Discontinued Operations

9 Months Ended

Sep. 30, 2014

Discontinued Operations [Abstract]

Discontinued Operations

Note 4–  Discontinued Operations

Discontinued Operations – In September 2012, the Company began to market for sale its water and wastewater operations in Florida, which served approximately 38,000 customers, and the Company’s wastewater treatment facility in Georgia.  In March, April, and December 2013, through five separate sales transactions, the Company completed the sale of its water and wastewater utility systems in Florida, which concluded its regulated operations in Florida.  The Company received total net proceeds from these sales of $88,934 and recognized a gain on sale of $21,178($13,766 after-tax).  On March 12, 2014, the Company completed the sale of its wastewater treatment facility in Georgia.

The City of Fort Wayne, Indiana (the “City”) authorized the acquisition by eminent domain of the northern portion of the utility system of one of the Company’s operating subsidiaries in Indiana (the “Northern Assets”).  In January 2008, the Company reached a settlement with the City to transition the Northern Assets in February 2008 upon receipt of the City’s initial valuation payment of $16,911.  The settlement agreement specifically stated that the final valuation of the Northern Assets will be determined through a continuation of the legal proceedings that were filed challenging the City’s valuation.  On February 12, 2008, the Company turned over the Northern Assets to the City upon receipt of the initial valuation payment.  The proceeds received by the Company are in excess of the book value of the assets relinquished.  No gain has been recognized due to the contingency over the final valuation of the assets.  The net book value of the Northern Assets has been removed from the consolidated balance sheet and the difference between the net book value and the initial payment received has been deferred and is recorded in other accrued liabilities on the Company’s consolidated balance sheet.  Once the contingency is resolved and the asset valuation is finalized, through the finalization of the litigation between the Company and the City, the amounts deferred will be recognized in the Company’s consolidated statement of net income.  The Northern Assets relinquished represent approximately 0.4% of the Company’s total assets. 

In addition, in December 2012, the Fort Wayne City Council considered an ordinance that sought to declare it a “public convenience and necessity” to acquire certain of the Company's water utility system assets located in the southwest section of the City and in Allen County (the “Southern Assets”), and if negotiations with Fort Wayne officials were to fail, to condemn the Southern Assets.  The first public hearing on the ordinance was held on January 22, 2013 and a subsequent hearing scheduled for February 5, 2013 was not held due to ongoing settlement discussions between the parties. As part of such settlement discussions, the parties negotiated an acquisition agreement that was approved by the City on May 13, 2014.  The acquisition agreement will settle both the acquisition of the Southern Assets and the dispute concerning the Northern Assets.  The acquisition agreement establishes an aggregate purchase price of $67,011 for the Southern and Northern Assets.  The City has already paid Aqua Indiana $16,911 for the Northern Assets.  On October 22, 2014, the Indiana Utility Regulatory Commission approved the transaction.  Upon completion of this transaction, the Company will expand its sewer customer base by accepting new wastewater from the City.  The transaction is expected to close in the fourth quarter of 2014.  The planned sale of these operations is accounted for as discontinued operations held for sale beginning in the first quarter of 2014. 

The operating results, cash flows, and financial position of the Company’s operations named above, during the periods owned, have been presented in the Company’s consolidated statements of net income, consolidated statements of cash flow, and consolidated balance sheets as discontinued operations.  These operations were included in the Company’s “Regulated” segment.     

A summary of discontinued operations presented in the consolidated statements of net income include the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Operating revenues	$	1,935	$	4,103	$	5,234	$	15,716
Total operating expenses		1,463		2,669		2,603		9,882
Operating income		472		1,434		2,631		5,834
Other (income) expense:
Loss (gain) on sale		-		-		134		(5,469)
Other, net		-		1		-		2
Income from discontinued operations before income taxes		472		1,433		2,497		11,301
Provision for income taxes		187		565		1,003		4,150
Income from discontinued operations	$	285	$	868	$	1,494	$	7,151

The assets and liabilities of discontinued operations presented in the consolidated balance sheets include the following:

	September 30,		December 31,
	2014		2013
Property, plant and equipment, at cost	$	37,226	$	37,303
Less: accumulated depreciation		8,197		8,378
Net property, plant and equipment		29,029		28,925
Current assets		976		1,362
Regulatory assets		423		460
Assets of discontinued operations held for sale		30,428		30,747
Current liabilities		14,583		16,212
Deferred income taxes and investment tax credits		1,819		1,308
Contributions in aid of construction		11,048		10,935
Other liabilities		1,219		1,194
Liabilities of discontinued operations held for sale		28,669		29,649
Net assets	$	1,759	$	1,098