UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 1998
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 0-18516
ARTESIAN RESOURCES CORPORATION
(exact name of registrant as specified in its charter)
State or other jurisdiction of incorporation or organization: Delaware
I.R.S. Employer Identification Number: 51-0002090
Address of principal executive offices: 664 Churchmans Road, Newark, Delaware
Zip Code: 19702
Registrant's telephone number, including area code: (302) 453-6900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. X Yes No
As of July 30, 1998, 1,286,473 shares and 509,653 shares of Class A
Non-Voting Common Stock and Class B Common Stock, respectively, were
outstanding.
ARTESIAN RESOURCES CORPORATION
INDEX TO FORM 10-Q
Part I - Financial Information: Page(s)
Item 1 - Financial Statements
Consolidated Balance Sheet -
June 30, 1998 and December 31, 1997 3
Consolidated Statement of Income for
the quarters ended June 30, 1998 and 1997 4
Consolidated Statement of Income for the
six months ended June 30, 1998 and 1997 5
Consolidated Statement of Retained Earnings
for the six months ended June 30, 1998 and 1997 5
Consolidated Statement of Cash Flows for the
six months ended June 30, 1998 and 1997 6
Notes to the Consolidated Financial Statements 7-10
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
Part II - Other Information:
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities 12
Item 3 - Default Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
Index to Exhibits 13-14
Exhibit 11 - Computation of Earnings Per Common Share 14
Exhibit 27 - Financial Data Schedules 15-16
Signatures 17
Part I - Financial Information
Item I - Financial Statements
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
Unaudited December 31,
June 30, 1998 1997
ASSETS
Utility plant, at original cost
less accumulated depreciation $105,494 $ 97,694
Current assets
Cash and cash equivalents 206 146
Accounts receivable, net 1,946 2,131
Unbilled operating revenues 2,376 1,869
Materials and supplies-at cost
on FIFO basis 588 610
Prepaid property taxes 12 519
Prepaid expenses and other 438 388
State and federal income taxes --- 135
5,566 5,798
Other assets
Non-utility property (less accumulated
depreciation 1998-$148;1997-$145) 345 349
Other deferred assets 1,179 1,208
1,524 1,557
Regulatory assets, net 2,886 2,818
$115,470 $107,867
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' equity
Common stock $ 1,794 $ 1,780
Additional paid-in capital 17,899 17,648
Retained earnings 7,341 6,887
Preferred stock 272 272
Total common stockholders' equity 27,306 26,587
Preferred stock-mandatorily redeemable 600 600
Long-term debt, net of current portion 32,082 32,103
59,988 59,290
Current liabilities
Notes payable 6,070 1,164
Current portion of long-term debt 45 46
Current portion of mandatorily
redeemable preferred stock --- 112
Accounts payable 3,230 2,616
Overdraft payable 855 510
State and federal income taxes 633 ---
Deferred income taxes 85 189
Interest accrued 610 880
Customer deposits 353 370
Dividends payable 20 ---
Other 796 360
12,697 6,247
Deferred credits and other liabilities
Net advances for construction 18,247 17,880
Postretirement benefit obligation 1,676 1,704
Deferred investment tax credits 1,010 1,029
Deferred income taxes 414 176
21,347 20,789
Net contributions in aid of construction 21,438 21,541
$115,470 $107,867
See notes to the consolidated financial statements.
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Unaudited
(In thousands, except share and per share amounts)
For the Quarter
Ended June 30,
1998 1997
OPERATING REVENUES
Water sales $ 6,568 $ 5,474
Other utility operating revenue 104 77
6,672 5,551
OPERATING EXPENSES
Utility operating expenses 3,402 3,045
Related party expenses 57 62
Depreciation and amortization 472 641
State and federal income taxes 675 324
Property and other taxes 370 356
4,976 4,428
OPERATING INCOME 1,696 1,123
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 70 42
OTHER INCOME (EXPENSE) 6 (17)
INCOME BEFORE INTEREST CHARGES 1,772 1,148
INTEREST CHARGES
Long-term debt 672 609
Short-term debt 72 2
Amortization of debt expense 8 5
Other 7 (1)
759 615
NET INCOME 1,013 533
DIVIDENDS ON PREFERRED STOCK 19 23
NET INCOME APPLICABLE TO COMMON STOCK $ 994 $ 510
INCOME PER COMMON SHARE
Basic $ 0.55 $ 0.29
Diluted $ 0.55 $ 0.29
CASH DIVIDENDS PER COMMON SHARE $ 0.23 $ 0.23
AVERAGE COMMON SHARES OUTSTANDING
Basic 1,793,737 1,756,436
Diluted 1,810,283 1,769,426
See notes to the consolidated financial statements.
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF INCOME
Unaudited
(In thousands, except share and per share amounts.)
For the Six Months
Ended June 30,
1998 1997
OPERATING REVENUES
Water sales $ 12,115 $ 10,365
Other utility operating revenue 177 165
12,292 10,530
OPERATING EXPENSES
Utility operating expenses 6,773 6,123
Related party expenses 114 123
Depreciation and amortization 1,078 1,227
State and federal income taxes 893 450
Property and other taxes 746 735
9,604 8,658
OPERATING INCOME 2,688 1,872
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION 118 89
OTHER INCOME (EXPENSE) 24 (39)
INCOME BEFORE INTEREST CHARGES 2,830 1,922
INTEREST CHARGES
Long-term debt 1,345 1,170
Short-term debt 109 6
Amortization of debt expense 16 9
Other 20 8
1,490 1,193
NET INCOME 1,340 729
DIVIDENDS ON PREFERRED STOCK 42 47
NET INCOME APPLICABLE TO COMMON STOCK $ 1,298 $ 682
INCOME PER COMMON SHARE:
Basic $ 0.72 $ 0.39
Diluted $ 0.72 $ 0.39
CASH DIVIDEND PER COMMON SHARE $ 0.46 $ 0.46
AVERAGE COMMON SHARES OUTSTANDING
Basic 1,792,787 1,756,143
Diluted 1,809,208 1,769,156
See notes to the consolidated financial statements.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
Unaudited
(In thousands)
For the Six Months
Ended June 30,
1998 1997
Balance, beginning of period $ 6,887 $ 6,614
Net income 1,340 729
8,227 7,343
Dividends 886 876
Balance, end of period $ 7,341 $ 6,467
See notes to the consolidated financial statements.
ARTESIAN RESOURCES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
(In thousands)
For the Six Months
Ended June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME $ 1,340 $ 729
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,001 1,151
Allowance for funds used during construction (118) (89)
Changes in Assets and Liabilities:
Accounts receivable 185 (157)
Unbilled operating revenue (507) (386)
Materials and supplies 22 39
State and federal income taxes 768 (209)
Prepaid property taxes 507 484
Prepaid expenses and other (50) (199)
Deferred income taxes, net 115 800
Other deferred assets 29 (294)
Regulatory assets (68) 47
Postretirement benefit obligation (28) 3
Accounts payable 614 (1,289)
Interest accrued (270) (19)
Customer deposits and other, net 419 368
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,959 979
CASH FLOWS USED IN INVESTING ACTIVITIES
Capital expenditures (net of AFUDC) (8,478) (4,041)
Proceeds from sale of assets 13 183
NET CASH USED IN INVESTING ACTIVITIES (8,465) (3,858)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under line
of credit agreement 4,905 (8,979)
Proceeds from issuance of mortgage bonds --- 12,500
Overdraft payable, net 345 (160)
Net advances and contributions in aid
of construction 50 569
Repayment on ALI note --- (25)
Proceeds from issuance of Common Stock 265 66
Proceeds from common stock dividends
reinvested and stock options exercised --- 113
Dividends (866) (856)
Principal payments under capital
lease obligations (21) (142)
Redemption of preferred stock (112) (113)
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,566 2,973
NET INCREASE IN CASH AND CASH EQUIVALENTS 60 94
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 146 148
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 206 $ 242
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 1,204 $ 1,212
Income taxes paid $ --- $ ---
See notes to the consolidated financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The unaudited financial statements of Artesian Resources Corporation and
its wholly-owned subsidiaries (the Company or Artesian Resources),
including its principal operating company, Artesian Water Company, Inc.
(Artesian Water), presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1997 included in
the Company's Annual Report on Form 10-K. The accompanying consolidated
financial statements have not been examined by independent accountants in
accordance with generally accepted auditing standards, but in the opinion of
management such consolidated financial statements include all adjustments,
consisting only of normal recurring adjustments, necessary to fairly
summarize the Company's financial position and results of operations. The
results of operations for the quarter and six months ended June 30, 1998 may
not be indicative of the results that may be expected for the year ending
December 31, 1998.
NOTE 2 - REGULATORY ASSETS
Certain expenses, which are recoverable through rates as permitted by the
State of Delaware Public Service Commission (PSC), are deferred and
amortized during future periods using various methods. Expenses related to
rate proceedings are amortized on a straight-line basis over two years. The
post retirement benefit obligation, which is being amortized over twenty
years, is adjusted for the difference between the net periodic post retirement
benefit costs and the cash payments. The deferred income taxes will be
amortized over future years as the tax effects of temporary differences
previously flowed through to the customer reverse. Regulatory assets, net of
amortization, comprise:
June 30, 1998 December 31, 1997
(,000) (,000)
Postretirement benefit obligation $1,676 $1,704
Deferred income taxes recoverable
in future rates 702 710
Expense of rate proceedings 508 404
$2,886 $2,818
NOTE 3 - NON-UTILITY OPERATIONS
Artesian Wastewater Management, Inc. (Artesian Wastewater) plans to
provide wastewater treatment services in Delaware. On March 12, 1997
Artesian Wastewater became a one-third owner in AquaStructure Delaware,
L.L.C. which intends to develop and market various proposals to provide
wastewater treatment services. No operations have occurred under Artesian
Wastewater for the six months ended June 30, 1998.
NOTE 4 - RELATED PARTY TRANSACTIONS
The office building and shop complex utilized by Artesian Water are
leased at an annual rental of $184,000 from a partnership, White Clay Realty,
in which certain of Artesian Resources' officers and directors are partners.
The lease expires in 2002, with provisions for renewals for two five year
periods thereafter. Management believes that the payments made to White Clay
Realty for the lease of its office building and shop complex are comparable
to what Artesian Water would have to pay to unaffiliated parties for similar
facilities.
Artesian Water leases certain parcels of land for water production wells
from Glendale Enterprises Limited, a company wholly-owned by Ellis D. Taylor,
former director and Chairman Emeritus of Artesian Resources, at an annual
rental of $44,000. The initial term of the lease was for ten years ending
September 30, 1995 and, thereafter, renewal is automatic from year to year
unless 60 days written notice is given by either party before the end of the
year's lease. The annual rental is adjusted each year by the consumer price
index as of June 30 of the preceding year. Artesian Water has the right to
terminate this lease by giving 60 days written notice should the water supply
be exhausted or other conditions beyond the control of Artesian Water
materially and adversely affect its interest in the lease.
Expenses associated with related party transactions are as follows:
For the Quarter Ended For the Six Months
June 30, Ended June 30,
(,000) (,000)
1998 1997 1998 1997
White Clay Realty $ 46 $ 51 $ 92 $102
Glendale Enterprises 11 11 22 21
$ 57 $ 62 $ 114 $123
NOTE 5 - RATE PROCEEDINGS
On April 20, 1998, Artesian Water entered into a proposed settlement
agreement of rate case Docket 97-340 with the Division of the Public Advocate
and the PSC staff which allowed Artesian Water to increase customer rates
from a temporary increase of 11.35% implemented December 3, 1997 to an
increase of approximately 13.2%, or $2.975 million annualized, effective
May 12, 1998. The settlement agreement was approved by the Hearing Examiner
in the rate case and the PSC on May 5, 1998 and May 12, 1998, respectively.
The proposed annualized revenue increase of $2.975 million under the rate
case settlement agreement was based on a projected utility plant in service
level of $124.2 million as of June 30, 1998. Artesian Water's actual June 30,
1998 utility plant in service balance of $125.7 million will be subject to
audit by the PSC. If the actual June 30, 1998 utility plant in service
balance had been more than $0.5 million below the $124.2 million projected
utility plant in service level, then a refund equaling revenues related to the
entire plant in service deficiency would have been required to be made to
customers from the effective date of the rate increase put into place as a
result of this settlement. The Company believes that the required utility
plant in service level of $124.2 million has been exceeded at June 30, 1998
and no refund to customers will be necessary under the terms of the settlement
agreement, although there can be no assurance that a refund will not be
required.
NOTE 6 - NET INCOME PER COMMON SHARE AND EQUITY PER COMMON SHARE
In December 1997, the Company adopted SFAS No. 128, "Earnings per Share"
which prescribes two methods for calculating net income per common share:
"Basic" and "Diluted" methods. These calculations differ from those used in
prior periods and as a result all prior period earnings per share data have
been restated to reflect the adoption of SFAS No. 128.
Basic net income per share is based on the weighted average number of
common shares outstanding. Diluted net income per share is based on the
weighted average number of common shares outstanding and potentially dilutive
effect of employee stock options. The adoption of this statement had no
effect on the results of operations, financial conditions, or long-term
liquidity of the Company. The following table summarizes the shares used in
computing basic and diluted net income per share:
For the Quarter For the Six Months
Ended June 30, Ended June 30
1998 1997 1998 1997
Average common shares
outstanding during the period
for Basic computation 1,793,737 1,756,436 1,792,787 1,756,143
Dilutive effect of
employee stock options 16,546 12,990 16,421 13,013
Average common shares
outstanding during the period
for Diluted computation 1,810,283 1,769,426 1,809,208 1,769,156
Equity per common share was $15.06 and $14.45 at June 30, 1998 and 1997,
respectively. These amounts were computed by dividing common stockholders'
equity, excluding preferred stock, by the number of shares of common stock
outstanding at June 30, 1998 and 1997, respectively.
NOTE 7 - IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be reported in a financial statement that
is displayed with the same prominence as other financial statements. The
Company has adopted this Statement effective January 1, 1998, and has no
components of comprehensive income to report.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS 131"). This Statement established standards for reporting information
about operating segments in interim financial reports issued to shareholders.
It also establishes standards for related disclosure about products and
services, geographic areas and major customers. The Company has adopted this
Statement effective January 1, 1998.
In February 1998, the FASB issued Statement of Financial Accounting
Standard No. 132 "Employers Disclosure about Pension and Other Postretirement
Benefits" ("SFAS 132"), which revises employers' annual disclosures about
pensions and other postretirement benefit plans, and does not change the
measurement or recognition of those plans. The Company plans to adopt this
Statement in connection with the preparation of the December 31, 1998
consolidated financial statement and the adoption of these statements will
not have a material impact on the Company's financial condition or results of
operation.
In June 1998, the FASB issued Statements of Financial Accounting Standard
No. 133 "Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative instruments and
hedging activities. The Company plans to adopt this statement effective
January 1, 2000 and the adoption of this statement will not have a material
impact on the Company's financial condition or results of operations.
ITEM 2
ARTESIAN RESOURCES CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE QUARTER ENDED
JUNE 30, 1997
RESULTS OF OPERATIONS
For the quarter ended June 30, 1998, Artesian Resources recorded net
income of $1,013,000 which represents a $480,000, or a 90.1%, increase as
compared to earnings of $533,000 for the quarter ended June 30, 1997. For
the six months ended June 30, 1998, Artesian Resources recorded net income
of $1,340,000 which represents a $611,000, or 83.8%, increase as compared to
net income of $729,000 for the six months ended June 30, 1997. The increase
is primarily attributable to three increases in Artesian Water's rates charged
to customers of approximately 1.13%, 11.35%, and 1.85% which were placed in
effect May 1, 1997, December 3, 1997, and May 12, 1998, respectively, and a
2.4% growth in customers served. Water sales revenue increased $1,094,000,
or 20.0%, and $1,750,000, or 16.9%, respectively, for the quarter and six
months ended June 30, 1998 as compared to the same period in 1997.
Payroll expense increased $103,000 and $270,000 for the quarter and six
months ended June 30, 1998 as compared to the same periods in 1997 due to the
addition of several new positions as well as pay increases. Rate case
amortization expense increased $53,000 and $151,000 for the quarter and six
months ended June 30, 1998 as compared to the same periods in 1997 due to
using a two year amortization period for the deferred rate case costs
associated with Docket 97-66 and Docket 97-340 as required under the rate
case settlement agreement. The estimated total cost of these two dockets is
higher than the total cost of Docket 94-164 which was amortized over the
three years ended December 31, 1997. Purchased water expense decreased
$20,000 and $147,000 for the quarter and six months ended June 30, 1998 as
compared to the same period in 1997 primarily due to the renegotiated
contract with the Chester Water Authority (CWA) which reduced the mandatory
minimum takes from a daily average of four million gallons to three million
gallons effective August 1, 1997. Total purchased water consumption is 17%
lower in 1998 as compared to 1997 due to the decreased takes from CWA and to
the timing of purchases from the City of Wilmington.
Income taxes increased $351,000 and $443,000 for the quarter and six
months ended June 30, 1998 as compared to the same period in 1997 due to the
increased profitability of the Company.
Interest expense and debt amortization expense increased by $144,000 and
$297,000 for the quarter and six months ended June 30, 1998 as compared with
the same period in 1997 due to a higher average debt outstanding of $35.8
million at a slightly lower interest rate for 1998 as compared to $28.1
million in average debt outstanding for 1997. The increase in the average
debt outstanding is attributable to the issuance of Artesian Water's $10
million Series M and $5 million Series N Mortgage Bonds in June and September
of 1997, respectively, and to increased borrowings on the lines of credit.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity for the six months ended June 30, 1998
is $4.0 million provided by cash flow from operations and $4.9 million
borrowed on Artesian Water's lines of credit. At June 30, 1998, Artesian
Resources had a working capital deficit of $7.1 million primarily
attributable to borrowings on the lines of credit and to an increase in
accounts payable associated with the volume of construction projects
currently in progress. As of July 31, 1998, $7.9 million was drawn on the
$30.0 million available lines of credit. Artesian Resources anticipates it
will complete long term financing arrangements in 1999 or 2000 to eliminate
the working capital deficit.
CAUTIONARY STATEMENT
Statements in this Report on Form 10-Q which express the "belief,"
"anticipation" or "expectation," as well as other statements which are not
historical fact, are forward-looking statements within the meaning of the
Private Securities Litigation Reform Action of 1995 and involve risks and
uncertainties that could cause actual results to differ materially from
those projected. Certain factors such as competitive market pressures,
material changes in demand from larger customers, changes in weather,
availability of labor, changes in government policies and changes in economic
conditions could cause results to differ materially from those in the
forward-looking statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The proposed annualized revenue increase of $2.975 million under the rate
case settlement agreement was based on a projected utility plant in service
level of $124.2 million as of June 30, 1998. Artesian Water's actual June 30,
1998 utility plant in service balance of $125.7 million will be subject to
audit by the PSC. If the actual June 30, 1998 utility plant in service
balance had been more than $0.5 million below the $124.2 million projected
utility plant in service level, then a refund equaling revenues related to
the entire plant in service deficiency would have been required to be made to
customers from the effective date of the rate increase put into place as a
result of this settlement. The Company believes that the required utility
plant in service level of $124.2 million has been achieved at June 30, 1998
and no refund to customers will be necessary under the terms of the
settlement agreement, although there can be no assurance that a refund will
not be required.
There are no other material legal proceedings pending at this date.
ITEM 2 - CHANGES IN SECURITIES
Not applicable.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
(a) The annual meeting of Class B Common Shareholders was held on
May 6, 1998
(b) With 431,696 votes in favor, 8,076 votes against, and 10,626 votes
abstained, the Class B Common Shareholders approved an Amendment to
the 1992 Non-Qualified Stock Option Plan. Under the approved
Amendment, the number of shares of Class A Non-Voting Common stock
authorized for issuance under the 1992 Non-Qualified Stock Option Plan
was increased from 100,000 to 250,000.
(c) With 446,696 votes in favor, and 4,291 votes withheld, the Class B
Common Shareholders elected William C. Wyer to serve a three year term
on Artesian Resources' Board of Directors (the "Board") until his
successor shall have been elected and qualified or until his earlier
resignation or removal. Mr. Wyer has served as a member of the Board
since 1991. He was last re-elected at the 1995 Annual Meeting of
Shareholders. Mr. Wyer has also served on the Executive; Audit;
Personnel, Compensation and Benefits; and Budget Committees of the
Board.
With 443,698 votes in favor and 6,700 votes withheld, the Class B
Common Shareholders also elected William H. Taylor, II to serve a three
year term on Artesian Resources' Board of Directors (the "Board") until
his successor shall have been elected and qualified or until his
earlier resignation or removal. Mr. Taylor has served as a member of
the Board since March 1998.
Following the re-election of Mr. Wyer and election of Mr. Taylor, the
members of the Board and their respective terms are as follows:
William H. Taylor, II-- term expires at the 2001 annual meeting
William C. Wyer-- term expires at the 2001 annual meeting
Kenneth R. Biederman-- term expires at the 2000 annual meeting
Dian C. Taylor-- term expires at the 1999 annual meeting
John R. Eisenbrey, Jr.-- term expires at the 1999 annual meeting
ITEM 5 - OTHER INFORMATION
Not applicable.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K were filed for the quarter ended June 30, 1998.
INDEX TO EXHIBITS
Exhibit Number Description
3 Articles of Incorporation and By-Laws
(3.1) Restated Certificate of Incorporation of the Company effective
May 26, 1995 incorporated by reference to the exhibit filed
with Artesian Resources Corporation Form 10-Q for the quarter
ended June 30, 1995.
(3.2) Restated Certificate of Incorporation of the Company effective
April 26, 1994 including Certificate of Correction incorporated
by reference to the exhibit filed with the Artesian Resources
Corporation Form 10-Q for the quarter ended March 31, 1994.
(3.3) By-Laws of the Company effective April 27, 1993 incorporated by
reference to the exhibit filed with the Artesian Resources
Corporation Form 8-K filed April 27, 1993.
4 Instruments Defining the Rights of Security Holders, Including Indentures
(4.1) Thirteenth and Fourteenth Indentures dated as of June 17, 1997
between Artesian Water Company, Inc., subsidiary of Artesian
Resources Corporation, and Wilmington Trust Company, as Trustee.
Incorporated by reference to the exhibits filed with Artesian
Resources Corporation Form 10-Q for the quarter ended June 30,
1997.
(4.2) Twelfth Supplemental Indenture dated as of December 5, 1995
between Artesian Water Company, Inc. subsidiary of Artesian
Resources Corporation, and Wilmington Trust Company, as Trustee.
Incorporated by reference to the exhibit filed with the Artesian
Resources Corporation Annual Report on Form 10-K for the year
ended December 31, 1995.
(4.3) Eleventh Supplemental Indenture dated as of February 16, 1993
between Artesian Water Company, Inc., subsidiary of Artesian
Resources Corporation, and Principal Mutual Life Insurance
Company. Incorporated by reference to the exhibit filed with
Artesian Resources Corporation Annual Report on Form 10-K for
the year ended December 31, 1992.
(4.4) Tenth Supplemental Indenture dated as of April 1, 1989 between
Artesian Water Company, Inc., subsidiary of Artesian Resources
Corporation, and Wilmington Trust Company, as Trustee.
Incorporated by reference to the exhibit filed with Artesian
Resources Corporation Registration Statement on Form 10 filed
April 30, 1990 and as amended by Form 8 filed on June 19, 1990.
(4.5) Other Supplemental Indentures with amounts authorized less than
ten percent of the total assets of the Company and its
subsidiaries on a consolidated basis will be furnished upon
request. Incorporated by reference to the exhibit filed with
Artesian Resources Corporation Registration Statement on Form
10 filed April 30, 1990 and as amended by Form 8 filed on
June 19, 1990.
10 Material Contracts
(10.1) Artesian Resources Corporation Non-Qualified Stock Option Plan
incorporated by reference to the exhibit filed with Artesian
Resources Corporation Registration Statement on Form 10 filed
April 30, 1990 and as amended by Form 8 filed on June 19, 1990.
(10.2) Lease dated as of March 1, 1972 between White Clay Realty
Company and Artesian Water Company, Inc. incorporated by
reference to the exhibit filed with Artesian Resources
Corporation Registration Statement on Form 10 filed April 30,
1990 and as amended by Form 8 filed on June 19, 1990.
(10.3) 1992 Artesian Resources Corporation Non-Qualified Stock Option
Plan incorporated by reference to the exhibit filed with the
Artesian Resources Annual Report on Form 10-K for the year
ended December 31, 1991.
(10.4) Artesian Resources Corporation Cash and Stock Bonus
Compensation Plan for Officers incorporated by reference to the
exhibit filed with the Artesian Resources Corporation Form
10-K for the year ended December 31, 1993.
(10.5) Artesian Resources Corporation Incentive Stock Option Plan
incorporated by reference to the exhibit filed with the
Artesian Resources Corporation Annual Report on Form 10-K for
the year ended December 31, 1995.
11 Computation of Earnings per Common Share
27 Financial Data Schedules
EXHIBIT 11 - COMPUTATION OF EARNINGS PER COMMON SHARE
For the Six Months Ended
June 30,
1998 1997
Earnings
Income applicable to Common Stock $1,298,000 $ 682,000
Shares
Average common shares outstanding
during the period for
Basic computation 1,792,787 1,756,143
Dilutive effect of employee
stock options 16,421 13,013
Average common shares outstanding
during the period for
Diluted computation 1,809,208 1,769,156
Net income per Common Share
Basic $ 0.72 $ 0.39
Diluted $ 0.72 $ 0.39
EXHIBIT 27 - FINANCIAL DATA SCHEDULES
This schedule contains summary financial information extracted from the
consolidated balance sheets, consolidated statements of income and the
consolidated statement of cash flows the Company's June 30, 1998 Form 10-Q
and is qualified in its entirety by reference to such financial statements.
PERIOD TYPE 3-MOS 6-MOS
FISCAL YEAR END DEC-31-1998 DEC-31-1998
PERIOD END JUN-30-1998 JUN-30-1998
BOOK VALUE PER-BOOK PER-BOOK
TOTAL NET UTILITY PLANT 105,494,000 105,494,000
OTHER PROPERTY AND INVEST 345,000 345,000
TOTAL CURRENT ASSETS 5,566,000 5,566,000
TOTAL DEFERRED CHARGES 4,065,000 4,065,000
OTHER ASSETS 0 0
TOTAL ASSETS 115,470,000 115,470,000
COMMON 1,794,000 1,794,000
CAPITAL SURPLUS PAID IN 17,899,000 17,899,000
RETAINED EARNINGS 7,341,000 7,341,000
TOTAL COMMON STOCKHOLDERS EQ 27,034,000 27,034,000
PREFERRED MANDATORY 487,000 487,000
PREFERRED 272,000 272,000
LONG TERM DEBT NET 32,082,000 32,082,000
SHORT TERM NOTES 6,070,000 6,070,000
LONG TERM NOTES PAYABLE 0 0
COMMERCIAL PAPER OBLIGATIONS 0 0
LONG TERM DEBT CURRENT PORT 0 0
PREFERRED STOCK CURRENT 112,000 112,000
CAPITAL LEASE OBLIGATIONS 82,000 82,000
LEASES CURRENT 46,000 46,000
OTHER ITEMS CAPITAL AND LIAB 49,285,000 49,285,000
TOT CAPITALIZATION AND LIAB 115,470,000 115,470,000
GROSS OPERATING REVENUE 6,672,000 12,292,000
INCOME TAX EXPENSE 675,000 893,000
OTHER OPERATING EXPENSES 4,301,000 8,711,000
TOTAL OPERATING EXPENSES 4,976,000 9,604,000
OPERATING INCOME LOSS 1,696,000 2,688,000
OTHER INCOME NET 76,000 142,000
INCOME BEFORE INTEREST EXPEN 1,772,000 2,830,000
TOTAL INTEREST EXPENSE 759,000 1,490,000
NET INCOME 1,013,000 1,340,000
PREFERRED STOCK DIVIDENDS 19,000 42,000
EARNINGS AVAILABLE FOR COMM 994,000 1,298,000
COMMON STOCK DIVIDENDS 432,000 865,000
TOTAL INTEREST ON BONDS 2,677,000 2,677,000
CASH FLOW OPERATIONS 4,425,000 3,959,000
EPS PRIMARY 0.55 0.72
EPS DILUTED 0.55 0.72
This schedule contains summary financial information extracted from the
consolidated balance sheets, consolidated statements of income and the
consolidated statement of cash flows the Company's June 30, 1997 Form 10-Q,
restated as required under SFAS 128, and is qualified in its entirety by
reference to such financial statements.
PERIOD TYPE 3-MOS 6-MOS
FISCAL YEAR END DEC-31-1997 DEC-31-1997
PERIOD END JUN-30-1997 JUN-30-1997
BOOK VALUE PER-BOOK PER-BOOK
TOTAL NET UTILITY PLANT $ 91,873,000 $ 91,873,000
OTHER PROPERTY AND INVEST 354,000 354,000
TOTAL CURRENT ASSETS 5,479,000 5,479,000
TOTAL DEFERRED CHARGES 4,624,000 4,624,000
OTHER ASSETS 0 0
TOTAL ASSETS $102,330,000 $102,330,000
COMMON $ 1,755,000 $ 1,755,000
CAPITAL SURPLUS PAID IN 17,236,000 17,236,000
RETAINED EARNINGS 6,467,000 6,467,000
TOTAL COMMON STOCKHOLDERS EQ 25,458,000 25,458,000
PREFERRED MANDATORY 599,500 599,500
PREFERRED 272,000 272,000
LONG TERM DEBT NET 29,500,000 29,500,000
SHORT TERM NOTES 79,000 79,000
LONG TERM NOTES PAYABLE 0 0
COMMERCIAL PAPER OBLIGATIONS 0 0
LONG TERM DEBT CURRENT PORT 0 0
PREFERRED STOCK CURRENT 112,500 112,500
CAPITAL LEASE OBLIGATIONS 86,000 86,000
LEASES CURRENT 142,000 142,000
OTHER ITEMS CAPITAL AND LIAB 46,081,000 46,081,000
TOT CAPITALIZATION AND LIAB $102,330,000 $102,330,000
GROSS OPERATING REVENUE $ 5,551,000 $ 10,530,000
INCOME TAX EXPENSE 324,000 450,000
OTHER OPERATING EXPENSES 4,104,000 8,208,000
TOTAL OPERATING EXPENSES 4,428,000 8,658,000
OPERATING INCOME LOSS 1,123,000 1,872,000
OTHER INCOME NET 25,000 50,000
INCOME BEFORE INTEREST EXPEN 1,148,000 1,922,000
TOTAL INTEREST EXPENSE 615,000 1,193,000
NET INCOME 533,000 729,000
PREFERRED STOCK DIVIDENDS 23,000 47,000
EARNINGS AVAILABLE FOR COMM $ 510,000 $ 682,000
COMMON STOCK DIVIDENDS $ 428,000 $ 854,000
TOTAL INTEREST ON BONDS $ 2,495,000 $ 2,495,000
CASH FLOW OPERATIONS $ 1,467,000 $ 1,001,000
EPS PRIMARY $ 0.29 $ 0.39
EPS DILUTED $ 0.29 $ 0.39
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.
ARTESIAN RESOURCES CORPORATION
8/7/98 /s/ Dian C. Taylor
Dian C. Taylor
President, CEO, and Chair of the Board
Artesian Resources Corporation and Subsidiaries
8/7/98 /s/ David B. Spacht
David B. Spacht
Vice President, Chief Financial Officer, and
Treasurer
Artesian Resources Corporation and Subsidiaries
