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Previous: PUBLIC STORAGE PARTNERS II LTD, 10-Q, 1997-08-12 |
Next: NUCLEAR METALS INC, PRES14A, 1997-08-12 |
<PAGE> 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, 1997 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.
3,017,101
Number of shares of common stock outstanding, June 30, 1997
<PAGE> 2
CONNECTICUT WATER SERVICE, INC.
Financial Report
June 30, 1997 and 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
PART I, ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets at June 30, 1997
and December 31, 1996 Page 3
Consolidated Statements of Capitalization at
June 30, 1997 and December 31, 1996 Page 4
Consolidated Statements of Income for Three Months
Ended June 30, 1997 and 1996 Page 5
Consolidated Statements of Income for Six Months
Ended June 30, 1997 and 1996 Page 6
Consolidated Statements of Income for Twelve Months
Ended June 30, 1997 and 1996 Page 7
Consolidated Statements of Retained Earnings for Three
Months Ended June 30, 1997 and 1996 Page 8
Consolidated Statements of Retained Earnings for Six
Months Ended June 30, 1997 and 1996 Page 8
Consolidated Statements of Retained Earnings for Twelve
Months Ended June 30, 1997 and 1996 Page 8
Consolidated Statements of Cash Flows for Six Months
Ended June 30, 1997 and 1996 Page 9
Notes to Consolidated Financial Statements Page 10
PART I, ITEM 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations Page 11-12
Signature Page Page 13
</TABLE>
<PAGE> 3
Page 3
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
JUNE 30,
1997 DEC. 31,
ASSETS (UNAUDITED) 1996
--------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Utility Plant
Utility Plant $ 196,334 $ 195,223
Construction Work in Progress 11,547 8,940
Utility Plant Acquisition Adjustments (1,206) (1,206)
--------- ---------
206,675 202,957
Accumulated Provision for Depreciation (50,766) (49,059)
--------- ---------
Net Utility Plant 155,909 153,898
--------- ---------
Investments 1,515 1,290
--------- ---------
Current Assets
Cash 326 35
Accounts Receivable (Less Allowance, 1997 - $152; 1996 - $140) 3,882 3,736
Accrued Unbilled Revenues 2,731 2,830
Prepayments and Other Current Assets 944 736
--------- ---------
Total Current Assets 7,883 7,337
--------- ---------
Deferred Charges
Unamortized Debt Issuance Expense 5,118 5,212
Taxes Recoverable Through Future Rates 9,000 9,000
Postretirement Benefits Other Than Pension Recoverable
Through Future Rates 1,036 1,036
Recoverable Contamination Clean-Up Costs 5,400 5,400
Prepaid Income Taxes on Contributions in Aid of Construction 576 528
Other Costs 1,240 939
--------- ---------
Total Deferred Charges 22,370 22,115
--------- ---------
TOTAL ASSETS $ 187,677 $ 184,640
========= =========
CAPITALIZATION AND LIABILITIES
Capitalization (See accompanying statements)
Common Stockholders' Equity $ 54,527 $ 54,395
Preferred Stock 772 772
Long-Term Debt 54,400 54,430
--------- ---------
Total Capitalization 109,699 109,597
--------- ---------
Current Liabilities
Interim Bank Loans Payable 8,646 5,795
Accounts Payable and Accrued Taxes and Interest 6,345 7,166
Accrued Recoverable Contamination Clean-Up Costs 300 300
Other 2,162 1,951
--------- ---------
Total Current Liabilities 17,453 15,212
--------- ---------
Long-Term Liabilities
Accrued Recoverable Contamination Clean-Up Costs 2,585 2,757
Advances for Construction 13,959 13,600
Contributions in Aid of Construction 18,595 18,563
Deferred Federal Income Taxes 13,217 12,717
Unfunded Future Income Taxes 9,000 9,000
Unfunded Postretirement Benefits Other Than Pension 1,036 1,036
Unamortized Investment Tax Credits 2,133 2,158
--------- ---------
Total Long-Term Liabilities 60,525 59,831
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $ 187,677 $ 184,640
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 4
Page 4
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
AT JUNE 30, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
JUNE 30,
1997 DEC. 31,
(UNAUDITED) 1996
----------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Common Stockholders' Equity
Common Stock Without Par Value Authorized - 7,500,000 Shares;
Shares Issued and Outstanding: 1997 - 3,017,101; 1996 - 3,012,083 $ 43,780 $ 43,672
Stock Issuance Expense (1,239) (1,216)
Retained Earnings 11,986 11,939
--------- ---------
Total Common Stockholders' Equity 54,527 54,395
--------- ---------
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
--------- ---------
Long-Term Debt
The Connecticut Water Company
First Mortgage Bonds
6.9% Series Q, due 2021 10,000 10,000
5 7/8% Series R, due 2022 14,800 14,830
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
--------- ---------
Total Long-Term Debt 54,400 54,430
--------- ---------
TOTAL CAPITALIZATION $ 109,699 $ 109,597
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 5
Page 5
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (UNAUDITED)
----------- -----------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Operating Revenues $ 9,633 $9,276
------- ------
Operating Expenses
Operation 3,346 3,367
Maintenance 598 396
Depreciation 869 824
Federal Income Taxes 788 975
Connecticut Corporation Business Taxes 169 241
Municipal Taxes 811 804
Payroll Taxes 100 120
Connecticut Gross Earnings Tax 474 464
Organizational Charges 422 0
------- ------
Total Operating Expenses 7,577 7,191
------- ------
Utility Operating Income 2,056 2,085
------- ------
Other Income (Deductions)
Interest 25 24
Allowance for Funds Used During Construction 162 62
Other 64 17
Taxes on Other Income (56) 7
------- ------
Total Other Income (Deductions) 195 110
------- ------
Interest and Debt Expense
Interest on Long-Term Debt 865 865
Other Interest Charges 139 59
Amortization of Debt Expense 47 47
------- ------
Total Interest and Debt Expense 1,051 971
------- ------
Net Income 1,200 1,224
Preferred Stock Dividend Requirement 9 9
------- ------
Net Income Applicable to Common Stockholders $ 1,191 $1,215
======= ======
Weighted Average Common Shares Outstanding 3,016 2,994
======= ======
Earnings Per Average Common Share $ 0.39 $ 0.41
======= ======
Dividends Per Common Share $ 0.43 $ 0.42
======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 6
Page 6
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (UNAUDITED)
-------------- --------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Operating Revenues $ 18,645 $18,363
-------- -------
Operating Expenses
Operation 6,510 6,710
Maintenance 1,008 842
Depreciation 1,739 1,644
Federal Income Taxes 1,521 1,745
Connecticut Corporation Business Taxes 324 430
Municipal Taxes 1,623 1,610
Payroll Taxes 269 310
Connecticut Gross Earnings Tax 924 917
Organizational Charges 422 0
-------- -------
Total Operating Expenses 14,340 14,208
-------- -------
Utility Operating Income 4,305 4,155
-------- -------
Other Income (Deductions)
Interest 49 48
Allowance for Funds Used During Construction 315 114
Other 181 47
Taxes on Other Income (106) 6
-------- -------
Total Other Income (Deductions) 439 215
-------- -------
Interest and Debt Expense
Interest on Long-Term Debt 1,730 1,730
Other Interest Charges 262 134
Amortization of Debt Expense 94 94
-------- -------
Total Interest and Debt Expense 2,086 1,958
-------- -------
Net Income 2,658 2,412
Preferred Stock Dividend Requirement 19 19
-------- -------
Net Income Applicable to Common Stockholders $ 2,639 $ 2,393
======== =======
Weighted Average Common Shares Outstanding 3,015 2,984
======== =======
Earnings Per Average Common Share $ 0.88 $ 0.80
======== =======
Dividends Per Common Share $ 0.86 $ 0.84
======== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 7
Page 7
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (UNAUDITED)
-------------- --------------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Operating Revenues $ 38,874 $ 39,715
-------- --------
Operating Expenses
Operation 12,764 13,807
Maintenance 1,830 2,017
Depreciation 3,410 3,177
Federal Income Taxes 3,654 3,974
Connecticut Corporation Business Taxes 828 1,007
Municipal Taxes 3,297 3,214
Payroll Taxes 454 532
Connecticut Gross Earnings Tax 1,937 1,984
Organizational Charges 422 0
-------- --------
Total Operating Expenses 28,596 29,712
-------- --------
Utility Operating Income 10,278 10,003
-------- --------
Other Income (Deductions)
Interest 180 128
Allowance for Funds Used During Construction 538 134
Other 81 151
Taxes on Other Income (133) (37)
-------- --------
Total Other Income (Deductions) 666 376
-------- --------
Interest and Debt Expense
Interest on Long-Term Debt 3,460 3,460
Other Interest Charges 447 279
Amortization of Debt Expense 188 188
-------- --------
Total Interest and Debt Expense 4,095 3,927
-------- --------
Net Income 6,849 6,452
Preferred Stock Dividend Requirement 38 38
-------- --------
Net Income Applicable to Common Stockholders $ 6,811 $ 6,414
======== ========
Weighted Average Common Shares Outstanding 3,013 2,971
======== ========
Earnings Per Average Common Share $ 2.26 $ 2.16
======== ========
Dividends Per Common Share $ 1.72 $ 1.68
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
Page 8
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (UNAUDITED)
------------ -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Balance at Beginning of Period $12,091 $10,398
Net Income 1,200 1,224
------- -------
13,291 11,622
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.20 per share 3 3
Cumulative Preferred, Series $.90, $.225 per share 6 6
Common Stock - 1997 $.43 per share; 1996 $.42 per share 1,296 1,256
------- -------
1,305 1,265
------- -------
Balance at End of Period $11,986 $10,357
======= =======
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Balance at Beginning of Period $11,939 $10,468
Net Income 2,658 2,412
------- -------
14,597 12,880
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.40 per share 6 6
Cumulative Preferred, Series $.90, $.45 per share 13 13
Common Stock - 1997 $.86 per share; 1996 $.84 per share 2,592 2,504
------- -------
2,611 2,523
------- -------
Balance at End of Period $11,986 $10,357
======= =======
FOR THE TWELVE MONTHS ENDED JUNE 30, 1997 AND 1996
Balance at Beginning of Period $10,357 $ 8,916
Net Income 6,849 6,452
------- -------
17,206 15,368
------- -------
Dividends Declared:
Cumulative Preferred, Class A, $.80 per share 12 12
Cumulative Preferred, Series $.90, $.90 per share 27 26
Common Stock - 1997 $1.72 per share; 1996 $1.68 per share 5,181 4,973
------- -------
5,220 5,011
------- -------
Balance at End of Period $11,986 $10,357
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 9
Page 9
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
(UNAUDITED) (UNAUDITED)
------------- -------------
(THOUSANDS OF DOLLARS)
<S> <C> <C>
Operating Activities:
Net Income Before Preferred Dividends of Parent $ 2,658 $ 2,412
------- -------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation (including $57 in 1997, $48 in 1996 charged to other accounts) 1,773 1,692
Change in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues (48) 362
(Increase) Decrease in Other Current Assets (208) 27
(Increase) Decrease in Other Non-Current Items (652) (405)
Increase (Decrease) in Accounts Payable, Accrued Expenses and
Other Current Liabilities (609) (1,436)
Increase (Decrease) in Deferred Federal Income Taxes and
Investment Tax Credits, Net 475 470
------- -------
Total Adjustments 731 710
------- -------
Net Cash Provided by Operating Activities 3,389 3,122
------- -------
Investing Activities:
Gross Additions to Utility Plant (including Allowance for Funds
Used During Construction of $214 in 1997 and $144 in 1996) (3,762) (2,686)
------- -------
Financing Activities:
Proceeds from Interim Bank Loans 8,646 3,104
Repayment of Interim Bank Loans (5,795) (2,646)
Reduction of Long-Term Debt Including Current Portion (30) (5)
Proceeds from Issuance of Common Stock 108 1,135
Advances, Contributions and Funds From Others for Construction, Net of (Refunds) 369 528
Costs Incurred to Issue Long-Term Debt, Preferred Stock, and Common Stock (22) 0
Cash Dividends Paid (2,612) (2,523)
------- -------
Net Cash Provided by (Used in) Financing Activities 664 (407)
------- -------
Net Increase (Decrease) in Cash 291 29
Cash at Beginning of Year 35 124
------- -------
Cash at End of Year $ 326 $ 153
======= =======
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Year for:
Interest (Net of Amounts Capitalized) $ 2,837 $ 1,864
Income Taxes $ 1,595 $ 1,690
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 10
Page 10
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:
<TABLE>
<CAPTION>
3 Months Ended 12 Months Ended
------------------------- ------------------------------------------
6/30/97 6/30/96 6/30/97 6/30/96 12/31/96
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Common Shares Outstanding:
January 1, 1996 -- -- -- -- 2,966,757
July 1, 1996 & 1995
respectively -- 3,010,091 2,928,817 --
April 1, 1997 & 1996
respectively 3,016,286 2,991,038 -- -- --
Common Shares Issued:
To DRIP - September 15, 1995 -- -- -- 18,906 --
To 401-K - September 30, 1995 -- -- -- 674 --
To DRIP - December 15, 1995 -- -- -- 18,360 --
To 401-K - January 2, 1996 -- -- -- 703 703
To PSP- February 16, 1996 -- -- -- 4,220 4,220
To DRIP - March 15, 1996 -- -- -- 18,615 18,615
To 401-K - March 30, 1996 -- -- -- 743 743
To DRIP - June 15, 1996 -- 18,299 -- 18,299 18,299
To 401-K - June 30, 1996 -- 754 -- 754 754
To PSP - July 1, 1996 -- -- 687 -- 687
To 401-K - September 30, 1996 -- -- 655 -- 655
To 401-K - December 31, 1996 -- -- 650 -- 650
To PSP - February 14, 1997 -- -- 3,526 -- --
To 401-K - March 30, 1997 -- -- 677 -- --
To PSP - June 13, 1997 40 -- 40 -- --
To 401-K - June 30, 1997 775 -- 775 -- --
--------- --------- --------- --------- ---------
Common Shares Outstanding:
June 30, 1997 & 1996
respectively 3,017,101 3,010,091 3,017,101 3,010,091
========= ========= ========= =========
December 31, 1996 3,012,083
=========
Weighted Average Common Shares Outstanding:
Days outstanding basis 3,016,301 2,994,261 3,012,954 2,970,804 2,997,337
========= ========= ========= ========= =========
</TABLE>
DRIP = Dividend Reinvestment Plan
PSP = Performance Stock Program
401-K = Company contribution to employees' 401-K savings plan
<PAGE> 11
Page 11
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
3. The Consolidated Statements of Income reflect the summation of Organizational
Charges associated with a Company early retirement program offered to qualifying
employees. These charges represent the actuarially determined FASB 88 expense
for pension benefits for the 16 employees who accepted the offer of early
retirement and the costs of administrative services related to the early
retirement plan.
4. Effective July 1, 1997, the Company reduced customer water bill rates by 5%.
This reduction is a result of the repeal of the Connecticut Gross Earnings Tax
(GRT) on private and investor owned water companies. This rate reduction is
equivalent to the reduced cost to the Company due to the elimination of the GRT.
There is no earnings impact on the company as a result of this rate decrease.
On July 31, 1997, the Company filed an application with the Connecticut
Department of Public Utility Control requesting a net increase in customer water
rates of .724%. This increase is comprised of the following: 1) an .800%
increase for the collection of additional FASB 106 expenses for Postretirement
Benefits Other Than Pension and 2) a .076% decrease in rates due to the
legislative elimination of the Connecticut sales tax on certain operations and
maintenance expense items. A decision on this application is expected in the
third quarter.
PART I, ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CORPORATE RESOURCES
At June 30, 1997 the Company had $3,354,000 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, 1997 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, 1997 decreased from that of June 30, 1996 by $24,000, or $.02, per average
common share on an increased number of common shares. The decline in net income
resulted from a $29,000 decrease in operating income and a $80,000 increase in
interest and debt expense, partially offset by a $85,000 increase in other
income and deductions.
The decrease in operating income is due to a 5.4% increase in operating
expense, partially offset by a 3.9% increase in operating revenues.
The increase in operating expense is primarily due to Organizational
Charges of $422,000 for an early retirement program significantly offset by a
reduction in property and liability insurance premiums and a greater percentage
of the Subsidiary's overall labor activity being devoted to capital related
projects. The increase in revenues is a result of higher than average
residential water consumption due to the dry, hot weather in June 1997.
The increase in other income and deductions is primarily due to an
increase in AFUDC relating to several of the Subsidiary's on-going construction
projects.
<PAGE> 12
Page 12
CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARY
The increase in interest and debt expense is attributable to interest
on short-term borrowings. This interest is higher due to higher average rates
being carried on higher average outstanding balances.
THE FOLLOWING FACTORS HAD A SIGNIFICANT EFFECT UPON THE COMPANY'S NET
INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 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,
1997 increased from that of June 30, 1996 by $246,000 on an increased number of
common shares. The improvement in net income resulted from a $282,000 increase
in operating revenue, and a $224,000 increase in other income, partially offset
by a $128,000 increase in interest and debt expense and a $132,000 increase in
operating expense.
The increase in operating revenues is due to higher than average
residential water consumption as a result of the dry, hot weather in June 1997,
and a $70,000 increase in unmetered revenues, primarily from public and private
fire customers.
The increase in other income is primarily due to an increase in AFUDC
relating to several of the Subsidiary's on-going construction projects. Also
contributing to the increase are $102,000 in net gains from real estate sales.
The increase in operating expenses is primarily due to an
Organizational Charge of $422,000 for an early retirement program. This expense
is significantly offset by overall lower operating expenses.
The increase in interest and debt expense is attributable to interest
on short-term borrowings. This interest is higher due to higher average rates
being carried on higher average outstanding balances.
<PAGE> 13
Page 13
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 12, 1997 By: /s/ David C. Benoit
David C. Benoit
Vice President - Finance
Date: August 12, 1997 By: /s/ Peter J. Bancroft
Peter J. Bancroft
Assistant Treasurer
<TABLE> <S> <C>
<ARTICLE> OPUR1
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 155,909
<OTHER-PROPERTY-AND-INVEST> 1,515
<TOTAL-CURRENT-ASSETS> 7,883
<TOTAL-DEFERRED-CHARGES> 22,370
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 187,677
<COMMON> 42,541
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 11,986
<TOTAL-COMMON-STOCKHOLDERS-EQ> 54,527
0
772
<LONG-TERM-DEBT-NET> 54,400
<SHORT-TERM-NOTES> 8,646
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 69,332
<TOT-CAPITALIZATION-AND-LIAB> 187,677
<GROSS-OPERATING-REVENUE> 18,645
<INCOME-TAX-EXPENSE> 1,845
<OTHER-OPERATING-EXPENSES> 12,495
<TOTAL-OPERATING-EXPENSES> 14,340
<OPERATING-INCOME-LOSS> 4,305
<OTHER-INCOME-NET> 439
<INCOME-BEFORE-INTEREST-EXPEN> 4,744
<TOTAL-INTEREST-EXPENSE> 2,086
<NET-INCOME> 2,658
19
<EARNINGS-AVAILABLE-FOR-COMM> 2,639
<COMMON-STOCK-DIVIDENDS> 2,592
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 3,389
<EPS-PRIMARY> 2.26
<EPS-DILUTED> 2.26
</TABLE>
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