-----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, AmQ+H1LDDJHpyXemiAdTo4bYlWLMhHCqJKLpjFlqVhUueBY3JenbkmGLzeMExj0t MLRSWJND7RVkkA2RgZ2p8Q== 0000108985-98-000009.txt : 19980812 0000108985-98-000009.hdr.sgml : 19980812 ACCESSION NUMBER: 0000108985-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980811 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: 98681890 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 June 30, 1998 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 2,956,381 Shares outstanding as of June 30, 1998 THE YORK WATER COMPANY PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets (Unaudited) As Of As of June 30,1998 Dec. 31, 1997 UTILITY PLANT, at original cost $99,761,632 $97,487,926 Less-Reserve for depreciation 15,044,271 14,332,890 84,717,361 83,155,036 OTHER PHYSICAL PROPERTY: Less-Reserve for depreciation of $67,711 in 1998 and $65,193 in 1997 499,013 498,859 CURRENT ASSETS: Cash and cash equivalents 657,127 - Receivables, less reserves of $105,000 in 1998 and $110,000 in 1997 2,568,932 2,540,075 Recoverable income taxes 150,041 547,182 Materials and supplies, at cost 341,315 337,837 Prepaid expenses 250,475 190,314 Deferred income taxes 75,017 75,017 4,015,907 3,690,425 OTHER LONG-TERM ASSETS: Prepaid pension cost 1,807,418 1,732,394 Deferred debt expense 423,220 440,163 Deferred rate case expense 14,264 57,055 Notes receivable 860,027 913,934 Deferred regulatory assets 7,412,338 7,287,799 Other 1,178,811 1,078,409 11,696,078 11,509,754 $100,928,359 $98,854,074 THE YORK WATER COMPANY Balance Sheets (Unaudited) As Of As Of June 30,1998 Dec. 31, 1997 CAPITALIZATION Common stock, no par value, authorized 6,000,000 shares in 1998 and in 1997, outstanding 2,956,381 shares in 1998 and 2,934,782 shares in 1997 $26,868,810 $26,453,873 Earnings retained in the business 2,802,844 2,696,913 29,671,654 29,150,786 LONG-TERM DEBT 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 4.75% Industrial Development Authority Revenue Refunding Bonds, Series 1994, due 2009 2,700,000 2,700,000 32,000,000 32,000,000 CURRENT LIABILITIES Short-term borrowings 500,000 843,000 Accounts payable 471,534 551,402 Dividends payable 487,797 488,483 Accrued taxes 105,793 115,073 Advance water revenues 205,123 182,118 Accrued interest 675,761 675,761 Other accrued expenses 381,300 345,939 2,827,308 3,201,776 DEFERRED CREDITS Customers' advances for construction 17,409,487 16,219,638 Contributions in aid of construction 6,007,805 5,861,487 Deferred income taxes 10,256,511 9,807,788 Deferred regulatory liabilities 1,586,964 1,572,985 Deferred employee benefits 1,168,630 1,039,614 36,429,397 34,501,512 $100,928,359 $98,854,074 THE YORK WATER COMPANY Statements of Income
(Unaudited) (Unaudited) Three Months Ended Six Months Ended June 30 June 30 1998 1997 1998 1997 WATER OPERATING REVENUES Residential $2,480,183 $2,457,077 $4,828,708 $4,808,675 Commercial and industrial 1,327,641 1,278,722 2,555,202 2,531,590 Other 451,453 424,306 892,935 826,716 4,259,277 4,160,105 8,276,845 8,166,981 OPERATING EXPENSES Operation and maintenance 1,048,226 972,281 1,941,053 1,768,291 Administrative and general 752,673 822,707 1,479,433 1,524,991 1,800,899 1,794,988 3,420,486 3,293,282 Depreciation 409,145 388,085 818,289 776,169 Taxes other than income taxes 259,423 252,580 531,110 515,877 Federal and state income taxes 395,567 317,755 753,679 719,851 2,865,034 2,753,408 5,523,564 5,305,179 Operating Income 1,394,243 1,406,697 2,753,281 2,861,802 INTEREST EXPENSE AND OTHER EXPENSE/(INCOME) Interest on long-term debt 679,737 679,737 1,359,475 1,359,475 Interest on short- term debt 7,231 9,161 22,555 25,512 Allowance for funds used during construction (25,641) (6,277) (52,147) (9,502) Other income, net (26,091) (62,029) (34,814) (65,987) 635,236 620,592 1,295,069 1,309,498 Net Income $759,007 $786,105 $1,458,212 $1,552,304 Basic Earnings Per Share $.25 $.27 $.49 $.53 Cash Dividends Per Share $.23 $.23 $.46 $.45
THE YORK WATER COMPANY Statements of Cash Flows
(Unaudited) (Unaudited) Six Months Six Months Ended Ended June 30, 1998 June 30, 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,458,212 $1,552,304 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 818,289 776,169 Provision for losses on accounts receivable 51,000 45,000 Increase (decrease) in deferred income taxes (including regulatory assets and liabilities) 338,163 (163,817) Changes in assets and liabilities: Increase in accounts receivable (79,857) (83,847) Decrease in recoverable income taxes 397,141 159,203 Decrease (increase) in materials and supplies 23,522 (12,631) Increase in prepaid expenses and prepaid pension costs (135,185) (127,933) Increase (decrease) in accounts payable, accrued expenses, other liabilities and deferred employee benefits 106,828 (9,655) (Decrease) increase in accrued interest and taxes (9,280) 212,415 (Increase) decrease in other assets (53,065) 14,851 Net cash provided by operating activities 2,915,768 2,362,059 CASH FLOWS FROM INVESTING ACTIVITIES: Construction expenditures (2,368,371) (1,469,636) Customers' advances for construction and contributions in aid of construction 1,336,167 647,074 Net cash used in investing activities (1,032,204) (822,562) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under line-of-credit agreements (343,000) (1,237,000) Issuance of common stock under dividend reinvestment plan 375,355 240,462 Issuance of common stock under employee stock purchase plan 39,582 39,323 Dividends paid (1,352,281) (1,307,103) Decrease in notes receivable 53,907 49,921 Net cash used in financing activities (1,226,437) (2,214,397) Net increase (decrease) in cash and cash equivalents 657,127 (674,900) Cash and cash equivalents at beginning of period - 694,491 Cash and cash equivalents at end of period 657,127 $ 19,591 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest, net of amounts capitalized $1,328,746 $1,378,194 Income taxes 417,298 546,217
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 1997. Operating results for the three month and six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. 2. Basic Earnings Per Share Basic earnings per share for the six months ended June 30, 1998 and 1997 were based on weighted average shares outstanding of 2,948,130 and 2,910,164, respectively. 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, 1998 Compared with Three Months Ended June 30, 1997 Water operating revenues for the three months ended June 30, 1998 increased $99,172 or 2.4% compared to the three months ended June 30, 1997. Consumption was up slightly in all sectors. Operating expenses, exclusive of depreciation and taxes, for the three months ended June 30, 1998 increased $5,911 or .3% compared to the three months ended June 30, 1997. Increases in water analysis fees, pension expense, year 2000 system maintenance, main maintenance, deferred compensation and retirement costs caused the increase. Workers compensation and package commercial insurance credits, lower meter reading expenses, reduced postage, legal fees, and lower hydrant maintenance costs almost negated the increase. Depreciation expense for the three months ended June 30, 1998 increased $21,060 or 5.4% compared to the three months ended June 30, 1997 due to increased plant investment. Federal and state income taxes for the three months ended June 30, 1998 increased $77,812 or 24.5% compared to the three months ended June 30, 1997 principally as a result of an increase in taxable net income. The effective tax rates for the quarters ended June 30, 1998 and 1997 were 34.3% and 28.8%, respectively. Allowance for funds used during construction for the three months ended June 30, 1998 increased $19,364 when compared to the same period in 1997. The increase was due to two main projects at the Southern York County main extension and the Hametown Booster Station. Six Months Ended June 30, 1998 Compared with Six Months Ended June 30, 1997 Net income for the six months ended June 30, 1998 was $1,458,212, a decrease of $94,092 (6.1%) compared to the six months ended June 30, 1997. Water operating revenues for the six months ended June 30, 1998 increased $109,864 (1.3%) compared to six months ended June 30, 1997. Consumption was higher in the residential, commercial and other sectors, while declining slightly in the industrial sector. Operating expenses, exclusive of depreciation and taxes, for the six months ended June 30, 1998 increased $127,204 or 3.9% compared to the six months ended June 30, 1997. The main causes of the increase were higher pension expense, main, service and filter plant maintenance, and additional deferred compensation and supplemental retirement plan liabilities. Expenses for water analysis required by the Safe Drinking Water Act and computer system maintenance for the year 2000 added to the increase. These increases were significantly offset by workers compensation and package commercial premium credits, reduced legal fees, lower postage and lower meter reading expenses. Depreciation expense for the six months ended June 30, 1998 increased $42,120 or 5.4% compared to the six months ended June 30, 1997 due to increased plant investment. Federal and state income taxes for the six months ended June 30, 1998 increased $33,828 or 4.7% when compared to the same period in 1997 principally as a result of an increase in taxable income. The effective tax rates for the year-to-date periods ended June 30, 1998 and 1997 were 34.1% and 31.7%, respectively. Allowance for funds used during construction for the first six months of 1998 increased $42,645 when compared to the same period in 1997. The increase was due to two main projects at the Southern York County main extension and the Hametown Booster Station. 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 9.6% 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%. The Company does not expect to file for another rate increase until after 1998. Liquidity and Capital Resources During the first half of 1998, the per capita volume of water sold did not significantly change compared to the first half of 1997. 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 six months ended June 30, 1998, the Company had $2,368,371 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 1998, net cash provided by operating activities exceeded net cash used in investing and financing activities. The Company anticipates that during the remainder of 1998 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 June 30, 1998, current assets exceeded current liabilities by $1,188,599. Short-term borrowings from lines of credit as of June 30, 1998 were $500,000. 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. 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 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, did not have a material effect on the Company's financial statements. In June 1997, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards No. 130, "Reporting Comprehensive Income," and No. 131, "Disclosure 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 did not have a material effect on the Company's financial statements. In February 1998, the FASB issued Statement of Financial Accounting Standards No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits" (SFAS 132) which amends the disclosure requirements of Statements No. 87, "Employers' Accounting for Pensions" (SFAS 87), No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits" (SFAS 88), and No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions (SFAS 106). The statement is effective for fiscal years beginning after December 15, 1997. Adoption of this statement did not have a material impact on the Company's financial position, results of operations, or liquidity as of June 30, 1998. In June 1998, the FASB issued Statement of Financial Position No. 133, "Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). The statement establishes accounting and reporting standards for derivative instruments and is effective for fiscal years beginning after June 15, 1999. Adoption of this statement is not expected to have a material effect on the Company's financial position, results of operations, or liquidity. THE YORK WATER COMPANY Part II - Other Information Item 4. Results of Votes of Security Holders The Annual Meeting of the Shareholders of The York Water Company was convened May 4, 1998 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: Irvin S. Naylor William T. Morris Horace Keesey III For election 2,248,968.567 2,265,726.949 2,254,959.036 Shares withheld 85,297.234 77,363.770 81,303.921 The following Directors' terms of office continued after the Annual Meeting. Frank Motter Paul W. Ware George Hay Kain, III John L. Finlayson Michael W. Gang Chloe R. Eichelberger (2) To appoint KPMG Peat Marwick LLP as independent accountants to audit the books and accounts of the Company for the year 1998. The actions taken by the Shareholders concerning the appointment of KPMG Peat Marwick LLP as independent accountants are as follows: For Approval 2,321,587.578 Against Approval 752.578 Abstaining From Voting 11,562.799 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: August 10, 1998 Jeffrey S. Osman Principal Financial and Accounting Officer Date: August 10, 1998 EX-27 2
UT 0000108985 YORK WATER CO 3-MOS DEC-31-1998 JUN-30-1998 PER-BOOK 84717361 499013 4015907 7849822 3846256 100928359 26868810 0 2802844 29671654 0 0 32000000 500000 0 0 0 0 0 0 38756705 100928359 4259277 395567 2469467 2865034 1394243 26091 1420334 661327 759007 0 759007 677282 487750 1603148 .25 .25
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