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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A Amendment No. 1
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2006
Commission File No. 1-31374
BIW LIMITED
(Exact Name of registrant as specified in its charter)
CONNECTICUT 04-3617838
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
230 Beaver Street, Ansonia, CT 06401-0426
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203)735-1888
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which Registered
------------------- -----------------------------------------
Common Stock (no par value) The American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [] No[X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes[] No [X]
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 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]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated
Filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes[ ] No [X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing sale price of such stock as of June 30, 2006:
$23,779,110.
As of March 16, 2007, the Registrant had 1,674,579 shares of common stock, no
par value, outstanding.
Documents Incorporated by Reference
Portions of the Annual Report to stockholders for the fiscal year ended December
31, 2006 are incorporated by reference into Part II of this report.
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PART I
FORWARD LOOKING INFORMATION
Forward looking statements in this report, including, without limitation,
statements relating to the Company's plans, strategies, objectives, intentions,
and expectations, are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward looking statements are
based on current information and involve known and unknown risks and
uncertainties, which could cause the Company's actual results to differ
materially from expected results.
These factors include, among others, the adequacy of rates approved by the DPUC,
weather conditions, changes in governmental regulations affecting water quality,
success of operating initiatives, changes in business strategy, as well as
general economic and business conditions, as set forth in Item 1A, below.
ITEM 1. BUSINESS
BIW Limited ("BIW" or the "Company") is the parent company of Birmingham
Utilities, Inc. ("BUI" or "Birmingham Utilities") 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, which is referred to as the Ansonia division. Water
service is also provided for domestic and commercial use in 33 satellite water
operations in 16 towns in eastern Connecticut, which form BUI's Eastern
Division. This division, which was acquired in 2003, was the former Eastern
Connecticut Regional Water Company, Inc. In November of 2006, as part of the
Connecticut Department of Public Utility Control's rate order, both the Ansonia
and Eastern division were combined for regulatory purposes. Birmingham H2O
Services Inc. ("BHS" or "Birmingham H2O Services"), the Company's non-regulated
subsidiary, offers a consumer protection program for residential service lines
and provides water related services to other water utilities, municipalities,
contractors and individuals throughout Connecticut. Under its charter,
Birmingham Utilities enjoys a monopoly franchise in the distribution of water in
the area which it serves. In conjunction with its right to sell water,
Birmingham Utilities 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 Birmingham Utilities' 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"), and 75 wells located in
16 towns in eastern Connecticut that service 33 satellite water systems.
Birmingham Utilities maintains its interconnected Beaver Lake Reservoir System,
a 2.2 million gallon per day (MGD) surface supply, in case of emergency needs,
located in Seymour and Woodbridge, CT.
Birmingham Utilities' main system operating in Ansonia, Derby, and Seymour has a
safe daily yield (including only those supplies that comply with the Federal
Safe Drinking Water Act (SDWA) on a consistent basis) of approximately 8.0 MGD,
while the average daily demand and the maximum daily demand on the system during
2006 were approximately 3.07 MGD and 3.97 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 include approximately 25%
of BUI's customers.
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During 2006, approximately 1.12 billion gallons of water from all sources were
delivered to Birmingham Utilities' customers. Birmingham Utilities has
approximately 11,705 customers of whom approximately 97% are residential and
commercial. No single customer accounted for as much as 10% of total billings in
2006. The business of Birmingham Utilities 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 9, 2007, 40 full-time employees and 1 part-time
employee. The Company's employees are not affiliated with any union
organization.
Birmingham Utilities is subject to the jurisdiction of the Connecticut
Department of Public Utility Control ("DPUC") as to accounting, financing,
ratemaking, disposal of property, the issuance of long-term securities and other
matters affecting its operations. The Connecticut Department of Public Health
(the "Health Department" or "DPH") has regulatory powers over Birmingham
Utilities 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 BUI'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.
Birmingham Utilities' 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. Birmingham
Utilities is subject to regulation of its water quality under the 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.
The Company operates in two business segments - regulated water operations
(Birmingham Utilities) and unregulated service operations (H2O Services).
Applicable segment information appears in Note 20 of the Notes to Consolidated
Financial Statements incorporated by reference in Item 8 of this Report.
Executive Officers of the Registrant
Name, Age and Position Business Experience Past 5 Years
Betsy Henley-Cohn, 54
Chairwoman of the Board Chairwoman of the Board of Directors and
and Chief Executive Officer Chief Executive Officer of the Company since May
1992; Chairperson/Treasurer, Joseph Cohn & Sons,
Inc. since 1979; Director, UIL Holdings
Corporation, since 1990; Director, Aristotle
Corp. (1995-2002); Director, Citizens Bank of
Connecticut (1997-1999).
John S. Tomac, 53
President and Treasurer President of the Company since October 1, 1998;
Vice President of the Company December 1,
1997-September 30, 1998; Treasurer of the Company
since December 1997; Assistant Controller, BHC
Company 1991-1997.
ITEM 1A. RISK FACTORS
Our business is subject to a number of risks, some of which are discussed below.
Other risks are presented elsewhere in this report and in the information
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incorporated by reference into this report. You should carefully consider the
following risks in addition to the other information contained in this report
and our other filings with the SEC, including our subsequent reports on Forms
10-Q and 8-K, before deciding to buy, sell or hold our common stock. The risks
and uncertainties described below are not the only ones facing the Company.
Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also affect our business operations. Any of these
risks could materially and adversely affect the Company's business, financial
condition and results of operations, which in turn could materially and
adversely affect the price of the Company's common stock.
DIVIDENDS ON OUR COMMON STOCK WILL BE DEPENDENT ON DIVIDENDS PAID TO BIW LIMITED
BY BIRMINGHAM UTILITIES.
Funds required by BIW Limited to enable it to pay dividends on BIW Limited
common stock are derived predominantly from the dividends paid by Birmingham
Utilities to BIW Limited. Accordingly, the ability of BIW Limited to pay
dividends, as a practical matter, will be governed by the ability of Birmingham
Utilities to pay common stock dividends. The ability of Birmingham Utilities to
pay dividends to BIW Limited will continue to be subject to outstanding common
stock dividend restrictions currently contained in Birmingham Utilities'
mortgage bond indenture. Because Birmingham Utilities will remain subject to
regulation by the Connecticut Department of Public Utility Control (DPUC), the
amount of its earnings and dividends will continue to be affected by the manner
in which the DPUC regulates Birmingham Utilities. Therefore, there can be no
assurance as to the payment of future dividends by BIW Limited. Furthermore, any
losses incurred by BIW Limited's unregulated businesses will not be recoverable
through the water rates of Birmingham Utilities.
OUR BUSINESS REQUIRES SIGNIFICANT CAPITAL EXPENDITURES AND THE RATES WE CHARGE
OUR CUSTOMERS ARE SUBJECT TO REGULATION.
The water utility business is capital intensive. In addition to any capital
required to fund potential acquisitions, on an annual basis, we spend
significant sums for additions to or replacement of property, plant and
equipment. Our ability to maintain and meet our financial objectives is
dependent upon the availability of adequate capital and the recovery of our
capital investments through the rates we charge our customers. There is no
guarantee that we will be able to obtain sufficient capital in the future on
reasonable terms and conditions for expansion, construction and maintenance. In
the event we are unable to obtain sufficient capital, our expansion efforts
could be curtailed, which may affect our growth and may affect our future
results of operations.
The rates our regulated operations charge our customers are subject to approval
by the DPUC. We file rate increase requests, from time to time, to recover our
investments in utility plant and expenses. Once a rate increase petition is
filed with the DPUC, the ensuing administrative and hearing process may take up
to 180 days and may be costly. We can provide no assurances that any future rate
increase request will be approved; and, if approved, we cannot guarantee that
these rate increases will be granted in a timely or sufficient manner to cover
the investments and expenses for which we initially sought the rate increase.
OUR OPERATING COSTS COULD BE SIGNIFICANTLY INCREASED IN ORDER TO COMPLY WITH NEW
OR STRICTER REGULATORY STANDARDS IMPOSED BY FEDERAL AND STATE ENVIRONMENTAL
AGENCIES.
Our water services are governed by various federal and state environmental
protection and health and safety laws and regulations, including the federal
Safe Drinking Water Act, the Clean Water Act and similar state laws, and federal
and state regulations issued under these laws by the United States Environmental
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Protection Agency and state environmental regulatory agencies. These laws and
regulations establish, among other things, criteria and standards for drinking
water and for discharges into the waters of the United States and states.
Pursuant to these laws, we are required to obtain various environmental permits
from environmental regulatory agencies for our operations. We cannot assure you
that we have been or will be at all times in total compliance with these laws,
regulations and permits. If we violate or fail to comply with these laws,
regulations or permits, we could be fined or otherwise sanctioned by regulators.
Environmental laws and regulations are complex and change frequently. These
laws, and the enforcement thereof, have tended to become more stringent over
time. While we have budgeted for future capital and operating expenditures to
maintain compliance with these laws and our permits, it is possible that new or
stricter standards could be imposed that will raise our operating costs.
Although these costs may be recovered in the form of higher rates, there can be
no assurance that the DPUC would approve rate increases to enable us to recover
such costs. In summary, we cannot assure you that our costs of complying with,
or discharging liability under, current and future environmental and health and
safety laws will not adversely affect our business, results of operations or
financial condition.
OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS, WHICH COULD AFFECT DEMAND FOR
OUR WATER SERVICE AND OUR REVENUES.
Demand for our water during the warmer months is generally greater than during
cooler months due primarily to additional requirements for water in connection
with irrigation systems, swimming pools, cooling systems and other outside water
use. Throughout the year, and particularly during typically warmer months,
demand will vary with temperature and rainfall levels. In the event that
temperatures during the typically warmer months are cooler than normal, or if
there is more rainfall than normal, the demand for our water may decrease and
adversely affect our revenues.
DROUGHT CONDITIONS MAY IMPACT OUR ABILITY TO SERVE OUR CURRENT AND FUTURE
CUSTOMERS.
We depend on an adequate water supply to meet the present and future demands of
our customers. Drought conditions could interfere with our sources of water
supply and could adversely affect our ability to supply water in sufficient
quantities to our existing and future customers. An interruption in our water
supply could have a material adverse effect on our financial condition and
results of operations. Moreover, governmental restrictions on water usage during
drought conditions may result in a decreased demand for our water, even if our
water reserves are sufficient to serve our customers during these drought
conditions, which may adversely affect our revenues and earnings.
CONTAMINATION TO OUR WATER SUPPLY MAY RESULT IN DISRUPTION IN OUR SERVICES.
Our water supplies are potentially subject to contamination, including
contamination from the development of naturally-occurring compounds, chemicals
in groundwater systems, pollution resulting from man-made sources, such as MTBE,
and possible terrorist attacks. In the event that our water supply is
contaminated, we may have to interrupt the use of that water supply until we are
able to substitute the flow of water from an uncontaminated water source. In
addition, we may incur significant costs in order to treat the contaminated
source through expansion of our current treatment facilities, or development of
new treatment methods. If we are unable to substitute water supply from an
uncontaminated water source, or to adequately treat the contaminated water
source in a cost-effective manner, there may be an adverse effect on our
revenues, operating results and financial condition. The costs we incur to
decontaminate a water source or an underground water system could be significant
and could adversely affect our business, operating results and financial
condition and may not be recoverable in rates. We could also be held liable for
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consequences arising out of human exposure to hazardous substances in our water
supplies or other environmental damage. For example, private plaintiffs have the
right to bring personal injury or other toxic tort claims arising from the
presence of hazardous substances in our drinking water supplies. Our insurance
policies may not be sufficient to cover the costs of these claims.
WE DEPEND SIGNIFICANTLY ON THE SERVICES OF THE MEMBERS OF OUR MANAGEMENT TEAM.
Our success depends significantly on the continued individual and collective
contributions of our management team. The loss of the services of any member of
our management team or the inability to hire and retain experienced management
personnel could harm our operating results.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 2. PROPERTIES
The Company's properties consist chiefly of land, wells, reservoirs, and
pipelines. Birmingham Utilities operations in Ansonia, Derby and Seymour have 5
production wells with an aggregate effective capacity of approximately 3.0 MGD.
Birmingham Utilities' existing interconnections with the Regional Water
Authority can provide 5.0 MGD. Birmingham Utilities' entire system has a safe
daily yield (including only those supplies that comply with the SDWA on a
consistent basis) of approximately 8.0 MGD, while the average daily demand and
the maximum daily demand on the system during 2006 were approximately 3.07 MGD
and 3.97 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 include approximately 25% of Birmingham Utilities' customers.
Birmingham Utilities has two emergency stand-by reservoirs (Peat Swamp and
Middle) with a storage capacity of 457 million gallons and a safe daily yield of
approximately 2.1 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 Birmingham Utilities to supply water to the system.
Birmingham Utilities' Eastern Division consists of 33 satellite water
systems in 16 towns in eastern Connecticut serving 2,280 connections. These
systems serve residential subdivisions, elderly housing complexes, and
condominium complexes. Typical system configuration includes two or more wells,
chemical addition, atmospheric storage, booster pumps, and hydropneumatic
storage. Several of these systems also include filtration for iron and manganese
removal. Two systems have radon removal treatment. Three of the systems are
seasonal, only operating during the months of April through October.
Birmingham Utilities' dams are subject to inspection by and the approval of
the DEP. All of Birmingham Utilities' dams are in compliance with improvements
previously ordered by the U.S. Army Corps of Engineers.
Birmingham Utilities owns an office building at 230 Beaver Street, Ansonia,
CT that contains 4,200 square feet of office and storage space. In addition,
Birmingham Utilities owns two buildings devoted to equipment storage. Birmingham
Utilities owns office space in a wood frame, residential building owned by
Birmingham Utilities at 228 Beaver Street, Ansonia, CT. Birmingham Utilities
also owns two residential houses at 189 Maple Street and 59 Rimmon Road,
Seymour, CT. Birmingham Utilities also rents office and warehouse space in
Glastonbury, CT and Birmingham H2O Services owns two buildings in Guilford, CT
at 2935 and 2940 Boston Post Road.
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Birmingham Utilities' approximately 1,400 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 Birmingham Utilities' first Water Supply Plan in 1988 and updated Water
Supply Plan in 1993, 1998 and in 2003. Pursuant to abandonment permits issued by
the Health Department in 1988, Birmingham Utilities 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 and in 1999 the abandonment of the Quillinan Reservoir was also
approved by the Health Department.
Since 1988, Birmingham Utilities has sold approximately 2,325 acres of land
in Bethany, Ansonia, Derby, Seymour and Oxford, realizing net gains of
$13,085,806.
Birmingham Utilities no longer has any significant land holdings that will
not be needed in the future for water supply purposes. The DPUC has accepted
with respect to prior transactions, an accounting and ratemaking mechanism by
which the gain on the sale of Birmingham Utilities' 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.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
The inside back cover of the Company's Annual Report to shareholders for
the year ended December 31, 2006, (Market Information), is incorporated herein
by reference, pursuant to Rule 12b-23 of the Securities and Exchange Act of 1934
(the "Act") and to Instruction G(2) to Form 10-K.
The following graph shows the cumulative total stockholder return on our
common stock since January 1, 2002, compared to the returns of the American
Stock Exchange Market Index, and the reporting companies in SIC Code 4941 -
Water Supply Companies.
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COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
------------------------ FISCAL YEAR ENDING ---------------------
COMPANY/INDEX/MARKET 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/30/2005 12/29/2006
BIW LIMITED 100.00 100.61 108.21 115.85 109.11 99.35
WATER SUPPLY 100.00 71.22 88.56 113.68 143.63 221.08
AMEX MARKET INDEX 100.00 96.01 130.68 149.65 165.03 184.77
Item 6. Selected Financial Data
The inside front cover of the Company's Annual Report to shareholders for the
year ended December 31, 2006, (Financial Highlights), is incorporated herein by
reference, pursuant to Rule 12b-23 of the Act and to Instruction G(2) to Form
10-K.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Pages 6 through 13 of the Company's Annual Report to Shareholders for the year
ended December 31, 2006 (Management's Discussion and Analysis of Financial
Condition and Results of Operations) are incorporated herein by reference,
pursuant to Rule 12b-23 of the Act and to Instruction G(2) to Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has certain exposures to market risk related to changes in interest
rates. The Company has an outstanding revolving credit agreement, under which
there were borrowings of $7,330,000 at December 31, 2006. The revolving credit
agreement bears interest at variable rates based on current LIBOR indices. The
Company is not subject in any material respect to currency or other commodity
risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, together with the report therein, of
Dworken, Hillman, LaMorte and Sterczala, P.C., dated March 14, 2007 appearing on
pages 14 through 32 of the Company's 2006 Annual Report to Shareholders are
incorporated herein by reference, pursuant to Rule 12b-23 of the Act and
Instruction G(2) to Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed in the Company's Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and that such information is accumulated
and communicated to the Company's management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure based on the definition of "disclosure controls
and procedures" in Rule 13a-15(e). In designing and evaluating the disclosure
controls and procedures, management recognized that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of
possible controls and procedures.
As of December 31, 2006, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
the Company's Chief Executive Officer and the Company's Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on the foregoing, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's disclosure
controls and procedures were effective.
In connection with the evaluation described in the foregoing paragraph, there
were no changes identified in the Company's internal controls over financial
reporting during the quarter ended December 31, 2006 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
Item 9B. Other Information
9
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Our Bylaws provide for not less than seven nor more than fifteen directors to be
elected at each Annual Meeting of Stockholders, each to serve for the ensuing
year and until his or her successor is elected and has qualified. The Board of
Directors currently consists of nine (9) persons. The directors, their ages, the
year in which each first became a director and their principal occupations or
employment during the past five years are as follows:
Year First Principal Occupation
Director Age Became Director During the Past Five Years
- -------- --- --------------- --------------------------
Mary Jane Burt 53 2000 Associate, H. Pearce, Real Estate Company; Principal, The
Laurel Group (Business Consultants) since 1998. Previously
Director, INSITE ONE (1999-2002).
James E. Cohen 60 1982 Practicing attorney with Derby law firm Cohen & Thomas
since 1971; Attorney Trial Referee for the Connecticut
Superior Court since 1996.
Betsy Henley-Cohn 54 1981 Chairwoman of the Board of Directors and Chief Executive
Officer of the Company since 1992; Chairperson/Treasurer,
Joseph Cohn & Sons, Inc. (construction subcontractors)
since 1979; Director, UIL Holdings Corporation, since 1990;
Director, Aristotle Corp. (1995-2002).
Juri Henley-Cohn* 29 2004 Vice President, Joseph Cohn & Son (construction
subcontractor); Managing Member, Cohn Realty & Investment
(real estate management and development company); Writer;
Producer; Graduate of Harvard University.
Alvaro da Silva 61 1997 President, DSA Corp. (a management company) since 1979;
President B.I.D., Inc. (land development and home building
company); Managing Partner, Connecticut Commercial
Investors, LLC (a commercial real estate and investment
partnership) since 1976.
10
Themis Klarides 41 2001 Lawyer in practice in Shelton, CT since 1998; State
Representative, 114 District Connecticut General Assembly,
since 1998
B. Lance Sauerteig 61 1996 Principal in BLS Strategic Capital, Inc. (financial and
investment advisory company) since 1994; Principal in
Tortoise Capital Partners, LLC (real estate investments)
since 2000; Director, Chemwerth, Inc. since 2003; Director,
United Aluminum Corporation since 2002.
Kenneth E. Schaible 65 1994 Real Estate Developer and Director of AuthX, Inc.
John S. Tomac 53 1999 President of Company since October 1, 1998; Treasurer of
the Company since December 1997; previously, Vice President
of Company (December 1, 1997-September 30, 1998).
* Mr. Henley-Cohn is the son of Ms. Henley-Cohn, the Chairwoman of the Board and
Chief Executive Officer of BIW Limited.
ADDITIONAL INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES
In 2006, the Board of Directors held five meetings. Each director attended at
least seventy five percent (75%) of the aggregate number of meetings of the
Board of Directors and Committees.
Betsy Henley-Cohn and John S. Tomac are employee directors of the Board. Juri
Henley-Cohn is not an independent director since he has an immediate family
member who is employed by the Company as an executive officer. The Board of
Directors has determined affirmatively that Mary Jane Burt, James E. Cohen,
Alvaro da Silva, Themis Klarides, B. Lance Sauerteig and Ken Schaible are
independent directors based upon listing standards of the American Stock
Exchange and none of these directors has a relationship that would interfere
with their ability to exercise independent judgment when carrying out director
responsibilities.
The Board of Directors' Executive Committee consists of Ms. Henley-Cohn, Ms.
Burt and Messrs. Tomac, Cohen, Henley-Cohn and Sauerteig. The Executive
Committee met five times in 2006. The Executive Committee reviews strategic
planning alternatives and advises the Board of Directors on financial policy,
issuance of securities and other high priority issues.
Members of the Board serve on at least one of the three committees described
below, except for directors who are also employees of the company, who do not
serve on Board committees beyond the executive committee. Each of the committees
is governed by a written charter; copies of each committee charter are available
on our website at www.buiweb.com.
The Board of Directors' Audit Committee, which met four times in 2006, consists
of Messrs. Schaible, da Silva and Sauerteig and Ms. Burt and Ms. Klarides. The
Audit Committee is directly responsible for the appointment, compensation and
11
oversight of the independent accountants and reviews the degree of their
independence; approves the scope of the audit engagement, including the cost of
the audit; approves any non-audit services rendered by the accountants and the
fees therefor; reviews with the accountants and management our policies and
procedures with respect to internal accounting and financial controls and, upon
completion of an audit, the results of the audit engagement; and reviews
internal accounting and auditing procedures with our financial staff and the
extent to which recommendations made by the independent accountants have been
implemented.
The Board of Directors has determined that Mr. Schaible is an "audit committee
financial expert" as that term is defined in Item 407(d)(5) of Regulation S-K of
the Securities and Exchange Commission. All members of the Audit Committee are
independent under Rule 10A-3 of the Securities and Exchange Commission and
American Stock Exchange listing standards. The Audit Committee charter, as
amended on March 25, 2004, meets the current requirements of the Securities and
Exchange Commission and the American Stock Exchange.
The Board of Directors' Personnel and Pension Committee, which met four times in
2006, consists of Mssrs. Sauerteig and Shaible and Ms. Burt and Ms. Klarides.
The Personnel and Pension Committee reviews and makes all decisions regarding
executive officer compensation. It also proposes to the full Board overall
payroll pool levels and pension plan arrangements for all employees. These
functions are not delegated to our officers or to third-party professionals,
although the committee does from time to time, retain third-party consultants to
provide advice regarding compensation issues. The committee also considers input
from our executive officers, although final decisions regarding executive
compensation are made by the committee. All members of the Personnel and Pension
Committee are independent as defined American Stock Exchange listing standards.
The Committee on Directors, which met once in 2006, consists of Messrs. Cohen,
da Silva and Schaible and Ms. Burt. The Committee makes recommendations to the
Board of Directors for Board replacements when vacancies exist, and nominees for
the Board to be proposed at each annual meeting of shareholders. The Committee
on Directors also make recommendations regarding compensation levels for the
Board of Directors. All members of the Committee on Directors are independent as
defined American Stock Exchange listing standards. The Committee on Directors
does not set specific, minimum qualifications that nominees must meet in order
for the committee to recommend them to the Board of Directors, but rather
believes that each nominee should be evaluated based on his or her individual
merits, taking into account the needs of BIW Limited and the composition of the
Board of Directors. Members of the Committee on Directors discuss and evaluate
possible candidates in detail, and suggest individuals to explore in more depth.
Once a candidate is identified whom the committee wants to seriously consider
and move toward nomination, the Chairperson of the Committee on Directors enters
into a discussion with that nominee. The Committee on Directors will consider
nominees recommended by stockholders. The policy adopted by the Committee on
Directors provides that nominees recommended by stockholders are given
appropriate consideration in the same manner as other nominees. Stockholders who
wish to submit nominees for director for consideration by the Committee on
Directors for election at our 2008 Annual Meeting of stockholders may do so by
submitting in writing the names of such nominees with their qualifications and
biographical information forwarded to the Committee in care of the corporate
Secretary of BIW Limited between December 1, 2007 and December 31, 2007.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Directors and persons who are considered "officers" of the company for purposes
of Section 16(a) of the Securities Exchange Act of 1934 and greater than ten
percent stockholders (referred to as reporting persons) are required to file
12
reports with the Securities and Exchange Commission showing their holdings of
and transactions in Company securities. It is generally our practice to file the
forms on behalf of our reporting persons who are directors or officers. We
believe that all such forms have been timely filed for 2006.
CODE OF ETHICS
Our Board of Directors has approved a Code of Ethics in accordance with the
rules of the Securities and Exchange Commission and the American Stock Exchange
that governs the conduct of each of our employees and directors, including our
principal executive officer, principal financial officer, principal accounting
officer and controller. Our Code of Ethics is available on our website at
www.buiweb.com. Any amendments to or waivers of the Code of Ethics that apply to
our principal executive officer, principal financial officer or principal
accounting officer and that relates to any element of the definition of the term
"code of ethics," as the term is defined by the Securities and Exchange
Commission, will be posted on our website at www.buiweb.com. There are currently
no such amendments or waivers.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Our Personnel and Pension Committee (the "Committee"), which is comprised of
three independent non-employee directors, has formulated a compensation program,
the overall objective of which is to enable us to attract, retain and reward
capable executives and other employees who can contribute to the success of the
Company. Three key principles serve as the guiding framework for compensation
decisions designed to achieve that overall objective:
o Provide base compensation, pension benefits, and health and welfare
benefits that are competitive with similar water utility companies.
o Motivate senior executives to achieve annual and long-term business
goals by providing cash bonus and equity-based incentive
opportunities.
o Strive for fairness in administration by emphasizing performance -
related measures as the basis of compensation decisions.
Accordingly, we have designed a four-part executive compensation program
consisting of base salary, cash bonuses, equity awards, and pension and other
employment benefits, all as further described below. The Committee makes all
decisions regarding the compensation of the Named Executive Officers, and those
executives are not involved in the process of setting such compensation.
BASE SALARY. We seek to maintain levels of compensation that are competitive
with similar water utility companies to attract and retain talented executives.
Our philosophy regarding base salaries is conservative; we seek to maintain
salaries for the aggregate officer group at approximately the competitive
industry average. Periodic increases in base salary relate to individual
contributions evaluated against established objectives, length of service, and
the industry's pay practices. We have determined that the base salary for 2006
for our Chief Executive Officer and for the other executive officers was
generally at or below the competitive industry average.
CASH BONUSES. We reward exceptional performance by executives in a particular
year with discretionary cash bonuses. These bonuses are not part of an incentive
compensation plan that sets targets in advance, but are made on a discretionary
basis to individual officers in light of exceptional efforts in pursuing
corporate objectives.
13
LONG TERM INCENTIVES. We believe that a compensation program should align the
interests of executives with those of shareholders and allow executives to
potentially gain financially from stock price increases over the long-term.
Therefore, Company executives are eligible to receive stock options, giving them
the right to purchase shares of common stock at a specified price in the future.
We believe that the use of stock options as the basis for long-term incentive
compensation meets our compensation strategy and business needs by retaining key
employees, aligning their interests with those of shareholders and rewarding
long-term contributions to the Company. Ms. Henley-Cohn and Mr. Tomac do not
have outstanding options currently; the Committee believes that given Ms.
Henley-Cohn and Mr. Tomac's significant equity ownership that their interests
are well-aligned with shareholders.
OTHER BENEFITS. Our philosophy is to provide pension, health- and
welfare-oriented benefits to executives and employees that are competitive with
similar water utility companies, but to maintain a conservative posture relative
to executive benefits. Consistent with industry practices, we provide a company
automobile to certain executive officers.
GENERALLY. In setting overall compensation for executives, we consider the level
of each executive's equity ownership in deciding whether to make additional
equity grants and adjustments to base salary. Due to her significant equity
ownership, the Chief Executive Officer's base salary is set below the industry
average. Otherwise, each element of compensation is set to be competitive with
similar water utility companies, and individual performance for the Named
Executive Officers is typically evaluated in terms of the Company's earnings per
share.
COMPARABLE COMPANIES. As noted above, a principal objective of the Company's
compensation program for executives is to be competitive with similar water
utility companies. The Committee evaluates data from a variety of sources, but
typically focuses on water utility companies based in Connecticut of comparable
size, including Torrington Water Company, Valley Water System, Avon Water
Company and Connecticut Water Company. The Committee carefully evaluates
compensation data regarding such comparable companies when an executive joins
the Company. The Committee also revisits such data from time to time in
considering adjustments to compensation, but factors individual performance more
heavily than comparable company data in making such adjustments.
TAX AND ACCOUNTING CONSIDERATIONS. Section 162(m) of the Internal Revenue Code
generally disallows a tax deduction to a public corporation for compensation
over $1 million paid to a corporation's chief executive officer and the four
other most highly compensated executive officers. Qualifying performance-based
compensation will not be subject to the cap if certain requirements are met. We
intend to structure the compensation of our executive officers in a manner that
should ensure that the Company does not lose any tax deductions because of the
$1 million compensation limit. The salaries for our highest paid executives are
established at levels approximating the average for companies of comparable size
in similar industries and are not expected to approach $1 million in the
foreseeable future.
SUMMARY COMPENSATION
The following table shows all compensation paid or granted, during or with
respect to the 2006 fiscal year to the President and Chief Executive Officer for
services rendered to BIW Limited and its subsidiaries during 2006. (Persons in
this group are referred to individually as a "named executive officer" and
collectively as the "named executive officers," and the titles listed are the
titles held as of the end of the 2006 fiscal year.)
SUMMARY COMPENSATION TABLE
14
- ------------------------------------------------------------------------------------------------------------------
Change in Pension Value &
Non-qualified Deferred All Other
Bonus Compensation Earnings Compensation Total
Name and Principal Position Year Salary($) ($) ($) ($)(a) ($)
- ----------------------------- ---------- ----------- ------- ---------------------------- -------------- ---------
John S. Tomac, 2006 155,493 $500 6,473 26,630 189,096
President and Treasurer
- ----------------------------- ---------- ----------- ------- ---------------------------- -------------- ---------
Betsy Henley-Cohn, 2006 84,365 - 4,263 5,062 93,690
Chief Executive Officer
- ------------------------------------------------------------------------------------------------------------------
(a) Amounts shown consist of a car allowance, which includes gas, maintenance,
insurance and depreciation in the amount of $16,416 for Mr. Tomac, payment of
life insurance premiums of $902 for Mr. Tomac, and a Company 401(k) match in the
amount of $9,312 for Mr. Tomac and $5,062 for Ms. Henley-Cohn.
GRANTS OF PLAN-BASED AWARDS
The Company did not make any plan-based equity or non-equity grants during the
2006 fiscal year to the named executive officers.
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED
AWARDS TABLE
Effective October 1, 1998, we entered into an employment agreement with our
President, John S. Tomac. The agreement has a three-year term with automatic
three-year extensions, unless either party gives written notice that the
agreement will no longer be automatically extended. No notice was given in 2001
or 2004 and this agreement was extended to September 30, 2007. The employment
agreement terminates upon the death of Mr. Tomac or upon mutual agreement of the
parties. The agreement can be terminated by us: (i) for "cause" (as defined in
the employment agreement), (ii) in the event Mr. Tomac becomes disabled, or
(iii) without cause, during a six month period during each term; provided
however, that if Mr. Tomac is terminated without cause during such six month
period, he is entitled to receive a severance package equal to his base salary
plus benefits for one year from the date of such termination. Mr. Tomac may
terminate the agreement in the event of a Change of Control (as defined in the
employment agreement) or in the event that we breach this agreement. (See
addition detail under the heading "Potential Payments Upon Termination or Change
in Control" in this Item 11 below.)
The employment agreement provides for an annual salary of $100,000 and provides
that the Board of Directors shall review Mr. Tomac's salary annually. Mr.
Tomac's annual salary for 2006 was $155,493. In addition, we agree to provide an
automobile for Mr. Tomac and pay all expenses in connection with the operation
of the vehicle. Pursuant to the employment agreement, Mr. Tomac is entitled to
four weeks paid vacation, to be taken each year and is also entitled to
participate in any employee welfare and retirement plan or program available
generally to our employees including hospital, medical and dental benefits.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
15
The named executive officers did not hold any unexercised options to purchase
BIW Limited common stock, nor any BIW Limited stock that had not vested as of
the end of the 2006 fiscal year.
OPTION EXERCISES AND STOCK VESTED
The named executive officers did not hold any unexercised options during 2006,
and therefore, no options to purchase common stock were exercised in 2006 by
these persons.
PENSION BENEFITS
The following table shows information as of December 31, 2006 with respect to
each plan that provides retirement-based payments or other benefits to the named
executive officers.
PENSION BENEFITS TABLE
- ---------------------------------------------------------------------------------------------------------------------------------
Number of Years of Present Value of Accumulated Payments During Last
Name Plan Name Credited Service(#) Benefit($) Fiscal Year($)
- ------------------------ -------------------------- ---------------------- ---------------------------- --------------------
John S. Tomac, President Birmingham Utilities, Inc. 9 58,260 0
and Treasurer Noncontributory Defined
Benefit Plan
- ------------------------ -------------------------- ---------------------- ---------------------------- --------------------
Betsy Henley-Cohn, Chief Birmingham Utilities, Inc. 13 55,414 0
Executive Officer Noncontributory Defined
Benefit Plan
- --------------------------------------------------------------------------------------------------------------------------------
Birmingham Utilities, Inc., a wholly-owned subsidiary of the Company, has a
noncontributory defined benefit plan, which covers substantially all of its
employees. The retirement plan generally provides a retirement benefit based
upon the participant's years of credited service and his or her final average
earnings, with final average earnings consisting of the total compensation
(including salary, bonus and overtime earnings) of the participant during the
five years of highest total compensation of the participant in the ten (10)
years preceding the participant's retirement or termination date. Retirement
benefits are payable either as a straight life annuity, a joint and survivor
annuity or in other optional forms. Normal retirement is at age 65, but certain
early retirement benefits may be payable to participants who have attained age
55 and completed ten (10) years of continuous service, and survivor benefits may
be payable to the surviving spouse of a vested participant who dies prior to
early or normal retirement. A participant's benefit under the retirement plan
vests after five years of credited service, all benefits funded by Birmingham
Utilities, Inc. are based upon actuarial computations, and no contributions are
made by participants.
ASSUMPTIONS
The information contained in the Company's 2006 Annual Report under the heading
"Note 13: Employee Benefits" is incorporated herein by reference.
NONQUALIFIED DEFINED CONTRIBUTION AND OTHER NONQUALIFIED DEFERRED COMPENSATION
PLANS
The Company does not have any nonqualified defined contribution, nor any other
nonqualified deferred compensation plans.
16
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Mr. Tomac is party to an employment agreement that can be terminated by us: (i)
for "cause" (as defined in the employment agreement), (ii) in the event Mr.
Tomac becomes disabled, or (iii) without cause, during a six month period during
each term; provided however, that if Mr. Tomac is terminated without cause
during such six month period, he is entitled to receive a severance package
equal to his base salary plus benefits for one year from the date of such
termination. If Mr. Tomac had been terminated without cause as of December 31,
2006, he would have been entitled to receive $155,493. Mr. Tomac may terminate
the agreement in the event of a Change of Control (as defined in the employment
agreement) or in the event that we breach this agreement. If Mr. Tomac elects to
terminate the agreement upon a Change of Control, he will be entitled to receive
a lump sum payment, payable within 90 days of making the election, equal to two
times the greater of (x) his compensation during the last full fiscal year
immediately preceding the election and (y) his average annual compensation with
respect to the two most recent fiscal years preceding such election. Mr. Tomac's
compensation for purposes of the foregoing calculation includes base salary,
bonus and any other cash incentives paid to him. If Mr. Tomac does not elect to
terminate the agreement upon a Change of Control, the agreement will continue in
effect for a period of three years from the Change of Control and then
terminate. If Mr. Tomac had been entitled to elect to receive a payment
following a change of control as of December 31, 2006, he would have been
entitled to receive $310,986.
COMPENSATION OF DIRECTORS
The Company's non-employee directors received an annual fee of $6,000.
Additionally, each non-employee director received $750 for each full Board
meeting attended and $600 for each Committee meeting attended. Ms. Henley-Cohn
and Mr. Tomac received no separate compensation for their service as directors.
Directors are eligible to receive options pursuant to our 2000 Stock Option
Plan. Options were granted to one director in 2006, Juri Henley-Cohn.
The following table shows all compensation paid or granted, during or with
respect to the 2006 fiscal year to each of the non-employee directors for
services rendered to BIW Limited and its subsidiaries during 2006.
2006 DIRECTOR COMPENSATION
- -----------------------------------------------------------------------------
Fees Earned
or Paid in
Name (1) Cash($) Option Awards Total($)
- ----------------------- ----------------- -------------------- --------------
Mary Jane Burt $17,100 $17,100
- ----------------------- ----------------- -------------------- --------------
James E. Cohen 14,100 14,100
- ----------------------- ----------------- -------------------- --------------
Alvaro da Silva 11,400 11,400
- ----------------------- ----------------- -------------------- --------------
Juri Henley-Cohn 13,500 $14,832 28,332
- ----------------------- ----------------- -------------------- --------------
Themis Klarides 15,300 15,300
- ----------------------- ----------------- -------------------- --------------
B. Lance Sauerteig 17,100 17,100
- ----------------------- ----------------- -------------------- --------------
Kenneth E. Schaible 14,700 14,700
- -----------------------------------------------------------------------------
(1) Our non-employee directors are eligible to receive options under our 2000
Stock Option Plan. One grant of 2,500 options, which will be fully exercisable
as of August 1, 2008, was made to Juri Henley-Cohn. As of April 9, 2007, Ms.
Burt, Mr. da Silva, Ms. Klarides and Mr. Sauerteig held options to purchase
10,000 shares of BIW common stock, and Mr. Henley-Cohn held options to purchase
7,500 shares of BIW common stock.
17
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of our Personnel and Pension Committee have ever been an
officer or employee of the Company or had any relationship with the Company of
the type required to be disclosed under the rules of the SEC. There did not
exist during 2006 any relationship between an executive officer of the Company
and another entity with which a director of the Company was an executive
officer.
COMPENSATION COMMITTEE REPORT
Our Personnel and Pension Committee is comprised of three independent,
non-employee directors. The Personnel and Pension Committee consists of Mr.
Sauerteig, Ms. Burt and Ms. Klarides. As members of the Personnel and Pension
Committee, it is our responsibility to administer BIW Limited's executive
compensation programs, monitor corporate performance and its relationship to
compensation of executive officers, and make appropriate recommendations
concerning matters of executive compensation.
In this context, the Personnel and Pension Committee has reviewed and discussed
with Management the section of this annual report on Form 10-K above entitled
"Compensation Discussion and Analysis". Based on this review and discussion, the
Personnel and Pension Committee recommended to the Board of Directors, and the
Board has approved, that the Compensation Discussion and Analysis be included in
BIW Limited's annual report on the Form 10-K for the year ended December 31,
2006.
Personnel and Pension Committee
of the Board of Directors
- B. Lance Sauerteig
- Themis Klarides
- Mary Jane Burt
- Kenneth Schaible
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tables set forth information as of April 9, 2007 with respect to
the only persons known to us to be the beneficial owners of more than five
percent (5%) of the outstanding shares of our common stock as of that date
(1,674,579 shares).
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP PERCENT OF CLASS
- ----------------- -------------------- ----------------
Group consisting of Betsy Henley-Cohn,
Cohn Realty & Investment, Betsy Cohn
Spray Trust and Betsy Cohn Income Trust,
80 Hamilton Street, New Haven, 215,724(1) 12.88%
Connecticut 06511
(1) Of the 215,724 shares owned by this Group, Betsy Henley-Cohn owns 20,000
shares directly; 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 69,200 shares;
Juniper LLC, Betsy Henley-Cohn and Juri Henley-Cohn, as trustees for Jesse
Henley-Cohn, have beneficial ownership of 46,028 shares; Betsy Cohn Spray Trust
has beneficial ownership of 59,176 shares; Betsy Cohn Income Trust has
18
beneficial ownership of 21,320 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.
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth information as of April 9, 2007 with respect to
shares of BIW Limited common stock beneficially owned by the Company's executive
officers and directors. The Company is not aware of any arrangements that may
result in a change of control of the Company at any subsequent date.
- ------------------------------------------------------------------------------
Common Shares Beneficially Percent
Name Owned As of April 9, 2007(1) of Class(2)
- ---------------------------------- ----------------------------- -------------
Mary Jane Burt 19,586(3) 1.16%
James E. Cohen 80,296(4) 4.79%
Betsy Henley-Cohn 215,724(5) 12.88%
Juri Henley-Cohn 70,852(6) 4.23%
Alvaro da Silva 15,315(7) *
Themis Klarides 10,200 *
B. Lance Sauerteig 10,400 *
Kenneth E. Schaible 10,460(8) *
John S. Tomac 11,215 *
Executive Officers and Directors
as a group, 9 in number 398,02(9) 23.76%
- ------------------------------------------------------------------------------
* Less than 1%
(1) Includes options to purchase shares of common stock exercisable within 60
days of April 9, 2007, as follows: Mr. da Silva, 10,000; Mr. Henley-Cohn 3,750,
Mr. Sauerteig, 10,000; Mr. Schaible, 2,500; Ms. Burt, 10,000 and Ms. Klarides
10,000.
(2) For the purpose of calculating the percentage of common stock beneficially
owned (a) by the individual persons listed in the table, the number of options
held by such person is included in both the number of shares beneficially owned
by the person and in the total number of shares outstanding in the class with
respect to the individual person's percentage calculation, and (b) by the
directors and officers as a group, the total number of shares beneficially owned
by the group and the total number of shares outstanding includes the 46,250
shares issuable upon the exercise of options exercisable by all persons in the
group within 60 days of April 9, 2007.
(3) Includes 1,586 shares held for Ms. Burt's children.
(4) Includes 64,696 shares held by Mr. Cohen as Trustee for the David B. Cohen
Family Trust, and 3,600 shares held in a brokerage custodial account for Mr.
Cohen's benefit.
(5) Ms. Henley-Cohn is a member of the shareholder group described in the
preceding table. The 215,724 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.
(6) Includes 46,028 shares beneficially owned by Juniper LLC, Betsy Henley-Cohn
and Juri Henley-Cohn, as trustees for Jesse Henley-Cohn. In addition to the
21,074 shares held by him directly, Mr. Henley-Cohn is one of the
19
beneficiaries of (i) the trusts held by Cohn Realty & Investment which has
beneficial ownership of 69,200 shares, (ii) the Betsy Cohn Spray Trust which has
beneficial ownership of 59,176 shares, and (iii) the Betsy Cohn Income Trust
which has beneficial ownership of 21,320 shares. Mr. Henley-Cohn however, does
not have either voting or dispositive power with respect to any such shares.
(7) Includes 2,000 shares owned with Cynthia da Silva.
(8) Includes 1,000 shares owned with Dorothy Schaible.
(9) The 46,028 shares beneficially owned by Juniper LLC, Betsy Henley-Cohn and
Juri Henley -Cohn, as trustees for Jesse Henley-Cohn were only counted once in
this total.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information regarding our equity compensation plans
as of December 31, 2006:
- ------------------------------------------------------------------------------------------------------
Number of securities
Number of Securities remaining available
to be issued Weighted-average for future issuance
upon exercise of exercise price of under equity
Plan Category outstanding options outstanding options compensation plans
- ------------------------------- ------------------------- --------------------- ----------------------
Equity compensation plans
approved by security
holders 62,000 $16.33 per share 61,000
- ------------------------------- ------------------------- --------------------- ----------------------
Equity compensation plans
not approved by security
holders
-- -- -- -
- ------------------------------- ------------------------- --------------------- ----------------------
Total 62,000 $16.33 per share 61,000
- ------------------------------------------------------------------------------------------------------
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The Company has not during the 2006 fiscal year, and does not contemplate
currently, any transaction with a related person in an amount exceeding
$120,000.
Other than set forth in our Code of Business Conduct and Ethics, our board does
not have a specific policy regarding review of transactions involving directors,
management or other related parties. However, we discourage such transactions
and have historically limited the approval of such transactions to specific and
rare instances with the full disclosure to, and approval of, the disinterested
members of our board.
Betsy Henley-Cohn and John S. Tomac are employee directors of the Board. Juri
Henley-Cohn is not an independent director since he has an immediate family
member who is employed by the Company as an executive officer. The Board of
Directors has determined affirmatively that Mary Jane Burt, James E. Cohen,
Alvaro da Silva, Themis Klarides, B. Lance Sauerteig and Ken Schaible are
independent directors based upon listing standards of the American Stock
20
Exchange and none of these directors has a relationship that would interfere
with their ability to exercise independent judgment when carrying out director
responsibilities.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
The aggregate fees billed to BIW Limited by our independent accountants Dworken,
Hillman, LaMorte & Sterczala, P.C. for professional services rendered in
connection with the audit of our annual financial statements for the 2005 and
2006 fiscal years and the reviews of the interim financial statements included
in our Quarterly Reports on Form 10-Q for such years were $104,065 and $93,800,
respectively.
TAX FEES
The aggregate fees billed to BIW Limited for tax-related services in 2005 and
2006 by our independent accountants Dworken, Hillman, LaMorte & Sterczala, P.C.
were $12,500 and $15,000, respectively.
ALL OTHER FEES
During 2005 and 2006, no services other than those described above were rendered
by Dworken, Hillman, LaMorte & Sterczala, P.C.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy requiring pre-approval by the committee
before Dworken, Hillman, LaMorte & Sterczala, P.C. is engaged for any audit or
non-audit services. The Audit Committee receives detailed information regarding
each service for which the Company seeks to hire an accounting firm. The Audit
Committee makes such decisions independent from Company management. After review
and discussion, the Audit Committee has concluded that the provision of
non-audit services by Dworken, Hillman, LaMorte & Sterczala, P.C. to BIW Limited
during 2006 was compatible with maintaining Dworken, Hillman, LaMorte &
Sterczala, P.C. auditor independence.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following statements are filed as part of this report: Page in
Annual Report*
Consolidated Statements of Income and Retained
earnings for the three years ended
December 31, 2006 14
Consolidated Balance Sheets at December 31, 2006
and 2005 13
Consolidated Statements of Cash Flows for the three
years ended December 31, 2006 15
Notes to the Consolidated Financial Statements 16-28
Report of Independent Registered Public Accounting Firm 12
* Incorporated by reference from the indicated pages of the 2006 Annual Report.
(b) Exhibits
21
(3) Certificate of Incorporation and By-Laws of BIW Limited. Incorporated herein
by reference to Exhibits C and D of the prospectus contained in the Registration
Statement of BIW Limited on Form S-4 (Reg. No. 333-84508) dated May 20, 2002.
(4) Instruments Defining Rights of Security Holders
(4.1) Bond Purchase Agreement dated as of April 15, 2004 between Birmingham
Utilities, Inc., and General Electric Capital Assurance Company. Incorporated
herein by reference to Exhibit 4.1 of the Form 10-Q of BIW Limited for the
period ended June 30, 2004.
(4.2) Eighth Supplemental Indenture dated as of April 15, 2004 between
Birmingham Utilities, Inc., and US Bank National Association. Incorporated
herein by reference to Exhibit 4.2 of the Form 10-Q of BIW Limited for the
period ended June 30, 2004.
(4.3)First Modification and Reaffirmation Agreement by and between Birmingham
Utilities, Inc., Birmingham H2O Services, Inc., and Citizens Bank of
Connecticut, dated December 30, 2003. Incorporated herein by reference to
Exhibit 4.2 of BIW's Annual Report on Form 10-K for the period ended December
31, 2003.
(4.4) Birmingham Utilities, Inc. Dividend Reinvestment Plan, adopted by its
Board of Directors on September 13, 1994. Incorporated herein by reference to
Exhibit 4 (iii) of Birmingham Utilities, Inc.'s Annual Report on Form 10-K for
the period ended December 31, 1994.
(4.5) Third Modification and Reaffirmation Agreement. Incorporated herein by
reference to Exhibit 10.1 of BIW Limited's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2006.
(4.6) Fourth Modification and Reaffirmation Agreement. Incorporated herein by
reference to Exhibit 10.1 of BIW Limited's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2006.
(4.7) Commercial Revolving Promissory Note. Incorporated herein by reference to
Exhibit 10.1 of BIW Limited's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2006.
(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 to Exhibit
(10.1) of the Annual Report on Form 10-K of Birmingham Utilities, Inc. for the
period ended December 31, 1999.
(10.2) Agreement to Purchase Water by and between The Ansonia Derby Water
Company and South Central Connecticut Regional Water Authority dated November
30, 1984 for the sale by the Authority to the company of water and for the
construction of the pipeline and pumping and storage facilities in connection
therewith by the Authority at the expense primarily of the Company and
Bridgeport Hydraulic Company. Incorporated herein by reference to Exhibit (10.2)
of the Annual Report on Form 10-K of Birmingham Utilities, Inc. for the period
ended December 31, 1996.
(10.3) Employment Agreement between Birmingham Utilities, Inc. and John S. Tomac
dated October 1, 1998. Incorporated herein by reference to Exhibit (10.3) of
22
the Annual Report on Form 10-K of Birmingham Utilities, Inc. for the period
ended December 31, 1998.
(10.4) Birmingham Utilities, Inc. 1994 Stock Incentive Plan adopted by its Board
of Directors on September 13, 1994. Incorporated herein by reference to 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. 1994 Stock Option Plan for Non-Employee
Directors adopted by its Board of Directors on September 13, 1994. Incorporated
herein by reference to Exhibit (10.10) of Birmingham Utilities, Inc.'s Annual
Report on Form 10-K for the period ended December 31, 1994.
(10.6) Birmingham Utilities, Inc. 1998 Stock Incentive Plan adopted by its Board
of Directors on December 9, 1998. Incorporated herein by reference to Exhibit
(10.8) of Birmingham Utilities, Inc.'s Annual Report on Form 10-K for the period
ended December 31, 1999.
(10.7) Birmingham Utilities, Inc. 2000 Stock Option Plan for non-employee
Directors adopted by its Board of Directors on September 6, 2000. Incorporated
herein by reference to Exhibit (10.9) of Birmingham Utilities, Inc.'s Annual
Report on Form 10-K for the period ended December 31, 2000.
(10.8) BIW Limited's Stock Option Agreement Form for grants pursuant to 2000
Stock Option Plan for non-employee Directors. Incorporated herein by reference
to Exhibit (10.8) of BIW's Annual Report on Form 10-K for the period ended
December 31, 2004.
(10.9) BIW Limited's Stock Option Agreement Form for grants pursuant to 1998
Stock Incentive Plan. Incorporated herein by reference to Exhibit (10.9) of BIW
Limited's Annual Report on Form 10-K for the period ended December 31, 2004.
(13) 2006 Annual Report to Shareholders
(21) Subsidiaries of the Registrant
(23) Consent of Independent Registered Public Accounting Firm
(31.1) Certification of the Chief Executive Officer Pursuant to Securities
Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(31.2) Certification of the Chief Financial Officer Pursuant to Securities
Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
(32) Certification of the Chief Executive Officer and Chief Financial Officer
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(c) Financial Statement Schedules None.
23
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.
BIW Limited
(Registrant)
BY: /s/ Betsy Henley-Cohn
------------------------------
Betsy Henley-Cohn
Chairwoman of the Board
and Chief Executive Officer
Date: April 30, 2007
24
BIW Limited
INDEX TO EXHIBITS
Item No.
(13) 2006 Annual Report to Shareholders
(21) Subsidiaries of the Registrant
(23) Consent of Independent Registered Public Accounting Firm
(31.1) Certification of the Chief Executive Officer Pursuant to Securities
Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(31.2) Certification of the Chief Financial Officer Pursuant to Securities
Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
(32) Certification of the Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
25