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Date Filed : Jun 21, 2021
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-8858
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
Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
6 Liberty Lane West, Hampton, New Hampshire 03842-1720
Financial Statements and
Report of Independent
RegisteredPublic Accounting Firm
Savings andInvestment Plan
December 31, 2020 and 2019
C O N T E N T S
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS - DECEMBER 31, 2020 AND 2019
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS - YEAR ENDEDDECEMBER 31, 2020
NOTES TO FINANCIAL STATEMENTS
SCHEDULE H, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR) AS OF DECEMBER 31, 2020
SCHEDULES REQUIRED UNDER THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, OTHER THAN THESCHEDULE LISTED ABOVE, ARE OMITTED BECAUSE OF THE ABSENCE OF CONDITIONS UNDER WHICH THE SCHEDULES ARE REQUIRED.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
To the Members of the Unitil Corporation 401(k) Plan Committee, the Plan Administrator of the Unitil Corporation Tax Deferred Savings and Investment Plan andPlan Participants:
Opinion on the Financial Statements
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, 2020 and 2019, and the related Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 2020, and the related notes (collectively referred to as the financial statements). In our opinion,the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2020 and 2019, and the changes in net assets available for benefits for the year ended December 31,2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on the Plans financialstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with the U.S. federalsecurities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordancewith the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
The supplemental Schedule H,Line 4(i) Schedule of Assets (Held at End of Year) as of December 31, 2020, has been subjected to audit procedures performed in conjunction with the audit of the Plans financial statements. The supplemental information is theresponsibility of the Plans management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performingprocedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content,is presented in conformity with the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in allmaterial respects, in relation to the financial statements as a whole.
/s/ Caron & Bletzer, PLLC
We have served as the Plans auditor since 2014
June 21, 2021
Unitil Corporation Tax Deferred Savings and Investment Plan
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
Investments at Fair Value
Investments at Contract Value
Notes Receivable from Participants
Net Assets Available for Benefits
(The accompanying notes are an integral part of these financial statements.)
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the year ended December 31,
Additions to net assets attributed to:
Net appreciation in fair value of investments
Interest and dividends
Total investment gain
Interest on notes receivable from participants
Deductions from net assets attributed to:
Benefits paid to participants
Net assets available for benefits:
Beginning of year
End of year
NOTES TO FINANCIAL STATEMENTS
NOTE A -DESCRIPTION OF PLAN
The following description of the Unitil Corporation (Unitil or the Company) Tax Deferred Savings andInvestment Plan (Plan or 401(k) Plan) provides only general information. Participants should refer to the Plan Document for a more complete description of the Plans provisions.
The Plan is a defined contribution plan coveringall 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, Inc. (Usource) (collectively, the subsidiaries), who satisfy the eligibility requirements. The Company divested of Usource in March 2019. The Company has engaged John HancockTrust Company LLC (John Hancock 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 (theCode).
The Plans effective date is July 1, 1985. The Plan was amended and restated effective January 1, 2015 to comply withcurrent federal regulations and to incorporate all previous amendments.
Employees are eligible to participate in the Plan on the first of the month following:
Attainment of age 18, and
Completion of 1,000 hours of credited service, as defined by the Plan Document.
Participants may contributefrom 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 thedeferral percentage to either (1) base pay, as defined by the Plan Document, or (2) total pay including bonuses, commissions, incentive, overtime and all other forms of premium pay.
Participants who are age 50 or will turn age 50 by the end of the Plan year (December 31) may be eligible to makecatch-up contributions, as defined by the Plan Document and the Code.
Participants may also makerollover contributions into the Plan from other qualified plans.
New employees are automatically enrolled in the 401(k) Plan following the completion of1,000 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 employees 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 April 1, 2019, the automatic employee contribution rate for newly eligible participantswas increased from 3% to 6%.
Effective April 1, 2019, the Plan added a Roth 401(k) option for Participants. Contributions made byParticipants under the Roth 401(k) option are on an after-tax basis. Combined Roth 401(k) and pre-tax deferrals are subject to Code limits. In-plan Roth Rollovers and Roth Conversions will be allowed effective with the addition of the Roth 401(k) option.
The Company matches participantcontributions on a dollar-for-dollar basis, up to the first 3% percent of their eligible compensation, as defined by the Plan Document, except as noted below. Overtimepay, commissions and other forms of premium pay 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 Companys existing Pension Plan and accept afrozen 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-unionemployee elects to contribute to the 401(k) Plan. The Company also matches 100% of these employees elective deferrals up to 6% of compensation.
Forthose United Steel Workers (USW) Local 12012-6 members who are hired on or after January 1, 2011, and for USW Local 12012-6 members who elected to movefrom the Companys 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 basepay each year, regardless of whether the employee elects to contribute to the 401(k) Plan.
For those Utility Workers Union of America (UWUA)Local 341 members who are hired on or after April 1, 2012, 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 International Brotherhood of Electrical Workers (IBEW)members who are hired on or after June 1, 2012, and for IBEW members who elected to move from the Companys existing Pension Plan and accept a frozen pension benefit, the Plan provides enhanced Plan benefits including the Company matchingemployee 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 matchingemployee 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.
Each participants account iscredited with the participants contribution and allocations of (a) the Companys contribution and (b) Plan earnings. Allocations are based on participant earnings or account balances, as defined by the Plan Document. Eachparticipants 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 funds expense ratio. The benefit to which a participant isentitled is the benefit that can be provided from the participants vested account.
Participants are immediately vested in their contributions and the Company contributions plus actual earnings or losses thereon.
Notes Receivable from Participants
Participants mayborrow 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 rangefrom 1-5 years or up to 15 years for the purchase of a primary residence. The loans are secured by the balance in the participants account and bear interest at a rate that is fixed at the origination ofthe loan at the then prime rate plus one percent (1%). No more than two loans may be outstanding at any time. Principal and interest is paid ratably through payroll deductions. As of December 31, 2020, there are 257 loans to participants,maturing from 2021 to 2033 with interest rates ranging between 4.25% and 6.50%.
Payment of Benefits
On termination of service due to death, disability or retirement, a participant may elect to receive either a lump-sumamount equal to the value of the participants 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.
One of the Plans investment options is the Unitil Corporation Stock Fund, described below (comprised of Company shares and a money market fund). Whenreceiving 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 andcash equivalent portions of the underlying stock account, being distributed in cash. In 2020, the Plan did not have any in-kind distributions, which would be included in Benefits Paid to Participants on theStatement of Changes in Net Assets Available for Benefits.
The Plan offers 28 investment portfolio or fund options consisting of registered investment companies (mutual funds) and the Unitil Corporation Stock Fund,described below (comprised of Company shares and a money market fund) as well as one pooled separate account (New York Life Anchor Account Stable Value Fund). Participants may change their investment options daily, and all investments withinthe 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 andcash 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. The Stock Fund had approximately 4% and 3% in cashand cash equivalents, and 96% and 97% in Company stock at December 31, 2020, and December 31, 2019, respectively.
NOTE B - SUMMARY OFSIGNIFICANT 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 ofAmerica (US GAAP).
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management tomake 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
Registeredinvestment 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 LifeStable Value Fund are valued at contract value, 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 cashequivalents held in the fund.
Interest income is recorded when earned. Dividends are recorded on the ex-dividenddate. 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 are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent notes receivable fromparticipants are recorded as distributions based on the terms of the Plan document.
Benefit payments to participants are recorded when paid.
Certain Plan expenses are paid by the Company as provided in the Administration Agreement between the Company and John Hancock Retirement Plan Services LLC(JHRPS). 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 funds expense ratio.A portion of the expense ratio is paid to JHRPS to cover Plan administration expenses. If the Plans share of those fees exceeds the amount that is required by JHRPS to perform its obligations as record-keeper, the excess fees are returned tothe Plan and are available to pay future Plan expenses. During 2020, the Plans share of the fees related to this arrangement amounted to $101,341 and were all used to pay fund expenses. Receipts from JHRPS related to this arrangement arereflected in Interest and dividends on the Statement of Changes in Net Assets Available for Benefits. If the excess fees are not used for additional Plan expenses by the end of the quarter following the calendar year in which they were generated,JHRPS is directed by Unitil to reallocate the excess fees back to participant accounts on a pro rata basis. If the Plans share of those fees is less than the amount that is required to pay for the Plans expenses, the expenses that exceedthe revenues returned to the Plan shall be paid by the Company from its general funds.
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 securitieswill 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 anyintent 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 Plans trustee. In the event of aPlan 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 September 29, 2016, that the Plan, including amendments made through October 15, 2015, and related trust are designed in accordance with applicable sections of theCode. Although the Plan has been amended since receiving the determination letter, the Plan administrator believes that the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the Code and, therefore,believes that the Plan is qualified, and the related trust is tax-exempt.
NOTE F NEW YORK LIFE STABLE VALUE FUND
The investment in the Stable Value Fund is a contractual account with New York Life Trust Company (New York Life). New York Life maintains thePlans 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 contractuallyobligated to repay the principal and a specified interest rate that is guaranteed to the Plan. The crediting rate is based on a formula established by the contract issuer but may not be less than zero percent. Such interest rates are reviewed on aquarterly basis for resetting. The contract does not have a maturity date.
The Plan must provide 12 months notice to the contract issuer to redeemits interest in this investment at contract value.
Contract value is the relevant measurement attribute for the portion of net assets available forbenefits attributable to the investment contract because the investment contract is fully benefit-responsive. The Statements of Net Assets Available for Benefits presents the New York Life Stable Value Fund at contract value. Participants mayordinarily direct the withdrawal or transfer of all or a portion of their investments at contract value.
Certain events could limit the ability of thePlan to transact at contract value with the issuer. Such events include the following: (1) total or partial Plan termination; (2) changes to the Plans 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 sponsors operations; (8) bankruptcy; (9) receivership; or (10) thefailure 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 Plansability to transact at contract value with participants, is probable.
NOTE G FAIR VALUE OF PLAN ASSETS
The Plan follows the guidance set forth by the Financial Accounting Standards Board (FASB) for reporting fair value of Plan investments. The FASBguidance 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, eitherdirectly or indirectly.
Level 3 Prices or valuations that require inputs that are both significant to the fair valuemeasurement and unobservable.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, thedetermination 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 instruments level within the fair value hierarchy is based on thelowest level of any input that is significant to the fair value measurement.
Fair value is a market-based measure considered from the perspective of amarket participant rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, the Companys own assumptions are set to reflect those that market participants would use in pricing the asset orliability 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 bereduced 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.
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 inLevel 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.
Assets measured at fair value on a recurring basis as of December 31, 2020 are as follows:
Registered Investment Companies
Common Stock Fund
Total Investments at Fair Value
Assets measured at fair value on a recurring basis as of December 31, 2019 are as follows:
NOTE H - PARTY-IN-INTEREST TRANSACTIONS
Included in the Plans assets are common shares of Unitil Corporation, the Plans sponsor, and notes receivable from participants. These transactionsqualify as party-in-interest transactions. As of December 31, 2020 and 2019, there were 261,181 and 227,207 common shares, respectively, of Unitil Corporation, agross value of $11,562,483 and $14,045,937, respectively, included in the Plans assets. During the year ended December 31, 2020, the Unitil Corporation common stock included in the Plans assets depreciated by $3,939,878.
NOTE I CORONAVIRUS PANDEMIC
The extent to which thecoronavirus pandemic affects the Plans net assets available for benefits or the changes in net assets available for benefits will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including theduration of the outbreak, new information which may emerge concerning the severity of the coronavirus pandemic, and the actions to contain the coronavirus pandemic or treat its effect, among others. Because of the uncertainty impacting the financialmarkets during this time, management is unable to estimate the ultimate effect of the pandemic on the assets of the Plan.
NOTE J 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 whichaffected the Plans financial statements.
Employer Identification Number 02-0381573
Plan Number 002
SCHEDULEH, LINE 4i SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2020
Identity of Insurer, Borrower,Lessor or Similar Party
Investments at Fair Value:
Growth Fund of America A
American Balanced Fund A
Vanguard Institutional Index Fund
Dodge & Cox Income Fund
Invesco Growth & Income Fund
American EuroPacific Growth R4
Jennison Small Company Z Fund
Mainstay High Yield Corporate Bond Fund I
JP Morgan Mid Cap Value Fund
PIMCO Real Return Fund
Delaware Small Value Fund A
Fidelity Advisor Mid Cap Value Fund
Loomis Sayles Core Plus Bond Fund A
The Investment Company of America R6
MFS International Intrinsic Value Fund A
Invesco Opp Developing Mkts
Cohen & Steers Institutional Realty
Goldman International Small Caps Insights
American Funds Target 2020 Fund R4
American Funds Target 2025 Fund R4
American Funds Target 2030 Fund R4
American Funds Target 2035 Fund R4
American Funds Target 2040 Fund R4
American Funds Target 2045 Fund R4
American Funds Target 2050 Fund R4
American Funds Target 2055 Fund R4
PIMCO Money Market Fund Admin
* Unitil Corp Common Stock
Investments at Contract Value:
New York Life Stable Value Fund
Total Investments on Financial Statements
* Notes Receivable from Participants
Represents a party-in-interestto the Plan
Cost omitted for participant-directed investments
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly causedthis 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 21, 2021
/s/ Daniel J. Hurstak