Document



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 11-K
_____________________________________________________________________________

/X/
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015

OR

/  /
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________

_____________________________________________________________________________

COMMISSION FILE NUMBER: 0-8084

_____________________________________________________________________________

SAVINGS PLAN OF THE CONNECTICUT WATER COMPANY

_____________________________________________________________________________

Connecticut Water Service, Inc.
93 West Main Street
Clinton, Connecticut 06413
(860) 669-8636







Savings Plan of the
Connecticut Water Company

Financial Statements
(With Supplementary Information)
and Report of Independent Registered Public Accounting Firm

Years Ended December 31, 2015 and 2014







Savings Plan of the
Connecticut Water Company
Years Ended December 31, 2015 and 2014
 
 
 
 
 
 
 
Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Supplemental Schedules
 
 
 
 
 
 
 
 
 
 

Other supplemental schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act (“ERISA”) of 1974 have been omitted because they are not applicable.






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants and Plan Administrator
Savings Plan of the Connecticut Water Company

We have audited the accompanying statements of net assets available for benefits of Savings Plan of the Connecticut Water Company (the “Plan”) as of December 31, 2015 and 2014, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2015 and 2014, and the changes in net assets available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The supplemental information in the accompanying schedule of assets (held at end of year) (Schedule H, Line 4i) as of December 31, 2015 and the schedule of delinquent participant contributions for the year then ended (Schedule H, Line 4a) have been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is presented for the purpose of additional analysis and is not a required part of the financial statements but includes supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedules is fairly stated in all material respects in relation to the financial statements as a whole.


/s/ CohnReznick LLP
Hartford, Connecticut
June 28, 2016




1




Savings Plan of the Connecticut Water Company
Statements of Net Assets Available for Benefits
December 31, 2015 and 2014


 
 
2015
 
2014
Assets
 
 
 
 
Investments, at fair value:
 
 

 
 

Mutual funds
 
$
22,016,979

 
$
22,377,221

Connecticut Water Service, Inc. common stock fund
 
2,063,072

 
1,814,309

Collective investment trust
 
1,674,916

 
2,435,322

Total investments
 
25,754,967

 
26,626,852

 
 
 
 
 
Receivables:
 
 

 
 

Notes receivable from participants
 
731,468

 
795,227

Net assets available for benefits
 
$
26,486,435

 
$
27,422,079



The accompanying notes are an integral part of these financial statements.

2




 


Savings Plan of the Connecticut Water Company
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2015 and 2014

 
 
2015
 
2014
Additions to net assets attributable to:
 
 
 
 
Investment income:
 
 
 
 
Dividends
 
$
478,959

 
$
366,139

Net (depreciation) appreciation in fair value of investments (see Note 3)
 
(360,382
)
 
1,392,241

 
 
118,577

 
1,758,380

 
 
 
 
 
Interest income on notes receivable from participants
 
34,836

 
38,488

 
 
 
 
 
Other income
 
26,452

 
25,051

 
 
 
 
 
Contributions:
 
 

 
 

Employee contributions
 
1,166,360

 
1,216,943

Employer contributions
 
603,143

 
582,720

 
 
1,769,503

 
1,799,663

 
 
 
 
 
Total additions
 
1,949,368

 
3,621,582

 
 
 
 
 
Deductions from net assets attributable to:
 
 

 
 

Benefits paid to participants
 
2,807,667

 
2,958,524

Administrative expenses (see Note 2)
 
77,345

 
79,193

Total deductions
 
2,885,012

 
3,037,717

 
 
 
 
 
Net (decrease) increase
 
(935,644
)
 
583,865

 
 
 
 
 
Transfer of assets
 
—

 
350

 
 
 
 
 
Net assets available for benefits, beginning of year
 
27,422,079

 
26,837,864

Net assets available for benefits, end of year
 
$
26,486,435

 
$
27,422,079



The accompanying notes are an integral part of these financial statements.

3
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014



1.  Description of the Plan

The following description of Savings Plan of the Connecticut Water Company (the “Plan”) provides only general information.  Participants should refer to the Plan document for a more complete description of the Plan’s provisions.  The Connecticut Water Company (the “Company”) is a wholly-owned subsidiary of Connecticut Water Service, Inc.  The Plan was established by the Board of Directors of the Company in 1985 and has been amended and restated since that date.  The Plan is a trusteed, defined contribution plan covering all eligible employees of the Company and, effective January 1, 2012, The Maine Water Company, a wholly-owned subsidiary of Connecticut Water Service, Inc.

Wells Fargo Bank, N.A. serves both as the Plan’s Trustee and record-keeper.

The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). The Company’s Corporate Finance and Investment Committee determines the Plan’s valuation policies utilizing information provided by Fiduciary Investment Advisors.

Effective January 1, 2009, the Company changed the Plan to meet the requirements of a special Internal Revenue Code (“IRC”) safe harbor.  Under the provisions of this safe harbor plan, as amended and restated effective January 1, 2012, the Company makes an automatic contribution of 3% of eligible compensation for all eligible employees, even if the employee does not elect to make their own contributions.  Employees hired on or after January 1, 2009 are ineligible to participate in the Company’s pension plan; therefore, the Company contributes an additional 1.5% of eligible compensation to the employee’s account.  Additionally, the Plan contains the following provisions as described below:
 
(a)
Participant salary deferral contributions are made on a pre-tax basis of between 1% and 50% of eligible compensation, or a flat dollar amount up to an annual maximum set by the IRC, for all employees.  Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions.  Participants may also contribute via rollover amounts representing distributions from other qualified defined benefit or defined contribution plans.
(b)
New employees are eligible to enroll in the Plan after six months of employment with the Company.  Enrollment will take place on the first day of the next plan year quarter following the date on which such eligibility requirements are satisfied.
(c)
Participants are eligible to receive Company contributions upon Plan enrollment.

Once eligible, employees can elect to enter into a written salary deferral agreement.  Participant loans and hardship withdrawals are permitted.  Changes in contributions are allowed quarterly.

Participants may borrow up to the lesser of $50,000 or 50% of the vested amount of their accounts at the rate of interest of prime rate plus 1%.  The minimum loan amount is $1,000. Notes receivable from participants must be repaid within five years, or before attaining age 65, whichever is shorter.  Notes receivable from participants to purchase a principal residence may be repaid within fifteen years. Principal and interest are paid ratably through payroll deductions over the life of the loan. Delinquent notes receivable from participants are treated as a benefit payment based upon the terms of the Plan document.

A participant is fully vested at all times in the accrued balance of his or her entire account.

On a daily basis, the Trustee determines the total net earnings of each investment option and allocates this amount to the accounts of the participants on the basis of the percentage each participant has invested in each investment option.

Employer contributions are deposited into participants’ accounts based on the participant elected allocations.

Payments of benefits upon retirement at age 55 or later, or termination of employment, are, at the election of the participant, either made in a lump-sum payment, paid over a period of time not to exceed the participant’s life expectancy, or paid out commencing at age 70-1/2.  Payment of benefits in the event of death are made to the beneficiaries designated by the participant and initiated by the beneficiary.  A retired or terminated participant who elects distributions commencing at age 70-1/2 may elect to receive periodic distributions at any time prior to taking a lump-sum payout.  Benefits are recorded when paid.


4
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014

1.  Description of the Plan (Continued)

Each participant’s account is credited with the participant’s contributions, the Company’s contributions and account earnings.  Participant’s accounts are charged with an allocation of certain administrative expenses to the extent those expenses are not paid by the Company.  Participants are permitted to invest in one or more of the investment options offered pursuant to the provisions of the Plan.

Prior to age 59-1/2, a participant may withdraw roll-over balances for any reason, subject to tax penalties, if applicable.  Additionally, participants under the age of 59-1/2 are able to withdraw balances attributable to employee contributions for hardship purposes.  Company contributions are not available for in-service distributions due to hardship or following the attainment of age 59-1/2.  Participants may withdraw all or any part of their contributed balance upon having attained age 59-1/2.  Company contributions can be withdrawn at age 70-1/2.

The Company amended the Plan effective January 1, 2016 in order to bring all previous amendments under one, updated plan document.

2. Summary of Significant Accounting Policies

Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management of the Plan to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period.  Actual results could differ from those estimates.

Expenses
Administrative expenses and fees of the Plan are ordinarily paid by the Company unless the Plan administrator directs the Trustee to pay these expenses utilizing Plan assets.  Fees related to the administration of notes receivable from participants are charged directly to the participant’s account and are included in administrative expenses. Investment related expenses are included in the net appreciation of fair value of investments. During 2015 and 2014, administrative expenses of $77,345 and $79,193, respectively, were paid to the Trustee out of Plan assets.

Valuation of Investments and Income Recognition
Investments held by a collective investment trust are required to be reported at fair value.  However, contract value is the relevant measurement attribute for that portion of the net assets of a collective investment trust attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the underlying defined contribution plans.  Since there is not a material difference between fair value and contract value for the collective investment trust, the Plan’s investment in the collective investment trust is presented at contract value, which approximates fair value on the statements of net assets available for benefits as of December 31, 2015 and 2014.

The investments in the accompanying statements of net assets available for benefits are stated at fair value.  Securities traded on a national securities exchange are reported at fair value, at the last reported sales price on the last business day of the Plan year.  Investments traded in the over-the-counter market and listed securities for which no sales were reported on that date are valued at the average of the last reported bid and asked prices.  Mutual funds are reported at net asset value.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net (depreciation) appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

5
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014

2. Summary of Significant Accounting Policies (Continued)


Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when they are incurred. No allowance for credit losses has been recorded as of December 31, 2015 or 2014.

Risks and Uncertainties
The Plan provides for various investment options in mutual funds, a collective investment trust, and a common stock fund.  Investment securities are exposed to various risks, such as interest rate, market and credit risks.  Due to the level of risk associated with certain investment securities, it is possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the accompanying financial statements and supplemental schedule.

Recently Issued Accounting Pronouncements
In May 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-07, “Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)” (“ASU 2015-07”)  Under ASU 2015-07, Plan investments for which fair value is measured at net asset value per share using the practical expedient should not be categorized in the fair value hierarchy disclosure in the financial statements.  ASU 2015-07 is effective for annual periods beginning after December 15, 2015.  The adoption of ASU 2015-07 is not expected to have a material impact on the disclosures in the Plan’s financial statements.

In July 2015, the FASB issued ASU No. 2015-12, “Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient” (“ASU 2015-12”), which is part of the FASB’s Simplification Initiative for employee benefit plans. Part I of ASU 2015-12 designates contract value as the only required measure for fully benefit-responsive investment contracts. Part II of ASU 2015-12 removes the requirement to disclose individual investments that represent 5 percent or more of net assets available for benefits, removes the requirement to disclose the net appreciation or depreciation for investments by general type, and removes the requirement to disclose investments by class of investments in the fair value table prescribed by FASB Accounting Standards Codification 820, “Fair Value Measurement”. Part III allows for certain amounts to be reported as of the month end date prior to the plan’s year end for those year ends that do not fall on a month end. ASU 2015-12 is effective for all entities for fiscal years beginning after December 15, 2015. Early adoption is permitted for all entities. The adoption of ASU 2015-12 is not expected to have a material impact on the disclosures in the Plan’s financial statements.

3. Investments
 
Participants direct the Trustee regarding the investment of amounts held in their accounts.  The fair value of investments that represent 5% or more of the Plan’s net assets as of December 31, 2015 and 2014 are as follows:
 

6
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014

3. Investments (Continued)

2015
 
Vanguard Growth Index Fund
$
2,606,793

Vanguard Target Retirement Fund 2030
2,404,253

Vanguard Target Retirement Fund 2020
2,231,908

Connecticut Water Service, Inc. common stock fund
2,063,072

MFS Value Fund
1,951,629

American Balanced Fund
1,848,490

Vanguard 500 Index Fund
1,802,501

Wells Fargo Stable Return Fund
1,674,916

Vanguard Small Cap Growth Index Fund
1,615,501

MetWest Total Return Bond Fund
1,591,843

American EuroPacific Growth Fund
1,565,664

 
 
2014
 
Wells Fargo Stable Return Fund
$
2,435,322

Blackrock Funds III Lifepath 2030
2,533,967

Blackrock Funds III Lifepath 2020
1,849,119

MFS Value Fund
2,287,443

Vanguard Growth Index Fund
2,352,783

American EuroPacific Growth Fund
1,622,564

MetWest Total Return Bond Fund
1,784,934

American Balanced Fund
2,017,589

Vanguard Small Cap Growth Index Fund
1,725,722

Vanguard 500 Index Fund
2,060,230

Connecticut Water Service, Inc. common stock fund
1,814,309

Blackrock Funds III Lifepath 2040
1,373,600


During 2015 and 2014, the Plan’s investments, including gains and losses on investments bought and sold as well as held during the year, (depreciated)/appreciated in value by $(360,382) and $1,392,241, respectively, as follows:

 
 
2015
 
2014
 
 
 
 
 
Mutual Funds
 
$
(542,139
)
 
$
1,259,336

Common Stock Fund
 
148,300

 
90,449

Collective Investment Trust
 
33,457

 
42,456

 
 
$
(360,382
)
 
$
1,392,241



4. Fair Value Measurements

The Plan values its financial instruments based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In order to increase consistency and comparability in fair value measurements, a fair value hierarchy that prioritizes observable and unobservable inputs is used to measure fair value into three broad levels, which are described below:


7
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014

4. Fair Value Measurements (Continued)


Level 1:
Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.  The fair value hierarchy gives the highest priority to Level 1 inputs.
Level 2:
Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in inactive markets; or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated with observable market data.
Level 3:
Unobservable inputs are used when little or no market data is available.  The fair value hierarchy gives the lowest priority to Level 3 inputs.

In determining fair value, the Plan utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value. The asset or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial assets carried at fair value at December 31, 2015 are classified in the table below in one of the three categories described above:

 
 
Level 1
 
Level 2
 
Level 3
 
Total
Equity Mutual Funds
 
$
11,860,157

 
$
—

 
$
—

 
$
11,860,157

Balanced Mutual Funds
 
8,564,979

 
—

 
—

 
8,564,979

Fixed Income Mutual Funds
 
1,591,843

 
—

 
—

 
1,591,843

Total Mutual Funds
 
22,016,979

 
—

 
—

 
22,016,979

Collective Investment Trust
 
—

 
1,674,916

 
—

 
1,674,916

Common Stock Fund
 
—

 
2,063,072

 
—

 
2,063,072

 
 
$
22,016,979

 
$
3,737,988

 
$
—

 
$
25,754,967


Financial assets carried at fair value at December 31, 2014 are classified in the table below in one of the three categories described above:

 
 
Level 1
 
Level 2
 
Level 3
 
Total
Equity Mutual Funds
 
$
12,625,446

 
$
—

 
$
—

 
$
12,625,446

Balanced Mutual Funds
 
7,966,841

 
—

 
—

 
7,966,841

Fixed Income Mutual Funds
 
1,784,934

 
—

 
—

 
1,784,934

Total Mutual Funds
 
22,377,221

 
—

 
—

 
22,377,221

Collective Investment Trust
 
—

 
2,435,322

 
—

 
2,435,322

Common Stock Fund
 
—

 
1,814,309

 
—

 
1,814,309

 
 
$
22,377,221

 
$
4,249,631

 
$
—

 
$
26,626,852


There have been no changes in the methodologies used at December 31, 2015 and 2014.

Investments in mutual funds are valued at the net asset value (“NAV”) of shares held by the Plan at year end using quoted market prices on active markets (Level 1).  Level 1 instrument valuations are obtained from real-time quotes for transactions in active exchange markets involving identical assets.

Investments in the common stock fund are valued at the closing price reported on the active market on which the individual securities are traded, plus any uninvested cash position (Level 2).

The Plan’s interest in the collective investment trust is valued at the NAV of units of a bank collective trust. The NAV, as provided by the trustee, is used as a practical expedient to estimate fair value. The NAV is based on the fair value of the underlying investments held by the fund less its liabilities. This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV. Participant transactions (purchases and sales) may occur daily.

8
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014

4. Fair Value Measurements (Continued)


Were the Plan to initiate a full redemption of the collective trust, the investment adviser reserves the right to temporarily delay withdrawal from the trust in order to ensure that securities liquidations will be carried out in an orderly business manner.

Fair value of investments in entities that use NAV
The following table summarizes investments measured at fair value based on NAV per share as of December 31, 2015 and 2014:

2015
 
Fair Value
 
Unfunded Commitment
 
Redemption Frequency (If Currently Eligible)
 
Redemption Notice Period
Wells Fargo Stable Return Fund
 
$
1,674,916

 
—

 
Daily
 
1 Day
 
 
 
 
 
 
 
 
 
2014
 
Fair Value
 
Unfunded Commitment
 
Redemption Frequency (If Currently Eligible)
 
Redemption Notice Period
Wells Fargo Stable Return Fund
 
$
2,435,322

 
—

 
Daily
 
1 Day

The Wells Fargo Stable Return Fund seeks to maintain the safety of the investor’s principal while obtaining a consistent, low volatility return superior to other high quality alternatives over a full interest rate cycle.

5. Tax Status

The Plan obtained its latest determination letter on September 15, 2010, in which the Internal Revenue Service (the “IRS”) stated that the Plan, as then designed, was in compliance with the applicable requirements of the IRC. Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC and that, therefore, the Plan qualifies under Section 401(a) and the related trust is tax exempt as of December 31, 2015 and 2014.  Therefore, no provision for income taxes has been included in the Plan’s financial statements.

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS.  The Plan is subject to routine audits by taxing jurisdictions and, in April 2016, the Company was notified by the IRS that the Plan would undergo an examination for the 2014 plan year.  The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2012.

6. Related-Party Transactions and Party-in-Interest Transactions

Section 3(14) of ERISA defines a party-in-interest to include among others, fiduciaries or employees of the Plan, any person who provides services to the Plan or an employer whose employees are covered by the Plan.  Accordingly, notes receivable from participants and investments in Connecticut Water Service, Inc. Common Stock Fund are considered party-in-interest transactions. The Plan held 67,776 and 63,775 units of the Company’s Common Stock Fund as of December 31, 2015 and 2014, respectively.  The fair value of the investment in the Company’s Common Stock Fund was $2,063,072 and $1,814,309 as of December 31, 2015 and 2014, respectively.  Net appreciation in the Plan’s investment in Connecticut Water Service, Inc. Common Stock Fund was $148,300 and $90,449 for the years ended December 31, 2015 and 2014, respectively.  Dividends are reinvested in the Plan when paid.  Total dividends paid during the years ended December 31, 2015 and 2014 were approximately $51,000 and $46,000, respectively.

The Plan’s investment in the Wells Fargo Stable Return Fund managed by the Trustee is considered an exempt party-in-interest transaction. Fees incurred by the Plan for investment management services are included in net appreciation in fair value of investment, as they are paid through revenue sharing, rather than a direct payment. As described in Note 2, the Plan made direct payments to the Trustee of $77,345 and $79,193 for the years ended December 31, 2015 and 2014, respectively, which were not covered by revenue sharing. The Plan sponsor pays directly any other fees related to the Plan’s operations.

9
Savings Plan of the Connecticut Water Company
Notes to Financial Statements
December 31, 2015 and 2014



7. Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan document to discontinue its contributions at any time and to terminate the Plan, subject to the provisions of ERISA.

8. Nonexempt Transactions

As reported on the supplemental schedule of delinquent participant contributions (Schedule H, Line 4a) for the year ended December 31, 2015, certain contributions of $208 were not remitted to the trust within the time frame specified by the Department of Labor’s Regulation 29 (CFR 2510.3-102), thus constituting nonexempt transactions between the Plan and the Company for the year ended December 31, 2015.

For the year ended December 31, 2014, certain contributions of $55,930 were not remitted to the trust within the time frame specified by the Department of Labor’s Regulation 29 (CFR 2510.3-102), thus constituting nonexempt transactions between the Plan and the Company.

9. Compliance Related Matters

During 2014, certain operational failures were identified surrounding participant loan administration including the timeliness of loan setup. As a result of these operational failures, the Plan has filed, and the IRS accepted, an application under the Voluntary Fiduciary Correction Program (“VFCP”) of the IRS. In December 2015, the IRS accepted the Plan’s VFCP application without changes and the Company believes this matter is closed. During 2015, certain additional operational failures were identified surrounding Plan administration, including an operational issue where incorrect compensation was used to calculate 2015 contributions to the Plan. The Plan administrator is in the process of determining the correct contributions required to make to the Plan. Despite the operational failures identified, the Plan administrator believes the Plan is being operated in compliance with the applicable requirements of the IRC.

10





Savings Plan of the Connecticut Water Company
EIN:  06-0713930
Plan Number:  003
Schedule H - Line 4(a) - Schedule of Delinquent Participant Contributions
Year Ended December 31, 2015


Total That Constitute Nonexempt Prohibited Transactions
 
 
 
 
 
 
 
 
 
 
 
Total Fully Corrected
 
Check Here
 
 
 
Under Voluntary
Participant
if Late
 
 
Contributions
Fiduciary Correction
Contributions
Participant Loan
Contributions
Contributions
Pending
Program (“VFCP”) and
Transferred
Repayments
Not
Corrected
Correction
Prohibited Transaction
Late to the Plan
are Included
Corrected
Outside VFCP
in VFCP
Exemption 2002-51
 
 
 
 
 
 
 
 
 
 
 
 
$208
 
—
$208
—
—
 
 
 
 
 
 

See Report of Independent Registered Public Accounting Firm.

11





Savings Plan of the Connecticut Water Company
EIN:  06-0713930
Plan Number:  003
Schedule H - Line 4(i) - Schedule of Assets (Held at End of Year)
December 31, 2015

 
 
Description of Investment including
 
 
 
Identity of Issue, Borrower, Lessor or
Maturity Date, Rate of Interest,
 
Current
 
Similar Party
Collateral, Par, or Maturity Value
Cost
Value
 
 
 
 
 
 
American EuroPacific Growth Fund
Mutual Fund
**
$
1,565,664

 
American Balanced Fund
Mutual Fund
**
1,848,490

 
Vanguard Target Retirement Fund
Mutual Fund
**
129,556

 
Vanguard Target Retirement Fund 2015
Mutual Fund
**
13,025

 
Vanguard Target Retirement Fund 2020
Mutual Fund
**
2,231,908

 
Vanguard Target Retirement Fund 2025
Mutual Fund
**
251,926

 
Vanguard Target Retirement Fund 2030
Mutual Fund
**
2,404,253

 
Vanguard Target Retirement Fund 2035
Mutual Fund
**
238,931

 
Vanguard Target Retirement Fund 2040
Mutual Fund
**
1,163,429

 
Vanguard Target Retirement Fund 2045
Mutual Fund
**
167,425

 
Vanguard Target Retirement Fund 2050
Mutual Fund
**
107,774

 
Vanguard Target Retirement Fund 2055
Mutual Fund
**
8,194

 
Vanguard Target Retirement Fund 2060
Mutual Fund
**
68

 
Vanguard Growth Index Fund
Mutual Fund
**
2,606,793

 
Vanguard 500 Index Fund
Mutual Fund
**
1,802,501

 
Vanguard Mid Cap Index Fund
Mutual Fund
**
1,194,942

 
Vanguard Small Cap Growth Index Fund
Mutual Fund
**
1,615,501

 
Vanguard Small Cap Index Fund
Mutual Fund
**
724,432

 
Vanguard Value Index Fund
Mutual Fund
**
398,695

 
MFS Value Fund
Mutual Fund
**
1,951,629

 
MetWest Total Return Bond Fund
Mutual Fund
**
1,591,843

 
Total Mutual Funds
 
 
22,016,979

 
 
 
 
 

*
Connecticut Water Service, Inc.
Common Stock Fund
**
2,063,072

 
 
 
 
 

*
Wells Fargo Stable Return Fund
Collective Investment Trust
**
1,674,916

 
 
 
 
 

*
Participant loans
Interest rates ranging from 4.25% to
 
 
 
 
9.25%, maturing between 2016 and
 
 
 
 
2020, secured by participant account
 
 

 
 
balance
**
731,468

 
 
 
 
 

 
Total
 
 
$
26,486,435

 
 
 
 
 

*
Indicates a party-in-interest
 
 
 

 
 
 
 
 

**
Cost information was omitted since all investments are participant directed.
 

See Report of Independent Registered Public Accounting Firm.

12





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.



 
SAVINGS PLAN OF THE CONNECTICUT WATER COMPANY
 
Date:  June 28, 2016
By:  /s/ David C. Benoit
 
Name:  David C. Benoit
Title:  Senior Vice President and Chief Financial Officer, Connecticut Water Company, the Plan Administrator








EXHIBIT INDEX


Exhibit No.
Description
23
Consent of Independent Registered Public Accounting Firm