Document Summary:
Document: MAR9610Q
Author:
Addressee:
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Creation Date: 05/14/1996
Modification Date: 05/14/1996
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Comments:
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-15420
IWC RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
Indiana 35-1668886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1220 Waterway Boulevard, Indianapolis, Indiana 46202
(Address of principal executive office) (Zip Code)
(317) 639-1501
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days: Yes x No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, no par value per share 8,368,011
Class Outstanding at 4-1-96
IWC RESOURCES CORPORATION AND SUBSIDIARIES
Index
Part I. Financial Information:
Consolidated Balance Sheets as of March 31, 1996 and
1995, and December 31, 1995 (Unaudited)
Consolidated Statement of Shareholders' Equity - Three
Months ended March 31, 1996 (Unaudited)
Consolidated Statements of Earnings - Three Months ended
March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows -
Three Months ended March 31, 1996 and 1995 (Unaudited)
Notes to Consolidated Financial Statements (Unaudited)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II. Other Information:
<TABLE>
PART I. FINANCIAL INFORMATION
IWC RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and 1995 and December 31, 1995
(Unaudited)
<CAPTION>
March 31, December 31,
1996 1995 1995
(in thousands)
ASSETS
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents $ 1,100 1,518 1,771
Accounts receivable, less allowance for
doubtful accounts of $332, 190 and 327 19,257 10,579 21,092
Materials and supplies, at cost 3,161 2,099 3,194
Other current assets 2,472 1,447 4,370
Total current assets 25,990 15,643 30,427
Utility plant:
Utility plant in service 365,426 347,090 362,610
Less accumulated depreciation 83,300 77,370 81,594
Net plant in service 282,126 269,720 281,016
Construction work in progress 9,273 8,889 7,855
Utility plant, net 291,399 278,609 288,871
Construction funds held by Trustee 11,545 - 14,260
Other property, net 34,978 14,817 32,909
Goodwill, net of accumulated amortization 23,602 16,836 23,776
Deferred charges and other assets 19,174 14,729 18,636
$406,688 340,634 408,879
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 28,340 22,454 30,589
Accounts payable and accrued expenses 21,277 17,079 20,282
Dividends payable 51 51 -
Federal income taxes - 1,538 -
Customer deposits 1,392 1,140 1,369
Total current liabilities 51,060 42,262 52,240
Long-term obligations:
Long-term debt, less current portion 113,375 98,225 113,375
Customer advances for construction 50,552 48,487 51,606
Other liabilities 9,935 6,904 9,346
Total long-term obligations 173,862 153,616 174,327
Deferred income taxes 37,675 31,347 37,347
Contributions in aid of construction 33,662 30,527 32,932
Preferred stock of subsidiary and
redeemable preferred stock 5,705 5,705 5,705
Shareholders' equity
Common stock, authorized 10,000 common
shares; 8,345, 6,932, and 8,247 issued
and outstanding, respectively 88,651 61,736 86,575
Retained earnings 16,604 16,241 20,321
105,255 77,977 106,896
Less unearned compensation 531 800 568
Total shareholders' equity 104,724 77,177 106,328
Commitments and contingencies
$406,688 340,634 408,879
======= ======= =======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
<TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Three months ended March 31, 1996
(Unaudited)
<CAPTION>
Total
Common Stock Retained Unearned Shareholders'
Shares Amount Earnings Compensation Equity
(In thousands, except share data)
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 8,247,353 $ 86,575 $ 20,321 $ (568) $106,328
Net loss - - (716) - (716)
Dividends - $.36 per share:
Common Stock - - (2,982) - (2,982)
Redeemable preferred stock - - (19) - (19)
Common stock issued:
Dividend Reinvestment Plan 96,062 2,037 - - 2,037
Restricted stock plan 1,969 39 - (39) -
Compensation expense - - - 76 76
Balance at March 31, 1996 8,345,384 $ 88,651 $ 16,604 $ (531) $104,724
========= ======= ======= === =======
The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended March 31, 1996 and 1995
(Unaudited)
Three Months
Ended March 31,
1996 1995
(in thousands, except per share data)
Operating revenues:
Water utilities $18,128 17,095
Utility-related services 17,284 7,360
35,412 24,455
Operating expenses:
Operation and administration:
Water utilities 9,913 8,731
Utility-related services 17,007 7,247
Amortization of acquisition costs 335 281
Depreciation 2,804 2,126
Taxes other than income taxes 3,012 2,272
Total operating expenses 33,071 20,657
Operating earnings 2,341 3,798
Other income (expense):
Interest expense, net (2,456) (2,173)
Interest income 73 2
(2,383) (2,171)
Earnings (loss) before income
taxes and dividends on
preferred stock of subsidiary (42) 1,627
Income taxes 623 1,294
Earnings (loss) before dividends
on preferred stock of subsidiary (665) 333
Dividends on preferred
stock of subsidiary 51 51
Net earnings (loss) $ (716) 282
====== ======
Net earnings (loss) per common and
common equivalent share $ (.09) .04
====== ======
Average number of common
and common equivalent shares outstanding 8,349 6,974
====== ======
The accompanying notes are an integral part of the
consolidated financial statements.
<TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1996 and 1995
(Unaudited)
<CAPTION>
Three Months
Ended March 31,
1996 1995
(in thousands)
Cash flows from operating activities:
<S> <C> <C> <C>
Net earnings (loss) $ (716) 282
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation and amortization 3,344 2,539
Deferred income taxes 328 344
Gain on sales of other property (124) (632)
Provision for bad debts 111 95
Dividends on preferred stock of subsidiary 51 51
Other, net 87 288
Changes in operating assets and liabilities:
Accounts receivable 1,724 (550)
Materials and supplies 33 158
Other current assets 1,898 212
Accounts payable and accrued expenses 995 849
Federal income taxes - 1,282
Customer deposits 23 14
Net cash provided by operating activities 7,754 4,932
Cash flows from investing activities:
Additions to utility plant and other property (7,591) (7,607)
Proceeds from sales of other property 126 156
Customer advances for construction 1,064 1,485
Refunds of customer advances for construction (1,388) (1,402)
Other investing activities, net (138) (379)
Net cash used by investing activities (7,927) (7,747)
Cash flows from financing activities:
Increase (decrease) in notes payable to banks (2,249) 4,780
Payments of long-term debt - (1,215)
Decrease in construction funds
held by Trustee 2,715 -
Cash dividends (3,001) (2,439)
Proceeds from issuance of common stock 2,037 318
Net cash provided (used) by
financing activities (498) 1,444
Decrease in cash and cash equivalents (671) (1,371)
Cash and cash equivalents at beginning of period 1,771 2,889
Cash and cash equivalents at end of period $ 1,100 1,518
====== ======
Supplemental disclosures of cash flow information-
Cash paid for:
Interest on long-term debt and notes payable
to banks, net of capitalized interest $ 3,230 2,704
Income taxes $ 171 56
The accompanying notes are an integral part of the
consolidated financial statements.
</TABLE>
IWC RESOURCES CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
BASIS OF PRESENTATION
The foregoing consolidated financial statements are unaudited.
However, in the opinion of management, all adjustments (comprising
only normal recurring accruals) necessary for a fair presentation
of the financial statements have been included. Results for any
interim period are not necessarily indicative of results to be
expected for the year. The consolidated financial statements
include the accounts of IWC Resources Corporation (Resources) and
its wholly owned subsidiaries. The term "Company" refers to the
consolidated operations of Resources and its subsidiaries.
Through its water utility subsidiaries, the Company owns and
operates waterworks systems supplying water for residential,
commercial and industrial uses, and for fire protection in
Indianapolis, Indiana, and the surrounding area. These
subsidiaries are regulated by the Indiana Utility Regulatory
Commission (Commission), and their accounting policies, which are
substantially consistent with generally accepted accounting
principles, are governed by the Commission. The Company also owns
and operates businesses which are involved in utility line
locating, installation, repairs and maintenance of underground
pipelines, data processing and other utility-related services, and
real estate sales and development. All significant intercompany
accounts and transactions have been eliminated in consolidation.
A summary of the Company's significant accounting policies is set
forth in Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
CURRENT EVENTS
Securities
On March 22, 1995, the Commission granted Indianapolis Water
Company (IWC) authority to issue, on or before December 31, 1996,
an aggregate of $30,000,000 in securities, to consist of not more
than $18,000,000 in the form of long-term debt and/or preferred
equity, and, assuming favorable market conditions, at least
$12,000,000 in common equity. In September 1995, IWC issued
$18,000,000 of long-term debt in the form of First Mortgage Bonds,
5.85% Series due 2025. Proceeds from the issuance of these
securities are being used for the construction, extension and
improvement of IWC's facilities, plant and distribution system,
reimbursement of IWC's treasury for plant capital previously made,
and the discharge or refunding of short-term debt and higher cost
long-term debt. In December 1995 and March 1996, Resources made
equity capital contributions to IWC of $10,505,000 and $1,495,000,
respectively, which amounts to the $12,000,000 required by the
Commission. The amounts invested by Resources were derived from
proceeds of the sale of common shares of Resources through its
Dividend Reinvestment and Share Purchase Plan.
COMMITMENTS AND CONTINGENCIES
Pursuant to the 1986 Amendments of the Safe Drinking Water Act, the
United States Environmental Protection Agency (EPA) continues to
propose new drinking water standards and requirements which, if
promulgated, could be costly and require substantial changes in
current operations of the Company. The outcome of EPA's proposals
are uncertain at this time. Additionally, the Indiana Department
of Environmental Management issues permits for discharges from the
Company's treatment stations, the terms and limitations of which
can, and may well be, onerous. As a result, compliance with such
permits may be expensive.
The Company has agreements with five key executives which provide
that in the event of change of control of the Company, each
executive vests in a three-year employment contract at his then
existing level of compensation. In the case of three of these key
executives, in the event of change of control of the Company, a
supplemental pension applies pursuant to their contracts that
provides the difference between their benefits under the regular
benefit plans and that which would be available upon attaining age
65.
RECLASSIFICATIONS
Certain amounts as of March 31, 1995 have been reclassified to
conform with the 1996 presentation.
-2-
IWC Resources Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The most significant changes in the consolidated financial
condition and results of operations of IWC Resources Corporation
and subsidiaries (Company) are attributable to the combined
operations of its two segments: (1) water utilities and (2)
utility-related services. These segments are discussed more
fully in Notes to Consolidated Financial Statements, Segment
Information, in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
In August 1995, the Company acquired Miller Pipeline Corporation
(MPC). As a result of this acquisition, many of the differences
between results of operations in the utility-related services
segment for 1996 are due primarily to the operations of MPC,
which is included in this segment.
The Company's results of operations for both water utilities and
utility-related services segments are seasonal in nature with
the higher proportion of operating revenues and operating
earnings being realized in the second and third quarters of the
year than the first and fourth quarters. Such seasonality is
considered by the Company in developing its budgets by quarter.
Three Months Ended March 31, 1996, Compared with
Three Months Ended March 31, 1995
During the three months ended March 31, 1996, total operating
earnings were $2,341,000 (6.6% of revenues) compared to
$3,798,000 (15.5% of revenues) during the same period in 1995.
Operating earnings in the water utilities segment decreased to
$4,843,000 (26.7% of segment revenues) in 1996 from $5,095,000
(29.8% of segment revenues) in 1995. The operating margin in
this segment decreased to 26.7% in 1996 compared to 29.8% in
1995. The reduction in the operating margin is primarily due to
the combined effects of a reduction in income taxes collected
from developers and an increase in operation and administration
expenses. The utility-related services segment incurred an
operating loss of $2,502,000 (14.5% of segment revenues) in 1996
compared to an operating loss of $1,297,000 (17.6% of segment
revenues) in 1995; however, the operating margin in this segment
improved to an operating deficit of 14.5% in 1996 from an
operating deficit of 17.6% in 1995. The increase in the
operating loss in this segment is due primarily to the
seasonality of operations at Miller Pipeline Corporation (MPC)
acquired in August 1995 whereas the improvement in the operating
margin results primarily from MPC's higher operating margin.
-3-
Total operating revenues increased $10,957,000 (44.8%) during
the three months ended March 31, 1996 over the same period in
1995. Operating revenues applicable to the water utilities
segment increased $469,000, excluding a decrease of $564,000 in
income taxes collected from developers, representing a 2.9%
increase over 1995, and is primarily due to two rate increases
in the second quarter of 1995 and a moderate increase in total
water consumption. Operating revenues applicable to the
utility-related services segment increased $9,924,000 (134.8%)
due primarily to the acquisition of MPC and the continued
expansion of business contracts at SM&P.
Total operation and administration expenses increased
$10,942,000 (68.5%) during the three months ended March 31, 1996
over the same period in 1995, of which $9,760,000 is applicable
to the utility-related services segment. The increase in water
utilities segment expenses of $1,182,000 is discussed below and
represents a 13.5% increase over 1995. Labor expenses increased
$325,000 (9.9%) mainly due to an increase in maintenance
activity during 1996 as compared to 1995 and a general wage
increase, effective January 1, 1996. Chemical costs increased
$66,000 (29.8%) primarily due to increased usage. Materials and
transportation costs increased $160,000 (28.9%) primarily due to
increased maintenance activities. Costs of the Company's
pension and other benefit plans increased $419,000 (86.0%)
primarily due to the amortization of cost of postretirement
benefits other than pensions commencing May 1995 resulting from
the settlement of IWC's rate case on April 26, 1995.
Operation and administration expenses applicable to the
utility-related services segment, excluding $7,875,000 in
expenses applicable to the operations of MPC, increased
$1,885,000 (26.0%). Labor expense increased $1,107,000 (23.9%)
primarily due to the addition of employees resulting from the
expansion of business contracts at SM&P and a general wage
increase. Materials expense increased $116,000 (25.5%)
primarily due to the expansion of business of SM&P.
Transportation costs increased $355,000 (65.1%) primarily due to
the increase in the number of vehicles, leasing costs and
associated maintenance costs. Insurance expense increased
$78,000 (10.9%) primarily due to higher healthcare premiums
resulting from increased numbers of employees. Cable cut costs
increased $98,000 (38.0%) primarily due to the expansion of
business and the increased costs associated with cable cuts.
Amortization of acquisition costs increased $54,000 (19.2%)
primarily due to the acquisition of MPC. Depreciation increased
$678,000 (31.9%) primarily due to additional utility plant and
other property placed in service including other property added
through the acquisition of MPC.
-4-
Taxes other than income taxes increased $740,000 (32.6%)
primarily due to an increase in payroll related taxes resulting
from an increase in the number of employees in the
utility-related services segment.
The increase in interest expense, net, of $283,000 is largely
due to the effect of higher average debt outstanding. The
increase in interest income of $71,000 is primarily due to the
increase in construction funds held by Trustee.
Income taxes decreased $671,000 (51.9%) primarily due to a
decrease of $563,000 in income taxes collected from developers
and a decrease in pretax earnings.
-5-
Liquidity and Capital Resourcrs
At the present time, the Company's business activities are conducted
through its regulated water utilities and unregulated utility-related
businesses. The Company acquired SM&P Utility Resources, Inc. in
June 1993 and Miller Pipeline Corporation (MPC) in August 1995 which
diversified the Company's operations. The Company may, in the
future, become involved in other water utilities and utility-related
activities through the acquisition or formation of additional
subsidiaries. The source of capital to finance these subsidiaries
will be determined at the time they are established or acquired.
However, the Company does not intend to enter into any business that
would impair the Company's primary commitment to maintain and develop
its water utilities to meet the current and future needs of its
customers.
Cash Flows From Operating Activities
Cash flows from operating activities result primarily from net
earnings (loss) adjusted for non-cash items such as depreciation and
deferred taxes and changes in operating assets and liabilities. The
seasonal nature of the Company's businesses typically results in
higher operating revenues in the second and third quarters of the
year than in the first and fourth quarters. Fluctuations in accounts
payable and accrued expenses result primarily from property taxes and
timing of payments, whereas federal income taxes vary with pretax
earnings and the level of income taxes collected from developers on
customer advances for construction.
Cash Flows From Investing Activities
Cash flows from investing activities fluctuate primarily as a result
of additions to utility plant and other property and the level of
customer advances for construction, net of refunds.
The Company continues to experience significant growth in its
distribution system. The Company received $1,064,000 in new customer
advances and refunded $1,388,000 in customer advances during the
three months ended March 31, 1996, compared to $1,485,000 and
$1,402,000, respectively, during the same period in 1995. The
Company also added $7,591,000 to utility plant and other property
during the three months ended March 31, 1996, compared to $7,607,000
during the same period in 1995.
-6-
Cash Flows From Financing Activities
Cash flows from financing activities consist primarily of the
Company's borrowings, dividend payments and sales of common stock.
The Company utilizes borrowings against its lines of credit with
local banks for its short-term cash needs.
In March 1995, the Commission granted IWC authority to issue, on or
before December 31, 1996, an aggregate of $30,000,000 in securities,
to consist of not more than $18,000,000 in the form of long-term debt
and/or preferred equity, and assuming favorable market conditions, at
least $12,000,000 in common equity. In September 1995, IWC issued
$18,000,000 of 5.85% Series First Mortgage Bonds to secure a like
amount of Economic Development Bonds issued by the City of
Indianapolis due September 1, 2025. Proceeds from this issue were
deposited with a trustee and are being used for the construction,
extension and improvement of IWC's facilities, plant and distribution
system and reimbursement of IWC's treasury for plant capital
expenditures previously made. In December 1995 and March 1996,
Resources made equity capital contributions to IWC of $10,505,000 and
$1,495,000, respectively, which amounts to the $12,000,000 required
by the Commission. The amounts invested by Resources were derived
from proceeds of the sale of common shares of Resources through its
Dividend Reinvestment and Share Purchase Plan.
The Company's goal is to reduce the percentage of net earnings
applicable to common and common equivalent shareholders declared
payable in cash dividends to a level which allows the Company greater
flexibility in operating its businesses. Approximately 84%, 95%, and
99% of net earnings applicable to common and common equivalent
shareholders were declared payable in cash dividends during 1995,
1994, and 1993, respectively. The reduction in the payout percentage
in 1995 is due primarily to improved net earnings resulting from
diversification of the Company's businesses and improved operating
results in the water utilities segment.
At March 31, 1996, the Company had lines of credit with banks
aggregating $47,000,000 which require a compensating cash balance of
$100,000. At March 31, 1996, unused lines of credit aggregated
$19,360,000. Interest on borrowings under the lines of credit is
variable (an average of 6.16% at March 31, 1996).
-7-
Capital Expenditures
Capital expenditures for 1996 are budgeted at approximately
$48,000,000 and are expected to be financed primarily from internally
generated cash, customer advances for construction, short-term bank
borrowings, and long-term financings. Capital expenditures for the
five-year period 1996 through 2000 are budgeted at approximately
$150,000,000 with the major portion for new mains and distribution
and plant facilities and other operating equipment. The Company
anticipates that it will be necessary during the five-year period
1996 through 2000 to secure additional outside financing from both
short- and long-term debt and equity capital, to finance planned
capital expenditures and long-term debt maturities.
Projected capital expenditures do not include any construction
projects that IWC could be required to undertake to comply with
legislative or regulatory environmental or water quality requirements
that may be imposed in the future. If IWC is required to adopt new
methods of water treatment, the costs involved may be substantial.
Capital costs are presently estimated at $27,000,000 for ozonation
and $105,000,000 for granular activated carbon (GAC). Additionally,
IWC is subject to regulatory requirements regarding discharges from
its treatment plants. The Company estimates that the cost to comply
with possible changes to existing regulatory requirements for
discharges approximate $2,000,000 in increased annual operating
costs. Such costs and expenses should be recoverable through water
rates, but only after appropriate regulatory action.
Environmental Matters
The Company's utility operations are subject to pollution control and
water quality control regulations, including those issued by the
Environmental Protection Agency (EPA), the Indiana Department of
Environmental Management (IDEM), the Indiana Water Pollution Control
Board and the Indiana Department of Natural Resources. Under the
Federal Clean Water Act and Indiana's regulations, the Company must
obtain National Pollutant Discharge Elimination System (NPDES)
permits for discharges from its White River, White River North, Fall
Creek, Thomas W. Moses and the Geist treatment stations. The
Company's current NPDES permits were to have expired June 30, 1989,
for White River and Fall Creek stations, December 31, 1990, for
Thomas W. Moses, April 30, 1994, for Geist treatment station, and
January 31, 1996 for White River North station. Applications for
renewal of the permits have been filed with, but not finalized by,
IDEM. (These permits continue in effect pending review of the
applications).
-8-
Under the federal Safe Drinking Water Act (SDWA), the Company is
subject to regulation by EPA of the quality of water it sells and
treatment techniques it uses to make the water potable. EPA
promulgates nationally applicable maximum contaminant levels (MCLs)
for contaminants found in drinking water. Management believes that
the Company is currently in compliance with all MCLs promulgated to
date. EPA has continuing authority, however, to issue additional
regulations under the SDWA, and Congress amended the SDWA in July
1986 to require EPA, within a three-year period, to promulgate MCLs
for over 80 chemicals not then regulated. EPA has been unable to
meet the three-year deadline, but has promulgated MCLs for many of
these chemicals and has proposed additional MCLs. Management of the
Company believes that it will be able to comply with the promulgated
MCLs and those now proposed without any change in treatment
technique, but anticipates that in the future, because of EPA
regulations, the Company may have to change its method of treating
drinking water to include ozonation and/or GAC. In either case, the
capital costs could be significant (currently estimated at
$27,000,000 for ozonation and $105,000,000 for GAC), as would be the
Company's increase in annual operating costs (currently estimated at
$1,400,000 for ozonation and $5,600,000 for GAC). Actual costs could
exceed these estimates. The Company would expect to recover such
costs through its water rates; however, such recovery may not
necessarily be timely.
Under a 1991 law enacted by the Indiana Legislature, a water utility,
including the utility subsidiaries of the Company, may petition the
Indiana Utility Regulatory Commission (Commission) for prior approval
of its plans and estimated expenditures required to comply with
provisions of, and regulations under, the Federal Clean Water Act and
SDWA. Upon obtaining such approval, the utility may include, to the
extent of its estimated costs as approved by the Commission, such
costs in its rate base for ratemaking purposes and recover its costs
of developing and implementing the approved plans if statutory
standards are met. The capital costs for such new systems, equipment
or facilities or modifications of existing facilities may be included
in the utility's rate base upon completion of construction of the
project or any part thereof. While use of this statute is voluntary
on the part of a utility, if utilized it should allow utilities a
greater degree of confidence in recovering major costs incurred to
comply with environmentally related laws on a timely basis.
-9-
Rate Case
On May 10, 1995, the Commission approved a Settlement Agreement
entered into by the UCC, four intervening customers and IWC. As part
of the Agreement, the parties agreed not to seek an adjustment in
IWC's basic rates and charges prior to April 1, 1997, subject to
IWC's interim right to request approval of new rates to cover
operating expenses connected with implementing measures which might
be required in connection with new National Pollutant Discharge
Elimination System permits which IWC anticipates receiving for
wastewater discharges at its Fall Creek and White River Stations
(NPDES permits). The parties also agreed that prior to April 1,
1997, IWC may request that the Commission approve, in a separate
proceeding, the continuation of the allowance for funds used during
construction (debt component only), and the deferral of depreciation,
on any capital expenditures made in connection with new NPDES permits
at the Fall Creek and White River Stations or IWC's anticipated new
South Well Field Station until a rate base determination has been
made with respect to these items in IWC's next rate case.
Inflation, Rate Changes and Seasonality
Under normal conditions and particularly during periods of inflation,
water utility revenues from increased water consumption will not keep
pace with the increase in operating costs. Therefore, periodic water
rate and service charge adjustments are necessary, with the frequency
of such increases being partially determined by the amount of
inflation.
Results for any interim period are not indicative of results to be
expected for the year. Typically, the seasonal nature of the
Company's business results in a higher proportion of operating
revenues being realized in the second and third quarters of the year
than the first and fourth quarters of the year.
-10-
Part II. OTHER INFORMATION
IWC RESOURCES CORPORATION AND SUBSIDIARIES
March 31, 1996
Item 4. Submission of Matters to Vote of Security Holders
The annual meeting of the shareholders of the Company was
held on April 18, 1996.
Election of Directors
The following table sets forth the nominees elected at the
annual meeting, and the number of votes cast for, or
withheld, as well as the number of broker non-votes, with
respect to each nominee. The number of abstentions recorded
is not applicable to the election of directors.
Votes Votes Broker
Nominee Cast for Withheld Non-Votes
Joseph R. Broyles 6,458,304 81,630 0
Robert B. McConnell 6,427,936 111,998 0
J. George Mikelsons 6,400,433 139,501 0
Thomas M. Miller 6,396,106 143,828 0
Jerry D. Semler 6,469,270 70,664 0
Authorized Common Stock
Article V of Resources' Articles of Incorporation was
amended increasing the number of authorized shares of common
stock from 10,000,000 to 20,000,000 shares. There were
6,276,856 votes cast in favor, 170,993 votes cast against
and 97,036 abstentions and zero broker non-votes were
recorded with respect to such approved amendment.
Other Matters Voted Upon at the Meeting
KPMG Peat Marwick LLP was appointed as auditor for the
Company for 1996. There were 6,186,871 votes cast in favor,
165,263 votes cast against and 186,804 abstentions and zero
broker non-votes were recorded with respect to such
appointment.
Item 6. Exhibits and Reports on Form 8-K
(a) exhibits 27 - Financial Data Schedule
(b) reports on Form 8-K No reports on Form 8-K were
filed during the quarter
ended March 31, 1996.
-11-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IWC RESOURCES CORPORATION
(Registrant)
By:
J. A. Rosenfeld, President
IWC Utilities (Principal
Financial Officer) duly
authorized to sign this
report on behalf of the
registrant
Date
James P. Lathrop, Assistant
Treasurer (Principal Accounting
Officer)
Date
-12-
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet as of March 31, 1996, and from the consolidated
statements of earnings and cash flows for the nine months then ended, and
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 291,399
<OTHER-PROPERTY-AND-INVEST> 46,523
<TOTAL-CURRENT-ASSETS> 25,990
<TOTAL-DEFERRED-CHARGES> 42,776
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 406,688
<COMMON> 88,651
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 16,604
<TOTAL-COMMON-STOCKHOLDERS-EQ> 104,724
1,200
4,505
<LONG-TERM-DEBT-NET> 113,375
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 28,340
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0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 154,544
<TOT-CAPITALIZATION-AND-LIAB> 301,964
<GROSS-OPERATING-REVENUE> 35,412
<INCOME-TAX-EXPENSE> 623
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 33,071
<OPERATING-INCOME-LOSS> 2,341
<OTHER-INCOME-NET> (2,383)
<INCOME-BEFORE-INTEREST-EXPEN> 1,740
<TOTAL-INTEREST-EXPENSE> 2,456
<NET-INCOME> (716)
51
<EARNINGS-AVAILABLE-FOR-COMM> (716)
<COMMON-STOCK-DIVIDENDS> 3,001
<TOTAL-INTEREST-ON-BONDS> 7,943
<CASH-FLOW-OPERATIONS> 7,754
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
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