Interest expense remained flat in 2017 when compared to 2016 due to lower than
anticipated capital expenditures in 2017. This was a result of unanticipated deviations
in project timing and/or deferrals of project start-up, for the just completed construction
season.
Pre-tax loss for the fourth quarter decreased to $2.0 million in 2017 versus $2.2 million
in 2016, due to an increase in revenues which was offset by increased operating
expenses, primarily property taxes and depreciation costs, year-over-year.
The pre-tax loss for the year increased from $1.1 million in 2016 to $5.3 million in
2017 due to the $1.8 million in lower revenues discussed previously, as well as the non-
repetitive nature of the $0.9 million in Other Income in 2016, which was primarily
related to the sale of the former distribution facility in 2016. These reductions in
revenues and other income, coupled with the increased operating costs year-over-year,
result in the greater pre-tax loss in 2017.
Dividends paid to the sole shareholder in both 2017 and 2016 were consistent with, and
were paid pursuant to, the CBFRR structure provided for in the New Hampshire Public
Utilities Commission’s Order approving the City’s ownership of the Company.
Income Tax Provision in the current year reflects the tax accounting for the
amortization of the Municipal Acquisition Regulatory Asset, which is not deductible
for tax purposes, and as such, constitutes a permanent difference in the deductibility of
those amortization expenses for tax purposes, as opposed to their inclusion in the
GAAP based financial statements. The Income Tax Provision (Benefit) also reflects
the impact of the 2017 Tax Cuts and Jobs Act which made broad and complex changes
to the U.S. tax code which included: (1) reducing the U.S. federal corporate tax rate
from 35% to 21%; (2) elimination of the corporate alternative minimum tax (AMT) and
changing how existing AMT credits can be realized; (3) changing the rules related to
usage and limitation of net operating loss carryforward; and (4) changing the rules
related to the limitation of interest expense deductions. Therefore, the year-to-date
results reflect a tax provision of approximately -20.8% of pre-tax income for 2017,
compared to the statutory tax rate expense of 39.4%.
Earnings Before Interest, Taxes, Depreciation and Amortization increased in the fourth
quarter from $2.3 million in 2016 to $2.7 million in 2017 due to increased revenues as
discussed previously, offset by operating expense variations (excluding depreciation
and interest).
Earnings Before Interest, Taxes, Depreciation and Amortization for 2017 decreased
from 2016 by approximately $3.0 million, again due to: (1) lower revenues earned
year-over-year, (2) the income associated with the “one time” sale of the former
distribution facility in 2016, and (3) operating expense increases, excluding interest
expense.
