UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 10, 2007
(Date of earliest event reported)
CONSOLIDATED WATER CO. LTD.
(Exact Name of Registrant as Specified in Charter)
         
Cayman Islands, B.W.I.   0-25248   Not Applicable
(State or Other Jurisdiction of Incorporation)   (Commission File No.)   (IRS Employer Identification No.)
The Regatta Office Park
Windward Three, 4 th Floor
West Bay Road, P.O Box 1114
Grand Cayman KY1-1102
Cayman Islands
(Address of Principal Executive Offices)
(345) 945-4277
(Registrant’s telephone number, including area code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):
o       Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o       Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o       Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o       Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 2.02 Results of Operations and Financial Condition.
On May 10, 2007, Consolidated Water Co. Ltd. (the “Company”) issued a press release (the “Initial Press Release”) announcing its results of operations for the first quarter ended March 31, 2007. A copy of the press release is attached as Exhibit 99.1 to this report. On May 14, 2007, the Company issued another release correcting the information in the Initial Press Release regarding the shareholder record date and payment date of the second quarter dividend. The additional release is attached as Exhibit 99.2 to this report. The information in this Item 2.02 and Exhibits 99.1 and 99.2 are not deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 and are not incorporated by reference into any Securities Act registration statements.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
In August 2006, the SEC approved rule filings by NASDAQ that require all NASDAQ-listed issuers to have the ability to issue uncertificated shares by January 1, 2008. In order to comply with this requirement, at the Annual General Meeting of Shareholders of the Company held on May 11, 2007, the Company’s shareholders approved an amendment (the “Amendment”) to the Company’s Articles of Association to permit uncertificated shares of stock to be issued for one or more class or series of the shares of capital stock of the Company consistent with limitations imposed by law. Prior to the Amendment, the Company’s Articles of Association required that the stock of the Company be represented by certificates and did not allow the Company the flexibility to issue shares in uncertificated form. The Amendment was effective on May 11, 2007. The Company’s the Amendment is attached hereto as Exhibit 3.1.
Item 9.01. Financial Statements and Exhibits.
(c)   Exhibits.
         
Exhibit No.   Description
       
 
  3.1    
Amendment to the Company’s Articles of Association.
       
 
  99.1    
Press release issued by the Company on May 10, 2007.
       
 
  99.2    
Press release issued by the Company on May 14, 2007.

2

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
         
  CONSOLIDATED WATER CO. LTD.


  		 
  By:   /s/ Frederick W. McTaggart    
    Name:   Frederick W. McTaggart   
    Title:   President and Chief Executive Officer   
 
Date: May 14, 2007

3

 

EXHIBIT INDEX
         
Exhibit No.     Description
         
  3.1    
Amendment to the Company’s Articles of Association.
         
  99.1    
Press release issued by the Company on May 10, 2007.
         
  99.2    
Press release issued by the Company on May 14, 2007.

4

 

Exhibit 3.1
CONSOLIDATED WATER CO. LTD.
SPECIAL RESOLUTION OF THE COMPANY PASSED ON THE 11 TH DAY OF MAY 2007
 
RESOLVED as a Special Resolution that the Articles of Association of the Company be amended as follows:
(1)   In Article 7.03, by the deletion of:
  a.   “Every” at the beginning of the first sentence and the substitution of “Subject to Article 7.07, every”; and
 
  b.   “A” at the beginning of the second sentence and the substitution of “Subject to Article 7.07, a”;
(2)   In Article 7.06, by the insertion of “(if any)” after the words “old certificate”;
 
(3)   By inserting a new Article 7.07 as follows:
 
    “7.07 The Directors may at any time, determine in their absolute discretion that the Company will no longer issue share certificates and if they so determine,
  (i)   they must use their best endeavours to call in and cancel all existing share certificates giving a receipt therefor to the holder and ensure that the Company keeps a record of all share certificates not surrendered for cancellation; and
 
  (ii)   no shares for which a certificate is outstanding may thereafter be transferred unless the requirements of Article 7.05 and, if applicable, Article 7.06 are complied with; and no share certificate shall be issued either to the transferee or, if all the shares in the certificate are not being transferred, to the transferor for the balance of the shares.”
(4)   In Article 10.04 (c), by the insertions of:
  a.   "(if any)” after the words “relevant share certificate”; and
 
  b.   “subject to Article 7.07” after the word “reissue”.
(5)   In Article 34.10, by the insertion of “(if any)” after the word “certificate”.

 

Exhibit 99.1
CONSOLIDATED WATER CO. LTD. REPORTS 17% INCREASE IN FIRST QUARTER EARNINGS
COMPANY DECLARES SECOND QUARTER CASH DIVIDEND
GEORGE TOWN, Grand Cayman, Cayman Islands (May 10, 2007). Consolidated Water Co. Ltd. (NASDAQ Global Select Market: “CWCO”) today reported record quarterly revenues and earnings for the three months ended March 31, 2007. The Company also announced the declaration of its quarterly cash dividend.
Net income for the first quarter of 2007 increased 17% to $3,587,478 ($0.25 per diluted share), compared with net income of $3,078,011 ($0.24 per diluted share) in the first quarter of 2006.
“We are pleased to report higher revenues and earnings for the first quarter of 2007,” stated Rick McTaggart, Chief Executive Officer of Consolidated Water Co. Ltd. “We generated more gross profit dollars this quarter as compared to last year’s first quarter due to growth in our bulk revenues and our plant construction and expansion activities. However our gross profit percentage declined for this quarter when compared to the first quarter of 2006 due to a change in relative revenue mix, as our bulk and services operations generate a lower relative gross profit as a percentage of sales than our retail operations.
Our new Blue Hills plant in Nassau, Bahamas, contributed $1.7 million in water sales during the first quarter of 2007. However, margins for this plant continue to be affected by a requirement under our contract to provide the government water utility with free water until we complete the requirement under the Blue Hills contract to reduce the water lost by the public water distribution system on New Providence. We continue to believe we will meet this requirement before the end of this year.
Revenues and gross profit from the services segment increased due to revenues earned on the construction of the plant at Tynes Bay on the northern coast of Bermuda and the expansion of the North Sound plant on behalf of the Water Authority — Cayman. The North Sound expansion was commissioned in April 2007 and the construction of the Tynes Bay plant is proceeding on schedule,” concluded Mr. McTaggart.
Total revenues for the three months ended March 31, 2007 increased 38% to $12.7 million, compared with $9.2 million in the three months ended March 31, 2006. Retail revenues were relatively unchanged at $5.1 million for the three months ended March 31, 2007 and 2006. Bulk revenues rose 39% to approximately $5.2 million in the most recent quarter, compared with approximately $3.8 million in the corresponding quarter of the previous year. Services revenues increased significantly to approximately $2.4 million in the first quarter of 2007 versus approximately $441,000 in the three months ended March 31, 2006.

 

 

Consolidated gross profit increased to approximately $5.3 million (42% of revenues) in the three months ended March 31, 2007 versus approximately $4.8 million (52% of revenues) in the year-earlier period. The gross margin on retail revenues approximated $3.3 million (65% of revenues) in the most recent quarter, versus approximately $3.6 million (71% of sales) in the three months ended March 31, 2006. The gross margin on bulk revenues improved to approximately $1.3 million (26% of revenues) for the three months ended March 31, 2007, compared with approximately $832,000 (22% of revenues) in the three months ended March 31, 2006. The gross profit on services revenues approximated $624,000 and $337,000 for the three months ended March 31, 2007 and 2006, respectively.
General and administrative expenses increased to approximately $2.3 million in the first quarter of 2007, versus approximately $2.1 million in the 2006 prior-year quarter.
A substantial portion of the Company’s interest costs were capitalized as part of the construction cost of the Blue Hills plant during the quarter ended March 31, 2006. The Company ceased capitalizing interest when the plant was commissioned in July 2006 and, consequently, the Company’s interest expense increased to approximately $481,000 in the most recent quarter, compared with approximately $215,000 in the corresponding period of the previous year. The Company benefited from the investment of the unused proceeds from its recent public offering during the quarter ended March 31, 2007, earning interest income of $449,000, or approximately $420,000 more than the interest income for the 2006 quarter.
The Company also announced that its Board of Directors has declared a quarterly cash dividend of $0.065 per share, payable May 31, 2007 to shareholders of record at the close of business on April 30, 2007.
The Company will host a conference call at 11:00 a.m. EDT, Monday, May 14, 2007. Shareholders and other interested parties may participate in the conference call by dialing 888-200-2794 (international/local participants dial 973-935-8766) and referencing the ID code 8723100 a few minutes before 11:00 a.m. EDT on May 14, 2007. A replay of the conference call will be available two hours after the completion of the conference call from May 14, 2007 until May 21, 2007 by dialing 877-519-4471 (international/local participants dial 973-341-3080) and entering the conference ID 8723100.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. The Company currently operates water production and/or distribution facilities in the Cayman Islands, Barbados, Belize and The Commonwealth of the Bahamas. The Company’s affiliate, Ocean Conversion (BVI) Ltd., also produces and distributes water in the British Virgin Islands.
The ordinary (common) shares of Consolidated Water Co. Ltd. are traded on the NASDAQ Global Select Market under the symbol “CWCO”. Additional information on the Company is available on its website at http://www.cwco.com .
This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe”, “estimate”, “project”, “intend”, “expect” or similar expressions. These statements are made

 

 

pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company’s products and services in the marketplace, changes in its relationship with the Governments of the jurisdictions in which it operates, the ability to successfully secure contracts for water projects in other countries, the ability to develop and operate such projects profitably and the Company’s ability to manage growth and other risks detailed in the Company’s periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
For further information, please contact:
Frederick W. McTaggart, President and CEO, or David W. Sasnett, Executive Vice President and CFO,
at (345) 945-4277 or via e-mail at info@cwco.com
http://www.cwco.com
or
RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via e-mail at info@rjfalkner.com
(Financial Highlights Follow)

 

 

CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
                 
    March 31,     December 31,  
    2007     2006  
    (unaudited)          
ASSETS
               
Current assets
               
Cash and cash equivalents
  $ 39,139,931     $ 37,310,699  
Accounts receivable, net
    7,963,443       6,231,718  
Inventory
    3,454,516       2,794,892  
Prepaid expenses and other current assets
    982,425       1,099,619  
Current portion of loans receivable
    735,632       735,632  
 
           
Total current assets
    52,275,947       48,172,560  
 
               
Loans receivable
    1,514,158       1,697,648  
Property, plant and equipment and construction in progress, net
    63,224,482       63,568,369  
Investment in and loan to affiliate
    15,855,559       15,457,880  
Other assets
    10,307,380       10,064,886  
 
           
Total assets
  $ 143,177,526     $ 138,961,343  
 
           
 
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities
               
Accounts payable and other current liabilities
  $ 6,163,691     $ 6,468,290  
Current portion of long term debt
    1,081,190       1,154,067  
 
           
Total current liabilities
    7,244,881       7,622,357  
 
               
Long term debt
    23,222,825       23,500,593  
Other liabilities
    492,363       497,985  
Minority interest in subsidiary
    1,509,053       1,495,753  
 
           
Total liabilities
    32,469,122       33,116,688  
 
           
 
               
Stockholders’ equity
               
Controlling interests:
               
Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares; issued and outstanding 23,957 shares and 24,971 shares, respectively
    14,375       14,983  
Class A common stock, $0.60 par value. Authorized 19,680,000 shares; issued and outstanding 14,362,450 shares and 14,132,860 shares, respectively
    8,617,470       8,479,716  
Class B common stock, $0.60 par value. Authorized 120,000 shares; none issued or outstanding
    —       —  
Additional paid-in capital
    78,145,473       76,071,710  
Retained earnings
    23,931,086       21,278,246  
 
           
 
    110,708,404       105,844,655  
Noncontrolling interests
    —       —  
 
           
 
               
Total stockholders’ equity
    110,708,404       105,844,655  
 
           
Total liabilities and stockholders’ equity
  $ 143,177,526     $ 138,961,343  
 
           

 

 

CONSOLIDATED WATER CO. LTD.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
                 
    Three Months Ended March 31,  
    2007     2006  
Retail revenues
  $ 5,104,210     $ 5,054,149  
Bulk revenues
    5,227,521       3,748,855  
Services revenues
    2,402,879       440,560  
 
           
Total revenues
    12,734,610       9,243,564  
 
           
 
               
Cost of retail revenues
    1,763,316       1,449,393  
Cost of bulk revenues
    3,888,962       2,917,097  
Cost of services revenues
    1,778,977       103,726  
 
           
Total cost of revenues
    7,431,255       4,470,216  
 
           
 
               
Gross profit
    5,303,355       4,773,348  
 
               
General and administrative expenses
    2,346,207       2,123,340  
 
           
 
               
Income from operations
    2,957,148       2,650,008  
 
           
 
               
Other income (expense):
               
Interest income
    448,804       28,705  
Interest expense
    (480,928 )     (214,972 )
Other income
    203,331       198,281  
Equity in earnings of affiliate
    459,123       415,989  
 
           
 
               
Other income, net
    630,330       428,003  
 
           
 
               
Income before noncontrolling interests
    3,587,478       3,078,011  
 
               
Income attributable to noncontrolling interests
    —       —  
 
           
 
               
Net income
  $ 3,587,478     $ 3,078,011  
 
           
 
               
Basic earnings per common share
  $ 0.25     $ 0.25  
 
           
 
               
Diluted earnings per common share
  $ 0.25     $ 0.24  
 
           
 
               
Dividends declared per common share
  $ 0.065     $ 0.06  
 
           
 
               
Weighted average number of common shares used in the determination of:
               
 
               
Basic earnings per share
    14,141,620       12,216,870  
 
           
 
               
Diluted earnings per share
    14,377,695       12,599,001  
 
           

 

 

Exhibit 99.2
CONSOLIDATED WATER CO. LTD. SECOND QUARTER
CASH DIVIDEND DISTRIBUTION INFORMATION
GEORGE TOWN, Grand Cayman, Cayman Islands (May 14, 2007). Consolidated Water Co. Ltd. (NASDAQ Global Select Market: “CWCO”) today issued a correction of previously announced information regarding its second quarter cash dividend.
In a news release dated May 10, 2007, the Company announced the declaration of its second quarter cash dividend of $0.065 per share. The news release contained incorrect dates regarding the record date and payment date for the dividend.
The correct information is as follows:
The Company’s Board of Directors has declared a quarterly cash dividend of $0.065 per share, payable July 31, 2007 to shareholders of record at the close of business on June 30, 2007.
About Consolidated Water Co. Ltd.
Consolidated Water Co. Ltd. develops and operates seawater desalination plants and water distribution systems in areas of the world where naturally occurring supplies of potable water are scarce or nonexistent. The Company currently operates water production and/or distribution facilities in the Cayman Islands, Barbados, Belize and The Commonwealth of the Bahamas. The Company’s affiliate, Ocean Conversion (BVI) Ltd., also produces and distributes water in the British Virgin Islands.
The ordinary (common) shares of Consolidated Water Co. Ltd. are traded on the NASDAQ Global Select Market under the symbol “CWCO”. Additional information on the Company is available on its website at http://www.cwco.com .
For further information, please contact:
David W. Sasnett, Executive Vice President and CFO, at (345) 945-4277 or via e-mail at
info@cwco.com
http://www.cwco.com
or
RJ Falkner & Company, Inc., Investor Relations Counsel at (800) 377-9893 or via e-mail at
info@rjfalkner.com