-----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, ARdkPuzs92T54dKtnxLj2P1Tjdk8YDy3qz92vZSrw0UrwvsO0hcO7mGAOL50X157 7+NDWvaJ/KQB7b8Bn06Nuw== 0000914039-02-000219.txt : 20020514 0000914039-02-000219.hdr.sgml : 20020514 ACCESSION NUMBER: 0000914039-02-000219 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020514 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: 02644758 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 y60497e10-q.txt FORM 10-Q 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 March 31, 2002 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. 7,661,728 Number of shares of common stock outstanding, March 31, 2002 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES Financial Report March 31, 2002 and 2001 TABLE OF CONTENTS
PART I, ITEM 1: FINANCIAL STATEMENTS Consolidated Balance Sheets at March 31, 2002 and December 31, 2001 Page 3 Consolidated Statements of Capitalization at March 31, 2002 and December 31, 2001 Page 4 Consolidated Statements of Income for the Three Months Ended March 31, 2002 and 2001 Page 5 Consolidated Statements of Income for the Twelve Months Ended March 31, 2002 and 2001 Page 6 Consolidated Statements of Retained Earnings for the Three and Twelve Months Ended March 31, 2002 and 2001 Page 7 Consolidated Statements of Cash Flows for Three Months Ended March 31, 2002 and 2001 Page 8 Notes to Consolidated Financial Statements Page 9 PART I, ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations Page 10 PART II, ITEM 1: Submission of Matters to a Vote of Security Holders Page 12 PART II, ITEM 6: Exhibits and Reports on Form 8-K Page 13 Signatures Page Page 14
Page 3 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS At March 31, 2002 and December 31, 2001 (In thousands)
MARCH 31, 2002 DEC. 31, ASSETS (UNAUDITED) 2001 - ------ --------- --------- Utility Plant $ 273,684 $ 267,575 Construction Work in Progress 8,396 12,761 Utility Plant Acquisition Adjustments (1,309) (1,309) --------- --------- 280,771 279,027 Accumulated Provision for Depreciation (77,979) (76,697) --------- --------- Net Utility Plant 202,792 202,330 --------- --------- Other Property and Investments 3,334 3,334 --------- --------- Cash 500 102 Accounts Receivable (Less Allowance, 2002 - $229; 2001 - $234) 4,949 4,811 Accrued Unbilled Revenues 3,247 3,402 Materials and Supplies, at Average Cost 874 869 Prepayments and Other Current Assets 1,192 239 --------- --------- Total Current Assets 10,762 9,423 --------- --------- Unamortized Debt Issuance Expense 5,212 5,308 Unrecovered Income Taxes 8,983 8,963 Postretirement Benefits Other Than Pension 849 849 Other Costs 1,492 1,507 --------- --------- Total Deferred Charges and Regulatory Assets 16,536 16,627 --------- --------- TOTAL ASSETS $ 233,424 $ 231,714 ========= ========= CAPITALIZATION AND LIABILITIES Common Stockholders' Equity $ 70,885 $ 70,783 Preferred Stock 847 847 Long-Term Debt 63,806 63,953 --------- --------- Total Capitalization 135,538 135,583 --------- --------- Current Portion of Long Term Debt 172 2,205 Interim Bank Loans Payable 6,613 1,825 Accounts Payable, Accrued Taxes and Accrued Interest 5,543 8,462 Other 181 164 --------- --------- Total Current Liabilities 12,509 12,656 --------- --------- Advances for Construction 17,698 16,075 Contributions in Aid of Construction 32,296 32,277 Deferred Federal Income Taxes 19,152 18,902 Unfunded Future Income Taxes 8,223 8,223 Long-term Compensation Arrangements 6,053 6,028 Unamortized Investment Tax Credits 1,955 1,970 Commitments and Contingencies --------- --------- Total Long-Term Liabilities 85,377 83,475 --------- --------- TOTAL CAPITALIZATION AND LIABILITIES $ 233,424 $ 231,714 ========= =========
The accompanying notes are an integral part of these financial statements. Page 4 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CAPITALIZATION At March 31, 2002 and December 31, 2001 (In thousands, except share data)
MARCH 31, 2002 DEC. 31, (UNAUDITED) 2001 ---------- ----------- Common Stockholders' Equity Common Stock Without Par Value Authorized - 15,000,000 Shares; $ 47,841 $ 47,742 Shares Issued and Outstanding: 2002 - 7,661,728; 2001 - 7,649,362 Stock Issuance Expense (1,400) (1,400) Retained Earnings 24,444 24,441 ---------- ----------- Total Common Stockholders' Equity 70,885 70,783 ---------- ----------- 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 First Mortgage Bonds 5 7/8% Series R, due 2022 14,670 14,670 6.65% Series S, due 2020 8,000 8,000 5 3/4% 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 9,670 9,705 5.125% 1998 Series B, due 2028 7,770 7,770 Other 5.5% Unsecured Promissory Note 25 37 ---------- ----------- Total Connecticut Water Company 61,735 61,782 Crystal Water Utilities Corporation 8.0% New London Trust, Due 2017 126 126 ---------- ----------- Crystal Water Company of Danielson 7.82% Connecticut Development Authority, Due 2020 495 495 8.0% New London Trust, Due 2011 -- 2,033 ---------- ----------- Total Crystal Water Company 495 2,528 ---------- ----------- Chester Realty 6% Note Payable, Due 2006 97 97 ---------- ----------- Barnstable Water Company 10.2% Indianapolis Life Insurance Co., Due 2011 1,525 1,625 ---------- ----------- Total Connecticut Water Service, Inc. 63,978 66,158 ---------- ----------- Less Current Portion (172) (2,205) ---------- ----------- Total Long-Term Debt 63,806 63,953 ---------- ----------- TOTAL CAPITALIZATION $135,538 $135,583 ========== ===========
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 MARCH 31, 2002 AND 2001 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
2002 2001 (UNAUDITED) (UNAUDITED) -------- -------- Operating Revenues $ 10,284 $ 10,228 -------- -------- Operating Expenses Operation and Maintenance 4,468 4,440 Depreciation 1,230 1,225 Income Taxes 883 861 Taxes Other Than Income Taxes 1,204 1,237 -------- -------- Total Operating Expenses 7,785 7,763 -------- -------- Utility Operating Income 2,499 2,465 -------- -------- Other Income (Deductions), Net of Taxes Gain on Property Transactions -- 1,117 Non-Water Sales Earnings 80 64 Allowance for Funds Used During Construction 115 99 Merger Costs -- (320) Other 34 23 -------- -------- Total Other Income (Deductions), Net of Taxes 229 983 -------- -------- Interest and Debt Expense Interest on Long-Term Debt 972 1,028 Other Interest Charges 107 80 Amortization of Debt Expense 96 56 -------- -------- Total Interest and Debt Expense 1,175 1,164 -------- -------- Net Income Before Preferred Dividends 1,553 2,284 Preferred Stock Dividend Requirement 9 9 -------- -------- Net Income Applicable to Common Stock $ 1,544 $ 2,275 ======== ======== Weighted Average Common Shares Outstanding: Basic 7,656 7,610 Diluted 7,724 7,640 Earnings Per Common Share: Basic $ 0.20 $ 0.30 Diluted $ 0.20 $ 0.30 Dividends Per Common Share $ 0.20 $ 0.19
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 Twelve Months Ended March 31, 2002 and 2001 (In thousands, except per share amounts)
2002 2001 (UNAUDITED) (UNAUDITED) -------- -------- Operating Revenues $ 45,448 $ 44,000 -------- -------- Operating Expenses Operation and Maintenance 20,104 18,457 Depreciation 4,842 4,788 Income Taxes 4,799 4,518 Taxes Other Than Income Taxes 4,355 4,757 -------- -------- Total Operating Expenses 34,100 32,520 -------- -------- Utility Operating Income 11,348 11,480 -------- -------- Other Income (Deductions), Net of Taxes Gain on Property Transactions 4 1,629 Non-Water Sales Earnings 388 268 Allowance for Funds Used During Construction 455 415 Merger Costs (32) (549) Other 188 179 -------- -------- Total Other Income (Deductions), Net of Taxes 1,003 1,942 -------- -------- Interest and Debt Expense Interest on Long-Term Debt 4,001 4,107 Other Interest Charges 380 464 Amortization of Debt Expense 262 222 -------- -------- Total Interest and Debt Expense 4,643 4,793 -------- -------- Net Income Before Preferred Dividends 7,708 8,629 Preferred Stock Dividend Requirement 38 38 -------- -------- Net Income Applicable to Common Stock $ 7,670 $ 8,591 ======== ======== Weighted Average Common Shares Outstanding: Basic 7,630 7,606 Diluted 7,712 7,635 Earnings Per Common Share: Basic $ 1.01 $ 1.13 Diluted $ 0.99 $ 1.13 Dividends Per Common Share $ 0.81 $ 0.77
The accompanying notes are an integral part of these financial statements. Page 7 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF RETAINED EARNINGS For the Three Months Ended March 31, 2002 and 2001 (In thousands, except per share amounts)
2002 2001 (UNAUDITED) (UNAUDITED) ------------ ---------- Balance at Beginning of Period $24,441 $22,145 Net Income Before Preferred Dividends of Parent 1,553 2,284 ------- ------- 25,994 24,429 ------- ------- Dividends Declared: Cumulative Preferred, Class A, $.20 per share 3 3 Cumulative Preferred, Series $.90, $.225 per share 6 6 Common Stock - 2002 $.20 per share; 2001 $.19 per share 1,541 1,451 ------- ------- 1,550 1,460 ------- ------- Balance at End of Period $24,444 $22,969 ======= =======
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS For the Twelve Months Ended March 31, 2002 and 2001 (In thousands, except per share amounts)
2002 2001 (UNAUDITED) (UNAUDITED) ---------- ---------- Balance at Beginning of Period $22,969 $20,250 Net Income Before Preferred Dividends of Parent 7,708 8,629 ------- ------- 30,677 28,879 ------- ------- Dividends Declared: Cumulative Preferred, Class A, $.80 per share 12 12 Cumulative Preferred, Series $.90, $.90 per share 26 26 Common Stock - 2002 $.81 per share; 2001 $.77 per share 6,195 5,872 ------- ------- 6,233 5,910 ------- ------- Balance at End of Period $24,444 $22,969 ======= =======
The accompanying notes are an integral part of these financial statements. Page 8 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Three Months Ended March 31, 2002 and 2001 (In thousands)
2002 2001 (UNAUDITED) (UNAUDITED) ------- ------- Operating Activities: Net Income Before Preferred Dividends of Parent $ 1,553 $ 2,284 ------- ------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation (including $43 in 2002, $43 in 2001 charged to other accounts) 1,273 1,268 Change in Assets and Liabilities: (Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues 18 23 (Increase) Decrease in Other Current Assets (955) (1,007) (Increase) Decrease in Other Non-Current Items 115 95 Increase (Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities (2,902) (3,189) Increase (Decrease) in Deferred Federal Income Taxes and Investment Tax Credits, Net 235 235 ------- ------- Total Adjustments (2,216) (2,575) ------- ------- Net Cash Provided by (Used for) Operating Activities (663) (291) ------- ------- Investing Activities: Gross Additions to Utility Plant (including Allowance for Funds Used During Construction of $115 in 2002 and $99 in 2001) (1,747) (862) ------- ------- Financing Activities: Proceeds from Interim Bank Loans 6,613 3,535 Repayment of Interim Bank Loans (1,825) (1,800) Proceeds from Issuance of Common Stock 96 219 Minority Interest -- (117) Repayment of Long-Term Debt (2,180) (200) Advances, Contributions and Funds From Others for Construction, Net 1,654 1,312 Cash Dividends Paid (1,550) (1,460) ------- ------- Net Cash Provided by (Used in) Financing Activities 2,808 1,489 ------- ------- Net Increase (Decrease) in Cash 398 336 Cash at Beginning of Year 102 314 ------- ------- Cash at End of Period $ 500 $ 650 ======= ======= Supplemental Disclosures of Cash Flow Information: Cash Paid During the Year for: Interest (Net of Amounts Capitalized) $ 1,759 $ 1,217 State and Federal Income Taxes $ 17 $ 60
The accompanying notes are an integral part of these financial statements. Page 9 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 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 or Form 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 on the following page: Page 10 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
3 Months Ended 12 Months Ended ---------------------- --------------------------------------- 3/31/02 3/31/01 3/31/02 3/31/01 12/31/01 ------- ------- ------- ------- -------- Common Shares Outstanding: January 1, 2001 -- -- -- -- 7,604,594 April 1, 2001 & 2000 respectively -- 7,609,267 7,603,901 -- January 1, 2002 & 2001 respectively 7,649,362 7,604,594 -- -- -- Common Shares Issued: To CSE - June 15, 2000 -- -- -- 248 -- To CSE - September 15, 2000 -- -- -- 213 -- To CSE - December 15, 2000 -- -- - 232 - To PSP- January 13, 2001 -- 8,607 -- 8,607 18,607 To PSP - February 17, 2001 -- (4,216) -- (4,216) (4,216) To CSE - March 15, 2001 -- 282 -- 282 282 To CSE - June 15, 2001 -- -- 239 -- 239 To SOE - August 20, 2001 -- -- 9,898 -- 9,898 To SOE - August 21, 2001 -- -- 2,145 -- 2,145 To SOE - August 22, 2001 -- -- 1,969 -- 1,969 To CSE - September 15, 2001 -- -- 232 -- 232 Liquidation Fractional Shares -- -- (752) -- (752) To SOE - September 17, 2001 -- -- 10,100 -- 10,100 To SOE - September 18, 2001 -- -- 1,969 -- 1,969 To SOE - December 5, 2001 -- -- 6,059 -- 6,059 To SOE - December 7, 2001 -- -- 1,200 -- 1,200 To SOE - December 10, 2001 -- -- 3,200 -- 3,200 To SOE - December 11, 2001 -- -- 3,637 -- 3,637 To CSE - December 15, 2001 -- -- 209 -- 209 To PSP - January 10, 2002 6,710 -- 6,710 -- -- To PSP - February 14, 2002 (1,109) -- (1,109) -- -- To CSE - March 15, 2002 265 -- 265 -- -- To SOE - March 18, 2002 400 -- 400 -- -- To SOE - March 19, 2002 1,000 -- 1,000 -- -- To SOE - March 21, 2002 1,700 -- 1,700 -- -- To SOE - March 22, 2002 2,400 -- 2,400 -- -- To SOE - March 25, 2002 1,000 -- 1,000 -- -- -------- --------- --------- --------- --------- Common Shares Outstanding: March 31, 2002 & 2001 respectively 7,661,728 7,609,267 7,661,728 7,609,267 ========= ========= ========= ========= December 31, 2001 7,649,362 ========= Weighted Average Common Shares Outstanding: Days outstanding basis Basic 7,655,643 7,610,092 7,630,263 7,605,637 7,619,031 ========= ========= ========= ========= ========= Fully Diluted 7,723,915 7,640,237 7,712,011 7,634,200 7,680,915 ========= ========= ========= ========= =========
PSP = Performance Stock Program CSE = Common Stock Equivalents SOE = Stock Option Exercised PART I, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CORPORATE RESOURCES At March 31, 2002, the Company had a total of $9,000,000 in lines of credit with two banks. Availability under the lines of credit as of March 31, 2002 was $2,387,496. The Company, to increase its financial flexability in the future, increased one of its lines of credit by $3,000,000 in May 2002, giving it a total of $12,000,000 in lines of credit with two (2) banks. Page 11 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES RESULT OF OPERATIONS THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2002 AS COMPARED WITH THE NET INCOME FOR THE SAME PERIOD LAST YEAR. Net income applicable to common stock for the three months ended March 31, 2002 decreased from that of March 31, 2001 by $731,000, or $.10 per average common share. The decrease in net income was primarily due to the $754,000 decrease in Other Income (Deductions). The largest contributing factor to the Company's decrease in Other Income (Deductions) was the reduction in Gain on Property Transactions. The Company has not yet completed a planned land donation for 2002. The prior year land donation was completed within the first quarter. The $1,117,000 reduction in Gain on Property Transactions is partially offset by the $320,000 decrease in Merger Costs. Utility Operating Income for the three months ended March 31, 2002 increased from that of March 31, 2001 by $34,000. This increase in Utility Operating Income is primarily due to increased Operating Revenues and decreased Taxes Other Than Income partially offset by an increase in Operation and Maintenance and Income Taxes. COMMITMENTS AND CONTINGENCIES Federal Tax Audit - The Company has been informed by the Internal Revenue Service (IRS) that the IRS intends to audit the Company's federal income tax return for the calendar year 2000. The Company intends to fully cooperate and respond to all information document requests put forth by the auditor. At this time, the Company does not have sufficient information to determine the amount, if any, of additional liability that may result from this proceeding. The Company does not anticipate that this audit will have a material effect on its consolidated results of operations or financial position. Hungerfords - In 1999, the Company formed a three-year joint venture with Hungerfords, Inc., a pump service provider, which has been in business in Connecticut for over 75 years. The three-year period ended in February 2002. The Company is evaluating whether specific financial targets were met and will decide during the second quarter of 2002 on the nature of its future business relationship with Hungerfords, Inc. Unionville - The Company is pursuing the acquisition of Unionville Water Company located in Farmington, Connecticut. The Company filed a Form S-4 with the Securities and Exchange Commission (SEC) on April 24, 2002. The Company has been informed that the SEC will not review the Form S-4. In April 2002, the Company also filed an application with the Connecticut Department of Public Utility Control (DPUC)requesting that the DPUC approve the proposed merger. Moles Environmental Services - Connecticut Water Utility Services, Inc., (CWUS) a subsidiary of the Company, has signed a Letter Of Intent (LOI)with Moles Environmental Services, Inc. (MES), of Taunton, Massachusetts. The LOI calls for CWUS to acquire the assets of MES. MES provides certain environmental services including contract operations of water and wastewater treatment systems owned by other parties in Massachusetts. The companies are currently working to produce a definitive agreement for acquisition. 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 12 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES PART II, ITEM 1: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On April 26, 2002, at its annual meeting, the stockholders of Connecticut Water Service, Inc. elected the following directors for, a three year term until 2005:
Number of Common Shares Cast ---------------------------- Abstentions Affirmative Negative and Non-Votes ----------- -------- ------------- Mark G. Kachur* 6,440,201 0 87,616 Mary Ann Hanley 6,437,933 0 89,884 Ronald D. Lengyel 6,432,962 0 94,855 David A Lentini 6,131,670 0 396,197
* New Board members On April 26, 2002, at its annual meeting, the stockholders of Connecticut Water Service, Inc. elected the following directors for, a one year term until 2003:
Number of Common Shares Cast ---------------------------- Abstentions Affirmative Negative and Non-Votes ----------- -------- ------------- Carol P. Wallace* 6,447,152 0 80,665
* New Board member Preferred Series A stockholders cast the following votes for each of the Directors listed above. There were no abstentions for any of the Directors listed above.
Number of Preferred Series A Cast ------------- Affirmative Withheld ----------- -------- Mark G. Kachur 9,661 0 Carol P. Wallace 9,661 0 Mary Ann Hanley 9,197 464 Ronald D. Lengyel 9,661 0 David A. Lentini 9,611 50
Page 13 CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES Directors whose term of office continues until 2003 are Roger Engle, Lisa Thibdaue, Carol P. Wallace, and Donald B. Wilbur. Directors whose term of office continue until 2004 are Marshall T. Chiaraluce, Marcia L. Hincks, Robert F. Neal, and Arthur C. Reeds. The appointment of Arthur Andersen, LLP or the appointment of a different independent public accounting firm at any time during 2002 at the discretion of the Board of Directors was ratified.
Number of Shares Cast --------------------- Abstentions Arthur Andersen LLP Affirmative Negative and Non-Votes - ------------------- ----------- -------- ------------- Common Stock 5,120,553 1,219,833 187,431 Preferred Series A Stock 8,413 1,042 206
The final matter voted at the Annual Meeting was approval of the Amended and Restated Connecticut Water Service, Inc. Performance Stock Program.
Number of Shares Cast Abstentions Performance Stock Program Affirmative Negative and Non-Votes - ------------------------- ----------- -------- ------------- Common Stock 5,935,612 416,566 185,300 Preferred Series A Stock 9,199 462 0
PART II, ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K A Form 8-K was filed by the Company on May 8, 2002. The following topics were covered in the filing: - First Quarter Earnings - Dividend Declaration Page 14 SIGNATURES PAGE 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: May 14, 2002 By /s/ David C. Benoit ------------------------------- David C. Benoit Vice President - Finance Date: May 14, 2002 By: /s/ Peter J. Bancroft ------------------------------- Peter J. Bancroft Assistant Treasurer -----END PRIVACY-ENHANCED MESSAGE-----