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 June 30, 1996 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, CT 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 July 31, 1996
Common stock, no par value 755,107
ITEM I. FINANCIAL STATEMENTS
<TABLE>
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
As of June 30, 1996, December 31, 1995 and June 30, 1995
<CAPTION>
(Unaudited) (Unaudited)
June 30, Dec. 31, June 30,
1996 1995 1995
----------- --------- -----------
<S> <C> <C> <C>
ASSETS:
Utility Plant $16,860,399 $16,352,307 $16,135,087
Accumulated depreciation (5,327,400) (5,130,305) (4,960,058)
11,532,999 11,222,002 11,175,029
Current Assets:
Cash and cash equivalent 31,042 398,869 108,541
Accounts receivable, net of
allowance for doubtful
accounts 668,172 725,154 772,700
Accrued utility revenue 430,068 412,876 549,233
Materials & supplies 79,019 50,840 63,503
Prepayments 109,210 27,160 113,659
Total current asset 1,317,511 1,614,899 1,652,636
Note receivable 0 0 1,013,222
Deferred Charges 851,911 713,417 759,252
Unamortized debt expense 197,962 205,429 212,896
Income taxes recoverable 456,659 456,659 372,247
Other assets 424,118 411,352 388,867
1,930,650 1,786,857 2,746,484
$14,781,161 $14,623,758 $15,574,149
STOCKHOLDERS' EQUITY AND LIABILITIES
Stockholders' Equity:
Common Stock, no par value,
authorized 2,000,000 shares;
issued and outstanding
6/30/96-755,107; 12/31/95-
752,282; 6/30/95-749,867 $ 2,199,617 $ 2,172,116 $ 2,149,482
Retained earnings 1,217,723 1,235,482 1,032,284
3,417,340 3,407,598 3,181,766
Note Payable 1,592,500 1,300,000 1,696,783
Long-term debt 4,700,000 4,700,564 4,703,189
6,292,500 6,000,564 6,399,972
Current Liabilities:
Current portion of note
payable 75,000 75,000 408,717
Accounts payable and accrued
liabilities 610,944 674,488 690,258
Total current liabilities 685,944 749,488 1,098,975
Customers' advances for
construction 1,229,985 1,229,985 1,258,913
Contributions in aid of
construction 719,736 719,736 719,736
Regulatory liability-income
taxes refundable 195,049 195,049 202,641
Deferred income taxes 1,308,784 1,263,932 1,134,727
Deferred income on disposition
of land 931,823 1,057,406 1,577,419
Commitment and contingent
liabilities 0 0 0
$14,781,160 $14,623,758 $15,574,149
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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
----------------- -----------------
<S> <C> <C> <C> <C>
Operating Revenue (Note B) $1,098,183 $1,060,095 $2,156,935 $2,043,551
Operating Expenses:
Operations and Maintenance 200,561 198,915 401,564 398,767
Purchased Water 174,200 185,574 325,833 356,163
Administrative and General 270,207 280,803 544,988 555,914
Depreciation 99,000 93,471 196,476 188,023
Taxes Other Than Income 140,703 133,980 282,793 266,335
Taxes on Income 31,647 19,847 51,822 5,150
Total Operating Expense 916,318 912,590 1,803,476 1,770,352
Utility Operating Income 181,865 147,505 353,459 273,199
Amortization of Prior Years'
Deferred Income on Land
Dispositions,net 36,691 27,832 73,381 54,248
(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)
Other Income, net 24,313 33,632 31,465 69,878
Income before interest expense 242,869 208,969 458,305 397,325
Interest and Amortization of
Debt Discount & Expense 146,216 156,220 291,591 308,920
Income from dispositions of
land, net (net of income
taxes of $32,935 in 1995) -0- -0- -0- 46,494
Net income 96,653 52,749 166,714 134,899
Retained earnings, beginning 1,215,269 1,069,435 1,235,482 1,077,185
Dividends paid 94,198 89,900 184,472 179,800
Retained earnings, ending $1,217,724 $1,032,284 $1,217,724 $1,032,284
Earnings per share $.13 $.07 $.22 $.18
Dividends per share $.125 $.12 $.245 $.24
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(Unaudited)
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $166,714 $134,899
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 226,937 204,516
Amortization of deferred income,
net of tax (73,381) (54,248)
Income from current year land
dispositions,net of tax -0- (46,494)
Increases and decreases in assets
and liabilities:
Accounts receivable and accrued
utility revenue 39,790 (143,895)
Materials and supplies (28,179) ( 18,054)
Prepayments (82,050) ( 75,233)
Accounts payable and accrued expenses (63,544) 114,837
Other assets and deferred charges, net (174,254) ( 50,758)
Deferred income taxes 7,352 ( 63,133)
Customer advance (refund) for
construction -0- 100,458
Total Adjustments (162,033) ( 32,004)
Net cash flows provided by operating
activities 4,681 102,895
Cash flows from investing activities:
Net construction expenditures (508,092) (395,965)
Proceeds from sale of utility plant 619 499
Proceeds from land dispositions -0- 200,000
Net Cash flows (used in)
investing activities (507,473) (195,466)
Cash flows from financing activities:
Increase in current note payable -0- 243,717
Increase in long-term debt 291,936 71,219
Dividends paid (184,472) (179,800)
Dividends reinvested 27,501 7,164
Net Cash flows provided by
financing activities: 134,965 142,300
Net (decrease) in cash & cash
equivalents (367,827) ( 49,729)
Cash & cash equivalents, beginning 398,869 58,812
Cash, ending $ 31,042 $108,541
Supplemental disclosure of cash
flow information:
Cash paid for
Interest $284,072 $301,402
Income Taxes $200,550 $60,575
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 $508,092 $395,965
Customers' advances for
construction -0- (100,458)
Capital expenditures, net $508,092 $295,507
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 six months ended June
30, 1996 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, 1995 has been audited.
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 six months ended June 30, 1996 and June 30, 1995, if annualized,
do not necessarily reflect annual results.
Note C. - ACCOUNTS RECEIVABLES, NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts Receivable, net declined $104,528 during the first six months
of 1996, as the result of a more formalized collection effort developed
during 1995.
Note D. - ACCRUED UTILITY REVENUE
Accrued Utility Revenue at June 30, 1996 and December 31, 1995 includes
$84,380 in costs incurred by the Company to date on a Main replacement
project required by the State of Connecticut. At June 30, 1995 the balance
due for that project and included in accrued utility revenue totaled
$212,151. The Company's costs are reimbursable to the Company by the State
of Connecticut. - See Note H - Accounts Payable and Accrued Expenses.
Note E. - PREPAYMENTS
<TABLE>
Prepayments consist of:
<CAPTION>
June 31, Dec. 31, June 31,
1996 1995 1995
-------- -------- --------
<S> <C> <C> <C>
Insurance $ 62,159 $ 7,545 $ 56,571
Legal & accountg.fees 22,242 0 26,053
Other prepaid expenses 24,809 19,615 31,035
$109,210 $27,160 $113,659
</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
accounting and other annual reporting costs which regularly occur in the
first quarter and are amortized over the remaining part of the year to better
match costs to the annual time period benefitted.
Note F. - NOTE RECEIVABLE:
The note receivable in 1995 reflected the balance owed by a real estate
developer for the sale of approximately 152 acres of land. The promissory
note was paid in full during 1995, with $200,000 of the principal being
received during the first quarter, 1995 and the balance in the fourth quarter
of 1995.
Note G. - LONG TERM DEBT
<TABLE>
<CAPTION>
June 30, Dec. 31, June 30,
1996 1995 1995
-------- -------- --------
<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 1,592,500 1,300,000 1,696,783
Other 0 564 3,189
--------- --------- ---------
$6,292,500 $6,000,564 $6,399,972
</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 $373,000 was
available to pay dividends at June 30, 1996, 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 converted certain short term borrowings to a
ten-year $1,500,000 secured term loan, established a $1,500,000 two-year
secured revolving line of credit to fund additional capital improvements, and
obtained a one-year, unsecured line of credit of $600,000 to be used for
working capital purposes. The two-year revolving period expired in April
1996 and has been renewed for another two year period through April, 1998, at
which time the outstanding balance may be converted to a term loan with the
same maturity and payment terms as the original term loan. 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 Note 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 interest rate at December 31, 1995 and through
July 2000 is 8.18%. Interest is payable monthly. The renewed 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, fixed for
various short term periods including 30, 60 or 90 days, at 1.75% over the
applicable LIBOR rate. Interest is payable monthly. There were outstanding
borrowings of $330,000 on the revolving line of credit at June 30, 1996.
In April 1996, the unsecured, working capital line of credit was extended for
one year. The unsecured line of credit also provides for various 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. There were no outstanding borrowings on the unsecured line of
credit at June 30, 1996.
All three facilities provide that a default under any of them 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>
June 30, Dec. 31, June 30,
1996 1995 1995
-------- -------- --------
<S> <C> <C> <C>
Accounts Payable $131,480 $116,313 $193,135
Accrued Expenses:
Taxes 178,599 297,810 195,491
Interest 151,192 151,172 151,120
Pension 87,858 72,710 85,839
Other 61,815 36,483 64,673
------- ------- -------
$610,944 $674,488 $690,258
</TABLE>
The fluctuation in "Accounts Payable" reflects primarily a $44,000 progress
payment owed to the contractor on a main replacement project, included as
a payable at June 30, 1995 with no comparable balance due as of December
31, 1995 or June 30, 1996. The main replacement is required by the State
of Connecticut and the costs will be reimbursed by the State to the
Company. - See Note D - Accrued Utility Revenue. The fluctuation in taxes
primarily reflects the increased liability for federal income taxes as of
year-end due to increased taxable income for 1995 resulting from the land
sale. - See Note F. Note Receivable.
<TABLE>
<CAPTION>
June 30, Dec. 31, June 30,
1996 1995 1995
-------- -------- --------
<S> <C> <C> <C>
Post Retirement Benefit
Other Than Pensions $21,000 $ 0 $16,972
</TABLE>
The fluctuation in Other accruals reflects the accrual for post retirement
benefits other than pension ("PBOP") which is funded by year end.
Note I - DEFERRED GAINS ON LAND DISPOSITIONS
The DPUC has provided for 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 three and six
months ended June 30, 1996 and 1995 such deferred land disposition gains
(net of income taxes) were included in income as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Amortization of Prior Years'
Deferred Income on
Land Dispositions, net $36,691 $27,832 $73,381 $54,248
</TABLE>
The increase in the amortization for the three months and six months
ended June 30, 1996 vs 1995 reflects primarily the additional amortization
in 1996 of the gain deferred from the proceeds received in November of 1995
from a previous installment sale. See Note F-Note Receivable.
The receipt of a $200,000 installment payment in March of 1995 with
respect to that installment sale resulted in a gain in that quarter - see
Note F, Note Receivable, and Management's Discussion and Analysis. 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 during the first six months of 1996.
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. Average shares outstanding were
753,602 and 749,176 for the three month periods ended June 30, 1996 and
1995, respectively and 752,956 and 749,172 for the six months ended June
30, 1996 and 1995, respectively.
Note K - RATE MATTERS
Effective January 1, 1996, the DPUC granted the Company increased rates
designed to produce additional annual revenues of $289,333 (an increase of
approximately 6.89% over previous rates).
Note L - EQUITY
Stock Option Plans
In 1994, the Company adopted two stock option plans, nonemployee
director option plan and a key employee stock 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 December 31, 1995,
options for 57,750 shares had been granted to directors and employees of
the Company under both plans.
Dividend Reinvestment Plan
In 1994, the Company also 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.
In 1995 the Company issued 3,114 shares of common stock at a value of
$31,108 in lieu of cash dividends in connection with its dividend
reinvestment plan. Through June 30, 1996, an additional 2,825 shares of
common stock were issued at a value of $27,501 in lieu of cash dividends.
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
Net Income
Net income increased $43,904 (83%) to $96,653 in the second quarter of
1996 from $52,749 in the second quarter of 1995. The increase for the
quarter reflects an increase in operating revenue, an increase in the
amortization of prior years' deferred income on land dispositions and lower
interest expense partly offset by a reduction in other income, net.
For the six months ended June 30, 1996, net income increased $31,815
(24%) to $166,714 from $134,899 for the first six months of 1995. The
increase for the first six months of 1996 compared to the same period of
1995 resulted primarily from an increase in operating revenue, additional
amortization of prior years' deferred income and lower interest expense,
partly offset by decreases in other income, net. Also, there was no
current year gain on land sales in 1996 as compared to a gain of $46,494
recorded in March, 1995. (See Note I to the Financial Statements).
Operating Revenues
In the second quarter of 1996, operating revenues increased $38,088
(3.6%) over the same period of 1995. The increase was primarily the result
of the impact in 1996 of the 6.89% rate increase, which became effective
on January 1, 1996, (see Note K to the Financial Statements). Water
consumption by all customer classes declined 3% in the aggregate during the
second quarter of 1996 as compared to the second quarter of 1995. The
decline in commercial consumption accounted for approximately 80% of the
total decrease in consumption.
For the six months ended June 30, 1996, operating revenue increased
$113,384 (5.6%) reflecting the January 1, 1996 rate increase of 6.89%,
partly offset by decreased commercial and municipal water consumption.
Operating Expenses
Operating expenses increased $3,728, less than one percent when
comparing the second quarter of 1996 to the second quarter of 1995. The
increase reflects increases in non-controllable expenses net of the efforts
of the Company to control costs and the lower water consumption levels
requiring less costs. Non-controllable expense increases include
depreciation expense, taxes other than income and taxes on income.
Depreciation expense increased $5,529 as a result of utility plant
additions. Taxes other than income increased $6,723 (5%) as a result of
increases in property taxes and increased gross receipts tax due to
increased revenue. Taxes on income increased $11,800 reflecting an
increase in taxable income. The above increases were partially offset by
lower consulting costs, which in 1995 related to improving the collection
process, and a reduction of purchased water costs of $11,374 (6%).
Operating expenses for the first six months of 1996 increased $33,124
(2%) over the same 1995 period, also as a result of increased non-
controllable costs. A portion of this six month increase was the result
of $16,973 (up 37%) in added maintenance costs, primarily to repair one
large main break. The overall increase in operating expenses also reflects
a $46,672 increase in taxes on the Company's increased taxable income, and
a $8,453 increase in depreciation expense as a result of the increase in
utility plant. These increases were partially offset by a $30,330
reduction in purchased water costs and lower consulting costs related to
the improved collection process versus 1995.
Amortization of Prior Years' Deferred Income on Land Dispositions, net
The amortization of prior years' deferred income on land dispositions,
net of taxes increased $8,859 (31%) to $36,691 for the second quarter of
1996 from $27,832 in the same quarter of 1995. For the six months ended
June 30, 1996 compared to the same period of 1995, the amortization of
prior years' deferred income increased $19,133 (35%). The increase for
both periods reflects primarily the additional amortization of gains
deferred from land sales the proceeds from which were received during 1995.
Other Income, net
Other income, net, decreased $9,319 and $38,413 between 1996 and 1995
for the three months and six months, respectively, due primarily to the
decrease in interest income on the note receivable, which had been accruing
at the prime rate in 1995 and was paid in full in November, 1995.
Interest and Amortization of Debt Discount & Expense
Interest expense decreased $10,004 and $17,329, respectively, for the
three and six months ended June 30, 1996 as compared to the same periods
of 1995. The level of the Company's debt, which is incurred on a regular
basis to finance required additions to utility plant, was reduced by the
application to that debt of installment payments received by the Company
in 1995 from a prior sale of land.
FINANCIAL CONDITION
The Company applied to the Connecticut Department of Public Utility
Control ("DPUC") on July 3, 1995 for authority to increase rates generally.
Effective January 1, 1996, the DPUC granted the Company increased rates,
designed to provide additional annual revenues of $289,333 (6.89%).
The Company generates sufficient funds available from operations to meet
its day-to-day 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 $8,726,000. Such land dispositions are subject to approval by the DPUC.
The Company's 1996 Capital Budget of $1,140,000 is two-tiered. The
first tier, totalling $805,000, includes $268,000 for routine annual
expenditures for services, mains, hydrants, and meters, as well as $240,000
for low system distribution improvements, $115,000 for the painting of two
storage tanks, $150,000 for small main replacements and $32,000 toward
Level "A' Mapping to be used in the process of protecting the Housatonic
Well Field aquifer. The Company has expended $508,000 on its tier one
budget through the first six months. The Company expects to fund the
routine annual expenditures from internally generated funds and the balance
of the first tier budget from borrowings under its $1,500,000 secured, two-
year revolving line of credit.
The second tier of the 1996 Capital Budget consists of replacements and
betterments which are part of the Company's Long Term Capital Improvement
Program and includes $335,000 of budgeted plant additions. Plant additions
from this part of the 1996 budget will require external financing in
addition to the Company's two-year revolving 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 1996.
As of June 30, 1996, the Company has approximately 1,460 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 defers the costs it incurs to prepare the excess
land for sale. It allocates non-specific land sale costs among all parcels
available for sale, based upon the total acres available for sale when the
costs are incurred. The costs are charged against the proceeds received
when a parcel is sold. The $138,494 increase in deferred charges during
the first six months of 1996 primarily reflects costs for surveys and maps
related to readying these land parcels for sale, as well as, costs incurred
during the application process for the proposed sale to the City of Ansonia
noted below.
On April 30, 1996, the Company entered into a Purchase and Sale
Agreement with the City of Ansonia, Connecticut (the "City") for the sale
by the Company to the City of approximately 59.24 acres of unimproved real
property for the purchase price of $1,041,350. Approval of the transaction
by the DPUC and the City's Board of Aldermen, both of which were
conditional to the consummation of the transaction, have been received, and
is anticipated that the sale will occur during 1996.
The Company is actively pursuing additional 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 1996, 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 a term loan due in the year 2004 and a secured,
two-year line of credit also in the principal amount of $1,500,000. On May
1, 1996, the DPUC granted approval to the Company to renew its two year
revolving facility, in accordance with Fleet Bank's commitment. The
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 a six year term loan at the end of the two year revolving period. The
Company also maintains an additional one-year, unsecured line of credit in
the amount of $600,000 to be used for working capital purposes.
The DPUC has 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 June 30, 1996 was $330,000. The
effect of the limitation noted above, as of June 30, 1996, was to limit the
Company to $650,000 of additional borrowings on the revolver until the
Company obtains additional equity capital. The DPUC has also required that
the Company's ratio of long-term debt to total capital be reduced to 62%
by the end of the new two-year revolving period.
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. Since the
plan's implementation just prior to the June 30, 1995 dividend, a total of
$31,108 was reinvested in 1995 and an additional $27,501 was reinvested
during the first six months of 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Default Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
During the second quarter of 1996, the only matters submitted to a vote
of the holders of the Company's common stock, its only class of voting
stock, were submitted at the Company's Annual Meeting of Shareholders held
on June 12, 1996, as follows:
a) Election of Directors - All nominees for Director were elected, as
follows:
<TABLE>
<CAPTION>
Votes Cast % of Votes Abstentions
Votes Cast Against or Cast in & Broker
Name of Nominee In Favor Withheld Favor Non-Votes
--------------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Stephen P. Ahern 650,923 3,952 99.4 98,712
E.G. Brickett 650,923 3,952 99.4 "
J.E. Cohen 650,923 3,952 99.4 "
B. Henley-Cohn 650,923 3,952 99.4 "
A.J. Rivers 650,923 3,952 99.4 "
B.L. Sauerteig 601,606 53,267 91.9 "
K.E. Schaible 649,879 4,996 99.2 "
C.T. Seccombe 650,123 4,752 99.3 "
D. Silverstone 649,911 4,964 99.2 "
</TABLE>
b) Approval of Auditors - Shareholders approved the appointment of
Dworken, Hillman, LaMorte & Sterczala, P.C. as auditors for the Company to
make the annual audit for the 1996 fiscal year. There were 634,690 shares
voted in favor, representing 96.9% of all shares voting. There were 20,185
voting against and 98,712 abstentions and broker non-votes.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) Reports on Form 8-K
Current Report on Form 8-K, dated May 6, 1996, with respect to the
Company's entering into a purchase and sale agreement with the City
of Ansonia to sell to the City of Ansonia approximately 59.24 acres
of real property for a purchase price of $1,041,350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its
behalf of the undersigned, thereunto duly authorized.
BIRMINGHAM UTILITIES, INC.
Registrant
/s/ Aldore J. Rivers
Date: August 13, 1996 Aldore J. Rivers, President
Date: August 13, 1996 /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 JUNE 30, 1996 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 11,532,999
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,317,511
<TOTAL-DEFERRED-CHARGES> 851,911
<OTHER-ASSETS> 1,078,740
<TOTAL-ASSETS> 14,781,161
<COMMON> 2,199,617
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,217,723
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,417,340
0
0
<LONG-TERM-DEBT-NET> 6,292,500<F1>
<SHORT-TERM-NOTES> 0
<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> 4,996,321
<TOT-CAPITALIZATION-AND-LIAB> 14,781,161
<GROSS-OPERATING-REVENUE> 2,156,935
<INCOME-TAX-EXPENSE> 51,822
<OTHER-OPERATING-EXPENSES> 1,751,654
<TOTAL-OPERATING-EXPENSES> 1,803,476
<OPERATING-INCOME-LOSS> 353,459
<OTHER-INCOME-NET> 104,846
<INCOME-BEFORE-INTEREST-EXPEN> 458,305
<TOTAL-INTEREST-EXPENSE> 291,591
<NET-INCOME> 166,714
0
<EARNINGS-AVAILABLE-FOR-COMM> 166,714
<COMMON-STOCK-DIVIDENDS> 184,472
<TOTAL-INTEREST-ON-BONDS> 0<F2>
<CASH-FLOW-OPERATIONS> 4,681
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
<FN>
<F1>See Note G to financial statements; includes long term note payable.
<F2>Not reported on an interim basis.
</FN>
</TABLE>
