CLINTON, Conn., Nov. 9, 2006 (PRIMEZONE) -- Connecticut Water Service, Inc. (Nasdaq:CTWS) announced that its Net Income from Continuing Operations for the third-quarter of 2006 was $3.5 million, or $0.42 per basic common share. Compared to the same period in 2005, this was an increase of $221,000, or $0.02 per basic common share. During the first nine months of 2006, Net Income from Continuing Operations was $6.2 million, or $0.75 per basic common share, which was a decrease of about $285,000, or $.05 per basic common share during the same period in 2005.
The Company realized an increase in Net Income of $976,000 from the Real Estate segment in the third-quarter compared to the third-quarter of 2005 primarily due to the elimination of tax reserves related to the value of land donations previously made by the Company. The tax reserves had been established because of an Internal Revenue Service (IRS) examination of the Company's 2002 through 2004 Federal Income Tax Returns. The IRS has completed its examination and no adjustments were required to the Company's 2002 through 2004 federal tax liability. As a result, those reserves were eliminated.
Net Income in the Services and Rentals segment increased $37,000 during the third-quarter compared to same period in 2005 and was largely attributable to higher revenues from the Linebacker(r) service line protection program and revenues related to the water system operations and maintenance agreement with the University of Connecticut.
The increase in Net Income from the Real Estate and Service and Rentals segments was partially offset by a decline of $747,000 in Net Income from the Water Activities segment. The reduction in Water Activities Net Income in the third-quarter was due in large part to a weather related reduction in residential water consumption, increased Operation and Maintenance expenses associated with power, labor and benefits costs, and increased interest expense associated with two debt issuances during 2005 and higher rates on variable rate debt. However, the reduced revenue and increase in expenses in this segment was partially offset by a $600,000 decrease in Operating Income Tax Expense due to lower pretax net income and a lower effective tax rate.
Eric W. Thornburg, Connecticut Water's President and Chief Executive Officer, stated, "We anticipated the decrease in earnings per share for the first nine-months of 2006 as The Connecticut Water Company prepared to file its first application for rate relief in 15 years on July 18, 2006. Since filing its application to raise revenues by $14.6 million, or 30 percent over existing rates, our team has laid out the Company's case before the Connecticut Department of Public Utility Control (DPUC) detailing our $130 million investment in infrastructure improvements and 60 percent increase in operating expenses since our last rate increase." A decision on the Company's rate request is expected by mid-January 2007.
On October 6, 2006, The Connecticut Water Company completed the acquisition of the South Coventry Water Supply Company in Coventry, Connecticut. The South Coventry System has about 125 customers located within a mile of two other Connecticut Water systems in Coventry. The Company is also negotiating the acquisition of the Avery Heights Water System in South Windsor, Connecticut. The Avery Heights Homeowners Association, which owns the water system, recently voted overwhelmingly to transfer the water system's assets and its 216 customers to Connecticut Water. Several regulatory approvals are necessary before the Avery Heights acquisition can be completed.
On October 25, 2006, the DPUC issued a decision allowing The Connecticut Water Company to enter into water supply agreement with the South Central Connecticut Regional Water Authority (RWA) to purchase up to one million gallons a day of treated drinking water. In its decision, the DPUC allowed Connecticut Water to treat capacity payments totaling $1,050,000 to RWA as a regulatory asset on which it may earn a return. The capacity payments are for RWA's capital investment in infrastructure required to secure and produce the water called for by the agreement.
The Board of Directors of Connecticut Water Service, Inc. approved the following dividends at its November 8, 2006 meeting.
Class Record Date Payable Date Rate Per Share ----- ----------- ------------ -------------- Preferred A 12/18/06 1/2/07 $0.20 Preferred 90 12/22/06 1/9/07 $0.225 Common 12/1/06 12/15/06 $0.215
Connecticut Water Service, Inc., New England's largest domestically based investor owned water company, provides drinking water to 41 towns and over 82,000 customers or nearly 280,000 people in Connecticut through its wholly owned public water utility subsidiary, The Connecticut Water Company.
Connecticut Water Service, Inc. is the largest, domestic-based, investor-owned water utility in New England. It provides water to over 82,000 customers in 41 towns in Connecticut, as well as providing water-related services under contract to municipalities and companies.
The Connecticut Water Service, Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2893
This press release may contain 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.
Our water companies are subject to various federal and state regulatory agencies concerning water quality and environmental standards. Generally, the water industry is materially dependent on the adequacy of approved rates to allow for a fair rate of return on the investment in utility plant. The ability to maintain our operating costs at the lowest possible level while providing good quality water service is beneficial to customers and stockholders. Profitability is also dependent on the timeliness and amount of rate relief, including the rate relief sought in the Company's rate case application to the DPUC filed on July 18, 2006, and numerous factors over which we have little or no control, such as the quantity of rainfall and temperature, industrial demand, financing costs, energy rates, tax rates, and stock market trends which may affect the return earned on pension assets, and compliance with environmental and water quality regulations. The profitability of our other revenue sources is subject to the amount of land we have available for sale and/or donation, the demand for the land, the continuation of the current state tax benefits relating to the donation of land for open space purposes, regulatory approval of land dispositions, the demand for telecommunications antenna site leases and the successful extensions and expansion of our service contracts. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
Connecticut Water Service, Inc. & Subsidiaries
Condensed Consolidated Statements of Income (unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands except
per share amounts) 2006 2005 2006 2005
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Operating Revenues $13,346 $14,088 $35,232 $35,999
Utility Operating Income $ 3,218 $ 3,794 $ 6,369 $ 7,737
Non-Water Sales Earnings
(Services and Rentals) $ 223 $ 186 $ 747 $ 644
Income from Continuing
Operations $ 3,503 $ 3,282 $ 6,177 $ 6,462
Basic Earnings Per
Average Common
Share-Continuing
Operations $ 0.42 $ 0.40 $ 0.75 $ 0.80
Basic Earnings Per
Average Common
Share-Discontinued
Operations $ 0.03 $ 0.01 $ 0.03 $ 0.36
Diluted Earnings Per
Average Common
Share- Continuing
Operations $ 0.42 $ 0.40 $ 0.75 $ 0.79
Diluted Earnings Per
Average Common
Share-Discontinued
Operations $ 0.03 $ 0.01 $ 0.03 $ 0.36
Basic Weighted Average
Common Shares
Outstanding 8,243 8,108 8,217 8,078
Diluted Weighted Average
Common Shares
Outstanding 8,250 8,141 8,227 8,123
Book Value Per Share $ 11.73 $ 11.61 $ 11.73 $ 11.61
Condensed Consolidated Balance Sheets (unaudited)
(In thousands) September 30, September 30,
2006 2005
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ASSETS
Net Utility Plant $254,791 $244,161
Current Assets 17,720 21,773
Other Assets 37,321 33,943
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Total Assets $309,832 $299,877
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CAPITALIZATION AND LIABILITIES
Shareholders' Equity $ 96,791 $ 94,326
Preferred Stock 847 847
Long-Term Debt 77,349 64,584
Current Liabilities 9,510 18,786
Other Liabilities and Deferred Credits 125,335 121,334
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Total Capitalization and Liabilities $309,832 $299,877
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