(Mark
One)
|
|
þ
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2008
|
|
OR
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from _________________
to______________________
|
New Jersey
|
22-1114430
|
(State
of Incorporation)
|
(IRS
employer identification no.)
|
Title
of Each Class:
|
Name
of each exchange on which registered:
|
None
|
None
|
PAGE
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1
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2
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Overview
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Financial
Information
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4
|
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Water
Supplies and Contracts
|
4
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Employees
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5
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|
Competition
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6
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|
Regulation
|
7
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|
Management
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10
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14
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14
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16
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16
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16
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16
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18
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18
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26
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26
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49
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49
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52
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53
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53
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53
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53
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53
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53
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55
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56
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|
-
|
statements
as to expected financial condition, performance, prospects and earnings of
the Company;
|
|
-
|
statements
regarding strategic plans for
growth;
|
|
-
|
statements
regarding the amount and timing of rate increases and other regulatory
matters;
|
|
-
|
statements
as to the Company’s expected liquidity needs during the upcoming fiscal
year and beyond and statements as to the sources and availability of funds
to meet its liquidity needs;
|
|
-
|
statements
as to expected rates, consumption volumes, service fees, revenues,
margins, expenses and operating
results;
|
|
-
|
statements
as to the Company’s compliance with environmental laws and regulations and
estimations of the materiality of any related
costs;
|
|
-
|
statements
as to the safety and reliability of the Company’s equipment, facilities
and operations;
|
|
-
|
statements
as to financial projections;
|
|
-
|
statements
as to the ability of the Company to pay
dividends;
|
|
-
|
statements
as to the Company’s plans to renew municipal franchises and consents in
the territories it serves;
|
|
-
|
expectations
as to the amount of cash contributions to fund the Company’s retirement
benefit plans, including statements as to anticipated discount rates and
rates of return on plan assets;
|
|
-
|
statements
as to trends; and
|
|
-
|
statements
regarding the availability and quality of our water
supply.
|
|
-
|
the
effects of general economic
conditions;
|
|
-
|
increases
in competition in the markets served by the
Company;
|
|
-
|
the
ability of the Company to control operating expenses and to achieve
efficiencies in its operations;
|
|
-
|
the
availability of adequate supplies of
water;
|
|
-
|
actions
taken by government regulators, including decisions on rate increase
requests;
|
|
-
|
new
or additional water quality
standards;
|
|
-
|
weather
variations and other natural
phenomena;
|
|
-
|
the
existence of financially attractive acquisition candidates and the risks
involved in pursuing those
acquisitions;
|
|
-
|
acts
of war or terrorism;
|
|
-
|
significant
changes in the housing starts in
Delaware;
|
|
-
|
the
availability and cost of capital resources;
and
|
|
-
|
other
factors discussed elsewhere in this annual
report.
|
Item
1.
|
Business.
|
Years Ended December 31,
|
||||||||||||
(Thousands
of Dollars)
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Operating
Revenues
|
$ | 91,038 | $ | 86,114 | $ | 81,061 | ||||||
Operating
Income
|
$ | 24,019 | $ | 22,671 | $ | 21,318 |
Years Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Residential
|
45.1 | % | 45.0 | % | 42.6 | % | ||||||
Commercial
|
9.6 | 9.7 | 10.0 | |||||||||
Industrial
|
9.3 | 9.9 | 10.7 | |||||||||
Fire
Protection
|
10.4 | 10.3 | 10.7 | |||||||||
Contract
Sales
|
13.1 | 12.5 | 12.3 | |||||||||
Contract
Operations
|
10.5 | 10.3 | 11.0 | |||||||||
Other
|
2.0 | 2.3 | 2.7 | |||||||||
TOTAL
|
100.0 | % | 100.0 | % | 100.0 | % |
Date
|
January
1, 2008
|
July
1, 2008
|
January
1, 2009
|
%
Increase
|
1.45%
|
1.32%
|
2.31%
|
Cumulative
%
|
1.62%
|
2.94%
|
5.25%
|
Name
|
Age
|
Principal
Position(s)
|
||
Dennis
W. Doll
|
50
|
President
and Chief Executive Officer
|
||
A.
Bruce O’Connor
|
|
50
|
|
Vice
President and Chief Financial Officer
|
Ronald
F. Williams
|
59
|
Vice
President-Operations and Chief Operating Officer
|
||
Kenneth
J. Quinn
|
61
|
Vice
President-General Counsel, Secretary and Treasurer
|
||
James
P. Garrett
|
|
62
|
|
Vice
President–Human Resources
|
Richard
M. Risoldi
|
|
52
|
|
Vice
President–Subsidiary Operations
|
Bernadette
M. Sohler
|
48
|
Vice
President-Corporate Affairs
|
||
Gerard
L. Esposito
|
|
57
|
|
President,
Tidewater Utilities, Inc.
|
Item 1A.
|
Risk Factors.
|
Item
1B.
|
Unresolved
Staff Comments.
|
Item
2.
|
Properties.
|
Item
3.
|
Legal
Proceedings.
|
Item
5.
|
Market
for the Registrant's Common Equity and Related Stockholder Matters.
|
2008
|
High
|
Low
|
Dividend
|
|||||||||
Fourth
Quarter
|
$ | 17.93 | $ | 12.05 | $ | 0.1775 | ||||||
Third
Quarter
|
$ | 18.52 | $ | 15.68 | $ | 0.1750 | ||||||
Second
Quarter
|
$ | 19.23 | $ | 16.59 | $ | 0.1750 | ||||||
First
Quarter
|
$ | 19.83 | $ | 17.25 | $ | 0.1750 |
2007
|
High
|
Low
|
Dividend
|
|||||||||
Fourth
Quarter
|
$ | 19.25 | $ | 18.10 | $ | 0.1750 | ||||||
Third
Quarter
|
$ | 20.24 | $ | 18.05 | $ | 0.1725 | ||||||
Second
Quarter
|
$ | 19.48 | $ | 18.12 | $ | 0.1725 | ||||||
First
Quarter
|
$ | 19.07 | $ | 17.75 | $ | 0.1725 |
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
|||||||||||||||||||
Middlesex
Water Company
|
100.00 | 93.30 | 85.42 | 92.27 | 93.35 | 84.88 | ||||||||||||||||||
Dow
Jones Wilshire 5000
|
100.00 | 110.85 | 115.91 | 132.02 | 137.22 | 84.14 | ||||||||||||||||||
Peer
Group
|
100.00 | 116.61 | 154.40 | 153.89 | 147.33 | 140.97 |
Item
6.
|
Selected Financial Data.
|
CONSOLIDATED
SELECTED FINANCIAL DATA
|
|||||||||||||||||||||
(Thousands
of Dollars Except per Share Data)
|
|||||||||||||||||||||
2008
|
2007
|
2006
|
2005
|
2004
|
|||||||||||||||||
Operating
Revenues
|
$ | 91,038 | $ | 86,114 | $ | 81,061 | $ | 74,613 | $ | 70,991 | |||||||||||
Operating
Expenses:
|
|||||||||||||||||||||
Operations
and Maintenance
|
48,929 | 46,240 | 43,345 | 42,156 | 39,984 | ||||||||||||||||
Depreciation
|
7,922 | 7,539 | 7,060 | 6,460 | 5,846 | ||||||||||||||||
Other
Taxes
|
10,168 | 9,664 | 9,338 | 8,779 | 8,228 | ||||||||||||||||
Total
Operating Expenses
|
67,019 | 63,443 | 59,743 | 57,395 | 54,058 | ||||||||||||||||
Operating
Income
|
24,019 | 22,671 | 21,318 | 17,218 | 16,933 | ||||||||||||||||
Other
Income, Net
|
1,302 | 1,527 | 774 | 740 | 795 | ||||||||||||||||
Interest
Charges
|
7,057 | 6,619 | 7,012 | 6,245 | 5,468 | ||||||||||||||||
Income
Taxes
|
6,056 | 5,736 | 5,041 | 3,237 | 3,814 | ||||||||||||||||
Net Income | 12,208 | 11,843 | 10,039 | 8,476 | 8,446 | ||||||||||||||||
Preferred
Stock Dividend
|
218 | 248 | 248 | 251 | 255 | ||||||||||||||||
Earnings
Applicable to Common Stock
|
$ | 11,990 | $ | 11,595 | $ | 9,791 | $ | 8,225 | $ | 8,191 | |||||||||||
Earnings
per Share:
|
|||||||||||||||||||||
Basic
|
$ | 0.90 | $ | 0.88 | $ | 0.83 | $ | 0.72 | $ | 0.74 | |||||||||||
Diluted
|
$ | 0.89 | $ | 0.87 | $ | 0.82 | $ | 0.71 | $ | 0.73 | |||||||||||
Average
Shares Outstanding:
|
|||||||||||||||||||||
Basic
|
13,317 | 13,203 | 11,844 | 11,445 | 11,080 | ||||||||||||||||
Diluted
|
13,615 | 13,534 | 12,175 | 11,784 | 11,423 | ||||||||||||||||
Dividends
Declared and Paid
|
$ | 0.703 | $ | 0.693 | $ | 0.683 | $ | 0.673 | $ | 0.663 | |||||||||||
Total
Assets
|
$ | 440,000 | $ | 392,675 | $ | 370,267 | $ | 324,383 | $ | 305,634 | |||||||||||
Convertible
Preferred Stock
|
$ | 2,273 | $ | 2,856 | $ | 2,856 | $ | 2,856 | $ | 2,961 | |||||||||||
Long-term
Debt
|
$ | 118,217 | $ | 131,615 | $ | 130,706 | $ | 128,175 | $ | 115,281 |
Item
7.
|
Management's Discussion and Analysis of Financial Condition and
Results of Operation.
|
Years ended December
31,
|
||||||||||||||||||||||||
(Millions
of Dollars)
|
||||||||||||||||||||||||
2008
|
2007
|
|||||||||||||||||||||||
Regulated
|
Non-
Regulated
|
Total
|
Regulated
|
Non-
Regulated
|
Total
|
|||||||||||||||||||
Revenues
|
$ | 81.1 | $ | 9.9 | $ | 91.0 | $ | 77.1 | $ | 9.0 | $ | 86.1 | ||||||||||||
Operations
and maintenance
|
41.2 | 7.7 | 48.9 | 38.8 | 7.4 | 46.2 | ||||||||||||||||||
Depreciation
|
7.8 | 0.1 | 7.9 | 7.4 | 0.1 | 7.5 | ||||||||||||||||||
Other
taxes
|
10.0 | 0.2 | 10.2 | 9.5 | 0.2 | 9.7 | ||||||||||||||||||
Operating
income
|
22.1 | 1.9 | 24.0 | 21.4 | 1.3 | 22.7 | ||||||||||||||||||
Other
income (expense)
|
0.9 | 0.4 | 1.3 | 1.5 | - | 1.5 | ||||||||||||||||||
Interest
expense
|
7.0 | 0.1 | 7.1 | 6.6 | - | 6.6 | ||||||||||||||||||
Income
taxes
|
5.0 | 1.0 | 6.0 | 5.2 | 0.6 | 5.8 | ||||||||||||||||||
Net
income
|
$ | 11.0 | $ | 1.2 | $ | 12.2 | $ | 11.1 | $ | 0.7 | $ | 11.8 |
Years ended December
31,
|
||||||||||||||||||||||||
(Millions
of Dollars)
|
||||||||||||||||||||||||
2007
|
2006
|
|||||||||||||||||||||||
Regulated
|
Non-
Regulated
|
Total
|
Regulated
|
Non-
Regulated
|
Total
|
|||||||||||||||||||
Revenues
|
$ | 77.1 | $ | 9.0 | $ | 86.1 | $ | 71.9 | $ | 9.2 | $ | 81.1 | ||||||||||||
Operations
and maintenance
|
38.8 | 7.4 | 46.2 | 35.7 | 7.7 | 43.4 | ||||||||||||||||||
Depreciation
|
7.4 | 0.1 | 7.5 | 7.0 | 0.1 | 7.1 | ||||||||||||||||||
Other
taxes
|
9.5 | 0.2 | 9.7 | 9.1 | 0.2 | 9.3 | ||||||||||||||||||
Operating
income
|
21.4 | 1.3 | 22.7 | 20.1 | 1.2 | 21.3 | ||||||||||||||||||
Other
income (expense)
|
1.5 | - | 1.5 | 0.9 | (0.1 | ) | 0.8 | |||||||||||||||||
Interest
expense
|
6.6 | - | 6.6 | 7.0 | -- | 7.0 | ||||||||||||||||||
Income
taxes
|
5.2 | 0.6 | 5.8 | 4.6 | 0.5 | 5.1 | ||||||||||||||||||
Net
income
|
$ | 11.1 | $ | 0.7 | $ | 11.8 | $ | 9.4 | $ | 0.6 | $ | 10.0 |
Payment
Due by Period
(Millions
of Dollars)
|
||||||||||||||||||||
Total
|
Less
than
1 Year
|
1-3
Years
|
4-5
Years
|
More
than
5 Years
|
||||||||||||||||
Long-term
Debt
|
$ | 136.0 | $ | 18.0 | $ | 6.8 | $ | 7.0 | $ | 104.2 | ||||||||||
Notes
Payable
|
25.9 | 25.9 | --- | --- | --- | |||||||||||||||
Interest
on Long-term Debt
|
93.4 | 5.8 | 10.9 | 10.3 | 66.4 | |||||||||||||||
Purchased
Water Contracts
|
41.9 | 4.9 | 7.8 | 4.9 | 24.3 | |||||||||||||||
Wastewater
Operations
|
47.6 | 4.2 | 8.7 | 9.3 | 25.4 | |||||||||||||||
Employee
Retirement Plans (1)
|
5.6 | 5.6 | --- | --- | --- | |||||||||||||||
Total
|
$ | 350.4 | $ | 64.4 | $ | 34.2 | $ | 31.5 | $ | 220.3 | ||||||||||
(1) Amount
not determinable after one year.
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
MIDDLESEX
WATER COMPANY
|
CONSOLIDATED BALANCE
SHEETS
|
(In
thousands)
|
December
31,
|
December
31,
|
||||||||
ASSETS
|
2008
|
2007
|
|||||||
UTILITY
PLANT:
|
Water
Production
|
$ | 107,517 | $ | 98,942 | ||||
Transmission
and Distribution
|
283,759 | 264,939 | |||||||
General
|
27,142 | 24,874 | |||||||
Construction
Work in Progress
|
11,653 | 9,833 | |||||||
TOTAL
|
430,071 | 398,588 | |||||||
Less
Accumulated Depreciation
|
70,544 | 64,736 | |||||||
UTILITY
PLANT - NET
|
359,527 | 333,852 | |||||||
CURRENT
ASSETS:
|
Cash
and Cash Equivalents
|
3,288 | 2,029 | ||||||
Accounts
Receivable, net
|
9,510 | 8,227 | |||||||
Unbilled
Revenues
|
4,822 | 4,609 | |||||||
Materials
and Supplies (at average cost)
|
1,475 | 1,205 | |||||||
Prepayments
|
1,481 | 1,363 | |||||||
TOTAL
CURRENT ASSETS
|
20,576 | 17,433 | |||||||
DEFERRED
CHARGES
|
Unamortized
Debt Expense
|
2,903 | 2,884 | ||||||
AND
OTHER ASSETS:
|
Preliminary
Survey and Investigation Charges
|
7,187 | 5,283 | ||||||
Regulatory
Assets
|
31,910 | 16,090 | |||||||
Operations
Contracts Fees Receivable
|
3,708 | 4,184 | |||||||
Restricted
Cash
|
7,049 | 6,418 | |||||||
Non-utility
Assets - Net
|
6,762 | 6,183 | |||||||
Other
|
378 | 348 | |||||||
TOTAL
DEFERRED CHARGES AND OTHER ASSETS
|
59,897 | 41,390 | |||||||
TOTAL
ASSETS
|
$ | 440,000 | $ | 392,675 | |||||
CAPITALIZATION AND LIABILITIES | |||||||||
CAPITALIZATION:
|
Common
Stock, No Par Value
|
$ | 107,726 | $ | 105,668 | ||||
Retained
Earnings
|
30,077 | 27,441 | |||||||
Accumulated
Other Comprehensive Income, net of tax
|
0 | 69 | |||||||
TOTAL
COMMON EQUITY
|
137,803 | 133,178 | |||||||
Preferred
Stock
|
3,375 | 3,958 | |||||||
Long-term
Debt
|
118,217 | 131,615 | |||||||
TOTAL
CAPITALIZATION
|
259,395 | 268,751 | |||||||
CURRENT
|
Current
Portion of Long-term Debt
|
17,985 | 2,723 | ||||||
LIABILITIES:
|
Notes
Payable
|
25,877 | 6,250 | ||||||
Accounts
Payable
|
5,689 | 6,477 | |||||||
Accrued
Taxes
|
7,781 | 7,611 | |||||||
Accrued
Interest
|
2,053 | 1,916 | |||||||
Unearned
Revenues and Advanced Service Fees
|
842 | 758 | |||||||
Other
|
1,243 | 1,274 | |||||||
TOTAL
CURRENT LIABILITIES
|
61,470 | 27,009 | |||||||
COMMITMENTS
AND CONTINGENT LIABILITIES (Note 4)
|
|||||||||
DEFERRED
CREDITS
|
Customer
Advances for Construction
|
22,089 | 21,758 | ||||||
AND
OTHER LIABILITIES:
|
Accumulated
Deferred Investment Tax Credits
|
1,382 | 1,461 | ||||||
Accumulated
Deferred Income Taxes
|
21,733 | 17,940 | |||||||
Employee
Benefit Plans
|
25,540 | 13,333 | |||||||
Regulatory
Liability - Cost of Utility Plant Removal
|
6,197 | 5,726 | |||||||
Other
|
963 | 459 | |||||||
TOTAL
DEFERRED CREDITS AND OTHER LIABILITIES
|
77,904 | 60,677 | |||||||
CONTRIBUTIONS
IN AID OF CONSTRUCTION
|
41,231 | 36,238 | |||||||
TOTAL
CAPITALIZATION AND LIABILITIES
|
$ | 440,000 | $ | 392,675 | |||||
See
Notes to Consolidated Financial Statements.
|
MIDDLESEX WATER
COMPANY
|
||||||||||||
CONSOLIDATED
STATEMENTS OF INCOME
|
||||||||||||
(In
thousands except per share amounts)
|
||||||||||||
Years
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Operating
Revenues
|
$ | 91,038 | $ | 86,114 | $ | 81,061 | ||||||
Operating
Expenses:
|
||||||||||||
Operations
|
44,782 | 42,117 | 39,799 | |||||||||
Maintenance
|
4,147 | 4,123 | 3,546 | |||||||||
Depreciation
|
7,922 | 7,539 | 7,060 | |||||||||
Other
Taxes
|
10,168 | 9,664 | 9,338 | |||||||||
Total
Operating Expenses
|
67,019 | 63,443 | 59,743 | |||||||||
Operating
Income
|
24,019 | 22,671 | 21,318 | |||||||||
Other
Income (Expense):
|
||||||||||||
Allowance
for Funds Used During Construction
|
667 | 537 | 632 | |||||||||
Other
Income
|
906 | 1,153 | 160 | |||||||||
Other
Expense
|
(271 | ) | (163 | ) | (18 | ) | ||||||
Total
Other Income, net
|
1,302 | 1,527 | 774 | |||||||||
Interest
Charges
|
7,057 | 6,619 | 7,012 | |||||||||
Income
before Income Taxes
|
18,264 | 17,579 | 15,080 | |||||||||
Income
Taxes
|
6,056 | 5,736 | 5,041 | |||||||||
Net
Income
|
12,208 | 11,843 | 10,039 | |||||||||
Preferred
Stock Dividend Requirements
|
218 | 248 | 248 | |||||||||
Earnings
Applicable to Common Stock
|
$ | 11,990 | $ | 11,595 | $ | 9,791 | ||||||
Earnings
per share of Common Stock:
|
||||||||||||
Basic
|
$ | 0.90 | $ | 0.88 | $ | 0.83 | ||||||
Diluted
|
$ | 0.89 | $ | 0.87 | $ | 0.82 | ||||||
Average
Number of
|
||||||||||||
Common
Shares Outstanding :
|
||||||||||||
Basic
|
13,317 | 13,203 | 11,844 | |||||||||
Diluted
|
13,615 | 13,534 | 12,175 | |||||||||
Cash
Dividends Paid per Common Share
|
$ | 0.703 | $ | 0.693 | $ | 0.683 |
See
Notes to Consolidated Financial Statements.
|
MIDDLESEX
WATER COMPANY
|
||||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||||
(In
thousands)
|
||||||||||||
Years
Ended December 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
Income
|
$ | 12,208 | $ | 11,843 | $ | 10,039 | ||||||
Adjustments
to Reconcile Net Income to
|
||||||||||||
Net
Cash Provided by Operating Activities:
|
||||||||||||
Depreciation
and Amortization
|
8,530 | 8,176 | 7,761 | |||||||||
Provision
for Deferred Income Taxes and ITC
|
1,032 | 399 | 897 | |||||||||
Equity
Portion of AFUDC
|
(348 | ) | (255 | ) | (259 | ) | ||||||
Cash
Surrender Value of Life Insurance
|
576 | (271 | ) | (155 | ) | |||||||
Gain
on Disposal of Equity Investments
|
(86 | ) | - | - | ||||||||
Gain
on Sale of Real Estate
|
- | (267 | ) | - | ||||||||
Changes
in Assets and Liabilities:
|
||||||||||||
Accounts
Receivable
|
(807 | ) | (2,752 | ) | (463 | ) | ||||||
Unbilled
Revenues
|
(213 | ) | (596 | ) | (276 | ) | ||||||
Materials
& Supplies
|
(270 | ) | 101 | (46 | ) | |||||||
Prepayments
|
(118 | ) | (134 | ) | (301 | ) | ||||||
Other
Assets
|
(351 | ) | (9 | ) | (485 | ) | ||||||
Accounts
Payable
|
147 | 986 | (538 | ) | ||||||||
Accrued
Taxes
|
206 | 941 | 197 | |||||||||
Accrued
Interest
|
137 | 36 | 11 | |||||||||
Employee
Benefit Plans
|
(1,146 | ) | 239 | (84 | ) | |||||||
Unearned
Revenue & Advanced Service Fees
|
84 | 157 | 127 | |||||||||
Other
Liabilities
|
(465 | ) | 224 | (299 | ) | |||||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
19,116 | 18,818 | 16,126 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Utility
Plant Expenditures, Including AFUDC of $319 in 2008, $282 in 2007 and $373
in 2006
|
(28,429 | ) | (21,930 | ) | (30,734 | ) | ||||||
Restricted
Cash
|
(591 | ) | 444 |