FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1995 Commission File Number 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
230 Beaver Street, Ansonia, Connecticut 06401
Address of principal executive office (Zip Code)
(Registrant's telephone number
including area code) (203) 735-1888
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports; and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at November 13, 1995
Common stock, no par value 750,981
ITEM I. FINANCIAL STATEMENTS
- -----------------------------
<TABLE>
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
--------------------------
As of September 30, 1995, December 31, 1994 and September 30, 1994
<CAPTION>
(Unaudited) (Unaudited)
Sept. 30, Dec. 31, Sept. 30,
1995 1994 1994
----------- ---------- -----------
ASSETS:
- -------
<S> <C> <C> <C>
Utility Plant $16,236,250 $15,739,122 $15,762,622
Accumulated depreciation (5,054,758) (4,771,536) (4,751,438)
---------- ---------- ----------
11,181,492 10,967,586 11,011,184
---------- ---------- ----------
Current Assets:
Cash 82,048 58,812 28,200
Accounts receivable, net of
allowance for doubtful accounts 801,139 838,981 881,316
Accrued utility revenue 469,860 384,057 351,552
Materials & supplies 46,798 45,449 54,179
Prepayments 88,333 39,426 75,183
---------- ---------- ----------
Total current assets 1,488,178 1,366,725 1,390,430
---------- ---------- ----------
Note receivable 1,013,222 1,213,222 1,213,222
Deferred Charges 784,937 728,307 653,965
Unamortized debt expense 209,162 220,362 225,691
Income taxes recoverable 372,247 372,247 366,139
Other assets 417,949 378,031 371,206
---------- ---------- ----------
2,797,517 2,912,169 2,830,223
$15,467,187 $15,246,480 $15,231,837
========== ========== ==========
STOCKHOLDERS' EQUITY AND LIABILITIES
- ------------------------------------
Stockholders' Equity:
Common Stock, no par
value, authorized
2,000,000 shares; issued
and outstanding 750,981
shares and 749,168
shares in 1995 and
1994, respectively $ 2,161,181 $ 2,142,318 $ 2,142,318
Retained earnings 1,057,541 1,077,185 1,059,928
---------- ---------- ----------
3,218,722 3,219,503 3,202,246
Note Payable 1,919,106 1,625,000 1,580,750
Long-term debt 4,703,189 4,703,753 4,703,753
---------- ---------- ----------
6,622,295 6,328,753 6,284,503
---------- ---------- ----------
Current Liabilities:
Short term notes and
current portion of
note payable 289,664 165,000 250,000
Accounts payable and
accrued liabilities 474,576 575,421 545,167
---------- ---------- ----------
Total current liabilities 764,240 740,421 795,167
---------- ---------- ----------
Customers' advances
for construction 1,258,913 1,158,455 1,205,729
Contributions in aid
of construction 719,736 719,736 707,184
Income taxes refundable 202,641 202,641 210,213
Deferred income taxes 1,152,694 1,135,558 1,031,901
Deferred income on
dispositions of land 1,527,946 1,741,413 1,794,894
---------- ---------- ----------
$15,467,187 $15,246,480 $15,231,837
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating Revenue (Note B) $1,169,460 $1,102,691 $3,213,011 $3,092,289
--------- --------- --------- ---------
Operating Expenses:
Operations and Maintenance 198,843 196,357 597,603 546,764
Purchased Water 218,366 170,591 574,529 530,642
Administrative and General 254,178 257,470 810,092 788,858
Depreciation 98,943 94,500 286,966 265,500
Taxes Other Than Income 137,669 135,957 402,011 396,757
Taxes on Income 45,382 35,325 50,532 71,346
--------- --------- --------- ---------
Total Operating Expense 953,381 890,200 2,721,733 2,599,867
--------- --------- --------- ---------
Utility Operating Income 216,079 212,491 491,278 492,422
Amortization of Prior Years'
Deferred Income on Land
Dispositions, net (Net of
income taxes of $19,825
and $58,467 in 1995 and
$21,727 and $68,864 in
1994 for the three
months and nine months,
respectively) 27,831 30,501 82,079 96,677
Other Income, net 29,931 35,398 97,809 66,954
--------- --------- --------- ---------
Income before interest
expense 273,841 278,390 671,166 656,053
Interest and Amortization of
Debt Discount & Expense 158,600 140,419 467,520 400,691
Income from dispositions of
land, net (net of income
taxes of $32,935 in 1995) -0- -0- 46,494 -0-
--------- --------- --------- ---------
Net income 115,241 137,971 250,140 255,362
Retained earnings,
beginning 1,032,284 1,011,857 1,077,185 1,074,266
Dividends paid 89,984 89,900 269,784 269,700
--------- --------- --------- ---------
Retained earnings, ending $1,057,541 $1,059,928 $1,057,541 $1,059,928
========= ========= ========= =========
Earnings per share $.15 $.18 $.33 $.34
=== === === ===
Dividends per share $.12 $.12 $.36 $.36
=== === === ===
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<CAPTION>
Nine Months Nine Months
Ended Ended
Sept. 30, 1995 Sept. 30, 1994
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $250,140 $255,362
------- -------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 314,012 319,155
Amortization of deferred income,
net of tax (82,079) (96,677)
Income from current year land
dispositions,net of tax (46,494) - 0 -
Increases and decreases in assets
and liabilities:
Accounts receivable and accrued
utility revenue (47,961) (113,418)
Materials and supplies 1,349 ( 4,288)
Prepayments (48,907) (22,908)
Accounts payable and accrued expenses (80,845) (58,502)
Other assets and deferred charges, net (222,473) (173,924)
Deferred income taxes 15,120 (11,025)
Customer advance (refund) for
construction 100,458 76,233
------- -------
Total Adjustments (97,820) (85,354)
------- -------
Net cash flows provided in
operating activities 152,320 170,008
------- -------
Cash flows from investing activities:
Net construction expenditures (497,128) (659,600)
Proceeds from sale of utility plant 759 981
Proceeds from land dispositions 200,000 - 0 -
------- -------
Net Cash flows used in investing
activities (296,369) (658,619)
------- -------
Cash flows from financing activities:
Increase in current note payable 124,664 250,000
Increase in long-term debt 293,542 469,811
Dividends paid, net of reinvested
dividends (250,921) (269,700)
Net Cash flows provided by financing
activities: 167,285 450,111
------- -------
Net increase in cash 23,236 (38,500)
Cash, beginning 58,812 66,700
------- -------
Cash, ending $ 82,048 $ 28,200
======= =======
Supplemental disclosure of cash
flow information:
Cash paid for
Interest $569,512 $526,068
======= =======
Income Taxes $ 60,575 $ 21,200
======= =======
Supplemental disclosure of
non-cash flow information:
The Company receives contributions
of plant from builders and
developers. These contributions
of plant are reported in utility
plant and in customers'advances
for construction. The
contributions are deducted from
construction expenditures to
determine cash expenditures by
the Company.
Gross Plant, additions $497,128 $659,600
Customers' advances for
construction (100,458) (76,233)
------- -------
Capital expenditures, net $396,670 $583,367
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A. - UNAUDITED STATEMENTS
- ------------------------------
The statements as of and for the three months and nine months ended
September 30, 1995 and September 30, 1994 are prepared without audit,
however, in the opinion of management, all material adjustments for a fair
statement of results have been made. The balance sheet as of December 31,
1994 has been audited. Certain amounts from prior years have been
reclassified in the financial statements to conform with the 1995
presentation.
Note B. - SEASONALITY OF REVENUE
- --------------------------------
The Company's business of selling water is to a certain extent seasonal
because water consumption normally increases during the drier and warmer
summer months. Accordingly, the results of operations for the three months
and nine months ended September 30, 1995 and September 30, 1994, if
annualized, do not necessarily reflect annual results.
Note C. - ACCRUED UTILITY REVENUE
- ---------------------------------
Accrued Utility Revenue at September 30, 1995 includes $80,022 in costs
incurred by the Company to date on a Main replacement project required by the
State of Connecticut. The Company's costs are reimbursable to the Company by
the State of Connecticut. - See Note G - Long Term Debt - Note Payable.
Note D. - PREPAYMENTS
- ---------------------
<TABLE>
Prepayments consist of:
<CAPTION>
Sept 30, Dec. 31, Sept 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
Insurance $ 44,369 $ 6,405 $ 33,945
Legal & accounting fees 13,054 3,702 14,449
Other prepaid expenses 30,910 29,319 26,789
------- ------- -------
$ 88,333 $ 39,426 $ 75,183
======= ======= =======
</TABLE>
The fluctuation in total prepayments as of the ends of the periods noted
was caused primarily by the fluctuation in prepaid insurance. Insurance
premium payments are made during the first quarter, since January 1 is the
beginning of the policy period, and amortized throughout the year.
The fluctuation in "Legal and Accounting Fees" reflects certain large,
expenses which regularly occur in the first quarter and are amortized
throughout the year to better match costs to the annual time period
benefitted.
Note E. - NOTE RECEIVABLE:
- --------------------------
In September 1992, the Company modified a 1990 agreement with a real estate
developer to provide for the sale of approximately 152 acres of land to the
developer. The modified agreement provided for the $1,213,222 unpaid balance
of the purchase price to be paid on April 10, 1995, and to bear interest at 6%
through December 31, 1993 and thereafter at a variable rate equal to the current
prime rate (8.75% at September 30, 1995) (the "Mortgage Debt"). The Mortgage
Debt is secured by a mortgage lien in favor of the Company on the 152 acres
(the "Mortgage"). The buyers are jointly and severally liable on the
obligation. The Mortgage was further amended in December 1994 to provide
for an interim payment of $200,000 on the principal of the Mortgage Debt by
March 31, 1995 and extended the maturity of the balance of the Mortgage Debt
to November 30, 1995. The Company received payment of the $1,013,222 balance
of the Mortgage Debt, together with all accrued interest, on November 14,
1995.
Under the prevailing Connecticut banking and real estate markets, practical
realization of the original Mortgage Debt is dependent upon the developer's
success in obtaining necessary financing and governmental and regulatory
approvals, none of which were or are assured. Accordingly, the sale has been
accounted for under the installment method.
Note F. - DEFERRED CHARGES
- ---------------------------
Deferred charges increased due to costs incurred to reclassify and obtain
regulatory approval for future sales of unneeded land.
Note G. - LONG TERM DEBT
- ------------------------
<TABLE>
<CAPTION>
Sept 30, Dec. 31, Sept 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
First mortgage bonds,
Series E 9.64% due
September 2011 $4,700,000 $4,700,000 $4,700,000
Note Payable 1,919,106 1,625,000 1,580,750
Other 3,189 3,753 3,753
--------- --------- ---------
$6,622,295 $6,328,753 $6,284,503
========= ========= =========
</TABLE>
First Mortgage Bonds
- --------------------
Pursuant to its Amended and Restated Mortgage Indenture, the Company has
outstanding a series of first mortgage bonds in the amount of $4,700,000 due
on September 1, 2011. The terms of the Indenture provide for, among other
things, annual sinking fund payments commencing September 1, 1997, and
limitations on (a) payment of cash dividends and (b) incurrence of additional
bonded indebtedness. Pursuant to this agreement, approximately $160,777 was
available to pay dividends at September 30, 1995, after the quarterly
dividend payment made on that date. Interest is payable semi-annually on
the first day of March and September. The indenture is secured by a lien on
all of the Company's utility property other than excess land available for
sale.
There are no maturities of bonds until September 1, 1997, when the Company
is required to begin payments of $94,000 on each September 1, until the bonds
are paid in full.
Note Payable
- ------------
In April 1994, the Company entered into a ten year credit facility with
Fleet Bank, N.A. The outstanding balance on the Company's previous line of
credit was converted to a new ten year $1,500,000 term loan. This term loan
is repayable at $75,000 per year for ten years with a $750,000 balloon
payment due at the end of ten years.
Also, a new $1,500,000 two year revolving line of credit was established to
fund additional capital improvements. At the end of the two year revolving
period, the outstanding balance may be converted to a term loan with the same
maturity and payment terms as the original term loan portion of the facility.
Both the term loan and the revolving line of credit are secured by a lien
(subordinate to the lien of the Mortgage Bond Indenture (see First Mortgage
Bonds above) on all of the Company's utility property other than its excess
land available for sale.
The term loan portion of the facility has both fixed and variable interest
rate options. The applicable weighted average interest rate on the term loan
at September 30, 1995 was 8.28%. The Company fixed the rate on this long-term
facility for a five year period at 8.18% on July 26, 1995. Interest is
payable monthly.
The two year revolving line of credit also has various interest rate
options, including a variable rate at 1% above the prime rate and LIBOR rate
options plus 1.9%, fixed for various short term periods including 30, 60, or
90 days. Interest is payable monthly. At September 30, 1995, the
outstanding balance on the two year revolving line of credit was $735,000 and
the weighted average interest rate payable at that time was 8.21%. Only a
portion of the $735,000 balance is carried as long-term debt since a total of
$80,022 is reimburseable by the State of Connecticut. (See Note C - Accrued
Utility Revenue).
The Company has also obtained an additional one year, unsecured line of
credit of up to $600,000 to be used for working capital purposes. The balance
of the working capital line must be reduced to zero for at least one full
month during the course of the year in order for the facility to be eligible
for renewal. The working capital line of credit also provides for interest
rate options, including a variable rate at 0.25% above the prime rate, a
variable rate at 1.75% above the bank's cost of funds (as provided by the
bank), and the LIBOR options also available under the two year revolving
line of credit. The outstanding balance of the working capital line of
credit at September 30, 1995 was $80,000, and the interest rate payable at
that date was 9.00%.
All three facilities provide that a default under one or under the Mortgage
Bond Indenture is considered a default under the others. They also provide
that the net proceeds from the sale of any of the Company's excess land must
be used to reduce the balance of the two year line of credit first and then
the term loan.
Note H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
- ----------------------------------------------
<TABLE>
<CAPTION>
Sept 30, Dec. 31, Sept 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
Accounts Payable $121,126 $116,467 $205,219
Accrued Expenses:
Taxes 154,036 182,601 152,507
Interest 37,876 151,130 39,942
Other 161,538 125,223 147,499
------- ------- -------
$474,576 $575,421 $545,167
======= ======= =======
</TABLE>
The fluctuation in "Accounts Payable" primarily reflects the timing of
construction project liabilities and their subsequent payments. The
fluctuation in accrued taxes primarily refelcts the timing of payments
against municipal property tax liabilities. The fluctuation in "Accrued
Interest" reflects primarily the semi-annual interest payment requirement on
the Company's bonds. See Note G - Long Term Debt, First Mortgage Bonds.
The fluctuation in other accrued expenses also reflects the timing of
payments.
Note I - DEFERRED GAINS ON LAND DISPOSITIONS
- --------------------------------------------
The DPUC has prescribed a rate making accounting procedure for income from
land dispositions which has the effect of sharing the economic benefits of
such dispositions between ratepayers and shareholders over a period of time.
Accordingly, the Company includes in its income in years in which it has a
land disposition only a portion of the income that is realized from such
disposition. The balance of the income is deferred and amortized to the
Company's rate base and equity for rate making purposes, and to income for
financial reporting purposes, over the period of time during which the rate
making procedure is in effect. For the nine months ended September 30, 1995
and 1994, $79,249 and $96,677 (net of income taxes), respectively, of such
deferred land disposition gains was included in income.
There was one "land sale" during the first nine months of 1995, resulting
from the receipt of a $200,000 instalment payment by a developer - see Note E,
Note Receivable, and Management's Discussion and Analysis - Other Income, Net
and Current Year Gain From Land Sales Net. The gain recognized from this
payment in March, 1995 was $46,494, net of tax. The remaining portion of this
gain was deferred and is to be amortized. There were no land sales in 1994.
Note J - EARNINGS PER SHARE
- ---------------------------
The Company has only one class of stock outstanding; earnings per share are
computed by dividing the outstanding weighted average shares of common stock,
on a year to date basis through the balance sheet date into the earnings for
all periods presented. The weighted average shares were 750,501 and 751,542
for the quarter and nine month period ended September 30, 1995 and 749,168
for both the quarter and nine months ended September 30, 1994.
Note K - RATE MATTERS
- ---------------------
Effective August 4, 1993 and July 20, 1994, the DPUC granted the Company
additional revenues of $75,000 (1.86% increase) and $113,000 (2.75% increase),
respectively.
The Company filed an application for a general rate increase with the DPUC
on July 3, 1995. A decision on this application is anticipated in December,
1995. The Company is unable to predict the amount of increase that the DPUC
will allow.
Note L - EQUITY
- ---------------
Stock Option Plans
- ------------------
On September 13, 1994, the Company adopted two stock option plans. A
nonemployee director option plan and a key employee option plan. 75,000 shares
were authorized under the two plans which provide for options to purchase
common stock of the Company at the fair market value at the date of the
grant. The options vest over various periods. As of September 30, 1995,
options for 57,750 shares had been granted to directors and employees of
the Company under both plans. The option plans and all options issued were
approved by the Company's shareholders at their Annual Meeting on May 17,
1995 and by the DPUC on May 24, 1995. The shares of the Company stock
to be issued under the two plans were registered under the Securities Act of
1933 by the filing of Registration Statements on Form S-8 with the Securities
and Exchange Commission on July 25, 1995.
Dividend Reinvestment Plan
- --------------------------
On September 13, 1994, the Company adopted a dividend reinvestment plan
which provides for the issuance and sale of up to 70,000 shares of the
Company's authorized but unissued common stock to its shareholders who elect
to reinvest cash dividends on the Company's existing shares. Shares
available under the plan may be purchased at their fair market value price on
the date of the dividends to be invested in the new shares. The plan was
approved by the DPUC on May 24, 1995 and registration of the shares under the
various applicable securities laws was completed on June 18, 1995.
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
- ---------------------
Net Income
- ----------
Net income decreased $22,730 (16%) to $115,241 in the third quarter of 1995
from $137,971 in the third quarter of 1994. For the nine months ended
September 30, 1995, net income decreased $5,222 (2%) to $250,140 from
$255,362 for the first nine months of 1994. These decreases for both periods
were primarily caused by the decreases in deferred income on land
dispositions and increased interest expense and were partially offset for the
nine months by increased other income.
Operating Revenues
- ------------------
For the third quarter, 1995, operating revenues increased by $66,769 (6%)
when compared to the same period of 1994. This increase was primarily the
result of higher residential and commercial consumption in 1995 due to the
record dry, hot summer.
For the nine months ended September 30, 1995, operating revenues increased
$120,722 (4%) reflecting the July 20, 1994 rate increase (see Note K to the
Financial Statements), as well as, increased residential and commercial water
consumption.
Operating Expenses
- ------------------
Operating expenses increased $63,181 (7%) when comparing the third quarter
of 1995 to the third quarter of 1994. The primary contributor was purchased
water expense, which increased $47,775 (28%). The total increase was due
primarily to increased water consumption in 1995 required during the record
dry and hot summer months of 1995.
Operating expenses for the nine months increased $121,866 (5%). The
primary contributors to this nine month increase were:
- Operations and Maintenance expense which increased $50,839 (4%),
primarily due to the increased cost of collection efforts on past
due accounts primarily during the first quarter of 1995.
- Purchased Water expense increased $43,887.
- Administrative and General Expense increased $21,234 (3%)
reflecting a 4% increase in salary costs, increased supplies
expense and professional service costs.
- Depreciation expense increased $21,466 as a result of the
increase in utility plant.
- Reduction in taxes on income due to lower taxable income for the
nine months, partially offset the impact of the increased
expenses noted above.
Utility Operating Income
- ------------------------
The Company's utility operating income was $216,079 for the third quarter
of 1995 as compared to $212,491 in the same quarter of 1994. For the nine
months utility operating income remained relatively the same at $491,278 in
1995 versus $492,422 in 1994.
Amortization of Prior Year's Deferred Income
on Land Dispositions, net
- --------------------------------------------
This item of income decreased $2,670 for the quarter and $14,598 for the
nine months ended September 30, 1995 versus the comparable September 30, 1994
period. The decrease in deferred land sale income results from the fact that
such income is amortized partially based on "sum of the years digits method."
Other Income, Net and Current Year Gain on Land Sales, Net
- ----------------------------------------------------------
Other income, net decreased $5,467 for the quarter ended September 30, 1995
compared to the quarter ended September 30, 1994, primarily due to a reduction
in interest income resulting from a lower note receivable principal amount due
after the March, 1995 $200,000 payment. This payment resulted in the current
year gain on land sales of $46,494, reflected in the first quarter and nine
months ended September 30, 1995 - See Note I Deferred Gain on Land Dispositions.
On a nine months year to date basis, this category increased $30,855
primarily the result of increased interest income due to higher rates on the
prime based note receivable from the developer.
Interest and Amortization of Debt Discount and Expense
- ------------------------------------------------------
Interest expense during the third quarter and nine months ended September
30, 1995 increased $18,181 and $66,829 respectively, over interest expense
during the same periods of 1994. The increase results from both higher
interest rates on the Company's variable rate indebtedness and from higher
levels of debt incurred primarily to finance the construction of utility
facilities.
FINANCIAL CONDITION
-------------------
The Company applied to the Department of Public Utility Control ("DPUC")
on July 3, 1995 for authority to increase rates generally. This
is the Company's first full rate case since 1991. The 1991 application
resulted in a settlement agreement and a series of reopeners in 1993 and
1994. The amount of the increase to be granted by the DPUC, which is unknown
at this time, should become effective in December 1995 or January 1996.
The Company projects that for the year 1995 it will have sufficient funds
available from operations to meet its operational needs. It will not, however,
be able to generate sufficient funds from sales of water to satisfy all of its
construction plans. Completion of the Company's Long-Term Capital Improvement
Program is dependent upon the Company's ability to raise capital from external
sources, including, for the purpose of this analysis, proceeds from the sale
of the Company's holdings of excess land. The Company believes that by
selling excess lands it can generate sufficient equity capital to support its
10 year capital budget, currently estimated at $8,246,000. Such land
dispositions are subject to approval by the DPUC.
The Company's present 1995 Capital Budget of $1,128,000 is two tiered. The
first tier, totalling $281,000 for routine annual expenditures for services,
mains, hydrants and meters which are expected to be financed with internally
generated funds. The 1995 tier one budget also includes $30,000 of capital
expenditures for Level "A' Mapping to be used in the process of protecting the
Housatonic Well Field aquifer.
The second tier of the 1995 Capital Budget consists of replacements and
betterments which are part of the Company's Long Term Capital Improvement
Program and includes $817,000 of budgeted plant additions. Plant additions
from this part of the 1995 budget will require external financing in addition
to the Company's line of credit. The second tier plant additions can be, and
portions of it are expected to be, deferred to future years if funds are not
available for their construction in 1995.
The 1990 agreement by and between the Company and a local developer
regarding the installment sale of approximately 152 acres of land in Seymour
was modified in 1994. The 1994 modification provided for an interim payment
of $200,000 on the $1,213,222 unpaid balance on or before March 31, 1995,
which interim payment was received March 29, 1995, and the $1,013,222 balance
no later than November 30, 1995. (See Note 3 to the Financial Statements).
The Company received the payment for the balance, together with all accrued
interest, on November 14, 1995.
As of September 30, 1995, the Company has approximately 1,425 acres of
excess land available for sale, consisting of land currently classified as
Class III, non-watershed land under the statutory classification system for
water company lands. The Company believes that by selling these excess
lands it can generate sufficient equity capital to support its 10 year
capital budget. Such land dispositions are subject to approval by the DPUC.
The Company is actively pursuing new sales of real property. Because of
the delays required by the regulatory process, however, it does not expect to
be able to consummate any such sales during 1995 other than receiving the
$1,013,222 proceeds from the developer mentioned above, even if current
discussions lead to a sales agreement in the near future.
In 1994 the Company entered into a credit facility with Fleet Bank, N.A.
consisting of $1,500,000 of new long term debt due in the year 2004 and a new,
additional, secured, two-year line of credit also in the principal amount of
$1,500,000. The new, secured line of credit is being used to provide funds to
continue the Company's construction program; at the Company's option it may be
converted to an eight year term loan at the end of the two year revolving
period. The Company also obtained an additional one-year, unsecured line of
credit in the amount of $600,000 to be used for working capital purposes. In
April, 1994 when the financing arrangement was approved by the DPUC, the DPUC
prohibited the Company from drawing down funds under the revolving line of
credit, if at the time of or as a result of the draw down, the amount of the
Company's long-term debt (including amounts outstanding under the two year
revolving line of credit) would exceed 67% of the Company's total
capitalization.
The outstanding balance under the two year revolving line of credit at
September 30, 1995 was $735,000. The effect of the limitation noted above
was, as of September 30, 1995, to prohibit the Company from taking any
additional advances under the revolving line of credit for use on budgeted
projects until such time as the Company obtains additional equity
capital. A combination of the increase to equity from both fourth quarter
operating earnings and the gain from the $1,013,222 proceeds received
from the developer, which has been applied to reduce debt amounts, will be
sufficient to allow additional borrowings.
In 1994 the Company's Board of Directors approved a common stock Dividend
Reinvestment Plan (the "Plan") pursuant to which shareholders will be entitled
to purchase up to 70,000 new shares of the Company's common Stock by applying
to the purchase price of the new shares cash dividends which otherwise would
be issued by the Company with respect to its existing common stock. The
Dividend Reinvestment Plan provides that the purchase price for the new
shares will be their fair market value at the time of the purchase. The plan
was approved by the DPUC on May 24, 1995. The Company cannot predict what
percentage of its cash dividends will from time to time be reinvested in new
shares of the Company's Common Stock. On June 30, 1995, $7,164 of the
$89,900 dividend paid on that date was reinvested by shareholders, and on
September 30, 1995, $11,699 of the $89,984 dividend paid on that date was
reinvested by shareholders.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
BIRMINGHAM UTILITIES, INC.
Registrant
/s/ Aldore J. River
Date: November 14, 1995 Aldore J. Rivers, President
Date: November 14, 1995 /s/ Paul V. Erwin
Paul V. Erwin, Treasurer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S SEPTEMBER 30, 1995 UNAUDITED BALANCE SHEET, INCOME STATEMENT
AND CASH FLOW STATEMENT, AND NOTES THERETO, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 11,181,492
<OTHER-PROPERTY-AND-INVEST> 1,013,222
<TOTAL-CURRENT-ASSETS> 1,488,178
<TOTAL-DEFERRED-CHARGES> 784,937
<OTHER-ASSETS> 999,358
<TOTAL-ASSETS> 15,467,187
<COMMON> 2,161,181
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,057,541
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,218,722
0
0
<LONG-TERM-DEBT-NET> 6,622,295<F1>
<SHORT-TERM-NOTES> 214,664
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 75,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,336,506
<TOT-CAPITALIZATION-AND-LIAB> 15,467,187
<GROSS-OPERATING-REVENUE> 3,213,011
<INCOME-TAX-EXPENSE> 50,532
<OTHER-OPERATING-EXPENSES> 2,671,201
<TOTAL-OPERATING-EXPENSES> 2,721,733
<OPERATING-INCOME-LOSS> 491,278
<OTHER-INCOME-NET> 226,382
<INCOME-BEFORE-INTEREST-EXPEN> 717,660
<TOTAL-INTEREST-EXPENSE> 467,520
<NET-INCOME> 250,140
0
<EARNINGS-AVAILABLE-FOR-COMM> 250,140
<COMMON-STOCK-DIVIDENDS> 269,784
<TOTAL-INTEREST-ON-BONDS> 0<F2>
<CASH-FLOW-OPERATIONS> 152,320
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
<FN>
<F1>See Note F to financial statements; includes long term note payable.
<F2>Not reported on an interim basis.
</FN>
</TABLE>
