,400,000.
(h) Except as disclosed in Section 4.10(h) of the Company Disclosure
Schedule, no director or officer or other employee of the Company or its
subsidiaries will become entitled to any retirement, severance or similar
benefit or enhanced or accelerated benefit solely as a result of the
transactions contemplated hereby. Except as disclosed on Schedule 4.10(h)
of the Company Disclosure Schedule, such benefit would not be an "excess
parachute payment" to a "disqualified individual" as those terms are
defined in Code Section 280G.
(i) Except as disclosed on Section 4.10(i) of the Company Disclosure
Schedule, since June 30, 1999, there has been no change in the terms and
conditions of employment of any director or any of the fifteen most senior
officers of the Company.
(j) There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any of its
subsidiaries relating to, or change in employee participation or coverage
under, any Company Benefit Plan which would increase materially the expense
of maintaining such plan above the level of expense incurred in respect
thereto for the most recent 12 month period updated on the Company
Financial Statements except as set forth in Section 4.10(i) of the Company
Disclosure Schedule.
Section 4.11 Environmental Protection. Except as set forth in Section 4.11
of the Company Disclosure Schedule or in the Company SEC Reports filed prior to
the date hereof:
(a) Compliance. The Company and to the Company's knowledge each of its
subsidiaries are in compliance with all Environmental Laws and the Company
has not received any communication from any Governmental Authority or third
party that alleges that the Company or any of its subsidiaries is not in
compliance with applicable Environmental Laws, except where the failure to
be in such compliance would not reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect. The Company has
made available to Parent copies of any and all material environmental
assessment or audit reports or other similar studies or analyses generated
within the last three years and in Company's possession, that relate to the
Company or any of its subsidiaries or the Company Joint Ventures.
(b) Environmental Permits. The Company and to the Company's knowledge
each of its subsidiaries have obtained all applicable environmental, health
and safety permits, licenses, approvals and governmental authorizations
(collectively, the "Environmental Permits") which are required, pursuant to
Environmental Laws, for the construction of their facilities and the
conduct of their operations; all such Environmental Permits are in current
effect and in good standing; all required renewal applications have been
timely filed and are pending agency approval; the Company reasonably
believes that such renewals will be accomplished in the ordinary course of
business without material delay or expense (except where failure to
accomplish such renewals would not, individually or in the aggregate, be
reasonably likely to have a Company Material Adverse Effect); and the
Company has received no information that when renewed such permit(s) will
impose material restrictions or obligations not required in the current
permit; no capital expense will be required to meet the requirements of any
permit or Environmental Law existing as of the date hereof except for such
capital expenditure as would not reasonably be likely to have,
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individually or in the aggregate, a Company Material Adverse Effect; the
Company and its subsidiaries are in compliance with all terms and
conditions of the Environmental Permits, except for such noncompliance as
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect; the Company reasonably believes that any
transfer or renewal of or reapplication for any Environmental Permit
required as a result of the Merger can be accomplished in the ordinary
course of business without material delay or expense (except where failure
to accomplish such transfer or renewal will not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect).
(c) Environmental Claims. There is no Environmental Claim pending or, to
the best knowledge of the Company, threatened against the Company or any of
its subsidiaries that, if adversely determined, would have, individually or
in the aggregate, a Company Material Adverse Effect. There are no
circumstances existing, to the knowledge of the Company, that would form a
reasonable basis for an Environmental Claim against the Company or any of
its subsidiaries which, if adversely determined, would have, individually
or in the aggregate, a Company Material Adverse Effect. To the Company's
knowledge, no real property currently or formerly owned or operated by the
Company or any subsidiary is listed on the National Priorities List, the
CERCLIS or any state or local list of sites with known or suspected
Release.
(d) Releases. The Company has no knowledge of any Releases that would be
reasonably likely to form the basis of any Environmental Claim against the
Company or any of its subsidiaries, except for Releases the liability for
which would not reasonably be likely to have, individually or in the
aggregate, a Company Material Adverse Effect.
(e) Predecessors. The Company has no knowledge of any Environmental
Claim pending or of any Release that would be reasonably likely to form the
basis of any Environmental Claim, in each case against any predecessor of
the Company or any of its subsidiaries or any other party whose liability
the Company or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law, except for such Releases the
liability for which would not, individually or in the aggregate, have a
Company Material Adverse Effect.
(f) As used in this Agreement:
(i) "Environmental Claim" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters,
directives, claims, liens, investigations, proceedings or notices of
noncompliance or violation by any person or by any Governmental
Authority with jurisdiction under Environmental Laws alleging potential
responsibility or liability for enforcement costs, investigatory costs,
cleanup costs, governmental response costs, removal costs, remedial
costs, natural-resources damages, property damages, personal injuries,
fines or penalties, or other liabilities pursuant to Environmental Laws
including, but not limited to those arising out of, based on or
resulting from (A) the presence of any Hazardous Materials or (B)
circumstances forming the basis of any violation, or alleged violation,
of any Environmental Law.
(ii) "Environmental Laws" means any applicable statute, regulation,
rule, code, common law, order or judgment of any federal, state, local
or foreign jurisdiction where the Company or any of its subsidiaries
operates concerning protection or preservation of the environment,
human health or natural resources, including but not limited to
statutes, regulations, rules, codes, common law, orders or judgments
relating to (i) any discharges, releases or emissions to air, water
(including surface water, ground water and wetlands), soil or sediment,
(ii) the quality of any environmental medium, (iii) the generation,
treatment, recycling, storage, disposal, transportation or other
management of waste, (iv) the manufacture, distribution, disposal, or
recycling of chemical substances and mixtures, or (v) responsibility or
liability for environmental conditions.
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(iii) "Hazardous Materials" means any substance, material or waste
(in any relevant physical form or concentration) regulated, listed or
identified under any Environmental Law and any other substance,
material or waste (in any form or concentration) which is hazardous,
dangerous, or toxic to living things or the environment.
(iv) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment of any Hazardous Materials.
Section 4.12 Regulation as a Utility. The Company and/or its subsidiaries
are regulated as a public utility in the states set forth on Section 4.12 of
the Company Disclosure Schedule. Except as set forth on Section 4.12 of Company
Disclosure Schedule, neither the Company nor any "subsidiary company" or
"affiliate" of the Company is subject to regulation as a public utility or
public service company (or similar designation) by the United States or any
other state of the United States. All filings required to be made by the
Company or any of its subsidiaries since December 31, 1998, under any
applicable laws or orders relating to the regulation of public utilities, have
been filed with the appropriate public utility commission, health agency or
other appropriate governmental entity (including, without limitation, to the
extent required, the state public utility regulatory agencies in the states
identified in Section 4.12 of the Company Disclosure Schedule), as the case may
be, including all forms, statements, reports, agreements (oral or written) and
all documents, exhibits, amendments and supplements appertaining thereto,
including but not limited to all rates, tariffs, franchises, service agreements
and related documents and all such filings complied, as of their respective
dates, with all applicable requirements of the appropriate laws or orders,
except for such filings or such failure to comply that would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect. Except as specified on Section 4.12 of the Company Disclosure Schedule,
no approval of any public utilities regulatory authority (including all public
utility control or public service commissions and similar state regulatory
bodies) is required for the Company's execution and delivery of this Agreement
by the Company or the performance of its obligations under this Agreement or
the consummation of the transactions contemplated by this Agreement.
Section 4.13 Water Quality. Except as set forth on Section 4.13 of the
Company Disclosure Schedule, the quality of water supplied by the Company and
its subsidiaries meets or exceeds all standards for quality and safety of water
in all material respects in accordance with all applicable federal, state,
local or foreign statutes, laws, ordinances, rules and regulations.
Section 4.14 Vote Required. The approval of (i) two-thirds of the
outstanding shares of Company Common Stock not owned by Parent or any affiliate
of Parent which is an "interested shareholder" as defined in NJBCA (S) 14A:10A-
3 and (ii) two-thirds of the outstanding shares of the Series A Preference
Stock at the Company Special Meeting (collectively, the "Company Stockholders'
Approval") are the only votes of the holders of any class or series of the
capital stock of the Company or any of its subsidiaries required to approve
this Agreement, the Merger and the other transactions contemplated hereby.
Section 4.15 Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley & Co. Incorporated to the effect that, as of the date
hereof, the Per Share Cash Consideration is fair from a financial point of view
to the holders of Company Common Stock.
Section 4.16 The Company Rights Agreement. The Company has taken all
necessary action with respect to all of the outstanding stock purchase rights
of the Company (the "Rights") issued pursuant to the Rights Agreement, dated as
of July 12, 1989, as amended by Amendment No. 1 thereto dated as of September
15, 1993, Amendment No. 2 thereto dated as of July 30, 1999 and Amendment No. 3
thereto dated as of August 20, 1999 (the "Rights Agreement"), between the
Company and ChaseMellon Shareholder Services, LLC, as Rights Agent, so that the
Company, as of the time immediately prior to the Effective Time, will have no
obligations under the Rights or the Rights Agreement and so that the holders of
the Rights will have no rights under the Rights or the Rights Agreement. The
Board of Directors of the Company has taken all necessary action to amend the
Rights Agreement so that neither the execution and delivery of this Agreement,
the performance of the parties' obligations hereunder nor the consummation of
the Merger will (a) cause the
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Rights issued pursuant to the Rights Agreement to become exercisable, (b) cause
Parent or Merger Sub to become an Acquiring Person (as such term is defined in
the Rights Agreement) or (c) give rise to a Distribution Date (as such term is
defined in the Rights Agreement). The execution, delivery and performance of
this Agreement will not result in a distribution of, or otherwise trigger, the
Rights under the Rights Agreement.
Section 4.17 Real Property. The Company and each of its subsidiaries and, to
the Company's knowledge, each of the Company Joint Ventures has good title or
valid leases with respect to all of their real property free and clear of any
and all liens, claims and encumbrances other than (i) as set forth in Section
4.17 of the Company Disclosure Schedule, (ii) those reflected or reserved
against in the Company Financial Statements and the notes thereto, (iii)
imperfections of title, easements, pledges, charges, restrictions and
encumbrances, including, without limitation, survey matters and mechanics'
liens, if any, that do not materially detract from the value of the property
subject thereto, or materially interfere with the manner in which it is
currently being used, (iv) taxes and general and special assessments not in
default and payable without penalty or interest, and (v) such other liens,
claims and encumbrances as would not reasonably be likely to have, individually
or in the aggregate, a Company Material Adverse Effect. Except, in each case,
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
for assessments for public improvements against the real property and, to the
knowledge of the Company and its subsidiaries, no such assessment has been
proposed; and (B) neither the Company nor any of its subsidiaries nor, to the
Company's knowledge, any of the Company Joint Ventures has received any notice
or order by any governmental or other public authority, any insurance company
which has issued a policy with respect to any of such properties or any board
of fire underwriters or other body exercising similar functions which (i)
relates to violations of building, safety, fire or other ordinances or
regulations, (ii) claims any defect or deficiency with respect to any of such
properties or (iii) requests the performance of any repairs, alterations or
other work to or in any of such properties or in the streets bounding the same.
Except as set forth in Section 4.17 of the Company Disclosure Schedule or as
would not reasonably be likely to have, individually or in the aggregate, a
Company Material Adverse Effect, there is no pending condemnation,
expropriation, eminent domain or similar proceeding affecting all or any
portion of any of such properties and, to the Company's knowledge, no such
proceeding is threatened.
Section 4.18 Property Franchises. The Company and each of its subsidiaries
owns or has sufficient rights and consents to use under existing franchises,
easements, leases, and license agreements all properties, rights and assets
necessary for the conduct of their business and operations as currently
conducted, except where the failure to own or have sufficient rights and
consents to use such properties, rights and assets would not reasonably be
likely to have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 4.19 Insurance. The Company and each of its subsidiaries is, and has
been continuously since at least January 1, 1995, insured with financially
responsible insurers in such amounts and against such risks and losses as are
customary for companies conducting the business as conducted by the Company and
its subsidiaries during such time period. Neither the Company nor any of its
subsidiaries has received any notice of cancellation or termination with
respect to any material insurance policy of the Company or any of its
subsidiaries. All material insurance policies of the Company and each of its
subsidiaries are valid and enforceable policies.
Section 4.20 Trademarks, Patents and Copyrights. Except where a failure is
not reasonably likely, individually or in the aggregate, to have a Company
Material Adverse Effect, the Company and its subsidiaries and, to the Company's
knowledge, the Company Joint Ventures own, or possess licenses or other valid
rights to use, all patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, service marks, trade secrets,
applications for trademarks and for service marks, know-how and other
proprietary rights and information that are material to the business of the
Company and its subsidiaries and, to the Company's knowledge, Company Joint
Ventures as currently conducted, and the Company is unaware of any assertion or
claim challenging the validity of any of the foregoing, other than any
assertions or claims which, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect.
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The conduct of the business of the Company and its subsidiaries and, to the
Company's knowledge, the Company Joint Ventures as currently conducted does not
conflict with any patent, patent right, license, trademark, trademark right,
trade name, trade name right, service mark or copyright of any third party,
other than conflicts that, individually or in the aggregate, would not
reasonably be likely to have a Company Material Adverse Effect. To the
knowledge of the Company, there are no infringements by any third party of any
proprietary rights owned or licensed by or to the Company or any subsidiary
which are reasonably likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 4.21 Year 2000. Except as would not reasonably be likely to have,
individually or in the aggregate, a Company Material Adverse Effect, to the
knowledge of the Company, all internal computer systems, computer software,
equipment or technology that are material to the business, finances or
operations of the Company and its subsidiaries or were sold or licensed to
customers of the Company and its subsidiaries are (i) able to receive, record,
store, process, calculate, manipulate and output dates from and after January
1, 2000, time periods that include January 1, 2000 and information that is
dependent on or relates to such dates or time periods, in the same manner and
with the same accuracy, functionality, data integrity and performance as when
dates or time periods prior to January 1, 2000 are involved, (ii) able to store
and output date information in a manner that is unambiguous as to century and
(iii) able to recognize Year 2000 as a leap year.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Except as set forth in
Section 5.1 of the Parent Disclosure Schedule (as defined in Section
7.6(ii)), Parent, Merger Sub and each of Parent's other subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, has all
requisite corporate power and authority, and has been duly authorized by
all necessary approvals and orders, to own, lease and operate its assets
and properties to the extent owned, leased and operated and to carry on its
business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership or leasing of its assets and properties makes
such qualification necessary, other than in such jurisdictions where the
failure to be so qualified and in good standing will not, when taken
together with all other such failures, have a Parent Material Adverse
Effect. As used in this Agreement, "Parent Material Adverse Effect" means
any change, effect, condition or circumstance that will, or is reasonably
likely to, have a material adverse effect on Parent's or Merger Sub's
ability to consummate the transactions contemplated by this Agreement.
Section 5.2 Authority; Non-Contravention; Statutory
Approvals. Authority. Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and, subject to
the applicable Parent Required Statutory Approvals (as defined in Section
5.2(c)), to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Parent and Merger Sub, the performance by
Parent and Merger Sub of their respective obligations hereunder and the
consummation by Parent and Merger Sub of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, respectively. This Agreement has been duly
and validly executed and delivered by Parent and Merger Sub and, assuming
the due authorization, execution and delivery hereof by the other
signatories hereto, constitutes the valid and binding obligation of each of
Parent and Merger Sub enforceable against each in accordance with its
terms.
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(b) Non-Contravention. Except as set forth in Section 5.2(b) of the
Parent Disclosure Schedule, the execution and delivery of this Agreement by
Parent and Merger Sub do not, and the consummation of the transactions
contemplated hereby will not, result in a Violation pursuant to any
provisions of (i) the certificate of incorporation, by-laws or similar
governing documents of Parent or Merger Sub, respectively, or any of
Parent's other subsidiaries or, to Parent's knowledge, any of its joint
ventures, (ii) subject to obtaining the Parent Required Statutory
Approvals, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority
applicable to Parent, Merger Sub or any of Parent's other subsidiaries or,
to Parent's knowledge, any of its joint ventures or any of their respective
properties or assets or (iii) subject to obtaining the third-party consents
or other approvals set forth in Section 5.2(b) of the Parent Disclosure
Schedule (the "Parent Required Consents"), any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to which
Parent, Merger Sub or any of Parent's other subsidiaries or, to Parent's
knowledge, any of its joint ventures is a party or by which it or any of
their respective properties or assets may be bound or affected, excluding
from the foregoing clauses (ii) and (iii) such violations as would not
have, in the aggregate, a Parent Material Adverse Effect.
(c) Statutory Approvals. Except as described in Section 5.2(c) of the
Parent Disclosure Schedule, no declaration, filing or registration with, or
notice to or authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery of this Agreement by
Parent or Merger Sub, the performance by Parent or Merger Sub of their
respective obligations hereunder or the consummation by Parent or Merger
Sub of the transactions contemplated hereby, the failure to obtain, make or
give which would reasonably be likely to have, individually and in the
aggregate, a Parent Material Adverse Effect (the "Parent Required Statutory
Approvals"), it being understood that references in this Agreement to
"obtaining" such Parent Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notices; obtaining such
authorizations, consents or approvals; and having such waiting periods
expire as are necessary to avoid a violation of law.
Section 5.3 Reports and Financial Statements. The audited consolidated
financial statements and unaudited interim financial statements of Parent
since December 31, 1995 (collectively, the "Parent Financial Statements")
have been prepared in accordance with generally accepted accounting
principles (except as may be indicated therein or in the notes thereto) and
fairly present the consolidated financial position of Parent as of the
dates thereof and the consolidated results of its operations and cash flows
for the periods then ended. True, accurate and complete copies of the
certificate of incorporation and by-laws of Parent (including all
amendments thereto) as in effect on the date hereof, have been made
available to the Company.
Section 5.4 Proxy Statement. None of the information supplied or to be
supplied by or on behalf of Parent or Merger Sub for inclusion or
incorporation by reference in the Proxy Statement shall, at the dates
mailed to the Company stockholders and at the times of the meeting of the
Company stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement, insofar as it relates to Parent, Merger
Sub or any other Parent subsidiary, shall comply as to form in all material
respects with the applicable provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 5.5 Ownership of Company Capital Stock. Except as set forth in
Section 5.5 of the Parent Disclosure Schedule, Parent does not
"beneficially own" (as such term is defined for purposes of Section 13(d)
of the Exchange Act) any shares of Company Common Stock or Series A
Preference Stock.
Section 5.6 Financing. Parent has or will have available, prior to the
Effective Time, sufficient cash in immediately available funds to pay all
Cash Consideration required to be paid pursuant to Article II hereof and to
consummate the Merger and other transactions contemplated hereby.
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ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Covenants of Company. After the date hereof and prior to the
Effective Time or earlier termination of this Agreement, the Company agrees as
to itself and to its subsidiaries, as follows, except as expressly contemplated
or permitted in this Agreement, or to the extent Parent shall otherwise consent
in writing:
(a) Ordinary Course of Business. The Company shall, and shall cause its
subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore
conducted. In addition, the Company shall, and shall cause its subsidiaries
to, use all commercially reasonable efforts to (i) preserve intact its
present business organization and goodwill, preserve the goodwill and
relationships with customers, suppliers and others having business dealings
with it, (ii) subject to prudent management of workforce needs and ongoing
programs currently in force, keep available the services of its present
officers and employees as a group, and (iii) maintain and keep material
properties and assets in as good repair and condition as at present,
subject to ordinary wear and tear, and maintain supplies and inventories in
quantities consistent with past practice.
(b) Dividends. The Company shall not nor shall it permit any of its
subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of their capital stock other than (A)
dividends by a wholly-owned subsidiary to the Company or another wholly-
owned subsidiary, (B) dividends by a less than wholly-owned subsidiary
consistent with past practice, (C) stated dividends on Company Preferred
Stock, (D) regular dividends on Company Common Stock with usual record and
payment dates that, in any fiscal quarter, do not exceed 100% of the
dividends for the same quarter of the prior fiscal year, (E) if the
Effective Time occurs on a date other than a usual record date for
dividends on Company Common Stock, a "stub period" dividend equal to an
amount not to exceed 100% of the dividends for the same quarter of the
prior fiscal year as the quarter in which the Effective Time occurs
multiplied by a fraction, the numerator of which is the number of days
between the immediately preceding record date and the Effective Time and
the denominator of which is the number of days between such record date and
the next regularly scheduled record date, (F) an additional dividend on
Company Common Stock in each of the first three fiscal quarters following
the date of this Agreement in an amount not to exceed $0.06 per share per
quarter, and (G) a special dividend payable to each holder of record of
Company Common Stock immediately prior to the Effective Time in an amount
per share equal to the difference between $0.48 and the amount of the
aggregate dividends per share payable pursuant to clause (F) of this
Section 6.1(b); (ii) split, combine or reclassify any capital stock or the
capital stock of any subsidiary or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of, or in
substitution for, shares of capital stock or the capital stock of any
subsidiary; or (iii) redeem, repurchase or otherwise acquire any shares of
capital stock or the capital stock of any subsidiary (or any option with
respect thereto) other than (A) redemptions, repurchases and other
acquisitions of shares of capital stock in connection with the
administration of employee benefit and dividend reinvestment plans as in
effect on the date hereof in the ordinary course of the operation of such
plans consistent with past practice, or (B) the intercompany acquisitions
of capital stock described in Section 6.1(b) of the Company Disclosure
Schedule.
(c) Issuance of Securities. The Company shall not, nor shall it permit
any of its subsidiaries to, issue, agree to issue, deliver, sell, award,
pledge, dispose of or otherwise encumber or authorize or propose the
issuance, delivery, sale, award, pledge, disposal or other encumbrance of,
any shares of their capital stock of any class or any securities
convertible into or exchangeable for, or any rights, warrants or options to
acquire, any such shares or convertible or exchangeable securities, other
than as provided for in the Company Benefit Plans consistent with past
practice or as set forth in Section 6.1(c) of the Company Disclosure
Schedule. The Company shall promptly furnish to Parent such information as
may be reasonably requested including financial information. Without
limiting the foregoing, as soon as
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practicable following the date of this Agreement, the Company shall
exercise and shall cause any applicable administrator to exercise all
discretion to (i) purchase Company Common Stock for participants under its
Dividend Reinvestment and Stock Purchase Plan (the "DRIP Program") on the
open market for all dividend payment dates following the date of this
Agreement and terminate the issuance or distribution of shares under the
DRIP Program at the earliest possible date; (ii) purchase Company Common
Stock for distribution to participants under its Management Incentive Plan
and other Company Stock Plans on the open market for all distributions
following the date of this Agreement; and (iii) make any and all purchases
of Company Common Stock for its 401(k) plan (or other retirement plan) on
the open market.
(d) Acquisitions. Except as disclosed in Section 6.1(d) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or business organization or division
thereof, or otherwise acquire or agree to acquire any material amount of
assets other than in the ordinary course of business; provided, however,
that notwithstanding the foregoing, the Company may acquire solely for cash
or agree to acquire solely for cash equity interests or the business or
assets of businesses that (i) are water or wastewater utilities, (ii) have
a value not in excess of $5 million individually and $25 million in the
aggregate (in each case, including the assumption of debt and other
liabilities), and (iii) would not reasonably be expected to prevent or
materially delay the receipt of the Company Required Statutory Approvals.
The Company shall inform Parent reasonably in advance of taking, or
permitting any of its subsidiaries to take, action relating to any such
direct or indirect acquisition.
(e) Capital Expenditures. Except as set forth in Section 6.1(e) of the
Company Disclosure Schedule or as required by law, the Company shall not,
nor shall it permit any of its subsidiaries to, make aggregate capital
expenditures that exceed 110% of the cumulative amount budgeted by the
Company or its subsidiaries for capital expenditures as set forth in
Section 6.1(e) of the Company Disclosure Schedule.
(f) No Dispositions. Except as set forth in Section 6.1(f) of the
Company Disclosure Schedule, and other than in the ordinary course of
business or consistent with past practice, the Company shall not, nor shall
it permit any of its subsidiaries to, sell, lease, license, encumber or
otherwise dispose of, any of its assets, other than encumbrances or
dispositions in the ordinary course of its business consistent with past
practice.
(g) Indebtedness. Except as set forth in Section 6.1(g) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, incur or guarantee any indebtedness (including any debt
borrowed or guaranteed or otherwise assumed including, without limitation,
the issuance of debt securities or warrants or rights to acquire debt) or
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing other than (i) a net increase
in short-term indebtedness in the ordinary course of business consistent
with past practice in amounts not exceeding $65 million; (ii) arrangements
between the Company and its wholly-owned subsidiaries or among its wholly-
owned subsidiaries; (iii) net increase in total indebtedness in an amount
not to exceed in the aggregate $35 million; or (iv) indebtedness in
connection with acquisitions permitted by Section 6.1(d) hereof or long-
term indebtedness in connection with the refunding of existing indebtedness
either at its stated maturity or at a lower cost of funds.
(h) Compensation, Benefits. Except as set forth in Section 6.1(h) of the
Company Disclosure Schedule, as may be required by applicable law, as may
be required to facilitate or obtain a determination from the IRS that a
plan is "qualified" within the meaning of Section 401(a) of the Code or as
contemplated by this Agreement, the Company shall not, nor shall it permit
any of its subsidiaries to, (i) enter into, adopt or amend or increase the
amount or accelerate the payment or vesting of any benefit or amount
payable under, any employee benefit plan or other contract, agreement,
commitment, arrangement, plan or policy covering employees, former
employees, directors or former directors or their beneficiaries
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or providing benefits to such persons that is maintained by, contributed to
or entered into by such party or any of its subsidiaries, or increase or
enter into any contract, agreement commitment or arrangement to increase in
any manner, the compensation or fringe benefits, or otherwise to extend
expand or enhance the engagement employment or any related rights of, or
take any other action or grant any benefit (including, without limitation,
any stock options or stock option plan) not required under the terms of any
existing employee benefit plan or other contract, agreement, commitment,
arrangement, plan or policy to or with any current or former director,
officer or other employee of such party or any of its subsidiaries, except
for normal increases or grants or actions in the ordinary course of
business consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation expense to the
Company or any of its subsidiaries or (ii) enter into or amend any
employment, severance or special pay arrangement with respect to the
termination of employment or other similar contract, agreement or
arrangement with any current or former director or officer or other
employee other than in the ordinary course of business consistent with
current industry practice.
(i) Accounting. Except as set forth in Section 6.1(i) of the Company
Disclosure Schedule, the Company shall not, nor shall it permit any of its
subsidiaries to, make any changes in their accounting methods, policies or
procedures, except as required by law, rule, regulation or GAAP, nor shall
the Company or any of its subsidiaries file any Tax Return inconsistent
with past practice, or, on any such Tax Return, take any position or method
that is inconsistent with positions taken, elections made or methods used
in preparing or filing similar Tax Returns in prior periods, or settle or
compromise any Tax liability that is subject to an audit, claim for
delinquent Taxes, examination, suit or proceeding.
(j) Cooperation, Notification. The Company shall, and shall cause its
subsidiaries to, (i) confer on a regular and frequent basis with one or
more representatives of Parent to discuss, subject to applicable law,
material operational matters and the general status of its ongoing
operations and other matters relating to the Merger; (ii) promptly notify
Parent of any significant changes in its business, properties, assets,
condition (financial or other), results of operations or prospects or of
the receipt of any written complaint or notice of the commencement of any
investigation or proceeding which alleges the occurrence of any event or
the existence of any fact which is reasonably likely to result in a Company
Material Adverse Effect or the institution or, to the actual knowledge of
the Company, threat of any material litigation; (iii) advise Parent of any
change or event which has had or, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect; and (iv)
promptly provide Parent with copies of all filings made by the Company or
any of its subsidiaries with any state or federal court, administrative
agency, commission or other Governmental Authority in connection with this
Agreement and the transactions contemplated hereby.
(k) Third-Party Consents. The Company shall, and shall cause its
subsidiaries to, use all commercially reasonable efforts to obtain all the
Company Required Consents. The Company shall promptly notify Parent of any
failure or prospective failure to obtain any such consents and, if
requested by Parent shall provide copies of all the Company Required
Consents obtained by the Company to Parent.
(l) No Breach, Etc. The Company shall not, nor shall it permit any of
its subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or
in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
(m) Discharge of Liabilities. The Company shall not, nor shall it permit
any of its subsidiaries to, pay, discharge or satisfy any material claims,
liabilities or obligations (absolute accrued, asserted or unasserted
contingent or otherwise), or settle any material claim or litigation, other
than the payment, discharge, satisfaction or settlement, in the ordinary
course of business consistent with past practice (which includes the
payment of final and non-appealable judgments) or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Company SEC Reports or incurred in the ordinary
course of business consistent with past practice.
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(n) Contracts. The Company shall not, nor shall it permit any of its
subsidiaries to, except in the ordinary course of business consistent with
past practice, modify, amend, terminate, renew or fail to use reasonable
business efforts to renew any material contract or agreement to which the
Company or any subsidiary of the Company is a party, or, except in
connection with an acquisition permitted under Section 6.1(d) hereof, enter
into any new material contract, or waive, release or assign any material
rights or claims, or enter into any material contracts or arrangements
other than on terms that are arm's length.
(o) Insurance. The Company shall, and shall cause its subsidiaries to,
maintain with financially responsible insurance companies insurance in such
amounts and against such risks and losses as are customary for companies
engaged in the water utility industry.
(p) Permits. The Company shall, and shall cause its subsidiaries to, use
reasonable efforts to maintain in effect all existing governmental permits
pursuant to which such party or its subsidiaries operate.
(q) Charter Amendments. The Company shall not, nor shall it permit any
of its subsidiaries to, amend or otherwise change its certificate of
incorporation or bylaws or equivalent organizational documents or take or
fail to take any other action, which in any case would reasonably be
expected to prevent or materially impede or interfere with the Merger
(except as permitted in Section 6.2).
(r) Tax Elections. Except as set forth in Section 6.1(r) of the Company
Disclosure Schedule, the Company shall not nor shall it permit any of its
subsidiaries to make, change or rescind any material Tax election, other
than (i) recurring elections that customarily are made in connection with
the filing of any Tax Return; provided that any such elections are
consistent with the past practices of the Company or its subsidiaries, as
the case may be; (ii) gain recognition agreements under Section 367 of the
Code and Treasury regulations thereunder with respect to transactions
occurring in the 1998 fiscal year of the Company; (iii) elections with
respect to subsidiaries purchased by the Company under Section 338(h)(10)
of the Code or, solely in the case of non-U.S. subsidiaries purchased by
the Company, Section 338(g) of the Code; and (iv) elections with respect to
partnership interests purchased by the Company under Section 754 of the
Code, or settle or compromise any material Tax liability that is the
subject of an audit, claim for delinquent Taxes, examination, action, suit,
proceeding or investigation by any taxing authority.
(s) Non-Competition Agreements. Except as set forth in Section 6.1(s) of
the Company Disclosure Schedule, the Company shall not nor shall it permit
any of its subsidiaries to enter into any agreement, understanding or
commitment that restrains, limits or impedes the Company's or any of its
subsidiaries' ability to compete with or conduct any business or line of
business, including, but not limited to, geographic limitations on the
Company's or any of its subsidiaries' activities, other than in the
ordinary course of business consistent with past practice.
(t) Regulatory Matters. The Company shall, and shall cause its
subsidiaries to (i) timely file, in the ordinary course of business
consistent with past practice, rate applications and other required filings
with state public utility control or public service commissions and similar
state regulatory bodies and (ii) except with respect to filings in the
ordinary course of business consistent with past practice that would not
reasonably be likely to have, individually or in the aggregate, a Company
Material Adverse Effect, consult with Parent reasonably in advance of
making any filing to implement changes in any of its or its subsidiaries'
rates or surcharges for water service, standards of service or accounting
or executing any agreement with respect thereto that is otherwise permitted
under this Agreement. The Company shall, and shall cause its subsidiaries
to, deliver to Parent a copy of each such filing or agreement.
(u) Other Agreements. The Company shall not nor shall it permit any of
its subsidiaries to agree or enter into, in writing or otherwise, or amend
any written contract or agreement that would be in violation of the
covenants set forth in this Section 6.1.
(v) Company Joint Ventures. The Company shall use reasonable efforts to
cause the Company Joint Ventures to operate their respective businesses
only in the ordinary course consistent with past practice and, except as
contemplated by Section 7.14, not to expand the scope of their respective
businesses.
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Section 6.2 Alternative Proposal.
(a) The Company shall, and shall direct and use reasonable efforts to cause
its subsidiaries and any of its or its subsidiaries' directors, officers,
employees, investment bankers, attorneys or other agents or representatives
immediately to cease any discussions or negotiations with any parties that may
be ongoing with respect to any Alternative Proposal (as defined below). The
Company agrees that, prior to the Effective Time, it shall not, and shall not
authorize or permit any of its subsidiaries or any of its or its subsidiaries'
directors, officers, employees, investment bankers, attorneys or other agents
or representatives, (x) directly or indirectly, to initiate, solicit or
encourage, or take any action to facilitate the making of any offer or proposal
that constitutes or is reasonably likely to lead to any Alternative Proposal or
(y) directly or indirectly, engage in negotiations or provide any confidential
information or data to any person relating to any Alternative Proposal. The
Company shall notify Parent orally and in writing of any such inquiries, offers
or proposals (including, without limitation, the terms and conditions of any
such proposal). Notwithstanding anything in this Section 6.2 to the contrary,
in response to an unsolicited Alternative Proposal which did not result from a
breach of this Section 6.2, unless the Company Shareholders Approval has been
obtained, the Company may furnish information to, and afford access to the
properties, books and records of the Company and its subsidiaries to the person
making the Alternative Proposal (i) not earlier than 24 hours after providing
written notice to Parent regarding such Alternative Proposal, including the
terms and conditions thereof, and the identity of the person or group making
the Alternative Proposal and (ii) participate in discussions with such person
or group regarding the Alternative Proposal if, but only to the extent that (A)
the Board of Directors of the Company has reasonably concluded in good faith
(after consultation with its financial advisors) that the person or group
making the Alternative Proposal will have adequate sources of financing to
consummate the Alternative Proposal and that the Alternative Proposal is more
favorable to the Company's shareholders than the Merger (taking into account,
without limitation, the likelihood that all required regulatory approvals for
such Alternative Proposal will be obtained in a prompt and timely manner), (B)
the Board of Directors of the Company has determined in good faith, based on
advice of outside counsel with respect to such Board's fiduciary duties under
applicable law with respect to the proposed Alternative Proposal and such other
matters as such Board deems relevant, that it is necessary to do so in order to
act in a manner consistent with its fiduciary duties to its shareholders, and
(C) such person or group has entered into a confidentiality agreement with the
person or group making the Alternative Proposal (the "Alternative Proposal
Confidentiality Agreement") containing terms and conditions no less favorable
to the Company than the Confidentiality Agreement (as defined in Section 7.1)
and the other agreements and arrangements governing the Company's relationship
with Parent, it being understood that nothing herein to the contrary shall
restrict the Board of Directors of the Company from exercising its authority
under the Alternative Proposal Confidentiality Agreement as it may deem
appropriate and (iii) not terminate this Agreement in respect of an Alternative
Proposal except as provided in Section 9.1(h). The Company will keep Parent
informed on a timely and current basis on the status and details (including
amendments or proposed amendments) of any request for information or
Alternative Proposal. The Company will immediately provide to Parent any non-
public information concerning the Company provided to any other person in
connection with an Alternative Proposal which was not previously provided to
Parent. As used in this Agreement, "Alternative Proposal" shall mean any
inquiry, proposal or offer from any person relating to any direct or indirect
acquisition or purchase of a business that constitutes 20% or more of the net
revenues, net income or the assets of the Company and its subsidiaries, taken
as a whole, or 20% or more of any class of equity securities of the Company, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by this Agreement.
(b) The Board of Directors of the Company shall not withdraw or modify, or
propose to withdraw or modify, in any manner adverse to Parent or Merger Sub or
both, the approval or recommendation of the Board of Directors of the Company
of this Agreement unless the Board of Directors of the Company shall have
(i) determined in good faith as a result of changed circumstances and based on
the advice of outside counsel with respect to the Board of Directors of the
Company's fiduciary duties under applicable law that such fiduciary duties
require the directors to withdraw or modify such approval or recommendation,
and
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(ii) provided to Parent a statement in writing in reasonable detail stating the
reasons therefor. Notwithstanding the foregoing, nothing contained in this
Section 6.2(b) shall prohibit the Company from taking and disclosing to
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to the Company's stockholders if, in
the good faith judgment of the Board of Directors of the Company, after
consultation without outside counsel, failure to so disclose would be
inconsistent with its obligations under applicable law.
Section 6.3 Covenants of Parent. After the date hereof and prior to the
Effective Time or earlier termination of their Agreement, Parent agrees, as to
itself and to its subsidiaries, as follows, except as expressly contemplated or
permitted in this Agreement, or to the extent the other parties hereto shall
otherwise consent in writing:
(a) Third-Party Consents. Parent shall, and shall cause its subsidiaries
to, use all commercially reasonable efforts to obtain all Parent Required
Consents. Parent shall promptly notify the Company of any failure or
prospective failure to obtain any such consents and, if requested by the
Company, shall provide copies of all Parent Required Consents obtained by
Parent to the Company.
(b) No Breach, Etc. Parent shall not, nor shall it permit any of its
subsidiaries to, willfully take any action that would or is reasonably
likely to result in a material breach of any provision of this Agreement or
in any of its representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. Upon reasonable notice and during normal
business hours the Company shall, and shall cause its subsidiaries and shall
use reasonable efforts to cause the Company Joint Ventures to, afford to the
officers, directors, employees, accountants, counsel, investment bankers,
financial advisors and other representatives of Parent (collectively,
"Representatives") reasonable access, during normal business hours throughout
the period prior to the Effective Time, to all of its properties, books,
contracts, commitments and records (including, but not limited to, Tax Returns)
and, during such period, the Company shall, and shall cause its subsidiaries
to, furnish promptly to Parent (i) access to each report, schedule and other
document filed or received by it or any of its subsidiaries pursuant to the
requirements of federal or state securities laws or filed with or sent to the
SEC, the Department of Justice, the Federal Trade Commission, and any other
Governmental Authority, and (ii) access to all information concerning the
Company, its subsidiaries, directors, officers and stockholders and such other
matters as may be reasonably requested by Parent, including in connection with
any filings, applications or approvals required or contemplated by this
Agreement; provided that no investigation pursuant to this Section 7.1 shall
affect any representation or warranty made herein or any condition to the
obligations of the respective parties to consummate the Merger. Parent shall,
in accordance with the Confidentiality Agreement dated as of July 26, 1999
between the Company and Parent (the "Confidentiality Agreement"), and shall
cause its subsidiaries and Representatives to, hold in strict confidence all
information concerning the Company furnished to it in connection with the
transactions contemplated by this Agreement.
Section 7.2 Proxy Statement.
(a) The Company will prepare and file the Proxy Statement with the SEC as
soon as reasonably practicable after the date hereof and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC at the
earliest practicable time. Parent, Merger Sub and the Company shall cooperate
with each other in the preparation of the Proxy Statement, and the Company
shall notify Parent of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to Parent
promptly copies of all correspondence between
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the Company, or any representative of the Company, and the SEC or its staff.
The Company shall give Parent and their counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
their counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company, Parent and Merger Sub agrees to use all reasonable efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Company Special Meeting at the earliest
practicable time. Parent shall furnish all information concerning itself which
is required or customary for inclusion in such Proxy Statement. The information
provided by Parent for use in the Proxy Statement shall be true and correct in
all material respects without omission of any material fact which is required
to make such information not false or misleading. No representation, covenant
or agreement is made by or on behalf of the Company with respect to information
supplied by Parent for inclusion in the Proxy Statement.
(b) If, at any time prior to the Effective Time, any event with respect to
the Company, its officers and directors or any of its subsidiaries should occur
which is required to be described in an amendment of, or a supplement to, the
Proxy Statement, such event shall be so described, and such amendment or
supplement shall be promptly filed with the SEC and, as required by law,
disseminated to the Company's stockholders. Prior to the filing of such
amendment or supplement with the SEC, a copy thereof will be delivered to
Parent and their counsel, who shall, to the extent practicable under the
circumstances and applicable law, have the opportunity to comment on such
amendment or supplement.
Section 7.3 Regulatory Matters. Each party hereto shall cooperate and use
its best efforts to promptly prepare and file all necessary documentation to
effect all necessary applications, notices, petitions, filings and other
documents, and to use all commercially reasonable efforts to obtain as soon as
reasonably practicable following the date hereof all necessary permits,
consents, approvals and authorizations of all Governmental Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement, including, but not limited to, (a) all notifications required to be
filed under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder, (b) the other Company
Required Statutory Approvals and (c) the other Parent Required Statutory
Approvals. The parties agree that they will consult with each other with
respect to obtaining Company Required Statutory Approvals and the Parent
Required Statutory Approvals; provided, however, that it is agreed that the
Company shall have primary responsibility for the preparation and filing of any
applications, filings or other material with state utility commissions required
to be filed or submitted in connection with obtaining the Company Required
Statutory Approvals. Parent shall have the right to review and approve in
advance drafts of and final applications, filings and other material submitted
to or filed with state utility commissions, which approval shall not be
unreasonably conditioned, withheld or delayed.
Section 7.4 Stockholder Approval.
(a) The Company Stockholders. Subject to the provisions of Section 7.4(b)
and the NJBCA, the Company shall, as soon as reasonably practicable after the
date hereof (i) take all steps necessary to duly call, give notice of, convene
and hold a meeting of its stockholders (the "Company Special Meeting") for the
purpose of securing Company Stockholders' Approval, (ii) distribute to its
stockholders the Proxy Statement in accordance with applicable federal and
state law and with its certificate of incorporation and by-laws, (iii) subject
to Section 6.2(b), recommend to its stockholders the approval of this Agreement
and the transactions contemplated hereby, (iv) subject to Section 6.2(b), use
its reasonable best efforts to obtain the Company Stockholders' Approval at the
Company Special Meeting, and (v) cooperate and consult with Parent with respect
to each of the foregoing matters.
(b) Meeting Date. Subject to Section 7.4(a), the Company Special Meeting for
the purpose of securing the Company Stockholders' Approval shall be held on
such date as the Company shall determine.
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Section 7.5 Directors' and Officers' Indemnification.
(a) Indemnification. To the extent, if any, not provided by an existing
right of indemnification or other agreement or policy, after the Effective
Time, Parent, the Surviving Corporation and the Company shall, to the fullest
extent permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director of any of the
parties hereto or any subsidiary (each, an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses, expenses
(including reasonable attorneys' fees and expenses), claims, damages or
liabilities or, subject to the proviso of the next sentence, amounts paid in
settlement, arising out of actions or omissions occurring at or prior to the
Effective Time (and whether asserted or claimed prior to, at or after the
Effective Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director or officer of such party or a
subsidiary of such party (the "Indemnified Liabilities"), and (ii) all
Indemnified Liabilities to the extent they are based on or arise out of or
pertain to the transactions contemplated by this Agreement. In the event of any
such loss, expense, claim, damage or liability (whether or not arising before
the Effective Time), (i) Parent shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to Parent, promptly after statements therefor are received and
otherwise advance to such Indemnified Party upon request reimbursement of
documented expenses reasonably incurred, (ii) Parent and the Company will
cooperate in the defense of any such matter and (iii) any determination
required to be made with respect to whether an Indemnified Party's conduct
complies with the standards set forth under New Jersey law and other applicable
law, and the certificate of incorporation or by-laws shall be made by
independent counsel mutually acceptable to Parent and the Indemnified Party;
provided, however, that Parent shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld).
The Indemnified Parties as a group may retain only one law firm with respect to
each related matter except to the extent there is, in the written opinion of
counsel to an Indemnified Party, under applicable standards of professional
conduct, a conflict on any significant issue between positions of such
Indemnified Party and any other Indemnified Party or Indemnified Parties. Any
Indemnified Party wishing to claim indemnification under this Section 7.5, upon
learning of any such claim, action, suit or proceeding eligible for
indemnification under this Section 7.5, shall notify the Indemnifying Parties,
but the failure so to notify an Indemnifying Party shall not relieve it from
any liability which it may have under this Section 7.5, except to the extent
that such failure results in the forfeiture of substantive rights or defenses.
(b) Insurance. For a period of six years after the Effective Time, Parent
shall cause to be maintained in effect policies of directors' and officers'
liability insurance for the benefit of those persons who are currently covered
by such policies of the Company or its Subsidiaries on terms no less favorable
than the terms of such current insurance coverage; provided, however, that
Parent shall not be required to expend in any year an amount in excess of two
hundred percent (200%) of the annual aggregate premiums currently paid by the
Company, for such insurance; and provided, further, that if the annual premiums
of such insurance coverage exceed such amount, Parent shall be obligated to
obtain a policy with the best coverage available, in the reasonable judgment of
the Board of Directors of Parent, for a cost not exceeding such amount.
(c) Successors. In the event Parent or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (ii) transfers all or substantially all of its properties and assets, then
and in either such case, proper provisions shall be made so that the successors
and assigns of Parent shall assume the obligations set forth in this Section
7.5.
(d) Survival of Indemnification. To the fullest extent permitted by law,
from and after the Effective Time, all rights to indemnification as of the date
hereof in favor of the directors and officers of the Company, and its
subsidiaries with respect to their activities as such prior to the Effective
Time, as provided in its respective certificate of incorporation and by-laws in
effect on the date hereof, or otherwise in effect on the date hereof, shall
survive the Merger and shall continue in full force and effect for a period of
not less than six years from the Effective Time.
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(e) Benefit. The provisions of this Section 7.5 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her representatives.
Section 7.6 Disclosure Schedules. On the date hereof, (i) Parent has
delivered to the Company a schedule (the "Parent Disclosure Schedule"),
accompanied by a certificate signed by the chief financial officer of Parent
stating the Parent Disclosure Schedule is being delivered pursuant to this
Section 7.6(i) and (ii) the Company has delivered to Parent a schedule (the
"Company Disclosure Schedule"), accompanied by a certificate signed by the
chief financial officer of the Company stating the Company Disclosure Schedule
is being delivered pursuant to this Section 7.6(ii). The Company Disclosure
Schedule and the Parent Disclosure Schedule are collectively referred to herein
as the "Disclosure Schedules". The Disclosure Schedules constitute an integral
part of this Agreement and modify the respective representations, warranties,
covenants or agreements of the parties hereto contained herein to the extent
that such representations, warranties, covenants or agreements expressly refer
to the Disclosure Schedules. Anything to the contrary contained herein or in
the Disclosure Schedules notwithstanding, any and all statements,
representations, warranties or disclosures set forth in the Disclosure
Schedules shall be deemed to have been made on and as of the date hereof.
Section 7.7 Public Announcements. Subject to each party's disclosure
obligations imposed by law, the Company and Parent will cooperate with each
other in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement or any of the
transactions contemplated hereby and, except as may be required by law or the
rules of any applicable stock exchange, shall not issue any public announcement
or statement with respect hereto without the consent of the other party (which
consent shall not be unreasonably withheld).
Section 7.8 Certain Employee Agreements. Subject to Section 7.9, Parent and
the Company and its subsidiaries shall honor, without modification, all
contracts, agreements, collective bargaining agreements and commitments of the
parties prior to the date hereof which apply to any current or former employee
or current or former director of the parties hereto; provided, however, that
this undertaking is not intended to prevent Parent or the Company from
enforcing or complying with such contracts, agreements, collective bargaining
agreements and commitments in accordance with their terms, including, without
limitation, exercising any right to amend, modify, suspend, revoke or terminate
any such contract, agreement, collective bargaining agreement or commitment
under any such contract, agreement, collective bargaining agreement or
commitment or under applicable law. Any workforce reductions carried out
following the Effective Time by Parent or the Company and their subsidiaries
shall be done in accordance with all applicable collective bargaining
agreements, and all laws and regulations governing the employment relationship
and termination thereof, including, without limitation, the Worker Adjustment
and Retraining Notification Act and regulations promulgated thereunder, and any
comparable state or local law.
Section 7.9 Employee Benefit Plans.
(a) Maintenance of the Company Benefit Plans. Each of the Company Benefit
Plans (other than Company Stock Plans) in effect at the date hereof shall be
maintained in effect with respect to the employees or former employees of the
Company and any of its subsidiaries, who are covered by any such benefit plan
immediately prior to the Closing Date (the "Affiliated Employees") until Parent
or the Company otherwise determine after the Effective Time; provided, however,
that nothing herein contained shall limit any right contained in any such
Company Benefit Plan or under applicable law to amend, modify, suspend, revoke
or terminate any such plan; provided further, however, that Parent or the
Company or their subsidiaries shall provide benefits to the Affiliated
Employees for a period of not less than one year following the Effective Time
which are no less favorable in the aggregate than those provided under the
Company Benefit Plans (with respect to employees and former employees of the
Company and its subsidiaries). Without limitation of the foregoing, each
participant in any such Company Benefit Plan shall receive credit for purposes
of eligibility to participate, vesting, and eligibility to receive benefits
under any benefit plan of the Company or any of its subsidiaries or affiliates
for service credited for the corresponding purpose under such benefit plan;
provided, however, that such crediting of service shall not operate to
duplicate any benefit to any such participant or the funding for any such
benefit or cause any such Company Benefit Plan to fail to comply with the
applicable provisions of the Code or ERISA.
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(b) Welfare Benefits Plans. With respect to any welfare benefit plan
established to replace any Company Benefit Plan which is a welfare benefit plan
in which Affiliated Employees may be eligible to participate after the Closing
Date, other than limitations, exclusions or waiting periods that are already in
effect with respect to such Affiliated Employees and that have not been
satisfied as of the Closing Date, such replacement plans shall waive all
limitations to pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements and provide each Affiliated
Employee with credit for other co-payments and deductibles paid prior to the
Closing Date in satisfying any applicable deductible or out-of-pocket
requirements applicable to the same calendar year under any welfare plans that
such Affiliated Employees are eligible to participate in after the Closing
Date.
Section 7.10 The Company Stock Plans. With respect to each Company Benefit
Plan or other plan, agreement or arrangement that provides for benefits in the
form of Company Common Stock or options to purchase Company Common Stock (the
"Company Stock Plans"), the Company and its subsidiaries and Parent and its
subsidiaries, including the Surviving Corporation and its subsidiaries, shall
take all actions necessary to provide that upon the Effective Time, (i) each
outstanding option to purchase Company Common Stock under any Company Stock
Plan, whether or not then vested and exercisable, shall be canceled in exchange
for a cash payment equal to (A) the excess of the Per Share Cash Consideration
over the exercise price thereof times (B) the number of shares of Company
Common Stock subject thereto, less applicable tax withholding, and (ii) each
outstanding restricted share of Company Common Stock granted under any Company
Stock Plans shall become fully vested as provided in the applicable Company
Stock Plan and shall be simultaneously converted into the right to receive the
Per Share Cash Consideration as provided in Section 2.1. The Company and its
subsidiaries shall take all actions needed to terminate all Company Stock
Plans, subject, however, to the payments required under the preceding sentence.
Section 7.11 Expenses. Subject to Section 9.3, all costs, and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
Section 7.12 Further Assurances. Each party will, and will cause its
subsidiaries to, (i) execute such further documents and instruments and use
their reasonable best efforts to take such further actions as may be necessary
or appropriate or as may reasonably be requested by any other party in order to
consummate the Merger in accordance with the terms hereof, and (ii) not take
action (including effecting or agreeing to effect or announcing an intention or
proposal to effect any acquisition, business combination or other transaction)
which could reasonably be expected to impede, interfere with, prevent, impair
or delay the ability of the parties to consummate the Merger. In case at any
time any further action is necessary or desirable to carry out the terms and
provisions of this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take all such
action.
Section 7.13 Governance Agreement.
(a) General. Except as set forth herein, the terms and conditions of the
Governance Agreement, dated as of April 22, 1994, as amended, between Parent
and the Company (the "Governance Agreement") shall remain in full force and
effect and the parties shall continue to be fully bound by the provisions
thereof as modified hereby. The Company and Parent agree that the Governance
Agreement is hereby modified (i) as expressly set forth in Section 7.13(b)
hereof, (ii) as long as this Agreement is in effect, to waive any provisions of
the Governance Agreement that are inconsistent with Section 6.2 hereof,
including the "30 day" right granted to Parent under Section 3.1(a) of the
Governance Agreement and Parent's right to acquire the Company Common Stock
during any "Second 120-day Period" as defined in Section 3.1(b) of the
Governance Agreement, and (iii) as may otherwise be required to give effect to
the provisions of this Agreement.
(b) Waivers Upon Acceptance of Alternative Proposal. Upon any termination of
this Agreement by the Company pursuant to Section 9.1(h) hereof, the Company
shall, and it hereby does, waive any and all obligations of or restrictions on
Parent and affiliates contained in Sections 3.7 (Conversion of Preference
Stock).
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(c) Waivers Upon Termination of Agreement in Certain Circumstances. If this
Agreement is terminated by the Company pursuant to Section 9.1(h), by Parent
pursuant to Section 9.1(e) or by either the Company or Parent pursuant to
Section 9.1(c) due to the failure to obtain the approval of the Company's
stockholders at the Company Special Meeting and at the time of such failure,
any person shall have made a public announcement or otherwise communicated to
the Company or its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company and
terminated or withdrawn by the party making the Alternative Proposal, then:
(1) Notwithstanding anything in Sections 3.1(a) or (b) or Sections
3.3(a), (d) or (e) of the Governance Agreement to the contrary, Parent
shall be permitted to make a proposal or proposals to the Board of
Directors of the Company for the acquisition of 100% of the outstanding
equity of the Company or substantially all of the assets of the Company and
its subsidiaries during the period commencing on the date of termination of
this Agreement and ending on the date 120 days after such date if the
Company has not entered into a definitive agreement with a third party
effecting an Alternative Proposal during such 120 day period, or if the
Company enters into such definitive Agreement with a third party during
such 120 day period, the earlier of the date on which the Company's
stockholders approve such Alternative Proposal or the date on which such
definitive agreement is terminated. Parent agrees that it shall have no "30
day" right with respect to any third party Alternative Proposal made during
such period.
(2) Notwithstanding anything in Sections 4.1(a) and (b) of the
Governance Agreement to the contrary, Parent shall not be required to vote
any Company Common Stock in favor of any Alternative Proposal; provided,
however, that if Parent determines not to vote in favor of any Alternative
Proposal, it shall, at the request of the Company, not be present at the
shareholders meeting at which approval of the Alternative Proposal is
sought for quorum or any other purposes.
Section 7.14 North American Rights Agreement.
(a) General. The Company and Parent agree that, except as otherwise set
forth in this Section 7.14(b), the terms and conditions of the North American
Rights Agreement, dated July 14, 1997, as amended, among the Company, Parent
and other parties (the "NARA") shall remain in full force and effect and
further agree, except as set forth in Section 7.14(b), to continue to be fully
bound by the provisions thereof.
(b) Exceptions for Market Opportunities. In order to permit the Company and
Parent to respond appropriately to market opportunities while this Agreement is
in effect, notwithstanding any contrary provisions of the NARA, Parent and the
Company, on their own behalf and on behalf of their respective affiliates,
agree as follows:
(i) Acquisitions of Rate-Regulated Businesses.
(A) Acquisitions Prior to Termination. From the date hereof until
the termination of this Agreement, (1) the Company and its subsidiaries
may acquire or invest in rate-regulated water and wastewater utility
businesses as permitted by Section 6.1(d) hereof and (2) Parent and its
affiliates may acquire or invest in rate-regulated water and wastewater
utility businesses in the United States, provided that neither Parent
nor any of its affiliates shall make or agree to make any such
acquisition or investment if such acquisition or agreement could
reasonably be expected to prevent, or materially delay the receipt of
regulatory approvals necessary to consummate the Merger.
(B) Rights After Termination.
(1) The Company's Right to Acquire Regulated Company
Interests. Subject to Section 7.14(b)(i)(B)(2), from the date of
termination of this Agreement through the first anniversary of such
termination, the Company shall have the right and option, on not
less that 15 days' notice to Parent, to purchase up to 50% of any
interests in regulated water businesses in the United States
acquired by Parent or its affiliates as permitted by Section
7.14(b)(i)(A) (each, a "Regulated Company Interest"). The price of
any portion of a Regulated Company Interest
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purchased by the Company under this subsection shall equal the full
cost of the interest to be transferred, including (1) a pro rata
portion of the consideration paid by Parent or such affiliate to
acquire the Regulated Company Interest, (2) a pro rata portion of
the actual out-of-pocket third party transaction costs (including
fees and disbursements of counsel and other advisors) incurred by
Parent or such affiliate in acquiring the Regulated Company
Interest, and (3) interest on the foregoing amounts at the rate of
8.00% per annum from the date the Regulated Company Interest was
acquired by Parent or its affiliate through the date of transfer to
the Company.
(2) Parent Right to Retain Regulated Company Interests. If (w)
the Company shall terminate this Agreement pursuant to Section
9.1(h), (x) Parent shall terminate this Agreement pursuant to
Section 9.1(e), (y) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain
the approval of the Company' stockholders at the Company Special
Meeting and, at the time of such failure, any person shall have made
a public announcement or otherwise communicated to the Company or
its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative
Proposal, or (z) Parent shall terminate this Agreement for a
Terminating the Company Breach pursuant to Section 9.1(g), then,
notwithstanding Section 7.14(b)(i)(B)(1), Parent and its affiliates
shall have the right to own and retain any and all Regulated Company
Interests that (x) they may have acquired prior to such termination
or (y) with respect to which Parent or its affiliates shall have
entered into a binding commitment or agreement prior to such
termination, and, in each case, the right to manage, operate and
control the business thereof.
(ii) Acquisitions of Delegated Services Businesses.
(A) UWS Entity Right of First Refusal.
(1) Rights to Acquire Delegated Services Company
Interests. United Water Services LLC, a Delaware limited liability
company ("UWS"), United Water Services Canada L.P., an Ontario,
Canada limited partnership ("UWS Canada"), and United Water Services
Mexico LLC, a Delaware limited liability company ("UWS Mexico"),
each of which is owned jointly by Parent and the Company (each, a
"UWS Entity"), shall have the right, at its sole option (each, a
"UWS Option"), to purchase on the terms and subject to the
conditions set forth in this Section 7.14(b)(ii) all but not less
than all of any interests in Delegated Services Providers (as
defined in the NARA) in the United States, Canada or Mexico,
respectively (each, a "Delegated Services Company Interest"), that
Parent or any of its affiliates wishes to acquire under this Section
7.14(b)(ii). From the date hereof until the termination of this
Agreement, Parent and its affiliates shall have the right to acquire
any and all such Delegated Services Company Interests subject only
to the UWS Option.
(2) Exercise of UWS Option. Prior to acquiring any Delegated
Services Company Interest, Parent (or its affiliate, as the case may
be) shall first give written notice to the applicable UWS Entity of
such proposed acquisition (a "Notice of Option"). Each such Notice
of Option shall include the identity of the proposed target, the
terms of the proposed acquisition and the price or other
consideration proposed to be paid for such Delegated Services
Company Interest. The applicable UWS Entity may exercise any UWS
Option by written notice to Parent given within 15 days after the
date of the applicable Notice of Option. If such UWS Entity fails to
exercise any UWS Option for any reason other than a Parent Veto
(defined below), or if such UWS Entity fails to acquire any
Delegated Services Company Interest with respect to which it has
exercised a UWS Option within 90 days of such exercise, Parent (or
its affiliate) shall have the right to purchase such Delegated
Services Company Interest at the price and on substantially the
terms set forth in the applicable Notice of Option.
(3) If the acquisition of any Delegated Services Company Interest
by either a UWS Entity or Parent and/or any of its affiliates could
reasonably be expected to prevent or materially delay
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the receipt of regulatory approvals necessary to consummate the
Merger, then, notwithstanding anything to the contrary set forth in
this Section 7.14(b)(i), Parent and its affiliates shall not have
the right to acquire such Delegated Services Company Interest
without first obtaining the prior written consent of the Company.
(4) As used in this Section 7.14(b)(ii), "Parent Veto" means (1)
a failure of the Board of Managers of UWS or UWS Mexico, or the
Board of Directors of the general partner of UWS Canada, to approve
the exercise of the UWS Option with respect to any Delegated
Services Company Interest solely due to one or more Managers or
Directors appointed by Parent to such Board voting against the
exercise of such UWS Option or (2) a failure of the members or
partners of such UWS Entity to approve the exercise of the UWS
Option with respect to such Delegated Services Company Interest
solely due to Parent voting against the exercise of such UWS Option,
if a vote of the members or partners is required for such approval.
(B) Rights After Termination.
(1) Subject to Section 7.14(b)(ii)(B)(2), from the date of
termination of this Agreement through the first anniversary of such
termination, the UWS Entities shall have the right and option,
without regard to any Parent Veto, on not less than 15 days' notice
to Parent, to purchase all but not less than all of any Delegated
Services Company Interests acquired by Parent or any affiliate
thereof in accordance with this Section 7.14(b). The price of any
Delegated Services Company Interest purchased by a UWS Entity under
this subsection shall equal the full cost of such Delegated Services
Company Interest, including (1) the consideration paid by Parent or
such affiliate to acquire the Delegated Services Company Interest,
(2) the actual out-of-pocket third party transaction costs
(including fees and disbursements of counsel and other advisors)
incurred by Parent or such affiliate in acquiring the Delegated
Services Company Interest, and (3) interest on the foregoing amounts
at the rate of 8% per annum from the date the Delegated Services
Company Interest was acquired by Parent or its affiliate through the
date of transfer to the UWS Entity.
(2) If (w) the Company shall terminate this Agreement pursuant to
Section 9.1(h), (x) Parent shall terminate this Agreement pursuant
to Section 9.1(e), (y) Parent or the Company shall terminate this
Agreement pursuant to Section 9.1(c) due to the failure to obtain
the approval of the Company's stockholders at Company Special
Meeting and, at the time of such failure, any person shall have made
a public announcement or otherwise communicated to the Company or
its stockholders with respect to an Alternative Proposal with
respect to the Company which has not been rejected by the Company
and terminated or withdrawn by the party making the Alternative
Proposal, or (z) Parent shall terminate this Agreement for a
Terminating Company Breach pursuant to Section 9.1(g), then,
notwithstanding Section 7.14(b)(ii)(B)(1), Parent and its affiliates
shall have the right to own and retain any and all Delegated
Services Company Interests that (x) they may have acquired prior to
such termination or (y) with respect to which Parent or its
affiliates shall have entered into a binding commitment or agreement
prior to such termination, and, in each case, the right to manage,
operate and control the business thereof.
Section 7.15 Notice and Cure. The Company will notify Parent in writing of,
and will use all commercially reasonable efforts to cure before the Closing,
any event, transaction or circumstance, as soon as practicable after it becomes
known to the Company, that causes or will or may be likely to cause any
covenant or agreement of the Company under the Agreement to be breached or that
renders or will render untrue in any material respect any representation or
warranty of the Company contained in the Agreement. No notice given pursuant to
this paragraph shall have any effect on the representations, warranties,
covenants or agreements contained in the Agreement for purposes of determining
satisfaction of any condition contained in the Agreement.
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ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction on or prior to the Closing Date of the following conditions,
except that such conditions may be waived in writing pursuant to Section 9.5 by
the joint action of the parties hereto to the extent permitted by applicable
law:
(a) Stockholder Approval. The Company Stockholders' Approval shall have
been obtained.
(b) No Injunction. No temporary restraining order or preliminary or
permanent injunction or other order, decree, ruling or action taken by any
United States or French federal or state court of competent jurisdiction or
other United States or French federal or state or other governmental
authority of competent jurisdiction restraining, enjoining or otherwise
prohibiting the Merger shall have been issued and be continuing in effect,
and the Merger and the other transactions contemplated hereby shall not
have been prohibited under any United States or French federal or state or
other applicable law, order, rule or regulation.
(c) Statutory Approvals. The Company Required Statutory Approvals and
the Parent Required Statutory Approvals shall have been obtained at or
prior to the Effective Time, such approvals shall have become Final Orders
(as defined below) and such Final Orders shall not impose terms or
conditions which, individually or in the aggregate, insofar as reasonably
can be foreseen, will have, a Company Material Adverse Effect. A "Final
Order" means action by the relevant regulatory authority which has not been
reversed, stayed, enjoined, set aside, annulled or suspended, with respect
to which any waiting period prescribed by law before the transactions
contemplated hereby may be consummated has expired, and as to which all
conditions to the consummation of such transactions prescribed by law,
regulation or order have been satisfied.
Section 8.2 Conditions to Obligation of Parent to Effect the Merger. The
obligation of Parent and Merger Sub to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions except as may be waived by Parent and Merger Sub in writing pursuant
to Section 9.5:
(a) Performance of Obligations of the Company. The Company (and/or its
appropriate subsidiaries) shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement to
be performed by it at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties
of the Company set forth in this Agreement shall be true and correct in all
material respects (i) on and as of the date hereof and (ii) on and as of
the Closing Date with the same effect as if such representations and
warranties had been made on and as of the Closing Date (other than
representations and warranties that expressly speak only as of a specific
date or time other than the date hereof or the Closing Date which need only
be true and correct as of such date or time) except, in the case of
representations and warranties other than those contained in Section 4.2
(but only to the extent that such Section contains a representation as to
the ownership of the Company of its subsidiaries described in clause (x) of
the first sentence thereof) and Sections 4.3(a), 4.4(a), 4.15 and 4.16, for
such failures of representations and warranties to be true and correct
(determined without regard to any materiality standard contained therein)
which individually or in the aggregate would not be reasonably likely to
result in a Company Material Adverse Effect.
(c) Closing Certificates. Parent shall have received a certificate
signed by the chief financial officer of the Company, dated the Closing
Date, to the effect that, to the best of such officer's knowledge, the
conditions set forth in Section 8.2(a) and Section 8.2(b) have been
satisfied.
(d) No Company Material Adverse Effect. No Company Material Adverse
Effect shall have occurred and be continuing and there shall exist no fact
or circumstance which individually or in the aggregate would reasonably be
likely to have a Company Material Adverse Effect.
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(e) Company Required Consents. Company Required Consents the failure of
which to obtain would, individually or in the aggregate, reasonably be
likely to have a Company Material Adverse Effect shall have been obtained.
(f) Other Evidence. Parent and Merger Sub shall have received from the
Company such further certificates and documents evidencing due action in
accordance with this Agreement, including certified copies of proceedings
of the Board of Directors and stockholders of the Company, as Parent or
Merger Sub reasonably shall request.
Section 8.3 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be further
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions, except as may be waived by the Company in writing pursuant to
Section 9.5.
(a) Performance of Obligations of Parent. Parent (and/or its appropriate
subsidiaries) shall have performed in all material respects its agreements and
covenants contained in or contemplated by this Agreement to be performed by it
at or prior to the Effective Time.
(b) Representations and Warranties. The representations and warranties of
Parent set forth in this Agreement shall be true and correct in all material
respects (i) on and as of the date hereof and (ii) on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of the Closing Date (other than representations and
warranties that expressly speak only as of a specific date or time other than
the date hereof or the Closing Date which need only be true and correct as of
such date or time) except for such failures of representations and warranties
to be true and correct (determined without regard to any materiality standard)
which individually or in the aggregate would not be reasonably likely to result
in a Parent Material Adverse Effect.
(c) Closing Certificates. The Company shall have received a certificate
signed by the chief financial officer of Parent, dated the Closing Date to the
effect that, to the best of such officer's knowledge, the conditions set forth
in Section 8.3(a) and Section 8.3(b) have been satisfied.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date, whether before or after approval by the stockholders of
the respective parties hereto contemplated by this Agreement:
(a) by mutual written consent of the Boards of Directors of the Company
and Parent;
(b) by either Parent or the Company, by written notice to the other
party, if the Effective Time shall not have occurred on or before the
twelve month anniversary of the date hereof (the "Initial Termination
Date"); provided, however, that the right to terminate the Agreement under
this Section 9.1(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date; and provided, further, that if on the Initial Termination Date the
conditions to the Closing set forth in Sections 8.1(c) and/or 8.2(e) shall
not have been fulfilled but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the Initial
Termination Date shall be extended to the eighteen month anniversary of the
date hereof;
(c) by either Parent or the Company, by written notice to the other
party if the Company Stockholders' Approval shall not have been obtained at
a duly held Company Special Meeting, including any adjournments thereof;
(d) by either Parent or the Company, if any United States or French
federal, state or other law, order, rule or regulation is adopted or
issued, which has the effect, as supported by the written opinion of
outside
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counsel for such party, of prohibiting the Merger, or by any party hereto
if any United States or French federal, state or other court of competent
jurisdiction or other United States federal or state or French governmental
authority of competent jurisdiction shall have issued an order, decree or
ruling, or taken any other action, restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree or ruling or other action
shall have become final and non-appealable;
(e) by Parent, if (i) the Board of Directors of the Company withdraws,
modifies or changes its approval or recommendation of this Agreement in a
manner adverse to Parent or shall have resolved to do so, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company an Alternative Proposal or shall have resolved to do so, or (iii) a
tender offer or exchange offer for 20% or more of the outstanding shares of
capital stock of the Company is commenced and the Board of Directors of the
Company fails to recommend against acceptance of such tender offer or
exchange offer by its stockholders (including by taking no position with
respect to the acceptance of such tender offer or exchange offer by its
stockholders);
(f) by the Company, by written notice to Parent, if (i) there exist
breaches of the representations and warranties of Parent made herein as of
the date hereof which breaches, individually or in the aggregate, would or
would be reasonably likely to result in a Parent Material Adverse Effect,
and such breaches shall not have been remedied within 20 days after receipt
by Parent of notice in writing from the Company, specifying the nature of
such breaches and requesting that they be remedied, or (ii) Parent (and/or
its appropriate subsidiaries) shall not have performed and complied with,
in all material respects, its agreements and covenants hereunder and such
failure to perform or comply shall not have been remedied within 20 days
after receipt by Parent of notice in writing from the Company, specifying
the nature of such failure and requesting that it be remedied;
(g) by Parent, by written notice to the Company, if (i) there exist
material breaches of the representations and warranties of the Company made
herein as of the date hereof which breaches, individually or in the
aggregate, would or would be reasonably likely to result in a Company
Material Adverse Effect, and such breaches shall not have been remedied
within 20 days after receipt by the Company of notice in writing from
Parent, specifying the nature of such breaches and requesting that they be
remedied, (ii) the Company (and/or its appropriate subsidiaries) shall not
have performed and complied with its agreements and covenants contained in
Sections 6.1(b) and 6.1(c) or shall have failed to perform and comply with,
in all material respects, its other agreements and covenants hereunder, and
such failure to perform or comply shall not have been remedied within 20
days after receipt by the Company;
(h) prior to the Company Shareholders' Approval, by the Company, upon
five (5) Business Days' prior written notice to Parent, if, as a result of
any written offer or proposal in respect of an Alternative Proposal, the
Board of Directors of the Company determines that such written offer or
proposal be accepted; provided, however, that (i)(A) the Board of Directors
of the Company shall have reasonably concluded in good faith (after
consultation with its financial advisors) that the person or group making
the Alternative Proposal will have adequate sources of financing to
consummate the Alternative Proposal and that the Alternative Proposal is
more favorable to the Company shareholders than the Merger (taking into
account, without limitation, the likelihood that all required regulatory
approvals for such Alternative Proposal will be obtained in a prompt and
timely manner) and (B) the Board of Directors of the Company shall have
determined in good faith, based on advice of outside counsel with respect
to such Board's fiduciary duties under applicable law with respect to the
proposed Alternative Proposal as the Board of Directors deem to be
relevant, that, notwithstanding a binding commitment to consummate an
agreement of the nature of this Agreement entered into in the proper
exercise of their applicable fiduciary duties, and notwithstanding all
modifications that may be offered by Parent in negotiations entered into
pursuant to clause (ii) below, such fiduciary duties would also require the
directors to reconsider such commitment and terminate this Agreement as a
result of such written offer or proposal and (ii) prior to any such
termination, the Company shall, and shall cause its respective financial
and legal advisors to, negotiate in good faith with Parent to make such
adjustments in the terms and conditions of this Agreement as would not
require termination of this Agreement.
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Section 9.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Section 9.1 there shall be no liability under this
Agreement on the part of Parent, Merger Sub or the Company or any of their
respective representatives, and all rights and obligations of each party hereto
shall cease, except as set forth in Sections 6.2, 7.14, 9.3 and 10.1; provided,
however, that nothing in this Agreement shall relieve any party from liability
for the willful breach of any of its representations and warranties or the
breach of any of its covenants or agreements set forth in this Agreement.
Section 9.3 Termination Fee; Expenses.
(a) The Company agrees that, if (i) the Company shall terminate this
Agreement pursuant to Section 9.1(h), (ii) Parent shall terminate this
Agreement pursuant to Section 9.1(e), or (iii) Parent or the Company shall
terminate this Agreement pursuant to Section 9.1(c) due to the failure to
obtain the approval of the Company's stockholders at a Company Special
Meeting and at the time of such failure, any person shall have made a
public announcement or otherwise communicated to the Company or its
stockholders with respect to an Alternative Proposal with respect to the
Company which has not been rejected by the Company and terminated or
withdrawn by the party making the Alternative Proposal, then in accordance
with Section 9.3(c), immediately prior to such termination in the case of
clause (i), or in the case of clause (ii) or (iii) if, within two years
following the date of termination, the Company enters into a definitive
acquisition, merger or similar agreement to effect an Alternative Proposal
upon execution of such agreement, the Company shall pay to Parent an amount
equal to Parent's documented Expenses (as defined below) not in excess of
$3,000,000 in connection with this Agreement and the transactions
contemplated hereby and a termination fee in an amount equal to $42,000,000
(collectively, such Expenses and such fee, the "Termination Amount").
(b) Each of Parent and the Company agrees that the payments provided for
in Section 9.3(a) shall be the sole and exclusive remedy of the parties
upon a termination of this Agreement pursuant to Section 9.1(c), (e) or
(h), as the case may be, and such remedy shall be limited to the payment
stipulated in Section 9.3(a); provided, however, that nothing in this
Agreement shall relieve any party from liability for the willful breach of
any of its representations and warranties or the willful breach of any of
its covenants or agreements set forth in this Agreement.
(c) Any payment required to be made pursuant to clause (i) of Section
9.3(a) shall be made to Parent by the Company immediately prior to the
termination of this Agreement and shall be made by wire transfer of
immediately available funds to an account designated by Parent.
(d) The parties agree that the agreements contained in this Section 9.3
are an integral part of the transactions contemplated by the Agreement and
constitute liquidated damages and not a penalty. If one party fails to
promptly pay to the other any fee due hereunder, the defaulting party shall
pay the costs and expenses (including legal fees and expenses) in
connection with any action, including the filing of any lawsuit or other
legal action, taken to collect payment, together with interest on the
amount of any unpaid fee at the publicly announced prime rate of Citibank,
N.A. from the date such fee was required to be paid.
(e) For purposes of this Agreement, "Expenses" consist of all out-of-
pocket expenses (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
affiliates) incurred by a party or on its behalf, in connection with or
related to, the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and
mailing of the Proxy Statement and/or any documents relating thereto, the
solicitation of stockholder approvals and all other matters relating to the
transactions contemplated hereby.
Section 9.4 Amendment. This Agreement may be amended by the Boards of
Directors of the parties hereto, at any time before or after approval hereof by
the stockholders of the Company and prior to the Effective Time, but after such
approval, no such amendment shall (i) alter or change the amount or kind of
shares, rights or any of the proceedings of the treatment of shares under
Article II, or (ii) alter or change any of the terms and conditions of this
Agreement if any of the alterations or changes, alone or in the aggregate,
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would materially adversely affect the rights of holders of the Company's
capital stock, except for alterations or changes that could otherwise be
adopted by the Board of Directors of the Company without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 9.5 Waiver. At any time prior to the Effective Time, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein, to the extent permitted by applicable law. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival; Effect of Representations and Warranties. (a) All
representations, warranties and agreements in this Agreement shall not survive
the Merger, except as otherwise provided in this Agreement and except for the
agreements contained in this Section 10.1 and in Article II, Section 7.5,
Section 7.8, Section 7.9, Section 7.10, Section 7.11, Section 7.12, Section
7.13, Section 7.14, Section 10.8 and Section 10.9.
(b) No party may assert a claim for breach of any representation or warranty
contained in this Agreement (whether by direct claim or counterclaim) except in
connection with the cancellation of this Agreement pursuant to Section
9.1(f)(i) or Section 9.1(g)(i) (or pursuant to any other subsection of Section
9.l if the terminating party would have been entitled to terminate this
Agreement pursuant to Section 9.1(f)(i) or Section 9.1(g)(i)).
Section 10.2 Brokers. The Company represents and warrants that, except for
Morgan Stanley & Co. Incorporated whose fees have been disclosed to Parent
prior to the date hereof, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Merger or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Parent represents and
warrants that, except for Rothschild Inc., prior to the date hereof no broker
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent.
Section 10.3 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if (i) delivered personally, (ii) sent
by reputable overnight courier service, (iii) telecopied (receipt of which is
confirmed), or (iv) five days after being mailed by registered or certified
mail (return receipt requested) postage prepaid to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to the Company, to:
United Water Resources Inc.
200 Old Hook Road
Harrington Park, NJ 07640
Attention: President
Telephone: (201) 767-2838
Telecopy: (201) 505-0481
A-35
<PAGE>
with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019
Attention: William S. Lamb, Esq.
Telephone: (212) 424-8000
Telecopy: (212) 424-8500
(b) If to Parent or Merger Sub, to:
Lyonnaise American Holding, Inc.
200 Old Hook Road
Harrington Park, NJ 07640
Attention: Mr. Jean Michel Brault,
Executive Vice President
Telephone: (201) 784-7089
Telecopy: (201) 767-2082
with a copy to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Garry P. McCormack, Esq.
Telecopy: (212) 835-6001
Telephone: (212) 835-6000
(c) If to SLDE, to:
Suez Lyonnaise des Eaux
18 Square Edouard VII
75316 Paris Cedex 09
France
Attention: Mr. Gerard Payen, Directeur
Telephone: 33 1.46.95.54.16
Telecopy: 33 1.46.95.40.72
with a copy to:
Piper & Marbury L.L.P.
1251 Avenue of the Americas
New York, NY 10020-1104
Attention: Garry P. McCormack, Esq.
Telephone: (212) 835-6000
Telecopy: (212) 835-6001
Section 10.4 Miscellaneous. This Agreement (including the Disclosure
Schedules and the documents and instruments referred to herein) (i) constitutes
the entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof other than the Confidentiality Agreement,
the Governance Agreement and the NARA, each of which remains in full force and
effect except as expressly herein modified; (ii) shall not be assigned by
A-36
<PAGE>
operation of law or otherwise; except that Parent or Merger Sub may assign all
or any of their rights and obligations hereunder to any wholly-owned subsidiary
of Parent; provided that no such assignment shall relieve the assigning party
of its obligations hereunder if such assignee does not perform such
obligations; and (iii) shall be governed by and construed in accordance with
the laws of the State of New Jersey applicable to contracts executed in and to
be fully performed in such State, without giving effect to its conflicts of
law, rules or principles and except to the extent the provisions of this
Agreement (including the documents or instruments referred to herein) are
expressly governed by or derive their authority from the NJBCA.
Section 10.5 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit of this
Agreement, respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
Section 10.6 Counterparts; Effect. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except for rights of
Indemnified Parties as set forth in Section 7.5, nothing in this Agreement,
express or implied, is intended to confer upon any other person any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
Section 10.8 Waiver of Jury Trial and Certain Damages. Each party to this
Agreement waives, to the fullest extent permitted by applicable law, (i) any
right it may have to a trial by jury in respect of any action, suit or
proceeding arising out of or relating to this Agreement and (ii) except as
expressly set forth in this Agreement (including, but not limited to, Section
9.3 hereof), any right it may have to receive damages from any other party on
any claim arising out of this Agreement (but not any other agreement the
parties to which include any or all parties to this Agreement) based on any
theory of liability for any special, indirect, consequential (including lost
profits) or punitive damages.
Section 10.9 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any United States federal state
court located in the States of New Jersey, New York or Delaware, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit itself to the
exclusive personal jurisdiction of any federal or state court located in any of
the States of New Jersey, New York or Delaware solely with respect to any
dispute arising out of this Agreement or any of the transactions contemplated
by this Agreement, (b) agrees that it will not attempt to deny such personal
jurisdiction by motion or other request for leave from any such court and (c)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this Agreement in any court.
Section 10.10 Severability. If any term or other provision of this Agreement
is determined by a court of competent jurisdiction to be invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
A-37
<PAGE>
ARTICLE XI
PROVISIONS RELATING TO SLDE
Section 11.1 Organization and Authority. SLDE is a societe anonyme duly
organized and validly existing under the laws of the Republic of France and has
full power, corporate or otherwise, to execute and deliver and to perform all
of its obligations contained in Section 11.2 of this Agreement. The execution
and delivery of this Agreement by SLDE and the performance by SLDE of its
obligations hereunder have been duly authorized by all necessary action on
behalf of SLDE, and this Agreement has been duly and validly executed and
delivered by SLDE and, assuming the due authorization, execution and delivery
hereof by the other signatories hereto, constitutes the valid and binding
obligation of SLDE enforceable against it in accordance with its terms.
Section 11.2 Obligations of SLDE. SLDE agrees (i) to cause Parent and Merger
Sub to have at the Closing sufficient funds to consummate the transactions
contemplated by this Agreement at the Closing, and (ii) to cause Parent and
Merger Sub to have sufficient funds to meet all of their other financial
obligations under or related to this Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
A-38
<PAGE>
IN WITNESS WHEREOF, the Company, Parent, Merger Co. and SLDE have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
United Water Resources Inc.
/s/ Donald L. Correll
By: _________________________________
Name: Donald L. Correll
Title: Chairman and CEO
/s/ Michael C. J. Fallon
Attest: _________________________
Lyonnaise American Holding, Inc.
/s/ Jean Michel Brault
By: _________________________________
Name: Jean Michel Brault
Title: Executive Vice President
/s/ Garry P. McCormack
Attest: _________________________
Lah Acquisition Co.
/s/ Jean Michel Brault
By: _________________________________
Name: Jean Michel Brault
Title: President
/s/ Garry P. McCormack
Attest: _________________________
Suez Lyonnaise Des Eaux
/s/ Gerard Payen
By: _________________________________
Name: Gerard Payen
Title: Executive Vice President -
Water
/s/ Jean-Paul Minette
Attest: _________________________
A-39
<PAGE>
[Letterhead of Morgan Stanley & Co. Incorporated]
ANNEX B
August 20, 1999
Board of Directors
United Water Resources
200 Old Hook Road
Harrington Park, NJ 07640-1799
Members of the Board:
We understand that United Water Resources Inc. ("UWR" or the "Company"),
Lyonnaise American Holding, Inc. ("LAH"), LAH Acquisition Co., a wholly owned
subsidiary of LAH ("LAH Acquisition Co.") and solely with respect to certain of
LAH's obligations, Suez Lyonnaise des Eaux, a French Societe Anonyme ("Suez"),
the parent of LAH, propose to enter into an Agreement and Plan of Merger,
substantially in the form of the draft dated August 20, 1999 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of LAH Acquisition Co. with and into UWR. Pursuant to the Merger, UWR will
become a wholly owned subsidiary of LAH and each outstanding share of common
stock, no par value per share (the "Common Stock"), of UWR, together with the
associated right to purchase shares of 5% Series A Cumulative Convertible
Preference Stock, no par value, of UWR (the "Series A Preference Stock"), other
than shares and rights held in treasury or held by LAH or any affiliate of LAH
and UWR, will be converted into the right to receive $35.00 per share in cash,
an additional dividend of $0.06 per share in each of the first three fiscal
quarters after announcement and a special dividend payable at closing of the
difference between $0.48 and the additional dividends paid, all as described in
the Merger Agreement (collectively the "Consideration"). Additionally, pursuant
to the Merger, each outstanding share of Series A Preference Stock, other than
shares held in treasury or held by LAH or any affiliate of LAH and UWR, shall
be converted into the right to receive $35.00 per share in cash multiplied by
the number of shares of Common Stock issuable upon the conversion of a share of
Series A Preference Stock. The terms and conditions of the Merger are more
fully set forth in the Merger Agreement. We further understand that
approximately 32% of the outstanding shares of the Common Stock is owned by LAH
and its affiliates.
You have asked for our opinion as to whether the Consideration to be
received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair from a financial point of view to such holders other than LAH
and its affiliates.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of UWR;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning UWR prepared by the management of UWR;
(iii) reviewed certain financial projections prepared by the management
of UWR;
(iv) discussed the past and current operations and financial condition
and the prospects of UWR with senior executives of UWR;
(v) reviewed the proforma impact of the Merger on Suez's earnings per
share, consolidated capitalization and financial ratios;
(vi) reviewed the reported prices and trading activity for the Common
Stock;
(vii) compared the financial performance of UWR and the prices and
trading activity of the Common Stock with that of certain other comparable
publicly-traded companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain comparable acquisition transactions;
B-1
<PAGE>
(ix) participated in discussions and negotiations among representatives
of UWR, LAH and Suez and their financial and legal advisors;
(x) reviewed certain material agreements between UWR and LAH;
(xi) reviewed the draft Merger Agreement and certain related documents;
and
(x) performed such other analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes
of this opinion. With respect to the financial projections, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performance of UWR.
We have not made any independent valuation or appraisal of the assets or
liabilities of UWR. Our opinion is necessarily based on financial, economic,
market and other conditions as in effect on, and the information made
available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of UWR or any
of its assets, nor did we negotiate with any of the parties, other than LAH
and Suez.
We have acted as financial advisor to the Board of Directors of UWR in
connection with this transaction and will receive a fee for our services.
Morgan Stanley and its affiliates have provided and continue to provide
financial advisory and financing services to Suez and/or its affiliates and
have received and will receive fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of UWR, except that this opinion may be included in its entirety in
any filing made by UWR in respect of the transaction with the Securities and
Exchange Commission. In addition, Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of UWR should vote at the
shareholders' meetings held in connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Consideration to be received by the holders of shares of
Common Stock pursuant to the Merger Agreement is fair from a financial point
of view to such holders other than LAH and its affiliates.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/
By: ___________________________________
Daniel B. More
Managing Director
B-2
<PAGE>
United Water [LOGO]\(R)\
- -------------------------------------------------------------------------------
1999 Special Meeting
Location: ________________
- -------------------------------------------------------------------------------
The ____________________ is accessible via ____________________. From Exit
ramp turn ____________________............
FROM NEW JERSEY & SOUTH: Take ____________________
FROM NEW YORK CITY: Take ____________________
FROM UPSTATE NEW YORK. Take ____________________
[MAP OF ____________________ APPEARS HERE]
This Proxy Is Solicited On Behalf Of The Board of Directors Please mark
your votes
as [X]
indicated in
this example
- ---------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. To Adopt and Approve The Agreement and [_] [_] [_]
Plan of Merger, dated as of August 20,
1999, by and among United Water Resources,
Inc., Lyonnaise American Holding, Inc.,
LAH Acquisition Co., and Suez Lyonnaise des Eaux.
FOR AGAINST ABSTAIN
2. To authorize, if deemed appropriate, the [_] [_] [_]
adjournment of the special meeting for the
purpose of soliciting additional proxies
for the approval of proposal 1 above.
3. To vote all of such shares as they or he or she may deem proper upon
all other matters that may properly come before said meeting and any
adjournments thereof.
Mark box if you plan to attend the Special Meeting [_]
This Proxy is given and is to be construed under the laws of the State
of New Jersey and will be voted "FOR" the merger agreement and for the
above proposals if in either case the undersigned has not specified a
choice in the spaces provided therefore. This proxy when properly
executed will be voted in the manner directed herein by the
undersigned.
Signature(s) of Stockholder(s)___________________________ Date___________, 1999
<PAGE>
NOTE: Please date and sign exactly as name appears hereon. When shares are held
by joint tenants both should sign. (Executors, Administrators, Trustees, etc.
should so indicate).
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
VOTE BY TELEPHONE
[GRAPHIC] [GRAPHIC]
QUICK ... EASY ... IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free [____________] on a touch tone telephone 24
hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is
located in the box in the lower right hand corner of this form
[Insert instructions]
or
--
2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
PROXY
UNITED WATER RESOURCES INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS-__________, 1999
The undersigned stockholder of United Water Resources Inc. ("UWR")
hereby constitutes and appoints LAWRENCE R. CODEY, PETER DEL COL and MARCIA L.
WORTHING, or any of them, the attorneys or attorney and proxies or proxy of the
undersigned, with full power of substitution and revocation, for and in the name
of the undersigned, to attend the Special Meeting of Stockholders of UWR to be
held at ____________________, New Jersey ____________________, on
____________________, 1999, at _____a.m., and any adjournment or adjournments
thereof, receipt of the notice of which meeting stating the purposes thereof
being hereby acknowledged, to vote all of the shares of UWR which the
undersigned would be entitled to vote if then personally present as follows:
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
Dear Stockholder(s) of United Water Resources Inc.:
Enclosed you will find materials regarding the United Water Resources Inc.,
[ ],1999, Special Meeting of Stockholders. The notice of the Special Meeting
and proxy statement describe the formal business to be transacted at the meeting
as summarized on the attached proxy card.
Whether or not you expect to attend the Special Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. You may vote your proxy by
telephone. If you vote by telephone, there is no need to mail back your proxy
card. As a stockholder, please remember that your vote is important to us. We
look forward to hearing from you.
[Image]
<PAGE>
EXHIBIT D(2)
United Water [LOGO]\(R)\
- -------------------------------------------------------------------------------
1999 Special Meeting
Location: ________________
- -------------------------------------------------------------------------------
The ____________________ is accessible via ____________________. From Exit
ramp turn ____________________............
FROM NEW JERSEY & SOUTH: Take ____________________
FROM NEW YORK CITY: Take ____________________
FROM UPSTATE NEW YORK. Take ____________________
[MAP OF ____________________ APPEARS HERE]
This Proxy Is Solicited On Behalf Of The Board of Directors Please mark
your votes
as [X]
indicated in
this example
- ---------------------------------------------------------------------
FOR AGAINST ABSTAIN
1. To Adopt and Approve The Agreement and [_] [_] [_]
Plan of Merger, dated as of August 20,
1999, by and among United Water Resources,
Inc., Lyonnaise American Holding, Inc.,
LAH Acquisition Co., and Suez Lyonnaise des Eaux.
FOR AGAINST ABSTAIN
2. To authorize, if deemed appropriate, the [_] [_] [_]
adjournment of the special meeting for the
purpose of soliciting additional proxies
for the approval of proposal 1 above.
3. To vote all of such shares as they or he or she may deem proper upon
all other matters that may properly come before said meeting and any
adjournments thereof.
Mark box if you plan to attend the Special Meeting [_]
This Proxy is given and is to be construed under the laws of the State
of New Jersey and will be voted "FOR" the merger agreement and for the
above proposals if in either case the undersigned has not specified a
choice in the spaces provided therefore. This proxy when properly
executed will be voted in the manner directed herein by the
undersigned.
Signature(s) of Stockholder(s)___________________________ Date___________, 1999
D(2)-1
<PAGE>
NOTE: Please date and sign exactly as name appears hereon. When shares are held
by joint tenants both should sign. (Executors, Administrators, Trustees, etc.
should so indicate).
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
VOTE BY TELEPHONE
[GRAPHIC] [GRAPHIC]
QUICK ... EASY ... IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free [____________] on a touch tone telephone 24
hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is
located in the box in the lower right hand corner of this form
[Insert instructions]
or
--
2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
PROXY
UNITED WATER RESOURCES INC.
PROXY FOR SPECIAL MEETING OF STOCKHOLDERS-__________, 1999
The undersigned stockholder of United Water Resources Inc. ("UWR")
hereby constitutes and appoints LAWRENCE R. CODEY, PETER DEL COL and MARCIA L.
WORTHING, or any of them, the attorneys or attorney and proxies or proxy of the
undersigned, with full power of substitution and revocation, for and in the name
of the undersigned, to attend the Special Meeting of Stockholders of UWR to be
held at ____________________, New Jersey ____________________, on
____________________, 1999, at _____a.m., and any adjournment or adjournments
thereof, receipt of the notice of which meeting stating the purposes thereof
being hereby acknowledged, to vote all of the shares of UWR which the
undersigned would be entitled to vote if then personally present as follows:
(Continued and to be signed on other side)
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
Dear Stockholder(s) of United Water Resources Inc.:
Enclosed you will find materials regarding the United Water Resources Inc.,
[ ],1999, Special Meeting of Stockholders. The notice of the Special Meeting
and proxy statement describe the formal business to be transacted at the meeting
as summarized on the attached proxy card.
Whether or not you expect to attend the Special Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. You may vote your proxy by
telephone. If you vote by telephone, there is no need to mail back your proxy
card. As a stockholder, please remember that your vote is important to us. We
look forward to hearing from you.
[Image]
D(2)-2
