-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RC9gBSJWSbVzkKBEAET2Cc9Xa+OjSlRF/gMeN0m7i4l6zR7D/1g2Ms7e0DYo2whG Vqdbw3dPRoNR1htU295Rww== 0000914039-01-500142.txt : 20010814 0000914039-01-500142.hdr.sgml : 20010814 ACCESSION NUMBER: 0000914039-01-500142 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010813 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONNECTICUT WATER SERVICE INC / CT CENTRAL INDEX KEY: 0000276209 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 060739839 STATE OF INCORPORATION: CT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08084 FILM NUMBER: 1706278 BUSINESS ADDRESS: STREET 1: 93 W MAIN ST CITY: CLINTON STATE: CT ZIP: 06413 BUSINESS PHONE: 8606698630 MAIL ADDRESS: STREET 1: 93 WEST MAIN ST CITY: CLINTON STATE: CT ZIP: 06413 10-Q 1 y52210e10-q.txt 10-Q 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, 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. 5,072,598 Number of shares of common stock outstanding, June 30, 2001 2 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES Financial Report June 30, 2001 and 2000 TABLE OF CONTENTS PART I, ITEM 1: FINANCIAL STATEMENTS Consolidated Balance Sheets at June 30, 2001 and December 31, 2000 Page 3 Consolidated Statements of Capitalization at June 30, 2001 and December 31, 2000 Page 4 Consolidated Statements of Income for Three Months Ended June 30, 2001 and 2000 Page 5 Consolidated Statements of Income for Six Months Ended June 30, 2001 and 2000 Page 6 Consolidated Statements of Income for Twelve Months Ended June 30, 2001 and 2000 Page 7 Consolidated Statements of Retained Earnings for Three Months Ended June 30, 2001 and 2000 Page 8 Consolidated Statements of Retained Earnings for Six Months Ended June 30, 2001 and 2000 Page 8 Consolidated Statements of Retained Earnings for Twelve Months Ended June 30, 2001 and 2000 Page 8 Consolidated Statements of Cash Flows for Six Months Ended June 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 3 Page 3 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AT JUNE 30, 2001 AND DECEMBER 31, 2000 (IN THOUSANDS)
DEC. 31, JUNE 30, 2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ----------- ------------ ASSETS Utility Plant Utility Plant $ 261,796 $ 257,634 Construction Work in Progress 6,960 8,359 Utility Plant Acquisition Adjustments (1,256) (1,256) --------- --------- 267,500 264,737 Accumulated Provision for Depreciation (74,163) (71,568) --------- --------- Net Utility Plant 193,337 193,169 --------- --------- Other Property and Investments 3,133 3,039 --------- --------- Current Assets Cash 792 314 Accounts Receivable (Less Allowance, 2001 - $251; 2000 - $218) 4,992 4,831 Accrued Unbilled Revenues 3,414 3,229 Materials and Supplies, at Average Cost 872 795 Prepayments and Other Current Assets 203 122 --------- --------- Total Current Assets 10,273 9,291 --------- --------- Deferred Charges and Regulatory Assets Unamortized Debt Issuance Expense 5,418 5,530 Unrecovered Income Taxes 9,083 9,040 Postretirement Benefits Other Than Pension 953 953 Other Costs 1,509 1,524 --------- --------- Total Deferred Charges and Regulatory Assets 16,963 17,047 --------- --------- TOTAL ASSETS $ 223,706 $ 222,546 ========= ========= CAPITALIZATION AND LIABILITIES Capitalization (See accompanying statements) Common Stockholders' Equity $ 68,625 $ 67,110 Preferred Stock 847 847 Minority Interest -- 117 Long-Term Debt 65,993 66,283 --------- --------- Total Capitalization 135,465 134,357 --------- --------- Current Liabilities Current Portion of Long Term Debt 305 280 Interim Bank Loans Payable 2,798 1,800 Accounts Payable, Accrued Taxes and Accrued Interest 3,954 7,436 Other 256 101 --------- --------- Total Current Liabilities 7,313 9,617 --------- --------- Long-Term Liabilities Advances for Construction 17,627 17,062 Contributions in Aid of Construction 28,320 27,009 Deferred Federal Income Taxes 18,666 18,165 Unfunded Future Income Taxes 8,546 8,546 Long-term Compensation Arrangements 5,768 5,758 Unamortized Investment Tax Credits 2,001 2,032 Commitments and Contingencies --------- --------- Total Long-Term Liabilities 80,928 78,572 --------- --------- TOTAL CAPITALIZATION AND LIABILITIES $ 223,706 $ 222,546 ========= =========
The accompanying notes are an integral part of these financial statements. 4 Page 4 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CAPITALIZATION At June 30, 2001 and December 31, 2000 (In thousands, except share amounts)
DEC. 31, JUNE 30, 2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Common Stockholders' Equity Common Stock Without Par Value Authorized - 7,500,000 Shares; $ 48,909 $ 48,617 Shares Issued and Outstanding: 2001 - 5,072,598; 2000 - 5,069,324 Stock Issuance Expense (1,385) (1,385) Retained Earnings 21,101 19,878 ------------ ------------ Total Common Stockholders' Equity 68,625 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 9,745 9,770 5.125% 1998 Series B, due 2028 7,770 7,830 Other 5.5% Unsecured Promissory Note 51 71 ------------ ------------ Total Connecticut Water Company 61,836 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 501 507 8.0% New London Trust, Due 2011 2,102 2,170 ------------ ------------ Total Crystal 2,603 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. 66,298 66,563 ------------ ------------ Less Current Portion 305 280 ------------ ------------ Total Long-Term Debt 65,993 66,283 ------------ ------------ TOTAL CAPITALIZATION $ 135,465 $ 134,357 ============ ============
The accompanying notes are an integral part of these financial statements. 5 Page 5 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Operating Revenues $ 10,974 $ 10,834 ------------ ------------ Operating Expenses Operation and Maintenance 4,652 4,558 Depreciation 1,233 1,182 Income Taxes 1,351 1,150 Taxes Other Than Income Taxes 887 1,077 ------------ ------------ Total Operating Expenses 8,123 7,967 ------------ ------------ Utility Operating Income 2,851 2,867 ------------ ------------ Other Income (Deductions), Net of Taxes Gain (Loss) on Property Transactions (7) 39 Non-Water Sales Earnings 106 75 Allowance for Funds Used During Construction 99 103 Merger Costs (31) (38) Other 76 44 ------------ ------------ Total Other Income (Deductions), Net of Taxes 243 223 ------------ ------------ Interest and Debt Expense Interest on Long-Term Debt 1,002 1,027 Other Interest Charges 112 121 Amortization of Debt Expense 56 56 ------------ ------------ Total Interest and Debt Expense 1,170 1,204 ------------ ------------ Net Income Before Preferred Dividends 1,924 1,886 Preferred Stock Dividend Requirement 10 10 ------------ ------------ Net Income Applicable to Common Stock $ 1,914 $ 1,876 ============ ============ Weighted Average Common Shares Outstanding: Basic 5,072 5,069 Diluted 5,106 5,084 Earnings Per Common Share: Basic $ 0.38 $ 0.37 Diluted $ 0.37 $ 0.37 Dividends Per Common Share $ 0.30 $ 0.29
The accompanying notes are an integral part of these financial statements. 6 Page 6 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Operating Revenues $ 21,202 $ 21,059 ------------ ------------ Operating Expenses Operation and Maintenance 9,092 8,989 Depreciation 2,458 2,367 Income Taxes 2,212 2,072 Taxes Other Than Income Taxes 2,124 2,215 ------------ ------------ Total Operating Expenses 15,886 15,643 ------------ ------------ Utility Operating Income 5,316 5,416 ------------ ------------ Other Income (Deductions), Net of Taxes Gain (Loss) on Property Transactions 1,110 59 Non-Water Sales Earnings 170 136 Allowance for Funds Used During Construction 198 203 Merger Costs (351) (99) Other 99 78 ------------ ------------ Total Other Income (Deductions), Net of Taxes 1,226 377 ------------ ------------ Interest and Debt Expense Interest on Long-Term Debt 2,030 2,047 Other Interest Charges 192 197 Amortization of Debt Expense 112 112 ------------ ------------ Total Interest and Debt Expense 2,334 2,356 ------------ ------------ Net Income Before Preferred Dividends 4,208 3,437 Preferred Stock Dividend Requirement 19 19 ------------ ------------ Net Income Applicable to Common Stock $ 4,189 $ 3,418 ============ ============ Weighted Average Common Shares Outstanding: Basic 5,073 5,069 Diluted 5,099 5,087 Earnings Per Common Share: Basic $ 0.83 $ 0.67 Diluted $ 0.82 $ 0.67 Dividends Per Common Share $ 0.59 $ 0.58
The accompanying notes are an integral part of these financial statements. 7 Page 7 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE TWELVE MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Operating Revenues $ 44,140 $ 45,401 ------------ ------------ Operating Expenses Operation and Maintenance 18,483 19,184 Depreciation 4,809 4,679 Income Taxes 4,719 5,333 Taxes Other Than Income Taxes 4,567 4,447 ------------ ------------ Total Operating Expenses 32,578 33,643 ------------ ------------ Utility Operating Income 11,562 11,758 ------------ ------------ Other Income (Deductions), Net of Taxes Gain (Loss) on Property Transactions 1,583 130 Non-Water Sales Earnings 277 162 Allowance for Funds Used During Construction 411 414 Merger Costs (640) (149) Other 257 199 ------------ ------------ Total Other Income (Deductions), Net of Taxes 1,888 756 ------------ ------------ Interest and Debt Expense Interest on Long-Term Debt 4,083 4,088 Other Interest Charges 478 429 Amortization of Debt Expense 222 223 ------------ ------------ Total Interest and Debt Expense 4,783 4,740 ------------ ------------ Net Income Before Preferred Dividends 8,667 7,774 Preferred Stock Dividend Requirement 38 38 ------------ ------------ Net Income Applicable to Common Stock $ 8,629 $ 7,736 ============ ============ Weighted Average Common Shares Outstanding: Basic 5,071 5,066 Diluted 5,094 5,085 Earnings Per Common Share: Basic $ 1.70 $ 1.53 Diluted $ 1.69 $ 1.52 Dividends Per Common Share $ 1.18 $ 1.17
The accompanying notes are an integral part of these financial statements. 8 Page 8 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS FOR THE THREE MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Balance at Beginning of Period $ 20,703 $ 18,003 Net Income Before Preferred Dividends of Parent 1,924 1,886 ------------ ------------ 22,627 19,889 ------------ ------------ Dividends Declared: Cumulative Preferred, Class A, $.20 per share 3 3 Cumulative Preferred, Series $.90, $.225 per share 7 7 Common Stock - 2001 $.30 per share; 2000 $.29 per share 1,516 1,468 ------------ ------------ 1,526 1,478 ------------ ------------ Balance at End of Period $ 21,101 $ 18,411 ============ ============
FOR THE SIX MONTHS ENDED JUNE 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 4,208 3,437 ------------ ------------ 24,086 21,347 ------------ ------------ Dividends Declared: Cumulative Preferred, Class A, $.40 per share 6 6 Cumulative Preferred, Series $.90, $.45 per share 13 13 Common Stock - 2001 $.59 per share; 2000 $.58 per share 2,966 2,917 ------------ ------------ 2,985 2,936 ------------ ------------ Balance at End of Period $ 21,101 $ 18,411 ============ ============
FOR THE TWELVE MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Balance at Beginning of Period $ 18,411 $ 16,532 Net Income Before Preferred Dividends of Parent 8,667 7,774 ------------ ------------ 27,078 24,306 ------------ ------------ Dividends Declared: Cumulative Preferred, Class A, $.80 per share 12 12 Cumulative Preferred, Series $.90, $.90 per share 26 26 Common Stock - 2001 $1.18 per share; 2000 $1.17 per share 5,939 5,857 ------------ ------------ 5,977 5,895 ------------ ------------ Balance at End of Period $ 21,101 $ 18,411 ============ ============
The accompanying notes are an integral part of these financial statements. 9 Page 9 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 (IN THOUSANDS)
2000 2001 (UNAUDITED (UNAUDITED) AND RESTATED) ------------ ------------ Operating Activities: Net Income Before Preferred Dividends of Parent $ 4,208 $ 3,437 ------------ ------------ Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation (including $100 in 2001, $75 in 2000 charged to other accounts) 2,575 2,442 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues (346) (223) (Increase) Decrease in Other Current Assets (158) 43 (Increase) Decrease in Other Non-Current Items -- 43 Increase (Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities (3,327) (2,318) Increase (Decrease) in Deferred Federal Income Taxes and Investment Tax Credits, Net 470 506 ------------ ------------ Total Adjustments (786) 493 ------------ ------------ Net Cash Provided by (Used for) Operating Activities 3,422 3,930 ------------ ------------ Investing Activities: Gross Additions to Utility Plant (including Allowance for Funds Used During Construction of $198 in 2001 and $203 in 2000) (2,766) (2,582) ------------ ------------ Financing Activities: Proceeds from Interim Bank Loans 2,798 3,081 Repayment of Interim Bank Loans (1,800) (3,061) Proceeds from Issuance of Common Stock 292 42 Minority Interest (117) (11) Repayment of Long-Term Debt (265) (364) Advances, Contributions and Funds From Others for Construction, Net 1,899 933 Cash Dividends Paid (2,985) (2,936) ------------ ------------ Net Cash Provided by (Used in) Financing Activities (178) (2,316) ------------ ------------ Net Increase (Decrease) in Cash 478 (968) Cash at Beginning of Year 314 1,127 ------------ ------------ Cash at End of Period $ 792 $ 159 ============ ============ Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (Net of Amounts Capitalized) $ 2,206 $ 2,047 State and Federal Income Taxes $ 1,760 $ 2,167
The accompanying notes are an integral part of these financial statements. 10 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. 2. On May 30, 2001 the Connecticut Department of Pubic Utility Control (DPUC) approved the Company's subsidiary, The Crystal Water Company's request to donate approximately 340 acres of land to the Town of Killingly, Connecticut over a three year period starting in 2002. The land to be donated has a total fair market value of $2,995,000. Primarily as a result of Connecticut tax legislation granting tax credits for the donation of land for open space purposes, these donations will result in an after tax gain of approximately $1,500,000. The Company expects that the donations will be made in three phases, one in each of the calendar years of 2002, 2003 and 2004. On July 25, 2001 the DPUC approved approximately 10 acres of land to be donated the Town of Avon, Connecticut. The land has a fair market value of $225,000. Primarily as a result of Connecticut tax legislation granting tax credits for the donation of land for open space purposes, the donation will result in an after tax gain of approximately $150,000. The Company expects that the donation will be made in the calendar year 2002. 3. In June 2001, the FASB issued SFAS No. 141 "Business Combinations" which eliminates the pooling-of-interests method of accounting and requires the use of the purchase method for future business combinations. Also in June 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible Assets" requiring that certain goodwill and other intangible assets acquired after June 30, 2001 not be amortized effective January 1, 2002 subject to a fair value-based test. These new accounting standards will not have a material effect on the Company's financial position or results of operations. 4. On August 6, 2001 at a Special Meeting of its shareholders, the Company's shareholders approved the amendment to the Company's Amended and Restated Certificate of Incorporation increasing the number of authorized shares of common stock to 15,000,000 from 7,500,000 shares. 11 Page 11 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES 5. 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:
3 Months Ended 12 Months Ended 6/30/01 6/30/00 6/30/01 6/30/00 12/31/00 ---------- ---------- ---------- ---------- ---------- Common Shares Outstanding: January 1, 2000 -- -- -- -- 5,063,687 July 1, 2000 & 1999 respectively -- -- 5,069,026 5,063,456 -- April 1, 2001 & 2000 respectively 5,072,439 5,068,861 -- -- -- Common Shares Issued: To CSE - September 15, 1999 -- -- -- 125 -- To CSE - December 15, 1999 -- -- -- 106 -- To PSP - January 13, 2000 -- -- -- 10,099 10,099 To CSE - February 17, 2000 -- -- -- (5,070) (5,070) To CSE - March 15, 2000 -- -- -- 145 145 To CSE - June 15, 2000 -- 165 -- 165 165 To CSE - September 15, 2000 -- -- 142 -- 142 To CSE - December 15, 2000 -- -- 155 -- 156 To PSP - January 13, 2001 -- -- 5,738 -- -- To PSP - February 17, 2001 -- -- (2,810) -- -- To CSE - March 15, 2001 -- -- 188 -- -- To CSE - June 15, 2001 159 -- 159 -- -- ---------- ---------- ---------- ---------- ---------- Common Shares Outstanding: June 30, 2001 & 2000 respectively 5,072,598 5,069,026 5,072,598 5,069,026 ========== ========== ========== ========== December 31, 2000 5,069,324 ========== Weighted Average Common Shares Outstanding: Days outstanding basis Basic 5,072,467 5,068,890 5,070,910 5,066,483 5,069,291 ========== ========== ========== ========== ========== Fully Diluted 5,106,077 5,083,929 5,093,716 5,085,652 5,088,180 ========== ========== ========== ========== ==========
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 June 30, 2001 approximately $6,200,000 of these lines were unused and available to the Company. 12 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 JUNE 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 June 30, 2001 increased from that of June 30, 2000 by $38,000, or $.01 per basic average common share. The increase in net income resulted from $20,000 higher net other income (deductions), a $34,000 decrease in interest and debt expense and a $16,000 decrease in utility operating income. 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 decrease in utility operating income was primarily due to the following: - a 2% increase in operation and maintenance expense - increased depreciation expense due to the Company's increased investment in utility plant - increased income tax expense partially due to book/tax timing adjustments partially offset by - increased operating revenues partially due to over 1,000 new customers added to the Company's water systems during the past 12 months - a reduction in taxes other than income taxes resulting from property tax rebatements THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2001 AS COMPARED TO THE NET INCOME FOR THE SAME PERIOD LAST YEAR. Net income applicable to common stock for the six months ended June 30, 2001 increased from that of June 30, 2000 by $771,000 or $.16 per basic average common share. The increased income resulted from $849,000 higher net other income (deductions), a $22,000 decrease in interest and debt expense and a $100,000 decrease in utility operating income. The major reasons for the higher net other income (deductions) were: - a $1,051,000 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 $34,000, or 25% increase in net non-water sales earnings partially due to increased customer participation in its Linebacker (SM) service line maintenance program partially offset by - a $252,000 increase in merger costs related to the Company's acquisition of Barnstable Holding Company which was consummated in February 2001. 13 Page 13 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES The major causes of the lower utility operating income were: - a 1.1% increase in operation and maintenance expense partially due to higher treatment and utility costs - a 3.8% increase in depreciation expense due to the Company's increased investment in utility plant - a 6.7% increase in income tax expense primarily due to book/tax timing adjustments partially offset by - a .7% increase in operating revenues partially due to over 1,000 new customers added to Company's water systems during the past 12 months - a 4.1% reduction in taxes other than income taxes resulting from property tax rebatements. 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. 14 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: August 8, 2001 By /s/ David C. Benoit David C. Benoit Vice President - Finance Date: August 8, 2001 By: /s/ Peter J. Bancroft Peter J. Bancroft Assistant Treasurer -----END PRIVACY-ENHANCED MESSAGE-----