SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File No. 0-690
THE YORK WATER COMPANY
(Exact name of Registrant as specified in its Charter)
PENNSYLVANIA 23-1242500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
130 East Market Street, York, Pennsylvania 17401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including Area Code 717-845-3601
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $10 par value 631,585 Shares outstanding
as of March 31, 1995<PAGE>
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet
(Unaudited)
As Of As of
Mar.31, 1995 Dec. 31, 1994
UTILITY PLANT, at original cost $84,628,027 $83,642,650
Less-Reserve for depreciation 10,936,411 10,535,512
73,691,616 73,107,138
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$51,480 in 1995 and $50,312 in 1994 428,995 430,162
CURRENT ASSETS:
Receivables, less reserves of $90,000
in 1995 and in 1994 2,112,829 2,211,288
Materials and supplies, at cost
(first-in, first-out) 244,159 298,356
Prepaid expenses 50,250 111,278
Deferred income taxes 63,187 64,877
2,470,425 2,685,799
OTHER LONG-TERM ASSETS:
Prepaid pension cost 1,442,946 1,402,946
Deferred debt expense 431,879 445,713
Deferred rate case expense 115,523 139,864
Notes receivable 1,139,344 1,155,753
Deferred regulatory assets 6,980,756 6,885,508
Other 706,745 714,447
10,817,193 10,744,231
$87,408,229 $86,967,330
<PAGE>
THE YORK WATER COMPANY
Balance Sheet
(Unaudited)
As Of As Of
Mar.31, 1995 Dec. 31, 1994
CAPITALIZATION
Common stock $ 6,315,845 $ 6,296,836
Capital surplus 13,245,218 13,146,153
Earnings retained in the business 1,804,285 1,808,925
21,365,348 21,251,914
LONG-TERM DEBT
6.25% Ind. Dev. Auth. Rev. Refund
Bonds, due 2000 4,300,000 4,300,000
10.05% Senior Notes, Series C,
due 2020 6,500,000 6,500,000
10.17% Senior Notes, Series A,
due 2019 6,000,000 6,000,000
9.6% Senior Notes, Series B,due 2019 5,000,000 5,000,000
8.43% Senior Notes,Series D,due 2022 7,500,000 7,500,000
4.75% Ind. Dev. Auth. Rev.
Refunding Bonds, due 2009 2,700,000 2,700,000
32,000,000 32,000,000
CURRENT LIABILITIES
Short-term borrowings 1,324,000 1,302,000
Accounts payable 55,978 891,034
Dividends payable 465,566 464,295
Accrued taxes 770,214 331,847
Advance water revenues 186,246 169,110
Accrued interest 501,690 680,240
Other accrued expenses 1,194,971 991,079
4,498,665 4,829,605
DEFERRED CREDITS
Customers' advances for construction15,744,484 15,037,501
Contributions in aid of construction 4,375,345 4,375,345
Deferred income taxes 7,948,986 7,969,029
Deferred regulatory liabilities 1,475,401 1,503,936
29,544,216 28,885,811
$87,408,229 $86,967,330<PAGE>
THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Ended March 31
1995 1994
WATER OPERATING REVENUES
Residential $2,095,687 $1,984,738
Commercial and industrial 1,290,280 1,193,168
Other 309,041 282,269
3,695,008 3,460,175
OPERATING EXPENSES
Operation and maintenance 754,120 786,081
Administrative and general 838,809 856,751
1,592,929 1,642,832
Depreciation 377,480 332,084
Taxes other than income taxes 249,537 243,122
Federal and state income taxes 329,654 264,715
2,549,600 2,482,753
Operating Income 1,145,408 977,422
INTEREST EXPENSE AND
OTHER EXPENSE/(INCOME)
Interest on long-term debt 693,175 734,237
Interest on interim bank loans 27,051 1,942
Allowance for funds used during
construction (79,257) (8,418)
Gain on sale of land - (215,417)
Other income, net (57,635) (138,652)
583,334 373,692
Net Income $ 562,074 $ 603,730
Earnings Per Share $0.89 $0.97
Cash Dividends Per Share $0.90 $0.90<PAGE>
<TABLE>
THE YORK WATER COMPANY
Statements of Cash Flows
<CAPTION> (Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
March 31, 1995 March 31, 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 562,074 $ 603,730
Adjustments to reconcile net income to
net cash provided by operating activities
Gain on sale of land - (215,417)
Depreciation 377,480 332,084
Provision for losses on accounts receivable 22,500 22,500
(Decrease) increase in deferred income taxes
(including regulatory assets and liabilities) (142,136) 165,762
Changes in assets and liabilities:
Decrease in accounts receivable 75,959 17,497
Decrease in materials and supplies 54,197 26,595
Decrease in prepaid expenses 21,028 31,941
Decrease in accounts payable, accrued expenses
and other liabilities (612,757) (431,651)
Increase (decrease) in accrued interest and taxes 259,817 (88,730)
Decrease in other assets 73,909 13,007
Net cash provided by operating activities 692,071 477,318
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of temporary investments - (8,072)
Maturities of temporary investments - 1,007,310
Proceeds from the sale of land - 249,000
Costs incurred relating to the sale of land - (33,583)
Construction expenditures (988,823) (365,885)
Customers' advances for construction and
contributions in aid of construction 706,983 131,670
Net cash (used in) provided by investing activities (281,840) 980,440
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line-of-credit agreements 22,000 (452,000)
Issuance of common stock under dividend
reinvestment plan 100,995 97,016
Issuance of common stock under employee stock
purchase plan 17,079 14,685
Dividends paid (566,714) (559,637)
Decrease in notes receivable 16,409 5,721
Net cash (used in) financing activities (410,231) (894,215)
Net increase in cash and cash equivalents - 563,543
Cash and cash equivalents at beginning of period - 42,634
Cash and cash equivalents at end of period $ - $ 606,177
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 792,468 $ 914,410
Income taxes 43,219 104,612
/TABLE
<PAGE>
THE YORK WATER COMPANY
Notes to Interim Financial Statements
1. Interim Financial Information
The interim financial statements are unaudited but, in the
opinion of management, reflect all adjustments necessary for a
fair presentation of results for such periods. These financial
statements should be read in conjunction with the financial
statements and notes thereto contained in the Company's Annual
Report to Shareholders for the year ended 1994.
2. Earnings Per Share
Earnings per share for the three months ended March 31, 1995 and
1994 were based on weighted average shares outstanding of
631,121 and 623,324, respectively.
<PAGE>
THE YORK WATER COMPANY
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Three Months Ended March 31, 1995 Compared
with Three Months Ended March 31, 1994
Net income for the three months ended March 31, 1995 was $562,074,
a decrease of $41,656 compared to the three months ended March 31,
1994.
Operating revenues for the three months ended March 31, 1995
increased $234,833 (6.8%) compared to the three months ended March
31, 1994. The revenue increase resulted primarily from an increase
in rates of 3.7% approved by the Pennsylvania Public Utility
Commission (PPUC) effective September 23, 1994 and an increase in
the volume of water sold as a result of adding 1,104 customers
since March 31, 1994.
Operation and maintenance expenses for the three months ended March
31, 1995 decreased $31,961 (4.1%) compared to the three months
ended March 31, 1994 generally due to operation and maintenance
expenses associated with the abnormal freezing weather which
occurred during the three months ended March 31, 1994.
Interest on long-term debt for the three months ended March 31,
1995 decreased $41,062 (5.6%) compared to the three months ended
March 31, 1994. The decrease in interest on long-term debt is
primarily related to the issuance of $2,700,000 4.75% Revenue
Refunding Bonds to replace a like amount of bonds with an interest
rate of 7.0% during the first quarter of 1994.<PAGE>
During the three months
ended March 31, 1994, the Company had a gain on the sale of one parcel
of land of $215,417 ($124,759 after tax).
Rate Developments
Within the last several years the Company has filed written
applications for rate increases with the PPUC and has been granted
rate relief as a result of such requests. The most recent formal
rate request was filed by the Company on April 29, 1994 seeking a
6.7% increase in annual revenues. Effective September 23, 1994,
the PPUC authorized an increase in rates designed to produce
approximately $550,000 in additional annual revenues, an increase
of 3.7%.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
During the first three months of 1995, the per capita volume of
water sold did not significantly change compared to the first three
months of 1994. The Company does not anticipate any change in the
level of water usage which would have a material impact on future
results of operations.
During the three months ended March 31, 1995, the Company had
$988,823 of construction expenditures. The Company financed such
expenditures through internally generated funds, customers'
advances and proceeds from the issuance of common stock under its
dividend reinvestment plan (stock issued in lieu of cash dividends)
and employee stock purchase plan and short-term borrowings.
The Company anticipates annual construction expenditures for 1995
and 1996 of approximately $4,491,000 and $3,645,000, respectively.
The Company plans to finance such expenditures with internally
generated funds, customers' advances short-term borrowings and
proceeds from the issuance of common stock under its dividend
reinvestment plan (stock issued in lieu of cash dividends) and
employee stock purchase plan.
The Company anticipates that it will submit an application in the
future with the PPUC proposing increases in rates to provide a fair
rates of return on the capital expenditures associated with its
1995 and 1996 construction projects.
During three months ended March 31, 1995, net cash used in
investing and financing activities exceeded net cash provided by
operating activities. The Company anticipates that during the
remainder of 1995 net cash used in investing and financing
activities will again exceed net cash provided by operating
activities. Customers' advances, borrowings against the Company's
lines of credit and proceeds from the issuance of common stock
under its dividend reinvestment plan (stock issued in lieu of cash
dividends) and employee stock purchase plan are used to satisfy the
need for additional cash.
As of March 31,1995, current liabilities exceeded current assets by
$2,028,240. As of December 31, 1994, current liabilities exceeded
current assets by $2,143,806. Generally, the Company finances a
portion of its construction expenditures with borrowings against
its lines of credit until such borrowings reach an amount which
would justify issuing long-term debt. Accordingly, current
liabilities frequently exceed current assets on the Company's
balance sheets.
Short-term borrowings from lines of credit as of March 31, 1995 and
December 31, 1994 were $1,324,000 and $1,302,000, respectively.
The Company maintains lines of credit aggregating $10,000,000.
Loans granted under these lines bear interest based on the prime or
Libor rates. The Company is not required to maintain compensating
balances on its lines of credit.
During the three months ended March 31, 1995, the Company's
dividend payout ratios relative to net income and cash provided by
operating activities were 100.1% and 81.9%, respectively. The
Company believes that these payout ratios are appropriate for the
first quarter of 1995.
Shareholders investment as a percent of total capitalization was
40.0% as of March 31, 1995 compared with 39.9% as of December 31,
1994. This increase was the result of an increase in the amount of
shareholder equity.
The Company like all other businesses is affected by inflation most
notably by the continually increasing costs incurred to maintain
and expand its service capacity. The cumulative effect of
inflation results in significantly higher facility replacement
costs which must be recovered from future cash flows. The ability
of the Company to recover this increased investment in facilities
is dependent upon future revenue increases which are subject to
approval by the PPUC.
Impact of Recent Accounting Pronouncements
There are no issued but not effective accounting pronouncements of
the Financial Accounting Standards Board that would have a material
impact on the Company's financial position or results of
operations.
<PAGE>
THE YORK WATER COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of the
registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
THE YORK WATER COMPANY
/s/William T. Morris
William T. Morris
Principal Executive
Officer
Date: May 10, 1995
/s/Jeffrey S. Osman
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: May 10, 1995
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000108985
<NAME> YORK WATER COMPAMY
<S> <C>
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<PERIOD-END> MAR-31-1995
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<TOTAL-NET-UTILITY-PLANT> 73,691,616
<OTHER-PROPERTY-AND-INVEST> 428,995
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<TOTAL-ASSETS> 87,408,229
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<CAPITAL-SURPLUS-PAID-IN> 13,245,218
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