SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission file number 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 17405
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 845-3601
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
The aggregate market value of the Common Stock, no par value,
held by nonaffiliates of the registrant (based on the bid price
of such stock) on February 10, 2000 was $50,067,274.
As of February 10, 2000 there were 2,989,091 shares of Common
Stock, no par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 1999 Annual Report to Shareholders are
incorporated by reference into Part II.
Portions of the Proxy Statement for the Company's 1999 Annual
Meeting of Shareholders are incorporated by reference into Part
III.
PART I
Item 1. Business.
FORWARD-LOOKING STATEMENTS
This annual report on Form 10-K contains certain
forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995,
including statements made with respect to the results
of operations and businesses of the Company. Words
such as "may," "should," "believe," "anticipate,"
"estimate," "expect," "intend," "plan" and similar
expressions are intended to identify forward-looking
statements. Forward-looking statements include certain
information relating to the Company's business
strategy, including the markets in which it operates,
the services it provides, its plans for construction,
its expansion of its service territories, water usage
by its customers and its plans to invest in new
technologies. These forward-looking statements are
based upon management's current plans, expectations,
estimates and assumptions and are subject to a number
of risks and uncertainties that could significantly
affect current plans, anticipated actions and the
Company's financial condition and results of
operations. Factors that may cause actual results to
differ materially from those discussed in such
forward-looking statements include, among others, the
following possibilities: (i) weather conditions,
particularly the amount of rainfall; (ii) the level of
commercial and industrial business activity within the
Company's service territory; (iii) construction of new
housing within the Company's service territory; (iv)
governmental regulations affecting the Company's rates
and service obligations; and (v) general economic and
business conditions which are less favorable than
expected. The Company does not intend to update these
cautionary statements.
(a) General development of business.
The Company is a corporation duly organized under the laws of the
Commonwealth of Pennsylvania in 1816.
(b) Financial information about industry segments.
The Company operates in only one segment, the impounding,
purification and distribution of water.
(c) Narrative description of business.
The business of the Company is to impound, purify and distribute
water. The Company operates entirely within its franchised
territory located in York County, Pennsylvania. The Company is
regulated by the Pennsylvania Public Utility Commission (PPUC) in
the areas of billing, payment procedures, dispute processing,
terminations, service territory, and rate setting. The Company
must obtain PPUC approval before changing any of the
aforementioned procedures. Water service is supplied through the
Company's own distribution system to the City of York, the
Boroughs of North York, West York, Manchester, Mount Wolf, New
Salem, Hallam, Jacobus, Loganville, Yorkana, Seven Valleys, East
Prospect, Jefferson, Glen Rock, New Freedom, Railroad, and
portions of the Townships of Manchester, East Manchester, West
Manchester, North Codorus, Shrewsbury, North Hopewell, Hopewell,
Springettsbury, Spring Garden, Conewago, Springfield, York,
Hellam, Windsor, Lower Windsor, Dover and Jackson. The Company
obtains its water supply from the south branch and east branch of
the Codorus Creek which drains an area of approximately 117
square miles. The Company's present average daily consumption is
20,928,000 gallons, and its present safe daily yield is
29,900,000 gallons.
The Company's service territory has an estimated population of
144,000. Territory expansion during 1999 included: the
completion of water mains and appurtenances to serve Railroad
Borough, completion of interconnection with New Freedom Borough,
finalization of Conewago Township as a water district, and
completion of main to Conewago Township. Industry of the
Company's service territory is diversified, manufacturing such
items as fixtures and furniture, electrical machinery, food
products, paper, ordnance, textile products, air conditioning,
barbells, etc. In the area served by the Company under the
regulation of the PPUC there are no competitors.
An internal evaluation of adding an additional source of supply
was conducted during 1998. Available options were analyzed and
turned over to an external source for further analysis and
costing. A prior study indicated that no new source of supply
would be required before the year 2020. The Company expects that
one new tank site may be needed, but no new booster stations will
be required within the next five years.
The Company's business is somewhat dependent on weather
conditions, particularly the amount of rainfall; however, minimum
customer charges are in place, and the Company will be able to
cover fixed costs of operations.
The Company's business does not require large amounts of working
capital and is not dependent upon any single customer or a very
few customers. Operating revenue is derived from the following
sources and in the following percentages: residential, 58%;
commercial and industrial, 31%; other, 11%. The Company
presently has 89 employees.
During the last five years ended in 1999, the Company has
maintained an increasing growth in number of customers and
distribution facilities as shown by the following chart:
1999 1998 1997 1996 1995
Average daily
consumption
(gallons
per day) 20,928,000 19,488,000 19,405,000 18,593,000 19,657,000
Miles of
mains
at year end 696 671 655 641 622
Additional
distribution
mains
installed
(ft.) 130,262 85,431 77,274 78,619 84,515
Number of
customers 48,144 47,173 46,458 45,800 44,879
Population
served 144,000 142,000 140,700 143,000 140,000
During 1999, the per capita volume of water sold did not
significantly change compared to 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.
Item 2. Properties.
The accounting and executive offices of the Company are located
in two two-story brick and masonry buildings, containing
approximately 21,861 square feet of floor space, at 124 and 130
East Market Street, York, Pennsylvania.
The Company has two impounding dams located in York and
Springfield Townships adjoining the Borough of Jacobus to the
south. The lower dam is constructed of compacted earth with a
concrete core wall and is 660 feet long and 50 feet high and
creates a reservoir covering approximately 220 acres containing
about 1,150,000,000 gallons of water. About 800 acres
surrounding the reservoir are planted with more than 1,200,000
evergreen trees which the Company believes will protect the area
both from pollution and also from soil erosion which might
otherwise fill the reservoir with silt. The upper dam is
constructed of compacted earth and is 1,000 feet long and 50 feet
high and creates a reservoir covering approximately 290 acres
containing about 1,600,000,000 gallons of water. About 600 acres
surrounding the reservoir are planted with grass which the
Company believes will protect the area both from pollution and
also from soil erosion which might otherwise fill the reservoir
with silt.
The Company's main pumping station is located in Spring Garden
Township on the south branch of the Codorus Creek about 1,500
feet upstream from its confluence with the west branch of the
Codorus Creek and about four miles downstream from the Company's
lower impounding dam. The pumping station presently houses
pumping equipment consisting of three electrically driven
centrifugal pumps and two diesel-engine driven centrifugal pumps
with a combined pumping capacity of 75,000,000 gallons per day.
From here, raw water is pumped approximately two miles to the
filtration plant through pipes located on a right-of-way owned by
the Company.
The Company's filtration plant is located in Spring Garden
Township about one-half mile south of the City of York. Water at
this plant is filtered through 12 dual media filters having a
stated capacity of 31,000,000 gallons per day and being capable
of filtering 46,500,000 gallons per day for short periods if
necessary. Based on an average daily consumption in 1999 of
20,928,000 gallons, the Company believes the pumping and
filtering facilities are adequate to meet present and anticipated
demands.
Clear water reservoirs of the Company which are located in Spring
Garden Township adjacent to the filtration plant are capable of
storing up to 32,000,000 gallons of water, and there are
standpipes located throughout the Company's service area capable
of storing another 18,460,000 gallons of clear water.
The Company's distribution center and material and supplies
warehouse are located at 1801 Mt. Rose Avenue, Springettsbury
Township. There are two one-story concrete block buildings
having 26,680 square feet of area.
The distribution system of the Company has approximately 696
miles of main water lines.
All of the Company's properties listed above are held in fee by
the Company. There are no encumbrances.
In addition, the Company has entered into a "Joint Use and Park
Management Agreement" dated December 29, 1976, with the County of
York, Pennsylvania, whereby the Company has licensed its present
reservoir lands and waters, comprised of approximately 1,175
acres and including two lakes, to the County of York for fifty
(50) years for county park purposes.
York County has, in return, agreed not to erect a dam upstream on
the east branch of the Codorus Creek and to waive flood damages
to the County's Spring Valley Tract of park lands if, as planned,
the Company builds a third dam around the year 2020. The Company
and its customers are thereby assured of a future reservoir site
at reasonable expense.
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 "year 2000" issue has had no impact on the Company's
operations. The Company incurred costs of year 2000 remediation
of approximately $135,600. The Company will continue to monitor
this issue but does not expect it to have a significant impact on
the Company's operations.
Item 3. Legal Proceedings.
There are no material legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the security holders during
the fourth quarter of the fiscal year covered by this report.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters.
The information set forth under the caption "Market for Common Stock
and Dividends" of the 1999 Annual Report to Shareholders is
incorporated herein by reference.
Item 6. Selected Financial Data.
The information set forth under the caption "Highlights of Our
184th Year" of the 1999 Annual Report to Shareholders is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information set forth under the caption "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" of the 1999 Annual Report to Shareholders is
incorporated herein by reference.
"Safe Harbor" Statements under the U. S. Private Securities
Litigation Reform Act of 1995: Some statements in the 1999
Annual Report are forward-looking and actual results may differ
materially from those stated. In addition to the factors
discussed, among the other factors that may affect actual results
are water demand and supply, the effect of economic conditions,
interest-rate movements, and technological difficulties and
changes in governmental regulations, including those of the
Pennsylvania Public Utilities Commission. Investors are also
directed to consider other risks and uncertainties discussed in
documents filed by the Company with the Securities and Exchange
Commission.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
The Company does not use derivative financial instruments for
speculative trading purposes. The Company's operations are
exposed to market risks primarily as a result of changes in
interest rates and foreign currency exchange rates. This
exposure to these market risks relates to the Company's debt
obligations under its lines of credit. Loans granted under these
lines bear interest based upon the prime or LIBOR rate plus basis
points. The Company has not entered into financial instruments
such as interest rate swaps or interest rate lock agreements.
The Company's 4.40% Industrial Development Authority Revenue
Refunding Bonds Series 1994 have a mandatory tender date of May
15, 2004. The 5% Series 1995 bonds have mandatory tender dates
of June 1, 2000 and June 1, 2005. The Company is required to
purchase any unremarketed 1994 and 1995 bonds, despite the rate.
Item 8. Financial Statements and Supplementary Data.
The following financial statements set forth in the 1999 Annual
Report to Shareholders are incorporated herein by reference:
Balance Sheets as of December 31, 1999 and 1998 Page 12
Statements of Income for Years Ended December 31,
1999, 1998 and 1997 Page 13
Statements of Shareholders' Investment for Years
Ended December 31, 1999, 1998 and 1997 Page 13
Statements of Cash Flows for Years Ended
December 31, 1999, 1998 and 1997 Page 14
Notes to Financial Statements Page 15
Independent Auditors' Report Page 21
Except for the above financial data and the information specified
under Items 5, 6 and 7 of this report, the 1999 Annual Report to
Shareholders is not deemed to be filed as part of this report.
Selected quarterly financial data are not presented because the
Company does not meet the tests set forth in Item 302 (a)(5) of
Regulation S-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
There were no changes in or disagreements with accountants on
accounting and financial disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Proxy Statement issued pursuant to Regulation
14A for the Company's 2000 Annual Meeting of Shareholders to be
held May 1, 2000 is incorporated herein by reference.
Item 11. Executive Compensation.
The information set forth under the caption "Compensation of
Directors and Executive Officers" of the Proxy Statement issued
pursuant to Regulation 14A for the Company's 2000 Annual Meeting
of Shareholders to be held May 1, 2000 is incorporated herein by
reference.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
The information set forth under the caption "Voting Securities
and Principal Holders Thereof" of the Proxy Statement issued
pursuant to Regulation 14A for the Company's 2000 Annual Meeting
of Shareholders to be held May 1, 2000 is incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
The information set forth under the caption "Compensation
Committee Interlocks and Insider Participation" of the Proxy
Statement issued pursuant to Regulation 14A for the Company's
2000 Annual Meeting of Shareholders to be held May 1, 2000 is
incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K.
(a) Certain documents filed as a part of the Form 10-K.
The financial statements set forth under Item 8 of this Form
10-K.
Schedule Schedule Page
Number Description Number
II Valuation and Qualifying Accounts 8
The report of the Company's independent auditors with respect to
the financial statement schedule appears on page 7.
All other financial statements and schedules not listed have been
omitted since the required information is included in the
financial statements or the notes thereto, or is not applicable
or required.
The exhibits are set forth in the Index to Exhibits shown on
pages 10, 11 and 12.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the last quarter of
the period covered by this report.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
The York Water Company:
Under date of February 25, 2000, we reported on the balance
sheets of The York Water Company as of December 31, 1999 and
1998, and the related statements of income, shareholders'
investment, and cash flows for each of the years in the
three-year period ended December 31, 1999, as contained in the
1999 annual report to shareholders. These financial statements
and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year 1999. In connection with
our audits of the aforementioned financial statements, we also
audited the related financial statement schedule as listed in
Item 14(a). This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.
KPMG LLP
Baltimore, Maryland
February 25, 2000
THE YORK WATER COMPANY
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 1999
Additions Charged to
Balance
at Costs Balance
beginning and Recov- Deduc- At End
Of Year Expenses eries tions Of Year
FOR THE YEAR
ENDED
DECEMBER 31,
1999:
Reserve for
uncollectible
accounts $120,000 $ 87,795 $12,992 $100,787 $120,000
FOR THE YEAR
ENDED
DECEMBER 31,
1998:
Reserve for
uncollectible
accounts $110,000 $103,957 $ 7,115 $101,072 $120,000
FOR THE YEAR
ENDED
DECEMBER 31,
1997:
Reserve for
uncollectible
accounts $ 90,000 $ 97,923 $ 5,043 $ 82,966 $110,000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
(Registrant)
Dated: March 27, 2000 By: /s/ W. T. Morris
William T. Morris
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
By: /s/ W. T. Morris By: /s/ Jeffrey S. Osman
William T. Morris Jeffrey S. Osman
(Principal Executive and (Principal Accounting
Financial Officer and Officer)
Director)
Dated: March 27, 2000 Dated: March 27, 2000
Directors: Date
By: /s/
Irvin S. Naylor
(Chairman)
By: /s/ Horace Keesey III 3/27/00
Horace Keesey III
By: /s/ Chloe R. Eichelberger 3/27/00
Chloe Eichelberger
By: /s/ Paul W. Ware 3/27/00
Paul W. Ware
By: /s/ John L. Finlayson 3/27/00
John L. Finlayson
By: /s/
Frank Motter
By: /s/ George Hay Kain, III 3/27/00
George Hay Kain, III
By: /s/ Michael W. Gang 3/27/00
Michael W. Gang
INDEX TO EXHIBITS
Page Number of
Exhibit Exhibit Incorporation
Number Description By Reference
3 Amended and Restated
Articles of Incorporation Incorporated herein by
reference. Filed
previously with the
Securities and Exchange
Commission as Exhibit
4.1 to Amendment No. 1
to Form S-3 dated June
12, 1997 (File No. 33-
81246).
3.1 By-Laws Incorporated herein by
reference. Filed
previously with the
Securities and Exchange
Commission as Exhibit
4.2 to Form S-3 dated
July 1, 1996 (File No.
333-7307).
4.1 Optional Dividend
Reinvestment Plan Incorporated herein by
reference. Filed
previously with the
Securities and Exchange
Commission as the
Prospectus included in
Amendment No. 1 to Form
S-3 dated June 12, 1997
(File No. 33-81246).
4.6 Note Agreement Relative Incorporated herein by
to the $6,000,000 10.17% reference. Filed previously
Senior Notes, Series A with the Securities and
and $5,000,000 9.60% Exchange Commission as Exhibit
Senior Notes, Series B 4.5 to the Company's 1989
dated January 2, 1989 Form 10-K.
4.8 Note Agreement Relative Incorporated herein by
to the $6,500,000 10.05% reference. Filed previously
Senior Notes, Series C with the Securities and
dated August 15, 1990 Exchange Commission as Exhibit
4.6 to the Company's 1990 Form
10-K.
4.11 Note Agreement Relative Incorporated herein by
to the $7,500,000 8.43% reference. Filed previously
Senior Notes, Series D with the Securities and
dated December 15, 1992 Exchange Commission as Exhibit
4.7 to the Company's 1992 Form
10-K.
4.12 Fourth Supplemental Incorporated herein by
Acquisition, Financing reference. Filed previously
and Sale Agreement with the Securities and
Relative to the Exchange Commission as Exhibit
$2,700,000 4.75% Water 4.8 to the Company's Quarterly
Facilities Revenue Report Form 10-Q for the
Refunding Bonds dated quarter ended June 30, 1994.
February 1, 1994
4.13 Fifth Supplemental Incorporated herein by
Acquisition, Financing reference. Filed previously
and Sale Agreement with the Securities and
Relative to the Exchange Commission as Exhibit
$4,300,000 5% Water 4.9 to the Company's Quarterly
Facilities Revenue Report Form 10-Q for the
Refunding Bonds dated quarter ended September 30,
October 1, 1995 1995.
10.1 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed previously
Company and Springetts- with the Securities and
bury Township Relative Exchange Commission as Exhibit
to Extension of Water 10.1 to the Company's 1989
Mains dated April 17, Form 10-K.
1985
10.2 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed previously
Company and Windsor with the Securities and
Township Relative to Exchange Commission as Exhibit
Extension of Water Mains 10.2 to the Company's 1989
dated February 9, 1989 Form 10-K.
10.3 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed previously
Company and Windsor with the Securities and
Township, Yorkana Exchange Commission as Exhibit
Borough, Modern Trash 10.3 to the Company's 1989
Removal of York, Inc. and Form 10-K.
Lower Windsor Township
Relative to Extension of
Water Mains dated July 18,
1989
10.4 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed previously
Company and North Codorus with the Securities and
Township Relative to Exchange Commission as Exhibit
Extension of Water Mains 10.4 to the Company's 1990
dated September 20, 1989 Form 10-K.
10.5 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed previously
Company and York Township with the Securities and
Relative to Extension of Exchange Commission as Exhibit
Water Mains dated 10.5 to the Company's 1990
December 29, 1989 Form 10-K.
11 Common Shares Used in Page 13
Computing Earnings Per
Share
13 1999 Annual Report to Page 14
Shareholders
23 Consent of Independent Page 15
Auditors
27 Financial Data Schedule Page 16
EXHIBIT 11
THE YORK WATER COMPANY
COMMON SHARES USED IN
COMPUTING EARNINGS
PER SHARE
1999 1998 1997 1996 1995
Common shares
outstanding,
beginning of
the year 2,979,722 2,934,782 2,900,524 2,549,496 2,518,736
Weighted average
shares issued in
connection with
1996 stock
subscription - - - 66,432 -
Weighted average
shares repurchased
in 1999 (7,392) - - - -
Weighted average
shares issued in
connection with the
Employee Stock
Purchase Plan 1,701 1,565 1,569 1,744 1,720
Weighted average
shares issued in
connection with
the Optional
Dividend Rein-
vestment Plan 16,236 14,938 10,376 9,892 9,924
2,990,267 2,951,285 2,912,469 2,627,564 2,530,380
All share data has been restated to reflect the June 1997
four-for-one stock split.
EXHIBIT 13
THE YORK WATER COMPANY
1999 ANNUAL REPORT TO SHAREHOLDERS
The York Water Company's 1999 Annual Report to Shareholders
is attached hereto.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Directors of
The York Water Company:
We consent to incorporation by reference in the registration
statements No. 2-80547 on Form S-3, No. 33-81246 on Form S-3 as
amended, and No. 33-26180 on Form S-8, as amended, of The York
Water Company of our report dated February 25, 2000, relating to
the balance sheets of The York Water Company as of December 31,
1999 and 1998, and the related statements of income,
shareholders' investment, and cash flows for each of the years in
the three-year period ended December 31, 1999, which report
appears in the December 31, 1999 annual report to shareholders
and is incorporated by reference in the annual report on Form
10-K of The York Water Company.
We also consent to incorporation by reference in the registration
statements No. 2-80547 on Form S-3, No. 33-81246 on Form S-3, as
amended, and No. 33-26180 on Form S-8, as amended, of The York
Water Company of our report dated February 25, 2000 relating to
the financial statement schedule as listed in Item 14(a) of the
Company's December 31, 1999 annual report on Form 10-K, which
report appears in such annual report on Form 10-K.
KPMG LLP
Baltimore, Maryland
March 28, 2000