-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GJbh1w8C4d7luYyqigWSxJqWiMgq3BMbzi5g1bcLatoAuRAlfxEq1V0bCHt4/ANT lh9SEbQ1exsZ9GOyuhfY6g== 0000108985-97-000015.txt : 19971114 0000108985-97-000015.hdr.sgml : 19971114 ACCESSION NUMBER: 0000108985-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: YORK WATER CO CENTRAL INDEX KEY: 0000108985 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 231242500 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-00690 FILM NUMBER: 97712689 BUSINESS ADDRESS: STREET 1: 130 E MARKET ST CITY: YORK STATE: PA ZIP: 17405 BUSINESS PHONE: 7178453601 MAIL ADDRESS: STREET 1: PO BOX 15089 10-Q 1 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, 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, no par value 2,924,310 Shares outstanding as of September 30, 1997 THE YORK WATER COMPANY PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets (Unaudited) As Of As of Sept.30,1997 Dec. 31, 1996 UTILITY PLANT, at original cost $95,872,249 $93,492,775 Less-Reserve for depreciation 14,103,564 13,158,637 81,768,685 80,334,138 OTHER PHYSICAL PROPERTY: Less-Reserve for depreciation of $63,999 in 1997 and $60,326 in 1996 495,365 421,145 CURRENT ASSETS: Cash and Cash Equivalents 132,997 694,491 Receivables, less reserves of $90,000 in 1997 and 1996 2,667,408 2,523,510 Recoverable income taxes - 159,203 Materials and supplies, at cost 300,458 302,821 Prepaid expenses 280,246 221,402 Deferred income taxes 61,377 61,377 3,442,486 3,962,804 OTHER LONG-TERM ASSETS: Prepaid pension cost 1,792,822 1,680,286 Deferred debt expense 448,634 474,049 Deferred rate case expense 78,451 142,385 Notes receivable 947,074 990,448 Deferred regulatory assets 7,834,938 7,827,988 Other 934,732 903,191 12,036,651 12,018,347 $97,743,187 $96,736,434 THE YORK WATER COMPANY Balance Sheets (Unaudited) As Of As Of Sept.30,1997 Dec. 31, 1996 CAPITALIZATION Common stock, no par value, authorized 6,000,000 shares in 1997 and 4,800,000 shares in 1996, outstanding 2, 924,310 shares in 1997 and 2,900,524 shares in 1996 $26,247,969 $25,775,639 Earnings retained in the business 2,753,258 2,227,118 29,001,227 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 339,000 1,237,000 Accounts payable 225,083 376,469 Dividends payable 496,498 531,977 Accrued taxes 368,003 117,668 Advance water revenues 194,638 164,256 Accrued interest 483,774 675,761 Other accrued expenses 340,012 391,483 2,447,008 3,494,614 DEFERRED CREDITS Customers' advances for construction 16,484,168 15,471,245 Contributions in aid of construction 5,606,920 5,606,358 Deferred income taxes 9,650,148 9,744,675 Deferred regulatory liabilities 1,528,582 1,528,582 Deferred employee benefits 1,025,134 888,203 34,294,952 33,239,063 $97,743,187 $96,736,434 THE YORK WATER COMPANY Statements of Income
(Unaudited) (Unaudited) Three Months Ended Nine Months Ended Sept. 30 Sept. 30 1997 1996 1997 1996 WATER OPERATING REVENUES Residential $2,718,675 $2,326,006 $7,527,350 $6,807,405 Commercial and industrial 1,442,767 1,207,861 3,974,357 3,579,330 Other 451,465 387,572 1,278,181 1,081,399 4,612,907 3,921,439 12,779,888 11,468,134 OPERATING EXPENSES Operation and maintenance 1,066,201 991,599 2,834,492 2,612,855 Administrative and general 822,852 840,635 2,347,843 2,353,199 1,889,053 1,832,234 5,182,335 4,966,054 Depreciation 388,085 342,613 1,164,254 1,027,840 Taxes other than income taxes 263,168 227,531 779,045 720,424 Federal and state income taxes 524,469 281,387 1,244,320 864,800 3,064,775 2,683,765 8,369,954 7,579,118 Operating Income 1,548,132 1,237,674 4,409,934 3,889,016 INTEREST EXPENSE AND OTHER EXPENSE/(INCOME) Interest on long-term debt 679,738 679,738 2,039,213 2,039,213 Interest on short-term debt 2,158 97,107 27,670 248,313 Allowance for funds used during construction (12,140) (28,960) (21,642) (87,000) Other income, net (73,132) (47,665) (139,119) (113,215) 596,624 700,220 1,906,122 2,087,311 Net Income $ 951,508 $ 537,454 $2,503,812 $1,801,705 Earnings Per Share $.33 $.22 $.86 $.71 Cash Dividends Per Share $.23 $.23 $.68 $.68 /TABLE THE YORK WATER COMPANY Statements of Cash Flows
(Unaudited) (Unaudited) Nine Months Nine Months Ended Ended Sept.30, 1997 Sept.30, 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $2,503,812 $ 1,801,705 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 1,164,254 1,027,840 Provision for losses on accounts receivable 73,500 56,250 (Decrease) increase in deferred income taxes (including regulatory assets and liabilities) (101,477) 304,766 Changes in assets and liabilities: Increase in accounts receivable (217,398) (44,208) Decrease in recoverable income taxes 159,203 30,584 Decrease in materials and supplies 2,363 6,346 Increase in prepaid expenses and prepaid pension costs (171,380) (190,488) (Decrease) increase in accounts payable, accrued expenses, other liabilities and deferred employee benefits (71,023) 197,643 Increase (decrease) in accrued interest and taxes 58,348 (190,823) Decrease (increase) in other assets 112,176 (238,144) Net cash provided by operating activities 3,512,378 2,761,471 CASH FLOWS FROM INVESTING ACTIVITIES: Construction expenditures (2,727,389) (3,302,315) Customers' advances for construction and contributions in aid of construction 1,013,485 439,661 Net cash used in investing activities (1,713,904) (2,862,654) CASH FLOWS FROM FINANCING ACTIVITIES: Net (repayments)/borrowings under line-of-credit agreements (898,000) 1,389,000 Issuance of common stock under dividend reinvestment plan 413,205 269,023 Issuance of common stock under employee stock purchase plan 59,125 57,991 Dividends paid (1,977,672) (1,725,923) Decrease in notes receivable 43,374 111,092 Net cash (used in)/provided by financing activities (2,359,968) 101,183 Net decrease in cash and cash equivalents (561,494) - Cash and cash equivalents at beginning of period 694,491 - Cash and cash equivalents at end of period $ 132,997 $ - Supplemental disclosures of cash flow information: Cash paid during the year for: Interest, net of amounts capitalized $2,241,957 $2,412,750 Income taxes 1,029,567 619,151 /TABLE 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 nine months ended September 30, 1997 and 1996 were based on weighted average shares outstanding of 2,912,372 and 2,560,824, respectively. 3. Articles of Incorporation 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 (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. 4. Stock Split 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 stock was distributed on June 10, 1997. Shareholders of record received three additional shares of common stock for each share owned. The transaction had no effect on total stockholders' equity. All per share amounts in this report have been restated to reflect the effect of the stock split. 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, 1997 Compared with Three Months Ended September 30, 1996 Water operating revenues for the three months ended September 30, 1997 increased $691,468 or 17.6% compared to the three months ended September 30, 1996. Part of the increase resulted from an increase in consumption, with August 1997 consumption being recorded at our highest level since September 1995. The remaining increase resulted from an increase in rates of 6.0% approved by the Pennsylvania Public Utility Commission (PPUC) effective September 5, 1996. Operating expenses, exclusive of depreciation and taxes, for the three months ended September 30, 1997 increased $56,819 or 3.1%. Expenses incurred in relation to the Information Collection Rule (part of the re-authorization of the Safe Drinking Water Act) and to maintain purification structures were the primary reasons for the increase. Additional costs associated with maintenance of mains, services, and office equipment contributed to the increase. The Company portion of 401k expenses also rose in 1997 due to the participation of union employees and a higher Company match, as a result of a plan amendment, for general and administrative employees. The increase in operating expenses was partially offset by lower workers compensation insurance premiums and reduced health insurance premiums due to higher union employee contributions to the plan. Depreciation expense for the three months ended September 30, 1997 increased $45,472 or 13.3% compared to 1996 as a result of increased depreciable plant. Federal and state income taxes for the three months ended September 30, 1997 increased $243,082 compared to the three months ended September 30, 1996 principally as a result of an increase in taxable net income. Interest on short-term debt for the three months ended September 30, 1997 declined $94,949 when compared to the same period in 1996. The decline was due to a decrease in the average short-term debt outstanding from approximately $5,400,000 in 1996 to approximately $124,000 in 1997. Nine Months Ended September 30, 1997 Compared with Nine Months Ended September 30, 1996 Net income for the nine months ended September 30, 1997 was $2,503,812, an increase of $702,107 (39.0%) compared to the nine months ended September 30, 1996. Water operating revenues for the nine months ended September 30, 1997 increased $1,311,754 (11.4%) compared to the nine months ended September 30, 1996. The increase resulted primarily from an increase in rates of 6.0% approved by the PPUC effective September 5, 1996. Consumption was up in the residential, commercial, and public sectors, while industrial consumption declined in 1997 compared to 1996. Operating expenses, exclusive of depreciation and taxes, for the nine months ended September 30, 1997 increased $216,281 or 4.4%. Increases in electric, maintenance of mains, services and hydrants, and maintenance of facilities including the sediment pond were the primary causes for the increase. In addition, the Company portion of 401k expenses was higher in 1997 due to the participation of union employees, and a higher Company match, as a result of a plan amendment, for general and administrative employees. Computer mapping system and printer maintenance also increased in 1997 compared to 1996. Decreases in workers compensation insurance, meter reading unit expense, and maintenance of pumping equipment partially offset the increased expenses. Depreciation expense for the nine months ended September 30, 1997 increased $136,414 or 13.3% compared to 1996 as a result of increased depreciable plant. Taxes other than income taxes increased $58,621 in 1997 due to higher realty taxes. The Public Utility Commission assessment and capital stock tax were also slightly higher in 1997 than in 1996. Federal and state income taxes for the nine months ended September 30, 1997 increased $379,520 or 43.9% compared to the nine months ended September 30, 1996 principally as a result of an increase in taxable net income. Interest on short-term debt for the nine months ended September 30, 1997 declined $220,643 when compared to the same period in 1996. The decline was due to a decrease in the average short-term debt outstanding from approximately $4,600,000 in 1996 to approximately $500,000 in 1997. Allowance for funds used during construction was $65,358 lower during the nine months ended September 30, 1997 when compared to the nine months ended September 30, 1996. In 1996, interest was capitalized on two large main extensions, as well as the Loganville standpipe, the basin covers, Glen Rock Borough, and the new downtown office building. No such large projects occurred during the first nine months of 1997. 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%. Management does not expect to file for another rate increase until after 1998. Liquidity and Capital Resources During the first nine months of 1997, the per capita volume of water sold did not significantly change compared to the first nine 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 nine months ended September 30, 1997, the Company incurred $2,727,389 of construction expenditures. The Company financed such expenditures primarily through internally generated funds, customers' advances, 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 1997 and 1998 of approximately $4,108,000 and $4,210,000, respectively. These expenditures will be financed in the same manner. During the first nine months 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 September 30, 1997, current assets exceeded current liabilities by $995,478. Short-term borrowings from lines of credit were $339,000. The Company maintains lines of credit aggregating $20,000,000. 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 (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 stock was distributed on June 10, 1997. Shareholders of record received three additional shares of common stock for each share owned. The transaction had no effect on total stockholders' equity. All per share amounts in this report have been restated to reflect the effect of the stock split. 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. 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. In June 1997, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," and No. 131, "Disclosures about Segments of an Enterprise and Related Information." These statements establish standards for reporting and display of comprehensive income and its components and for reporting information about business segments and products in financial statements, and are effective for years beginning after December 15, 1997 Adoption of these statements is not expected to have a material effect on the Company's financial statements. In January 1997, the Securities and Exchange Commission amended regulations and forms, including regulations S-X and S-K, to clarify and expand existing disclosure requirements about accounting policies for certain derivative instruments, and to add new disclosure requirements about the risk of loss from changes in market rates or prices which are inherent in derivatives. Adoption by the Company of the disclosure requirements relating to risk of loss, which requirements are effective for fiscal years ending after June 15, 1998, are not expected to have a material effect on the Company's financial statements. 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 William T. Morris Principal Executive Officer Date: November 12, 1997 /s/ Jeffrey S. Osman Jeffrey S. Osman Principal Financial and Accounting Officer Date: November 12, 1997 EX-27 2
UT 0000108985 YORK WATER CO 3-MOS DEC-31-1997 SEP-30-1997 PER-BOOK 81768685 495365 3442486 8362023 3674628 97743187 26247969 0 2753258 29001227 0 0 32000000 339000 0 0 0 0 0 0 36741960 97743187 4612907 524469 2540306 3064775 1548132 73132 1621264 669756 951508 0 951508 670569 871725 1150319 .33 .33
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