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 June 30, 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 641,109 Shares outstanding
as of June 30, 1996<PAGE>
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet
(Unaudited)
As Of As of
June 30,1996 Dec. 31, 1995
UTILITY PLANT, at original cost $90,594,587 $88,710,279
Less-Reserve for depreciation 12,500,895 11,890,730
78,093,692 76,819,549
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$57,808 in 1996 and $55,291 in 1995 423,663 426,180
CURRENT ASSETS:
Receivables, less reserves of $90,000
in 1996 and in 1995 2,444,047 2,443,129
Recoverable income taxes 143,588 96,123
Materials and supplies, at cost
(first-in, first-out) 271,164 299,637
Prepaid expenses 329,845 115,392
Deferred income taxes 61,377 61,377
3,250,021 3,015,658
OTHER LONG-TERM ASSETS:
Prepaid pension cost 1,605,262 1,530,238
Deferred debt expense 490,100 495,594
Deferred rate case expense 89,058 42,499
Notes receivable 966,789 1,046,118
Deferred regulatory assets 6,423,201 6,302,127
Other 874,692 781,743
10,449,102 10,198,319
$92,216,478 $90,459,706<PAGE>
THE YORK WATER COMPANY
Balance Sheet
(Unaudited)
As Of As Of
June 30,1996 Dec. 31, 1995
CAPITALIZATION
Common stock $ 6,411,094 $ 6,373,743
Capital surplus 13,757,157 13,554,042
Earnings retained in the business 1,959,300 1,843,982
22,127,551 21,771,767
LONG-TERM DEBT
5% Ind. Dev. Auth. Rev. Refund
Bonds, due 2010 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 4,884,000 4,164,000
Accounts payable 377,839 342,610
Dividends payable 468,686 468,053
Accrued taxes 31,743 34,833
Advance water revenues 176,641 183,398
Accrued interest 684,438 697,261
Other accrued expenses 1,220,024 1,112,406
7,843,371 7,002,561
DEFERRED CREDITS
Customers' advances for construction16,068,044 15,913,616
Contributions in aid of construction 4,579,105 4,576,923
Deferred income taxes 8,157,009 7,753,441
Deferred regulatory liabilities 1,441,398 1,441,398
30,245,556 29,685,378
$92,216,478 $90,459,706<PAGE>
<TABLE> THE YORK WATER COMPANY
Statements of Income
<CAPTION> (Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
<S> 1995 1994 1995 1994
WATER OPERATING REVENUES <C> <C> <C> <C>
Residential $2,278,826 $2,187,996 $4,481,399 $4,283,683
Commercial and industrial 1,220,073 1,336,808 2,371,469 2,627,088
Other 373,397 312,509 693,827 621,550
3,872,296 3,837,313 7,546,695 7,532,321
OPERATING EXPENSES
Operation and maintenance 837,233 827,523 1,621,256 1,581,643
Administrative and general 742,924 833,521 1,512,564 1,672,330
1,580,157 1,661,044 3,133,820 3,253,973
Depreciation 281,627 377,479 685,227 754,959
Taxes other than income taxes 234,888 232,556 492,893 482,093
Federal and state income taxes 312,945 300,254 583,413 629,908
2,409,617 2,571,333 4,895,353 5,120,933
Operating Income 1,462,679 1,265,980 2,651,342 2,411,388
INTEREST EXPENSE AND
OTHER EXPENSE/(INCOME)
Interest on long-term debt 679,737 693,175 1,359,475 1,386,350
Interest on short-term debt 75,831 37,361 151,206 64,412
Allowance for funds used during
construction (22,926) (6,128) (58,040) (85,385)
Other income, net (16,540) (32,264) (65,550) (89,899)
716,102 692,144 1,387,091 1,275,478
Net Income $ 746,577 $ 573,836 $1,264,251 $1,135,910
Earnings Per Share $1.17 $0.91 $1.98 $1.80
Cash Dividends Per Share $0.90 $0.90 $1.80 $1.80
/TABLE
<PAGE>
<TABLE> THE YORK WATER COMPANY
Statements of Cash Flows
<CAPTION> (Unaudited) (Unaudited)
Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,264,251 $ 1,135,910
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 685,227 754,959
Provision for losses on accounts receivable 45,000 45,000
Increase (decrease) in deferred income taxes
(including regulatory assets and liabilities) 282,494 (5,718)
Changes in assets and liabilities:
Increase in accounts receivable (45,918) (48,343)
Increase in recoverable income taxes (47,465) -
Decrease in materials and supplies 28,473 34,727
Increase in prepaid expenses (214,453) (75,513)
Increase (decrease) in accounts payable,
accrued expenses and other liabilities 136,723 (124,183)
Decrease in accrued interest and taxes (15,913) (331,847)
(Increase) decrease in other assets (154,531) 98,534
Net cash provided by operating activities 1,963,888 1,483,526
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of temporary investments - -
Maturities of temporary investments - -
Proceeds from the sale of land - -
Costs incurred relating to the sale of land - -
Construction expenditures (2,011,361) (2,276,805)
Customers' advances for construction and
contributions in aid of construction 156,610 830,382
Net cash provided by investing activities (1,854,751 (1,446,423)
<PAGE>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line-of-credit agreements 720,000 826,000
Issuance of common stock under dividend
reinvestment plan 201,762 202,454
Issuance of common stock under employee stock
purchase plan 38,704 34,689
Dividends paid (1,148,932) (1,135,136)
Decrease in notes receivable 79,329 34,890
Net cash (used in) financing activities (109,137) (37,103)
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 $1,479,499 $ 1,307,093
Income taxes 449,837 808,465
/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 1995.
2. Earnings Per Share
Earnings per share for the six months ended June 30, 1996 and
1995 were based on weighted average shares outstanding of
639,728 and 632,090, 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 June 30, 1996 Compared
with Three Months Ended June 30, 1995
Water operating revenues for the three months ended June 30, 1996
increased $34,983 or .9% compared to the three months ended June
30, 1995. The increase resulted from higher consumption in the
residential and public sectors during the second quarter of 1996
compared to second quarter 1995.
Operating expenses, exclusive of depreciation and taxes, for the
three months ended June 30, 1996 decreased $80,887 or 4.9%. The
decline in expense was primarily due to reduced cable meter reading
charges, and a reduction in general insurance cost for plan year
1995 received during the second quarter of 1996.
Depreciation expense for the three months ended June 30, 1996
decreased $95,852 or 25% compared to 1995 as a result of lower
rates. A re-evaluation of plant assets resulted in longer useful
lives, and therefore lower depreciation rates.
Interest on long-term debt for the three months ended June 30, 1996
decreased $13,438 or 1.9% compared to the three months ended June
30, 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 June 30,
1996 increased $38,470 when compared to thesame period in 1995.
The increase is to higher short-term debt outstanding during the
three months ended June 30, 1996.
Six Months Ended June 30, 1996 Compared
with Six Months Ended June 30, 1995
Net income for the six months ended June 30, 1996 was $1,264,251,
an increase of $128,341 (11.3%) compared to the six months ended
June 30, 1995.
Operating revenues for the six months ended June 30, 1996 increased
$14,374 (.2%) compared to the six months ended June 30, 1995.
Increased consumption and new customers within the residential
sector caused an increase in revenue from the prior year of
approximately 4.6%. Public sector consumption also increased
substantially since 1995. Reduced commercial and industrial
consumption partially offset the increases.
Administrative and general expenses for the six months ended June
30, 1996 decreased $159,766 (9.6%) compared to six months ended
June 30, 1995. Reduced cable meter reading fees, general insurance
credits received in 1996 for the 1995 policy year, and a
retroactive charge for postretirement benefits in 1995 all
contributed to the favorable variance.
Depreciation expense for the six months ended June 30, 1996
decreased $69,732 (9.2%) compared to six months ended June 30,
1995. A re-evaluation of plant assets resulted in longer useful
lives, and therefore lower depreciation rates.
Federal and state income taxes for the six months ended June 30,
1996 decreased $46,495 when compared to the six months ended June
30, 1995 principally as a result of a decrease in taxable net
income.
Interest on long-term debt for the six months ended June 30, 1996
decreased $26,875 compared to the six months ended June 30, 1995.
The decrease was related to the issuance of $4,300,000 5% Revenue
Refunding Bonds to replace a like amount of bonds at a 6.75%
interest rate during the fourth quarter of 1995.
Interest on short-term debt for the six months ended June 30, 1996
increased $86,794 when compared to the same period in 1995. The
increase is due primarily to an increase in short-term debt
outstanding during 1996 versus 1995.
Allowance for funds used during construction for the six months
ended June 30, 1996 decreased $27,345 or 32% when compared to the
six months ended June 30, 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
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 May 9, 1996 seeking a
$1,534,393 increase in annual revenues. The PPUC is currently
examining the potential rate increase.
Liquidity and Capital Resources
During the first six months of 1996, the per capita volume of water
sold did not significantly change compared to the first six 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 six months ended June 30, 1996, the Company had
$2,011,361 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 has submitted an application with the PPUC proposing
increases in rates to provide a fair rate of return on the capital
expenditures associated with its 1996 construction projects.
During the first half 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.
As of June 30, 1996, current liabilities exceeded current assets by
$4,593,350. 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
June 30, 1996 were $4,884,000. 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.
<PAGE>
THE YORK WATER COMPANY
Part II - Other Information
Item 4. Results of Votes of Security Holders
The Annual Meeting of the Shareholders of The York Water Company
was convened May 6, 1996 at the office of the Company, 130 East
Market Street, in the City of York, Pennsylvania, at 1:00 P.M. for
the purpose of taking action upon the following proposals:
(1) To elect three (3) Directors to three-year terms of office.
The actions taken by the Shareholders concerning the election of
Directors are as follows:
Paul W. Ware John L. Finlayson Chloe R. Eichelberger
For election 467,073.187 462,856.956 461,824.895
Shares withheld 8,855.065 10,676.131 12,392.081
The following Directors' terms of office continued after the Annual
Meeting.
Irvin S. Naylor Josephine S. Appell
William T. Morris Frank Motter
Horace Keesey III George Hay Kain, III
Michael w. Gang
(2) To appoint KPMG Peat Marwick LLP as independent
accountants to audit the books and accounts of the Company
for the year 1996.
The actions taken by the Shareholders concerning the appointment of
KPMG Peat Marwick LLP as independent accountants are as follows:
For Approval 468,897.065
Against Approval 996.511
Abstaining From Voting 2,386.675
(3) To amend and restate the Articles of Incorporation of the
Company.
For Approval 464,077.557
Against Approval 1,683.051
Abstaining From Voting 6,519.643<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
William T. Morris
Principal Executive
Officer
Date: July 24, 1996
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: July 24, 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> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 78093692
<OTHER-PROPERTY-AND-INVEST> 423663
<TOTAL-CURRENT-ASSETS> 3250021
<TOTAL-DEFERRED-CHARGES> 7002359
<OTHER-ASSETS> 3446743
<TOTAL-ASSETS> 92216478
<COMMON> 6411094
<CAPITAL-SURPLUS-PAID-IN> 13757157
<RETAINED-EARNINGS> 1959300
<TOTAL-COMMON-STOCKHOLDERS-EQ> 22127551
0
0
<LONG-TERM-DEBT-NET> 32000000
<SHORT-TERM-NOTES> 4884000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 33204927
<TOT-CAPITALIZATION-AND-LIAB> 92216478
<GROSS-OPERATING-REVENUE> 3872296
<INCOME-TAX-EXPENSE> 312945
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<TOTAL-OPERATING-EXPENSES> 2409617
<OPERATING-INCOME-LOSS> 1462679
<OTHER-INCOME-NET> 16540
<INCOME-BEFORE-INTEREST-EXPEN> 1479219
<TOTAL-INTEREST-EXPENSE> 732642
<NET-INCOME> 746577
0
<EARNINGS-AVAILABLE-FOR-COMM> 746577
<COMMON-STOCK-DIVIDENDS> 575298
<TOTAL-INTEREST-ON-BONDS> 85813
<CASH-FLOW-OPERATIONS> 918592
<EPS-PRIMARY> 1.17
<EPS-DILUTED> 1.17
</TABLE>
