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, 2002
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.
Indicate by check mark whether the registrant is an accelerated
filer as defined by rule 12b-2 of the Securities Exchange Act.
YES X NO
The aggregate market value of the Common Stock, no par value,
held by nonaffiliates of the registrant on June 30, 2002 was
$104,547,597.
As of March 24, 2003 there were 6,364,803 shares of Common Stock,
no par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2002 Annual Report to Shareholders are
incorporated by reference into Part II.
Portions of the Proxy Statement for the Company's 2003 Annual
Meeting of Shareholders are incorporated by reference into Part
III.
PART I
Item 1. Business.
The Company is a corporation duly organized under the laws of the
Commonwealth of Pennsylvania in 1816.
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, or 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 has two reservoirs, Lake Williams and
Lake Redman, which together hold up to 2.75 billion gallons of
water. The Company's present average daily consumption is
17,901,000 gallons, and its present safe daily yield is
23,000,000 gallons.
The Company's service territory has an estimated population of
153,000. Territory expansion during 2002 included: the completion
of three water district main extensions: Green Valley Road and
Chestnut Hill Road in York Township and Rohrbaugh Road in North
Codorus Township. The Company expects to extend service for two
new water districts in Conewago and Springfield Townships.
Industry within the Company's service territory is diversified,
manufacturing such items as furniture, electrical machinery, food
products, paper, ordnance, textile products, air conditioning
equipment and weight training equipment. Within the area served
by the Company there are no competitors.
The permitting process for the Company's pipeline to the
Susquehanna River continued throughout 2002. The Company's
petition to reclassify Lake Redman as a warm water fishery is
in the final rulemaking stage. The Company expects a favorable
final ruling in August 2003 and a discharge permit soon after
that. This rulemaking affects only the discharge of water from
the Susquehanna River into Lake Redman. While this process
continued, the Department of Environmental Protection and the
Susquehanna River Basin Commission both approved the Company's
allocation permit to withdraw water from the Susquehanna River.
This allocation process is now with the Federal Energy
Regulatory Commission for its approval. The Company has also
applied for construction permits and intends to begin
construction in June 2003.
The engineering phase for the design of the intake, the
pump station, and the first mile of pipeline is expected to be
completed by April 2003. The entire project cost is estimated at
$18 to $20 million and will be financed through a combination of
debt and stock issues. The project is expected to be completed by
December 2004.
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 expects to cover
its fixed costs of operations under all likely weather
conditions. On November 6, 2001, the Governor issued a drought
warning, which called for voluntary reductions in water use. On
February 12, 2002, the drought warning became a drought emergency
which imposed mandatory water use restrictions on our service
territory. The drought emergency was upgraded to drought warning
on November 7, 2002, then to drought watch on December 19, 2002.
The drought reduced operating income for 2002. On January 8,
2003, Governor Schweiker returned the county to a normal state.
The Company's business does not require large amounts of working
capital and is not dependent on any single customer or a very few
customers. Operating revenue is derived from the following
sources and in the following percentages: residential,59%;
commercial and industrial, 33%; other, 8%. The Company presently
has 89 employees.
During the last five years ended in 2002, the Company has
maintained an increasing growth in number of customers and
distribution facilities as shown by the following chart:
2002 2001 2000 1999 1998
Average daily
consumption
(gallons
per day) 17,901,000 19,734,000 19,542,000 20,928,000 19,488,000
Miles of
mains at
year end 731 717 703 696 671
Additional
distribution
mains
installed
(ft.) 72,121 77,923 67,072 130,262 85,431
Number of
customers 51,023 50,079 49,195 48,144 47,173
Population
served 153,000 149,000 146,000 144,000 142,000
During 2002, the per capita volume of water sold declined in all
classes due to the drought. The Company does not anticipate an
immediate change in the level of water usage which would have a
material impact on future results of operations.
The Form 10-K (including financial statements and schedules) may
be obtained free of charge by writing to: The York Water Company,
130 E. Market Street, York, Pennsylvania 17401. Copies of
exhibits to the Form 10-K will be furnished upon request and the
payment of a reasonable fee. The Form 10-K is available on the
Company's website at www.yorkwater.com.
Item 2. Properties.
The accounting and executive offices of the Company are located
in two two-story brick and masonry buildings, containing a total
of approximately 21,861 square feet, 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, Lake
Redman, 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 2002 of
17,901,000 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 20,390,000 gallons of clear water. The Company
plans to install an additional 500,000 gallon standpipe in 2003.
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
aggregating 26,680 square feet of area. Construction of a third
facility at that same location amounting to 3,764 square feet is
expected to begin around mid-year 2003 and be completed by the
end of the year. Estimated costs of the project are $350,000
which include renovations to one of the older buildings.
The distribution system of the Company has approximately 731
miles of main water lines.
All of the Company's properties described above are held in
fee by the Company. There are no material encumbrances on such
properties.
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.
Item 3. Legal Proceedings.
There are no material legal proceedings involving the Company.
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" on page 7 of the 2002 Annual Report
to Shareholders is incorporated herein by reference.
Item 6. Selected Financial Data.
The information set forth under the caption "Highlights of Our
187th Year" of the 2002 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 2002 Annual Report to Shareholders is
incorporated herein by reference.
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, the
Company's pipeline project to the Susquehanna River, 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;(v) obtaining permits for
expansion projects; and (vi) general economic and business
conditions, including interest rates, which are less favorable
than expected. The Company does not intend to update these
cautionary statements.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
The Company is not aware of demands, events or uncertainties
that will result in a decrease of liquidity or in a material
change in the mix and relative cost of capital resources.
The Company does not use off-balance sheet transactions,
arrangements or obligations that may have a material current or
future effect on financial condition, results of operations,
liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses. The Company does
not use securitization of receivables or unconsolidated entities.
The Company does not engage in trading or risk management
activities, has no lease obligations, and does not have material
transactions involving related parties.
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 1 to
1.25 percent. 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 6% Series 1995 bonds have a mandatory tender date
of 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 2002 Annual
Report to Shareholders are incorporated herein by reference:
Balance Sheets as of December 31, 2002 and 2001 Page 12
Statements of Income for Years Ended December 31,
2002, 2001 and 2000 Page 13
Statements of Shareholders' Investment for Years
Ended December 31, 2002, 2001 and 2000 Page 13
Statements of Cash Flows for Years Ended
December 31, 2002, 2001 and 2000 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 2002 Annual Report to
Shareholders is not deemed to be filed as part of this report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
There were no changes in or disagreements with Stambaugh
Ness, PC on accounting and financial disclosure in connection
with its report on the Company's financial statements as of
December 31, 2002.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information set forth under the captions "Voting
Securities and Principal Holders Thereof" and "Section 16(a)
Beneficial Ownership Reporting Compliance" of the Proxy Statement
issued pursuant to Regulation 14A for the Company's 2003 Annual
Meeting of Shareholders to be held May 5, 2003 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 2003 Annual Meeting
of Shareholders to be held May 5, 2003 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 2003 Annual Meeting
of Shareholders to be held May 5, 2003 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
2003 Annual Meeting of Shareholders to be held May 5, 2003 is
incorporated herein by reference.
Item 14. Controls and Procedures
Evaluation of the Company's Disclosure and Internal
Controls.
Within 90 days prior to the date of this Annual Report on
Form 10-K, the Company evaluated the effectiveness of the design
and operation of its disclosure controls and procedures and its
internal controls and procedures for financial reporting. This
evaluation was done under the supervision and with the
participation of management, including the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO). Based upon this
evaluation, the Company's President and Chief Executive Officer
along with the Company's Vice President of Finance and Chief
Financial Officer concluded that the Company's disclosure
controls and procedures are effective in ensuring that material
information required to be disclosed is included in the
reports that it files with the Securities and Exchange
Commission.
CEO and CFO Certification
Following the signatures section of this report, there are
two separate forms of Certification of the CEO and the CFO. The
first form of Certification is required in accordance with
Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302
Certification), and certifies to the accuracy and completeness of
this report and the establishment and maintenance of disclosure
controls and procedures. The second form of Certification is
required in accordance with Section 906 of the Sarbanes-Oxley Act
of 2002 (the Section 906 Certification) and certifies that the
information contained in this report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
Disclosure and Internal Controls
Disclosure Controls are procedures that are designed to
ensure that information required to be disclosed in our reports
filed with the Securities and Exchange Commission (SEC) is
accumulated and communicated to the CEO and CFO to allow the
required disclosure and that such information is timely
reported to the SEC. Internal Controls are procedures designed
to provide reasonable assurance that transactions are properly
authorized, assets are safeguarded against unauthorized or
improper use, and transactions are properly recorded and reported
to permit the preparation of the Company's financial statements
in conformity with generally accepted accounting principles.
Conclusions
Based on an evaluation of the Company's Disclosure and Internal
Controls, the CEO and CFO have concluded that our Disclosure
Controls are effective to ensure that material information is
made known to the CEO and CFO and our Internal Controls are
effective to provide reasonable assurance that our financial
statements are fairly presented in conformity with generally
accepted accounting principles. There were no significant
changes in the Company's internal controls or, to the knowledge
of the management of the Company, in other factors that could
significantly affect these controls subsequent to the evaluation
date.
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a)(1) Certain documents filed as a part of the Form 10-K.
The financial statements set forth under Item 8 of this Form
10-K.
(a)(2) Financial Statement schedules.
Schedule Schedule Page
Number Description Number
II Valuation and Qualifying Accounts 9
The report of the Company's independent auditors with respect to
the financial statement schedule appears on page 8.
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 13, 14 and 15.
(b) Reports on Form 8-k
The Company filed various Form 8-K's during the fourth quarter of
2002.
On November 8, 2002, the Company filed an 8-K stating that the
drought emergency was upgraded to a drought warning for York
County.
On November 12, 2002, the Company filed an 8-K announcing third
quarter and nine months earnings for 2002.
On November 18, 2002, the Company announced its sixth consecutive
annual dividend increase.
On November 25, 2002, the Company filed an 8-K announcing
its intention to file for a rate increase on or after January 2,
2003.
The Company also filed an 8-K subsequent to the fourth quarter of
2002. On January 24, 2003, the Company reported that it had
filed for a rate increase.
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of The York Water
Company:
Under date of March 4, 2003, we reported on the balance sheets of
The York Water Company as of December 31, 2002 and 2001 and the
related statements of income, shareholders' investment, and cash
flows for each of the years in the three-year period ended
December 31, 2002 as contained in the 2002 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 2002. In connection with our audit of the
aforementioned financial statements, we also audited the related
financial statement schedule as of December 31, 2002, as listed
in Item 15(a)(2). This financial statement schedule is the
responsibility of the Company's management. Our responsibility
is to express an opinion on the 2002 financial statement schedule
based upon our audit.
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.
/s/ Stambaugh Ness, PC
March 4, 2003
York, Pennsylvania
THE YORK WATER COMPANY
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 31, 2002
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,
2002:
Reserve for
uncollectible
accounts $130,000 $90,481 $13,148 $103,629 $130,000
FOR THE YEAR
ENDED
DECEMBER 31,
2001:
Reserve for
uncollectible
accounts $130,000 $ 89,265 $11,098 $100,363 $130,000
FOR THE YEAR
ENDED
DECEMBER 31,
2000:
Reserve for
uncollectible
accounts $120,000 $ 85,356 $19,193 $ 94,549 $130,000
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 24, 2003 By: /s/ Jeffrey S. Osman
Jeffrey S. Osman
President and CEO
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/ Jeffrey S. Osman By: /s/ Kathleen M. Miller
Jeffrey S. Osman Kathleen M. Miller
(Principal Executive (Principal Financial Officer)
Officer and Director)
Dated: March 24, 2003 Dated: March 24, 2003
Directors: Date
By: /s/ William T. Morris March 24, 2003
William T. Morris
By: /s/ Irvin S. Naylor March 24, 2003
Irvin S. Naylor
By: /s/ Jeffrey S. Osman March 24, 2003
Jeffrey S. Osman
By: /s/ Chloe Eichelberger March 24, 2003
Chloe Eichelberger
By: /s/ John L. Finlayson March 24, 2003
John L. Finlayson
By: /s/ George Hay Kain, III March 24, 2003
George Hay Kain, III
By: /s/ Michael W. Gang March 24, 2003
Michael W. Gang
By: /s/ George W. Hodges March 24, 2003
George W. Hodges
By: /s/ Thomas C. Norris March 24, 2003
Thomas C. Norris
THE YORK WATER COMPANY
SECTION 302 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
I, Jeffrey S. Osman, certify that:
1. have reviewed this annual report on Form 10-K of The
York Water Company;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and
for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: /s/ Jeffrey S. Osman
Jeffrey S. Osman
President and CEO
THE YORK WATER COMPANY
SECTION 302 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
I, Kathleen M. Miller, certify that:
1. have reviewed this annual report on Form 10-K of The
York Water Company;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light
of the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual report,
fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and
for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14 and
15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this annual
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"evaluation Date"); and
c) presented in this annual report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
Date: /s/ Kathleen M. Miller
Kathleen M. Miller
Chief Financial Officer
INDEX TO EXHIBITS
Page Number of
Exhibit Exhibit Incorporation
Number Description By Reference
3 Amended and Restated Incorporated herein by
Articles of Incorporation 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 Incorporated herein by
Reinvestment Plan 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).
4.2 Loan Agreement between Incorporated herein by
The York Water Company reference. Filed previously
and the Pennsylvania with the Securities and
Infrastructure Invest- Exchange Commission as Exhibit
ment Authority for 4.2 to the Company's 2000
$800,000 at 1.00% dated Form 10-K.
August 24, 1999
4.3 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.
4.4 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.
4.5 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.
4.6 Fourth Supplemental Incorporated herein by
Acquisition, Financing reference. Filed previously
and Sale Agreement with the Securities and
Relative to the Exchange Commission as
$2,700,000 4.75% Water Exhibit 4.8 to the Company's
Facilities Revenue Quarterly Report Form 10-Q for
Refunding Bonds dated the quarter ended June 30,
February 1, 1994 1994.
4.7 Fifth Supplemental Incorporated herein by
Acquisition, Financing reference. Filed
and Sale Agreement previously with the
Relative to the Securities and Exchange
$4,300,000 5% Water Commission as Exhibit
Facilities Revenue 4.9 to the Company's
Refunding Bonds dated Quarterly Report Form
October 1, 1995 10-Q for the quarter ended
September 30, 1995.
4.8 Shareholder Rights Incorporated herein by
Agreement reference. Filed previously
with the Securities and
Exchange Commission as
Exhibit 1 to Form 8-A dated
January 26, 1999.
10.1 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed
Company and Springetts- previously with the
bury Township Relative Securities and Exchange
to Extension of Water Commission as Exhibit
Mains dated April 17, 10.1 to the Company's
1985 1989 Form 10-K.
10.2 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed
Company and Windsor previously with the
Township Relative to Securities and Exchange
Extension of Water Mains Commission as Exhibit
dated February 9, 1989 10.2 to the Company's
1989 Form 10-K.
10.3 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed
Company and Windsor previously with the
Township, Yorkana Securities and Exchange
Borough, Modern Trash Commission as Exhibit
Removal of York, Inc. 10.3 to the Company's
and Lower Windsor 1989 Form 10-K.
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
Company and North Codorus previously with the
Township Relative to Securities and Exchange
Extension of Water Mains Commission as Exhibit
dated September 20, 1989 10.4 to the Company's
1990 Form 10-K.
10.5 Articles of Agreement Incorporated herein by
Between The York Water reference. Filed
Company and York Township previously with the
Relative to Extension of Securities and Exchange
Water Mains dated December Commission as Exhibit
29, 1989 10.5 to the Company's
1990 Form 10-K.
11 Common Shares Used in Filed herewith.
Computing Earnings Per
Share
13 2002 Annual Report to Filed herewith.
Shareholders
14 Company Code of Conduct Filed herewith.
23 Consent of Independent Filed herewith.
Auditors Stambaugh Ness,
PC
99.1 Certification pursuant to Filed herewith.
18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002.
99.2 Certification pursuant to Filed herewith.
18 U.S.C. Section 1350, as
adopted pursuant to Section
906 of the Sarbanes-Oxley
Act of 2002
EXHIBIT 11
THE YORK WATER COMPANY
COMMON SHARES USED IN COMPUTING
EARNINGS PER SHARE
2002 2001 2000 1999 1998
Common
shares
outstanding,
beginning
of the year 6,308,663 6,085,466 5,978,182 5,959,444 5,869,564
Weighted
average
shares
issued in
connection
with 2001
stock
subscription - 39,202 - - -
Weighted
average
shares
repurchased
in 1999 - - - (14,784) -
Weighted
average
shares issued
in connection
with the
Employee Stock
Purchase Plan 1,607 2,650 4,312 3,402 3,130
Weighted
average
shares issued
in connection
with the
Optional
Dividend
Reinvestment
Plan 20,124 25,932 38,856 32,472 29,876
6,330,394 6,153,250 6,021,350 5,980,534 5,902,570
Shares for all years have been adjusted to reflect the May,
2002 two-for-one stock split.
EXHIBIT 13
THE YORK WATER COMPANY
2002 ANNUAL REPORT TO SHAREHOLDERS
The York Water Company's 2002 Annual Report to Shareholders
is attached hereto.
EXHIBIT 14
THE YORK WATER COMPANY
Policy
Approved by: Board of Directors File: Code of Conduct
Date: February 24, 2003
Revision: Page 1 of 5
CODE OF CONDUCT
The reputation and integrity of The York Water Company (the
"Company") are valuable assets that are vital to the Company's
success. Each employee and Board member of the Company,
including each of the Company's officers, is responsible for
conducting the Company's business in a manner that demonstrates a
commitment to the highest standards of integrity. No Code of
Conduct can replace the thoughtful behavior of an ethical
employee or Board member. The purpose of this Code is to focus
employees and Board members on areas of ethical risk, provide
guidance to help employees and Board members to recognize and
deal with ethical issues, provide mechanisms for employees and
Board members to report unethical conduct, and foster among
employees and Board members a culture of honesty and
accountability. Dishonest or unethical conduct or conduct that
is illegal will constitute a violation of this Code, regardless
of whether such conduct is specifically referenced herein.
The Company's Board of Directors is ultimately responsible
for the implementation of the Code of Conduct. The Board has
designated the Secretary to be the compliance officer (the
"Compliance Officer") for the implementation and administration
of the Code.
Questions regarding the application or interpretation of the
Code of Conduct are inevitable. Employees and Board members
should feel free to direct questions to the Compliance Officer.
In addition, employees and Board members who observe, learn of,
or, in good faith, suspect a violation of the Code, must
immediately report the violation to the Compliance Officer,
another member of the Company's senior management, or to the
Audit Committee of the Board of Directors. Employees and Board
members who report violations or suspected violations in good
faith will not be subject to retaliation of any kind. Reported
violations will be investigated and addressed promptly and will
be treated confidentially to the extent possible. A violation of
the Code of Conduct may result in disciplinary action, up to and
including termination of employment or Board membership.
Requests for a waiver of a provision of the Code of Conduct
must be submitted in writing to the Compliance Officer for
appropriate review, and an officer, director or appropriate Board
committee will decide the outcome. For conduct involving an
executive officer or Board member, only the Board of Directors or
the Audit Committee of the Board has the authority to waive a
provision of the Code. The Audit Committee must review and
approve any "related party" transaction as defined in Item 404(a)
of Regulation S-K before it is consummated. In the event of an
approved waiver involving the conduct of an officer or Board
member, appropriate and prompt disclosure must be made to the
Company's shareholders as and to the extent required by listing
standards or any other regulation.
THE YORK WATER COMPANY
Policy
Approved by: Board of Directors File: Code of Conduct
Date: February 24, 2003
Revision: Page 1 of 5
CODE OF CONDUCT
Statements in the Code of Conduct to the effect that certain
actions may be taken only with "Company approval" will be
interpreted to mean that appropriate officers or Board directors
must give prior written approval before the proposed action may
be undertaken.
Employees will receive periodic training on the contents and
importance of the Code of Conduct and related policies and the
manner in which violations must be reported and waivers must be
requested. Each officer of the Company will be asked to certify
on an annual basis that he/she is in full compliance with the
Code of Conduct and related policy statements.
I. Violations of Law
A variety of laws apply to the Company and its operations,
and some carry criminal penalties. These laws include banking
regulations, securities laws, environmental protection laws, and
state laws relating to duties owed by corporate directors and
officers. Examples of criminal violations of the law include:
stealing, embezzling, misapplying corporate or bank funds,
using threats, physical force or other unauthorized means to
collect money; making a payment for an expressed purpose on the
Company's behalf to an individual who intends to use it for a
different purpose; or making payments, whether corporate or
personal, of cash or other items of value that are intended to
influence the judgment or actions of political candidates,
government officials or businesses in connection with any of the
Company's activities. The Company must and will report all
suspected criminal violations to the appropriate authorities for
possible prosecution, and will investigate, address and report,
as appropriate, non-criminal violations.
II. Conflicts of Interest
A conflict of interest can occur or appear to occur in a wide
variety of situations. Generally speaking a conflict of interest
occurs when an employee's or an employee's immediate family's
personal interest interferes with, has the potential to interfere
with, or appears to interfere with the interests or business of
the Company. For example, a conflict of interest could arise
that makes it difficult for an employee or Board member to
perform corporate duties objectively and effectively where he/she
is involved in a competing interest. Another such conflict may
occur where an employee or a family member receives a
gift,
THE YORK WATER COMPANY
Policy
Approved by: Board of Directors File: Code of Conduct
Date: February 24, 2003
Revision: Page 1 of 5
CODE OF CONDUCT
a unique advantage, or an improper personal benefit as a result
of the employee's or Board member's position at the Company.
Because a conflict of interest can occur in a variety of
situations, you must keep the foregoing general principle in mind
in evaluating both your conduct and that of others.
Employees and Board members are prohibited from trading in
securities while in possession of material inside information.
Among other things, trading while in possession of material
inside information can subject the employee or Board member to
criminal or civil penalties. The Company's Securities Trades
Policy is incorporated by reference into this Code.
OUTSIDE ACTIVITIES/EMPLOYMENT
Any outside activity, including employment, should not
significantly encroach on the time and attention employees devote
to their corporate duties, should not adversely affect the
quality or quantity of their work, and should not make use of
corporate equipment, facilities, or supplies, or imply (without
the Company's approval), the Company's sponsorship or support.
In addition, under no circumstances are employees permitted to
compete with the Company, or take for themselves or their family
members business opportunities that belong to the Company that
are discovered or made available by virtue of their positions at
the Company. Employees are prohibited from taking part in any
outside employment without the Company's prior approval.
CIVIC/POLITICAL ACTIVITIES
Employees are encouraged to participate in civic, charitable or
political activities so long as such participation does not
encroach on the time and attention they are expected to devote
to their company-related duties. Such activities are to be
conducted in a manner that does not involve the Company or its
assets or facilities, and does not create an appearance of
Company involvement or endorsement.
LOANS TO EMPLOYEES
The Company will not make loans or extend credit guarantees
to or for the personal benefit of officers, except as permitted
by law. Loans or guarantees may be extended to other employees
only with Company approval.
THE YORK WATER COMPANY
Policy
Approved by: Board of Directors File: Code of Conduct
Date: February 24, 2003
Revision: Page 1 of 5
CODE OF CONDUCT
III. Fair Dealing
Each employee should deal fairly and in good faith with the
Company's customers, suppliers, regulators, business partners,
and others. No employee may take unfair advantage of anyone
through manipulation, misrepresentation, inappropriate threats,
fraud, abuse of confidential information, or other related
conduct.
IV. Proper Use of Company Assets
Company assets, such as information, materials, supplies,
time, intellectual property, facilities, software, and other
assets owned or leased by the Company, or that are otherwise in
the Company's possession, may be used only for legitimate
business purposes. The personal use of Company assets, without
Company approval, is prohibited.
V. Delegation of Authority
Each employee, and particularly each of the Company's
officers, must exercise due care to ensure that any delegation of
authority is reasonable and appropriate in scope, and includes
appropriate and continuous monitoring. No authority may be
delegated to employees who the Company has reason to believe,
through the exercise of reasonable due diligence, may have a
propensity to engage in illegal activities.
VI. Handling Confidential Information
Employees and Board members should observe the
confidentiality of information that they acquire by virtue of
their positions at the Company, including information concerning
customers, suppliers, competitors, and other employees, except
where disclosure is approved by the Company or otherwise legally
mandated. Of special sensitivity is financial information,
which should under all circumstances be considered confidential
except where its disclosure is approved by the Company, or when
it has been publicly available in a periodic or special report
for at least two business days.
VII. Handling of Financial Information
Federal law requires the Company to set forth guidelines
pursuant to which the principal executive officer and senior
financial employees perform their duties. Employees subject to
this requirement include the principal executive officer, the
principal financial officer, controller or principal accounting
officer, and any person who performs a similar function.
However, the Company expects that all employees who participate
in the preparation of any part of the Company's financial
statements follow these guidelines:
THE YORK WATER COMPANY
Policy
Approved by: Board of Directors File: Code of Conduct
Date: February 24, 2003
Revision: Page 1 of 5
CODE OF CONDUCT
Act with honesty and integrity, avoiding violations of
the code, including actual or apparent conflicts of
interest with the Company in personal and professional
relationships.
Disclose to the Compliance Officer any material
transaction or relationship that reasonably could be
expected to give rise to any violations of the code,
including actual or apparent conflicts of interest with
the Company.
Provide the Company's other employees, consultants, and
advisors with information that is accurate, complete,
objective, relevant, timely, and understandable.
Endeavor to ensure full, fair, timely, accurate, and
understandable disclosure in the Company's periodic
reports.
Comply with rules and regulations of federal,
state, provincial and local governments, and other
appropriate private and public regulatory agencies.
Act in good faith, responsibly, and with due care,
competence and diligence, without misrepresenting
material facts or allowing your independent judgment
to be subordinated.
Respect the confidentiality of information acquired in
the course of your work except where you have Company
approval or where disclosure is otherwise legally
mandated. Confidential information acquired in the
course of your work will not be used for personal
advantage.
Share and maintain skills important and relevant to the
Company's needs. Proactively promote ethical behavior
among peers in your work environment.
Achieve responsible use of and control over all
assets and resources employed or entrusted to you.
Record or participate in the recording of entries in
the Company's books and records that are accurate to
the best of your knowledge.
The foregoing are set forth as guidelines for the
principal executive officer and financial employees, but, are, in
fact, statements of mandatory conduct. It is also important to
note that Federal law requires that any waiver of, or amendment
to the requirements in this Section VII will be subject to public
disclosure.
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITOR'S
To the Shareholders and Board of Directors of The York Water
Company:
We consent to the 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 March 4, 2003,
relating to the balance sheet of The York Water Company as of
December 31, 2002, and the related statements of income,
shareholders' investment, and cash flows for the year then ended,
which report appears in the 2002 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 March 4, 2003 relating to
the financial statement schedule as listed in Item 15(a) (2) for
the year ended December 31, 2002, which is a part of the
Company's December 31, 2002 annual report on Form 10-K, which
report appears in such annual report on Form 10-K.
/s/ Stambaugh Ness, PC
York, Pennsylvania
March 24, 2003
EXHIBIT 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of The York Water
Company on Form 10-K for the period ending December 31, 2002 as
filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Jeffrey S. Osman, Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a)); and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
THE YORK WATER COMPANY
/s/ Jeffrey S. Osman
Jeffrey S. Osman
Chief Executive Officer
Date: March 24, 2003
EXHIBIT 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of The York Water
Company on Form 10-K for the period ending December 31, 2002 as
filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Kathleen M. Miller, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(a)); and
(2) The information contained in the Report fairly
presents, in all material respects, the financial condition and
results of operations of the Company.
THE YORK WATER COMPANY
/s/ Kathleen M. Miller
Kathleen M. Miller
Chief Financial Officer
Date: March 24, 2003