1 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 June 30, 1995 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 (Address of principal executive offices) (Zip Code) (203) 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. 2,928,817 Number of shares of common stock outstanding, June 30, 1995 2 CONNECTICUT WATER SERVICE, INC. Financial Report June 30, 1995 and 1994 TABLE OF CONTENTS PART I, ITEM 1: FINANCIAL STATEMENTS Consolidated Balance Sheets at June 30, 1995 and December 31, 1994 Page 3 Consolidated Statements of Capitalization at June 30, 1995 and December 31, 1994 Page 4 Consolidated Statements of Income for Three Months Ended June 30, 1995 and 1994 Page 5 Schedules of Operating Revenues, Taxes Other Than Income and Other Income for Three Months Ended June 30, 1995 and 1994 Page 6 Consolidated Statements of Income for Six Months Ended June 30, 1995 and 1994 Page 7 Schedules of Operating Revenues, Taxes Other Than Income and Other Income for Six Months Ended June 30, 1995 and 1994 Page 8 Consolidated Statements of Income for Twelve Months Ended June 30, 1995 and 1994 and for Twelve Months Ended March 31, 1995 Page 9 Schedules of Operating Revenues, Taxes Other Than Income and Other Income for Twelve Months Ended June 30, 1995 and 1994 and for Twelve Months Ended March 31, 1995 Page 10 Consolidated Statements of Retained Earnings for Three Months Ended June 30, 1995 and 1994 Page 11 Consolidated Statements of Retained Earnings for Six Months Ended June 30, 1995 and 1994 Page 11 Consolidated Statements of Retained Earnings for Twelve Months Ended June 30, 1995 and 1994 Page 11 Consolidated Statements of Cash Flows for Six Months Ended June 30, 1995 and 1994 Page 12 Notes to Consolidated Financial Statements Page 13 PART I, ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Page 14 Signature Page Page 15 3 Page 3 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED BALANCE SHEETS At June 30, 1995 and December 31, 1994 June 30, 1995 Dec. 31, ASSETS (Unaudited) 1994 ----------- -------- (Thousands of dollars) Utility Plant Utility Plant $181,926 $181,079 Construction Work in Progress 4,266 3,369 Utility Plant Acquisition Adjustments (1,206) (1,206) -------- -------- 184,986 183,242 Accumulated Provision for Depreciation (43,939) (42,458) -------- -------- Net Utility Plant 141,047 140,784 -------- -------- Investments 1,020 881 -------- -------- Current Assets Cash 481 18 Accounts Receivable (Less Allowance, 1995- $139; 1994 - $149) 3,522 3,599 Accrued Unbilled Revenues 2,655 2,800 Prepayments and Other Current Assets 1,240 1,515 -------- -------- Total Current Assets 7,898 7,932 -------- -------- Deferred Charges Unamortized Debt Issuance Expense 5,493 5,587 Taxes Recoverable Through Future Rates 9,200 9,200 Postretirement Benefits Other Than Pension Recoverable Through Future Rates 757 757 Recoverable Contamination Clean-Up Costs 4,700 4,700 Prepaid Income Taxes on Contributions in Aid of Construction 507 450 Other Costs 1,020 950 -------- -------- Total Deferred Charges 21,677 21,644 -------- -------- Total Assets $171,642 $171,241 ======== ======== CAPITALIZATION AND LIABILITIES Capitalization (See accompanying statements) Common Stockholders' Equity $ 49,181 $ 47,983 Preferred Stock 772 772 Long-Term Debt 54,470 54,600 -------- -------- Total Capitalization 104,423 103,355 -------- -------- Current Liabilities Interim Bank Loans Payable 2,600 2,700 Current Portion of Preferred Stock 0 30 Accounts Payable and Accrued Taxes and Interest 5,673 7,279 Accrued Recoverable Contamination Clean-Up Costs 500 500 Other 1,664 1,544 -------- -------- Total Current Liabilities 10,437 12,053 -------- -------- Long-Term Liabilities Accrued Recoverable Contamination Clean-Up Costs 2,607 2,811 Advances for Construction 12,779 12,099 Contributions in Aid of Construction 18,147 18,145 Deferred Federal Income Taxes 11,047 10,547 Unfunded Future Income Taxes 9,200 9,200 Unfunded Postretirement Benefits Other Than Pension 757 757 Unamortized Investment Tax Credits 2,245 2,274 -------- -------- Total Long-Term Liabilities 56,782 55,833 -------- -------- Total Capitalization and Liabilities $171,642 $171,241 ======== ======== The accompanying notes are an integral part of these financial statements. 4 Page 4 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF CAPITALIZATION At June 30, 1995 and December 31, 1994 June 30, 1995 Dec. 31, (Unaudited) 1994 ----------- -------- (Thousands of dollars) Common Stockholders' Equity Common Stock Without Par Value Authorized - 7,500,000 Shares; Shares Issued and Outstanding: 1995 - 2,928,817; 1994 - 2,870,559 $ 41,448 $ 40,126 Stock Issuance Expense (1,183) (1,183) Retained Earnings 8,916 9,040 -------- -------- Total Common Stockholders' Equity 49,181 47,983 -------- -------- 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 The Connecticut Water Company, with Mandatory Redemption Provisions, Voting, $100 Par Value; Authorized 50,000 Shares, Issued and Outstanding: 4 3/4% Series: Shares - 1995 - 0; 1994 - 300 Shares 0 30 Current Portion of Preferred Stock 0 (30) -------- -------- Total Preferred Stock of The Connecticut Water Company 0 0 -------- -------- Long-Term Debt The Connecticut Water Company First Mortgage Bonds 6.9% Series Q, due 2021 10,000 10,000 5.875% Series R, due 2022 14,870 15,000 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 -------- -------- Total Long-Term Debt 54,470 54,600 -------- -------- Total Capitalization $104,423 $103,355 ======== ======== The accompanying notes are an integral part of these financial statements. 5 Page 5 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME For the Three Months Ended June 30, 1995 and 1994 1995 1994 Increase (Unaudited) (Unaudited) (Decrease) ----------- ----------- ---------- (In thousands except per share amounts) Operating Revenues (See accompanying schedule) $9,179 $9,201 ($22) ------ ------ ----- Operating Expenses Operation 3,251 3,436 (185) Maintenance 432 457 (25) Depreciation 812 770 42 Federal Income Taxes 929 831 98 Connecticut Corporation Business Taxes 248 230 18 Taxes Other Than Income Taxes (See accompanying schedule) 1,418 1,469 (51) ------ ------ ----- Total Operating Expenses 7,090 7,193 (103) ------ ------ ----- Utility Operating Income 2,089 2,008 81 ------ ------ ----- Other Income (Deductions) Interest 34 24 10 Allowance for Funds Used During Construction 16 10 6 Preferred Stock Dividends of Subsidiary 0 0 0 Other (See accompanying schedule) 9 17 (8) Taxes on Other Income 9 10 (1) ------ ------ ----- Total Other Income (Deductions) 68 61 7 ------ ------ ----- Interest and Debt Expense Interest on Long-Term Debt 865 887 (22) Other Interest Charges 69 50 19 Amortization of Debt Expense 47 46 1 ------ ------ ----- Total Interest and Debt Expense 981 983 (2) ------ ------ ----- Net Income 1,176 1,086 90 Preferred Stock Dividend Requirement 9 9 0 ------ ------ ----- Net Income Applicable to Common Stockholders $1,167 $1,077 $90 ====== ====== ===== Weighted Average Common Shares Outstanding 2,909 2,805 104 ====== ====== ===== Earnings Per Average Common Share $ 0.40 $ 0.38 $0.02 ====== ====== ===== Dividends Per Common Share $ 0.42 $ 0.41 $0.01 ====== ====== ===== The accompanying notes are an integral part of these financial statements. 6 Page 6 Connecticut Water Service, Inc. and Subsidiary SCHEDULE OF OPERATING REVENUES, TAXES OTHER THAN INCOME AND OTHER INCOME For the Three Months Ended June 30, 1995 and 1994 1995 1994 Increase (Unaudited) (Unaudited) (Decrease) ----------- ----------- ---------- (Thousands of dollars) Operating Revenues: Residential $5,623 $5,662 ($39) Seasonal 132 132 0 Commercial 1,116 1,127 (11) Industrial 457 495 (38) Public Authority 255 218 37 Metered Sales - Temporary and Non-Recurring 11 7 4 Private Fire 218 213 5 Public Fire 1,312 1,292 20 CWIP Surcharge 0 0 0 Other 35 35 0 ------ ------ ---- Revenues Billed 9,159 9,181 (22) Change in Revenues Accrued 20 20 0 ------ ------ ---- Total Operating Revenue $9,179 $9,201 ($22) ====== ====== ==== Taxes - Other Than Income Taxes Municipal Taxes $ 839 $ 893 ($54) Payroll Taxes 120 114 6 Connecticut Gross Earnings Tax 459 462 (3) ------ ------ ---- Total Other Taxes $1,418 $1,469 ($51) ====== ====== ==== Other Income Merchandising, Jobbing and Contracting - Net $ 3 $ 5 ($2) Income from Lease of Other Physical Property - Net 5 6 (1) Miscellaneous Non-Operating Income 2 7 (5) Miscellaneous Income Deductions (1) (1) 0 ------ ------ ---- Total Other Income $ 9 $ 17 ($8) ====== ====== ==== The accompanying notes are an integral part of these financial statements. 7 Page 7 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME For the Six Months Ended June 30, 1995 and 1994 1995 1994 Increase (Unaudited) (Unaudited) (Decrease) ----------- ----------- ---------- (In thousands except per share amounts) Operating Revenues (See accompanying schedule) $17,998 $18,065 ($67) ----------- ----------- ---------- Operating Expenses Operation 6,307 6,553 (246) Maintenance 851 887 (36) Depreciation 1,625 1,540 85 Federal Income Taxes 1,696 1,617 79 Connecticut Corporation Business Taxes 448 441 7 Taxes Other Than Income Taxes (See accompanying schedule) 2,897 2,908 (11) ------- ------- ---- Total Operating Expenses 13,824 13,946 (122) ------- ------- ---- Utility Operating Income 4,174 4,119 55 ------- ------- ---- Other Income (Deductions) Interest 76 48 28 Allowance for Funds Used During Construction 32 11 21 Preferred Stock Dividends of Subsidiary 0 (72) 72 Other (See accompanying schedule) 8 17 (9) Taxes on Other Income 10 19 (9) ------- ------- ---- Total Other Income (Deductions) 126 23 103 ------- ------- ---- Interest and Debt Expense Interest on Long-Term Debt 1,732 1,746 (14) Other Interest Charges 151 108 43 Amortization of Debt Expense 94 93 1 ------- ------- ---- Total Interest and Debt Expense 1,977 1,947 30 ------- ------- ---- Net Income 2,323 2,195 128 Preferred Stock Dividend Requirement 19 19 0 ------- ------- ---- Net Income Applicable to Common Stockholders $ 2,304 $ 2,176 $ 128 ======= ======= ===== Weighted Average Common Shares Outstanding 2,894 2,800 94 ======= ======= ===== Earnings Per Average Common Share $ 0.80 $ 0.78 $0.02 ======= ======= ===== Dividends Per Common Share $ 0.84 $ 0.82 $0.02 ======= ======= ===== The accompanying notes are an integral part of these financial statements. 8 Page 8 Connecticut Water Service, Inc. and Subsidiary SCHEDULE OF OPERATING REVENUES, TAXES OTHER THAN INCOME AND OTHER INCOME For the Six Months Ended June 30, 1995 and 1994 1995 1994 Increase (Unaudited) (Unaudited) (Decrease) ----------- ----------- ---------- (Thousands of dollars) Operating Revenues: Residential $11,235 $11,370 ($135) Seasonal 264 264 0 Commercial 2,157 2,179 (22) Industrial 898 919 (21) Public Authority 468 408 60 Metered Sales - Temporary and Non-Recurring 11 7 4 Private Fire 436 426 10 Public Fire 2,623 2,585 38 CWIP Surcharge 0 0 0 Other 51 52 (1) ------- ------- ----- Revenues Billed 18,143 18,210 (67) Change in Revenues Accrued (145) (145) 0 ------- ------- ----- Total Operating Revenue $17,998 $18,065 ($67) ======= ======= ==== Taxes - Other Than Income Taxes Municipal Taxes $ 1,680 $ 1,711 ($31) Payroll Taxes 317 291 26 Connecticut Gross Earnings Tax 900 906 (6) ------- ------- ----- Total Other Taxes $ 2,897 $ 2,908 ($11) ======= ======= ===== Other Income Merchandising, Jobbing and Contracting - Net ($13) ($3) ($10) Income from Lease of Other Physical Property - Net 12 12 0 Miscellaneous Non-Operating Income 12 11 1 Miscellaneous Income Deductions (3) (3) 0 ------- ------- ----- Total Other Income $ 8 $ 17 ($9) ======= ======= ===== The accompanying notes are an integral part of these financial statements. 9 Page 9 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME For the Twelve Months Ended June 30, 1995 and 1994 and for the Twelve Months Ended March 31, 1995 June 30, March 31, 1995 1994 Increase 1995 Increase (Unaudited) (Unaudited) (Decrease) (Unaudited) (Decrease) ----------- ----------- ---------- ----------- ---------- (In thousands except per share amounts) Operating Revenues (See accompanying schedule) $38,062 $38,337 ($275) $38,084 ($22) ------- ------- ----- ------- ----- Operating Expenses Operation 12,683 12,801 (118) 12,868 (185) Maintenance 1,934 1,929 5 1,959 (25) Depreciation 3,171 3,072 99 3,129 42 Federal Income Taxes 3,848 3,854 (6) 3,750 98 Connecticut Corporation Business Taxes 994 992 2 976 18 Taxes Other Than Income Taxes (See accompanying schedule) 5,722 5,873 (151) 5,773 (51) ------- ------- ----- ------- ----- Total Operating Expenses 28,352 28,521 (169) 28,455 (103) ------- ------- ----- ------- ----- Utility Operating Income 9,710 9,816 (106) 9,629 81 ------- ------- ----- ------- ----- Other Income (Deductions) Interest 128 102 26 118 10 Allowance for Funds Used During Construction 110 46 64 104 6 Preferred Stock Dividends of Subsidiary (1) (215) 214 (1) 0 Other (See accompanying schedule) 14 (4) 18 22 (8) Taxes on Other Income 17 72 (55) 18 (1) ------- ------- ----- ------- ----- Total Other Income (Deductions) 268 1 267 261 7 ------- ------- ----- ------- ----- Interest and Debt Expense Interest on Long-Term Debt 3,443 3,643 (200) 3,465 (22) Other Interest Charges 338 238 100 319 19 Amortization of Debt Expense 189 200 (11) 188 1 ------- ------- ----- ------- ----- Total Interest and Debt Expense 3,970 4,081 (111) 3,972 (2) ------- ------- ----- ------- ----- Net Income 6,008 5,736 272 5,918 90 Preferred Stock Dividend Requirement 38 38 0 38 0 ------- ------- ----- ------- ----- Net Income Applicable to Common Stockholders $ 5,970 $ 5,698 $ 272 $ 5,880 $90 ======= ======= ===== ======= ===== Weighted Average Common Shares Outstanding 2,860 2,789 71 2,835 25 ======= ======= ===== ======= ===== Earnings Per Average Common Share $ 2.09 $ 2.04 $0.05 $ 2.07 $0.02 ======= ======= ===== ======= ===== Dividends Per Common Share $ 1.67 $ 1.64 $0.03 $ 1.66 $0.01 ======= ======= ===== ======= ===== The accompanying notes are an integral part of these financial statements. 10 Page 10 Connecticut Water Service, Inc. and Subsidiary SCHEDULE OF OPERATING REVENUES, TAXES OTHER THAN INCOME AND OTHER INCOME For the Twelve Months Ended June 30, 1995 and 1994 and for the Twelve Months Ended March 31, 1995 March 31, 1995 1994 Increase 1995 Increase (Unaudited) (Unaudited) (Decrease) (Unaudited) (Decrease) ----------- ----------- ---------- ----------- ---------- (Thousands of dollars) Operating Revenues: Residential $23,806 $24,231 ($425) $23,845 ($39) Seasonal 547 504 43 547 0 Commercial 4,674 4,721 (47) 4,685 (11) Industrial 1,901 1,900 1 1,939 (38) Public Authority 953 911 42 916 37 Metered Sales - Temporary and Non-Recurring 33 25 8 29 4 Private Fire 866 849 17 861 5 Public Fire 5,203 5,151 52 5,183 20 CWIP Surcharge 0 0 0 0 0 Other 79 73 6 79 0 ------- ------- ----- ------- ---- Revenues Billed 38,062 38,365 (303) 38,084 (22) Change in Revenues Accrued 0 (28) 28 0 0 ------- ------- ----- ------- ---- Total Operating Revenue $38,062 $38,337 ($275) $38,084 ($22) ======= ======= ===== ======= ==== Taxes - Other Than Income Taxes Municipal Taxes $ 3,300 $ 3,459 ($159) $ 3,354 ($54) Payroll Taxes 522 495 27 516 6 Connecticut Gross Earnings Tax 1,900 1,919 (19) 1,903 (3) ------- ------- ----- ------- ---- Total Other Taxes $ 5,722 $ 5,873 ($151) $ 5,773 ($51) ======= ======= ===== ======= ==== Other Income Merchandising, Jobbing and Contracting - Net ($17) $2 ($19) ($15) ($2) Income from Lease of Other Physical Property - Net 22 19 3 23 (1) Miscellaneous Non-Operating Income 17 32 (15) 22 (5) Miscellaneous Income Deductions (8) (57) 49 (8) 0 ------- ------- ----- ------- ---- Total Other Income $ 14 ($4) $ 18 $ 22 ($8) ======= ======= ===== ======= ==== The accompanying notes are an integral part of these financial statements. 11 Page 11 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF RETAINED EARNINGS For the Three Months Ended June 30, 1995 and 1994 1995 1994 (Unaudited) (Unaudited) ----------- ----------- (Thousands of dollars) Balance at Beginning of Period $ 8,969 $ 7,790 Net Income 1,176 1,086 ------- ------- 10,145 8,876 ------- ------- Dividends Declared: Cumulative Preferred, Class A, $.20 per share 3 3 Cumulative Preferred, Series $.90, $.225 per share 6 6 Common Stock - 1995 $.42 per share; 1994 $.41 per share 1,220 1,151 ------- ------- 1,229 1,160 ------- ------- Balance at End of Period $ 8,916 $ 7,716 ======= ======= FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994 Balance at Beginning of Period $ 9,040 $ 8,092 Net Income 2,323 2,195 ------- ------- 11,363 10,287 ------- ------- Charges Related to Redemption of Subsidiary's 9 1/2% Series Preferred Stock 0 257 ------- ------- Dividends Declared: Cumulative Preferred, Class A, $.40 per share 6 6 Cumulative Preferred, Series $.90, $.45 per share 13 13 Common Stock - 1995 $.84 per share; 1994 $.82 per share 2,428 2,295 ------- ------- 2,447 2,314 ------- ------- Balance at End of Period $ 8,916 $ 7,716 ======= ======= FOR THE TWELVE MONTHS ENDED JUNE 30, 1995 AND 1994 Balance at Beginning of Period $ 7,716 $ 6,847 Net Income 6,008 5,736 ------- ------- 13,724 12,583 ------- ------- Charges Related to Redemption of Subsidiary's 9 1/2% Series Preferred Stock 0 257 ------- ------- Dividends Declared: Cumulative Preferred, Class A, $.80 per share 12 12 Cumulative Preferred, Series $.90, $.90 per share 26 26 Common Stock - 1995 $1.67 per share; 1994 $1.64 per share 4,770 4,572 ------- ------- 4,808 4,610 ------- ------- Balance at End of Period $ 8,916 $ 7,716 ======= ======= The accompanying notes are an integral part of these financial statements. 12 Page 12 Connecticut Water Service, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 1995 and 1994 1995 1994 (Unaudited) (Unaudited) ----------- ----------- (Thousands of dollars) Operating Activities: Net Income Before Preferred Dividends of Parent $ 2,323 $ 2,195 ------- ------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation (including $49 in 1995, $68 in 1994 charged to other accounts) 1,676 1,610 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues 222 127 (Increase) Decrease in Other Current Assets 275 (40) (Increase) Decrease in Other Non-Current Items (376) (326) Increase (Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities (1,486) (674) Increase (Decrease) in Deferred Federal Income Taxes and Investment Tax Credits, Net 471 481 ------- ------- Total Adjustments 782 1,178 ------- ------- Net Cash Provided by Operating Activities 3,105 3,373 ------- ------- Investing Activities: Gross Additions to Utility Plant (including Allowance for Funds Used During Construction of $32 in 1995 and $11 in 1994) (2,000) (1,410) ------- ------- Financing Activities: Proceeds from Interim Bank Loans 2,600 4,750 Repayment of Interim Bank Loans (2,700) (3,950) Proceeds from Issuance of Long-Term Debt 0 12,050 Reduction of Long-Term Debt Including Current Portion (130) (9,050) Proceeds from Issuance of Common Stock 1,322 563 Retirement of Preferred Stock (30) (3,030) Charges Related to Redemption of Subsidiary's 9 1/2% Series Preferred Stock 0 (257) Advances, Contributions and Funds From Others for Construction, Net 743 247 Costs Incurred to Issue Long-Term Debt, Preferred Stock, and Common Stock 0 (661) Cash Dividends Paid (2,447) (2,314) ------- ------- Net Cash Provided by (Used in) Financing Activities (642) (1,652) ------- ------- Net Increase (Decrease) in Cash 463 311 Cash at Beginning of Year 18 44 ------- ------- Cash at End of Year $ 481 $ 355 ======= ======= Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (Net of Amounts Capitalized) $ 1,872 $ 1,887 Income Taxes $ 2,175 $ 1,880 The accompanying notes are an integral part of these financial statements. 13 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY 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 10-K. 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. 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: 3 Months Ended 12 Months Ended ----------------------- ------------------------------------ 6/30/95 6/30/94 6/30/95 6/30/94 12/31/94 --------- --------- --------- --------- --------- Common Shares Outstanding: January 1, 1994 -- -- -- -- 2,789,977 July 1, 1994 & 1993 respectively -- -- 2,813,912 2,772,944 -- April 1, 1995 & 1994 respectively 2,904,827 2,803,397 -- -- -- Common Shares Issued: To DRIP - Sept 15, 1993 -- -- -- 7,965 -- To 401-K - Sept. 30, 1993 -- -- -- 421 -- To DRIP - Dec. 15, 1993 -- -- -- 8,201 -- To 401-K - Dec. 31, 1993 -- -- -- 446 -- To PSP - Jan. 21, 1994 -- -- -- 4,061 4,061 To DRIP - March 15, 1994 -- -- -- 8,798 8,798 To 401-K - March 30, 1994 -- -- -- 561 561 To DRIP - June 15, 1994 -- 9,878 -- 9,878 9,878 To 401-K - June 30, 1994 -- 637 -- 637 637 To DRIP - Sept. 15, 1994 -- -- 15,397 -- 15,397 To 401-K - Sept. 30, 1994 -- -- 620 -- 620 To DRIP - Dec. 15, 1994 -- -- 39,980 -- 39,980 To 401-K - Dec. 31, 1994 -- -- 650 -- 650 To PSP - Jan. 6, 1995 -- -- 6,369 -- -- To DRIP - March 15, 1995 -- -- 27,213 -- -- To 401-K - March 30, 1995 -- -- 686 -- -- To DRIP - June 15, 1995 23.328 -- 23,328 -- -- To 401-K - June 30, 1995 662 -- 662 -- -- --------- --------- --------- --------- --------- Common Shares Outstanding: June 30, 1995 & 1994 respectively 2,928,817 2,813,912 2,928,817 2,813,912 ========= ========= ========= ========= December 31, 1994 2,870,559 ========= Weighted Average Common Shares Outstanding: Days outstanding basis 2,908,936 2,805,145 2,860,451 2,789,211 2,812,456 ========= ========= ========= ========= ========= DRIP = Dividend Reinvestment Plan PSP = Performance Stock Program 401-K = Company contribution to employees' 401-K savings plan 14 Page 14 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY PART I, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CORPORATE RESOURCES At June 30, 1995 the Company had $6,400,000 of unused lines of interim bank loan credit available. RESULT OF OPERATIONS THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1995 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, 1995 increased from that of June 30, 1994 by $90,000, or $.02 per average common share, on an increased number of average common shares as a result of a $81,000 increase in utility operating income, a $7,000 increase in other income (deductions), and a $2,000 decrease in interest and debt expense. Operating revenues decreased $22,000, or .2%, reflecting lower water consumption by residential, industrial, and commercial customers, partially offset by increases in revenues from public authority and public fire customers. The $103,000 decrease in operating expenses is primarily attributable to lower operation and maintenance expenses and municipal taxes, partially offset by increased income taxes related to higher taxable income and increased depreciation expense. THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995 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, 1995 increased from that of June 30, 1994 by $128,000, or $.02 per average common share, on an increased number of average common shares as a result of a $55,000 increase in utility operating income and a $103,000 increase in other income and deductions, partially offset by a $30,000 increase in interest and debt expense. Operating revenues decreased $67,000, or .4%, reflecting lower water consumption by residential, commercial, and industrial customers, partially offset by increases in revenues from public authority and public fire customers. The $122,000 decrease in operating expenses is primarily attributable to lower operation and maintenance expenses, partially offset by increased income taxes related to higher taxable income and increased depreciation expense. The increase in other income and deductions is primarily related to the elimination of preferred stock dividends of the Subsidiary. This was achieved through the refinancing of the Subsidiary's 9.5% preferred stock with 6.94% long-term debt during March, 1994. The increase in interest and debt expense is primarily due to higher interest on interim bank loans primarily due to higher interest rates. 15 Page 15 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 11, 1995 By /s/ Bertram L. Lenz ------------------------------- Bertram L. Lenz Vice President - Finance Date: August 11, 1995 By: /s/ Peter J. Bancroft ------------------------------- Peter J. Bancroft Assistant Treasurer 16 Exhibit Index ------------- Exhibit No. Description - ----------- ----------- 27 Financial Data Schedule