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, 1996 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 639,225 Shares outstanding
as of March 31, 1996
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet
(Unaudited)
As Of As of
Mar.31, 1996 Dec. 31, 1995
UTILITY PLANT, at original cost $89,379,798 $88,710,279
Less-Reserve for depreciation 12,307,773 11,890,730
77,072,025 76,819,549
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$56,549 in 1996 and $55,291 in 1995 424,922 426,180
CURRENT ASSETS:
Receivables, less reserves of
$90,000 in 1996 and in 1995 2,248,622 2,443,129
Recoverable income taxes - 96,123
Materials and supplies, at cost
(first-in, first-out) 279,896 299,637
Prepaid expenses 92,039 115,392
Deferred income taxes 61,377 61,377
2,681,934 3,015,658
OTHER LONG-TERM ASSETS:
Prepaid pension cost 1,562,062 1,530,238
Deferred debt expense 498,581 495,594
Deferred rate case expense 23,559 42,499
Notes receivable 1,024,617 1,046,118
Deferred regulatory assets 6,362,664 6,302,127
Other 842,657 781,743
10,314,140 10,198,319
$90,493,021 $90,459,706
THE YORK WATER COMPANY
Balance Sheet
(Unaudited)
As Of As Of
Mar.31, 1996 Dec. 31, 1995
CAPITALIZATION
Common stock $ 6,392,254 $ 6,373,743
Capital surplus 13,658,639 13,554,042
Earnings retained in the business 1,788,022 1,843,982
21,838,915 21,771,767
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 4,195,000 4,164,000
Accounts payable 176,897 342,610
Dividends payable 468,585 468,053
Accrued taxes 78,081 34,833
Advance water revenues 183,332 183,398
Accrued interest 505,273 697,261
Other accrued expenses 1,104,511 1,112,406
6,711,679 7,002,561
DEFERRED CREDITS
Customers' advances for construction15,945,869 15,913,616
Contributions in aid of construction 4,579,105 4,576,923
Deferred income taxes 7,976,055 7,753,441
Deferred regulatory liabilities 1,441,398 1,441,398
29,942,427 29,685,378
$90,493,021 $90,459,706
THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Ended March 31
1996 1995
WATER OPERATING REVENUES
Residential $2,202,573 $2,095,687
Commercial and industrial 1,151,396 1,290,280
Other 320,430 309,041
3,674,399 3,695,008
OPERATING EXPENSES
Operation and maintenance 784,023 754,120
Administrative and general 769,640 838,809
1,553,663 1,592,929
Depreciation 403,600 377,480
Taxes other than income taxes 258,005 249,537
Federal and state income taxes 270,468 329,654
2,485,736 2,549,600
Operating Income 1,188,663 1,145,408
INTEREST EXPENSE AND
OTHER EXPENSE/(INCOME)
Interest on long-term debt 679,738 693,175
Interest on interim bank loans 75,375 27,051
Allowance for funds used during
construction (35,114) (79,257)
Other income, net (49,010) (57,635)
670,989 583,334
Net Income $ 517,674 $ 562,074
Earnings Per Share $0.81 $0.89
Cash Dividends Per Share $0.90 $0.90<TABLE>THE YORK WATER COMPANY
Statements of Cash Flows
<CAPTION> (Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 517,674 $ 562,074
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 403,600 377,480
Provision for losses on accounts receivable 22,500 22,500
Increase (decrease) in deferred income taxes
(including regulatory assets and liabilities) 162,077 (142,136)
Changes in assets and liabilities:
Decrease in accounts receivable 172,007 75,959
Decrease in recoverable income taxes 96,123 -
Decrease in materials and supplies 19,741 54,197
(Increase) decrease in prepaid expenses and prepaid
pension costs (8,471) 21,028
Decrease in accounts payable, accrued expenses
and other liabilities (173,142) (612,757)
(Decrease) increase in accrued interest and taxes (148,740) 259,817
(Increase) decrease in other assets (18,073) 73,909
Net cash provided by operating activities 1,045,296 692,071
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (681,706) (988,823)
Customers' advances for construction and
contributions in aid of construction 34,435 706,983
Net cash used in investing activities (647,271) (281,840)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line-of-credit agreements 31,000 22,000
Issuance of common stock under dividend
reinvestment plan 104,697 100,995
Issuance of common stock under employee stock
purchase plan 18,411 17,079
Dividends paid (573,634) (566,714)
Decrease in notes receivable 21,501 16,409
Net cash used in financing activities (398,025) (410,231)
Net increase in cash and cash equivalents - -
Cash and cash equivalents at beginning of period - -
Cash and cash equivalents at end of period $ - $ -
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest, net of amounts capitalized $ 905,735 $ 792,468
Income taxes 86,735 43,219
</TABLE>
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 1995.
2. Earnings Per Share
Earnings per share for the three months ended March 31, 1996 and 1995 were
based on weighted average shares outstanding of 638,770 and 631,121,
respectively.
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, 1996 Compared
with Three Months Ended March 31, 1995
Water operating revenues for the three months ended March 31, 1996 decreased
$20,609 or .6% compared to the three months ended March 31, 1995. The decrease
resulted primarily from lower consumption in the commercial and industrial
sectors during the first three months of 1996 compared to the same period in
1995.
Operating expenses, exclusive of depreciation and taxes, for the three months
ended March 31, 1996 decreased $39,266 or 2.5%. The decline in expense was
primarily due to reduced cable meter reading charges and a retroactive charge
for postretirement benefits in 1995 resulting from the implementation of a
new accounting standard. The decline was partially offset by an increase in
maintenance expenses for structures and equipment.
Depreciation expense for the three months ended March 31, 1996 increased
$26,120 or 6.9% over 1995 as a result of increased plant investment
throughout 1995.
Federal and state income taxes for the three months ended March 31, 1996
decreased $59,186 or 18% compared to the three months ended March 31, 1995
principally as a result of a decrease in taxable income. In addition, a 1%
reduction in the state income tax rate accounts for some of the decrease in
taxes.
Interest on long-term debt for the three months ended March 31, 1996
decreased $13,437 or 1.9% compared to the three months ended March 31, 1995.
The decrease was related to the issuance of $4,300,000 5% Revenue Refunding
Bonds to replace a like amount of bonds with an interest rate of 6.25% during
the fourth quarter of 1995.
Interest on short-term debt for the three months ended March 31, 1996
increased $48,324 when compared to the same period in 1995. The increase is
due primarily to an increase in short-term debt outstanding during the three
months ended March 31, 1996.
Allowance for funds used during construction for the three months ended March
31, 1996 decreased $44,143 or 55.7% when compared to the three months ended
March 31, 1995. The decrease was due to the completion of a major
construction project during 1995. The 1996 allowance was at a more normal
level.
Rate Developments
The Company is in the process of filing a written application for a rate
increase with the PPUC. The application is expected to be submitted on
May 9, 1996.
Liquidity and Capital Resources
During the first three months of 1996, the per capita volume of water sold
did not significantly change compared to the first three months of 1995. 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, 1996, the Company had $681,706 of
construction expenditures. The Company financed such expenditures through
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 annual construction expenditures for 1996 and 1997 of
approximately $5,457,000 and $3,662,000, respectively. The Company plans to
finance such expenditures with a common stock subscription, 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 will be submitting an application with the PPUC proposing
increases in rates to provide a fair rate of return on the capital
expenditures associated with its 1996 and 1997 construction projects.
During the first quarter of 1996, net cash used in investing and financing
activities exceeded net cash provided by operating activities. The Company
anticipates that during the remainder of 1996 net cash used in investing and
financing activities will again exceed net cash provided by operating
activities. Borrowings against the Company's lines of credit, proceeds from
the issuance of common stock under its dividend reinvestment plan and
employee stock purchase plan, a common stock subscription and customers'
advances are used to satisfy the need for additional cash.
The York Water Company
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
As of March 31, 1996, current liabilities exceeded current assets by
$4,029,745. As of December 31, 1995, current liabilities exceeded current
assets by $3,986,903. 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 permanent
financing. Accordingly, current liabilities frequently exceed current assets
on the Company's balance sheets. Short-term borrowings from lines of credit
as of March 31, 1996 were $4,195,000. The Company maintains lines of credit
aggregating $11,000,000. Loans granted under these lines of credit bear
interest based on the prime or Libor rates. The Company is not required to
maintain compensating balances on its lines of credit.
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
William T. Morris
Principal Executive
Officer
Date: May 10, 1996
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000108985
<NAME> YORK WATER COMPANY
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
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<TOTAL-NET-UTILITY-PLANT> 77,072,025
<OTHER-PROPERTY-AND-INVEST> 424,922
<TOTAL-CURRENT-ASSETS> 2,681,934
<TOTAL-DEFERRED-CHARGES> 6,884,804
<OTHER-ASSETS> 3,429,336
<TOTAL-ASSETS> 90,493,021
<COMMON> 6,392,254
<CAPITAL-SURPLUS-PAID-IN> 13,658,639
<RETAINED-EARNINGS> 1,788,022
<TOTAL-COMMON-STOCKHOLDERS-EQ> 21,838,915
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<LONG-TERM-DEBT-NET> 32,000,000
<SHORT-TERM-NOTES> 4,195,000
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<TOTAL-OPERATING-EXPENSES> 2,485,736
<OPERATING-INCOME-LOSS> 1,188,663
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<EARNINGS-AVAILABLE-FOR-COMM> 517,674
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