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x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2008
or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE TRANSITION PERIOD FROM
|
Connecticut
(State
or other jurisdiction of
incorporation
or organization)
|
06-0739839
(I.R.S.
Employer Identification No.)
|
93
West Main Street, Clinton, CT
(Address
of principal executive office)
|
06413
(Zip
Code)
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Large
Accelerated Filer o
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Accelerated
Filer x
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Non-Accelerated
Filer o
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Smaller
Reporting Company o
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Part
I, Item 1: Financial Statements
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Page
3
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Page
4
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Page
5
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Page
6
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Page
7
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Page
8
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Page
9
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Page
10
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Page
17
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Page
24
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Page
24
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Page
25
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Page
25
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Page
25
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Page
25
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Page
26
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Page
27
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At
June 30, 2008 and December 31, 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
ASSETS
|
June
30, 2008
|
December
31, 2007
|
||||||
Utility
Plant
|
$ | 394,383 | $ | 384,421 | ||||
Construction
Work in Progress
|
6,747 | 1,407 | ||||||
401,130 | 385,828 | |||||||
Accumulated
Provision for Depreciation
|
(112,737 | ) | (108,166 | ) | ||||
Net
Utility Plant
|
288,393 | 277,662 | ||||||
Other
Property and Investments
|
6,674 | 6,652 | ||||||
Cash
and Cash Equivalents
|
181 | 337 | ||||||
Restricted
Cash
|
8,361 | 8,220 | ||||||
Accounts
Receivable (Less Allowance, 2008 - $452; 2007 - $352)
|
6,876 | 6,507 | ||||||
Accrued
Unbilled Revenues
|
5,812 | 4,545 | ||||||
Materials
and Supplies, at Average Cost
|
1,319 | 987 | ||||||
Prepayments
and Other Current Assets
|
3,431 | 2,375 | ||||||
Total
Current Assets
|
25,980 | 22,971 | ||||||
Unamortized
Debt Issuance Expense
|
7,471 | 7,685 | ||||||
Unrecovered
Income Taxes
|
29,411 | 30,278 | ||||||
Post-retirement
Benefits Other Than Pension
|
6,249 | 6,410 | ||||||
Goodwill
|
3,608 | 3,608 | ||||||
Deferred
Charges and Other Costs
|
6,426 | 5,547 | ||||||
Total
Regulatory and Other Long-Term Assets
|
53,165 | 53,528 | ||||||
Total
Assets
|
$ | 374,212 | $ | 360,813 | ||||
CAPITALIZATION AND
LIABILITIES
|
||||||||
Common
Stockholders' Equity
|
$ | 101,996 | $ | 100,098 | ||||
Preferred
Stock
|
772 | 772 | ||||||
Long-Term
Debt
|
92,256 | 92,285 | ||||||
Total
Capitalization
|
195,024 | 193,155 | ||||||
Current
Portion of Long Term Debt
|
7 | 7 | ||||||
Interim
Bank Loans Payable
|
14,175 | 6,459 | ||||||
Accounts
Payable and Accrued Expenses
|
6,060 | 5,984 | ||||||
Accrued
Taxes
|
1,123 | 1,316 | ||||||
Accrued
Interest
|
854 | 810 | ||||||
Other
Current Liabilities
|
276 | 337 | ||||||
Total
Current Liabilities
|
22,495 | 14,913 | ||||||
Advances
for Construction
|
36,851 | 34,583 | ||||||
Contributions
in Aid of Construction
|
49,178 | 47,865 | ||||||
Deferred
Federal and State Income Taxes
|
29,549 | 28,616 | ||||||
Unfunded
Future Income Taxes
|
24,553 | 25,404 | ||||||
Long-Term
Compensation Arrangements
|
14,841 | 14,717 | ||||||
Unamortized
Investment Tax Credits
|
1,529 | 1,560 | ||||||
Other
Long-Term Liabilities
|
192 | -- | ||||||
Total
Long-Term Liabilities
|
156,693 | 152,745 | ||||||
Commitments
and Contingencies
|
||||||||
Total
Capitalization and Liabilities
|
$ | 374,212 | $ | 360,813 | ||||
At
June 30, 2008 and December 31, 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except share data)
|
||||||||
June
30, 2008
|
December
31, 2007
|
|||||||
Common
Stockholders' Equity
|
||||||||
Common
Stock Without Par Value Authorized - 25,000,000 Shares;
|
$ | 65,387 | $ | 64,414 | ||||
Shares
Issued and Outstanding: 2008 - 8,430,354 ; 2007 -
8,376,842
|
||||||||
Stock
Issuance Expense
|
(1,607 | ) | (1,606 | ) | ||||
Retained
Earnings
|
38,265 | 37,272 | ||||||
Accumulated
Other Comprehensive (Loss) Income
|
(49 | ) | 18 | |||||
Total
Common Stockholders' Equity
|
101,996 | 100,098 | ||||||
Preferrred
Stock
|
||||||||
Cumulative
Preferred Stock of Connecticut Water Service, Inc.
|
||||||||
Series
A Voting, $20 Par Value; Authorized, Issued and
|
||||||||
Outstanding
15,000 Shares, Redeemable at $21.00 Per Share
|
300 | 300 | ||||||
Series
$.90 Non-Voting, $16 Par Value; Authorized 50,000 Shares
|
||||||||
Issued
and Outstanding 29,499 Shares, Redeemable at $16.00 Per
Share
|
472 | 472 | ||||||
Total
Preferred Stock of Connecticut Water Service, Inc.
|
772 | 772 | ||||||
Long-Term
Debt
|
||||||||
The
Connecticut Water Company
|
||||||||
Unsecured
Water Facilities Revenue Refinancing Bonds
|
||||||||
5.05% 1998
Series A, due 2028
|
9,640 | 9,640 | ||||||
5.125%
1998 Series B, due 2028
|
7,635 | 7,635 | ||||||
4.40% 2003A
Series, due 2020
|
8,000 | 8,000 | ||||||
5.00% 2003C
Series, due 2022
|
14,915 | 14,915 | ||||||
Var. 2004
Series Variable Rate, due 2029
|
12,500 | 12,500 | ||||||
Var. 2004
Series A, due 2028
|
5,000 | 5,000 | ||||||
Var. 2004
Series B, due 2028
|
4,550 | 4,550 | ||||||
5.00% 2005
A Series, due 2040
|
14,935 | 14,960 | ||||||
5.00% 2007
A Series, due 2037
|
15,000 | 15,000 | ||||||
Total
The Connecticut Water Company
|
92,175 | 92,200 | ||||||
Unregulated
Secured
|
||||||||
8.0%
New London Trust, Due 2017
|
88 | 92 | ||||||
Total
Connecticut Water Service, Inc.
|
92,263 | 92,292 | ||||||
Less
Current Portion
|
(7 | ) | (7 | ) | ||||
Total
Long-Term Debt
|
92,256 | 92,285 | ||||||
Total
Capitalization
|
$ | 195,024 | $ | 193,155 | ||||
For
the Three Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues
|
$ | 16,020 | $ | 14,446 | ||||
Operating
Expenses
|
||||||||
Operation
and Maintenance
|
8,023 | 7,673 | ||||||
Depreciation
|
1,523 | 1,576 | ||||||
Income
Taxes
|
1,166 | 966 | ||||||
Taxes
Other Than Income Taxes
|
1,481 | 1,393 | ||||||
Total
Operating Expenses
|
12,193 | 11,608 | ||||||
Net
Operating Revenues
|
3,827 | 2,838 | ||||||
Other
Utility Income, Net of Taxes
|
155 | 131 | ||||||
Total
Utility Operating Income
|
3,982 | 2,969 | ||||||
Other
Income (Deductions), Net of Taxes
|
||||||||
Non-Water
Sales Earnings
|
204 | 181 | ||||||
Allowance
for Funds Used During Construction
|
19 | 14 | ||||||
Other
|
(21 | ) | (85 | ) | ||||
Total
Other Income, Net of Taxes
|
202 | 110 | ||||||
Interest
and Debt Expense
|
||||||||
Interest
on Long-Term Debt
|
1,029 | 905 | ||||||
Other
Interest Charges
|
105 | 219 | ||||||
Amortization
of Debt Expense
|
99 | 93 | ||||||
Total
Interest and Debt Expense
|
1,233 | 1,217 | ||||||
Net
Income
|
2,951 | 1,862 | ||||||
Preferred
Stock Dividend Requirement
|
10 | 10 | ||||||
Net
Income Applicable to Common Stock
|
$ | 2,941 | $ | 1,852 | ||||
Weighted
Average Common Shares Outstanding:
|
||||||||
Basic
|
8,368 | 8,249 | ||||||
Diluted
|
8,421 | 8,260 | ||||||
Earnings
Per Common Share:
|
||||||||
Basic
|
$ | 0.35 | $ | 0.22 | ||||
Diluted
|
$ | 0.35 | $ | 0.22 | ||||
Dividends
Per Common Share
|
$ | 0.2175 | $ | 0.2150 | ||||
For
the Six Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues
|
$ | 29,589 | $ | 27,608 | ||||
Operating
Expenses
|
||||||||
Operation
and Maintenance
|
15,221 | 14,827 | ||||||
Depreciation
|
3,119 | 3,153 | ||||||
Income
Taxes
|
1,784 | 1,640 | ||||||
Taxes
Other Than Income Taxes
|
2,947 | 2,844 | ||||||
Total
Operating Expenses
|
23,071 | 22,464 | ||||||
Net
Operating Revenues
|
6,518 | 5,144 | ||||||
Other
Utility Income, Net of Taxes
|
276 | 237 | ||||||
Total
Utility Operating Income
|
6,794 | 5,381 | ||||||
Other
Income (Deductions), Net of Taxes
|
||||||||
Gain
on Property Transactions
|
-- | 41 | ||||||
Non-Water
Sales Earnings
|
394 | 323 | ||||||
Allowance
for Funds Used During Construction
|
34 | 26 | ||||||
Other
|
(43 | ) | (131 | ) | ||||
Total
Other Income, Net of Taxes
|
385 | 259 | ||||||
Interest
and Debt Expense
|
||||||||
Interest
on Long-Term Debt
|
2,085 | 1,782 | ||||||
Other
Interest Charges
|
240 | 334 | ||||||
Amortization
of Debt Expense
|
198 | 187 | ||||||
Total
Interest and Debt Expense
|
2,523 | 2,303 | ||||||
Net
Income
|
4,656 | 3,337 | ||||||
Preferred
Stock Dividend Requirement
|
19 | 19 | ||||||
Net
Income Applicable to Common Stock
|
$ | 4,637 | $ | 3,318 | ||||
Weighted
Average Common Shares Outstanding:
|
||||||||
Basic
|
8,359 | 8,241 | ||||||
Diluted
|
8,411 | 8,251 | ||||||
Earnings
Per Common Share:
|
||||||||
Basic
|
$ | 0.55 | $ | 0.40 | ||||
Diluted
|
$ | 0.55 | $ | 0.40 | ||||
Dividends
Per Common Share
|
$ | 0.4350 | $ | 0.4300 | ||||
For
the Three Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Net
Income Applicable to Common Stock
|
$ | 2,941 | $ | 1,852 | ||||
Other
Comprehensive Income, net of tax
|
||||||||
Qualified
Cash Flow Hedging Instrument Expense,
|
||||||||
net
of tax expense of $38 in 2008; $11 in
2007
|
59 | 18 | ||||||
Adjustment
to Pension and Post-Retirement Benefits Other
|
||||||||
Than
Pension, net of tax benefit of $0 and $1 in 2008 and 2007
|
-- | (1 | ) | |||||
Comprehensive
Income
|
$ | 3,000 | $ | 1,869 | ||||
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||
For
the Six Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Net
Income Applicable to Common Stock
|
$ | 4,637 | $ | 3,318 | ||||
Other
Comprehensive Income, net of tax
|
||||||||
Qualified
Cash Flow Hedging Instrument Benefit,
|
||||||||
net
of tax (benefit) of ($42) in 2008; ($23) in
2007
|
(66 | ) | (25 | ) | ||||
Adjustment
to Pension and Post-Retirement Benefits Other
|
||||||||
Than
Pension, net of tax benefit of $1 and $1 in 2008 and 2007
|
(1 | ) | (1 | ) | ||||
Comprehensive
Income
|
$ | 4,570 | $ | 3,292 | ||||
For
the Three Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Balance
at Beginning of Period
|
$ | 37,142 | $ | 35,373 | ||||
Net
Income Before Preferred Dividends of Parent
|
2,951 | 1,862 | ||||||
40,093 | 37,235 | |||||||
Dividends
Declared:
|
||||||||
Cumulative
Preferred, Class A, $.20 per share
|
3 | 3 | ||||||
Cumulative
Preferred, Series $.90, $.225 per share
|
7 | 7 | ||||||
Common
Stock - 2008 $.2175 per share; 2007 $.215 per share
|
1,818 | 1,763 | ||||||
1,828 | 1,773 | |||||||
Balance
at End of Period
|
$ | 38,265 | $ | 35,462 | ||||
CONSOLIDATED
STATEMENTS OF RETAINED EARNINGS
|
||||||||
For
the Six Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Balance
at Beginning of Period
|
$ | 37,272 | $ | 35,676 | ||||
Net
Income Before Preferred Dividends of Parent
|
4,656 | 3,337 | ||||||
41,928 | 39,013 | |||||||
Dividends
Declared:
|
||||||||
Cumulative
Preferred, Class A, $.40 per share
|
6 | 6 | ||||||
Cumulative
Preferred, Series $.90, $.45 per share
|
13 | 13 | ||||||
Common
Stock - 2008 $.435 per share; 2007 $.43 per share
|
3,644 | 3,532 | ||||||
3,663 | 3,551 | |||||||
Balance
at End of Period
|
$ | 38,265 | $ | 35,462 | ||||
For
the Six Months Ended June 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Operating
Activities:
|
||||||||
Net
Income
|
$ | 4,656 | $ | 3,337 | ||||
Adjustments
to Reconcile Net Income to Net Cash Provided by
|
||||||||
Operating
Activities:
|
||||||||
Deferred
Revenues
|
(896 | ) | (1,912 | ) | ||||
Allowance
for Funds Used During Construction
|
(56 | ) | (49 | ) | ||||
Depreciation
(including $318 in 2008, $169 in 2007 charged to other
accounts)
|
3,437 | 3,382 | ||||||
Change
in Assets and Liabilities:
|
||||||||
Decrease
in Accounts Receivable and Accrued Unbilled Revenues
|
(1,637 | ) | (1,985 | ) | ||||
Increase
in Other Current Assets
|
(1,507 | ) | (841 | ) | ||||
Decrease
in Other Non-Current Items
|
1,003 | 725 | ||||||
(Decrease)
Increase in Accounts Payable, Accrued Expenses and
|
||||||||
Other
Current Liabilities
|
(45 | ) | 1,598 | |||||
Increase
in Deferred Income Taxes and
|
||||||||
Investment
Tax Credits, Net
|
919 | 1,152 | ||||||
Total
Adjustments
|
1,218 | 2,070 | ||||||
Net
Cash and Cash Equivalents Provided by Operating Activities
|
5,874 | 5,407 | ||||||
Investing
Activities:
|
||||||||
Company
Financed Additions to Utility Plant
|
(7,136 | ) | (7,554 | ) | ||||
Advances
from Others for Construction
|
(171 | ) | (230 | ) | ||||
Net
Additions to Utility Plant Used in Continuing Operations
|
(7,307 | ) | (7,784 | ) | ||||
Purchase
of Eastern and H2O Services Assets
|
(3,500 | ) | -- | |||||
Release
of Restricted Cash
|
-- | 1 | ||||||
Net
Cash and Cash Equivalents Used in Investing Activities
|
(10,807 | ) | (7,783 | ) | ||||
Financing
Activities:
|
||||||||
Net
Proceeds from Interim Bank Loans
|
14,175 | 9,175 | ||||||
Net
Repayment of Interim Bank Loans
|
(6,459 | ) | (5,250 | ) | ||||
Proceeds
from Issuance of Common Stock
|
484 | 593 | ||||||
Proceeds
from the Exercise of Stock Options
|
90 | -- | ||||||
Repayment
of Long-Term Debt Including Current Portion
|
(28 | ) | (3 | ) | ||||
Costs
Incurred to Issue Long-Term Debt and Common
Stock
|
(1 | ) | -- | |||||
Advances
from Others for Construction
|
171 | 230 | ||||||
Cash
Dividends Paid
|
(3,655 | ) | (3,555 | ) | ||||
Net
Cash and Cash Equivalents Provided by Financing Activities
|
4,777 | 1,190 | ||||||
Net
Decrease in Cash and Cash Equivalents
|
(156 | ) | (1,186 | ) | ||||
Cash
and Cash Equivalents at Beginning of Period
|
337 | 1,377 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 181 | $ | 191 | ||||
Non-Cash
Investing and Financing Activites
|
||||||||
Non-Cash
Contributed Utility Plant
|
$ | 2,317 | $ | 558 | ||||
Short-term
Investment of Bond Proceeds Held in Restricted Cash
|
$ | 8,361 | $ | -- | ||||
Supplemental
Disclosures of Cash Flow Information:
|
||||||||
Cash
Paid for:
|
||||||||
Interest
|
$ | 2,357 | $ | 2,047 | ||||
State
and Federal Income Taxes
|
$ | 1,410 | $ | 453 | ||||
Three
Months
|
Six
Months
|
|||||||||||||||
Period
ended June 30
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
Cost
|
$ | 324 | $ | 320 | $ | 630 | $ | 639 | ||||||||
Interest
Cost
|
488 | 447 | 953 | 894 | ||||||||||||
Expected
Return on Plan Assets
|
(532 | ) | (504 | ) | (1,060 | ) | (1,008 | ) | ||||||||
Amortization
of:
|
||||||||||||||||
Transition
Obligation
|
-- | -- | 1 | 1 | ||||||||||||
Prior
Service Cost
|
17 | 17 | 34 | 34 | ||||||||||||
Net
Loss
|
46 | 86 | 71 | 172 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 343 | $ | 366 | $ | 629 | $ | 732 |
Three
Months
|
Six
Months
|
|||||||||||||||
Period
ended June 30
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
Cost
|
$ | 130 | $ | 153 | $ | 316 | $ | 325 | ||||||||
Interest
Cost
|
138 | 161 | 329 | 306 | ||||||||||||
Expected
Return on Plan Assets
|
(68 | ) | (48 | ) | (136 | ) | (95 | ) | ||||||||
Amortization
of Transition Obligation
|
30 | 30 | 60 | 60 | ||||||||||||
Recognized
Net Loss
|
11 | 100 | 101 | 171 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 241 | $ | 396 | $ | 670 | $ | 767 |
Three
months ended June 30,
|
2008
|
2007
|
||||||
Common
Shares Outstanding
|
||||||||
End
of Period:
|
8,430,354 | 8,312,806 | ||||||
Weighted
Average Shares Outstanding:
|
||||||||
Days
Outstanding Basis
|
||||||||
Basic
|
8,367,559 | 8,249,113 | ||||||
Diluted
|
8,421,149 | 8,259,976 | ||||||
Basic
Earnings per Share
|
$ | 0.35 | $ | 0.22 | ||||
Dilutive
Effect of Unexercised Stock Options
|
-- | -- | ||||||
Diluted
Earnings per Share
|
$ | 0.35 | $ | 0.22 | ||||
Six
months ended June 30,
|
||||||||
Weighted
Average Shares Outstanding:
|
||||||||
Days
Outstanding Basis
|
||||||||
Basic
|
8,358,722 | 8,240,816 | ||||||
Diluted
|
8,411,012 | 8,251,285 | ||||||
Basic
Earnings per Share
|
$ | 0.55 | $ | 0.40 | ||||
Dilutive
Effect of Unexercised Stock Options
|
-- | -- | ||||||
Diluted
Earnings per Share
|
$ | 0.55 | $ | 0.40 |
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
|||||||||
Liabilities:
|
||||||||||||
Interest
Rate Swap
|
$ | - | $ | 64 | $ | - |
Three Months Ended June 30,
2008
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 16,259 | $ | 3,985 | $ | 1,238 | $ | 2,747 | ||||||||
Real
Estate Transactions
|
-- | -- | -- | -- | ||||||||||||
Service
and Rentals
|
1,270 | 339 | 135 | 204 | ||||||||||||
Total
|
$ | 17,529 | $ | 4,324 | $ | 1,373 | $ | 2,951 |
Three Months Ended June 30,
2007
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 14,698 | $ | 2,604 | $ | 923 | $ | 1,681 | ||||||||
Real
Estate Transactions
|
-- | -- | -- | -- | ||||||||||||
Service
and Rentals
|
1,083 | 298 | 117 | 181 | ||||||||||||
Total
|
$ | 15,781 | $ | 2,902 | $ | 1,040 | $ | 1,862 |
Six Months Ended June 30,
2008
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 30,074 | $ | 6,190 | $ | 1,928 | $ | 4,262 | ||||||||
Real
Estate Transactions
|
-- | -- | -- | -- | ||||||||||||
Service
and Rentals
|
2,337 | 646 | 252 | 394 | ||||||||||||
Total
|
$ | 32,411 | $ | 6,836 | $ | 2,180 | $ | 4,656 |
Six Months Ended June 30,
2007
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 28,088 | $ | 4,596 | $ | 1,623 | $ | 2,973 | ||||||||
Real
Estate Transactions
|
92 | 68 | 27 | 41 | ||||||||||||
Service
and Rentals
|
1,987 | 532 | 209 | 323 | ||||||||||||
Total
|
$ | 30,167 | $ | 5,196 | $ | 1,859 | $ | 3,337 |
June 30, 2008
|
December 31, 2007
|
|||||||
Total
Plant and Other Investments:
|
||||||||
Water
|
$ | 294,400 | $ | 283,641 | ||||
Non-Water
|
666 | 673 | ||||||
295,066 | 284,314 | |||||||
Other
Assets:
|
||||||||
Water
|
76,124 | 73,421 | ||||||
Non-Water
|
3,022 | 3,078 | ||||||
79,146 | 76,499 | |||||||
Total
Assets
|
$ | 374,212 | $ | 360,813 |
Business Segment
|
June 30, 2008
|
June 30, 2007
|
Increase/(Decrease)
|
|||||||||
Water
Activities
|
$ | 2,747,000 | $ | 1,681,000 | $ | 1,066,000 | ||||||
Real
Estate Transactions
|
-- | -- | -- | |||||||||
Services
and Rentals
|
204,000 | 181,000 | 23,000 | |||||||||
Total
|
$ | 2,951,000 | $ | 1,862,000 | $ | 1,089,000 |
-
|
An
increase of approximately $1,574,000 in Operating Revenue primarily due to
new rates approved by the DPUC that became effective on April 1, 2008 and
the acquisition of Eastern in January 2008, partially off-set by a
decrease in per-customer consumption. The largest component of
the increase in Operating Revenue was an increase of $268,000 in revenue
from residential customers. Additionally, the Company received
approximately $144,000 in payments from the South Central Regional Water
Authority. In addition to these residential revenue increases,
there were minor increases from commercial, industrial and public
authority customers, due primarily to the rate increase effective April 1,
2008.
|
-
|
Operation
and Maintenance expense increased by $350,000 primarily due to the
following components:
|
Expense Components
|
June 30, 2008
|
June 30, 2007
|
Increase/(Decrease)
|
|||||||||
Labor
|
$ | 3,058,000 | $ | 2,786,000 | $ | 272,000 | ||||||
Customer
|
249,000 | 175,000 | 74,000 | |||||||||
Outside
Services
|
327,000 | 256,000 | 71,000 | |||||||||
Investor
Relations
|
205,000 | 134,000 | 71,000 | |||||||||
Utility
costs
|
859,000 | 789,000 | 70,000 | |||||||||
Water
treatment (including chemical costs)
|
453,000 | 406,000 | 47,000 | |||||||||
Subscriptions
& dues
|
52,000 | 12,000 | 40,000 | |||||||||
Purchased
water
|
281,000 | 452,000 | (171,000 | ) | ||||||||
Employee
benefit costs
|
1,043,000 | 1,241,000 | (198,000 | ) | ||||||||
Other
|
1,496,000 | 1,422,000 | 74,000 | |||||||||
Total
|
$ | 8,023,000 | $ | 7,673,000 | $ | 350,000 |
-
|
Labor
and employee benefit costs increased in 2008 by a net $74,000 due to an
increase in employee levels due to the Eastern acquisition, regular wage
increases effective as of April 1, 2008 and higher medical costs
associated with the Company’s health and welfare plan, partially off-set
by pension, post-retirement medical and other benefit cost
decreases. Customer costs increased over the prior year period
primarily due to an increase in uncollectible accounts. Outside
services have increased primarily due to audit and information technology
consulting fees, partially off-set by lower legal costs. The
Company saw an increase in investor relations costs primarily due to the
timing of the distribution of the 2007 annual report when compared to the
distribution of the 2006 annual report. Utility costs have increased
despite the Company’s efforts to lock in lower negotiated rates from
energy suppliers due to higher electric costs in the state. The
decrease in purchased water costs stemmed from a negotiated reduction in
the Company’s purchased water rate from a neighboring water
utility.
|
-
|
An
increase in operating income tax expense of $200,000 primarily due to
higher pretax income partially off-set by a lower effective income tax
rate. This lower rate is due primarily to the effect of the
planned pension contribution in 2008 exceeding the expected SFAS 87
pension expense.
|
Business Segment
|
June 30, 2008
|
June 30, 2007
|
Increase/(Decrease)
|
|||||||||
Water
Activities
|
$ | 4,262,000 | $ | 2,973,000 | $ | 1,289,000 | ||||||
Real
Estate Transactions
|
-- | 41,000 | (41,000 | ) | ||||||||
Services
and Rentals
|
394,000 | 323,000 | 71,000 | |||||||||
Total
|
$ | 4,656,000 | $ | 3,337,000 | $ | 1,319,000 |
-
|
An
increase of approximately $1,981,000 in Operating Revenue primarily due to
the acquisition of Eastern in January 2008 and new rates approved by the
DPUC that became effective on April 1, 2008, partially off-set by a
decrease in per-customer consumption. The largest component of
the increase in Operating Revenue was an increase of $450,000 in revenue
from residential customers. Additionally, the Company received
approximately $250,000 in payments from the South Central Regional Water
Authority. In addition to these residential revenue increases,
there were minor increases from commercial, industrial and public
authority customers, due primarily to the rate increase effective April1,
2008.
|
-
|
Operation
and Maintenance expense increased by $394,000 primarily due to the
following components:
|
Expense Components
|
June 30, 2008
|
June 30, 2007
|
Increase/(Decrease)
|
|||||||||
Labor
|
$ | 5,813,000 | $ | 5,396,000 | $ | 417,000 | ||||||
Customer
|
467,000 | 307,000 | 160,000 | |||||||||
Outside
services
|
652,000 | 577,000 | 75,000 | |||||||||
Water
treatment (including chemical costs)
|
855,000 | 784,000 | 71,000 | |||||||||
Utility
costs
|
1,717,000 | 1,676,000 | 41,000 | |||||||||
Maintenance
|
747,000 | 782,000 | (35,000 | ) | ||||||||
Employee
benefit costs
|
2,353,000 | 2,403,000 | (50,000 | ) | ||||||||
Purchased
water
|
303,000 | 605,000 | (302,000 | ) | ||||||||
Other
|
2,314,000 | 2,297,000 | 17,000 | |||||||||
Total
|
$ | 15,221,000 | $ | 14,827,000 | $ | 394,000 |
-
|
Labor
and employee benefit costs increased in 2008 by a net $367,000 due to an
increase in employee levels due to the Eastern acquisition, regular wage
increases effective as of April 1, 2008 and higher medical costs
associated with the Company’s health and welfare plan. These
increases in Labor and employee benefit costs were partially off-set due
to reduced pension costs and post-retirement medical
costs. Customer costs increased over the prior year primarily
due to an increase in uncollectible accounts. Outside services
have increased primarily due to audit and information technology
consulting fees, partially off-set by lower legal costs. The
decrease in purchased water costs stemmed from a negotiated reduction in
the Company’s purchased water rate from a neighboring water
utility.
|
-
|
An
increase in operating income tax expense of $144,000 primarily due to
higher pretax income partially off-set by a lower effective income tax
rate. This lower rate is due primarily to the effect of the
planned pension contribution in 2008 exceeding the expected SFAS 87
pension expense.
|
For
|
Withheld
|
|||||||
Mary
Ann Hanley
|
20,241,457 | 446,289 | ||||||
Mark
G. Karchur
|
20,221,827 | 465,919 | ||||||
David
A. Lentini
|
20,211,497 | 476,249 |
For
|
Withheld
|
Abstain
|
||||||||||
PricewaterhouseCoopers,
LLP
|
20,417,894 | 183,696 | 86,156 |
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
12/31/98).
|
|
3.2
|
By
Laws, as amended, of Connecticut Water Service, Inc. as amended and
restated as of August 12, 1999. (Exhibit 3.2 to Form 10-K for the year
ended 12/31/99).
|
|
3.3
|
Certification
of Incorporation of The Connecticut Water Company effective April,
1998. (Exhibit 3.3 to Form 10-K for the year ended
12/31/98).
|
|
3.4
|
Certificate
of Amendment to the Certificate of Incorporation of Connecticut Water
Service, Inc. dated August 6, 2001 (Exhibit 3.4 to Form 10-K for the year
ended 12/31/01).
|
|
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, 2003).
|
|
10.1*
|
Stock
Purchase Agreement, dated July 21, 2008, between The Connecticut Water
Company, Ellington Acres Company, and the shareholders of
EAC.
|
|
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.
|
|
*
filed herewith
|
Connecticut
Water Service, Inc.
(Registrant)
|
|
Date: August
8, 2008
|
By: /s/ David C.
Benoit
David
C. Benoit
Vice
President – Finance and
Chief
Financial Officer
|
Date:
August 8, 2008
|
By: /s/ Nicholas A.
Rinaldi
Nicholas
A. Rinaldi
Controller
|