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, 2011

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:

THE 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 Firms

The Unitil Corporation

Tax Deferred

Savings and Investment Plan

December 31, 2011 and 2010

C O N T E N T S

 

     Page

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

   1

FINANCIAL STATEMENTS

  

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS - DECEMBER 31, 2011 AND 2010

   2

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - YEAR ENDED DECEMBER 31, 2011

   3

NOTES TO FINANCIAL STATEMENTS

   4-18

SUPPLEMENTAL INFORMATION

  

SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2011

   20

SCHEDULES REQUIRED UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, OTHER THAN THE SCHEDULE 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


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 statements of net assets available for benefits of the Unitil Corporation Tax Deferred Savings and Investment Plan (the “Plan”) as of December 31, 2011 and 2010, and the related statement of changes in net assets available for benefits for the year ended December 31, 2011. 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 audits.

We conducted our audits in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are 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 audits 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. 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 audits provide 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 Unitil Corporation Tax Deferred Savings and Investment Plan as of December 31, 2011 and 2010, and the changes in net assets available for benefits for the year ended December 31, 2011, in conformity with U.S. generally accepted accounting principles.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2011 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the United States Department of Labor Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ McGladrey LLP

Boston, Massachusetts

June 27, 2012

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

December 31,

 

     2011      2010  

Investments at Fair Value:

     

Registered Investment Companies:

     

American Balanced Fund

   $ 1,632,274       $ 1,782,424   

Growth Fund of America

     6,794,598         7,898,754   

MainStay High Yield Corporate Bond Fund

     1,065,306         1,042,552   

PIMCO Real Return Fund

     1,354,503         870,828   

PIMCO Total Return Fund

     2,741,442         2,436,980   

Columbia Acorn Select Fund Z

     415,212         496,795   

BlackRock LifePath Retirement Fund

     462,520         211,563   

BlackRock LifePath 2020 Fund

     856,270         676,928   

BlackRock LifePath 2030 Fund

     548,908         436,457   

BlackRock LifePath 2040 Fund

     334,297         323,983   

MainStay S&P 500 Index Fund

     1,654,586         1,412,774   

Columbia Mid Cap Index Fund

     602,166         499,329   

Van Kampen Growth and Income Fund

     2,812,155         3,018,953   

Davis New York Venture Fund

     481,977         735,742   

Jennison Small Company Fund Z

     715,182         643,500   

Third Avenue Small Cap Value Fund

     208,686         134,495   

JP Morgan Mid Cap Value Fund

     845,114         747,294   

Royce Low-Priced Stock Fund

     1,168,847         1,357,697   

Manning & Napier World Opportunities Fund A

     1,962,377         2,639,405   
  

 

 

    

 

 

 

Total Registered Investment Companies

     26,656,420         27,366,453   
  

 

 

    

 

 

 

New York Life Stable Value Fund

     10,763,723         8,748,803   

Unitil Corporation Stock Fund:

     

Unitil Corporation Common Stock

     6,071,532         4,866,815   

MainStay Cash Reserves Fund I

     213,573         178,985   
  

 

 

    

 

 

 

Total Unitil Corporation Stock Fund

     6,285,105         5,045,800   
  

 

 

    

 

 

 

Total Investments at Fair Value

     43,705,248         41,161,056   
  

 

 

    

 

 

 

Notes Receivable from Participants

     1,226,998         1,143,489   

Contributions Receivable - Employer

     —           2,519   

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

     112,020         100,886   
  

 

 

    

 

 

 

Net Assets Available for Benefits

   $ 45,044,266       $ 42,407,950   
  

 

 

    

 

 

 

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

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

For the year ended December 31,

 

     2011  

Additions to net assets attributed to:

  

Investment income:

  

Net depreciation in fair value of investments

   $ (354,775

Interest and dividends

     1,321,695   
  

 

 

 

Total investment income

     966,920   
  

 

 

 

Interest on notes receivable from participants

     58,160   
  

 

 

 

Contributions:

  

Participant

     2,459,911   

Employer

     1,200,476   

Participant rollovers

     360,958   
  

 

 

 

Total contributions

     4,021,345   
  

 

 

 

Total additions

     5,046,425   
  

 

 

 

Deductions from net assets attributed to:

  

Benefits paid to participants

     (1,199,824

Rollover distributions

     (1,157,795

In-kind distributions

     (52,490
  

 

 

 

Total deductions

     (2,410,109
  

 

 

 

Net increase

     2,636,316   

Net assets available for benefits:

  

Beginning of year

     42,407,950   
  

 

 

 

End of year

   $ 45,044,266   
  

 

 

 

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

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

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.

In September 2009, the Company simultaneously amended its 401(k) Plan and its defined benefit pension plan (“Pension Plan”), effective January 1, 2010. The changes to the Company’s 401(k) Plan, resulting from these amendments, were as follows:

For current non-union employees who elected to stay with the Company’s existing Pension Plan, there were no changes in the 401(k) Plan. For those employees, the Company will continue to match contributions, with a maximum matching contribution of 3% of current compensation and those participants will be 100% vested in these company matching contributions once they have completed three years of service.

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 Company is providing the following enhancements to the 401(k) Plan, effective January 1, 2010:

 

   

The Company will contribute 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 will increase the matching contributions from 3% of base pay to 6% of base pay. This will be a 100% match of the elective deferrals up to 6% of compensation.

 

   

All Company contributions will be 100% vested at all times.

 

   

New non-union employees will be 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 non-union employee’s contribution is 10% of pay. Non-union employees may elect to opt-out of the automatic enrollment and/or automatic increase features of the enhanced 401(k) Plan.

In September 2010, the Company simultaneously amended its 401(k) Plan and its Pension Plan, effective January 1, 2011. The changes to the Company’s 401(k) Plan, resulting from these amendments, were as follows:

For union employees who are members of the United Steelworkers union (“USWA”) and who elected to stay with the Company’s existing Pension Plan, there were no changes in the 401(k) Plan. For those employees, the Company will continue to match contributions, with a maximum matching contribution of 50% of the first 5% of current compensation and those participants will be 100% vested in these company matching contributions at all times.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

For union employees who are members of the USWA and 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 Company is providing the following enhancements to the 401(k) Plan, effective January 1, 2011:

 

   

The Company will contribute 4% of base pay each year, regardless of whether or not the employee elects to contribute to the 401(k) Plan.

 

   

The Company will increase the matching contributions from 2.5% of base pay to 6% of base pay. This will be a 100% match of the elective deferrals up to 6% of compensation.

 

   

All Company contributions will be 100% vested at all times.

 

   

New employees who are USWA members will be 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 of the enhanced 401(k) Plan.

General

The Plan is a defined contribution plan covering substantially 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”) (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, as discussed above. 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.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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.

Employees who are members of Utility Workers Union of America (“UWUA”) Local 341 are eligible to participate on the first day of the month following completion of one (1) year of service.

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 or Granite State who are members of UWUA Local 341 or employees of Northern Utilities who are members of the 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.

Participants who are age 50 or will turn age 50 by the end of the Plan year 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.

As discussed above, new non-union employees and new USWA members will be 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 of the enhanced 401(k) Plan.

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 above and below. Overtime pay and commissions are not included in the definition of compensation eligible for matching purposes.

Employees of Northern Utilities or Granite State who are members of UWUA Local 341 or 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

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

Document. As discussed above, 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 Company will increase the matching contributions from 2.5% to 6% of base pay and the Company will contribute 4% of base pay each year, regardless of whether the employee elects to contribute to the 401(k) Plan. Overtime pay and commissions are not included in the definition of compensation eligible for matching purposes.

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. 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 above. 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.

Employees who are enrolled in the enhanced 401(k) 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 preceeding 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 monthly payroll deductions. As of December 31, 2011, there are 164 loans to participants, maturing from 2012 to 2025 with interest rates ranging between 4.25% and 9.25%.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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. There were no forfeitures used to reduce future Company contributions in 2011. There were $11,969 and $0 of unallocated forfeited amounts available to reduce future Company contributions at December 31, 2011 and 2010, respectively.

Investment Options

The Plan offers twenty-one 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 December 31, 2011 and 2010, the Stock Fund had approximately 3% and 4%, respectively, in cash and cash equivalents and 97% and 96%, respectively, in Company stock.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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 presents the New York Life Stable Value Fund at fair value 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 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.

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 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.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

Payment of Benefits

Benefit payments to participants are recorded when paid.

Expenses

The Plan’s expenses are paid by the Company, as provided in the Plan Document. Investment management fees are netted against the earnings of each fund.

New Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs”, (ASU 2011-04). This update changes certain fair value measurement principles and enhances the disclosure requirements particularly for Level 3 fair value measurements. This update is effective for reporting periods beginning on or after December 15, 2011, with early adoption prohibited, and requires prospective application. The Company does not expect that the adoption of ASU 2011-04 will have a significant, if any, impact on the Plan’s net assets available for benefits and changes in net assets available for benefits.

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.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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, 2011, 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 2007.

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.

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,  
     2011      2010  

New York Life Stable Value Fund - Fair Value

   $ 10,763,723       $ 8,748,803   

Adjustment from Fair Value to Contract Value

     112,020         100,886   
  

 

 

    

 

 

 

New York Life Stable Value Fund - Contract Value

   $ 10,875,743       $ 8,849,689   
  

 

 

    

 

 

 

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.

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.

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

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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.

 

Average Yields:

   2011     2010  

Based on actual earnings

     3.14     2.64

Based on interest rate credited to participants

     2.64     2.14

NOTE G - FAIR VALUE OF PLAN ASSETS

The Plan follows the guidance set forth by the FASB for 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.

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.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

Valuation Techniques

There have been no changes in the valuation techniques used during the current period.

Trading Securities (Mutual Funds)

These equity securities are valued based on quoted prices from the market and include mutual funds. 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 MainStay Cash Reserve Fund I. The MainStay Cash Reserve Fund I 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 based on the fair value of the underlying investments based on information provided by the trustee. These investments are categorized as Level 2.

 

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The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

Assets measured at fair value on a recurring basis as of December 31, 2011 are as follows:

 

     Fair Value Measurements at Reporting Date Using  

Description

   Balance as of
December 31, 2011
     Quotes Prices
in Active
Markets for
Identical Assets

(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable Inputs
(Level 3)
 

Mutual Funds:

           

Asset Allocation Funds

   $ 2,201,995       $ 2,201,995       $ —         $ —     

Growth & Income Funds

     6,701,181         6,701,181         —           —     

Growth Funds

     10,629,616         10,629,616         —           —     

Income Funds

     5,161,251         5,161,251         

International Fund

     1,962,377         1,962,377         
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Mutual Funds

     26,656,420         26,656,420         —           —     

Common Stock Fund:

           

Unitil Corporation Common Stock

     6,071,532         6,071,532         —           —     

MainStay Cash Reserve Fund I

     213,573         213,573         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Common Stock Fund

     6,285,105         6,285,105         —           —     

Stable Value Fund

     10,763,723         —           10,763,723         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 43,705,248       $ 32,941,525       $ 10,763,723       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

Assets measured at fair value on a recurring basis as of December 31, 2010 are as follows:

 

     Fair Value Measurements at Reporting Date Using  

Description

   Balance as of
December 31, 2010
     Quotes Prices
in Active
Markets for
Identical Assets
(Level 1)
     Significant Other
Observable Inputs
(Level 2)
     Significant
Unobservable Inputs
(Level 3)
 

Mutual Funds:

           

Asset Allocation Funds

   $ 1,648,931       $ 1,648,931         —         $ —     

Growth & Income Funds

     6,713,480         6,713,480         —           —     

Growth Funds

     12,014,277         12,014,277         —           —     

Income Funds

     4,350,360         4,350,360         

International Fund

     2,639,405         2,639,405         
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Mutual Funds

     27,366,453         27,366,453         —           —     

Common Stock Fund:

           

Unitil Corporation Common Stock

     4,866,815         4,866,815         —           —     

MainStay Cash Reserve Fund I

     178,985         178,985         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Common Stock Fund

     5,045,800         5,045,800         —           —     

Stable Value Fund

     8,748,803         —           8,748,803         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Assets

   $ 41,161,056       $ 32,412,253       $ 8,748,803       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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, 2011:

 

     For the Year Ended
December 31, 2011
 

Registered Investment Companies (at fair value):

  

American Balanced Fund

   $ 28,495   

Growth Fund of America

     (417,668

MainStay High Yield Corporate Bond Fund

     (20,700

PIMCO Real Return Fund

     32,265   

PIMCO Total Return Fund

     5,617   

Columbia Acorn Select Fund Z

     (72,703

BlackRock LifePath Retirement Fund

     (5,851

BlackRock LifePath 2020 Fund

     (42,245

BlackRock LifePath 2030 Fund

     (19,744

BlackRock LifePath 2040 Fund

     (12,429

MainStay S&P 500 Index Fund

     9,973   

Columbia Mid Cap Index Fund

     (38,722

Van Kampen Growth and Income Fund

     (101,550

Davis New York Venture Fund

     (68,209

Jennison Small Company Fund Z

     (18,319

Third Avenue Small Cap Value Fund

     (10,381

JP Morgan Mid Cap Value Fund

     8,602   

Royce Low-Priced Stock Fund

     (272,742

Manning & Napier World Opportunities Fund A

     (533,579
  

 

 

 
     (1,549,890

Common Stock Fund (at fair value):

  

Unitil Corporation Stock Fund

     1,195,115   
  

 

 

 

Total

   $ (354,775
  

 

 

 

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

The following table shows investments that represent 5% or more of the Plan’s Net Assets Available for Benefits as of December 31, 2011 and 2010, respectively.

 

Funds (at fair value):    2011     2010  
     Amount     % of Net
Assets Available
For Benefits
    Amount     % of Net
Assets Available
For Benefits
 

New York Life Stable Value Fund

   $     10,875,743     24.1   $     8,849,689     20.9

Growth Fund of America

   $ 6,794,598        15.1   $ 7,898,754        18.6

Unitil Corporation Stock Fund

   $ 6,285,105        14.0   $ 5,045,800        11.9

Van Kampen Growth and Income Fund

   $ 2,812,155        6.2   $ 3,018,953        7.1

PIMCO Total Return Fund

   $ 2,741,442        6.1   $ 2,436,980        5.7

Manning & Napier World Opportunities Fund A

   $ 1,962,377 **      4.4   $ 2,639,405        6.2

 

* Amount represents contract value for the investment.
** Did not represent 5% or more of the Plan’s Net Assets Available for Benefits as of December 31, 2011, only as of December 31, 2010.

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, 2011 is as follows:

 

Fair Value, beginning of year

   $ 5,045,800   

Contributions:

  

Participant

     212,556   

Employer

     96,015   

Rollover

     2,136   

Loan Repayments

     102,034   
  

 

 

 

Total Contributions

     412,741   
  

 

 

 

Interest and Dividend Reinvestment Income

     291,657   

Net Appreciation in Fair Value

     1,195,115   

Benefits Paid to Participants

     (220,544

Loans to Participants

     (96,964

Interfund Transfers and Other

     (342,700
  

 

 

 

Fair Value, end of year

   $ 6,285,105   
  

 

 

 

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

 

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Table of Contents

The Unitil Corporation Tax Deferred Savings and Investment Plan

NOTES TO FINANCIAL STATEMENTS

December 31, 2011 and 2010

 

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.

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,

   2011     2010  

Net assets available for benefits per the financial statements

   $ 45,044,266      $ 42,407,950   

Differences in:

    

Investments

     1,226,998        1,143,489   

Notes receivable from participants

     (1,226,998     (1,143,489

Adjustment from contract value to fair value for interest in fully benefit-responsive contract

     (112,020     (100,886
  

 

 

   

 

 

 

Net assets available for benefits per the Form 5500

   $ 44,932,246      $ 42,307,064   
  

 

 

   

 

 

 

The following is a reconciliation of the net increase in net assets available for benefits per the financial statements to the Form 5500:

 

As of December 31,

   2011  

Net increase in net assets available for benefits per the financial statements

   $ 2,636,316   

Increase in the adjustment from contract value to fair value for interest in fully benefit-responsive contract

     (11,134
  

 

 

 

Net increase in net assets available for benefits per the Form 5500

   $ 2,625,182   
  

 

 

 

 

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SUPPLEMENTAL INFORMATION

 

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Table of Contents

The 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, 2011

 

(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
 
  

American Balanced Fund

   Registered
Investment
Company
     n/a         n/a        n/a         n/a         n/a       $ 1,632,274   
  

Growth Fund of America

        n/a         n/a        n/a         n/a         n/a         6,794,598   

*

  

Mainstay High Yield Corporate Bond Fund

        n/a         n/a        n/a         n/a         n/a         1,065,306   
  

PIMCO Real Return Fund

        n/a         n/a        n/a         n/a         n/a         1,354,503   
  

PIMCO Total Return Fund

        n/a         n/a        n/a         n/a         n/a         2,741,442   
  

Columbia Acorn Select Fund Z

        n/a         n/a        n/a         n/a         n/a         415,212   
  

BlackRock LifePath Retirement Fund

        n/a         n/a        n/a         n/a         n/a         462,520   
  

BlackRock LifePath 2020 Fund

        n/a         n/a        n/a         n/a         n/a         856,270   
  

BlackRock LifePath 2030 Fund

        n/a         n/a        n/a         n/a         n/a         548,908   
  

BlackRock LifePath 2040 Fund

        n/a         n/a        n/a         n/a         n/a         334,297   

*

  

MainStay S&P 500 Index Fund

        n/a         n/a        n/a         n/a         n/a         1,654,586   
  

Columbia Mid Cap Index Fund

        n/a         n/a        n/a         n/a         n/a         602,166   
  

Van Kampen Growth and Income Fund

        n/a         n/a        n/a         n/a         n/a         2,812,155   
  

Davis New York Venture Fund

        n/a         n/a        n/a         n/a         n/a         481,977   
  

Jennison Small Company Fund Z

        n/a         n/a        n/a         n/a         n/a         715,182   
  

Third Avenue Small Cap Value Fund

        n/a         n/a        n/a         n/a         n/a         208,686   
  

JP Morgan Mid Cap Value Fund

        n/a         n/a        n/a         n/a         n/a         845,114   
  

Royce Low-Priced Stock Fund

        n/a         n/a        n/a         n/a         n/a         1,168,847   
  

Manning & Napier World Opportunities Fund A

        n/a         n/a        n/a         n/a         n/a         1,962,377   

*

  

New York Life Stable Value Fund

   Pooled

Separate

Account

     n/a         3.14     n/a         n/a         n/a         10,763,723   

*

  

Unitil Corporation Stock Fund

   Unitized

Stock Fund

     n/a         n/a        n/a         n/a         n/a         6,285,105   

*

  

Notes Receivable from Participants

   Participant

Loans

     varies         4.25% - 9.25     n/a         n/a       $ —           1,226,998   
                      

 

 

 
  

Total

                    $ 44,932,246   
                      

 

 

 

*

  

Represents a party-in-interest to the Plan

                   

 

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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.

 

   

THE UNITIL CORPORATION

TAX DEFERRED SAVINGS AND

INVESTMENT PLAN

    (Name of Plan)

Date: June 27, 2012

   

/s/    Mark H. Collin

           Mark H. Collin
                        Chief Financial Officer

 

21