SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C. 20549
(Mark One)
[X]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
              For the quarterly period ended June 30, 2000

                                  OR
[ ]
          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934
              For the transition period from ________ to ________

                        Commission file number 1-11023
                              E'town CORPORATION
             (Exact name of registrant as specified in its charter)
       New Jersey                                         22-2596330
(State of incorporation)                    (I.R.S. Employer Identification No.)
    600 South Avenue
  Westfield, New Jersey                                     07090
(Address of principal executive offices)                  (Zip Code)

         Registrant's telephone number, including area code:    (908) 654-1234

 Title of each class                  Name of each exchange on which registered
Common Stock, without par value                 New York Stock Exchange

                        Commission file number 0-628
                         ELIZABETHTOWN WATER COMPANY
            (Exact name of registrant as specified in its charter)
   New Jersey                                              22-1683171
(State of incorporation)                    (I.R.S. Employer Identification No.)
  600 South Avenue
 Westfield, New Jersey                                      07090
(Address of principal executive offices)                  (Zip Code)

         Registrant's telephone number, including area code:     (908) 654-1234

Title of each class                   Name of each exchange on which registered
Senior Unsecured Debentures                            None
Mandatory Redeemable Preferred Stock                   None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes __X__ No_____

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date
                                                   Outstanding at
 Class of Common Stock:                            June 30, 2000
 E'town Corporation (without par value)              8,842,601
 Elizabethtown Water Company (without par value)*    1,974,902

 * All shares are owned by E'town Corporation
===============================================================================
<PAGE>


                    E'TOWN CORPORATION AND SUBSIDIARIES
               ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY

                                  INDEX


-------------------------------------------------------------------------------

PART I - FINANCIAL INFORMATION                                       PAGE

Item 1. Financial Statements

 E'TOWN CORPORATION AND SUBSIDIARIES

    - Statements of Consolidated Income                                1
    - Consolidated Balance Sheets                                     2-3
    - Statements of Consolidated Capitalization                        4
    - Statements of Consolidated Shareholders' Equity                  5
    - Statements of Consolidated Cash Flows                            6

 ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY

    - Statements of Consolidated Income                                7
    - Consolidated Balance Sheets                                     8-9
    - Statements of Consolidated Capitalization                        10
    - Statements of Consolidated Shareholder's Equity                  11
    - Statements of Consolidated Cash Flows                            12

  E'TOWN CORPORATION AND SUBSIDIARIES AND
  ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY

    - Notes to Consolidated Financial Statements                       13

      Item 2. Management's Discussion and Analysis of Consolidated
              Financial Condition and Results of Operations            20

PART II - OTHER INFORMATION                                            27

      Items 1 - 5

      Item 6 (a) - Exhibits                                            28
             (b) - Reports on Form 8-K                                 28

      SIGNATURES                                                       29
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
In Thousands Except Per Share Amounts)
           (Unaudited)
                                         Three Months Ended   Six Months Ended
                                               June 30,            June 30,
                                          2000      1999       2000      1999
===============================================================================
Operating Revenues                     $ 41,794  $ 41,611  $  79,957 $  77,087
-------------------------------------------------------------------------------
Operating Expenses:
 Operation                               17,920    17,889     35,906    32,464
 Maintenance                              1,660     1,563      3,561     3,172
 Depreciation and amortization            4,187     3,711      8,374     7,385
 Revenue taxes                            4,473     4,542      8,429     8,282
 Real estate, payroll and other taxes     1,106       872      2,207     1,862
 Federal income taxes                     2,274     2,855      3,435     5,068
-------------------------------------------------------------------------------
     Total operating expenses            31,620    31,432     61,912    58,233
-------------------------------------------------------------------------------
Operating Income                         10,174    10,179     18,045    18,854
-------------------------------------------------------------------------------
Other Income (Expense):
 Allowance for equity funds used during
  construction                              111       141        225       216
 Federal income taxes                      (158)     (309)      (305)   (1,552)
 Gain on sale of land (Note 8)                                           3,197
 Other - net                                343       751        666     1,032
-------------------------------------------------------------------------------
     Total other income                     296       583        586     2,893
-------------------------------------------------------------------------------
Total Operating and Other Income         10,470    10,762     18,631    21,747
-------------------------------------------------------------------------------
Interest Charges:
 Interest on long-term debt               4,785     4,239      9,223     8,373
 Other interest expense - net             1,144       565      2,384       856
 Capitalized interest                      (105)     (112)      (200)     (165)
 Amortization of debt discount and
  expense-net                               115       110        229       220
-------------------------------------------------------------------------------
Total interest charges                    5,939     4,802     11,636     9,284
-------------------------------------------------------------------------------
Income Before Preferred Stock Dividends
 of Subsidiary                            4,531     5,960      6,995    12,463
Preferred Stock Dividends                   203       203        406       406
-------------------------------------------------------------------------------
Net Income                             $  4,328  $  5,757  $   6,589  $ 12,057
===============================================================================

Earnings Per Share of Common Stock (Note 7):
-------------------------------------------------------------------------------
 Basic                                 $   0.49  $   0.67  $    0.75  $   1.41
 Diluted                               $   0.49  $   0.66  $    0.75  $   1.39
-------------------------------------------------------------------------------

Average Number of Shares Outstanding for
   the Calculation of Earnings Per Share:
-------------------------------------------------------------------------------
      Basic                               8,824     8,562      8,798     8,537
      Diluted                             9,057     8,843      9,037     8,820
-------------------------------------------------------------------------------

Dividends Paid Per Common Share        $   0.51  $   0.51  $    1.02   $  1.02
===============================================================================

See Notes to Consolidated Financial Statements.






                                                 - 1 -
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)                                        June 30,
                                                        2000       December 31,
Assets                                               (Unaudited)       1999
-------------------------------------------------------------------------------


Utility Plant-At Original Cost:
Utility plant in service                            $  778,508      $  779,485
  Construction work in progress                         30,093          17,441
-------------------------------------------------------------------------------
     Total utility plant                               808,601         796,926
  Less accumulated depreciation                        143,890         137,587
-------------------------------------------------------------------------------
     Utility plant-net                                 664,711         659,339
-------------------------------------------------------------------------------


Non-utility Property and Other
 Investments - Net (Note 8)                             85,373          85,163
-------------------------------------------------------------------------------


Current Assets:
 Cash and cash equivalents                               3,993           4,367
 Customer and other accounts receivable
  (less reserve: 2000, $1,352, 1999, $1,044) (Note 8)   33,119          30,129
 Mortgage and other notes receivable                     2,232           4,600
 Unbilled revenues                                      14,953          12,972
 Infrastructure loan funds receivable (Note 5)           5,657           5,657
 Materials and supplies-at average cost                  4,732           4,069
 Prepaid federal income taxes                              271           4,617
 Prepaid insurance, taxes, other                         2,668           3,663
-------------------------------------------------------------------------------
     Total current assets                               67,625          70,074
-------------------------------------------------------------------------------


Deferred Charges:
 Waste residual management                               1,405           1,538
 Unamortized debt and preferred stock expenses           9,469           9,419
 Taxes recoverable through future rates                 13,466          13,466
 Postretirement benefit expense                          3,024           3,145
 Flood expenditures                                      5,267           5,000
 Other unamortized expenses                              3,010           1,164
-------------------------------------------------------------------------------
     Total deferred charges                             35,641          33,732
-------------------------------------------------------------------------------
     Total                                          $  853,350      $  848,308
===============================================================================

See Notes to Consolidated Financial Statements.











                                    -2-
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Thousands)                                        June 30,
                                                        2000       December 31,
Capitalization and Liabilities                      (Unaudited)         1999
-------------------------------------------------------------------------------

Capitalization (Notes 4 and 5):
 Common shareholders' equity                        $  232,911      $  229,233
 Mandatory Redeemable Cumulative Preferred Stock        12,000          12,000
 Redeemable preferred stock                                227             227
 Long-term debt - net                                  294,919         266,015
-------------------------------------------------------------------------------
     Total capitalization                              540,057         507,475
-------------------------------------------------------------------------------


Current Liabilities:
 Notes payable - banks                                  82,000          89,500
 Long-term debt - current portion (Note 5)                 737             494
 Accounts payable and other liabilities                 25,265          31,434
 Contract obligations payable (Note 5)                                  19,000
 Customers' deposits                                       243             263
 Municipal and state taxes accrued                      18,689          17,682
 Interest accrued                                        5,018           4,219
 Preferred stock dividends accrued                          59              59
-------------------------------------------------------------------------------
     Total current liabilities                         132,011         162,651
-------------------------------------------------------------------------------


Deferred Credits:
 Customers' advances for construction                   42,783          41,321
 Federal income taxes                                   72,589          71,236
 State income taxes                                        302             302
 Unamortized investment tax credits                      7,535           7,636
 Accumulated postretirement benefits                     3,338           3,571
-------------------------------------------------------------------------------
     Total deferred credits                            126,547         124,066
-------------------------------------------------------------------------------


Contributions in Aid of Construction                    54,735          54,116
-------------------------------------------------------------------------------


Commitments and Contingent Liabilities
-------------------------------------------------------------------------------
      Total                                         $  853,350      $  848,308
===============================================================================

See Notes to Consolidated Financial Statements.











                                            -3-
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CAPITALIZATION
(In Thousands Except Share Amounts)
                                                     June 30,
                                                       2000        December 31,
                                                    (Unaudited)        1999
-------------------------------------------------------------------------------
Common Shareholders' Equity:
 E'town Corporation:
  Common stock without par value, authorized,
   15,000,000 shares, issued 2000, 8,875,155
   shares; 1999, 8,760,862 shares                   $  186,286      $  180,124
  Paid-in capital                                        1,216           1,315
  Capital stock expense                                 (5,160)         (5,160)
  Retained earnings                                     51,537          53,922
  Less cost of treasury stock; 2000 and 1999,
   32,554 shares                                          (968)           (968)
-------------------------------------------------------------------------------
     Total common shareholders' equity                 232,911         229,233
-------------------------------------------------------------------------------
Preferred Shareholders' Equity
 Elizabethtown Water Company:
  Mandatory Redeemable Cumulative Preferred Stock:
   $100 par value, authorized, 200,000 shares; $5.90
   series, issued and outstanding, 120,000 shares       12,000          12,000
  Cumulative Preferred Stock:
   $25 par value, authorized, 500,000 shares;
   none issued
 Applied Wastewater Management, Inc.:
  Redeemable Preferred Stock:
   No par value, noncumulative, issued and
   outstanding, 227 shares                                 227             227
-------------------------------------------------------------------------------
     Total preferred shareholders' equity               12,227          12,227
-------------------------------------------------------------------------------
Long-term Debt (Notes 5 and 8):
 E'town Corporation:
  6 3/4% Convertible Subordinated Debentures,
  due 2012                                               7,846           8,705
  6.79% Senior Notes, due 2007                          12,000          12,000
  7.69% Senior Notes, due 2010                          30,000
 Applied Wastewater/Applied Water Management:
  6% Note Payable (due serially through 2027)              204             204
  9.65% Mortgage Note Payable (due 2001)                   246             264
 Elizabethtown Water Company:
  7.20% Debentures, due 2019                            10,000          10,000
  7 1/2% Debentures, due 2020                           15,000          15,000
  6.60% Debentures, due 2021                            10,500          10,500
  6.70% Debentures, due 2021                            15,000          15,000
  8 3/4% Debentough, due 2021                           27,500          27,500
  8% Debentures, due 2022                               15,000          15,000
  5.60% Debentures, due 2025                            40,000          40,000
  7 1/4% Debentures, due 2028                           50,000          50,000
  Variable Rate Debentures, due 2027                    50,000          50,000
 The Mount Holly Water Company:
  New Jersey Environmental Infrastructure Trust
   Notes (due serially through 2018)                     7,040           7,040
  New Jersey Department of Environmental Protection
   Notes (due serially through 2018)                     5,594           5,677
  9.65% Mortgage Note Payable (due 2001)                                   156
-------------------------------------------------------------------------------
     Total long-term debt                              295,930         267,046
  Unamortized (discount) premium-net                    (1,011)         (1,031)
-------------------------------------------------------------------------------
     Total long-term debt-net                          294,919         266,015
-------------------------------------------------------------------------------
           Total Capitalization                     $  540,057      $  507,475
===============================================================================

See Notes to Consolidated Financial Statements.

                                         -4-
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
(In Thousands Except Share Amounts)
                                                  Six Months Ended
                                                     June 30,       Year Ended
                                                       2000        December 31,
                                                    (Unaudited)        1999
-------------------------------------------------------------------------------

Common Stock:
 Balance at Beginning of Period                     $  180,124      $  169,324
  Common stock issued under Dividend Reinvestment
   and Stock Purchase Plan (2000, 81,123 shares;
   1999, 197,547 shares)                                 4,992           8,702
 Redemption of Convertible Debentures (2000, 20,850
  shares; 1999, 44,225 shares)                             834           1,769
 Issuance of restricted stock under compensation
  programs (1999, 2,822 shares)                                            119
 Restricted stock (redeemed) in connection with
  acquisitions (1999, (25,756) shares)                                    (867)
 Exercise of stock options (2000, 12,500 shares;
  1999, 37,500 shares)                                     336           1,077
-------------------------------------------------------------------------------
 Balance at End of Period                              186,286         180,124
-------------------------------------------------------------------------------

Paid-in Capital:                                         1,216           1,315
-------------------------------------------------------------------------------

Capital Stock Expense:                                  (5,160)         (5,160)
-------------------------------------------------------------------------------

Retained Earnings:
 Balance at Beginning of Period                         53,922          50,961
 Net Income                                              6,589          20,487
 Dividends on common stock (2000, $1.02; 1999, $2.04)   (8,974)        (17,526)
-------------------------------------------------------------------------------
 Balance at End of Period                               51,537          53,922
-------------------------------------------------------------------------------


Treasury Stock:                                           (968)           (968)
-------------------------------------------------------------------------------

    Total Common Shareholders' Equity               $  232,911      $  229,233
===============================================================================

See Notes to Consolidated Financial Statements.






                                         -5-
<PAGE>
E'TOWN CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
            (Unaudited)
                                                         Six Months Ended
                                                             June 30,
                                                       2000            1999
-------------------------------------------------------------------------------

Cash Flows Provided by Operating Activities:
 Net Income                                         $    6,589      $   12,057
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization                         8,374           7,385
   Gain on the sale of land                                              3,197
   Increase in deferred charges                         (1,980)         (1,279)
   Deferred income taxes and investment tax
   credits- net                                          1,252           1,458
   Capitalized interest and AFUDC                         (425)           (381)
   Other operating activities-net                         (215)           (461)
 Change in current assets and current liabilities
  excluding cash, short-term investments and
  current portion of debt :
     Customer and other accounts receivable             (2,990)         (2,118)
      Mortgage and other notes receivable                2,368          (2,833)
     Unbilled revenues                                  (1,981)         (2,719)
     Accounts payable and other liabilities             (6,189)         (1,131)
     Accrued/prepaid interest and taxes                  7,147           2,958
     Other                                                (755)            254
-------------------------------------------------------------------------------
     Net cash provided by operating activities          11,195          16,387
-------------------------------------------------------------------------------
Cash Flows Provided (Used) by Financing Activities:
 Proceeds from issuance of common stock                  5,328           4,278
 Funds held in Trust by others                            (120)            114
 Debt and preferred stock issuance and
  amortization costs                                       (50)            237
 Issuance of other long-term debt                       30,000
 Repayment of long-term debt                           (19,012)        (12,671)
 Contributions and advances for construction             3,239           2,552
 Refunds of customer advances for construction          (1,068)         (1,496)
 Net increase (decrease) in notes payable - banks       (7,500)         21,181
 Dividends paid on common stock                         (8,974)         (8,695)
-------------------------------------------------------------------------------
    Net cash flows provided by financing activities      1,843           5,500
-------------------------------------------------------------------------------
Cash Flows Used for Investing Activities:
 Utility plant and other capital expenditures
 (excluding allowance for funds used during
  construction)                                        (12,324)        (21,914)
 Purchase of companies                                                  (1,800)
 Capital expenditures on non-regulated property         (1,088)           (660)
 Proceeds from sale of land                                              2,069
-------------------------------------------------------------------------------
    Net cash flows used for investing activities       (13,412)        (22,305)
-------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents                 (374)           (418)
Cash and Cash Equivalents at Beginning of Period         4,367           5,909
-------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period          $    3,993      $    5,491
===============================================================================
Supplemental Disclosures of Cash
  Flow Information:
    Cash paid during the year for:
      Interest (net of amount capitalized)          $    9,655      $   10,133
      Income taxes                                  $        0      $    3,400
      Preferred stock dividends                     $      354      $      354
   Noncash issuance of common stock                 $      834      $      751

See Notes to Consolidated Financial Statements.


                                                -6-
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED INCOME
          (In Thousands)
            (Unaudited)
                                       Three Months Ended   Six Months Ended
                                             June 30,            June 30,
                                          2000      1999      2000      1999
-------------------------------------------------------------------------------
Operating Revenues                     $ 35,379  $ 35,509  $  67,122 $  66,575
-------------------------------------------------------------------------------
Operating Expenses:
 Operation                               12,134    12,541     24,366    24,132
 Maintenance                              1,463     1,447      3,205     2,903
 Depreciation                             3,460     3,197      6,920     6,394
 Revenue taxes                            4,444     4,532      8,373     8,265
 Real estate, payroll and other taxes       851       746      1,740     1,629
 Federal income taxes                     2,841     3,079      4,496     5,268
-------------------------------------------------------------------------------
     Total operating expenses            25,193    25,542     49,100    48,591
-------------------------------------------------------------------------------
Operating Income                         10,186     9,967     18,022    17,984
-------------------------------------------------------------------------------
Other Income (Expense):
 Allowance for equity funds used
  during construction                       111       141        225       216
 Federal income taxes                      (155)     (290)      (281)     (362)
 Other - net                                332       688        595       816
-------------------------------------------------------------------------------
     Total other income                     288       539        539       670
-------------------------------------------------------------------------------
Total Operating and Other Income         10,474    10,506     18,561    18,654
-------------------------------------------------------------------------------
Interest Charges:
 Interest on long-term debt               3,858     3,862      7,634     7,619
 Other interest expense - net               968       315      1,881       378
 Allowance for funds used during
  construction                             (105)     (112)      (200)     (165)
 Amortization of debt discount and
  expense-net                                99        98        198       196
-------------------------------------------------------------------------------
     Total interest charges               4,820     4,163      9,513     8,028
-------------------------------------------------------------------------------
Net Income                                5,654     6,343      9,048    10,626
Preferred Stock Dividends                   203       203        406       406
-------------------------------------------------------------------------------
Earnings Applicable To Common Stock    $  5,451  $  6,140  $   8,642 $  10,220
===============================================================================

See Notes to Consolidated Financial Statements.










                                      - 7 -
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)                                        June 30,
                                                        2000       December 31,
Assets                                              (Unaudited)        1999
-------------------------------------------------------------------------------

Utility Plant-At Original Cost:
 Utility plant in service                           $  769,448      $  770,251
 Construction work in progress                          30,062          17,495
-------------------------------------------------------------------------------
     Total utility plant                               799,510         787,746
 Less accumulated depreciation and amortization        143,083         136,975
-------------------------------------------------------------------------------
     Utility plant-net                                 656,427         650,771
-------------------------------------------------------------------------------


Non-utility Property (Note 8)                            7,456           7,337
-------------------------------------------------------------------------------


Current Assets:
 Cash and cash equivalents                               2,383           1,342
 Customer and other accounts receivable
  (less reserve: 2000, $683, 1999, $674)                20,829          19,341
 Unbilled revenues                                      12,251          10,578
 Infrastructure loan funds receivable (Note 5)           5,657           5,657
 Materials and supplies-at average cost                  4,732           4,069
 Prepaid federal income taxes                              739           5,807
 Prepaid insurance, taxes, other                         2,416           3,229
-------------------------------------------------------------------------------
     Total current assets                               49,007          50,023
-------------------------------------------------------------------------------


Deferred Charges:
 Waste residual management                               1,405           1,538
 Unamortized debt and preferred stock expenses           8,803           8,900
 Taxes recoverable through future rates                 13,466          13,466
 Postretirement benefit expense                          3,024           3,145
 Flood expenditures                                      5,267           5,000
 Other unamortized expenses                              2,733           1,007
-------------------------------------------------------------------------------
     Total deferred charges                             34,698          33,056
-------------------------------------------------------------------------------
     Total                                          $  747,588      $  741,187
===============================================================================

See Notes to Consolidated Financial Statements.




                                             - 8 -
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In Thousands)                                        June 30,
                                                                   December 31,
Capitalization and Liabilities                      (Unaudited)         1999
-------------------------------------------------------------------------------


Capitalization (Note 4):
 Common shareholder's equity                        $  225,120      $  220,461
 Mandatory redeemable cumulative preferred stock        12,000          12,000
 Long-term debt - net                                  244,623         244,842
-------------------------------------------------------------------------------
     Total capitalization                              481,743         477,303
-------------------------------------------------------------------------------


Current Liabilities:
 Notes payable - banks                                  57,000          51,500
 Long-term debt - current portion                          715             481
 Accounts payable and other liabilities                 12,290          19,989
 Customers' deposits                                       179             197
 Municipal and state taxes accrued                      18,568          17,592
 Interest accrued                                        3,699           3,745
 Preferred stock dividends accrued                          59              59
-------------------------------------------------------------------------------
     Total current liabilities                          92,510          93,563
-------------------------------------------------------------------------------


Deferred Credits:
 Customers' advances for construction                   41,571          40,019
 Federal income taxes                                   70,757          69,570
 Unamortized investment tax credits                      7,535           7,636
 Accumulated postretirement benefits                     3,156           3,399
-------------------------------------------------------------------------------
     Total deferred credits                            123,019         120,624
-------------------------------------------------------------------------------


Contributions in Aid of Construction                    50,316          49,697
-------------------------------------------------------------------------------


Commitments and Contingent Liabilities
-------------------------------------------------------------------------------
                Total                               $  747,588      $  741,187
===============================================================================

See Notes to Consolidated Financial Statements.





                                            - 9 -
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED CAPITALIZATION
           (In Thousands)                             June 30,
                                                       2000        December 31,
                                                   (Unaudited)         1999
-------------------------------------------------------------------------------

Common Shareholder's Equity (Note 4):
 Common stock without par value, authorized,
  15,000,000 shares, issued 2000 and 1999,
  1,974,902 shares                                  $   15,741      $   15,741
 Paid-in capital                                       146,566         141,575
 Capital stock expense                                    (485)           (485)
 Retained earnings                                      63,298          63,630
-------------------------------------------------------------------------------
     Total common shareholder's equity                 225,120         220,461
-------------------------------------------------------------------------------

Preferred Shareholders' Equity:
 Mandatory Redeemable Cumulative Preferred Stock
  $100 par value, authorized, 200,000 shares; $5.90
  series, issued and outstanding, 120,000 shares        12,000          12,000

 Cumulative Preferred Stock:
  $25 par value, authorized, 500,000 shares; none issued
-------------------------------------------------------------------------------

 Long-term Debt:
  Elizabethtown Water Company:
   7.20% Debentures, due 2019                           10,000          10,000
   7 1/2% Debentures, due 2020                          15,000          15,000
   6.60% Debentures, due 2021                           10,500          10,500
   6.70% Debentures, due 2021                           15,000          15,000
   8 3/4% Debentures, due 2021                          27,500          27,500
   8% Debentures, due 2022                              15,000          15,000
   5.60% Debentures, due 2025                           40,000          40,000
   7 1/4% Debentures, due 2028                          50,000          50,000
   Variable Rate Debentures, due 2027                   50,000          50,000
  The Mount Holly Water Company:
   New Jersey Environmental Infrastructure Trust
    Notes (due serially through 2018)                    7,040           7,040
   New Jersey Department of Environmental Protection
    Notes (due serially through 2018)                    5,594           5,677
   9.65% Mortgage Note Payable (due 2001)                                  156
-------------------------------------------------------------------------------
     Total long-term debt                              245,634         245,873
   Unamortized discount-net                             (1,011)         (1,031)
-------------------------------------------------------------------------------
     Total long-term debt-net                          244,623         244,842
-------------------------------------------------------------------------------
        Total Capitalization                        $  481,743      $  477,303
===============================================================================

See Notes to Consolidated Financial Statements.


                                            -10-
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
           (In Thousands)
                                                 Six Months Ended
                                                      June 30,      Year Ended
                                                       2000        December 31,
                                                   (Unaudited)          1999
-------------------------------------------------------------------------------


Common Stock:                                       $   15,741      $   15,741
-------------------------------------------------------------------------------

Paid-in Capital:
 Balance at Beginning of Period                        141,575         132,753
 Capital Contributed by Parent Company from:
 Common Stock Issued Under Dividend Reinvestment
  and Stock Purchase Plan                                4,991           8,702
 Issuance of Restricted and Unrestricted Stock
  Under Compensation Programs                                              120
-------------------------------------------------------------------------------
 Balance at End of Period                              146,566         141,575
-------------------------------------------------------------------------------

Capital Stock Expense                                     (485)           (485)
-------------------------------------------------------------------------------

Retained Earnings:
 Balance at Beginning of Period                         63,630          60,564
 Net income                                              9,048          21,405
 Dividends on common stock                              (8,974)        (17,526)
 Dividends on preferred stock                             (406)           (813)
-------------------------------------------------------------------------------
 Balance at End of Period                               63,298          63,630
-------------------------------------------------------------------------------

     Total Common Shareholder's Equity              $  225,120      $  220,461
===============================================================================

See Notes to Consolidated Financial Statements.





                                    -11-
<PAGE>
ELIZABETHTOWN WATER COMPANY AND SUBSIDIARY
STATEMENTS OF CONSOLIDATED CASH FLOWS
            (In Thousands)
              (Unaudited)                                Six Months Ended
                                                              June 30,
                                                        2000            1999
-------------------------------------------------------------------------------
Cash Flows from Operating Activities:
 Net income                                         $    9,048      $   10,626
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization                         6,920           6,394
   Increase in deferred charges                         (1,860)         (1,427)
   Deferred income taxes and investment tax
     credits-net                                         1,086           1,438
   Allowance for funds used during construction           (425)           (381)
   Other operating activities-net                         (101)            998
 Change in current assets and current liabilities
  excluding cash, short-term investments and
  current portion of debt :
   Customer and other accounts receivable               (1,488)         (1,940)
   Unbilled revenues                                    (1,673)         (2,575)
   Accounts payable and other liabilities               (7,717)         (2,040)
   Accrued/prepaid interest and taxes                    6,811           1,916
   Other                                                  (715)            254
-------------------------------------------------------------------------------
   Net cash provided by operating activities             9,886          13,263
-------------------------------------------------------------------------------

Cash Flows Provided (Used) by Financing Activities:
 Capital contributed by parent company                   4,991           4,156
 Funds held in Trust by others                            (120)            114
 Debt and preferred stock issuance and
  amortization costs                                        97             229
 Repayment of long-term debt                                (5)            (15)
 Contributions and advances for construction             3,239           2,471
 Refunds of customer advances for construction          (1,068)         (1,293)
 Net increase in notes payable - banks                   5,500           8,000
 Dividends paid on common stock and preferred stock     (9,328)         (9,049)
-------------------------------------------------------------------------------
   Net cash provided by financing activities             3,306           4,613
-------------------------------------------------------------------------------

Cash Flows Used for Investing Activities:
 Utility plant expenditures (excluding allowance
  for funds used during construction)                  (12,151)        (19,168)
Purchase of company                                                       (860)
-------------------------------------------------------------------------------
   Cash used for investing activities                  (12,151)        (20,028)
-------------------------------------------------------------------------------
Net Increase in Cash and Cash Equivalents                1,041          (2,152)
Cash and Cash Equivalents at Beginning of Period         1,342           3,598
-------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period          $    2,383      $    1,446
===============================================================================
Supplemental Disclosures of Cash
 Flow Information:
  Cash paid during the year for:
   Interest (net of amount capitalized)             $    8,910      $    8,379
   Income taxes                                     $        0      $    3,400
   Preferred stock dividends                        $      354      $      354
See Notes to Consolidated Financial Statements.


                                   -12-
<PAGE>
                      E'TOWN CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION
    E'town Corporation (E'town), a New Jersey holding company, is the parent
    company of Elizabethtown Water Company (Elizabethtown or Company), Edison
    Water Company (Edison), E'town Properties, Inc. (Properties), Liberty
    Water Company (Liberty), Applied Water Management, Inc. (AWM) and Applied
    Wastewater Management, Inc. (AWWM). The Mount Holly Water Company (Mount
    Holly) is a wholly-owned subsidiary of Elizabethtown. The Corporation and
    its subsidiaries as a consolidated entity are referred to herein as the
    Corporation. The assets and operating results of Elizabethtown constitute
    the predominant portions of E'town's assets and operating results. The
    regulated utilities, Elizabethtown, Mount Holly and AWWM, comprise the
    Regulated Utilities segment, Liberty and Edison comprise the Contract
    Operations segment, AWM is the Engineering/Operations and Construction
    segment and E'town and Properties comprise the Financing and Investment
    segment.

2.  PENDING MERGER
    On November 21, 1999, E'town entered into an agreement (Merger Agreement)
    with Thames Water Plc (Thames Water) under which Thames Water has agreed,
    subject to certain conditions, to acquire E'town for $68 per share in
    cash. Thames Water will also assume the debt of the Corporation. The
    acquisition will take the form of a merger (Merger) of E'town with a newly
    formed subsidiary of Thames Water and E'town will be the surviving company.

    A special meeting of shareholders was held on May 18, 2000 at which time
    the E'town shareholders approved the transaction. The acquisition is
    subject to approval by the New Jersey Board of Public Utilities (BPU).
    Certain clearances must also be obtained  from the New Jersey
    environmental regulators. The transaction is expected to close prior to
    the end of 2000.

    On May 19, 2000 the Utility Workers Union of America, the AFL-CIO and the
    Utility Workers Union of America Local 423 (collectively referred to as
    the "unions"), which represent certain employees of Elizabethtown and
    Mount Holly, intervened in the merger petition before the BPU. On June 7,
    2000 the BPU granted the unions intervention status.

3.   INTERIM FINANCIAL STATEMENTS
     The financial statements reflect all adjustments which, in the opinion of
     management, are necessary for a fair presentation. The Notes to
     Consolidated Financial Statements accompanying the 1999 Annual Report to
     Shareholders and the 1999 Form 10-K should be read in conjunction with
     this report.

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities
     and disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period.

    New Accounting Pronouncements
    In 1998, the Financial Accounting Standards Board (FASB) issued Statement
    of Financial Accounting Standards (SFAS) No. 133, "Accounting for
    Derivative Instruments and Hedging Activity". In June 1999, the FASB
    issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging
    Activity - Deferral of the Effective Date of SFAS No. 133" to defer the
    effective date of SFAS No. 133 for one year. Consequently, SFAS No. 133
    will now be effective for all fiscal quarters of all fiscal years
    beginning after June 15, 2000. The Corporation does not believe this
    Statement will have any impact on  the Corporation's financial condition
    and results of operations.

    In December 1999, the Securities and Exchange Commission released Staff
    Accounting Bulletin No. 101 (SAB 101) which provides guidance on the
    timing of revenue recognition in financial statements. SAB 101 provides
    specific criteria to assist in this determination. The adoption of SAB 101
    is not expected to have an impact on the present revenue recognition
    practices of the Corporation and therefore, there is no expected impact on
    the Corporation's financial statements.

                                     -13-
<PAGE>
4.  CAPITALIZATION
    E'town routinely makes equity contributions to Elizabethtown from the
    proceeds of common stock issued under E'town's Dividend Reinvestment and
    Stock Purchase Plan (DRP). E'town contributed $2.36 million and $4.99
    million from the DRP proceeds to Elizabethtown for the three and six month
    periods ended June 30, 2000, respectively.

5.  LONG-TERM DEBT
    In February 2000, E'town issued $30 million of 7.69% Senior Notes due 2010
    in a private placement.  The proceeds were used to repay short-term debt
    incurred to finance the acquisition of the contract to operate the water
    system of the city of Elizabeth and capital expenditures for the
    non-regulated subsidiaries.

    E'town has outstanding $12 million of 6.79% Senior Notes due December 15,
    2007. The Note Agreements for E'town's 6.79% and 7.69%  Senior Notes
    require the maintenance of a consolidated fixed charges coverage ratio of
    at least 1.5 to 1 and a debt to total capitalization ratio not to exceed
    .65 to 1. As of June 30, 2000, the fixed charges coverage ratio was 2.10
    to 1 and the debt to total capitalization ratio was .62 to 1, calculated
    in accordance with the Note Agreements.

    The aggregate maturities of the Corporation's long-term  debt  (including
    the portion classified as current  and contract obligations payable) as of
    December 31, 1999 for each of the succeeding five years are: 2000, $19.49
    million; 2001, $1.00 million; 2002, $.59 million; 2003, $.60 million and
    2004, $.61 million.  Included in the Corporation's amounts are
    Elizabethtown's  aggregate long-term debt maturities for each of the five
    years succeeding December 31, 1999 : 2000, $.48 million; 2001, $.72
    million; 2002, $.58 million; 2003, $.59 million and 2004, $.60 million.

    In November 1998 Mount Holly closed on loan agreements that will make
    available up to $13.19 million in proceeds from the issuance of unsecured
    notes through the New Jersey Environmental Infrastructure Trust Financing
    Program. This program provides financing through two loans. The first
    loan, in the amount of $7.30 million, is through the New Jersey
    Environmental Infrastructure Trust (Trust), which issued tax-exempt bonds
    with average interest rates of 4.7%. The second loan, in the amount of
    $5.89 million, is from the State of New Jersey, acting through the New
    Jersey Department of Environmental Protection. The State is participating
    in the Safe Drinking Water State Revolving Fund authorized by the Safe
    Drinking Water Act amendments of 1996 whereby the federal government is
    funding the state loan at no interest cost. The effective interest rate
    for the combined notes is approximately 2.59%. The proceeds of the loans
    will be used to repay short-term debt incurred to finance the Mansfield
    Project, a construction project  that was  undertaken  to comply with New
    Jersey legislative restrictions to obtain an alternative water supply to
    reduce pumpage from an aquifer and was fully in service in late December
    1999. The Company has requested $9.84 million from the Trust and expects
    to receive payment in the third quarter of 2000.

 6. LINES OF CREDIT
    E'town has $115 million of uncommitted lines of credit with several banks,
    of which up to $55 million is available for use by its unregulated
    subsidiaries and $90 million is available to Elizabethtown.  Of the lines
    available to Elizabethtown, $10 million represents a committed line of
    credit. These lines, together with internal funds and proceeds from the
    sale of E'town's common stock or capital contributions from Thames Water
    after the pending Merger, medium-term notes, long-term debt, proceeds of
    tax-exempt New Jersey Economic Development Authority (NJEDA) bonds and
    short-term borrowings are expected to be sufficient to finance the
    Corporation's capital needs.
                                     -14-
<PAGE>
 7. EARNINGS PER SHARE
    Basic earnings per share are computed on the basis of the weighted average
    number of shares outstanding. Diluted earnings per share assumes both the
    conversion of the 6 3/4% Convertible Subordinated Debentures and common
    stock equivalents, assuming all stock options are exercised. The
    calculations of basic and diluted earnings per share for the three and six
    month periods ended June 30, 2000 and 1999 follow:

                                      Three Months     Six Months
                                          Ended          Ended
                                         June 30,       June 30,
                                     2000     1999    2000    1999
                                    ---------------------------------
    In Thousands of Dollars Except
    Per Share Amounts

    Basic:
    Net Income                      $ 4,328  $5,757  $6,589  $12,057
    Average common shares             8,824   8,562   8,798    8,537
    outstanding
                                    --------------------------------
    Basic earnings per share        $  0.49  $ 0.67  $ 0.75  $  1.41
                                    ================================
    Diluted:
    Net income                      $ 4,328  $5,757  $6,589  $12,057
    After tax interest expense           87     111     179      222
     applicable to 6  3/4%
     Convertible Subordinated
     Debentures
                                    --------------------------------
    Adjusted net income             $ 4,415  $5,868  $6,768  $12,279
                                    ================================
    Average common shares             8,824   8,562   8,798    8,537
     outstanding
    Additional shares from assumed       37      28      34       28
     exercise of stock options
    Additional shares from assumed      196     253     205      255
     conversion of 6 3/4%
    Convertible Subordinated
     Debentures                     --------------------------------
    Average common shares             9,057   8,843   9,037    8,820
     outstanding as
     adjusted
                                    --------------------------------
    Diluted earnings per share      $  0.49  $ 0.66  $ 0.75  $  1.39
                                    ================================

                                     -15-
<PAGE>
8.  NON-UTILITY PROPERTY AND OTHER INVESTMENTS
    The  detail of amounts included  in  Non-Utility   Property  and  Other
    Investments at June 30, 2000 and December 31, 1999 is as follows :

                                                       2000    1999
                                                    -----------------
    Thousands of Dollars
    Except Per Share Amounts

    Funds held in trust by others                    $ 7,384  $ 7,264
    Other capital assets                                  72       73
                                                     ----------------
    Total Elizabethtown Water Company & Subsidiary     7,456    7,337
                                                     ----------------
    Concession fees on privatization contracts -
     net of amortization                              53,178   53,946
    Capital assets from prizatization contracts -
     net of amortization                               7,070    6,165
    Investments in real estate                         9,049    9,049
    Goodwill on AWM and AWWM acquisitions - net
     of amortization                                   4,953    5,036
    Investment in SEGS                                 1,089    1,089
    Other capital assets                               2,397    2,356
    Other                                                181      185
                                                     ----------------
    Total E'town Corporation & Subsidiaries          $85,373  $85,163
                                                     ================

    E'town,  through Liberty, has a 40-year privatization agreement, entered
    into in July 1998  with the city of Elizabeth (Elizabeth), New Jersey to
    operate its water system which  serves approximately 17,600 customers.
    Under the contract, Liberty made concession payments to Elizabeth of $19.7
    million in 1998, $12 million in 1999 and $19 million in June 2000. These
    concession fee payments are being amortized on a straight-line basis over
    the life of the contract and are included in the table above. Under the
    terms of the contract, Liberty will deposit $57.8 million from customer
    collections over the 40-year contract into a fund administered by
    Elizabeth (Fund Deposits), of which $52.3 million is due after 2012.
    Elizabeth will use the Fund Deposits to pay for capital improvements or
    for other water system purposes. As these funds will be controlled by
    Elizabeth, they will be accounted for as a pass-through from customers to
    Elizabeth and will not be included in revenues or expenses of Liberty.
    Liberty is responsible for $7.45 million of construction expenditures,
    primarily for meter replacements, over the life of the contract as well as
    for all operating expenses. Of the construction commitments, approximately
    $2.45 million is expected to be expended in the next three years. The
    accumulated amortization of concession fees on privatization contracts and
    on capital assets from privatization contracts were $2.54 million and
    $1.90 million as of June 30, 2000 and December 31, 1999, respectively.
    Over the life of the contract, Liberty  will bill the customers of the
    water system in accordance with rate increases set forth in the contract
    and receive all revenues except for the Fund Deposits. E'town has
    guaranteed Liberty's performance of  the contract provisions.

    Liberty also performs the commercial billing operations for the wastewater
    system of Elizabeth and remits all cash collected to Elizabeth. Liberty
    does not operate the  wastewater system. Included in the Consolidated
    Balance Sheets of the Corporation as Customer and Other Accounts
    Receivable at June 30, 2000 and December 31, 1999 are the receivables from
    the customers of Elizabeth for wastewater services in the amount of $3.3
    million and $4.6 million, respectively. An equal amount of liability to
    Elizabeth is included in  Accounts Payable and Other Liabilities to
    reflect Liberty's obligation to remit these funds to Elizabeth as
    collected.

    E'town, through Edison, has a 20-year privatization agreement, entered
    into in June 1997,  with the township of Edison, New Jersey to operate its
    water system which  serves approximately 11,500 customers. Under the
    terms of the contract, Edison bills and receives all water revenues
    generated as a result of operating the water system of the township of
    Edison and pays all the operating expenses. Edison expects to make
    expenditures of approximately $25 million during the 20-year life of the
    contract of which $13.28 million has been spent as of June 30, 2000.
    Construction expenditures, as they are incurred, are being amortized on a
    straight-line basis over the remaining life of the contract. Expenditures
    include capital improvements to the water system as well as contract
    payments to the township of Edison. Of the total, approximately $2.94
    million is expected to be expended in the next three years of the
    contract. An initial payment of $5.7 million was made upon the closing and
    has been included in the table above. The accumulated amortization of
    concession fees on privatization contracts and on capital assets from
    privatization contracts were $.86 million and $.71 million as of June 30,
    2000 and December 31, 1999, respectively. E'town has guaranteed Edison's
    performance of the contract provisions.

                                     -16-
<PAGE>
    If the Elizabeth or Edison contracts were terminated by either the
    township of Edison or the city of Elizabeth, the unamortized balance of
    the concession fees and amounts paid for additional capital improvements
    would be refunded to Liberty and Edison in accordance with the contracts

    Included in Non-Utility Property and Other Investments at June 30, 2000
    and December 31, 1999 are $9.05 million of investments in various parcels
    of undeveloped land in New Jersey. In February 1999, Properties sold a
    parcel of land which had been under contract since 1995 in Green Brook,
    New Jersey for $5.83 million, at a gain of $2.00 million net of taxes.
    Cash proceeds of $1.99 million were received in 1999. The remaining $4.33
    million was financed  with a 7.75% mortgage, to be paid over 2 years. The
    mortgage balance, including accrued interest is included in Mortgage and
    Other Notes Receivable in the Corporation's Consolidated Balance Sheet as
    of June 30, 2000. Properties sold a small parcel in Clinton, New Jersey in
    1999 for $.6 million at a gain of less than $.1 million net of taxes. The
    sale proceeds are being invested into water and wastewater projects.
    Properties has entered into contracts for sale for all of its remaining
    parcels. The eventual sale of these parcels is contingent upon the
    purchaser obtaining various approvals for development. This process could
    take up to several years. Based upon the expected sales prices for these
    properties under the contracts, the estimated net realizable value of each
    property exceeds its respective carrying value as of June 30, 2000.

    Included in Non-Utility Property and Other Investments at June 30, 2000
    and December 31, 1999 is an investment of $1.09 million ($.35 million net
    of related deferred taxes) in a limited partnership that owns Solar
    Electric Generating System V (SEGS), located in California. E'town owns a
    3.19% interest in SEGS. The investment is being accounted for on the
    equity method. E'town continues to monitor the relationship between the
    carrying and net realizable values of its investment in SEGS, based upon
    information provided by SEGS management as well as through cash flow
    analyses.

    During 1999 AWM made certain investments in non-regulated  wastewater
    assets for $1.7 million. Of this amount $1.2 million was recorded as other
    capital assets and $.5 million was recorded as goodwill. The goodwill is
    being amortized over 10 years.

9.  REGULATORY MATTERS
    MOUNT HOLLY
    In December 1999, Mount Holly completed a construction project, called the
    Mansfield Project, to comply with New Jersey legislative restrictions to
    obtain alternative water supplies, thereby reducing its water pumpage from
    an aquifer, which had been subject to over-pumping by Mount Holly and
    various local purveyors in a portion of southern New Jersey.

    Effective January 1, 2000, Mount Holly received an increase in annual
    rates of $1.88 million. This increase included costs for the Mansfield
    Project. After elimination of a purchased water adjustment clause (PWAC),
    the net rate increase was $.51 million. This increase also reflects
    additional construction and financing costs, as well as higher operating
    costs since base rates were last established in January 1996.

    In June 1999, Mount Holly purchased Homestead Water Utility, Inc. and AWWM
    purchased  Homestead Treatment Utility, Inc. for a combined cash price of
    $1.8 million. The entities provide water and wastewater services to
    approximately 800 customers of the Homestead community in southern New
    Jersey. The transactions were accounted for as purchases.

10. SEGMENT REPORTING
    SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
    Information," requires that companies disclose segment data based upon how
    management makes decisions, allocates resources and measures performance.
    Segment data for the three and six month periods ended June 30, 2000 and
    1999 is presented as follows :

                                     -17-
<PAGE>
                                      Three Months Ended      Six Months Ended
                                            June 30,             June 30,
In Thousands of Dollars                 2000      1999       2000       1999
                                       -----------------------------------------
Operating Revenues:
Regulated Utilities                    $35,585    $35,580   $67,523    $66,697
Contract Operations                      5,296      4,311    10,165      9,085
Engineering/Operations/Construction      2,981      3,733     6,285      5,247
Intersegment Elimination                (2,068)    (2,013)   (4,016)    (3,942)
                                       -----------------------------------------
Consolidated Operating Revenues        $41,794    $41,611   $79,957    $77,087
                                       =========================================

Operating Expenses:
Regulated Utilities                    $25,384    $25,630   $49,458    $48,758
Contract Operations                      4,501      4,047     8,742      8,037
Engineering/Operations/Construction      3,154      3,634     6,885      5,072
Financing & Investment                     649        134       843        480
Intersegment Elimination                (2,068)    (2,013)   (4,016)    (4,114)
                                       -----------------------------------------
Consolidated Operating Expenses        $31,620    $31,432   $61,912    $58,233
                                       =========================================

Interest Expense:
Regulated Utilities                    $ 4,873    $ 4,167   $ 9,604    $ 8,033
Contract Operations                        518        309       945        599
Engineering/Operations/Construction          7          4        52          5
Financing & Investment                     541        322     1,035        647
                                       -----------------------------------------
Consolidated Interest Expense          $ 5,939    $ 4,802   $11,636    $ 9,284
                                       =========================================

Depreciation and
Amortization Expense:
Regulated Utilities                    $ 3,550    $ 3,225   $ 7,100    $ 6,449
Contract Operations                        477        401       954        802
Engineering/Operations/Construction        130         49       260         60
Financing & Investment                      30         36        60         74
                                       -----------------------------------------
Consolidated Depreciation
                                       $ 4,187    $ 3,711   $ 8,374    $ 7,385
and Amortization Expense
                                       =========================================

Net Income (Loss):
Regulated Utilities                    $ 5,407    $ 6,127   $ 8,585    $10,187
Contract Operations                        277        (18)      509        503
Engineering/Operations/Construction       (180)        95      (652)       170
Financing & Investment                  (1,176)      (447)   (1,853)     1,197
                                       -----------------------------------------
Consolidated Net Income                $ 4,328    $ 5,757   $ 6,589    $12,057
                                       =========================================

                                     -18-
<PAGE>
                                       Total Assets           Total Debt
                                    As of      As of       As of      As of
                                   June 30,  December 31, June 30, December 31,
                                     2000       1999       2000        1999
                                  ----------------------------------------------

Regulated Utilities               $ 756,928   $750,690   $ 304,904   $ 299,398
Contract Operations                  70,552     72,921      36,364      44,624
Engineering/Operations/Construction   7,809      7,506       3,328       2,067
Financing & Investment               62,098     51,574      74,921      59,660
Intersegment Elimination            (44,037)   (34,383)    (41,861)    (30,740)
                                  ----------------------------------------------
Consolidated Total                $ 853,350   $848,308   $ 377,656   $ 375,009
                                  ==============================================

11. OTHER MATTERS
    In September 1999, Elizabethtown  withdrew its primary water treatment
    plant, the Raritan-Millstone Water Treatment Plant (Plant), from service
    as a result of flooding from Tropical Storm Floyd (Floyd). For several
    days, Elizabethtown had difficulty maintaining adequate water pressure in
    portions of its distribution system because overall system production
    levels were substantially less than normal. Customers in portions of a few
    municipalities were without water service for approximately 3 days. Costs
    incurred to repair and replace equipment damaged by the flood and to
    respond to inquiries by customers, regulatory bodies and the media have
    been deferred and are expected to be recoverable through insurance. The
    Company has incurred $9.3  million of flood-related expenditures and has
    received advanced reimbursements of $4.0 million from its insurance
    carrier. The remaining $5.3 million of flood-related expenditures is
    reported on the Consolidated Balance Sheet as a deferred charge at June
    30, 2000 (see Note 12 for legal matters related to Floyd).

12. LEGAL MATTERS
    On September 23, 1999, two parties filed separate class action law suits
    for compensatory damages and related fees on behalf of themselves and
    similarly situated residential and commercial customers against
    Elizabethtown Water Company, Edison Water Company and Liberty Water
    Company. The law suit alleges breach of contract, breach of tariff,
    negligence and products liability regarding the quantity and quality of
    water services provided by the Corporation during the period in September
    1999 when Elizabethtown's plant was flooded from Hurricane Floyd and was
    withdrawn from service for approximately three days. Upon notifying its
    insurance carrier of the law suit, the insurance carrier has taken a
    position that there is no coverage for Breach of Contract and has reserved
    its rights under the policy regarding Breach of Tariff.  The insurance
    carrier has neither limited nor denied coverage for negligence and
    products liability. Elizabethtown filed a Motion for Summary Judgment to
    dismiss the law suit as a class action proceeding prior to answering the
    plaintiff's allegations.  In March, 2000, the New Jersey Superior Court
    denied the Motion for Summary Judgment and referred the case to the New
    Jersey Board of Public Utilities (NJBPU) for purposes of investigating the
    matter and reporting its findings to the New Jersey Superior Court.  The
    New Jersey Superior Court, in view of the NJBPU's findings will then
    determine what, if any, damages were suffered by the plaintiffs and what
    liability rests with Elizabethtown.

    The Corporation maintains that the plaintiffs' allegations are without
    merit, believes that the plaintiffs' chances of prevailing are not
    probable, and that those allegations specifically not covered by insurance
    pose immaterial liability.
                                     -19-
<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      E'town Corporation (E'town), a New Jersey holding company, is the parent
      company of Elizabethtown Water Company (Elizabethtown or Company),
      Edison Water Company (Edison), E'town Properties, Inc. (Properties),
      Liberty Water Company (Liberty), Applied Water Management, Inc. (AWM)
      and Applied Wastewater Management, Inc. (AWWM). The Mount Holly Water
      Company (Mount Holly) is a  wholly-owned subsidiary of Elizabethtown.
      The assets and operating results of Elizabethtown constitute the
      predominant portions of E'town's assets and operating results. Mount
      Holly, Liberty, AWM and Edison contributed 3.2%, 5.4%, 7.4% and 1.6%,
      respectively, of the Corporation's consolidated operating revenues for
      1999. Reference to the Corporation and its subsidiaries as a
      consolidated entity is referred to herein as E'town. The regulated
      utilities, Elizabethtown, Mount Holly and AWWM, comprise the Regulated
      Utilities segment, Liberty and Edison comprise the Contract Operations
      segment, AWM is the Engineering/Operations and Construction segment and
      E'town and Properties comprise the Financing and Investment segment (See
      Note 10 to E'town's Notes to Consolidated Financial Statements). The
      following analysis sets forth significant events affecting the financial
      condition of the various segments at June 30, 2000 and the results of
      operations for the three and six month periods ended June 30, 2000 and
      1999.

      PENDING MERGER
      On November 21, 1999, E'town entered into an agreement (Merger
      Agreement) with Thames Water Plc (Thames Water) under which Thames Water
      has agreed, subject to certain conditions, to acquire E'town for $68 per
      share in cash or approximately $607 million. Thames Water will also
      assume the debt of the Corporation. The acquisition will take the form
      of a merger (Merger) of E'town with a newly formed subsidiary of Thames
      Water and E'town will be the surviving company.

      A special meeting of shareholders  was held on May 18, 2000 at which
      time the E'town shareholders approved the transaction. The acquisition
      is  subject to approval by the New Jersey Board of Public Utilities
      (BPU). Certain clearances must also be obtained  from the New Jersey
      environmental regulators. The transaction is expected to close prior to
      the end of 2000.

      On May 19, 2000 the Utility Workers Union of America, the AFL-CIO and
      the Utility Workers Union of America Local 423 (collectively referred to
      as the "unions"), which represent certain employees of Elizabethtown and
      Mount Holly, intervened in the merger petition before the BPU. On June
      7, 2000 the BPU granted the unions intervention status.

      LIQUIDITY AND CAPITAL RESOURCES
      Capital Expenditures Program
      For the six months ended June 30, 2000, capital expenditures were $12.6
      million, principally comprised of other additions and improvements to
      water utility plant and wastewater facilities. In addition, Liberty
      disbursed $19.0 million to the City of Elizabeth in June 2000 for a
      scheduled concession payment. For the three years ending December 31,
      2002, capital and investment requirements for the Corporation are
      estimated to be $171.4 million, consisting of (i) expenditures for the
      Regulated Utilities Segment ($135.1 million for Elizabethtown, $4.7
      million for Mount Holly and $5.2 million for AWWM), (ii) investments in
      the Contract Operations segment for a scheduled concession payment by
      Liberty in June 2000 of $19.0 million and capital improvements for
      Liberty and Edison of $5.4 million, and (iii) investments in the
      Engineering/Operations and Construction segment of $2.0 million. These
      estimates do not include any amounts for possible additional
      acquisitions or privatization activities in the three-year period.

                                     -20-
<PAGE>
      REGULATED UTILITIES SEGMENT
      Elizabethtown
      Elizabethtown's three-year capital program includes $62.0 million for
      routine projects (services, hydrants, system rehabilitation and main
      extensions not funded by developers) and $73.1 million for transmission
      system upgrades, a new operations center, expansion of the Canal Road
      Water Treatment Plant (Canal Road) and other projects. Canal Road will
      be expanded to provide for enhanced system reliability and to
      accommodate customer growth. Canal Road was designed as a 40 million
      gallon per day (MGD) plant, expandable to 200 MGD.

      Mount Holly
      During the next three years, Mount Holly expects to spend $4.7 million,
      of which $3.3 million is for routine projects (services, hydrants and
      main extensions not funded by developers).

      In December 1999, Mount Holly completed a construction project, called
      the Mansfield Project, to comply with New Jersey legislative
      restrictions to obtain alternative water supplies, thereby reducing its
      water pumpage from an aquifer, which had been subject to over-pumping by
      Mount Holly and various local purveyors in a portion of southern New
      Jersey.

      Effective January 1, 2000, Mount Holly received an increase in annual
      rates of $1.88 million. This increase included costs for the Mansfield
      Project. After elimination of a purchased water adjustment clause
      (PWAC), the net rate increase was $.51 million. This increase also
      reflects additional construction and financing costs, as well as higher
      operating costs since base rates were last established in January 1996.

      AWWM
      AWWM expects to incur capital expenditures of $5.2 million in the next
      three years for purchases of wastewater plants from developers.

      CONTRACT OPERATIONS SEGMENT
      LIBERTY
      Under the contract to operate the water system of the city of Elizabeth,
      New Jersey, Liberty made payments to Elizabeth of $19.7 million in 1998,
      $12.0 million in June 1999 and  $19 million in June 2000. Under the
      terms of the contract, Liberty will deposit $57.8 million from revenues
      earned during the 40-year contract, of which $52.3 million is due after
      2012, into a fund administered by Elizabeth (Fund Deposits). Elizabeth
      will use the Fund Deposits  to pay for capital improvements or for other
      water system purposes. Liberty is responsible for $7.45 million of
      construction expenditures, primarily for meter replacements, during the
      life of the contract. Of the total construction expenditures,
      approximately $2.5 million is expected to be expended in the next three
      years.

      EDISON
      Under the contract to operate the water system of the township of
      Edison, New Jersey, Edison  Water Company expects to spend $2.9 million
      during the next three years to upgrade the system.

      ENGINEERING/OPERATIONS/CONSTRUCTION SEGMENT
      AWM
      AWM expects to incur capital expenditures of $2.0 million during the
      next three years,  primarily for vehicles and equipment used in the
      construction and waste hauling operations.

      Capital Resources
      During 1999 the Corporation financed 37.0% of its capital expenditures,
      including capital expenditures for the Regulated Utilities segment and
      investments in the Contract Operations and Engineering/Operations and
      Construction segments, from internally generated funds (after payment of
      common stock dividends). The balance was financed with a combination of
      short-term borrowings under lines of credit, proceeds from capital
      contributions from E'town (funded by issuances of Common Stock under
      E'town's Dividend Reinvestment and Stock Purchase Plan) and proceeds
      from the sale of real estate.

                                     -21-
<PAGE>
      For the three-year period ending December 31, 2002, the Corporation
      estimates that 52% of its currently projected capital expenditures and
      concession fee obligations for all segments are expected to be financed
      with internally generated funds (after payment of common stock
      dividends, at current levels). The balance will be financed with a
      combination of proceeds from the sale of E'town common stock or capital
      contributions from Thames Water after the pending Merger, medium-term
      notes, long-term debt, proceeds of tax-exempt New Jersey Economic
      Development Authority (NJEDA) bonds and short-term borrowings.
      Elizabethtown expects to pursue additional tax-exempt financing to the
      extent that final allocations are granted by the NJEDA.

      In February 2000 E'town issued $30 million of 7.69% Senior Notes due
      2010. The proceeds were used to repay short-term debt incurred to
      finance the acquisition of the contract to operate the water system of
      the city of Elizabeth and capital expenditures for the non-regulated
      subsidiaries.

      In November 1998 Mount Holly closed on loan agreements that will make
      available up to $13.2 million in proceeds from the issuance of unsecured
      notes through the New Jersey Environmental Infrastructure Trust
      Financing Program. This program provides financing through two loans.
      The first loan, in the amount of $7.3 million, is through the New Jersey
      Environmental Infrastructure Trust (Trust), which issued tax-exempt
      bonds with average interest rates of 4.7%. The second loan, in the
      amount of $5.9 million, is from the State of New Jersey, acting through
      the New Jersey Department of Environmental Protection. The State is
      participating in the Safe Drinking Water State Revolving Fund authorized
      by the Safe Drinking Water Act amendments of 1996 whereby the federal
      government is funding the state loan at no interest cost. The effective
      interest rate for the combined notes is approximately 2.6%. The proceeds
      of the loans  will be used to repay short-term debt incurred to finance
      a portion of the Mansfield Project. The Company has requested $9.84
      million from the Trust and expects to receive payment in the third
      quarter of 2000.

      E'town's senior debt is currently rated A3 and A and Elizabethtown's
      senior debt is currently rated A2 and A+ by Moody's Investors Service
      and Standard & Poor's Ratings Group, respectively.

      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
      INTEREST RATE RISK
      The Corporation is subject to the risk of fluctuating interest rates in
      the normal course of business. The Corporation manages interest rates
      through the use of fixed and, to a lesser extent, variable rate debt. A
      hypothetical single percentage point change in interest rates for the
      three months ended June 30, 2000 would result in a $.7 million change in
      interest costs related to short-term and variable rate debt and to
      earnings before tax.

      RESULTS OF OPERATIONS

      Net Income for the three months ended June 30, 2000 was $4.3 million or
      $.49 per basic share compared to $5.8 million or $0.67 per basic share
      for the same period in 1999. This represents a decrease of 24.8%. Net
      income for the six months ended June 30, 2000 was $6.6 million or $.75
      per basic share as compared with $12.1 million or $1.41 per basic share
      for the same period in 1999. This represents a decrease of 45.4%.

      The decrease in net income of $1.4 million for the three month period
      resulted primarily from items that include, on a pretax basis, (i) $.9
      million of costs associated with the pending Merger (ii) increased
      interest cost of $1.1 million to finance the regulated utilities'
      ongoing capital programs (iii) $.3 million of income in the second
      quarter of 1999 from the settlement of litigation and (iv) a $.5 million
      increase in depreciation expense due to additional capital investment in
      the regulated utilities.

                                     -22-
<PAGE>
      The decrease in net income of $5.5 million for the six month period
      resulted primarily from items that include, on a pretax basis, the six
      month effect of the items identified above as follows: (i) $1.1 million
      of costs associated with the pending Merger (ii) increased interest cost
      of $2.4 million to finance the regulated utilities' ongoing capital
      programs (iii) $.3 million of income in the second quarter of 1999 from
      the settlement of litigation and (iv) a 1.0 million increase in
      depreciation expense due to additional capital investment in the
      regulated utilities. In addition, the Corporation sold real estate in
      the first quarter of 1999 and recognized, at that time, a pretax gain of
      $3.2 million.

      Operating Revenues increased $.2 million or .4% for the three months
      ended June 30, 2000 compared to the same period in 1999. Revenues from
      the Contract Operations segment increased $1.0 million from increased
      water consumption and increased rates while revenues from the
      Engineering/Operations and Construction segment decreased $.8 million
      due to delays in the commencement of anticipated contracts to design and
      build wastewater facilities (see Economic Outlook - Engineering/
      Operations and Construction Segment). Revenues for the Regulated
      Utilities segment remained constant as decreases in water consumption
      due to a warmer, drier weather in the summer of 1999, were offset by an
      increase in revenues from Mount Holly's rate increase effective January
      2000 and customer growth.

      Operating revenues for the six month period increased $2.9 million or
      3.7% over the same period in 1999. Revenues from the Contract Operations
      segment increased $1.1 million from increased water consumption and
      increased rates. Revenues from the Engineering/Operations and
      Construction segment increased $1.1 million due to a substantially
      higher level of construction activity in the first quarter of 2000 than
      in the same period in 1999. Revenues for the Regulated Utilities segment
      increased $.8 million due a decrease in water consumption in the second
      quarter which was more than offset by an increase in revenues from Mount
      Holly's rate increase effective January 2000 and customer growth.

      Operation Expenses increased less than $.1 million for the three months
      ended June 30, 2000 as compared to the same period in 1999. Costs
      associated with the pending Merger accounted for a $.9 million increase.
      Operation expenses decreased $.5 million from the Engineering/Operations
      and Construction segment. The Regulated Utilities segment accounted for
      a decrease of $.4 million. The Contract Operations segment accounted for
      an increase of $.1 million.

      Operation expenses for the six month period increased $3.4 million or
      10.6% over the same period in 1999. Costs associated with the pending
      Merger accounted for $1.1 million of the increase. Operation expenses
      further increased $1.8 million from the Engineering/Operations and
      Construction segment, primarily reflecting additional personnel costs as
      well as other operating costs, largely incurred in the first quarter of
      2000, to support recently acquired businesses (see Operating Revenues
      above) and future customer growth opportunities (see Economic Outlook -
      Engineering/ Operations and Construction Segment). The Regulated
      Utilities segment accounted for an increase of $.2 million primarily
      from costs associated with harsh winter weather in 2000. The Contract
      Operations segment accounted for $.3 million of the increase,
      principally due to purchased water costs.

      Maintenance Expenses decreased $.6 million or 28.1% for the three month
      period ended June 30, 2000 as compared to the comparable period in 1999.
      The Engineering/Operations and Construction segment accounted for a
      decrease of $.7 million. The Regulated Utilities segment and Contract
      Operations segments combined accounted for an increase of $.1 million.

      Maintenance expenses for the six month period decreased $.4 million or
      9.1% from the same period in 1999. The Engineering/Operations and
      Construction segment accounted for a decrease of $.7 million. The
      Regulated Utilities segment accounted for an increase of $.3 million
      primarily from costs associated with harsh winter weather in 2000.
      Maintenance costs for the Contract Operations segment remained flat for
      the six month period.
                                     -23-
<PAGE>
      Depreciation and Amortization Expense increased $.5 million or 12.8% for
      the three month period in 2000 as compared with the second quarter of
      1999. Of the increase, $.3 million is due to depreciation on additions
      to utility plant in the Regulated Utilities segment, $.1 million is due
      to depreciation on nonutility plant in the Contract Operations segment
      and $.1 million is due to amortization of goodwill from acquisition of a
      septic services business in 1999 in the Engineering/Operations and
      Construction segment.

      Depreciation and amortization expense for the six month period increased
      $1.0 million or 13.4% over the same period in 1999. Of the increase, $.7
      million is due to depreciation on additions to utility plant in the
      Regulated Utilities segment, $.1 million is due to depreciation on
      nonutility plant in the Contract Operations segment and $.2 million is
      due to amortization of goodwill from acquisition of a septic services
      business in 1999 in the Engineering/Operations and Construction segment.


      Revenue Taxes decreased $.1 million and increased $.1 million for the
      three and six month periods, respectively due to changes discussed above
      in the revenues of the Regulated Utilities segment.

      Real Estate, Payroll and Other Taxes Expenses increased $.2 million or
      26.8% and $.3 million or 18.5% for the three months and six months ended
      June 30, 2000, respectively due to increased payroll taxes on higher
      labor costs as well as for payroll taxes on distributions made in the
      second quarter under incentive compensation programs.

      Federal Income Taxes as a component of operating expenses decreased $.6
      million or 20.4% and $1.6 million or 32.2% for the three and six month
      periods ended June 30, 2000 compared to 1999 due to changes in taxable
      operating income for each segment discussed herein.

      Other Income (Expense) decreased $.3 million or 49.2% for the three
      months ended June 30, 2000 as compared with the same period in 1999 due
      to the a payment received in the second quarter of 1999 for the
      settlement of litigation.

      Other income (expense) decreased $2.3 million or 79.7% for the six
      months ended June 30, 2000 as compared with the same period in 1999 due
      to the a payment of $.3 million received in the second quarter of 1999
      for the settlement of litigation as well as for the recognition in the
      first quarter of 1999 of a gain of $3.2 million ($2.1 million after
      taxes) on the sale of a parcel of land in the Financing and Investment
      segment.

      Total Interest Charges increased $1.1 million or 23.7% for the three
      months ended June 30, 2000 over the same period in 1999. The increase is
      comprised of (i) $.7 million in the Regulated Utilities segment for
      interest expense incurred on a higher level of short-term bank notes
      used to fund Elizabethtown's and Mount Holly's capital expenditures and
      a higher interest rate on Elizabethtown's long-term variable rate debt
      (ii) $.2 million in the Financing and Investment segment for interest
      costs to finance equity contributions by E'town to Liberty for
      concession payments made by Liberty to the City of Elizabeth in June
      2000 and (iii) $.2 million in the Contract Operations segment to finance
      Liberty's concession payment made in June 2000 to the city of Elizabeth.

      Total interest charges increased $2.4 million or 25.3% for the six
      months ended June 30, 2000 over the same period in 1999. The increase is
      comprised of (i) $1.6 million in the Regulated Utilities segment for
      interest expense incurred on a higher level of short-term bank notes
      used to fund Elizabethtown's and Mount Holly's capital expenditures and
      a higher interest rate on Elizabethtown's long-term variable rate debt
      (ii) $.4 million in the Financing and Investment segment for interest
      costs to finance equity contributions by E'town to Liberty for
      concession payments made by Liberty to the City of Elizabeth in June
      2000 and (iii) $.3 million in the Contract Operations segment to finance
      Liberty's concession payments made in June 2000 and 1999 to the city of
      Elizabeth.
                                     -24-
<PAGE>
      ECONOMIC OUTLOOK
      Forward Looking Information
      Information in this report includes certain forward looking statements
      within the meaning of the Federal securities laws regarding future
      earnings, capital expenditures and anticipated actions of regulators,
      among other things. Any forward looking statements are based upon
      information currently available and are subject to future events, risks
      and uncertainties that could cause actual results to differ materially
      from those expressed in the statements. Such events, risks and
      uncertainties include, without limitation, actions of regulators, the
      effects of weather, changes in historical patterns of water consumption
      and demand, including changes through increased use of water-conserving
      devices, conditions in capital and real estate markets, increases in
      operating expenses due to factors beyond the Corporation's control, the
      closing of the pending Merger with Thames Water, changes in
      environmental regulation and associated costs of compliance and
      additional investments or acquisitions which may be made by the
      Corporation.

      E'town Corporation and Subsidiaries
      Earnings are expected to be lower in 2000 than in 1999 for the following
      reasons:

 .     Regulated Utilities Segment - Water consumption is assumed to return to
      normal levels for 2000 following a warm, dry summer in 1999. In
      addition, Elizabethtown has agreed to delay the filing of a base rate
      case, originally planned for early 2000 until at least August 2000 as a
      condition of the Merger Agreement. A rate case is expected to be filed
      early in 2001. As a result, recovery of increases in operating costs and
      costs associated with additional utility plant investments since rates
      were last increased in 1996 will be delayed.

 .     Engineering/Operations and Construction Segment - Revenue gains were
      more modest than expected for the six months ended June 30, 2000. Also,
      increased costs, primarily related to additional personnel incurred to
      support growth of this segment, further contributed to a loss for the
      six months ended June 30, 2000. A loss is also currently expected for
      the year 2000. Management continues to review its plans and financial
      projections for the remainder of the year to achieve improved financial
      results as the company grows.

 .     Financing and Investment Segment - Properties' $2.1 million contribution
      to net income during the first quarter of 1999 was due to a land sale
      that will not recur in 2000. Gains are expected on land sales for
      Properties remaining two parcels. The sales are not expected to close
      before 2001. In addition, E'town continues to incur expenses associated
      with the pending Merger. Such costs totaled $.9 million for the six
      months ended June 30, 2000.

      During the next several years, management will further seek to increase
      earnings by (i) maximizing earned returns on the Regulated Utilities
      segment through expansion efforts to increase sales, cost control
      measures and obtaining timely and adequate rate relief and (ii)
      investing in water and wastewater assets (including municipal
      privatization contracts, as well as designing, constructing, operating
      and purchasing wastewater assets through AWM and AWWM, discussed below).

      Regulated Utilities Segment
      Elizabethtown, Mount Holly and AWWM
      Elizabethtown expects lower net income in 2000 because (i) water
      consumption for 2000 is assumed to return to normal levels following a
      warm, dry summer in 1999 and (ii) higher costs associated with
      operations and capital investments incurred since rates were last
      established in 1996 which are not presently recovered in rates. Both
      factors will be partially offset by continued growth in Elizabethtown's
      customer base. Furthermore, a rate case originally planned to be filed
      early in 2000, but delayed to at least August 2000 due to the Merger
      Agreement, is planned to be filed early in 2001.

                                     -25-
<PAGE>
      Management has assumed lower earnings in 2000 than in 1999 based on a
      return to normal usage patterns (based on a 5-year average). Water sales
      during 1999 exceeded normal levels (based on 5-year average per customer
      consumption) by an estimated $2.7 million due to a drought during July
      and taking into effect state-imposed restrictions on water use during
      August.

      Elizabethtown, which received its last rate increase in 1996, expects
      lower net income in 2000 and 2001 pending the completion of the rate case
      planned for early in 2001. Elizabethtown expects its earned returns on
      common equity to increase from 8.9% (for the twelve months ended June
      30, 2000) to levels comparable to authorized rates of return. As part
      of that rate case, Elizabethtown will request rate recognition for
      approximately $109 million in additional investments in utility plant
      since rates were last adjusted in 1996, as well as for increases in
      expenses since that time. In addition, Elizabethtown will request rate
      recognition for capital expenditures and increases in operating
      expenses incurred through the completion of the rate case.

      Mount Holly had a negative rate of return on common equity of 2.6% in
      1999, compared to an authorized rate of return of 11.25%, established in
      its 1996 base rate case. Mount Holly earned significantly below its
      authorized return in 1999 and 1998 because the Company was precluded
      from filing for needed rate relief due to recently settled litigation
      with another purveyor. Management expects Mount Holly to contribute to
      the Corporation's earnings per share in 2000 as a result of a
      Stipulation Agreement approved by the BPU whereby a rate increase of
      $1.9 million, or a net increase of $.5 million after elimination of the
      PWAC, was effective January 1, 2000.

      AWWM expects to become profitable after it expands its customer base in
      the next several years.

      Contract Operations Segment
      Liberty
      Liberty is expected to realize a return on its capital in an amount
      similar to that currently earned by the Corporation's regulated
      operations.

      Edison
      Edison is expected to realize a return on its capital in an amount
      similar to that currently earned by the Corporation's regulated
      operations. Contributions to earnings will be small through 2002 and
      then will increase as rate increases specified in the contract take
      effect.

      E'town continues to pursue opportunities to operate municipal water and
      wastewater systems under long-term contracts, primarily in New Jersey.
      E'town will focus on opportunities where it may have an advantage due to
      location or experience in operation.

      Engineering/Operations and Construction Segment
      AWM
      AWM, acquired by E'town in June 1998, provides engineering, construction
      and operations services for stand-alone water and wastewater treatment
      facilities for industrial, commercial and residential customers, as well
      as developers of such properties.

      Despite increases in revenues for the six months ended June 30, 2000
      versus the comparable period in 1999, reduced revenues in the second
      quarter, compared to the same period in 1999, and higher costs to
      finance growth contributed to a loss for the second quarter. Such costs
      are due to additional personnel to support higher business volumes as
      well as startup, and subsequent expansion, of an office in New England.
      In addition, two construction projects anticipated for the first quarter
      were delayed due to permitting issues. These projects have now
      commenced. Customer demand remains strong with several projects in the
      proposal and/or contract negotiation stage. Management is reviewing its
      plans and financial projections for the remainder of the year to achieve
      improved financial results as the company grows.

                                     -26-
<PAGE>
      Financing and Investment Segment
      E'town and Properties
      In 1997, E'town decided to sell its unregulated real estate assets
      (Properties) and reinvest the proceeds in water and wastewater projects.
      Several properties were sold during 1997 and 1998 and one property was
      sold in January, 1999 for an after-tax gain of $2.1 million.

      At this time, the two remaining properties are under contract to be sold
      for amounts in excess of current carrying costs. The sale of these
      parcels is contingent upon various municipal approvals and closings are
      expected to occur in stages from 2001 through 2004. After-tax sale
      proceeds are expected to be used to fund investments in water and
      wastewater projects.

      New Accounting Pronouncements
      See Note 3 of the Corporation's Notes to Consolidated Financial
      Statements for a discussion of new accounting standards.

      Year 2000
      The Corporation has not experienced any operational difficulties with
      respect to the year 2000 nor has it incurred any additional costs with
      respect to this issue.

      PART II - OTHER INFORMATION

      Item 1 Legal Proceedings
      On September 23, 1999, two parties filed separate class action law suits
      for compensatory damages and related fees on behalf of themselves and
      similarly situated residential and commercial customers against
      Elizabethtown Water Company, Edison Water Company and Liberty Water
      Company.

      The law suit alleges breach of contract, breach of tariff, negligence
      and products liability regarding the quantity and quality of water
      services provided by the Corporation during the period in September 1999
      when Elizabethtown's plant was flooded from Hurricane Floyd and was
      withdrawn from service for approximately three days.

      Upon notifying its insurance carrier of the law suit, the insurance
      carrier has taken a position that there is no coverage for Breach of
      Contract and has reserved its rights under the policy regarding Breach
      of Tariff.  The insurance carrier has neither limited nor denied
      coverage for negligence and products liability.

      Elizabethtown filed a Motion for Summary Judgment to dismiss the law
      suit as a class action proceeding prior to answering the plaintiff's
      allegations.  In March, 2000, the New Jersey Superior Court denied the
      Motion for Summary Judgment and referred the case to the New Jersey
      Board of Public Utilities (NJBPU) for purposes of investigating the
      matter and reporting its findings to the New Jersey Superior Court.  The
      New Jersey Superior Court, in view of the NJBPU's findings will then
      determine what, if any, damages were suffered by the plaintiffs and what
      liability rests with Elizabethtown.

      The Corporation maintains that the plaintiffs' allegations are without
      merit, believes that the plaintiffs' chances of prevailing are not
      probable, and that those allegations specifically not covered by
      insurance pose immaterial liability.

                                     -27-
<PAGE>
      Items 2 - 5:

           Nothing to Report.

      Item 6(a) - Exhibits

      Exhibits to Part I:



           Exhibit 12     -    E'town Corporation and Subsidiaries -
                               Computation of Ratio of Earnings to Fixed Charges

           Exhibit 12(a)  -    Elizabethtown Water Company - Computation of
                               Ratio of Earnings to Fixed Charges

           Exhibit 12(b)  -    Elizabethtown Water Company - Computation of
                               Ratio of Earnings to Fixed Charges and Preferred
                               Dividends

           Exhibit 27     -    E'town Corporation and Subsidiaries and
                               Elizabethtown Water Company and Subsidiary -
                               Financial Data Schedules

      Item 6(b)            -   Reports on Form 8-K

                     None








                                     -28-
<PAGE>
                              E'TOWN CORPORATION
                          ELIZABETHTOWN WATER COMPANY


                                  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 thereunto duly authorized.


Date : August 15, 2000



                               E'TOWN CORPORATION
                               ELIZABETHTOWN WATER COMPANY




                               /s/ Gail P. Brady
                               ____________________________________
                               Gail P. Brady
                               Treasurer



                               /s/ Dennis W. Doll
                               _____________________________________
                               Dennis W. Doll
                               Controller






                                     -29-