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, 1996 Commission File Number 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
230 Beaver Street, Ansonia, CT 06401
(Address of principal executive office (Zip Code)
(Registrant's telephone number
including area code) (203) 735-1888
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports; and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at Oct. 31, 1996
Common stock, no par value 756,776
ITEM I. FINANCIAL STATEMENTS
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
As of September 30, 1996, December 31, 1995 and September 30, 1995
(Unaudited) (Unaudited)
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
ASSETS:
Utility Plant $17,345,831 $16,352,307 $16,236,250
Accumulated depreciation (5,424,650) (5,130,305) (5,054,758)
11,921,181 11,222,002 11,181,492
Current Assets:
Cash and cash equivalent 348,111 398,869 82,048
Accounts receivable, net of
allowance for doubtful
accounts 626,966 725,154 801,139
Accrued utility revenue 409,872 412,876 469,860
Materials & supplies 52,167 50,840 46,798
Prepayments 77,172 27,160 88,333
Total current assets 1,514,288 1,614,899 1,488,178
Note receivable 0 0 1,013,222
Deferred Charges 800 898 713,417 784,937
Unamortized debt expense 196,212 205,429 209,162
Income taxes recoverable 456,659 456,659 372,247
Other assets 411,159 411,352 417,949
1,864,928 1,786,857 2,797,517
$15,300,397 $14,623,758 $15,467,187
STOCKHOLDERS' EQUITY AND LIABILITIES
Stockholders' Equity:
Common Stock, no par value,
authorized 2,000,000 shares;
issued and outstanding
9/30/96-756,806;
12/31/95-752,282;
9/30/95-750,981 $ 2,213,805 $ 2,172,116 $ 2,161,181
Retained earnings 1,629,632 1,235,482 1,057,541
3,843,437 3,407,598 3,218,722
Note Payable 1,243,750 1,300,000 1,919,106
Long-term debt 4,700,000 4,700,564 4,703,189
5,943,750 6,000,564 6,622,295
Current Liabilities:
Current portion of
note payable 75,000 75,000 289,664
Acounts payable and
accrued liabilities 915,458 674,488 474,240
Total current
liabilities 990,458 749,488 764,240
Customers' advances
for construction 1,264,696 1,229,985 1,258,913
Contributions in aid
of construction 719,736 719,736 719,736
Regulatory liability-income
taxes refundable 195,049 195,049 202,641
Deferred income taxes 1,232,779 1,263,932 1,152,694
Deferred income on disposition
of land 1,110,492 1,057,406 1,527,946
Commitment and contingent
liabilities $ 0 $ 0 $ 0
$15,300,397 $14,623,758 $15,467,187
The accompanying notes are an integral part of these financial statements.
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1996 1995 1996 1995
Operating Revenue (Note B) $1,129,750 $1,169,460 $3,286,685 $3,213,011
Operating Expenses:
Operations and Maintenance 205,785 198,843 607,349 597,603
Purchased Water 173,741 218,366 499,574 574,529
Administrative and General 270,616 254,178 815,604 810,092
Depreciation 99,318 98,943 295,794 286,966
Taxes Other Than Income 101,908 137,669 384,701 402,011
Taxes on Income 53,456 45,382 105,278 50,532
Total Operating Expense 904,824 953,381 2,708,300 2,721,733
Utility Operating Income 224,926 216,079 578,385 491,278
Amortization of Prior Years'
Deferred Income on Land
Dispositions, net 36,690 27,831 110,071 82,079
(Net of income taxes of
$25,165 and $78,304 in 1996
and $19,825 and $58,467 in
1995 for the three months
and nine months, respectively)
Other Income, net 23,771 29,931 55,236 97,809
Income before interest expense 285,387 273,841 743,692 671,166
Interest and Amortization of
Debt Discount & Expense 162,007 158,600 453,598 467,520
Income from dispositions of
land, net (net of income
taxes of $266,130 and
$32,935 in 1996 and 1995,
respectively) 386,709 -0- 386,709 46,494
Net income 510,089 115,241 676,803 250,140
Retained earnings, beginning 1,217,724 1,032,284 1,235,482 1,077,185
Dividends paid 98,181 89,984 282,653 269,784
Retained earnings, ending $1,629,632 $1,057,541 $1,629,632 $1,057,541
Earnings per share $.68 $.15 $.90 $.33
Dividends per share $.13 $.12 $.375 $.36
The accompanying notes are an integral part of these financial statements.
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
Nine Months Ended Nine Months Ended
Sept. 30, 1996 Sept. 30, 1995
Cash Flows From Operating Activities
Net Income $676,803 $250,140
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 335,229 314,012
Amortization of deferred income, net of tax (110,071) (82,079)
Income from current year land dispositions,
net of tax (386,709) (46,494)
Increases and decreases in assets
and liabilities:
Accounts receivable and accrued utility
revenue 101,192 (47,961)
Materials and supplies (1,327) 1,349
Prepayments (50,012) (48,907)
Accounts payable and accrued expenses (123,592) (80,845)
Other assets and deferred charges, net (218,027) (222,473)
Deferred income taxes ( 11,025) ( 15,120)
Customer advance (refund) for construction 34,711 100,458
Total Adjustments (429,631) ( 97,820)
Net cash flows provided by operating activities 247,172 152,320
Cash flows from investing activities:
Net construction expenditures (1,042,753) (497,128)
Proceeds from sale of utility plant 1,251 759
Proceeds from land dispositions 1,041,350 200,000
Net Cash flows (used in)
investing activities ( 152) (296,369)
Cash flows from financing activities:
Increase in current note payable -0- 124,664
Increase (decrease) in long-term debt (56,814) 293,542
Dividends paid, net of reinvested dividends (240,964) (250,921)
Net Cash flows provided by
financing activities: (297,778) 167,285
Net (decrease) in cash & cash equivalents ( 50,758) 23,236
Cash & cash equivalents, beginning 398,869 58,812
Cash, ending $348,111 $ 82,048
Supplemental disclosure of cash flow
information:
Cash paid for
Interest $547,022 $569,512
Income Taxes $207,800 $ 60,575
Supplemental disclosure of non-cash flow information:
The Company receives contributions
of plant from builders and developers.
These contributions of plant are reported in
utility plant and in customers' advances for
construction. The contributions are deducted
from construction expenditures to determine
cash expenditures by the Company.
Gross Plant, additions $1,042,753 $497,128
Customers' advances for
construction ( 34,711) (100,458)
Capital expenditures, net $1,008,042 $396,670
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,
1996 are prepared without audit, however, in the opinion of management, all
material adjustments for a fair statement of results have been made. The
balance sheet as of December 31, 1995 has been audited.
Note B. - SEASONALITY OF REVENUE
The Company's business of selling water is to a certain extent
seasonal because water consumption normally increases during the drier and
warmer summer months. Accordingly, the results of operations for the three
and nine months ended September 30, 1996 and September 30, 1995, if
annualized, do not necessarily reflect annual results.
Note C. - ACCOUNTS RECEIVABLES, NET OF ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts Receivable, net declined $98,188 during the first nine months of
1996, as the result of a more formalized collection effort developed during
1995, as well as, lower third quarter utility operating revenue in 1996
versus 1995.
Note D. - ACCRUED UTILITY REVENUE
Accrued Utility Revenue at September 30, 1996 and December 31, 1995
includes $60,707 and $84,380, respectively, in costs incurred by the Company to
date on a Main replacement project required by the State of Connecticut. At
September 30, 1995 the balance due for that project and included in accrued
utility revenue totaled $80,022. The Company's costs are reimbursable to the
Company by the State of Connecticut.
Note E. - PREPAYMENTS
Prepayments consist of:
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
Insurance $ 38,685 $ 7,545 $ 44,369
Legal & accountg.fees 9,242 0 13,054
Other prepaid expenses 47,927 19,615 30,910
$ 77,172 $27,160 $ 88,333
The fluctuation in total prepayments as of the ends of the
periods noted was caused primarily by the fluctuation in prepaid
insurance. Insurance premium payments are made during the first quarter,
since January 1 is the beginning of the policy period, and amortized
throughout the year.
The fluctuation in "Legal and Accounting Fees" reflects
certain large accounting and other annual reporting costs which
regularly occur in the first quarter and are amortized over the
remaining part of the year to better match costs to the annual time
period benefitted.
Note F. - NOTE RECEIVABLE:
The $1,013,222 note receivable as of September 30, 1995
reflected the balance owed by a real estate developer for the sale
of approximately 152 acres of land. The promissory note was paid
in full during 1995, with $200,000 of the principal being received
during the first quarter, 1995 and the balance in the fourth
quarter of 1995.
Note G. - LONG TERM DEBT
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
First mortgage bonds,
Series E 9.64% due
September 2011 $4,700,000 $4,700,000 $4,700,000
Note Payable 1,243,750 1,300,000 1,919,106
Other 0 564 3,189
$5,943,750 $6,000,564 $6,622,295
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 $771,822
was available to pay dividends at September 30, 1996, after the
quarterly dividend payment made on that date. Interest is payable
semi-annually on the first day of March and September. The
indenture is secured by a lien on all of the Company's utility
property other than excess land available for sale.
There are no maturities of bonds until September 1, 1997,
when the Company is required to begin payments of $94,000 on each
September 1, until the bonds are paid in full.
Note Payable
In 1994, the Company (a) converted certain short term
borrowings to a ten-year $1,500,000 secured term loan, (as of
September 30, 1996 the principal balance has been paid down to
$1,318,750, $75,000 of which is paid down annually, therefore
$1,243,750 is long-term) (b) established a $1,500,000 two-year
secured revolving line of credit to fund additional capital
improvements, and obtained a one-year, unsecured line of credit of
$600,000 to be used for working capital purposes. The two-year
revolving period 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
First Mortgage Bonds, above) on all of the Company's utility
property other than its excess land available for sale.
The term loan portion of the facility has both fixed and variable
interest rate options. The applicable interest rate at December
31, 1995 and through July 2000 is 8.18%. Interest is payable
monthly. The renewed two-year revolving line of credit also has
various interest rate options, including a variable rate at 1%
above the prime rate and LIBOR rate options, fixed for various
short term periods including 30, 60 or 90 days, at 1.75% over the
applicable LIBOR rate. Interest is payable monthly. There were no
outstanding borrowings on the revolving line of credit at September
30, 1996.
In April 1996, the unsecured, working capital line of credit was
extended for one year. The unsecured line of credit also provides
for various interest rate options, including a variable rate at
0.25% above the prime rate, a variable rate at 1.75% above the
bank's cost of funds (as provided by the bank), and the LIBOR
options also available under the two-year revolving line of credit.
There were no outstanding borrowings on the unsecured line of
credit at September 30, 1996.
All three facilities provide that a default under any of them or
under the Mortgage Bond Indenture is considered a default under the
others. They also provide that the net proceeds from the sale of
any of the Company's excess land must be used to reduce the balance
of the two year line of credit first and then the term loan.
Note H - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
Accounts Payable $193,988 $116,313 $121,126
Accrued Expenses:
Taxes 510,469 297,810 154,036
Interest 46,513 151,172 37,876
Pension 95,429 72,710 120,689
Other 69,159 36,483 40,849
$915,458 $674,488 $474,576
The fluctuation in "Accounts Payable" reflects primarily a progress payment
owed to a contractor on a main replacement project, included as a payable
at September 30, 1996 with no comparable balance due as of December 31,
1995 or September 30, 1995. The fluctuation in taxes primarily reflects
the increased liability for federal income taxes as of September 30, 1996,
due to increased taxable income for 1995 resulting from the September 26,
1996 land sale. - See Note I. Deferred Gains on Land Dispositions.
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
Post Retirement Benefit
Other Than Pensions $32,400 $ 0 $25,972
The fluctuation in Other accruals primarily reflects the accrual for post
retirement benefits other than pension ("PBOP") which is funded by year
end.
Note I - DEFERRED GAINS ON LAND DISPOSITIONS
The DPUC has provided for a rate making accounting procedure for income
from land dispositions which has the effect of sharing the economic
benefits of such dispositions between ratepayers and shareholders over a
period of time. Accordingly, the Company includes in its income in years
in which it has a land disposition only a portion of the income that is
realized from such disposition. The balance of the income is deferred and
amortized to the Company's rate base and equity for rate making purposes,
and to income for financial reporting purposes, over the period of time
during which the rate making procedure is in effect. For the three and
nine months ended September 30, 1996 and 1995 such deferred land
disposition gains (net of income taxes) were included in income as follows:
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1996 1995 1996 1995
Amortization of Prior Years'
Deferred Income on
Land Dispositions, net $36,690 $27,831 $110,071 $82,079
The increase in the amortization for the three months and nine months
ended September 30, 1996 vs 1995 reflects primarily the additional
amortization in 1996 of the gain deferred from the proceeds received in
November of 1995 from a previous installment sale. See Note F-Note
Receivable.
In September 1996, the Company sold excess land for an aggregate
purchase price of $1,041,350 resulting in an after tax gain of $529,739.
Under the ratemaking procedures approved by the Connecticut Department of
Public Utility Control ("DPUC"), the Company included $386,709 of the gain
in the third quarter. In accordance with the DPUC's order approving the
sale, the remainder of the gain is deferred and will be recognized over the
four years ending September 30, 2000.
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
755,125 and 749,879 for the three month periods ended September 30, 1996
and 1995, respectively and 753,665 and 749,397 for the nine months ended
September 30, 1996 and 1995, respectively.
Note K - RATE MATTERS
Effective January 1, 1996, the DPUC granted the Company increased rates
designed to produce additional annual revenues of $289,333 (an increase of
approximately 6.89% over previous rates).
Note L - EQUITY
Stock Option Plans
In 1994, the Company adopted two stock option plans, 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, 1996,
options for 60,750 shares had been granted to directors and employees of
the Company under both plans.
Dividend Reinvestment Plan
In 1994, the Company also adopted a dividend reinvestment plan which
provides for the issuance and sale of up to 70,000 shares of the Company's
authorized but unissued common stock to its shareholders who elect to
reinvest cash dividends on the Company's existing shares. Shares available
under the plan may be purchased at their fair market value price on the
date of the dividends to be invested in the new shares.
In 1995 the Company issued 3,114 shares of common stock at a value
of $31,108 in lieu of cash dividends in connection with its dividend
reinvestment plan. Through September 30, 1996, an additional 4,524 shares
of common stock were issued at a value of $41,689 in lieu of cash
dividends.
ITEM II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
Net Income
Net income increased $394,848 (343%) to $510,089 in the third quarter
of 1996 from $115,241 in the third quarter of 1995. The increase for the
quarter reflects the $386,709 current year gain on land sales in the third
quarter of 1996 as compared to no current year gains in the third quarter,
1995. Without the impact of the current year land sale gain, quarterly
net income increased $8,139 (7%) to $123,380 in the third quarter 1996 from
$115,241 in the third quarter 1995. This increase was primarily the result
of increased utility operating income. Lower 1996 third quarter operating
revenue, resulting from reduced consumption during the relatively wet 1996
third quarter compared to the record draught conditions in the third
quarter of 1995, was more than offset by lower operating expenses,
particularly purchased water costs.
For the nine months ended September 30, 1996, net income increased
$426,663 (171%) to $676,803 from $250,140 for the first nine months of
1995. The increase for the nine months 1996 compared to 1995 also resulted
primarily from the $340,215 increase in current year land sale gains of
$386,709 for the first nine months of 1996 compared to $46,494 for the
first nine months of 1995. Nine month net income without the impact of the
current year gains increased $86,448 (42%) to $290,094 for the 1996 period
from $203,646 for the 1995 period. This increase was primarily caused by
increased operating revenue, a reduction in purchased water costs and taxes
other than income, and an increase in the amortization of prior years
deferred gains. (See Note H to the Financial Statements).
Operating Revenues
For the third quarter of 1996, operating revenues decreased $39,710
(3.4%) from the same period of 1995. The decrease was primarily the result
of reduced water consumption. During the third quarter of 1995, the region
experienced record draught conditions as compared to the relatively wet
third quarter of 1996. Water consumption by all customer classes declined
13.8% in the aggregate during the third quarter of 1996 compared to the
third quarter of 1995. This decline in consumption was partly offset by
the impact in 1996 of a 6.89% rate increase, which became effective on
January 1, 1996, (see Note K to the Financial Statements).
For the nine months ended September 30, 1996, operating revenue
increased $73,674 (2.3%) over the same 1995 period reflecting the January
1, 1996 rate increase of 6.89%, which was partly offset by decreased water
consumption.
Operating Expenses
Operating expenses decreased $48,557 (5.1%), when comparing the third
quarter of 1996 to the third quarter of 1995. The decrease primarily
reflects lower water consumption, resulting in a $44,625 (20.4%) reduction
in purchased water expense. Taxes other than income decreased $35,761,
primarily due to a re-valuation and reduced mill rate for personal property
taxes in one of the towns in the Company's service area.
Operating expenses of $2,708,300 for the first nine months of 1996
decreased $13,433 from $2,721,733 for the same period of 1995. This
reduction was primarily caused by a $74,955 (13%) decrease in purchased
water expense resulting from reduced consumption of water in 1996 compared
to 1995. Taxes other than income decreased $17,310 for the nine months of
1996 compared to 1995, reflecting the re-valuation and mill rate reduction.
Amortization of Prior Years' Deferred Income on Land Dispositions, net
The amortization of prior years' deferred income on land dispositions
increased $8,859 (32%) to $36,690 for the third quarter of 1996 from
$27,831 in the same quarter of 1995. For the nine months ended September
30, 1996 compared to the same period of 1995, the amortization of prior
years' deferred income increased $27,992 (34%). The increase for both
periods reflects primarily the additional amortization of gains deferred
from land sales which occurred during 1995.
Other Income, net
Other income, net, decreased $6,160 and $42,573 between 1996 and 1995
for the three months and nine months, respectively, due primarily to the
decrease in interest income on the note receivable, which was accruing at
the prime rate in 1995 until it was paid in full in November 1995.
Interest and Amortization of Debt Discount & Expense
The fluctuation in the average level of outstanding debt resulting
from the timing of capital expenditures and the application of land sale
proceeds, caused interest expense to increase for the three months ended
September 30, 1996, compared to the same quarter of 1995, and decrease for
the nine months comparison.
FINANCIAL CONDITION
Effective January 1, 1996, the DPUC granted the Company increased
rates designed to provide additional annual revenues of $289,333 (6.89%).
The Company generates sufficient funds available from operations to
meet its day-to-day operational needs. It will not, however, be able to
generate sufficient funds from sales of water to satisfy all of its
construction plans. Completion of the Company's Long-Term Capital
Improvement Program is dependent upon the Company's ability to raise
capital from external sources, including, for the purpose of this analysis,
proceeds from the sale of the Company's holdings of excess land. The
Company believes that by selling excess lands and reinvesting the net
proceeds it can generate sufficient equity capital to support its recently
updated 10 year capital budget, currently estimated at $11,602,000. Such
land dispositions are subject to approval by the DPUC.
The Company's 1996 Capital Budget of $1,140,000 is two-tiered. The
first tier, totalling $805,000, includes $268,000 for routine annual
expenditures for services, mains, hydrants, and meters, as well as $240,000
for low system distribution improvements, $115,000 for the painting of two
storage tanks, $150,000 for small main replacements and $32,000 toward
Level "A" Mapping to be used in the process of protecting the Housatonic
Well Field aquifer. The Company has expended $691,000 on its tier one
budget through the first nine months of 1996. The Company has funded and
expects to continue to fund the routine annual expenditures from internally
generated funds and the balance of the first tier budget from external
sources. These external sources include either borrowings under its
$1,500,000 secured, two-year revolving line of credit, net proceeds from
land sales or a combination of both.
The second tier of the 1996 Capital Budget consists of replacements
and betterments which are part of the Company's Long Term Capital
Improvement Program and includes $335,000 of budgeted plant additions.
Plant additions from this part of the 1996 budget will require external
financing in addition to the Company's two-year revolving line of credit.
Through September 30, 1996, the Company has expended approximately $182,000
on projects included in the second tier budget. The balance of planned
second tier plant additions can be, and portions of them are expected to
be, deferred to future years if funds are not available for their
construction in 1996.
As of September 30, 1996, 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 Company defers the costs it incurs to prepare
the excess land for sale. It allocates non-specific land sale costs among
all parcels available for sale, based upon the total acres available for
sale when the costs are incurred. The costs are charged against the
proceeds received when a parcel is sold. The $87,481 net increase in
deferred charges during the first nine months of 1996 primarily reflects
costs for surveys and maps related to readying these land parcels for sale,
as well as costs incurred during the application process for a 10-acre
parcel subdivision.
On September 26, 1996, the Company sold approximately 59.24 acres of
unimproved real property to the City of Ansonia (the "City") for an
aggregate purchase price of $1,041,350. On November 7, 1996, the Company
agreed to sell to the Connecticut Department of Transportation ("DOT") a
3.68 acre parcel of land in Seymour, Connecticut for $175,000. The DOT sale
is subject to approval by the DPUC, and the Company does not expect the
transaction to be consummated until mid-1997.
The Company is actively pursuing additional sales of real property.
Because of the delays required by the regulatory process, however, it does
not expect to be able to consummate any such sales during 1996, even if
current discussions lead to a sales agreement or sales agreements in the
near future.
The Company maintains a credit facility with Fleet Bank, N.A.
consisting of a $1,500,000 term loan due in the year 2004 and a secured
line of credit also in the principal amount of $1,500,000 which expires in
April, 1998. The secured line of credit is being used to provide funds to
continue the Company's construction program; at the Company's option it may
be converted to a six year term loan at the end of the two year revolving
period. The Company also maintains an additional one-year, unsecured line
of credit in the amount of $600,000 to be used for working capital
purposes.
The DPUC has prohibited the Company from drawing down funds under the
revolving line of credit, if at the time of or as a result of the draw
down, the amount of the Company's long-term debt (including amounts
outstanding under the two year revolving line of credit) would exceed 67%
of the Company's total capitalization. There was no outstanding balance
under the two year revolving line of credit at September 30, 1996. The
limitation noted above, as of September 30, 1996, would not, given the
Company's ratio of long term debt to total capital of 61% at that time,
limit additional borrowings under the revolving line of credit. The DPUC
has also required that the Company's ratio of long-term debt to total
capital be no greater than 62% by the end of the new two-year revolving
period.
In 1994, the Company's Board of Directors approved a common stock
Dividend Reinvestment Plan (the "Plan") pursuant to which shareholders will
be entitled to purchase up to 70,000 new shares of the Company's common
stock by applying to the purchase price of the new shares cash dividends
which otherwise would be issued by the Company with respect to its existing
common stock. The Dividend Reinvestment Plan provides that the purchase
price for the new shares will be their fair market value at the time of the
purchase. The plan was approved by the DPUC on May 24, 1995. The Company
cannot predict what percentage of its cash dividends will from time to time
be reinvested in new shares of the Company's common stock. Since the
plan's implementation just prior to the June 30, 1995 dividend, a total of
$31,108 was reinvested in 1995 and an additional $41,689 was reinvested
during the first nine months of 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Default Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(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
/s/ Aldore J. Rivers
Date: November 14, 1996 Aldore J. Rivers, President
/s/ Paul V. Erwin
Date: November 14, 1996 Paul V. Erwin, Treasurer