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, 1997 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, 1997
Common stock, no par value 760,066
ITEM I. FINANCIAL STATEMENTS
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
As of June 30, 1997, December 31, 1996 and June 30, 1996
[CAPTION]
<TABLE>
<S> <C> <C> <C>
(Unaudited) (Unaudited)
June 30, Dec. 31, June 30,
1997 1996 1996
ASSETS:
Utility Plant $18,287,236 $17,766,937 $16,860,399
Accumulated depreciation 5,674,874 5,472,071 5,327,400
12,612,362 12,294,866 11,532,999
Current Assets:
Cash and cash equivalent 224,411 185,479 31,042
Accounts receivable, net of
allowance for doubtful accounts 696,436 681,194 668,172
Accrued utility revenue 417,149 411,542 430,068
Materials & supplies 63,409 51,792 79,019
Prepayments 138,406 34,586 109,210
Total current assets 1,539,811 1,364,593 1,317,511
Deferred Charges 922,114 870,736 851,911
Unamortized debt expense 185,999 193,466 197,962
Income taxes recoverable 422,915 422,915 456,659
Other assets 477,959 421,844 424,118
Total deferred and
other assets 2,008,987 1,908,961 1,930,650
Total Assets $16,161,160 $15,568,420 $14,781,160
STOCKHOLDERS' EQUITY AND LIABILITIES
Stockholders' Equity:
Common Stock, no par value,
authorized 2,000,000 shares;
issued and outstanding
6/30/97-760,126; 12/31/96-757,892;
6/30/96-755,107 $ 2,244,326 $ 2,221,786 $ 2,199,617
Retained earnings 1,560,221 1,619,188 1,217,723
3,804,547 3,840,974 3,417,340
Note Payable 1,887,500 1,375,000 1,592,500
Long-term debt 4,606,000 4,606,000 4,700,000
6,493,500 5,981,000 6,292,500
Current Liabilities:
Notes Payable 310,000 125,000 --
Current portion of
note payable
and long-term debt 169,000 169,000 75,000
Accounts payable and
accrued liabilities 669,068 747,323 610,943
Total current liabilities 1,148,068 1,041,323 685,943
Customers' advances for
construction 1,289,809 1,291,114 1,229,985
Contributions in aid
of construction 766,941 719,736 719,736
Regulatory liability-income
taxes refundable 187,477 187,477 195,049
Deferred income taxes 1,546,562 1,484,972 1,308,784
Deferred income on disposition
of land 924,256 1,021,824 931,823
Total deferred liabilities 4,715,045 4,705,123 4,385,377
$16,161,160 $15,568,420 $14,781,160
</TABLE>
The accompanying notes are an integral part of these financial
statements.
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
[CAPTION]
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Operating Revenue (Note B) $1,054,560 $1,098,183 $2,135,811 $2,156,935
Operating Expenses:
Operations and Maintenance 196,207 200,561 418,040 401,564
Purchased Water 186,105 174,200 366,883 325,833
Administrative and General 280,524 270,207 555,675 544,988
Depreciation 124,801 99,000 229,801 196,476
Taxes Other Than Income 124,420 140,703 255,827 282,793
Taxes on Income 11,211 31,647 26,636 51,822
Total Operating Expense 923,268 916,318 1,852,862 1,803,476
Utility Operating Income 131,292 181,865 282,949 353,459
Amortization of Prior Years' 43,791 36,691 87,582 73,381
Deferred Income on Land
Dispositions, net
(Net of income taxes of $31,180
and $62,359 in 1997 and $19,825
and $58,467 in 1996 for the three
months and six months, respectively)
Other Income, net 20,636 24,313 42,923 31,465
Income before interest expense 195,719 242,869 413,454 458,305
Interest and Amortization of
Debt Discount & Expense 157,558 146,216 307,436 291,591
Income from dispositions of land,
net (net of income taxes of
$42,760 in 1997) 62,559 0 62,559 0
Net income 100,720 96,653 168,577 166,714
Retained earnings, beginning 1,573,361 1,215,269 1,619,188 1,235,482
Dividends paid 113,860 94,198 227,544 184,472
Retained earnings, ending 1,560,221 1,217,724 1,560,221 1,217,724
Earnings per share .13 .13 .22 .22
Dividends per share .15 .125 .30 .245
The accompanying notes are an integral part of these financial statements.
</TABLE>
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
[CAPTION]
<TABLE>
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $168,577 $166,714
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 249,220 226,937
Amortization of deferred income, net of tax (87,582) 73,381
Income from current year land
dispositions, net of tax (62,559) -0-
Accounts receivable and accrued
utlity revenue (20,849) 39,790
Materials and supplies (11,617) (28,179)
Prepayments (103,820) (82,050)
Accounts payable and accrued expenses (78,255) (63,544)
Other asets, and deferred charges, net (124,431) (174,254)
Deferred liabilities (14,937) (7,352)
Net cash flows provided by (used for)
operating activities (86,253) 4,681
Cash flows from investing activities:
Net construction expenditures (542,311) (508,092)
Proceeds from sale of utility plant -0- 619
Proceeds from land dispositions 175,000 -0-
Net Cash Flows used in
investing activities (367,311) (507,473)
Cash flows from financing activities:
Increase in current note payable 185,000 -0-
Increase in long-term debt 512,500 291,936
Dividends paid (227,544) (184,472)
Dividends reinvested 22,540 27,501
Net Cash Flows provided by
financing activities 492,496 134,965
Net increase(decrease) in cash
& cash equivalents 38,932 (367,827)
Cash & cash equivalents, beginning 185,479 398,869
Cash and cash equivalents, end $224,411 $ 31,042
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 $542,311 $508,092
Customers' advances for construction -0- -0-
Net Plant Additions $542,311 $508,092
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, 1997 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, 1996 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, 1997
and June 30, 1996, if annualized, do not necessarily reflect annual
results.
Note C. - ACCOUNTS RECEIVABLES, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS
Accounts Receivable, net, remained virtually constant during
the three periods presented as a result of improvements in the
Company's collection procedures developed prior to June 30, 1996.
Except for a single item of $45,900 owed by a single town in the
Company's service area at June 30, 1997, the accounts receivable at
that date would show a decrease; the amount was collected in July
of 1997.
Note D. - ACCRUED UTILITY REVENUE
Accrued Utility Revenue at June 30, 1997 and December 31, 1996
includes $60,707 in costs incurred by the Company on a main
replacement project required by the State of Connecticut. At June
30, 1996, the balance due for that project was $84,380 and was
included in Accrued Utility Revenues.
The amounts represent costs incurred by the Company which are
fully reimburseable by the State. Payments by the State are
expected to commence in August of 1997.
Note E. - PREPAYMENTS
[CAPTION]
<TABLE>
<S> <C> <C> <C>
Prepayments consist of:
June 30, Dec. 31, June 30,
1997 1996 1996
Insurance $ 62,339 $11,397 $ 62,159
Legal & accountg. fees 37,871 0 22,242
Other prepaid expenses 38,196 23,189 24,809
$138,406 $34,586 $109,210
</TABLE>
The difference in total prepayments as of the end of the
periods noted was caused primarily by the fluctuation in prepaid
insurance. Insurance premiums are recognized during the first
quarter, since January 1 is the beginning of the policy period for
most of the Company's coverage, and amortized throughout the year.
The fluctuations in "Legal and Accounting Fees" and "Other
Prepaid Expenses" between June 30 and December 31 reflect certain
large accounting and other costs which regularly occur in the first
two quarters of the year and are amortized over the remaining
portion of the year to better match costs to the annual time period
benefitted. The increase of $29,196 from June 30, 1996 to June 30,
1997 reflects annual charges related to the departure of the
Company's Treasurer in January of 1997.
Note F. - LONG TERM DEBT
[CAPTION]
<TABLE>
<S> <C> <C> <C>
June 30 December 31, June 30,
1997 1996 1996
First Mortgage Bonds,
Series E - 9.64%-due Sept. 2011 $4,606,000 $4,606,000 $4,700,000
Note Payable 1,887,500 1,375,000 1,592,500
$6,493,500 $5,981,000 $6,292,500
</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 $645,000
was available to pay dividends at June 30, 1997, 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 September 1, 2011, when the bonds are to be 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 $600,00 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 amortgage 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
June 30, 1997 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 $700,000 on the revolving line of credit
at June 30, 1997.
In May 1997, 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 outstanding borrowings of $310,000 on the unsecured line
of credit at June 30, 1997.
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
[CAPTION]
<TABLE>
<S> <C> <C> <C>
June 30, Dec. 31, June 30,
1997 1996 1996
Accounts Payable $163,888 $239,886 $131,480
Accrued Expenses:
Taxes 155,529 173,777 178,599
Interest 151,027 151,027 151,192
Pension 161,394 147,250 87,858
Other 37,230 35,383 61,825
$669,068 $747,323 $610,944
</TABLE>
The primary factor in the change in Accounts Payable and Accrued
Expenses during the six month period ended June 30, 1997 is the
decrease in Accounts Payable, from a level at year end that was
higher than usual due to the capital improvements that were made
during the second half of 1996.
Note I - DEFERRED GAINS ON LAND DISPOSITIONS
The Connecticut Department of Public Utility Control ("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, 1997 and
1996, such deferred land disposition gains (net of income taxes)
were included in income as follows:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
[CAPTION]
<TABLE>
<S> <C> <C> <C> <C>
Amortization of Prior Years'
Deferred Income on
Land Dispositions, net 43,791 36,691 87,582 $73,381
</TABLE>
The increase in the amortization for the three months and six
months ended June 30, 1997 vs 1996 reflects primarily the
additional amortization in 1997 of the gain deferred from the
proceeds from a sale of land received in September 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 758,496 and 753,602 for the three month
periods ended June 30, 1997 and 1996, respectively and 758,490 and
752,956 for the six months ended June 30, 1997 and 1996,
respectively.
Note K - RATE MATTERS
Effective July 1, 1997, the 5% Gross Revenues Tax was repealed
and accordingly, the Company's rates were decreased by order of the
DPUC to reflect that change.
The Company applied to the DPUC on July 15, 1997 for a rate
increase of 14.2% overall. It is expected that the new rates will
go into effect early in 1998. The amount of the request is subject
to change, depending on the successful completion of any land
dispositions. The Company cannot predict whether the DPUC will
grant any or all of the Company's request; historically, the DPUC
has not granted the full amount of any rate increase requested by
the Company.
Note L - EQUITY
Stock Option Plans
In 1994, the Company adopted two stock option plans, a
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 June 30, 1997, options for 59,750 shares
were granted and outstanding.
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.
Through December 31, 1996, the Company had issued 8,724 shares
for an aggregate purchase price of $82,492 in lieu of cash
dividends, in connection with its Dividend Reinvestment Plan.
During 1997, an additional 2,171 shares of common stock at an
aggregate purchase price of $22,539 were issued in lieu of cash
dividends through June 30, 1997.
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
Net Income
Net income increased by $1,863 during the first six months of
1997 compared to the same 1996 period, resulting primarily from (a)
the Company's recognition of $62,559 of income, net of taxes, from
the sale of a parcel of land in June 1997, (b) an increase of
$14,201 in the amortization to income of land sales gains from
prior years and (c) an increase of $11,458 in other income. Net
income for the three months ended June 30, 1997 increased $4,067
over the same 1996 period, resulting primarily from the recognition
of the June 1997 land sale income and the increased amortization of
prior years' land sale gains. The 1997 six months net income
increase was moderated by a decline in utlity operating income for
the period of $70,510, resulting from a decline in operating
revenues of $21,124 and an increase in operating expenses of
$49,386. The 1997 second quarter results were significantly
affected by a decline of $50,573 in utility operating income from
the 1996 second quarter, resulting from a decline in operating
revenues of $43,623 and in an increase in operating expenses of
$6,950.
Operating Revenues
Operating revenues declined by $21,124 when comparing the six
months ended June 30, 1997 to the same period in 1996. Operating
revenues decreased $43,623 for the three months ended June 30, 1997
compared to the same period ending June 30, 1996. Both revenue
decreases resulted from decreases in water consumption.
Approximately 75% of the decreases in revenues and consumption of
water relates to residential customers. The Company's management
believes that the decreases in residential water consumption from
the 1996 to 1997 periods reflect long term decreases in population
in the Company's service area as well as the effects of residential
customers' conservation efforts resulting both from (a) publicized
efforts of the Connecticut Department of Health Services to promote
conservation and (b) the effects of the Company's increase in rates
in 1996.
Operating Expenses
Operating expenses increased by $49,386 from the first half of
1996 to the first half of 1997. The major factors in the increase
were $41,050 increase in purchased water and a $33,325 increase in
depreciation offset by a decrease of $25,186 in taxes on income.
The increase in purchased water is a result of a change in the
Company's pattern of purchasing water, but the Company expects,
however, that the annual cost of purchased water in 1997 will not
change substantially from that in 1996. The increase in
depreciation charges is a result of the investment by the Company
in additional capital improvements. The Company has added
approximately $2,000,000 of capital improvements in the twelve
months since June 30, 1996. The decrease in taxes on income is a
result of the decline in income from operations of $60,696. The
$62,559 gain from the land disposition is net of Taxes.
Other Income, Net
The increase of $11,458 for the six months ended June 30, 1997
and the decrease for the three months ended June 30, 1996 of
$3,677, are due to variations in the quarterly fee recognized for
management of a small independent water system.
Interest and Amortization of Debt Discount and Expense
The increases in interest expenses of $11,342 and $15,845 are
caused by the larger outstanding balances in the Company's line of
credit and revolving loan during the three and six month periods
ended June 30, 1997, respectively, compared to the like 1996
periods.
FINANCIAL CONDITION
The Company was granted an increase in rates effective January
1, 1996, and has applied for another increase during 1997 with a
proposed effective date in early 1998. The Company nonetheless
expects that for 1997 it will have 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 depends 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's 1997 Capital Budget of $1,430,000 is two-tiered.
The first tier, totalling $450,000, includes $295,000 for routine
annual expenditures for services, mains, hydrants, and meters,
$150,000 for small main replacements and $5,000 toward Level "A"
Mapping to be used in the process of protecting the Housatonic Well
Field aquifer. 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
revolving line of credit.
The second tier of the 1997 Capital Budget consists of
replacements and betterments which are part of the Company's Long
Term Capital Improvement Program and includes $980,000 of budgeted
plant additions. Plant additions from this part of the 1997 budget
will require external financing in addition to the Company's
revolving line of credit.
As of June 30, 1997, the Company has approximately 1,400 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 increase in
deferred charges during the first half 1997 reflects costs for
surveys and maps related to readying these land parcels for sale.
The Company believes that by selling these excess lands it can
generate sufficient equity capital to support its 10 year capital
budget. Such land dispositions are subject to approval by the
DPUC.
On March 18, 1997, the Company entered into a Purchase and
Sale Agreement with M/1 Homes, LLC ("M/1 Homes"), pursuant to which
the Company agreed to sell and M/1 Homes agreed to purchase
approximately 245 acres of the Company's unimproved real property
in Seymour, Connecticut for $3,950,000. The purchase and sale are
subject to the DPUC's approval. While the Company cannot predict
whether it will be able to obtain the approval of the DPUC, it
knows of no reason why the DPUC should not approve the sale. The
Company filed its application to the DPUC on April 30, 1997 and a
public hearing was held on July 14, 1997. Connecticut law requires
that the DPUC render a decision on such an application within 150
days from its filing. The agreement between the Company and M/1
Homes may be terminated by the Company if the Company has not
received the required approval by November 14, 1997. The
obligation of M/1 Homes to purchase the property is conditioned
upon its receipt of local, state and federal approvals of its
proposed development of the site as an 18 hole golf course, along
with not fewer than 180 detached residential units for adults 55
years old and older, a clubhouse and catering facilities. The
agreement may be terminated by either party if M/1 Homes has not
received all the required development approvals by December 31,
1998. The agreement may be extended through December 31, 2000 to
accommodate appeals of required governmental development approvals,
in which case the purchase price for the property will increase by
$20,000 for each month, or portion thereof, after December 31, 1999
until the closing shall occur. The Company cannot predict whether
M/1 Homes will be able to obtain all of the required approvals.
On May 12, 1997, the Company entered into an Agreement to sell
all of the approximately 145 acres of the portion of its Sentinel
Hill property located in Derby, Connecticut to the City of Derby
for $1,800,000. The City has obtained overwhelming voter approval
to issue bonds to fund the purchase price and approval of its City
Council for the terms of the Agreement. The Company has submitted
the agreement to the DPUC for approval. The Company knows of no
reason why the DPUC should not approve the sale.
The Company is actively pursuing additional sales of real
property. Because of the delays required by the regulatory process,
however, it is unlikely that it will be able to consummate any such
sales during 1997.
The Company has a $1,500,000 secured term loan, (of which
$1,262,500 was outstanding on June 30, 1997), a $1,500,000 secured
revolving line of credit to fund additional capital improvements,
and a one-year, unsecured line of credit of $600,000 to be used for
working capital purposes. The term loan matures on May 1, 2004 and
requires annual principal repayment of $75,000. The revolving line
of credit period expires in April of 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
F - 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
June 30, 1997 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 1.75% over the applicable
LIBOR rate. Interest is payable monthly. There were outstanding
borrowings of $700,000 on the revolving line of credit at June 30,
1997 and $330,000 at the same date in 1996. The annual interest
rate payable on the revolving line of credit was 7.4375% on
$535,000 and 8.625% on $165,000 at June 30, 1997.
The unsecured, working capital line of credit currently
expires on May 1, 1998. The unsecured line of credit also provides
for various interest rate options, including a variable rate at
0.125% 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.
Outstanding borrowings on the unsecured line of credit at June 30,
1997 and 1996 were $310,000 and $-0-, respectively. The annual
interest rate payable on the working capital line of credit on June
30, 1997 was 7.4375%.
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.
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 revolving line of credit)
would exceed 67% of the Company's total capitalization; the DPUC
limitation currently has no effect on the Company's ability to
borrow the full $1,500,000 contractual amount of line of credit.
There was an outstanding balance of $700,000 under the revolving
line of credit at June 30, 1997.
The Company maintains a common stock Dividend Reinvestment
Plan (the "Plan") pursuant to which shareholders are entitled to
purchase in the aggregate 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 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 implemented just prior to the June 30, 1995 dividend, a total
of $105,031 has been reinvested through the June 30, 1997 dividend.
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 first half of 1997, 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 May 14, 1997, as follows:
a) Election of Directors - All nominees for Director were
elected, as follows:
[CAPTION]
<TABLE>
Votes Cast % of Votes Abstentions
Votes Cast Against or Cast in & Broker
<S> <C> <C> <C> <C>
Name of Nominee In Favor Withheld Favor Non-Votes
Stephen P. Ahern 480,819 174 99.9 "
E.G. Brickett 480,943 50 99.9 "
J.E. Cohen 480,811 182 99.9 "
A. da Silva 479,343 1,650 99.7 "
B. Henley-Cohn 480,943 50 99.9 "
A.J. Rivers 480,943 50 99.9 "
B.L. Sauerteig 480,943 50 99.9 "
K.E. Schaible 479,343 1,650 99.7 "
D. Silverstone 480,811 182 99.9 "
</TABLE>
The nomination of M.J. Adanti to serve on the Company's Board
of Directors was withdrawn at the Annual Meeting of Shareholders
when the Company became aware that he had not acquired shares of
the Company's common stock as required by its by-laws.
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 1997
fiscal year. There were 478,929 shares voted in favor,
representing 99.8% of all shares voting. There were 1,608 voting
against and 456 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 March 18, 1997, with respect
to the Company's entering into a purchase and sale agreement
with M/1 Homes, LLC to sell to M/1 Homes approximately 245
acres of real property for a purchase price of $3,950,000.
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
Date: August 14, 1997 /s/ Aldore J. Rivers
Aldore J. Rivers, President
Date: August 14, 1997 /s/ Leroy A. DeFrances
Leroy A. DeFrances, Controller
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S JUNE 30, 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> $12,612,362
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,539,811
<TOTAL-DEFERRED-CHARGES> 922,114
<OTHER-ASSETS> 1,086,873
<TOTAL-ASSETS> 16,161,160
<COMMON> 2,244,326
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,560,221
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,804,547
0
0
<LONG-TERM-DEBT-NET> 6,493,500<F1>
<SHORT-TERM-NOTES> 310,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 169,000
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,384,113
<TOT-CAPITALIZATION-AND-LIAB> 16,161,160
<GROSS-OPERATING-REVENUE> 2,135,811
<INCOME-TAX-EXPENSE> 26,636
<OTHER-OPERATING-EXPENSES> 1,826,226
<TOTAL-OPERATING-EXPENSES> 1,852,862
<OPERATING-INCOME-LOSS> 282,949
<OTHER-INCOME-NET> 193,064
<INCOME-BEFORE-INTEREST-EXPEN> 476,013
<TOTAL-INTEREST-EXPENSE> 307,436
<NET-INCOME> 168,577
0
<EARNINGS-AVAILABLE-FOR-COMM> 168,577
<COMMON-STOCK-DIVIDENDS> 227,544
<TOTAL-INTEREST-ON-BONDS> 453,080
<CASH-FLOW-OPERATIONS> (86,253)
<EPS-PRIMARY> $.22
<EPS-DILUTED> $.22
<FN>
<F1>See Note F to financial statements; includes long term note payable.
</FN>
</TABLE>
