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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 September 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
25
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Page
25
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Page
25
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Page
26
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Page
26
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Exhibit
31.1
Exhibit
31.2
Exhibit
32
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Page
27
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At
September 30, 2008 and December 31, 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
ASSETS
|
September
30, 2008
|
December
31, 2007
|
||||||
Utility
Plant
|
$ | 402,265 | $ | 384,421 | ||||
Construction
Work in Progress
|
5,230 | 1,407 | ||||||
407,495 | 385,828 | |||||||
Accumulated
Provision for Depreciation
|
(114,584 | ) | (108,166 | ) | ||||
Net
Utility Plant
|
292,911 | 277,662 | ||||||
Other
Property and Investments
|
6,699 | 6,652 | ||||||
Cash
and Cash Equivalents
|
354 | 337 | ||||||
Restricted
Cash
|
3,399 | 8,220 | ||||||
Accounts
Receivable (Less Allowance, 2008 - $393; 2007 - $352)
|
8,017 | 6,507 | ||||||
Accrued
Unbilled Revenues
|
5,729 | 4,545 | ||||||
Materials
and Supplies, at Average Cost
|
1,338 | 987 | ||||||
Prepayments
and Other Current Assets
|
4,422 | 2,375 | ||||||
Total
Current Assets
|
23,259 | 22,971 | ||||||
Unamortized
Debt Issuance Expense
|
7,350 | 7,685 | ||||||
Unrecovered
Income Taxes
|
29,308 | 30,278 | ||||||
Post-retirement
Benefits Other Than Pension
|
5,999 | 6,410 | ||||||
Goodwill
|
3,608 | 3,608 | ||||||
Deferred
Charges and Other Costs
|
5,934 | 5,547 | ||||||
Total
Regulatory and Other Long-Term Assets
|
52,199 | 53,528 | ||||||
Total
Assets
|
$ | 375,068 | $ | 360,813 | ||||
CAPITALIZATION AND
LIABILITIES
|
||||||||
Common
Stockholders' Equity
|
$ | 103,695 | $ | 100,098 | ||||
Preferred
Stock
|
772 | 772 | ||||||
Long-Term
Debt
|
92,229 | 92,285 | ||||||
Total
Capitalization
|
196,696 | 193,155 | ||||||
Current
Portion of Long Term Debt
|
7 | 7 | ||||||
Interim
Bank Loans Payable
|
15,423 | 6,459 | ||||||
Accounts
Payable and Accrued Expenses
|
5,365 | 5,984 | ||||||
Accrued
Taxes
|
1,397 | 1,316 | ||||||
Accrued
Interest
|
950 | 810 | ||||||
Other
Current Liabilities
|
390 | 337 | ||||||
Total
Current Liabilities
|
23,532 | 14,913 | ||||||
Advances
for Construction
|
38,309 | 34,583 | ||||||
Contributions
in Aid of Construction
|
49,175 | 47,865 | ||||||
Deferred
Federal and State Income Taxes
|
30,006 | 28,616 | ||||||
Unfunded
Future Income Taxes
|
24,554 | 25,404 | ||||||
Long-Term
Compensation Arrangements
|
11,172 | 14,717 | ||||||
Unamortized
Investment Tax Credits
|
1,513 | 1,560 | ||||||
Other
Long-Term Liabilities
|
111 | -- | ||||||
Total
Long-Term Liabilities
|
154,840 | 152,745 | ||||||
Commitments
and Contingencies
|
||||||||
Total
Capitalization and Liabilities
|
$ | 375,068 | $ | 360,813 |
At
September 30, 2008 and December 31, 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except share data)
|
||||||||
September
30, 2008
|
December
31, 2007
|
|||||||
Common
Stockholders' Equity
|
||||||||
Common
Stock Without Par Value Authorized - 25,000,000 Shares;
|
$ | 66,092 | $ | 64,414 | ||||
Shares
Issued and Outstanding: 2008 - 8,448,855 ; 2007 -
8,376,842
|
||||||||
Stock
Issuance Expense
|
(1,608 | ) | (1,606 | ) | ||||
Retained
Earnings
|
39,224 | 37,272 | ||||||
Accumulated
Other Comprehensive (Loss) Income
|
(13 | ) | 18 | |||||
Total
Common Stockholders' Equity
|
103,695 | 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
|
9,635 | 9,640 | ||||||
5.125%
1998 Series B, due 2028
|
7,615 | 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
|
92,150 | 92,200 | ||||||
Unregulated
Secured
|
||||||||
6.39%
NewAlliance Bank, Due 2017
|
86 | 92 | ||||||
Total
Connecticut Water Service, Inc.
|
92,236 | 92,292 | ||||||
Less
Current Portion
|
(7 | ) | (7 | ) | ||||
Total
Long-Term Debt
|
92,229 | 92,285 | ||||||
Total
Capitalization
|
$ | 196,696 | $ | 193,155 |
For
the Three Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues
|
$ | 17,040 | $ | 16,951 | ||||
Operating
Expenses
|
||||||||
Operation
and Maintenance
|
8,528 | 7,464 | ||||||
Depreciation
|
1,588 | 1,600 | ||||||
Income
Taxes
|
1,601 | 1,525 | ||||||
Taxes
Other Than Income Taxes
|
1,491 | 1,478 | ||||||
Total
Operating Expenses
|
13,208 | 12,067 | ||||||
Net
Operating Revenues
|
3,832 | 4,884 | ||||||
Other
Utility Income, Net of Taxes
|
162 | 137 | ||||||
Total
Utility Operating Income
|
3,994 | 5,021 | ||||||
Other
Income (Deductions), Net of Taxes
|
||||||||
Gain
on Property Transactions
|
-- | 20 | ||||||
Non-Water
Sales Earnings
|
136 | 149 | ||||||
Allowance
for Funds Used During Construction
|
29 | 25 | ||||||
Other
|
(46 | ) | (366 | ) | ||||
Total
Other Income (Deductions), Net of Taxes
|
119 | (172 | ) | |||||
Interest
and Debt Expense
|
||||||||
Interest
on Long-Term Debt
|
1,067 | 848 | ||||||
Other
Interest Charges
|
112 | 9 | ||||||
Amortization
of Debt Expense
|
99 | 93 | ||||||
Total
Interest and Debt Expense
|
1,278 | 950 | ||||||
Net
Income
|
2,835 | 3,899 | ||||||
Preferred
Stock Dividend Requirement
|
10 | 10 | ||||||
Net
Income Applicable to Common Stock
|
$ | 2,825 | $ | 3,889 | ||||
Weighted
Average Common Shares Outstanding:
|
||||||||
Basic
|
8,388 | 8,285 | ||||||
Diluted
|
8,442 | 8,293 | ||||||
Earnings
Per Common Share:
|
||||||||
Basic
|
$ | 0.34 | $ | 0.47 | ||||
Diluted
|
$ | 0.34 | $ | 0.47 | ||||
Dividends
Per Common Share
|
$ | 0.2225 | $ | 0.2175 |
For
the Nine Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Operating
Revenues
|
$ | 46,629 | $ | 44,559 | ||||
Operating
Expenses
|
||||||||
Operation
and Maintenance
|
23,749 | 22,291 | ||||||
Depreciation
|
4,707 | 4,753 | ||||||
Income
Taxes
|
3,385 | 3,165 | ||||||
Taxes
Other Than Income Taxes
|
4,438 | 4,322 | ||||||
Total
Operating Expenses
|
36,279 | 34,531 | ||||||
Net
Operating Revenues
|
10,350 | 10,028 | ||||||
Other
Utility Income, Net of Taxes
|
438 | 374 | ||||||
Total
Utility Operating Income
|
10,788 | 10,402 | ||||||
Other
Income (Deductions), Net of Taxes
|
||||||||
Gain
on Property Transactions
|
-- | 61 | ||||||
Non-Water
Sales Earnings
|
530 | 472 | ||||||
Allowance
for Funds Used During Construction
|
63 | 51 | ||||||
Other
|
(89 | ) | (497 | ) | ||||
Total
Other Income, Net of Taxes
|
504 | 87 | ||||||
Interest
and Debt Expense
|
||||||||
Interest
on Long-Term Debt
|
3,152 | 2,630 | ||||||
Other
Interest Charges
|
352 | 343 | ||||||
Amortization
of Debt Expense
|
297 | 280 | ||||||
Total
Interest and Debt Expense
|
3,801 | 3,253 | ||||||
Net
Income
|
7,491 | 7,236 | ||||||
Preferred
Stock Dividend Requirement
|
29 | 29 | ||||||
Net
Income Applicable to Common Stock
|
$ | 7,462 | $ | 7,207 | ||||
Weighted
Average Common Shares Outstanding:
|
||||||||
Basic
|
8,369 | 8,256 | ||||||
Diluted
|
8,422 | 8,266 | ||||||
Earnings
Per Common Share:
|
||||||||
Basic
|
$ | 0.89 | $ | 0.87 | ||||
Diluted
|
$ | 0.89 | $ | 0.87 | ||||
Dividends
Per Common Share
|
$ | 0.6575 | $ | 0.6475 |
For
the Three Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Net
Income Applicable to Common Stock
|
$ | 2,825 | $ | 3,889 | ||||
Other
Comprehensive Income, net of tax
|
||||||||
Qualified
Cash Flow Hedging Instrument Expense,
|
||||||||
net
of tax expense (benefit) of $23 in 2008; $(68) in
2007
|
37 | (107 | ) | |||||
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
|
$ | 2,862 | $ | 3,781 | ||||
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||
For
the Nine Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Net
Income Applicable to Common Stock
|
$ | 7,462 | $ | 7,207 | ||||
Other
Comprehensive Income, net of tax
|
||||||||
Qualified
Cash Flow Hedging Instrument Benefit,
|
||||||||
net
of tax (benefit) of $(19) in 2008; $(91) in
2007
|
(30 | ) | (132 | ) | ||||
Adjustment
to Pension and Post-Retirement Benefits Other
|
||||||||
Than
Pension, net of tax benefit of $1 and $1 in 2008 and 2007
|
(1 | ) | (2 | ) | ||||
Comprehensive
Income
|
$ | 7,431 | $ | 7,073 |
For
the Three Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands, except per share amounts)
|
||||||||
2008
|
2007
|
|||||||
Balance
at Beginning of Period
|
$ | 38,265 | $ | 35,462 | ||||
Net
Income Before Preferred Dividends of Parent
|
2,835 | 3,899 | ||||||
41,100 | 39,361 | |||||||
Dividends
Declared:
|
||||||||
Cumulative
Preferred, Class A, $.20 per share
|
3 | 3 | ||||||
Cumulative
Preferred, Series $.90, $.225 per share
|
7 | 7 | ||||||
Common
Stock - 2008 $.2225 per share; 2007 $.2175 per share
|
1,866 | 1,800 | ||||||
1,876 | 1,810 | |||||||
Balance
at End of Period
|
$ | 39,224 | $ | 37,551 | ||||
CONSOLIDATED
STATEMENTS OF RETAINED EARNINGS
|
||||||||
For
the Nine Months Ended September 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
|
7,491 | 7,236 | ||||||
44,763 | 42,912 | |||||||
Dividends
Declared:
|
||||||||
Cumulative
Preferred, Class A, $.60 per share
|
9 | 9 | ||||||
Cumulative
Preferred, Series $.90, $.675 per share
|
20 | 20 | ||||||
Common
Stock - 2008 $.6575 per share; 2007 $.6475 per share
|
5,510 | 5,332 | ||||||
5,539 | 5,361 | |||||||
Balance
at End of Period
|
$ | 39,224 | $ | 37,551 |
For
the Nine Months Ended September 30, 2008 and 2007
|
||||||||
(Unaudited)
|
||||||||
(In
thousands)
|
||||||||
2008
|
2007
|
|||||||
Operating
Activities:
|
||||||||
Net
Income
|
$ | 7,491 | $ | 7,236 | ||||
Adjustments
to Reconcile Net Income to Net Cash Provided by
|
||||||||
Operating
Activities:
|
||||||||
Deferred
Revenues
|
(836 | ) | (2,867 | ) | ||||
Allowance
for Funds Used During Construction
|
(103 | ) | (101 | ) | ||||
Depreciation
(including $479 in 2008, $314 in 2007 charged to other
accounts)
|
5,186 | 5,067 | ||||||
Change
in Assets and Liabilities:
|
||||||||
Decrease
in Accounts Receivable and Accrued Unbilled Revenues
|
(2,694 | ) | (3,612 | ) | ||||
Increase
in Other Current Assets
|
(2,542 | ) | (1,962 | ) | ||||
(Increase)
Decrease in Other Non-Current Items
|
(1,620 | ) | 1,007 | |||||
Increase
in Accounts Payable, Accrued Expenses and
|
||||||||
Other
Current Liabilities
|
333 | 2,738 | ||||||
Increase
in Deferred Income Taxes and
|
||||||||
Investment
Tax Credits, Net
|
1,463 | 1,427 | ||||||
Total
Adjustments
|
(813 | ) | 1,697 | |||||
Net
Cash and Cash Equivalents Provided by Operating Activities
|
6,678 | 8,933 | ||||||
Investing
Activities:
|
||||||||
Company
Financed Additions to Utility Plant
|
(12,469 | ) | (12,512 | ) | ||||
Advances
from Others for Construction
|
(525 | ) | (606 | ) | ||||
Net
Additions to Utility Plant Used in Continuing Operations
|
(12,994 | ) | (13,118 | ) | ||||
Purchase
of Eastern and H2O Services Assets
|
(3,500 | ) | -- | |||||
Release
of Restricted Cash
|
-- | 1 | ||||||
Net
Cash and Cash Equivalents Used in Investing Activities
|
(16,494 | ) | (13,117 | ) | ||||
Financing
Activities:
|
||||||||
Net
Proceeds from Interim Bank Loans
|
15,423 | 11,486 | ||||||
Net
Repayment of Interim Bank Loans
|
(6,459 | ) | (5,250 | ) | ||||
Proceeds
from Issuance of Common Stock
|
728 | 911 | ||||||
Proceeds
from the Exercise of Stock Options
|
218 | 729 | ||||||
Proceeds
from the Issuance of Long-Term Debt
|
4,987 | -- | ||||||
Repayment
of Long-Term Debt Including Current Portion
|
(55 | ) | (5 | ) | ||||
Costs
Incurred to Issue Long-Term Debt and Common
Stock
|
(2 | ) | (5 | ) | ||||
Advances
from Others for Construction
|
525 | 606 | ||||||
Cash
Dividends Paid
|
(5,532 | ) | (5,366 | ) | ||||
Net
Cash and Cash Equivalents Provided by Financing Activities
|
9,833 | 3,106 | ||||||
Net
Increas (Decrease) in Cash and Cash Equivalents
|
17 | (1,078 | ) | |||||
Cash
and Cash Equivalents at Beginning of Period
|
337 | 1,377 | ||||||
Cash
and Cash Equivalents at End of Period
|
$ | 354 | $ | 299 | ||||
Non-Cash
Investing and Financing Activites
|
||||||||
Non-Cash
Contributed Utility Plant
|
$ | 3,420 | $ | 723 | ||||
Short-term
Investment of Bond Proceeds Held in Restricted Cash
|
$ | 3,399 | $ | -- | ||||
Supplemental
Disclosures of Cash Flow Information:
|
||||||||
Cash
Paid for:
|
||||||||
Interest
|
$ | 3,465 | $ | 3,300 | ||||
State
and Federal Income Taxes
|
$ | 2,773 | $ | 1,682 |
Three
Months
|
Nine
Months
|
|||||||||||||||
Period
ended September 30
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
Cost
|
$ | 314 | $ | 319 | $ | 944 | $ | 958 | ||||||||
Interest
Cost
|
476 | 447 | 1,429 | 1,341 | ||||||||||||
Expected
Return on Plan Assets
|
(530 | ) | (504 | ) | (1,590 | ) | (1,512 | ) | ||||||||
Amortization
of:
|
||||||||||||||||
Transition
Obligation
|
1 | 1 | 2 | 2 | ||||||||||||
Prior
Service Cost
|
18 | 18 | 52 | 52 | ||||||||||||
Net
Loss
|
36 | 86 | 107 | 258 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 315 | $ | 367 | $ | 944 | $ | 1,099 |
Three
Months
|
Nine
Months
|
|||||||||||||||
Period
ended September 30
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Service
Cost
|
$ | 158 | $ | 163 | $ | 474 | $ | 488 | ||||||||
Interest
Cost
|
164 | 152 | 493 | 458 | ||||||||||||
Expected
Return on Plan Assets
|
(68 | ) | (47 | ) | (204 | ) | (142 | ) | ||||||||
Amortization
of Transition Obligation
|
30 | 30 | 90 | 90 | ||||||||||||
Recognized
Net Loss
|
51 | 85 | 152 | 256 | ||||||||||||
Net
Periodic Benefit Cost
|
$ | 335 | $ | 383 | $ | 1,005 | $ | 1,150 |
Three
months ended September 30,
|
2008
|
2007
|
||||||
Common
Shares Outstanding
|
||||||||
End
of Period:
|
8,448,855 | 8,358,436 | ||||||
Weighted
Average Shares Outstanding:
|
||||||||
Days
Outstanding Basis
|
||||||||
Basic
|
8,388,134 | 8,284,883 | ||||||
Diluted
|
8,442,004 | 8,293,133 | ||||||
Basic
Earnings per Share
|
$ | 0.34 | $ | 0.47 | ||||
Dilutive
Effect of Unexercised Stock Options and Performance Shares
|
-- | -- | ||||||
Diluted
Earnings per Share
|
$ | 0.34 | $ | 0.47 | ||||
Nine
Months ended September 30,
|
||||||||
Weighted
Average Shares Outstanding:
|
||||||||
Days
Outstanding Basis
|
||||||||
Basic
|
8,368,598 | 8,255,788 | ||||||
Diluted
|
8,421,528 | 8,265,547 | ||||||
Basic
Earnings per Share
|
$ | 0.89 | $ | 0.87 | ||||
Dilutive
Effect of Unexercised Stock Options and Performance Shares
|
-- | -- | ||||||
Diluted
Earnings per Share
|
$ | 0.89 | $ | 0.87 |
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
|||||||||
Liabilities:
|
||||||||||||
Interest
Rate Swap
|
$ | - | $ | 4 | $ | - |
Three Months Ended September 30,
2008
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 17,325 | $ | 4,371 | $ | 1,672 | $ | 2,699 | ||||||||
Real
Estate Transactions
|
-- | -- | -- | -- | ||||||||||||
Service
and Rentals
|
1,201 | 223 | 87 | 136 | ||||||||||||
Total
|
$ | 18,526 | $ | 4,594 | $ | 1,759 | $ | 2,835 |
Three Months Ended September 30,
2007
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 17,218 | $ | 5,224 | $ | 1,494 | $ | 3,730 | ||||||||
Real
Estate Transactions
|
-- | -- | (20 | ) | 20 | |||||||||||
Service
and Rentals
|
1,210 | 238 | 89 | 149 | ||||||||||||
Total
|
$ | 18,428 | $ | 5,462 | $ | 1,563 | $ | 3,899 |
Nine Months Ended September 30,
2008
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 47,399 | $ | 10,561 | $ | 3,600 | $ | 6,961 | ||||||||
Real
Estate Transactions
|
-- | -- | -- | -- | ||||||||||||
Service
and Rentals
|
3,538 | 869 | 339 | 530 | ||||||||||||
Total
|
$ | 50,937 | $ | 11,430 | $ | 3,939 | $ | 7,491 |
Nine Months Ended September 30,
2007
|
||||||||||||||||
Segment
|
Revenues
|
Pre-Tax Income
|
Income Tax Expense
|
Net Income
|
||||||||||||
Water
Activities
|
$ | 45,306 | $ | 9,820 | $ | 3,117 | $ | 6,703 | ||||||||
Real
Estate Transactions
|
92 | 68 | 7 | 61 | ||||||||||||
Service
and Rentals
|
3,197 | 770 | 298 | 472 | ||||||||||||
Total
|
$ | 48,595 | $ | 10,658 | $ | 3,422 | $ | 7,236 |
September 30, 2008
|
December 31, 2007
|
|||||||
Total
Plant and Other Investments:
|
||||||||
Water
|
$ | 298,944 | $ | 283,641 | ||||
Non-Water
|
666 | 673 | ||||||
299,610 | 284,314 | |||||||
Other
Assets:
|
||||||||
Water
|
72,770 | 73,421 | ||||||
Non-Water
|
2,688 | 3,078 | ||||||
75,458 | 76,499 | |||||||
Total
Assets
|
$ | 375,068 | $ | 360,813 |
Business Segment
|
September 30, 2008
|
September 30, 2007
|
Increase/(Decrease)
|
|||||||||
Water
Activities
|
$ | 2,699,000 | $ | 3,730,000 | $ | (1,031,000 | ) | |||||
Real
Estate Transactions
|
-- | 20,000 | (20,000 | ) | ||||||||
Services
and Rentals
|
136,000 | 149,000 | (13,000 | ) | ||||||||
Total
|
$ | 2,835,000 | $ | 3,899,000 | $ | (1,064,000 | ) |
-
|
An
increase of approximately $89,000 in Operating Revenue primarily due to
increased fire protection charges and revenues from its Eastern
acquisition in January of 2008, which includes payments received from the
South Central Regional Water Authority. In addition, new rates
approved by the DPUC that became effective April 1, 2008 also added to the
increase in the third quarter. Off-setting these increases was a
significant decrease in residential revenues directly related to the
unusually wet weather in the third quarter of 2008 versus the same period
in 2007. In the Company’s northern service area, which is its largest
service area, at least a trace of rain was recorded on 43 days during the
quarter, including 10 of 13 weekends, and rainfall totaled 23.95 inches.
In the same period in 2007, 6.69 inches of rain were recorded, while
normal rainfall is 11.8 inches. The additional rainfall led to a nearly 10
percent reduction in billed water consumption per customer for the third
quarter of 2008 versus the same period in
2007.
|
-
|
Operation
and Maintenance expense increased by $1,064,000 primarily due to the
following components:
|
Expense Components
|
September 30, 2008
|
September 30, 2007
|
Increase/(Decrease)
|
|||||||||
Labor
|
$ | 3,045,000 | $ | 2,637,000 | $ | 408,000 | ||||||
Water
treatment (including chemical costs)
|
665,000 | 535,000 | 130,000 | |||||||||
Utility
costs
|
945,000 | 816,000 | 129,000 | |||||||||
Outside
Services
|
420,000 | 323,000 | 97,000 | |||||||||
Vehicles
|
399,000 | 318,000 | 81,000 | |||||||||
Maintenance
|
448,000 | 370,000 | 78,000 | |||||||||
Employee
benefit costs
|
1,209,000 | 1,146,000 | 63,000 | |||||||||
Customer
|
120,000 | 146,000 | (26,000 | ) | ||||||||
Purchased
water
|
390,000 | 494,000 | (104,000 | ) | ||||||||
Other
|
887,000 | 679,000 | 208,000 | |||||||||
Total
|
$ | 8,528,000 | $ | 7,464,000 | $ | 1,064,000 |
-
|
Labor
costs increased in 2008 by approximately $408,000 due to an increase in
employee levels due to the Eastern acquisition and regular wage increases
effective as of April 1, 2008. Water treatment costs increased primarily
due to an increase in the cost of key chemicals. Utility costs increased
over the prior year, primarily due to an upgrade to our communication
networks and higher costs for power and partially due to the acquisition
of Eastern. Outside services have increased primarily due to
audit, human resources and information technology consulting fees, and
higher legal costs. Employee benefits costs increased due to
higher medical and post-retirement medical costs associated with the
Company’s health and welfare plan, partially off-set by pension and other
benefit cost decreases. The decrease in purchased water costs
stemmed from a negotiated reduction in the Company’s purchased water rate
from a neighboring water utility.
|
-
|
Despite
an increase in Utility Plant, the Company saw a slight decrease in its
Depreciation expense due to the amortization of the acquisition adjustment
resulting from the Eastern
acquisition.
|
Business Segment
|
September 30, 2008
|
September 30, 2007
|
Increase/(Decrease)
|
|||||||||
Water
Activities
|
$ | 6,961,000 | $ | 6,703,000 | $ | 258,000 | ||||||
Real
Estate Transactions
|
-- | 61,000 | (61,000 | ) | ||||||||
Services
and Rentals
|
530,000 | 472,000 | 58,000 | |||||||||
Total
|
$ | 7,491,000 | $ | 7,236,000 | $ | 255,000 |
-
|
An
increase of approximately $2,070,000 in Operating Revenue primarily due to
increases in fire protection charges, unmetered revenues due to the
acquisition of Eastern in January 2008 and payments received from the
South Central Regional Water Authority. Additionally, the
Company saw modest gains in residential revenues primarily due to new
rates approved by the DPUC that became effective on April 1, 2008,
partially off-set by weather-related decreases in per-customer
consumption. In addition to the fire protection and residential
revenue increases, there were minor increases from commercial, industrial
and public authority customers, due primarily to the April 2008 rate
increase.
|
-
|
Operation
and Maintenance expense increased by $1,458,000 primarily due to the
following components:
|
Expense Components
|
September 30, 2008
|
September 30, 2007
|
Increase/(Decrease)
|
|||||||||
Labor
|
$ | 8,858,000 | $ | 8,033,000 | $ | 825,000 | ||||||
Water
treatment (including chemical costs)
|
1,520,000 | 1,319,000 | 201,000 | |||||||||
Outside
services
|
1,072,000 | 900,000 | 172,000 | |||||||||
Utility
costs
|
2,662,000 | 2,492,000 | 170,000 | |||||||||
Customer
|
587,000 | 453,000 | 134,000 | |||||||||
Vehicles
|
1,027,000 | 951,000 | 76,000 | |||||||||
Maintenance
|
1,195,000 | 1,152,000 | 43,000 | |||||||||
Employee
benefit costs
|
3,562,000 | 3,549,000 | 13,000 | |||||||||
Purchased
water
|
693,000 | 1,099,000 | (406,000 | ) | ||||||||
Other
|
2,573,000 | 2,343,000 | 230,000 | |||||||||
Total
|
$ | 23,749,000 | $ | 22,291,000 | $ | 1,458,000 |
-
|
Labor
and employee benefit costs increased in 2008 by a combined $838,000 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 by
reduced pension costs. Customer costs increased over the prior
year primarily due to an increase in uncollectible accounts and
communication with customers, including postage. Outside
services have increased primarily due to increased audit fees, consultants
related to information technology and human resources projects, and higher
legal costs, partially off-set by decreased actuarial fees. The
decrease in purchased water costs stemmed from a negotiated reduction in
the Company’s purchased water rate from a neighboring water
utility.
|
-
|
Despite
an increase in Utility Plant, the Company saw a slight decrease in its
Depreciation expense due to the amortization of the acquisition adjustment
resulting from the Eastern
acquisition.
|
-
|
An
increase in operating income tax expense of $220,000 primarily due to
higher pretax income.
|
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. (Exhibit 10.1 to Form 10-Q for the quarter ended June 30, 2008). | |
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: November
7, 2008
|
By: /s/ David C.
Benoit
David
C. Benoit
Vice
President – Finance and
Chief
Financial Officer
|
Date:
November 7, 2008
|
By: /s/ Nicholas A.
Rinaldi
Nicholas
A. Rinaldi
Controller
|