SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED September 30, 2001
OR
( ) 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 06-0739839
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
93 West Main Street, Clinton, CT 06413-1600
(Address of principal executive offices) (Zip Code)
(860) 669-8636
(Registrant's telephone number, including area code)
Not Applicable
(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. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a count. Yes [ ] No [ ]
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.
7,635,057
Number of shares of common stock outstanding, September 30, 2001
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Financial Report
September 30, 2001 and 2000
TABLE OF CONTENTS
PART I, ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets at September 30, 2001
and December 31, 2000 Page 3
Consolidated Statements of Capitalization at
September 30, 2001 and December 31, 2000 Page 4
Consolidated Statements of Income for Three Months
Ended September 30, 2001 and 2000 Page 5
Consolidated Statements of Income for Nine Months
Ended September 30, 2001 and 2000 Page 6
Consolidated Statements of Income for Twelve Months
Ended September 30, 2001 and 2000 Page 7
Consolidated Statements of Retained Earnings for Three,
Six and Nine Months Ended September 30, 2001 and 2000 Page 8
Consolidated Statements of Cash Flows for Nine Months
Ended September 30, 2001 and 2000 Page 9
Notes to Consolidated Financial Statements Page 10-11
PART I, ITEM 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations Page 11-13
Signature Page Page 14
Page 3
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS)
DEC. 31,
SEPTEMBER 30, 2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
------------- -------------
ASSETS
Utility Plant
Utility Plant $ 263,440 $ 257,634
Construction Work in Progress 8,550 8,359
Utility Plant Acquisition Adjustments (1,256) (1,256)
--------- ---------
270,734 264,737
Accumulated Provision for Depreciation (75,300) (71,568)
--------- ---------
Net Utility Plant 195,434 193,169
--------- ---------
Other Property and Investments 3,140 3,039
--------- ---------
Current Assets
Cash 1,548 314
Accounts Receivable (Less Allowance, 2001 - $259; 2000 - $218) 6,141 4,831
Accrued Unbilled Revenues 3,759 3,229
Materials and Supplies, at Average Cost 833 795
Prepayments and Other Current Assets 962 122
--------- ---------
Total Current Assets 13,243 9,291
--------- ---------
Deferred Charges and Regulatory Assets
Unamortized Debt Issuance Expense 5,363 5,530
Unrecovered Income Taxes 9,104 9,040
Postretirement Benefits Other Than Pension 949 953
Other Costs 1,428 1,524
--------- ---------
Total Deferred Charges and Regulatory Assets 16,844 17,047
--------- ---------
TOTAL ASSETS $ 228,661 $ 222,546
========= =========
CAPITALIZATION AND LIABILITIES
Capitalization (See accompanying statements)
Common Stockholders' Equity $ 70,695 $ 67,110
Preferred Stock 847 847
Minority Interest -- 117
Long-Term Debt 65,931 66,283
--------- ---------
Total Capitalization 137,473 134,357
--------- ---------
Current Liabilities
Current Portion of Long Term Debt 306 280
Interim Bank Loans Payable 3,298 1,800
Accounts Payable, Accrued Taxes and Accrued Interest 5,063 7,436
Other 185 101
--------- ---------
Total Current Liabilities 8,852 9,617
--------- ---------
Long-Term Liabilities
Advances for Construction 18,712 17,062
Contributions in Aid of Construction 28,346 27,009
Deferred Federal Income Taxes 18,916 18,165
Unfunded Future Income Taxes 8,546 8,546
Long-term Compensation Arrangements 5,830 5,758
Unamortized Investment Tax Credits 1,986 2,032
Commitments and Contingencies
--------- ---------
Total Long-Term Liabilities 82,336 78,572
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $ 228,661 $ 222,546
========= =========
The accompanying notes are an integral part of these financial statements.
Page 4
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DEC. 31,
SEPTEMBER 30, 2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
------------- -------------
Common Stockholders' Equity
Common Stock Without Par Value Authorized - 15,000,000 Shares; $ 49,581 $ 48,617
Shares Issued and Outstanding: 2001 - 7,635,057; 2000 - 7,604,594
Stock Issuance Expense (1,385) (1,385)
Retained Earnings 22,499 19,878
--------- ---------
Total Common Stockholders' Equity 70,695 67,110
--------- ---------
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
--------- ---------
Minority Interest -- 117
--------- ---------
Long-Term Debt
The Connecticut Water Company
First Mortgage Bonds
5.875% Series R, due 2022 14,670 14,670
6.65% Series S, due 2020 8,000 8,000
5.75% Series T, due 2028 5,000 5,000
5.3% Series U, due 2028 4,550 4,550
6.94% Series V, due 2029 12,050 12,050
--------- ---------
44,270 44,270
Unsecured Water Facilities Revenue Refinancing Bonds
5.05% 1998 Series A, due 2028 9,730 9,770
5.125% 1998 Series B, due 2028 7,770 7,830
Other
5.5% Unsecured Promissory Note 42 71
--------- ---------
Total Connecticut Water Company 61,812 61,941
--------- ---------
Crystal Water Utilities Corporation
8.0% New London Trust, Due 2017 128 130
--------- ---------
Crystal Water Company of Danielson
7.82% Connecticut Development Authority, Due 2020 499 507
8.0% New London Trust, Due 2011 2,067 2,170
--------- ---------
Total Crystal 2,566 2,677
--------- ---------
Chester Realty
6% Note Payable, Due 2006 106 115
--------- ---------
Barnstable Water Company
10.2% Indianapolis Life Insurance Co., Due 2011 1,625 1,700
--------- ---------
Total Connecticut Water Service, Inc. 66,237 66,563
--------- ---------
Less Current Portion 306 280
--------- ---------
Total Long-Term Debt 65,931 66,283
--------- ---------
TOTAL CAPITALIZATION $ 137,473 $ 134,357
========= =========
The accompanying notes are an integral part of these financial statements.
Page 5
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
----------- ------------
Operating Revenues $ 13,538 $ 12,353
-------- --------
Operating Expenses
Operation and Maintenance 5,282 4,455
Depreciation 1,196 1,204
Income Taxes 2,009 1,657
Taxes Other Than Income Taxes 1,164 1,262
-------- --------
Total Operating Expenses 9,651 8,578
-------- --------
Utility Operating Income 3,887 3,775
-------- --------
Other Income (Deductions), Net of Taxes
Gain (Loss) on Property Transactions 11 (1)
Non-Water Sales Earnings 92 52
Allowance for Funds Used During Construction 110 109
Merger Costs (1) (50)
Other 15 16
-------- --------
Total Other Income (Deductions), Net of Taxes 227 126
-------- --------
Interest and Debt Expense
Interest on Long-Term Debt 1,011 1,037
Other Interest Charges 93 121
Amortization of Debt Expense 55 55
-------- --------
Total Interest and Debt Expense 1,159 1,213
-------- --------
Net Income Before Preferred Dividends 2,955 2,688
Preferred Stock Dividend Requirement 10 10
-------- --------
Net Income Applicable to Common Stock $ 2,945 $ 2,678
======== ========
Weighted Average Common Shares Outstanding:
Basic 7,618 7,604
Diluted 7,678 7,636
Earnings Per Common Share:
Basic $ 0.39 $ 0.35
Diluted $ 0.38 $ 0.35
Dividends Per Common Share $ 0.20 $ 0.20
The accompanying notes are an integral part of these financial statements.
Page 6
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
----------- ------------
Operating Revenues $ 34,740 $ 33,412
-------- --------
Operating Expenses
Operation and Maintenance 14,374 13,444
Depreciation 3,654 3,571
Income Taxes 4,221 3,729
Taxes Other Than Income Taxes 3,288 3,477
-------- --------
Total Operating Expenses 25,537 24,221
-------- --------
Utility Operating Income 9,203 9,191
-------- --------
Other Income (Deductions), Net of Taxes
Gain (Loss) on Property Transactions 1,121 58
Non-Water Sales Earnings 262 188
Allowance for Funds Used During Construction 308 312
Merger Costs (352) (149)
Other 114 94
-------- --------
Total Other Income (Deductions), Net of Taxes 1,453 503
-------- --------
Interest and Debt Expense
Interest on Long-Term Debt 3,041 3,084
Other Interest Charges 285 318
Amortization of Debt Expense 167 167
-------- --------
Total Interest and Debt Expense 3,493 3,569
-------- --------
Net Income Before Preferred Dividends 7,163 6,125
Preferred Stock Dividend Requirement 29 29
-------- --------
Net Income Applicable to Common Stock $ 7,134 $ 6,096
======== ========
Weighted Average Common Shares Outstanding:
Basic 7,612 7,605
Diluted 7,657 7,633
Earnings Per Common Share:
Basic $ 0.94 $ 0.80
Diluted $ 0.93 $ 0.80
Dividends Per Common Share $ 0.59 $ 0.58
The accompanying notes are an integral part of these financial statements.
Page 7
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
----------- ------------
Operating Revenues $ 45,325 $ 44,021
-------- --------
Operating Expenses
Operation and Maintenance 19,310 18,512
Depreciation 4,800 4,684
Income Taxes 5,071 4,719
Taxes Other Than Income Taxes 4,468 4,545
-------- --------
Total Operating Expenses 33,649 32,460
-------- --------
Utility Operating Income 11,676 11,561
-------- --------
Other Income (Deductions), Net of Taxes
Gain (Loss) on Property Transactions 1,595 98
Non-Water Sales Earnings 429 223
Allowance for Funds Used During Construction 412 444
Merger Costs (613) (149)
Other 140 167
-------- --------
Total Other Income (Deductions), Net of Taxes 1,963 783
-------- --------
Interest and Debt Expense
Interest on Long-Term Debt 4,056 4,096
Other Interest Charges 427 403
Amortization of Debt Expense 223 221
-------- --------
Total Interest and Debt Expense 4,706 4,720
-------- --------
Net Income Before Preferred Dividends 8,933 7,624
Preferred Stock Dividend Requirement 38 38
-------- --------
Net Income Applicable to Common Stock $ 8,895 $ 7,586
======== ========
Weighted Average Common Shares Outstanding:
Basic 7,610 7,602
Diluted 7,649 7,632
Earnings Per Common Share:
Basic $ 1.17 $ 1.00
Diluted $ 1.16 $ 0.99
Dividends Per Common Share $ 0.78 $ 0.79
The accompanying notes are an integral part of these financial statements.
Page 8
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
---------- ------------
Balance at Beginning of Period $21,101 $18,411
Net Income Before Preferred Dividends of Parent 2,955 2,688
------- -------
24,056 21,099
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.20 per share 3 3
Cumulative Preferred, Series $.90, $.225 per share 7 7
Common Stock - 2001 $0.202 per share; 2000 $0.20 per share 1,547 1,524
------- -------
1,557 1,534
------- -------
Balance at End of Period $22,499 $19,565
======= =======
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
---------- ------------
Balance at Beginning of Period $19,878 $17,910
Net Income Before Preferred Dividends of Parent 7,163 6,125
------- -------
27,041 24,035
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.40 per share 9 9
Cumulative Preferred, Series $.90, $.45 per share 20 20
Common Stock - 2001 $0.59 per share; 2000 $0.58 per share 4,513 4,441
------- -------
4,542 4,470
------- -------
Balance at End of Period $22,499 $19,565
======= =======
FOR THE TWELVE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
---------- ------------
Balance at Beginning of Period $19,565 $18,003
Net Income Before Preferred Dividends of Parent 8,933 7,624
------- -------
28,498 25,627
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.80 per share 12 12
Cumulative Preferred, Series $.90, $.90 per share 26 26
Common Stock - 2001 $0.78 per share; 2000 $0.79 per share 5,961 6,024
------- -------
5,999 6,062
------- -------
Balance at End of Period $22,499 $19,565
======= =======
The accompanying notes are an integral part of these financial statements.
Page 9
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(IN THOUSANDS)
2000
2001 (UNAUDITED
(UNAUDITED) AND RESTATED)
---------- ------------
Operating Activities:
Net Income Before Preferred Dividends of Parent $ 7,163 $ 6,125
------- -------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation (including $119 in 2001, $112 in 2000 charged to other accounts) 3,773 3,683
Change in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues (1,840) (655)
(Increase) Decrease in Other Current Assets (878) (705)
(Increase) Decrease in Other Non-Current Items 174 (38)
Increase (Decrease) in Accounts Payable, Accrued Expenses and
Other Current Liabilities (2,289) (429)
Increase (Decrease) in Deferred Federal Income Taxes and
Investment Tax Credits, Net 705 526
------- -------
Total Adjustments (355) 2,382
------- -------
Net Cash Provided by (Used for) Operating Activities 6,808 8,507
------- -------
Investing Activities:
Gross Additions to Utility Plant (including Allowance for Funds
Used During Construction of $308 in 2001 and $312 in 2000) (6,071) (5,358)
------- -------
Financing Activities:
Proceeds from Interim Bank Loans 3,298 2,581
Repayment of Interim Bank Loans (1,800) (3,061)
Proceeds from Issuance of Common Stock 964 154
Minority Interest (117) (19)
Repayment of Long-Term Debt (326) (632)
Advances, Contributions and Funds From Others for Construction, Net 3,020 1,370
Cash Dividends Paid (4,542) (4,470)
------- -------
Net Cash Provided by (Used in) Financing Activities 497 (4,077)
------- -------
Net Increase (Decrease) in Cash 1,234 (928)
Cash at Beginning of Year 314 1,127
------- -------
Cash at End of Period $ 1,548 $ 199
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest (Net of Amounts Capitalized) $ 3,516 $ 3,482
State and Federal Income Taxes $ 2,324 $ 2,740
The accompanying notes are an integral part of these financial statements.
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. (the Company), without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission and reflect all
adjustments 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.
The results for interim periods are not necessarily indicative of results
to be expected for the year since consolidated earnings are subject to seasonal
factors.
On September 7, 2001 the Company effected a three-for-two stock split. The
distribution of these shares increased the number of shares outstanding by
2,562,052 shares. All outstanding common shares and per share amounts in this
report have been restated to reflect this stock split. Appropriate adjustments
to reflect this stock split were made to the Company's Performance Stock
Program.
2. 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:
Page 11
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
Following is restated for September 2001 three-for-two stock split:
3 Months Ended 12 Months Ended
9/30/01 9/30/00 9/30/01 9/30/00 12/31/00
--------- --------- --------- --------- ---------
Common Shares Outstanding:
January 1, 2000 -- -- -- -- 7,596,141
October 1, 2000 & 1999
respectively -- -- 7,604,362 7,595,982 --
July 1, 2001 & 2000
respectively 7,609,506 7,604,149 -- -- --
Common Shares Issued:
To CSE - December 15, 1999 -- -- -- 159 --
To PSP - January 13, 2000 -- -- -- 15,148 15,148
To CSE - February 17, 2000 -- -- -- (7,605) (7,605)
To CSE - March 15, 2000 -- -- -- 217 217
To CSE - June 15, 2000 -- -- -- 248 248
To CSE - September 15, 2000 -- 213 -- 213 213
To CSE - December 15, 2000 -- -- 232 -- 232
To PSP - January 13, 2001 -- -- 8,607 -- --
To PSP - February 17, 2001 -- -- (4,216) -- --
To CSE - March 15, 2001 -- -- 282 -- --
To CSE - June 15, 2001 -- -- 239 -- --
Liquidation of Fractional Shares (752) -- (752) -- --
Exercised Stock Options 26,071 -- 26,071 -- --
To CSE - September 15, 2001 232 -- 232 -- --
--------- --------- -------- --------- ---------
Common Shares Outstanding:
September 30, 2001 & 2000
respectively 7,635,057 7,604,362 7,635,057 7,604,362
========= ========= ========= =========
December 31, 2000 7,604,594
=========
Weighted Average Common Shares Outstanding:
Days outstanding basis
Basic 7,617,554 7,604,186 7,610,344 7,602,437 7,604,546
========= ========= ========= ========= =========
Fully Diluted 7,677,316 7,636,190 7,649,595 7,631,945 7,632,928
========= ========= ========= ========= =========
PSP = Performance Stock Program
CSE = Common Stock Equivalents
PART I, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CORPORATE RESOURCES
The Company has a total of $9,000,000 in lines of credit provided by two
banks. As of September 30, 2001 approximately $5,700,000 of these lines were
unused and available to the Company.
Page 12
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET
INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AS COMPARED TO THE NET
INCOME FOR THE SAME PERIOD LAST YEAR.
Net income applicable to common stock for the three months ended September
30, 2001 increased from that of September 30, 2000 by $267,000, or $.04 per
basic average common share. The increase in net income resulted from $112,000
higher utility operating income, a $101,000 increase in net other income
(deductions) and a $54,000 decrease in interest and debt expense.
The increase in utility operating income was primarily due to the
following:
- a 9.6% increase in operating revenue due to increased water
consumption brought on by a hotter, dryer summer and customer growth
- a reduction in taxes other than income taxes resulting from property
tax rebatements and property tax revaluations
partially offset by
- an increase in operation and maintenance expense
- increased income tax expense primarily due to increased earnings
The increase in net other income (deductions) was partially due to an
increase in profits from the Company's Linebacker (SM) service line maintenance
program related to increased customer enrollment.
THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET
INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AS COMPARED TO THE NET
INCOME FOR THE SAME PERIOD LAST YEAR.
Net income applicable to common stock for the nine months ended September
30, 2001 increased from that of September 30, 2000 by $1,038,000 or $.14 per
basic average common share. The increased income resulted from $950,000 higher
net other income (deductions), a $76,000 decrease in interest and debt expense
and a $12,000 increase in utility operating income.
The major reasons for the higher net other income (deductions) were:
- a $1,063,000 increase in net gains on property transactions
resulting primarily from tax benefits the Company received for its
January 2001 donation of 134 acres of land to the Town of
Middlebury, Connecticut
- a $74,000, or 39% increase in net non-water sales earnings partially
due to increased customer participation in its Linebacker (SM)
service line maintenance program and increased earnings from sales
of emergency and pool water
partially offset by
- a $203,000 increase in merger costs related to the Company's
acquisition of Barnstable Holding Company which was consummated in
February 2001.
Page 13
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
The major causes of the higher utility operating income were:
- a 4.0% increase in operating revenues partially due to a hotter,
dryer summer and to over 1,000 new customers added to Company's
water systems during the past 12 months
- a 5.4% reduction in taxes other than income taxes resulting from
property tax rebatements
partially offset by
- a 6.9% increase in operation and maintenance expense partially due
to higher treatment and utility costs
- a 2.3% increase in depreciation expense due to the Company's
increased investment in utility plant
- a 13.2% increase in income tax expense primarily due to increased
earnings and book/tax timing adjustments
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.
Page 14
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: November 8, 2001 By /s/ David C. Benoit
David C. Benoit
Vice President - Finance
Date: November 8, 2001 By: /s/ Peter J. Bancroft
Peter J. Bancroft
Assistant Treasurer