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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 1-11023
E'TOWN CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-2596330
(State of incorporation) (I.R.S. Employer Identification No.)
600 South Avenue
Westfield, New Jersey 07090
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 654-1234
Title of each class Name of each exchange on which registered
Common Stock, without par value New York Stock Exchange
Commission file number 0-628
ELIZABETHTOWN WATER COMPANY
(Exact name of registrant as specified in its charter)
New Jersey 22-1683171
(State of incorporation) (I.R.S. Employer Identification No.)
600 South Avenue
Westfield, New Jersey 07090
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 654-1234
Title of each class Name of each exchange on which registered
None None
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. Yes __X__ No_____
Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date
Outstanding at
Class of Common Stock: March 31, 1998
E'town Corporation (without par value) 8,082,515
Elizabethtown Water Company (without par value)* 1,974,902
* All shares are owned by E'town Corporation
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E'TOWN CORPORATION AND SUBSIDIARIES
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
INDEX
- -------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
E'TOWN CORPORATION AND SUBSIDIARIES
- Statements of Consolidated Income 1
- Consolidated Balance Sheets 2-3
- Statements of Consolidated Capitalization 4
- Statements of Consolidated Shareholders' Equity 5
- Statements of Consolidated Cash Flows 6
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
- Statements of Consolidated Income 7
- Consolidated Balance Sheets 8-9
- Statements of Consolidated Capitalization 10
- Statements of Consolidated Shareholder's Equity 11
- Statements of Consolidated Cash Flows 12
E'TOWN CORPORATION AND SUBSIDIARIES AND
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
- Notes to Consolidated Financial Statements 13
Item 2. Management's Discussion and Analysis of Consolidated
Financial Condition and Results of Operations 17
PART II - OTHER INFORMATION 22
Items 1 - 5
Item 6 (a) - Exhibits 22
(b) - Reports on Form 8-K 22
SIGNATURES 23
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
(In Thousands Except Per Share Amounts)
Three Months Ended Twelve Months Ended
March 31, March 31,
1998 1997 1998 1997
------ ------ ------ ------
Operating Revenues $ 31,267 $ 30,121 $ 134,972 $ 114,770
Operating Expenses:
Operation 11,156 11,120 48,018 44,960
Maintenance 1,569 1,475 6,700 5,860
Depreciation 3,158 3,022 12,532 10,571
Revenue taxes 3,846 3,779 16,617 14,371
Real estate, payroll and other taxes 846 823 3,175 2,938
Federal income taxes 2,237 1,891 10,833 7,340
------- ------- ------- -------
Total operating expenses 22,812 22,110 97,875 86,040
------- ------- ------- -------
Operating Income 8,455 8,011 37,097 28,730
------- ------- ------- -------
Other Income (Expense):
Allowance for equity funds used during
construction 115 44 286 2,670
Federal income taxes (70) (41) (437) (1,175)
Other - net 82 74 961 688
------- ------- ------- -------
Total other income (expense) 127 77 810 2,183
------- ------- ------- -------
Total Operating and Other Income 8,582 8,088 37,907 30,913
------- ------- ------- -------
Interest Charges:
Interest on long-term debt 3,985 3,447 15,345 13,796
Other interest expense - net 214 986 1,788 3,218
Capitalized interest (91) (116) (413) (2,677)
Amortization of debt discount and exp 108 98 421 396
------- ------- ------- -------
Total interest charges 4,216 4,415 17,141 14,733
------- ------- ------- -------
Income Before Preferred Stock Dividends
of Subsidiary 4,366 3,673 20,766 16,180
Preferred Stock Dividends 203 203 813 813
------- ------- ------- -------
Net Income $ 4,163 $ 3,470 $ 19,953 $ 15,367
======= ======= ======= =======
Earnings Per Share of Common Stock:
Basic $ 0.52 $ 0.44 $ 2.50 $ 1.99
Diluted $ 0.51 $ 0.44 $ 2.47 $ 1.98
Average Number of Shares Outstanding for
the Calculation of Earnings Per Share:
Basic 8,057 7,818 7,972 7,730
Diluted 8,366 8,116 8,277 8,027
Dividends Paid Per Common Share $ .51 $ .51 $ 2.04 $ 2.04
See Notes to Consolidated Financial Statements.
-1-
E'TOWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
Assets 1998 1997
-------- --------
Utility Plant-At Original Cost:
Utility plant in service $679,787 $678,590
Construction work in progress 15,529 9,336
-------- --------
Total utility plant 695,316 687,926
Less accumulated depreciation
and amortization 117,615 114,587
-------- --------
Utility plant-net 577,701 573,339
-------- --------
Non-utility Property and Other
Investments - Net 19,811 20,016
-------- --------
Current Assets:
Cash and cash equivalents 6,573 6,233
Short-term investments 37 31
Customer and other accounts receivable
(less reserve: 1998, $613; 1997, $612) 18,359 17,539
Unbilled revenues 9,921 10,412
Materials and supplies-at average cost 2,316 1,966
Prepaid insurance, taxes, other 1,625 3,733
-------- --------
Total current assets 38,831 39,914
-------- --------
Deferred Charges:
Waste residual management 772 936
Unamortized debt and preferred
stock expenses 10,139 10,263
Taxes recoverable through future rates 21,439 21,439
Postretirement benefit expense 3,649 3,738
Other unamortized expenses 2,162 1,259
Total deferred charges 38,161 37,635
-------- --------
Total $674,504 $670,904
======== ========
See Notes to Consolidated Financial Statements.
-2-
E'TOWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
Capitalization and Liabilities 1998 1997
-------- -------
Capitalization (Note 3):
Common shareholders' equity $196,000 $193,923
Cumulative preferred stock 12,000 12,000
Long-term debt - net 253,236 247,298
-------- --------
Total capitalization 461,236 453,221
-------- --------
Current Liabilities:
Notes payable - banks 11,000 23,000
Long-term debt - current portion 30 30
Accounts payable and other liabilities 13,502 11,569
Customers' deposits 255 272
Municipal and state taxes accrued 20,822 16,817
Interest accrued 5,204 3,456
Preferred stock dividends accrued 59 59
-------- --------
Total current liabilities 50,872 55,203
-------- --------
Deferred Credits:
Customers' advances for construction 38,205 39,131
Federal income taxes 70,736 69,916
State income taxes 196 196
Unamortized investment tax credits 8,025 8,042
Accumulated postretirement benefits 4,371 4,332
-------- --------
Total deferred credits 121,533 121,617
-------- --------
Contributions in Aid of Construction 40,863 40,863
-------- --------
Commitments and Contingent Liabilities
-------- --------
Total $674,504 $670,904
======== ========
See Notes to Consolidated Financial Statements.
-3-
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CAPITALIZATION
(In Thousands Except Share Amounts)
March 31, December 31,
1998 1997
-------- --------
E'town Corporation:
Common Shareholders' Equity:
Common stock without par value,
authorized, 15,000,000 shares, issued
1998, 8,115,020 shares; 1997,
8,054,461 shares $155,195 $153,162
Paid-in capital 1,315 1,315
Capital stock expense (5,160) (5,160)
Retained earnings 45,616 45,560
Less cost of treasury stock; 1998,
32,505 shares; 1997, 32,208 shares (966) (954)
-------- -------
Total common shareholders' equity 196,000 193,923
-------- -------
Elizabethtown Water Company:
Cumulative Preferred Stock
$100 par value, authorized, 200,000
shares; $5.90 series, issued and
outstanding, 120,00 shares 12,000 12,000
-------- --------
Cumulative Preferred Stock:
$25 par value, authorized, 500,000
shares; none issued
Long-Term Debt:
E'town Corporation:
6 3/4% Convertible Subordinated
Debentures, due 2012 11,286 11,354
6.79% Senior Notes, due 2007 10,000 4,000
Elizabethtown Water Company:
7.20% Debentures, due 2019 10,000 10,000
7 1/2% Debentures, due 2020 15,000 15,000
6.60% Debentures, due 2021 10,500 10,500
6.70% Debentures, due 2021 15,000 15,000
8 3/4% Debentures, due 2021 27,500 27,500
8% Debentures, due 2022 15,000 15,000
5.60% Debentures, due 2025 40,000 40,000
Variable Rate Debentures, due 2027 50,000 50,000
7 1/4% Debentures, due 2028 50,000 50,000
The Mount Holly Water Company:
Notes Payable (due serially through 2000 53 57
-------- --------
Total long-term debt 254,339 248,411
Unamortized discount-net (1,103) (1,113)
-------- --------
Total long-term debt-net 253,236 247,298
-------- --------
Total Capitalization $461,236 $453,221
======== ========
See Notes to Consolidated Financial Statements.
-4-
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In Thousands Except Share Amounts)
Three Months Ended Year Ended
March 31, December 31,
1998 1997
--------- ---------
Common Stock:
Balance at Beginning of Period $153,162 $ 145,661
Common stock issued under Dividend
Reinvestment and Stock Purchase
Plan (1998, 57,518 shares; 1997,
227,992 shares) 1,951 6,980
Issuance of restricted stock (1997,
4,033 shares) 123
Exercise of stock options (1998, 3,041
shares; 1997, 14,685 shares) 82 398
-------- ---------
Balance at End of Period 155,195 153,162
-------- --------
Paid-in Capital: 1,315 1,315
-------- --------
Capital Stock Expense: (5,160) (5,160)
-------- --------
Retained Earnings:
Balance at Beginning of Period 45,560 42,434
Net Income 4,163 19,260
Dividends on common stock
(1998, $.51, 1997, $2.04) (4,107) (16,134)
-------- --------
Balance at End of Period 45,616 45,560
-------- --------
Treasury Stock:
Balance at Beginning of Period (954) (737)
Cost of shares redeemed to exercise stock
options (1998, 297 shares; 1997, 6,332 (12) (217)
-------- --------
Balance at End of Period (966) (954)
-------- --------
Total Common Shareholders' Equity $196,000 $193,923
======== ========
See Notes to Consolidated Financial Statements.
-5-
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS Three Months Ended
(In Thousands) March 31,
1998 1997
------- -------
Cash Flows From Operating Activities:
Net Income $ 4,163 $ 3,470
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,158 3,022
Increase in deferred charges (739) (299)
Deferred income taxes and investment tax
credits-net 803 678
Capitalized interest and AFUDC (206) (160)
Other operating activities-net 351 148
Change in current assets and current liabilities
excluding cash, short-term investments and
current portion of debt:
Customer and other accounts receivable (820) (1,750)
Unbilled revenues 491 135
Accounts payable and other liabilities 1,916 (4,955)
Accrued/prepaid interest and taxes 7,861 5,321
Other (350) 111
------- -------
Net cash provided by operating activities 16,628 5,721
------- -------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock 2,021 1,803
Proceed from issuance of debentures and other
long-term debt 6,000
Debt and preferred stock issuance and
amortization costs 124 112
Repayment of long-term debt (72) (116)
Contributions and advances for construction-net (926) 235
Net decrease in notes payable - banks (12,000)
Dividends paid on common stock (4,107) (3,985)
------- -------
Net cash used by financing activities (8,960) (1,951)
------- -------
Cash Flows From Investing Activities:
Utility plant expenditures (excluding allowance
for funds used during construction) (7,314) (3,466)
Development costs of land (excluding
capitalized interest) (14) (37)
------- -------
Cash used for investing activities (7,328) (3,503)
------- -------
Net Increase in Cash and Cash Equivalents 340 267
Cash and Cash Equivalents at Beginning of Period 6,233 3,228
------- -------
Cash and Cash Equivalents at End of Period $ 6,573 $ 3,495
======= =======
Supplemental Disclosures of Cash
Flow Information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 2,244 $ 3,791
Income taxes $ -0- $ -0-
Preferred stock dividends $ 177 $ 177
See Notes to Consolidated Financial Statements.
-6-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED INCOME
(In Thousands)
Three Months Ended Twelve Months Ended
March 31, March 31,
1998 1997 1998 1997
------ ------ ------ ------
Operating Revenues $ 30,507 $ 30,013 $ 132,282 $ 114,611
------- ------- ------- -------
Operating Expenses:
Operation 10,409 10,840 44,870 43,764
Maintenance 1,455 1,475 6,528 5,860
Depreciation 3,158 3,022 12,369 10,571
Revenue taxes 3,846 3,779 16,617 14,371
Real estate, payroll and other taxes 824 804 3,084 2,854
Federal income taxes 2,413 2,001 11,438 7,906
------- ------- ------- -------
Total operating expenses 22,105 21,921 94,906 85,326
------- ------- ------- -------
Operating Income 8,402 8,092 37,376 29,285
------- ------- ------- -------
Other Income (Expense):
Allowance for equity funds used durin
construction 115 44 286 2,670
Federal income taxes (43) (46) (245) (1,075)
Other - net 7 88 413 401
------- ------- ------- -------
Total other income (expense) 79 86 454 1,996
------- ------- ------- -------
Total Operating and Other Income 8,481 8,178 37,830 31,281
------- ------- ------- -------
Interest Charges:
Interest on long-term debt 3,624 3,253 14,401 13,011
Other interest expense - net 206 986 1,602 3,218
Allowance for funds used during construc (91) (35) (222) (2,357)
Amortization of debt discount and expens 97 89 384 363
------- ------- ------- -------
Total interest charges 3,836 4,293 16,165 14,235
------- ------- ------- -------
Income Before Preferred Stock Dividen 4,645 3,885 21,665 17,046
Preferred Stock Dividends 203 203 813 813
------- ------- ------- -------
EARNINGS APPLICABLE TO COMMON STOCK $ 4,442 $ 3,682 $ 20,852 $ 16,233
======= ======= ======= =======
See Notes to Consolidated Financial Statements.
-7-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
1998 1997
-------- ---------
Assets
Utility Plant-At Original Cost:
Utility plant in service $679,106 $677,909
Construction work in progress 15,398 9,300
------- -------
Total utility plant 694,504 687,209
Less accumulated depreciation
and amortization 117,598 114,424
------- -------
Utility plant-net 576,906 572,785
------- -------
Non-utility Property 80 79
------- -------
Current Assets:
Cash and cash equivalents 4,064 4,226
Customer and other accounts receivable
(less reserve: 1998, $613; 1997, $612) 18,225 17,283
Unbilled revenues 9,118 9,663
Materials and supplies-at average cost 2,316 1,966
Prepaid insurance, taxes, other 1,415 3,461
------- -------
Total current assets 35,138 36,599
------- -------
Deferred Charges:
Waste residual management 772 936
Unamortized debt and preferred
stock expenses 9,543 9,656
Taxes recoverable through future rates 21,439 21,439
Postretirement benefit expense 3,649 3,738
Other unamortized expenses 1,837 1,086
------- -------
Total deferred charges 37,240 36,855
------- -------
Total $649,364 $646,318
======= =======
See Notes to Consolidated Financial Statements.
-8-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)
March 31, December 31,
1998 1997
-------- ---------
Capitalization and Liabilities
Capitalization (Note 3):
Common shareholder's equity $195,187 $193,354
Cumulative preferred stock 12,000 12,000
Long-term debt - net 231,950 231,944
------- -------
Total capitalization 439,137 437,298
------- -------
Current Liabilities:
Notes payable - banks 11,000 18,000
Long-term debt - current portion 30 30
Accounts payable and other liabilities 12,927 10,626
Customers' deposits 255 272
Accrued federal income taxes 223
Municipal and state taxes accrued 20,832 16,817
Interest accrued 4,900 3,120
Preferred stock dividends accrued 59 59
------- -------
Total current liabilities 50,226 48,924
------- -------
Deferred Credits:
Customers' advances for construction 38,205 39,131
Federal income taxes 68,651 67,851
Unamortized investment tax credits 8,025 8,042
Accumulated postretirement benefits 4,257 4,209
------- -------
Total deferred credits 119,138 119,233
------- -------
Contributions in Aid of Construction 40,863 40,863
------- -------
Commitments and Contingent Liabilities
------- -------
Total $649,364 $646,318
======= =======
See Notes to Consolidated Financial Statements.
-9-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED CAPITALIZATION
(In Thousands Except Share Amounts)
March 31, December 31,
1998 1997
-------- ---------
Common Shareholder's Equity:
Common stock without par value,
authorized, 10,000,000 shares,
issued 1998 and 1997, 1,974,902
shares $ 15,741 $ 15,741
Paid-in capital 126,058 124,560
Capital stock expense (485) (485)
Retained earnings 53,873 53,538
------- -------
Total common shareholder's equit 195,187 193,354
------- -------
Cumulative Preferred Stock
$100 par value, authorized, 200,000
shares; $5.90 series, issued and
outstanding, 120,000 shares 12,000 12,000
Cumulative Preferred Stock:
$25 par value, authorized, 500,000
shares; none issued
------- -------
Long-Term Debt:
7.20% Debentures, due 2019 10,000 10,000
7 1/2% Debentures, due 2020 15,000 15,000
6.60% Debentures, due 2021 10,500 10,500
6.70% Debentures, due 2021 15,000 15,000
8 3/4% Debentures, due 2021 27,500 27,500
8% Debentures, due 2022 15,000 15,000
5.60% Debentures, due 2025 40,000 40,000
Variable Rate Debentures, due 2027 50,000 50,000
7 1/4% Debentures, due 2028 50,000 50,000
The Mount Holly Water Company:
Notes Payable (due serially through 2000 53 57
------- -------
Total long-term debt 233,053 233,057
Unamortized discount-net (1,103) (1,113)
------- -------
Total long-term debt-net 231,950 231,944
------- -------
Total Capitalization $439,137 $437,298
======= =======
See Notes to Consolidated Financial Statements.
-10-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In Thousands)
Three Months Ended Year Ended
March 31, December 31,
1998 1997
------- -------
Common Stock: $ 15,741 $ 15,741
------- -------
Paid-in Capital:
Balance at Beginning of Period 124,560 117,457
Capital contributed by parent company 1,498 7,103
------- -------
Balance at End of Period 126,058 124,560
------- -------
Capital Stock Expense: (485) (485)
------- -------
Retained Earnings:
Balance at Beginning of Period 53,538 49,580
Earnings applicable to common stock 4,645 20,905
Dividends on common stock (4,107) (16,134)
Dividends on preferred stock (203) (813)
------- -------
Balance at End of Period 53,873 53,538
------- -------
Total Common Shareholder's Equity $195,187 $193,354
======= =======
See Notes to Consolidated Financial Statements.
-11-
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED CASH FLOWS Three Months Ended
(In Thousands) March 31,
1998 1997
------- -------
Cash Flows From Operating Activities:
Income before preferred stock dividends
of subsidiary $ 4,645 $ 3,885
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,158 3,022
Increase in deferred charges (587) (289)
Deferred income taxes and investment tax
credits-net 783 679
Allowance for funds used during construction (206) (79)
Other operating activities-net 120 113
Change in current assets and current liabilities
excluding cash, short-term investments and
current portion of debt:
Customer and other accounts receivable (942) (300)
Unbilled revenues 545 135
Accounts payable and other liabilities 2,284 (5,924)
Accrued/prepaid interest and taxes 8,064 5,623
Other (350) 111
------- ------
Net cash provided by operating activities 17,514 6,976
------- ------
Cash Flows From Financing Activities:
Capital contributed by parent company 1,498 500
Debt and preferred stock issuance and
amortization costs 113 105
Repayment of long-term debt (4) (4)
Contributions and advances for construction-net (926) 235
Net increase in notes payable - banks (7,000)
Dividends paid on common and preferred stock (4,284) (4,162)
------- ------
Net cash used by financing activities (10,603) (3,326)
------- ------
Cash Flows From Investing Activities:
Utility plant expenditures (excluding allowance
for funds used during construction) (7,073) (3,466)
------- ------
Cash used for investing activities (7,073) (3,466)
------- ------
Net (Decrease) Increase in Cash and
Cash Equivalents (162) 184
Cash and Cash Equivalents at
Beginning of Period 4,226 3,122
------- ------
Cash and Cash Equivalents at End of Period $ 4,064 $ 3,306
======= ======
Supplemental Disclosures of Cash
Flow Information:
Cash paid during the year for:
Interest (net of amount capitalized) $ 2,049 $ 3,482
Income taxes $ -0- $ -0-
Preferred stock dividends $ 177 $ 177
See Notes to Consolidated Financial Statements.
-12-
E'TOWN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
E'town Corporation (E'town or Corporation), a New Jersey holding
company, is the parent company of Elizabethtown Water Company
(Elizabethtown or Company), Edison Water Company (Edison) and E'town
Properties, Inc. (Properties) and owner of a 65% interest in Applied
Watershed Management, LLC (AWM). The Mount Holly Water Company
(Mount Holly) is a wholly owned subsidiary of Elizabethtown.
2. INTERIM FINANCIAL STATEMENTS
The financial statements reflect all adjustments which, in the
opinion of management, are necessary for a fair presentation. The
Notes to Consolidated Financial Statements accompanying the 1997
Annual Report to Shareholders and the 1997 Form 10-K should be read
in conjunction with this report.
The preparation of financial statements in conformity with
generally accepted accounting principles 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.
New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement
of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which is
effective for fiscal years beginning after December 15, 1997. The
pronouncement requires disclosure of selected information about
operating segments in interim financial reports. Based upon the
relative immateriality of the Corporation's business segments, no
additional disclosures are required.
In February 1998, the FASB issued SFAS No. 132 "Employers'
Disclosures about Pensions and Other Postretirement Benefits,"
effective for fiscal years beginning after December 15, 1997. The
pronouncement revises certain disclosure requirements for pension
and other postretirement plans but does not change the measurement
or recognition of expenses under those plans.
In March 1998, the American Institute of Certified Public
Accountants (AICPA) issued Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained
for Internal Use." The SOP is effective for fiscal years beginning
after December 15, 1998 and establishes criteria for capitalizing
certain internal use software costs.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of
Start-Up Activities" which is effective for fiscal years beginning
after December 15, 1998 and provides guidance on the expensing of
costs of start-up activities as these costs are incurred.
The Corporation is currently assessing the impact of these SOPs
however, the adoption of SOPs 98-1 and 98-5 is not expected to have
a material impact on the financial statements.
-13-
3. CAPITALIZATION
E'town routinely makes equity contributions to Elizabethtown which
represent a portion of the proceeds of common stock issued under
E'town's Dividend Reinvestment and Stock Purchase Plan (DRP).
E'town contributed $1.5 million from the DRP proceeds of $2.0
million to Elizabethtown for the three months ended March 31, 1998.
The remaining $.5 million of DRP proceeds were used to fund working
capital requirements of the Corporation.
4. LONG-TERM DEBT
In December 1997, E'town signed an agreement to issue $12 million of
6.79% Senior Notes due December 15, 2007. E'town issued $4 million
of these notes in December 1997. The proceeds of the notes were used
to make capital contributions to Elizabethtown for purposes of
financing its ongoing capital program. E'town issued $6 million of
these notes in January 1998 for purposes of repaying E'town's
outstanding short-term debt and expects to issue the remaining $2.0
million of notes later in May 1998. The Note Agreement requires the
maintenance of a consolidated fixed charges coverage ratio of at
least 1.5 to 1 and a debt to total capitalization ratio not to
exceed .65 to 1. As of March 31, 1998, the fixed charges coverage
ratio was 2.7 to 1 and the debt to total capitalization ratio was
.58 to 1, calculated in accordance with the Note Agreement.
5. LINES OF CREDIT
E'town has $87.5 million of uncommitted lines of credit with several
banks, of which $82.5 million was available to Elizabethtown as of
March 31, 1998. These lines, together with internal funds and
proceeds of future issuances of debt and preferred stock by
Elizabethtown and sales of common stock and issuances of short-and
long-term debt by E'town, are expected to be sufficient to finance
the Corporation's capital needs.
6. EARNINGS PER SHARE
Basic earnings per share are computed on the basis of the weighted
average number of shares outstanding. Diluted earnings per share
assume both the conversion of the 6 3/4% Convertible Subordinated
Debentures and common stock equivalents, which assume that all stock
options are exercised. Reference is made to Exhibit 11 for the
computations of earnings per share.
7. NON-UTILITY PROPERTY AND OTHER INVESTMENTS
Included in Non-utililty Property and Other Investments at March 31,
1998 is an investment of $1.33 million ($.30 million net of related
deferred taxes) in a limited partnership that owns Solar Electric
Generating System V (SEGS), located in California.
Also included in Non-utility Property and Other Investments at March
31, 1998 is $12.79 million of investments in various parcels of
undeveloped land in New Jersey. The carrying value of each parcel
includes the original cost plus any real estate taxes, interest and,
where applicable, direct costs capitalized while rezoning or
governmental approvals were being sought. Based upon independent
appraisals received at various times prior to 1997, the estimated
net realizable value of each property exceeds its respective
carrying value as of March 31, 1998. No information has come to the
attention of management since these appraisals were last performed
that would indicate the aggregate carrying value of these parcels
has been impaired.
One of the real estate parcels was sold in June 1997 for $.4
million, resulting in a gain of less than $.1 million. E'town and
Properties are proceeding with plans to sell such properties and
expect to invest the sale proceeds into water and wastewater utility
investments that produce a current return.
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In 1995, Properties entered into an agreement to sell a parcel of
land to a developer. The agreement intended that the transaction
would close prior to December 31, 1996. The developer had been
unable to obtain approval from the municipality for an appropriate
number of buildable units. All of the material issues have been
resolved and a sale is expected to be consummated in 1998.
The Corporation will continue to monitor the relationship between
the carrying and net realizable values of its properties through
updated appraisals and its investment in SEGS based upon information
provided by SEGS management and through cash flow analyses.
8. REGULATORY MATTERS
Rates
In December 1997, the BPU adopted an Order for rate increases for
Elizabethtown and Mount Holly, effective January 1, 1998, for the
recovery of costs associated with SFAS No. 106 currently recovered
in rates and the full SFAS No. 106 expense on an accrual basis. The
total increases in annual operating revenues resulting from these
petitions are $.39 million for Elizabethtown and $.02 million for
Mount Holly.
In June 1995, Mount Holly petitioned the BPU for an increase in
rates, to take place in two phases. The first phase was stipulated
for a rate increase effective February 1996 of $.55 million. The
second phase would recover the cost of a new water supply, treatment
and transmission system necessary to obtain water outside a
designated portion of an aquifer currently used by Mount Holly, and
to treat and pump the water into the Mount Holly distribution
system. Management believes this project is the most cost-effective
alternative available to Mount Holly to comply with state
legislation that restricts the amount of water that can be withdrawn
from an aquifer in certain areas of southern New Jersey. The project
is referred to as the Mansfield Project.
In September 1995, the New Jersey Department of Environmental
Protection (DEP) granted Mount Holly a water allocation permit for
four wells that are to be the water supply for the Mansfield
Project. In October 1995, another water purveyor requested of the
DEP, and was subsequently granted, an adjudicatory hearing in
opposition to the permit. In August 1997, Mount Holly settled this
matter by entering into an agreement with the other water purveyor
and the DEP.
On March 19, 1998, Mount Holly began taking water under this
agreement. Under the agreement Mount Holly will purchase 1.0 million
gallons per day from the other purveyor for a period to include the
later of two years or the date the Mansfield Project is placed into
service.
As a result of the agreement Mount Holly expects to continue with
its plan to construct the Mansfield Project subject to an
acknowledgement by the BPU and the parties to Mount Holly's last
rate case of the need for the Mansfield Project. This
acknowledgement should also clarify the need for and
cost-effectiveness of the Mansfield Project as the method for Mount
Holly to meet the state restrictions on well water diversions.
In September 1997, Mount Holly filed a petition with the BPU to
establish a Purchased Water Adjustment Clause (PWAC) to reflect the
cost of water purchased from the other purveyor under the agreement
discussed above. The petition requests an increase in annual
operating revenues of approximately $1.3 million or 40.3%. Mount
Holly has requested deferred accounting treatment, in its PWAC
petition, for the cost of the purchased water until such time as the
rate increase under the PWAC becomes effective. This methodology
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would ensure that the recording of the revenues under the PWAC
petition would coincide with the recording of the purchased water
expenses under the settlement agreement. As of March 31, 1998, Mount
Holly has deferred less than $.1 million for water purchased from
the period March 19, 1998 to March 31, 1998. Mount Holly is
currently awaiting a decision regarding its PWAC petition.
In the second quarter of 1998, Mount Holly expects to file a
petition with the BPU for a rate increase, which will reflect
additional construction and financing costs, as well as increases in
operating costs since rates were last established in January 1996.
This rate case will also include the cost for a portion of the
Mansfield Project. A decision is expected by the end of 1998. Mount
Holly expects to file an additional rate case next year for the
remaining cost of the Mansfield Project, as well as other increases
in construction, financing and operating costs, to coincide with the
completion of the project and the expiration of the agreement to
purchase water from the other purveyor.
9. COMMITMENTS AND CONTINGENT LIABILITIES
E'town has completed negotiations with the City of Elizabeth, New
Jersey to operate its water system under a 40-year contract. The
contract has been approved by the city council and a public hearing
has been held. We are awaiting final regulatory and council
approval. The contract would require E'town to make payments to the
City of $19.0 million on June 1, 1998, $12.0 million on July 1, 1999
and $19.0 million on July 1, 2000. E'town would receive all revenues
generated as a resulted of operating the system and would incur all
operating expenses. E'town would be responsible for replacing meters
within the water system over a 40-year period at an estimated cost
of $7 million. Other capital improvements would be the
responsibility of the City of Elizabeth.
In 1995, the Corporation entered into a three-year joint venture
agreement with Applied Wastewater Group (AWG) to form a New Jersey
limited liability company, Applied Watershed Management, LLC (AWM).
AWG is a unit of several privately held and affiliated companies
providing design, engineering, construction and operating services
for water and wastewater facilities. E'town has determined it is in
the Corporation's long-term interest to exercise an option to
purchase the operations of AWG to provide a full complement of water
and wastewater services and on March 6, 1998, exercised such option.
A closing is expected in the second quarter of 1998. The purchase
price is expected to be approximately $7 million, payable in E'town
Corporation Common Stock.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
E'town Corporation (E'town or Corporation), a New Jersey holding company, is
the parent company of Elizabethtown Water Company (Elizabethtown or Company),
Edison Water Company (Edison) and E'town Properties, Inc. (Properties) and
owner of a 65% interest in Applied Watershed Management, LLC (AWM). The
Mount Holly Water Company (Mount Holly) is a wholly owned subsidiary of
Elizabethtown. The assets and operating results of Elizabethtown constitute
the predominant portions of E'town's assets and operating results. Mount
Holly contributed 3% of the Company's consolidated operating revenues for
1997. The following analysis sets forth significant events affecting the
financial condition of E'town and Elizabethtown at March 31, 1998, and the
results of operations for the three and twelve months ended March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Capital Expenditures Program
Capital expenditures, primarily for water utility plant, were $7.3 million
for the first three months of 1998. For the three years ending December 31,
2000, capital and investment requirements for E'town are estimated to be
$142.0 million, consisting of (i) expenditures for water utility plant
($112.7 million for Elizabethtown and $21.9 million for Mount Holly) and,
(ii) investments in non-regulated water and wastewater operations including
systems operated by E'town or its subsidiaries under privatization contracts
($7.4 million). These estimates do not include any amounts for the proposed
Elizabeth contract (discussed below) or possible additional acquisition
activities in the three-year period.
Elizabethtown
While Elizabethtown's projected capital outlays have dropped from recent
years now that the Canal Road Water Treatment Plant (Plant) is completed,
Elizabethtown's facilities will continue to be upgraded and expanded to
handle customer growth. Elizabethtown's three-year capital program includes
$62.0 million for routine projects (services, hydrants and main extensions
not funded by developers) and $50.7 million for transmission system upgrades,
a new operations center and other projects. Elizabethtown expects to file for
rate relief periodically to ensure that such costs are adequately reflected
in rates. (See Economic Outlook.)
Mount Holly
During the next three years, Mount Holly expects to spend $21.9 million,
primarily for an additional supply source (the Mansfield Project) to comply
with state regulations designed to prevent further depletion of a local
aquifer. Mount Holly plans to file for rate relief to recover these costs, as
well as to increase the rates of return realized by Mount Holly and,
therefore, Mount Holly's contribution to E'town's earnings per share.
Under an August 1997 settlement agreement among Mount Holly, the New Jersey
Department of Environmental Protection (DEP) and a regional purveyor, Mount
Holly began purchasing 1.0 million gallons per day from the regional purveyor
on March 19, 1998 and expects to continue to purchase this amount until the
Mansfield Project is constructed in approximately two years.
As a result of the settlement agreement, Mount Holly expects to continue with
its plan to construct the Mansfield Project. The New Jersey Board of Public
Utilities (BPU) and the parties to Mount Holly's last rate case are
participating in a proceeding connected with the second phase of a 1995 rate
case to clarify the need for, and cost-effectiveness of, the Mansfield
Project.
In September 1997, Mount Holly filed a petition with the BPU to establish a
Purchased Water Adjustment Clause (PWAC) to reflect the cost of water
purchased from the other purveyor under the agreement discussed above. The
petition requests an increase in annual operating revenues of approximately
$1.3 million or 40.3%. Mount Holly has requested deferred accounting
treatment, in its PWAC petition, for the cost of the purchased water until
such time as the rate increase under the PWAC becomes effective. This
methodology would ensure that the recording of the revenues under the PWAC
petition would coincide with the recording of the purchased water expenses
under the settlement agreement. As of March 31, 1998, Mount Holly has
deferred less than $.1 million for water purchased from the period March 19,
1998 to March 31, 1998. Mount Holly is currently awaiting a decision
regarding its PWAC petition.
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In the second quarter of 1998, Mount Holly expects to file a petition with
the BPU for a rate increase, which will reflect additional construction and
financing costs, as well as increases in operating costs since rates were
last established in January 1996. This rate case will also include the cost
for a portion of the Mansfield Project. A decision is expected by the end of
1998. Mount Holly expects to file an additional rate case next year for the
remaining cost of the Mansfield Project, as well as other increases in
construction, financing and operating costs, to coincide with the completion of
the project and the expiration of the agreement to purchase water from the
other purveyor.
Capital Resources
For the three-year period ending December 31, 2000, E'town estimates that
50.2% of its currently projected consolidated capital expenditures and
investments are expected to be financed with internally generated funds
(after payment of common stock dividends). The balance will be financed with
a combination of proceeds from the sale of E'town common stock, long-term
debt, proceeds of tax-exempt New Jersey Economic Development Authority
(NJEDA) bonds and short-term borrowings. Additional external financing may be
required to finance payments required by the proposed Elizabeth contract
(discussed below) and future acquisitions or investments in the three-year
period. The NJEDA has granted preliminary approval for the financing of
almost all of Elizabethtown's major projects during the next three years and
the Mansfield Project. Elizabethtown expects to pursue tax-exempt financing
to the extent that final allocations are granted by the NJEDA. Mount Holly
has applied to the DEP State Revolving Fund Program for low interest funding
(approximately 3% to 3.5%) for the Mansfield Project.
E'town has completed negotiations with the City of Elizabeth, New Jersey to
operate its water system under a 40-year contract. The contract has been
approved by the city council and a public hearing has been held. We are
awaiting final regulatory and council approval. The contract would require
E'town to make payments to the City of $19.0 million on June 1, 1998, $12.0
million on July 1, 1999 and $19.0 million on July 1, 2000. E'town would
receive all revenues generated as a resulted of operating the system and
would incur all operating expenses. E'town would be responsible for replacing
meters within the water system over a 40-year period at an estimated cost of
$7 million. Other capital improvements would be the responsibility of the
City of Elizabeth.
In 1995, the Corporation entered into a three-year joint venture agreement
with Applied Wastewater Group (AWG) to form a New Jersey limited liability
company, Applied Watershed Management, LLC (AWM). AWG is a unit of several
privately held and affiliated companies providing design, engineering,
construction and operating services for water and wastewater facilities.
E'town has determined it is in the Corporation's long-term interest to
exercise an option to purchase the operations of AWG to provide a full
complement of water and wastewater services and on March 6, 1998, exercised
such option. A closing is expected in the second quarter of 1998. The
purchase price is expected to be approximately $7 million, payable in E'town
Corporation Common Stock.
RESULTS OF OPERATIONS
Net Income for the three months ended March 31, 1998 was $4.2 million or $.52
per share as compared to $3.5 million or $.44 per share for the same period
in 1997. Net income for the twelve months ended March 31, 1998 was $20.0
million or $2.50 per share as compared to $15.4 million or $1.99 per share
for the same period in 1997. Net income increased for the three month period
primarily due to higher revenues primarily due to the operations of Edison
Water Company, and lower interest costs due to a refinancing in June 1997.
Revenues for Elizabethtown Water Company were comparable to those of the same
period in 1997. These changes were partially offset by an increase in
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operating expenses. The increase in net income for the twelve month period
reflects a full year of Elizabethtown's base rate increase effective October
1996 for the new Canal Road Plant, favorable 1997 summer weather resulting in
higher water consumption and cost savings in labor and other operating and
interest costs.
Operating Revenues increased $1.1 million or 3.8% and $20.2 million or 17.6%
for the three and twelve months ended March 31, 1998, respectively, compared
to the same periods in 1997. The increase for the three month period resulted
primarily from revenues of Edison Water Company which began operation in July
1997. The increase for the twelve month period was comprised of $13.0 million
from Elizabethtown's rate increase effective October 1996 and increased water
consumption of $7.2 million, of which $4.0 million was contributed by Edison
Water Company.
Operation Expenses increased less than $.1 million or .3% and $3.1 million or
6.8% for the three and twelve months ended March 31, 1998, respectively,
compared to the same periods in 1997. The small increase for the three month
period is comprised of an increase for the operations of Edison Water Company
which was substantially offset by lower labor and other operating costs of
Elizabethtown and Mount Holly resulting primarily from mild winter weather in
1998. The increase for the twelve month period is due primarily to increased
operating costs resulting from operation of the Plant, which went into
service in October 1996, in addition to information technology expenditures
and other administrative costs.
Maintenance Expenses increased $.1 million or 6.4% and $.8 million or 14.3%
for the three and twelve months ended March 31, 1998, respectively, over the
comparable 1997 amounts. The increase for the three month period is due to
scheduled maintenance functions throughout the treatment and distribution
system. The increase for the twelve month period is due primarily due to
costs associated with the Plant. The increase for the twelve month period
also includes $.4 million related to the costs of determining the most
cost-effective method of disposing of byproducts (waste residuals) generated
from the water treatment process at the Raritan-Millstone Plant.
Depreciation Expense increased $.1 million or 4.5% and $2.0 million or 18.6%
for the three and twelve months ended March 31, 1998, respectively, over the
comparable 1997 amounts. The increases were due primarily to a higher level
of depreciable plant in service. The higher level of depreciable plant for
the twelve month period was primarily related to the Plant.
Revenue Taxes increased $.1 million, or 1.8% and $2.2 million or 15.6% for
the three and twelve month periods ended March 31, 1998, respectively,
compared to the same periods in 1997 due to the increases in operating
revenues discussed above, upon which these taxes are calculated.
Real Estate, Payroll and Other Taxes Expenses increased by less than $.1
million or 2.8% and $.2 million or 8.1% for the three and twelve month
periods, respectively. The increase for the twelve month period is due
primarily to increased property taxes associated with the Plant.
Federal Income Taxes as a component of operating expenses increased $.3
million or 18.3% and $3.5 million or 47.6% for the three and twelve months
ended March 31, 1998, respectively, over the comparable 1997 amounts due to
the changes in the components of taxable income discussed herein.
Other Income (Expense) increased $.1 million or 70.7% and decreased $1.48
million or 62.8%, for the three and twelve month periods ended March 31,
1998, respectively, compared to the same periods in 1997. The decrease for
the twelve month period is due primarily to the reduction in AFUDC, the
largest portion of which was recorded while the Plant was under construction.
These decreases were offset by the decreases in associated federal income
taxes.
Total Interest Charges decreased $.2 million or 4.5% and increased $2.4
million or 16.3% for the three and twelve month periods ended March 31, 1998,
respectively, compared to the same periods in 1997. The decrease for the
three month period is due primarily to a refinancing in June 1997. The
decrease for the twelve month period is due primarily to a reduction in the
debt component of AFUDC. This reduction in AFUDC was related to the
completion of the Plant in October 1996.
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ECONOMIC OUTLOOK
Forward Looking Information
Information in this report includes certain forward looking statements within
the meaning of the Federal securities laws. Any forward looking statements
are based upon information currently available and are subject to future
events, risks and uncertainties that could cause actual results to differ
materially from those expressed in the statements. Such events, risks and
uncertainties include, without limitation, actions of regulators, the effects
of weather on water consumption, changes in historical patterns of water
consumption and demand, including changes through increased use of
water-conserving devices, conditions in capital and real estate markets,
increases in operating expenses due to factors beyond the Corporation's
control, changes in environmental regulation and associated costs of
compliance and other claims or assessments made upon the Corporation.
E'town Corporation and Subsidiaries
Consolidated earnings for E'town for the next several years will be
determined by related but different strategies for the regulated and
non-regulated businesses. For Elizabethtown and Mount Holly, management will
continue to focus on expansion efforts to increase sales, as well as on
controlling costs through productivity improvements so that realized returns
remain comparable to authorized levels. For the non-regulated businesses,
management seeks to invest in water and wastewater assets (including
municipal privatization contracts, as well as designing, constructing,
operating and purchasing wastewater assets through the proposed AWG
acquisition) which produce a current return. Capital to finance investments
in both the regulated and non-regulated businesses will be raised from
external sources and from the sale of real estate parcels owned by E'town and
Properties.
E'town expects earnings from the regulated operations to be somewhat lower in
1998, based on an assumed return to normal weather patterns after the
unusually dry summer in 1997 and because Elizabethtown will be completing its
second year since its last rate adjustment. However, consistent with E'tow's
strategy to sell its real estate properties (discussed below) management
expects to realize gains from property sales in 1998. Based upon these
factors, management currently expects earnings per share to be similar to
those reported for 1997.
Elizabethtown and Subsidiary - Regulated Utilities
Elizabethtown's authorized rate of return on common equity is currently
11.25%. In 1997, Elizabethtown achieved an actual return on common equity of
11.0%. Realizing rates of return in 1998 comparable to authorized levels will
require continued customer additions and the success of ongoing cost control
efforts, as well as rate relief later in the year.
Mount Holly earned a rate of return on common equity of 2.8% in 1997,
compared to an authorized rate of return of 11.25% established in its most
recent rate proceeding. Mount Holly contributed $.02 to E'town's consolidated
earnings per share in 1997. Management expects Mount Holly to increase its
contribution to E'town's earnings per share later in 1998 and into 1999 upon
receipt of additional rate relief so that Mount Holly can realize rates of
return comparable to authorized levels.
E'town and Properties
The activities of E'town and Properties are not regulated by the BPU.
-20-
Properties
E'town Properties and E'town Corporation own various parcels of undeveloped
land in New Jersey carried as investments of $12.8 million in Non-Utility
Property and Other Investments -- Net, in the Consolidated Balance Sheets of
E'town at March 31, 1998. E'town and Properties are proceeding with plans to
sell such properties and expect to invest the sale proceeds into water and
wastewater utility investments that produce a current return.
Properties had previously entered into a contract to sell another parcel to a
developer. The parties expected that the contract would close in 1996, but
the developer was unable to obtain the required municipal approvals. The
contract has been extended and all the material issues appear to have been
resolved. Properties expects to close on several parcels during 1998,
including the parcel described above which, if consummated, would result in a
gain.
The carrying value of each parcel includes the original cost plus any real
estate taxes, interest and, where applicable, direct costs capitalized while
rezoning or governmental approvals are or were being sought. Such costs are
capitalized until the property is offered for sale, after which time such
costs are expensed. Based on independent appraisals received at various times
prior to 1997, the estimated net realizable value of each property exceeds
its respective carrying value as of March 31, 1998.
Included in Non-utililty Property and Other Investments at March 31, 1998 is
an investment of $1.33 million ($.30 million net of related deferred taxes)
in a limited partnership that owns Solar Electric Generating System V (SEGS),
located in California.
E'town will continue to monitor the relationship between the carrying and net
realizable values of its properties through updated appraisals, when
appropriate, and of its investment in SEGS based on information provided by
SEGS management.
New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of
an Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997. The pronouncement requires disclosure of
selected information about operating segments in interim financial reports.
Based upon the relative immateriality of the Corporation's business segments,
no additional disclosures are required.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures about
Pensions and Other Postretirement Benefits," effective for fiscal years
beginning after December 15, 1997. The pronouncement revises certain
disclosure requirements for pension and other postretirement plans but does
not change the measurement or recognition of expenses under those plans.
In March 1998, the American Institute of Certified Public Accountants (AICPA)
issued Statement of Position (SOP) 98-1, "Accounting for the Costs of
Computer Software Developed or obtained for Internal Use." The SOP is
effective for fiscal years beginning after December 15, 1998 and establishes
criteria for capitalizing certain internal use software costs.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Star-Up
Activities" which is effective for fiscal years beginning after December 15,
1998 and provides guidance on the expensing of costs of start-up activities
as these costs are incurred.
The Corporation is currently assessing the impact of these SOPs however, the
adoption of SOPs 98-1 and 98-5 is not expected to have a material impact on
the financial statements.
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PART II - OTHER INFORMATION
Items 1 - 5:
Nothing to Report.
Item 6(a) - Exhibits
Exhibits to Part I:
Exhibit 11 - E'town Corporation and Subsidiaries - Statement
Regarding Computation of Per Share Earnings
Exhibit 12 - Elizabethtown Water Company - Computation of Ratio of
Earnings to Fixed Charges and Preferred Dividends and
Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 - E'town Corporation and Subsidiaries and Elizabethtown
Water Company and Subsidiary - Financial
Data Schedules
Item 6(b) - Reports on Form 8-K
None
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E'TOWN CORPORATION
ELIZABETHTOWN WATER COMPANY
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.
Date: May 13, 1998
E'TOWN CORPORATION
ELIZABETHTOWN WATER COMPANY
/s/ Gail P. Brady
________________________________
Gail P. Brady
Treasurer
/s/ Dennis W. Doll
________________________________
Dennis W. Doll
Controller
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