Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2005 OR |
o | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM |
TO
Commission File Number 0-8084
Connecticut Water Service, Inc.
(Exact name of registrant as specified in its charter)
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 offices) | 06413-1600 (Zip Code) |
(860) 669-8636
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, address and former fiscal year, if changed since last report)
(Former name, address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yesþ Noo
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
8,096,542
Number of shares of common stock outstanding, June 30, 2005
(Includes 49,105 common stock equivalent shares awarded under the Performance Stock Program)
(Includes 49,105 common stock equivalent shares awarded under the Performance Stock Program)
Table of Contents
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Financial Report
June 30, 2005 and 2004
June 30, 2005 and 2004
TABLE OF CONTENTS
Part I, Item 1: Financial Statements | ||||||||
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Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 | ||||||||
EX-31.1: CERTIFICATION | ||||||||
EX-31.2: CERTIFICATION | ||||||||
EX-32: CERTIFICATION |
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Page 3
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
At June 30, 2005 and December 31, 2004
(In thousands)
At June 30, 2005 and December 31, 2004
(In thousands)
June 30, | Dec. 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
ASSETS | ||||||||
Utility Plant | $ | 329,574 | $ | 333,985 | ||||
Construction Work in Progress | 6,357 | 7,463 | ||||||
Utility Plant Acquisition Adjustments | (1,273 | ) | (1,273 | ) | ||||
334,658 | 340,175 | |||||||
Accumulated Provision for Depreciation | (95,825 | ) | (98,399 | ) | ||||
Net Utility Plant | 238,833 | 241,776 | ||||||
Other Property and Investments | 10,810 | 4,298 | ||||||
Cash and Cash Equivalents | 102 | 707 | ||||||
Accounts Receivable (Less Allowance, 2005 - $182; 2004 - $212) | 5,067 | 5,702 | ||||||
Accrued Unbilled Revenues | 4,053 | 4,064 | ||||||
Materials and Supplies, at Average Cost | 891 | 869 | ||||||
Prepayments and Other Current Assets | 894 | 3,923 | ||||||
Barlaco Assets Held for Sale | 305 | — | ||||||
Total Current Assets | 11,312 | 15,265 | ||||||
Unamortized Debt Issuance Expense | 6,931 | 7,169 | ||||||
Unrecovered Income Taxes | 16,097 | 16,173 | ||||||
Post-retirement Benefits Other Than Pension | 1,502 | 1,088 | ||||||
Goodwill | 3,608 | 3,608 | ||||||
Deferred Charges and Other Costs | 1,336 | 1,563 | ||||||
Total Regulatory and Other Long-Term Assets | 29,474 | 29,601 | ||||||
Total Assets | $ | 290,429 | $ | 290,940 | ||||
CAPITALIZATION AND LIABILITIES | ||||||||
Common Stockholders’ Equity | $ | 91,893 | $ | 87,865 | ||||
Preferred Stock | 847 | 847 | ||||||
Long-Term Debt | 64,615 | 66,399 | ||||||
Total Capitalization | 157,355 | 155,111 | ||||||
Current Portion of Long Term Debt | 226 | 326 | ||||||
Interim Bank Loans Payable | 7,750 | 5,650 | ||||||
Accounts Payable and Accrued Taxes, Interest and Other Expenses | 4,664 | 9,413 | ||||||
Other Current Liabilities | 592 | 559 | ||||||
Total Current Liabilities | 13,232 | 15,948 | ||||||
Advances for Construction | 27,930 | 27,157 | ||||||
Contributions in Aid of Construction | 44,797 | 46,111 | ||||||
Deferred Federal and State Income Taxes | 24,437 | 24,249 | ||||||
Unfunded Future Income Taxes | 12,720 | 13,096 | ||||||
Long-term Compensation Arrangements | 8,240 | 7,445 | ||||||
Unamortized Investment Tax Credits | 1,718 | 1,823 | ||||||
Commitments and Contingencies | ||||||||
Total Long-Term Liabilities | 119,842 | 119,881 | ||||||
Total Capitalization and Liabilities | $ | 290,429 | $ | 290,940 | ||||
The accompanying notes are an integral part of these financial statements.
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Page 4
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CAPITALIZATION
At June 30, 2005 and December 31, 2004
(In thousands, except share data)
At June 30, 2005 and December 31, 2004
(In thousands, except share data)
June 30, | Dec. 31, | |||||||
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Common Stockholders’ Equity | ||||||||
Common Stock Without Par Value Authorized - 15,000,000 Shares; | $ | 58,401 | $ | 57,111 | ||||
Shares Issued and Outstanding: 2005 - 8,096,542 ; 2004 - 8,035,199 | ||||||||
Stock Issuance Expense | (1,598 | ) | (1,597 | ) | ||||
Retained Earnings | 34,955 | 32,264 | ||||||
Accumulated Other Comprehensive Income | 135 | 87 | ||||||
Total Common Stockholders’ Equity | 91,893 | 87,865 | ||||||
Preferred 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 | ||||||
Cumulative Preferred Stock of Barnstable Water Company | ||||||||
Voting, $100 Par Value; Authorized, Issued and Outstanding 750 shares. Redeemable at $105 per share. | 75 | 75 | ||||||
Total Preferred Stock | 847 | 847 | ||||||
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 | 7,685 | 7,685 | ||||||
4.40% 2003A Series, due 2020 | 8,000 | 8,000 | ||||||
5.00% 2003C Series, due 2022 | 14,930 | 14,930 | ||||||
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 | ||||||
Total Connecticut Water Company | 62,305 | 62,305 | ||||||
Crystal Water Utilities Corporation | ||||||||
8.0% New London Trust, Due 2017 | 108 | 111 | ||||||
Crystal Water Company of Danielson | ||||||||
7.82% Connecticut Development Authority, Due 2021 | — | 455 | ||||||
Chester Realty | ||||||||
6% Note Payable, Due 2006 | 23 | 35 | ||||||
Barnstable Water Company | ||||||||
10.2% Indianapolis Life Insurance Co., Due 2011 | — | 1,325 | ||||||
Unionville Water Company | ||||||||
8.125% Farmington Savings Bank, Due 2011 | 904 | 963 | ||||||
3.56% State of Connecticut, Due 2023 | 1,501 | 1,531 | ||||||
Total Unionville | 2,405 | 2,494 | ||||||
Total Connecticut Water Service, Inc. | 64,841 | 66,725 | ||||||
Less Current Portion | (226 | ) | (326 | ) | ||||
Total Long-Term Debt | 64,615 | 66,399 | ||||||
Total Capitalization | $ | 157,355 | $ | 155,111 | ||||
The accompanying notes are an integral part of these financial statements.
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Page 5
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
For the Three Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Revenues | $ | 11,409 | $ | 11,959 | ||||
Operating Expenses | ||||||||
Operation and Maintenance | 6,478 | 5,483 | ||||||
Depreciation | 1,473 | 1,456 | ||||||
Income Taxes | 334 | 987 | ||||||
Taxes Other Than Income Taxes | 1,327 | 1,270 | ||||||
Gain on Sale of Assets of Barnstable Water Co, Net of Taxes | (2,794 | ) | — | |||||
Total Operating Expenses | 6,818 | 9,196 | ||||||
Utility Operating Income | 4,591 | 2,763 | ||||||
Other Income, Net of Taxes | ||||||||
Non-Water Sales Earnings | 281 | 240 | ||||||
Allowance for Funds Used During Construction | 150 | 100 | ||||||
Other | 36 | 21 | ||||||
Total Other Income, Net of Taxes | 467 | 361 | ||||||
Interest and Debt Expense | ||||||||
Interest on Long-Term Debt | 750 | 837 | ||||||
Other Interest Charges | 133 | 75 | ||||||
Amortization of Debt Expense | 87 | 76 | ||||||
Total Interest and Debt Expense | 970 | 988 | ||||||
Net Income Before Preferred Dividends | 4,088 | 2,136 | ||||||
Preferred Stock Dividend Requirement | 10 | 10 | ||||||
Net Income Applicable to Common Stock | $ | 4,078 | $ | 2,126 | ||||
Weighted Average Common Shares Outstanding: | ||||||||
Basic | 8,078 | 7,992 | ||||||
Diluted | 8,118 | 8,030 | ||||||
Earnings Per Common Share: | ||||||||
Basic | $ | 0.50 | $ | 0.26 | ||||
Diluted | $ | 0.50 | $ | 0.26 | ||||
Dividends Per Common Share | $ | 0.2100 | $ | 0.2075 |
The accompanying notes are an integral part of these financial statements.
Table of Contents
Page 6
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Operating Revenues | $ | 22,831 | $ | 22,878 | ||||
Operating Expenses | ||||||||
Operation and Maintenance | 12,039 | 11,107 | ||||||
Depreciation | 2,976 | 2,967 | ||||||
Income Taxes | 1,089 | 1,516 | ||||||
Taxes Other Than Income Taxes | 2,692 | 2,619 | ||||||
Gain on Sale of Assets of Barnstable Water Co, Net of Taxes | (2,794 | ) | — | |||||
Total Operating Expenses | 16,002 | 18,209 | ||||||
Utility Operating Income | 6,829 | 4,669 | ||||||
Other Income, Net of Taxes | ||||||||
Gain on Real Estate Transactions | 261 | 706 | ||||||
Non-Water Sales Earnings | 521 | 387 | ||||||
Allowance for Funds Used During Construction | 271 | 199 | ||||||
Other | 75 | 58 | ||||||
Total Other Income, Net of Taxes | 1,128 | 1,350 | ||||||
Interest and Debt Expense | ||||||||
Interest on Long-Term Debt | 1,454 | 1,538 | ||||||
Other Interest Charges | 255 | 211 | ||||||
Amortization of Debt Expense | 175 | 150 | ||||||
Total Interest and Debt Expense | 1,884 | 1,899 | ||||||
Net Income Before Preferred Dividends | 6,073 | 4,120 | ||||||
Preferred Stock Dividend Requirement | 19 | 19 | ||||||
Net Income Applicable to Common Stock | $ | 6,054 | $ | 4,101 | ||||
Weighted Average Common Shares Outstanding: | ||||||||
Basic | 8,063 | 7,983 | ||||||
Diluted | 8,102 | 8,027 | ||||||
Earnings Per Common Share: | ||||||||
Basic | $ | 0.75 | $ | 0.51 | ||||
Diluted | $ | 0.75 | $ | 0.51 | ||||
Dividends Per Common Share | $ | 0.4200 | $ | 0.4150 |
The accompanying notes are an integral part of these financial statements.
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Page 7
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2005 and 2004
(In thousands)
For the Three Months Ended June 30, 2005 and 2004
(In thousands)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net Income | $ | 4,078 | $ | 2,126 | ||||
Other Comprehensive Income, net of tax Qualified Cash Flow Hedging Instrument Benefit (Expense) net of tax expense (benefit) of $(88) in 2005; $253 in 2004 | (124 | ) | 376 | |||||
Comprehensive Income | $ | 3,954 | $ | 2,502 | ||||
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net Income | $ | 6,054 | $ | 4,101 | ||||
Other Comprehensive Income, net of tax Qualified Cash Flow Hedging Instrument Benefit (Expense) net of tax expense (benefit) of $27 in 2005; $135 in 2004 | 48 | 201 | ||||||
Comprehensive Income | $ | 6,102 | $ | 4,302 | ||||
The accompanying notes are an integral part of these financial statements.
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Page 8
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Three Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
For the Three Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Balance at Beginning of Period | $ | 32,562 | $ | 29,870 | ||||
Net Income Before Preferred Dividends of Parent | 4,088 | 2,136 | ||||||
36,650 | 32,006 | |||||||
Dividends Declared: | ||||||||
Cumulative Preferred, Class A, $.20 per share | 3 | 3 | ||||||
Cumulative Preferred, Series $.90, $.225 per share | 7 | 7 | ||||||
Common Stock - 2005 $.21 per share; 2004 $.2075 per share | 1,685 | 1,649 | ||||||
1,695 | 1,659 | |||||||
Balance at End of Period | $ | 34,955 | $ | 30,347 | ||||
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
For the Six Months Ended June 30, 2005 and 2004
(In thousands, except per share amounts)
2005 | 2004 | |||||||
(Unaudited) | (Unaudited) | |||||||
Balance at Beginning of Period | 32,264 | $ | 29,549 | |||||
Net Income Before Preferred Dividends of Parent | 6,073 | 4,120 | ||||||
38,337 | 33,669 | |||||||
Dividends Declared: | ||||||||
Cumulative Preferred, Class A, $.40 per share | 6 | 6 | ||||||
Cumulative Preferred, Series $.90, $.45 per share | 13 | 13 | ||||||
Common Stock - 2005 $.42 per share; 2004 $.415 per share | 3,363 | 3,303 | ||||||
3,382 | 3,322 | |||||||
Balance at End of Period | $ | 34,955 | $ | 30,347 | ||||
The accompanying notes are an integral part of these financial statements.
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Page 9
Connecticut Water Service, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2005 and 2004
(In thousands)
For the Six Months Ended June 30, 2005 and 2004
(In thousands)
2005 | 2004 | ||||||||
(Unaudited) | (Unaudited) | ||||||||
Operating Activities: | |||||||||
Net Income Before Preferred Dividends of Parent | $ | 6,073 | $ | 4,120 | |||||
Adjustments to Reconcile Net Income to Net Cash Provided by (Used for) Operating Activities: | |||||||||
Gain on Sale of Assets of Barnstable Water Company Assets Sold | (4,528 | ) | |||||||
Depreciation (including $99 in 2005, $97 in 2004 charged to other accounts) | 3,074 | 3,064 | |||||||
Change in Assets and Liabilities: | |||||||||
(Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues | 646 | (278 | ) | ||||||
(Increase) Decrease in Other Current Assets | 2,930 | (689 | ) | ||||||
(Increase) Decrease in Other Non-Current Items | 568 | (396 | ) | ||||||
(Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities | (4,716 | ) | (2,444 | ) | |||||
Increase (Decrease) in Deferred Income Taxes and Investment Tax Credits, Net | (217 | ) | 603 | ||||||
Total Adjustments | (2,243 | ) | (140 | ) | |||||
Net Cash and Cash Equivalents Provided by Operating Activities | 3,830 | 3,980 | |||||||
Investing Activities: | |||||||||
Gross Additions to Utility Plant (including Allowance for Funds Used During Construction of $318 in 2005 and $239 in 2004) | (6,577 | ) | (3,092 | ) | |||||
Proceeds from Sale of Barnstable Water Company Assets (Net of $78 in Transaction Costs) | 9,922 | — | |||||||
Investment Fund — Proceeds of Barnstable Water Company Assets Sale | (6,724 | ) | — | ||||||
Net Cash (Used in) Investing Activities | (3,379 | ) | (3,092 | ) | |||||
Financing Activities: | |||||||||
Proceeds from Interim Bank Loans | 7,750 | 8,700 | |||||||
Repayment of Interim Bank Loans | (5,650 | ) | (9,700 | ) | |||||
Proceeds from Issuance of Common Stock | 1,290 | 602 | |||||||
Proceeds from Long-Term Debt | — | 14,060 | |||||||
Reduction of Long-Term Debt including Current Portion | (1,884 | ) | (12,222 | ) | |||||
Costs to Issue Debt and Common Stock | 62 | (860 | ) | ||||||
Costs to Prepay Long-Term Debt | (315 | ) | — | ||||||
Advances, Contributions and Funds From Others for Construction, Net | 1,073 | 1,464 | |||||||
Cash Dividends Paid | (3,382 | ) | (3,322 | ) | |||||
Net Cash and Cash Equivalents Provided by (Used in) Financing Activities | (1,056 | ) | (1,278 | ) | |||||
Net (Decrease) in Cash and Cash Equivalents | (605 | ) | 2,702 | ||||||
Cash and Cash Equivalents at Beginning of Year | 707 | 1,122 | |||||||
Cash and Cash Equivalents at End of Period | $ | 102 | $ | 3,824 | |||||
Supplemental Disclosures of Cash Flow Information: | |||||||||
Cash Paid During the Year for: | |||||||||
Interest | $ | 1,650 | $ | 1,685 | |||||
State and Federal Income Taxes | $ | 1,089 | $ | 1,304 |
The accompanying notes are an integral part of these financial statements.
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Page 10
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.The consolidated financial statements included herein have been prepared by CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission and reflect all adjustments that are of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the results for interim periods. Certain information and footnote disclosures have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report on Form 10-K for the period ended December 31, 2004 and as updated in the Company’s March 31, 2005 Form
10-Q.
10-Q.
The results for interim periods are not necessarily indicative of results to be expected for the year since the consolidated earnings are subject to seasonal factors.
2. Stock-Based Compensation
The Company has a Stock-Based Compensation Plan with two components: the Performance Stock Program and the Stock Option Program. Statement of Financial Accounting Standards (SFAS) No. 123 “Accounting for Stock-Based Compensation,” encourages entities to recognize as expense over the vesting period the fair value of all stock-based awards on the date of grant. Alternatively, SFAS No. 123 also allows entities to continue to apply the provisions of APB opinion No. 25 “Accounting for Stock Issued to Employees” and provide pro forma net income and pro forma earnings per share disclosures for employee stock grants as if the fair-value-based method defined in SFAS No. 123 had been applied.
The Company accounts for its Stock Option Program under the recognition and measurement principles of APB No. 25. As such, no compensation cost related to the Stock Option Program is reflected in Net Income, as all options under this program had an exercise price equal to market value of the underlying common stock on the date of grant. The following table illustrates the effect on Net Income and Earnings Per Share if the Company had applied the fair value recognition provisions of SFAS No. 123 to the Stock Option Program.
Three Months Ended | ||||||||
June 30, | ||||||||
2005 | 2004 | |||||||
(in thousands, except for per share data) | ||||||||
Net income, as reported | $ | 4,078 | $ | 2,126 | ||||
Add: Total stock-based employee compensation expense determined under intrinsic value based method for all awards, net of related tax effects | 65 | 1 | ||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (78 | ) | (68 | ) | ||||
Pro forma net income | $ | 4,065 | $ | 2,059 | ||||
Earnings per share: | ||||||||
Basic — as reported | $ | 0.50 | $ | 0.26 | ||||
Basic — pro forma | $ | 0.50 | $ | 0.26 | ||||
Diluted — as reported | $ | 0.50 | $ | 0.26 | ||||
Diluted — pro forma | $ | 0.50 | $ | 0.26 |
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Six Months Ended | ||||||||
June 30 | ||||||||
2004 | 2005 | |||||||
(in thousands, except for per share data) | ||||||||
Net income, as reported | $ | 6,054 | $ | 4,101 | ||||
Add: Total stock-based employee compensation expense determined under intrinsic value based method for all awards, net of related tax effects | 149 | 2 | ||||||
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects | (185 | ) | (137 | ) | ||||
Pro forma net income | $ | 6,018 | $ | 3,966 | ||||
Earnings per share: | ||||||||
Basic — as reported | $ | 0.75 | $ | 0.51 | ||||
Basic — pro forma | $ | 0.75 | $ | 0.50 | ||||
Diluted — as reported | $ | 0.74 | $ | 0.51 | ||||
Diluted — pro forma | $ | 0.74 | $ | 0.49 |
See Note 5, “Accounting Pronouncements,” for a discussion of SFAS No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123R”) and its effect on the Company’s financial statements in 2006.
3.Pension and Other Postretirement Benefits
Pension Benefits | ||||||||
Components of Net Periodic Cost | ||||||||
Three months ended June 30 | 2005 | 2004 | ||||||
Service Cost | $ | 251 | $ | 238 | ||||
Interest Cost | 395 | 364 | ||||||
Expected Return on Plan Assets | (412 | ) | (400 | ) | ||||
Amortization of Transition Obligation | 2 | 3 | ||||||
Amortization of Prior Service Cost | 25 | 27 | ||||||
Amortization of Net (Gain) Loss | 93 | 24 | ||||||
Net Periodic Benefit Cost | $ | 354 | $ | 256 | ||||
Other Postretirement Benefits | ||||||||||||||||
Components of Net Periodic Cost | Connecticut Water | Barnstable Water | ||||||||||||||
Three months ended June 30 | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Service Cost | $ | 100 | $ | 75 | $ | 1 | $ | — | ||||||||
Interest Cost | 93 | 79 | 1 | 1 | ||||||||||||
Expected Return on Plan Assets | (43 | ) | (43 | ) | — | — | ||||||||||
Amortization of Transition Obligation | 30 | 31 | 1 | 2 | ||||||||||||
Amortization of Net (Gain) Loss | 27 | (5 | ) | — | — | |||||||||||
Net Periodic Benefit Cost | $ | 207 | $ | 137 | $ | 3 | $ | 3 | ||||||||
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Pension Benefits | ||||||||
Components of Net Periodic Cost | ||||||||
Six months ended June 30 | 2005 | 2004 | ||||||
Service Cost | $ | 525 | $ | 475 | ||||
Interest Cost | 776 | 729 | ||||||
Expected Return on Plan Assets | (823 | ) | (786 | ) | ||||
Amortization of Transition Obligation | 5 | 6 | ||||||
Amortization of Prior Service Cost | 49 | 54 | ||||||
Amortization of Net (Gain) Loss | 161 | 48 | ||||||
Net Periodic Benefit Cost | $ | 693 | $ | 526 | ||||
Other Postretirement Benefits | ||||||||||||||||
Components of Net Periodic Cost | Connecticut Water | Barnstable Water | ||||||||||||||
Six months ended June 30 | 2005 | 2004 | 2005 | 2004 | ||||||||||||
Service Cost | $ | 200 | $ | 150 | $ | 1 | $ | 1 | ||||||||
Interest Cost | 186 | 158 | 3 | 3 | ||||||||||||
Expected Return on Plan Assets | (86 | ) | (85 | ) | — | — | ||||||||||
Amortization of Transition Obligation | 60 | 62 | 3 | 3 | ||||||||||||
Amortization of Net (Gain) Loss | 55 | (10 | ) | (1 | ) | (1 | ) | |||||||||
Net Periodic Benefit Cost | $ | 415 | $ | 275 | $ | 6 | $ | 6 | ||||||||
The Company has concluded that the postretirement welfare plan’s benefits will be considered actuarially equivalent to the benefits provided by Medicare Part D. The Company does not intend to apply for the government subsidy for postretirement prescription drug benefits, even though it expects to be eligible. Therefore, the impact of the subsidy on the plan’s liabilities is not reflected in the June 30, 2005 disclosure.
4. Earnings per Share
Earnings per average common share are calculated by dividing net income applicable to common stock by the average number of shares of common stock outstanding during the respective periods as detailed below (fully diluted shares include the effect of unexercised stock options):
3 Months Ended | 6 Months Ended | |||||||||||||||
06/30/05 | 06/30/04 | 06/30/05 | 06/30/04 | |||||||||||||
Common Shares Outstanding: | ||||||||||||||||
End of period: | 8,096,542 | 8,003,328 | 8,096,542 | 8,003,328 | ||||||||||||
Weighted Average Shares Outstanding: | ||||||||||||||||
Days outstanding basis | ||||||||||||||||
Basic | 8,078,110 | 7,991,703 | 8,062,649 | 7,982,525 | ||||||||||||
Fully Diluted | 8,117,728 | 8,030,473 | 8,101,729 | 8,026,654 | ||||||||||||
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
5.Accounting Pronouncements
Statement of Financial Accounting Standards (SFAS) No. 151, “Inventory (an amendment to ARB No. 43)” was issued in November 2004 and is effective for inventory costs incurred during fiscal years beginning after June 15, 2005 with prospective application. The Company has analyzed the potential effect of the provisions of SFAS No. 151 and does not expect any significant impact.
Financial Accounting Standards Board Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations (an interpretation of FASB Statement No. 143)” was issued in March 2005. This Interpretation provides clarification with respect to the timing of liability recognition for legal obligations associated with the retirement of tangible long-lived assets when the timing and/or method of settlement of the obligation are conditional on a future event. The Company is currently evaluating the potential impact of this Interpretation.
In April 2005, the Securities and Exchange Commission issued a rule that amends the implementation dates for SFAS 123R. The new rule calls for the implementation of SFAS 123R at the beginning of the first quarter of 2006, instead of the third quarter of 2005. Although the compensation expense required under the revised statement differs slightly, the impacts on the Company’s quarterly financial statements in 2006 are expected to be similar to the pro forma disclosures included in Note 2 above.
In May 2005, the FASB issued FAS No. 154, “Accounting Changes and Error Corrections” (FAS 154), which changes the requirements for the accounting and reporting of a change in accounting principle. FAS 154 applies to all voluntary changes in accounting principle as well as to changes required by an accounting pronouncement that does not include specific transition provisions. FAS 154 eliminates the requirement to include the cumulative effect of changes in accounting principle in the income statement and instead requires that changes in accounting principle be retroactively applied. A change in accounting estimate continues to be accounted for in the period of change and future periods if necessary. A correction of an error continues to be reported by restating prior period financial statements. FAS 154 is effective for the Company for accounting changes and correction of errors made on or after January 1, 2006.
6. Segment Reporting
The Company operates principally in three business segments: water activities, real estate transactions, and services and rentals. Financial data for the segments is as follows in thousands of dollars:
Three Months Ended June 30, 2005 | ||||||||||||||||
Pre-tax | ||||||||||||||||
Segment | Revenues | Income | Income Tax | Net Income | ||||||||||||
Water Activities | $ | 11,409 | $ | 5,937 | $ | 2,140 | $ | 3,797 | ||||||||
Real Estate Transactions | — | — | — | — | ||||||||||||
Services & Rentals | 1,238 | 455 | 174 | 281 | ||||||||||||
Total | $ | 12,647 | $ | 6,392 | $ | 2,314 | $ | 4,078 | ||||||||
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Three Months Ended June 30, 2004 | ||||||||||||||||
Pre-tax | ||||||||||||||||
Segment | Revenues | Income | Income Tax | Net Income | ||||||||||||
Water Activities | $ | 11,959 | $ | 2,862 | $ | 976 | $ | 1,886 | ||||||||
Real Estate Transactions | — | — | — | — | ||||||||||||
Services & Rentals | 1,204 | 400 | 160 | 240 | ||||||||||||
Total | $ | 13,163 | $ | 3,262 | $ | 1,136 | $ | 2,126 | ||||||||
Six Months Ended June 30, 2005 | ||||||||||||||||
Pre-tax | ||||||||||||||||
Segment | Revenues | Income | Income Tax | Net Income | ||||||||||||
Water Activities | $ | 22,831 | $ | 8,167 | $ | 2,895 | $ | 5,272 | ||||||||
Real Estate Transactions | 475 | 427 | 166 | 261 | ||||||||||||
Services & Rentals | 2,209 | 849 | 328 | 521 | ||||||||||||
Total | $ | 25,515 | $ | 9,443 | $ | 3,389 | $ | 6,054 | ||||||||
Six Months Ended June 30, 2004 | ||||||||||||||||
Pre-tax | ||||||||||||||||
Segment | Revenues | Income | Income Tax | Net Income | ||||||||||||
Water Activities | $ | 22,878 | $ | 4,508 | $ | 1,500 | $ | 3,008 | ||||||||
Real Estate Transactions | — | (29 | ) | (735 | ) | 706 | ||||||||||
Services & Rentals | 2,076 | 645 | 258 | 387 | ||||||||||||
Total | $ | 24,954 | $ | 5,124 | $ | 1,023 | $ | 4,101 | ||||||||
7. Sale of Barnstable Water Company Assets
On May 20, 2005, the Company completed the sale of the assets of one of its Massachusetts’ subsidiaries, the Barnstable Water Company (“BWC”), to the town of Barnstable, Massachusetts. Upon closing of the deal, the town of Barnstable and BWC entered into a one year management contract for BWC to provide the town with full operating and management services for the water system’s operations. This management contract may be terminated within the 12 month period by 30 days written notice by either party.
The Company received $10.0 million in gross proceeds from the sale of its water utility assets, advances, and contribution in aid of construction. The gain, net of income taxes of $1,734,000, was $2,794,000.
Under the terms of the management contract, BWC is being paid $130,000 a month for operating and management services performed by BWC for the town of Barnstable.
The sale of Barnstable’s assets has not been classified as ‘Discontinued Operations’ in the Consolidated Statements of Income because we anticipate that our ongoing cash flows from the management contract after the sale will be substantially similar to the pre-sale cash flows generated from these assets. Currently, we have recorded the presale results of the Barnstable operations and the gain on the sale in our ‘Water Activities’ business segment. We are reporting the post-sale earnings on the management contract in our ‘Services and Rentals’ segment.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
8. Assets Held for Sale
The agreement the Town entered into with the Company to purchase the assets of the Barnstable Water Company also included a provision whereby the Town will acquire all the land owned by BARLACO, another of our Massachusetts subsidiaries, for an additional $1,000,000. The sale of the BARLACO land is expected to close early in 2006.
The following is a breakdown of the consolidated book basis of the assets classified as being held for sale as of June 30, 2005:
Assets Held for Sale: | ||||
BARLACO | ||||
Other Property and Investments | $ | 305,000 | ||
BARLACO is a real estate company which holds its land for sale. BARLACO did not sell any land in 2005 or 2004.
Part I, Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Regulatory Matters and Inflation
During six months ended June 30, 2005, there were no material changes under this subheading to any items previously disclosed by the Company in its Annual Report on Form 10-K for the period ended December 31, 2004 and as updated in the Company’s March 31, 2005 Form 10-Q.
Critical Accounting Policies and Estimates
The Company maintains its accounting records in accordance with accounting principles generally accepted in the United States of America and as directed by the regulatory commissions to which the Company’s subsidiaries are subject. Significant accounting policies employed by the Company, including the use of estimates, were presented in the Notes to Consolidated Financial Statements of the Company’s Annual Report.
Critical accounting policies are those that are the most important to the presentation of the Company’s financial condition and results of operations. The application of such accounting policies requires management’s most difficult, subjective, and complex judgments and involves uncertainties and assumptions. The Company’s most critical accounting policies pertain to public utility regulation related to Financial Accounting Standards No. 71, “Accounting for the Effects of Certain Types of Regulation” (FAS 71), revenue recognition, and pension plan accounting. Each of these accounting policies and the application of critical accounting policies and estimates was discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. There were no significant changes in the application of critical accounting policies or estimates during the second quarter of 2005.
Management must use informed judgments and best estimates to properly apply these critical accounting policies. Because of the uncertainty in these estimates, actual results could differ from estimates used in applying the critical accounting policies. The Company is not aware of any reasonably likely events or circumstances which would result in different amounts being reported that would materially affect its financial condition or results of operations.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Liquidity and Capital Resources
The Company is not aware of demands, events, or uncertainties that will result in a decrease of liquidity or a material change in the mix or relative cost of capital resources.
Interim Bank Loans Payable at June 30, 2005 was $7,750,000.
We consider the current $15,500,000 lines of credit with four banks adequate to finance any expected short-term borrowing requirements that may arise in 2005. The bank lines of credit have expiration dates ranging from October 2005 through May 2006. Interest expense charged on interim bank loans will fluctuate based on market interest rates.
The Company is currently in the process of negotiating additional fixed-rate, long-term borrowings from the Connecticut Development Authority to fund ongoing and planned capital improvement projects. In July, the Company submitted applications to the Connecticut Department of Public Utility Control (DPUC) with respect to these anticipated borrowings. The ability of the Company to complete these borrowing transactions will depend upon the receipt of final decisions of the DPUC with terms acceptable to the Company, which have not yet been issued, and the successful completion of negotiations with the Authority and the execution of definitive borrowing agreements.
Results of Operations
The following factors had a significant effect upon the Company’s net income for the three months ended June 30, 2005 as compared with the net income for the same period last year.
Net income applicable to common stock for the three months ended June 30, 2005 increased from that of the prior year by $1,952,000, which resulted in an increase of earnings per basic average common share of $0.24 for the same period ended. This increase in net income is broken down by business segment as follows:
Increase | ||||
(Decrease) | ||||
Business Segment | Net Income | |||
Water Activities | $ | 1,911,000 | ||
Real Estate Transactions | — | |||
Services and Rentals | 41,000 | |||
Total | $ | 1,952,000 | ||
The $1,911,000 increase in the Water Activity segment’s net income was primarily due to the net effects of several large variances listed below.
• a one time, non-recurring $2,794,000 Gain on Sale of Assets of Barnstable Water Co. (net of income taxes).
• a $550,000 decrease in Operating Revenue primarily due to approximately $290,000 of Operating Revenue earned by Barnstable Water Co. in 2004 that was not earned in 2005 during the period of May 21 to June 30. Excluding this revenue, Operating Revenue decreased by approximately $260,000 primarily due to a decrease in revenues from our metered customers. Partially off-setting this decrease was an increase in fire protection revenues.
• a $653,000 decrease in Operating Income Tax Expense primarily due to lower pretax income.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
• a $50,000 increase in Allowance for Funds Used for Construction related to a dam reconstruction project and work begun on a new water treatment plant.
• a $995,000 increase in Operation and Maintenance expense due primarily to increases in payroll, employee benefit costs, legal expense, utility costs, maintenance costs and purchased water.
There were no real estate transactions in the three months ended June 30, 2005 or 2004.
The 17% increase in the Services and Rentals segment’s net income was primarily due to more income earned from contracted services, including income earned under the contract with the town of Barnstable, MA for performing operations and maintenance labor and specific non-labor activities; the Company’s LinebackerTM Service Line Maintenance program; and antenna site leases.
The following factors had a significant effect upon the Company’s net income for the six months ended June 30, 2005 as compared with the net income for the same period last year.
Net income applicable to common stock for the six months ended June 30, 2005 increased from that of the prior year by $1,953,000, which resulted in an increase of earnings per basic average common share of $0.24 for the same period ended. This increase in net income is broken down by business segment as follows:
Increase | ||||
(Decrease) | ||||
Business Segment | Net Income | |||
Water Activities | $ | 2,264,000 | ||
Real Estate Transactions | (445,000 | ) | ||
Services and Rentals | 134,000 | |||
Total | $ | 1,953,000 | ||
The $2,264,000 increase in the Water Activity segment’s net income was primarily due to the net effects of several large variances listed below.
• a one-time, non-recurring $2,794,000 Gain on Sale of Assets of Barnstable Water Co. (net of income taxes).
• a $47,000 decrease in Operating Revenue primarily due to approximately $290,000 of Operating Revenue earned by Barnstable Water Co. in 2004 that was not earned in 2005 during the period of May 21 to June 30. Excluding this revenue, Operating Revenue increased by approximately $243,000 due to increases in revenues from residential, public authority and fire protection customers. Partially off-setting these increases were decreases in revenues from industrial and commercial customers.
• a $932,000 increase in Operation and Maintenance expense due primarily to increases in payroll, employee benefit costs, legal expense, utility costs, maintenance costs and purchased water.
• a $427,000 decrease in Operating Income Tax Expense primarily due to lower pretax income.
• a $72,000 increase in Allowance for Funds Used for Construction related to a dam reconstruction project and work begun on a new water treatment plant.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
The decrease in the Real Estate segment’s net income was a result of a sale of small parcel of land (74 acres) in the first half of 2005 which resulted in a net profit of $261,000 compared with a donation of 133 acres of land in the first half of 2004 which generated a net profit of $706,000.
The 35% increase in the Services and Rentals segment’s net income was primarily due to more income earned from contracted services, including income earned under the contract with the town of Barnstable, MA for performing operations and maintenance labor and specific non-labor activities; the Company’s LinebackerTM Service Line Maintenance program; and antenna site leases.
Commitments and Contingencies
Reverse Privatization
On March 31, 2005, the Barnstable Town Council approved the agreement the Town had entered into with the Company to purchase the assets of the Barnstable Water Company for $10,000,000 and all the land owned by BARLACO for an additional $1,000,000. The sale of the water company assets closed on May 20, 2005 which resulting in a one time $2.794 million non-recurring gain. The sale of the BARLACO land is expected to close early in 2006. See Footnotes 7 and 8 for further details.
There were no other material changes under this subheading to any of the other items previously disclosed by the Company in its Annual Report on Form 10-K for the period ended December 31, 2004 and as updated in the Company’s March 31, 2005 Form 10-Q.
Forward Looking Information
This report, including management’s discussion and analysis, contains certain forward-looking statements regarding the Company’s results of operations and financial position. These forward-looking statements are based on current information and expectations, and are subject to risks and uncertainties, which could cause the Company’s actual results to differ materially from expected results.
Our water companies are subject to various federal and state regulatory agencies concerning water quality and environmental standards. Generally, the water industry is materially dependent on the adequacy of approved rates to allow for a fair rate of return on the investment in utility plant. The ability to maintain our operating costs at the lowest possible level, while providing good quality water service, is beneficial to customers and stockholders. Profitability is also dependent on the timeliness of rate relief, when necessary, and numerous factors over which we have little or no control, such as the quantity of rainfall and temperature, industrial demand, financing costs, energy rates, tax rates, stock market trends which may affect the return earned on pension assets, and compliance with environmental and water quality regulations. The profitability of our other revenue sources is subject to the amount of land we have available for sale and/or donation, the demand for the land, the continuation of the current state tax benefits relating to the donation of land for open space purposes, regulatory approval of land dispositions, the demand for telecommunications antenna site leases and the successful extensions and expansion of our service contract work, including maintaining the contract between the town of Barnstable and BWC. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
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Part I, Item 3: Quantitative and Qualitative Disclosure About Market Risk
The primary market risk faced by the Company is interest rate risk. The Company has exposure to derivative financial instruments through an interest rate swap agreement. The Company has no other financial instruments with significant credit risk or off-balance sheet risks and is not subject in any material respect to any currency or other commodity risk.
The Company is subject to the risk of fluctuating interest rates in the normal course of business. The Company’s exposure to interest fluctuations is managed at the Company and subsidiary operations levels through the use of a combination of fixed rate long-term debt, variable long-term debt and short-term variable borrowings under financing arrangements entered into by the Company and its subsidiaries and its use of the interest rate swap agreement discussed below. The Company has $15,500,000 of variable rate lines of credit with four banks, under which interim bank loans payable at June 30, 2005 were $7,750,000. In the third quarter 2004, the Company refinanced $9,550,000 of fixed rate bonds with variable rate bonds.
During March 2004, The Connecticut Water Company entered into a five-year interest rate swap transaction in connection with the refunding of its First Mortgage Bonds (Series V). The swap agreement provides for The Connecticut Water Company’s exchange of floating rate interest payment obligations for fixed rate interest payment obligations on a notional principal amount of $12,500,000. The purpose of the interest rate swap is to manage the Company’s exposure to fluctuations in prevailing interest rates. The Company does not enter into derivative financial contracts for trading or speculative purposes and does not use leveraged instruments.
Management does not believe that changes in interest rates will have a material effect on income or cash flow during 2005, although there can be no assurances that interest rates will not significantly change.
Part I, Item 4: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of June 30, 2005, management, including the Company’s Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-14(c) and Rule 13a-15(e)). Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective, in all material respects, to ensure that information required to be disclosed in the reports the Company files and submits under the Securities Exchange Act of 1934 is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding disclosure to be made within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ending June 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Part II, Item 1: Legal Proceedings
We are involved in various legal proceedings. Although the results of legal proceedings cannot be predicted with certainty, there are no pending legal proceedings to which we or any of our subsidiaries are a party or to which any of our properties is the subject that presents a reasonable likelihood of a material adverse impact on the Company.
Part II, Item 4: Submission of Matters to a Vote of Security Holders
On May 11, 2005, at its annual meeting, the stockholders of Connecticut Water Service, Inc. elected the following directors to serve three-year terms expiring at the annual meeting to be held in 2008 by the following votes:
Affirmative | Withheld | |||||||
Mary Ann Hanley | 6,697,026 | 95,174 | ||||||
Mark G. Kachur | 6,680,967 | 111,233 | ||||||
Ronald D. Lengyel | 6,712,006 | 80,194 | ||||||
David A. Lentini | 6,700,144 | 92,056 |
Directors whose term of office continues until 2006 are Roger Engle, Lisa J. Thibdaue, Carol P. Wallace, and Donald B. Wilbur.
Directors whose term of office continues until 2007 are Marshall T. Chiaraluce, Marcia L. Hincks, Robert F. Neal and Arthur C. Reeds.
The appointment of PricewaterhouseCoopers, LLP, independent public accountants, as independent auditors for the Company for the calendar year ending December 31, 2005 was ratified by the stockholders by the following vote:
Affirmative | Negative | Abstain | ||||||||||
PricewaterhouseCoopers LLP | 6,713,655 | 39,140 | 39,405 |
Part II, Item 5: Other Information
On May 19, 2005, an election was conducted under the supervision of the National Labor Relations Board for purposes of determining whether certain employees of the Company would authorize the International Union of Operating Engineers, Local 478 (“Union”) to represent a portion of the Company’s employees for purposes of collective bargaining with the Company. A majority of the ballots cast were not cast for the labor organization; therefore no collective bargaining representative was selected.
On June 28, 2005, the Company merged the Crystal Water Company of Danielson with the Gallup Water Service, Incorporated, two of our Connecticut based water companies, forming one company, the Crystal Water Company of Danielson (“Crystal”). The merger of the two companies had no effect on our financial reporting.
On July 8, 2005, the Company filed an application with the DPUC to amend the rate schedules for its newly merged Crystal subsidiary. The application requests an overall increase in revenues of $768,000, or 27.25%. The request for rate relief is based on a Return on Equity of 10.5% and an overall return on Rate Base of 7.792%. The Company expects a final decision from the DPUC in either the fourth quarter of 2005 or the first quarter of 2006.
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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Effective April 1, 2005, the Board of Director’s retainer was increased to $8,000 annually from $6,000; the Committee Chair retainer was increased to $1,500 annually from $1,000; the combined boards’ meeting fees were unchanged at $700 per regular meeting and $800 per special meeting; and a fee of $350 was authorized for participating board/committee members for each telephone conference meeting set in accordance with the Company’s bylaws.
Part II, Item 6: Exhibits
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.) | |
31.1* | Rule 13a-14 Certification of Marshall T. Chiaraluce, Chief Executive Officer. | |
31.2* | Rule 13a-14 Certification of David C. Benoit, Chief Financial Officer. | |
32* | Certification of Marshall T. Chiaraluce, Chief Executive Officer, and David C. Benoit, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
* filed herewith
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Connecticut Water Service, Inc. (Registrant) | ||||
Date: August 9, 2005 | By: | /s/ David C. Benoit | ||
David C. Benoit | ||||
Vice President - Finance, and Chief Financial Officer | ||||
Date: August 9, 2005 | By: | /s/ Peter J. Bancroft | ||
Peter J. Bancroft | ||||
Assistant Treasurer |