York Water Co 10-K for FY2021

York Water Co (YORW)

10-K 2022-03-08 For: 2021-12-31

Added on April 12, 2026

About this 10-K

York Water Co filed this 10-K on March 8, 2022, covering the fiscal year ended December 31, 2021 (FY2021).

Headline figures

Fiscal year ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $55.12M; up 2.4% from $53.85M a year earlier
Net income: $16.98M; up 2.3% from net income of $16.6M a year earlier
Diluted EPS: $1.30; up 2.4% from $1.27 a year earlier

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☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2021
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from __________ to __________

Commission file number 001-34245
THE YORK WATER COMPANY
(Exact name of registrant as specified in its charter)

Pennsylvania		23-1242500
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

130 East Market Street, York, Pennsylvania		17401
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code (717) 845-3601

Common Stock, No par value	YORW	The Nasdaq Global Select Market
(Title of Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes				⌧ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
☐ Yes				⌧ No
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				☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
⌧ Yes				☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act (check one):
Large accelerated filer ☐	Accelerated filer ☐		Non-accelerated filer ⌧

Smaller reporting company ☒		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes	⌧ No

Forward-Looking Statements		3

PART I
Item 1.	Business	4
Item 1A.	Risk Factors	7
Item 1B.	Unresolved Staff Comments	7
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Mine Safety Disclosures	9

PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6.	Selected Financial Data	10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 8.	Financial Statements	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	50
Item 9A.	Controls and Procedures	50
Item 9B.	Other Information	51
Item 9C	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	51

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	51
Item 11.	Executive Compensation	51
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	52
Item 13.	Certain Relationships and Related Transactions, and Director Independence	52
Item 14.	Principal Accounting Fees and Services	52

PART IV
Item 15.	Exhibits and Financial Statement Schedules	53
Item 16.	Form 10-K Summary	57

Signatures		59

Securities registered pursuant to Section 12(g) of the Act:		None
		(Title of Each Class)

•	the amount and timing of rate increases and other regulatory matters including the recovery of costs recorded as regulatory assets;
•	expected profitability and results of operations;
•	trends;
•	goals, priorities and plans for, and cost of, growth and expansion;
•	strategic initiatives;
•	availability of water supply;
•	water usage by customers; and
•	the ability to pay dividends on common stock and the rate of those dividends.

•	changes in weather, including drought conditions or extended periods of heavy rainfall;
•	natural disasters, including pandemics such as the current outbreak of the novel strain of coronavirus known as “COVID-19” and the effectiveness of the Company’s pandemic plans;
•	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, including the tax code;
•	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;
•	loss of customers;
•	changes in, or unanticipated, capital requirements;
•	the impact of acquisitions;
•	changes in accounting pronouncements;
•	changes in the Company’s credit rating or the market price of its common stock; and
•	the ability to obtain financing.

Molly E. Norton	The York Water Company	(717) 718-2942
Investor Relations &	130 East Market Street	(800) 750-5561
Communications Administrator	York, PA 17401	mollyn@yorkwater.com

Item 8.	Financial Statements.
		Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 23)		21
Balance Sheets		22
Statements of Income		24
Statements of Common Stockholders' Equity		25
Statements of Cash Flows		26
Notes to Financial Statements		27

	Dec. 31, 2021			Dec. 31, 2020
ASSETS
UTILITY PLANT, at original cost	$	485,750		$	438,670
Plant acquisition adjustments		(3,637	)		(3,707	)
Accumulated depreciation		(99,204	)		(91,340	)
Net utility plant		382,909			343,623

OTHER PHYSICAL PROPERTY, net of accumulated depreciation
of $483 in 2021 and $458 in 2020		717			742

CURRENT ASSETS:
Cash and cash equivalents		1			2
Restricted cash		–			5,000
Accounts receivable, net of reserves of $855 in 2021 and $655 in 2020		4,634			5,184
Unbilled revenues		2,784			2,847
Recoverable income taxes		894			721
Materials and supplies inventories, at cost		1,917			1,010
Prepaid expenses		1,032			1,526
Total current assets		11,262			16,290

OTHER LONG-TERM ASSETS:
Prepaid pension cost		14,054			2,209
Note receivable		255			255
Deferred regulatory assets		45,280			39,893
Other assets		4,376			3,945
Total other long-term assets		63,965			46,302

Total Assets	$	458,853		$	406,957

	Dec. 31, 2021		Dec. 31, 2020
STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 13,112,948 shares in 2021 and 13,060,817 shares in 2020	$	88,230	$	85,935
Retained earnings		64,392		57,317
Total common stockholders' equity		152,622		143,252

PREFERRED STOCK, authorized 500,000 shares, no shares issued		–		–

LONG-TERM DEBT, excluding current portion		138,869		123,573

COMMITMENTS

CURRENT LIABILITIES:
Current portion of long-term debt		7,500		–
Accounts payable		6,712		6,540
Dividends payable		2,293		2,192
Accrued compensation and benefits		1,575		1,417
Accrued interest		959		959
Deferred regulatory liabilities		607		525
Other accrued expenses		440		360
Total current liabilities		20,086		11,993

DEFERRED CREDITS:
Customers' advances for construction		12,820		10,326
Deferred income taxes		49,590		43,538
Deferred employee benefits		4,530		4,793
Deferred regulatory liabilities		36,374		25,444
Other deferred credits		2,086		2,731
Total deferred credits		105,400		86,832

Contributions in aid of construction		41,876		41,307

Total Stockholders' Equity and Liabilities	$	458,853	$	406,957

	Year Ended December 31
	2021			2020

OPERATING REVENUES	$	55,119		$	53,852

OPERATING EXPENSES:
Operation and maintenance		11,822			10,781
Administrative and general		9,754			9,258
Depreciation and amortization		8,859			8,177
Taxes other than income taxes		1,288			1,205
		31,723			29,421

Operating income		23,396			24,431

OTHER INCOME (EXPENSES):
Interest on debt		(4,926	)		(4,707	)
Allowance for funds used during construction		1,221			530
Other pension costs		(1,214	)		(1,362	)
Gain on life insurance		–			515
Other income (expenses), net		(373	)		(791	)
		(5,292	)		(5,815	)

Income before income taxes		18,104			18,616

Income taxes		1,120			2,018

Net Income	$	16,984		$	16,598

Basic Earnings Per Share	$	1.30		$	1.27

Diluted Earnings Per Share	$	1.30		$	1.27

	Common Stock Shares		Common Stock Amount		Retained Earnings			Total

Balance, December 31, 2019		13,014,898	$	83,976	$	50,209		$	134,185
Net income		–		–		16,598			16,598
Cash dividends declared, $0.7280 per share		–		–		(9,490	)		(9,490	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		41,088		1,805		–			1,805
Stock-based compensation		4,831		154		–			154
Balance, December 31, 2020		13,060,817		85,935		57,317			143,252
Net income		–		–		16,984			16,984
Cash dividends declared, $0.7571 per share		–		–		(9,909	)		(9,909	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		45,961		2,082		–			2,082
Stock-based compensation		6,170		213		–			213
Balance, December 31, 2021		13,112,948	$	88,230	$	64,392		$	152,622

	December 31				Approximate range
Utility Plant Asset Category	2021		2020		of remaining lives
Mains and accessories	$	242,160	$	212,164	11 – 85 years
Services, meters and hydrants		87,164		80,590	17 – 51 years
Operations structures, reservoirs and water tanks		73,462		65,617	9 – 57 years
Pumping and treatment equipment		37,209		34,163	5 – 30 years
Office, transportation and operating equipment		16,856		15,520	2 – 21 years
Land and other non-depreciable assets		3,714		3,478		–
Utility plant in service		460,565		411,532
Construction work in progress		25,185		27,138		–
Total Utility Plant	$	485,750	$	438,670

	December 31				Remaining Recovery
	2021		2020		Periods
Assets
Income taxes	$	33,255	$	28,200	Various
Unrealized swap losses		2,054		2,700	1 – 8 years
Utility plant retirement costs		7,245		5,968	5 years
Customer-owned lead service line replacements		1,161		1,081	Various
Income taxes on customers’ advances for construction and contributions in aid of construction		1,545		1,815	Various
Service life study expenses		3		8	1 year
Rate case filing expenses		17		121	1 year
	$	45,280	$	39,893
Liabilities
Excess accumulated deferred income taxes on accelerated depreciation	$	13,644	$	13,826	Various
Postretirement benefits		11,870		25	Not yet known
Income taxes		8,314		8,706	Various
IRS TPR catch-up deduction		3,153		3,412	12 years
	$	36,981	$	25,969

	As of			As of
	Dec. 31, 2021			Dec. 31, 2020			Change

Accounts receivable – customers	$	5,034		$	5,633		$	(599	)
Other receivables		455			206			249
		5,489			5,839			(350	)
Less: allowance for doubtful accounts		(855	)		(655	)		(200	)
Accounts receivable, net	$	4,634		$	5,184		$	(550	)

Unbilled revenue	$	2,784		$	2,847		$	(63	)

	2021		2020
Weighted average common shares, basic		13,076,263		13,033,681
Effect of dilutive securities:
Employee stock-based compensation		1,027		839
Weighted average common shares, diluted		13,077,290		13,034,520

	2021			2020

8.43% Senior Notes, Series D, due 2022	$	7,500		$	7,500
Variable Rate Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2008A, due 2029		12,000			12,000
3.00% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series A of 2019, due 2036		10,500			10,500
3.10% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series B of 2019, due 2038		14,870			14,870
3.23% Senior Notes, due 2040		15,000			15,000
4.00% - 4.50% York County Industrial Development Authority Exempt Facilities Revenue Bonds, Series 2015, due 2029 - 2045		10,000			10,000
4.54% Senior Notes, due 2049		20,000			20,000
3.24% Senior Notes, due 2050		30,000			30,000
Committed Line of Credit, due 2023		29,320			6,700
Total long-term debt		149,190			126,570
Less discount on issuance of long-term debt		(169	)		(181	)
Less unamortized debt issuance costs		(2,652	)		(2,816	)
Less current maturities		(7,500	)		–
Long-term portion	$	138,869		$	123,573

	2021		2020
Note receivable, including interest	$	255	$	255
Customers’ advances for construction		284		302

Description		December 31, 2021		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$2,086		$2,086

Description		December 31, 2020		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$2,731		$2,731

	2021		2020
Water utility service:
Residential	$	33,986	$	33,987
Commercial and industrial		14,575		13,764
Fire protection		3,247		3,191
Wastewater utility service:
Residential		1,899		1,746
Commercial and industrial		317		304
Billing and revenue collection services		481		266
Collection services		26		15
Other revenue		37		23
Total Revenue from Contracts with Customers		54,568		53,296
Rents from regulated property		551		556
Total Operating Revenue	$	55,119	$	53,852

Obligations and Funded Status At December 31	2021			2020

Change in Benefit Obligation
Pension benefit obligation, beginning of year	$	54,106		$	47,530
Service cost		1,086			938
Interest cost		1,209			1,457
Actuarial (gain) loss		(3,045	)		6,165
Benefit payments		(1,826	)		(1,984	)
Pension benefit obligation, end of year		51,530			54,106

Change in Plan Assets
Fair value of plan assets, beginning of year		56,315			49,349
Actual return on plan assets		8,795			6,650
Employer contributions		2,300			2,300
Benefits paid		(1,826	)		(1,984	)
Fair value of plan assets, end of year		65,584			56,315

Funded Status of Plans at End of Year	$	14,054		$	2,209

	2021			2020
Net gain (loss) arising during the period	$	(8,189	)	$	2,713
Recognized net actuarial loss		(483	)		(370	)
Recognized prior service credit		13			13
Total changes in regulatory asset during the year	$	(8,659	)	$	2,356

	2021			2020
Net loss	$	1,825		$	10,497
Prior service credit		(50	)		(63	)
Regulatory asset	$	1,775		$	10,434

2022				2023				2024				2025				2026						2027– 2031
	$	1,964			$	2,066			$	2,183			$	2,176			$	2,261			$	12,847

	2021		2020
Projected benefit obligation	$	51,530	$	54,106
Fair value of plan assets		65,584		56,315

	2021		2020
Accumulated benefit obligation	$	48,464	$	50,578
Fair value of plan assets		65,584		56,315

	2021	2020
Discount rate	2.65%	2.30%
Rate of compensation increase	2.50% – 3.00%	2.50% – 3.00%

	Total Fair Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)
Asset Category	2021		2020		2021		2020		2021		2020
Cash and Money Market Funds (a)	$	671	$	624	$	671	$	624	$	–	$	–
Equity Securities:
Equity Mutual Funds (b)		43,178		35,707		43,178		35,707		–		–
Fixed Income Securities:
U.S. Treasury Obligations		621		631		–		–		621		631
Corporate and Foreign Bonds (c)		4,580		5,615		–		–		4,580		5,615
Fixed Income Mutual Funds (d)		16,534		13,738		16,534		13,738		–		–
Total Plan Assets	$	65,584	$	56,315	$	60,383	$	50,069	$	5,201	$	6,246

	Number of Shares			Grant Date Weighted Average Fair Value
Nonvested at beginning of the year 2020		7,342			$33.57
Granted		4,912			$44.07
Vested		(5,491	)		$36.00
Forfeited		(81	)		$33.61
Nonvested at end of the year 2020		6,682			$39.30
Granted		6,170			$51.40
Vested		(4,048	)		$41.19
Forfeited		–			–
Nonvested at end of the year 2021		8,804			$46.91


	2021		2020
Regulatory Assessment	$	332	$	298
Property		377		353
Payroll, net of amounts capitalized		575		551
Other		4		3
Total taxes other than income taxes	$	1,288	$	1,205


	2021			2020
Federal current	$	710		$	1,376
State current		246			554
Federal deferred		311			247
State deferred		(109	)		(120	)
Federal investment tax credit, net of current utilization		(38	)		(39	)
Total income taxes	$	1,120		$	2,018


	2021			2020
Statutory Federal tax provision	$	3,802		$	3,909
State income taxes, net of Federal benefit		177			426
IRS TPR deduction		(2,620	)		(1,979	)
Tax-exempt interest		(34	)		(29	)
Amortization of investment tax credit		(38	)		(39	)
Cash value of life insurance		(17	)		(110	)
Amortization of excess accumulated deferred income taxes on accelerated depreciation		(182	)		(182	)
Other, net		32			22
Total income taxes	$	1,120		$	2,018

	2021		2020
Deferred tax assets:
Reserve for doubtful accounts	$	247	$	189
Compensated absences		176		151
Deferred compensation		1,376		1,375
Excess accumulated deferred income taxes on accelerated depreciation		3,942		3,995
Deferred taxes associated with the gross-up of revenues necessary to return, in rates, the effect of temporary differences		2,348		2,456
Customers’ advances for construction and contributions in aid of construction		1,545		1,815
Tax effect of pension regulatory liability		3,429		7
Other costs deducted for book, not for tax		74		64
Total deferred tax assets		13,137		10,052

Deferred tax liabilities:
Accelerated depreciation		30,953		29,893
Basis differences from IRS TPR		16,912		13,671
Investment tax credit		329		356
Deferred taxes associated with the gross-up of revenues necessary to recover, in rates, the effect of temporary differences		9,553		8,088
Pensions		4,060		638
Unamortized debt issuance costs		469		500
Other costs deducted for tax, not for book		451		444
Total deferred tax liabilities		62,727		53,590

Net deferred tax liability	$	49,590	$	43,538

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)	(c)
Equity compensation plans approved by security holders*	-	-	75,557

Equity compensation plans not approved by security holders	-	-	0

Schedule	Schedule	Page
Number	Description	Number

II	Valuation and Qualifying Accounts	58
	for the years ended December 31, 2021 and 2020

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 May 4, 2010.
3.1	Amended and Restated By-Laws	Incorporated herein by reference. Filed previously with the Securities and Exchange Commission as Exhibit 3.1 to Form 8-K dated January 26, 2012.