-----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, Vvg5bps2zP7favCEa2rd8viYR8amuxkzuWlJcytYG+IkQpWH0jU0XUQoGN3yKdGc wAR2QAWuhK5K+lZ/0vrOzA== 0000108985-99-000015.txt : 19990513 0000108985-99-000015.hdr.sgml : 19990513 ACCESSION NUMBER: 0000108985-99-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990512 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: 99618045 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 March 31, 1999 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 2,991,889 Shares outstanding as of March 31, 1999 THE YORK WATER COMPANY PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Balance Sheets (Unaudited) As Of As of Mar. 31, 1999 Dec. 31, 1998 UTILITY PLANT, at original cost $103,002,586 $102,088,220 Less-Reserve for depreciation 16,053,663 15,687,003 86,948,923 86,401,217 OTHER PHYSICAL PROPERTY: Less-Reserve for depreciation of $71,773 in 1999 and $70,457 in 1998 493,950 495,267 CURRENT ASSETS: Cash and Cash Equivalents 448,987 257,706 Receivables, less reserves of $120,000 in 1999 and in 1998 2,398,722 2,481,799 Materials and supplies, at cost 338,157 361,400 Prepaid expenses 156,884 174,888 Deferred income taxes 81,836 81,836 3,424,586 3,357,629 OTHER LONG-TERM ASSETS: Prepaid pension cost 1,850,044 1,826,514 Deferred debt expense 397,806 406,277 Deferred rate case expense 10,830 4,820 Notes receivable 780,455 813,075 Deferred regulatory assets 7,991,265 7,959,948 Other 1,270,252 1,214,344 12,300,652 12,224,978 $103,168,111 $102,479,091 THE YORK WATER COMPANY Balance Sheets (Unaudited) As Of As Of Mar. 31, 1999 Dec. 31, 1998 CAPITALIZATION Common stock, no par value, authorized 6,000,000 shares, out- standing 2,991,889 shares in 1999 and 2,979,722 shares in 1998 $ 27,503,082 $ 27,292,726 Earnings retained in the business 3,087,034 3,087,710 30,590,116 30,380,436 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 - - Accounts payable 303,263 290,179 Dividends payable 509,040 506,415 Accrued taxes 440,414 347,244 Advance water revenues 209,314 216,478 Accrued interest 483,774 675,761 Other accrued expenses 385,960 338,431 2,331,765 2,374,508 DEFERRED CREDITS Customers' advances for construction 16,974,532 16,689,050 Contributions in aid of construction 7,017,697 7,080,610 Deferred income taxes 11,200,182 10,967,235 Deferred regulatory liabilities 1,706,139 1,681,584 Deferred employee benefits 1,347,680 1,305,668 38,246,230 37,724,147 $103,168,111 $102,479,091 THE YORK WATER COMPANY Statements of Income (Unaudited) (Unaudited) Three Months Three Months Ended Ended Mar. 31, 1999 Mar. 31, 1998 WATER OPERATING REVENUES Residential $2,460,272 $2,348,525 Commercial and industrial 1,225,187 1,227,561 Other 473,258 441,482 4,158,717 4,017,568 OPERATING EXPENSES Operation and maintenance 883,763 892,827 Administrative and general 848,310 726,760 1,732,073 1,619,587 Depreciation 413,286 409,144 Taxes other than income taxes 266,771 271,687 Federal and state income taxes 398,838 358,112 2,810,968 2,658,530 Operating Income 1,347,749 1,359,038 INTEREST EXPENSE AND OTHER EXPENSE/(INCOME) Interest on long-term debt 679,738 679,738 Interest on interim bank loans 786 15,324 Allowance for funds used during construction (13,261) (26,506) Other income, net (19,073) (8,723) 648,190 659,833 Net Income $ 699,559 $ 699,205 Basic Earnings Per Share $0.23 $0.24 Cash Dividends Per Share $0.24 $0.23 THE YORK WATER COMPANY Statements of Cash Flows (Unaudited) (Unaudited) Three Months Three Months Ended Ended Mar. 31, 1999 Mar. 31, 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 699,559 $ 699,205 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 413,286 409,144 Provision for losses on accounts receivable 29,250 25,500 Increase in deferred income taxes (including regulatory assets and liabilities) 226,185 226,225 Changes in assets and liabilities: Decrease in accounts receivable 53,827 81,252 Decrease in recoverable income taxes - 102,521 Decrease (increase) in materials and supplies 23,243 (792) (Increase) decrease in prepaid expenses and prepaid pension costs (5,526) 14,259 Increase (decrease) in accounts payable, accrued expenses, other liabilities and deferred employee benefits 98,086 (155,101) Decrease in accrued interest and taxes (98,817) (80,189) Decrease (increase) in other assets 52,559 (9,404) Net cash provided by operating activities 1,491,652 1,312,620 CASH FLOWS FROM INVESTING ACTIVITIES: Construction expenditures (1,065,681) (924,638) Customers' advances for construction and contributions in aid of construction 222,569 471,262 Net cash used in investing activities (843,112) (453,376) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under line-of-credit agreements - (143,000) Issuance of common stock under dividend reinvestment plan 190,961 186,221 Issuance of common stock under employee stock purchase plan 19,395 19,076 Dividends paid (700,235) (674,999) Decrease in notes receivable 32,620 27,145 Net cash used in financing activities (457,259) (585,557) Net increase in cash and cash equivalents 191,281 273,687 Cash and cash equivalents at beginning of period 257,706 - Cash and cash equivalents at end of period $ 448,987 $ 273,687 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest, net of amounts capitalized $ 859,251 $ 860,542 Income taxes 44,641 29,365 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, 1998. 2. Basic Earnings Per Share Basic earnings per share for the three months ended March 31, 1999 and 1998 were based on weighted average shares outstanding of 2,988,884 and 2,942,258, 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 March 31, 1999 Compared with Three Months Ended March 31, 1998 Water operating revenues for the three months ended March 31, 1999 increased $141,149 or 3.5% compared to the three months ended March 31, 1998. Residential consumption increased 2.7% , while net commercial and industrial consumption declined by 1.5%. Other revenues including public consumption and fire service revenues increased in 1999 compared to 1998. Operating expenses, exclusive of depreciation and taxes, for the three months ended March 31, 1999 increased $112,486 or 6.9% compared to the three months ended March 31, 1998. Expenses related to the printing of our first water quality report, legal fees related to strategic planning and shareholder rights, year 2000 system maintenance, and increases in workers compensation, pumping equipment maintenance, and payroll expenses were the primary reasons for the increase. Timing differences in the payment of dues and office supplies accounted for the remainder of the increase. Declines in rate case expense, filter plant maintenance, and maintenance of service lines and hydrants partially offset the increase. Federal and state income taxes for the three months ended March 31, 1999 increased $40,726 or 11.4% when compared to the same period in 1998 primarily as a result of an increase in taxable income. The effective tax rates for the quarters ended March 31, 1999 and 1998 were 36.3 and 33.8, respectively. Interest on interim bank loans decreased $14,538 or 94.8% through March 31, 1999 compared to March 31, 1998 due to a decrease in short-term debt outstanding in 1999. The average short-term debt outstanding in 1999 and 1998 was $48,611 and $882,000, respectively. Allowance for funds used during construction for the first three months of 1999 decreased $13,245 when compared to the same period in 1998 due mainly to the completion of 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 April 22, 1999 seeking a $1,535,946 or 8.8% increase in annual revenues. The PPUC is currently examining the potential rate increase. THE YORK WATER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES During the first three months of 1999, the per capita volume of water sold did not significantly change compared to the first three months of 1998. 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 1999, the Company had $1,065,681 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 1999, net cash provided by operating activities exceeded net cash used in investing and financing activities. The Company anticipates that during the remainder of 1999 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, 1999, current assets exceeded current liabilities by $1,092,821. Short-term borrowings from lines of credit as of March 31, 1999 were $0. 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. YEAR 2000 This statement constitutes a year 2000 readiness disclosure by The York Water Company, under the Year 2000 Information and Readiness Disclosure Act. THE YORK WATER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is aware of the issues associated with the programming code in existing computer systems as the millennium (year 2000) approaches. The "year 2000" issue is pervasive and complex as virtually every computer operation will be affected in some way by the rollover of the two digit year value to 00. The issue is whether computer systems will properly recognize date sensitive information when the year changes to 2000. Systems that do not properly recognize such information could generate erroneous data or cause a system to fail. The Company has done an inventory of programs and has developed a plan, including a timetable, for solving and testing year 2000 issues. The Company has identified three areas that do have year 2000 compliance issues: Accounting, communications and embedded technology. As far as accounting, the Company will be replacing all of its current software. The software upgrade is approximately 60% complete and is expected to be completely installed by the end of second quarter 1999. This will allow for testing and adjustments to be made through the remainder of 1999. Current software will be used in the event something unanticipated occurs with the software upgrade. The Company's electronic communications review has been completed and all necessary changes have been made. Only slight modifications were required. In the area of embedded technology, the Company is working with the manufacturers of all our time-sensitive equipment to make sure the date field in the software has been located and updated to accept a four-digit date. The Company has identified filter plant control units, PC's, burglar alarms, and the check encoder as some of the items to be addressed for year 2000 problems. The Company expects to solve problems and test solutions in this area by the end of June 1999. As of March 31, 1999, the Company incurred costs of approximately $68,000, and estimates total costs of year 2000 remediation efforts to reach $100,000. While the Company anticipates that critical vendors and suppliers will be year 2000 compliant, contingency plans will be put in place so that water service to customers will not be interrupted. In one of our most critical areas, energy, the Company already has emergency power generators installed as backups at most locations. Those locations which currently have no emergency backup, will have generators by the year 2000. THE YORK WATER COMPANY ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS The Company's 4.75% Industrial Development Authority Revenue Refunding bonds Series 1994 have mandatory tender dates of May 15, 1999 and May 15, 2004. The bonds will be remarketed and the interest rate redetermined to 4.40% on May 15, 1999. Under the terms of the bonds, existing bond holders may elect to retain their bonds at the 4.40% interest rate. All bonds not retained by current bond holders have been remarketed. The newly issued bonds will mature on May 15, 2009. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The Company filed a report on Form 8-K on January 26, 1999, which included a statement providing for a Shareholder Rights Plan designed to protect the Company's shareholders in the event of an unsolicited, unfair offer to acquire the Company. 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, 1999 Jeffrey S. Osman Principal Financial and Accounting Officer Date: May 12, 1999 EX-27 2
UT 0000108985 YORK WATER CO 3-MOS DEC-31-1999 MAR-31-1999 PER-BOOK 86948923 493950 3424586 8399901 3900751 103168111 27503082 0 3087034 30590116 0 0 32000000 0 0 0 0 0 0 0 40577995 103168111 4158717 398838 2412130 2810968 1347749 19073 1366822 667263 699559 0 699559 700235 871725 1491652 .23 .23
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