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 September 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 3,030,480 Shares outstanding
as of September 30, 2000
<PAGE>
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets
(Unaudited)
As Of As of
Sept. 30, 2000 Dec. 31, 1999
UTILITY PLANT, at original cost $113,064,178 $108,804,699
Less-Reserve for depreciation 18,201,035 17,079,631
94,863,143 91,725,068
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$79,669 in 2000 and $75,721 in 1999 511,865 515,813
CURRENT ASSETS:
Receivables, less reserves of
$130,000 in 2000 and $120,000
in 1999 2,712,534 2,753,260
Recoverable income taxes - 5,702
Materials and supplies, at cost 346,805 390,440
Prepaid expenses 333,882 225,106
Deferred income taxes 88,655 81,836
3,481,876 3,456,344
OTHER LONG-TERM ASSETS:
Prepaid pension cost 2,128,288 1,977,883
Deferred debt expense 399,672 396,190
Deferred rate case expense 62,048 105,688
Notes receivable 953,554 783,794
Deferred regulatory assets 8,406,179 8,296,669
Other 1,462,158 1,342,661
13,411,899 12,902,885
$112,268,783 $108,600,110
<PAGE>
THE YORK WATER COMPANY
Balance Sheets
(Unaudited)
As Of As Of
Sept. 30, 2000 Dec. 31, 1999
CAPITALIZATION
Common stock, no par value,
authorized 31,000,000 shares,
outstanding 3,030,480 shares
in 2000 and 2,989,091 shares
in 1999 $ 28,700,887 $ 28,099,197
Earnings retained in the business 4,105,828 3,418,257
Treasury stock, 38,000 shares in
2000 and 1999 (687,800) (687,800)
32,118,915 30,829,654
LONG-TERM DEBT
1.0% Pennvest Loan, due 2019 737,630 765,943
6.00% 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
32,737,630 32,765,943
CURRENT LIABILITIES
Short-term borrowings 2,027,608 1,431,118
Current portion of long-term debt 37,406 34,057
Accounts payable 540,955 600,993
Dividends payable 568,981 534,889
Accrued taxes 164,843 31,458
Advance water revenues 17,534 18,173
Accrued interest 494,564 676,687
Other accrued expenses 348,600 396,771
4,200,491 3,724,146
DEFERRED CREDITS
Customers' advances for construction 18,195,312 17,054,497
Contributions in aid of construction 8,666,543 8,658,845
Deferred income taxes 13,032,340 12,109,748
Deferred regulatory liabilities 1,751,672 1,823,447
Deferred employee benefits 1,565,880 1,633,830
43,211,747 41,280,367
$112,268,783 $108,600,110
<PAGE>
<TABLE> THE YORK WATER COMPANY
Statements of Income
<CAPTION> (Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
Sept. 30 Sept. 30
<S> 2000 1999 2000 1999
WATER OPERATING REVENUES <C> <C> <C> <C>
Residential $2,801,417 $2,649,564 $8,234,420 $7,700,196
Commercial and
industrial 1,405,447 1,494,749 3,977,878 4,054,982
Other 539,506 474,468 1,644,015 1,425,790
4,746,370 4,618,781 13,856,313 13,180,968
OPERATING EXPENSES
Operation and
maintenance 1,011,285 1,136,752 3,025,718 3,045,055
Administrative and
general 811,496 810,259 2,534,228 2,589,234
Depreciation and
amortization 418,429 413,287 1,255,286 1,239,859
Taxes other than
income taxes 583 231,127 560,723 765,705
2,241,793 2,591,425 7,375,955 7,639,853
Operating Income 2,504,577 2,027,356 6,480,358 5,541,115
INTEREST EXPENSE AND
OTHER INCOME
Interest on long-term
debt 690,079 677,376 2,050,074 2,036,063
Interest on interim
bank loans 29,576 8,105 73,787 12,793
Allowance for funds used
during construction (9,630) (33,939) (39,106) (63,821)
Other income, net (39,828) (89,424) (119,228) (169,849)
670,197 562,118 1,965,527 1,815,186
Income before income
taxes 1,834,380 1,465,238 4,514,831 3,725,929
Federal and state
income taxes 692,611 552,199 1,634,887 1,382,204
Net Income $1,141,769 $ 913,039 $2,879,944 $2,343,725
Basic earnings per share $.38 $.30 $.96 $.78
Cash dividends per share $.25 $.24 $.73 $.71
</TABLE>
<PAGE>
<TABLE> THE YORK WATER COMPANY
Statements of Cash Flows
<CAPTION> (Unaudited) (Unaudited)
Nine Months Nine Months
Ended Ended
Sept.30, 2000 Sept.30, 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,879,944 $2,343,725
Adjustments to reconcile net income
to net cash provided by operating
activities
Depreciation 1,255,286 1,239,859
Provision for losses on accounts
receivable 97,500 87,750
Increase in deferred income taxes
(including regulatory assets and
liabilities) 734,488 705,146
Changes in assets and liabilities:
Increase in accounts receivable (56,774) (234,743)
Decrease (increase) in recoverable
income taxes 5,702 (14,393)
Decrease (increase) in materials
and supplies 43,635 (33,584)
Increase in prepaid expenses and
prepaid pension costs (259,181) (96,007)
(Decrease) increase in accounts
payable, accrued expenses, other
liabilities and deferred employee
benefits (139,357) 476,334
(Decrease) in accrued interest
and taxes (48,738) (515,428)
Increase in other assets (55,880) (177,034)
Net cash provided by operating
activities 4,456,625 3,781,625
CASH FLOWS FROM INVESTING ACTIVITIES:
Construction expenditures (4,412,872) (4,991,662)
Customers' advances for construction
and contributions in aid of
construction 1,148,513 1,388,779
(Increase) decrease in notes
receivable (169,760) 38,603
Net cash used in investing
activities (3,434,119) (3,564,280)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (28,313) -
Net borrowings under line-of-credit
agreements 596,490 1,027,000
Issuance of common stock under
dividend reinvestment plan 543,178 549,320
Issuance of common stock under
employee stock purchase plan 58,512 57,777
Dividends paid (2,192,373) (2,109,148)
Net cash used in financing
activities (1,022,506) (475,051)
Net decrease in cash and cash
equivalents - (257,706)
Cash and cash equivalents at
beginning of period - 257,706
Cash and cash equivalents at
end of period $ -0- $ -0-
Supplemental disclosures of cash
flow information:
Cash paid during the period for:
Interest, net of amounts
capitalized $2,292,435 $2,177,208
Income taxes 836,813 881,413
</TABLE>
<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 - 2,879,944 -
Cash Dividends - (2,192,373) -
Issuance of common stock
under dividend reinvest-
ment plan 543,178 - -
Issuance of common stock
under employee stock
purchase plan 58,512 - -
Balance, September 30, 2000 $28,700,887 $4,105,828 $(687,800)
<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 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 nine month
periods ended September 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 nine months ended
September 30, 2000 and 1999 were based on weighted average shares
outstanding of 3,003,981 and 2,997,524, 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 September 30, 2000 Compared
with Three Months Ended September 30, 1999
Net income for the three months ended September 30, 2000 was
$1,141,769, an increase of $228,730 (25.1%) compared to the three
months ended September 30, 1999.
Water operating revenues for the third quarter of 2000 increased
$127,589 or 2.8% compared to third quarter 1999. The increase
resulted from a 5.3% rate increase approved by the Pennsylvania
Public Utility Commission (PPUC) effective October 1, 1999. High
amounts of rainfall during the third quarter have reduced
customers outdoor water usage. Overall consumption was down 7.7%
for third quarter 2000 compared to third quarter 1999.
Operating expenses for the third quarter of 2000 decreased
$349,632 or 13.5% compared to the same period in 1999. The main
reason for the decline was the public utility realty tax refund
for 1998, 1999 and 2000 tax overpayments. A decrease in the tax
base and tax rates retroactive to January 1, 1998 resulted in the
refund. In addition, reduced deferred compensation expenses,
pension expenses, hydrant maintenance and Y2K expenses added to
the favorable variance. These reductions were partially offset
by increased health insurance costs, rate case expenses, and
capital stock tax.
Interest on interim bank loans increased $21,471 during the third
quarter 2000 compared to third quarter 1999. The average
short-term debt outstanding in 2000 and 1999 was $1,443,625 and
$507,972, respectively.
Allowance for funds used during construction decreased $24,309.
Three large projects (Railroad/New Freedom, Chlorination System
and Windsor 3) were open during third quarter 1999, while only
one large project (Cape Horn) was open during third quarter 2000.
Other income, net decreased by $49,596 for the third quarter of
2000 compared to the third quarter of 1999 due to the recognition
of less interest on the Windsor 2 water district note.
Federal and state income taxes for the quarter ended September
30, 2000 were $140,412 or 25.4% higher than the period ended
September 30, 1999 due to an increase in taxable income.
Nine Months Ended September 30, 2000 Compared
with Nine Months Ended September 30, 1999
Net income for the nine months ended September 30, 2000 was
$2,879,944, an increase of $536,219 or 22.9% compared to the nine
months ended September 30, 1999.
RESULTS OF OPERATIONS
Water operating revenues for the nine months ended September 30,
2000 increased $675,345 or 5.1% compared to the nine months ended
September 30, 1999 due to the rate increase effective October 1,
1999. High amounts of rainfall during the year 2000 have reduced
customers outdoor water usage. Overall consumption fell by 3.4%
during the period.
Operating expenses for the year-to-date period ended September
30, 2000 decreased $263,898 or 3.5% compared to the same period
in 1999. The primary reasons for the decrease were reduced
public utility realty taxes due to a change in tax base and lower
deferred compensation costs. In addition, pension expenses, Y2K
costs, and hydrant maintenance costs decreased in 2000 compared
to 1999. Increases in maintenance of mains and service lines due
to Route 30 relocation, general insurance, health insurance, and
rate case expenses partially offset the decrease.
Interest on interim bank loans increased $60,994 during the first
nine months of 2000 compared to the first nine months of 1999 due
to an increase in short-term debt outstanding in 2000. The
average short-term debt outstanding in 2000 and 1999 was
$1,214,089 and $253,059, respectively.
Allowance for funds used during construction for the year-to-date
period ended September 30, 2000 decreased $24,715 when compared
to the same period in 1999 due to smaller projects being worked
on in 2000.
Other income, net decreased by $50,621 for the first three
quarters of 2000 compared to 1999 due to the recognition of less
interest income on the Mt. Zion and Windsor 2 water district
notes.
Federal and state income taxes rose by $252,683 or 18.3% due to
an increase in taxable income. The effective tax rate for the
first nine months of 2000 and 1999 was 36.2% and 37.1%,
respectively.
The Company currently projects that earnings during the fourth
quarter 2000 will match the levels recorded during the fourth
quarter of 1999, and year-end earnings will continue to exceed
the levels recorded for the year 1999.
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 be filed in 2001.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of 2000, the per capita volume of
water sold did not significantly change compared to the first
nine 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 nine months ended September 30, 2000, the Company had
$4,412,872 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 nine months 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 September 30, 2000, current liabilities exceeded current
assets by $718,615. Short-term borrowings from lines of credit
as of September 30, 2000 were $2,027,608. 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company filed an 8-K report on November 8, 2000 stating that
an application has been filed to list its common stock on the
Nasdaq National Market.
<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
/s/ William T. Morris
Principal Executive Officer
Date: November 9, 2000
/s/ Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: November 9, 2000
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