Server: Microsoft-IIS/3.0 Date: Thu, 18 Dec 1997 21:59:50 GMT Content-Type: text/html Accept-Ranges: bytes Last-Modified: Mon, 18 Aug 1997 22:00:13 GMT Set-Cookie: EGSOFT_ID=128.2.209.145-1131924768.29166592; expires=Fri, 31-Dec-2010 00:00:00 GMT; path=/ Content-Length: 11597 Letter from the prez
 
This is always a time of year I look forward to, because it gives me a chance to share with you our most recent accomplishments and our strategy for long-term growth and success.

I would like to again welcome our new shareholders to the Artesian Family. Just to recap, on May 24, 1996, Janney Montgomery Scott, acting as underwriters, successfully offered 675,000 shares of Artesian Resources Corporation Class A Non-voting Common Stock to the general public at $15 per share. This stock was subsequently listed on NASDAQ under the symbol ARTNA.

Earnings per share of common stock in 1996, at $1.06, were the same as in 1995 despite the issuance of the 675,000 additional common shares. Net income applicable to common shares increase to $1,554,157 in 1996 from $1,088,239 in 1995. The 1995 result includes a one-time charge of $784,000, before taxes, related to the sale of the company's rental office building. Although Artesian Water Company, a wholly-owned subsidiary, recorded a 2.2% increase in the number of customers during 1996, the extremely wet weather conditions throughout the year reduced water usage and delayed construction of new homes, resulting in water sales revenue just about equal to that of 1995.

In Delaware, the media have devoted significant attention to water supply issues in New Castle County since the drought in the summer of 1995. An assured long-range water supply has been, and remains our highest strategic priority. Everyone in Delaware should have safe, reliable water service, and Artesian is committed to making this a reality.

Artesian has been an active participant in the Environmental Impact Study (EIS) since 1988 to identify an acceptable long-term source of water supply to meet the needs of northern New Castle County over the next 50 years. When the EIS began, it identified a 20 million gallon per day shortfall in available sources of supply to meet the area's projected peak water demand in 2040. I am proud to report that since 1992, Artesian has already added 9 million gallons per day of water supply through conscientious planning and extensive investment. As a result of test wells we drilled in our service area, we believe an additional 10.5 million gallons per day of undeveloped groundwater supply is available to meet future water demands.

As the EIS unfolds, we now see that the remaining water "need" is no longer Artesian's. Even during the drought of 1995, our water supply was abundant and our water quality was superior. We had a sufficient supply to sell water to neighboring utilities--and we anticipate doing so again. Moreover, we will continue our aggressive efforts to prepare for further growth of our customer base and ensure an even greater supply of water.

Our Churchmans Marsh property was removed from consideration as a reservoir option in the EIS process, because the state determined that this site would not receive wetlands permits. A tract know as Thompson's Station is now listed as the preferred site for a reservoir. However, our Artesian Marsh site is still listed as an option, and we believe it remains a viable reservoir alternative. In the event the preferred Thompson's Station site proves impractical, the Artesian Marsh site could meet the demand arising from future growth beyond levels currently projected.

For the past several years, Artesian has participated in a number of initiatives to enhance the quality of life in Delaware beyond simply ensuring long-term sources of water supply. We are actively involved with state, county and local governments on economic development and land use planning issues. We believe these efforts will both benefit the residents of Delaware and be Artesian Resources CEO, Dian Taylorrewarding to Artesian. Since 1993, we have increased our service area by 20 percent through our expansion initiatives. In the past 14 months, we have negotiated water service agreements to serve an additional 3.8 square miles in southern New Castle County including, most recently, a tract of approximately 1,900 acres known as Whitehall.

Our work on economic development issues and our expansion activities helped us identify a need for integrated water management in the state of Delaware. Integrated water management means complete stewardship of the water cycle, including provision of drinking water, treatment of wastewater and management of storm water. As a result, we will have more direct control over the water resources on which our success depends.

To develop a program of integrated water management, we have formed a strategic alliance with two distinguished partners in the field of wastewater management, George & Lynch, Inc., a major regional process facility and heavy site contractor, and Woodward-Clyde International-Americas, an international design and engineering firm. This alliance, AquaStructure Delaware L.L.C., will offer wastewater and storm water management throughout Delaware. This new venture still needs various governmental approvals; however, AquaStructure has already been approached by a number of communities interested in the service it has to offer. We are excited about the opportunity this alliance gives us to provide services in developing areas of the state.

Through our participation in economic development and the land use planning and our alliance with AquaStructure, we are building Artesian into a stronger company with a more diverse revenue stream. We have laid the groundwork for continued growth.

 


Dian C. Taylor
President & CEO
Chair of the Board

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