United Water 3rd Quarter Report
Dear Fellow Shareholders:
United Water
achieved a new milestone in the company's growth strategy
during the third quarter of 1997. In July, we formed United
Water Services, the new-business development arm we are
marketing nationally under the United Water name. We did
this by restructuring our joint interest with Suez Lyonnaise
des Eaux in JMM Operational Services from 50 percent to full
ownership.
The restructuring
reinforced United Water's position as a leading contract
operator of municipal water and wastewater systems in North
America and enhanced our ability to compete for contracts
with large cities to operate their water and wastewater
systems. Our position in this market was advanced during the
quarter when Indianapolis extended our two contracts for
wastewater treatment and sewage collection by ten years. The
wastewater contract is the largest of its kind in the United
States.
The major factor
in our results for the third quarter of 1997 was the
negative impact of the one-time windfall profits tax imposed
in the United Kingdom on privatized utilities, including
Northumbrian Water Group, which is partially owned by United
Water. As a result, earnings per share for the quarter were
18 cents, compared with 46 cents in the same period a year
ago. Excluding the impact of the windfall profits tax, core
utility investments, which include Northumbrian Water,
improved to 53 cents per share in the third quarter of 1997
from 52 cents per share in the same period in 1996.
Maintaining our
long-standing dividend record, United Water will pay a
regular quarterly dividend of 23 cents per common share on
December 1, 1997, to shareholders of record on November 14,
1997. Thank you for your continuing support of our
company.
Donald L.
Correll
Chairman and Chief Executive Officer
November 1, 1997
Statement of Consolidated Income
|
Three Months
Ended September 30,
|
|
Nine Months
Ended September 30,
|
|
Twelve Months
Ended September 30,
|
In
thousands of dollars except per share data
(unaudited)
|
1997
|
1996
|
1997
|
1996
|
1997
|
1996
|

Operating revenues
|
$ 99,690
|
$97,871
|
|
$267,457
|
$250,211
|
|
$349,291
|
$324,528
|

Operating expenses
|
|
|
|
|
|
|
|
|
Operations and
maintenance
|
42,959
|
42,667
|
128,299
|
116,583
|
167,594
|
163,726
|
Depreciation and
amortization
|
8,687
|
7,980
|
26,055
|
23,332
|
33,575
|
30,556
|
General
taxes
|
13,875
|
13,304
|
39,299
|
37,869
|
51,046
|
49,420
|

Total
operating expenses
|
65,521
|
63,951
|
|
193,653
|
177,784
|
|
252,215
|
243,702
|

Operating income
|
34,169
|
33,920
|
|
73,804
|
72,427
|
|
97,076
|
80,826
|
Interest
and other expenses
|
18,451
|
7,678
|
32,848
|
17,861
|
41,788
|
28,485
|

Income
from continuing operations before income
taxes
|
15,718
|
26,242
|
|
40,956
|
54,566
|
|
55,288
|
52,341
|
Provision for income
taxes
|
8,185
|
9,314
|
15,871
|
22,432
|
19,317
|
22,017
|

Income
from continuing operations
|
7,533
|
16,928
|
|
25,085
|
32,134
|
|
35,971
|
30,324
|
Preferred & preference
stock dividends
|
1,069
|
1,137
|
3,275
|
3,477
|
4,411
|
4,678
|

Net
income applicable to common stock from continuing
operations
|
$ 6,464
|
$ 15,791
|
|
$ 21,810
|
$ 28,657
|
|
$ 31,560
|
$ 25,646
|
Loss from discontinued operations
|
|
(270)
|
|
(892)
|
(3,505)
|
(3,334)
|

Net
income applicable to common stock
|
$ 6,464
|
$ 15,521
|
|
$ 21,810
|
$ 27,765
|
|
$ 28,055
|
$ 22,312
|

Average
common shares outstanding
(in thousands)
|
35,985
|
33,986
|
|
35,454
|
33,505
|
|
35,203
|
33,278
|
Net income (loss) per common share
|
|
|
|
|
|
|
Continuing operations
|
$.18
|
$.47
|
$.62
|
$.86
|
$.90
|
$.77
|
Discontinued operations
|
|
($.01)
|
|
($.03)
|
($.10)
|
($.10)
|

TOTAL
|
$ .18
|
$ .46
|
|
$ .62
|
$.83
|
|
$ .80
|
$.67
|
Stock Price Data
1997 STOCK PRICE
|
Quarter
|
High
|
Low
|
Dividend
|
1
|
$18.500
|
$15.000
|
.23
|
2
|
19.375
|
16.375
|
.23
|
3
|
19.813
|
17.000
|
.23
|
1996 STOCK PRICE
|
Quarter
|
High
|
Low
|
Dividend
|
1
|
$13.250
|
$12.000
|
.23
|
2
|
13.500
|
12.000
|
.23
|
3
|
17.500
|
12.750
|
.23
|
4
|
16.625
|
14.625
|
.23
|
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