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, 1999 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 06401-0426
(Address of principal executive offices) Zip Code
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 (Section 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 10, 2000: $18,124,736.
Indicate the number of shares outstanding or each of the registrant's
class of common stock, as of the latest practicable date.
Page Two
Class Outstanding at March 10, 2000
Common Stock, no par value 1,583,025
* 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.
Page Three
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 Beaver Lake
Reservoir System, a 2.2 million gallon per day (MGD) surface supply in
case of emergency needs.
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 8.0 MGD, while the average daily demand and the maximum
daily demand on the system during 1999 were approximately 3.4 MGD and
4.7 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.
During 1999 approximately 1.25 billion gallons of water from all
sources were delivered to the Company's customers. The Company has
approximately 8,990 customers of whom approximately 94% are residential
and commercial. No single customer accounted for as much as 10% of
total billings in 1999. 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 February 29, 2000, 20 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 (the "Health Department"or "DPH") 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.
Page Four
Executive Officers of the Registrant
Name, Age and Position Business Experience Past 5 Years
Betsy Henley-Cohn, 47
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.; Director,
United Illuminating Company; Director,
Aristotle Corp.; Director, Citizens Bank
of Connecticut (1997-1999).
John S. Tomac, 46
President President of the Company since October
1, 1998. Vice President and Treasurer of
the Company December 1, 1997-September
30, 1998.
Assistant Controller, BHC Company 1991-
1997.
Item 2. Properties
The Company's properties consist chiefly of land, wells, reservoirs,
and pipelines. The Company has 5 production wells with an aggregate
effective capacity of approximately 3.0 MGD. The Company's existing
interconnections with the Regional Water Authority can provide 5.0 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 8.0 MGD, while the average daily demand and the maximum
daily demand on the system during 1999 were approximately 3.4 MGD and
4.7 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 those reservoirs is actively being used by the Company
to supply water to the system. During 1996 and in January of 1998, the
Company sold to the City of Ansonia and the City of Derby the Sentinel
Hill Reservoir system and its watershed located in Ansonia and Derby.
In November of 1998, the Company sold to the Town of Seymour the Great
Hill reservoir system and its watershed located in the Towns of Seymour
and Oxford.
Page Five
The Company's dams are subject to inspection by and the approval of
the DEP. All of the Company's dams are in compliance with improvements
previously ordered by the U.S. Army Corps of Engineers.
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 3,400 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 and updated Water Supply Plan in 1993. 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. In 1994, the abandonment of Great
Hill Reservoir was approved by the Health Department.
Since 1988, the Company has sold approximately 1,364 acres of land
in Bethany, Ansonia, Derby, Seymour and Oxford, realizing net gains of
$6,994,974.
The Company believes that approximately 1,050 acres of its land
oldings 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).
Page Six
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
Page 6 of the Company's Annual Report to shareholders for the year ended
December 31, 1999, (Financial Highlights), is incorporated herein by
reference, pursuant to Rule 12-23 of the Securities and Exchange Act of
1934 (the "Act") and to Instruction G(2) to Form 10-K.
Item 6. Selected Financial Data
Page 6 of the Company's Annual Report to shareholders for the year ended
December 31, 1999 (Financial Highlights) is incorporated herein by
reference, pursuant to Rule 12-23 of the Act and to Instruction G(2) to
Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Income
Pages 8 through 11 of the Company's Annual Report to Shareholders for
the year ended December 31, 1999 are incorporated herein by reference,
pursuant to Rule 12-23 of the Act and to Instruction G(2) to Form 10-K.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements, together with the report therein,
of Dworken, Hillman, LaMorte and Sterczala, P.C., dated January 28,
2000, appearing on pages 12 through 24 of the accompanying 1999 Annual
Report to Shareholders of Birmingham Utilities, Inc. are incorporated
herein by reference, pursuant to Rule 126-23 of the Act and Instruction
G(2) to Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Registrant has nothing to report on this item.
Page Seven
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.
Business Experience during the Last Director
Name Age Five Years and Other Directorships Since
Stephen P. Ahern 70 V.P., Unicco Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 70 Retired; Director of Finance, Town 1979
of Southington, CT until June 1995
James E. Cohen 53 Lawyer in Practice in Derby; 1982
Betsy Henley-Cohn 47 Chairwoman of the Board of Directors 1981
of the Company; Chairman and
Treasurer, Joseph Cohn & Sons, Inc.
(construction, sub-contractors);
Director, United Illuminating Corp.;
Director, Aristotle Corp.; Director,
Citizens Bank of Connecticut (1997-1999).
Alvaro da Silva 54 President, DSA Corp.(a management company); 1997
President, B.I.D.Inc (land development
and home building company); Managing
Partner Connecticut Commercial
Investors, LLC.,(a commercial real estate
and investment partnership); Chairman,
Shelton Inland Wetlands Commission; Board
of Governors Unquowa School; Director,
Great Country Bank ( 1991-1995).
Aldore J. Rivers 66 Retired; President of the Company until 1986
September 30, 1998.
B. Lance Sauerteig 54 Lawyer in Practice in Westport; Principal 1996
in BLS Strategic Capital, Inc. (financial
and inv. advisory company); Principal in
Tortoise Capital, Partners, LLC
(real estate investments); Director,
OFFITBANK (a New York based private
investment management bank)
Page Eight
Kenneth E. Schaible 58 Bank Consultant and Real Estate Developer; 1994
Senior Vice President, Webster Bank
(1995-1996); President, Shelton Savings
Bank and Shelton Bancorp.,Inc. (1972-1995)
David Silverstone, 53 Utility Consultant; previously Group 1994
Vice President-Chief Administrative
Officer The Southern Connecticut Gas
Company 1998-February 2000);
Lawyer in Practice in Hartford until 1998.
John S. Tomac, 46 President and Treasurer of the Company; 1998
previously, Vice President and Treasurer
of the Company (1997-1998); Assistant
Controller, BHC Company,(1991-1997).
The Board of Directors' Audit Committee consisted of Messrs.
Brickett, da Silva and Schaible during 1999. It performs the function
of recommending the engagement and reviewing the performance of the
Company's independent public accountants. The Audit Committee met twice
in 1999. The Board of Directors' Personnel and Pension Committee
consisted of Ms. Henley-Cohn (ex-officio) and Messrs. Ahern, Brickett,
Sauerteig and Silverstone and performs the function of reviewing
Executive Office compensation and proposing the same to the full Board
of Directors for action. It also proposes to the full Board overall
payroll pool levels and pension plan arrangements for all employees.
The Personnel and Pension Committee met four times in 1999. In 1999,
five meetings of the full Board of Directors were held, and all
Directors attended at least 75% of the meetings of the full Board and
committees on which they served.
(b) Section 16(a) Beneficial Ownership Reporting Compliance.
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, 1999, 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
Page 5 of the Company's Definitive Proxy Statement, dated April 6,
2000 relating to the proposed Annual Meeting of Shareholders to be held
on May 10, 2000, filed with the Commission pursuant to Regulation 14a
under the Act, are incorporated herein by reference, pursuant to Rule
126-23 of the Act and Instruction G(3) to Form 10-K.
Page Nine
Item 12. Security Ownership of Management and Certain Beneficial Owners
Pages 3 through 5 of the Company's Definitive Proxy Statement, dated
April 6, 2000, relating to the proposed Annual Meeting of Shareholders
to be held on May 10, 2000, filed with the Commission pursuant to
Regulation 14a under the Act, are incorporated herein by reference,
pursuant to Rule 126-23 of the Act and Instruction G(3) to Form 10-K.
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.
Mr. Silverstone was, until March 31, 1998, a partner in the law
firm of Silverstone & Koontz, which represented the Company on rate
matters in 1997.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood
and Sanders, which provided legal services to the Company in past years
and may do so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The following documents are filed as part of this report:
Page in
Annual Report*
(1) Statements of Income and Retained
earnings for the three years ended
December 31, 1999 14
Balance Sheets at December 31, 1999 13
(3) Statements of Cash Flows for the three
years ended December 31, 1999 15
Notes to the Consolidated Financial Statements 16-24
Report of Independent Accountants 12
Financial Highlights 6
Selected Financial Data 6
Management's Discussion and Analysis 8-11
* Incorporated by reference from
the indicated pages of the 1999 Annual Report.
(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.
Page Ten
(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 Annual Report on Form 10-K of Birmingham Utilities, Inc.,
for the period ended December 31, 1998.
(ii) Commercial Term and Revolving Loan Agreement by and between
Birmingham Utilities, Inc. and Fleet Bank, N.A., dated April 29, 1994,
Amended and Restated on September 17, 1998. 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.
Attached hereto as pp. 15-23.
(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 Annual Report
on Form 10-K of Birmingham Utilities, Inc. for the period ended December
31, 1996.
(10.3) Employment Agreement between Birmingham Utilities, Inc. and
John S. Tomac dated October 1, 1998. Incorporated herein by reference
is Exhibit (10.3) of the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the period ended December 31, 1998.
(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.
Page Eleven
(10.6) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and The Trust for Public Land, ("TPL"), dated September
16, 1999 for the sale by the Company to TPL of approximately 42.5 acres
of unimproved land in Ansonia, Connecticut. Incorporated by reference
is Exhibit (10)(b) of the Quarterly Report on Form 10-Q of Birmingham
Utilities, Inc. for the period ended September 30, 1999.
(10.7) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and The Trust for Public Land, ("TPL"), dated September
16, 1999 for the sale by the Company to TPL of approximately 570 acres
of unimproved land in Ansonia and Seymour, Connecticut. Incorporated by
reference is Exhibit (10)(a) of the Quarterly Report on Form 10-Q of
Birmingham Utilities, Inc. for the period ended September 30, 1999.
(10.8) Birmingham Utilities, Inc. 1998 Stock Incentive Plan adopted
by its Board of Directors on December 9, 1998.
Attached hereto as pp 24-36.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Registrant during the last quarter of 1999.
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/ John S. Tomac
___________________________
John S. Tomac
President
Date: March 10,2000
______________
Page Twelve
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, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ Edward G. Brickett /s/ B. Lance Sauerteig
________________________ ___________________________
Edward G. Brickett, Director B. Lance Sauerteig, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ James E. Cohen /s/ Kenneth E. Schaible
________________________ ___________________________
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 10, 2000 Date: March 10, 2000
/s/ Betsy Henley-Cohn /s/ David Silverstone
________________________ ___________________________
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March 10, 2000
Date: March 14,2000
/s/ Alvaro da Silva /s/ John S. Tomac
________________________ ___________________________
Alvaro da Silva, Director John S. Tomac, President/Treasurer
Date: March 10, 2000 Date: March 10, 2000
Page Thirteen
BIRMINGHAM UTILITIES, INC.
INDEX TO EXHIBITS
Item No. Page No.
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..............................15-23
10.8 Birmingham Utilities, Inc. 1998 Stock Incentive
Plan ...............................................24-36
23 Consent of Dworken, Hillman, LaMorte
& Sterczala, P.C. ..................................37
Page Fourteen
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.
___________________________ __________________________
Stephen P. Ahern, Director Aldore J. Rivers, Director
Date: March , 2000 Date: March , 2000
___________________________ ____________________________
Edward G. Brickett, Director B. Lance Sauerteig, Director
Date: March , 2000 Date: March , 2000
____________________________ _____________________________
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March , 2000 Date: March , 2000
____________________________ _____________________________
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March , 2000
Date: March , 2000
_____________________________ __________________________________
Alvaro da Silva, Director John S. Tomac, President/Treasurer
Date: March , 2000 Date: March , 2000