Form 11-K
Table of Contents

 

 

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

C O N T E N T S

 

     Page  

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

     1   

FINANCIAL STATEMENTS

  

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   

NOTES TO FINANCIAL STATEMENTS

     5-17   

SUPPLEMENTAL INFORMATION

     18   

SCHEDULE H, LINE 4a – SCHEDULE OF DELINQUENT PARTICIPANT CONTRIBUTIONS FOR THE YEAR ENDED DECEMBER 31, 2013

     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.

  

SIGNATURES

     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

 

1


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, 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

 

2


Table of Contents

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   
  

 

 

   

 

 

 

Total Registered Investment Companies

     41,329,855        31,381,444   
  

 

 

   

 

 

 

New York Life Stable Value Fund

     10,165,562        11,572,057   
  

 

 

   

 

 

 

Unitil Corporation Stock Fund:

    

Unitil Corporation Common Stock

     7,372,513        5,936,458   

PIMCO Money Market Fund Admin

     252,115        205,407   
  

 

 

   

 

 

 

Total Unitil Corporation Stock Fund

     7,624,628        6,141,865   
  

 

 

   

 

 

 

Total Investments at Fair Value

     59,120,045        49,095,366   
  

 

 

   

 

 

 

Notes Receivable from Participants

     1,443,890        1,492,432   
  

 

 

   

 

 

 

Net Assets Reflecting Investments at Fair Value

     60,563,935        50,587,798   
  

 

 

   

 

 

 

Adjustment from Fair Value to Contract Value for Interest in Fully Benefit-Responsive Contract

     (48,561     (162,022
  

 

 

   

 

 

 

Net Assets Available for Benefits

   $ 60,515,374      $ 50,425,776   
  

 

 

   

 

 

 

(The accompanying notes are an integral part of these financial statements.)

 

3


Table of Contents

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   
  

 

 

 

Total investment income

     8,729,146   
  

 

 

 

Interest on notes receivable from participants

     64,756   
  

 

 

 

Contributions:

  

Participant

     2,887,209   

Employer

     1,596,443   

Participant rollovers

     212,103   
  

 

 

 

Total contributions

     4,695,755   
  

 

 

 

Total additions

     13,489,657   
  

 

 

 

Deductions from net assets attributed to:

  

Benefits paid to participants

     (1,494,053

Rollover distributions

     (1,810,418

Administrative fees

     (60,391

In-kind distributions

     (35,197
  

 

 

 

Total deductions

     (3,400,059
  

 

 

 

Net increase

     10,089,598   

Net assets available for benefits:

  

Beginning of year

     50,425,776   
  

 

 

 

End of year

   $ 60,515,374   
  

 

 

 

(The accompanying notes are an integral part of these financial statements.)

 

4


Table of Contents

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.

 

5


Table of Contents

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.

 

6


Table of Contents

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.

 

7


Table of Contents

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.

 

8


Table of Contents

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.

 

9


Table of Contents

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.

 

10


Table of Contents

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.

 

11


Table of Contents

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
  

 

 

   

 

 

 

New York Life Stable Value Fund – Contract Value

   $ 10,117,001      $ 11,410,035   
  

 

 

   

 

 

 

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.

 

12


Table of Contents

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


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, 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

SUPPLEMENTAL INFORMATION

 

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

SIGNATURES

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

EX-23.1

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

EX-23.2

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