FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1997 Commission File Number0-6028
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 tofile such reports; and (2)
has been subject to such filingrequirements 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 Oct. 31, 1997
Common stock, no par value 760,839
[CAPTION]
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
As of September 30, 1997, December 31, 1996 and September 30,1996
<TABLE>
<S> <C> <C> <C>
(Unaudited) (Unaudited)
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1996
ASSETS:
Utility Plant $18,733,242 $17,766,937 $17,345,831
Accumulated depreciation (5,787,859) (5,472,071) (5,424,650)
12,945,383 12,294,866 11,921,181
Current Assets:
Cash and cash
equivalent 47,401 185,479 348,111
Accounts receivable,
net of allowance for
doubtful accounts 669,006 681,194 626,966
Accrued utility revenue 401,983 411,542 409,872
Materials & supplies 81,450 51,792 52,167
Prepayments 87,064 34,586 77,172
Total current assets 1,286,904 1,364,593 1,514,288
Deferred Charges 1,006,154 870,736 800,898
Unamortized debt expense 182,266 193,466 196,212
Income taxes recoverable 422,915 422,915 456,659
Other assets 494,341 421,844 411,159
2,105,676 1,908,961 1,864,928
$16,337,963 $15,568,420 $15,300,397
STOCKHOLDERS' EQUITY AND LIABILITIES
Stockholders' Equity:
Common Stock, no par
value, authorized
2,000,000 shares;
issued and outstanding
9/30/97-760,839;
12/31/96-757,892;
9/30/96-756,806 $2,255,811 $2,221,786 $2,213,805
Retained earnings 1,619,225 1,619,188 1,629,632
3,875,036 3,840,974 3,843,437
Note Payable 2,143,750 1,375,000 1,243,750
Long-term debt 4,512,000 4,606,000 4,700,000
6,655,750 5,981,000 5,943,750
Notes payable 510,000 125,000 ---
Current portion of
note payable & long
term debt 169,000 169,000 75,000
Accounts payable and
accrued liabilities 456,652 747,323 915,458
Total current
liabilities 1,135,652 1,041,323 990,458
Customers' advances
for construction 1,289,809 1,291,114 1,264,696
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 1,582,677 1,484,972 1,232,779
Deferred income on
disposition of land 844,621 1,021,824 1,110,492
$16,337,963 $15,568,420 $15,300,397
</TABLE>
The accompanying notes are an integral part of these financialstatements.
[CAPTION]
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1997 1996 1997 1996
Operating Revenue
(Note B) $1,153,694 $1,129,750 $3,289,505 $3,286,685
Operating Expenses:
Operations and
Maintenance 181,513 205,785 599,553 607,349
Purchased Water 175,789 173,741 542,672 499,574
Administrative
and General 297,486 270,616 853,161 815,604
Depreciation 107,514 99,318 337,315 295,794
Taxes Other
Than Income 71,286 101,908 327,113 384,701
Taxes on Income 49,633 53,456 76,269 105,278
Total Operating
Expense 883,221 904,824 2,736,083 2,708,300
Utility Operating
Amortization of
Prior Years'
Deferred Income on
Land Dispositions,
net 46,659 36,690 134,241 110,071
(Net of income taxes
of $32,976 and
$95,335 in 1997 and
$25,165 and $78,304
in 1996 for the three
months and nine months,
respectively)
Other Income, net 20,564 23,771 63,487 55,236
Income before
interest expense 337,696 285,387 751,150 743,692
Interest and
Amortization of
Debt Discount &
Expense 164,662 162,007 472,098 453,598
Income from
dispositions of
land, net (net of
income taxes of
$42,760 and
$266,130 in 1997
and 1996,
respectively) -0- 386,709 62,559 386,709
Net income 173,034 510,089 341,611 676,803
Retained earnings,
beginning 1,560,221 1,217,724 1,619,188 1,235,482
Dividends paid 114,030 98,181 341,574 282,653
Retained earnings,
ending $1,619,225 $1,629,632 $1,619,225 $1,629,632
Earnings per share $.23 $.68 $.45 $.90
Dividends per share $.15 $.13 $.45 $.375
</TABLE>
The accompanying notes are an integral part of these financialstatements.
[CAPTION]
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<S> <C> <C>
Nine Months Ended Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996
Cash Flows From
Operating Activities
Net Income $341,611 $676,803
Adjustments to
reconcile net income
to net cash provided
by operating activities:
Depreciation and
amortization 366,955 335,229
Amortization of
deferred income,
net of tax (134,241) (110,071)
Income from current
year land dispositions,
net of tax (62,559) (386,709)
Increases and decreases
in assets and liabilities:
Accounts receivable and
accrued utility
revenue 21,747 101,192
Materials and supplies (29,658) (1,327)
Prepayments (52,478) (50,012)
Accounts payable and
accrued expenses (290,671) (123,592)
Other assets and
deferred charges,
net (226,355) (218,027)
Deferred income taxes (57,213) (11,025)
Customer advance
(refund) for
construction 45,900 34,711
Total Adjustments (418,573) (429,631)
Net cash flows
provided by (used in)
operating activities (76,962) 247,172
Cash flows from
investing activities:
Net construction
expenditures (988,317) (1,042,753)
Proceeds from sale of
utility plant -0- 1,251
Proceeds from land
Net Cash flows (used in)
investing activities (813,317) (152)
Cash flows from
financing activities:
Increase in current
note payable 385,000 -0-
Increase (decrease) in
long-term debt 674,750 (56,814)
Dividends paid, net
of reinvested
dividends (307,549) (240,964)
Net Cash flows provided
by financing
activities: 752,201 (297,778)
Net (decrease) in cash
& cash equivalents (138,078) (50,758)
Cash & cash equivalents,
beginning 185,479 398,869
Cash, ending $ 47,401 $348,111
Supplemental disclosure
of cash flow
information:
Cash paid for
Interest $573,018 $547,022
Income Taxes $148,150 $207,800
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 $ 988,317 1,042,753
Customers'
advances for
construction (45,900) (34,711)
Capital
expenditures,
net $ 942,417 $1,008,042
</TABLE>
The accompanying notes are an integral part of these financial statements.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A. - UNAUDITED STATEMENTS
The statements as of and for the three and nine months ended September 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 ofDecember 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 thedrier and warmer
summer months. Accordingly, the results of operations for the three and nine
months ended September 30, 1997 and September 30, 1996, if annualized, do not
necessarily reflect annual results.
Note C. - ACCOUNTS RECEIVABLES, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS
Accounts Receivable, net declined $12,188 during the first nine months of
1997, as the result of more formalized collection efforts.
Note D. - ACCRUED UTILITY REVENUE
Accrued Utility Revenue at September 30, 1997 and December 31, 1996 includes
$60,707 in costs incurred by the Company to date on a main replacement
project required by the State of Connecticut. The Company's costs for the
most part are reimbursable to the Company by the State of Connecticut. It
is estimated at the present time that approximately $25,000 in costs will
not be recovered and that amount will be the Company's cost of the project
and be transferred to Utility Plant in Service.
[CAPTION]
Prepayments consist of:
<TABLE>
<S> <C> <C> <C>
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1997
Insurance $42,675 $11,397 $38,685
Legal & accountg
fees 10,585 0 9,242
Other prepaid
expenses 33,804 23,189 29,245
$87,064 $34,586 $77,172
</TABLE>
The fluctuation in total prepayments as of the ends of the periods noted
was caused primarily by the fluctuation in prepaid insurance. Insurance
premium payments are made during the first quarter, since January 1 is the
beginning of the policy period, and amortized throughout the year.
The fluctuation in "Legal and Accounting Fees" reflects certain large
accounting and other annual reporting costs which regularly occur in the
first quarter and are amortized over the remaining part of the year to
better match costs to the annual time period benefitted.
Note F. - LONG TERM DEBT
<TABLE>
<S> <C> <C> <C>
Sept.7, Dec. 31, Sept. 30,
1997 1996 1996
First mortgage bonds,
Series E 9.64% due
September 2011 $4,512,000 $4,606,000 $4,700,000
Note Payable 2,143,750 1,375,000 1,243,750
Other -0- -0- -0-
$6,655,750 $5,981,000 $5,943,750
</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 $4,606,000
due on September 1, 2011. The terms of the Indenture provide for, among
other things, annual sinking fund payments which commenced September 1, 1997,
and limitations on(a) payment of cash dividends and (b) incurrence of
additional bonded indebtedness. Pursuant to this agreement, approximately
$657,000 was available to pay dividends at September 30, 1997, after the
quarterly dividend payment made on that date. Interestis 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.
Note Payable
The Company has a $1,500,000 secured term loan, (of which $1,243,750 was
outstanding on September 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 repayment 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 utiltiy 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, 1996 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 no
outstanding borrowings on the revolving line of credit at September 30, 1996
and $975,000 at September 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 ofcredit. There were no outstanding borrowings on the unsecured line
of credit at September 30, 1996 and $510,000 at September 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 G - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
There were many factors contributing to the variations in Accounts Payable
and Accrued Expenses among the various periods. Accounts payable at year end
1996 were higher than usual because of a higher than normal level of capital
expensidutures late in the second half of 1996. Accrued taxes at September
30, 1997 have been reduced because taxes for the period this year, including
those resulting from a land sale in late June, have been fully paid. The
fluctuation in accrued interest reflects primarily the semi-annual interest
payment requirement on the Company's mortgage bonds. See Note F - Long Term
Debt, First Mortgage Bonds.
<TABLE>
<S> <C> <C> <C>
Sept. 30, Dec. 31, Sept. 30,
1997 1996 1996
Accounts Payable $179,096 $239,886 $193,988
Accrued Expenses:
Taxes 48,689 173,777 510,469
Interest 37,757 151,027 46,513
Pension 156,370 147,250 95,429
Other 34,740 35,383 69,159
$456,652 $747,323 $915,458
</TABLE>
Note H - DEFERRED GAINS ON LAND DISPOSITIONS
The DPUC has provided for a rate making accounting procedure forincome 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 nine months ended September
30, 1996 and 1997 such deferred land disposition gains (net of income taxes)
were included in income as follows:
<TABLE>
<S> <C> <C>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1997 1996 1997 1996
Amortization of
Prior Years'
Deferred Income on
Land Dispositions,net $ 46,659 $36,690 $134,241 $110,071
</TABLE>
The increase in the amortization for the three months and nine months ended
September 30, 1997 as compared to 1996 reflects primarily the additional
amortization in 1997 of the gain deferred from a sale which closed in
September of 1996.
NOTE I - 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 758,764 and 755,125
for the three month periods ended September 30, 1997 and 1996, respectively
and 758,455 and 753,665 for the nine months ended September 30, 1997 and
1996, respectively.
Note J - RATE MATTERS
Effective July 1, 1997, the 5% Connecticut 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 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 K - EQUITY
Stock Option Plans
The Company has two stock option plans, a non employee 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 September 30, 1997, options for 63,250 shares
had been granted to directors and employees of the Company under both plans.
Dividend Reinvestment Plan
The Company also has 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. An additional 2947 shares of common
stock at an aggregate purchase price of $33,994 have been issued in lieu of
cash dividends through the nine month period ended September 30, 1997.
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
Net Income
Net income decreased by $335,192 during the nine month period ended September
30, 1997 from the same 1996 period. The decrease results primarily from the
fact that in the 1996 period the Company enjoyed current land sale gains
$324,150 greater than in the 1997 period. The 1997 decrease also reflected
(a) an increase in interest expense of $18,500, (b) a decrease in utility
operating income of $24,963 and (c) offsetting increases in amortization of
prior land sales of $24,170 and other income of $8,251.
Third quarter 1997 net income decreased by $337,055 from the same 1996
period. Those results were affected primarily by the absence of a
significant current land sale gain compared to the 1996 third quarter, which
included such a gain in the amount of $386,709. The absence of a 1997 third
quarter land sale gain was mitigated somewhat by increases in 1997 third
quarter utility operating income of $45,547 and amortization of prior years'
land sale gains of $9,969 over the 1996 third quarter.
Operating Revenues
Operating revenues for the nine months ended September 30, 1997 as compared
to the same period of 1996 were relatively constant. The three month period
from July 1, 1997 to September 30, 1997, however, showed an increase of
$23,944. Revenue comparisons between the 1996 and 1997 third quarters are
distorted by the 5% rate reduction ordered by the DPUC effective July 1, 1997
to reflect the repeal of the Connecticut Gross Revenues Tax on that date.
See Note J - Rate Matters. The rate reduction should not have a material
effect on net income because the Company's tax expense was reduced by a like
amount. Without the rate reduction, the Company's 1997 third quarter
revenues would have exceeded its 1996 third quarter revenues by approximately
$75,000, resulting primarily from increased customer water consumption due
to the drier and hotter 1997 summer weather.
Operating Expenses
Operating expenses for the 1997 nine month period increased by $27,783 over
the same 1996 period. Expense increases of $43,098 for purchased water,
$37,557 for administrative and general, and $41,521 for depreciation
contributed to the increase but were offset by decreases of $57,588 in taxes
other than income and $29,009 in income taxes.
The increase in purchased water is a result of a change in the Company's
interim pattern of purchasing water, but the Company expects that the annual
cost of purchased water in 1997 will not materially differ from that in 1996.
The increase in administrative and general expenses is attributable for the
most part to a change in the method of allocating an officer's salary between
expense and deferred charges. The increase in depreciation expense is the
result of the over $2,000,000 in Capital Improvements completed in the past
fifteen months.
The decreases in taxes, other than income and taxes on income, were the
result of the repeal of the 5% gross receipts tax and the decrease in
operating income, respectively.
FINANCIAL CONDITION
The Company was granted an increase in rates by the DPUC 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 September 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 changes during the nine months of 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.
The Company has 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 agreement between the
Company and M/1 Homes may be terminated if the Company has not received
final approval by the DPUC by November 14, 1997. The DPUC issued its
decision approving the sale on September 17, 1997, but the company was served
with an appeal of the decision on October 31, 1997. The Company does not
know if M/1 Homes will attempt to terminate the agreement as a result of the
service of the appeal. The obligation of M/1 Homes to purchase the property
is also 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. One of the required approvals,
a change in the Town of Seymour's Zoning Regulations applicable to the property,
was approved in July, but that approval has also been appealed.
In June 1997, the Company consummated the sale of a 3.6 acre parcel of land
in Seymour for a gross sales price of $175,000. On November 7, it also
completed a sale of a 10 acre parcel for a gross sales price of $300,000.
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 or the first half of
1998.
The Company has a $1,500,000 secured term loan, (of which $1,243,750 was
outstanding on September 30, 1997), $1,500,000 secured revolving line of
credit to fund additioanl 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 $975,000 on the revolving line of credit at September 30, 1997 and none
at the same date in 1996. The annual interest rate payable on the revolving
line of credit was 7.40625% on $825,000 of the principal amount outstanding
and 8.625% on the remaining $150,000 outstanding at September 30, 1997.
The unsecured, working capital line of credit currently expireson 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 September 30, 1997
and 1996 were $510,000 and $-0-,respectively. The annual interest rate
payable on the working capital line of credit on September 30, 1997 was
7.40625% on $410,000 of the principal amount outstanding and 8.625 on the
remaining $100,000 outstanding.
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 $150,000 contractual amount of line of credit.
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 $116,486 has been
reinvested through the September 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.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
Report on Form 8-K, dated September 12, 1997, was filed with respect to the
status of certain proposed land sales reported under Item 5 of such Form.
(b) Reports on Form 8-K. None.
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: November 14, 1997 /s/ Aldore J. Rivers
Aldore J. Rivers, President
Date: November 14, 1997 /s/ Leroy A. DeFrances
Leroy A. DeFrances, Controller
<TABLE> <S> <C>
<ARTICLE> UT
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 12,945,383
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 1,286,904
<TOTAL-DEFERRED-CHARGES> 1,006,154
<OTHER-ASSETS> 1,099,522
<TOTAL-ASSETS> 16,337,963
<COMMON> 2,255,811
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,619,225
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,875,036
0
0
<LONG-TERM-DEBT-NET> 6,655,750<F1>
<SHORT-TERM-NOTES> 510,000
<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> 5,128,177
<TOT-CAPITALIZATION-AND-LIAB> 16,337,963
<GROSS-OPERATING-REVENUE> 3,289,505
<INCOME-TAX-EXPENSE> 76,269
<OTHER-OPERATING-EXPENSES> 2,659,814
<TOTAL-OPERATING-EXPENSES> 2,736,083
<OPERATING-INCOME-LOSS> 553,422
<OTHER-INCOME-NET> 260,287
<INCOME-BEFORE-INTEREST-EXPEN> 813,709
<TOTAL-INTEREST-EXPENSE> 472,098
<NET-INCOME> 341,611
0
<EARNINGS-AVAILABLE-FOR-COMM> 341,611
<COMMON-STOCK-DIVIDENDS> 341,574
<TOTAL-INTEREST-ON-BONDS> 444,018
<CASH-FLOW-OPERATIONS> (122,862)
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.45
<FN>
<F1>See Note F to financial statements; includes long term note payable.
</FN>
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