##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transaction period from  to
 Commission File Number: 0-25248
 CONSOLIDATED WATER CO. LTD.
  CAYMAN ISLANDS
    
    N/A(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)Regatta Office ParkWindward Three, 4th Floor, West Bay RoadP.O. Box 1114Grand Cayman KY1-1102Cayman Islands
    
    N/A(Address of principal executive offices)
    
    (Zip Code)
 (345) 945-4277
  þ o
  o þ o
  o þ
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TABLE OF CONTENTS
 Section
    
    Description
    
    PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of June 30, 2007 (Unaudited) and December 31, 2006
    
    
    4Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended June 30, 2007 and 2006
    
    
    5Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2007 and 2006
    
    
    6Notes to Consolidated Financial Statements (Unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    24Item 4.
    
    Controls and Procedures
    
    
    24PART II
    
    OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    25Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 6.
    
    Exhibits
    
    
    27SIGNATURE
    
    
    
    
    27EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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NOTE REGARDING CURRENCY AND EXCHANGE RATES
        3




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PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CONSOLIDATED WATER CO. LTD.
 
 CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 June 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    39,555,924
    
    
    $
    37,310,699Accounts receivable, net
    
    
    6,118,005
    
    
    
    6,231,718Inventory
    
    
    3,506,392
    
    
    
    2,794,892Prepaid expenses and other current assets
    
    
    741,087
    
    
    
    1,099,619Current portion of loans receivable
    
    
    950,115
    
    
    
    735,632Total current assets
    
    
    50,871,523
    
    
    
    48,172,560Property, plant and equipment and construction in progress, net
    
    
    63,802,988
    
    
    
    63,568,369Loans receivable
    
    
    2,801,570
    
    
    
    1,697,648Investment in and loan to affiliate
    
    
    16,391,388
    
    
    
    15,457,880Other assets
    
    
    10,486,721
    
    
    
    10,064,886Total assets
    
    $
    144,354,190
    
    
    $
    138,961,343LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable and other current liabilities
    
    $
    4,695,304
    
    
    $
    6,468,290Current portion of long term debt
    
    
    1,101,174
    
    
    
    1,154,067Total current liabilities
    
    
    5,796,478
    
    
    
    7,622,357Long term debt
    
    
    22,939,924
    
    
    
    23,500,593Other liabilities
    
    
    468,050
    
    
    
    497,985Minority interest in subsidiary
    
    
    1,466,586
    
    
    
    1,495,753Total liabilities
    
    
    30,687,296
    
    
    
    33,116,688Stockholders equityControlling interests:Redeemable preferred stock, $0.60 par value. Authorized 200,000 shares;
issued and outstanding 19,273 and 24,971 shares, respectively
    
    
    11,564
    
    
    
    14,983Class A common stock, $0.60 par value. Authorized 19,680,000 shares;
issued and outstanding 14,481,794 and 14,132,860 shares, respectively
    
    
    8,689,077
    
    
    
    8,479,716Class B common stock, $0.60 par value. Authorized 120,000 shares;
none issued or outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    79,218,040
    
    
    
    76,071,710Retained earnings
    
    
    25,614,324
    
    
    
    21,278,246113,533,005
    
    
    
    105,844,655Non-controlling interests
    
    
    133,889
    
    
    
    Total stockholders equity
    
    
    113,666,894
    
    
    
    105,844,655Total liabilities and stockholders equity
    
    $
    144,354,190
    
    
    $
    138,961,343
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CONSOLIDATED WATER CO. LTD.
 
 CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Retail water revenues
    
    $
    5,279,316
    
    
    $
    4,863,830
    
    
    $
    10,383,525
    
    
    $
    9,917,977Bulk water revenues
    
    
    5,372,907
    
    
    
    4,315,928
    
    
    
    10,600,429
    
    
    
    8,064,783Services revenues
    
    
    1,312,157
    
    
    
    447,221
    
    
    
    3,715,038
    
    
    
    887,779Total revenues
    
    
    11,964,380
    
    
    
    9,626,979
    
    
    
    24,698,992
    
    
    
    18,870,539Cost of retail revenues
    
    
    1,986,615
    
    
    
    1,952,660
    
    
    
    3,749,934
    
    
    
    3,485,301Cost of bulk revenues
    
    
    4,552,547
    
    
    
    3,106,910
    
    
    
    8,441,509
    
    
    
    5,940,756Cost of services revenues
    
    
    940,922
    
    
    
    157,924
    
    
    
    2,719,900
    
    
    
    261,648Total cost of revenues
    
    
    7,480,084
    
    
    
    5,217,494
    
    
    
    14,911,343
    
    
    
    9,687,705Gross profit
    
    
    4,484,296
    
    
    
    4,409,485
    
    
    
    9,787,649
    
    
    
    9,182,834General and administrative expenses
    
    
    2,412,076
    
    
    
    2,075,907
    
    
    
    4,751,259
    
    
    
    4,207,032Income from operations
    
    
    2,072,220
    
    
    
    2,333,578
    
    
    
    5,036,390
    
    
    
    4,975,802Other income (expense):Interest income
    
    
    479,405
    
    
    
    67,858
    
    
    
    928,209
    
    
    
    96,564Interest expense
    
    
    (467,067
    )
    
    
    (304,694
    )
    
    
    (947,995
    )
    
    
    (519,667
    )Other income
    
    
    216,185
    
    
    
    132,549
    
    
    
    419,517
    
    
    
    330,829Equity in earnings of affiliate
    
    
    427,548
    
    
    
    315,564
    
    
    
    886,670
    
    
    
    731,553Other income, net
    
    
    656,071
    
    
    
    211,277
    
    
    
    1,286,401
    
    
    
    639,279Income before noncontrolling and minority interests
    
    
    2,728,291
    
    
    
    2,544,855
    
    
    
    6,322,791
    
    
    
    5,615,081Income attributable to noncontrolling and minority
interests
    
    
    106,754
    
    
    
    22,826
    
    
    
    113,780
    
    
    
    15,042Net income
    
    $
    2,621,537
    
    
    $
    2,522,029
    
    
    $
    6,209,011
    
    
    $
    5,600,039Basic earnings per common share
    
    $
    0.18
    
    
    $
    0.20
    
    
    $
    0.43
    
    
    $
    0.46Diluted earnings per common share
    
    $
    0.18
    
    
    $
    0.20
    
    
    $
    0.43
    
    
    $
    0.44Dividends declared per common share
    
    $
    0.065
    
    
    $
    0.06
    
    
    $
    0.13
    
    
    $
    0.12Weighted average number of common
shares used in the determination of:Basic earnings per share
    
    
    14,470,512
    
    
    
    12,381,686
    
    
    
    14,306,975
    
    
    
    12,299,727Diluted earnings per share
    
    
    14,517,021
    
    
    
    12,670,129
    
    
    
    14,451,664
    
    
    
    12,638,142
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CONSOLIDATED WATER CO. LTD.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six Months Ended June 30,2007
    
    
    2006Net cash flows provided by (used in) operating activities
    
    $
    4,545,763
    
    
    $
    4,786,822Cash flows provided by (used in) investing activitiesPurchases of property, plant and equipment and construction in progress
    
    
    (3,820,846
    )
    
    
    (19,028,429
    )Distribution of income from affiliate
    
    
    189,375
    
    
    
    757,500Proceeds from sale of minority interest in subsidiary
    
    
    
    
    
    
    672,136Loan to affiliate
    
    
    
    
    
    
    (800,000
    )Collections of loans receivable
    
    
    419,595
    
    
    
    404,762Net cash used provided by (used in) investing activities
    
    
    (3,211,876
    )
    
    
    (17,994,031
    )Cash flows provided by (used in) financing activitiesDividends paid
    
    
    (1,779,429
    )
    
    
    (1,512,976
    )Proceeds from issuance of preferred stock
    
    
    
    
    
    
    10,841Proceeds from exercises of stock options
    
    
    3,379,136
    
    
    
    1,165,298Net borrowings from line of credit
    
    
    
    
    
    
    5,659,608Principal repayments of long term debt
    
    
    (688,369
    )
    
    
    (1,861,044
    )Net cash provided by (used in) financing activities
    
    
    911,338
    
    
    
    3,461,727Net increase (decrease) in cash and cash equivalents
    
    
    2,245,225
    
    
    
    (9,745,482
    )Cash and cash equivalents at beginning of period
    
    
    37,310,699
    
    
    
    11,955,589Cash and cash equivalents at end of period
    
    $
    39,555,924
    
    
    $
    2,210,107Interest paid in cash
    
    $
    1,030,333
    
    
    $
    850,066Interest received in cash
    
    $
    1,079,595
    
    
    $
    69,517Non-cash investing and financing activitiesNote received for plant facility sold
    
    $
    1,654,255
    
    
    $
    897,000Issuance of 4,664 and 2,135, respectively, common shares for services rendered
    
    $
    111,507
    
    
    $
    43,326Issuance of nil and 3,587, respectively, preferred shares for services rendered
    
    $
    
    
    
    $
    108,397Conversion of 5,698 and 9,164 redeemable preferred shares to common shares
    
    $
    3,419
    
    
    $
    5,498
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CONSOLIDATED WATER CO. LTD.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 1. Basis of presentation
     2. Accounting policies
 Plant construction revenue and cost of plant construction revenue:
 Basis of consolidation: Consolidated Financial Statements Consolidation of Variable Interest Entities
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3. Stock based compensation
     WeightedAverageWeighted
    
    
    Remaining
    
    
    AggregateAverage
    
    
    Contractual Life
    
    
    IntrinsicOptions
    
    
    Exercise Price
    
    
    (Years)
    
    
    Value (1)Outstanding at beginning of year
    
    
    374,759
    
    
    $
    10.26Granted
    
    
    1,865
    
    
    
    19.77Exercised
    
    
    (338,004
    )
    
    
    9.98Forfeited
    
    
    Outstanding as of June 30, 2007
    
    
    38,620
    
    
    $
    13.20
    
    
    1.03 years
    
    $
    622,071Exercisable as of June 30, 2007
    
    
    18,555
    
    
    $
    8.92
    
    
    0.07 years
    
    $
    378,296
 
 (1)
    
    The intrinsic value of a stock option represents the amount by which the fair value of the
underlying stock, measured by reference to the closing price of the common shares of $29.31 in
the NASDAQ Global Select Market as of June 30, 2007, exceeds the exercise price of the option.   8




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4. Segment information
  For the Three Months Ended June 30, 2007Retail
    
    
    Bulk
    
    
    Services
    
    
    TotalRevenues
    
    $
    5,279,316
    
    
    $
    5,372,907
    
    
    $
    1,312,157
    
    
    $
    11,964,380Cost of revenues
    
    
    1,986,615
    
    
    
    4,552,547
    
    
    
    940,922
    
    
    
    7,480,084Gross profit
    
    
    3,292,701
    
    
    
    820,360
    
    
    
    371,235
    
    
    
    4,484,296General & administrative expenses
    
    
    2,136,984
    
    
    
    241,725
    
    
    
    33,367
    
    
    
    2,412,076Income from operations
    
    
    1,155,717
    
    
    
    578,635
    
    
    
    337,868
    
    
    
    2,072,220Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    656,071Income before noncontrolling and
minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,728,291Income attributable to
noncontrolling and minority
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106,754Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,621,537
 For the Six Months Ended June 30, 2007Retail
    
    
    Bulk
    
    
    Services
    
    
    TotalRevenues
    
    $
    10,383,525
    
    
    $
    10,600,429
    
    
    $
    3,715,038
    
    
    $
    24,698,992Cost of revenues
    
    
    3,749,934
    
    
    
    8,441,509
    
    
    
    2,719,900
    
    
    
    14,911,343Gross profit
    
    
    6,633,591
    
    
    
    2,158,920
    
    
    
    995,138
    
    
    
    9,787,649General & administrative expenses
    
    
    4,096,579
    
    
    
    583,491
    
    
    
    71,189
    
    
    
    4,751,259Income from operations
    
    
    2,537,012
    
    
    
    1,575,429
    
    
    
    923,949
    
    
    
    5,036,390Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,286,401Income before noncontrolling and
minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,322,791Income attributable to
noncontrolling and minority
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    113,780Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    6,209,011As of June 30, 2007:Property plant and equipment, net
    
    $
    22,005,797
    
    
    $
    36,155,240
    
    
    $
    2,407,561
    
    
    $
    60,568,598Construction in progress
    
    
    3,035,780
    
    
    
    198,610
    
    
    
    
    
    
    
    3,234,390Total assets
    
    
    85,452,027
    
    
    
    53,539,608
    
    
    
    5,362,555
    
    
    
    144,354,190
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4. Segment information (continued)
 For the Three Months Ended June 30, 2006Retail
    
    
    Bulk
    
    
    Services
    
    
    TotalRevenues
    
    $
    4,863,830
    
    
    $
    4,315,928
    
    
    $
    447,221
    
    
    $
    9,626,979Cost of revenues
    
    
    1,952,660
    
    
    
    3,106,910
    
    
    
    157,924
    
    
    
    5,217,494Gross profit
    
    
    2,911,170
    
    
    
    1,209,018
    
    
    
    289,297
    
    
    
    4,409,485General & administrative expenses
    
    
    1,798,219
    
    
    
    250,669
    
    
    
    27,019
    
    
    
    2,075,907Income from operations
    
    
    1,112,951
    
    
    
    958,349
    
    
    
    262,278
    
    
    
    2,333,578Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211,277Income before noncontrolling and
minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,544,855Income attributable to
noncontrolling and minority
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,826Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,522,029
 For the Six Months Ended June 30, 2006Retail
    
    
    Bulk
    
    
    Services
    
    
    TotalRevenues
    
    $
    9,917,977
    
    
    $
    8,064,783
    
    
    $
    887,779
    
    
    $
    18,870,539Cost of revenues
    
    
    3,485,301
    
    
    
    5,940,756
    
    
    
    261,648
    
    
    
    9,687,705Gross profit
    
    
    6,432,676
    
    
    
    2,124,027
    
    
    
    626,131
    
    
    
    9,182,834General & administrative expenses
    
    
    3,582,139
    
    
    
    580,679
    
    
    
    44,214
    
    
    
    4,207,032Income from operations
    
    
    2,850,537
    
    
    
    1,543,348
    
    
    
    581,917
    
    
    
    4,975,802Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    639,279Income before noncontrolling and
minority interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,615,081Income attributable to
noncontrolling and minority
interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,042Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,600,039As of June 30, 2006:Property plant and equipment, net
    
    $
    20,712,242
    
    
    $
    8,790,822
    
    
    $
    2,706,584
    
    
    $
    32,209,648Construction in progress
    
    
    405,129
    
    
    
    28,889,206
    
    
    
    195,838
    
    
    
    29,490,173Total assets
    
    
    48,764,263
    
    
    
    46,199,023
    
    
    
    5,664,381
    
    
    
    100,627,667
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5. Earnings per share
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    2,621,537
    
    
    $
    2,522,029
    
    
    $
    6,209,011
    
    
    $
    5,600,039Less:Dividends declared and earnings attributable to
preferred shares
    
    
    (1,528
    )
    
    
    (2,315
    )
    
    
    (3,214
    )
    
    
    (4,839
    )Net income available to holders of common
shares in the determination of basic and
diluted earnings per share
    
    $
    2,620,009
    
    
    $
    2,519,714
    
    
    $
    6,205,797
    
    
    $
    5,595,200Weighted average number of common shares used
in the determination of basic earnings per
common share
    
    
    14,470,512
    
    
    
    12,381,686
    
    
    
    14,306,975
    
    
    
    12,299,727Plus:Weighted average number of preferred shares
outstanding during the period
    
    
    23,390
    
    
    
    31,089
    
    
    
    23,930
    
    
    
    31,693Potential dilutive effect of unexercised options
    
    
    23,119
    
    
    
    257,354
    
    
    
    120,759
    
    
    
    306,722Weighted average number of common shares used
in the determination of diluted earnings per
common share
    
    
    14,517,021
    
    
    
    12,670,129
    
    
    
    14,451,664
    
    
    
    12,638,142
 6. Consolidated Water (Bermuda) Limited
   11




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7. Impact of recent accounting pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets and
Financial Liabilities
 8. Investment in and loan to affiliate
  June 30,
    
    
    December 31,2007
    
    
    2006Equity investment
    
    $
    13,391,388
    
    
    $
    12,457,880Loan receivable  plant construction
    
    
    3,000,000
    
    
    
    3,000,000$
    16,391,388
    
    
    $
    15,457,880
 Baughers Bay plant:
    12




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Bar Bay plant:
  13




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9. Litigation
  10. Subsequent Event
  14




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ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Cautionary Note Regarding Forward-Looking Statements
     Recent Developments
 Frank Sound Contract
  15




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Critical Accounting Policies
  Use of estimates:
 Trade accounts receivable:
 Property, plant and equipment:
 Buildings
    
    5 to 40 yearsPlant and equipment
    
    4 to 40 yearsDistribution system
    
    3 to 40 yearsOffice furniture, fixtures and equipment
    
    3 to 10 yearsVehicles
    
    3 to 10 yearsLeasehold improvements
    
    Lesser of 5 years or operating lease termLab equipment
    
    5 to 10 years
  Construction in progress:
 Goodwill and other intangible assets:
 Revenue and cost of sales:
 16




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Plant construction revenue and cost of plant construction revenue:
 Consolidation: Consolidated Financial Statements Consolidation of Variable Interest Entities
 RESULTS OF OPERATIONS
  Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
 Consolidated Results
     17




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Results by Segment
 Retail Segment:
    Bulk Segment:
    18




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##### Table of Contents



Services Segment:
    Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
 Consolidated Results
     Results by Segment
 Retail Segment:
   19




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Bulk Segment:
    Services Segment:
    20




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LIQUIDITY AND CAPITAL RESOURCES
 Overview
     Cash Flows for the Six Months Ended June 30, 2007
  Cash Flows from Operating Activities
  Cash Flows used in Investing Activities
  Cash Flows from Financing Activities
  Financial Position
    Borrowings Outstanding
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5.95% Secured Bonds
    Consolidated Water (Bahamas) Limited (CW-Bahamas) Series A Bonds
  CW-Bahamas Credit Facility
    Material Commitments, Expenditures and Contingencies
 OC-BVI Contract Dispute
        Tynes Bay, Bermuda Project
  Sandy Lane Agreement Non-renewal
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Dividends
     Dividend Reinvestment and Common Stock Purchase Plan
  23




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Impact of Inflation
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Credit Risk
  Interest Rate Risk
  Foreign Exchange Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
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PART II  OTHER INFORMATION
 
 ITEM 1A. RISK FACTORS
 Our business faces significant risks. These risks include those disclosed in Item 1A of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2006 as supplemented by the additional
risk factors included below. If any of the events or circumstances described in the referenced
risks actually occur, our business, financial condition or results of operations could be
materially adversely affected and such events or circumstances could cause our actual results to
differ materially from the results contemplated by the forward-looking statements contained in this
report. These risks should be read in conjunction with the other information set forth in this
Quarterly Report as well as in our Annual Report on Form 10-K for the year ended December 31, 2006
and in our other periodic reports on Form 10-Q and Form 8-K .
 The water supply agreement between the British Virgin Islands Water and Sewerage Department and our
affiliate, OC-BVI, is on a month-to-month basis and could be cancelled or renegotiated on less
favorable terms.
   The British Virgin Islands government has asserted a purported right of ownership of OC-BVIs
Baughers Bay plant. If this right is found to be enforceable and is exercised by the government,
OC-BVI will lose ownership of the Baughers Bay plant.
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We account for our projects using percentage-of-completion, therefore variations of actual results
from our assumptions may reduce our profitability.
  If OC-BVI does not obtain a customer to purchase water to be produced at its Bar Bay plant
currently under construction, it may not be able to recover the cost of its investment in the
plant, which could adversely affect its operations and in turn decrease the value of our investment
in OC-BVI.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   
 ITEM 6. EXHIBITS
 ExhibitNumber
    
    Exhibit Description31.1
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of the Company31.2
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of the Company32.1
    
    Section 1350 Certification of Chief Executive Officer of the Company32.2
    
    Section 1350 Certification of Chief Financial Officer of the Company
 
 SIGNATURE
  CONSOLIDATED WATER CO. LTD.By:
    /s/ Frederick W. McTaggartFrederick W. McTaggartChief Executive Officer  27