SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13, OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file No. 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact Name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
230 Beaver Street, Ansonia, CT 06401
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number including area code (203) 735-1888
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
None None
Securities registered pursuant to Section 12(g) of the Act
Common Stock (no par value)
Title of Class
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Sec. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates* of the
registrant based on the average bid and asked prices of such stock as of
March 27, 1996: $5,313,126.
Indicate the number of shares outstanding or each of the registrant's class
of common stock, as of the latest practicable date.
Class Outstanding at March 10, 1995
Common Stock, no par value 752,282
*For purposes of setting forth on the cover sheet of this Annual Report on
Form 10-K the aggregate market value of the voting stock held by non-
affiliates of the registrant, the registrant has deemed that all shares
beneficially held by officers, directors, and nominees are shares held by
affiliates.
PART I
Item 1. Business
The Company is a specially chartered Connecticut public
service corporation in the business of collecting and distributing
water for domestic, commercial and industrial uses and fire
protection in Ansonia and Derby, Connecticut, and in small parts of
the contiguous Town of Seymour. Under its charter, the Company
enjoys a monopoly franchise in the distribution of water in the
area which it serves. In conjunction with its right to sell water,
the Company has the power of eminent domain and the right to erect
and maintain certain facilities on and in public highways and
grounds, all subject to such consents and approvals of public
bodies and others as may be required by law.
The current sources of the Company's water are wells located
in Derby and Seymour and interconnections with the South Central
Connecticut Regional Water Authority's (the "Regional Water
Authority") system (a) at the border of Orange and Derby (the
"Grassy Hill Interconnection") and (b) near the border of Seymour
and Ansonia (the "Woodbridge Interconnection"). The Company
maintains its interconnected Peat Swamp, Middle and Quillinan
Reservoirs, a 2.2 million gallons per day (MGD) surface supply, for
emergency use only.
During 1995 approximately 1.24 billion gallons of water from
all sources were delivered to the Company's customers. The Company
has approximately 8500 customers of whom approximately 98.6% are
residential and commercial. No single customer accounted for as
much as 10% of total billings in 1995. The business of the Company
is to some extent seasonal, since greater quantities of water are
delivered to customers in the hot summer months.
The Company had, as of March 10, 1996, 19 full-time employees.
The Company's employees are not affiliated with any union
organization.
The Company is subject to the jurisdiction of the Connecticut
Department of Public Utility Control ("DPUC") as to accounting,
financing, ratemaking, disposal of property, the issuance of long
term securities and other matters affecting its operations. The
Connecticut Department of Public Health and Addiction Services (the
"Health Department" or "DPHAS") has regulatory powers over the
Company under state law with respect to water quality, sources of
supply, and the use of watershed land. The Connecticut Department
of Environmental Protection ("DEP") is authorized to regulate the
Company's operations with regard to water pollution abatement,
diversion of water from streams and rivers, safety of dams and the
location, construction and alteration of certain water facilities.
The Company's activities are also subject to regulation with regard
to environmental and other operational matters by federal, state
and local authorities, including, without limitation, zoning
authorities.
The Company is subject to regulation of its water quality
under the Federal Safe Drinking Water Act ("SDWA"). The United
States Environmental Protection Agency has granted to the Health
Department the primary enforcement responsibility in Connecticut
under the SDWA. The Health Department has established regulations
containing maximum limits on contaminants which have or may have an
adverse effect on health.
Executive Officers of the Registrant
Business Experience
Name, Age and Position Past 5 Years
Betsy Henley-Cohn, 43,
Chairwoman of the Board Chairwoman of the Board of Directors
of the Company since May of 1992;
Chairman of the Board of Directors
and Treasurer, Joseph Cohn & Sons,
Inc, (painting contractors);
Director, United Illuminating
Company and Aristotle Corp.; Society
for Savings Bancorp., Director 1985
- 1993;
Aldore J. Rivers, 62, President of the Company since 1985.
President
Paul V. Erwin, 50 Treasurer of the Company since
Vice President, Treasurer July 1, 1993. Senior Vice President
and Chief Financial Officer,
Lafayette Bank & Trust Co., 1986 to
1990; Executive Officer TR Paul,
Inc. 1990 to 1993.
Item 2. Properties
The Company's properties consist chiefly of land, wells,
reservoirs, and pipelines. The Company has 4 production wells with
an aggregate effective capacity of approximately 3.0 MGD. In 1995
the Company formally abandoned one well in Derby in accordance with
DPHAS regulations. All existing interconnections with the Regional
Water Authority can provide 3.8 MGD. The Company's entire system
has a safe daily yield (including only those supplies that comply
with the SDWA on a consistent basis) of approximately 6.8 MGD,
while the average daily demand and the maximum daily demand on the
system during 1995 were approximately 3.41 MGD and 4.63 MGD,
respectively. The distribution system, with the exception of the
well supplies, is mainly through gravity, but there are seven
distinct areas at higher elevations where pumping, pressure tanks
and standpipes are utilized. These higher areas serve
approximately 25% of the Company's customers.
The Company has three emergency stand-by reservoirs (Peat
Swamp, Quillinan and Middle) with a storage capacity of 484 million
gallons and a safe daily yield of approximately 2.2 MGD. Because
the water produced by those reservoirs does not consistently meet
the quality standards of the SDWA, none of the reservoirs is
actively being used by the Company to supply water to the system.
In addition, the Company owns the Sentinel Hill and Great Hill
reservoir systems which were abandoned as usable reservoirs in 1988
and 1994, respectively, with the approval of the Health Department.
Because these reservoirs do not meet the requirements of the SDWA
and because of their minimal storage capacity, the Company has
determined that they are not large enough to build filtration
plants to bring the water into compliance economically.
The Company's dams are subject to inspection by and the
approval of the DEP. The DEP, in a recent review of the Company's
Middle Reservoir Dam, concluded that the improvements required for
that dam are of a maintenance type only and do not require
diversion or construction permits. It is now planned to commence
proposed maintenance work on that dam in 1996 if funds are
available.
The Company has an office building at 230 Beaver Street, in
Ansonia. That building was built in 1964, is of brick
construction, and contains 4,200 square feet of office and storage
space. In addition, the Company owns two buildings devoted to
equipment storage. The Company also maintains some office space in
a wood frame, residential building owned by the Company at 228
Beaver Street, Ansonia.
The Company's approximately 3,450 acres of land were acquired
over the years principally in watershed areas to protect the
quality and purity of the Company's water at a time when land use
was not regulated and standards for water quality in streams were
non-existent.
Under Connecticut law a water company cannot abandon a source
of supply or dispose of any land holdings associated with a source
of supply until it has a "water supply plan" approved by the Health
Department. The Health Department approved the Company's first
water supply plan in 1988 subject to certain modifications. The
first modification required the Company to retain the Great Hill
reservoir as an emergency source of supply. The second
modification reserved to the Health Department the right to require
the Company to revise its plan, if necessary, upon review of the
water supply plan for the South Central Connecticut Regional Water
Authority, from which the Company purchases a significant
percentage of its water supply. Pursuant to abandonment permits
issued by the Health Department in 1988, the Company abandoned its
Upper and Lower Sentinel Hill Reservoirs, Steep Hill (Bungay)
Reservoir, and Fountain Lake Reservoir, and the land associated
with them then became available for sale.
During 1993, the Company submitted to the Health Department an
updated Water Supply Plan that resulted in the abandonment of the
Company's Great Hill Reservoir. On March 21, 1994, the Health
Department approved the updated Water Supply Plan, and on August
17, 1994 the abandonment of Great Hill Reservoir. Approximately
766 acres of land associated with the reservoir, which land had
previously been watershed land, has now become available for sale.
Since 1988, the Company has sold 150 acres of land in Bethany
for $1.5 million, 96 acres in Ansonia, Derby and Seymour for $1.8
million and 151 acres in Seymour for $1.561 million.
The Company believes that approximately 1,460 acres of its
land holdings will not be needed in the future for water supply
purposes and can be sold. The Company has proposed, and the DPUC
has accepted with respect to prior transactions, an accounting and
ratemaking mechanism by which the gain on the sale of the Company's
land holdings is shared between ratepayers and stockholders as
contemplated by Connecticut law. (See Note 1 to the Company's
Financial Statements).
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Stock and Related Security Holding
Matters.
As of February 26, 1996 there were approximately 522 record holders of the
Company's common stock. Approximately 33.9% of the Company's stock is held in
"nominee" or "street" name. The Company's common stock is traded on the NASDAQ
Small-Cap Market. The market is not active, and actual trades are infrequent.
The following table sets forth the dividend record for the Company's common
stock and the range of bid prices for the last two calendar years. The stock
prices are based upon NASDAQ records provided to the Company. The prices given
are retail prices. The Company's Mortgage Bond Indenture under which its First
Mortgage Bonds are issued limits the dividends the Company may pay.
<TABLE>
<CAPTION>
Bid
High Low Dividend Paid
<S> <C> <C> <C>
1994 First Quarter 9.50 9.25 .12
Second Quarter 10.75 9.50 .12
Third Quarter 10.50 10.00 .12
Fourth Quarter 11.00 10.25 .12
1995 First Quarter 10.50 10.50 .12
Second Quarter 10.50 10.00 .12
Third Quarter 10.50 10.50 .12
Fourth Quarter 10.50 10.00 .12
1996 Through February 26 10.00 9.50 --
</TABLE>
Item 6. Selected Financial Data
Presented below is a summary of selected financial data for the years 1991
through 1995:
<TABLE>
<CAPTION>
(000's omitted except for per share data)
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
Operating Revenues $4,238 $4,124 $4,033 $3,847 $3,649
Income before
Interest Charges 863 913 910 810 765
Income from Land
Dispositions* 279 - - 39 -
Net Income 518 363 378 342 298
Earnings Per Share** .69 .48 .50 .46 .40
Cash Dividends Declared
(per share)** .48 .48 .46 .44 .44
Total Assets 14,624 15,246 14,602 13,944 12,633
Long Term Debt 6,001 6,329 5,815 5,511 4,707
Short Term Debt 75 165 - - 350
Shareholder Equity 3,407 3,220 3,217 3,195 3,183
</TABLE>
* See Management Discussion and Analysis, Results of Operations - Land
Dispositions.
**Per share amounts for 1991 and 1992 have been restated for comparability to
reflect the impact of the July 16, 1993 two for one stock split.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Net Income
Net income fluctuated from $378,213 in 1993 to $362,520 in 1994 and to
$518,065 in 1995. The $15,693 decrease in net income from 1993 to 1994
resulted from a $20,317 decrease in the amortization of deferred gains on
dispositions of land, net of income taxes and increased interest expense.
These reductions to net income were partly offset by a $19,560 increase in
other income, net, reflecting timber sales in 1994 versus none in 1993.
The $155,545 increase in net income from 1994 to 1995 reflects the
$279,101 current year gain on land sales, net of income taxes in 1995 and the
$34,970 increase in other income which primarily results from an increase in
fee income from the managed water system. The increases to net income were
partly offset by a decline in operating income of $84,940 due to increased
operating expenses and a $73,586 increase in interest expense related to
budgeted capital expenditures.
Revenues
The Company's business is to provide water service to customers, primarily
in the cities of Ansonia and Derby, Connecticut. In 1995, revenues increased
$113,688 (2.8%) over 1994 revenues, primarily as a result of the full impact
in 1995 of a July 20, 1994 2.75% annual rate increase granted by the
Connecticut DPUC and the increased use of water during the summer months.
More than 73% of the water consumed by the Company's customers is consumed
by residential customers. Residential water consumption and total water
consumption were higher in 1995 than in 1994 as a result of experiencing the
worst drought in thirty years during the summer of 1995. Commercial and
industrial customers' consumption dropped from 1994 to 1995.
Revenues in 1994 increased $91,393 (2.3%) over those in 1993 primarily
as a result of the full impact in 1994 of a $75,000 (1.86%) annual rate increase
granted by the Connecticut DPU, effective August 4, 1993, and the impact in
1994 of an additional $113,786 (2.75%) annual rate increase granted by the
Connecticut DPUC, effective on July 20, 1994. The impact of these rate
increases was partially offset by a return to normal weather conditions in
1994 when compared to the record heat recorded during the summer months of
1993.
Residential water consumption, and consequently total water consumption
in 1994 was less than in 1993. The relatively wet 1994 summer compared to
1993's hot summer months is believed to be the main reason for the reduction
in residential consumption from 1993 to 1994. Commercial and industrial
customers consumed slightly more water in 1994 than they did in 1993.
Operating Deductions
Operating deductions in 1995 increased $194,497 (5.6%) when compared to
1994. The cost of purchased water increased $53,904, due to the Company's
increased reliance on purchased water during drought conditions experienced
in 1995's summer months. The cost of maintaining distribution mains increased
$26,064 primarily the result of fixing two significant main breaks in 1995.
Customer account expense increased $31,368 as the result of a concerted
collection effort which significantly reduced delinquent accounts during 1995.
The reamining increase reflects the $28,990 increase in depreciation expense
associated with the cost of budgeted capital expenditures of $671,390 in 1995
and $696,340 in 1994, the annual increase in salaries and the general level of
inflation affecting many accounts, including the $18,875 increase in taxes
other than income. The decline in taxes on income (see Management's Discussion
and Analysis-Income Taxes) as a result of lower operating income partially
offset the impact of the increases noted above.
Operating deductions increased $87,794 (2.6%) from 1993 to 1994. The
1994 increase in operating deductions over those in 1993 reflects a $59,045
(2.6%) increase in operating expenses, a $22,594 (24.4%) increase in
maintenance expense and increased depreciation expenses resulting from the
addition of new depreciable plant of $696,340 in 1994 and $716,096 in 1993.
The impact of these 1994 operating expense increases was partially offset by
a decrease in taxes, other than income taxes, due to lower personal property
tax expenditures resulting from a 1993 professional review of this expenditure.
Interest
Interest expense increased to $623,741 from $550,155 in 1994 and $531,620
in 1993. The increasing amounts of interest expense result from increased
levels of debt, used primarily to finance construction of new utility plant.
Income Taxes
Taxes on the Company's income from operations were $67,742 in 1995,
$95,884 in 1994 and $97,321 in 1993. The 1995 decrease reflects the reduction
in operating income in 1995 as compared to 1994.
The Company also incurs income tax liability for gains from land
transactions, both in the year in which they occur and in the later years in
which income, previously deferred in accordance with the DPUC's orders
concerning the sharing of the gains between the Company's shareholders and
ratepayers, is recognized by the Company. Taxes related to gains on land
transactions were $286,694, $90,977 and $104,203 in 1995, 1994 and 1993,
respectively. The Company's total income tax liability including both the
tax on operating income and on land sale gains was $354,436 in 1995, $186,861
in 1994 and $201,524 in 1993.
Land Dispositions
When the Company disposes of land, any gain, net of tax, recognized is
shared between rate payers and stockholders based upon a formula approved by
the DPUC. The impact of land dispositions is recognized in two places on
the statement of income.
The 1995 statement of income reflects income from dispositions of land
(net of taxes) of $279,101 which represents the stockholders' immediate share
of income from land dispositions occurring in that year. In 1994 and 1993
there were no dispositions of land.
The second place where land disposition income is recognized in the
financial statements is as a component of operating income on the line
entitled "Amortization of Deferred Income on Dispositions of Land." These
amounts represent the recognition of income deferred on land dispositions
which occurred in prior years. The amortization of deferred income on land
dispositions, net of tax was $121,897, $126,028 and $146,345 for the years
1995, 1994 and 1993, respectively.
Recognition of deferred income will continue over time periods ranging
from ten to fifteen years depending upon the amortization period ordered by
the DPUC for each particular disposition.
Effects of Inflation
The Company has received rate orders from the DPUC allowing increases in
the Company's rates designed to produce increases in the Company's annual
revenues of $75,000 (effective August 4, 1993), and $113,287 (effective July
20, 1994). The 1993 and 1994 increases resulted from the settlement by the
Company and the Office of Consumer Counsel (the statutory entity charged with
the protection of ratepayers' interests) of the Company's 1991 application
to the DPUC for increased rates.
The settlement agreement restricted the Company's ability to obtain
general rate relief effective prior to April 1, 1995 but allowed for limited
rate increases to protect the Company from uncontrollable increases in expenses.
The Company sought approval for additional rate relief in 1995. As a
result of the Company's July 3, 1995 application, the DPUC approved a $289,333
(6.9%) increase in rates effective Janury 1, 1996.
FINANCIAL RESOURCES
During 1995, 1994 and 1993, the Company's water operations generated funds
available for investment in utility plant and for use in financing activities,
including payment of dividends on common stock of $471,196, $333,579 and
$740,665, respectively (see Statement of Cash Flows).
The $137,617 increase in funds generated through operations in 1995 as
compared to 1994 is caused by a reduction in accounts receivable and accrued
utility revenue and an increase in accounts payable and accrued liabilities,
which offset a decline in operating income. The $85,008 reduction in accounts
receivable and accrued revenues was due to a review of existing collection
procedures and the implementation of changes, coupled with a concerted
collection effect, as compared to a $103,588 increase in these items during the
prior year. Accounts payable and accrued liabilities increased $99,067 versus
a $14,398 decrease from 1993 to 1994. The accounts payable increase is due
primarily to an increased federal tax liability resulting from 1995 land sales,
which tax is payable during the first quater of 1996.
The $407,086 decline in funds generated by operating activities in 1994 as
compared to 1993 was due primarily to increases in accounts receivable, accrued
revenue and other assets. The balance in accounts receivable and accrued
revenue increased $103,588 in 1994 compared to a decline in these accounts in
1993 of $130,407. A substantial portion of the account receivable increase
was due to a $46,000 increase in a single, non-profit commercial account
balance from year-end 1993, the bulk of which was collected in 1995. The
$226,663 increase in other assets during 1994 reflects an increase in deferred
charges relating to readying land parcels for sale.
During the three-year period from the beginning of 1993 to the end of
1995, the Company has been able to generate sufficient funds internally to
meet its day-to-day operational needs, including regular expenses, payment of
dividends, and investment in normal plant replacements, such a new services,
meters and hydrants. The Company believes that it will continue to be able
to meet its day-to-day operations needs from internaly generated funds. In
order to meet day-to-day cash needs that may arise unexpectedly the Company
maintains an unsecured working capital line of credit of up to $600,000
with a local bank. There were no borrowings outstanding under the
working capital line of credit at December 31, 1995.
Completion of the Company's Long Term Capital Improvement Program,
however, is dependant 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. During 1995, 1994, and
1993, the Company's additions to utility plant net of customer advances, cost
$600,278, $619,773, and $674,473, respectively (see Statement of Cash Flows).
These additions were primarily financed from external sources including
proceeds from land sales and increases in debt.
The Company has outstanding $4,7000,000 principal amount of Mortgage
Bonds, due September 1, 2011, issued under its Mortgage Indenture. The
Mortgage Indenture limits the issuing of additional First Mortgage Bonds
and the payment of dividends. It does not, however, restrict the issuance
of either long term or short term debt which is either unsecured or secured
with liens subject to the lien of the Mortgage Indenture.
In 1994 the Company converted the outstanding balance under its existing
line of credit to $1,500,000 of new long term debt due ten years from
conversion and obtained a new, additional, secured, two-year line of credit
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. (See Note 7 to the Financial
Statements). 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 effect of the limitation, as of December
31, 1995 is to limit the Company to advances outstanding under the line of
credit in the aggregate amount of approximately $800,000 for use on budgeted
projects until such time as the Company obtains additional equity capital.
There was no balance outstanding under the two year revolving line of credit
at December 31, 1995. The local bank at which the revolving line of credit
is maintained has committed to extend it for an additional two years,
through April 1998. DPUC approval of the extension is pending.
The Company's 1996 Capital Budget of $1,184,000 is two-tiered. The first
tier consists of typical capital improvements made each year for services,
mains, hydrants and meters budgeted for approximately $287,000 in 1996 and is
expected to be financed primarily with internally generated funds. In
addition to the above, the 1996 tier one budget also includes $32,000 of
capital expenditures for Level "A" Mapping to be used in the process of
protecting the Housatonic Well Field aquifer, and $65,000 for painting a
storage tank.
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 $800,00 of budgeted plant additions. Plant additions from
this part of the 1996 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 1996.
As of December 31, 1995, 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 believes that by selling these excess lands
it can generate sufficient equity capital to support its 10 year capital
budget, currently estimated at $8,770,000. Such land dispositions are
subject to approval by the DPUC.
The Company is actively pursuing new sales of real property, but, because
of the preliminary nature of those discussions and the delays required by the
regulatory process, it cannot predict whether any current discussions will lead
to sales agreements in the near future. Even if such agreements were to be
reached in the near future, it is unlikely that any such new sales will be
consummated during 1996.
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.
All regulatory approvals for the Plan were obtained during the first six
months of 1995 and the Plan was in place for the quarterly dividends paid
on June 30, 1995 and each quarterly dividend payment thereafter. Dividends
reinvested during 1995 totalled $31,108.
Item 8. Financial Statements and Supplementary Data
Index To Financial Statements Page
Reports of Independent Accountants 16 & 17
Balance Sheet as of December 31, 1995 and
December 31, 1994 18
Statement of Income and Retained Earnings for
the three years ended December 31, 1995 19
Statement of Cash Flows for
the three years ended December 31, 1995 20 & 21
Notes to Financial Statements 22 - 34
Financial Statement Schedule:
Schedule IX - Short Term Borrowings 35
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
the notes thereto.
BIRMINGHAM UTILITIES, INC.
Years Ended December 31, 1995, 1994 and 1993
Report of Independent Auditors
February 24, 1995
To the Board of Directors and Shareholders of
Birmingham Utilities, Inc.
In our opinion, the accompanying balance sheet and the related
statements of income and retained earnings and of cash flow present
fairly, in all material respects, the financial position of
Birmingham Utililities, Inc. at December 31, 1994 and 1993, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
We have not audited the financial statements of Birmingham
Utilities, Inc. for any period subsequent to December 31, 1994.
As discussed in Notes 1 and 12 to the financial statements, in 1993
the company changed its method of accounting for postretirement
benefits other than pensions.
/s/ Price Waterhouse LLP
Independent Auditors' Report
To the Shareholders
Birmingham Utilities, Inc.
Ansonia, Connecticut
We have audited the accompanying balance sheet of Birmingham
Utilities, Inc. as of December 31, 1995, and the related
statements of income and retained earnings and cash flows for the
year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Birmingham Utilities, Inc. as of December 31, 1995 and the results
of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
February 23, 1996
Bridgeport, Connecticut
<TABLE>
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
December 31, 1995 and 1994
Assets
<CAPTION>
<S> <C> <C>
1995 1994
Utility plant $16,352,307 $15,739,122
Accumulated depreciation ( 5,130,305) ( 4,771,536)
11,222,002 10,967,586
Current assets:
Cash and cash equivalents 398,869 58,812
Accounts receivable, net of
allowance for doubtful accounts
of $75,000 725,154 838,981
Accrued utility and other revenue 412,876 384,057
Materials and supplies 50,840 45,449
Prepayments 27,160 39,426
Total current assets 1,614,899 1,366,725
Note receivable - 1,213,222
Deferred charges 713,417 728,307
Unamortized debt expense 205,429 220,362
Income taxes recoverable 456,659 372,247
Other assets 411,352 378,031
1,786,857 2,912,169
$14,623,758 $15,246,480
</TABLE>
<TABLE>
<CAPTION>
Shareholder's Equity and Liabilities
1995 1994
<S> <C> <C>
Shareholders' equity:
Common stock, no par value;
authorized 2,000,000 shares;
issued and outstanding
(1995, 752,282 shares; 2,172,116 2,142,318
1994, 749,168 shares) 1,235,482 1,077,185
Retained earnings
3,407,598 3,219,503
Note payable 1,300,000 1,625,000
Long term debt 4,700,564 4,703,753
6,000,564 6,328,753
Current liabilities:
Current portion of note payable 75,000 165,000
Accounts payable and accrued liabilities 674,488 575,421
Total current liabilities 749,488 740,421
Customers' advances for construction 1,229,985 1,158,455
Contributions in aid of construction 719,736 719,736
Regulatory liability - income taxes
refundable 195,049 202,641
Deferred income taxes 1,263,932 1,135,558
Deferred income on dispositions of land 1,057,406 1,741,413
Commitments and contingent
liabilities (Note13)
$14,623,758 $15,246,480
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
<S> <C> <C> <C>
Operating revenues:
Residential and commercial $3,214,442 $3,089,759 $3,009,776
Industrial 164,192 152,402 141,980
Fire protection 615,563 608,954 599,108
Public authorities 83,212 97,933 97,737
Other 160,666 175,339 184,393
4,238,075 4,124,387 4,032,994
Operating deductions:
Operating expenses 2,503,866 2,370,823 2,311,778
Maintenance expenses 154,929 113,198 92,622
Depreciation 382,852 353,862 336,645
Taxes, other than income taxes 539,296 520,421 528,028
Taxes on income 67,742 95,884 97,321
3,648,685 3,454,188 3,366,394
589,390 670,199 666,600
Amortization of deferred income
on dispositions of land (net of
income taxes of $90,091 in
1995, $90,977 in 1994 and
$104,203 in 1993) 121,897 126,028 146,345
Operating income 711,287 796,227 812,945
Other income, net 151,418 116,448 96,888
Income before interest expense 862,705 912,675 909,833
Interest expense 623,741 550,155 531,620
Income from dispositions of land
(net of income
taxes of $196,603) 279,101 - -
Net income 518,065 362,520 378,213
Retained earnings, beginning of
year 1,077,185 1,074,266 1,040,670
Dividends 359,768 359,601 344,617
Retained earnings, end of year $1,235,482 $1,077,185 $1,074,266
Earnings per share $.69 $.48 $.50
Dividends per share $.48 $.48 $.46
Shares outstanding 752,282 749,168 749,168
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
<S> <C> <C> <C>
1995 1994 1993
Cash flows from operating activities:
Net income $ 518,065 $ 362,520 $378,213
Adjustments to reconcile net
income to net cash
provided by operating activities:
Income from land dispositions (279,101) - -
Depreciation and amortization 460,108 429,425 410,239
Amortization of deferred income (121,897) (126,028) (146,345)
Deferred income taxes (256,489) 29,935 60,789
Allowance for funds used
during construction - ( 21,515) -
Change in assets and liabilities:
(Increase) decrease in accounts
receivable and
accrued revenues 85,008 (103,588) 130,407
Decrease (increase) in
materials and supplies ( 5,391) 4,442 17,552
Increase in prepayments ( 421) ( 551) (18,587)
Increase (decrease) in accounts
payable and accrued
liabilities 99,067 ( 14,398) 45,120
Increase in other assets (27,753) (226,663) (136,723)
Net cash provided by operating activities 471,196 333,579 740,665
Cash flows from investing activities:
Capital expenditures (671,390) (696,340) (716,096)
Sale of utility plant 3,187 2,165
Note receivable 2,248 - -
Customer advances 1,213,222 76,567 41,623
Customer advances for construction 71,112 ( 6,074) ( 20,776)
( 2,107)
Net cash provided by (used in)
investing activities 613,085 (622,660) (693,084)
Cash flows from financing activities:
Issuance of long-term debt - 1,500,000 -
Net borrowings under revolving line of credit - 340,000 305,000
Repayments of long-term debt ( 75,564) ( 50,939) ( 939)
Repayments of revolving line of credit ( 340,000) (1,110,000) -
Debt issuance cost - ( 38,267) -
Dividends paid, net ( 328,660) ( 359,601) (344,617)
Other - - ( 12,478)
Net cash provided by (used in)
financing activities ( 744,224) 281,193 ( 53,034)
Net increase (decrease) in cash 340,057 ( 7,888) ( 5,453)
Cash and cash equivalents, beginning of year 58,812 66,700 72,153
Cash and cash equivalents, ending
of year $ 398,869 $ 58,812 $66,700
</TABLE>
See notes to financial statements.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1995, 1994 and 1993
1. Accounting policies:
Description of business:
Birmingham Utilities, Inc.'s (the Company) predominant business activity is to
provide water service to various cities and towns in Connecticut. The
Company's accounting policies conform to generally accepted accounting
principles, and the Uniform System of Accounts and ratemaking practices
prescribed by the Connecticut Department of Public Utility Control (DPUC).
Estimates and assumptions:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported revenues and expenses during the
reporting period. Actual results could vary from those estimates.
Utility plant:
The costs of additions to utility plant and the costs of renewals and
betterments are capitalized. The cost of repairs and maintenance is charged
to income. Upon retirement of depreciable utility plant in service,
accumulated depreciation is charged with the book cost of the property
retired and the cost of removal, and is credited with the salvage value and
any other amounts recovered.
Depreciation:
For financial statement purposes, the Company provides for depreciation using
the straight-line method. The rates used are intended to distribute the cost
of depreciable properties over their estimated service lives. For income
tax purposes, the Company provides for depreciation utilizing accelerated
methods.
Cash and cash equivalents:
Cash and cash equivalents consist of cash in banks and overnight investment
accounts in banks.
From time to time, the Company has on deposit at financial institutions cash
balances which exceed federal deposit insurance limitations. The Company has
not experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
1. Accounting policies (continued):
Allowance for funds used during construction:
An allowance for funds used during construction ("AFUDC") is made by applying
the last allowed rate of return on rate base granted by the DPUC to
construction projects exceeding $10,000 and requiring more than one month to
complete. AFUDC represents the net cost, for the period of construction, of
borrowed funds used for construction purposes and a reasonable rate on other
funds used. AFUDC represents a noncash credit to income. Utility plant
under construction is not recognized as part of the Company's rate base for
ratemaking purposes until facilities are placed into service. Accordingly,
the Company capitalizes AFUDC as a portion of the construction cost of
utility plant until it is completed. Capitalized AFUDC is recovered
through water service rates over the service lives of the facilities.
Revenue recognition:
The Company follows the practice of recognizing revenue when bills are
rendered to customers. In addition, the Company accrues revenue for the
estimated amount of water sold but not billed as of the balance sheet date.
Advances for construction/contributions in aid of construction:
The Company receives cash advances from developers and customers to finance
construction of new water main extensions. A portion of these advances are
refunded to developers and customers as revenues are earned on the new water
mains. Any unrefunded balances are reclassified to "Contributions in aid
of Construction" and are no longer refundable.
Fair value of financial instruments:
The carrying amount of cash and cash equivalents, trade accounts receivable,
and trade accounts payable approximate their fair values due to their
short-term nature. The carrying amount of note payable and long-term debt
approximates fair value based on market conditions for debt of similar
terms and maturities.
Income taxes:
Except for accelerated depreciation since 1981 (federal only) and the tax
effect of post-1986 contributions in aid of construction, for which deferred
income taxes have been provided, the Company's policy is to reflect as
income tax expense the amount of tax currently payable. This method, known
as the flow-through method of accounting, is consistent with the ratemaking
policies of the DPUC, and is based on the expectation that tax expense
payments in future years will be allowed for ratemaking purposes.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
1. Accounting policies (continued):
Income taxes (continued):
The Company's deferred tax provision was determined under the liability method.
Deferred tax assets and liabilities were recognized based on differences
between the book and tax bases of assets and liabilities using presently
enacted tax rates. The provision for income taxes is the sum of the amount
of income tax paid or payable as determined by applying the provisions of
enacted tax laws to the taxable income for that year and the net change
during the year in the Company's deferred tax assets and liabilities.
In addition, the Company is required to record an additional deferred
liability for temporary differences not previously recognized. This
additional deferred tax liability totaled $261,610 at December 31, 1995 and
$169,606 at December 31, 1994. Management believes that these deferred
taxes will be recovered through the ratemaking process. Accordingly, the
Company has recorded an offsetting regulatory asset and regulatory liability.
Employee benefits:
The Company has a noncontributory defined benefit plan which covers
substantially all employees. The benefits are primarily based on years of
service and the employee's compensation. Pension expense includes the
amortization of a net transition obligation over a twenty-five year period. The
Company's funding policy is to contribute annually the maximum amount that can
be deducted for federal income tax purposes. Contributions are intended to
provide not only for benefits attributed to service to date, but also for those
expected to be earned in the future.
The Company has a 401(k) Plan. Employees are allowed to contribute a
percentage of salary, based on certain parameters, and, as amended in 1994,
the Company matches 25% of the employee contributions up to 6% of total
compensation.
In addition, the Company provides certain health care and life insurance
benefits for retired employees and their spouses. Generally, the plan provides
for Medicare wrap-around coverage plus life insurance based on a percentage of
each participant's final salary. Substantially all of the Company's employees
may become eligible for these benefits if they reach retirement age while
working for the Company. The Company's obligation for postretirement benefits
expected to be provided to or for an employee must be fully accrued by the date
that the employee attains full eligibility for all benefits. The Company has
elected to recognize the unfunded accumulated postretirement benefit obligation
over 20 years. The Company's funding policy is to contribute amounts annually
to a benefit trust and pay directly all current retiree premiums.
Compensated absences:
Company policy and practice does not provide for any accumulated but unused
vacation, sick time or any other compensated absences to be carried over beyond
the year end.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
1. Accounting policies (continued):
Deferred charges relating to land dispositions:
Deferred charges are allocated to dispositions ofland based on specific
identification, if applicable, and on the percentage of acres disposed to
total surplus acres.
Land dispositions:
The Company is actively seeking to dispose of surplus land not required for
utility operations. The net gain of each disposition, after deducting
costs, expenses and taxes is allocated between the shareholders and
ratepayers by a method approved by the DPUC based on legislation passed by
the Connecticut General Assembly. The portion of income applicable to
shareholders is recognized in the year of disposition. Income attributable
to ratepayers is deferred and amortized in a matter that reflects reduced
water revenue arising from the sharing formula as determined by the DPUC.
Unamortized debt expense:
Costs related to the issuance of debt are capitalized and amortized over the
term of the related indebtedness. The Company has received permission from the
DPUC to amortize the costs associated with debt previously outstanding over
the term of the new indebtedness.
2. Utility plant:
<TABLE>
<S> <C> <C>
1995 1994
Pumping, treatment and distribution $12,260,402 $11,866,785
Source of supply 2,879,303 2,897,293
General plant 1,010,268 921,495
Organization 30,219 30,219
16,180,192 15,715,792
Construction in process 172,115 23,330
$16,352,307 $15,739,122
</TABLE>
3. 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 for $1,388,222. Under the terms of the modification, a payment
of $175,000 was made in 1992 and a promissory note in the amount of
$1,213,222, due on April 30, 1995 was received. Due to uncertainties
regarding the developer's ability to obtain the necessary financing and
governmental and regulatory approvals, the sale has been accounted for under
the installment method. The promissory note was paid during 1995 and the
sale recognized in accordance with the sharing formula as determined by the
DPUC.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
3. Note receivable (continued):
In 1994, the developer agreed to the purchase of an additional 36 acres of
land, adjacent to the 152 acre parcel, for $900,000. This agreement allowed
the Company to retain as liquidated damages a $40,000 deposit paid by the
developer in 1994 if he failed to complete the 36 acre transaction. In 1995,
the developer notified the Company that the transaction would not be
completed.
4. Accounts payable and accrued liabilities:
<TABLE>
<S> <C> <C>
1995 1994
Accounts payable $116,313 $116,467
Accrued liabilities:
Interest 151,172 151,130
Taxes 297,810 182,601
Pension 72,710 41,445
Other 36,483 83,778
$674,488 $575,421
</TABLE>
5. Taxes, other than income taxes:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Municipal $267,183 $261,685 $278,634
Gross receipts 208,201 198,548 192,814
Payroll 63,912 60,188 56,580
$539,296 $520,421 $528,028
</TABLE>
6. Long term debt:
<TABLE>
<S> <C> <C>
1995 1994
First mortgage bonds, Series E, 9.64%,
due September 1, 2011 $4,700,000 $4,700,000
Other 564 3,753
$4,700,564 $4,703,753
</TABLE>
Pursuant to its Mortgage Bond 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, among other things,
annual sinking fund requirements commencing September 1, 1997, and
limitations on (a) payment of cash dividends; and (b) incurrence of
additional bonded indebtedness. Under the dividend limitation,
approximately $382,905 was available to pay dividends at December 31, 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.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1995, 1994 and 1993
6. Long term debt (continued):
There are no maturities of long term debt until September 1, 1997, when the
Company is required to pay $94,000 and on each September 1 thereafter, until
the bonds are paid in full.
7. Note payable:
In 1994, the Company converted certain short term borrowings to a ten year
$1,500,000 term loan, established a $1,500,000 two year 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 expires in April 1996, 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 6) 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 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 1.9% over the applicable
LIBOR rate. Interest is payable monthly. There were no outstanding
borrowings on the revolving line of credit at December 31, 1995.
In April 1995, the unsecured 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
December 31, 1995.
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.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
7. Notes payable (continued):
Minimum annual principal payments due on the term loan are as follows:
<TABLE>
<CAPTION>
Year ending December 31:
<S> <C>
1996 $ 75,000
1997 75,000
1998 75,000
1999 75,000
2000 75,000
Thereafter 1,000,000
$1,375,000
</TABLE>
8. Income taxes:
The provisions for taxes on income for the years ended December 31, 1995, 1994
and 1993 consist of:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Current:
Federal $212,705 26,820 $ 32,701
State 111,526 20,838 9,328
Deferred:
Federal:
Accelerated depreciation 117,076 96,405 98,893
Alternative minimum tax credit 76,855 (24,342) ( 25,779)
Income on land dispositions (112,489) 65,821 75,390
Investment tax credit ( 14,700) (14,700) (14,700)
Construction advances ( 6,165) ( 9,137) ( 3,122)
State ( 30,372) 25,156 28,813
$354,436 $186,861 $201,524
</TABLE>
State deferred income taxes relate solely to timing differences in the
recognition of income related to land dispositions.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
8. Income taxes (continued):
A reconciliation of the income tax expense at the federal statutory tax rate of
34 percent to the effective rate is:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
Federal income tax at statutory rates $296,650 $185,500 $197,110
Increase (decrease) resulting from:
State income tax, net of federal benefit 93,653 30,356 25,173
Rate case expense ( 9,103) 9,187 10,726
SFAS 106 expense in excess of funding 2,068 995 ( 4,067)
Other, net ( 14,132) ( 24,477) ( 12,718)
Investment tax credit ( 14,700) ( 14,700) ( 14,700)
Total provision for income taxes 354,436 186,861 201,524
Taxes related to land dispositions ( 286,694) ( 90,977) ( 104,203)
Operating provision for taxes $ 67,742 $ 95,884 $ 97,321
Deferred tax liabilities (assets)
were comprised of the following:
1995 1994
Depreciation $1,483,004 $1,355,210
Investment tax credits 378,661 393,361
Other 251,598 193,257
Gross deferred tax liabilities 2,113,263 1,941,828
Land sales ( 441,952) ( 299,091)
Alternative minimum tax ( 164,879) ( 241,734)
Other ( 242,500) ( 265,445)
Gross deferred tax assets ( 849,331) ( 806,270)
Total deferred income taxes $1,263,932 $1,135,558
</TABLE>
The Company has minimum tax credit carryovers of $164,879 at December 31, 1995
which can be carried forward indefinitely.
9. Related party transactions:
The Company has paid legal and consulting fees to firms whose partners are
directors and shareholders of the Company. During the years ended December
31, 1995, 1994 and 1993 fees paid amounted to $34,748, $27,912 and $15,731,
respectively. Amounts due to these firms at year end are not significant.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
10. Allowance for doubtful accounts:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
Allowance for doubtful accounts,
beginning $75,000 $100,000 $ 90,000
Provision 46,712 42,487 79,087
Recoveries 13,036 1,916 8,020
Charge-offs ( 59,748) ( 69,403) ( 77,107)
$75,000 $ 75,000 $100,000
</TABLE>
11. Supplemental information:
Amortization of deferred charges is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Rate case and other $62,592 $71,391 $59,217
Debt issue costs 14,934 13,658 20,915
$77,526 $85,049 $80,132
</TABLE>
The Company has received revenues through the rate making process to recover
the amortization of deferred charges.
12. Postemployment benefits:
Pension plan:
The plan's funded status and related pension accrual was as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested
benefits of $413,926 in 1995 and $389,957 in 1994 $419,625 $392,158
Projected benefit obligation ( 562,788) ( 511,344)
Plan assets at fair value 460,380 350,713
Projected benefit obligation in excess of
plan assets ( 102,408) ( 160,631)
Unrecognized prior service cost ( 46,437) ( 48,700)
Unrecognized deferred loss 71,173 128,849
Other liability - ( 60,784)
Unrecognized net obligation at transition 93,949 99,821
Prepaid (accrued) pension obligation included
in accounts payable accrued liabilities $ 16,277 ($ 41,445)
</TABLE>
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
12. Postemployment benefits (continued):
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligations was 7.5% in 1995 and 1994. The expected long-
term rate of return on assets was 8.5% in 1995 and in 1994.
Net periodic pension costs include the following components:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost $30,077 $23,945 $25,309
Interest cost on projected benefit obligation 38,004 34,843 30,837
Amortization of net loss from prior years 6,167 3,182 5,818
Amortization of net obligation at transition 5,872 5,872 5,872
Amortization of unrecognized prior service
cost ( 2,263) ( 2,271) ( 2,387)
Deferred gain (loss) 61,097 (39,600) ( 8,632)
Actual return on assets ( 91,892) 9,507 (13,611)
Net pension cost $47,062 $35,478 $43,206
</TABLE>
Employer matching contributions to the 401(k) plan were $7,731 in 1995 and
$6,722 in 1994.
Other postretirement benefit:
The net periodic postretirement benefit cost includes the following components:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
Service cost-benefits earned during the period $22,268 $15,230
Interest cost on benefit obligation 29,700 35,205
Actual return on plan assets ( 27,185) 2,376
Net amortization and deferral 11,430 ( 13,704)
Amortization of transition obligation 25,378 25,378
Net periodic postretirement benefit cost $61,591 $64,485
</TABLE>
Certain costs have been recorded as a regulatory asset and the Company
applied for recovery of these costs in its 1993 reopening of its rate
decision. Approval from the DPUC on August 4, 1993, however, was only
prospective. The DPUC applied a reduction to the total projected
postretirement benefit expense for rate purposes and included the costs
prospectively from that date. In conjunction with the filing of the rate
case in 1995, the Company applied to obtain full inclusion in rates of the
total SFAS 106 expense, including the deferred amount to be amortized over
a reasonable period. The DPUC approved the Company's request and the
deferred amount will be amortized over the remaining transitional
obligation life.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
12. Postemployment benefits (continued):
Other postretirement benefits (continued):
The funded status and the related accrual for postretirement benefits other
than pensions were as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ($233,530) ($338,294)
Other vested ( 205,659) ( 120,315)
( 439,189) ( 458,609)
Plan assets at fair value 170,275 104,540
Accumulated postretirement obligation in
excess of plan assets ( 268,914) ( 354,069)
Unrecognized net gain ( 162,512) ( 98,911)
Unrecognized net transition
obligation 431,426 456,804
</TABLE>
Accrued postretirement benefit cost included
in current assets $ 0 $ 3,824
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1995 and 1994. The expected
long-term rate of return on assets was 7.5% in 1995 and 1994.
For measurement purposes, a 12.0% annual increase in the per capita cost of
covered health care benefits was assumed for 1996. This rate was assumed to
decrease gradually to 6% for 2004 and remain at that level thereafter. A 1%
increase in health care cost trend rate assumptions would produce an increase
in the accumulated postretirement benefit obligation at December 31, 1995 of
$70,596 and an increase in the aggregate service and interest cost of the net
periodic postretirement benefit cost of $14,639.
The Company has established tax effective funding vehicles for such
retirement benefits in the form of a qualified Voluntary Employee
Beneficiary Association (VEBA) trust. The Company funded the VEBA trust
with tax deductible contributions totaling $57,767 and $61,559 in 1995 and
1994, respectively.
The Company president's employment contract requires accounting for benefits
payable in accordance with SFAS 106. The accumulated present value of
future benefits attributable to the Company's president is being
recognized over his remaining years of service to retirement. The liability
recorded at December 31, 1995 and 1994 was $88,987 and $65,156,
respectively. At December 31, 1995, an amount of $55,387 has been included
in other assets relating to a regulatory asset for costs which were included
in the Company's rate case.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
13. Commitments and contingent liabilities:
Leases:
The Company leases equipment under several noncancellable operating leases
expiring through 2000. Total minimum rentals under noncancellable operating
leases are as follow:
Year ending December 31:
1996 $27,857
1997 10,084
1998 6,561
1999 6,561
2000 547
$51,610
Lease expense was $35,274 in 1995, $31,173 in 1994 and $33,530 in 1993,
respectively.
Management agreement:
The Company maintains an agreement with the City of Derby (the "City"),
pursuant to which agreement, the Company manages the water system owned by
the City. The Company is responsible for costs of maintenance and
improvements. Amounts collected from customers, net of expenses, are
retained by the Company.
Capital budget:
Management has budgeted $1,184,000 for capital expenditures in 1996, $287,000
of which is expected to be necessary to meet its service obligations for the
coming year. The balance of the capital budget depends on the Company's
ability to raise additional capital.
Purchase commitment:
The Company has an agreement with South Central Connecticut Regional Water
Authority to purchase water. This agreement provides for a minimum purchase
of 600 million gallons of water annually. Charges to expense were $743,904,
$690,000 and $690,795 for the years 1995, 1994 and 1993, respectively.
The purchase price is based on South Central Connecticut Regional Water
Authority's wholesale rate. At December 31, 1995, this rate was
approximately $1,150 per million gallons. This agreement expires December
31, 2015 and provides for two ten year extensions at the Company's option.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
14. Rate matters:
On December 27, 1995, the DPUC granted the Company an increase in annual
revenues of $289,333 (6.89% increase) effective January 1, 1996.
15. 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. The following table
summarizes activity in common shares subject to options for the two years
ended December 31, 1995:
<TABLE>
<CAPTION>
<S> <C> <C>
Number of Shares Exercise Price
January 1, 1994 - -
Granted 54,000 $10.50
December 31, 1994 54,000 10.50
Granted 3,750 11.00
December 31, 1995 57,750 $10.50 -$11.00
</TABLE>
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 under the
plan will 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.
16. Supplemental disclosure of cash flow information and non-cash
financing activities:
Cash paid for interest for the years ended 1995, 1994 and 1993 was $608,764,
$557,909 and $516,240, respectively.
Cash paid for income taxes for the years ended 1995, 1994 and 1993 was
$188,575, $82,200 and $37,226, respectively.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1995, 1994 and 1993
16. Supplemental disclosures of cash flow information and non-cash financing
activities (continued):
The Company receives contributions of plant from developers. These
contributions 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1995 1994 1993
Gross plant additions $671,390 $696,340 $716,096
Customers' advances for
construction ( 71,112) ( 76,567) ( 41,623)
$600,278 $619,773 $674,473
</TABLE>
BIRMINGHAM UTILITIES, INC.
SCHEDULE IX - SHORT TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Weighted Maximum Average Weighted
average amount amount average
interest outstanding outstanding interest
Balance rate at during the during the during the
at the end end of period period period
of period period
Year ended
December 31, 1995
Notes payable $ 75,000 8.53% $408,717 $138,199 8.63%
Year ended
December 31, 1994
Notes payable $165,000 7.93% $165,000 $ 52,250 6.97%
Year ended
December 31, 1993
Notes payable $ - - $ $ - %
</TABLE>
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The following list identifies all current directors of the Company. No
director or executive officer has (i) any family relationship with any
other such person or (ii) been involved in any legal proceeding which would
require disclosure under Item 401 of Regulation S-K. There are no
arrangements between any director or officer and any other person pursuant
to which he or she was or is to be selected as a director or officer or as a
nominee therefor.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Business Experience during the Last Director
Name Age Five Years and Other Directorships Since
Stephen P. Ahern 66 V.P., Ogden Allied Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 66 Retired; Director of Finance, Town of 1979
Southington, CT until June, 1995.
James E. Cohen 49 Lawyer in Practice in Derby; Director 1982
Great Country Bank 1987-1993.
Betsy Henley-Cohn 43 Chairwoman of the Board of Directors 1981
of the Company since May of 1992;
Chairman and Treasurer, Joseph Cohn & Sons, Inc.,
(painting contractors); Director,
United Illuminating Corp. and Aristotle Corp.;
Director, Society for Savings Bancorp,Inc.
(1985-1993).
Aldore J. Rivers 62 President of the Company 1986
Kenneth E. Schaible 54 Senior Vice President, Webster Bank; 1994
previously President Shelton Savings Bank
and Shelton Bancorp, Inc. 1967 to 1995.
Charles T. Seccombe 69 President and Treasurer, 1967
Seccombe's Men's Shop, Inc.
David Silverstone 49 Lawyer in Practice in Hartford 1994
</TABLE>
(b) Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten-percent
of a registered class of the Company's equity securities, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission and the Company.
Based solely on review of copies of such forms furnished to the Company, or
written representations that no reconciliation forms were required, the
Company believes that during fiscal year ending December 31, 1995, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent shareholders were complied with.
Item 11. Compensation of Directors and Executive Officers
Directors: The Company's Directors, except for Ms. Henley-Cohn and
Mr. Rivers, received an annual fee of $3,000 plus $500 for each
full Board meeting and $300 for each Committee meeting actually
attended. Ms. Henley-Cohn received an annual salary of $43,500 for
services in pursuit of land sales during 1995 and as Chairwoman of
the Board of Directors. Mr. Rivers received no director's fees in
1993, 1994 or 1995.
Executive Officers: During 1993, and 1994, the Company had no
Executive Officer whose total annual salary exceeded $100,000. The
Company does not have any long-term incentive plan.
The following table sets forth the annual cash compensation
for Mr. Rivers, the Company's Chief Executive Officer, for each of
1993, 1994 and 1995.
<TABLE>
<CAPTION>
Annual Compensation
<S> <C> <C> <C> <C>
Securities
Name and Underlying
Principal Position Year Salary* Bonus Options**
Aldore J. Rivers,
President,
CEO and Director 1993 $ 90,225 N/A N/A
1994 $ 92,945 N/A 10,000
1995 $101,404 $2,500 N/A
</TABLE>
* Includes the economic benefit of premiums on a split-dollar life
insurance policy pursuant to which Mr. Rivers is the Insured and
the Company is the owner and paid the premiums in 1993, 1994 and
1995.
**On September 13, 1994, the Company's Board of Directors approved
the Birmingham Utilities, Inc. 1994 Stock Incentive Plan (The "1994
Plan"), subject to approval by the Company's shareholders and by
the Connecticut Department of Public Utility Control (DPUC"). The
amounts set forth in the tables, both above and below, represent
the award of options to Mr. Rivers by the Personnel and Pension
Committee of the Board of Directors. Approval of the 1994 Plan by
the Company's shareholders and the DPUC, was received in 1995. The
options awarded to Mr. Rivers will not vest and be exercisable
until the earlier of September 12, 1996 or Mr. Rivers' death or
disability. Accordingly, none of the options are currently
exercisable and none have been exercised.
<TABLE>
<CAPTION>
Option Grants on September 13, 1994
Name Number of Shares % of Total Exercise Expiration
of Common Stock Options Price Date
Underlying Granted to
Options Granted Employees
<S> <C> <C> <C> <C>
Aldore J. Rivers 10,000 31.75% $10.50 9/13/2004
</TABLE>
Employment Agreement and Split-Dollar Insurance Plan:
The Company entered into an Employment Agreement with Mr. Rivers in
1990 (the" Employment Agreement"), pursuant to which the Company agreed
to employ Mr. Rivers as President of the Company for a period of five
years, until August of 1996.
The Employment Agreement provides for a so-called "Split Dollar
Life Insurance" plan for the benefit of both the Company and Mr. Rivers.
The plan provides for the Company to maintain insurance on Mr. Rivers'
life in an amount not less than $150,000, and to pay to Mr. Rivers'
designee $150,000 if he should die on or before the age of 65. The
balance of the life insurance proceeds, if any, may be retained by the
Company. If Mr. Rivers dies after reaching the age of 65, all death
benefits of the policy are retained by the Company. The Company has
agreed to pay one hundred eighty (180) monthly supplemental pension
payments (a) of $l,l70 each to Mr. Rivers commencing when he reaches the
age of 65 and, continuing until the earlier of his death or the end of
the 180-month period, and (b) if he should die after reaching the age of
65 but before the end of the 180-month period and his spouse survives
him, of $585 each to her until the earlier of her death or the
expiration of the balance of the 180-month period. The Company expects
to use the proceeds of the life insurance to reimburse itself for the
supplemental pension payments that may be made to Mr. Rivers and his
spouse after Mr. Rivers' 65th birthday.
Item 12. Security Ownership of Management and Certain Beneficial Owners
(a) The following table sets forth certain information with respect to
the only persons, to the knowledge of the Company, who own as much as 5%
of the Company's stock as of February 26, 1996.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Group consisting of Cohn Realty & Investment, 182,550 Shares (1) 24.27%
Betsy Henley-Cohn, John J. Crawford, as custod-
ian for Juri Henley-Cohn, and as custodian for
Jesse Henley-Cohn, Joel Cohn Revocable Trust 1A,
Betsy Cohn Spray Trust, Harry Berkowitz Revocable
Trust, Betsy Cohn Income Trust, Rosenfield-
Weisman Trust, 441 Chapel St., New Haven, CT
06510, and Ruth Weisman, 26 Kohary Drive,
New Haven, CT 06515.
John J. Crawford, 70 Indian Road,
Guilford, CT 06437 66,262 Shares (2) 8.81%
</TABLE>
(1) Of the 182,550 shares owned by this Group, Cohn Realty & Investment (a
Connecticut general partnership consisting of three investment trusts whose
managing agent is Betsy Henley-Cohn, whose beneficiaries are certain members of
the Cohn Family and whose Trustees are Rhoda Cohn and Stanley Bergman) has
beneficial ownership of 35,640 shares; John J. Crawford, as custodian for Juri
Henley-Cohn, has beneficial ownership of 21,785 shares; John J. Crawford, as
custodian for Jesse Henley-Cohn, has beneficial ownership of 22,091 shares;
Joel Cohn Revocable Trust 1A has beneficial ownership of 26,060 shares;
Betsy Cohn Spray Trust has beneficial ownership of 32,188 shares; Betsy
Cohn Income Trust has beneficial ownership of 10,460 shares; Harry
Berkowitz Revocable Trust has beneficial ownership of 16,098 shares;
Rosenfield-Weisman Trust has beneficial ownership of 7,000 shares and
Ruth Weisman has beneficial ownership of 10,228 shares. Betsy Henley-Cohn
has either a controlling or a beneficial interest in Cohn Realty &
Investment, Betsy Cohn Spray Trust and Betsy Cohn Income Trust. No member
of the Group owns or has the right to acquire, directly or indirectly, any
other shares. Unless otherwise indicated, the named beneficial owner of the
shares has sole voting and dispositive power with respect thereto. The
information set forth in this footnote is derived from a filing with the
Securities and Exchange Commission made by the Group.
(2) Includes 5,830 shares held jointly by Mr. Crawford and his wife, 22,091
shares held by Mr. Crawford as custodian for the benefit of Jesse Henley-Cohn,
and 21,785 shares held by Mr. Crawford as custodian for the benefit of Juri
Henley-Cohn. Mr. Crawford has sole voting power over the shares held for
the benefit of Jesse Henley-Cohn and Juri Henley- Cohn, but has no family
relationship with Jesse Henley-Cohn or Juri Henley-Cohn. The 22,091 shares
held in trust for the benefit of Jesse Henley-Cohn and the 21,785 shares
held in trust for the benefit of Juri Henley-Cohn are also included in the
shares set forth in footnote (1), above, as being held by John J. Crawford
as custodian for Jesse Henley-Cohn and Juri Henley-Cohn.
(b) The following table sets forth certain information concerning ownership
of the Company's Shares by management:
<TABLE>
<CAPTION>
<S> <C> <C>
Common Shares
Beneficially Owned Percent
Name As of February 26, 1995 of Class
Stephen P. Ahern 12,772 (1) 1.70
Edward G. Brickett 3,359 .45
James E. Cohen 36,497 (2) 4.85
Betsy Henley-Cohn 182,550 (3) 24.27
Aldore J. Rivers 1,940 .26
Kenneth E. Schaible 980 .13
Charles T. Seccombe 8,069 (4) 1.07
David Silverstone 103 .01
Executive Officers and Directors
as a group, 8 in number 246,270 32.74%
</TABLE>
(1) Includes 1,700 shares owned by Ahern Family Limited Partnership.
(2) Includes 2,899 shares held by Mr. Cohen's son, Matthew D. Cohen, 32,598
shares held by Mr. Cohen as executor of the estate of Mr. Cohen's father,
David B. Cohen, and 1,000 shares held in a brokerage custodial account for
Mr. Cohen's benefit.
(3) Ms. Henley-Cohn is a member of the shareholder group described in the
preceding table. The 182,550 shares set forth in this table is the
aggregate number of shares held by all of the members of the group. See
note (1) to the preceding table for information concerning shares
beneficially held by Ms. Henley-Cohn.
(4) All of which are held in a Trust, of which Mr. Seccombe is the Grantor and
Trustee.
Item 13. Certain Relationships and Related Transactions
Mr. Cohen is a partner in the law firm of Cohen and Thomas, which
has represented the Company on occasions in past years; the Company
may continue to employ that firm on occasion in the future.
Seccombe's Men's Shop, owned by Mr. Seccombe, in downtown Ansonia
has been utilized as a collection facility for the paying of bills
and will be used in that capacity in the future.
Mr. Silverstone is a partner in the law firm of Silverstone &
Koontz, which represented the Company on rate matters in 1995 and
may do so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) (1) and (2). See Index to Item 8. Financial Statements and
Supplementary Data are herein incorporated by reference.
(3) Certificate of Incorporation and By-Laws of Birmingham
Utilities, Inc. Incorporated herein by reference is Exhibit 3 of
Birmingham Utilities, Inc.'s Annual Report on Form 10K for the
period ended December 31, 1994.
(4) Instruments Defining Rights of Security Holders
(i) Amended and Restated Mortgage Indenture by and between
The Ansonia Derby Water Company and The Connecticut National Bank
as Trustee, dated as of August 9, 1991. Incorporated herein by
reference is Exhibit (4) (i) of The Ansonia Derby Water Company's
Annual Report on Form 10-K for the period ending December 31, 1991.
(ii) Commercial Term and Revolving Loan Agreement by and
between Birmingham Utilities, Inc. and Fleet Bank, N.A., dated
April 29, 1994. Incorporated herein by reference is Exhibit 10(1)
of the Quarterly Report on Form 10-Q/A of Birmingham Utilities,
Inc. for the period ended June 30, 1994.
(iii) Birmingham Utilities, Inc. Dividend Reinvestment Plan,
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit 4 (iii) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10) Material Contracts
(10.1) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated January 18, 1984 for the sale of water by the
Authority to the Company and subsequent amendment dated December
29, 1988. Incorporated herein by reference is Exhibit (10.1) of the
Annual Report on Form 10-K of Birmingham Utilities, Inc. for the
period ended December 31, 1993.
(10.2) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated November 30, 1984 for the sale by the Authority to
the Company of water and for the construction of the pipeline and
pumping and storage facilities in connection therewith by the
Authority at the expense primarily of the Company and Bridgeport
Hydraulic Company. Incorporated herein by reference is Exhibit
(10.2) of The Ansonia Derby Water Company's Annual Report on Form
10-K for the period ended December 31, 1990.
(10.3) Employment Agreement between The Ansonia Derby Water
Company and Aldore J. Rivers dated August 5, 1990, as amended by
amendments dated July 28, 1992 and April 20, 1993. Incorporated
herein by reference is Exhibit (10.6) of the Annual Report on Form
10-K of Birmingham Utilities, Inc. for the period ended December
31, 1993.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit (10.9) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10.5) Birmingham Utilities, Inc. Stock Option Plan for Non-
Employee Directors adopted by its Board of Directors on September
13, 1994. Incorporated herein by reference is Exhibit (10.10) of
Birmingham Utilities, Inc.'s Annual Report on Form 10-K for the
period ended December 31, 1994.
(23) Consent of Price Waterhouse LLP
(23.1) Consent of Dworken, Hillman, LaMorte & Sterczala, P.C.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Registrant during the last quarter of 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
(Registrant) BIRMINGHAM UTILITIES, INC.
BY:/s/ Betsy Henley-Cohn
Betsy Henley-Cohn
Chairwoman of the Board
BY:/s/ Paul V. Erwin
Paul V. Erwin
Treasurer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
/s/ Stephen P. Ahern /s/ Aldore J. Rivers
Stephen P. Ahern, Director Aldore J. Rivers, President
Date: March 27, 1996 and Director
Date: March 27, 1996
/s/ Edward G. Brickett /s/ Charles T. Seccombe
Edward G. Brickett, Director Charles T. Seccombe, Director
Date: March 27, 1996 Date: March 27, 1996
/s/ James E. Cohen /s/ Kenneth E. Schaible
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 27, 1996 Date: March 27, 1996
/s/ Betsy Henley-Cohn /s/ David Silverstone
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
of the Board of Directors Date: March 27, 1996
Date: March 27, 1996
DATE: March 27, 1996
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of the
Registration Statement of Birmingham Utilities, Inc. on Form S-3
dated June 12, 1995 of our report dated February 24, 1995, which
appears on page 16 of the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the year ended December 31, 1995.
Price Waterhouse LLP
New York, New York
March 25, 1996
Dworken, Hillman, LaMorte & Sterczala, P.C.
March 28, 1996
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of
the Registration Statement of Birmingham Utilities, Inc. on Form
S-3 dated June 12, 1995 of our report dated February 23, 1996,
which appears on page 17 of the Annual Report on form 10-K of
Birmingham Utilities, Inc. for the year ended December 31, 1995.
/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
March 28, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's December 31, 1995 audited 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 11,222,002
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,614,899
<TOTAL-DEFERRED-CHARGES> 713,417
<OTHER-ASSETS> 1,073,440
<TOTAL-ASSETS> 14,623,758
<COMMON> 2,172,116
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,235,482
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,407,598
0
0
<LONG-TERM-DEBT-NET> 6,000,564<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> 5,140,596
<TOT-CAPITALIZATION-AND-LIAB> 14,623,758
<GROSS-OPERATING-REVENUE> 4,238,075
<INCOME-TAX-EXPENSE> 67,742
<OTHER-OPERATING-EXPENSES> 3,580,943
<TOTAL-OPERATING-EXPENSES> 3,648,685
<OPERATING-INCOME-LOSS> 589,390
<OTHER-INCOME-NET> 552,416
<INCOME-BEFORE-INTEREST-EXPEN> 1,141,806
<TOTAL-INTEREST-EXPENSE> 623,741
<NET-INCOME> 518,065
0
<EARNINGS-AVAILABLE-FOR-COMM> 518,065
<COMMON-STOCK-DIVIDENDS> 359,768
<TOTAL-INTEREST-ON-BONDS> 464,187
<CASH-FLOW-OPERATIONS> 471,196
<EPS-PRIMARY> .69
<EPS-DILUTED> .69
<FN>
<F1>See Note 6 to financial statements; includes long term note payable
</FN>
</TABLE>
