York Water Co
Annual Report 2013

Plain-text annual report

The York Water Company 130 East Market Street York, Pennsylvania 17401 717-845-3601 www.yorkwater.com U i f ! Z p s l ! X b u f s ! D p n q b o z 2013 Annual Report Our G V U V S F 1 ' Is Framed by Our Past Vision 2 : 9 ! th Z f b s ' Lively Bidding At Auction Held In Owen And Broth er's Rooms _, FRY SECURITIES SOLD .. II Will Be;:. '?.0 W t2l ·cr_,. To Tlura CI~-' C1 .:. D-1~gate~ R VENTED G IN YORK -- WEEK'S TEST Cd'MPLETEO BY PROF. CAIRD, . HIGH AUTJ-iORITY Presidem: Of W a;~er Con1pany Points Out In Reviewing Utility's History h J ~ADDRESSES ROTARIANS --_..._._.,_......,...,...:,_.;:.;.:;... New York eacterlo~ogl~t Can Clto None More Efficient at Such Low Operating Stertllzatlon 99.98 Per Cent Cost - PLANT IS SECOND TO NONE On~ band!'"'a nnd !.hirtcen yenr;: o · The York Water Company 130 East Market Street York, Pennsylvania 17401 717-845-3601 www.yorkwater.com U i f ! Z p s l ! X b u f s ! D p n q b o z 2013 Annual Report Our G V U V S F Is Framed by Our Past Vision 2 : 9 ! Z f b s :-tock rf'c.=-ptly sold. Sixty-n1M PISTI:Z£Bt77'Ial\r-SYSTE.i\£ X IC' NO. •!- ( a ) J.V«pShQWln[/ . ,af'f:h,.. YlJmr l f'ArEBCOlo:f/YNJ,.. 'YOrkPdlfr.',Ybzmkt. WATER STOCK SOARS Reco~d Pri;.e of 68't2 Paid Last N ight At Owen's Auction Other Securities Sold s'(ll were- lot" : T '"'n .>8, u t 1:1 Rhan~s at 6R%. following l'h e sa.m~ thn.t; thP- securitit:.; were ~.;old: $500 .Middle~ town and Roya I ton Water company ll t. i:f.IO and. nccrued lntet•e:=:t; tlv.,. l:i' :> :;h a.t"t•s ::,· ork State bank ~tt (i2;2 ; Sl !lO 1'"c:H·k C:~LS rompany o'a at TO::l ~nd :l.CCl'l.t~d UH>'r~.st; 17 sha.re::~ :turk 2'Jatl ontt1 a.l 611;~; five slw.rt:.R Ynl'l< X~:ttlonal bank at 611h. ,:..; o:rtll .\t r,rconl Pril'c, 'ThP lll"k~ of Tork :-.rational iR also bt-ing o11e dollar a. lJiglH:•r than tlli.s sto<-k has ever ~;old ~ Jn/ thf" pnhlic marl. cit:, of York ,. •. N.P- recched b;-.· · will art'h·1"d in a few day·s. ~ ---===----=-=--• MANY ARE ATTRAOTE·D s ~-\Jl Ot' th~~e trees a r e l'·ed and White !JiJl~. E'\ ergrecns hcing c-bo&en b~ca.1.1 se - _ 11 '·1·~ ·".--~dinK of lhe leaves of d-ecidu~ ~~O?tlel!:. in~o tho basin was ro · - TO RESERVOIR PARK ~ ohJE:~t~nnable. Tlwr e haxe . -plant~d ReSt"rvoir park along the Country e :.tot-ap-e basin as a. s tart for road has been attra'Otln g -·a,.'lE>nse rPforcs.hn g· project. t.;l.:<'n 1 ltiR,OI)O trees , - Club ~ · · F largG number of visitors daily and thl:()ughout the summer tt had been - estimated that an average of more than one picnic a. day was held on I :-;f1c,J':'T1,""/I( 'fn" the beautttui Sunday school classes a.nd cbur~b I ~-------------:! soetettes have held afternoon .sup~ -pers. Numerous V.A'!'"' r.HOTrJtt\; ~ .QE:. la.wns. AI)!l~ • Brown indicates pipe 1R1d 1850- 1860 . • Ysllow 1860 - 1870. • • 1870 - 1880, Oresn 1880 - 1890 •. • Blus • Red 1890 - 1900. • 1900- 1910. Purp1s The lawns and evergreens are fn roads excellent condition and the have been oiled during the Bummoi' which has prevented the ralaing ot 'fO'' ' ·an)" dust.. Thts part contalnR 72 acre-R of ground and, on account of "' benches are provided by the 1 1 i~: el~~~tto~~ a o~~~~~an1~~e~ DROUGHT :pR· OVES WORTH I·M. POUNDING BASIN :::;,. ~~x;;::t~~ ~~rs~:~~isl~~~~ oF· th;h:t~~~~:a.~hich had been clc . for a. few days on account or la: NO WATER SHORTAGE HER E the SlOO,OOO, plpe through the &"t'ou trom the -pumping Atat1ou, are . ooon tQ the general publ1c du REFORESTATION HEl.PS CONSERVE SU PPLY . · · r11:: I. ~INFALL ONLY ·.6 INCH WATER SUPPLY IS MORE ASSURED Secretr.iT Of Forests And \Vaters Praises Forestation Work Of York \Vater Co. WATER STOCK SOARS Re~ord Price of 68Y2 Pa id La s t Night At Owet'l 's Auction Other Sec.urities S o ld The }>r1.ce for York Wat.m: com pany stock bro·kc all t·ecords last oveuin g at the tl,uction rooms of V~t S. Owen and Brother, '\Yherf\ it sol d R.c:~ higti as o!P 2 , being $8 .50 in a.d vance of the highest price a.t which ~h'-' stock recently sold. Sixty-nine sharf's were in the following lot:;: Ten shar es a t 68:14, 40 sha.res ut liS. 19 shar es at 68Jh . followi n g t h e $5()(} M.i:ddle- Ar t.he sante t i me seeuri.ties wer e s o ld : sold. -----·--·--......_ . I . . lJ [ PLAN~ WAT~R OUTSTANDING LEADER· YORK'S WATER PUREST · Te:>t of 90 San'lples by Eminent Chemi~~;~;~, t~a:::r-~:1 A n y YORK PUMPING STATION MODEl OF EFFirlrNCY ·~.~~:~~~:~~~.l~!t~t j~E~nc:~~?~f~:i:l COMPANY ALONG CODOt>tliS SEEN BY ONLY FEW CITIZENS thorough test of tho local filtering plant a.nd of the 90 .sa.m.plcs coliooted irom va.rious pa.tt~ of the oity none ~!1~wed a single hanuful b.a.ctet.·ia. Mr. Ctul·d used the highest standards as lc~,id down by the United states b"OV· r n blic ernmcnt and tho I!ea.tth a..c:;sociation for testing public ~vater supplies. He stated tha.t it i.\1 a commun oocurrence for plants to fall Wht.!n . those high sta.nda:rds a.re 6 000 000 GALLONS DAILY a.pplied, whcrP.as in rork t11e water filter plants of lmmel"o-us cities ·thvoughO plant which pro duces a better re...mpa.ny is d elivering a water frP.e from taete, pdor,. color and tur l:idity a.nd these respects simila.r to bacterial cl is tilled water. From a standpoint, the ws.ter is practi~al:ly Since 1896 there has nestled in t'he valley alqng the south branch of the Codorus creek o, handsome red brick E!tructure trimmed in gray sandston.<:\. which has housed the' mighty pumps that 'K..s•t numJ.)a l ro port of tl'te opera- f ion and fl ns.u:wlal condition of the company '\vas rea,d a.t the m1.1eting. t\ cop~· 11as heen m:illcd to each stockholder. The report.. which is - - -•-·"- -- GOOD WATE·R REDUCES I LIQUOR OONS·UMPTION A good w a.tR-..r supply· ha '!J! mor e i n t h e d t-inking fiuehce in eliminating. of sp irl.tuou s Uctuor than all t h e pro l.a.w.s in the l!rt.atute books, .h.ibltlon t o Dr'. W illiam. Ma.yo, of a ccording t h e oelel>ratOOi Mayo Clinic, R och es ter, :.UinneJSo ta.. ln an addr ess b e.f()re the ,American Chem1cal B()Ciety, lliis eml.ne.nt m ed icaJ author1t y pointed out t h at t he drin king o! billl ()n.s ot g allons of b eer 'Lively Bidding At Auction Held In Owen And Broth- .er's Rooms SECURIT IES SOLD t he Stocks of the York Water company, the Y.ork Telephone apd Teleg ra ph Industrial Nation al comapny, bank and ..the Trust Company of Glen Rock reached n ew hig"h pr.ices at a puhlt cauction .held last evening in t he rooms of W. S. O wen & Brother, · nental Eur()'J)e in t he p a s.t c entury an<\ w ine b y the yeople ot conti- ~~1~t1~~~~ t~e~;e<>~~!1~~~ ~~C::u~~ the p olluted w a.t er in t hoge centur ie5. AND PURE WATER :!:':utlsooa· would have wiped CJTY BETTER PROTECTED FROM FIRE THAN IN 1924 -- Service Company's Report Shows No Typhoid Trace able To This Source KERR AGAIN PRESIDENl\ The directors of the York W ·atei re- elec t ecl yesterdal t Dmpany were YORK WATERCOMPANYSPE NDS ,600,000 TO IMPROVE ITS SYSTEM --·-- In 1913, the Lake Williams Dam was first filled with water. For the past 100 years the reservoir has provided invaluable service to the community as a water supply during droughts and as a place for recreation and aquatic life. The 1,600 acre forest surrounding the lake helps filter rainwater and also provides miles of hiking trails, picnic areas, and wildlife habitat. The old newspaper articles contained in this annual report are part of York Water's historical archives. We'd like to thank our wonderful local newspapers who, over the past two centuries, have done a magnificent job chronicling the events that occurred in the communities we serve. These included the York Daily Record, the York Dispatch, and the York Gazette. Always Preparing for the Future Always Preparing for the Future Environmental Stewardship from the Beginning NO DANGER OF NEW WAHR CO. DAM BREAKING CONSIDERABLE AMONG SKEPTICAL PERSONS ABOUT BIG IMP<>UNOING BASIN NOW IN COURSE OF ERECTION SOUTH> OF YORK-FEAR TER· RIBLE CALAMITY SHOULD IT BREAK, BUT, AS A M•ATTER OF FACT, IF IT DID BREAK THE HAR·M OONE WO"ui..D BE :TRIF-. LING ..J!J.i!..,2.d iNS P E C TE 0 FREQUENTLY In 1913, the Lake Williams Dam was first filled with water. For the past 100 years the reservoir has provided invaluable service to the community as a water supply during droughts and as a place for recreation and aquatic life. The 1,600 acre forest surrounding the lake helps filter rainwater and also provides miles of hiking trails, picnic areas, and wildlife habitat. The old newspaper articles contained in this annual report are part of York Water's historical archives. We'd like to thank our wonderful local newspapers who, over the past two centuries, have done a magnificent job chronicling the events that occurred in the communities we serve. These included the York Daily Record, the York Dispatch, and the York Gazette. U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t For almost two centuries, The York Water Company tradition has reflected Strong Leadership and Vision– Framing the successes of the Past and Present as we prepare our communities for the Future. A glance at newspaper clippings from nearly a century ago conveys our commitment to the communities that we serve and displays a tradition of strong leadership, vision and success that continues to the present - and frames a positive future for The York Water Company and its customers. The headlines repeatedly reflect themes about "Purity of Water and High Water Quality" - "Record Stock Prices" - "New Pipeline and Pumping Station Construction." Conservation measures and community spirit, such as "Tree Planting, Reservoir Parks, and Impounding Basins" are also consistent news article themes that have captured the culture and commitment of The York Water Company. This tradition continues at The York Water Company today with Record Financial Performance, Continued Growth and Expansion, Efficiency and System Improvements, Increased Shareholder Value and the issuance of Dividends in 2013 for the 198th consecutive year - an American Record. This is a reassuring message from The York Water Company to shareholders and customers - one about consistently serving the community's needs, supplying water of the highest quality, achieving financial success and planning for a bright sustainable future. Q b h f ! 2 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Jeffrey R. Hines, P.E. President and Chief Executive Officer Dear Shareholders, I am pleased to report that 2013 was a record year which continues our 198-year tradition of service, growth, and performance. Record Financial Performance Due to our continued growth, 2013 results were the best in our history. Operating revenues grew by 2.3% to $42.4 million in 2013. Operating income increased 0.9% to $20.8 million. Our net income increased by 3.8% to $9.7 million in 2013. Earnings per share increased 4.2% to $0.75. We are only including a summary of our financial results in this annual report. Please refer to our annual SEC 10-K Report, which was delivered with this report, or can be downloaded from the investor relations section of our website at www.yorkwater.com for a more detailed review of our financial performance. Continued Growth, Acquisitions, and Expansion The number of customers served in 2013 grew to 64,118 water and wastewater customers. This was an increase of 339 new water and wastewater customers. This 0.5% customer growth in 2013 was below our pre-recession growth rate of 2-3%. The Company is now authorized to serve in 47 municipalities in Adams and York Counties. Our population served grew by about 0.5% in 2013 to approximately 190,000 people. Growth in Wastewater Business In 2013, York Water announced the planned acquisitions of the wastewater assets of the East Prospect Borough Authority and the SYC, Inc. wastewater system. These two acquisitions will complement the 2012 acquisition of the Asbury Pointe wastewater collection and treatment system. York's total wastewater customers with these three systems will total nearly 800 customers and include three 80,000 gallon per day wastewater treatment plants. In 2013, we also expanded our wastewater billing and customer service contracts to include the West Manheim Township Sewer Authority, bringing our number of municipal wastewater billing customer contracts to three. York Water Continues to Assist Communities in Need In 2013, York Water began a project to install water lines in York Haven Borough in York County. This project will provide domestic water to over one hundred customers plus provide high quality fire protection for the first time Q b h f ! 3 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t This 1898 photo shows the aerating fountain on Reservoir Hill. The fountain and 100 acre park were open to the public. Today the fountain has been replaced by a gazebo which was originally built in 1876, but the park continues to serve as a green space that is open to visitors. in the Borough's history. In 2013, York Water was approached by the owners of the Lincoln Estates water system in Adams County and Forrest Lakes water system in York County to purchase their respective water systems. The contracts for these two areas were signed in early 2014. These acquisitions will add about 270 customers. Rate Increase Approved, Water Still Costs Less than One Cent per Gallon On January 9, 2014 the Pennsylvania Public Utility Commission approved a $5.0 million per year increase in revenue. This increase in water and wastewater customer rates was necessary to recover costs associated with $48 million in capital improvements since the last rate increase. Much of this investment was required to replace critical infrastructure and to insure our customers have a safe, reliable, and abundant supply of water and that wastewater is properly treated and discharged now and into the future. York Water's customer complaint rate and water rates remain among the lowest in the state while still providing world class service to our customers. Dividends and Shareholder Value: An American Record! In line with our objective to maintain regular dividend increases, we raised the quarterly dividend rate by 3.5% during the year. This is the seventeenth consecutive year we have raised our dividend and the 198th consecutive year of dividend payments. We believe this to be the longest consecutive dividend record in America. Shareholder value continued to improve in 2013. The market price of our common stock increased 19% from $17.57 per share to $20.93. Declared dividends increased in 2013 by 3.5% to $0.558 per share. The total increase in shareholder value for a share of stock purchased on January 1, 2013 was 22.3%. Increasing Efficiency Although we are a 198-year-old company, we continue to make technological advances to assist our customers while still providing that personal touch. When you call our office, one of our friendly customer service representatives will answer the phone and assist you. We continue to expand our initiatives in paperless billing and Q b h f ! 4 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t electronic bill pay. In 2013, we increased the number of paperless billing customers by 50%, and we are working to continue this trend in 2014. We've also deployed a state-of-the-art radio frequency drive-by and fixed meter reading system. Of course, our historic office in downtown York remains open for walk-in or phone-in customer support. System Improvements for a Sustainable Future York Water continues to replace almost 1% of its existing water pipe each year. This reduces main breaks, water leakage, and potential property damage. York Water continues to work with local governments and other utilities to coordinate water main replacements prior to road resurfacing projects. This saves our customers money and provides the motoring public with a new road and equally new utilities below. At our Grantley Road Filter Plant we have initiated a process to rebuild all twelve water filters over the next several years. This will increase our capacity and provide redundancy in emergencies. As this past winter has demonstrated: York's investments in back-up generators and infrastructure replacement insured that, although electrical power was out for up to five days, York's customers had a reliable and uninterrupted supply of water. Dedicated and Experienced Employees A Company that continues to thrive and grow, and improve service to its customers for nearly 200 years, can only be possible due to the dedication, loyalty, and hard work of its employees. York Water's talented employees have an average of 16 years at the Company, which is indicative of the rewarding environment and corporate culture of The York Water Company. We thank all of the York Water family for their commitment to make this Company the most efficient water utility in the nation. Director Finlayson Retires in 2014 John Finlayson has been a Director since 1993 and Audit Committee Chair since 2000. During his twenty-year tenure, John provided professionalism and financial expertise that helped transform The York Water Company into its preeminent position in the community and among our peers. Fortunately, John will continue to provide counsel and advice as he serves the Company as a Director Emeritus. Outlook As we begin our 199th year in business, we continue our efforts to grow and serve our communities. We monitor our operating region for opportunities to acquire new franchise territories in both water and wastewater and enter into non-regulated business activities so that we may provide our extensive history, experience, and know-how to communities that realize the importance of a high quality, drought-resistant supply of water for domestic, commercial, industrial, and fire protection uses. We will do all of this while managing our natural resources and the environment so that we are fully sustainable for the communities we serve for the next two centuries and beyond. We will continue to anticipate our communities' growth so that wherever and whenever "That good York water" supply and service is needed, we will be there. Q b h f ! 5 Note: Efficiency ratio as measured by net income as a percent of revenue. U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Highlights of Our 198th Year (In thousands of dollars, except per share amounts) For the Year 2013 2012 2011 2010 2009 Summary of Operations Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . $ 42,383 $ 41,447 $ 40,629 $ 39,005 $ 37,043 Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 21,622 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,761 Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,162 Other income (expenses), net . . . . . . . . . . . . (133) Income before income taxes . . . . . . . . . . . . . . 15,466 Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,812 20,874 20,573 5,144 (520) 14,909 5,606 20,754 19,875 5,155 19,238 19,767 4,795 19,655 17,388 4,780 (677) (465) (517) 14,043 4,959 14,507 5,578 12,091 4,579 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,654 $ 9,303 $ 9,084 $ 8,929 $ 7,512 Per Share of Common Stock Book value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ Basic earnings per share . . . . . . . . . . . . . . . . . . . . 7.98 0.75 $ 7.73 0.72 $ 7.45 0.71 $ $ 7.19 0.71 6.92 0.64 Cash dividends declared per share. . . . . 0.5580 0.5391 0.5266 0.5150 0.5060 Weighted average number of shares outstanding during the year . . . . . . . . . . . . 12,928,040 12,847,160 12,734,420 12,626,660 11,695,155 Utility Plant Original cost, net of acquisition adjustments. . . . . . . . . . . $ 298,670 $ 289,579 $ 278,344 $ 269,856 $ 259,839 Construction expenditures . . . . . . . . . . . . . . . . 9,852 11,543 9,472 10,541 12,535 Other Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 282,529 $ 282,490 $ 274,219 $ 259,931 $ 248,837 Long-term debt including current portion . . . . . . . . . . . . . . . . 84,928 84,975 85,017 85,173 77,568 For Management’s Discussion and Analysis of Financial Condition and Results of Operations, please refer to Item 7 in the Company’s Annual Report on Form 10-K. Q b h f ! 6 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Shareholder Information Market for Common Stock and Dividends The common stock of The York Water Company is traded on the NASDAQ Global Select Market (Symbol “YORW”). Quarterly price ranges and cash dividends per share for the last two years follow: High $19.24 19.64 21.99 22.00 2013 Low $17.62 17.86 18.92 19.70 Dividend* $0.1383 0.1383 0.1383 0.1431 High $18.43 17.89 18.49 18.49 2012 Low $17.00 16.94 17.51 16.75 Dividend* $0.1336 0.1336 0.1336 0.1383 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter * Cash dividends per share reflect dividends declared at each dividend date. Prices listed in the above table are sales prices as listed on the NASDAQ Global Select Market. Shareholders of record (excluding individual participants in securities positions listings) as of December 31, 2013 numbered approximately 2,023. Performance Graph The following line graph presents the annual and cumulative total shareholder return for The York Water Company Common Stock over a five-year period from 2008 through 2013, based on the market price of the Common Stock and assuming reinvestment of dividends, compared with the cumulative total shareholder return of companies in the S&P 500 Index and a peer group made up of publicly traded water utilities, also assuming reinvestment of dividends. The peer group companies include: American States, American Water, Aqua America, Artesian Resources, California Water Service, Connecticut Water, Middlesex Water and San Jose Water. American Water was added to the peer group in 2013 as it completed its fifth year as a publicly traded water utility. The line graph shows the peer group as it existed in 2012 and in 2013 for comparison purposes. Q b h f ! 7 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Shareholder Information Dividend Policy Dividends on the Company's common stock are declared by the Board of Directors and are normally paid in January, April, July and October. Dividends are paid based on shares outstanding as of the stated record date, which is ordinarily the last day of the calendar month immediately preceding the dividend payment. The dividend paid on the Company’s common stock on January 15, 2014 was the 572nd consecutive dividend paid by the Company. The Company has paid consecutive dividends for its entire history, since 1816. The policy of the Company’s Board of Directors is currently to pay cash dividends on a quarterly basis. The dividend rate has been increased annually for seventeen consecutive years. The Company’s Board of Directors declared dividend number 573 in the amount of $0.1431 per share at its January 2014 meeting. The dividend is payable on April 15, 2014 to shareholders of record as of February 28, 2014. Future cash dividends will be dependent upon the Company’s earnings, financial condition, capital demands and other factors and will be determined by the Company’s Board of Directors. Financial Reports and Investor Relations 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. Shareholders may request, without charge, copies of the Company’s financial reports. Such requests, as well as other investor relations inquiries, should be addressed to: Bonnie J. Rexroth — Investor Relations Administrator The York Water Company 130 East Market Street York, PA 17401 (717) 845-3601 (800) 750-5561 bonnier@yorkwater.com Stock Exchange Listing The Company’s common shares trade on the NASDAQ Global Select Market. The trading symbol is “YORW”. Independent Auditors ParenteBeard LLC Suite 200 221 West Philadelphia Street York, PA 17401 Transfer Agent & Registrar American Stock Transfer & Trust Company LLC 6201 15th Avenue Brooklyn, NY 11219 (877) 739-9990 www.amstock.com Annual Meeting Information Monday, May 5, 2014 1:00 p.m. - Lunch 12:00 p.m. (reservation required) Strand-Capitol Performing Arts Center 50 North George Street York, PA 17401 Plumber wiping joint where service was cut so as to make room for 20" supply main. August 28, 1898. Q b h f ! 8 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Supplemental Information (Unaudited) (In thousands of dollars, except per share amounts) Year Ended December 31 Selected Financial Data Income 2013 2012 2011 Operating Revenues.............................................................................................. Operating Expenses .............................................................................................. Operating Income.................................................................................................. Interest Expense..................................................................................................... Net Income ............................................................................................................. Percent Change in Net Income Compared to Prior Year ................................ Common Stock Dividends ................................................................................... Dividend Payout Ratio ......................................................................................... $42,383 $21,622 $20,761 $5,162 $9,654 3.8% $7,214 74.7% $41,447 $20,874 $20,573 $5,144 $9,303 2.4% $6,929 74.5% $40,629 $20,754 $19,875 $5,155 $9,084 1.7% $6,708 73.8% Weighted Average Common Shares Outstanding............................................ 12,928,040 12,847,160 12,734,420 Basic Earnings Per Weighted Average Common Share................................... $0.75 $0.72 $0.71 Number of Common Shares Outstanding......................................................... 12,979,281 12,918,633 12,791,671 ROE on Year End Common Equity .................................................................... Common Stock Dividends Per Share ................................................................. Net Cash Flows From Operating Activities ...................................................... 9.3% $0.5580 $18,438 Balance Sheet Common Stockholders’ Equity ........................................................................... $103,511 Long-Term Debt Including Current Maturities ................................................ $84,928 Total Capitalization ............................................................................................... $188,439 Percent Common Stockholders’ Equity ............................................................. Percent Long-Term Debt ...................................................................................... 55% 45% 9.3% $0.5391 $16,422 $99,825 $84,975 $184,800 54% 46% 9.5% $0.5266 $17,474 $95,265 $85,017 $180,282 53% 47% Net Utility Plant .................................................................................................... $244,237 $239,539 $232,277 Operating Data Revenue Class Residential .............................................................................................................. Commercial and Industrial.................................................................................. Other........................................................................................................................ Total Operating Revenues.................................................................................... $26,796 $12,299 $3,288 $42,383 $26,114 $12,114 $3,219 $41,447 $25,693 $11,820 $3,116 $40,629 Construction Expenditures .......................................................................... $9,852 $11,543 $9,472 Other Operating Data Number of Customers .......................................................................................... Number of Employees.......................................................................................... Common Shareholders ......................................................................................... Book Value Per Common Share .......................................................................... Market Value at Year End .................................................................................... Market Value to Book Value ................................................................................ P/E Ratio ................................................................................................................ 64,118 104 2,023 $7.98 $20.93 262% 27.9 63,779 105 1,786 $7.73 $17.57 227% 24.4 62,738 106 1,658 $7.45 $17.64 237% 24.8 Q b h f ! 9 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Supplemental Information (Unaudited) (In thousands of dollars, except per share amounts) 2010 2009 2008 2007 2006 2005 2004 2003 $39,005 $19,238 $19,767 $4,795 $8,929 18.9% $6,506 72.9% $37,043 $19,655 $17,388 $4,780 $7,512 16.8% $6,050 80.5% $32,838 $18,158 $14,680 $4,112 $6,431 0.3% $5,526 85.9% $31,433 $17,333 $14,100 $3,916 $6,414 5.3% $5,332 83.1% $28,658 $15,754 $12,904 $3,727 $6,091 4.4% $4,820 79.1% $26,805 $14,049 $12,756 $3,423 $5,833 10.0% $4,392 75.3% $22,504 $12,627 $9,877 $2,132 $5,301 19.2% $3,930 74.1% $20,889 $11,578 $9,311 $2,523 $4,448 17.4% $3,512 79.0% 12,626,660 11,695,155 11,298,215 11,225,822 10,475,173 10,359,374 9,937,836 9,579,690 $0.71 $0.64 $0.57 $0.57 $0.58 $0.56 $0.53 $0.46 12,692,054 12,558,724 11,367,248 11,264,923 11,201,119 10,399,995 10,330,571 9,628,845 9.8% $0.5150 $14,755 8.6% $0.5060 $15,801 $91,257 $85,173 $86,922 $77,568 $176,430 $164,490 52% 48% 53% 47% 9.2% $0.4890 $11,527 $69,766 $86,353 $156,119 45% 55% 9.5% $0.4750 $10,040 9.3% $0.4540 $7,116 11.6% $0.4240 $8,451 $67,272 $70,505 $137,777 49% 51% $65,361 $62,335 $127,696 51% 49% $50,415 $51,874 $102,289 49% 51% 11.0% $0.3940 $7,670 $48,037 $51,913 $99,950 48% 52% 11.4% $0.3667 $6,772 $39,056 $32,652 $71,708 54% 46% $227,677 $221,475 $210,820 $191,046 $173,800 $154,774 $139,454 $115,724 $24,478 $11,440 $3,087 $39,005 $23,299 $10,734 $3,010 $37,043 $20,572 $9,671 $2,595 $32,838 $19,722 $9,290 $2,421 $31,433 $17,972 $8,497 $2,189 $28,658 $16,737 $8,009 $2,059 $26,805 $13,789 $6,893 $1,822 $22,504 $12,574 $6,598 $1,717 $20,889 $10,541 $12,535 $24,438 $18,154 $20,678 $15,562 $25,689 $10,252 62,505 111 1,649 $7.19 $17.29 240% 24.4 62,186 111 1,516 $6.92 $14.51 210% 22.7 61,527 110 1,485 $6.14 $12.10 197% 21.2 58,890 109 1,443 $5.97 $15.50 260% 27.2 57,578 106 1,463 $5.84 $17.88 306% 30.8 55,731 97 1,449 $4.85 $17.23 356% 30.8 53,134 95 1,459 $4.65 $12.93 278% 24.3 51,916 92 1,392 $4.05 $12.13 299% 26.0 Q b h f ! : U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Directors, Officers, & Key Employees Board of Directors Cynthia A. Dotzel, CPA (2) (3) Age 59 Director Since 2009 John L. Finlayson (2) (4) Age 73 Director Since 1993 Michael W. Gang, Esq. (1) (3) Age 63 Director Since 1996 George W. Hodges (1) Age 63 Chairman Director Since 2000 George Hay Kain, III (4) Age 64 Director Since 1986 Robert P. Newcomer (4) Age 65 Director Since 2013 Jeffrey S. Osman (1) Age 71 Director Since 2001 Steven R. Rasmussen, CPA (2) (3) Age 41 Director Since 2011 Ernest J. Waters (2) (4) Age 64 Director Since 2007 (1) Executive Committee (2) Audit Committee (3) Nomination and Corporate Governance Committee (4) Compensation Committee Q b h f ! 2 1 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Directors, Officers, & Key Employees Officers & Key Employees Vernon L. Bracey Age 52 Vice President- Customer Service Joseph T. Hand Age 51 Chief Operating Officer Jeffrey R. Hines, P.E. (1) Age 52, President and Chief Executive Officer Director Since 2008 Bruce C. McIntosh Age 61 Vice President-Human Resources and Secretary Kathleen M. Miller Age 51 Chief Financial Officer and Treasurer Mark S. Snyder Age 43 Vice President-Engineering Directors Emeriti Josephine S. Appell Chloé R. Eichelberger Horace E. Keesey, III William T. Morris Irvin S. Naylor Thomas C. Norris John H. Strine Age 57 Vice President-Operations Bonnie J. Rexroth Age 53 Investor Relations Administrator Q b h f ! 2 2 U i f ! Z p s l ! X b u f s ! D p n q b o z 2 0 1 3 A n n u a l R e p o r t Chartered Territory Distribution and Supply System A map of York Water’s 2014 chartered territory and service area. After Lake Williams was completed in 1913, the surrounding farmland was forested with over one million trees. This was one of the first large scale reforestation projects in the world, and visitors from all over traveled to York to admire the planting. Q b h f ! 2 3 Always Preparing for the Future Always Preparing for the Future Environmental Stewardship from the Beginning MINNESOTA FORESTRY BOARD TO ~SIT YO~~~~~~~~~~ STATE TRt;ASURER LEWIS AR· RANGES FOR TRIP TO WATER CO. PLANTATION - • - WILL A.ItRIVE SATURD/ --- REFORESTATION MARVEl PiOt:ures A~ d News A-: • u Dhcribo \', a-:~r c~-p~~ Fa-· t1cn. M1nn~s .. -;- -s Say . .. ar\C·luu~. • 1 1':\, .:. Members o! the Minnesota Re~ . research will sp-c!Jffir.lE>.'' , . , .•. 1~-r ... ,~, ~o:unnot dP.!'C\"lhE' e~tation commission, who are the East on a forestry tour o:t inv · t.!gu.tion and Satur·du.y nigh't In York, and Suul41-v-ful sight. -.: = morning will inspect the pla.ntatflJllf'StFI of parts of Cana.dli., l\cw of the York Water company, at Englu.nd :;tu,Lcs I;I.Ild the Allanliuso<~­ impoundlng reservoir several miicanl ::;tu.tes and iluso nul. seen uuY _sautlL.oLtb..e_cit.lr. ....Tha_<".omnlillsi.(t.hhlJ{ to comparo wlth the roforestC>d !Project of the York \\'ater cvrupm1y.' This wa!< th"' <>xprP~..nd bactel"lologist, Troy, ::\. Y ., ha..s just cotnplet:ed a thorough local filtering plant a.nd. of the ~0 sa.r.n.ples c~">llooted from varlou~ pa.rt~ of the c ity none ~howed a sing le ha rmful bac t eria.. Mr.. Caird US€d the hig'nest standar ds as l d.id down by the United B-t."'.:tes &ov ernment and tho Alnerica.n P ubHc llea.tth a.sso-cia.t ion for test lng p;ttblic water supplies. He stated tha.t i t i:;; a common 6Ccurrence f or p la.nts t o fail when . these high sta ndards ar-e a.l>Plie<.l., w h erea..on. lt was the e:xJ.remcly hot weather which in Ct'eas-ed the consumption of w ater in York far beyond any previous day during the -present On days when the ISUn shines br ightlY th'e oonsumpticm of water t h e 'highest, for it is on such days that the many h ouseholder s put the hose to use f or watering la.wns and g a.r- summer. is MANY ARE ATTRAOTED ~---·--- TO RESERVOm PARK ReSt>rvoir park a.long the Country road has been attracting a. C'Jub large number of visitors daily and throughout the summer It bad been estimated that an average or more than one p1cn1c a day was hcln on ~be beautiful NumeronR Sunday ~SChool clasae~ a.nd church sucletten have held afternoon .~:~up­ pers. ~wns. The lawns and evergreens are fn excellent eonditton and tho roads have been oiled during the summer which has pl'evented the rals.tng or n,r dust. This part contain~ 72 aC'res of gJ•otmd and, on account or Its elevation, a magnlflcant ,·lew of obtained. Numf'rous the clty benches arf' provide-d by the York Wat.er company for the visltor.l:l and them by every tl-.a o+tat'\...tanf• courtf'..Sy 115 shown is WATER GOMPA~~Y'S STOCK SKYROCKETS Nin etee~l Of The Xe ,~ Shares Se:: At Forty-Five

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