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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2019 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
cwclogocolora01.jpg
CONNECTICUT WATER SERVICE INC / CT
(Exact name of registrant as specified in its charter)
Connecticut
 
06-0739839
(State or other jurisdiction of
incorporation or organization)
 

(I.R.S. Employer Identification No.)

 
 
 
 
 
93 West Main Street,
Clinton,
Connecticut
 
06413
(Address of principal executive offices)

 
(Zip Code)

(860) 669-8636
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each Class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, without par value
CTWS
The Nasdaq Stock Market, LLC

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         No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes         No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company





If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes         No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date
12,068,537
Number of shares of common stock outstanding, July 1, 2019
(Includes 94,431 common stock equivalent shares awarded under the Performance Stock Programs)


Table of Contents

CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES

Financial Report
June 30, 2019

TABLE OF CONTENTS

Part I, Item 1:  Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 31
Exhibit 32
Exhibit 101.INS
Exhibit 101.SCH
Exhibit 101.CAL
Exhibit 101.DEF
Exhibit 101.LAB
Exhibit 101.PRE


Table of Contents

CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share data)
ASSETS
 
June 30, 2019
 
December 31, 2018
Utility Plant
 
$
1,000,278

 
$
983,220

Construction Work in Progress
 
23,017

 
14,765

 
 
1,023,295

 
997,985

Accumulated Provision for Depreciation
 
(266,915
)
 
(258,192
)
Net Utility Plant
 
756,380

 
739,793

Other Property and Investments
 
12,914

 
11,501

Cash and Cash Equivalents
 
2,435

 
2,856

Accounts Receivable (Less Allowance, 2019 - $1,242; 2018 - $1,236)
 
13,879

 
14,169

Accrued Unbilled Revenues
 
10,810

 
10,011

Materials and Supplies, at Average Cost
 
1,657

 
1,679

Prepayments and Other Current Assets
 
11,614

 
9,943

Total Current Assets
 
40,395

 
38,658

Restricted Cash
 
947

 

Unrecovered Income Taxes - Regulatory Asset
 
81,204

 
75,763

Pension Benefits - Regulatory Asset
 
8,712

 
9,337

Post-Retirement Benefits Other Than Pension - Regulatory Asset
 
127

 
133

Goodwill
 
66,403

 
66,403

Deferred Charges and Other Costs
 
14,345

 
11,755

Total Regulatory and Other Long-Term Assets
 
171,738

 
163,391

Total Assets
 
$
981,427

 
$
953,343

CAPITALIZATION AND LIABILITIES
 
 

 
 

Common Stockholders’ Equity:
 
 

 
 

Common Stock Without Par Value: Authorized - 25,000,000 Shares
 
 

 
 

     Issued and Outstanding: 2019 - 12,068,537; 2018 - 12,054,712
 
$
191,292

 
$
190,433

Retained Earnings
 
104,493

 
104,188

Accumulated Other Comprehensive (Loss)
 
(210
)
 
(485
)
Common Stockholders’ Equity
 
295,575

 
294,136

Long-Term Debt
 
256,916

 
257,511

Total Capitalization
 
552,491

 
551,647

Current Portion of Long-Term Debt
 
4,051

 
4,059

Interim Bank Loans Payable and Other Short-Term Debt
 
74,632

 
54,249

Accounts Payable and Accrued Expenses
 
10,691

 
13,782

Accrued Interest
 
1,593

 
1,531

Current Portion of Refund to Customers - Regulatory Liability
 
1,960

 
2,331

Other Current Liabilities
 
2,988

 
3,101

Total Current Liabilities
 
95,915

 
79,053

Advances for Construction
 
24,673

 
22,654

Deferred Federal and State Income Taxes
 
32,877

 
31,593

Unfunded Future Income Taxes
 
73,229

 
67,725

Long-Term Compensation Arrangements
 
32,096

 
31,043

Unamortized Investment Tax Credits
 
1,019

 
1,057

Excess Accumulated Deferred Income Tax - Regulatory Liability
 
29,386

 
29,611

Refund to Customers - Regulatory Liability
 

 
534

Other Long-Term Liabilities
 
3,305

 
3,345

Total Long-Term Liabilities
 
196,585

 
187,562

Contributions in Aid of Construction
 
136,436

 
135,081

Commitments and Contingencies
 

 

Total Capitalization and Liabilities
 
$
981,427

 
$
953,343


The accompanying footnotes are an integral part of these condensed consolidated financial statements.

4

Table of Contents

CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except per share amounts)
 
2019
 
2018
Operating Revenues
$
30,664

 
$
29,904

Operating Expenses
 
 
 
Operation and Maintenance
12,803

 
12,720

Depreciation
4,895

 
4,360

Income Tax Expense
299

 
627

Taxes Other Than Income Taxes
2,851

 
2,618

Total Operating Expenses
20,848

 
20,325

Net Operating Revenues
9,816

 
9,579

Other Utility Income, Net of Taxes
283

 
248

Total Utility Operating Income
10,099

 
9,827

Other (Deductions) Income, Net of Taxes
 
 
 
Gain on Real Estate Transactions
11

 

Non-Water Sales Earnings
404

 
432

Allowance for Funds Used During Construction
203

 
105

Merger and Acquisition Costs
(2,171
)
 
(2,391
)
Other
553

 
(472
)
Total Other Loss, Net of Taxes
(1,000
)
 
(2,326
)
Interest and Debt Expense
 
 
 
Interest on Long-Term Debt
2,642

 
2,606

Other Interest Expense (Income), Net
605

 
115

Amortization of Debt Expense and Premium, Net
66

 
51

Total Interest and Debt Expense
3,313

 
2,772

Net Income
5,786

 
4,729

Preferred Stock Dividend Requirement

 
1

Net Income Applicable to Common Stock
$
5,786

 
$
4,728

Weighted Average Common Shares Outstanding:
 
 
 
Basic
11,970

 
11,884

Diluted
12,065

 
12,083

Earnings Per Common Share:
 
 
 
Basic
$
0.48

 
$
0.39

Diluted
$
0.48

 
$
0.39


The accompanying footnotes are an integral part of these condensed consolidated financial statements.


5

Table of Contents

CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except per share amounts)
 
2019
 
2018
Operating Revenues
$
56,910

 
$
54,757

Operating Expenses
 

 
 

Operation and Maintenance
25,725

 
25,740

Depreciation
9,712

 
9,065

Income Tax Expense
511

 
620

Taxes Other Than Income Taxes
5,943

 
5,475

Total Operating Expenses
41,891

 
40,900

Net Operating Revenues
15,019

 
13,857

Other Utility Income, Net of Taxes
482

 
515

Total Utility Operating Income
15,501

 
14,372

Other (Deductions) Income, Net of Taxes
 

 
 

Gain on Real Estate Transactions
23

 

Non-Water Sales Earnings
890

 
828

Allowance for Funds Used During Construction
359

 
158

Merger and Acquisition Costs
(3,096
)
 
(5,652
)
Other
866

 
(818
)
Total Other Loss, Net of Taxes
(958
)
 
(5,484
)
Interest and Debt Expense
 

 
 

Interest on Long-Term Debt
5,274

 
5,168

Other Interest Expense (Income), Net
1,112

 
116

Amortization of Debt Expense and Premium, Net
133

 
102

Total Interest and Debt Expense
6,519

 
5,386

Net Income
8,024

 
3,502

Preferred Stock Dividend Requirement

 
10

Net Income Applicable to Common Stock
$
8,024

 
$
3,492

Weighted Average Common Shares Outstanding:
 

 
 

Basic
11,966

 
11,873

Diluted
12,062

 
12,082

Earnings Per Common Share:
 
 
 

Basic
$
0.67

 
$
0.29

Diluted
$
0.67

 
$
0.29


The accompanying footnotes are an integral part of these condensed consolidated financial statements.


6

Table of Contents

CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands)

 
2019
 
2018
Net Income
$
5,786

 
$
4,729

Other Comprehensive Income, net of tax
 

 
 

Reclassification to Pension and Post-Retirement Benefits Other than Pension, net of tax expense of $14 and $30 in 2019 and 2018
36

 
83

Unrealized gain on investments, net of tax expense of $10 and $14 in 2019 and 2018
29

 
36

Other Comprehensive Income, net of tax
65

 
119

Comprehensive Income
$
5,851

 
$
4,848







CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Six Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands)

 
2019
 
2018
Net Income
$
8,024

 
$
3,502

Other Comprehensive Income, net of tax
 

 
 

Reclassification to Pension and Post-Retirement Benefits Other than Pension, net of tax expense of $27 and $43 in 2019 and 2018
73

 
117

Unrealized gain on investments, net of tax expense of $74 and $4 in 2019 and 2018
202

 
10

Other Comprehensive Income, net of tax
275

 
127

Comprehensive Income
$
8,299

 
$
3,629

















The accompanying footnotes are an integral part of these condensed consolidated financial statements. 

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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Three Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except per share amounts)

 
2019
 
2018
Balance at Beginning of Period
$
102,658

 
$
97,586

Net Income
5,786

 
4,729

 
108,444

 
102,315

Premium on Redemption of Preferred Stock

 
(15
)
Dividends Declared:
 

 
 

Cumulative Preferred, Class A, $0.20 per share in 2018

 
1

Common Stock - 2019 $0.3275 per share; 2018 $0.3125 per share
3,951

 
3,776

 
3,951

 
3,777

Balance at End of Period
$
104,493

 
$
98,523






CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
For the Six Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands, except per share amounts)

 
2019
 
2018
Balance at Beginning of Period
$
104,188

 
$
102,417

Net Income
8,024

 
3,502

 
112,212

 
105,919

Premium on Redemption of Preferred Stock

 
(15
)
Dividends Declared:
 

 
 

Cumulative Preferred, Class A, $0.40 per share in 2018

 
4

Cumulative Preferred, Series $0.90, $0.45 per share in 2018

 
6

Common Stock - 2019 $0.64 per share; 2018 $0.61 per share
7,719

 
7,371

 
7,719

 
7,381

Balance at End of Period
$
104,493

 
$
98,523













The accompanying footnotes are an integral part of these condensed consolidated financial statements.


8

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CONNECTICUT WATER SERVICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 2019 and 2018
(Unaudited)
(In thousands)
 
2019
 
2018
Operating Activities:
 
 
 
Net Income (Loss)
$
8,024

 
$
3,502

Adjustments to Reconcile Net Income (Loss) to Net Cash and Cash Equivalents Provided by
 
 
 
Operating Activities:
 
 
 
Deferred Revenues
(4,263
)
 
(3,435
)
Provision for Deferred Income Taxes and Investment Tax Credits, Net
1,037

 
1,284

Allowance for Funds Used During Construction
(359
)
 
(158
)
Depreciation and Amortization (including $506 and $702 in 2019 and 2018, respectively, charged to other accounts)
10,218

 
9,767

Gain on Real Estate Transactions
(23
)
 

Change in Assets and Liabilities:
 
 
 
(Increase) Decrease in Accounts Receivable and Accrued Unbilled Revenues
(508
)
 
452

Increase in Prepaid Income Taxes and Prepayments and Other Current Assets
(1,589
)
 
(2,531
)
Decrease in Other Non-Current Items
2,059

 
4,590

Increase (Decrease) in Accounts Payable, Accrued Expenses and Other Current Liabilities
1,234

 
(445
)
Total Adjustments
7,806

 
9,524

Net Cash and Cash Equivalents Provided by Operating Activities
15,830

 
13,026

Investing Activities:
 

 
 

Net Additions to Utility Plant
(30,024
)
 
(20,858
)
Net Cash and Cash Equivalents Used in Investing Activities
(30,024
)
 
(20,858
)
Financing Activities:
 
 
 
Net Proceeds from Interim Bank Loans
74,632

 
42,891

Net Repayment of Interim Bank Loans
(54,249
)
 
(19,281
)
Redemption of Preferred Stock

 
(787
)
Purchase of Treasury Stock

 
(3,525
)
Proceeds from the Issuance of Long-Term Debt
1,686

 

Costs to Issue Long-Term Debt and Common Stock
(17
)
 

Proceeds from Issuance of Common Stock
571

 
722

Repayment of Long-Term Debt Including Current Portion
(1,733
)
 
(3,903
)
Advances from Others for Construction
1,549

 
(654
)
Cash Dividends Paid
(7,719
)
 
(7,381
)
Net Cash and Cash Equivalents Provided by Financing Activities
14,720

 
8,082

Net Increase in Cash and Cash Equivalents
526

 
250

Cash and Cash Equivalents and Restricted Cash at Beginning of Period
2,856

 
3,618

Cash and Cash Equivalents and Restricted Cash at End of Period
$
3,382

 
$
3,868

Non-Cash Investing and Financing Activities:
 

 
 

Non-Cash Contributed Utility Plant
$
1,182

 
$
852

Supplemental Disclosures of Cash Flow Information:
 
 
 
Cash Paid for:
 
 
 
Interest
$
6,486

 
$
5,350

State and Federal Income Taxes
$
300

 
$
320


The accompanying footnotes are an integral part of these condensed consolidated financial statements.

9

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.
Basis of Preparation of Financials

The condensed consolidated financial statements included herein have been prepared by Connecticut Water Service, Inc. (“CTWS” or the “Company”) and its wholly-owned subsidiaries, pursuant to the rules and regulations of the Securities and Exchange Commission and reflect all adjustments that are of a normal recurring nature 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.  The Company’s primary operating subsidiaries are: The Connecticut Water Company (“Connecticut Water”), The Heritage Village Water Company (“HVWC”) and The Avon Water Company (“Avon Water”) in the State of Connecticut and The Maine Water Company (“Maine Water”) in the State of Maine (together, the “Regulated Companies”). The Condensed Consolidated Balance Sheet at December 31, 2018 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  It is suggested that these condensed 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 for the fiscal year ended December 31, 2018 (the “10-K”) and as updated in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2019.

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.

Proposed Merger with SJW Group

On August 5, 2018, the Company entered into a Second Amended and Restated Agreement and Plan of Merger (the “Revised Merger Agreement”) with SJW Group, a Delaware corporation (“SJW”), and Hydro Sub, Inc., a Connecticut corporation and a direct wholly owned subsidiary of SJW (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving the merger as a wholly owned subsidiary of SJW (the “Merger”). Subject to the terms and conditions of the Revised Merger Agreement, at the effective time of the Merger, each outstanding share of our common stock (other than certain cancelled shares) will be automatically converted into the right to receive an amount in cash equal to $70.00 per share, payable without interest. The Revised Merger Agreement amends and restates in its entirety the Amended and Restated Agreement and Plan of Merger (the “First Amended and Restated Merger Agreement”), dated as of May 30, 2018, by and among the Company, SJW and Merger Sub, which amended and restated in its entirety the Agreement and Plan of Merger (the “Original Merger Agreement”), dated as of March 14, 2018, by and among the Company, SJW and Merger Sub.

The Board of Directors approved, adopted and declared advisable the Revised Merger Agreement and the Merger and recommended that the Company’s shareholders approve the Revised Merger Agreement following a comprehensive review of the transaction. The Revised Merger Agreement was approved by the Company’s shareholders on November 16, 2018. The Merger is subject to certain customary closing conditions, including, among other things, approval of the Revised Merger Agreement by the Company’s shareholders (which was received on November 16, 2018) and regulatory approvals (including the approval of the Connecticut Public Utilities Regulatory Authority (“PURA”) and the Maine Public Utilities Commission (“MPUC”)). The required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”), was terminated early on April 27, 2018, and the early termination expired on April 27, 2019. The Company and SJW re-filed the necessary notifications under the HSR Act on April 4, 2019, and the required waiting period was terminated early on April 15, 2019. On October 15, 2018, the Federal Communications Commission (“FCC”) consented to the joint application for transfer of control filed by the Company and SJW on October 4, 2018 and amended on October 12, 2018. On April 19, 2019, the FCC granted the Company and SJW’s request to extend the transfer of control deadline to October 20, 2019. No further clearance from the FCC is required.

On May 4, 2018, Maine Water filed with MPUC an application for approval of the Merger. On May 7, 2018, the Company and SJW filed with PURA a joint application for approval of the Merger. Following the start on May 31, 2018 of a 45-day go-shop process permitted by the First Amended and Restated Merger Agreement, the Company and SJW withdrew their joint PURA application on June 19, 2018, and filed a new joint application on July 18, 2018 following the end of the go-shop process. On January 9, 2019, the Company and SJW withdrew their current application before PURA and announced that they were continuing to evaluate their regulatory approach, including the possibility of submitting a new application to PURA in connection with the Merger. On January 23, 2019, Maine Water voluntarily requested to withdraw its application before MPUC, aligning the Maine regulatory process with the regulatory process in Connecticut. After a thorough review conducted by the management and boards of the Company and SJW, and with the support of their respective Connecticut regulatory counsel, the Company and SJW filed a new joint application with PURA on April 3, 2019, and Maine Water filed a new

10

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

application with MPUC on May 3, 2019. PURA must make a ruling on the merger within 120 days after the filing of an application, unless the Company and SJW agree to an extension of the 120-day timeframe. On July 10, 2019, the Company and SJW agreed to PURA’s request to extend the statutory deadline from August 28, 2019 to September 4, 2019. MPUC must make a ruling on the merger within 60 days after the filing of an application, unless it determines that the necessary investigation cannot be concluded within 60 days, in which event it can extend the review period for up to an additional 120 days. On June 24, 2019, MPUC extended the review period to October 29, 2019.

On July 20, 2018, the California Public Utilities Commission (“CPUC”) formally issued an Order Instituting Investigation (the “Order”) providing that CPUC will investigate whether the Merger is subject to CPUC approval and the Merger’s anticipated impacts within California. CPUC held a public participation hearing on January 31, 2019 in connection with the Order. By a letter dated February 21, 2019, SJW informed CPUC that it would file a new application with PURA in connection with the Merger. On March 4, 2019, CPUC suspended the Order pending a final decision by PURA. On April 19, 2019, the City of San José submitted a request to CPUC that it resume its investigation of the Merger, which request is still pending.

Regulatory Matters

The rates we charge our water and waste water customers in Connecticut and Maine are established under the jurisdiction of and are approved by PURA and the MPUC, respectively. It is our policy to seek rate relief as necessary to enable us to achieve an adequate rate of return. The Regulated Companies’ allowed returns on equity and allowed returns on rate base are as follows:

As of June 30, 2019
 
Allowed Return on Equity
 
Allowed Return on Rate Base
Connecticut Water
 
9.75
%
 
7.32
%
HVWC (blended water and wastewater rates)
 
10.10
%
 
7.19
%
Avon Water
 
10.00
%
 
7.79
%
Maine Water
 
9.50
%
 
7.96
%

The PURA establishes rates in Connecticut on a company-wide basis while the MPUC approves Maine Water’s rates on a division-by-division basis. Each of Connecticut Water, HVWC, Avon Water and Maine Water are allowed, subject to regulatory approval, to add surcharges to customers’ bills in order to recover certain costs associated with approved capital projects in between full rate cases, as well as approved surcharges for Water Revenue Adjustments, in Connecticut, as discussed in more detail below. HVWC has not added surcharges to customers’ bills in order to recover certain approved capital projects as of June 30, 2019, however, HVWC, as ordered by PURA, began to utilize Water Revenue Adjustments for water and wastewater as of March 31, 2017.

On January 3, 2018, PURA reopened the most recent rate case decisions for the Company’s Connecticut Regulated Companies to determine what, if any, adjustments to rates are appropriate to account for revisions to tax laws, including corporate tax rates, contained in the Federal Tax Cuts and Jobs Act (“Tax Act”). On January 23, 2019, PURA issued a decision that determined the appropriate accounting and rate treatments for the reduction in the Federal Corporate Income Tax rate from 35 to 21 percent. The reduction in the Federal Corporate Income Tax impacts two specific areas of corporate income tax that the regulated water utilities must account for: a) the income tax expense included in rates charged to customers; and b), the Excess Accumulated Deferred Income Tax (“EADIT”) liability accrued on the regulated utilities books.

PURA has directed regulated water companies who have not received updated rates after the passing of the Tax Act, including Avon and HVWC, to create a regulatory liability as of January 1, 2018 to account for the reduced Federal Corporate Income Tax expense and defer treatment until the companies file their next general rate cases, at which point the companies will propose a method to return the regulatory liability to customers. During the year ended December 31, 2018, Avon Water and HVWC recorded regulatory liabilities in the amounts of $154,000 and $89,000, respectively. Avon Water and HVWC will continue to record additional liabilities each month until their next rate cases. For the six months ended June 30, 2019, Avon Water and HVWC recorded an additional $74,000 and $42,000, respectively, to the regulatory liabilities. Additionally, PURA directed Avon Water and HVWC, to establish a liability account for the EADIT from January 1, 2018, going forward, which will also be returned to customers commencing with the their next rate cases. As discussed below, Connecticut Water has entered into a settlement agreement with the Connecticut Office of Consumer Counsel (“OCC”), which was approved by PURA, which covers treatment of the Tax Act.


11

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

On January 11, 2018, the MPUC issued a notice of investigation to determine the impact of the Tax Act on Maine Water. The investigation allowed the MPUC to determine what, if any, adjustments to rates would be appropriate to account for revisions to tax laws, including corporate tax rates contained in the Tax Act. On March 15, 2019, the MPUC issued an Order concluding the investigation, directing Maine Water to create regulatory liabilities in five of their ten operating divisions, collectively totaling $157,587 for the year ended December 31, 2018. During the year ended December 31, 2018, Maine Water recorded a regulatory liability in the amount of $167,000 in anticipation of the Order, inclusive of carrying costs. Maine Water will continue to record additional liabilities each month until the company’s next rate case in each division. For the six months ended June 30, 2019, Maine Water recorded an additional $90,000 to the regulatory liabilities. Further, the Order directs Maine Water to file general rate cases in the same five divisions on or before March 1, 2022.

Maine Water Land Sale
On March 11, 2016, Maine Water entered into a purchase and sale agreement with the Coastal Mountains Land Trust, a Maine nonprofit corporation (the “Land Trust”) pursuant to which Maine Water agreed to sell two conservation easements to the Land Trust on approximately 1,400 acres of land located in the towns of Rockport, Camden and Hope, in Knox County, Maine valued in the aggregate at $3.1 million. The land has a book value of approximately $270,000 and is included in “Other Property and Investments” on the Company’s Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018. The easements and purchase prices are as follows:

1.Ragged Mountain Mirror Lake Conservation Easement: $1,875,000; and
2.Grassy Pond Conservation Easement: $600,000.

The first transaction regarding Mirror Lake was completed on September 27, 2018. As a result of the transaction, Maine Water has recognized $435,000 in net income in the period and has recorded a regulatory liability of $435,000 that is being refunded to customers over a one-year period, beginning January, 2019. In addition to the net income recorded as a result of the transaction, the Company recorded a $100,000 deferred income tax benefit due to the timing difference related to the cash refund to customers. The total net income benefit recorded by the Company for this transaction was $535,000 presented as $625,000 in gain on real estate transactions offset by $90,000 of donation deduction in the Other line item. Maine Water also made a $250,000 contribution to the Land Trust at the closing.

The second transaction regarding Grassy Pond is scheduled to close on or before December 31, 2019. The second transaction is structured such that Maine Water will sell a conservation easement valued at $1,200,000 for $600,000. Accordingly, Maine Water expects to claim a $600,000 charitable deduction on the bargain sale. Similar to the first transaction, net proceeds from the second transaction will be shared equally between the customers of the Camden Rockland division and Maine Water.

Connecticut Rates
Connecticut Water’s Water Infrastructure Conservation Adjustment (“WICA”) was a 0.40% surcredit and a 9.98% surcharge at June 30, 2019 and 2018, respectively. Connecticut Water’s WICA was reset to zero during 2018 as a result of a rate ruling on the Company’s limited reopener and settlement agreement issued by PURA, as discussed below. As of June 30, 2019 and 2018, Avon Water’s WICA surcharge was 9.29% and 7.51%, respectively. As of June 30, 2019, HVWC has not filed for a WICA surcharge. Connecticut Water filed a WICA application for an additional 1.09% for a net surcharge of 0.69%. If approved, the surcharge will become effective as of July 1, 2019.

On February 6, 2018, Connecticut Water filed a petition with PURA to reopen Connecticut Water’s 2010 rate case proceeding (previously reopened in 2013) for the limited purpose of approving a Settlement Agreement entered into by Connecticut Water and the OCC (the “Agreement”). The Agreement proposes a change in Connecticut Water’s customer rates effective for bills rendered on and after April 1, 2018 made up of the following two components: (1) the revenue requirements associated with a $36.3 million addition to rate base to reflect necessary upgrades to Connecticut Water’s Rockville Water Treatment Plant; and (2) the folding in to base rates of the Company’s present WICA surcharges. In addition, the Agreement provides that:
1.Upon implementation of new rates under the Agreement, until such time as new rates are adopted in a general rate case, through a temporary modification of the earnings sharing mechanism, Connecticut Water customers will receive one hundred percent of any earnings in excess of levels allowed by law rather than limiting such customer credits to 50% as contemplated by applicable law;
2.Connecticut Water agrees it will not file for a general increase of Connecticut Water’s base rates unless those rates are to be effective on or after January 1, 2020;
3.The pending proceeding initiated by PURA in Docket No. 09-12-11RE03, Application of The Connecticut Water Company for Amended Rates – Federal Tax Cuts and Jobs Act shall be closed; and
4.Connecticut Water shall continue to make investments in infrastructure replacement consistent with its approved WICA plan. Connecticut Water shall be allowed to continue to pursue recovery of eligible projects through WICA.

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Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


On August 15, 2018, PURA issued a final decision that accepted the conditions of a revised settlement agreement. The primary facets of the revised settlement agreement were the revenue requirements associated with the Rockville Water Treatment Plant, discussed above, and the folding of previously approved WICA surcharges into base rates, which reset Connecticut Water’s WICA to zero and resolution of the Company’s obligations related to the Tax Act. New rates were effective as of April 1, 2018.

Since 2013, Connecticut law has authorized a Water Revenue Adjustment (“WRA”) to reconcile actual water revenues with the revenues projected in the last general rate case and allows companies to adjust rates as necessary to recover the revenues approved by PURA in the last general rate case. The WRA removes the financial disincentive for water utilities to develop and implement effective water conservation programs. The WRA allows water companies to defer on the balance sheet, as a regulatory asset or liability, for later collection from or crediting to customers the amount by which actual revenues deviate from the revenues allowed in the most recent general rate proceedings, including WICA proceedings. Additionally, projects eligible for WICA surcharges were expanded to include energy conservation projects, improvements required to comply with streamflow regulations, and improvements to certain acquired systems.

Connecticut Water’s and HVWC’s allowed revenues for the six months ended June 30, 2019, as approved by PURA during each company’s most recent general rate case and including subsequently approved WICA surcharges, are approximately $43.8 million. Through normal billing for the six months ended June 30, 2019, revenue for Connecticut Water and HVWC would have been approximately $39.4 million had the WRA not been implemented. As a result of the implementation of the WRA, Connecticut Water and HVWC recorded $4.4 million in additional revenue for the six months ended June 30, 2019. For the same period in 2018, the Connecticut Water and HVWC recognized $3.5 million in WRA revenues. Avon Water does not currently have PURA approval to apply the WRA surcharge to its customers’ bills and, therefore, does not currently use the WRA mechanism.

Maine Rates
In Maine, the overall, cumulative Water Infrastructure Charge (“WISC”) for all divisions was 5.7% and 6.8% as a percentage of total revenues as of June 30, 2019 and 2018, respectively.

A water revenue adjustment mechanism law in Maine became available to regulated water utilities in Maine on October 15, 2015. Maine Water is currently precluded from seeking new rates in the Biddeford and Saco division due to provisions in the settlement agreement with the MPUC. Maine’s rate-adjustment mechanism could provide revenue stabilization in divisions with declining water consumption and Maine Water expects to request usage of this mechanism in future rate filings when consumption trends support its use.

2.
Pension and Other Post-Retirement Benefits

The following tables set forth the components of pension and other post-retirement benefit costs for the three months ended June 30, 2019 and 2018.

Pension Benefits
Components of Net Periodic Cost (in thousands):
 
Three Months
 
Six Months
Period ended June 30,
2019
 
2018
 
2019
 
2018
Service Cost
$
412

 
$
451

 
$
863

 
$
975

Interest Cost
857

 
777

 
1,711

 
1,555

Expected Return on Plan Assets
(1,223
)
 
(1,162
)
 
(2,443
)
 
(2,331
)
Amortization of:
 

 
 

 
 
 
 
Prior Service Cost
4

 
4

 
8

 
8

Net Recognized Loss
395

 
629

 
788

 
1,299

Net Periodic Benefit Cost
$
445

 
$
699

 
$
927

 
$
1,506



The Company expects to make a total contribution of approximately $4,050,000 in 2019 for the 2018 plan year.


13

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Post-Retirement Benefits Other Than Pension (PBOP)
Components of Net Periodic Cost (in thousands):
 
Three Months
 
Six Months
Period ended June 30,
2019
 
2018
 
2019
 
2018
Service Cost
$
53

 
$
83

 
$
121

 
$
166

Interest Cost
85

 
126

 
226

 
251

Expected Return on Plan Assets
(93
)
 
(94
)
 
(185
)
 
(187
)
Amortization of:
 

 
 

 
 
 
 
Prior Service Credit

 
(1
)
 

 
(1
)
Recognized Net Gain
(213
)
 
(5
)
 
(251
)
 
(11
)
Net Periodic Benefit (Credit) Cost
$
(168
)
 
$
109

 
$
(89
)
 
$
218



3.
Earnings per Share and Common Stock

Earnings per weighted average common share are calculated by dividing net income applicable to common stock by the weighted average number of shares of common stock outstanding during the respective periods as detailed below (diluted shares include the effect of stock awards):

Three months ended June 30,
2019
 
2018
Common Shares Outstanding End of Period
12,068,537

 
12,044,006

Weighted Average Shares Outstanding (Days Outstanding Basis):
 

 
 

Basic
11,969,527

 
11,883,907

Diluted
12,064,788

 
12,082,573

 
 
 
 
Basic Earnings per Share
$
0.48

 
$
0.39

Dilutive Effect of Stock Awards

 

Diluted Earnings per Share
$
0.48

 
$
0.39

 
 
 
 
Six months ended June 30,
 
 
 
Weighted Average Shares Outstanding (Days Outstanding Basis):
 
 
 
Basic
11,965,678

 
11,872,995

Diluted
12,062,245

 
12,081,535

 
 
 
 
Basic Earnings per Share
$
0.67

 
$
0.29

Dilutive Effect of Stock Awards

 

Diluted Earnings per Share
$
0.67

 
$
0.29



Total unrecognized compensation expense for all stock awards was approximately $1.7 million as of June 30, 2019 and will be recognized over a weighted average period of 1.4 years.


14

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company has 25,000,000 authorized shares of common stock, no par value.  A summary of the changes in the common stock accounts three and six months ended June 30, 2018 and June 30, 2019, appears below:

(in thousands, except share data)
Shares
 
Issuance Amount
 
Expense
 
Total
Balance, April 1, 2018
12,089,125

 
$
196,343

 
$
(4,090
)
 
$
192,253

Stock and equivalents issued through Performance Stock Program, Net of Forfeitures
(50,401
)
 
(3,275
)
 

 
(3,275
)
Dividend Reinvestment Plan
5,282

 
342

 

 
342

Balance, June 30, 2018
12,044,006

 
$
193,410

 
$
(4,090
)
 
$
189,320

 
 
 
 
 
 
 
 
Balance, April 1, 2019
12,063,252

 
$
194,989

 
$
(4,090
)
 
$
190,899

Stock and equivalents issued through Performance Stock Program, Net of Forfeitures and Redemptions
1,028

 
101

 

 
101

Dividend Reinvestment Plan
4,257

 
292

 

 
292

Balance, June 30, 2019
12,068,537

 
$
195,382

 
$
(4,090
)
 
$
191,292

 
 
 
 
 
 
 
 
Balance, January 1, 2018
12,065,016

 
$
195,731

 
$
(4,090
)
 
$
191,641

Stock and equivalents issued through Performance Stock Program, Net of Forfeitures
(33,416
)
 
(3,043
)
 

 
(3,043
)
Dividend Reinvestment Plan
12,406

 
722

 

 
722

Balance, June 30, 2018
12,044,006

 
$
193,410

 
$
(4,090
)
 
$
189,320

 
 
 
 
 
 
 
 
Balance January 1, 2019
12,054,712

 
$
194,523

 
$
(4,090
)
 
$
190,433

Stock and equivalents issued through Performance Stock Program, Net of Forfeitures and Redemptions
5,432

 
289

 

 
289

Dividend Reinvestment Plan
8,393

 
570

 

 
570

Balance, June 30, 2019
12,068,537

 
$
195,382

 
$
(4,090
)
 
$
191,292



4.
Recently Adopted and New Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)”, (“ASU No. 2016-02”), which required lessees to recognize the following for all leases at the commencement date of a lease: a) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and b) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Public business entities had to apply the amendments in ASU No. 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application was permitted for all public business entities and all nonpublic business entities upon issuance. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) applied a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors could not apply a full retrospective transition approach. As required, the Company adopted ASU No. 2016-02 in January 2019 using the modified retrospective approach, see Note 12 for more details.

5.
Revenues from Contracts with Customers

Accounting Policy
Our revenues are primarily from tariff-based sales. We provide water and wastewater services to customers under these tariffs without a defined contractual term (at-will).  As the revenue from these arrangements is based upon the amount of the water and wastewater services supplied and billed in that period (including estimated billings), there was not a shift in the timing or pattern of revenue recognition for such sales when compared to our revenue recognition prior to the adoption of ASU No. 2014-09, “Revenue from Contracts with Customers” (“ASU No. 2014-09”).  We have also completed the evaluation of our other revenue streams, including those tied to longer term contractual commitments and the Company’s Linebacker program.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)


Customers are primarily billed quarterly on a cycle basis. To match revenues with associated expenses, we accrue unbilled revenues for water and wastewater services delivered to customers, but not yet billed at month end, creating a contract asset.

Nature of Goods and Services
Water Operations - We currently provide retail water and wastewater services to five primary customer classes. Our largest customer class consists of residential customers, which include single private dwellings and individual apartments. Our commercial class consists primarily of main street businesses, our industrial class consists primarily of manufacturing and processing businesses that turn raw materials into products, our public authority class represents services provided primarily to municipality or other government customers, and, finally, our fire protection class consists of services related to fire suppression systems and fire hydrants. Connecticut Water’s management has determined that tariff-based receipts; except for the WRA and other deferred revenue mechanisms, which are considered alternative revenue programs; are considered revenues from contracts with customers.
The Company has performance obligations for the service of standing ready to deliver water to customers. The Company recognizes revenue at a fixed rate as it provides these services, as approved by regulators. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by PURA and the MPUC through the rate-making process and represent the stand-alone selling price of Company’s service to stand ready to deliver.
The Company has performance obligations for the service of delivering the commodity of water to customers. The Company recognizes revenue at a price per unit of water delivered (gallons, cubic feet, etc.), based on the tariffs established by our regulators. These arrangements generally do not have fixed terms and remain in effect as long as the customer consumes the utility service. The rates are set by PURA and the MPUC through the rate-making process and represent the stand-alone selling price of a bundled product comprising the commodity and the service of delivering such commodity.
The Company has a performance obligation related to administrative services such as turn-on/turn-off services, assessment of late charges, etc. The Company views that these services are not distinct in the context of the contract because they are highly interdependent for the effective delivery of water service provided to consumers.

Based on the above discussion, the Company believes that the Goods and Services provided under customer contracts constitute a single performance obligation. The Company believes that this performance obligation is satisfied over time.

Services and Rentals - We provide contracted services to water utilities and other clients and also lease certain of our properties to third parties. The types of services provided include contract operations of water; Linebacker, our service line protection plan for public drinking water customers; and providing bulk deliveries of emergency drinking water to businesses and residences via tanker truck. Our lease and rental income comes primarily from the renting of residential and commercial property. The goods and services provided by Linebacker have been determined to be based on the stand ready nature of the Company to provide the goods and services and, therefore, customers simultaneously receive and consume the benefits provided by the Company. The other revenue streams in the Services and Rentals segment, including contracted services to water utilities and other clients, have performance obligations that are satisfied at a point in time, and likewise will not have a shift in the timing or pattern of revenue recognition.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disaggregation of Revenue
The following table disaggregates our revenue by major source and customer class (in thousands):

 
 
Three Months Ended
 
Six Months Ended
 
 
June 30, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Water Operations
 
 
 
 
 
 
 
 
Residential
 
$
16,127

 
$
15,755

 
$
30,810

 
$
30,164

Commercial
 
3,337

 
3,301

 
6,376

 
6,231

Industrial
 
761

 
736

 
1,479

 
1,455

Public Authority
 
941

 
761

 
1,770

 
1,508

Fire Protection
 
5,322

 
5,134

 
10,665

 
10,306

Other (including non-metered accounts)
 
784

 
886

 
1,547

 
1,760

Water Operations Revenues from Contracts with Customers
 
27,272

 
26,573

 
52,647

 
51,424

Alternative Revenue Program
 
3,392

 
3,331

 
4,263

 
3,333

Other
 
382

 
363

 
718

 
736

Total Revenue from Water Operations
 
31,046

 
30,267

 
57,628

 
55,493

Services and Rentals
 
 
 
 
 
 
 
 
Contract Operations
 
593

 
578

 
1,170

 
1,147

Linebacker
 
650

 
635

 
1,301

 
1,253

Services and Rentals Revenues from Contracts with Customers
 
1,243

 
1,213

 
2,471

 
2,400

Other
 
17

 
64

 
64

 
82

Total Revenue from Services and Rentals
 
1,260

 
1,277

 
2,535

 
2,482

Total Revenue from Real Estate Transactions
 

 

 

 

 
 
 
 
 
 
 
 
 
Total Revenues from Contracts with Customers
 
28,515

 
27,786

 
55,118

 
53,824

 
 
 
 
 
 
 
 
 
Total Revenue
 
$
32,306

 
$
31,544

 
$
60,163

 
$
57,975



The following table shows the components of Accounts Receivable and Accrued Unbilled Revenues related to revenues from contracts with customers:

 
 
June 30, 2019
 
December 31, 2018
Accounts Receivable
 
 
 
 
Water Operations Segment
 
$
12,445

 
$
11,890

Services and Rentals Segment
 
177

 
238

Accounts Receivable from Contracts with Customers
 
12,622

 
12,128

Other accounts receivable
 
1,257

 
2,041

Total Accounts Receivable
 
$
13,879

 
$
14,169

 
 
 
 
 
Accrued Unbilled Revenues from Contracts with Customers
 
$
10,810

 
$
10,011



Accounts Receivable and Accrued Unbilled Revenues: Accounts receivable are comprised of trade receivables primarily from our regulated water customers. The Company records their accounts receivable at cost, which approximates fair value. Additionally, the Company establishes an allowance for uncollectible accounts based on historical losses, management’s assessment of existing economic conditions, customer payment trends, and other factors. The Company assesses late payment

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

fees on trade receivables based on contractual past-due terms established with customers and approved by PURA or the MPUC. The provision for bad debts is charged to operating expense.

The Company’s customers are primarily billed quarterly in cycles having billing dates that do not generally coincide with the end of a fiscal quarter. This results in customers having received water or waste water services that they have not been billed for as of a given period’s end. The Company estimates its unbilled revenues by applying an average billed rate to total unbilled deliveries for each customer class.

6.
Accumulated Other Comprehensive Income

The changes in Accumulated Other Comprehensive Income (Loss) (“AOCI”) by component, net of tax, for the three and six months ended June 30, 2019 and 2018 are as follows (in thousands):
Three months ended June 30, 2019
 
Unrealized Gains on Investments
 
Defined Benefit Items
 
Total
Beginning Balance (a)
 
$
431

 
$
(706
)
 
$
(275
)
Other Comprehensive Income (Loss) Before Reclassification
 
4

 
(2
)
 
2

Amounts Reclassified from AOCI
 
25

 
38

 
63

Net current-period Other Comprehensive Income
 
29

 
36

 
65

Ending Balance
 
$
460

 
$
(670
)
 
$
(210
)
 
 
 
 
 
 
 
Three months ended June 30, 2018
 
Unrealized Gains on Investments
 
Defined Benefit Items
 
Total
Beginning Balance (a)
 
$
416

 
$
(836
)
 
$
(420
)
Other Comprehensive Income Before Reclassification
 
43

 

 
43

Amounts Reclassified from AOCI
 
(7
)
 
83

 
76

Net current-period Other Comprehensive Income
 
36

 
83

 
119

Ending Balance
 
$
452

 
$
(753
)
 
$
(301
)
 
 
 
 
 
 
 
Six months ended June 30, 2019
 
Unrealized Gains on Investments
 
Defined Benefit Items
 
Total
Beginning Balance (a)
 
$
258

 
$
(743
)
 
$
(485
)
Other Comprehensive Income (Loss) Before Reclassification
 
177

 
(2
)
 
175

Amounts Reclassified from AOCI
 
25

 
75

 
100

Net current-period Other Comprehensive Income
 
202

 
73

 
275

Ending Balance
 
$
460

 
$
(670
)
 
$
(210
)
 
 
 
 
 
 
 
Six months ended June 30, 2018
 
Unrealized Gains on Investments
 
Defined Benefit Items
 
Total
Beginning Balance (a)
 
$
442

 
$
(870
)
 
$
(428
)
Other Comprehensive Income Before Reclassification
 

 

 

Amounts Reclassified from AOCI
 
10

 
117

 
127

Net current-period Other Comprehensive Income
 
10

 
117

 
127

Ending Balance
 
$
452

 
$
(753
)
 
$
(301
)
 
 
 
 
 
 
 
(a) All amounts shown are net of tax. Amounts in parentheses indicate loss.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table sets forth the amounts reclassified from AOCI by component and the affected line item on the Condensed Consolidated Statements of Income for the three and six months ended June 30, 2019 and 2018 (in thousands):
Details about Other AOCI Components
 
Amounts Reclassified from AOCI Three Months Ended June 30, 2019 (a)
 
Amounts Reclassified from AOCI Three Months Ended June 30, 2018 (a)
 
Affected Line Items on Income Statement
Realized Gains on Investments
 
$
31

 
$
(10
)
 
Other Income
Tax expense
 
(6
)
 
3

 
Other Income
 
 
25

 
(7
)
 
 
 
 
 
 
 
 
 
Amortization of Recognized Net Gain from Defined Benefit Items
 
44

 
113

 
Other Income (b)
Tax expense
 
(6
)
 
(30
)
 
Other Income
 
 
38

 
83

 
 
 
 
 
 
 
 
 
Total Reclassifications for the period, net of tax
 
$
63

 
$
76

 
 
 
 
 
 
 
 
 
Details about Other AOCI Components
 
Amounts Reclassified from AOCI Six Months Ended June 30, 2019(a)
 
Amounts Reclassified from AOCI Six Months Ended June 30, 2018(a)
 
Affected Line Items on Income Statement
Realized Gains on Investments
 
$
31

 
$
14

 
Other Income
Tax expense
 
(6
)
 
(4
)
 
Other Income
 
 
25

 
10

 
 
 
 
 
 
 
 
 
Amortization of Recognized Net Gain from Defined Benefit Items
 
95

 
160

 
Other Income (b)
Tax expense
 
(20
)
 
(43