Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
---------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File
For the Fiscal Year ended December 31, 1997 No. 0-422
----------------- -----
MIDDLESEX WATER COMPANY
-----------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1114430
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1500 Ronson Road, Iselin, New Jersey 08830-3020
- ------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
(732) 634-1500
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each Class on which registered
- ------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No par Value
--------------------------
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant at March 18, 1998 was $87,705,186 based on the closing market price
of $20.375 per share.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding at March 18, 1998
----- -----------------------------
Common Stock, No par Value 4,304,549
- -------------------------- -----------------------------
Documents Incorporated by Reference
-----------------------------------
Annual Report to shareholders for fiscal year ended December 31, 1997; pages 10
through 23 as to Parts II and IV. Proxy Statement to be filed in connection with
the Registrant's Annual Meeting of Shareholders to be held on May 27, 1998 as to
Part III.
MIDDLESEX WATER COMPANY
FORM 10-K
INDEX
PAGE
PART I ----
Item 1. Business:
General 1
Retail Sales 1
Contract Sales 2
Contract Services 2
Financial Information 2
Water Supplies and Contracts 3
Competition 4
Regulation 4
Regulation of Rates and Services 5
Water Quality and Environmental Regulations 5
Employees 7
Executive Officers of Middlesex Water Company 7
Item 2. Properties 8
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote
of Security Holders 11
PART II
Item 5. Market for the Registrant's Common
Equity and Related Stockholder Matters:
Price Range of Common Stock 11
Approximate Number of Equity Security
Holders as of December 31, 1997 11
Dividends 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 12
PART III
Item 10. Directors and Executive Officers of the Registrant 12
Item 11. Executive Compensation 12
Item 12. Security Ownership of Certain Beneficial Owners
and Management 12
Item 13. Certain Relationships and Related Transactions 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
PART I
ITEM 1. BUSINESS
GENERAL
Middlesex Water Company (together with its subsidiaries, the
"Company"), has operated as a water utility in New Jersey since its organization
in 1897. The Company is in the business of collecting, treating and distributing
water for domestic, commercial, industrial and fire protection purposes in New
Jersey and, since 1992, in the State of Delaware through its wholly owned
subsidiary, Tidewater Utilities, Inc. (Tidewater). In July, 1997, the Company
completed the stock purchase of Public Water Supply Company, Inc. ("Public"), a
2,500 customer system in Southern Delaware; Public is held as a wholly owned
subsidiary of Tidewater. In April 1995, the Company, through two wholly owned
New Jersey subsidiaries, Pinelands Water Company and Pinelands Wastewater
Company (jointly "Pinelands") completed an asset purchase of a 2,200 customer
water utility and a 2,200 customer wastewater utility in Burlington County, New
Jersey. In January 1995, the Company formed a corporation, Utility Service
Affiliates, Inc., (USA), for the purpose of providing contract operations and
maintenance services for non-affiliated water and wastewater systems.
RETAIL SALES
MIDDLESEX SYSTEM:
The Company's Middlesex System, which produced approximately 91% of
the Company's total revenue in 1997, provides water services to retail customers
primarily in eastern Middlesex County, New Jersey. Water services are now
furnished to approximately 54,000 retail customers located in an area of
approximately 55 square miles of New Jersey in Woodbridge Township, the Boroughs
of Metuchen and Carteret, portions of Edison Township and the Borough of South
Plainfield in Middlesex County and, to a minor extent, a portion of the Township
of Clark in Union County. The retail customers include a mix of residential
customers, large industrial concerns and commercial and light industrial
facilities. These retail customers are located in generally well developed areas
of central New Jersey.
PINELANDS SYSTEM:
The Company's Pinelands System, which produced approximately 2% of
the Company's total revenue in 1997, provides water and wastewater services to
approximately 2,200 retail customers in Burlington County, New Jersey.
TIDEWATER SYSTEM:
The Company's Tidewater System (through Tidewater and Public),
which produced approximately 7% of the Company's total revenue in 1997, provides
water services to approximately 10,000 retail customers for domestic, commercial
and fire protection purposes in over 100 community water systems located in
Kent, Sussex and New Castle Counties in Delaware.
-1-
CONTRACT SALES
The Company's Middlesex System also provides water on a wholesale
basis in New Jersey to the Township of Edison (Edison), the Borough of Highland
Park (Highland Park), the City of South Amboy (South Amboy), the Old Bridge
Municipal Utilities Authority (Old Bridge), the Borough of Sayreville
(Sayreville) and the Marlboro Township Municipal Utilities Authority (Marlboro).
Under special contract, the Middlesex System also provides water treatment and
pumping services to the Township of East Brunswick (East Brunswick). These
municipal contract customers comprise an area of approximately 141 square miles
and have a total population of approximately 267,000. The contract sales to
Edison, Old Bridge, Sayreville and Marlboro are supplemental to the existing
water systems of these customers. The State of New Jersey in the mid-1980's
approved plans to increase available surface water supply to the South River
Basin area of the State to permit a reduced use of ground water in this area.
The Middlesex System provides water under long-term supply agreements to
Marlboro, Old Bridge, Sayreville, and South Amboy consistent with the State
approved plan.
CONTRACT SERVICES
The Company and USA jointly entered into a five-year contract with
South Amboy to operate and maintain the City's 2,600 customer water system in
May, 1995. The contract is subject to renewal for three future five-year
periods.
FINANCIAL INFORMATION
Consolidated operating revenues and operating income relating
primarily to operating water utilities are as follows:
(000's)
Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
Operating Revenues $40,294 $38,025 $37,847
====== ====== ======
Operating Income $ 8,768 $ 8,222 $ 8,662
====== ====== ======
Operating revenues were derived from the following sources:
Years Ended December 31,
------------------------
1997 1996 1995
---- ---- ----
Residential 40.3% 39.7% 40.2%
Commercial 11.4 11.4 11.6
Industrial 16.5 17.4 17.6
Fire Protection 11.6 12.2 12.0
Contract Sales 18.3 17.8 17.6
Other 1.9 1.5 1.0
---- ---- ----
TOTAL 100.0% 100.0% 100.0%
----- ----- -----
-2-
WATER SUPPLIES AND CONTRACTS
The Company's water utility plant consists of source of supply,
pumping, water treatment, transmission, distribution and general facilities
located in New Jersey and Delaware. The Company's New Jersey and Delaware water
supply systems are physically separate and are not interconnected. In addition,
the Pinelands system is not interconnected to the Middlesex system. In the
opinion of management, the Company has adequate sources of water supply to meet
the current and anticipated future service requirements of its present customers
in New Jersey and Delaware.
The Company's Middlesex System obtains water from both surface and
groundwater sources. In 1997, surface sources of water provided approximately
64% of the Middlesex System's water supply, groundwater from wells provided
approximately 29% and the balance of 7% was purchased from Elizabethtown Water
Company (Elizabethtown), a nonaffiliated water utility. Middlesex System's
distribution storage facilities are used to supply water to its customers at
times of peak demand, outages and emergencies.
The principal source of surface supply for the Middlesex System is
the Delaware and Raritan Canal (D&R Canal), owned by the State of New Jersey and
operated as a water resource by the New Jersey Water Supply Authority (NJWSA).
The Company has contracts with the NJWSA to divert a maximum of 20 million
gallons per day (mgd) of untreated water from the D&R Canal as augmented by the
Round Valley/Spruce Run Reservoir System. In addition, the Company has a
one-year agreement for an additional 5 mgd renewed through April 30, 1998. The
Company also has an agreement with Elizabethtown, effective through December 31,
2005, which provides for the minimum purchase of 3 mgd of treated water with
provisions for additional purchases.
The Company's Middlesex System also derives water from groundwater
sources equipped with electric motor-driven deep-well turbine type pumps. The
Middlesex System has 32 wells, which provide a pump capacity of approximately 27
mgd. The Company also owns water diversion rights with respect to Robinson's
Branch Reservoir in the Township of Clark, New Jersey for possible future use.
The Middlesex System's groundwater sources are:
1997 Maximum
Daily
Pumpage Pump
No. of (millions of Capacity
Middlesex System Wells gallons) (mgd) Location
---------------- ------ ------------- -------- --------
Park Avenue 15 11.4 15.2 South Plainfield
Tingley Lane North 4 3.2 2.8 Edison
Tingley Lane South 5 1.3 2.6 Edison
Spring Lake 4 1.3 2.8 South Plainfield
Sprague Avenue #1 1 1.0 1.1 South Plainfield
Sprague Avenue #2 1 1.3 1.3 South Plainfield
Maple Avenue 1 0.8 0.9 South Plainfield
Thermal Well 1 0.2 0.2 Edison
--
Total 32
--
-3-
PINELANDS SYSTEM:
The Pinelands System obtains its water supply from four (4) wells
drilled into the Mt. Laurel aquifer. The wells are equipped with three electric
motor driven deep well turbine pumps and one is equipped with a electric motor
driven submersible pump. Treatment (disinfection only) is done at individual
well sites.
The Pinelands System's groundwater sources are:
1997 Maximum
Daily Pumpage Pump
No. of (millions of Capacity
Pinelands System Wells gallons) (mgd) Location
---------------- ------ ------------- -------- --------
Leisuretowne/Hampton Lakes 4 2.1 2.2 Southampton
Township
The Pinelands wastewater system discharges into the south branch of
the Rancocas Creek through a tertiary treatment plant. The total capacity of the
plant is 0.5 mgd. Current average flow is 0.3 mgd. Pinelands has a current valid
NJPDES permit issued by the New Jersey Department of Environmental Protection
(DEP).
TIDEWATER SYSTEM:
Water supply to Delaware customers is derived from Tidewater's 84
wells, which provided overall system delivery of 461 million gallons (mg) during
1997 and from Public's 31 wells, which provided overall system delivery of 51 mg
during 1997. The Tidewater System does not have a central treatment facility.
Several of the water systems in Sussex County and New Castle County have
interconnected transmission systems. Tidewater currently has applications before
the Delaware regulatory authorities for the approval of additional wells.
Treatment is by chlorination and, in some cases, pH correction and filtration.
COMPETITION
The business of the Company in its franchised service areas is
substantially free from direct competition with other public utilities,
municipalities and other entities; however, its ability to provide some contract
water supply and wastewater services and operations and maintenance services is
subject to competition from other public utilities, municipalities and other
entities. Although Tidewater has been granted an exclusive franchise for each of
its existing community water systems, its ability to expand service areas can be
affected by the Delaware Department of Natural Resources and Environmental
Control (DNREC) awarding franchises to other regulated water purveyors.
REGULATION
The Company is subject to regulation as to its rates, services and
other matters by the States of New Jersey and Delaware with respect to utility
service within those states and with respect to environmental and water quality
matters. The Company is also subject to regulation as
-4-
to environmental and water quality matters by the United States Environmental
Protection Agency (EPA).
REGULATION OF RATES AND SERVICES
The Company's New Jersey operations are subject to regulation by
the New Jersey Board of Public Utilities (BPU). Similarly, the Company's
Delaware operations are subject to regulation by the Delaware Public Service
Commission (PSC). These regulatory authorities have jurisdiction with respect to
rates, service, accounting procedures, the issuance of securities and other
matters of utility companies operating within the States of New Jersey and
Delaware, respectively. The Company, for ratemaking purposes, accounts
separately for each of its operations in New Jersey and in Delaware so as to
facilitate independent ratemaking by the BPU for New Jersey operations and the
PSC for Delaware operations.
In determining rates for the Company, the BPU and the PSC consider
the income, expenses, rate base of property used and useful in providing service
to the public and a fair rate of return on that property, each within its
separate jurisdiction. Rate determinations by the BPU do not guarantee a
particular rate of return to the Company for its New Jersey operations nor do
rate determinations by the PSC guarantee a particular rate of return for
Tidewater's Delaware operations. Thus, the Company may not achieve the rates of
return permitted by the BPU or the PSC.
In January 1998, the BPU approved a rate increase of approximately
4.4% or an increase in annual revenues of $1,547,000 for the Company's Middlesex
System. In April, 1993, the BPU approved a rate increase of 9.33% or an increase
in annual revenues of $2,765,000. The Company expects to continue to seek rate
relief from the BPU as increases in operating expenses, construction and
financing expenses and other costs of doing business in New Jersey warrant.
In January 1997, the BPU approved a rate increase for the Company's
Pinelands System which will ultimately result in additional revenues of
approximately $400,000 per year; the additional revenues will be fully realized
after a three-year phase in period.
WATER QUALITY AND ENVIRONMENTAL REGULATIONS
Both the EPA and the DEP regulate the Company's operation in New
Jersey with respect to water supply, treatment and distribution systems and the
quality of the water, as do the EPA, the DNREC and the Delaware Department of
Health with respect to operations in Delaware.
Federal, Delaware and New Jersey regulations adopted over the past
five years relating to water quality require expanded types of testing by the
Company to insure that its water meets State and Federal water quality
requirements. In addition, the environmental regulatory agencies are reviewing
current regulations governing the limits of certain organic compounds found in
the water as by-products of treatment. The Company, as do many other water
companies, participates in industry-related research to identify the various
types of technology that might reduce the level of organic, inorganic and
synthetic compounds found in the water. The cost to water companies of complying
with the proposed water quality standards depends in part on the limits set in
the regulation and on the method selected to implement such reduction; the
Company believes that the upgrade and expansion of the Carl J. Olsen Water
Treatment Plant (CJO Plant) in Edison, New Jersey, will allow the Company to be
in a stronger position to meet any such future standards with regard to its
Middlesex System. The regular testing by the
-5-
Company of the water it supplies shows that the Company is in compliance with
existing Federal, New Jersey and Delaware primary water quality standards.
As required by the Federal Safe Drinking Water Act (FSDWA), the EPA
has established maximum contaminant levels (MCLs) for various substances found
in drinking water. As authorized by similar state legislation, the DEP has set
MCLs for certain substances which are more restrictive than the MCLs set by the
EPA. In certain cases, the EPA and the DEP have also mandated that certain
treatment procedures be followed in addition to satisfying MCLs established for
specific contaminants. The DEP and the Delaware Department of Health have
assumed primacy for enforcing the FSDWA in New Jersey and Delaware,
respectively, and, in that capacity, monitor the activities of the Company and
review the results of water quality tests performed by the Company for adherence
to applicable regulations.
Other regulations applicable to water utilities generally,
including the Company, include the Lead and Copper Rule (LCR), the MCLs
established for various volatile organic compounds (VOCs), the Federal Surface
Water Treatment Rule, and the Total Coliform Rule (TCR), and the Information
Collection Rule (ICR).
The LCR requires the Company to test on a sample basis the quantity
of lead and copper in drinking water at the customer's tap and, if certain
contaminant levels (Action Levels) are exceeded, to notify customers, initiate a
public information campaign advising customers how to minimize exposure to lead
and copper, add corrosion inhibitors to water to minimize leaching of lead from
piping, faucets and soldered joints into water consumed at the tap, and
implement applicable source water treatment requirements. Tests taken within the
Company's system yielded results well below the Action Levels.
VOCs, including primarily petro-chemicals, may percolate into
groundwater aquifers from surface sources. The Company has found VOCs in excess
of the applicable MCLs in certain of the Middlesex System wells and has
constructed air stripping facilities which remove such contaminants. In 1990 the
air stripping facility was complete at the Spring Lake Well Field. Construction
of a similar facility, along with a 2 mg storage reservoir, was completed in
1993 and is operational to treat water from the Park Avenue and Sprague Avenue
Well Fields. To the extent that contamination in excess of applicable MCLs
occurs at wells lacking air stripping and related facilities, the Company will
consider building such facilities if feasible and cost effective. VOCs have not
been detected in the Delaware or Pinelands' wells.
The SWTR established disinfection requirements for surface supplies
and for groundwater under the influence of surface water. Where required, the
Company provides disinfection for both surface and groundwater supplies.
Similarly, the TCR requires testing for the presence or absence of all coliform
in the water supply based upon a schedule of testing frequency determined with
reference to the population served. Testing is ongoing and the Company maintains
compliance with the TCR. ICR generally requires disinfection monitoring,
microbial monitoring and disinfection byproduct precursor removal studies, and
certain reporting requirements. The Company maintains compliance with ICR.
Federal and State regulations and controls concerning water
quality, pollution and the effluent from treatment facilities are still in the
process of being developed, and it is not possible to predict the scope or
enforceability of regulations or standards which may be established in the
future, or the cost and effect of existing and potential regulations and
legislation upon any of the existing and proposed facilities and operations of
the Company. Further, recent and possible
-6-
future developments with respect to the identification and measurement of
various elements in water supplies and concern with respect to the impact of one
or more of such elements on public health may in the future require the Company
to replace or modify all or portions of their various water supplies, to develop
replacement supplies and/or to implement new treatment techniques. In addition,
the Company anticipates that threatened and actual contamination of water
sources may become an increasing problem in the future. The Company has expended
and may in the future be required to expend substantial amounts to prevent or
remove said contamination or to develop alternative water supplies. Any such
developments may increase operating costs and capital requirements. Since the
rate regulation methodology of both the BPU and the PSC permits a utility to
recover through rates prudently incurred expenses and investments in plant,
based upon past BPU and PSC practice, the Company expects that all such
expenditures and costs should ultimately be recoverable through rates for water
service.
EMPLOYEES
As of December 31, 1997, the Company had a total of 142 employees
in New Jersey, and Tidewater had a total of 24 employees in Delaware. No
employees are represented by a union. Management considers its relations with
its employees to be satisfactory. Wages and benefits are reviewed annually and
are considered competitive within the industry.
EXECUTIVE OFFICERS OF MIDDLESEX WATER COMPANY
Walter J. Brady - age 56; Vice President-Administration; term expires May 1998.
Mr. Brady, who joined the Company in 1962, was elected Assistant
Secretary-Assistant Treasurer in 1979, Assistant Vice President in 1982, Vice
President-Human Resources in 1987, and Vice President-Administration in 1989. He
serves as Plan Administrator of the Pension Plan. He is a Director of Tidewater
Utilities, Inc., White Marsh Environmental Systems, Inc., Pinelands Water
Company, Pinelands Wastewater Company and Utility Service Affiliates, Inc.
A. Bruce O'Connor - age 39; Vice President and Controller; term expires May
1998. Mr. O'Connor, a Certified Public Accountant, joined the Company in 1990 as
Assistant Controller and was elected Controller in 1992 and Vice President in
1995. He assumed the designated title of Vice President and Controller and Chief
Financial Officer in May 1996. He is responsible for financial reporting,
customer service, rate cases, cash management and financings. He was formerly
employed by Deloitte & Touche LLP, a certified public accounting firm from 1984
to 1990. He is Treasurer of Tidewater Utilities, Inc., White Marsh Environmental
Systems, Inc., Public Water Supply Company, Inc. and Utility Service Affiliates,
Inc. and Vice President and Director of Pinelands Water Company and Pinelands
Wastewater Company.
Marion F. Reynolds - age 58; Vice President, Secretary and Treasurer; term
expires May 1998. Ms. Reynolds, who had been Secretary-Treasurer since 1987 was
elected Vice President, Secretary and Treasurer in 1993. Prior to her election
she had been employed by Public Service Electric and Gas Company, Newark, New
Jersey since 1958, and was elected Assistant Corporate Secretary in 1976. She is
Secretary of Tidewater Utilities, Inc., and Secretary/Treasurer of Pinelands
Water Company and Pinelands Wastewater Company and a Director of Utility Service
Affiliates, Inc.
Richard A. Russo - age 52; Executive Vice President; term expires May 1998. Mr.
Russo, who had been Vice President-Operations since 1989 was elected Executive
Vice President in 1995 and is responsible for engineering, water production,
water treatment and distribution maintenance.
-7-
He was formerly employed by Trenton Water Works as General Superintendent and
Chief Engineer since 1979. He is President and Director of Tidewater Utilities,
Inc., White Marsh Environmental Systems, Inc., Public Water Supply Company,
Inc., Pinelands Water Company and Pinelands Wastewater Company. He is also
Executive Vice President and Director of Utility Service Affiliates, Inc.
Dennis G. Sullivan - age 56; Vice President and General Counsel, Assistant
Secretary-Assistant Treasurer; term expires May 1998. Mr. Sullivan was hired in
1984 as Corporate Attorney, responsible for general corporate internal legal
matters. He was elected Assistant Secretary-Assistant Treasurer in 1988 and Vice
President and General Counsel in 1990. He was employed in a private law practice
from 1981 to 1984 as a staff attorney. He is Assistant Secretary and Assistant
Treasurer and a Director of Tidewater Utilities, Inc., Vice President, Secretary
and Director of White Marsh Environmental Systems, Inc. and Public Water Supply
Company Inc., a Director of Pinelands Water Company and Pinelands Wastewater
Company and a Director and Secretary of Utility Service Affiliates, Inc.
J. Richard Tompkins - age 59; Chairman of the Board and President; term expires
May 1998. Mr. Tompkins was elected President of the Company in 1981 and was
elected Chairman of the Board in 1990. In 1979 he was employed by Associated
Utility Services, an independent utility consulting firm in New Jersey, as Vice
President. From 1962 to 1979 he was employed by Buck, Seifert & Jost,
Incorporated, consulting engineers in New Jersey and was appointed Vice
President in 1973. He is Chairman and Director of Tidewater Utilities, Inc.,
White Marsh Environmental Systems, Inc., Pinelands Water Company and Pinelands
Wastewater Company; Director of Public Water Supply Company, Inc. and Director
and President of Utility Service Affiliates, Inc. He is also a Director of New
Jersey Utilities Association and Raritan Bay Healthcare Foundation.
Ronald F. Williams - age 49; Vice President-Operations; term expires May 1998.
Mr. Williams was hired in March 1995 as Assistant Vice President-Operations,
responsible for the Company's Engineering and Distribution Departments. He was
elected Vice President-Operations in October 1995. He was formerly employed with
the Garden State Water Company as President and Chief Executive Officer since
1991.
ITEM 2. PROPERTIES
The water utility plant of the Company's systems consists of source
of supply, pumping, water treatment, transmission and distribution and general
facilities.
MIDDLESEX SYSTEM:
Middlesex System's principal source of supply is the D&R Canal
owned by the State of New Jersey and operated as a water resource by the NJWSA.
Water is withdrawn from the D&R Canal at New Brunswick, New Jersey
through the Company's intake and pumping station located on State-owned land
bordering the Canal. It is transported through a 54-inch supply main for
treatment and distribution at the Company's CJO Plant, which has been in service
since 1969. Facilities at the CJO Plant consist of source of supply, pumping,
water treatment, transmission, storage, laboratory and general facilities. The
Company monitors water quality at
-8-
the CJO Plant, at each well field and throughout the distribution system to
determine that federal and state water quality standards are met.
The design capacity of the intake and pumping station in New
Brunswick, New Jersey, and the raw water supply main located there is 80 mgd.
The four electric motor-driven vertical turbine pumps presently installed have
an aggregate design capacity of 65 mgd. The station is designed to permit its
pumping capacity to be increased to 80 mgd by the installation of additional
pumping units. Associated facilities are the 4,901 feet of 54-inch reinforced
concrete water main connecting the intake and pumping station with the CJO
Plant, 23,200 feet of 48-inch reinforced concrete transmission main connecting
the CJO Plant to the Company's distribution pipe network and related storage
pumping, control, laboratory and other facilities. The Company also has a 58,600
foot transmission main, a long-term lease agreement with the City of Perth Amboy
for the use of a 38,800 foot transmission main, and a long term non-exclusive
"wheeling agreement" with the East Brunswick system, all used to transport water
to several of the Company's contract customers.
The CJO Plant includes chemical storage and chemical feed
equipment, dual-rapid mixing basins, four reinforced concrete mechanical
flocculation compartments, four underground reinforced concrete settling basins,
eight rapid filters containing gravel, sand and anthracite for water treatment
and a steel wash-water tank. The firm design capacity of the CJO Plant is 30 mgd
(45 mgd maximum capacity).
The main pumping station at the CJO Plant has a design capacity of
90 mgd. The four electric motor-driven vertical turbine pumps presently
installed have an aggregate capacity of 65 mgd. The station was constructed so
that an additional pumping unit can be installed without structural change. The
design capacity of the CJO Plant is also being significantly modified. In
addition to the main pumping station at the CJO Plant, there is a 15 mgd
auxiliary pumping station located in a separate building. It has a dedicated
substation and emergency power supply provided by a diesel-driven generator. It
pumps from the 10 mg reservoir directly into the distribution system.
In November, 1997, construction began on the upgrade, expansion and
addition of facilities at the CJO Plant and related water intake station, in New
Brunswick, New Jersey. At the CJO Plant, new facilities include the installation
of new flash mixers and new chemical storage and feed facilities. The existing
conventional sedimentation basins are being replaced by high-rate upflow
clarifiers that are intended more effectively to remove turbidity. The chlorine
application point is being relocated from preclarification to postclarification.
The existing sedimentation basins are to be used for chlorine contact basins.
Four additional filters are being added to the CJO Plant, a new laboratory is
being constructed, and a computerized Supervisory Control and Data Acquisition
(SCADA) system is being added to monitor and control the CJO Plant and various
other facilities. Upgrades are also being made to the heating, ventilating, air
conditioning and the electrical system at the CJO Plant.
The primary purpose of the Project is to upgrade the CJO Plant to
meet the new and anticipated regulatory changes concerning water quality, as
well as to increase capacity to meet peak-day demands. The firm capacity of the
CJO Plant is being increased from about 30 mgd to 45 mgd (firm capacity is
defined as the capacity when the largest unit is out of service).
The Project also involves changes to the raw water pump station
which delivers water from the D&R Canal to the CJO Plant, a distance of about
one mile. The station capacity is being
-9-
increased by replacing one existing pump with a larger pump. The firm capacity
of the raw water pump station is being increased from about 35 mgd to 45 mgd.
Functional completion of the Project (ability to produce water) is scheduled for
June 1, 1999, with final completion set for October 1, 1999. The total cost of
the Project, including design and engineering, is approximately $34 million.
Middlesex System's storage facilities consist of a 10 mg reservoir
at the CJO Plant, a 5 mg and a 2 mg reservoirs in Edison (Grandview), a 5 mg
reservoir in Carteret (Eborn) and a 2 mg reservoir at the Park Avenue Well
Field.
The Company owns the properties in New Jersey on which Middlesex
System's 32 wells are located. The Company also owns its two-building
headquarters complex at 1500 Ronson Road, Iselin, New Jersey, consisting of a
27,000 square foot, two-story office building and a 16,500 square foot
maintenance facility.
PINELANDS SYSTEM:
Pinelands Water owns the well site properties which are located in
Southampton Township, New Jersey. Pinelands Wastewater owns a 12 acre site on
which its .5 mgd capacity tertiary plant is located. Pinelands Water storage
facility is a 1.2 mg standpipe.
TIDEWATER SYSTEM:
Tidewater's storage facilities include 21 ground level storage
tanks with the following capacities; 11 - 30,000 gallons, 5 - 25,000 gallons, 3
- - 120,000 gallons, 1 - 135,000 gallons and 1 - 82,000 gallons. Public's
facilities include 1 ground level storage tank with a capacity of 80,000
gallons.
The Company's Delaware operations are managed from Tidewater's
leased offices in Odessa, Delaware and from Public's leased offices in
Millsboro, Delaware. Tidewater's office property, located on property owned by
White Marsh Environmental Systems, Inc., a wholly owned subsidiary of Tidewater,
consists of a 1,600 square foot building situated on a one (1) acre lot with
ample room for expansion; the area is commercially zoned.
ITEM 3. LEGAL PROCEEDINGS
A local entity and its owner have filed a negligence claim against
the Company, for which the Company is insured, with a claim for punitive damages
which may not be insured. Their action alleges financial losses arising out of
improper water pressure and service. An amendment to the claim alleges damages
resulting from some poor quality water. Other parties who dealt with the
claimants have joined the matter. Without taking a position on the negligence
claim, the Company does not believe that the claim for punitive damages will
prevail. While the outcome of this case is not presently determinable,
management believes that the final resolution will not have a significant effect
on the Company's financial position or results of operations or cash flows.
A fire at a warehouse within the Company's service territory has
resulted in multiple party claims for unspecified amounts. This has led the
warehouse operator and certain tenants to assert claims against the Company for
alleged insufficient water pressure and supply. The Company believes it has
substantial defenses to the claims.
-10-
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS PRICE RANGE OF COMMON STOCK
The following table shows the range of closing prices for the
Common Stock on the NASDAQ Stock Market for the calendar quarter indicated.
1997 High Low Dividend
---- ---- --- --------
First Quarter $18 $17 $0.28
Second Quarter 17 7/8 16 3/8 0.28
Third Quarter 19 1/4 16 3/8 0.28
Fourth Quarter 22 1/2 18 0.28 1/2
1996 High Low Dividend
---- ---- --- --------
First Quarter $19 1/4 $17 1/4 $0.27 1/2
Second Quarter 17 1/2 15 1/2 0.27 1/2
Third Quarter 18 16 0.27 1/2
Fourth Quarter 18 1/4 16 3/4 0.28
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS AS OF DECEMBER 31, 1997
Number of
Title of Class Record Holders
-------------- --------------
Common Stock, No Par Value 2,312
Cumulative Preferred Stock, No Par Value:
$7 Series 17
$4.75 Series 1
Cumulative Convertible Preferred Stock, No Par Value:
$7 Series 4
$8 Series 5
DIVIDENDS
The Company has paid dividends on its Common Stock each year since
1912. Although it is the present intention of the Board of Directors of the
Company to continue to pay regular quarterly cash dividends on its Common Stock,
the payment of future dividends is contingent upon the future earnings of the
Company, its financial condition and other factors deemed relevant by the Board
of Directors at its discretion.
-11-
The Common Stock of the Company is traded on the NASDAQ Stock
Market under the symbol MSEX.
ITEM 6. SELECTED FINANCIAL DATA
This information is incorporated herein by reference to the
attached Exhibit 13, 1997 Annual Report to Shareholders, Page 23.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This information is incorporated herein by reference to the
attached Exhibit 13, 1997 Annual Report to Shareholders, Pages 10 and 11.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and Independent Auditors'
Report are incorporated herein by reference to the attached Exhibit 13, 1997
Annual Report to Shareholders, Pages 12 through 22. The supplementary data is
included as indicated under Part IV, Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURES
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information with respect to Directors of Middlesex Water Company is
included in Middlesex Water Company's Proxy Statement for the 1998 Annual
Meeting of Stockholders and is incorporated herein by reference.
Information regarding the Executive Officers of Middlesex Water
Company is included under Item 1 in Part 1 of this Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
This Information for Middlesex Water Company is included in
Middlesex Water Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
This information for Middlesex Water Company is included in
Middlesex Water Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-12-
This information for Middlesex Water Company is included in
Middlesex Water Company's Proxy Statement for the 1998 Annual Meeting of
Stockholders and is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following information is incorporated herein by reference to the attached
Exhibit 13, 1997, Annual Report to Shareholders, pages 10 through 23:
Management's Discussion and Analysis, Pages 10-11
Consolidated Balance Sheets at December 31, 1997, and 1996, Pages 12-13
Consolidated Statements of Income for each of the three years in the period
ended December 31, 1997, Page 14
Consolidated Statements of Capital Stock and Long-term Debt at December 31,
1997, and 1996, Page 15
Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 1997, Page 16
Consolidated Statements of Retained Earnings for each of the three years in the
period ended December 31, 1997, Page 17
Notes to Consolidated Financial Statements, Pages 17-22
Independent Auditors' Report, Page 22
(A) 2. FINANCIAL STATEMENT SCHEDULES
All Schedules are omitted because of the absence of the conditions under which
they are required or because the required information is shown in the financial
statements or notes thereto.
(A) 3. EXHIBITS
See Exhibit listing on Pages 15-17.
(B) REPORTS ON FORM 8-K
None
-13-
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
Chairman of the Board and
President and Director /s/J. Richard Tompkins/ 3/27/98
----------------------------------- -------
J. Richard Tompkins Date
Executive Vice President and
Director /s/Richard A. Russo/ 3/27/98
----------------------------------- -------
Richard A. Russo Date
Vice President and Controller
Chief Financial Officer /s/A. Bruce O'Connor/ 3/27/98
----------------------------------- -------
A. Bruce O'Connor Date
Director /s/John C. Cutting/ 3/27/98
----------------------------------- -------
John C. Cutting Date
Director /s/Ernest C. Gere/ 3/27/98
----------------------------------- -------
Ernest C. Gere Date
Director /s/John P. Mulkerin/ 3/27/98
----------------------------------- -------
John P. Mulkerin Date
Director /s/Stephen H. Mundy/ 3/27/98
----------------------------------- -------
Stephen H. Mundy Date
Director /s/Philip H. Reardon/ 3/27/98
----------------------------------- -------
Philip H. Reardon Date
Director /s/William E. Scott/ 3/27/98
----------------------------------- -------
William E. Scott Date
Director /s/Jeffries Shein/ 3/27/98
----------------------------------- -------
Jeffries Shein Date
-14-
EXHIBIT INDEX
Exhibits designated with an asterisk (*) are filed herewith. The exhibits not so
designated have heretofore been filed with the Commission and are incorporated
herein by reference to the documents indicated in the previous filing columns
following the description of such exhibits.
Previous Filing's
Exhibit Registration Exhibit
No. Document Description No. No.
- ------- -------------------- ------------ -------
*3.1 Certificate of Incorporation of the Company,
as amended.
3.2 Bylaws of the Company, as amended. 33-54922 3.2
4.1 Form of Common Stock Certificate. 2-55058 2(a)
4.2 Registration Statement, Form S-3, under
Securities Act of 1933 filed February 3,
1987, relating to the Dividend Reinvestment
and Common Stock Purchase Plan. 33-11717
4.3 Post Effective Amendments No. 3 and 6,
Form S-3, under Securities Act of 1933 filed
May 28, 1993, relating to the Dividend Reinvestment
and Common Stock Purchase Plan. 33-11717
10.1 Copy of Purchased Water Agreement between
the Company and Elizabethtown Water Company,
filed as Exhibit No. 10.1 of 1996 Form 10K.
10.2 Copy of Mortgage, dated April 1, 1927, between
the Company and Union County Trust Company, as
Trustee, as supplemented by Supplemental
Indentures, dated as of October 1, 1939 and
April 1, 1949. 2-15795 4(a)-4(f)
10.3 Copy of Supplemental Indentures, dated as of
July 1, 1964 and June 15, 1991, between the
Company and Union County Trust 10.4 - 10.9
Company, as Trustee. 33-54922 and 10.16
10.4 Copy of Trust Indenture, dated as of June 15,
1991, between the New Jersey Economic Development
Authority and Midlantic National Bank, as Trustee. 33-54922 10.17
10.5 Copy of Supply Agreement, dated as of November
17, 1986, between the Company and the Old Bridge
Municipal Utilities Authority. 33-31476 10.12
-15-
EXHIBIT INDEX
Previous Filing's
Exhibit Registration Exhibit
No. Document Description No. No.
- ------- -------------------- ------------ -------
10.6 Copy of Supply Agreement, dated as of July 14,
1987, between the Company and the Marlboro
Township Municipal Utilities Authority, as amended. 33-3147 10.13
10.7 Copy of Supply Agreement, dated as of February
11, 1988, with modifications dated February 25,
1992, and April 20, 1994, between the Company
and the Borough of Sayreville filed as Exhibit
No. 10.11 of 1994 First Quarter Form 10-Q.
10.8 Copy of Water Purchase Contract and Supple-
mental Agreement, dated as of May 12, 1993,
between the Company and the New Jersey
Water Supply Authority filed as Exhibit No. 10.12 of
1993 Form 10-K.
10.9 Copy of Treating and Pumping Agreement, dated
April 9, 1984, between the Company and the
Township of East Brunswick. 33-31476 10.17
10.10 Copy of Supply Agreement, dated June 4, 1990,
between the Company and Edison Township. 33-54922 10.24
10.11 Copy of Supply Agreement, between the
Company and the Borough of Highland Park,
filed as Exhibit No. 10.15 of 1996 Form 10K.
10.12 Copy of Pipeline Lease Agreement, dated as of
January 9, 1987, between the Company and the
City of Perth Amboy. 33-31476 10.20
10.13 Copy of Supplemental Executive Retirement
Plan, effective January 1, 1984, as amended. 33-31476 10.21
10.14 Copy of 1989 Restricted Stock Plan, filed
as Appendix B to the Company's Definitive
Proxy Statement, dated and filed April 25, 1997. 33-31476 10.22
10.15 Amendment to Supplemental Executive Retirement
Plan, dated May 23, 1990, filed as Exhibit No. 10.23
of 1991 Form 10-K.
10.16 Copy of Transmission Agreement, dated October 16,
1992, between the Company and the Township of
East Brunswick. 33-54922 10.23
-16-
EXHIBIT INDEX
Previous Filing's
Exhibit Registration Exhibit
No. Document Description No. No.
- ------- -------------------- ------------ -------
10.17 Copy of Agreement and Plan of Merger, dated
January 7, 1992, between the Company, Midwater
Utilities, Inc. and Tidewater Utilities, Inc. 33-54922 10.29
10.18 Copy of Supplemental Indentures, dated
September 1, 1993, (Series S & T) and January
1, 1994, (Series U & V), between the Company
and United Counties Trust Company, as Trustee,
filed as Exhibit No. 10.22 of 1993 Form 10-K.
10.19 Copy of Trust Indentures, dated September 1,
1993, (Series S & T) and January 1, 1994,
(Series V), between the New Jersey Economic
Development Authority and First Fidelity Bank
(Series S & T), as Trustee, and Midlantic
National Bank (Series V), as Trustee, filed as
Exhibit No. 10.23 of 1993 Form 10-K.
10.20 Copy of Supply Agreement between the Company
and the City of South Amboy, filed as Exhibit
No. 10.24 of 1996 Form 10K.
*13 Annual Report to Shareholders for the year
ended December 31, 1997, pages 10 through 23.
*23 Independent Auditors' Consent.
*27 Financial Data Schedule
-17-