Connecticut
(State or other jurisdiction of
incorporation or organization)
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06-0739839
(I.R.S. Employer Identification No.)
|
|
|
|
93 West Main Street, Clinton, CT
(Address of principal executive offices)
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06413
(Zip Code)
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Large accelerated filer
o
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|
Accelerated filer
x
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
|
Smaller reporting company
o
|
ASSETS
|
|
June 30, 2014
|
|
December 31, 2013
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||||
Utility Plant
|
|
$
|
653,429
|
|
|
$
|
639,704
|
|
Construction Work in Progress
|
|
16,014
|
|
|
12,066
|
|
||
|
|
669,443
|
|
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651,770
|
|
||
Accumulated Provision for Depreciation
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|
(185,605
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)
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|
(179,894
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)
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||
Net Utility Plant
|
|
483,838
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|
|
471,876
|
|
||
Other Property and Investments
|
|
7,752
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7,388
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||
Cash and Cash Equivalents
|
|
10,593
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|
|
18,371
|
|
||
Accounts Receivable (Less Allowance, 2014 - $1,147; 2013 - $1,127)
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|
12,132
|
|
|
12,340
|
|
||
Accrued Unbilled Revenues
|
|
8,595
|
|
|
7,624
|
|
||
Materials and Supplies, at Average Cost
|
|
1,645
|
|
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1,633
|
|
||
Prepayments and Other Current Assets
|
|
9,262
|
|
|
6,928
|
|
||
Total Current Assets
|
|
42,227
|
|
|
46,896
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|
||
Restricted Cash
|
|
4,384
|
|
|
5,777
|
|
||
Unamortized Debt Issuance Expense
|
|
6,566
|
|
|
6,841
|
|
||
Unrecovered Income Taxes - Regulatory Asset
|
|
50,309
|
|
|
47,135
|
|
||
Pension Benefits - Regulatory Asset
|
|
2,585
|
|
|
3,085
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|
||
Post-Retirement Benefits Other Than Pension - Regulatory Asset
|
|
1,433
|
|
|
1,288
|
|
||
Goodwill
|
|
31,685
|
|
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31,685
|
|
||
Deferred Charges and Other Costs
|
|
9,736
|
|
|
8,840
|
|
||
Total Regulatory and Other Long-Term Assets
|
|
106,698
|
|
|
104,651
|
|
||
Total Assets
|
|
$
|
640,515
|
|
|
$
|
630,811
|
|
CAPITALIZATION AND LIABILITIES
|
|
|
|
|
|
|
||
Common Stockholders' Equity:
|
|
|
|
|
|
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||
Common Stock Without Par Value: Authorized - 25,000,000 Shares
|
|
|
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|
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||
Issued and Outstanding: 2014 - 11,097,506; 2013 - 11,038,232
|
|
$
|
139,826
|
|
|
$
|
138,591
|
|
Retained Earnings
|
|
64,259
|
|
|
59,277
|
|
||
Accumulated Other Comprehensive Income (Loss)
|
|
45
|
|
|
(115
|
)
|
||
Common Stockholders' Equity
|
|
204,130
|
|
|
197,753
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|
||
Preferred Stock
|
|
772
|
|
|
772
|
|
||
Long-Term Debt
|
|
173,916
|
|
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175,042
|
|
||
Total Capitalization
|
|
378,818
|
|
|
373,567
|
|
||
Current Portion of Long-Term Debt
|
|
4,234
|
|
|
4,121
|
|
||
Accounts Payable and Accrued Expenses
|
|
9,249
|
|
|
10,846
|
|
||
Accrued Interest
|
|
741
|
|
|
753
|
|
||
Current Portion of Refund to Customers - Regulatory Liability
|
|
6,275
|
|
|
4,650
|
|
||
Other Current Liabilities
|
|
2,364
|
|
|
2,359
|
|
||
Total Current Liabilities
|
|
22,863
|
|
|
22,729
|
|
||
Advances for Construction
|
|
28,018
|
|
|
28,718
|
|
||
Deferred Federal and State Income Taxes
|
|
49,941
|
|
|
47,470
|
|
||
Unfunded Future Income Taxes
|
|
49,897
|
|
|
46,723
|
|
||
Long-Term Compensation Arrangements
|
|
22,059
|
|
|
20,651
|
|
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Unamortized Investment Tax Credits
|
|
1,376
|
|
|
1,414
|
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Refund to Customers - Regulatory Liability
|
|
4,650
|
|
|
7,749
|
|
||
Other Long-Term Liabilities
|
|
1,013
|
|
|
1,018
|
|
||
Total Long-Term Liabilities
|
|
156,954
|
|
|
153,743
|
|
||
Contributions in Aid of Construction
|
|
81,880
|
|
|
80,772
|
|
||
Commitments and Contingencies
|
|
—
|
|
|
—
|
|
||
Total Capitalization and Liabilities
|
|
$
|
640,515
|
|
|
$
|
630,811
|
|
|
2014
|
|
2013
|
||||
Operating Revenues
|
$
|
25,459
|
|
|
$
|
22,545
|
|
Operating Expenses
|
|
|
|
||||
Operation and Maintenance
|
10,503
|
|
|
10,357
|
|
||
Depreciation
|
2,838
|
|
|
2,600
|
|
||
Income Taxes
|
1,840
|
|
|
2,519
|
|
||
Taxes Other Than Income Taxes
|
2,001
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|
|
1,810
|
|
||
Total Operating Expenses
|
17,182
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|
|
17,286
|
|
||
Net Operating Revenues
|
8,277
|
|
|
5,259
|
|
||
Other Utility Income, Net of Taxes
|
202
|
|
|
179
|
|
||
Total Utility Operating Income
|
8,479
|
|
|
5,438
|
|
||
Other Income (Deductions), Net of Taxes
|
|
|
|
||||
Non-Water Sales Earnings
|
398
|
|
|
376
|
|
||
Allowance for Funds Used During Construction
|
169
|
|
|
76
|
|
||
Other
|
51
|
|
|
(111
|
)
|
||
Total Other Income, Net of Taxes
|
618
|
|
|
341
|
|
||
Interest and Debt Expense
|
|
|
|
||||
Interest on Long-Term Debt
|
1,768
|
|
|
1,791
|
|
||
Other Interest (Income) Charges, Net
|
(164
|
)
|
|
(157
|
)
|
||
Amortization of Debt Expense and Premium, Net
|
3
|
|
|
(165
|
)
|
||
Total Interest and Debt Expense
|
1,607
|
|
|
1,469
|
|
||
Net Income
|
7,490
|
|
|
4,310
|
|
||
Preferred Stock Dividend Requirement
|
10
|
|
|
10
|
|
||
Net Income Applicable to Common Stock
|
$
|
7,480
|
|
|
$
|
4,300
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
||||
Basic
|
10,887
|
|
|
10,819
|
|
||
Diluted
|
11,085
|
|
|
10,989
|
|
||
Earnings Per Common Share:
|
|
|
|
||||
Basic
|
$
|
0.69
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.67
|
|
|
$
|
0.39
|
|
Dividends Per Common Share
|
$
|
0.2475
|
|
|
$
|
0.2425
|
|
|
2014
|
|
2013
|
||||
Operating Revenues
|
$
|
45,719
|
|
|
$
|
42,274
|
|
Operating Expenses
|
|
|
|
|
|
||
Operation and Maintenance
|
21,170
|
|
|
20,735
|
|
||
Depreciation
|
5,646
|
|
|
5,304
|
|
||
Income Taxes
|
2,334
|
|
|
3,647
|
|
||
Taxes Other Than Income Taxes
|
4,388
|
|
|
3,970
|
|
||
Total Operating Expenses
|
33,538
|
|
|
33,656
|
|
||
Net Operating Revenues
|
12,181
|
|
|
8,618
|
|
||
Other Utility Income, Net of Taxes
|
387
|
|
|
385
|
|
||
Total Utility Operating Income
|
12,568
|
|
|
9,003
|
|
||
Other Income (Deductions), Net of Taxes
|
|
|
|
||||
Non-Water Sales Earnings
|
831
|
|
|
762
|
|
||
Allowance for Funds Used During Construction
|
267
|
|
|
130
|
|
||
Other
|
69
|
|
|
(172
|
)
|
||
Total Other Income, Net of Taxes
|
1,167
|
|
|
720
|
|
||
Interest and Debt Expense
|
|
|
|
||||
Interest on Long-Term Debt
|
3,519
|
|
|
3,578
|
|
||
Other Interest (Income) Charges, Net
|
(322
|
)
|
|
(700
|
)
|
||
Amortization of Debt Expense and Premium, Net
|
62
|
|
|
(78
|
)
|
||
Total Interest and Debt Expense
|
3,259
|
|
|
2,800
|
|
||
Net Income
|
10,476
|
|
|
6,923
|
|
||
Preferred Stock Dividend Requirement
|
19
|
|
|
19
|
|
||
Net Income Applicable to Common Stock
|
$
|
10,457
|
|
|
$
|
6,904
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
||||
Basic
|
10,878
|
|
|
10,811
|
|
||
Diluted
|
11,073
|
|
|
10,977
|
|
||
Earnings Per Common Share:
|
|
|
|
||||
Basic
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.94
|
|
|
$
|
0.63
|
|
Dividends Per Common Share
|
$
|
0.4950
|
|
|
$
|
0.4850
|
|
|
2014
|
|
2013
|
||||
Net Income
|
$
|
7,490
|
|
|
$
|
4,310
|
|
Other Comprehensive Income/(Loss), net of tax
|
|
|
|
|
|
||
Qualified Cash Flow Hedging Instrument Income, net of tax benefit of $0 and $0 in 2014 and 2013
|
—
|
|
|
1
|
|
||
Reclassification to Pension and Post-Retirement Benefits Other than Pension, net of tax (expense) of $(13) in 2014 and $(61) in 2013
|
61
|
|
|
92
|
|
||
Unrealized gain on investments, net of tax (expense) of $(26) in 2014 and $(3) in 2013
|
41
|
|
|
5
|
|
||
Other Comprehensive Income, net of tax
|
102
|
|
|
98
|
|
||
Comprehensive Income
|
$
|
7,592
|
|
|
$
|
4,408
|
|
|
2014
|
|
2013
|
||||
Net Income
|
$
|
10,476
|
|
|
$
|
6,923
|
|
Other Comprehensive Income/(Loss), net of tax
|
|
|
|
|
|
||
Qualified Cash Flow Hedging Instrument Income, net of tax benefit of $0 and $0 in 2014 and 2013
|
—
|
|
|
1
|
|
||
Reclassification to Pension and Post-Retirement Benefits Other than Pension, net of tax (expense) of $(26) in 2014 and $(45) in 2013
|
122
|
|
|
67
|
|
||
Unrealized gain on investments, net of tax (expense) of $(24) in 2014 and $(35) in 2013
|
38
|
|
|
53
|
|
||
Other Comprehensive Income, net of tax
|
160
|
|
|
121
|
|
||
Comprehensive Income
|
$
|
10,636
|
|
|
$
|
7,044
|
|
|
2014
|
|
2013
|
||||
Balance at Beginning of Period
|
$
|
59,519
|
|
|
$
|
51,756
|
|
Net Income
|
7,490
|
|
|
4,310
|
|
||
|
67,009
|
|
|
56,066
|
|
||
Dividends Declared:
|
|
|
|
|
|
||
Cumulative Preferred, Class A, $0.20 per share
|
3
|
|
|
3
|
|
||
Cumulative Preferred, Series $0.90, $0.225 per share
|
7
|
|
|
7
|
|
||
Common Stock - 2014 $0.2475 per share; 2013 $0.2425 per share
|
2,740
|
|
|
2,661
|
|
||
|
2,750
|
|
|
2,671
|
|
||
Balance at End of Period
|
$
|
64,259
|
|
|
$
|
53,395
|
|
|
2014
|
|
2013
|
||||
Balance at Beginning of Period
|
$
|
59,277
|
|
|
$
|
51,804
|
|
Net Income
|
10,476
|
|
|
6,923
|
|
||
|
69,753
|
|
|
58,727
|
|
||
Dividends Declared:
|
|
|
|
|
|
||
Cumulative Preferred, Class A, $0.40 per share
|
6
|
|
|
6
|
|
||
Cumulative Preferred, Series $0.90, $0.45 per share
|
13
|
|
|
13
|
|
||
Common Stock - 2014 $0.495 per share; 2013 $0.485 per share
|
5,475
|
|
|
5,313
|
|
||
|
5,494
|
|
|
5,332
|
|
||
Balance at End of Period
|
$
|
64,259
|
|
|
$
|
53,395
|
|
|
2014
|
|
2013
|
||||
Operating Activities:
|
|
|
|
||||
Net Income
|
$
|
10,476
|
|
|
$
|
6,923
|
|
Adjustments to Reconcile Net Income to Net Cash Provided by
|
|
|
|
|
|
||
Operating Activities:
|
|
|
|
|
|
||
Deferred Revenues
|
(2,673
|
)
|
|
119
|
|
||
Provision for Deferred Income Taxes and Investment Tax Credits, Net
|
2,433
|
|
|
3,485
|
|
||
Allowance for Funds Used During Construction
|
(267
|
)
|
|
(130
|
)
|
||
Depreciation and Amortization (including $500 and $265 in 2014 and 2013 charged to other accounts)
|
6,146
|
|
|
5,569
|
|
||
Change in Assets and Liabilities:
|
|
|
|
|
|
||
Decrease in Accounts Receivable and Accrued Unbilled Revenues
|
(763
|
)
|
|
(1,652
|
)
|
||
Increase in Prepaid Income Taxes and Prepayments and Other Current Assets
|
(2,346
|
)
|
|
(673
|
)
|
||
Decrease in Other Non-Current Items
|
554
|
|
|
1,416
|
|
||
Decrease in Accounts Payable, Accrued Expenses and Other Current Liabilities
|
(10
|
)
|
|
(1,715
|
)
|
||
Total Adjustments
|
3,074
|
|
|
6,419
|
|
||
Net Cash and Cash Equivalents Provided by Operating Activities
|
13,550
|
|
|
13,342
|
|
||
Investing Activities:
|
|
|
|
|
|
||
Net Additions to Utility Plant Used in Continuing Operations
|
(17,458
|
)
|
|
(13,673
|
)
|
||
Release of Restricted Cash
|
1,395
|
|
|
1,295
|
|
||
Net Cash and Cash Equivalents Used in Investing Activities
|
(16,063
|
)
|
|
(12,378
|
)
|
||
Financing Activities:
|
|
|
|
|
|
||
Proceeds from Interim Bank Loans
|
—
|
|
|
134
|
|
||
Repayment of Interim Bank Loans
|
—
|
|
|
(1,660
|
)
|
||
Proceeds from the Issuance of Long-Term Debt
|
—
|
|
|
14,550
|
|
||
Costs to Issue Long-Term Debt and Common Stock
|
—
|
|
|
(31
|
)
|
||
Proceeds from Issuance of Common Stock
|
886
|
|
|
797
|
|
||
Repayment of Long-Term Debt Including Current Portion
|
(793
|
)
|
|
(15,269
|
)
|
||
Advances from Others for Construction
|
136
|
|
|
245
|
|
||
Cash Dividends Paid
|
(5,494
|
)
|
|
(5,332
|
)
|
||
Net Cash and Cash Equivalents Used in Financing Activities
|
(5,265
|
)
|
|
(6,566
|
)
|
||
Net Decrease in Cash and Cash Equivalents
|
(7,778
|
)
|
|
(5,602
|
)
|
||
Cash and Cash Equivalents at Beginning of Period
|
18,371
|
|
|
13,150
|
|
||
Cash and Cash Equivalents at End of Period
|
$
|
10,593
|
|
|
$
|
7,548
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
||
Non-Cash Contributed Utility Plant
|
$
|
412
|
|
|
$
|
346
|
|
Short-term Investment of Bond Proceeds Held in Restricted Cash
|
$
|
4,384
|
|
|
$
|
9,937
|
|
Supplemental Disclosures of Cash Flow Information:
|
|
|
|
|
|
||
Cash Paid for:
|
|
|
|
|
|
||
Interest
|
$
|
3,313
|
|
|
$
|
3,118
|
|
State and Federal Income Taxes
|
$
|
1,135
|
|
|
$
|
1,500
|
|
1.
|
Basis of Preparation of Financials
|
2.
|
Pension and Other Post-Retirement Benefits
|
|
Three Months
|
|
Six Months
|
||||||||||||
Period ended June 30,
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Service Cost
|
$
|
488
|
|
|
$
|
513
|
|
|
$
|
976
|
|
|
$
|
1,100
|
|
Interest Cost
|
763
|
|
|
651
|
|
|
1,526
|
|
|
1,306
|
|
||||
Expected Return on Plan Assets
|
(889
|
)
|
|
(727
|
)
|
|
(1,778
|
)
|
|
(1,473
|
)
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
||||||
Prior Service Cost
|
18
|
|
|
19
|
|
|
36
|
|
|
37
|
|
||||
Net Recognized Loss
|
273
|
|
|
540
|
|
|
546
|
|
|
1,031
|
|
||||
Net Periodic Benefit Cost
|
$
|
653
|
|
|
$
|
996
|
|
|
$
|
1,306
|
|
|
$
|
2,001
|
|
|
Three Months
|
|
Six Months
|
||||||||||||
Period ended June 30,
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Service Cost
|
$
|
154
|
|
|
$
|
176
|
|
|
$
|
308
|
|
|
$
|
337
|
|
Interest Cost
|
160
|
|
|
129
|
|
|
320
|
|
|
254
|
|
||||
Expected Return on Plan Assets
|
(77
|
)
|
|
(70
|
)
|
|
(154
|
)
|
|
(145
|
)
|
||||
Other
|
56
|
|
|
56
|
|
|
112
|
|
|
112
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
|
|
||||||
Prior Service Credit
|
(201
|
)
|
|
(202
|
)
|
|
(402
|
)
|
|
(403
|
)
|
||||
Recognized Net Loss
|
68
|
|
|
118
|
|
|
136
|
|
|
215
|
|
||||
Net Periodic Benefit Cost
|
$
|
160
|
|
|
$
|
207
|
|
|
$
|
320
|
|
|
$
|
370
|
|
3.
|
Earnings per Share
|
Three months ended June 30,
|
2014
|
|
2013
|
||||
Common Shares Outstanding End of Period:
|
11,097,506
|
|
|
11,001,715
|
|
||
Weighted Average Shares Outstanding (Days Outstanding Basis):
|
|
|
|
|
|
||
Basic
|
10,886,883
|
|
|
10,818,883
|
|
||
Diluted
|
11,085,061
|
|
|
10,988,813
|
|
||
|
|
|
|
||||
Basic Earnings per Share
|
$
|
0.69
|
|
|
$
|
0.40
|
|
Dilutive Effect of Stock Awards
|
(0.02
|
)
|
|
(0.01
|
)
|
||
Diluted Earnings per Share
|
$
|
0.67
|
|
|
$
|
0.39
|
|
|
|
|
|
||||
Six Months ended June 30,
|
|
|
|
||||
Weighted Average Shares Outstanding (Days Outstanding Basis):
|
|
|
|
||||
Basic
|
10,877,883
|
|
|
10,811,100
|
|
||
Diluted
|
11,073,258
|
|
|
10,976,812
|
|
||
|
|
|
|
||||
Basic Earnings per Share
|
$
|
0.96
|
|
|
$
|
0.64
|
|
Dilutive Effect of Stock Awards
|
(0.02
|
)
|
|
(0.01
|
)
|
||
Diluted Earnings per Share
|
$
|
0.94
|
|
|
$
|
0.63
|
|
4.
|
New Accounting Pronouncements
|
5.
|
Accumulated Other Comprehensive Income
|
Six Months Ended June 30, 2014
|
|
Interest Rate Swap
|
|
Unrealized Gains on Investments
|
|
Defined Benefit Items
|
|
Total
|
||||||||
Beginning Balance (a)
|
|
$
|
—
|
|
|
$
|
259
|
|
|
$
|
(374
|
)
|
|
$
|
(115
|
)
|
Other Comprehensive Income Before Reclassification
|
|
—
|
|
|
27
|
|
|
—
|
|
|
27
|
|
||||
Amounts Reclassified from AOCI
|
|
—
|
|
|
11
|
|
|
122
|
|
|
133
|
|
||||
Net current-period Other Comprehensive Income
|
|
—
|
|
|
38
|
|
|
122
|
|
|
160
|
|
||||
Ending Balance
|
|
$
|
—
|
|
|
$
|
297
|
|
|
$
|
(252
|
)
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30, 2013
|
|
Interest Rate Swap
|
|
Unrealized Gains on Investments
|
|
Defined Benefit Items
|
|
Total
|
||||||||
Beginning Balance (a)
|
|
$
|
(41
|
)
|
|
$
|
69
|
|
|
$
|
(1,356
|
)
|
|
$
|
(1,328
|
)
|
Other Comprehensive Income Before Reclassification
|
|
—
|
|
|
41
|
|
|
—
|
|
|
41
|
|
||||
Amounts Reclassified from AOCI
|
|
1
|
|
|
12
|
|
|
67
|
|
|
80
|
|
||||
Net current-period Other Comprehensive Income
|
|
1
|
|
|
53
|
|
|
67
|
|
|
121
|
|
||||
Ending Balance
|
|
$
|
(40
|
)
|
|
$
|
122
|
|
|
$
|
(1,289
|
)
|
|
$
|
(1,207
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
(a) All amounts shown are net of tax. Amounts in parentheses indicate loss.
|
Details about Other AOCI Components
|
|
Amounts Reclassified from AOCI Six Months Ended June 30, 2014(a)
|
|
Amounts Reclassified from AOCI Six Months Ended June 30, 2013(a)
|
|
Affected Line Items on Income Statement
|
||||
Amortization of Cash Flow Hedging Instrument
|
|
—
|
|
|
1
|
|
|
Other Income
|
||
Tax benefit
|
|
—
|
|
|
—
|
|
|
Other Income
|
||
|
|
—
|
|
|
1
|
|
|
|
||
|
|
|
|
|
|
|
||||
Realized Gains on Investments
|
|
$
|
18
|
|
|
$
|
21
|
|
|
Other Income
|
Tax expense
|
|
(7
|
)
|
|
(9
|
)
|
|
Other Income
|
||
|
|
11
|
|
|
12
|
|
|
|
||
|
|
|
|
|
|
|
||||
Amortization of Recognized Net Gain from Defined Benefit Items
|
|
148
|
|
|
112
|
|
|
Other Income (b)
|
||
Tax expense
|
|
(26
|
)
|
|
(45
|
)
|
|
Other Income
|
||
|
|
122
|
|
|
67
|
|
|
|
||
|
|
|
|
|
|
|
||||
Total Reclassifications for the period, net of tax
|
|
$
|
133
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
||||
(a) Amounts in parentheses indicate loss/expense.
|
||||||||||
(b) Included in computation of net periodic pension cost (see Note 2 for additional details).
|
6.
|
Long-Term Debt
|
7.
|
Fair Value Disclosures
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset Type:
|
|
|
|
|
|
|
|
||||||||
Company Owned Life Insurance
|
$
|
—
|
|
|
$
|
2,948
|
|
|
$
|
—
|
|
|
$
|
2,948
|
|
Money Market Fund
|
27
|
|
|
—
|
|
|
—
|
|
|
27
|
|
||||
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity Funds (1)
|
1,546
|
|
|
—
|
|
|
—
|
|
|
1,546
|
|
||||
Total
|
$
|
1,573
|
|
|
$
|
2,948
|
|
|
$
|
—
|
|
|
$
|
4,521
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Asset Type:
|
|
|
|
|
|
|
|
||||||||
Company Owned Life Insurance
|
$
|
—
|
|
|
$
|
2,843
|
|
|
$
|
—
|
|
|
$
|
2,843
|
|
Money Market Fund
|
62
|
|
|
—
|
|
|
—
|
|
|
62
|
|
||||
Mutual Funds:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Equity Funds (1)
|
1,528
|
|
|
—
|
|
|
—
|
|
|
1,528
|
|
||||
Total
|
$
|
1,590
|
|
|
$
|
2,843
|
|
|
$
|
—
|
|
|
$
|
4,433
|
|
(1)
|
Mutual funds consist primarily of equity securities and are presented on the Other Property and Investments line item of the Company's Condensed Consolidated Balance Sheets.
|
8.
|
Segment Reporting
|
Three Months Ended June 30, 2014
|
||||||||||||||||
Segment
|
|
Revenues
|
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Net Income
|
||||||||
Water Activities
|
|
$
|
25,810
|
|
|
$
|
8,837
|
|
|
$
|
1,745
|
|
|
$
|
7,092
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Services and Rentals
|
|
1,476
|
|
|
655
|
|
|
257
|
|
|
398
|
|
||||
Total
|
|
$
|
27,286
|
|
|
$
|
9,492
|
|
|
$
|
2,002
|
|
|
$
|
7,490
|
|
Three Months Ended June 30, 2013
|
||||||||||||||||
Segment
|
|
Revenues
|
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Net Income
|
||||||||
Water Activities
|
|
$
|
22,854
|
|
|
$
|
6,379
|
|
|
$
|
2,445
|
|
|
$
|
3,934
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Services and Rentals
|
|
1,477
|
|
|
634
|
|
|
258
|
|
|
376
|
|
||||
Total
|
|
$
|
24,331
|
|
|
$
|
7,013
|
|
|
$
|
2,703
|
|
|
$
|
4,310
|
|
Six Months Ended June 30, 2014
|
||||||||||||||||
Segment
|
|
Revenues
|
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Net Income
|
||||||||
Water Activities
|
|
$
|
46,430
|
|
|
$
|
11,755
|
|
|
$
|
2,110
|
|
|
$
|
9,645
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Services and Rentals
|
|
2,888
|
|
|
1,365
|
|
|
534
|
|
|
831
|
|
||||
Total
|
|
$
|
49,318
|
|
|
$
|
13,120
|
|
|
$
|
2,644
|
|
|
$
|
10,476
|
|
Six Months Ended June 30, 2013
|
||||||||||||||||
Segment
|
|
Revenues
|
|
Pre-Tax Income
|
|
Income Tax Expense
|
|
Net Income
|
||||||||
Water Activities
|
|
$
|
42,982
|
|
|
$
|
9,929
|
|
|
$
|
3,768
|
|
|
$
|
6,161
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Services and Rentals
|
|
2,866
|
|
|
1,287
|
|
|
525
|
|
|
762
|
|
||||
Total
|
|
$
|
45,848
|
|
|
$
|
11,216
|
|
|
$
|
4,293
|
|
|
$
|
6,923
|
|
|
June 30,
2014 |
|
December 31,
2013 |
||||
Total Plant and Other Investments:
|
|
|
|
||||
Water Activities
|
$
|
490,848
|
|
|
$
|
478,560
|
|
Non-Water
|
744
|
|
|
704
|
|
||
|
491,592
|
|
|
479,264
|
|
||
Other Assets:
|
|
|
|
||||
Water Activities
|
138,052
|
|
|
136,246
|
|
||
Non-Water
|
10,871
|
|
|
15,301
|
|
||
|
148,923
|
|
|
151,547
|
|
||
Total Assets
|
$
|
640,515
|
|
|
$
|
630,811
|
|
9.
|
Income Taxes
|
10.
|
Lines of Credit
|
•
|
Current off-campus customers of UCONN will become customers of Connecticut Water at UCONN’s water rates in effect at that time (subject to any state-approved surcharges);
|
•
|
Future water customers in the Town of Mansfield will be served by Connecticut Water at the rates authorized by the PURA;
|
•
|
Connecticut Water will assume responsibility for maintaining, repairing and replacing the off-campus water system serving the Town of Mansfield;
|
•
|
Connecticut Water will make any source or system improvements to meet current and future water supply needs of the area;
|
•
|
A Water System Advisory Committee (“WASC”) will be created with representatives of the Town of Mansfield, UCONN, regional representatives and other key stakeholders to advise Connecticut Water regarding water service and the system’s operations, expansion or integration as well as recommended best management practices, including water conservation programs. The WSAC has been established and its first meeting was held on July 30, 2014.
|
Business Segment
|
|
June 30, 2014
|
|
June 30, 2013
|
|
Increase/(Decrease)
|
||||||
Water Activities
|
|
$
|
7,092
|
|
|
$
|
3,934
|
|
|
$
|
3,158
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Services and Rentals
|
|
398
|
|
|
376
|
|
|
22
|
|
|||
Total
|
|
$
|
7,490
|
|
|
$
|
4,310
|
|
|
$
|
3,180
|
|
Expense Components
|
|
June 30, 2014
|
|
June 30, 2013
|
|
Increase / (Decrease)
|
||||||
Payroll
|
|
$
|
3,888
|
|
|
$
|
3,512
|
|
|
$
|
376
|
|
Customer
|
|
448
|
|
|
293
|
|
|
155
|
|
|||
Maintenance
|
|
824
|
|
|
672
|
|
|
152
|
|
|||
Water treatment (including chemicals)
|
|
747
|
|
|
674
|
|
|
73
|
|
|||
Utility costs
|
|
854
|
|
|
786
|
|
|
68
|
|
|||
Insurance costs
|
|
337
|
|
|
287
|
|
|
50
|
|
|||
Purchased water
|
|
362
|
|
|
421
|
|
|
(59
|
)
|
|||
Investor relations
|
|
168
|
|
|
287
|
|
|
(119
|
)
|
|||
Medical
|
|
592
|
|
|
813
|
|
|
(221
|
)
|
|||
Pension
|
|
648
|
|
|
988
|
|
|
(340
|
)
|
|||
Other
|
|
1,635
|
|
|
1,624
|
|
|
11
|
|
|||
Total
|
|
$
|
10,503
|
|
|
$
|
10,357
|
|
|
$
|
146
|
|
•
|
Payroll costs increased in the first quarter of 2014 due to an ongoing procurement project that allocated certain employee time to capital was completed during 2013 and normal wage increases. Employee time that had been charged to capital projects during the first quarter of 2013 returned to O&M at the completion of the project;
|
•
|
Customer costs increased primarily due to an increase in uncollectible accounts in the three months ended June 30, 2014. Additionally, the Company saw an increase in costs associated with customer communications and postage; and
|
•
|
The increase in water treatment costs was due primarily to an increase in costs associated with treatment in Maine.
|
•
|
Investor relations fees decreased primarily due to a reduction in costs associated with the Company's annual Proxy report. In addition, certain directors fees are down due to timing;
|
•
|
Medical expense decreased primarily due to a reduction in claims costs. Additionally, the Company saw a decrease in the costs to administer the health plan; and
|
•
|
Pension costs decreased primarily due to an increase in the discount rate used in determining the 2014 expense.
|
Business Segment
|
|
June 30, 2014
|
|
June 30, 2013
|
|
Increase/(Decrease)
|
||||||
Water Activities
|
|
$
|
9,645
|
|
|
$
|
6,161
|
|
|
$
|
3,484
|
|
Real Estate Transactions
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Services and Rentals
|
|
831
|
|
|
762
|
|
|
69
|
|
|||
Total
|
|
$
|
10,476
|
|
|
$
|
6,923
|
|
|
$
|
3,553
|
|
Expense Components
|
|
June 30, 2014
|
|
June 30, 2013
|
|
Increase / (Decrease)
|
||||||
Payroll
|
|
$
|
7,668
|
|
|
$
|
7,037
|
|
|
$
|
631
|
|
Other benefits
|
|
769
|
|
|
449
|
|
|
320
|
|
|||
Maintenance
|
|
1,528
|
|
|
1,293
|
|
|
235
|
|
|||
Water treatment (including chemicals)
|
|
1,439
|
|
|
1,285
|
|
|
154
|
|
|||
Insurance costs
|
|
678
|
|
|
564
|
|
|
114
|
|
|||
Utility costs
|
|
1,967
|
|
|
1,885
|
|
|
82
|
|
|||
Vehicles
|
|
886
|
|
|
814
|
|
|
72
|
|
|||
Post-retirement medical
|
|
320
|
|
|
371
|
|
|
(51
|
)
|
|||
Regulatory and commission expense
|
|
169
|
|
|
226
|
|
|
(57
|
)
|
|||
Medical
|
|
1,306
|
|
|
1,445
|
|
|
(139
|
)
|
|||
Outside services
|
|
1,020
|
|
|
1,159
|
|
|
(139
|
)
|
|||
Investor relations
|
|
319
|
|
|
461
|
|
|
(142
|
)
|
|||
Pension
|
|
1,297
|
|
|
1,985
|
|
|
(688
|
)
|
|||
Other
|
|
1,804
|
|
|
1,761
|
|
|
43
|
|
|||
Total
|
|
$
|
21,170
|
|
|
$
|
20,735
|
|
|
$
|
435
|
|
•
|
Payroll costs increased in the first quarter of 2014 due to an ongoing procurement project that allocated certain employee time to capital was completed during 2013 and normal wage increases. Employee time that had been charged to capital projects during the first quarter of 2013 returned to O&M at the completion of the project;
|
•
|
The increase in Other benefit costs was attributable primarily to an increase in costs associated with certain stock-based compensation awarded to executives;
|
•
|
The increase in water treatment costs was due primarily to increases in waste disposal costs, treatment costs in Maine and the cost of chemicals used in 2014; and
|
•
|
Insurance costs increased primarily due to higher premiums on directors and officers coverage.
|
•
|
Medical expense decreased primarily due to a reduction in claims costs. Additionally, the Company saw a decrease in the costs to administer the health plan;
|
•
|
Outside services decreased primarily as a result of the completion of the procurement project discussed above. A portion of the consulting fees paid during this project was expensed through O&M during 2013;
|
•
|
Investor relations fees decreased primarily due to a reduction in costs associated with the Company's annual Proxy report. In addition, certain directors fees are down due to timing; and
|
•
|
Pension costs decreased primarily due to an increase in the discount rate used in determining the 2014 expense.
|
•
|
projected capital expenditures and related funding requirements;
|
•
|
the availability and cost of capital;
|
•
|
developments, trends and consolidation in the water and wastewater utility industries;
|
•
|
dividend payment projections;
|
•
|
our ability to successfully acquire and integrate regulated water and wastewater systems, as well as unregulated businesses, that are complementary to our operations and the growth of our business;
|
•
|
the capacity of our water supplies, water facilities and wastewater facilities;
|
•
|
the impact of limited geographic diversity on our exposure to unusual weather;
|
•
|
the impact of conservation awareness of customers and more efficient plumbing fixtures and appliances on water usage per customer;
|
•
|
our capability to pursue timely rate increase requests;
|
•
|
our authority to carry on our business without unduly burdensome restrictions;
|
•
|
our ability to maintain our operating costs at the lowest possible level, while providing good quality water service;
|
•
|
our ability to obtain fair market value for condemned assets;
|
•
|
the impact of fines and penalties;
|
•
|
changes in laws, governmental regulations and policies, including environmental, health and water quality and public utility regulations and policies;
|
•
|
the decisions of governmental and regulatory bodies, including decisions to raise or lower rates;
|
•
|
our ability to successfully extend and expand our service contract work within our Service and Rentals Segment in both Connecticut and Maine;
|
•
|
the development of new services and technologies by us or our competitors;
|
•
|
the availability of qualified personnel;
|
•
|
the condition of our assets;
|
•
|
the impact of legal proceedings;
|
•
|
general economic conditions;
|
•
|
the profitability of our Real Estate Segment, which is subject to the amount of land we have available for sale and/or donation, the demand for any available land, the continuation of the current state tax benefits relating to the donation of land for open space purposes and regulatory approval for land dispositions;
|
•
|
the amount of repair tax deductions and the Internal Revenue Service’s ultimate acceptance of the deduction methodology; and
|
•
|
acquisition-related costs and synergies.
|
•
|
changes in general economic, business, credit and financial market conditions;
|
•
|
changes in environmental conditions, including those that result in water use restrictions;
|
•
|
the determination of what qualifies for a repair expense tax deduction;
|
•
|
abnormal weather conditions;
|
•
|
increases in energy and fuel costs;
|
•
|
unfavorable changes to the federal and/or state tax codes;
|
•
|
significant changes in, or unanticipated, capital requirements;
|
•
|
significant changes in our credit rating or the market price of our common stock;
|
•
|
our ability to integrate businesses, technologies or services which we may acquire;
|
•
|
our ability to manage the expansion of our business;
|
•
|
the extent to which we are able to develop and market new and improved services;
|
•
|
the continued demand by telecommunication companies for antenna site leases on our property;
|
•
|
the effect of the loss of major customers;
|
•
|
our ability to retain the services of key personnel and to hire qualified personnel as we expand;
|
•
|
labor disputes;
|
•
|
increasing difficulties in obtaining insurance and increased cost of insurance;
|
•
|
cost overruns relating to improvements or the expansion of our operations;
|
•
|
increases in the costs of goods and services;
|
•
|
civil disturbance or terroristic threats or acts; and
|
•
|
changes in accounting pronouncements.
|
Exhibit Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Incorporation of Connecticut Water Service, Inc. amended and restated as of April, 1998. (Exhibit 3.1 to Form 10-K for the year ended December 31, 1998).
|
|
|
|
3.2
|
|
By-Laws, as amended, of Connecticut Water Service, Inc. as amended and restated as of August 16, 2007. (Exhibit 3.1 to Form 8-K filed on August 21, 2007).
|
|
|
|
3.3
|
|
Certification of Incorporation of The Connecticut Water Company effective April, 1998. (Exhibit 3.3 to Form 10-K for the year ended December 31, 1998).
|
|
|
|
3.4
|
|
Certificate of Amendment to the Certificate of Incorporation of Connecticut Water Service, Inc. dated August 6, 2001 (Exhibit to Form 10-K for the year ended December 31, 2001).
|
|
|
|
3.5
|
|
Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Connecticut Water Service, Inc. dated April 23, 2004. (Exhibit 3.5 to Form 10-Q for the quarter ended March 31, 2004).
|
|
|
|
10.1
|
|
Form of Restricted Share Award Agreement for non-employee Directors under the Company’s 2014 Performance Stock Program (Exhibit 10.1 to current report on Form 8-K filed on May 12, 2014).
|
|
|
|
10.2*
|
|
Amended and Restated Promissory Note and Supplement, by and between the Company and CoBank, ACB, dated August 6, 2014.
|
|
|
|
31.1*
|
|
Rule 13a-14 Certification of Eric W. Thornburg, Chief Executive Officer.
|
|
|
|
31.2*
|
|
Rule 13a-14 Certification of David C. Benoit, Chief Financial Officer.
|
|
|
|
32**
|
|
Certification of Eric W. Thornburg, Chief Executive Officer, and David C. Benoit, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS**
|
|
XBRL Instance Document
|
|
|
|
101.SCH**
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL**
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF**
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB**
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE**
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
* filed herewith
|
||
** furnished herewith
|
|
|
Connecticut Water Service, Inc.
(Registrant)
|
|
|
|
Date:
|
August 8, 2014
|
By:
/s/ David C. Benoit
|
|
|
David C. Benoit
Senior Vice President – Finance and Chief Financial Officer |
|
|
|
Date:
|
August 8, 2014
|
By:
/s/ Nicholas A. Rinaldi
|
|
|
Nicholas A. Rinaldi
Controller |
CoBANK, ACB
|
|
CONNECTICUT WATER SERVICE, INC.
|
||
|
|
|
|
|
By:
|
/s/ Shannon Davoren
|
|
By:
|
/s/ David C. Benoit
|
|
|
|
|
|
Title:
|
Assistant Corporate Secretary
|
|
Title:
|
Senior Vice President – Finance and
Chief Financial Officer |
1.
|
I have reviewed this quarterly report on Form 10-Q of Connecticut Water Service, Inc. (the “registrant”).
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|