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, 1996 Commission file No. 0-6028
BIRMINGHAM UTILITIES, INC.
(Exact Name of registrant as specified in its charter)
CONNECTICUT 06-0878647
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
230 Beaver Street, Ansonia, CT 06401
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number including area code (203) 735-1888
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
None None
Securities registered pursuant to Section 12(g) of the Act
Common Stock (no par value)
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (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
February 28, 1997: $5,399,961.
Indicate the number of shares outstanding or each of the registrant's class
of common stock, as of the latest practicable date.
Class Outstanding at February 28, 1997
Common Stock, no par value 757,892
*For purposes of setting forth on the cover sheet of this Annual Report on
Form 10-K the aggregate market value of the voting stock held by non-
affiliates of the registrant, the registrant has deemed that all shares
beneficially held by officers, directors, and nominees are shares held by
affiliates.
PART I
Item 1. Business
The Company is a specially chartered Connecticut public
service corporation in the business of collecting and distributing
water for domestic, commercial and industrial uses and fire
protection in Ansonia and Derby, Connecticut, and in small parts of
the contiguous Town of Seymour. Under its charter, the Company
enjoys a monopoly franchise in the distribution of water in the
area which it serves. In conjunction with its right to sell water,
the Company has the power of eminent domain and the right to erect
and maintain certain facilities on and in public highways and
grounds, all subject to such consents and approvals of public
bodies and others as may be required by law.
The current sources of the Company's water are wells located
in Derby and Seymour and interconnections with the South Central
Connecticut Regional Water Authority's (the "Regional Water
Authority") system (a) at the border of Orange and Derby (the
"Grassy Hill Interconnection") and (b) near the border of Seymour
and Ansonia (the "Woodbridge Interconnection"). The Company
maintains its interconnected Peat Swamp, Middle and Quillinan
Reservoirs, a 2.2 million gallons per day (MGD) surface supply, for
emergency use only.
During 1996 approximately 1.19 billion gallons of water from
all sources were delivered to the Company's customers. The Company
has approximately 8,775 customers of whom approximately 98.7% are
residential and commercial. No single customer accounted for as
much as 10% of total billings in 1996. The business of the Company
is to some extent seasonal, since greater quantities of water are
delivered to customers in the hot summer months.
The Company had, as of March 3, 1997, 18 full-time employees.
The Company's employees are not affiliated with any union
organization.
The Company is subject to the jurisdiction of the Connecticut
Department of Public Utility Control ("DPUC") as to accounting,
financing, ratemaking, disposal of property, the issuance of long
term securities and other matters affecting its operations. The
Connecticut Department of Public Health and Addiction Services (the
"Health Department" or "DPHAS") has regulatory powers over the
Company under state law with respect to water quality, sources of
supply, and the use of watershed land. The Connecticut Department
of Environmental Protection ("DEP") is authorized to regulate the
Company's operations with regard to water pollution abatement,
diversion of water from streams and rivers, safety of dams and the
location, construction and alteration of certain water facilities.
The Company's activities are also subject to regulation with regard
to environmental and other operational matters by federal, state
and local authorities, including, without limitation, zoning
authorities.
The Company is subject to regulation of its water quality
under the Federal Safe Drinking Water Act ("SDWA"). The United
States Environmental Protection Agency has granted to the Health
Department the primary enforcement responsibility in Connecticut
under the SDWA. The Health Department has established regulations
containing maximum limits on contaminants which have or may have an
adverse effect on health.
Executive Officers of the Registrant
Business Experience
Name, Age and Position Past 5 Years
Betsy Henley-Cohn, 44,
Chairwoman of the Board Chairwoman of the Board of Directors
of the Company since May of 1992;
Chairman of the Board of Directors
and Treasurer, Joseph Cohn & Sons,
Inc, (painting contractors);
Director, United Illuminating
Company; Aristotle Corp.; Society
for Savings Bancorp., Director 1985
- 1993.
Aldore J. Rivers, 63, President of the Company since 1985.
President
Item 2. Properties
The Company's properties consist chiefly of land, wells,
reservoirs, and pipelines. The Company has 4 production wells with
an aggregate effective capacity of approximately 3.0 MGD. The
Company's existing interconnections with the Regional Water
Authority can provide 3.8 MGD. The Company's entire system has a
safe daily yield (including only those supplies that comply with
the SDWA on a consistent basis) of approximately 6.8 MGD, while the
average daily demand and the maximum daily demand on the system
during 1996 were approximately 3.25 MGD and 3.99 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.
In addition, the Company owns the Great Hill reservoir system and
the portion of the Sentinel Hill Reservoirs located in Derby which
were abandoned as usable reservoirs in 1994 and 1988 respectively,
with the approval of the Health Department. Because these
reservoirs do not meet the requirements of the SDWA and because of
their minimal storage capacity, the Company has determined that
they are not large enough to build filtration plants to bring the
water into compliance economically. During 1996, the Company sold
to the City of Ansonia a portion of the Sentinel Hill Reservoir
system and its watershed located in Ansonia.
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 an 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 150 acres of
land in Bethany for a gain after taxes of $765,367, 96 acres in
Ansonia, Derby and Seymour for a net gain of $974,567, 151 acres in
Seymour for a net gain of $796,527 and 59 acres in Ansonia for a
net gain of $529,739.
The Company believes that approximately 1,400 acres of its
land holdings will not be needed in the future for water supply
purposes and can be sold. The Company has proposed, and the DPUC
has accepted with respect to prior transactions, an accounting and
ratemaking mechanism by which the gain on the sale of the Company's
land holdings is shared between ratepayers and stockholders as
contemplated by Connecticut law. (See Note 1 to the Company's
Financial Statements).
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Market for the Registrant's Common Stock and Related
Security Holding Matters
As of February 28, 1997 there were approximately 496 record
holders of the Company's common stock. Approximately 37% of the
Company's stock is held in "nominee" or "street" name. The
Company's common stock is traded on the NASDAQ Small-Cap Market.
The market is not active, and actual trades are infrequent. The
following table sets forth the dividend record for the Company's
common stock and the range of bid prices for the last two calendar
years. The stock prices are based upon NASDAQ records provided to
the Company. The prices given are retail prices. The Company's
Mortgage Bond Indenture under which its First Mortgage Bonds are
issued contains provisions that limit the dividends the Company may
pay, under certain circumstances.
Bid
High Low Dividend Paid
1995 First Quarter 10.50 10.50 $0.12
Second Quarter 10.50 10.00 $0.12
Third Quarter 10.50 10.50 $0.12
Fourth Quarter 10.50 10.00 $0.12
1996 First Quarter 11.00 10.00 $0.12
Second Quarter 11.00 9.50 $0.125
Third Quarter 10.00 8.50 $0.13
Fourth Quarter 10.00 10.00 $0.13
1997 Through February 28 10.50 10.50 -
Item 6. Selected Financial Data
Presented below is a summary of selected financial data for the years 1992
through 1996:
(000's omitted except for per share data)
1996 1995 1994 1993 1992
Operating Revenues $4,380 $4,238 $4,124 $4,033 $3,847
Income before
Interest Charges 968 863 913 910 810
Income from Land
Dispositions* 387 279 - - 39
Net Income 765 518 363 378 342
Earnings Per Share** 1.02 .69 .48 .50 .46
Cash Dividends Declared
(per share)** .50 .48 .48 .46 .44
Total Assets 15,568 14,624 15,246 14,602 13,944
Long Term Debt 5,981 6,001 6,329 5,815 5,511
Short Term Debt 294 75 165 - -
Shareholder Equity 3,841 3,408 3,220 3,217 3,195
* See Management Discussion and Analysis, Results of Operations - Land
Dispositions
** Per share amounts for 1992 have been restated for comparability to
reflect the impact of the July 16, 1993 two for one stock split.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Net Income
Net income increased from $362,520 in 1994 to $518,065 in 1995
and $764,737 in 1996.
The $155,545 increase in net income from 1994 to 1995
reflected both a gain on a sale of land, recognized in 1995, of
$279,101 and an increase of $34,970 in other income, resulting
primarily from fees from a management contract. These increases
were partially offset by increased operating expenses of $84,940
and a $73,586 increase in interest expense in 1995.
Operating revenues in 1996 increased $141,696, and interest
expense declined by $33,959, compared to 1995. Other income,
however, decreased by $71,335 which resulted in an increase of
$99,896 in net income before land sales.
Current land sale gains of $386,709 in 1996, along with
$161,065 in amortization of prior years gains produced total gains
of $547,774 as compared with $400,998 in 1995. The increase of
$146,776, when combined with the increase from operations of
$99,896, resulted in the overall increase in 1996 net income of
$246,672 over 1995 net income.
Revenues
The Company's business is to provide water service to
customers, primarily in the cities of Ansonia and Derby,
Connecticut. In 1996, revenues from sales of water increased by
$141,696 (3.34%) over 1995 revenues. The Company was granted a
6.89% increase in rates by the Connecticut DPUC effective January
1, 1996. Due to a sharp decline (5.77%) in water consumed by the
Company's customers during the year, the Company did not enjoy the
full impact of the increase granted. The decline in consumption is
attributable, for the most part, to the wet summer of 1996, when
consumption declined (13.80%) from the summer drought conditions of
1995. Consumption of water by commercial and industrial customers
continued to decrease both from 1994 to 1995 and from 1995 to 1996,
due to continuing poor economic conditions in the Company's service
area, which has resulted in the loss of several commercial and
industrial customers.
In 1995, revenues increased $113,688 (2.8%) over 1994
revenues, primarily as a result of the full impact in 1995 of a
July 20, 1994 2.75% annual rate increase granted by the Connecticut
DPUC and the increased use of water during the 1995 summer drought
conditions. Because of favorable supply situations, the Company
did not need to impose use restrictions despite the drought.
While residential water consumption and total water
consumption were higher in 1995 than in 1994, commercial and
industrial customers' consumption dropped from 1994 to 1995 for the
same reasons as noted previously.
Operating Deductions
Operating deductions in 1996 increased by only $4,424 (.0012%)
when compared to 1995.
Operating expenses declined by $109,136 in 1996 from the 1995
level, due mainly to a decrease in purchased water of $63,779
resulting from the weather differences previously noted. The other
major expense reduction from 1995 to 1996 was $33,307 in special
services caused mainly by decreased auditing fees.
Maintenance expenses increased in 1996 by $70,133 over 1995,
caused primarily by the harsh winter of 1996 which created the
necessity for several major repairs. The increase of $12,207 in
depreciation expense from 1995 to 1996 reflects the additions to
plant of $2,885,872 over the past three years.
Taxes other than income taxes decreased by $29,497, due to a
decrease in property taxes caused by a sale of land and a decrease
in the mill rate by one Town in the Company's service area, while
the gross receipts tax increased due to the increase in revenues
discussed previously.
Operating deductions in 1995 increased $194,497 (5.6%) when
compared to 1994. The cost of purchased water increased $53,904,
due to the Company's increased reliance on purchased water during
drought conditions experienced in 1995's summer months. The cost
of maintaining distribution mains increased $26,064 primarily the
result of fixing two significant main breaks in 1995. Customer
account expense increased $31,368 as the result of a concerted
collection effort which significantly reduced delinquent accounts
during 1995. The remaining increase reflects the $28,990 increase
in depreciation expense associated with the cost of capital
expenditures of $671,390 in 1995 and $696,340 in 1994, the annual
increase in salaries and the general level of inflation affecting
many accounts, including the $18,875 increase in taxes other than
income. The decline in taxes on income partially offset the impact
of the increases noted above.
Interest
Interest expense, which increased from $550,155 in 1994 to
$623,741 in 1995, decreased in 1996 to $589,782, reflecting a sale
of land in late September 1995 the proceeds of which were used to
reduce debt incurred to fund the construction of improvements to
utility plant, and the capitalization of $20,262 in interest costs.
Income Taxes
Taxes on the Company's income from operations were $128,459,
in 1996, $67,742 in 1995 and $95,884 in 1994. The decrease in 1995
from 1994 reflects the reduction in operating income in that year,
while the increase in 1996 from 1995 reflects the increase in
operating income for that year.
The Company also incurs income tax liability for gains from
land transactions, both in the year in which they occur and in the
later years in which income, previously deferred in accordance with
the DPUC's orders concerning the sharing of the gains between the
Company's shareholders and ratepayers, is recognized by the
Company. Taxes related to gains on land transactions were
$382,107, $286,694 and $90,977 in 1996, 1995 and 1994,
respectively. The Company's total income tax liability including
both the tax on operating income and on land sale gains was
$510,566 in 1996, $354,436 in 1995 and $186,861 in 1994.
Land Dispositions
When the Company disposes of land, any gain, net of tax,
recognized is shared between rate payers and stockholders based
upon a formula approved by the DPUC. The impact of land
dispositions is recognized in two places on the statement of
income.
The 1996 statement of income reflects income from a
disposition of land (net of taxes) of $386,709 and the 1995
statement of income reflects income from dispositions of land (net
of taxes) of $279,101 which, in both cases, represent the
stockholders' immediate share of income from land dispositions
occurring in each year. In 1994, there were no dispositions of
land.
The second place where land disposition income is recognized
in the financial statements is as a component of operating income
on the line entitled "Amortization of Deferred Income on
Dispositions of Land." These amounts represent the recognition of
income deferred on land dispositions which occurred in prior years.
The amortization of deferred income on land dispositions, net of
tax was $161,065, $121,897 and $126,028 for the years 1996, 1995
and 1994, respectively.
Recognition of deferred income will continue over time
periods ranging from four to fifteen years depending upon the
amortization period ordered by the DPUC for each particular
disposition. See Note 7 of the Financial Statements.
Effects of Inflation
The Company received a rate order from the DPUC allowing an
increase in the Company's rates designed to produce increases in
the Company's annual revenues of $113,287 (effective July 20,
1994).
The Company sought approval for additional rate relief on
July 3, 1995. As a result of that application, the DPUC approved
a 6.9% increase in rates effective January 1, 1996 designed to
produce an annual increase in revenues of approximately $289,333.
The Company is currently reviewing the need to seek an
additional rate increase in 1997 to become effective on or about
January 1, 1998.
FINANCIAL RESOURCES
During 1996, 1995 and 1994, the Company's water operations
generated funds available for investment in utility plant and for
use in financing activities, including payment of dividends on
common stock, of $348,773, $471,196 and $333,579, respectively (see
Statement of Cash Flows).
Net cash provided by operating activities decreased $122,423
from 1995 to 1996. The major factors causing the decrease were an
increase in deferred charges and other assets of $80,425 related
mostly to the promotion of land sales and a lesser contribution
arising from changes in accounts receivable and accrued revenues
and accounts payable and accrued liabilities.
During the three-year period 1994, 1995 and 1996, the Company
has generated sufficient funds to meet its day-to-day operational
needs, including regular expenses, payment of dividends, and
investment in normal plant replacements, such as new services,
meters and hydrants. It expects to be able to continue to do so
for the forseeable future. In order to meet day-to-day cash needs
that may arise unexpectedly, the Company maintains an unsecured
working capital line of credit of up to $600,000 with a local bank.
There were borrowings outstanding of $125,000 under the working
capital line of credit as of December 31, 1996 at an interest rate
of 8.375% and at present an interest rate of 7.125%.
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.
During 1996, 1995, and 1994, the Company's additions to utility
plant, net of customer advances, cost $1,461,152, $600,278, and
$619,773, respectively (see Statement of Cash Flows). These
additions were financed primarily from external sources, including
proceeds from land sales and increases in debt.
The Company has outstanding $4,700,000 principal amount of
Mortgage Bonds, due September 1, 2011, issued under its Mortgage
Indenture. The Mortgage Indenture limits the issuing of additional
First Mortgage Bonds and the payment of dividends. It does not,
however, restrict the issuance of either long term or short term
debt which is either unsecured or secured with liens subject to the
lien of the Mortgage Indenture. The Company also has a secured,
term loan with a principal amount outstanding on December 31, 1996
of $1,300,000, at an interest rate of 8.18%. The term loan
provides for annual sinking fund payments and must be paid in full
in 2004.
The Company also maintains an additional, secured, two-year
line of credit in the principal amount of $1,500,000 maturing on
May 1, 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 term loan at the end of
the two year revolving period, with the term loan maturing in 2004.
(See Note 6 to the Financial Statements). In April 1996 when the
revolving loan financing arrangement was approved by the DPUC, the
DPUC prohibited the Company from drawing down funds under the
revolving line of credit if, at the time of or as a result of the
draw down, the amount of the Company's long-term debt (including
amounts outstanding under the two year revolving line of credit)
would exceed 67% of the Company's total capitalization. The effect
of the limitation,as of December 31, 1996, is to limit the Company
to advances outstanding under the line of credit in the aggregate
amount of approximately $750,000 for use on budgeted projects until
such time as the Company obtains additional equity capital. There
was a balance of $150,000 outstanding under the two year revolving
line of credit at December 31, 1996 at an interest rate of 8.375%
and at present an interest rate of 7.125%.
The Company's 1997 Capital Budget of $1,430,000 is two-tiered.
The first tier consists of typical capital improvements made each
year for services, hydrants and meters budgeted for $230,000 in
1997 and is expected to be financed primarily with internally
generated funds.
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 $1,200,000 of
budgeted plant additions. Plant additions from this part of the
1997 budget will require external financing in addition to the
Company's line of credit. Second tier plant additions can be, and
portions of it are expected to be, deferred to future years if
funds are not available for their construction in 1997.
As of December 31, 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 believes that by selling these excess lands it can generate
sufficient equity capital to support its 10 year capital budget,
currently estimated at $11,824,000. Such land dispositions are
subject to approval by the DPUC.
During 1996, the Company entered into an agreement with the
Connecticut Department of Transportation ("DOT") to sell to DOT a
3.6 acre parcel of land in Seymour for $175,000. The Company has
applied to the DPUC for permission to sell the parcel, and the
application is pending. The Company knows of no reason why the
DPUC should not approve the sale. The DPUC has issued a schedule
pursuant to which it expects to render a decision in May. Assuming
a favorable decision, the Company hopes to be able to close the
transaction shortly thereafter.
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
again knows of no reason why the DPUC should not approve the sale.
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 it
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 had not
received all the required development approvals by December 31,
1998. There is a provision in the agreement to extend its term
through December 31, 2000 to accommodate appeals of required
governmental 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.
Finally, late last year the Company reached a tentative, non-
binding 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 expects to use the
property primarily for open space purposes and, on March 19, 1997,
obtained overwhelming voter approval to issue bonds to fund the
purchase price. Since the voter approval, the Company and the City
have been negotiating the terms of a definitive, binding agreement
for the sale. If formal agreement between the parties is reached
shortly as the Company expects, the Company will submit the
agreement to the DPUC for approval approximately 40 days after
reaching such agreement. The Company knows of no reason why the
DPUC should not approve the sale.
In 1994 the Company's Board of Directors approved a common
stock Dividend Reinvestment Plan (the "Plan") pursuant to which
shareholders will be entitled to purchase up to 70,000 new shares
of the Company's Common Stock by applying to the purchase price of
the new shares cash dividends which otherwise would be issued by
the Company with respect to its existing common stock. The
Dividend Reinvestment Plan provides that the purchase price for the
new shares will be their fair market value at the time of the
purchase. All regulatory approvals for the Plan were obtained
during the first six months of 1995 and the Plan was in place for
the quarterly dividends paid on June 30, 1995 and each quarterly
dividend payment thereafter. Dividends reinvested during 1995
totalled $31,108 and in 1996 $51,386.
Item 8. Financial Statements and Supplementary Data
Index To Financial Statements Page
Reports of Independent Accountants 13 & 14
Balance Sheet as of December 31, 1996 and
December 31, 1995 15 & 16
Statement of Income and Retained Earnings for
the three years ended December 31, 1996 17
Statement of Cash Flows for
the three years ended December 31, 1996 18
Notes to Financial Statements 19 - 33
Financial Statement Schedule:
Schedule IX - Short Term Borrowings 34
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or
the notes thereto.
Report of Independent Accountants
February 24, 1995
To the Board of Directors and Shareholders of
Birmingham Utilities, Inc.
In our opinion, the accompanying statements of income and retained
earnings and of cash flows present fairly, in all material
respects, the results of operations and cash flows of Birmingham
Utilities, Inc. for the year ended December 31, 1994, in conformity
with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
We have not audited the financial statements of Birmingham
Utilities, Inc. for any period subsequent to December 31, 1994.
/s/ Price Waterhouse LLP
Independent Auditors' Report
To the Shareholders
Birmingham Utilities, Inc.
Ansonia, Connecticut
We have audited the accompanying balance sheets of Birmingham
Utilities, Inc. as of December 31, 1996 and 1995, and the related
statements of income and retained earnings and cash flows for the
years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the 1996 and 1995 financial statements referred to
above present fairly, in all material respects, the financial
position of Birmingham Utilities, Inc. as of December 31, 1996 and
1995 and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting
principles.
February 14, 1997
Bridgeport, Connecticut
BIRMINGHAM UTILITIES, INC.
BALANCE SHEETS
December 31, 1996 and 1995
Assets
1996 1995
Utility plant $17,766,937 $16,352,307
Accumulated depreciation (5,472,071) (5,130,305)
12,294,866 11,222,002
Current assets:
Cash and cash equivalents 185,479 398,869
Accounts receivable, net of allowance
for doubtful accounts of $75,000 681,194 725,154
Accrued utility and other revenue 411,542 412,876
Materials and supplies 51,792 50,840
Prepayments 34,586 27,160
Total current assets 1,364,593 1,614,899
Deferred charges 870,736 713,417
Unamortized debt expense 193,466 205,429
Income taxes recoverable 422,844 456,659
Other assets 421,844 411,352
1,908,961 1,786,857
$15,568,420 $14,623,758
Shareholders' Equity and Liabilities
1996 1995
Shareholders' equity:
Common stock, no par value; authorized
2,000,000 shares; issued and outstanding
(1996, 757,892 shares; $2,221,786 $2,172,116
Retained earnings 1,619,188 1,235,116
3,840,974 3,407,598
Notes payable 1,375,000 1,300,000
Long term debt 4,606,000 4,700,564
5,981,000 6,000,564
Current liabilities:
Note payable 125,000
Current portion of note payable
and long-term debt 169,000 75,000
Accounts payable and accrued liabilitie 747,323 674,488
Total current liabilities 1,041,323 749,488
Customers' advances for construction 1,291,114 1,229,985
Contributions in aid of construction 719,736 719,736
Regulatory liability - income taxes refundable 187,477 195,049
Deferred income taxes 1,484,972 1,263,932
Deferred income on dispositions of land 1,021,824 1,057,406
Commitments and contingent liabilities
(Note 13)
15,568,420 $14,623,758
See notes to financial statements.
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
Operating revenues:
Residential and commercial $3,325,758 $3,214,442 $3,089,759
Industrial 169,070 164,192 152,402
Fire protection 628,558 615,563 608,954
Public authorities 74,320 83,212 97,933
Other 182,065 160,666 175,339
4,379,771 4,238,075 4,124,387
Operating deductions:
Operating expenses 2,394,730 2,503,866 2,370,823
Maintenance expenses 225,062 154,929 113,198
Depreciation 395,059 382,852 353,862
Taxes, other than income taxes 509,799 539,296 520,421
Taxes on income 128,459 67,742 95,884
3,653,109 3,648,685 3,454,188
726,662 589,390 670,199
Amortization of deferred income on
dispositions of land (net of income taxes
of $115,977 in 1996, $90,091 in 1995 and
$90,977 in 1994) 161,065 121,897 126,028
Operating income 887,727 711,287 796,227
Other income, net 80,083 151,418 116,448
Income before interest expense 967,810 862,705 912,675
Interest expense 589,782 623,741 550,155
Income from dispositions of land (net of
income taxes of $266,130 in 1996 and
$196,603 in 1995) 386,709 279,101 -
Net income 764,737 518,065 362,520
Retained earnings, beginning of year 1,235,482 1,077,185 1,074,266
Dividends 381,031 359,768 359,601
Retained earnings, end of year $1,619,188 $1,235,482 $1,077,185
Earnings per share $1.02 $.69 $.48
Dividends per share $.50 $.48 $.48
Shares outstanding 757,892 752,282 749,168
See notes to financial statements.
BIRMINGHAM UTILITIES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from operating activities:
Net income $ 764,737 $ 518,065 $ 362,520
Adjustments to reconcile net income
to net cash provided by operating
activities:
Income from land dispositions (386,709) (279,101) -
Depreciation and amortization 453,116 460,108 429,425
Amortization of deferred income (161,065) (121,897) (126,028)
Deferred income taxes (302,617) (256,489) 29,935
Allowance for funds used during
construction (20,262) - (21,515)
Change in assets and liabilities:
(Increase) decrease in accounts
receivable and accrued revenues 45,294 85,008 (103,588)
(Increase) decrease in materials
and supplies (952) (5,391) 4,442
Increase in prepayments (7,426) (421) (551)
Increase (decrease) in accounts
payable and accrued liabilities 72,835 99,067 (14,398)
Increase in deferred charges and
other assets (108,178) (27,753) (226,663)
Net cash provided by operating activities 348,773 471,196 333,579
Cash flows from investing activities:
Capital expenditures (1,518,142) (671,390) (696,340)
Sale of utility plant - 2,248 3,187
Proceeds from land disposition 1,041,350 - -
Note receivable - 1,213,222 -
Customer advances 56,990 71,112 76,567
Customer advances for construction (9,180) (2,107) (6,074)
Net cash provided by (used in) investing
activities (428,982) 613,085 (622,660)
Cash flows from financing activities:
Issuance of long-term debt - - 1,500,000
Net borrowing under revolving line
of credit 275,000 - 340,000
Repayment of long-term debt (75,564) (75,564) (50,939)
Repayment of revolving line of credit - (340,000) (1,110,000)
Debt issuance cost (2,972) - (38,267)
Dividends paid, net (329,645) (328,660) (359,601)
Net cash provided by (used in) financing
activities (133,181) (744,224) 281,193
Net increase (decrease) in cash (213,390) 340,057 (7,888)
Cash and cash equivalents, beginning of year 398,869 58,812 66,700
Cash and cash equivalents, ending of year $185,479 $398,869 $58,812
See notes to financial statements.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies:
Description of business:
Birmingham Utilities, Inc.'s (the "Company") predominant business
activity is to provide water service to various cities and towns in
Connecticut. The Company's accounting policies conform to generally
accepted accounting principles, and the Uniform System of Accounts and
ratemaking practices prescribed by the Connecticut Department of Public
Utility Control ("DPUC").
Estimates and assumptions:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported revenues and
expenses during the reporting period. Actual results could vary from
those estimates.
Utility plant:
The costs of additions to utility plant and the costs of renewals and
betterments are capitalized. The cost of repairs and maintenance is
charged to income. Upon retirement of depreciable utility plant in
service, accumulated depreciation is charged with the book cost of the
property retired and the cost of removal, and is credited with the
salvage value and any other amounts recovered.
Depreciation:
For financial statement purposes, the Company provides for depreciation
using the straight-line method. The rates used are intended to
distribute the cost of depreciable properties over their estimated
service lives. For income tax purposes, the Company provides for
depreciation utilizing the straight-line and accelerated methods.
Cash and cash equivalents:
Cash and cash equivalents consist of cash in banks and overnight
investment accounts in banks.
From time to time, the Company has on deposit at financial institutions
cash balances which exceed federal deposit insurance limitations. The
Company has not experienced any losses in such accounts and believes it
is not exposed to any significant credit risk on cash and cash equivalents.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Allowance for funds used during construction:
An allowance for funds used during construction ("AFUDC") is made by
applying the last allowed rate of return on rate base granted by the DPUC
to construction projects exceeding $10,000 and requiring more than one
month to complete. AFUDC represents the net cost, for the period of
construction, of borrowed funds used for construction purposes and a
reasonable rate on other funds used. AFUDC represents a noncash credit
to income. Utility plant under construction is not recognized as part of
the Company's rate base for ratemaking purposes until facilities are
placed into service. Accordingly, the Company capitalizes AFUDC as a
portion of the construction cost of utility plant until it is completed.
Capitalized AFUDC is recovered through water service rates over the
service lives of the facilities.
Revenue recognition:
The Company follows the practice of recognizing revenue when bills are
rendered to customers. In addition, the Company accrues revenue for the
estimated amount of water sold but not billed as of the balance sheet
date.
Advances for construction/contributions in aid of construction:
The Company receives cash advances from developers and customers to
finance construction of new water main extensions. A portion of these
advances are refunded to developers and customers as revenues are earned
on the new water mains. Any unrefunded balances are reclassified to
"Contributions in aid of Construction" and are no longer refundable.
Fair value of financial instruments:
The carrying amount of cash and cash equivalents, trade accounts receivable,
and trade accounts payable approximate their fair values due to their
short-term nature. The carrying amount of note payable and long-term debt
approximates fair value based on market conditions for debt of similar
terms and maturities.
Income taxes:
Except for accelerated depreciation since 1981 (federal only) and the tax
effect of post-1986 contributions in aid of construction, for which deferred
income taxes have been provided, the Company's policy is to reflect as
income tax expense the amount of tax currently payable. This method, known
as the flow-through method of accounting, is consistent with the ratemaking
policies of the DPUC, and is based on the expectation that tax expense
payments in future years will be allowed for ratemaking purposes.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Income taxes (continued):
The Company's deferred tax provision was determined under the liability
method. Deferred tax assets and liabilities were recognized based on
differences between the book and tax bases of assets and liabilities using
presently enacted tax rates. The provision for income taxes is the sum of
the amount of income tax paid or payable as determined by applying the
provisions of enacted tax laws to the taxable income for that year and the
net change during the year in the Company's deferred tax assets and
liabilities.
In addition, the Company is required to record an additional deferred
liability for temporary differences not previously recognized. This
additional deferred tax liability totaled $235,438 at December 31, 1996
and $261,610 at December 31, 1995. Management believes that these
deferred taxes will be recovered through the ratemaking process.
Accordingly, the Company has recorded an offsetting regulatory asset and
regulatory liability.
Employee benefits:
The Company has a noncontributory defined benefit plan which covers
substantially all employees. The benefits are primarily based on years of
service and the employee's compensation. Pension expense includes the
amortization of a net transition obligation over a twenty-three year
period. The Company's funding policy is to make annual contributions in an
amount that approximates what was allowed for ratemaking purposes
consistent with ERISA funding requirements. Contributions are intended
to provide not only for benefits attributed to service to date, but also
for those expected to be earned in the future.
The Company has a 401(k) Plan. Employees are allowed to contribute a
percentage of salary, based on certain parameters. From January 1, 1994
through March 31, 1996 the Company matched 25% of employee contributions
up to 6% of total compensation. Effective April 1, 1996, the Company
matches 50% of employee contributions up to 6% of total compensation.
In addition, the Company provides certain health care and life insurance
benefits for retired employees and their spouses. Generally, the plan
provides for Medicare wrap-around coverage plus life insurance based on a
percentage of each participant's final salary. Substantially all of the
Company's employees may become eligible for these benefits if they reach
retirement age while working for the Company. The Company's obligation
for postretirement benefits expected to be provided to or for an employee
must be fully accrued by the date that the employee attains full
eligibility for all benefits. The Company has elected to recognize the
unfunded accumulated postretirement benefit obligation over 20 years.
The Company's funding policy is to contribute amounts annually to a
benefit trust and pay directly all current retiree premiums.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
1. Accounting policies (continued):
Compensated absences:
Company policy and practice does not provide for any accumulated but
unused vacation, sick time or any other compensated absences to be carried
over beyond the year end.
Deferred charges relating to land dispositions:
Deferred charges are allocated to dispositions of land based on specific
identification, if applicable, and on the percentage of acres disposed to
total surplus acres.
Land dispositions:
The Company is actively seeking to dispose of surplus land not required
for utility operations. The net gain of each disposition, after deducting
costs, expenses and taxes is allocated between the shareholders and
ratepayers by a method approved by the DPUC based on legislation passed by
the Connecticut General Assembly. The portion of income applicable to
shareholders is recognized in the year of disposition. Income attributable
to ratepayers is deferred and amortized in a manner that reflects
reduced water revenue arising from the sharing formula as determined by
the DPUC.
Unamortized debt expense:
Costs related to the issuance of debt are capitalized and amortized over
the term of the related indebtedness. The Company has received permission
from the DPUC to amortize the costs associated with debt previously
outstanding over the term of the new indebtedness.
2. Utility plant:
1996 1995
Pumping, treatment and distribution $13,368,635 $12,260,402
Source of supply $ 3,126,167 $ 2,879,303
General plant 1,132,329 1,010,268
Organization 30,219 30,219
17,657,350 16,180,192
Construction in process 109,587 172,115
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
3. Accounts payable and accrued liabilities:
1996 1995
Accounts payable $239,886 $116,313
Accrued liabilities:
Interest 151,027 151,172
Taxes 173,777 297,810
Pension 147,250 72,710
Other 35,383 36,483
747,323 674,488
4. Taxes, other than income taxes:
1996 1995 1994
Municipal $225,320 $267,183 $261,685
Gross receipts 215,300 208,201 198,548
Payroll 69,179 63,912 60,188
$509,799 $539,296 $520,421
5. Long term debt:
1996 1995
First mortgage bonds, Series E, 9.64%,
due September 1, 2011 $4,700,000 $4,700,000
Other - 564
$4,700,000 $4,700,564
Pursuant to its Mortgage Bond Indenture, the Company has outstanding, a
series of first mortgage bonds in the amount of $4,700,000 due on September 1,
2011. The terms of the indenture provide, among other things, annual sinking
fund requirements commencing September 1, 1997, and limitations on (a) payment
of cash dividends; and (b) incurrence of additional bonded indebtedness.
Under the dividend limitation, approximately $696,000 was available to pay
dividends at December 31, 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 long term debt until September 1, 1997, when the
Company is required to pay $94,000 and on each September 1 thereafter, until
the bonds are paid in full.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Years Ended December 31, 1996, 1995 and 1994
6. Note payable:
In a previous year, the Company converted certain short term borrowings to a
ten year $1,500,000 term loan, established a $1,500,000 revolving line of
credit to fund additional capital improvements, and obtained an unsecured line
of credit of $600,000 to be used for working capital purposes. The revolving
line of credit and unsecured line of credit become due and payable May 1, 1998
and May 1, 1997, respectively, with the unsecured portion required to be
reduced to a zero balance for 30 consecutive days prior to the maturity date.
The outstanding balance of the revolving note may be converted to a term loan
at maturity 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 5) 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, 1996 and
through July 2000 is 8.18%. Interest is payable monthly. The revolving line
of credit also has various interest rate options, including a variable rate
at 0.125% above the prime rate and LIBOR rate options, fixed for various short
term periods including 30, or 90 days at 1.75% over the applicable LIBOR rate.
Interest is payable monthly. Borrowings of $150,000 were outstanding on the
revolving line of credit at December 31, 1996.
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 revolving line of credit. Borrowings of
$125,000 were outstanding on the unsecured line of credit at December 31,
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 revolving line of credit
first and then the term loan and require maintenance of certain financial
ratios and shareholders' equity of at least $3,000,000. In addition, the DPUC
has restricted the Company from borrowing funds under the revolving line of
credit if at any time or as a result of the borrowing, 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 has also required
the Company's ratio of long-term debt to total capital not exceed 62% by May
1, 1998.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
6. Notes payable (continued):
Minimum annual principal payments due on the term loan follows:
Year ending December 31:
1997 $ 75,000
1998 75,000
1999 75,000
2000 75,000
2001 75,000
Thereafter 925,000
$1,300,000
7. Deferred income on dispositions of land:
Deferred income on the prior dispositions of land is amortized to
operating income under a method that coordinates the sharing of
the net gains from land sales between the Company's shareholders and
ratepayers in accordance with a rate making formula approved by the DPUC.
Amortization of deferred income and related taxes to be included in
future years operating income for land sales completed as of the balance
sheet date follow:
Amortization To Be
Deferred Included In
Year ending December 31: Deferred Income Income Taxes Operating Income
1997 $ 299,883 $124,718 $175,165
1998 231,777 96,148 135,629
1999 171,578 71,093 100,485
2000 126,387 52,506 73,881
2001 87,233 36,382 50,851
Thereafter 104,966 43,558 61,408
$1,021,824 $424,405 $579,419
The amortization of deferred income on prior land sales does not include
the effect of anticipated future land sales under the Company's ongoing
land sales program.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
8. Income taxes:
The provisions for taxes on income for the years ended December 31, 1996,
1995 and 1994 consist of:
1996 1995 1994
Current:
Federal $318,311 $212,705 $ 26,820
State 112,765 111,526 20,838
Deferred:
Federal:
Accelerated depreciation 81,714 117,076 96,405
Alternative minimum tax credit
Income on land dispositions 15,127 (112,489) 65,821
Investment tax credit (14,700) (14,700) (14,700)
Construction advances and other (5,071) (6,165) (9,137)
State 2,420 30,372 25,156
$510,566 $354,436 $186,861
State deferred income taxes relate solely to timing differences in the
recognition of income related to land dispositions.
A reconciliation of the income tax expense at the federal statutory tax
rate of 34 percent to the effective rate follows:
1996 1995 1994
Federal income tax at statutory
rates $433,603 $296,650 $185,500
Increase (decrease) resulting
from:
State income tax, net of federal
benefit 72,828 93,653 30,356
Rate case expense 4,536 (9,103) 9,187
SFAS 106 expense in excess of
funding 768 2,068 995
Other, net 13,531 (14,132) (24,477)
Investment tax credit (14,700) (14,700) (14,700)
Total provision for income taxes 510,566 354,436 186,861
Taxes related to land dispositions (382,107) (286,694) (90,977)
Operating provision for taxes $128,459 $ 67,742 $ 95,884
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
8. Income taxes (continued):
Deferred tax liabilities (assets) were comprised of the following:
1996 1995
Depreciation $1,572,362 $1,483,004
Investment tax credits 363,961 378,661
Other 229,181 251,598
Gross deferred tax liabilities 2,165,504 2,113,263
Land sales (424,405) (441,952)
Alternative minimum tax (2,228) (164,879)
Other (253,899) (242,500)
Gross deferred tax assets (680,532) (849,331)
Total deferred income taxes $1,484,972 $1,263,932
9. Related party transactions:
The Company has paid legal and consulting fees to firms whose partners are
directors and shareholders of the Company. During the years ended
December 31, 1996, 1995 and 1994 fees paid amounted to $32,378, $34,748,
and $27,912, respectively. Amounts due to these firms at year end are
not significant.
10.Allowance for doubtful accounts:
1996 1995 1994
Allowance for doubtful accounts,
beginning $75,000 $75,000 $100,000
Provision 43,237 46,712 42,487
Recoveries 8,549 13,036 1,916
Charge-offs (51,786) (59,748) (69,403)
Allowance for doubtful accounts,
ending $75,000 $75,000 $ 75,000
11.Supplemental information:
Amortization of deferred charges follows:
1996 1995 1994
Rate case and other $62,596 $62,592 $ 71,391
Debt issue costs 14,934 14,934 13,658
$77,530 $77,526 $85,049
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
11.Supplemental information (continued):
The Company has received revenues through the rate making process to
recover the amortization of deferred charges.
12.Postemployment benefits:
Pension plan:
The plan's funded status and related pension accrual follows:
1996 1995
Actuarial present value of benefit
obligations: Accumulated benefit obligation,
including vested benefits of $523,864 in 1996
and $413,926 in 1995 $537,226 $419,625
Projected benefit obligation (742,517) (562,788)
Plan assets at fair value 502,793 460,380
Projected benefit obligation in excess
of plan assets (239,724) (102,408)
Unrecognized prior service cost (44,183) (46,437)
Unrecognized deferred loss 194,709 71,173
Other liability (33,311) -
Unrecognized net obligation at transition 88,077 93,949
Prepaid (accrued) pension obligation included
in accounts payable accrued liabilities ($ 34,432) $ 16,277
The weighted-average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligations was 7.0% in 1996 and 7.5% in 1995.
The expected long-term rate of return on assets was 8.0% and 8.5% in
1996 and 1995, respectively.
Net periodic pension costs include the following components:
1996 1995 1994
Service cost $40,780 $30,077 $23,945
Interest cost on projected benefit
obligation 46,694 38,004 34,843
Amortization of net loss from prior
years 8,065 6,167 3,182
Amortization of net obligation at
transition 5,872 5,872 5,872
Amortization of unrecognized prior
service cost (2,254) (2,263) (2,271)
Deferred gain (loss) (13,119) 61,097 (39,600)
Actual return on assets (24,638) (91,892) 9,507
Net pension cost $61,400 $47,062 $35,478
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
12.Postemployment benefits (continued):
Employer matching contributions to the 401(k) plan were $14,372, $7,731
and $6,722 in 1996, 1995 and 1994, respectively.
Other postretirement benefit:
The net periodic postretirement benefit cost includes the following
components:
1996 1995 1994
Service cost-benefits earned during
the period $19,612 $22,268 $15,230
Interest cost on benefit obligation 29,385 29,700 35,205
Actual return on plan assets (16,003) (27,185) 2,376
Net amortization and deferral (8,985) 11,430 (13,704)
Amortization of transition
obligation 25,378 25,378 25,378
Net periodic postretirement benefit
cost $49,387 $61,591 $64,485
The funded status and the related accrual for postretirement benefits
other than pensions were as follows:
1996 1995
Accumulated postretirement benefit obligation:
Retirees ($234,544) ($233,530)
Other vested ( 196,674) ( 205,659)
( 431,218) ( 439,189)
Plan assets at fair value 214,759 170,275
Accumulated postretirement obligation in excess
of plan assets ( 216,459) ( 268,914)
Unrecognized net gain ( 189,588) ( 162,512)
Unrecognized net transition obligation 406,047 431,426
Accrued postretirement benefit cost included in
current assets $ 0 $ 0
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5% in 1996 and 1995. The
expected long-term rate of return on assets was 7.5% in 1996 and 1995.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
12.Postemployment benefits (continued):
Other postretirement benefits (continued):
For measurement purposes, a 11.0% annual increase in the per capita cost
of covered health care benefits was assumed for 1997. This rate was
assumed to decrease gradually to 6% for 2004 and remain at that level
thereafter. A 1% increase in health care cost trend rate assumptions
would produce an increase in the accumulated postretirement benefit
obligation at December 31, 1996 of $70,121 and an increase in the
aggregate service and interest cost of the net periodic postretirement
benefit cost of $9,597.
The Company has established tax effective funding vehicles for such
retirement benefits in the form of a qualified Voluntary Employee
Beneficiary Association (VEBA) trust. The Company funded the VEBA trust
with tax deductible contributions totaling $49,387, $57,767 and $61,559
in 1996, 1995 and 1994, respectively.
The Company president's employment contract requires accounting for
benefits payable in accordance with SFAS 106. The accumulated present
value of future benefits attributable to the Company's president is being
recognized over his remaining years of service to retirement. The
liability recorded at December 31, 1996 and 1995 was $112,818 and
$88,987, respectively. At December 31, 1996, an amount of $70,818 has
been included in other assets relating to a regulatory asset for costs
which were included in the Company's rate case.
13.Commitments and contingent liabilities:
Leases:
The Company leases equipment under several noncancellable operating leases
expiring through 2001. Total minimum rentals under noncancellable
operating leases are as follow:
Year ending December 31:
1997 $11,341
1998 11,808
1999 8,990
2000 5,841
2001 467
$38,447
Lease expense was $27,903 in 1996, $35,274 in 1995 and $31,173 in 1994,
respectively.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
13. Commitments and contingent liabilities (continued):
Management agreement:
The Company maintains an agreement with the City of Derby (the "City"),
pursuantto which agreement, the Company manages the water system owned
by the City. The Company is responsible for costs of maintenance and
improvements. Amounts collected from customers, net of expenses, are
retained by the Company.
Capital budget:
Management has budgeted $1,430,000 for capital expenditures in 1997,
$225,000 of which is expected to be necessary to meet its service
obligations for the coming year. The balance of the capital budget
depends on the Company's ability to raise additional capital.
Purchase commitment:
The Company has an agreement with South Central Connecticut Regional
Water Authority to purchase water. This agreement provides for a
minimum purchase of 600 million gallons of water annually. Charges to
expense were $680,125, $743,904, and $690,000 for the years 1996,
1995 and 1994, respectively. The purchase price is based on South
Central Connecticut Regional Water Authority's wholesale rate. At
December 31, 1996, this rate was approximately $1,150 per million
gallons. This agreement expires December 31, 2015 and provides for
two ten year extensions at the Company's option.
14. Rate matters:
On December 27, 1995, the DPUC granted the Company an increase in annual
revenues of $289,333 (6.89% increase) effective January 1, 1996.
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
15. Equity:
Stock option plans:
On September 13, 1994, the Company adopted two stock option plans. A
non-employee director stock option plan and a key employee incentive
stock option plan. 40,000 and 35,000 shares respectively 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 and must be exercised within 10 years
from date of grant. The following table summarizes the issuance of
options for the Company's common stock:
Granted Exercisable
Number Weighted Average Number Weighted Average
of Shares Exercise Price of Shares Exercise Price
Granted during
1994 54,000 $10.50
December 31, 1994 54,000 $10.50 - -
Granted during 1995 3,750 $11.00
December 31, 1995 57,750 $10.53 22,750 $10.50
Granted during 1996 5,000 $ 8.50
December 31, 1996 62,750 $10.37 55,875 $10.52
All of the options granted in 1996 and 1995 were granted under the non-
employee director stock option plan. As of December 31, 1996, no options
granted under the plans had been exercised or forfeited. On January 1,
1996, the Company adopted Statement of Financial Accounting Standards
No. 123 - "Accounting for Stock Based Compensation" (SFAS 123). As
permitted by SFAS 123, the Company has chosen to apply Accounting
Principles Board Opinion No. 25 - "Accounting for Stock Issued to
Employees" (APB 25) and related interpretations in accounting for
stock based compensation. There being no grants of options to employees
in 1996 or 1995, there was no material effect on the Company's results of
operations in those years.
Dividend reinvestment plan:
On September 13, 1994, the Company adopted a dividend reinvestment plan
which provides for the issuance and sale of up to 70,000 shares of the
Company's authorized but unissued common stock to its shareholders who
elect to reinvest cash dividends on the Company's existing shares. Shares
under the plan will be purchased at their fair market value price on the
date of the dividends to be invested in the new shares. The following
table summarizes the activity in common shares related to the dividend
reinvestment plan:
1996 1995
Number of shares issued 5,610 3,114
Value of shares when issued $51,386 $31,108
BIRMINGHAM UTILITIES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
Years Ended December 31, 1996, 1995 and 1994
16.Supplemental disclosure of cash flow information and noncash financing
activities:
Cash paid for interest for the years ended 1996, 1995 and 1994 was
$574,993, $608,764 and $557,909, respectively.
Cash paid for income taxes for the years ended 1996, 1995 and 1994 was
$539,200, $188,575, and $82,200, respectively.
The Company receives contributions of plant from developers. These
contributions are reported in utility plant and in customers' advances for
construction. The contributions are deducted from construction expenditures
to determine cash expenditures by the Company.
1996 1995 1994
Gross plant additions $1,518,142 $671,390 $696,340
Customers' advances for
construction ( 56,990) ( 71,112) ( 76,567)
$1,461,152 $600,278 $619,773
BIRMINGHAM UTILITIES, INC.
SCHEDULE IX - SHORT TERM BORROWINGS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Weighted
Average average
Weighted Maximum amount interest
Category of Balance interest outstanding outstanding rate
short-term at the end rate at end during during during the
borrowings of period of period the period the period period
Year ended
December 31,
1996
Notes payable $125,000 8.38% $480,000 $39,083 8.45%
Year ended
December 31,
1995
Notes payable $ 75,000 8.53% $408,717 $138,199 8.63%
Year ended
December 31,
1994
Notes payable $165,000 7.93% $165,000 $ 52,250 6.97%
PART III
Item 10. Directors and Executive Officers of the Registrant
(a) The following list identifies all current directors of the Company.
No directoror 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 67 V.P., Ogden Allied Security Services; 1994
Principal, Ahern Builders
Edward G. Brickett 67 Retired; Director of Finance, Town of 1979
Southington, CT until June, 1995.
James E. Cohen 50 Lawyer in Practice in Derby; Director 1982
Great Country Bank 1987-1993
Betsy Henley-Cohn 44 Chairwoman of the Board of Directors 1981
of the Company since May of 1992;
Chairman and Treasurer, Joseph Cohn & Sons,
Inc., (painting contractors); Director,
United Illuminating Corp. and Aristotle
Corp.; Director, Society for Savings
Bancorp,Inc. (1985-1993).
Aldore J. Rivers 63 President of the Company 1986
B. Lance Sauerteig 51 Lawyer in Practice in Westport; Principal 1996
in BLS Strategic Capital, Inc. (financial
and investment advisory company); previously,
President First Spring Corporation, 1986-1994
(private family investment management company);
Director OFFITBANK (a New York based private
investment management bank)
Kenneth E. Schaible 55 Banking Consultant/Developer since 1996; 1994
Senior Vice President, Webster Bank
1995-1996; previously, President Shelton
Savings Bank and Shelton Bancorp, Inc.
1967 to 1995
Charles T. Seccombe 70 President and Treasurer, Seccombe's Men's 1967
Shop, Inc. (retail clothing business)
David Silverstone 50 Lawyer in Practice in Hartford 1994
(b) Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten-percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and the Company.
Based solely on review of copies of such forms furnished to the Company,
or written representations that no reconciliation forms were required, the
Company believes that during fiscal year ending December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent shareholders were complied with.
Item 11. Compensation of Directors and Executive Officers
Directors: The Company's Directors, except for Ms. Henley-Cohn and
Mr. Rivers, received an annual fee of $3,000 plus $500 for each
full Board meeting and $300 for each Committee meeting actually
attended in 1996. Ms. Henley-Cohn received an annual salary of
$49,139 for services in pursuit of land sales during 1996 and as
Chairwoman of the Board of Directors.
Executive Officers: During 1994, the Company had no Executive
Officer whose total annual salary exceeded $100,000. The Company
does not have any long-term incentive plans.
The following table sets forth the annual cash compensation
for Mr. Rivers, the Company's Chief Executive Officer, for each of
1994, 1995 and 1996.
Annual Compensation
Securities
Name and Underlying
Principal Position Year Salary* Bonus Options**
Aldore J. Rivers,
President,
CEO and Director 1994 $ 92,945 N/A 10,000
1995 $101,404 $2,500 N/A
1996 $105,404 N/A N/A
* Includes the economic benefit of premiums on a split-dollar life
insurance policy pursuant to which Mr. Rivers is the Insured and
the Company is the owner and paid the premiums in 1994, 1995 and
1996.
**On September 13, 1994, the Company's Board of Directors approved
the Birmingham Utilities, Inc. 1994 Stock Incentive Plan (The "1994
Plan"), subject to approval by the Company's shareholders and by
the Connecticut Department of Public Utility Control (DPUC"). The
amounts set forth in the table above, represent the award of
options to Mr. Rivers which vested on September 12, 1996. None of
the options have been exercised, and there were no options granted
to Mr. Rivers in 1996.
Employment Agreement and Split-Dollar Insurance Plan:
The Company entered into an Employment Agreement with Mr.
Rivers in 1990 (the" Employment Agreement"), pursuant to which the
Company agreed to employ Mr. Rivers as President of the Company for
a period of five years, until August of 1996. The Employment
Agreement was amended in 1992 and 1993.
The Employment Agreement, as amended, provides for a so-called
"Split Dollar Life Insurance" plan for the benefit of both the
Company and Mr. Rivers. The plan provides for the Company to
maintain insurance on Mr. Rivers' life in an amount not less than
$150,000, and to pay to Mr. Rivers' designee $150,000 if he should
die on or before the age of 65. The balance of the life insurance
proceeds, if any, may be retained by the Company. If Mr. Rivers
dies after reaching the age of 65, all death benefits of the policy
are retained by the Company. The Company has agreed to make one
hundred eighty (180) monthly supplemental pension payments of
$1,170 each to Mr. Rivers commencing when he reaches the age of 65
and continuing until the earlier of his death or the end of the
180-month period. The Company expects to use the proceeds of the
life insurance to reimburse itself for the supplemental pension
payments that may be made to Mr. Rivers after his 65th birthday.
Item 12. Security Ownership of Management and Certain Beneficial
Owners
(a) The following table sets forth certain information with
respect to the only persons, to the knowledge of the Company, who
own as much as 5% of the Company's stock as of February 26, 1996.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class
Group consisting of Cohn Realty & Investment, 181,550 Shares (1) 23.95%
Betsy Henley-Cohn, John J. Crawford, as custod-
ian for Juri Henley-Cohn, and as custodian for
Jesse Henley-Cohn, Joel Cohn Revocable Trust 1A,
Betsy Cohn Spray Trust, Harry Berkowitz Revocable
Trust, Betsy Cohn Income Trust, Rosenfield-
Weisman Trust, 441 Chapel St., New Haven, CT 06510,
and Ruth Weisman, 26 Kohary Drive, New Haven, CT 06515.
John J. Crawford, 70 Indian Road,
Guilford, CT 06437 66,262 Shares (2) 8.81%
(1) Of the 181,550 shares owned by this Group, Cohn Realty & Investment (a
Connecticut general partnership consisting of three investment trusts
whose managing agent is Betsy Henley-Cohn, whose beneficiaries are certain
members of the Cohn Family and whose Trustees are Rhoda Cohn and Stanley
Bergman) has beneficial ownership of 35,640 shares; John J. Crawford,
as custodian for Juri Henley-Cohn, has beneficial ownership of 21,785
shares; John J. Crawford, as custodian for Jesse Henley-Cohn, has
beneficial ownership of 22,091 shares; Joel Cohn Revocable Trust 1A has
beneficial ownership of 26,060 shares; Betsy Cohn Spray Trust has
beneficial ownership of 32,188 shares; Betsy Cohn Income Trust has
beneficial ownership of 10,460 shares; Harry Berkowitz Revocable Trust
has beneficial ownership of 16,098 shares; Rosenfield-Weisman Trust has
beneficial ownership of 7,000 shares and Ruth Weisman has beneficial
ownership of 10,228 shares. Betsy Henley-Cohn has either a controlling
or a beneficial interest in Cohn Realty & Investment, Betsy Cohn
Spray Trust and Betsy Cohn Income Trust. No member of the Group owns
or has the right to acquire, directly or indirectly, any other shares.
Unless otherwise indicated, the named beneficial owner of the shares
has sole voting and dispositive power with respect thereto. The
information set forth in this footnote is derived from a filing with
the Securities and Exchange Commission made by the Group.
(2) Includes 5,830 shares held jointly by Mr. Crawford and his wife, 22,091
shares held by Mr. Crawford as custodian for the benefit of Jesse Henley
-Cohn, and 21,785 shares held by Mr. Crawford as custodian for the
benefit of Juri Henley-Cohn. Mr. Crawford has sole voting power over
the shares held for the benefit of Jesse Henley-Cohn and Juri Henley-
Cohn, but has no family relationship with Jesse Henley-Cohn or Juri
Henley-Cohn. The 22,091 shares held in trust for the benefit of Jesse
Henley-Cohn and the 21,785 shares held in trust for the benefit of Juri
Henley-Cohn are also included in the shares set forth in footnote (1),
above, as being held by John J. Crawford as custodian for Jesse Henley-
Cohn and Juri Henley-Cohn.
(b) The following table sets forth certain information concerning
ownership of the Company's Shares by management:
Common Shares
Beneficially Owned Percent
Name As of February 26, 1995 of Class
Stephen P. Ahern 13,403 (1) 1.77
Edward G. Brickett 3,550 .47
James E. Cohen 33,598 (2) 4.43
Betsy Henley-Cohn 181,550 (3) 23.95
Aldore J. Rivers 2,051 .27
B. Lance Sauerteig 200 .03
Kenneth E. Schaible 980 .13
Charles T. Seccombe 8,169 (4) 1.08
David Silverstone 109 .01
Executive Officers and
Directors as a
group, 8 in number 243,610 32.14
(1) Includes 1,700 shares owned by Ahern Family Limited Partnership.
(2) Includes 32,598 shares held by Mr. Cohen, as Trustee of the David B. Cohen
Family Trust, and 1,000 shares held in a brokerage custodial account for
Mr. Cohen's benefit.
(3) Ms. Henley-Cohn is a member of the shareholder group described in the
preceding table. The 181,550 shares set forth in this table is the
aggregate number of shares held by all of the members of the group.
See note (1) to the preceding table for information concerning shares
beneficially held by Ms. Henley-Cohn.
(4) All of which are held in a Trust, of which Mr. Seccombe is the Grantor and
Trustee.
Item 13. Certain Relationships and Related Transactions
Mr. Cohen is a partner in the law firm of Cohen and Thomas, which
has represented the Company on occasions in past years; the Company
may continue to employ that firm on occasion in the future.
Seccombe's Men's Shop, owned by Mr. Seccombe, in downtown Ansonia
has been utilized as a collection facility for the paying of bills
and will be used in that capacity in the future.
Mr. Silverstone is a partner in the law firm of Silverstone &
Koontz, which represented the Company on rate matters in 1995 and
may do so in the future.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood
and Sanders, which provided legal services to the Company in 1996
and may do so in the future.
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) (1) and (2). See Index to Item 8. Financial Statements and
Supplementary Data are herein incorporated by reference.
(3) Certificate of Incorporation and By-Laws of Birmingham
Utilities, Inc. Incorporated herein by reference is Exhibit 3 of
Birmingham Utilities, Inc.'s Annual Report on Form 10K for the
period ended December 31, 1994.
(4) Instruments Defining Rights of Security Holders
(i) Amended and Restated Mortgage Indenture by and between
The Ansonia Derby Water Company and The Connecticut National Bank
as Trustee, dated as of August 9, 1991. Incorporated herein by
reference is Exhibit (4) (i) of The Ansonia Derby Water Company's
Annual Report on Form 10-K for the period ending December 31, 1991.
(ii) Commercial Term and Revolving Loan Agreement by and
between Birmingham Utilities, Inc. and Fleet Bank, N.A., dated
April 29, 1994. Incorporated herein by reference is Exhibit 10(1)
of the Quarterly Report on Form 10-Q/A of Birmingham Utilities,
Inc. for the period ended June 30, 1994.
(iii) Birmingham Utilities, Inc. Dividend Reinvestment Plan,
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit 4 (iii) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10) Material Contracts
(10.1) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated January 18, 1984 for the sale of water by the
Authority to the Company and subsequent amendment dated December
29, 1988. Incorporated herein by reference is Exhibit (10.1) of the
Annual Report on Form 10-K of Birmingham Utilities, Inc. for the
period ended December 31, 1993.
(10.2) Agreement to Purchase Water by and between The Ansonia
Derby Water Company and South Central Connecticut Regional Water
Authority dated November 30, 1984 for the sale by the Authority to
the Company of water and for the construction of the pipeline and
pumping and storage facilities in connection therewith by the
Authority at the expense primarily of the Company and Bridgeport
Hydraulic Company. Attached hereto as pp. 46 to 82.
(10.3) Employment Agreement between The Ansonia Derby Water
Company and Aldore J. Rivers dated August 5, 1990, as amended by
amendments dated July 28, 1992 and April 20, 1993. Incorporated
herein by reference is Exhibit (10.6) of the Annual Report on Form
10-K of Birmingham Utilities, Inc. for the period ended December
31, 1993.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan
adopted by its Board of Directors on September 13, 1994.
Incorporated herein by reference is Exhibit (10.9) of Birmingham
Utilities, Inc.'s Annual Report on Form 10-K for the period ended
December 31, 1994.
(10.5) Birmingham Utilities, Inc. Stock Option Plan for Non-
Employee Directors adopted by its Board of Directors on September
13, 1994. Incorporated herein by reference is Exhibit (10.10) of
Birmingham Utilities, Inc.'s Annual Report on Form 10-K for the
period ended December 31, 1994.
(10.6) Purchase and Sale Agreement by and between Birmingham
Utilities, Inc. and M/1 Homes, LLC dated March 18, 1997 for the
sale by the Company to M/1 Homes of approximately 245 acres of
unimproved land in Seymour, Connecticut. Attached hereto as pp.
83 to 104.
(23) Consent of Price Waterhouse LLP
(23.1) Consent of Dworken, Hillman, LaMorte & Sterczala, P.C.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Registrant during the last quarter of 1996.
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 Henly-Cohn
Betsy Henley-Cohn
Chairwoman of the Board
BY:/s/ Leroy A. DeFrances
Leroy A. DeFrances
Controller
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/ B. Lance Sauerteig
Stephen P. Ahern, Director B. Lance Sauerteig, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ Edward G. Brickett /s/ Charles T. Seccombe
Edward G. Brickett, Director Charles T. Seccombe, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ James E. Cohen /s/ Kenneth E. Schaible
James E. Cohen, Director Kenneth E. Schaible, Director
Date: March 14, 1997 Date: March 14, 1997
/s/ Betsy Henley-Cohn /s/ David Silverstone
Betsy Henley-Cohn, Chairwoman David Silverstone, Director
Board of Directors Date: March 14, 1997
Date: March 14, 1997
/s/ Aldore J. Rivers
Aldore J. Rivers, President
Date: March 14, 1997
DATE: March 14, 1997
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of the
Registration Statement of Birmingham Utilities, Inc. on Form S-3
dated June 12, 1995 of our report dated February 24, 1995, which
appears on page 13 of the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the year ended December 31, 1996.
Price Waterhouse LLP
New York, New York
March 25, 1997
Dworken, Hillman, LaMorte & Sterczala, P.C.
We hereby consent to the incorporation by reference in the
Registration Statements of Birmingham Utilities, Inc. on Form S-8
dated July 25, 1995 and in the Prospectus constituting part of the
Registration Statement of Birmingham Utilities, Inc. on Form S-3
dated June 12, 1995 of our report dated February 14, 1995, which
appears in the Annual Report on Form 10-K of Birmingham
Utilities, Inc. for the year ended December 31, 1996.
/s/ Dworken, Hillman, LaMorte & Sterczala, P.C.
March 25, 1997
BIRMINGHAM UTILITIES, INC.
INDEX TO EXHIBITS
Item No. Page No.
10.2 Agreement to Purchase Water by and between
The Ansonia Derby Water Company and South
Central Connecticut Regional Water Authority . . . 46
10.6 Purchase and Sale Agreement by and between
Birmingham Utilities, Inc. and M/1 Homes, LLC. . . 83