Attached files
| file | filename |
|---|---|
| EX-23 - CONSENT OF PARENTEBEARD LLC - YORK WATER CO | exhibit23-123109.htm |
| EX-13 - YWC 2009 ANNUAL REPORT TO SHAREHOLDERS - YORK WATER CO | exhibit13-123109.htm |
| EX-31.1 - YWC CERTIFICATION OF CEO - YORK WATER CO | exhibit311-123109.htm |
| EX-31.2 - YWC CERTIFICATION OF CFO - YORK WATER CO | exhibit312-123109.htm |
| EX-32.1 - YWC SECTION 906 CERTIFICATION OF CEO - YORK WATER CO | exhibit321-123109.htm |
| EX-32.2 - YWC SECTION 906 CERTIFICATION OF CFO - YORK WATER CO | exhibit322-123109.htm |
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UNITED
STATES
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SECURITIES
AND EXCHANGE COMMISSION
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Washington,
D.C. 20549
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(Mark
One)
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ý
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the fiscal year ended December 31,
2009
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OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from __________to____________
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Commission
file number 001-34245
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THE YORK WATER COMPANY
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(Exact
name of registrant as specified in its charter)
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PENNSYLVANIA
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23-1242500
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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130 EAST MARKET STREET, YORK,
PENNSYLVANIA
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17401
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code (717)
845-3601
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Securities
registered pursuant to Section 12(b) of the Act:
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None
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(Title
of Each Class)
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(Name
of Each Exchange on Which Registered)
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Securities
registered pursuant to Section 12(g) of the Act:
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COMMON STOCK, NO PAR
VALUE
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(Title
of Class)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
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¨
YES
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ýNO
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Indicate
by check mark if the registrant is not required to file reports pursuant
to Section 13 or Section 15(d) of the Act.
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¨
YES
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ýNO
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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.
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ý
YES
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¨NO
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Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
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¨
YES
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¨NO
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Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) 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. ¨
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Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act
(check one):
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Large
accelerated filer ¨
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Accelerated
filer ý
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Non-accelerated
filer ¨
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Small
Reporting Company ¨
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
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¨
YES
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ýNO
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The
aggregate market value of the Common Stock, no par value, held by
nonaffiliates of the registrant on June 30, 2009
was $175,370,114.
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As
of March 8,
2010 there were 12,577,601
shares of Common Stock, no par value, outstanding.
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DOCUMENTS
INCORPORATED BY REFERENCE
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Portions
of the 2009 Annual Report to Shareholders are incorporated by reference
into Parts I and II.
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Portions
of the Proxy Statement for the Company's 2010 Annual Meeting of
Shareholders are incorporated by reference into Part
III.
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THE
YORK WATER COMPANY
PART
I
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Item
1.
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Business.
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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 to meet or exceed safe drinking
water standards and distribute water. The Company operates within its
franchised territory, which covers 39 municipalities within York County,
Pennsylvania and seven municipalities within Adams 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, debt and equity financing
and rate setting. The Company must obtain PPUC approval before
changing any practices associated with the aforementioned
areas. Water service is supplied through the Company's own
distribution system. The Company obtains its water supply from both
the South Branch and East Branch of the Codorus Creek, which together have an
average daily flow of 73.0 million gallons per day. This combined
watershed area is approximately 117 square miles. The Company has two
reservoirs, Lake Williams and Lake Redman, which together hold up to
approximately 2.2 billion gallons of water. The Company has a 15-mile
pipeline from the Susquehanna River to Lake Redman which provides access to an
additional supply of 12.0 million gallons of water per day. As of
December 31, 2009, the Company's average daily availability was 35.0 million
gallons, and daily consumption was approximately 18.2 million
gallons. The Company's service territory had an estimated population
of 180,000 as of December 31, 2009. Industry within the Company's service
territory is diversified, manufacturing such items as fixtures and furniture,
electrical machinery, food products, paper, ordnance units, textile products,
air conditioning systems, laundry detergent, barbells and
motorcycles.
The
Company's business is somewhat dependent on weather conditions, particularly the
amount of rainfall. The Company has minimum customer charges in place
which are intended to cover fixed costs of operations under all likely weather
conditions. 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.
Competition
As a
regulated utility, the Company operates within an exclusive franchised territory
that is substantially free from direct competition with other public utilities,
municipalities and other entities. Although the Company has been
granted an exclusive franchise for each of its existing community water systems,
the ability of the Company to expand or acquire new service territories may be
affected by currently unknown competitors obtaining franchises to surrounding
water systems by application or acquisition. These
competitors may include other investor-owned utilities, nearby municipally-owned
utilities and sometimes from strategic or financial purchasers seeking to enter
or expand in the water industry. The addition of new service
territory and the acquisition of other utilities are generally subject to review
and approval by the PPUC.
Water
Quality and Environmental Regulations
Provision
of water service is subject to regulation under the federal Safe Drinking Water
Act, the Clean Water Act and related state laws, and under federal and state
regulations issued under these laws. The federal Safe Drinking Water
Act establishes criteria and procedures for the U.S. Environmental Protection
Agency, or EPA, to develop national quality standards. Regulations
issued under the Act, and its amendments, set standards on the amount of certain
contaminants allowable in drinking water. Current requirements are
not expected to have a material impact on the Company’s operations or financial
condition as we currently meet or exceed standards.
The Clean
Water Act regulates discharges from water treatment facilities into lakes,
rivers, streams and groundwater. The Company complies with this Act
by obtaining and maintaining all required permits and approvals for discharges
from our water facilities and by satisfying all conditions and regulatory
requirements associated with the permits.
Under the
requirements of the Pennsylvania Safe Drinking Water Act, or SDWA, the
Pennsylvania Department of Environmental Protection, or DEP, monitors the
quality of the finished water we supply to our customers. DEP
requires the Company to submit weekly reports showing the results of daily
bacteriological and other chemical and physical analyses. As part of
this requirement, the Company conducts over 77,000 laboratory tests
annually. Management believes that the Company complies with the
standards established by the agency under the SDWA. DEP also assists
the Company by preventing and eliminating pollution by regulating discharges
into the Company’s watershed area.
Page
2
DEP and
the Susquehanna River Basin Commission, or SRBC, regulate the amount of water
withdrawn from streams in the watershed to assure that sufficient quantities are
available to meet the Company’s needs and the needs of other regulated
users. Through its Division of Dam Safety, DEP regulates the
operation and maintenance of the Company’s impounding dams. The
Company routinely inspects its dams and prepares annual reports of their
condition as required by DEP regulations. DEP reviews these reports
and inspects the Company’s dams annually. DEP most recently inspected
the Company’s dams in April 2009 and noted no violations.
Since
1980, DEP has required any new dam to have a spillway that is capable of passing
the design flood without overtopping the dam. The design flood is
either the Probable Maximum Flood, or PMF, or some fraction of it, depending on
the size and location of the dam. PMF is very conservative and is
calculated using the most severe combination of meteorological and hydrologic
conditions reasonably possible in the watershed area of a dam.
The
Company engaged a professional engineer to analyze the spillway capacities at
the Lake Williams and Lake Redman dams and validate DEP’s recommended design
flood for the dams. Management presented the results of the study to
DEP in December 2004, and DEP then requested that the Company submit a proposed
schedule for the actions to address the spillway
capacities. Thereafter, the Company retained an engineering firm to
prepare preliminary designs for increasing the spillway capacities to pass the
PMF through armoring the dams with roller compacted
concrete. Management met with DEP in September 2006 to review the
preliminary design and discuss scheduling, permitting, and construction
requirements. The Company is currently completing the final design
and permitting process and expects to begin armoring one of the dams between
2010 and 2012. A year or two following the first dam armoring,
management plans to armor the second dam. The cost to armor each dam
is expected to be approximately $5.5 million.
Capital
expenditures and operating costs required as a result of water quality standards
and environmental requirements have been traditionally recognized by state
public utility commissions as appropriate for inclusion in establishing
rates. The capital expenditures currently required as a result of
water quality standards and environmental requirements have been budgeted in our
capital program and represent less than 10% of our expected total capital
expenditures over the next 5 years.
Growth
During
the five year period ended December 31, 2009, the Company maintained an
increasing growth in number of customers and distribution facilities. The
Company presently has 111 full time employees.
The
following table sets forth certain of our summary statistical
information.
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(In
thousands of dollars)
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For
the Years Ended December 31,
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2009
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2008
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2007
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2006
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2005
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Revenues
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Residential
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$23,299
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$20,572
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$19,722
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$17,972
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$16,737
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Commercial
and industrial
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10,734
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9,671
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9,290
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8,497
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8,009
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Other
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3,010
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2,595
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2,421
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2,189
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2,059
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Total
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$37,043
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$32,838
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$31,433
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$28,658
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$26,805
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Average
daily consumption (gallons per day)
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18,233,000
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18,298,000
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19,058,000
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18,769,000
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18,657,000
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Miles
of mains
at
year-end
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938
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884
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845
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817
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786
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Additional
distribution mains installed/acquired (ft.)
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286,326
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206,140
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147,803
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159,330
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212,702
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Number
of customers
at
year-end
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62,186
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61,527
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58,890
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57,578
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55,731
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Population
served
at
year-end
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180,000
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176,000
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171,000
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166,000
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161,000
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Please
refer to the “Highlights of Our 194th Year” section of our 2009 Annual Report to
Shareholders filed herewith as Exhibit 13 for summary financial information for
the last five years.
Page
3
For
further information regarding requesting copies of the Company’s financial
reports, please see the “Financial Reports and Investor Relations” portion of
the Shareholder Information section of our 2009 Annual Report to Shareholders
filed herewith as Exhibit 13. The Company makes available free of
charge, on or through its website (www.yorkwater.com),
its annual report on Form 10-K, its quarterly reports on Form 10-Q, current
reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable
after the Company electronically files such material with, or furnishes it to,
the SEC.
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Item
1A.
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Risk
Factors.
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The rates we charge
our customers are subject to regulation. If we are unable to obtain government
approval of our requests for rate increases, or if approved rate increases are
untimely or inadequate to cover our investments in utility plant and equipment
and projected expenses, our results of operations may be adversely
affected.
Our
ability to maintain and meet our financial objectives is dependent upon the
rates we charge our customers, which are subject to approval by the
PPUC. We file rate increase requests with the PPUC, from time to
time, to recover our investments in utility plant and equipment and projected
expenses. Any rate increase or adjustment must first be justified
through documented evidence and testimony. The PPUC determines
whether the investments and expenses are recoverable, the length of time over
which such costs are recoverable, or, because of changes in circumstances,
whether a remaining balance of deferred investments and expenses is no longer
recoverable in rates charged to customers. Once a rate increase
application is filed with the PPUC, the ensuing administrative and hearing
process may be lengthy and costly. The timing of our rate increase
requests are therefore dependent upon the estimated cost of the administrative
process in relation to the investments and expenses that we hope to recover
through the rate increase.
We can
provide no assurances that future requests will be approved by the PPUC; and, if
approved, we cannot guarantee that these rate increases will be granted in a
timely or sufficient manner to cover the investments and expenses for which we
sought the rate increase. If we are unable to obtain PPUC approval of
our requests for rate increases, or if approved rate increases are untimely or
inadequate to cover our investments in utility plant and equipment and projected
expenses, our results of operations may be adversely affected.
We are subject to
federal, state and local regulation that may impose costly limitations and
restrictions on the way we do business.
Various
federal, state and local authorities regulate many aspects of our
business. Among the most important of these regulations are those
relating to the quality of water we supply our customers and water allocation
rights. Government authorities continually review these regulations,
particularly the drinking water quality regulations, and may propose new or more
restrictive requirements in the future. We are required to perform
water quality tests that are monitored by the PPUC, the EPA, and the DEP, for
the detection of certain chemicals and compounds in our water. If new
or more restrictive limitations on permissible levels of substances and
contaminants in our water are imposed, we may not be able to adequately predict
the costs necessary to meet regulatory standards. If we are unable to
recover the cost of implementing new water treatment procedures in response to
more restrictive water quality regulations through our rates that we charge our
customers, or if we fail to comply with such regulations, it could have a
material adverse effect on our financial condition and results of
operations.
We are
also subject to water allocation regulations that control the amount of water
that we can draw from water sources. The SRBC and DEP regulate the amount of
water withdrawn from streams in the watershed for water supply purposes to
assure that sufficient quantities are available to meet our needs and the needs
of other regulated users. In addition, government drought
restrictions could cause the SRBC or DEP to temporarily reduce the amount of our
allocations. If new or more restrictive water allocation regulations
are implemented or our allocations are reduced due to weather conditions, it may
have an adverse effect on our ability to supply the demands of our customers,
and in turn, on our revenues and results of operations.
Page
4
Our business is
subject to seasonal fluctuations, which could affect demand for our water
service and our revenues.
Demand
for our water during the warmer months is generally greater than during cooler
months due primarily to additional requirements for water in connection with
cooling systems, swimming pools, irrigation systems and other outside water
use. Throughout the year, and particularly during typically warmer
months, demand will vary with temperature and rainfall levels. If
temperatures during the typically warmer months are cooler than expected, or
there is more rainfall than expected, the demand for our water may decrease and
adversely affect our revenues.
Weather conditions
and overuse may interfere with our sources of water, demand for water services,
and our ability to supply water to our customers.
We depend
on an adequate water supply to meet the present and future demands of our
customers and to continue our expansion efforts. Unexpected
conditions may interfere with our water supply sources. Drought and
overuse may limit the availability of surface water. These factors
might adversely affect our ability to supply water in sufficient quantities to
our customers and our revenues and earnings may be adversely
affected. Additionally, cool and wet weather, as well as drought
restrictions and our customers’ conservation efforts, may reduce consumption
demands, also adversely affecting our revenue and
earnings. Furthermore, freezing weather may also contribute to water
transmission interruptions caused by pipe and main breakage. If we
experience an interruption in our water supply, it could have a material adverse
effect on our financial condition and results of operations.
The
current concentration of our business in central and southern Pennsylvania makes
us susceptible to adverse developments in local economic and demographic
conditions.
Our
service territory presently includes 39 municipalities within York County,
Pennsylvania and seven municipalities within Adams County,
Pennsylvania. Our revenues and operating results are therefore
subject to local economic and demographic conditions in the area. A
change in any of these conditions could make it more costly or difficult for us
to conduct our business. In addition, any such change would have a
disproportionate effect on us, compared to water utility companies that do not
have such a geographic concentration.
Contamination
of our water supply may cause disruption in our services and adversely affect
our revenues.
Our water
supply is subject to contamination from the migration of naturally-occurring
substances in groundwater and surface systems and pollution resulting from
man-made sources. In the event that our water supply is contaminated,
we may have to interrupt the use of that water supply until we are able to
substitute the flow of water from an uncontaminated water source through our
interconnected transmission and distribution facilities. In addition,
we may incur significant costs in order to treat the contaminated source through
expansion of our current treatment facilities or development of new treatment
methods. Our inability to substitute water supply from an
uncontaminated water source, or to adequately treat the contaminated water
source in a cost-effective manner, may have an adverse effect on our
revenues.
The necessity for
increased security has and may continue to result in increased operating
costs.
In the
wake of the September 11, 2001 terrorist attacks and the ensuing threats to
the nation’s health and security, we have taken steps to increase security
measures at our facilities and heighten employee awareness of threats to our
water supply. We have also tightened our security measures regarding
the delivery and handling of certain chemicals used in our
business. We have and will continue to bear increased costs for
security precautions to protect our facilities, operations and
supplies. We are not aware of any specific threats to our facilities,
operations or supplies. However, it is possible that we would not be
in a position to control the outcome of such events should they
occur.
Page
5
We depend on the
availability of capital for expansion, construction and
maintenance.
Our
ability to continue our expansion efforts and fund our construction and
maintenance program depends on the availability of adequate
capital. There is no guarantee that we will be able to obtain
sufficient capital in the future or that the cost of capital will not be too
high for future expansion and construction. In addition, approval
from the PPUC must be obtained prior to our sale and issuance of
securities. If we are unable to obtain approval from the PPUC on
these matters, or to obtain approval in a timely manner, it may affect our
ability to effect transactions that are beneficial to us or our
shareholders. A single transaction may itself not be profitable but
might still be necessary to continue providing service or to grow the
business.
We may face
competition from other water suppliers that may hinder our growth and reduce our
profitability.
We face
competition from other water suppliers for acquisitions, which may limit our
growth opportunities. Furthermore, even after we have been the
successful bidder in an acquisition, competing water suppliers may challenge our
application for extending our franchise territory to cover the target company’s
market. Finally, third parties either supplying water on a contract
basis to municipalities or entering into agreements to operate municipal water
systems might adversely affect our business by winning contracts that may be
beneficial to us. If we are unable to compete successfully with other
water suppliers for these acquisitions, franchise territories and contracts, it
may impede our expansion goals and adversely affect our
profitability.
An
important element of our growth strategy is the acquisition of water
systems. Any pending or future acquisitions we decide to undertake
will involve risks.
The
acquisition and integration of water systems is an important element in our
growth strategy. This strategy depends on identifying suitable
acquisition opportunities and reaching mutually agreeable terms with acquisition
candidates. The negotiation of potential acquisitions as well as the
integration of acquired businesses could require us to incur significant
costs. Further, acquisitions may result in dilution for the owners of
our common stock, our incurrence of debt and contingent liabilities and
fluctuations in quarterly results. In addition, the businesses and
other assets we acquire may not achieve the financial results that we expect,
which could adversely affect our profitability.
We
have restrictions on our dividends. There can also be no assurance that we will
continue to pay dividends in the future or, if dividends are paid, that they
will be in amounts similar to past dividends.
The terms
of our debt instruments impose conditions on our ability to pay
dividends. We have paid dividends on our common stock each year since
our inception in 1816 and have increased the amount of dividends paid each year
since 1997. Our earnings, financial condition, capital requirements,
applicable regulations and other factors, including the timeliness and adequacy
of rate increases, will determine both our ability to pay dividends on our
common stock and the amount of those dividends. There can be no
assurance that we will continue to pay dividends in the future or, if dividends
are paid, that they will be in amounts similar to past dividends.
If
we are unable to pay the principal and interest on our indebtedness as it comes
due or we default under certain other provisions of our loan documents, our
indebtedness could be accelerated and our results of operations and financial
condition could be adversely affected.
Our
ability to pay the principal and interest on our indebtedness as it comes due
will depend upon our current and future performance. Our performance
is affected by many factors, some of which are beyond our control. We
believe that our cash generated from operations, and, if necessary, borrowings
under our existing credit facilities will be sufficient to enable us to make our
debt payments as they become due. If, however, we do not generate
sufficient cash, we may be required to refinance our obligations or sell
additional equity, which may be on terms that are not as favorable to
us. No assurance can be given that any refinancing or sale of equity
will be possible when needed or that we will be able to negotiate acceptable
terms. In addition, our failure to comply with certain provisions
contained in our trust indentures and loan agreements relating to our
outstanding indebtedness could lead to a default under these documents, which
could result in an acceleration of our indebtedness.
Page
6
We
depend significantly on the services of the members of our senior management
team, and the departure of any of those persons could cause our operating
results to suffer.
Our
success depends significantly on the continued individual and collective
contributions of our senior management team. If we lose the services
of any member of our senior management or are unable to hire and retain
experienced management personnel, our operating results could
suffer.
There
is a limited trading market for our common stock; you may not be able to resell
your shares at or above the price you pay for them.
Although
our common stock is listed for trading on the NASDAQ Global Select Market, the
trading in our common stock has substantially less liquidity than many other
companies quoted on the NASDAQ Global Select Market. A public trading
market having the desired characteristics of depth, liquidity and orderliness
depends on the presence in the market of willing buyers and sellers of our
common stock at any given time. This presence depends on the
individual decisions of investors and general economic and market conditions
over which we have no control. Because of the limited volume of
trading in our common stock, a sale of a significant number of shares of our
common stock in the open market could cause our stock price to
decline.
The
failure of, or the requirement to repair, upgrade or dismantle, either of our
dams may adversely affect our financial condition and results of
operations.
Our water
system includes two impounding dams. While the Company maintains
robust dam maintenance and inspection programs, a failure of the dams could
result in injuries and damage to residential and/or commercial property
downstream for which we may be responsible, in whole or in part. The
failure of a dam could also adversely affect our ability to supply water in
sufficient quantities to our customers and could adversely affect our financial
condition and results of operations. We carry liability insurance on
our dams, however, our limits may not be sufficient to cover all losses or
liabilities incurred due to the failure of one of our dams. The
estimated costs to maintain and upgrade our dams is included in our capital
budget. Although such costs have previously been recoverable in
rates, there is no guarantee that these costs will continue to be recoverable
and in what magnitude they will be recoverable.
We
are subject to market and interest rate risk on our $12,000,000 variable rate
PEDFA Series A bond issue.
We are
subject to interest rate risk in conjunction with our $12,000,000 variable
interest rate debt issue. This exposure, however, has been hedged
with an interest rate swap. This hedge will protect the Company from
the risk of changes in the benchmark interest rates, but does not protect the
Company’s exposure to the changes in the difference between its own variable
funding rate and the benchmark rate. A breakdown of the historical
relationships between the Company’s cost of funds and the benchmark rate
underlying the interest rate swap could result in higher interest rates
adversely affecting our financial results.
The
holders of the $12,000,000 variable rate PEDFA Series A Bonds may tender their
bonds at any time. When the bonds are tendered, they are subject to
an annual remarketing agreement, pursuant to which a remarketing agent attempts
to remarket the tendered bonds pursuant to the terms of the
Indenture. In order to keep variable interest rates down and to
enhance the marketability of the Series A Bonds, the Company entered into a
Reimbursement, Credit and Security Agreement with PNC Bank, National Association
(“the bank”) dated as of May 1, 2008. This agreement provides for a
three-year direct pay letter of credit issued by the bank to the trustee for the
Series A Bonds. The bank is responsible for providing the trustee
with funds for the timely payment of the principal and interest on the Series A
Bonds and for the purchase price of the Series A Bonds that have been tendered
or deemed tendered for purchase and have not been remarketed. If the
bank is unable to meet its obligations, the Company would be required to buy any
bonds which had been tendered.
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Item
1B.
|
Unresolved
Staff Comments.
|
The
Company has no unresolved staff comments.
Page
7
|
Item
2.
|
Properties.
|
Source
of Supply
The
Company has two impounding dams located in York and Springfield Townships
adjoining the Borough of Jacobus to the south. The lower dam, the
Lake Williams Impounding Dam, is constructed of compacted earth with a concrete
core wall and is 700 feet long and 58 feet high and creates a reservoir covering
approximately 165 acres containing about 870 million gallons of
water. About 800 acres surrounding the reservoir are planted with
more than 1.2 million 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, the Lake Redman
Impounding Dam, is constructed of compacted earth and is 1,000 feet long and 52
feet high and creates a reservoir covering approximately 290 acres containing
about 1.3 billion 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.
In
addition to the two impounding dams, the Company owns a 15-mile pipeline from
the Susquehanna River to Lake Redman that provides access to a supply of an
additional 12.0 million gallons of water per day. As of December 31,
2009, the Company's present average daily availability was 35.0 million gallons,
and daily consumption was approximately 18.2 million gallons.
Pumping
Stations
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
68.0 million gallons per day. The pumping capacity is more than
double peak requirements and is designed to provide an ample safety margin in
the event of pump or power failure. A large diesel backup generator
is installed to provide power to the pumps in the event of an emergency. The raw
water is pumped approximately two miles to the filtration plant through pipes
owned by the Company.
The
Susquehanna River Pumping Station is located on the western shore of the
Susquehanna River several miles south of Wrightsville, PA. The
pumping station is equipped with three Floway Vertical Turbine pumps rated at 6
million gallons per day each. The pumps are driven by three
Caterpillar 3512 Diesel Engines rated at 1175 H.P. each. The pumping
station pumps water from the Susquehanna River approximately 15 miles through a
combination of 30” and 36” ductile iron main to the Company’s upper impounding
dam, located at Lake Redman.
Water
Treatment
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 twelve dual media filters having a stated capacity of 31.0 million
gallons per day with a maximum supply of 42.0 million gallons per day for short
periods if necessary. Based on an average daily consumption in 2009
of approximately 18.2 million gallons, the Company believes the pumping and
filtering facilities are adequate to meet present and anticipated
demands. In 2005, the Company performed a capacity study of the
filtration plant and in 2007, began upgrading the facility to increase capacity
for future growth. The project is expected to continue over the next
several years.
The
Company’s sediment recycling facility is located at its Spring Garden Township
location. This state of the art facility employs cutting edge
technology to remove fine, suspended solids from untreated water. The
Company estimates that through this energy efficient, environmentally friendly
process, approximately 600 tons of sediment will be removed annually, thereby,
improving the quality of the Codorus Creek watershed.
Page
8
Transmission
and Distribution
The
distribution system of the Company has approximately 938 miles of main water
lines which range in diameter from 2 inches to 36 inches. The
distribution system includes 28 booster stations and 30 standpipes and
reservoirs capable of storing approximately 58 million gallons of potable
water. All booster stations are equipped with at least two pumps for
protection in case of mechanical failure. In 2009, a new booster
station in the northwest area of York was interconnected to a new northwest
reinforcing main and an additional standpipe was constructed in Thomasville,
Jackson Township.
Other
Properties
The
Company's distribution center and material and supplies warehouse are located at
1801 Mt. Rose Avenue, Springettsbury Township, and are composed of three
one-story concrete block buildings aggregating 30,680 square feet.
The
accounting and executive offices of the Company are located in one three-story
and one two-story brick and masonry buildings, containing a total of
approximately 21,861 square feet, at 124 and 130 East Market Street, York,
Pennsylvania.
All of
the Company's properties described above are held in fee by the
Company. There are no material encumbrances on such
properties.
In 1976,
the Company entered into a Joint Use and Park Management Agreement with York
County under which the Company licensed use of certain of its lands and waters
for public park purposes for a period of 50 years. This property
includes two lakes and is located on approximately 1,700 acres in Springfield
and York townships. Of the Park’s acreage, approximately 500 acres
are subject to an automatically renewable one-year license. Under the
Joint Use Agreement, York County has agreed not to erect a dam upstream on the
East Branch of the Codorus Creek or otherwise obstruct the flow of the
creek. The Joint Use Agreement subordinates the County’s use of the
lands and waters for recreational purposes to our prior and overriding use of
the lands and waters for utility purposes.
|
Item
3.
|
Legal
Proceedings.
|
There are
no material legal proceedings involving the Company.
Page
9
PART
II
|
Item
5.
|
Market
for the Registrant's Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
The
information set forth under the caption "Market for Common Stock and Dividends"
and “Dividend Policy” of the 2009 Annual Report to Shareholders is incorporated
herein by reference.
The
Company has no securities authorized for issuance under equity compensation
plans with the exception of an employee stock purchase plan. The
employee stock purchase plan allows employees to purchase stock at a 5% discount
up to a maximum of 10% of their gross compensation. Under this plan,
approximately 45,000 authorized shares remain unissued as of December 31,
2009.
Purchases
of Equity Securities by the Company
The
Company did not repurchase any of its securities during the fourth quarter of
2009.
Performance
Graph
The
information set forth under the caption “Performance Graph" of the 2009
Annual Report to Shareholders is incorporated herein by reference.
|
Item
6.
|
Selected Financial
Data.
|
The
information set forth under the caption "Highlights of Our 194th Year" of the
2009 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 2009 Annual Report to
Shareholders is incorporated herein by reference.
This
annual report on Form 10-K contains certain matters which are not historical
facts, but which are forward-looking statements. Words such as "may,"
"should," "believe," "anticipate," "estimate," "expect," "intend," "plan" and
similar expressions are intended to identify forward-looking
statements. The Company intends these forward-looking statements to
qualify for safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include certain information relating to the Company’s business strategy;
statements including, but not limited to:
|
·
|
expected
profitability and results of
operations;
|
|
·
|
goals,
priorities and plans for, and cost of, growth and
expansion;
|
|
·
|
strategic
initiatives;
|
|
·
|
availability
of water supply;
|
|
·
|
water
usage by customers; and
|
|
·
|
ability
to pay dividends on common stock and the rate of those
dividends.
|
Page
10
The
forward-looking statements in this Annual Report reflect what the Company
currently anticipates will happen. What actually happens could differ
materially from what it currently anticipates will happen. The
Company does not intend to make any public announcement when forward-looking
statements in this Annual Report are no longer accurate, whether as a result of
new information, what actually happens in the future or for any other
reason. Important matters that may affect what will actually happen
include, but are not limited to:
|
·
|
changes
in weather, including drought
conditions;
|
|
·
|
levels
of rate relief granted;
|
|
·
|
the
level of commercial and industrial business activity within the Company's
service territory;
|
|
·
|
construction
of new housing within the Company's service territory and increases in
population;
|
|
·
|
changes
in government policies or
regulations;
|
|
·
|
the
ability to obtain permits for expansion
projects;
|
|
·
|
material
changes in demand from customers, including the impact of conservation
efforts which may impact the demand of customers for
water;
|
|
·
|
changes
in economic and business conditions, including interest rates, which are
less favorable than expected;
|
|
·
|
the
ability to obtain financing; and
|
|
·
|
other
matters set forth in Item 1A, “Risk
Factors”.
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
(All
dollar amounts are stated in thousands of dollars.)
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, with the exception of the
interest rate swap agreement discussed in Note 4 to the financial statements,
does not use derivative financial instruments for speculative trading purposes,
has no lease obligations, no guarantees and does not have material transactions
involving related parties.
The
Company's operations are exposed to market risks primarily as a result of
changes in interest rates. This exposure to market risks relates to
the Company's debt obligations under its lines of credit. As of
February 2010, the Company has unsecured lines of credit with maximum
availability of $33,000 with three banks. One line of credit includes a $4,000
portion which is payable upon demand and carries an interest rate of LIBOR plus
2.00%, and a $13,000 committed portion with a revolving 2-year maturity
(currently May 2011) which currently carries an interest rate of LIBOR plus
2.00%. The Company had $3,054 in outstanding borrowings under the
committed portion and no on-demand borrowings under this line of credit as of
December 31, 2009. The second line of credit, in the amount of
$11,000, is a committed line of credit which matures in May 2010 and carries an
interest rate of LIBOR plus 1.50%. This line of credit has a
compensating balance requirement of $500. The Company had $3,000 in
outstanding borrowings under this line of credit as of December 31,
2009. The third line of credit, in the amount of $5,000, is a
committed line of credit, which matures in April 2010 and carries an interest
rate of LIBOR plus 2.00%. The Company had $2,000 in outstanding
borrowings under this line of credit as of December 31, 2009. The
weighted average interest rate on line of credit borrowings as of December 31,
2009 was 1.56%. Other than
lines of credit, the Company has long-term fixed rate debt obligations as
discussed in Note 4 to the Financial Statements included in the 2009 Annual
Report to Shareholders included as Exhibit 13 to this Form 10-K and a variable
rate PEDFA loan agreement described below.
Page
11
In May
2008, the Pennsylvania Economic Development Financing Authority, or the PEDFA,
issued $12,000 aggregate principal amount of PEDFA Exempt Facilities Revenue
Bonds, Series A. The proceeds of this bond issue were used to refund
the $12,000 PEDFA Exempt Facilities Revenue Bonds, Series B of 2004 which were
refunded due to bond insurer downgrading issues. The PEDFA then
loaned the proceeds to the Company pursuant to a variable interest rate loan
agreement with a maturity date of October 1, 2029. In connection with
the loan agreement, the Company retained its interest rate swap agreement
whereby the Company exchanged its floating rate obligation for a fixed rate
obligation. The purpose of the interest rate swap is to manage the
Company’s exposure to fluctuations in the interest rate. If the
interest rate swap agreement works as intended, the receive rate on the swap
should approximate the variable rate we pay on the PEDFA Series A Bond Issue,
thereby minimizing our risk. See Note 4 to the financial statements
of our 2009 Annual Report to Shareholders included as Exhibit 13 to this Form
10-K.
The table
below provides information about the Company’s financial instruments that are
sensitive to changes in interest rates, including long-term debt obligations and
the interest rate swap. For debt obligations, the table presents
principal cash flows and related weighted average interest rates by expected
maturity dates. For the interest rate swap, the table presents the
undiscounted net payments and weighted average interest rates by expected
maturity dates. Notional amounts are used to calculate the
contractual payments to be exchanged under the contract. Weighted
average variable rates are based on implied forward rates in the yield curve at
the reporting date.
|
(In
thousands of dollars)
|
Expected
Maturity Date
|
|||||||
|
Liabilities
|
2010
|
2011
|
2012
|
2013
|
2014
|
Thereafter
|
Total
|
Fair
Value
|
|
Long-term
debt:
|
||||||||
|
Fixed
Rate
|
$4,341
|
$41
|
$42
|
$42
|
$43
|
$58,005
|
$62,514
|
$76,000
|
|
Average
interest rate
|
3.72%
|
1.00%
|
1.00%
|
1.00%
|
1.00%
|
7.10%
|
6.85%
|
|
|
Variable
Rate
|
-
|
$15,054
|
-
|
-
|
-
|
-
|
$15,054
|
$15,000
|
|
Average
interest rate
|
0.66%
|
0.66%
|
-
|
-
|
-
|
-
|
0.66%
|
|
|
(In
thousands of dollars)
|
Expected
Maturity Date
|
|||||||
|
Interest
Rate Derivatives
|
2010
|
2011
|
2012
|
2013
|
2014
|
Thereafter
|
Total
|
Fair
Value
|
|
Interest
Rate Swap –
Notional
Value $12,000
|
$979
|
|||||||
|
Variable
to Fixed *
|
$343
|
$241
|
$154
|
$99
|
$57
|
$267
|
$1,161
|
|
|
Average
pay rate
|
3.16%
|
3.16%
|
3.16%
|
3.16%
|
3.16%
|
3.16%
|
3.16%
|
|
|
Average
receive rate
|
0.30%
|
1.15%
|
1.90%
|
2.32%
|
2.68%
|
3.01%
|
2.67%
|
|
|
*Represents
undiscounted net payments.
|
||||||||
The
variable rate portion of the liabilities section of the table includes the
$12,000 variable rate loan due in 2011, as the underlying bonds could be
tendered at any time. If all of the bonds were tendered and could not
be remarketed, the earliest that the Company would have to buy them back would
be fourteen months from the date of notification. As of February 28,
2010, there had been no such notification. If the bonds are able to
be remarketed as intended for the term of the bonds, the loan will be due in
October 2029. Interest on the $12,000 variable rate loan is included
at an assumed interest rate of 0.26%, which represents the rate paid to
bondholders for the PEDFA Series A issue at December 31, 2009. The
variable rate portion of the liabilities section also includes $3,054 in 2011 of
outstanding borrowings under the Company’s committed line of
credit. This line of credit is reviewed annually and could be
extended for another year. The interest rate is variable but is included in the
table at 2.23% which is its December 31, 2009 rate adjusted for the increase in
interest rate based on the renewal signed in January 2010.
Page
12
|
Item
8.
|
Financial
Statements and Supplementary Data.
|
The
following financial statements set forth in the printed 2009 Annual Report to
Shareholders are incorporated herein by reference:
|
Management’s
Report on Internal Control Over Financial Reporting
|
Page
18
|
|
|
Report
of Independent Registered Public Accounting Firm
|
||
|
on
Internal Control Over Financial Reporting
|
Page
19
|
|
|
Report
of Independent Registered Public Accounting Firm
|
Page
20
|
|
|
Balance
Sheets as of December 31, 2009 and 2008
|
Page
21
|
|
|
Statements
of Income for Years Ended December 31, 2009, 2008 and 2007
|
Page
22
|
|
|
Statements
of Common Stockholders’ Equity and Comprehensive Income
|
||
|
for
Years Ended December 31, 2009, 2008 and 2007
|
Page
23
|
|
|
Statements
of Cash Flows for Years Ended December 31, 2009, 2008 and
2007
|
Page
24
|
|
|
Notes
to Financial Statements
|
Page
25
|
|
Except
for the above financial data and the information specified under Items 1,5, 6,
7, and 7A of this report, the 2009 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.
|
None.
Page
13
|
Item
9A.
|
Controls
and Procedures.
|
|
(a)
|
Evaluation
of Disclosure Controls and
Procedures
|
The
Company's management, with the participation of the Company's President and
Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the Company's disclosure controls and procedures as of the end of the period
covered by this report. Based upon this evaluation, the Company's
President and Chief Executive Officer along with the Chief Financial Officer
concluded that the Company's disclosure controls and procedures as of the end of
the period covered by this report are effective such that the information
required to be disclosed by the Company in reports filed under the Securities
Exchange Act of 1934 is (i) recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms and (ii) accumulated and
communicated to the Company’s management, including the President and Chief
Executive Officer and Chief Financial Officer, as appropriate to allow timely
decisions regarding disclosure. A controls system cannot provide
absolute assurance, however, that the objectives of the controls system are met,
and no evaluation of controls can provide absolute assurance that all control
issues and instances of fraud, if any, within a company have been
detected.
The
Company’s management’s report on internal control over financial reporting is
set forth in Item 8 of this annual report on Form 10-K and is incorporated by
reference herein.
|
(b)
|
Attestation
Report of the Independent Registered Public Accounting
Firm
|
The
Company’s internal control over financial reporting as of December 31, 2009 has
been audited by ParenteBeard LLC, the independent registered public accounting
firm who also audited the Company’s financial
statements. ParenteBeard’s attestation report on the Company’s
internal control over financial reporting is set forth in Item 8 of this annual
report on Form 10-K and is incorporated by reference herein.
|
(c)
|
Change
in Internal Control Over Financial
Reporting
|
No change
in the Company's internal control over financial reporting occurred during the
Company's most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
|
Item
9B.
|
Other
Information.
|
None.
Page
14
PART
III
|
Item
10.
|
Directors, Executive Officers
and Corporate Governance.
|
Directors,
Business Experience, and Directorships
The
information set forth under the caption "Election of Directors" of the Proxy
Statement issued pursuant to Regulation 14A for the Company's 2010 Annual
Meeting of Shareholders to be held May 3, 2010 is incorporated herein by
reference.
Executive
Officers
|
Name
|
Age
|
Principal Occupation During Last Five
Years
|
Officer Since
|
|
|
Jeffrey
R. Hines, P.E.
|
48
|
President
and Chief Executive Officer,
|
5/1/1995
|
|
|
The
York Water Company, March 2008 to date
|
||||
|
Chief
Operating Officer and Secretary,
|
||||
|
The
York Water Company, January 2007 to March 2008
|
||||
|
Vice
President-Engineering and Secretary,
|
||||
|
The
York Water Company, May 1995 to January 2007
|
||||
|
Joseph
T. Hand
|
47
|
Chief
Operating Officer,
|
3/3/2008
|
|
|
The
York Water Company, March 2008 to date
|
||||
|
Chief,
Navigation Branch, Baltimore District,
|
||||
|
U.S.
Army Corps of Engineers, September 2006
|
||||
|
to
February 2008
|
||||
|
Deputy
Commander and Deputy District Engineer,
|
||||
|
Baltimore
District, U.S. Army Corps of Engineers,
|
||||
|
June
2003 to September 2006
|
||||
|
Kathleen
M. Miller
|
47
|
Chief
Financial Officer and Treasurer,
|
1/1/2003
|
|
|
The
York Water Company, January 2003 to date
|
||||
|
Vernon
L. Bracey
|
48
|
Vice
President-Customer Service,
|
3/1/2003
|
|
|
The
York Water Company, March 2003 to date
|
||||
|
Bruce
C. McIntosh
|
57
|
Vice
President-Human Resources and Secretary,
|
5/4/1998
|
|
|
The
York Water Company, March 2008 to date
|
||||
|
Vice
President-Human Resources,
|
||||
|
The
York Water Company, May 1998 to March 2008
|
||||
|
Mark
S. Snyder, P.E.
|
39
|
Vice
President-Engineering,
|
5/1/2009
|
|
|
The
York Water Company, May 2009 to date
|
||||
|
Engineering
Manager,
|
||||
|
The
York Water Company, December 2006 to May 2009
|
||||
|
Project
Engineer, Buchart Horn, Inc., York, PA,
|
||||
|
an
international engineering firm, April 2001 to
|
||||
|
December
2006
|
||||
|
John
H. Strine
|
53
|
Vice
President-Operations,
|
5/1/2009
|
|
|
The
York Water Company, May 2009 to date
|
||||
|
Operations
Manager,
|
||||
|
The
York Water Company, February 2008 to May 2009
|
||||
|
Maintenance
and Grounds Superintendent,
|
||||
|
The
York Water Company, August 1991 to February 2008
|
||||
Page
15
Section
16(a) Beneficial Ownership Reporting Compliance
The
information set forth under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance” of the Proxy Statement issued pursuant to Regulation 14A
for the Company's 2010 Annual Meeting of Shareholders to be held May 3, 2010 is
incorporated herein by reference.
Code of
Ethics
The
Company’s Board of Directors has adopted a Code of Conduct applicable to all
Directors, officers and employees. There were no waivers of the code
made for any Director, officer or employee during 2009. A copy of the
Code of Conduct was filed with the Securities and Exchange Commission as Exhibit
14 to the Company’s Annual Report on Form 10-K for the year ended December 31,
2002. The Code of Conduct is also available, free of charge, on the
Company’s website at www.yorkwater.com. The
Company intends to disclose amendments to, or Director, officer and employee
waivers from, the Code of Conduct, if any, on its website, or by Form 8-K to the
extent required.
Audit
Committee
The
information set forth under the caption “Committees and Functions” of the Proxy
Statement issued pursuant to Regulation 14A for the Company’s 2010 Annual
Meeting of Shareholders to be held May 3, 2010 is incorporated herein by
reference.
The Board
of Directors has determined that John L. Finlayson, Chairman of the Audit
Committee, is an Audit Committee financial expert within the meaning of the
applicable SEC rules. Mr. Finlayson was a Certified Public
Accountant, and has an understanding of generally accepted accounting principles
and financial statements, as well as the ability to assess the general
application of such principles in connection with the accounting for estimates,
accruals and reserves. Mr. Finlayson is experienced in the
preparation and auditing of financial statements of public companies, and has an
understanding of accounting estimates, internal control over financial reporting
and audit committee functions. He is independent of
management.
|
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 2010 Annual Meeting of Shareholders to be held May 3, 2010 is
incorporated herein by reference.
Compensation
Committee Interlocks and Insider Participation
The
information set forth under the caption “Committees and Functions” of the Proxy
Statement issued pursuant to Regulation 14A for the Company’s 2010 Annual
Meeting of Shareholders to be held May 3, 2010 is incorporated herein by
reference.
Compensation
Committee Report
The
information set forth under the caption “Compensation Committee Report” of the
Proxy Statement issued pursuant to Regulation 14A for the Company’s 2010 Annual
Meeting of Shareholders to be held May 3, 2010 is incorporated herein by
reference.
Page
16
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
|
The
Company has no securities authorized for issuance under equity compensation
plans with the exception of an employee stock purchase plan. The
employee stock purchase plan allows employees to purchase stock at a 5% discount
up to a maximum of 10% of their gross compensation. Under this plan,
approximately 45,000 authorized shares remain unissued as of December 31,
2009.
The
information set forth under the caption "Security Ownership of Certain
Beneficial Owners and Management" of the Proxy Statement issued pursuant to
Regulation 14A for the Company's 2010 Annual Meeting of Shareholders to be held
May 3, 2010 is incorporated herein by reference.
|
Item
13.
|
Certain Relationships and
Related Transactions, and Director
Independence.
|
The
information set forth under the captions “Election of Directors” and “Disclosure
of Related Party Transactions” of the Proxy Statement issued pursuant to
Regulation 14A for the Company’s 2010 Annual Meeting of Shareholders to be held
May 3, 2010 is incorporated herein by reference.
|
Item
14.
|
Principal
Accounting Fees and Services.
|
The
information set forth under the caption, "Ratification of Appointment of
Independent Registered Public Accounting Firm" of the Proxy Statement issued
pursuant to Regulation 14A for the Company's 2010 Annual Meeting of Shareholders
to be held May 3, 2010 is incorporated herein by reference.
Page
17
PART
IV
|
Item
15.
|
Exhibits and Financial
Statement Schedules.
|
|
(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
|
20
|
|
|
for
the years ended December 31, 2009, 2008 and 2007
|
The
report of the Company's independent registered public accounting firm with
respect to the financial statement schedule appears on page 19.
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.
|
(a)(3)
|
Exhibits
required by Item 601 of Regulation
S-K.
|
The
exhibits are set forth in the Index to Exhibits shown on pages 22 through
25.
Page
18
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Stockholders
The York
Water Company
The
audits referred to in our report dated March 11, 2010 relating to the financial
statements of The York Water Company, incorporated in Item 8 of this
Form 10-K by reference to the annual report to shareholders for the year
ended December 31, 2009 also included the audit of the financial statement
schedule 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 this financial statement schedule
based upon our audits.
In our
opinion, the 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/ParenteBeard
LLC
|
|
ParenteBeard
LLC
|
|
York,
Pennsylvania
|
|
March
11, 2010
|
Page
19
FOR
THE THREE YEARS ENDED DECEMBER 31, 2009
|
Additions
|
|||||
|
Description
|
Balance
at
Beginning
of
Year
|
Charged
to
Cost
and
Expenses
|
Recoveries
|
Deductions
|
Balance
at
End of Year
|
|
FOR
THE YEAR ENDED
DECEMBER
31, 2009
Reserve
for
uncollectible
accounts
|
$195,000
|
$231,974
|
$27,914
|
$229,888
|
$225,000
|
|
FOR
THE YEAR ENDED
DECEMBER
31, 2008
Reserve
for
uncollectible
accounts
|
$193,000
|
$176,534
|
$38,224
|
$212,758
|
$195,000
|
|
FOR
THE YEAR ENDED
DECEMBER
31, 2007
Reserve
for
uncollectible
accounts
|
$173,000
|
$153,855
|
$20,831
|
$154,686
|
$193,000
|
The
Deductions column above represents write-offs of accounts receivable during the
applicable year.
Page
20
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 8,
2010
|
By: /s/Jeffrey R.
Hines
|
|
Jeffrey
R. Hines
|
|
|
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 R.
Hines
|
By:
/s/Kathleen M. Miller
|
|
Jeffrey
R. Hines
|
Kathleen
M. Miller
|
|
(Principal
Executive Officer
and
Director)
|
(Principal
Accounting Officer
and
Chief Financial Officer)
|
|
Dated:
March 8, 2010
|
Dated:
March 8, 2010
|
|
Directors:
|
Date:
|
|
By:
/s/Thomas C. Norris
|
March 8, 2010
|
|
Thomas
C. Norris
|
|
|
By:
/s/Cynthia A. Dotzel
|
March 8, 2010
|
|
Cynthia
A. Dotzel
|
|
|
By:
/s/John L. Finlayson
|
March 8, 2010
|
|
John
L. Finlayson
|
|
|
By:
/s/Michael W. Gang
|
March 8, 2010
|
|
Michael
W. Gang
|
|
|
By: /s/Jeffrey R.
Hines
|
March 8, 2010
|
|
Jeffrey
R. Hines
|
|
|
By:
/s/George W. Hodges
|
March 8, 2010
|
|
George
W. Hodges
|
|
|
By:
George Hay Kain, III
|
March 8, 2010
|
|
George
Hay Kain, III
|
|
|
By:
/s/William T. Morris
|
March 8, 2010
|
|
William
T. Morris
|
|
|
By:
/s/Jeffrey S. Osman
|
March 8, 2010
|
|
Jeffrey
S. Osman
|
|
|
By:
/s/Ernest J. Waters
|
March 8, 2010
|
|
Ernest
J. Waters
|
Page
21
INDEX
TO EXHIBITS
|
Exhibit
Number
|
Exhibit
Description
|
Page
Number of
Incorporation
By Reference
|
||
|
3
|
Amended
and Restated Articles of Incorporation
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 3.1 to Form 8-K dated August 30,
2006.
|
||
|
3.1
|
By-Laws
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 3.1 to Form 8-K dated January 24,
2007.
|
||
|
4
|
Dividend
Reinvestment and Direct Stock Purchase and Sale Plan
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as the Prospectus included in Post-Effective Amendment
No. 1 to Form S-3 dated June 26, 2008 (File No. 333-59072).
|
||
|
10.1
|
Articles
of Agreement Between The York Water Company and Springettsbury Township
relative to Extension of Water Mains dated April 17, 1985
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.1 to the Company's 1989 Form
10-K.
|
||
|
10.2
|
Articles
of Agreement Between The York Water Company and Windsor Township relative
to Extension of Water Mains dated February 9, 1989
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.2 to the Company's 1989 Form
10-K.
|
||
|
10.3
|
Articles
of Agreement Between The York Water Company and York Township relative to
Extension of Water Mains dated December 29, 1989
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.5 to the Company's 1990 Form
10-K.
|
||
|
10.4
|
Note
Agreement relative to the $6,000,000 10.17% Senior Notes, Series A and
$5,000,000 9.60% Senior Notes, Series B dated January 2,
1989
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 4.5 to the Company's 1989 Form
10-K.
|
||
|
10.5
|
Note
Agreement relative to the $6,500,000 10.05% Senior Notes, Series C dated
August 15, 1990
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 4.6 to the Company's 1990 Form
10-K.
|
Page
22
|
Exhibit
Number
|
Exhibit
Description
|
Page
Number of
Incorporation
By Reference
|
||
|
10.6
|
Note
Agreement relative to the $7,500,000 8.43% Senior Notes, Series D dated
December 15, 1992
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 4.7 to the Company's 1992 Form
10-K.
|
||
|
10.7
|
Fifth
Supplemental Acquisition, Financing and Sale Agreement relative to the
$4,300,000 5% Water Facilities Revenue Refunding Bonds dated October 1,
1995
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.1 to the Company's September 15, 2009 Form
8-K.
|
||
|
10.8
|
Promissory
Note between The York Water Company and the Pennsylvania Infrastructure
Investment Authority for $800,000 at 1.00% dated August 24,
1999
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 4.2 to the Company's 2000 Form
10-K.
|
||
|
10.9
|
Loan
Agreement between The York Water Company and Pennsylvania Economic
Development Financing Authority, dated as of April 1, 2004 relative to the
$2,350,000 4.05% and $4,950,000 5% Exempt Facilities Revenue
Bonds
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.2 to the Company's September 15, 2009 Form
8-K.
|
||
|
10.10
|
Loan
Agreement between The York Water Company and York County Industrial
Development Authority, dated as of October 1, 2006 relative to the
$10,500,000 4.75% Exempt Facilities Revenue Bonds
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.3 to the Company's September 15, 2009 Form
8-K.
|
||
|
10.11
|
Trust
Indenture dated October 1, 2006 between the York County Industrial
Development Authority and Manufacturers and Traders Trust Company, as
trustee
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.4 to the Company's September 15, 2009 Form
8-K.
|
||
|
10.12
|
Variable
Rate Loan Agreement between The York Water Company and Pennsylvania
Economic Development Financing Authority, dated as of May 1, 2008 relative
to the $12,000,000 Exempt Facilities Revenue Bonds
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.1 to the Company’s May 12, 2008 Form
8-K.
|
||
|
10.13
|
Trust
Indenture dated as of May 1, 2008 between Pennsylvania Economic
Development Financing Authority and Manufacturers and Traders Trust
Company, as trustee
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.5 to the Company's September 15, 2009 Form
8-K.
|
Page
23
|
Exhibit
Number
|
Exhibit
Description
|
Page
Number of
Incorporation
By Reference
|
||
|
10.14
|
Reimbursement,
Credit and Security Agreement, dated as of May 1, 2008 between The York
Water Company and PNC Bank, National Association
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.3 to the Company’s May 12, 2008 Form
8-K.
|
||
|
10.15
|
Loan
Agreement between The York Water Company and Pennsylvania Economic
Development Financing Authority, dated as of October 1, 2008 relative to
the $15,000,000 6.0% Exempt Facilities Revenue Bonds
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.1 to the Company’s October 15, 2008 Form
8-K.
|
||
|
10.16
|
Trust
Indenture dated as of October 1, 2008 between Pennsylvania Economic
Development Financing Authority and Manufacturers and Traders Trust
Company, as trustee
|
Incorporated
herein by reference. Filed previously with the Securities and Exchange
Commission as Exhibit 10.6 to the Company's September 15, 2009 Form
8-K.
|
||
|
10.17
|
Cash
Incentive Plan
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.1 to the Company's January 28, 2005 Form
8-K.
|
||
|
10.18
|
Form
of Amended and Restated Change in Control Agreement made as of November 5,
2008 between The York Water Company and each of the individuals listed on
Schedule 10.19 thereto, which plans are identical in all material respects
except as indicated in Schedule 10.19
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.19 to the Company's March 11, 2009 Form
10-K.
|
||
|
10.19
|
Form
of Amended and Restated Supplemental Retirement Plan made as of January 1,
2009 between The York Water Company and each of the individuals listed on
Schedule 10.20 thereto, which plans are identical in all material respects
except as indicated in Schedule 10.20
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.20 to the Company's March 11, 2009 Form
10-K.
|
||
|
10.20
|
Form
of Amended and Restated Deferred Compensation Plan made as of January 1,
2009 between The York Water Company and each of the individuals listed on
Schedule 10.21 thereto, which plans are identical in all material respects
except as indicated in Schedule 10.21
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 10.21 to the Company's March 11, 2009 Form
10-K.
|
Page
24
|
Exhibit
Number
|
Exhibit
Description
|
Page
Number of
Incorporation
By Reference
|
||
|
13
|
Filed
herewith.
|
|||
|
14
|
Company
Code of Conduct
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 14 to the Company's 2002 Form
10-K.
|
||
|
16
|
Letter
re Change in Certifying Accountant
|
Incorporated
herein by reference. Filed previously with the Securities and
Exchange Commission as Exhibit 16.1 to the Company’s October 2, 2009 Form
8-K.
|
||
|
23
|
|
Filed
herewith.
|
||
|
31.1
|
|
Filed
herewith.
|
||
|
31.2
|
|
Filed
herewith.
|
||
|
32.1
|
|
Filed
herewith.
|
||
|
32.2
|
Filed
herewith.
|
Page
25