ARTESIAN RESOURCES CORP — Regulatory Filings 2009

Jul 1, 2009

11-K 1 form11-k_dec2008.htm FORM 11-K DECEMBER 2008 form11-k_dec2008.htm Licensed to: Artesian Water Document Created using EDGARizer 4.0.3.0 Copyright 1995 - 2008 EDGARfilings, Ltd., an IEC company. All rights reserved

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 11-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2008

Or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _ to ___

Commission file number 000-18516

A. FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN, IF DIFFERENT FROM THAT OF THE ISSUER NAMED BELOW:

ARTESIAN RETIREMENT PLAN

B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE:

ARTESIAN RESOURCES CORPORATION

664 CHURCHMANS RD.

NEWARK, DE 19702

Artesian Resources Corporation

Retirement Plan

Financial Statements

December 31, 2008

Table of Contents

	Page
Independent
Auditors’ Report	2
Financial
Statements
Statement
of Net Assets Available for Benefits — December 31,
2008	3
Statement
of Net Assets Available for Benefits — December 31,
2007	4
Statement
of Changes in Net Assets Available for Benefits For the Year Ended
December 31, 2008	5
Notes
to the Financial Statements	6-15
Supplementary
Information
Schedule H,
Part IV, Line 4i - Schedule of Assets Held for Investment
Purposes	16
Consent
of McBride Shopa and
Company

Independent Auditors’ Report

Participants, Board of Trustees and

Administrator of Artesian Resources Corporation

Retirement Plan

We have audited the accompanying statements of net assets available for benefits of Artesian Resources Corporation Retirement Plan as of December 31, 2008 and 2007, and the related statement of changes in net assets available for benefits for the year ended December 31, 2008. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit 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 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 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 Artesian Resources Corporation Retirement Plan as of December 31, 2008 and 2007, and the changes in net assets available for plan benefits for the year ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes, referred to as, “supplementary information”, 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 Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplementary information is the responsibility of the Plan’s management. The supplementary information has been subjected to the auditing procedures applied in the audit 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.

McBride Shopa and Company, P.A.

Wilmington, Delaware

July 1, 2009

2

Table of Contents

Artesian Resources Corporation

Retirement Plan

Statement of Net Assets Available for Benefits

December 31, 2008

		Non- — Participant	Participant	Loan
	Total	Directed	Directed	Fund
ASSETS
Cash	$ 1,435	$ 16	$ 1,419	$ 0
Investments,
at fair value
Artesian
Resources Corp. Class A non-voting common stock	2,453,097	1,009	2,452,088	0
Collective
trusts	2,509,137	792,022	1,717,115	0
Mutual
funds	13,257,984	4,029,127	9,228,857	0
Investments,
at cost that approximate fair value
Loans
to participants	242,391	0	0	242,391
Total
investments	18,464,044	4,822,174	13,399,479	242,391
Contribution
receivable
Employer	146,851	138,065	8,786	0
Participants	0	0	0	0
Total
assets	18,610,895	4,960,239	13,408,265	242,391
LIABILITIES	0	0	0	0
NET
ASSETS AVAILABLE FOR BENEFITS	$ 18,610,895	$ 4,960,239	$ 13,408,265	$ 242,391

See accompanying notes to financial statements.

3

Table of Contents

Artesian Resources Corporation

Retirement Plan

Statement of Net Assets Available for Benefits

December 31, 2007

		Non- — Participant	Participant	Loan
	Total	Directed	Directed	Fund
ASSETS
Cash	$ 21,130	$ 3,727	$ 17,403	$ 0
Investments,
at fair value
Artesian
Resources Corp. Class A non-voting common stock	2,651,518	382,623	2,268,895	0
Collective
trusts	1,818,051	552,921	1,265,130	0
Mutual
funds	19,906,221	6,009,601	13,896,620	0
Investments,
at cost that approximate fair value
Loans
to participants	268,335	0	0	268,335
Total
investments	24,665,255	6,948,872	17,448,048	268,335
Contribution
receivable
Employer	186,551	186,551	0	0
Participants	0	0	0	0
Total
assets	24,851,806	7,135,423	17,448,048	268,335
LIABILITIES
Distributions
Payable	13,937	760	13,177	0
NET
ASSETS AVAILABLE FOR BENEFITS	$ 24,837,869	$ 7,134,663	$ 17,434,871	$ 268,335

See accompanying notes to financial statements.

4

Table of Contents

Artesian Resources Corporation

Retirement Plan

Statement of Changes in Net Assets Available for Benefits

For the Year Ended December 31, 2008

		Participant		Participant		Loan
	Total	Directed		Directed		Fund
ADDITIONS
TO NET ASSETS ATTRIBUTED TO
Net
investment income
Artesian
Resources Corp. Class A non-voting common stock
dividends	$ 101,479	$	3,500	$	97,979	$	0
Interest
and dividend income from other investments	803,282		387,711		415,571		0
Interest
income from participant loans	20,618		0		0		20,618
Net
appreciation (depreciation) in fair value of investments	(8,447,987	)	(2,571,379	)	(5,876,608	)	0
Contributions
Employer	828,896		525,671		303,225		0
Participants	978,084		0		978,084		0
	(5,715,628	)	(1,654,497	)	(4,081,749	)	20,618
DEDUCTIONS
FROM NET ASSETS ATTRIBUTED TO
Participant
Distributions	(510,618	)	(151,038	)	(334,252	)	(25,328	)
Administrative
Expense	(728	)	(224	)	(504	)	0
Transfers	0		(368,665	)	368,665		0
Loan
Transfers	0		0		21,234		(21,234	)
	(511,346	)	(519,927	)	55,143		(46,562	)
NET
INCREASE/(DECREASE)	(6,226,974	)	(2,174,424	)	(4,026,606	)	(25,944	)
NET
ASSETS AVAILABLE FOR BENEFITS- BEGINNING OF YEAR	24,837,869		7,134,663		17,434,871		268,335
NET
ASSETS AVAILABLE FOR BENEFITS — END OF YEAR	$ 18,610,895	$	4,960,239	$	13,408,265	$	242,391

See accompanying notes to financial statements.

5

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements

Note A — Description of the Plan

1.	General
	Effective
July 1, 1984,
Artesian Resources Corporation (the Company) established the Artesian
Resources Corporation Retirement Plan (the Plan) as a defined contribution
retirement plan for its employees. Pursuant to Internal Revenue Code
(IRC) Section 401(k), the Plan permits employees to exclude
contributions to the Plan from their current taxable income, subject
to
certain limits. The Plan is administered by a Committee of Trustees,
which
consists of six members appointed by the Company’s Board of Directors.
Plan administration expenses may be paid out of the Plan unless paid
by
the Company. (Note C).
2.	Participation,
Vesting, and
Withdrawals
	Generally,
all employees are
eligible for Plan participation after attaining age 21 and completing
1,000 hours of service during a one-year period. Employees may elect
to
make tax-deductible contributions up to the IRC limitation of $15,500
($20,500 for participants age 50 and older) for all deferrals under
all
plans in 2008 (basic contribution). For every dollar an employee
contributes up to 6% of compensation, the Company will provide a
50%
matching contribution. In each Plan year, the Company may make a
discretionary contribution to the Plan based on up to 2% of compensation
for all employees eligible to participate in the Plan. The full
discretionary contribution was made for 2008 . The total matching,
discretionary and service contributions in 2008 were $303,225, $267,037
and $258,635, respectively .
	Effective
January 1, 2007, the
Company’s Board of Directors, at its sole discretion, may make a Special
Discretionary Stock Contribution to the Plan. A Special
Discretionary Stock Contribution of was not made for
2008.
	Participant
contributions, and the
related earnings, are fully vested. Company contributions, and the
related
earnings, vest as follows:

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Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note A — Description of the Plan (Continued)

1. Participation, Vesting, and Withdrawals (Continued)

| Years
of Service | |
| --- | --- |
| Less
than 2 | 0 % |
| 2
but less than 3 | 20 % |
| 3
but less than 4 | 40 % |
| 4
but less than 5 | 60 % |
| 5
but less than 6 | 80 % |
| 6 years
or more | 100 % |

Any forfeitures of nonvested contributions are offset against required Company contributions. Withdrawals may generally commence without penalty upon attaining age 59 ½ or for situations involving hardship, as defined in the Plan and the IRC.

The Company also sponsored another defined contribution plan for its employees, the Supplemental Plan, which was merged into the Plan on March 31, 2000. The contribution and vesting guidelines for the participants of the Supplemental Plan continued and consist of the following:

| • | Only
employees as of
April 26, 1994 are eligible for
participation. |
| --- | --- |
| • | A
service contribution is made by
the Company to the Plan for all eligible participants each quarter
based
upon each employee’s years of service and current compensation in
accordance with the following
schedule: |

| Years | Percentage
of |
| --- | --- |
| of
Service | Compensation |
| 1
–
5 | 2 % |
| 6
–
10 | 4 % |
| 11
– 20 | 5 % |
| over
20 | 6 % |

• Participant contributions, and the related earnings thereon, are fully vested at all times. Company contributions, and the related earnings thereon, vest as follows:

7

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note A — Description of the Plan (Continued)

1. Participation, Vesting, and Withdrawals (Continued)

| Years
of Service | |
| --- | --- |
| Less
than 2 | 0 % |
| 2
but less than 3 | 20 % |
| 3
but less than 4 | 40 % |
| 4
but less than 5 | 60 % |
| 5
but less than 6 | 80 % |
| 6 years
or more | 100 % |

• Forfeitures are offset against required Company contributions. Any participant who separates from the Company for any reason, shall be entitled to receive the vested interest in their account.

| 3. | Investment
Elections |
| --- | --- |
| | Participants
may allocate basic
contributions among the various mutual fund investments and/or the
Company’s Class A non-voting common stock. |
| | Participants
may elect an
allocation among one or more of the investment funds in multiples
of 1%
with a minimum investment of 1% in any selected fund. Discretionary
Company contributions are invested by the Trustee in a uniform manner
for
all participants. |
| 4. | Loans |
| | Participants
may borrow from the
Plan under the following
guidelines: |

| • | A
participant may borrow as much
as 50% of his or her account balance, subject to certain minimum
and
maximum limitations as defined in the Plan. |
| --- | --- |
| • | Loans
are repaid over a period not
to exceed five years, unless the loan is to buy, build, or substantially
rehabilitate the borrower’s principal residence. |
| • | The
participant’s account balance
is secured as collateral when the loan is executed. If a participant
defaults on a loan, the loan is treated as a distribution from the
Plan to
the participant. |

8

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note A — Description of the Plan (Continued)

1. Loans (Continued)

| • | Interest
rates on loans are prime
plus 1% at the date of the loan. |
| --- | --- |
| • | As
loans are repaid to the Plan,
the total payment, principal plus interest, is credited back to the
participant’s account. |

As disclosed in the statement of changes in net assets available for benefits, the net transfer into participant loans for the year ended December 31, 2008 was made up of the following:

| New
loans | 28,000 | |
| --- | --- | --- |
| Loan
repayments | (28,934 | ) |
| Transfer
of interest income net of default interest of $318 | (20,300 | ) |
| $ | (21,234 | ) |

5.	Benefits
	Participants
are entitled to a
benefit payment equal to the amount credited to their accounts upon
retirement, upon permanent disability, at age 59 1 / 2 ,
or upon termination of
employment or death. In the event of death of a participant, a death
benefit payment is made to the participant’s beneficiary. In the event of
termination, distributions of less than $5,000 must be made in a
lump sum.
All other distributions may be made in the form of a joint and survivor
annuity, installments, or in a lump sum subject to certain restrictions
as
defined in the Plan.
6.	Termination
	The
Company may amend or terminate
the Plan. In the event of Plan termination, the accounts of all
participants affected shall become fully vested and nonforfeitable.
Assets
remaining in the Plan may be immediately distributed to the participants,
inactive participants, and beneficiaries in proportion to their respective
account balances; or the trust may be continued with distributions
made at
such time and in such manner as though the Plan had not been
terminated.

9

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note B — Significant Accounting Policies

| 1. | Basis
of
Accounting |
| --- | --- |
| | For
financial reporting purposes,
the assets and liabilities of the Plan are reflected on the accrual
basis
of accounting. |
| 2. | Use
of
Estimates |
| | The
preparation of 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 disclosure of contingent assets and liabilities at the date of
the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates. |
| 3. | Investment
Valuation and Income
Recognition |
| | Plan
assets held in mutual funds
and the Company’s Class A non-voting common stock are unsecured and
are valued at fair value based on quoted market prices. Plan assets
held
in collective trusts are unsecured and are valued at trading unit
prices,
which approximates fair value. |
| | In
accordance with the policy of
stating investments at fair value, net unrealized appreciation
(depreciation) for the year is included in the statement of changes
in net assets available for benefits. Participant loans are valued
at
cost, which approximates fair value. |
| | Purchases
and sales of securities
are recorded on a trade-date basis. Interest income is recorded on
the
accrual basis. Dividends are recorded on the ex-dividend
date. |
| 4. | Participant
Distributions |
| | Participant
distributions are
generally recorded when paid. |

10

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note B — Significant Accounting Policies (Continued)

| 5. |
| --- |
| The
Internal Revenue Service has
determined and informed the Company by a letter dated March 19, 2002,
that the original Plan plus amendments is qualified and the trust
established under the Plan is tax exempt under the appropriate sections
of
the Internal Revenue Code. |
| The
Plan has been amended since
receiving the determination letter. However, the Plan administrator
and
the Plan’s tax counsel believe that the Plan is currently designed and
being operated in compliance with the applicable requirements of
the
Internal Revenue Code. Therefore, no provision for income taxes has
been
included in the financial
statements. |

Note C — Plan Administration Expenses

Plan administration fees are based on asset value and number of participants. The Plan invests in various mutual funds with revenue-sharing agreements that help to offset fees. The Company paid the following net Plan expenses on behalf of the Plan in 2008:

| Fees
charged to the Plan | $ | |
| --- | --- | --- |
| Revenue-sharing
offsets | (68,200 | ) |
| Net
Plan expenses | $ 12,282 | |

Note D — Credit Risk

The Plan has no investment in mutual fund money market accounts at December 31, 2008.

Note E — Market Risk

All investments in the Plan, including holdings in the Company’s Class A non-voting common stock, are subject to market risk.

11

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note F — Investments

During 2008, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated (depreciated) in value as follows:

| Artesian
Resources Corp. Class A non-voting common stock | (431,354 | ) |
| --- | --- | --- |
| Collective
trusts | 81,800 | |
| Mutual
funds | (8,098,433 | ) |
| $ | (8,447,987 | ) |

The following investments each represent 5% or more of the net assets available for benefits at December 31:

Common
Stocks
Artesian
Resources Corp.
Class A
non-voting common stock	$ 2,453,097	$ 2,651,518
Collective
Trusts
Gartmore
Morley Trust Co.
Stable
Value Fund	2,509,137	1,818,051
Mutual
Funds
American
Funds Growth
Fund
of America A	3,064,869	5,030,978
Davis
Funds NY Venture A	3,119,778	5,115,098
Dodge
& Cox Funds
Stock
Fund	1,889,395	3,183,697
PIMCO
Funds Total Return
Fund
Admin	2,553,808	2,137,601
*Includes
both nonparticipant directed and participant directed
funds.

12

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note F – Investments (Continued)

The Plan adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” on January 1, 2008. This statement defines fair value, establishes a framework for using fair value to measure assets and liabilities, and expands disclosures about fair value measurements. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under FASB Statement No. 157 are as follows:

• Level 1: unadjusted quoted prices in active markets for identical assets or liabilities that the Plan has the ability to access;

• Level 2: inputs other than Level 1 that are observable, either directly or indirectly, such as quoted market prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in non-active markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

• Level 3: inputs that are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

13

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of December 31, 2008:

| | Investments
at Fair Value as of December 31, 2008 — Level
1 | Level
2 | Level
3 | Total |
| --- | --- | --- | --- | --- |
| Registered
investment companies | $ 13,259,419 | $ -- | $ -- | $ 13,259,419 |
| Artesian
Resources Corporation Class A non-voting common stock | 2,453,097 | -- | -- | 2,453,097 |
| Common
collective fund | -- | 2,509,137 | | 2,509,137 |
| Participant
loans | -- | -- | 242,391 | 242,391 |
| Total
investments at fair value | $ 15,712,516 | $ 2,509,137 | $ 242,391 | $ 18,464,044 |

The table below sets forth a summary of changes in the fair value of the Plan’s Level 3 assets for the year ended December 31, 2008:

| Balance,
beginning of year | Participant loans — $ 268,335 | |
| --- | --- | --- |
| New
loans issued, loans distributed and loan principal repayments,
net | (25,944 | ) |
| Balance,
end of year | $ 242,391 | |

14

Table of Contents

Artesian Resources Corporation

Retirement Plan

Notes to the Financial Statements (Continued)

Note G — Distributions Payable

Amounts allocated to withdrawing participants are reported on the Schedule H of Form 5500 for benefit claims that have been processed and approved for payment prior to December 31, but not yet paid as of that date.

At December 31, 2008 and 2007, net assets available for plan benefits included $0 and $13,937 respectively, for distributions to participants who have requested a distribution from the Plan prior to the end of the Plan year.

15

Supplementary Information

Artesian Resources Corporation

Retirement Plan

EIN 51-0002090, Plan No. 003

Schedule H, Part IV, Line 4i: Schedule of Assets Held for Investment

Purposes at End of Year as of December 31, 2008

(a)	(b)	(c)	(d)	(e)
	Identity
of issuer, borrower,	Description
of investment, including maturity date,		Current
	lessor,
or similar party	rate
of interest, collateral, par, or maturity value	Cost**	Value**
	Cash
	Investment
Fund	Liquidity
Fund	$ 1,435	$ 1,435
	Common
Stocks
*	Artesian
Resources Corporation	Class A
non-voting common stock	2,248,329	2,453,097
	Collective
Trusts
	Gartmore
Morley Trust Co.	Stable
Value Fund	2,261,857	2,509,137
	Mutual
Funds
	American
Fund	Growth
Fund of America A	3,613,637	3,064,869
	Calamos	Growth
A	711,133	417,248
	Columbia
Funds	Acorn
Z	647,795	451,935
	Columbia
Funds	Mid-Cap
Value A	149,888	87,530
	Davis
Funds	New
York Venture A	3,285,661	3,119,778
	Dodge
& Cox Funds	Balanced	141,579	94,480
	Dodge
& Cox Funds	Stock
Fund	2,853,292	1,889,395
	Lord
Abbett	Mid-Cap
Value A	655,732	349,357
	PIMCO
Funds	Total
Return Fund Admin.	2,662,009	2,553,808
	Royce	Low
Priced Stock	564,550	371,907
	Templeton
Funds	Foreign
Fund R	1,649,668	835,098
	Vanguard	Balanced
Index	20,783	22,579
			16,955,727	13,257,984
	Participant
Loans
	Various
participants	Interest
rates range from 5.00% to 9.75%, can borrow up to 50% of account
balance,
repayment terms range from five to 15 years, secured by vested
account balance.	242,391	242,391
			$ 21,709,739	$ 18,464,044

| * | Identifies
the party as a “Party in Interest.” |
| --- | --- |
| ** | Includes
both nonparticipant directed and participant directed
funds. |

16

Table of Contents

SIGNATURES

The Plan . Pursuant to the requirements of the Securities Exchange Act of 1934, the Administrative Committee has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized.

| /s/
Joseph A. DiNunzio |
| --- |
| Joseph
A. DiNunzio |
| Executive
Vice President and Corporate Secretary |

17

Table of Contents

EXHIBIT INDEX

| Exhibit
No. | |
| --- | --- |
| 23 | Consent
of McBride Shopa and
Company |