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, 1997 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 727,209 Shares outstanding
as of March 31, 1997<PAGE>
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet
(Unaudited)
As Of As of
Mar.31, 1997 Dec. 31, 1996
UTILITY PLANT, at original cost $94,099,446 $93,492,775
Less-Reserve for depreciation 13,557,663 13,158,637
80,541,783 80,334,138
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$61,584 in 1997 and $60,326 in 1996 419,887 421,145
CURRENT ASSETS:
Cash and Cash Equivalents 465,800 694,491
Receivables, less reserves of
$90,000 in 1997 and in 1996 2,479,160 2,523,510
Recoverable income taxes - 159,203
Materials and supplies, at cost 303,656 302,821
Prepaid expenses 131,009 221,402
Deferred income taxes 61,377 61,377
3,441,002 3,962,804
OTHER LONG-TERM ASSETS:
Prepaid pension cost 1,717,798 1,680,286
Deferred debt expense 465,577 474,049
Deferred rate case expense 121,243 142,385
Notes receivable 949,184 990,448
Deferred regulatory assets 7,834,938 7,827,988
Other 968,672 903,191
12,057,412 12,018,347
$96,460,084 $96,736,434<PAGE>
THE YORK WATER COMPANY
Balance Sheet
(Unaudited)
As Of As Of
Mar.31, 1997 Dec. 31, 1996
CAPITALIZATION
Common stock, par value $10 per
share, authorized 1,200,000 shares
in 1997 and in 1996, outstanding
727,209 shares in 1997 and 725,131
shares in 1996 $ 7,272,093 $ 7,251,308
Capital surplus 18,641,666 18,524,331
Earnings retained in the business 2,340,701 2,227,118
28,254,460 28,002,757
LONG-TERM DEBT
5.0% 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 600,000 1,237,000
Accounts payable 166,665 376,469
Dividends payable 532,437 531,977
Accrued taxes 570,153 117,668
Advance water revenues 170,477 164,256
Accrued interest 483,774 675,761
Other accrued expenses 413,575 391,483
2,937,081 3,494,614
DEFERRED CREDITS
Customers' advances for construction15,604,420 15,471,245
Contributions in aid of construction 5,606,358 5,606,358
Deferred income taxes 9,605,783 9,744,675
Deferred regulatory liabilities 1,528,582 1,528,582
Deferred employee benefits 923,400 888,203
33,268,543 33,239,063
$96,460,084 $96,736,434<PAGE>
THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Ended March 31
1997 1996
WATER OPERATING REVENUES
Residential $2,351,598 $2,202,573
Commercial and industrial 1,252,868 1,151,396
Other 402,410 320,430
4,006,876 3,674,399
OPERATING EXPENSES
Operation and maintenance 796,010 784,023
Administrative and general 702,284 769,640
1,498,294 1,553,663
Depreciation 388,084 403,600
Taxes other than income taxes 263,297 258,005
Federal and state income taxes 402,096 270,468
2,551,771 2,485,736
Operating Income 1,455,105 1,188,663
INTEREST EXPENSE AND
OTHER EXPENSE/(INCOME)
Interest on long-term debt 679,738 679,738
Interest on interim bank loans 16,351 75,375
Allowance for funds used during
construction (3,225) (35,114)
Other income, net (3,958) (49,010)
688,906 670,989
Net Income $ 766,199 $ 517,674
Earnings Per Share $1.05 $0.81
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, 1997 March 31, 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 766,199 $ 517,674
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 388,084 403,600
Provision for losses on accounts
receivable 22,500 22,500
(Decrease) increase in deferred
income taxes (including regulatory
assets and liabilities) (145,842) 162,077
Changes in assets and liabilities:
Decrease in accounts receivable 21,850 172,007
Decrease in recoverable income taxes 59,203 96,123
(Increase) decrease in materials and
supplies (835) 19,741
Decrease (increase) in prepaid
expenses and prepaid pension costs 52,881 (8,471)
Decrease in accounts payable,
accrued expenses, other liabilities
and deferred employee benefits (145,834) (173,142)
Increase (decrease) in accrued
interest and taxes 260,498 (148,740)
Increase in other assets (12,915) (18,073)
Net cash provided by operating
activities 1,365,789 1,045,296
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of temporary
investments (1,333,000) -
Maturities of temporary investments 1,333,000 -
Construction expenditures (617,423) (681,706)
Customers' advances for construction
and contributions in aid of
construction 133,175 34,435
Net cash used in investing
activities (484,248) (647,271)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
line-of-credit agreements (637,000) 31,000
Issuance of common stock under
dividend reinvestment plan 119,587 104,697
Issuance of common stock under
employee stock purchase plan 18,533 18,411
Dividends paid (652,616) (573,634)
Decrease in notes receivable 41,264 21,501
Net cash used in financing
activities (1,110,232) (398,025)
Net decrease in cash and cash
equivalents (228,691) -
Cash and cash equivalents at
beginning of period 694,491 -
Cash and cash equivalents at end
of period $ 465,800 $ -
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest, net of amounts
capitalized $ 884,852 $ 905,735
Income taxes 60,614 86,735
/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 1996.
2. Earnings Per Share
Earnings per share for the three months ended March 31, 1997
and 1996 were based on weighted average shares outstanding of
726,697 and 638,770, 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, 1997 Compared
with Three Months Ended March 31, 1996
Water operating revenues for the three months ended March 31,
1997 increased $332,477 or 9.0% compared to the three months
ended March 31, 1996. The increase resulted primarily from an
increase in rates of 6.0% approved by the Pennsylvania Public
Utility Commission (PPUC) effective September 5, 1996.
Consumption was up in both the residential and industrial
sectors, despite an overall decline.
Operating expenses, exclusive of depreciation and taxes, for the
three months ended March 31, 1997 decreased $55,369 or 3.6%.
Decreases in maintenance of structures, maintenance of pumping
equipment and meter reading expenses, as well as a workers
compensation credit caused the favorable variance. Increases in
power costs and filter plant equipment maintenance partially
offset the variance.
Federal and state income taxes for the three months ended March
31, 1997 increased $131,628 or 48.7% compared to the three months
ended March 31, 1996 principally as a result of an increase in
taxable net income.
Interest on short-term debt for the three months ended March 31,
1997 declined $59,024 when compared to the same period in 1996.
The decline is due to a decrease in the average short-term debt
outstanding from approximately $4,290,000 in 1996 to
approximately $932,000 in 1997.
Allowance for funds used during construction was $31,889 lower
during the three months ended March 31, 1997 when compared to the
three months ended March 31, 1996. In 1996, interest was
capitalized on two large main extensions, the Loganville
standpipe, and the basin covers. No such large projects occurred
during the first three months of 1997.
Other income, net for the first three months of 1997 decreased
$45,052 or 91.9% when compared to the first three months of 1996.
The decrease was due to increased donations and a 1996 adjustment
to amortization of debt expense.
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. Effective
September 5, 1996, the PPUC authorized an increase in rates
designed to produce approximately $960,000 in additional annual
revenues, an increase of approximately 6.0%.
Liquidity and Capital Resources
During the first three months of 1997, the per capita volume of
water sold did not significantly change compared to the first
three months of 1996. 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 first quarter of 1997, the Company had $617,423 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.
During the first quarter of 1997, net cash used in investing and
financing activities exceeded net cash provided by operating
activities. The Company anticipates that during the remainder of
1997 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
(stock issued in lieu of cash dividends) and employee stock
purchase plan, and customers' advances are used to satisfy the
need for additional cash.
As of March 31, 1997, current assets exceeded current liabilities
by $503,921. Short-term borrowings from lines of credit as of
March 31, 1997 were $600,000. The Company maintains lines of
credit aggregating $15,000,000. Loans granted under these lines
of credit bear interest based on the prime or Libor rates plus
basis points, as defined. The Company is not required to
maintain compensating balances on its lines of credit.
On May 5, 1997, the Company's shareholders approved amendments to
the existing Articles of Incorporation. The approved amendments
(i) increased the authorized capital stock of the Company from
1,200,000 shares of common stock, par value $10.00 to 6,500,000
shares, divided into 6,000,000 shares of common stock, without
par value, and 500,000 shares of Series Preferred Stock, without
par value; (ii) eliminate the concept of par value of the capital
stock; and (iii) delete certain provisions relating to dividends
and shares in distribution and common stock in order to allow for
the possible future issuance of Series Preferred Stock.
On May 5, 1997, the Company's Board of Directors declared a four-
for-one stock split for shareholders of record on June 2, 1997,
in conjunction with the increase in authorized shares. The
declared stock split is subject to the approval of the PPUC. The
Company's management expects to receive PPUC approved
registration of its four-for-one stock split on May 22, 1997.
Shareholders of record will receive three additional shares of
common stock for each share owned. The transaction will have no
effect on total stockholders' equity.
Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128),
"Earnings Per Share." SFAS 128 establishes standards for
computing and presenting earnings per share. SFAS 128 is
effective for financial statements issued for periods ending
after December 15, 1997. This statement is not expected to have
a material impact on the Company's financial statements.
In February 1997, FASB issued Statement of Financial Accounting
Standards No. 129, "Disclosure of Information about Capital
Structure" (SFAS 129). SFAS 129 establishes standards for
disclosing information about an entity's capital structure. SFAS
129 is effective for financial statements issued for periods
ending after December 15, 1997. This statement is not expected
to have a material impact on the Company's financial statements.
<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: May 6, 1997
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: May 6, 1997
<TABLE> <S> <C>
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<NAME> YORK WATER CO
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