 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 rewarding 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.
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Dian C. Taylor
President & CEO
Chair of the Board
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