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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
| x | ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) |
For the fiscal year ended December 31, 2013
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) |
Commission file number 1-8858
| A. | Full title of the plan and the address of the plan, if different from that of the issuer name below: |
UNITIL CORPORATION TAX DEFERRED SAVINGS AND INVESTMENT PLAN
| B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
UNITIL CORPORATION
6 Liberty Lane West, Hampton, New Hampshire 03842-1720
Table of Contents
Financial Statements and
Reports of Independent
Registered Public Accounting Firm
Unitil Corporation
Tax Deferred
Savings and Investment Plan
December 31, 2013 and 2012
| Page | ||||
| 1 | ||||
| FINANCIAL STATEMENTS |
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| STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS – DECEMBER 31, 2013 AND 2012 |
3 | |||
| STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS – YEAR ENDED DECEMBER 31, 2013 |
4 | |||
| 5-17 | ||||
| 18 | ||||
| 19 | ||||
| SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2013 |
20 | |||
| SCHEDULES REQUIRED UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, OTHER THAN THE SCHEDULES LISTED ABOVE, ARE OMITTED BECAUSE OF THE ABSENCE OF CONDITIONS UNDER WHICH THE SCHEDULES ARE REQUIRED. |
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| 21 | ||||
| CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Exhibit 23.1 | |||
| CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Exhibit 23.2 | |||
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Members of the Unitil corporation 401(k) Plan Committee and the Plan Administrator of the Unitil Corporation Tax Deferred Savings and Investment Plan:
We have audited the accompanying statement of net assets available for benefits of the Unitil Corporation Tax Deferred Savings and Investment Plan (the “Plan”) as of December 31, 2013 and the related statement of changes in net assets available for benefits for the year then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2013 and the changes in net assets available for benefits for the year then ended, in conformity with U.S. generally accepted accounting principles.
Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules are presented for the purpose of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules are the responsibility of the Plan’s management. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.
/s/ Caron & Bletzer, PLLC
Kingston, NH
June 11, 2014
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Report of Independent Registered Public Accounting Firm
To the Members of the Unitil Corporation 401(k) Plan Committee and the Plan Administrator of the Unitil Corporation Tax Deferred Savings and Investment Plan:
We have audited the accompanying statement of net assets available for benefits of the Unitil Corporation Tax Deferred Savings and Investment Plan (the “Plan”) as of December 31, 2012. This financial statement is the responsibility of the Plan’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above present fairly, in all material respects, the net assets available for benefits of the Unitil Corporation Tax Deferred Savings and Investment Plan as of December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
/s/ McGladrey LLP
Boston, Massachusetts
June 20, 2013
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Unitil Corporation Tax Deferred Savings and Investment Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
| 2013 | 2012 | |||||||
| Investments at Fair Value: |
||||||||
| Registered Investment Companies: |
||||||||
| Growth Fund of America |
$ | 10,152,285 | $ | 7,791,054 | ||||
| Invesco Growth and Income Fund |
4,187,145 | 3,007,751 | ||||||
| American Balanced Fund |
3,403,976 | 2,059,798 | ||||||
| MainStay S&P 500 Index Fund |
2,800,437 | 1,908,822 | ||||||
| Manning & Napier World Opportunities Fund A |
2,753,960 | 2,270,761 | ||||||
| PIMCO Total Return Fund Admin |
2,509,437 | 3,121,591 | ||||||
| PIMCO Real Return Fund Admin |
1,209,151 | 1,967,947 | ||||||
| Jennison Small Company Fund Z |
2,033,528 | 1,288,755 | ||||||
| JP Morgan Mid Cap Value Fund |
1,743,651 | 1,172,106 | ||||||
| MainStay High Yield Corporate Bond Fund |
1,375,163 | 1,239,051 | ||||||
| Columbia Acorn Select Fund Z |
1,231,264 | 760,377 | ||||||
| Delaware Small Value Fund A |
1,121,347 | — | ||||||
| BlackRock LifePath Retirement Fund |
387,408 | 250,298 | ||||||
| BlackRock LifePath 2020 Fund |
1,699,334 | 1,012,142 | ||||||
| BlackRock LifePath 2025 Fund |
280,962 | 5,472 | ||||||
| BlackRock LifePath 2030 Fund |
1,024,330 | 731,618 | ||||||
| BlackRock LifePath 2035 Fund |
111,227 | 347 | ||||||
| BlackRock LifePath 2040 Fund |
549,322 | 455,695 | ||||||
| BlackRock LifePath 2045 Fund |
1,484 | — | ||||||
| BlackRock LifePath 2050 Fund |
151,073 | 105,812 | ||||||
| BlackRock LifePath 2055 Fund |
12,549 | 3,281 | ||||||
| Loomis Sayles Core Plus Bond Fund A |
337,529 | 239,085 | ||||||
| Dreyfus Appreciation Fund |
775,830 | 456,944 | ||||||
| Oppenheimer Developing Markets Fund A |
504,077 | 358,489 | ||||||
| MFS International Value Fund A |
496,329 | 104,774 | ||||||
| Cohen & Steers Institutional Realty Shares |
271,484 | 138,129 | ||||||
| Third Avenue Small Cap Value Fund |
— | 801,267 | ||||||
| Columbia Acorn International Fund Z |
205,573 | 130,078 | ||||||
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| Total Registered Investment Companies |
41,329,855 | 31,381,444 | ||||||
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| New York Life Stable Value Fund |
10,165,562 | 11,572,057 | ||||||
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| Unitil Corporation Stock Fund: |
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| Unitil Corporation Common Stock |
7,372,513 | 5,936,458 | ||||||
| PIMCO Money Market Fund Admin |
252,115 | 205,407 | ||||||
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| Total Unitil Corporation Stock Fund |
7,624,628 | 6,141,865 | ||||||
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| Total Investments at Fair Value |
59,120,045 | 49,095,366 | ||||||
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| Notes Receivable from Participants |
1,443,890 | 1,492,432 | ||||||
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| Net Assets Reflecting Investments at Fair Value |
60,563,935 | 50,587,798 | ||||||
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| Adjustment from Fair Value to Contract Value for Interest in Fully Benefit-Responsive Contract |
(48,561 | ) | (162,022 | ) | ||||
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| Net Assets Available for Benefits |
$ | 60,515,374 | $ | 50,425,776 | ||||
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(The accompanying notes are an integral part of these financial statements.)
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Unitil Corporation Tax Deferred Savings and Investment Plan
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31,
| 2013 | ||||
| Additions to net assets attributed to: |
||||
| Investment income: |
||||
| Net appreciation in fair value of investments |
$ | 6,218,065 | ||
| Interest and dividends |
2,511,081 | |||
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| Total investment income |
8,729,146 | |||
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| Interest on notes receivable from participants |
64,756 | |||
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| Contributions: |
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| Participant |
2,887,209 | |||
| Employer |
1,596,443 | |||
| Participant rollovers |
212,103 | |||
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| Total contributions |
4,695,755 | |||
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| Total additions |
13,489,657 | |||
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| Deductions from net assets attributed to: |
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| Benefits paid to participants |
(1,494,053 | ) | ||
| Rollover distributions |
(1,810,418 | ) | ||
| Administrative fees |
(60,391 | ) | ||
| In-kind distributions |
(35,197 | ) | ||
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| Total deductions |
(3,400,059 | ) | ||
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| Net increase |
10,089,598 | |||
| Net assets available for benefits: |
||||
| Beginning of year |
50,425,776 | |||
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| End of year |
$ | 60,515,374 | ||
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(The accompanying notes are an integral part of these financial statements.)
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE A – DESCRIPTION OF PLAN
The following description of the Unitil Corporation (“Unitil” or the “Company”) Tax Deferred Savings and Investment Plan (“Plan” or “401(k) Plan”) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan covering all employees of the Company and its wholly-owned subsidiaries Unitil Service Corp., Unitil Energy Systems, Inc., Fitchburg Gas and Electric Light Company, Northern Utilities, Inc. (“Northern Utilities”), Granite State Gas Transmission, Inc. (“Granite State”) and Usource L.L.C. (“Usource”) (collectively, the “subsidiaries”), who satisfy the eligibility requirements. The Company has engaged New York Life Trust Company (“New York Life” or “Trustee”) as the trustee of the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code (the “Code”).
The Plan’s effective date is July 1, 1985. The Plan was amended and restated effective January 1, 2009 to comply with current Federal regulations. The Plan was also amended on June 18, 2009 to comply, effective January 1, 2007, with the final regulations under Section 415 of the Code. Further amendments were made to the Plan effective January 1, 2010, and January 1, 2011, to reflect enhancements to the benefits provided by the Plan in connection with amendments to the Company’s defined benefit pension plan (“Pension Plan”). The Plan was also amended in September 2010 to comply with the Heroes Earnings Assistance and Relief Tax Act of 2008 (“HEART Act”), and to reflect administration of 2009 required minimum distributions. In 2012, the Plan was amended effective January 1, 2012 to address the eligibility of rehired employees; and effective April 1, 2012, to incorporate the changes in the then effective collective bargaining agreements. In 2013, the Plan was again amended effective June 1, 2013 to incorporate the most recent changes in the currently effective collective bargaining agreements.
Eligibility
Employees are eligible to participate in the Plan on the first of the month following:
| (1) | Attainment of age 18, and |
| (2) | Completion of 1,000 hours of credited service, as defined by the Plan Document. |
Participant Contributions
Participants may contribute from 1% to 85% of their compensation, as defined by the Plan Document or as limited by the Code, on a pre-tax and/or after-tax basis. Participants may elect to apply the deferral percentage to either (1) total base pay, as defined by the Plan Document, or (2) total base pay plus bonuses, commissions, incentive and overtime pay.
Employees of Northern Utilities who are members of the United Steelworkers Union of America (“USWA”) Local 12012-6 who elected to remain in the existing pension plan, may contribute from 1% to 75% of their compensation, as defined by the Plan Document or as limited by the Code, on a pre-tax and/or after-tax basis.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Participants who are age 50 or will turn age 50 by the end of the Plan year (December 31) may be eligible to make “catch-up” contributions, as defined by the Plan Document and the Code.
Participants may also make rollover contributions into the Plan from other qualified plans.
New non-union employees and new union employees who are members of the USWA, IBEW or UWUA Local 341 are automatically enrolled in the 401(k) Plan following the completion of 1,000 hours of service, with the automatic employee contribution rate of 3%. This contribution rate will automatically increase by 1% on January 1st of each year until the employee’s contribution is 10% of pay. Employees may elect to opt-out of the automatic enrollment and/or automatic increase features provided by the enhanced Plan benefits.
Effective June 1, 2013, union employees who are members of the UWUA Local B340 that are hired after June 1, 2013 are automatically enrolled in the 401(k) Plan under terms consistent with those discussed above.
Employer Contributions
The Company matches participant contributions on a dollar-for-dollar basis, up to the first three (3%) percent of their eligible compensation, as defined by the Plan Document, except as noted below. Overtime pay and commissions are not included in the definition of compensation eligible for matching purposes.
For non-union employees who are hired on or after January 1, 2010, and for non-union employees who elected to move from the Company’s existing Pension Plan and accept a frozen pension benefit, the Plan provides enhanced Plan benefits including the Company contributing 4% of eligible compensation, as defined by the Plan, each year, regardless of whether or not the non-union employee elects to contribute to the 401(k) Plan. The Company also matches 100% of an employee’s elective deferrals up to 6% of compensation.
Employees of Northern Utilities who are members of USWA Local 12012-6 and who have completed one year of service shall receive company matching contributions equal to 50% of their employee contributions which do not exceed 5% of compensation, as defined by the Plan Document. Effective June 1, 2014, employees of Northern Utilities who are members of USWA Local 12012-6 shall receive company matching contributions equal to 100% of the first 3% of their contributions, as defined by the Plan Document. For those USWA members who are hired on or after January 1, 2011, and for USWA members who elected to move from the Company’s existing Pension Plan and accept a frozen pension benefit, the Plan provides for enhanced Plan benefits including the Company matching employee elective deferrals up to 6% of base pay and the Company contributing 4% of base pay each year, regardless of whether the employee elects to contribute to the 401(k) Plan.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Effective April 1, 2012, the Company match increased to 3% for UWUA Local 341 members. For those UWUA Local 341 members who are hired on or after April 1, 2012 and for UWUA members who elected to move from the Company’s existing Pension Plan and accept a frozen pension benefit, the Plan provides enhanced Plan benefits including the Company matching employee elective deferrals up to 6% of base pay and the Company contributing 4% of base pay each year, regardless of whether the employee elects to contribute to the 401(k) Plan.
For those IBEW members who are hired on or after June 1, 2012, and for IBEW members who elected to move from the Company’s existing Pension Plan and accept a frozen pension benefit, the Plan provides enhanced Plan benefits including the Company matching employee elective deferrals up to 6% of base pay and the Company contributing 4% of base pay each year, regardless of whether the employee elects to contribute to the 401(k) Plan.
For those UWUA – Local B340 members who are hired on or after June 1, 2013, the Plan provides enhanced Plan benefits including the Company matching employee elective deferrals up to 6% of base pay and the Company contributing 4% of base pay each year, regardless of whether the employee elects to contribute to the 401(k) plan.
Participant Accounts
Each participant’s account is credited with the participant’s contribution and allocations of (a) the Company’s contribution and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined by the Plan Document. Each participant’s account is charged for the investment management fees charged by each mutual fund. Investment management fees are netted against the earnings of each fund through each fund’s expense ratio. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
Participants are immediately vested in their contributions and rollover contributions plus actual earnings thereon. Vesting in the Company’s matching contribution portion of their accounts plus actual earnings thereon is based on years of continuous service, as defined by the Plan Document, except as noted below. A participant is 100 percent vested after three years of credited service. If a participant terminates employment for any reason other than disability, death or retirement, the participant will be entitled to the full amount of contributions they have deposited, plus a percentage of their account balance derived from employer contributions based upon the following schedule:
| Years of Service |
% Vested | |||
| 0-1 |
0 | % | ||
| 1-2 |
33 | % | ||
| 2-3 |
67 | % | ||
| 3+ |
100 | % | ||
A participant will become 100% vested in his or her account as a result of disability, death or retirement.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Employees who are receiving the enhanced Plan benefits and employees of Northern Utilities and Granite State who are members of UWUA Local 341 or USWA Local 12012-6 are always 100% vested in all employee and employer contributions.
Notes Receivable from Participants
Participants may borrow from their account balances a minimum of $1,000 up to a maximum equal to the lesser of $50,000, reduced by the highest outstanding loan balance during the preceding twelve month period, or 50% of their vested account balance. Loan terms range from 1-5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participant’s account and bear interest at a rate that is fixed at the origination of the loan at the then prime rate plus one percent (1%). Principal and interest is paid ratably through payroll deductions. As of December 31, 2013, there are 213 loans to participants, maturing from 2014 to 2027 with interest rates ranging between 4.25% and 9.25%.
Payment of Benefits
On termination of service due to death, disability or retirement, a participant may elect to receive either a lump-sum amount equal to the value of the participant’s vested interest in his or her account, partial distribution of any portion of the account balance, or annual installments over a fixed number of calendar quarters or years. In-service distributions and hardship withdrawals are available to participants in accordance with the provisions of the Plan. Payments are generally received in cash. Participants may elect to receive in-kind distributions of employer securities.
In-Kind Distributions
One of the Plan’s investment options is the Unitil Corporation Stock Fund, described below (comprised of Company shares and a money market fund). When receiving payment of benefits, a participant invested in the Unitil Corporation Stock Fund may elect to receive whole shares of stock (i.e. in-kind distributions), with any fractional shares, and the cash and cash equivalent portions of the underlying stock account, being distributed in cash.
Forfeitures
A participant who terminates his or her employment prior to becoming eligible for benefits and does not have a 100% vested right to Company contributions, forfeits the amounts not vested. Such forfeited amounts are used to reduce future Company contributions and pay Plan administrative expenses. There was $984 of forfeitures used to reduce Company contributions in 2013. There were $84 and $976 of unallocated forfeited amounts available to reduce future Company contributions at December 31, 2013 and 2012, respectively.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Investment Options
The Plan offers thirty investment portfolio or fund options consisting of registered investment companies (mutual funds), one pooled separate account (New York Life Anchor Account – Stable Value Fund) and the Unitil Corporation Stock Fund, described below (comprised of Company shares and a money market fund). Participants may change their investment options daily, and all investments within the Plan are participant-directed.
Unitil Corporation Stock Fund (Unitil Corporation, no par value common stock)
The Unitil Corporation Stock Fund (“Stock Fund”) is set up to hold common shares for the participants of the Plan and maintains liquidity in cash and cash equivalents to facilitate the timely settlement of participant transactions. Participants may allocate or withdraw their account balances between this fund and other funds without restrictions. At both December 31, 2013 and 2012, the Stock Fund had approximately 3% in cash and cash equivalents and 97% in Company stock.
NOTE B – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared under the accrual basis in accordance with accounting principles generally accepted in the United States of America.
Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The New York Life Stable Value Fund is a fully benefit-responsive investment contract. As such, the Statements of Net Assets Available for Benefits present the New York Life Stable Value Fund at fair value, based on information provided by the trustee regarding the underlying investments, as well as the adjustment from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is presented on a contract value basis.
Subsequent Events
The Plan has evaluated all events or transactions through the date of this filing. During this period, there were no material subsequent events, other than disclosed in Note A to the financial statements, that impacted the Plan’s financial statements.
Management Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Accordingly, actual results may differ from those estimates.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Investment Valuation and Income Recognition
Registered investment companies (mutual funds) and money market funds are valued at quoted market prices, which represent the net asset value of shares held by the Plan at year-end. Investments in the New York Life Stable Value Fund are valued at estimated fair value based on the fair value of the pooled separate account’s underlying investments by applying the Plan’s percentage ownership in the pooled separate account to the total fair value of the underlying investment securities, based on information provided by the trustee. (See Note F). The Unitil Corporation Stock Fund is stated at fair value as determined by quoted market prices of both Unitil common stock and cash equivalents held in the fund.
Interest income is recorded when earned. Dividends are recorded on the ex-dividend date. The Plan presents in the Statement of Changes in Net Assets Available for Benefits the net appreciation (depreciation) in the fair value of investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on those investments.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable from participants are recorded as distributions based on the terms of the Plan document.
Payment of Benefits
Benefit payments to participants are recorded when paid.
Expenses
Certain Plan expenses are paid by the Company as provided in the Administration Agreement between the Company and New York Life. Other Plan expenses are paid by the participants through the investment management fees charged by each mutual fund. Investment management fees are netted against the earnings of each fund through each fund’s expense ratio. A portion of the expense ratio is paid to New York Life to cover Plan administration expenses. If the Plan’s share of those fees exceeds the amount that is required by New York Life to perform its obligations as recordkeeper, the excess fees are returned to the Plan and are available to pay future Plan expenses. If the excess fees are not used for additional Plan expenses by the end of the quarter following the calendar year that they were generated, New York Life is directed by Unitil to reallocate the excess fees back to participant accounts on a pro rata basis.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE C – RISKS AND UNCERTAINTIES
The Plan provides for various investment options in any combination of stocks, fixed income securities, mutual funds and other investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amount reported in the Statements of Net Assets Available for Benefits.
NOTE D – PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan at any time subject to the provisions of ERISA with respect to its employees by a written resolution with a copy delivered to the Plan’s trustee. In the event of a Plan termination, participants would become fully vested in the balance of their accounts and the Plan assets would be distributed in accordance with the terms of the Plan Document.
NOTE E – TAX STATUS
The Internal Revenue Service (“IRS”) has determined and informed the Company by a letter dated October 15, 2009 that the Plan, including amendments made through January 1, 2009, and related trust are designed in accordance with applicable sections of the Code.
Although the Plan has been amended subsequent to January 1, 2009, the Company believes that the Plan is currently designed and being operated in compliance with applicable requirements of the Code.
Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to income tax examinations for years prior to 2010.
NOTE F – NEW YORK LIFE STABLE VALUE FUND
The investment in the Stable Value Fund is a pooled account with New York Life. New York Life maintains the Plan’s contributions in a separate account. The account is credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. The investment contract issuer, New York Life, is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan.
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
As described in Note B, because the investment contract is fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the investment contract. As such, the Statements of Net Assets Available for Benefits presents the New York Life Stable Value Fund at fair value as well as the adjustment from fair value to contract value, as shown in the table below.
| As of December 31, | ||||||||
| 2013 | 2012 | |||||||
| New York Life Stable Value Fund – Fair Value |
$ | 10,165,562 | $ | 11,572,057 | ||||
| Adjustment from Fair Value to Contract Value |
(48,561 | ) | (162,022 | ) | ||||
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| New York Life Stable Value Fund – Contract Value |
$ | 10,117,001 | $ | 11,410,035 | ||||
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|||||
Contract value, as reported to the Plan by New York Life, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investments at contract value.
Certain events could limit the ability of the Plan to transact at contract value with the issuer. Such events include the following: (1) total or partial Plan termination; (2) changes to the Plan’s prohibition on competing investment options; (3) mergers; (4) spin-offs; (5) lay-offs; (6) early retirement incentive programs; (7) sales or closings of all or part of a participating plan sponsor’s operations; (8) bankruptcy; (9) receivership; or (10) the failure of the trust to qualify for exemption from federal income taxes or any required prohibited transaction exemption under ERISA. The Plan administrator does not believe that the occurrence of any such event, which would limit the Plan’s ability to transact at contract value with participants, is probable.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on a formula agreed upon with the issuer, but it may not be less than zero percent. Such interest rates are reviewed on a daily basis for resetting. The table below shows the average yields for 2013 and 2012.
| Average Yields: |
2013 | 2012 | ||||||
| Based on actual earnings |
2.17 | % | 2.41 | % | ||||
| Based on interest rate credited to participants |
1.52 | % | 1.77 | % | ||||
NOTE G – FAIR VALUE OF PLAN ASSETS
The Plan follows the guidance set forth by the FASB for reporting fair value of Plan investments. The FASB guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
| Level 1 | – | Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. | ||
| Level 2 | – | Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | ||
| Level 3 | – | Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable. | ||
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs may be reduced for many instruments. This condition could cause an instrument to be reclassified from Level 1 to Level 2 or from Level 2 to Level 3.
Valuation Techniques
There have been no changes in the valuation techniques used during the current period.
Registered Investment Companies
These securities, consisting of mutual funds, are valued based on quoted prices from the market. These securities are categorized in Level 1 as they are actively traded and no valuation adjustments have been applied.
Unitil Corporation Stock Fund
This fund includes publicly traded common stock of Unitil Corporation valued at quoted prices available on the New York Stock Exchange (categorized as Level 1) as well as cash and cash equivalents held in the PIMCO Money Market Fund. The PIMCO Money Market Fund is categorized as Level 1 as it is actively traded and no valuation adjustments have been applied.
Stable Value Fund
Investments in the pooled separate account are valued by applying the Plan’s percentage ownership in the pooled separate account to the total fair value of the underlying investment securities, based on information provided by the trustee. These investments are categorized as Level 2.
13
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Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Assets measured at fair value on a recurring basis as of December 31, 2013 are as follows:
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Description |
Balance as of December 31, 2013 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Registered Investment Companies: |
||||||||||||||||
| Asset Allocation Funds |
$ | 4,217,689 | $ | 4,217,689 | $ | — | $ | — | ||||||||
| Growth & Income Funds |
10,391,558 | 10,391,558 | — | — | ||||||||||||
| Growth Funds |
17,329,389 | 17,329,389 | — | — | ||||||||||||
| Income Funds |
5,431,280 | 5,431,280 | — | |||||||||||||
| International Funds |
3,959,939 | 3,959,939 | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Registered Investment Companies |
41,329,855 | 41,329,855 | — | — | ||||||||||||
| Common Stock Fund: |
||||||||||||||||
| Unitil Corporation Common Stock |
7,372,513 | 7,372,513 | — | — | ||||||||||||
| PIMCO Money Market Fund |
252,115 | 252,115 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Common Stock Fund |
7,624,628 | 7,624,628 | — | — | ||||||||||||
| Stable Value Fund |
10,165,562 | — | 10,165,562 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Assets |
$ | 59,120,045 | $ | 48,954,483 | $ | 10,165,562 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
14
Table of Contents
Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
Assets measured at fair value on a recurring basis as of December 31, 2012 are as follows:
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Description |
Balance as of December 31, 2012 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Registered Investment Companies: |
||||||||||||||||
| Asset Allocation Funds |
$ | 2,564,665 | $ | 2,564,665 | $ | — | $ | — | ||||||||
| Growth & Income Funds |
6,976,371 | 6,976,371 | — | — | ||||||||||||
| Growth Funds |
12,408,632 | 12,408,632 | — | — | ||||||||||||
| Income Funds |
6,567,674 | 6,567,674 | — | — | ||||||||||||
| International Funds |
2,864,102 | 2,864,102 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Registered Investment Companies |
31,381,444 | 31,381,444 | — | — | ||||||||||||
| Common Stock Fund: |
||||||||||||||||
| Unitil Corporation Common Stock |
5,936,458 | 5,936,458 | — | — | ||||||||||||
| PIMCO Money Market Fund |
205,407 | 205,407 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Common Stock Fund |
6,141,865 | 6,141,865 | — | — | ||||||||||||
| Stable Value Fund |
11,572,057 | — | 11,572,057 | — | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Assets |
$ | 49,095,366 | $ | 37,523,309 | $ | 11,572,057 | $ | — | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
NOTE H – INVESTMENTS
The table below shows the net appreciation (depreciation) in fair value of the Plan’s investments (including gains and losses on investments realized, as well as held during the year) for the year ended December 31, 2013:
| For the Year Ended December 31, 2013 |
||||
| Registered Investment Companies |
$ | 5,160,127 | ||
| Unitil Corporation Common Stock |
1,057,938 | |||
|
|
|
|||
| Total |
$ | 6,218,065 | ||
|
|
|
|||
15
Table of Contents
Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
The following table shows investments that represent 5% or more of the Plan’s Net Assets Available for Benefits as of December 31, 2013 and 2012, respectively.
| Funds (at fair value): | 2013 | 2012 | ||||||||||||||
| Amount | % of Net Assets Available For Benefits |
Amount | % of Net Assets Available For Benefits |
|||||||||||||
| Growth Fund of America |
$ | 10,152,285 | 16.8 | % | $ | 7,791,054 | 15.5 | % | ||||||||
| New York Life Stable Value Fund |
$ | 10,117,001 | * | 16.7 | % | $ | 11,410,035 | * | 22.6 | % | ||||||
| Unitil Corporation Common Stock |
$ | 7,372,513 | 12.2 | % | $ | 5,936,458 | 11.8 | % | ||||||||
| Invesco Growth and Income Fund |
$ | 4,187,145 | 6.9 | % | $ | 3,007,751 | 6.0 | % | ||||||||
| American Balanced Fund |
$ | 3,403,976 | 5.6 | % | $ | 2,059,798 | 4.1 | % | ||||||||
| PIMCO Total Return Fund Admin |
$ | 2,509,437 | 4.1 | % | $ | 3,121,591 | 6.2 | % | ||||||||
| * | Amount represents contract value for the investment. |
NOTE I – UNITIL CORPORATION STOCK FUND
Information about the significant components of the change in net assets relating to the Unitil Corporation Stock Fund as of and for the year ended December 31, 2013 is as follows:
| Fair Value, beginning of year |
$ | 6,141,865 | ||
| Contributions: |
||||
| Participant |
274,096 | |||
| Employer |
126,293 | |||
| Loan Repayments |
113,486 | |||
|
|
|
|||
| Total Contributions |
513,875 | |||
|
|
|
|||
| Interest and Dividend Reinvestment Income |
317,565 | |||
| Net Appreciation in Fair Value |
1,057,938 | |||
| Benefits Paid to Participants |
(359,690 | ) | ||
| Loans to Participants |
(121,445 | ) | ||
| Interfund Transfers and Other |
74,520 | |||
|
|
|
|||
| Fair Value, end of year |
$ | 7,624,628 | ||
|
|
|
|||
NOTE J – PARTY-IN-INTEREST TRANSACTIONS
Certain Plan investments such as shares of registered investment companies in the Mainstay fund family and the New York Life Stable Value Fund are managed by affiliates of New York Life Trust Company, the trustee of the Plan, and therefore, these transactions qualify as party-in-interest transactions as that term is defined in Section 3(14) of ERISA. Also included in the Plan’s assets are common shares of Unitil Corporation, the Plan’s sponsor, and notes receivable from participants. These transactions also qualify as party-in-interest transactions.
16
Table of Contents
Unitil Corporation Tax Deferred Savings and Investment Plan
NOTES TO FINANCIAL STATEMENTS
December 31, 2013 and 2012
NOTE K – RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
| As of December 31, |
2013 | 2012 | ||||||
| Net assets available for benefits per the financial statements |
$ | 60,515,374 | $ | 50,425,776 | ||||
| Adjustment from contract value to fair value for interest in fully benefit-responsive contract |
48,561 | 162,022 | ||||||
|
|
|
|
|
|||||
| Net assets available for benefits per the Form 5500 |
$ | 60,563,935 | $ | 50,587,798 | ||||
|
|
|
|
|
|||||
The following is a reconciliation of the net increase in net assets available for benefits per the financial statements to the Form 5500:
| For the Year Ended December 31, |
2013 | |||
| Net increase in net assets available for benefits per the financial statements |
$ | 10,089,598 | ||
| Change in the adjustment from contract value to fair value for interest in fully benefit-responsive contract |
(113,461 | ) | ||
|
|
|
|||
| Net increase in net assets available for benefits per the Form 5500 |
$ | 9,976,137 | ||
|
|
|
|||
NOTE L – DELINQUENT CONTRIBUTIONS
As disclosed on Schedule H, Line 4a (see Supplemental Schedules), due to an inadvertent error, $28,968 of contributions and $7,796 of loan repayments from the week-ending May 4, 2013 for 222 Plan participants were not remitted to the Plan on a timely basis. These funds were remitted to the Plan on May 14, 2013, along with $1,103 of interest accrued on those contributions and loan repayments.
17
Table of Contents
18
Table of Contents
Unitil Corporation Tax Deferred Savings and Investment Plan
Employer Identification Number 02-0381573
Plan Number 002
SCHEDULE H, LINE 4A – SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS
For the year ended December 31, 2013
| Plan Year |
Participant Contributions Transferred Late to Plan* |
Contributions Not Corrected |
Contributions Corrected Outside VFCP |
Contributions Pending Correction in VFCP |
Total Fully Corrected Under VFCP and PTE 2002-51* |
|||||||||||||||
| 2013 |
$ | 36,764 | — | — | — | $ | 36,764 | |||||||||||||
| * | Indicates late participant loan repayments are included. |
See Note L for additional disclosure.
19
Table of Contents
Unitil Corporation Tax Deferred Savings and Investment Plan
Employer Identification Number 02-0381573
Plan Number 002
SCHEDULE H, LINE 4i – SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2013
| (a) | (b) | (c) | (d) | (e) | ||||||||||||||||
| Description of Investment | ||||||||||||||||||||
| Identity of Insurer, Borrower, Lessor or Similar Party |
Type of Investment |
Maturity Date |
Rate of Interest |
Collateral | Par or Maturity Value |
Cost | Current Value |
|||||||||||||
| Growth Fund of America |
Registered Investment Company |
n/a | n/a | n/a | n/a | n/a | $ | 10,152,285 | ||||||||||||
| Invesco Growth and Income Fund |
“ | n/a | n/a | n/a | n/a | n/a | 4,187,145 | |||||||||||||
| American Balanced Fund |
“ | n/a | n/a | n/a | n/a | n/a | 3,403,976 | |||||||||||||
| * |
MainStay S&P 500 Index Fund |
“ | n/a | n/a | n/a | n/a | n/a | 2,800,437 | ||||||||||||
| Manning & Napier World Opportunities Fund A |
“ | n/a | n/a | n/a | n/a | n/a | 2,753,960 | |||||||||||||
| PIMCO Real Return Fund Admin |
“ | n/a | n/a | n/a | n/a | n/a | 1,209,151 | |||||||||||||
| PIMCO Total Return Fund Admin |
“ | n/a | n/a | n/a | n/a | n/a | 2,509,437 | |||||||||||||
| Jennison Small Company Fund Z |
“ | n/a | n/a | n/a | n/a | n/a | 2,033,528 | |||||||||||||
| JP Morgan Mid Cap Value Fund |
“ | n/a | n/a | n/a | n/a | n/a | 1,743,651 | |||||||||||||
| * |
Mainstay High Yield Corporate Bond Fund |
“ | n/a | n/a | n/a | n/a | n/a | 1,375,163 | ||||||||||||
| Columbia Acorn Select Fund Z |
“ | n/a | n/a | n/a | n/a | n/a | 1,231,264 | |||||||||||||
| Delaware Small Value Fund A |
“ | n/a | n/a | n/a | n/a | n/a | 1,121,347 | |||||||||||||
| BlackRock LifePath Retirement Fund |
“ | n/a | n/a | n/a | n/a | n/a | 387,408 | |||||||||||||
| BlackRock LifePath 2020 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 1,699,334 | |||||||||||||
| BlackRock LifePath 2025 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 280,962 | |||||||||||||
| BlackRock LifePath 2030 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 1,024,330 | |||||||||||||
| BlackRock LifePath 2035 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 111,227 | |||||||||||||
| BlackRock LifePath 2040 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 549,322 | |||||||||||||
| BlackRock LifePath 2045 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 1,484 | |||||||||||||
| BlackRock LifePath 2050 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 151,073 | |||||||||||||
| BlackRock LifePath 2055 Fund |
“ | n/a | n/a | n/a | n/a | n/a | 12,549 | |||||||||||||
| Loomis Sayles Core Plus Bond Fund A |
“ | n/a | n/a | n/a | n/a | n/a | 337,529 | |||||||||||||
| Dreyfus Appreciation Fund |
“ | n/a | n/a | n/a | n/a | n/a | 775,830 | |||||||||||||
| Oppenheimer Developing Markets Fund A |
“ | n/a | n/a | n/a | n/a | n/a | 504,077 | |||||||||||||
| MFS International Value Fund A |
“ | n/a | n/a | n/a | n/a | n/a | 496,329 | |||||||||||||
| Cohen & Steers Institutional Realty Shares |
“ | n/a | n/a | n/a | n/a | n/a | 271,484 | |||||||||||||
| Columbia Acorn International Fund Z |
“ | n/a | n/a | n/a | n/a | n/a | 205,573 | |||||||||||||
| PIMCO Money Market Fund Admin. |
“ | n/a | n/a | n/a | n/a | n/a | 252,115 | |||||||||||||
| * |
New York Life Stable Value Fund |
Pooled Separate Account |
n/a | 2.17% | n/a | n/a | n/a | 10,165,562 | ||||||||||||
| * |
Unitil Corporation Common Stock |
Common Stock |
n/a | n/a | n/a | n/a | n/a | 7,372,513 | ||||||||||||
| * |
Notes Receivable from Participants |
Participant Loans |
varies | 4.25% - 9.25% | n/a | n/a | $ | — | 1,443,890 | |||||||||||
|
|
|
|||||||||||||||||||
| Total |
$ | 60,563,935 | ||||||||||||||||||
|
|
|
|||||||||||||||||||
| * | Represents a party-in-interest to the Plan |
20
Table of Contents
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
| UNITIL CORPORATION TAX DEFERRED SAVINGS AND INVESTMENT PLAN | ||||||
| (Name of Plan) | ||||||
| Date: | June 11, 2014 |
/s/ Mark H. Collin | ||||
| Mark H. Collin | ||||||
| Chief Financial Officer | ||||||
21
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Members of the Unitil corporation 401(k) Plan Committee and the Plan Administrator of the Unitil Corporation Tax Deferred Savings and Investment Plan:
We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-42266) pertaining to the Unitil Corporation Tax Deferred Savings and Investment Plan of our report dated June 11, 2014 relating to the statement of net assets available for plan benefits of the Unitil Corporation Tax Deferred Savings and Investment Plan as of December 31, 2013 and the related statement of changes in net assets available for plan benefits for the year then ended, included in this annual report on Form 11-K.
/s/ Caron & Bletzer, PLLC
Kingston, NH
June 11, 2014
Exhibit 23.2
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in Registration Statement (No. 333-42266) on Form S-8 of Unitil Corporation of our report dated June 20, 2013, relating to our audit of the financial statements and supplemental schedule of the Unitil Corporation Tax Deferred Savings and Investment Plan, which appears in this Annual Report on Form 11-K of the Unitil Corporation Tax Deferred Savings and Investment Plan for the year ended December 31, 2012.
/s/ McGladrey LLP
Boston, Massachusetts
June 11, 2014