SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
Annual Report Pursuant to Section 15(d) of
The Securities Exchange Act of 1934
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the transition period from ____________ to ___________
Commission File Number 0-18516 (Artesian Resources Corporation)
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
Artesian Retirement Plan
B. Name of issuer of the securities held pursuant to the plan
and the address of its principal executive office:
ARTESIAN RESOURCES CORPORATION
664 Churchmans Road
Newark, Delaware 19702
ARTESIAN RETIREMENT PLAN
Index to Financial Statements and Schedules
Page
Independent Accountants' Report 1
Financial Statements:
Statement of Net Assets Available for Plan Benefits at
December 31, 1997 2
Statement of Net Assets Available for Plan Benefits at
December 31, 1996 3
Statement of Changes in Net Assets Available for Plan
Benefits for the year ended December 31, 1997 4-7
Notes to Financial Statements 8-10
Additional Information:
Schedule of Investments at December 31, 1997 11
Schedule of Reportable Transactions (series of
transactions in one issue aggregating 5 percent
or more of net assets) for the year ended
December 31, 1997 12
Independent Accountants' Report
July 9, 1998
Participants and Administrator
of the Artesian Resources Corporation
Retirement Plan
We have audited the accompanying statement of net assets available for plan
benefits of Artesian Resources Corporation Retirement Plan as of December 31,
1997 and 1996, and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1997. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of
investments and reportable transactions are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for plan benefits and the statement of
changes in net assets available for plan benefits is presented for purposes of
additional analysis rather than to present the net assets available for plan
benefits and changes in net assets available for plan benefits of each fund.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
SIEGFRIED & SCHIEFFER, LLP
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Statement of Net Assets Available
For Plan Benefits at December 31, 1997
Fidelity Family of Funds
Managed
Equity Emerging Income Intermediate
Income II Growth Puritan Portfolio Bond
Assets:
Investments, at fair value:
Common/Collective Trusts $318,311
Registered Investment
Companies $2,914,247 $2,048,575 $563,836 $456,878
Funds held in insurance companies'
general accounts
Participant loans
Total investments 2,914,247 2,048,575 563,836 318,311 456,878
Amounts due from
employer 1,245 15,687 499 248 81
Net assets available
for plan benefits $2,915,492 $2,064,262 $564,335 $318,559 $456,959
Artesian Artesian
A B
Assets:
Investments, at fair value:
Common/Collective Trusts
Registered Investment Companies
Employer Securities $188,769 $189,509
Funds held in insurance companies'
general accounts
Participant loans
Total investments 188,769 189,509
Amounts due from employer 14,091
Net assets available for plan benefits $202,860 $189,509
Appreciation Participant
Plus Diversifier II Loans Total
Assets:
Investments, at fair value:
Common/Collective Trusts $ 318,311
Registered Investment Companies 5,983,536
Employer Securities 378,278
Funds held in insurance companies'
general accounts $235,914 $241,483 477,397
Participant loans $286,172 286,172
Total investments 235,914 241,483 286,172 7,443,694
Amounts due from employer 31,851
Net assets available
for plan benefits $235,914 $241,483 $286,172 $7,475,545
See accompanying notes.
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Statement of Net Assets Available
For Plan Benefits at December 31, 1996
CoreFund Family of Funds
Special SEI Stable
Equity Equity Balanced Fixed Asset
Assets:
Investments, at fair value:
Mutual funds $2,163,358 $1,358,497 $469,873 $697,588 $548,038
Funds held in insurance companies'
general accounts
Participant loans
Total investments 2,163,358 1,358,497 469,873 697,588 548,038
Amounts due from employer 47,429
Total assets 2,163,358 1,405,926 469,873 697,588 548,038
Liabilities:
Benefits payable 36,754 13,304 4,747
Net assets available
for plan benefits $2,126,604 $1,405,926 $456,569 $697,588 $543,291
Appreciation Participant
Plus Diversifier II Loans Total
Assets:
Investments, at fair value:
Mutual funds $5,237,354
Funds held in insurance companies'
general accounts $232,379 $255,019 487,398
Participant loans $241,512 241,512
Total investments 232,379 255,019 241,512 5,966,264
Amounts due from employer 47,429
Total assets 232,379 255,019 241,512 6,013,693
Liabilities:
Benefits payable 54,805
Net assets available
for plan benefits $232,379 $255,019 $241,512 $5,958,888
See accompanying notes.
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Statement of Changes in Net Assets
Available for Plan Benefits for the Year Ended December 31, 1997
Fidelity Family of Funds
Managed
Equity Emerging Income Intermediate
Income II Growth Puritan Portfolio Bond
Additions to net assets attributed to:
Contributions:
Employee $ 138,119 $ 154,819 $ 41,021 $ 14,083 $ 20,449
Employer 48,551 131,795 15,554 5.432 22,139
Investment Income
Dividends 30,292 14,251 17,857 24,990
Interest
Net unrealzied/realized
appreciation (depreciation)
of investments 622,149 489,239 89,188 16,389
Transfers from other plans
Transfers from other
funds 2,386,709 1,669,731 439,000 421,193 510,029
Total additions 3,225,820 2,445,584 599,014 458,565 593,996
Deductions from net assets attributed to:
Participant
distributions 288,897 162,479 21,062 25,853 57,578
Transfers to other
funds 21,431 218,843 13,617 84,201 79,459
Expenses 29,952
New Loans
Total deductions 310,328 381,322 34,679 140,006 137,037
Net increase (decrease)
in plan assets 2,915,492 2,064,262 564,335 318,559 456,959
Net assets available for
Plan benefits-
beginning of year
Net assets available
for Plan benefits-
end of year $2,915,492 $2,064,262 $564,335 $318,559 $456,959
Statement of Changes in Net Assets
Available for Plan Benefits for the Year Ended December 31, 1997 (Continued)
Artesian Artesian
A B
Additions to net assets attributed to:
Contributions:
Employee $ 1,071
Employer 14,413
Investment Income
Dividends 2,354 $ 9,882
Interest
Net unrealzied/realized
appreciation (depreciation)
of investments 6,101 6,659
Transfers form other plans 172,968
Transfers from other
funds 179,462
Total additions 203,401 189,509
Deductions from net assets attributed to:
Participant distributions 541
Transfers to other funds
Expenses
New Loans
Total deductions 541 0
Net increase in plan
assets 202,860 189,509
Net assets available for
Plan benefits-
beginning of year
Net assets available
for Plan benefits-
end of year $202,860 $189,509
Statement of Changes in Net Assets
Available for Plan Benefits for the Year Ended December 31, 1997 (Continued)
CoreFund Family of Funds
Special SEI Stable
Equity Equity Balanced Fixed Asset
Additions to net assets attributed to:
Contributions:
Employee $ 119 $ 218 $ 119 $ 597 $ 119
Employer
Investment Income
Dividends 541 2,977 464 10,520 8,154
Interest
Net unrealzied/realized
appreciation (depreciation)
of investments 42,970 (28,991) 6,595 (9,876)
Transfers from other
funds
Total additions 43,630 (25,796) 7,178 1,241 8,273
Deductions from net assets attributed to:
Participant
distributions 83,217
Transfers to other
funds 2,087,017 1,380,130 463,747 698,829 551,564
Expenses
New loans
Total deductions 2,170,234 1,380,130 463,747 698,829 551,564
Net increase (decrease)
in plan assets (2,126,604) (1,405,926) (456,569) (697,588) (543,291)
Net assets available for
Plan benefits-
beginning of year 2,126,604 1,405,926 456,569 697,588 543,291
Net assets available
for Plan benefits-
end of year $ 0 $ 0 $ 0 $ 0 $ 0
Statement of Changes in Net Assets
Available for Plan Benefits for the Year Ended December 31, 1997 (Continued)
Appreciation Participant
Plus Diversifier II Loans Total
Additions to net assets attributed to:
Contributions:
Employee $ 370,734
Employer 237,884
Investment Income
Dividends 122,282
Interest $ 13,533 $ 10,721 24,254
Net unrealzied/realized
appreciation (depreciation)
of investments 1,240,423
Transfers from other plans 172,968
Transfers from other
funds 5,606,124
Total additions 13,533 10,721 7,774,669
Deductions from net assets attributed to:
Participant distributions 7,810 16,731 664,168
Transfers to other funds 7,286 5,606,124
Expenses 2,188 240 32,380
New Loans $(44,660) (44,660)
Total deductions 9,998 24,257 (44,660) 6,258,012
Net increase (decrease)
in plan assets 3,535 (13,536) 44,660 1,516,657
Net assets available for
Plan benefits-
beginning of year 232,379 255,019 241,512 5,958,888
Net assets available
for Plan benefits-
end of year $235,914 $241,483 $286,172 $7,475,545
See accompanying notes.
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF THE PLAN
GENERAL
Effective July 1, 1984, Artesian Resources Corporation (the "Company")
established the Artesian Resources Corporation Retirement Plan (the "Plan")
as a defined contribution savings plan for its employees. Pursuant to
Internal Revenue Code ("IRC") Section 401(k), the Plan permits employees to
exclude contributions to the Plan from their current taxable income, subject
to certain limits. The Plan is administered by a Committee of Trustees which
consists of five members appointed by the Company's Board of Directors. Plan
expenses may be paid out of the Plan unless paid by the Company.
PARTICIPATION, VESTING AND WITHDRAWALS
Generally, all employees are eligible for Plan participation after attaining
age 21 and completing 1,000 hours of service during a one-year period.
Employees may elect to make tax deductible contributions up to a maximum of
12 percent of their compensation, however, such contributions may not exceed
the IRC limitation of $9,500 for all deferrals under all plans in 1997
("basic contribution"). For every dollar an employee contributes up to 6
percent of compensation, the Company will provide a 50 percent "matching
contribution". In each Plan year, the Company may make a "discretionary
contribution" to the Plan based on up to 2 percent of compensation for all
employees eligible to participate in the Plan. The full "discretionary
contribution" was made for 1997. Also, the Company's Board of Directors,
at its sole discretion, may make an "additional discretionary contribution"
of up to 3 percent of eligible compensation. No "additional discretionary
contribution" was made for 1997.
Participant contributions, and the related earnings thereon, are fully
vested at all times. Company contributions, and the related earnings thereon,
vest as follows:
Years Vested
of Service Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 years or more 100%
Any forfeitures of non-vested contributions are offset against required
Company contributions. Withdrawals may generally commence without penalty
upon attaining age 59-1/2 or for situations involving hardship, as defined
in the Plan and the IRC.
INVESTMENT ELECTIONS
Participants may allocate basic and matching contributions among the various
Fidelity Family of Funds or Artesian Resources Class A non-voting common
stock. Contracts with specified insurance companies and Artesian Resources
Class B voting common stock do not allow additional contributions provided as
investment options by the Plan.
NOTE 1 - DESCRIPTION OF THE PLAN (CONTINUED)
Participants may elect an allocation among one or more investment funds in
multiples of 5 percent with a minimum investment of 10 percent in any
selected fund. Discretionary Company contributions are invested by the
Trustee in a uniform manner for all participants.
Effective in September 1996, shares in the Conestoga Mutual Funds were
merged into similar fund types provided through the CoreFund Family of Funds.
Effective in January 1997, new contributions were invested in the Fidelity
Family of Funds. In March 1997, shares in the CoreFund Family of Funds were
sold and were reinvested in similar fund types provided through Fidelity
Investments.
Effective January 1, 1997, the assets of the Employee Stock Ownership Plan
of the Company were merged into the Plan pursuant to an agreement with the DOL
under the walk-in Cap program. All investments were in Artesian Resources
Class B voting common stock.
Effective July 1, 1997, participants may direct the investment of their
account balances into Artesian Class A non-voting common stock.
LOANS
Participants may borrow from the Plan under the following guidelines:
A participant may borrow as much as 50 percent of his account balance,
subject to certain minimum and maximum limitations as defined in the Plan.
Loans are repaid over a period not to exceed five years, unless the loan
is to buy, build or substantially rehabilitate the borrower's principal
residence.
Interest on loans is set at current market rates.
As disclosed in the Statement of Changes in Net Assets, the net change
in participant loans for the year ended December 31, 1997 was an increase of
$44,660. This increase is the result of new loans of $80,328 and loan
repayments of $35,668.
BENEFITS
Participants are entitled to a benefit payment equal to the amount credited
to their accounts upon retirement; upon permanent disability; at age 59-1/2;
or upon termination of employment or death. In the event of death of a
participant, a death benefit payment is made to the participant's beneficiary.
In the event of termination, distributions of less than $3,500 must be made
in a lump sum. All other distributions may be made in the form of a joint
and survivor annuity, installments or in a lump-sum subject to certain
restrictions as defined in the Plan.
TERMINATION
The Company may amend or terminate the Plan. In the event of Plan
termination, the accounts of all participants affected shall become fully
vested and nonforfeitable. Assets remaining in the Plan may be immediately
distributed to the participants, inactive participants and beneficiaries in
proportion to their respective account balances; or the trust may be continued
with distributions made at such time and in such manner as though the Plan
had not been terminated.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT AND RELATED TRANSACTIONS
For financial reporting purposes, the assets and liabilities of the Plan are
reflected on the accrual basis of accounting.
Plan assets held in the Fidelity Family of Funds, Artesian Resources Class A
non-voting common stock and Artesian Resources Class B voting common stock are
valued at fair value based on quoted market prices. In accordance with the
policy of stating investments at fair value, net unrealized appreciation
(depreciation) for the year is included in the statement of changes in net
assets available for Plan benefits. Funds held in insurance companies'
general accounts are stated at their contract value.
INCOME TAXES
The Internal Revenue Service has determined and informed the Company by a
letter dated April 6, 1995, that the Plan is qualified and the trust
established under the Plan is tax-exempt, under the appropriate sections of
the Code. The Plan has been amended since receiving the determination letter.
However, the Plan administrator and the Plan's tax counsel believe that the
Plan is currently designed and being operated in compliance with the
applicable requirements of the Code. Therefore, they believe that the Plan
was qualified and the related trust was tax-exempt as of the financial
statement date.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3 - SUBSEQUENT EVENTS
Effective March 31, 1998, Penn Mutual Diversifier II and Artesian Resources
Class B voting common stock were eliminated as investment options. All funds
were transferred to the Fidelity "Managed Income Portfolio Fund" and
participants could then redirect their investments if they chose to do so.
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Schedule of Investments at December 31, 1997
Current Market/Contract
Description % Rate Maturity Cost Value
Penn Mutual Life Insurance Co.
Fixed Accounts -
Diversifier II $241,483 $241,483
New England Mutual Life Insurance Co.:
Appreciation Plus
group annuity
policy - 5159:
1990 Contract 6.20 Various 235,914 235,914
Total funds held in insurance
companies' general accounts 477,397 477,397
Fidelity Family of Funds:
Equity Income II 2,626,634 2,914,247*
Emerging Growth 2,072,312 2,048,575*
Puritan 512,390 563,836*
Managed Income Portfolio 318,311 318,311
Intermediate Bond 446,161 456,878*
Total mutual funds 5,975,808 6,301,847
Artesian A Non-Voting Common Stock 182,692 188,769
Artesian B Voting Common Stock 184,176 189,509
Participant loans 286,172 286,172
Total Investments $7,106,245 $7,443,694
* Investment represents more than 5% of total plan assets
ARTESIAN RESOURCES CORPORATION
RETIREMENT PLAN
Schedule of Reportable Transactions
For the Year Ended December 31, 1997
(Series of transactions in one issue
aggregating 5 percent or more of net assets)
Aggregate Realized Net Gain
Number of Cost of Net Value /(Loss)
Transactions Purchases of Sales on Sales
Fidelity Family of Funds:
Equity Income II 59,21 $2,942,532 $ 370,955 $55,057
Emerging Growth 63,23 2,451,795 474,987 95,503
Puritan 62,17 554,821 47,588 5,157
Managed Income
Portfolio 87,17 489,049 170,738
Intermediate Bond 68,24 615,823 172,774 3,113
CoreFund Family of Funds:
Eqity 1 2,141,998 211,088
Special Equity 1 1,353,289 (5,828)
Balanced 1 463,774 7,983
Fixed 1 695,167 146,829
SEI Stable Asset 1 549,098 760
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
ARTESIAN RETIREMENT PLAN
(Name of Plan)
By: Artesian Resources Corporation
Plan Administrator
By: /s/ Dian C. Taylor
Dian C. Taylor
Chief Executive Officer
and President
Dated: July 15, 1998
