Exhibit 99.1
Newark, DE, November 1, 2004 - Artesian today announced basic and diluted
earnings per common share were $0.80 and $0.78, respectively, for the nine
months ended September 30, 2004, as compared to $0.77 and $0.75, respectively,
for the same period last year, a 3.9% increase in basic earnings per share.
Revenues for the nine months ended September 30, 2004 were $29.4 million, up
7.9% from $27.2 million in the comparable period in 2003. Net income available
to common stockholders was $3.2 million, compared to $3.0 million for the same
period last year, a 6.0% increase.
Basic and diluted earnings per common share for the third quarter in 2004 were
$0.38 and $0.36, respectively, as compared to $0.27 and $0.26 for the same
period last year. Revenues for the quarter were $10.6 million, up from $9.2
million compared to the same period last year. Net income available to common
stockholders increased to $1.5 million for the third quarter of 2004 from $1.1
million for the third quarter last year.
Increased revenues and earnings for both the quarter and nine month periods are
attributable primarily to increased water sales. Revenues from water sales for
the nine month period increased 6.8%, or $1.8 million, and 12.3%, or $1.1
million, for the third quarter compared to the same period a year ago. The
number of water customers served by Artesian has grown about 2% from a year ago.
As permitted by Delaware statute, Artesian also placed a 6.9% temporary rate
increase into effect on April 6, 2004 and an additional 8.1% increase on
September 7, 2004 pending a final ruling on our rate increase request filed in
February 2004.
Also contributing to our revenue growth, we recorded a 42.7% increase, $361,000,
in our non-utility and other utility operating revenue, primarily from our
contract water and wastewater operations, in the nine month period. These
sources of revenue increased by 127.2%, or $262,000, for the third quarter
compared to the same period a year ago.
The increase in revenues from the increased number of customers served and the
implementation of temporary rates was offset by suppressed water demand
resulting from significant rainfall and the need for recovery of costs
associated with investments in utility plant.
Rainfall in New Castle County, Delaware, where 94.6% of our customer base
reside, was approximately 40% above average for the nine months ended September
30, 2004, and 10% greater than the same period a year ago.
Artesian has invested $49 million in water utility plant providing supply,
treatment, storage and distribution of water to customers since September, 2002,
the end of the period for investment included in our last rate increase request.
Although we are now recovering a portion of the expense associated with this
investment under temporary rates, appropriate recovery of the costs associated
with this investment awaits conclusion of a rate filing currently pending before
the Delaware Public Service Commission. A significant portion of the investments
made in utility plant has been made to ensure compliance with the Delaware Water
Supply Self-Sufficiency Act, which was passed into law in 2003. We plan to file
our self-sufficiency certification by the end of the year, although
certification under the Act is not required until 2006.
Depreciation and amortization expense increased $374,000, or 14.2%, for the
first nine months of 2004 compared to the same period last year as a result of
our continued significant investment in utility plant. This expense increased by
10.4%, or $94,000, for the third quarter compared to the same period a year ago.
Our investments in utility plant also required additional borrowings in the past
year that resulted in an increase in interest expense of $820,000, or 22.7%,
when comparing the first nine months of 2004 to the same period a year ago.
Interest expense increased by 21.7%, or $266,000, for the third quarter compared
to the same period a year ago.
Consulting fees related to internal control documentation and testing in
compliance with Section 404 of the Sarbanes-Oxley Act of 2002 are also impacting
operating expenses in 2004. To date, we have paid $65,000 in consulting fees and
expect to incur additional fees of approximately $130,000 by the end of the
year. In addition, we anticipate increased fees from our auditors, related to
their review and testing of internal controls, to range between $56,000 and
$84,000, potentially a 40% to 60% increase in total auditing fees. These expense
estimates do not reflect additional accounting personnel needs and management
time relating to this effort.
Artesian Resources Corporation, through our wholly-owned subsidiary Artesian
Water Company, is the largest investor owned regulated public water utility in
the State of Delaware and has been providing water within the state since 1905.
Artesian has invested more than $150 million in utility plant over the last 10
years to provide sufficient treated supply, new water mains and additional
storage capacity to meet peak demands and provide fire protection for Delaware
residents. We distribute and sell water to residential, commercial, industrial,
governmental, municipal and utility customers throughout the state. As of
September 30, 2004, we are serving approximately 70,750 metered customers,
providing water service to about 230,000 residents, approximately 29% of
Delaware's total population. Artesian owns and maintains approximately 940 miles
of water main throughout the state. Last year, Artesian distributed 7.2 billion
gallons of water. Artesian's water supply is treated at 50 different locations
statewide. Artesian serves New Castle County from 84 operating wells in 31 well
fields. Artesian also has 11 wells in 9 active well fields in Kent County and 9
wells in 5 well fields in Sussex County.
##########
In addition to historical facts or statements of current conditions, this press
release contains forward-looking statements regarding projected consulting and
auditing fees related to Section 404 compliance work. These expenses may be more
or less than currently anticipated and may not be immediately recoverable in
rates. In addition, statements are made concerning the projected timing of our
self-sufficiency certification filing, which may be filed later than expected or
not at all. These statements are subject to certain risks and uncertainties
which include, but are not limited to, our ability to complete the filing
process related to our self-sufficiency certification. Given these risks and
uncertainties, this forward-looking statement may prove to be incorrect.
Furthermore, we do not intend to update publicly any forward-looking statements.
Contact: Nicki Taylor
Investor Relations
(302) 453-6943 ntaylor@artesianwater.com
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ARTESIAN RESOURCES CORPORATION
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CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Quarter ended Quarter ended Nine months ended Nine months ended
September 30, 2004 September 30, 2003 September 30, 2004 September 30, 2003
------------------ ------------------ ------------------ ------------------
OPERATING REVENUES $ 10,601 $ 9,227 $ 29,372 $ 27,218
OPERATING EXPENSES
Operations and Maintenance Expenses 5,100 4,936 15,486 14,585
Depreciation and Amortization 998 904 3,014 2,640
State & Federal Income Taxes 993 653 2,112 1,999
Property and Other Taxes 537 529 1,619 1,548
----------- ----------- ----------- ------------
7,628 7,022 22,231 20,772
----------- ----------- ----------- ------------
OPERATING INCOME 2,973 2,205 7,141 6,446
Miscellaneous Income - 77 446 210
----------- ----------- ----------- ------------
INTEREST BEFORE INTEREST CHARGES 2,973 2,282 7,587 6,656
----------- ----------- ----------- ------------
INTEREST CHARGES 1,493 1,227 4,430 3,610
----------- ----------- ----------- ------------
NET INCOME 1,480 1,055 3,157 3,046
PREFERRED DIVIDEND REQUIREMENT & REDEMPTION PREMIUM - 3 2 69
----------- ----------- ----------- ------------
NET INCOME APPLICABLE TO COMMON STOCK $ 1,480 $ 1,052 $ 3,155 $ 2,977
=========== =========== =========== ===========
Weighted Average Common Shares Outstanding - Basic 3,944,299 3,884,515 3,930,744 3,875,386
Net Income Per Common Share - Basic $ 0.38 $ 0.27 $ 0.80 $ 0.77
Weighted Average Common Shares Outstanding - Diluted 4,072,761 3,984,823 4,058,873 3,978,541
Net Income Per Common Share - Diluted $ 0.36 $ 0.26 $ 0.78 $ 0.75
ARTESIAN RESOURCES CORPORATION
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CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(Unaudited)
September 30, 2004 December 31, 2003
- -------------------------------------------------------------------------------------------------------------
ASSETS
Utility Plant, at original cost less
accumulated depreciation $ 208,364 $ 187,893
Current Assets $ 11,194 $ 9,211
Regulatory and Other Assets $ 6,444 $ 19,220
---------- ----------
$ 226,002 $ 216,324
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CAPITALIZATION AND LIABILITIES
Stockholders' Equity $ 54,245 $ 52,691
Long Term Debt, Net of Current Portion $ 83,073 $ 80,558
Current Liabilities $ 18,234 $ 19,674
Advances for Construction $ 21,398 $ 19,175
Contributions in Aid of Construction $ 32,083 $ 30,376
Other Liabilities $ 16,969 $ 13,850
---------- ----------
$ 226,002 $ 216,324
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