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, 2001 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 3,052,344 Shares outstanding
as of April 30, 2001
THE YORK WATER COMPANY
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets
(Unaudited)
As Of As of
Mar. 31, 2001 Dec. 31, 2000
UTILITY PLANT, at original cost $116,598,778 $114,748,545
Less-Reserve for depreciation 18,757,381 18,314,880
97,841,397 96,433,665
OTHER PHYSICAL PROPERTY:
Less-Reserve for depreciation of
$84,571 in 2001
and $80,985 in 2000 515,828 519,414
CURRENT ASSETS:
Receivables, less reserves of
$130,000 in 2001 and 2000 2,538,977 2,854,593
Materials and supplies, at cost 433,146 402,770
Prepaid expenses 237,481 258,236
Deferred income taxes 88,655 88,655
3,298,259 3,604,254
OTHER LONG-TERM ASSETS:
Prepaid pension cost 2,214,419 2,178,423
Deferred debt expense 384,403 394,422
Deferred rate case expense 55,198 46,950
Notes receivable 1,085,733 985,794
Deferred regulatory assets 8,403,479 10,360,708
Other 1,430,832 1,862,977
13,574,064 15,829,274
$115,229,548 $116,386,607
THE YORK WATER COMPANY
Balance Sheets
(Unaudited)
As Of As Of
Mar. 31, 2001 Dec. 31, 2000
CAPITALIZATION
Common stock, no par value,
authorized 31,000,000 shares, out-
standing 3,052,344 shares in 2001
and 3,042,733 shares in 2000 $ 29,083,152 $ 28,899,504
Earnings retained in the business 4,267,568 4,226,051
Treasury stock, 38,000 shares in
2001 and 2000 (687,800) (687,800)
32,662,920 32,437,755
LONG-TERM DEBT
1.0% Pennvest Loan, due 2019 718,797 728,220
6.0% 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
32,718,797 32,728,220
CURRENT LIABILITIES
Short-term borrowings 3,079,266 2,648,946
Current portion of long-term debt 37,593 37,500
Accounts payable 806,455 1,168,824
Dividends payable 581,635 577,914
Accrued taxes 397,291 165,002
Advance water revenues 23,846 21,182
Accrued interest 494,564 678,164
Other accrued expenses 397,781 466,563
5,818,431 5,764,095
DEFERRED CREDITS
Customers' advances for construction 17,071,578 16,746,170
Contributions in aid of construction 10,157,133 10,157,133
Deferred income taxes 13,360,824 15,117,013
Deferred regulatory liabilities 1,799,682 1,811,825
Deferred employee benefits 1,640,183 1,624,396
44,029,400 45,456,537
$115,229,548 $116,386,607
THE YORK WATER COMPANY
Statements of Income
(Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
Mar. 31, 2001 Mar. 31, 2000
WATER OPERATING REVENUES
Residential $2,700,543 $2,663,753
Commercial and industrial 1,235,713 1,262,604
Other 559,194 574,818
4,495,450 4,501,175
OPERATING EXPENSES
Operation and maintenance 988,892 957,114
Administrative and general 927,181 886,528
Depreciation and amortization 441,689 418,429
Taxes other than income taxes 200,300 335,759
2,558,062 2,597,830
Operating income 1,937,388 1,903,345
INTEREST EXPENSE AND OTHER INCOME
Interest on long-term debt 690,042 677,060
Interest on interim bank loans 51,176 22,320
Allowance for funds used during
construction (8,607) (20,203)
Other income, net (8,468) (35,700)
724,143 643,477
Income before income taxes 1,213,245 1,259,868
Federal and state income taxes 411,045 456,585
Net income $ 802,200 $ 803,283
Basic Earnings Per Share $0.26 $0.27
Cash Dividends Per Share $0.25 $0.24
THE YORK WATER COMPANY
Statements of Shareholders' Investment
Earnings
Retained
Common in the Treasury
Stock Business Stock
Balance, December 31, 2000 $28,899,504 $4,226,051 $(687,800)
Net Income - 858,097 -
Cash Dividends - (760,683) -
Issuance of common stock
under dividend reinvest-
ment plan 164,178 - -
Issuance of common stock
under employee stock
purchase plan 19,470 - -
Balance, March 31, 2001 $29,083,152 $4,323,465 (687,800)
THE YORK WATER COMPANY
Statements of Cash Flows
(Unaudited) (Unaudited)
Three Months Three Months
Ended Ended
Mar. 31, 2001 Mar. 31, 2000
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 802,200 $ 803,283
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation 441,689 418,429
Provision for losses on accounts
receivable 32,500 32,500
Increase in deferred income taxes
(including regulatory assets and
liabilities) 188,897 260,565
Changes in assets and liabilities:
Decrease in accounts receivable 283,116 56,643
Decrease in recoverable income
taxes - 5,702
(Increase) decrease in materials
and supplies (30,376) 10,890
(Increase) decrease in prepaid
expenses and prepaid pension costs (15,241) 16,705
Decrease in accounts payable,
accrued expenses, other
liabilities and deferred employee
benefits (408,979) (99,982)
Increase in accrued interest and
taxes 48,689 179,190
Decrease (increase) in other
assets 429,433 (21,866)
Net cash provided by operating
activities 1,771,928 1,662,059
CASH FLOWS FROM INVESTING
ACTIVITIES:
Construction expenditures (1,841,352) (1,065,172)
Customers' advances for
construction and contributions
in aid of construction 325,408 855,643
Increase in notes receivable (99,939) (234,575)
Net cash used in investing
activities (1,615,883) (444,104)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Repayments of long-term debt (9,330) (9,343)
Net borrowings (repayments) under
line-of-credit agreements 430,320 (690,632)
Issuance of common stock under
dividend reinvestment plan 164,178 179,867
Issuance of common stock under
employee stock purchase plan 19,470 19,535
Dividends paid (760,683) (717,382)
Net cash used in financing
activities (156,045) (1,217,955)
Net increase in cash and cash
equivalents - -
Cash and cash equivalents at
beginning of period - -
Cash and cash equivalents at
end of period $ - $ -
Supplemental disclosures of
cash flow information:
Cash paid during the year for:
Interest, net of amounts
capitalized $ 916,565 $ 871,334
Income taxes 53,897 53,897
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 of a normal
recurring nature 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, 2000.
Operating results for the three months ended March 31, 2001
are not necessarily indicative of the results that may be
expected for the year ending December 31, 2001.
2. Basic Earnings Per Share
Basic earnings per share for the three months ended March 31,
2001 and 2000 were based on weighted average shares outstanding
of 3,044,387 and 2,999,510, 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, 2001 Compared
with Three Months Ended March 31, 2000
Net income for the first three months of 2001 was $802,200, a
decrease of $1,083 or .1% compared to the same period of 2000.
Water operating revenues for the three months ended March 31,
2001 decreased $5,725 or .1% compared to the three months ended
March 31, 2000. The decrease resulted from lower consumption
primarily by commercial and industrial customers of approximately
10.7%. Other revenues, including public consumption (schools,
churches, etc.) and fire service also declined during the first
three months of 2001 compared to 2000. Residential revenues
increased during 2001 compared to 2000 due to an increase in
customers.
Operating expenses for the first three months of 2001 decreased
$39,768 or 1.5% compared to the same period in 2000. Reduced
public utility realty taxes due to a lower tax base and rate, and
lower main and service line maintenance were the primary reasons
for the decrease. These decreases were partially offset by
increased maintenance associated with pumping and water treatment
equipment and facilities, Nasdaq fees, and increased depreciation
due to plant investment.
Interest on long-term debt increased $12,982 through March 2001
compared to March 2000 due to the remarketing of the 5%
Industrial Development Bonds in July 2000 at a rate of 6%.
Interest on interim bank loans increased $28,856 for the first
three months of 2001 compared to the same period in 2000 due to
an increase in short-term debt outstanding in 2001. The average
daily short-term debt outstanding in 2001 and 2000 was $3,108,346
and $1,098,856, respectively.
Allowance for funds used during construction for 2001 decreased
$11,596 or 57.4% when compared to 2000. Interest was capitalized
on large main extension projects (Conewago Township and
Railroad/New Freedom) at the beginning of 2000, while first
quarter 2001 projects were of smaller magnitude.
Other income, net decreased by $27,232 during first quarter 2001
compared to first quarter 2000 due to increased donations and
reduced interest income on water district notes receivable.
Federal and state income taxes for the period ended March 31,
2001 were $45,540 or 10.0% lower than the period ended March 31,
2000 due to lower taxable income.
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 request was filed on March 20, 2001 seeking a $2,039,790
or 11.1% rate increase. The PPUC is currently examining the
request.
Liquidity and Capital Resources
During the first three months of 2001, the per capita volume of
water sold declined in the industrial class primarily due to the
loss of a large industrial customer who closed its operation in
December 2000. The per capita volume of water sold did not
change significantly in the other customer classifications. This
closing will reduce industrial revenues for the remainder of the
year unless the vacated industrial sites are re-occupied with
large operations. The Company does not anticipate any further
change in the level of water usage which would have a material
impact on future results of operations.
During the first quarter of 2001, the Company had $1,841,352 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 2001, net cash provided by operating
activities equaled net cash used in investing and financing
activities. The Company anticipates that during the remainder of
2001 net cash used in investing and financing activities will
again equal 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, 2001, current liabilities exceeded current assets
by $2,520,172. Short-term borrowings from lines of credit as of
March 31, 2001 were $3,079,266. The Company maintains lines of
credit aggregating $16,000,000. 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.
THE YORK WATER COMPANY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
The Company filed a Form 8-K on January 10, 2001 announcing that
its common stock was approved for listing on the Nasdaq National
Market.
The Company filed a Form 8-K on March 21, 2001 announcing its
record earnings for 2000.
The Company filed a Form 8-K on March 21, 2001 reporting its
filing for a $2,039,790 or 11.1% rate increase with the
Pennsylvania Public Utility Commission.
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 11, 2001
Jeffrey S. Osman
Principal Financial and
Accounting Officer
Date: May 11, 2001