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, 2000 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, No par value 3,002,920 Shares outstanding
as of March 31, 2000
<PAGE>
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
(Unaudited)
As Of As of
Mar. 31, 2000 Dec. 31, 1999
UTILITY PLANT, at original cost $109,870,292 $108,804,699
Less-Reserve for depreciation 17,514,517 17,079,631
92,355,775 91,725,068
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$77,037 in 2000 and $75,721 in
1999 514,497 515,813
CURRENT ASSETS:
Receivables, less reserves of
$130,000 in 2000 and $120,000
in 1999 2,664,117 2,753,260
Recoverable income taxes - 5,702
Materials and supplies, at cost 379,550 390,440
Prepaid expenses 184,871 225,106
Deferred income taxes 88,655 81,836
3,317,193 3,456,344
OTHER LONG-TERM ASSETS:
Prepaid pension cost 2,001,413 1,977,883
Deferred debt expense 387,090 396,190
Deferred rate case expense 90,590 105,688
Notes receivable 1,018,369 783,794
Deferred regulatory assets 8,247,053 8,296,669
Other 1,406,077 1,342,661
13,150,592 12,902,885
$109,338,057 $108,600,110
<PAGE>
THE YORK WATER COMPANY
Balance Sheets
(Unaudited)
As Of As Of
Mar. 31, 2000 Dec. 31, 1999
CAPITALIZATION
Common stock, no par value,
authorized 31,000,000 shares, out-
standing 3,002,920 shares in 2000
and 2,989,091 shares in 1999 $ 28,298,599 $ 28,099,197
Earnings retained in the business 3,504,158 3,418,257
Treasury stock, 38,000 shares in
2000 and 1999 (687,800) (687,800)
31,114,957 30,829,654
LONG-TERM DEBT
1.0% Pennvest Loan, due 2019 756,600 765,943
5.0% Industrial Development
Authority Revenue Refunding Bonds,
Series 1995, 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
4.40% Industrial Development
Authority Revenue Refunding
Bonds, Series 1994, due 2009 2,700,000 2,700,000
32,756,600 32,765,943
CURRENT LIABILITIES
Short-term borrowings 740,486 1,431,118
Current portion of long-term debt 37,231 34,057
Accounts payable 517,281 600,993
Dividends payable 537,262 534,889
Accrued taxes 407,105 31,458
Advance water revenues 18,014 18,173
Accrued interest 480,230 676,687
Other accrued expenses 413,030 396,771
3,150,639 3,724,146
DEFERRED CREDITS
Customers' advances for construction 17,910,140 17,054,497
Contributions in aid of construction 8,658,845 8,658,845
Deferred income taxes 12,357,124 12,109,748
Deferred regulatory liabilities 1,793,839 1,823,447
Deferred employee benefits 1,595,913 1,633,830
42,315,861 41,280,367
$109,338,057 $108,600,110
<PAGE>
THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
Mar. 31, 2000 Mar. 31, 1999
WATER OPERATING REVENUES
Residential $2,663,753 $2,460,272
Commercial and industrial 1,262,604 1,225,187
Other 574,818 473,258
4,501,175 4,158,717
OPERATING EXPENSES
Operation and maintenance 957,114 883,763
Administrative and general 886,528 848,310
Depreciation and amortization 418,429 413,286
Taxes other than income taxes 335,759 266,771
2,597,830 2,412,130
Operating income 1,903,345 1,746,587
INTEREST EXPENSE AND OTHER INCOME
Interest on long-term debt 677,060 679,738
Interest on interim bank loans 22,320 786
Allowance for funds used during
construction (20,203) (13,261)
Other income, net (35,700) (19,073)
643,477 648,190
Income before income taxes 1,259,868 1,098,397
Federal and state income taxes 456,585 398,838
Net income $ 803,283 $ 699,559
Basic Earnings Per Share $0.27 $0.23
Cash Dividends Per Share $0.24 $0.24
<PAGE>
THE YORK WATER COMPANY
Statements of Shareholders' Investment
Earnings
Retained
Common in the Treasury
Stock Business Stock
Balance, December 31, 1999 $28,099,197 $3,418,257 $(687,800)
Net Income - 803,283 -
Cash Dividends - (717,382) -
Issuance of common stock
under dividend reinvest-
ment plan 179,867 - -
Issuance of common stock
under employee stock
purchase plan 19,535 - -
Balance, March 31, 2000 $28,298,599 $3,504,158 $(687,800)
<PAGE>
THE YORK WATER COMPANY
Statements of Cash Flows
(Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
Mar. 31, 2000 Mar. 31, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 803,283 $ 699,559
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation 418,429 413,286
Provision for losses on accounts
receivable 32,500 29,250
Increase in deferred income taxes
(including regulatory assets and
liabilities) 260,565 226,185
Changes in assets and liabilities:
Decrease in accounts receivable 56,643 53,827
Decrease in recoverable income
taxes 5,702 -
Decrease in materials and supplies 10,890 23,243
Decrease (increase) in prepaid
expenses and prepaid pension costs 16,705 (5,526)
(Decrease) increase in accounts
payable, accrued expenses, other
liabilities and deferred employee
benefits (99,982) 98,086
Increase (decrease) in accrued
interest and taxes 179,190 (98,817)
(Increase) decrease in other
assets (21,866) 52,559
Net cash provided by operating
activities 1,662,059 1,491,652
CASH FLOWS FROM INVESTING
ACTIVITIES:
Construction expenditures (1,065,172) (1,065,681)
Customers' advances for
construction and contributions
in aid of construction 855,643 222,569
Net cash used in investing
activities (209,529) (843,112)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayments of long-term debt (9,343) -
Net repayments under line-of-
credit agreements (690,632) -
Issuance of common stock under
dividend reinvestment plan 179,867 190,961
Issuance of common stock under
employee stock purchase plan 19,535 19,395
Dividends paid (717,382) (700,235)
(Increase) decrease in notes
receivable (234,575) 32,620
Net cash used in financing
activities (1,452,530) (457,259)
Net increase in cash and cash
equivalents - 191,281
Cash and cash equivalents at
beginning of period - 257,706
Cash and cash equivalents at
end of period $ - $ 448,987
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest, net of amounts
capitalized $ 871,334 $ 859,251
Income taxes 53,897 44,641
<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 December 31, 1999.
2. Basic Earnings Per Share
Basic earnings per share for the three months ended March
31, 2000 and 1999 were based on weighted average shares
outstanding of 2,999,510 and 2,988,884, respectively.
3. Certain items from the prior year statements have been
reclassified for comparative purposes.
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, 2000 Compared
with Three Months Ended March 31, 1999
Water operating revenues for the three months ended March 31,
2000 increased $342,458 or 8.2% compared to the three months
ended March 31, 1999. The increase resulted from both a 5.3%
rate increase approved by the Pennsylvania Public Utility
Commission (PPUC) effective October 1, 1999, and an increase in
consumption of water due to an increase in customers.
Residential consumption increased 2.5%, while commercial and
industrial consumption increased by 1.9%. Other revenues
including public consumption and fire service increased in 2000
compared to 1999.
Operating expenses for the first three months of 2000 increased
$185,700 or 7.7% compared to the same period in 1999. Increased
main and service line maintenance primarily due to highway
relocation was the largest factor in the increase. Additionally,
realty taxes, general insurance, and rate case expenses increased
in 2000 compared to 1999. These increases were partially offset
by declines in Y2K expenses, legal fees, and deferred
compensation provisions.
Interest on interim bank loans increased $21,534 through March
2000 compared to March 1999 due to an increase in short-term debt
outstanding in 2000. The average short-term debt outstanding in
2000 and 1999 was $1,098,856 and $48,611, respectively.
Other income, net increased by $16,627 for the first three months
of 2000 compared to the first three months of 1999 due to the
recognition of additional interest income on Mt. Zion and Windsor
water district notes.
Federal and state income taxes for the period ended March 31,
2000 were $57,747 or 14.5% higher than the period ended March 31,
1999 due to an increase in taxable income.
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 request was filed in April 1999. Effective October 1,
1999, the PPUC authorized an increase in rates designed to
produce approximately $651,000 in additional annual operating
revenues, an increase of 5.3%.
Liquidity and Capital Resources
During the first three months of 2000, the per capita volume of
water sold did not significantly change compared to the first
three months of 1999. 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 2000, the Company had $1,065,172 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 2000, net cash provided by operating
activities equaled net cash used in investing and financing
activities. The Company anticipates that during the remainder of
2000 net cash used in investing and financing activities will
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 expected to be used to satisfy
the need for additional cash.
As of March 31, 2000, current assets exceeded current liabilities
by $157,434. Short-term borrowings from lines of credit as of
March 31, 2000 were $740,486. The Company maintains lines of
credit aggregating $16,000,000. 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.
Certain statements contained herein and elsewhere in this Form
10-Q which are not historical facts are forward-looking
statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements address activities or events which the
Company expects will or may occur in the future. The Company
cautions that a number of important factors could cause the
actual results to differ materially from those expressed in any
forward-looking statements made on behalf of the Company.
Year 2000
This statement constitutes a year 2000 readiness disclosure by
The York Water Company, under the Year 2000 Information and
Disclosure Act. The "year 2000" issue had no impact on the
Company's operations. The Company incurred costs of year 2000
remediation of approximately $142,100. The Company will continue
to monitor this issue, but does not expect it to have a
significant impact on the Company's operations.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
The Company's 5.00% Industrial Development Authority Revenue
Refunding bonds Series 1995 have a mandatory tender date of June
1, 2000. The bonds will be remarketed and the interest rate
redetermined to 6.00% on June 1, 2000. Under the terms of the
bonds, existing bond holders may elect to retain their bonds at
the 6.00% interest rate. All bonds not retained by current bond
holders are guaranteed to be remarketed. The newly issued bonds
will mature on June 1, 2010.
Item 6. Exhibits and Reports on Form 8-K
The Company filed two reports on Form 8-K on March 29, 2000. The
first reported the termination of KPMG LLP as the Company's
principal accountants, and the second reported the Board
recommendation of Stambaugh-Ness P.C. as independent auditors of
the Company subject to shareholder approval.
<PAGE>
THE YORK WATER COMPANY
SIGNATURES
Pursuant to the requirements 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.
THE YORK WATER COMPANY
William T. Morris
Principal Executive Officer
Date: May 12, 2000
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: May 12, 2000
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