U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission file number 0-18552
-------
Pennichuck Corporation
- ----------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New Hampshire 02-0177370
- ----------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Four Water Street, Nashua, New Hampshire 03061
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(603) 882-5191
- ----------------------------------------------------------------------------
(Issuer's telephone number)
Not applicable
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $1 Par Value-1,730,080 shares as of August 2, 1999
Transitional Small Business Disclosure Format (Check One):
Yes [ ] No [ X ]
--- ---
INDEX
PENNICHUCK CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NUMBER
- --------------------------------- -----------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets--
June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income--
Three and six months ended June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows--
Six months ended June 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements--
June 30, 1999 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-13
PART II. OTHER INFORMATION
- -----------------------------
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities 13
Item 3. Defaults upon Senior Securities Not Applicable
Item 4. Submission of Matters to a Vote
of Security Holders 13-14
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
- ----------
</TABLE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
1999 (In thousands) 1998
--------------------------------------------
ASSETS (Unaudited)
<S> <C> <C>
Property, Plant and Equipment
Land $ 999 $ 999
Buildings 22,318 22,248
Equipment 55,338 53,104
Construction work in progress 287 296
----------------------------------------
78,942 76,647
Less accumulated depreciation 18,853 18,258
----------------------------------------
60,089 58,389
Current Assets
Cash 2,864 3,602
Accounts receivable, net 2,951 2,331
Inventory 341 320
Other current assets 121 522
----------------------------------------
6,277 6,775
Other Assets
Land development costs 2,931 3,029
Deferred charges, net 2,183 2,170
Investment in real estate partnerships 567 475
----------------------------------------
TOTAL ASSETS $72,047 $70,838
========================================
STOCKHOLDERS' EQUITY AND LIABILITIES
Common stock-par value $1 per share $ 1,733 $ 1,714
Paid in capital 14,042 13,821
Retained earnings 9,794 9,335
Treasury stock, at cost (100) (59)
----------------------------------------
25,469 24,811
Minority Interest 296 314
Long Term Debt, less current portion 28,057 28,002
Current Liabilities
Current portion of long term debt 183 183
Accounts payable 503 568
Accrued interest payable 367 350
Other accrued liabilities 1,037 1,180
----------------------------------------
2,090 2,281
Other Liabilities
Contributions in aid of construction 10,197 9,509
Other liabilities and deferred credits 5,938 5,921
----------------------------------------
TOTAL STOCKHOLDERS' EQUITY & LIABILITIES $72,047 $70,838
========================================
</TABLE>
See notes to condensed consolidated financial statements.
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30 June 30
------------------------ ------------------------
1999 1998 1999 1998
---- ---- ---- ----
(In thousands, except per share amounts
and weighted average number of shares)
<S> <C> <C> <C> <C>
Revenues
Water utility operations $ 4,284 $ 3,694 $ 7,847 $ 6,510
Real estate operations and other 426 279 755 379
----------------------------------------------------
4,710 3,973 8,602 6,889
Operating expenses
Water utility operations 2,832 2,452 5,384 4,494
Real estate operations and other 156 110 319 135
----------------------------------------------------
2,988 2,562 5,703 4,629
Operating income 1,722 1,411 2,899 2,260
Other income 45 9 89 25
Interest expense (510) (592) (1,013) (1,082)
----------------------------------------------------
Income before income taxes 1,257 828 1,975 1,203
Provision for income taxes 483 318 760 457
----------------------------------------------------
Net income before minority interest 774 510 1,215 746
Minority interest in (loss) Westwood Park (3) -- (18) --
----------------------------------------------------
Net income $ 777 $ 510 $ 1,233 $ 746
====================================================
Earnings per common share:
Basic $ .45 $ .42 $ .71 $ .61
Diluted $ .44 $ .41 $ .70 $ .60
Weighted average common shares:
Basic 1,740,363 1,229,826 1,736,663 1,226,816
Diluted 1,755,105 1,244,489 1,751,405 1,237,812
Dividends paid per common share $ .23 $ .19 $ .45 $ .38
====================================================
</TABLE>
See notes to condensed consolidated financial statements
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
1999 1998
---------------
(In thousands)
<S> <C> <C>
CASH PROVIDED (USED) BY:
Operating Activities
Net income $1,233 $ 746
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,028 828
Deferred income taxes 45 45
Change in working capital (445) (455)
----------------
1,861 1,164
Investing Activities:
Purchase of property, plant and
equipment and other assets (2,783) (9,536)
Increase in contributions in aid of
construction 757 208
(Increase) in other (52) (1,107)
------------
(2,078) (10,435)
Financing Activities:
Payments on long-term debt (17) (1,159)
Proceeds from issuance of long-term debt 72 10,462
Payment of common dividends (774) (469)
Proceeds from dividend reinvestment plan
and other 198 123
----------------
(521) 8,957
(DECREASE) IN CASH (738) (314)
CASH AT BEGINNING OF PERIOD 3,602 448
----------------
CASH AT END OF PERIOD $2,864 $ 134
================
</TABLE>
Supplemental Cash Flow Information. Interest paid was $895,000 and $955,000
for the six months ended June 30, 1999 and 1998, respectively. Income taxes
paid were $242,000 and $169,00 for the six month periods ended June 30, 1999
and 1998, respectively.
See notes to condensed consolidated financial statements.
PENNICHUCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1999
NOTE A -- BACKGROUND
The financial statements include the accounts of Pennichuck Corporation (the
"Company") and its wholly-owned subsidiaries, Pennichuck Water Works, Inc.
("Pennichuck"), Pittsfield Aqueduct Company, Inc. ("Pittsfield"), Pennichuck
East Utility, Inc. ("Pennichuck East"), The Southwood Corporation
("Southwood") and Pennichuck Water Service Corporation (the "Service
Corporation"). All significant intercompany accounts have been eliminated
in consolidation.
NOTE B -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB
and Item 310 of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three month and six month periods ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1999. The Balance Sheet amounts shown under the
December 31, 1998 column have been derived from the audited financial
statements of the Company as contained in its Annual Report on Form 10-KSB
filed with the Securities and Exchange Commission as restated to reflect the
acquisition of Pittsfield which is discussed in Note G to such financial
statements. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Annual Report for
the year ended December 31, 1998.
NOTE C - EARNINGS PER SHARE
Diluted earnings per share were computed by dividing actual net income by
the adjusted weighted average number of shares of common stock which include
the effect of dilutive unexercised stock options.
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Financial Condition
The financial position of Pennichuck Corporation (the "Company") and its
wholly-owned operating subsidiaries, Pennichuck Water Works, Inc.
("Pennichuck"), Pittsfield Aqueduct Company, Inc. ("Pittsfield"), Pennichuck
East Utility, Inc. ("Pennichuck East"), The Southwood Corporation
("Southwood") and Pennichuck Water Service Corporation (the "Service
Corporation") is shown in the accompanying Condensed Consolidated Balance
Sheets.
During the first half of 1999, our cash needs for operations, capital
projects and dividends were funded primarily by the operating cash flow from
our subsidiaries. We were able to generate approximately $1.86 million in
consolidated operating cash flow for the six months ended June 30, 1999,
consisting of net income and non-cash charges of $2,306,000 less $445,000 of
working capital required during that period. Typically, our cash needs peak
during the second and third quarters due to capital expenditures related to
the construction activity of our water utilities. At June 30, 1999, our
Company's cash and cash equivalents on hand decreased by $738,000 to $2.86
million, which is currently held in short-term money market investments.
These funds represent the unexpended proceeds from a $9.4 million public
equity offering which we completed in late November 1998. We expect to use
this cash to fund any future acquisitions and any cash flow deficiencies in
1999 and 2000 which may result from our continued investment in capital
projects.
We also maintain a revolving credit agreement (the "agreement") with Fleet
Bank-NH ("Fleet"). The agreement, as amended, allows us to borrow up to $2.5
million at interest rates tied to Fleet's cost of funds or LIBOR, whichever
is lower. At June 30, 1999, there were no borrowings outstanding under this
agreement.
The Company's consolidated capital budget for 1999 consists of approximately
$4.4 million for various projects of our three operating utilities. Of that
amount, we expect to spend
(i) $1.18 million for replacement of our aging infrastructure,
(ii) $1.9 million for new distribution lines and storage,
(iii) $760,000 for water treatment and supply, and
(iv) the remainder on technology-related upgrades to our
operating and administrative systems.
So far in 1999, we have spent approximately $2,735,000, of which $757,000
has been in the form of contributions in aid of construction from area
developers. We believe that our operating cash flow, together with a portion
of available short-term investments, will be sufficient to fund our 1999
capital expenditure program, cash dividends and required principal payments.
Besides the change in our cash accounts from December 31, 1998 to June 30,
1999, other major changes in our financial position were (i) an increase of
$620,000 in "Accounts receivable" reflecting increase billed and unbilled
revenues as further explained in "Results of Operations" below and (ii) a
decrease of $401,000 in "Other current assets" resulting from prepaid
property taxes which were amortized and charged against our earnings during
the first quarter of 1999.
At June 30, 1999, consolidated retained earnings increased to $9,794,000, or
by $459,000 from the beginning of the year. This increase is due to
consolidated net income of $1,233,000 earned during the first six months of
1999 less a payout of $774,000 in common dividends.
Results of Operations -- Three Months Ended June 30, 1999 Compared to
Three Months Ended June 30, 1998
For the three months ended June 30, 1999, consolidated net income was
$777,000, or $.45 per share compared to $510,000, or $.42 per share for the
same period in 1998. For 1999, the basic and diluted earnings per share
calculations include the additional 483,000 new common shares which were
issued by the Company in its November 1998 common equity offering.
Consolidated revenues for the second quarter increased from $3,973,000 in
1998 to $4,710,000 in 1999, principally as a result of increased water
revenues generated by the Company's regulated utility operations during May
and June 1999.
The Company's consolidated revenues are generally seasonal due to the
overall significance of the water sales of Pennichuck, Pennichuck East and
Pittsfield as a percent of consolidated revenues. Water revenues are
typically at their lowest point during the first and fourth quarters of the
calendar year while water revenues in the second and third quarters tend to
be greater as a result of increased water consumption during the late spring
and summer months. In addition, the Company's consolidated revenues may be
significantly affected by sales of major real estate parcels which may occur
from time to time (see discussion below).
Water Utility Operations
- ------------------------
Utility operating revenues for the three months ended June 30, 1999
increased to $4,284,000, or a 16% increase over the same period in 1998 as
shown in the table below broken out by each of our regulated water
utilities:
<TABLE>
<CAPTION>
1999 1998 Change
---- ---- ------
<S> <C> <C> <C>
Pennichuck $3,448,000 $3,044,000 $404,000
Pennichuck East 728,000 539,000 189,000
Pittsfield 108,000 111,000 ( 3,000)
-------------------------------------
Total $4,284,000 $3,694,000 $590,000
====================================
</TABLE>
The increase in water revenues reflects the hotter and drier than normal
weather conditions which we experienced in June 1999 compared to June 1998.
The average daily temperature within Pennichuck's core franchise area was
84? in June 1999 which was 10? hotter than the same month last year. The
unusually high temperatures and the lack of any significant rainfall in June
1999 resulted in a 51% increase in Pennichuck's average daily pumpage --
from 14 million gallons in June 1998 to 21.2 million gallons in June 1999.
During the second quarter of 1999, none of our water companies had any rate
proceedings pending before the New Hampshire Public Utilities Commission.
Total utility operating expenses, which include production, distribution
system maintenance, administrative, depreciation and taxes other than income
taxes, were $2,832,000 for the three months ended June 30, 1999, or an
increase of $380,000 over the same period last year. Of that increase,
approximately $150,000 relates to the additional production and treatment
costs incurred by our water utilities as a result of the increased demands
on their systems caused by the hotter and drier weather experienced in June
1999. Pumpage at our principal treatment facility in Nashua increased nearly
21% from the second quarter of 1998 to the second quarter of 1999.
During 1998, our three water utilities invested nearly $3.7 million in new
operating assets. As a result of this additional investment, their combined
expenses for depreciation and property taxes increased by $76,000 and
$64,000, respectively, in the second quarter of 1999 over the same period in
1998.
Real Estate Operations and Other
- --------------------------------
Revenues from our real estate activities and other activities (principally
contract operations) were $269,000 and $138,000, respectively, for the three
months ended June 30, 1999. For the same period last year, real estate and
other revenues were $131,000 and $132,000, respectively.
Of our real estate revenues for the second quarter of 1999, $243,000 was
provided by the sale of homes through our two residential joint ventures in
which Southwood is a 50% owner. Those two joint ventures, Bowers Pond LLC
and Heron Cove LLP, were formed for the construction and sale of 46 and 87
homes, respectively. Under the terms of the partnership agreements,
Southwood conveyed the related land parcels to the partnerships in exchange
for non-interest bearing notes from the partnerships secured by a second
mortgage on the real estate conveyed. As of June 30, 1999, all 46 homes in
our Bowers Pond joint venture had been sold.
Our Heron Cove residential joint venture began construction of homes in the
fourth quarter of 1998 and as of June 30, 1999, thirteen homes had been sold
and sixteen additional homes are under purchase and sale agreements pending
completion of construction.
Other operating revenues of $138,000 for the quarter ended June 30, 1999 did
not change significantly from the same quarter in 1998. These revenues
consist chiefly of fees charged by our Service Corporation under various
operations and billing contracts with local municipalities as well as rental
income from several tower leases.
The operating expenses associated with our real estate and other activities
for the second quarter of 1999 were approximately $156,000, or $46,000
greater than in 1998. Real estate expenses during the second quarter of 1999
were $31,000, comprised chiefly of property taxes and allocated cost of
sales from Southwood's residential joint venture activities. Expenses
relating to our contract operations for the three months ended June 30, 1999
were approximately $125,000, or nearly $60,000 more than last year due to
increased intercompany charges from the Company.
Results of Operations -- Six Months Ended June 30, 1999 Compared to Six
Months Ended June 30, 1998
For the six month period ended June 30, 1999, consolidated net income was
$1,233,000, compared to $746,000 for the same period in 1998. On a per share
basis, basic earnings per share increased to $.71 for the six months ended
June 30, 1999 from $.61 last year. For 1999, the basic and diluted earnings
per share calculations include the additional 483,000 new common shares
which were issued by the Company in its November 1998 common equity
offering.
The year-to-date consolidated revenues in 1999 were $8,602,000, representing
a $1.7 million, or 24.9%, increase over last year. As discussed below, the
increase is principally attributable to growth in each of the Company's
utility, real estate and contract operations.
Water Utility Operations
- ------------------------
Utility operating revenues for the first half of 1999 totaled $7,847,000, or
a $1,337,000 increase over the same period in 1998. For the six months ended
June 30, 1999, approximately 81%, 16% and 3% of the total utility operating
revenues were generated by Pennichuck, Pennichuck East and Pittsfield,
respectively.
The principal reasons for that revenue growth were:
* additional billed revenues of $556,000 from Pennichuck East
which began its operations in April 1998,
* additional billed revenues of approximately $450,000 from a
16.8% rate increase granted to Pennichuck which became
effective on April 1, 1998 and
* additional unbilled revenues of $201,000 resulting from a
21% increase in water pumpage within Pennichuck's core
system due to the unusually hot and dry month of June 1999.
The utility operating expenses increased by $890,000, or 19.8%, to
$5,384,000 for the six months ended June 30, 1999. That increase is
primarily comprised of (i) $240,000 of operations and maintenance costs
relating to the addition of Pennichuck East during the second quarter of
1998, (ii) $189,000 of additional depreciation expense and $243,000 of
additional property taxes recognized by our three utilities for the first
half of 1999 as a result of their $3.7 million investment in plant assets
during 1998 and (iii) approximately $150,000 of additional production and
treatment costs incurred in the first half of 1999 due to the increased
pumpage in June 1999 discussed earlier.
Real Estate and Other Operations
- --------------------------------
For the six months ended June 30, 1999 and 1998, revenues from real estate
and other activities totaled $755,000 and $379,000, respectively. Of those
amounts, approximately $417,000 and $207,000 relate to real estate revenues
earned by Southwood during the comparative periods. Southwood revenues thus
far in 1999 include (i) $354,000 in partnership revenues earned through its
Heron Cove and Bowers Pond joint ventures, and (ii) $42,000 of option fee
income earned under a development option agreement with a regional
developer. For the six months ended June 30, 1998, revenues from those
activities were $156,000 and $42,000, respectively.
We also sold a one-half interest in a land parcel to a local developer which
resulted in a $72,000 pretax gain for Southwood in the first quarter of
1999. Subsequently, we conveyed our remaining interest in that land parcel
to a limited liability corporation - Heron Cove Office Park I ("HECOP I") in
which Southwood is a 50% owner. HECOP I is constructing a 39,000 square foot
office building which will be partially occupied by the local developer and
the remaining space is expected to be leased to third parties.
Southwood is also a 60% owner of Westwood Park LLC ("Westwood"), a joint
venture with a regional developer, formed in 1998. Westwood currently owns
approximately 378 acres of land in Nashua which is currently zoned for
commercial and industrial use. Westwood's operating loss for the first six
months of 1999 was $44,000, resulting primarily from real estate taxes and
interest on an outstanding construction loan.
Revenues from other operating activities during the six months ended June
30, 1999 include $248,000 for contract operations performed by the Service
Corporation and $12,000 for miscellaneous lease and rental income. For the
same period in 1998, revenues of the Service Corporation were approximately
$144,000 consisting of $117,000 in contract operations income and $27,000
of sundry revenues. The 1999 increase over 1998 resulted primarily from an
operations and maintenance contract entered into with the Town of Hudson,
New Hampshire in April 1998.
The operating expenses associated with the Company's real estate and other
non-utility activities increased from $135,000 in 1998 to $319,000 in 1999.
Principally all of that increase relates to the additional operating costs
incurred by the Service Corporation in connection with the aforementioned
contract operations agreement with the Town of Hudson. The remaining
expenses related primarily to property taxes on Southwood's real estate
holdings which for the first six months of 1998 were $37,000 compared to
$38,000 in same period of 1998.
Year 2000 Issue
- ---------------
The Company has performed an exhaustive review of its hardware and software
systems in order to determine the level of readiness to meet the next
millennium. Because the Company owns some operating assets which pre-date
1900, it has been aware of the potential Year 2000 problem well before the
recent publicity and in fact, 8 digit dates have been a requirement for all
in-house software developed since 1987. The Year 2000 issue has also been
addressed and included in all computer migration and upgrades since 1990.
As part of our project planning, the Company identified mission-critical
applications and implemented a 5 year plan in early 1994 to replace or
upgrade for both hardware and software. The Company's central computer
platform, consisting primarily of its minicomputer server, is completely
Year 2000 ready. Additionally, all of the Company's software applications
have been evaluated to identify any Year 2000 problems, their importance to
Company operations and efficiencies to be gained with newer and updated
software. A software development schedule was created based on this risk
assessment with the most critical applications being implemented first. At
this time, the Company's NT network, financial accounting, billing, customer
service information and meter management, human resources and SCADA
management systems are Year 2000 ready. In July 1999, the Company's
remaining software systems for work orders, inventory control, and various
maintenance programs were upgraded and are now 100% compliant.
We have identified and contacted all external vendors who provide and/or
require date dependent information and those customers who are material to
our operations to ensure that they will be in compliance with the Year 2000
issue. For any vendors or customers who are determined to be critical to our
operations, we are developing a disaster recovery plan containing
alternative actions plans in the event of vendor non-compliance. We
anticipate having all critical resource alternative plans in place during
the third quarter of 1999.
PART II. OTHER INFORMATION
Item 2. Changes in Securities
The Company maintains a stock option plan for the benefit of its officers
and key employees. Under the plan, incentive stock options may be granted to
acquire shares of the Company's common stock, $1.00 par value, at an
exercise price equal to the closing sale price of the Company's common stock
on the date of the grant. During the period covered by this report, options
were exercised to acquire 2,234 shares under the plan. The offer and
sale of shares of common stock under the plan is exempt from the
registration requirements of the Securities Act of 1933, as amended,
pursuant to Section 3(a)(11) thereof, as (i) the Company is incorporated
under the laws of New Hampshire and (ii) all employees receiving and
exercising stock option grants are residents of the State of New Hampshire.
The shares acquired pursuant to such exercise are restricted from transfer
for one year following the date of acquisition.
Item 4. Submission of Matters to a Vote of Security Holders
(a) On April 16, 1999, the Company held its Annual Meeting of Shareholders
to elect three directors; to ratify the appointment by the Board of
Directors of the firm of Arthur Andersen LLP as independent accountants of
the Company for the year ending December 31, 1999; and to act upon a
proposal to amend the Company's Articles of Incorporation to increase the
number of authorized common shares from 2.4 million to 5 million.
(b) The following incumbent directors were re-elected to a three year term
expiring at the Annual Meeting of Shareholders in 2002:
<TABLE>
<CAPTION>
Number of Shareholders Voting --
For Withheld
--- --------
<S> <C> <C>
Stephen J. Densberger 1,440,321 7,022
Hannah M. McCarthy 1,432,259 15,084
Charles J. Staab 1,436,186 11,156
</TABLE>
The continuing directors whose terms expire beyond the April 16, 1999 Annual
Meeting date are:
Maurice L. Arel Joseph A. Bellavance
Charles E. Clough Robert P. Keller
John R. Kreick Martha E. O'Neill
(c) By a vote of 1,431,390 shares FOR, 11,880 shares AGAINST and 4,072
shares ABSTAINING, the Board of Directors' appointment of Arthur Andersen
LLP as the Company's independent accountants for the year ending December
31, 1999 was ratified.
(d) By a vote of 1,312,439 shares FOR, 111,580 shares AGAINST and 23,323
shares ABSTAINING, the proposal to amend the Company's Articles of
Incorporation to increase the number of authorized common shares from 2.4
million to 5 million was approved.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits -The following exhibit is filed herewith:
Exhibit Number Exhibit Description
-------------- -------------------
Exhibit 3.4 Articles of Amendment to the Articles of
Incorporation of Pennichuck Corporation
(b) There were no reports filed on Form 8-K during the second quarter
of 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Pennichuck Corporation
----------------------
(Registrant)
Date: August 11, 1999 /s/ Maurice L. Arel
--------------- -------------------
Maurice L. Arel, President and
Principal Executive Officer
Date: August 11, 1999 /s/ Charles J. Staab
--------------- --------------------
Charles J. Staab, Vice President,
Treasurer and Principal Financial
Officer
Exhibit 3.4
STATE OF NEW HAMPSHIRE
Filing Fee: $35.00 Form No. 14
use black print or type. RSA 293-A:10.06
Leave 1" margins both sides.
ARTICLES OF AMENDMENT
to the
ARTICLES OF INCORPORATION
PURSUANT TO THE PROVISIONS OF THE NEW HAMPSHIRE BUSINESS CORPORATION ACT,
THE UNDERSIGNED CORPORATION ADOPTS THE FOLLOWING ARTICLES OF AMENDMENT TO
ITS ARTICLES OF INCORPORATION:
FIRST: The name of the corporation is Pennichuck Corporation.
SECOND: The text of each amendment adopted is:
See Exhibit I, attached hereto and incorporated herein by reference.
THIRD: If the amendment provides for an exchange, reclassification,
or cancellation of issued shares the provisions for implementing the
amendment(s) if not contained in the above amendment are:
NOT APPLICABLE
FOURTH: The amendment was adopted on: April 16, 1999
FIFTH: (check one)
A. _______ The amendment(s) were adopted by the incorporators or
board of directors without shareholder action and
shareholder action was not required.
B. ___X___ The amendment(s) were approved by the shareholders.
(Note 1)
<TABLE>
<CAPTION>
Number of votes
Designation Number of indisputably
(class or series) Number of votes entitled represented at
of voting group shares outstanding to be cast the meeting
- ----------------- ------------------ -------------- ---------------
<S> <C> <C> <C>
Common stock, 1,722,009 1,722,009 1,447,343
$1.00 par value
<CAPTION>
Designation Total number of
(class or series) Total number of votes cast: OR undisputed
--
of voting group FOR AGAINST votes cast FOR
- ---------------- --- ------- --------------
<S> <C> <C>
Common Stock, 1,312,439 111,580
$1.00 par value
</TABLE>
SIXTH: The number cast for each amendment(s) by each voting group
was sufficient for approval by each voting group.
Dated: June 17, 1999
Pennichuck Corporation (Note 2)
By: /s/ Maurice L. Arel (Note 3)
-------------------
Signature of its President
Maurice L. Arel
-------------------
Print or type name
Notes: 1. All sections under "B." must be completed. If any voting group
is entitled to vote separately, give respective information for
each voting group. (See RSA 293-A:1.40 for definition of
voting group.)
2. Exact corporate name of corporation adopting articles of
amendment.
3. Signature and title of person signing for the corporation.
Must be signed by the chairman of the board of directors,
president or another officer; or see RA 293-A:1.20(f) for
alternative signatures.
Mail fee and ORIGINAL AND ONE EXACT OR CONFORMED COPY to: Secretary of
State, State House, Room 204, 107 North Main Street, Concord, NH 03301-
4989.
EXHIBIT I
RESOLVED, that the first sentence of Article IV of the Articles of
Incorporation of Pennichuck Corporation be amended in part by striking the
phrase "Two Million Four Hundred Thousand (2,400,000) shares of common
stock, having par value of One Dollar ($1.00) per share," and inserting in
place thereof the phrase "Five Million (5,000,000) shares of common stock,
having par value of One Dollar ($1.00) per share," such that such sentence
as amended shall read in full:
"Except as provided in Article VII, the aggregate number of shares
of capital stock which the corporation shall have authority to issue
is: Five Million (5,000,000) shares of common stock, having par
value of One Dollar ($1.00) per share, and Fifteen Thousand (15,000)
shares of preferred stock, having par value of One Hundred Dollars
($100.00) per share";
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,864,000
<SECURITIES> 0
<RECEIVABLES> 2,894,000
<ALLOWANCES> 30,000
<INVENTORY> 341,000
<CURRENT-ASSETS> 6,277,000
<PP&E> 78,942,000
<DEPRECIATION> 18,942,000
<TOTAL-ASSETS> 72,047,000
<CURRENT-LIABILITIES> 2,090,000
<BONDS> 28,057,000
0
0
<COMMON> 1,733,000
<OTHER-SE> 23,736,000
<TOTAL-LIABILITY-AND-EQUITY> 72,047,000
<SALES> 0
<TOTAL-REVENUES> 8,602,000
<CGS> 0
<TOTAL-COSTS> 5,703,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,013,000
<INCOME-PRETAX> 1,993,000
<INCOME-TAX> 760,000
<INCOME-CONTINUING> 1,233,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,233,000
<EPS-BASIC> .71
<EPS-DILUTED> .70
</TABLE>
