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, 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 3,017,159 Shares outstanding
as of June 30, 2000
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THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
(Unaudited)
As of As of
June 30, 2000 Dec. 31, 1999
UTILITY PLANT, at original cost $110,892,999 $108,804,699
Less-Reserve for depreciation 17,812,476 17,079,631
93,080,523 91,725,068
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$78,353 in 2000 and $75,721 in 1999 513,181 515,813
CURRENT ASSETS:
Receivables, less reserves of
$130,000 in 2000 and $120,000 in 1999 2,705,296 2,753,260
Recoverable income taxes 71,454 5,702
Materials and supplies, at cost 380,230 390,440
Prepaid expenses 400,314 225,106
Deferred income taxes 88,655 81,836
3,645,949 3,456,344
OTHER LONG-TERM ASSETS:
Prepaid pension cost 2,078,153 1,977,883
Deferred debt expense 409,568 396,190
Deferred rate case expense 75,492 105,688
Notes receivable 980,077 783,794
Deferred regulatory assets 8,324,002 8,296,669
Other 1,423,357 1,342,661
13,290,649 12,902,885
$110,530,302 $108,600,110
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THE YORK WATER COMPANY
Balance Sheets
(Unaudited)
As Of As Of
June 30, 2000 Dec. 31, 1999
CAPITALIZATION
Common stock, no par value,
authorized 31,000,000 shares,
outstanding 3,017,159 shares in
2000 and 2,989,091 shares in 1999 $ 28,496,432 $ 28,099,197
Earnings retained in the business 3,718,349 3,418,257
Treasury stock, 38,000 shares in
2000 and 1999 (687,800) (687,800)
31,526,981 30,829,654
LONG-TERM DEBT
1.0% Pennvest Loan, due 2019 747,234 765,943
6.0% 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
32,747,234 32,765,943
CURRENT LIABILITIES
Short-term borrowings 1,435,880 1,431,118
Current portion of long-term debt 37,324 34,057
Accounts payable 379,702 600,993
Dividends payable 542,111 534,889
Accrued taxes 38,517 31,458
Advance water revenues 25,328 18,173
Accrued interest 678,164 676,687
Other accrued expenses 362,803 396,771
3,499,829 3,724,146
DEFERRED CREDITS
Customers' advances for construction 18,028,259 17,054,497
Contributions in aid of construction 8,658,845 8,658,845
Deferred income taxes 12,712,603 12,109,748
Deferred regulatory liabilities 1,774,033 1,823,447
Deferred employee benefits 1,582,518 1,633,830
42,756,258 41,280,367
$110,530,302 $108,600,110
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THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2000 1999 2000 1999
WATER OPERATING REVENUES
Residential $2,769,250 $2,590,360 $5,433,003 $5,050,632
Commercial and
industrial 1,309,827 1,335,046 2,572,431 2,560,233
Other 529,691 478,064 1,104,509 951,322
4,608,768 4,403,470 9,109,943 8,562,187
OPERATING EXPENSES
Operation and
maintenance 1,057,319 1,024,540 2,014,433 1,908,303
Administrative and
general 836,204 930,665 1,722,732 1,778,975
Depreciation 418,428 413,286 836,857 826,572
Taxes other than
income taxes 224,381 267,807 560,140 534,578
2,536,332 2,636,298 5,134,162 5,048,428
Operating Income 2,072,436 1,767,172 3,975,781 3,513,759
INTEREST EXPENSE AND
OTHER EXPENSE/(INCOME)
Interest on long-term
debt 682,935 678,949 1,359,995 1,358,687
Interest on short-term
debt 21,891 3,902 44,211 4,688
Allowance for funds used
during construction (9,273) (16,621) (29,476) (29,882)
Other income, net (43,700) (61,352) (79,400) (80,425)
651,853 604,878 1,295,330 1,253,068
Income before income
taxes 1,420,583 1,162,294 2,680,451 2,260,691
Federal and state
income taxes 485,691 431,167 942,276 830,005
Net Income $ 934,892 $ 731,127 $1,738,175 $1,430,686
Basic Earnings Per Share $0.31 $0.25 $0.58 $0.48
Cash Dividends Per Share $0.24 $0.23 $0.48 $0.47
<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 - 1,738,175 -
Cash Dividends - (1,438,083) -
Issuance of common
stock under dividend
reinvestment plan 358,125 - -
Issuance of common
stock under employee
stock purchase plan 39,110 - -
Balance, June 30, 2000 $28,496,432 $3,718,349 $(687,800)
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THE YORK WATER COMPANY
Statements of Cash Flows
(Unaudited) (Unaudited)
Six Months Six Months
Ended Ended
June 30, 2000 June 30, 1999
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $1,738,175 $1,430,686
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation 836,857 826,572
Provision for losses on
accounts receivable 65,000 58,500
Increase in deferred income taxes
(including regulatory assets and
liabilities) 519,289 454,305
Changes in assets and liabilities:
Increase in accounts receivable (17,036) (185,335)
Increase in recoverable income taxes (65,752) (71,608)
Decrease in materials and supplies 10,210 7,778
Increase in prepaid expenses and
prepaid pension costs (275,478) (136,105)
(Decrease) increase in accounts
payable, accrued expenses, other
liabilities and deferred employee
benefits (288,927) 485,989
Increase (decrease) in accrued
interest and taxes 8,536 (301,432)
Increase in other assets (57,975) (53,539)
Net cash provided by operating
activities 2,472,899 2,515,811
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (2,195,583) (2,911,037)
Customers' advances for construction
and contributions in aid of
construction 973,762 706,971
(Increase) decrease in notes
receivable (196,283) 37,027
Net cash used in investing
activities (1,418,104) (2,167,039)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long term debt (18,709) -
Net borrowings under line-of-credit
agreements 4,762 509,000
Issuance of common stock under
dividend reinvestment plan 358,125 369,893
Issuance of common stock under
employee stock purchase plan 39,110 38,113
Dividends paid (1,438,083) (1,403,330)
Net cash used in financing
activities (1,054,795) (486,324)
Net decrease in cash and cash
equivalents - (137,552)
Cash and cash equivalents at
beginning of period - 257,706
Cash and cash equivalents at
end of period $ - $ 120,154
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest, net of amounts
capitalized $1,366,540 $1,332,768
Income taxes 556,727 588,903
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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 of a normal
recurring nature 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 1999.
Operating results for the three month and six month
periods ended June 30, 2000, are not necessarily indicative of
the results that may be expected for the year ending December 31,
2000.
2. Basic Earnings Per Share
Basic earnings per share for the six months ended June 30,
2000 and 1999 were based on weighted average shares outstanding
of 3,006,687 and 2,994,730, 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, 2000 Compared
with Three Months Ended June 30, 1999
Water operating revenues for the three months ended June 30, 2000
increased $205,298 or 4.7% compared to the three months ended
June 30, 1999. The increase resulted from a 5.3% rate increase
approved by the Pennsylvania Public Utility Commission (PPUC)
effective October 1, 1999. Overall consumption was down 5.7%
for second quarter 2000 compared to second quarter 1999.
Operating expenses for the second quarter of 2000 decreased
$99,966 or 3.8% compared to the same period in 1999. Reduced
deferred compensation expenses, pension plan fees, and capital
stock tax caused most of the decrease. These reductions were
partially offset by increased main and service line maintenance
due to highway relocation, increased power, rate case, and
chemical expenses.
Interest on interim bank loans increased $17,989 during the
second quarter 2000 compared to second quarter 1999 due to an
increase in short-term debt outstanding in 2000. The average
short-term debt outstanding in 2000 and 1999 was $1,097,262
and $236,648, respectively.
Other income, net decreased by $17,652 for the second quarter of
2000 compared to the second quarter of 1999 due to the
recognition of less interest on the Mt. Zion water district note.
Federal and state income taxes for the quarter ended June 30,
2000 were $54,524 or 12.6% higher than the period ended June 30,
1999 due to an increase in taxable income.
Six Months Ended June 30, 2000 Compared
with Six Months Ended June 30, 1999
Water operating revenues for the six months ended June 30, 2000
increased $547,756 or 6.4% compared to the six months ended June
30, 1999. The increase resulted primarily from a 5.3% rate
increase approved by the PPUC effective October 1, 1999. Overall
consumption was down 1.0% for the year-to-date period.
Residential consumption was up slightly, while commercial and
industrial consumption were down. Public consumption, shown as
other, increased in 2000 when compared to 1999.
Operating expenses for the first six months of 2000 increased
$85,734 or 1.7% 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. In addition,
realty taxes, power, chemicals and rate case expenses increased
in 2000 compared to 1999. These increases were partially offset
by declines in deferred compensation, Y2K expenses, legal fees
and pension costs.
Interest on interim bank loans increased $39,523 during the first
half 2000 compared to first half 1999 due to an increase in
short-term debt outstanding in 2000. The average short-term debt
outstanding in 2000 and 1999 was $1,098,059 and $143,149,
respectively.
Federal and state income taxes for the year-to-date period ended
June 30, 2000 were $112,271 or 13.5% higher than the period ended
June 30, 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%. The next application to increase
rates will most likely be filed in 2001.
LIQUIDITY AND CAPITAL RESOURCES
During the first six months of 2000, the per capita volume of
water sold did not significantly change compared to the first six
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 half of 2000, the Company had $2,195,583 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 half 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
equal 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 June 30, 2000, current assets exceeded current liabilities
by $146,120. Short-term borrowings from lines of credit as of
June 30, 2000 were $1,435,880. 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.
<PAGE>
THE YORK WATER COMPANY
Part II - Other Information
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Shareholders of The York Water Company
was convened May 1, 2000 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:
Frank Motter George Hay Kain, III Michael W. Gang
For election 2,327,767.770 2,330,819.770 2,331,375.770
Shares withheld 49,763.000 46,711.000 46,155.000
The following Directors' terms of office continued after the
Annual Meeting.
Irvin S. Naylor Paul W. Ware
William T. Morris John L. Finleyson
Horace Keesey III Chloe R. Eichelberger
(2) To amend the Amended and Restated Articles of
Incorporation of the Company.
For Approval 2,320,888.770
Against Approval 44,507.000
Abstaining From Voting 12,134.000
(3) To appoint Stambaugh Ness, P.C. as independent
accountants to audit the financial statements of the Company for
the year 2000.
The actions taken by the Shareholders concerning the appointment
of Stambaugh Ness, P.C. independent accountants are as follows:
For Approval 2,353,059.770
Against Approval 5,251.000
Abstaining From Voting 19,221.000
<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: August 11, 2000
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: August 11, 2000
