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York Water Company Reports Operating Results (10-Q)

November 05, 2010 | About:
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10qk

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York Water Company (YORW) filed Quarterly Report for the period ended 2010-09-30.

York Water Company has a market cap of $201.5 million; its shares were traded at around $16 with a P/E ratio of 23.8 and P/S ratio of 5.5. The dividend yield of York Water Company stocks is 3.2%. York Water Company had an annual average earning growth of 5.9% over the past 10 years. GuruFocus rated York Water Company the business predictability rank of 3-star.YORW is in the portfolios of Mario Gabelli of GAMCO Investors.
This is the annual revenues and earnings per share of YORW over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of YORW.


Highlight of Business Operations:

Operating expenses for the third quarter of 2010 decreased $31, or 0.6%, from $4,914 for the third quarter of 2009 to $4,883 for the corresponding 2010 period. The decrease was primarily due to reduced filter plant and distribution system maintenance expense of approximately $54, lower rate case expense of approximately $47 and reduced pension expense of approximately $42. Higher capitalized overhead and reduced chemical expense aggregating approximately $62 also added to the reduction of expenses. Increased salary and wage expense, higher power costs, increased capital stock tax, higher 401K match and pension administration expense, higher depreciation expense due to increased plant investment, and other expenses aggregating approximately $174 partially offset the decrease.

Interest expense on debt for the third quarter of 2010 decreased $61, or 4.9%, from $1,254 for the third quarter of 2009 to $1,193 for the corresponding 2010 period. The primary reasons for the decrease were lower interest payments of $40 due to retirement of the 3.75% Industrial Development Authority Revenue Refunding Bonds, Series 1995, in June of 2010 and lower interest of $16 on the Company s lines of credit due to reduced borrowings. Interest on the $12,000 variable rate bonds decreased $5 due to reduced interest rates. The average interest rate on the lines of credit was 2.33% for the quarter ended September 30, 2010 compared to 1.40% for the quarter ended September 30, 2009. The average debt outstanding under the lines of credit was $11,537 for the third quarter of 2010 and $21,758 for the third quarter of 2009.

Operating expenses for the first nine months of 2010 decreased $372, or 2.5%, from $14,699 for the first nine months of 2009 to $14,327 for the corresponding 2010 period. The decrease was primarily due to lower salary and wage expense of approximately $191. This was mainly a result of the vacation accrual recorded last year as discussed in the Company s Form 10-K for the year ended December 31, 2009. Reduced pension cost, lower distribution system maintenance expense, increased capitalized overhead and other expenses aggregating approximately $477 added to the reduction of expenses. Higher depreciation expense due to increased plant investment, increased power costs and higher capital stock tax aggregating approximately $296 partially offset the decrease. For the remainder of the year, depreciation expense is expected to continue to rise due to investment in plant, and other operating expenses are expected to remain consistent with the first nine months.

Interest expense on debt for the first nine months of 2010 decreased $190, or 5.0%, from $3,787 for the first nine months of 2009 to $3,597 for the corresponding 2010 period. The primary reasons for the decrease were lower interest payments of $90 due to retirement of the 3.60% Industrial Development Authority Revenue Refunding Bonds, Series 1994, in May of 2009 and the 3.75% Industrial Development Authority Revenue Refunding Bonds, Series 1995, in June of 2010, lower interest of $53 on the Company s lines of credit due to reduced borrowings and lower interest of $47 on the $12,000 variable rate bonds due to reduced interest rates. The average interest rate on the lines of credit was 2.10% for the nine months ended September 30, 2010 compared to 1.51% for the nine months ended September 30, 2009. The average debt outstanding under the lines of credit was $9,328 for the first nine months of 2010 and $19,735 for the first nine months of 2009. For the remainder of the year, interest expense is expected to increase due to a higher rate on the new long-term debt issued in October than on the line of credit borrowings it replaced.

Historically, the Company has borrowed $15,000 to $20,000 under its lines of credit before refinancing with long-term debt or equity capital. As of September 30, 2010, the Company maintained unsecured lines of credit aggregating $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 2012), which currently carries an interest rate of LIBOR plus 2.00%. The Company had $2,047 in outstanding borrowings under the committed portion and no on-demand borrowings under this line of credit as of September 30, 2010. The second line of credit, in the amount of $11,000, is a committed line of credit, which matures in May 2012 and carries an interest rate of LIBOR plus 1.50%. This line of credit has a compensating balance requirement of $500 (see Note 10 to the financial statements). The Company had $6,000 in outstanding borrowings under this line of credit as of September 30, 2010. The third line of credit, in the amount of $5,000, is a committed line of credit, which matures in June 2011 and carries an interest rate of LIBOR plus 2.00%. The Company had $3,000 in outstanding borrowings under this line of credit as of September 30, 2010. The weighted average interest rate on line of credit borrowings as of September 30, 2010 was 2.24% compared to 1.47% as of September 30, 2009.

The Company's operations are exposed to market risks primarily as a result of changes in interest rates under its lines of credit. The Company has unsecured lines of credit with three banks having a combined maximum availability of $33,000. 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 2012), which currently carries an interest rate of LIBOR plus 2.00%. The Company had $2,047 in outstanding borrowings under the committed portion and no on-demand borrowings under this line of credit as of September 30, 2010. The second line of credit, in the amount of $11,000, is a committed line of credit, which matures in May 2012 and carries an interest rate of LIBOR plus 1.50%. This line of credit has a compensating balance requirement of $500 (see Note 10 to the financial statements included herein). The Company had $6,000 in outstanding borrowings under this line of credit as of September 30, 2010. The third line of credit, in the amount of $5,000, is a committed line of credit, which matures in June 2011 and carries an interest rate of LIBOR plus 2.00%. The Company had $3,000 in outstanding borrowings under this line of credit as of September 30, 2010. The weighted average interest rate on line of credit borrowings as of September 30, 2010 was 2.24%. Other than lines of credit, the Company has long-term fixed rate debt obligations as discussed in Note 8 to the financial statements included herein and a variable rate Pennsylvania Economic Development Financing Authority (PEDFA) loan agreement described below.

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