-----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, RFIv3NeO8lyRnxCYInt+oJAci/UTB29XxC49DWGiJNn64dRZmEUwmnAI9pLfWwDW nU+KdYEZNFl+Lll8B8gcBA== 0000108985-99-000017.txt : 19990816 0000108985-99-000017.hdr.sgml : 19990816 ACCESSION NUMBER: 0000108985-99-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990813 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: 99688059 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, 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 3,003,486 Shares outstanding as of June 30, 1999 THE YORK WATER COMPANY PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets (Unaudited) As Of As of June 30, 1999 Dec. 31, 1998 UTILITY PLANT, at original cost $104,682,348 $102,088,220 Less-Reserve for depreciation 16,327,184 15,687,003 88,355,164 86,401,217 OTHER PHYSICAL PROPERTY: Less-Reserve for depreciation of $73,089 in 1999 and $70,457 in 1998 506,020 495,267 CURRENT ASSETS: Cash and cash equivalents 120,154 257,706 Receivables, less reserves of $120,000 in 1999 and in 1998 2,608,634 2,481,799 Recoverable income taxes 71,608 - Materials and supplies, at cost 353,622 361,400 Prepaid expenses 263,933 174,888 Deferred income taxes 81,836 81,836 3,499,787 3,357,629 OTHER LONG-TERM ASSETS: Prepaid pension cost 1,873,574 1,826,514 Deferred debt expense 409,218 406,277 Deferred rate case expense 78,770 4,820 Notes receivable 776,048 813,075 Deferred regulatory assets 8,054,383 7,959,948 Other 1,310,757 1,214,344 12,502,750 12,224,978 $104,863,721 $102,479,091 THE YORK WATER COMPANY Balance Sheets (Unaudited) As Of As Of June 30, 1999 Dec. 31, 1998 CAPITALIZATION Common stock, no par value, authorized 31,000,000 shares in 1999 and 6,000,000 shares in 1998, outstanding 3,003,486 shares in 1999 and 2,979,722 shares in 1998 $ 27,700,732 $ 27,292,726 Earnings retained in the business 3,115,066 3,087,710 30,815,798 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 4.40% 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 509,000 - Accounts payable 479,849 290,179 Dividends payable 523,820 506,415 Accrued taxes 46,599 347,244 Advance water revenues 220,353 216,478 Accrued interest 674,974 675,761 Other accrued expenses 375,895 338,431 2,830,490 2,374,508 DEFERRED CREDITS Customers' advances for construction 17,458,068 16,689,050 Contributions in aid of construction 7,018,563 7,080,610 Deferred income taxes 11,369,691 10,967,235 Deferred regulatory liabilities 1,827,868 1,681,584 Deferred employee benefits 1,543,243 1,305,668 39,217,433 37,724,147 $104,863,721 $102,479,091 THE YORK WATER COMPANY Statements of Income (Unaudited) (Unaudited) Three Months Ended Six Months Ended June 30 June 30 1999 1998 1999 1998 WATER OPERATING REVENUES Residential $2,590,360 $2,480,183 $5,050,632 $4,828,708 Commercial and industrial 1,335,046 1,327,641 2,560,233 2,555,202 Other 478,064 451,453 951,322 892,935 4,403,470 4,259,277 8,562,187 8,276,845 OPERATING EXPENSES Operation and maintenance 1,024,540 1,048,226 1,908,303 1,941,053 Administrative and general 930,665 752,673 1,778,975 1,479,433 Depreciation 413,286 409,145 826,572 818,289 Taxes other than income taxes 267,807 259,423 534,578 531,110 2,636,298 2,469,467 5,048,428 4,769,885 Operating Income 1,767,172 1,789,810 3,513,759 3,506,960 INTEREST EXPENSE AND OTHER EXPENSE/(INCOME) Interest on long-term debt 678,949 679,737 1,358,687 1,359,475 Interest on short-term debt 3,902 7,231 4,688 22,555 Allowance for funds used during construction (16,621) (25,641) (29,882) (52,147) Other income, net (61,352) (26,091) (80,425) (34,814) 604,878 635,236 1,253,068 1,295,069 Income before income taxes 1,162,294 1,154,574 2,260,691 2,211,891 Federal and state income taxes 431,167 395,567 830,005 753,679 Net Income $ 731,127 $ 759,007 $1,430,686 $1,458,212 Basic Earnings Per Share $0.25 $0.25 $0.48 $0.49 Cash Dividends Per Share $0.23 $0.23 $0.47 $0.46 THE YORK WATER COMPANY Statements of Cash Flows (Unaudited) (Unaudited) Six Months Six Months Ended Ended June 30, 1999 June 30, 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $1,430,686 $1,458,212 Adjustments to reconcile net income to net cash provided by operating activities Depreciation 826,572 818,289 Provision for losses on accounts receivable 58,500 51,000 Increase in deferred income taxes (including regulatory assets and liabilities) 454,305 338,163 Changes in assets and liabilities: Increase in accounts receivable (185,335) (79,857) (Increase) decrease in recoverable income taxes (71,608) 397,141 Decrease in materials and supplies 7,778 23,522 Increase in prepaid expenses and prepaid pension costs (136,105) (135,185) Increase in accounts payable, accrued expenses, other liabilities and deferred employee benefits 485,989 106,828 Decrease in accrued interest and taxes (301,432) (9,280) Increase in other assets (53,539) (53,065) Net cash provided by operating activities 2,515,811 2,915,768 CASH FLOWS FROM INVESTING ACTIVITIES: Construction expenditures (2,911,037) (2,368,371) Customers' advances for construction and contributions in aid of construction 706,971 1,336,167 Decrease in notes receivable 37,027 53,907 Net cash used in investing activities (2,167,039) (978,297) CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings (repayments) under line-of-credit agreements 509,000 (343,000) Issuance of common stock under dividend reinvestment plan 369,893 375,355 Issuance of common stock under employee stock purchase plan 38,113 39,582 Dividends paid (1,403,330) (1,352,281) Net cash used in financing activities (486,324) (1,280,344) Net (decrease) increase in cash and cash equivalents (137,552) 657,127 Cash and cash equivalents at beginning of period 257,706 - Cash and cash equivalents at end of period $ 120,154 $ 657,127 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest, net of amounts capitalized $1,332,768 $1,328,746 Income taxes 588,903 417,298 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 1998. Operating results for the three month and six month periods ended June 30, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 2. Basic Earnings Per Share Basic earnings per share for the six months ended June 30, 1999 and 1998 were based on weighted average shares outstanding of 2,994,730 and 2,948,130, 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, 1999 Compared with Three Months Ended June 30, 1998 Net income for the three months ended June 30, 1999 was $731,127, a decrease of $27,880 or 3.7% compared to the three months ended June 30, 1998. Water operating revenues for the three months ended June 30, 1999 increased $144,193 or 3.4% compared to the three months ended June 30, 1998. Consumption was up by 2.4% overall with the largest increase occurring in the residential area. Operating expenses for the three months ended June 30, 1999 increased $166,831 or 6.8% compared to the three months ended June 30, 1998. Deferred compensation, retirement costs, legal fees related to union negotiations, stock transfer fees, year 2000 system maintenance and reduced premium credits for package and workers compensation insurance were the primary reasons for the increase. Declines in electric costs, water analysis fees, filter plant maintenance, rate case expense, and service line maintenance partially offset the increase. Federal and state income taxes for the three months ended June 30, 1999 increased $35,600 or 9.0% when compared to the same period in 1998 primarily as a result of an increase in taxable net income. The effective tax rates for the quarters ended June 30, 1999 and 1998 were 37.1% and 34.3%, respectively. Six Months Ended June 30, 1999 Compared with Six Months Ended June 30, 1998 Net income for the six months ended June 30, 1999 was $1,430,686, a decrease of $27,526 or 1.9% compared to the six months ended June 30, 1998. Water operating revenues for the six months ended June 30, 1999 increased $285,342 or 3.4% compared to six months ended June 30, 1998. Residential consumption increased 2.7%, while net commercial and industrial consumption declined slightly (.1%). Other revenues including public consumption and fire service revenues increased in 1999 compared to 1998. THE YORK WATER COMPANY Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Operating expenses for the six months ended June 30, 1999 increased $278,543 or 5.8% compared to the six months ended June 30, 1998. Deferred compensation, retirement costs, expenses related to the printing of our first water quality report, legal fees related to strategic planning, shareholder rights, and union negotiations, year 2000 system maintenance, and reduced premium credits for package and workers compensation insurance were the primary reasons for the increase. Declines in electric costs, filter plant maintenance, rate case expense, and service line and hydrant maintenance expenses partially offset the increase. Interest on interim bank loans decreased $17,867 or 79.2% through June 30, 1999 compared to June 30, 1998 due to a decrease in short-term debt outstanding in 1999. The average short-term debt outstanding in 1999 and 1998 was $143,149 and $641,972, respectively. Allowance for funds used during construction for the first six months of 1999 decreased $22,265 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. Federal and state income taxes for the six months ended June 30, 1999 increased $76,326 or 10.1% when compared to the same period in 1998 primarily as a result of an increase in taxable income. The effective tax rates for the first half of 1999 and 1998 were 36.7% and 34.1%, respectively. 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 six months of 1999, the per capita volume of water sold did not significantly change compared to the first six months of 1998. The Company does not anticipate any change in the level of water usage, other than the unknown effects of the drought, which could have a material impact on future results of operations. During the first half of 1999, the Company had $2,911,037 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 1999, net cash used in investing and financing activities exceeded net cash provided by operating activities. The Company anticipates that during the remainder of 1999 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 expected to be used to satisfy the need for additional cash. As of June 30, 1999, current assets exceeded current liabilities by $669,297. Short-term borrowings from lines of credit as of June 30, 1999 were $509,000. The Company maintains lines of credit aggregating $17,000,000. 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 is replacing all of its current software. The software upgrade is approximately 80% complete and is expected to be completely installed by the end of third 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. The Company's embedded technology review has been completed and all necessary changes have been made. Only slight modifications were required. As of June 30, 1999, the Company incurred costs of approximately $98,000, and estimates total costs of year 2000 remediation efforts to reach $110,000. 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. Drought Emergency On July 20, 1999, Pennsylvania Governor Tom Ridge signed a proclamation declaring a drought emergency in the Company's service territory, and calling on the Company's customers to conserve water. The Company is not able to determine the effect on the Company's financial position, results of operation or liquidity. Through the date of this filing, the effects of the drought have not had a material impact on water usage. 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 3, 1999 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: Paul W. Ware John L. Finlayson Chloe R. Eichelberger For election2,253,398.695 2,251,282.695 2,251,599.695 Shares withheld 6,992.000 9,107.000 8,791.000 The following Directors' terms of office continued after the Annual Meeting. Frank Motter Irvin S. Naylor George Hay Kain, III William T. Morris Michael W. Gang Horace Keesey III (2) To amend the Amended and Restated Articles of Incorporation of the Company to increase the number of authorized shares of capital stock from 6,000,000 to 31,000,000. For Approval 1,945,056.695 Against Approval 222,735.000 Abstaining From Voting 27,381.000 (3) To appoint KPMG LLP as independent accountants to audit the financial statements of the Company for the year 1999. The actions taken by the Shareholders concerning the appointment of KPMG LLP as independent accountants are as follows: For Approval 2,252,456.545 Against Approval 1,281.150 Abstaining From Voting 6,649.000 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 13, 1999 Jeffrey S. Osman Principal Financial and Accounting Officer Date: August 13, 1999 EX-27 2
UT 0000108985 YORK WATER CO 6-MOS DEC-31-1999 JUN-30-1999 PER-BOOK 88355164 506020 3499787 8542371 3960379 104863721 27700732 0 3115066 30815798 0 0 32000000 509000 0 0 0 0 0 0 41538923 104863721 8562187 830005 5048428 5878433 2683754 80425 2764179 1333493 1430686 0 1430686 1403330 1359475 2515811 .48 .48
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