SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: July 2, 2004
Date of earliest event reported: July 1, 2004
MAINE & MARITIMES CORPORATION
(Exact name of registrant as specified in its charter)
Maine
(State or other jurisdiction of
incorporation or organization)
333-103749
(Commission File No.)
30-0155348
(I.R.S. Employer Identification No.)
209 State Street, Presque Isle, Maine 04769
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 207-760-2499
Maine & Maritimes Corporation
Item 5. Other Events
Shareholder Newsletter
Introduction
To improve overall shareholder communications, we are in the process of
implementing a number of investor relations changes during 2004, including the
introduction of this mid-year progress report in a new format and increased
usage of quarterly webcasts. In addition to these activities, efforts are
underway to significantly improve our corporate and subsidiary web pages,
including an enhanced investor relations section. This mid-year progress report
will replace our "Interim Report to Shareholders" and will focus on strategic
updates with increased market and strategy highlights. We look forward to your
comments and suggestions as we seek to improve communications between Maine &
Maritimes Corporation (the "Company") and our shareholders. Our quarterly Form
10-Q reports filed with the Securities and Exchange Commission are available for
review by accessing the SEC's Edgar web site at http://www.sec.gov/edgar.shtml,
or on our web site in the investor relations area at www.maineandmaritimes.com.
We are pleased to report that Maine & Maritimes Corporation is executing its
overall strategic growth plan as detailed both in our Annual Report and during
our 2004 Annual Meeting. A copy of our Annual Meeting presentation can be
accessed by visiting the investor relations section of our web site.
As detailed more fully below, during the second quarter of this year, we
successfully completed two new acquisitions as part of the growth strategy for
our subsidiary, Maine & Maritimes Energy Services (dba "The Maricor Group") and
its Canadian subsidiary Maricor Ltd as discussed in our Annual Meeting
presentation.
Business Strategy
As a result of a combination of regulatory and economic factors, such as
deregulation, generation divestiture, and the lagging economy of our regulated
utility's service area, we believe that diversified growth is an essential part
of our continued creation of shareholder value. Maine & Maritimes Corporation's
Board of Directors and Management remain committed to creating increased
shareholder value through a portfolio growth strategy, while remaining
independently owned. Since migration to a holding company corporate structure
approximately one year ago, Maine & Maritimes Corporation has undertaken
increasing efforts to enter and develop a larger number of diverse and
unregulated businesses and markets in a broader geographic area. These efforts
continue to focus on, what we believe to be, a conservative and balanced revenue
model approach including annuity, growth, and real estate investment revenue
models.
Our strategy is to manage our corporate resources across a more diversified
portfolio of geographic, product and service, and industry markets to deliver
increased, consistent, and long-term earnings growth. This includes our
objective to expand our unregulated activities as a percentage of the Company's
total business mix between the growth and real estate investment revenue models,
as well as to evaluate other regulated operations within the annuity revenue
model category. Although an increasing focus is being placed on our unregulated
operations and evaluation of additional regulated operations, we continue to
maintain our commitment to the financial and operational integrity of our
existing regulated transmission and distribution utility, Maine Public Service
Company.
The Maricor Group Expands Canadian and U.S. Presence
During the second quarter of 2004, Maine & Maritimes Energy Services (dba "The
Maricor Group") followed a fourth quarter of 2003 acquisition with the
acquisitions of two additional mechanical and electrical engineering firms in
Halifax, Nova Scotia, Canada and the greater Boston, Massachusetts areas. As
previously announced in December 2003, Maricor Ltd, the Canadian subsidiary of
The Maricor Group, acquired Eastcan Consulting Engineers, Inc., a company
headquartered in Moncton, New Brunswick with an additional office in Saint John,
New Brunswick. In June 2004, Maricor Ltd completed its second acquisition with
the addition of Morris & Richard Consulting Engineers, Ltd., a Canadian company
headquartered in Halifax, Nova Scotia. The Maricor Group also acquired in June
of 2004, RES Engineering, Inc., a U.S. company headquartered in Hudson,
Massachusetts, with an additional office in downtown Boston.
These acquisitions make The Maricor Group, together with its subsidiaries, one
of the largest mechanical and electrical engineering firms serving the New
England and Atlantic Canada corridor. As a facility engineering and development
company, a primary business focus is intended to be on sustainable facility
asset management and engineering solutions, which result in improved energy
efficiency and environmental performance, reduced facility asset lifecycle
costs, and enhanced facility economic performance. In addition, the Maricor
Group has recently formed a Development Division that will focus on the
acquisition and/or development of end-user energy-related assets, such as
central utility plants.
With engineering and/or sales offices in Moncton and Saint John, New Brunswick;
Halifax, Nova Scotia; Hudson and Boston, Massachusetts; and Presque Isle and
Portland, Maine, the company is primarily focused on serving the needs of the
municipal, university, school and hospital markets (the "MUSH" market), as well
as light industrial and commercial markets. The Maricor Group's web site can be
accessed by visiting http://www.maricorgroup.com or http://www.maricor.ca.
Declaration of Quarterly Dividend
During the Maine & Maritimes Corporation's Board of Directors meeting held on
May 11, 2004, the Board of Directors declared a quarterly dividend of $.38 per
share on its Common Stock. The common dividend is payable July 1, 2004, to
shareholders of record as of June 15, 2004.
Annual Meeting
Maine & Maritimes Corporation's Annual Meeting was held on May 11, 2004, in
Presque Isle, Maine. David N. Felch, Richard G. Daigle and J. Nick Bayne were
elected as directors for a three-year term ending with the 2007 Annual Meeting.
During the meeting, shareholders also voted in favor of extending the maximum
age directors can stand for election to 78.
Maine Public Service Company
Maine Public Service Company ("MPS"), the Company's regulated transmission and
distribution utility serving northern Maine, intends to open a regulatory docket
or dockets in the appropriate regulatory jurisdiction(s) to propose a
comprehensive strategy to enhance transmission system security and adequacy
within the northern Maine and Canadian Maritimes region. As a part of the
strategy, MPS intends to propose one or more new transmission interconnections
with NB Power, as well as increasing access to market-based generation through
increased transmission reservations. In addition, MPS intends to propose the
development of a diesel peaking generation farm to ensure voltage support and to
strengthen the region's overall system reliability. Ultimately, the successful
implementation of these proposals is dependent on MPS obtaining the necessary
regulatory approvals. However, MPS believes the regulatory risk associated with
these actions is warranted, given the system security benefits that will result
from the improved near and long-term reliability of its transmission system.
We believe MPS's proposed strategy reflects a meaningful solution to the
challenging energy issues it faces in the northern Maine and Canadian Maritimes
region, which include the adverse effects of deregulation, the apparent lack of
energy market liquidity, the overall shortage of generation capacity within the
region, and other regulatory and market factors. Almost two years ago MPS began
its efforts to communicate to regulators and others its concerns relative to
generation and transmission inadequacy within the region. It appears that an
increasing consensus has evolved that actions of the type proposed by MPS must
be taken in the near-term to address the changing capacity and market conditions
within the region.
Further, while electric utility stocks appear to have been impacted during
recent weeks and months by concerns relative to potential interest rate
increases, MPS had already taken steps to protect itself from the adverse
consequences of interest rate increases by locking one hundred percent of its
long-term debt for its full maturity, through the use of interest rate swaps
effective September, 2003. We believe our decision to lock interest rates at an
almost forty-year low will prove to be beneficial to both shareholders and
customers, should interest rates rise as forecasted. Maine Public Service
Company's web site can be accessed by visiting
http://www.mainepublicservice.com.
Oracle Installation
During late 2003, Maine Public Service Company began the process of
significantly improving its information system technology by implementing a
tier-one financial system known as the Oracle Utility Enterprise Management
(UEM) system. As of April 1, 2004, the financial modules were operational,
representing a successful systems integration. MPS anticipates full
implementation of the Utility Enterprise Management system by late 2004.
The Company anticipates that these systems will bring increased efficiency to
MPS's overall operations, as well as improved financial reporting. A key element
of the Company's rationale to migrate to a new information system technology is
the system's ability to help ensure full compliance with the Sarbanes-Oxley Act
of 2002 (the "Act").
Sarbanes-Oxley Compliance
As a micro-cap stock with a market value of less than $75 million, Section 404
of the Act requires full compliance by December 31, 2005. Reflecting our
continuing commitment to effective corporate governance and full transparency to
ensure continuing shareholder confidence, the Company has begun an
enterprise-wide effort to ensure compliance, while at the same time working to
enhance its business processes. Anticipating the 2005 compliance date, the
Company is moving forward with its compliance efforts with the aid of the new
financial information technology system.
A special team of accountants, business process specialists, and information
technology professionals has been dedicated to this most important initiative.
In addition, enterprise-wide training and awareness is ongoing to ensure full
adherence to the principles of sound corporate governance and financial
reporting, as defined by the Act and required by the Securities and Exchange
Commission.
Market Highlights and Summary Outlook
Despite solid economic activity within the U.S. and Canada, we are closely
watching a number of economic and geo-political issues that could impact the
overall economic performance of our unregulated business markets. These issues
specifically relate to potential changes in interest rates, upcoming national
(U.S. and Canada) elections, the rise in energy prices, lagging government
revenue projections, a weakening U.S. and strengthening Canadian dollar, and the
increasing U.S. public debt, among other things.
While we anticipate that U.S. interest rates may increase in the near term, it
appears such increases will be moderated over an extended period. Within Canada,
due to their currency appreciation and low rate of inflation, we expect rates to
stay near historical lows. Inasmuch, we believe interest rates within both
nations will remain attractive and encourage facility investments and renewals
in the near to mid-term.
Within New England, particularly the greater Boston region, we believe the
combination of growth and infrastructure renewal requirements, combined with
increasing energy cost exposures, will increase the attractiveness of The
Maricor Group's intended business offerings. Given the aging facility
infrastructure within the region, we anticipate a continuing need and mandate to
address spiraling increases in deferred facilities maintenance liabilities.
Throughout New England, lagging revenues appear to be placing pressures on state
and local governments to address their facility infrastructure renewal needs in
new and innovative ways. We believe these needs are particularly acute in the
school, university, and hospital market sectors. Due to a number of diverse
factors, we find school's and university's maintenance requirements have been
dramatically under-funded, creating an increasing need to address expanding
deferred maintenance liabilities.
Similarly, within Canada, we also believe provincial governments will struggle
to meet budgetary shortfalls. Consequently, provincial government and municipal
operating expenditures appear to be rising faster than anticipated revenues.
Yet, there also appears to be an increasing recognition that significant capital
requirements can no longer be postponed. We believe these pressing capital
requirements, combined with escalating healthcare expenditures, will require
Atlantic Canadian provinces to adopt enhanced public and private partnerships to
address infrastructure renewal requirements within the MUSH market.
Rising energy costs, generation capacity shortages, transmission constraints,
and emissions reductions mandates are a few of the energy and environmental
issues that could create demand for The Maricor Group's intended business
offerings within Atlantic Canada and New England. Overall, the subsidiary
continues to believe that there is positive evidence that its actual and
potential customers will move forward with their capital investment plans to
meet future growth requirements; address the spiraling increases in deferred
facility maintenance liabilities; and seek to control energy costs and reduce
emissions.
The Maricor Group's planned development of its resources and business offerings
is intended to take advantage of these and other emerging market trends.
Recognizing our target market region's dependency on oil, natural gas, coal, and
Orimulsion(TM), we anticipate energy prices will continue to increase and remain
significantly higher than historical norms for the foreseeable future. As
certain New England-based demand-side management programs conclude, we also
believe there is a significant economic opportunity in addressing the economic
and energy security issues of individual businesses and organizations, focusing
on both asset renewal and energy efficiency benefits. Additionally, we believe
increased opportunities exist to address the electric demand reduction needs
within New Brunswick, Nova Scotia and New England.
While we continue to evaluate business opportunities related to each of our
targeted revenue models, our continued progress is partially dependent upon the
availability of investment capital. The pace of implementation of our strategy
will also be affected by our ability to access other potential sources of
capital such as monetized future cash flows that result from MPS's deferred
stranded cost rate structure. However, as we look to 2004 and beyond, we believe
our long-term outlook for our targeted growth remains positive and that the
Company's continued transformation and diversification strategy is well suited
to the developing market trends we are observing.
Primary Subsidiaries
Maine Public Service Company
Maine & Maritimes Energy Services Co.
(dba, The Maricor Group)
Maricor Ltd
Energy Atlantic, LLC
Investor Relations
Common Stock:
Maine & Maritimes Corporation Common Stock is traded on the AMEX under the
symbol MAM
Corporate Headquarters
P.O. Box 789
209 State Street
Presque Isle, Maine 04769-0789
Investor Contact
Annette Arribas
Vice President Investor Relations and Corporate Compliance
(207) 760-2402
Transfer Agent
Registrar
Dividend Distributing Agent
The Bank of New York
Shareholder Relations Dept.-11E
P.O. Box 11258
Church Street Station
New York, NY 10286
Tel. No. 1-800-524-4458
E-Mail: Shareholder-svcs@bankofny.com
Internet Address
For access to our most recent news releases and other investor information,
visit us at www.maineandmaritimes.com
NOTE REGARDING FORWARD-LOOKING STATEMENTS:
This newsletter contains forward- looking statements, including statements
relating to the expected performance of the Company's business and growth in
markets which the Company serves. It contains forward-looking statements within
the meaning of the "safe harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the businesses of Maine & Maritimes
Corporation are based on current expectations and beliefs that are subject to
risks and uncertainties. A number of factors could cause actual results or
outcomes to differ materially from those indicated by such forward-looking
statements. These factors include, but are not limited to, risks and
uncertainties set forth in Maine & Maritimes Corporation's filings with the SEC,
including risks and uncertainties relating to: failure to obtain and retain
expected synergies from start-ups, acquisitions and/or mergers, actual net
income projections for new or acquired firms, expected net income or earnings
per share performance, delays in obtaining or adverse conditions contained in
any required regulatory approvals, changes in laws or regulations, economic or
weather conditions affecting future sales and margins, changes in distribution
and/or transmission, customer decisions, changes in currency values, changes in
interest rates, availability and pricing of fuels and other energy commodities,
legislative and regulatory changes (including revised environmental and safety
requirements), availability and cost of capital, an inability to raise capital,
and other similar factors. Readers are referred to Maine & Maritimes
Corporation's most recent reports filed with the SEC.
The forward-looking statements are based on current Management expectations.
Actual results may differ materially as a result of several factors, including,
among other things, failure to achieve projected earning levels, the timely and
successful implementation of strategic initiatives, difficulties or delays
incurred in the execution of contracts, decreased capital investment by the
Company's clients, the Company's failure to receive anticipated new contract
awards, regulatory changes, an inability to achieve timely integration of
acquired companies, as well as other matters. Caution must be exercised in
relying on these and other forward- looking statements. Due to known and unknown
risks, the Company's results may differ materially from its expectations and
projections.
CONTACT: Maine & Maritimes Corporation
Annette Arribas, 877-272-1523 (Toll-free in US and Canada)
SIGNATURE
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, hereunto duly authorized.
MAINE & MARITIMES CORPORATION
Date: July 2, 2004
By: /s/ J. Nicholas Bayne
J. Nicholas Bayne, President & CEO