YORK WATER CO (Form: 10-Q, Received: 11/07/2019 10:29:10)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

⌧

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

◻

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

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 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).

⌧ 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:

Large accelerated filer ◻	Accelerated filer ⌧		Non-accelerated filer ◻

Small 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

◻ YES

⌧ NO

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, NO PAR VALUE	YORW	The NASDAQ Global Select Market
(Title of Class)	(Trading Symbol)	(Name of Each Exchange on Which Registered)

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common stock, No par value	12,988,567 Shares outstanding as of November 7, 2019

THE YORK WATER COMPANY

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

THE YORK WATER COMPANY

Balance Sheets (Unaudited)

(In thousands of dollars, except per share amounts)

	Sep. 30, 2019			Dec. 31, 2018
ASSETS
UTILITY PLANT, at original cost	$	397,524		$	380,784
Plant acquisition adjustments		(3,064	)		(3,108	)
Accumulated depreciation		(83,122	)		(78,519	)
Net utility plant		311,338			299,157

OTHER PHYSICAL PROPERTY, net of accumulated depreciation of $427 in 2019 and $410 in 2018		697			714

CURRENT ASSETS:
Cash and cash equivalents		2			2
Accounts receivable, net of reserves of $317 in 2019 and $305 in 2018		4,545			4,811
Unbilled revenues		2,394			2,427
Recoverable income taxes		508			–
Materials and supplies inventories, at cost		1,022			876
Prepaid expenses		1,442			895
Total current assets		9,913			9,011

OTHER LONG-TERM ASSETS:
Note receivable		255			255
Deferred regulatory assets		33,764			32,353
Other assets		4,972			3,650
Total other long-term assets		38,991			36,258

Total Assets	$	360,939		$	345,140

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Balance Sheets (Unaudited)

(In thousands of dollars, except per share amounts)

	Sep. 30, 2019		Dec. 31, 2018

STOCKHOLDERS' EQUITY AND LIABILITIES
COMMON STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized 46,500,000 shares, issued and outstanding 12,984,826 shares in 2019 and 12,943,536 shares in 2018	$	82,644	$	81,305
Retained earnings		49,164		44,890
Total common stockholders' equity		131,808		126,195

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

LONG-TERM DEBT, excluding current portion		94,212		93,328

COMMITMENTS		–		–

CURRENT LIABILITIES:
Short-term borrowings		–		1,000
Current portion of long-term debt		6,500		30
Accounts payable		4,751		3,030
Dividends payable		2,008		1,999
Accrued compensation and benefits		1,136		1,191
Accrued income taxes		–		150
Accrued interest		1,079		992
Deferred regulatory liabilities		1,138		2,104
Other accrued expenses		327		345
Total current liabilities		16,939		10,841

DEFERRED CREDITS:
Customers' advances for construction		7,916		6,849
Deferred income taxes		39,134		36,962
Deferred employee benefits		3,909		4,715
Deferred regulatory liabilities		24,835		24,710
Other deferred credits		2,435		1,815
Total deferred credits		78,229		75,051

Contributions in aid of construction		39,751		39,725

Total Stockholders' Equity and Liabilities	$	360,939	$	345,140

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Income (Unaudited)

(In thousands of dollars, except per share amounts)

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018
OPERATING REVENUES	$	13,680		$	12,698		$	38,559		$	36,368

OPERATING EXPENSES:
Operation and maintenance		2,586			2,280			7,639			7,197
Administrative and general		2,172			1,944			6,181			6,193
Depreciation and amortization		1,926			1,770			5,750			5,235
Taxes other than income taxes		281			275			914			856
		6,965			6,269			20,484			19,481

Operating income		6,715			6,429			18,075			16,887

OTHER INCOME (EXPENSES):
Interest on debt		(1,314	)		(1,377	)		(3,937	)		(4,117	)
Allowance for funds used during construction		117			53			273			176
Other pension costs		(362	)		(322	)		(1,088	)		(964	)
Other income (expenses), net		(81	)		(54	)		(353	)		(213	)
		(1,640	)		(1,700	)		(5,105	)		(5,118	)

Income before income taxes		5,075			4,729			12,970			11,769

Income taxes		592			929			1,957			2,070

Net Income	$	4,483		$	3,800		$	11,013		$	9,699

Basic Earnings Per Share	$	0.35		$	0.29		$	0.85		$	0.75

Diluted Earnings Per Share	$	0.35		$	0.29		$	0.85		$	0.75

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Common Stockholders' Equity (Unaudited)

(In thousands of dollars, except per share amounts)

For the Periods Ended September 30, 2019 and 2018

	Common Stock Shares		Common Stock Amount		Retained Earnings			Total
Balance, June 30, 2019		12,974,287	$	82,183	$	46,931		$	129,114
Net income		–		–		4,483			4,483
Cash dividends declared, $0.1733 per share		–		–		(2,250	)		(2,250	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		10,539		421		–			421
Stock-based compensation		–		40		–			40
Balance, September 30, 2019		12,984,826	$	82,644	$	49,164		$	131,808

Balance, December 31, 2018		12,943,536	$	81,305	$	44,890		$	126,195
Net income		–		–		11,013			11,013
Cash dividends declared, $0.5199 per share		–		–		(6,739	)		(6,739	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		34,327		1,220		–			1,220
Stock-based compensation		6,963		119		–			119
Balance, September 30, 2019		12,984,826	$	82,644	$	49,164		$	131,808

	Common Stock Shares		Common Stock Amount		Retained Earnings			Total
Balance, June 30, 2018		12,914,267	$	80,404	$	41,807		$	122,211
Net income		–		–		3,800			3,800
Cash dividends declared, $0.1666 per share		–		–		(2,152	)		(2,152	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		13,818		402		–			402
Stock-based compensation		–		11		–			11
Balance, September 30, 2018		12,928,085	$	80,817	$	43,455		$	124,272

Balance, December 31, 2017		12,872,742	$	79,201	$	40,204		$	119,405
Net income		–		–		9,699			9,699
Cash dividends declared, $0.4998 per share		–		–		(6,448	)		(6,448	)
Issuance of common stock under dividend reinvestment, direct stock and employee stock purchase plans		51,600		1,548		–			1,548
Stock-based compensation		3,743		68		–			68
Balance, September 30, 2018		12,928,085	$	80,817	$	43,455		$	124,272

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Statements of Cash Flows (Unaudited)

(In thousands of dollars, except per share amounts)

	Nine Months Ended September 30
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	11,013		$	9,699
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		5,750			5,235
Stock-based compensation		119			68
Increase in deferred income taxes		313			298
Other		195			234
Changes in assets and liabilities:
(Increase) decrease in accounts receivable and unbilled revenues		95			(253	)
Increase in recoverable income taxes		(508	)		–
Increase in materials and supplies, prepaid expenses, regulatory and other assets		(5,166	)		(4,741	)
Increase in accounts payable, accrued compensation and benefits, accrued expenses, deferred employee benefits, regulatory liabilities, and other deferred credits		1,805			3,821
Increase (decrease) in accrued interest and taxes		(63	)		49
Net cash provided by operating activities		13,553			14,410

CASH FLOWS FROM INVESTING ACTIVITIES:
Utility plant additions, including debt portion of allowance for funds used during construction of $153 in 2019 and $98 in 2018		(13,284	)		(10,664	)
Acquisition of wastewater system		(2,088	)		-
Cash received from surrender of life insurance policies		–			108
Net cash used in investing activities		(15,372	)		(10,556	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Customers' advances for construction and contributions in aid of construction		1,336			1,289
Repayments of customer advances		(243	)		(371	)
Proceeds of long-term debt issues		46,113			20,319
Debt issuance costs		(180	)		–
Repayments of long-term debt		(38,690	)		(20,239	)
Repayments under short-term line of credit agreements		(1,000	)		–
Changes in cash overdraft position		(7	)		26
Issuance of common stock		1,220			1,548
Dividends paid		(6,730	)		(6,426	)
Net cash used in financing activities		1,819			(3,854	)

Net change in cash and cash equivalents		–			–
Cash and cash equivalents at beginning of period		2			2
Cash and cash equivalents at end of period	$	2		$	2

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest, net of amounts capitalized	$	3,588		$	3,470
Income taxes		2,184			2,050

Supplemental disclosure of non-cash investing and financing activities:
Accounts payable includes $2,050 in 2019 and $1,871 in 2018 for the construction of utility plant.

The accompanying notes are an integral part of these statements.

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THE YORK WATER COMPANY

Notes to Interim Financial Statements

(In thousands of dollars, except per share amounts)

1. Basis of Presentation

The interim financial statements are unaudited but, in the opinion of management, reflect all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of results for such periods. Because the financial statements cover an interim period, they do not include all disclosures and notes normally provided in annual financial statements, and therefore, should be read in conjunction with the financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Operating results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

2. Acquisitions

On August 29, 2019, the Company completed the acquisition of the wastewater collection assets of the Jacobus Borough Sewer Authority in York County, Pennsylvania. The Company began operating the existing collection facilities on August 30, 2019. The acquisition resulted in the addition of approximately 700 wastewater customers with purchase price and acquisition cost of approximately $2,088. This acquisition is expected to be immaterial to Company results.

3. Accounts Receivable and Contract Assets

Accounts receivable and contract assets are summarized in the following table:

	As of Sep. 30, 2019			As of Dec. 31, 2018			Change
Accounts receivable – customers	$	4,651		$	4,731		$	(80	)
Other receivables		211			385			(174	)
		4,862			5,116			(254	)
Less: allowance for doubtful accounts		(317	)		(305	)		(12	)
Accounts receivable, net	$	4,545		$	4,811		$	(266	)

Unbilled revenue	$	2,394		$	2,427		$	(33	)

Differences in timing of revenue recognition, billings, and cash collections result in receivables and contract assets. Generally, billing occurs subsequent to revenue recognition, resulting in a contract asset reported as unbilled revenue on the balance sheet. The Company does not receive advances or deposits from customers before revenue is recognized so no contract liabilities are reported. Accounts receivable are recorded when the right to consideration becomes unconditional and are presented separately on the balance sheet. The changes in accounts receivable – customers and in unbilled revenue were primarily due to normal timing difference between performance and the customer’s payments.

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4. Common Stock and Earnings Per Share

Net income of $4,483 and $3,800 for the three months ended September 30, 2019 and 2018, respectively, and $11,013 and $9,699 for the nine months ended September 30, 2019 and 2018, respectively, is used to calculate both basic and diluted earnings per share. Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding plus potentially dilutive shares. The dilutive effect of employee stock-based compensation is included in the computation of diluted earnings per share and is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation.

The following table summarizes the shares used in computing basic and diluted earnings per share:

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018

Weighted average common shares, basic		12,968,540		12,912,833		12,955,602		12,895,144
Effect of dilutive securities:
Employee stock-based compensation		2,131		196		1,506		120
Weighted average common shares, diluted		12,970,671		12,913,029		12,957,108		12,895,264

On March 11, 2013, the Board of Directors, or the Board, authorized a share repurchase program granting the Company authority to repurchase up to 1,200,000 shares of the Company's common stock from time to time. The stock repurchase program has no specific end date and the Company may repurchase shares in the open market or through privately negotiated transactions. The Company may suspend or discontinue the repurchase program at any time. No shares were repurchased during the three or nine months ended September 30, 2019 and 2018. As of September 30, 2019, 618,004 shares remain authorized for repurchase.

	As of Sep. 30, 2019			As of Dec. 31, 2018

10.17% Senior Notes, Series A, due 2019	$	–		$	6,000
9.60% Senior Notes, Series B, due 2019		–			5,000
1.00% Pennvest Note, due 2019		–			30
10.05% Senior Notes, Series C, due 2020		6,500			6,500
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
4.75% York County Industrial Development Authority Revenue Bonds, Series 2006, due 2036		10,500			10,500
4.50% Pennsylvania Economic Development Financing Authority Exempt Facilities Revenue Refunding Bonds, Series 2014, due 2038		14,870			14,870
5.00% Monthly Senior Notes, Series 2010A, 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			–
Committed Lines of Credit, due 2021		6,958			8,508
Total long-term debt		103,328			95,908
Less discount on issuance of long-term debt		(195	)		(204	)
Less unamortized debt issuance costs		(2,421	)		(2,346	)
Less current maturities		(6,500	)		(30	)
Long-term portion	$	94,212		$	93,328

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On January 31, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $20,000 aggregate principal amount of the Company’s senior notes. The senior notes bear interest at 4.54% per annum payable semiannually and mature on January 31, 2049. The senior notes are unsecured and unsubordinated obligations of the Company. The Company received net proceeds, after deducting issuance costs, of approximately $19,820. The net proceeds were used to refinance the $11,000 aggregate principal amount of the Company’s 10.17% Series A Senior Notes due February 1, 2019 and the 9.60% Series B Senior Notes due February 1, 2019, and to refinance line of credit borrowings incurred by the Company as interim financing for various capital projects of the Company.

In the third quarter of 2019, the Company renewed its $10,000 committed line of credit and extended the maturity date to September 2020.

6. Interest Rate Swap Agreement

The Company is exposed to certain risks relating to its ongoing business operations. The primary risk managed by using derivative instruments is interest rate risk. The Company utilizes an interest rate swap agreement to effectively convert the Company's $12,000 variable-rate debt issue to a fixed rate. Interest rate swaps are contracts in which a series of interest rate cash flows are exchanged over a prescribed period. The notional amount on which the interest payments are based ($12,000) is not exchanged. The interest rate swap provides that the Company pays the counterparty a fixed interest rate of 3.16% on the notional amount of $12,000. In exchange, the counterparty pays the Company a variable interest rate based on 59% of the U.S. Dollar one-month LIBOR rate on the notional amount. The intent is for the variable rate received from the swap counterparty to approximate the variable rate the Company pays to bondholders on its variable rate debt issue, resulting in a fixed rate being paid to the swap counterparty and reducing the Company's interest rate risk. The Company’s net payment rate on the swap was 1.88% and 1.92% during the three months ended September 30, 2019 and 2018, respectively, and 1.75% and 2.02% for the nine months ended September 30, 2019 and 2018, respectively.

The interest rate swap agreement is classified as a financial derivative used for non-trading activities. The accounting standards regarding accounting for derivatives and hedging activities require companies to recognize all derivative instruments as either assets or liabilities at fair value on the balance sheet. In accordance with the standards, the interest rate swap is recorded on the balance sheet in other deferred credits at fair value (see Note 7).

The Company uses regulatory accounting treatment rather than hedge accounting to defer the unrealized gains and losses on its interest rate swap. These unrealized gains and losses are recorded as a regulatory asset. Based on current ratemaking treatment, the Company expects the unrealized gains and losses to be recognized in rates as a component of interest expense as the swap settlements occur. Swap settlements are recorded in the income statement with the hedged item as interest expense. Swap settlements resulted in the reclassification from regulatory assets to interest expense of $57 and $58 during the three months ended September 30, 2019 and 2018, respectively, and $158 and $183 during the nine months ended September 30, 2019 and 2018, respectively. The overall swap result was a (gain) loss of $290 and $(87) for the three months ended September 30, 2019 and 2018, respectively, and $776 and $(434) for the nine months ended September 30, 2019 and 2018, respectively. The Company expects to reclassify $265 from regulatory assets to interest expense as a result of swap settlements over the next 12 months.

The interest rate swap agreement contains provisions that require the Company to maintain a credit rating of at least BBB- with Standard & Poor's. If the Company's rating were to fall below this rating, it would be in violation of these provisions, and the counterparty to the derivative could request immediate payment if the derivative was in a liability position. On April 5, 2019, Standard & Poor's affirmed the Company's credit rating at A-, with a stable outlook and adequate liquidity. The Company's interest rate swap was in a liability position as of September 30, 2019. If a violation due to credit rating, or some other default provision, were triggered on September 30, 2019, the Company would have been required to pay the counterparty approximately $2,600.

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The interest rate swap will expire on October 1, 2029. Other than the interest rate swap, the Company has no other derivative instruments.

7. Fair Value of Financial Instruments

The accounting standards regarding fair value measurements establish a fair value hierarchy which indicates the extent to which inputs used in measuring fair value are observable in the market. Level 1 inputs include quoted prices for identical instruments and are the most observable. Level 2 inputs include quoted prices for similar assets and observable inputs such as interest rates, commodity rates and yield curves. Level 3 inputs are not observable in the market and include management’s own judgments about the assumptions market participants would use in pricing the asset or liability.

The Company has recorded its interest rate swap liability at fair value in accordance with the standards. The liability is recorded under the caption “Other deferred credits” on the balance sheet. The table below illustrates the fair value of the interest rate swap as of the end of the reporting period.

Description		September 30, 2019		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$2,435		$2,435

Fair values are measured as the present value of all expected future cash flows based on the LIBOR-based swap yield curve as of the date of the valuation. These inputs to this calculation are deemed to be Level 2 inputs. The balance sheet carrying value reflects the Company's credit quality as of September 30, 2019. The rate used in discounting all prospective cash flows anticipated to be made under this swap reflects a representation of the yield to maturity for 30-year debt on utilities rated A- as of September 30, 2019. The use of the Company's credit rating resulted in a reduction in the fair value of the swap liability of $165 as of September 30, 2019. The fair value of the swap reflecting the Company's credit quality as of December 31, 2018 is shown in the table below.

Description		December 31, 2018		Fair Value Measurements at Reporting Date Using Significant Other Observable Inputs (Level 2)
Interest Rate Swap		$1,815		$1,815

The carrying amount of current assets and liabilities that are considered financial instruments approximates fair value as of the dates presented. The Company's total long-term debt, with a carrying value of $103,328 at September 30, 2019, and $95,908 at December 31, 2018, had an estimated fair value of approximately $123,000 and $105,000, respectively. The estimated fair value of debt was calculated using a discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration and risk profile. These inputs to this calculation are deemed to be Level 2 inputs. The Company recognized its credit rating in determining the yield curve, and did not factor in third party credit enhancements including bond insurance on the 2006 York County Industrial Development Authority issue and the letter of credit on the 2008 Pennsylvania Economic Development Financing Authority Series A issue.

Customers' advances for construction and note receivable had carrying values at September 30, 2019 of $7,916 and $255, respectively. At December 31, 2018, customers' advances for construction and note receivable had carrying values of $6,849 and $255, respectively. The relative fair values of these amounts cannot be accurately estimated since the timing of future payment streams is dependent upon several factors, including new customer connections, customer consumption levels and future rate increases.

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8. Commitments

The Company entered into a consent order agreement with the Pennsylvania Department of Environmental Protection in December 2016 after the Company determined it exceeded the action level for lead as established by the Lead and Copper Rule, or LCR, issued by the U.S. Environmental Protection Agency. The Company did not have an exceedance in any subsequent compliance test. Under the agreement, the Company committed to exceed the LCR replacement schedule by replacing all of the remaining known company-owned lead service lines within four years from the agreement. The cost for these service line replacements was approximately $2,580 and $2,341 through September 30, 2019 and December 31, 2018, respectively, and is included in utility plant. As of September 30, 2019, all known company-owned lead service lines have been replaced. Any additional company-owned lead service lines that are discovered will be replaced but are not expected to have a material impact on the financial position of the Company.

The Company was granted approval by the Pennsylvania Public Utility Commission, or PPUC, to modify its tariff to include the cost of the annual replacement of up to 400 lead customer-owned service lines over nine years from the agreement. The tariff modification allows the Company to replace customer-owned service lines at its own initial cost. The Company will record the costs as a regulatory asset to be recovered in future base rates to customers, over a four-year period. The cost for the customer-owned lead service line replacements was approximately $821 and $304 through September 30, 2019 and December 31, 2018, respectively, and is included as a regulatory asset. Based on its experience, the Company estimates that lead customer-owned service lines replacements will cost $1,100. This estimate is subject to adjustment as more facts become available.

The following table shows the Company’s revenues disaggregated by service and customer type.

	Three Months Ended September 30				Nine Months Ended September 30
	2019		2018		2019		2018
Water utility service
Residential	$	8,460	$	7,969	$	24,060	$	22,740
Commercial and industrial		3,864		3,598		10,630		10,093
Fire protection		780		744		2,290		2,178
Wastewater utility service
Residential		334		186		878		696
Commercial and industrial		72		46		203		171
Billing and revenue collection services		19		16		56		48
Collection services		16		13		48		45
Other revenue		4		3		11		15
Total Revenue from Contracts with Customers		13,549		12,575		38,176		35,986
Rents from regulated property		131		123		383		382
Total Operating Revenue	$	13,680	$	12,698	$	38,559	$	36,368

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Utility Service

The Company provides utility service as a distinct and single performance obligation to each of its water and wastewater customers. The transaction price is detailed in the tariff pursuant to an order by the PPUC and made publicly available. There is no variable consideration and no free service, special rates, or subnormal charges to any customer. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied over time through the continuous provision of utility service through a stand-ready obligation to perform and the transfer of water or the collection of wastewater through a series of distinct transactions that are identical in nature and have the same pattern of transfer to the customer. The Company uses an output method to recognize the utility service revenue over time. The stand-ready obligation is recognized through the passage of time in the form of a fixed charge and the transfer of water or the collection of wastewater is recognized at a per unit rate based on the actual or estimated flow through the meter. Each customer is invoiced every month and the invoice is due within twenty days. The utility service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period. A contract asset for unbilled revenue is recognized for the passage of time and the actual or estimated usage from the latest meter reading to the end of the accounting period. The methodology is standardized and consistently applied to reduce bias and the need for judgment.

Billing and Revenue Collection Service

The Company provides billing and revenue collection service as distinct performance obligations to three municipalities within the service territory of the Company. The municipalities provide wastewater service to their residents and the Company acts as the billing and revenue collection agent for the municipalities. The transaction price is a fixed amount per bill prepared as established in the contract. There is no variable consideration. Due to the fact that both the billing performance obligation and the revenue collection performance obligation are materially complete by the end of the reporting period, the Company does not allocate the transaction price between the two performance obligations. The performance obligations are satisfied at a point in time when the bills are sent as the municipalities receive all the benefits and bears all of the risk of non-collection at that time. Each municipality is invoiced when the bills are complete and the invoice is due within thirty days. The billing and revenue collection service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period.

Collection Service

The Company provides collection service as a distinct and single performance obligation to several municipalities within the service territory of the Company. The municipalities provide wastewater service to their residents. If those residents are delinquent in paying for their wastewater service, the municipalities request that the Company post for and shut off the supply of water to the premises of those residents. When the resident is no longer delinquent, the Company will restore water service to the premises. The transaction price for each posting, each shut off, and each restoration is a fixed amount as established in the contract. There is no variable consideration. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied at a point in time when the posting, shut off, or restoration is completed as the municipalities receive all the benefits in the form of payment or no longer providing wastewater service. Each municipality is invoiced periodically for the posting, shut offs, and restorations that have been completed since the last billing and the invoice is due within thirty days. The collection service has no returns or warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no performance obligations remain unsatisfied as of the end of the reporting period. A contract asset for unbilled revenue is recognized for postings, shut offs, and restorations that have been completed from the last billing to the end of the accounting period.

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Service Line Protection Plan

The Company provides service line protection as a distinct and single performance obligation to current water customers that choose to participate. The transaction price is detailed in the plan’s terms and conditions and made publicly available. There is no variable consideration. Due to the fact that the contract includes a single performance obligation, no judgment is required to allocate the transaction price. The performance obligation is satisfied over time through the continuous provision of service line protection through a stand-ready obligation to perform. The Company uses an output method to recognize the service line protection revenue over time. The stand-ready obligation is recognized through the passage of time. A customer has a choice to prepay for an entire year or to pay in advance each month. The service line protection plan has no returns or extended warranties associated with it. No revenue is recognized from performance obligations satisfied in prior periods and no material performance obligations remain unsatisfied as of the end of the reporting period.

10. Rate Matters

From time to time, the Company files applications for rate increases with the PPUC and is granted rate relief as a result of such requests. The most recent rate request was filed by the Company on May 30, 2018, and sought an annual increase in water rates of $6,399 and an annual increase in wastewater rates of $289. Effective March 1, 2019, the PPUC authorized an increase in water rates designed to produce approximately $3,361 in additional annual revenues and an increase in wastewater rates designed to produce approximately $289 in additional annual revenues.

As part of a rate order approved by the PPUC, the Company has agreed to return $2,117 to customers as a reconcilable negative surcharge on their bills generated from March 2019 through February 2020 for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the Tax Cuts and Jobs Act of 2017, or 2017 Tax Act. During the three and nine months ended September 30, 2019, the Company increased its regulatory liability by reducing revenue by $14 and $319, respectively, including the gross-up of revenue necessary to return, in rates, the effect of this temporary tax difference, and reclassified $0 and $27, respectively, from excess accumulated deferred income taxes on accelerated depreciation recorded at December 31, 2017. During the three and nine months ended September 30, 2019 and 2018, the Company returned negative surcharges of $562 and $1,360, respectively.

The PPUC permits water utilities to collect a distribution system improvement charge, or DSIC. The DSIC allows the Company to add a charge to customers' bills for qualified replacement costs of certain infrastructure without submitting a rate filing. This surcharge mechanism typically adjusts periodically based on additional qualified capital expenditures completed or anticipated in a future period. The DSIC is capped at 5% of base rates, and is reset to zero when new base rates that reflect the costs of those additions become effective or when a utility's earnings exceed a regulatory benchmark. The DSIC reset to zero when the new base rates took effect March 1, 2019. The DSIC provided revenues of $0 and $512 for the three months ended September 30, 2019 and 2018, respectively, and $249 and $1,428 for the nine months ended September 30, 2019 and 2018, respectively.

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Components of Net Periodic Pension Cost

	Three Months Ended September 30						Nine Months Ended September 30
	2019			2018			2019			2018

Service cost	$	213		$	253		$	637		$	761
Interest cost		412			378			1,234			1,136
Expected return on plan assets		(684	)		(698	)		(2,050	)		(2,094	)
Amortization of actuarial loss		106			102			316			305
Amortization of prior service cost		(4	)		(3	)		(10	)		(10	)
Rate-regulated adjustment		532			543			1,598			1,627
Net periodic pension expense	$	575		$	575		$	1,725		$	1,725

Pension service cost is recorded in operating expenses. All other components of net periodic pension cost are recorded as other pension costs in other income (expenses).

Employer Contributions

The Company previously disclosed in its financial statements for the year ended December 31, 2018 that it expected to contribute $2,300 to its pension plans in 2019. For the nine months ended September 30, 2019, contributions of $1,725 have been made. The Company expects to contribute the remaining $575 during the final quarter of 2019.

12. Stock-Based Compensation

On May 2, 2016, the Company’s stockholders approved The York Water Company Long-Term Incentive Plan, or LTIP. The LTIP was adopted to provide the incentive of long-term stock-based awards to officers, directors and key employees. The LTIP provides for the granting of nonqualified stock options, incentive stock options, stock appreciation rights, performance restricted stock grants and units, restricted stock grants and units, and unrestricted stock grants. A maximum of 100,000 shares of common stock may be issued under the LTIP over the ten-year life of the plan. The maximum number of shares of common stock subject to awards that may be granted to any participant in any one calendar year is 2,000. Shares of common stock issued under the LTIP may be treasury shares or authorized but unissued shares. The LTIP will be administered by the Compensation Committee of the Board, or the full Board, provided that the full Board will administer the LTIP as it relates to awards to non-employee directors of the Company. The Company filed a registration statement with the Securities and Exchange Commission on May 11, 2016 covering the offering of stock under the LTIP. The LTIP was effective on July 1, 2016.

On November 20, 2018, the Board accelerated the vesting period for restricted stock granted in 2016, 2017, and 2018 to one retiring officer from three years to that officer’s 2019 retirement date, which had been fully recognized as of March 31, 2019.

On May 6, 2019, the Board awarded stock to non-employee directors effective May 6, 2019. This stock award vested immediately. On May 6, 2019, the Compensation Committee awarded restricted stock to officers and key employees effective May 6, 2019. This restricted stock award vests ratably over three years beginning May 6, 2019.

On August 19, 2019, the Board accelerated the vesting period for restricted stock granted in 2017, 2018, and 2019 to one retiring officer from three years to that officer’s 2020 retirement date.

The restricted stock awards provide the grantee with the rights of a shareholder, including the right to receive dividends and to vote such shares, but not the right to sell or otherwise transfer the shares during the restriction period. As a result, the awards are included in common shares outstanding on the balance sheet. Restricted stock awards result in compensation expense valued at the fair market value of the stock on the date of the grant and are amortized ratably over the restriction period.

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The following tables summarize the stock grant amounts and activity for the nine months ended September 30, 2019.

	Number of Shares	Grant Date Weighted Average Fair Value
Nonvested at beginning of the period	3,080		$33.85
Granted	6,963		$33.61
Vested	(2,556)		$33.80
Forfeited	–		–
Nonvested at end of the period	7,487		$33.64

For the three months ended September 30, 2019 and 2018, the statement of income includes $40 and $11 of stock-based compensation, respectively, and related recognized tax benefits of $12 and $3, respectively. For the nine months ended September 30, 2019 and 2018, the statement of income includes $119 and $68 of stock-based compensation, respectively, and related recognized tax benefits of $35 and $19, respectively. The total fair value of the shares vested in the nine months ended September 30, 2019 was $86. Total stock-based compensation related to nonvested awards not yet recognized is $252 which will be recognized over the remaining three year vesting period.

13. Income Taxes

The Company filed for a change in accounting method under the Internal Revenue Service tangible property regulations, or TPR, effective in 2014. Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable. It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate was 11.7% and 19.6% for the three months ended September 30, 2019 and 2018, respectively, and 15.1% and 17.6% for the nine months ended September 30, 2019 and 2018, respectively. The effective tax rate is lower for the three and nine months ended September 30, 2019 compared to 2018, primarily due to higher deductions from the TPR. The effective tax rate will vary depending on the level of eligible asset improvements expensed for tax purposes under TPR each period.

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14. Subsequent Events

On October 1, 2019, the Company entered into a note purchase agreement with certain institutional investors relating to the private placement of $15,000 aggregate principal amount of the Company’s senior notes. The senior notes bear interest at 3.23% per annum payable semiannually and mature on October 1, 2040. The senior notes are unsecured and unsubordinated obligations of the Company. The Company received net proceeds, after deducting issuance costs, of approximately $14,888. The net proceeds were used to refinance the $15,000 aggregate principal amount of the Company’s 5.00% Monthly Senior Notes Series 2010A due October 1, 2040.

On October 8, 2019, the Pennsylvania Economic Development Financing Authority, or PEDFA, issued and sold $10,500 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series A of 2019, or the Series A Bonds, and $14,870 aggregate principal amount of PEDFA Exempt Facilities Revenue Refunding Bonds, Series B of 2019, or the Series B Bonds, for the Company's benefit pursuant to the terms of a trust indenture, dated as of September 1, 2019, between the PEDFA and Manufacturers and Traders Trust Company, as trustee. The PEDFA then loaned the proceeds of the issuance and sale of the Series A and the Series B Bonds to the Company pursuant to a loan agreement dated as of September 1, 2019, between the Company and the PEDFA. The Series A Bonds, and therefore the loan, bears interest at 3.00% per annum payable semiannually and the maturity date of the loan is October 1, 2036 subject to optional and mandatory redemption provisions. The Series B Bonds, and therefore the loan, bears interest at 3.10% per annum payable semiannually and the maturity date of the loan is November 1, 2038 subject to optional and mandatory redemption provisions. Amounts outstanding under the loan agreement are direct, unsecured and unsubordinated obligations of the Company. The Company received net proceeds, after deducting issuance costs, of approximately $25,049. The net proceeds were used to refinance the $10,500 aggregate principal amount of the Company’s 4.75% York County Industrial Development Authority Revenue Bonds Series 2006 due October 1, 2036 and the $14,870 aggregate principal amount of the Company’s 4.50% PEDFA Exempt Facilities Revenue Refunding Bonds Series 2014 due November 1, 2038.

15. Impact of Recent Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, Leases (Topic 842), which replaces the existing guidance in Accounting Standard Codification 840 – Leases. This ASU requires a dual approach for lessee accounting under which a lessee would account for leases as finance leases or operating leases. Both finance leases and operating leases will result in the lessee recognizing a right-of-use asset and a corresponding lease liability. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize a straight-line total lease expense. This ASU is effective for fiscal years beginning after December 15, 2018, and for interim periods within those fiscal years. The Company adopted the standard on January 1, 2019. The Company did not identify any material leases under this standard, and therefore the adoption did not have a material effect on its financial position, results of operations or cash flows.

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Item 2.

Management's Discussion and Analysis of

Financial Condition and Results of Operations

(In thousands of dollars, except per share amounts)

Forward-looking Statements

Certain statements contained in this report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Words such as "may," "should," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. These forward-looking statements include certain information relating to the Company’s business strategy; statements including, but not limited to:

•	the amount and timing of rate changes 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.

The forward-looking statements in this 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 a public announcement when forward-looking statements in this 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 or extended periods of heavy rainfall;
•	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.

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General Information

The primary business of the Company is to impound, purify to meet or exceed safe drinking water standards and distribute water. The Company also owns and operates two wastewater collection systems and two wastewater collection and treatment systems. The Company operates within its franchised water territory, which covers 39 municipalities within York County, Pennsylvania and nine municipalities within Adams County, Pennsylvania. The Company’s wastewater operations include portions of five municipalities in York County, Pennsylvania. The Company is regulated by the Pennsylvania Public Utility Commission, or PPUC, for both water and wastewater 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 the bulk of 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. 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 supplements its reservoirs with a 15-mile pipeline from the Susquehanna River to Lake Redman which provides access to an additional supply of 12.0 million gallons of untreated water per day. The Company also owns seven wells which are capable of providing a safe yield of approximately 366,000 gallons per day to supply water to its customers in Carroll Valley Borough and Cumberland Township, Adams County. As of September 30, 2019, the Company's average daily availability was 35.4 million gallons, and average daily consumption was approximately 20.4 million gallons. The Company's service territory had an estimated population of 199,000 as of December 31, 2018. 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 water business is somewhat dependent on weather conditions, particularly the amount and timing of rainfall. Revenues are particularly vulnerable to weather conditions in the summer months. Prolonged periods of hot and dry weather generally cause increased water usage for watering lawns, washing cars, and keeping golf courses and sports fields irrigated. Conversely, prolonged periods of dry weather could lead to drought restrictions from governmental authorities. Despite the Company’s adequate water supply, customers may be required to cut back water usage under such drought restrictions which would negatively impact revenues. The Company has addressed some of this vulnerability by instituting minimum customer charges 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 for a material portion of its business. Increases in revenues are generally dependent on the Company’s ability to obtain rate increases from the PPUC in a timely manner and in adequate amounts and to increase volumes of water sold through increased consumption and increases in the number of customers served. The Company continuously looks for water and wastewater acquisition and expansion opportunities both within and outside its current service territory as well as additional opportunities to enter into bulk water contracts with municipalities and other entities to supply water.

The Company has agreements with several municipalities to provide sewer billing and collection services. The Company also has a service line protection program on a targeted basis in order to further diversify its business. Under this optional program, customers pay a fixed monthly fee, and the Company will repair or replace damaged customer service lines, as needed, subject to an annual maximum dollar amount. Opportunities to expand both initiatives are being pursued.

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Results of Operations

Three Months Ended September 30, 2019 Compared

With Three Months Ended September 30, 2018

Net income for the third quarter of 2019 was $4,483, an increase of $683, or 18.0%, from net income of $3,800 for the same period of 2018. The primary contributing factors to the increase were higher operating revenues and lower income taxes which were partially offset by higher operating expenses.

Operating revenues for the third quarter of 2019 increased $982, or 7.7%, from $12,698 for the three months ended September 30, 2018 to $13,680 for the corresponding 2019 period. The primary reason for the increase was a rate increase effective March 1, 2019. The Company reduced revenue by $14 in the third quarter of 2019 and $208 in the same period of 2018, by recording a regulatory liability for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the 2017 Tax Act, which it has agreed to give back to customers as part of the new rate order, including the gross-up of revenue necessary to return the effect of the temporary tax difference. Growth in the customer base also added to revenues. The average number of water customers served in 2019 increased as compared to 2018 by 544 customers, from 67,863 to 68,407 customers. The average number of wastewater customers served in 2019 increased as compared to 2018 by 230 customers, from 2,292 to 2,522 customers, due to the recent Jacobus Borough acquisition. The increased revenues were partially offset by a $512 decrease from a lower distribution system improvement charge, or DSIC, allowed by the PPUC. The DSIC reset to zero on March 1, 2019 when the rate order took effect. Total per capita consumption for the third quarter of 2019 was approximately 1.3% higher than the same period of last year.

Operating expenses for the third quarter of 2019 increased $696, or 11.1%, from $6,269 for the third quarter of 2018 to $6,965 for the corresponding 2019 period. The increase was primarily due to higher expenses of approximately $171 for maintenance, $156 for depreciation, $123 for wages, $80 for wastewater operating expenses, $68 for health insurance, and $41 for technology upgrades. Other expenses increased by a net of $57.

Interest on debt for the third quarter of 2019 decreased $63, or 4.6%, from $1,377 for the third quarter of 2018 to $1,314 for the corresponding 2019 period. The decrease was primarily due to lower interest on long-term debt due to the refinancing of the 10.17% and 9.60% Senior Notes with 4.54% Senior Notes. The average debt outstanding under the lines of credit was $4,873 for the third quarter of 2019 and $7,355 for the third quarter of 2018. The weighted average interest rate on the lines of credit was 3.45% for the quarter ended September 30, 2019 and 3.29% for the quarter ended September 30, 2018.

Allowance for funds used during construction increased $64, from $53 in the third quarter of 2018 to $117 in the corresponding 2019 period, due to higher volume of eligible construction. Eligible 2019 construction expenditures include dam improvements.

Other income (expenses), net for the third quarter of 2019 reflects increased expenses of $27 as compared to the same period of 2018. Lower earnings on life insurance policies of approximately $21 were the primary reason for the increased expenses. Other expenses increased by a net of $6.

Income taxes for the third quarter of 2019 decreased $337, or 36.3%, compared to the same period of 2018, due primarily to a higher volume of asset improvements eligible for the tax benefit under the Internal Revenue Service, or IRS, tangible property regulations, or TPR. The Company’s effective tax rate was 11.7% for the third quarter of 2019 and 19.6% for the third quarter of 2018.

Nine Months Ended September 30, 2019 Compared

With Nine Months Ended September 30, 2018

Net income for the first nine months of 2019 was $11,013, an increase of $1,314, or 13.5%, from net income of $9,699 for the same period of 2018. The primary contributing factor to the increase was higher operating revenues which were partially offset by higher operating expenses.

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Operating revenues for the first nine months of 2019 increased $2,191, or 6.0%, from $36,368 for the nine months ended September 30, 2018 to $38,559 for the corresponding 2019 period. The primary reason for the increase was a rate increase effective March 1, 2019. The Company reduced revenue by $319 in the first nine months of 2019 and $1,191 in the same period of 2018, by recording a regulatory liability for the benefit of the lower tax rate effective January 1, 2018 resulting from the enactment of the 2017 Tax Act, which it has agreed to give back to customers as part of the new rate order, including the gross-up of revenue necessary to return the effect of the temporary tax difference. Growth in the customer base also added to revenues. The average number of water customers served in 2019 increased as compared to 2018 by 561 customers, from 67,664 to 68,225 customers. The average number of wastewater customers served in 2019 increased as compared to 2018 by 84 customers, from 2,289 to 2,373 customers, due to the recent Jacobus Borough acquisition. The increased revenues were partially offset by a $1,179 decrease from a lower DSIC allowed by the PPUC. The DSIC reset to zero on March 1, 2019 when the rate order took effect. Total per capita consumption for the first nine months of 2019 was approximately 0.8% lower than the same period of last year. For the remainder of the year, the Company expects revenues to increase due to the increase in rates and an increase in the number of water and wastewater customers from acquisitions and growth within the Company’s service territory. Other regulatory actions and weather patterns could impact results.

Operating expenses for the first nine months of 2019 increased $1,003, or 5.1%, from $19,481 for the first nine months of 2018 to $20,484 for the corresponding 2019 period. The increase was primarily due to higher expenses of approximately $515 for depreciation, $275 for wages, $242 for maintenance, $75 for technology upgrades, $61 for rate case expense, $59 for purchased power related to raw water pumping, and $58 for taxes other than income taxes. The increase was partially offset by reduced expenses of approximately $191 for health insurance and $48 for a prior year consulting engagement, not repeated this year. Other expenses decreased by a net of $43. For the remainder of the year, the Company expects depreciation expense to continue to rise due to additional investment in utility plant, and other expenses to increase at a moderate rate as costs to treat water and wastewater and to maintain and extend the distribution system continue to rise.

Interest on debt for the first nine months of 2019 decreased $180, or 4.4%, from $4,117 for the nine months of 2018 to $3,937 for the corresponding 2019 period. The decrease was primarily due to lower interest on long-term debt due to the refinancing of the 10.17% and 9.60% Senior Notes with 4.54% Senior Notes. The average debt outstanding under the lines of credit was $3,914 for the first nine months of 2019 and $6,922 for the first nine months of 2018. The weighted average interest rate on the lines of credit was 3.62% for the nine months ended September 30, 2019 and 3.10% for the nine months ended September 30, 2018. Interest expense for the remainder of the year is expected to decrease due to the refinancing of the Company’s various long-term debt issues (see Note 14 to the financial statements included herein) partially offset by continued borrowings under lines of credit.

Allowance for funds used during construction increased $97, from $176 in the first nine months of 2018 to $273 in the corresponding 2019 period, due to a higher volume of eligible construction. Eligible 2019 construction expenditures include dam improvements. Allowance for funds used during construction for the remainder of the year is expected to increase based on a projected increase in the amount of eligible construction.

Other income (expenses), net for the first nine months of 2019 reflects increased expenses of $140 as compared to the same period of 2018. Lower earnings on life insurance policies of approximately $122 were the primary reason for the increased expenses. Other expenses increased by a net of $18. For the remainder of the year, other income (expenses) will be largely determined by the change in market returns and discount rates for retirement programs and related assets.

Income taxes for the first nine months of 2019 decreased $113, or 5.5%, compared to the same period of 2018, due primarily to a higher volume of asset improvements eligible for the tax benefit under the IRS TPR. The Company’s effective tax rate was 15.1% for the first nine months of 2019 and 17.6% for the first nine months of 2018. The Company's effective tax rate for the remainder of 2019 will largely be determined by the level of eligible asset improvements expensed for tax purposes under TPR.

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Rate Matters

See Note 10 to the financial statements included herein for a discussion of rate matters.

The Company does not expect to collect a distribution system improvement charge or file a rate increase request in 2019.

Acquisitions and Growth

On October 8, 2013, the Company signed an agreement to purchase the wastewater collection and treatment assets of SYC WWTP, L.P. in Shrewsbury and Springfield Townships, York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in 2020, at which time the Company will add approximately 30 commercial and industrial wastewater customers.

On December 28, 2018, the Company signed an agreement to purchase the wastewater collection and treatment assets of Felton Borough in York County Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in 2020 at which time the Company will add approximately 130 wastewater customers.

On March 4, 2019, the Company signed an agreement to purchase the wastewater collection assets of West Manheim Township in York County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in 2020 at which time the Company will add approximately 1,800 wastewater customers. These wastewater customers are currently water customers of the Company.

On June 25, 2019, the Company signed an agreement to purchase the wastewater collection and treatment assets of the Letterkenny Township Municipal Authority in Franklin County, Pennsylvania. Completion of the acquisition is contingent upon receiving approval from all required regulatory authorities. Closing is expected in 2020 at which time the Company will add approximately 180 wastewater customers.

In total, these acquisitions are expected to be immaterial to Company results. The Company is also pursuing other bulk water contracts and acquisitions in and around its service territory to help offset any further declines in per capita water consumption and to grow its business.

On May 10, 2017, the Company signed an emergency interconnect agreement with Dallastown-Yoe Water Authority. The effectiveness of this agreement is contingent upon receiving approval from all required regulatory authorities. Approval is expected to be granted in 2020 at which time the Company will begin construction of a water main extension to a single point of interconnection and either supply a minimum agreed upon amount of water to the authority, receive a payment in lieu of water, or provide water during an emergency, at current tariff rates.

Capital Expenditures

For the nine months ended September 30, 2019, the Company invested $13,284 in construction expenditures for routine items and dam improvements as well as various replacements and improvements to infrastructure. In addition, the Company invested $2,088 in the acquisition of a wastewater system. The Company was able to fund construction expenditures using internally-generated funds, line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions.

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The Company anticipates construction expenditures for the remainder of 2019 of approximately $4,500 exclusive of any potential acquisitions not yet approved. In addition to routine transmission and distribution projects, a portion of the anticipated expenditures will be for additional main extensions, expansion of a wastewater treatment plant, and various replacements and improvements to infrastructure. The Company intends to use primarily internally-generated funds for its anticipated construction and fund the remainder through line of credit borrowings, proceeds from its stock purchase plans and customer advances and contributions. Customer advances and contributions are expected to account for between 5% and 10% of funding requirements during the remainder of 2019. The Company believes it will have adequate credit facilities and access to the capital markets, if necessary, to meet its anticipated capital needs in 2019 and 2020.

Liquidity and Capital Resources

Cash

The Company manages its cash through a cash management account that is directly connected to one of its lines of credit. Excess cash generated automatically pays down outstanding borrowings under the line of credit arrangement. If there are no outstanding borrowings, the cash is used as an earnings credit to reduce banking fees. Likewise, if additional funds are needed beyond what is generated internally for payroll, to pay suppliers, to fund capital expenditures, or to pay debt service, funds are automatically borrowed under the line of credit. As of September 30, 2019, the Company has borrowed $6,958 on its lines of credit and incurred a cash overdraft on its cash management account of $1,063. The cash management facility and other lines of credit are expected to provide the necessary liquidity and funding for the Company's operations, capital expenditures, acquisitions and potential buybacks of stock for the foreseeable future.

Accounts Receivable

The accounts receivable balance tends to follow the change in revenues but is also affected by the timeliness of payments by customers and the level of the reserve for doubtful accounts. In the three months ended September 30, 2019, the negative surcharge to return to customers the benefit of the lower tax rate resulted in a decrease in accounts receivable – customers as compared to the end of 2018. Other receivables decreased due to the receipt of a large receivable to fund a capital project, which was outstanding at December 31, 2018. A reserve is maintained at a level considered adequate to provide for losses that can be reasonably anticipated based on inactive accounts with outstanding balances. Management periodically evaluates the adequacy of the reserve based on past experience, agings of the receivables, adverse situations that may affect a customer’s ability to pay, current economic conditions, and other relevant factors. If the status of these factors deteriorates, the Company may incur additional expenses for uncollectible accounts and experience a reduction in its internally-generated funds.

Internally-generated Funds

The amount of internally-generated funds available for operations and construction depends on the Company’s ability to obtain timely and adequate rate relief, changes in regulations including taxes, customers’ water usage, weather conditions, customer growth and controlled expenses. During the first nine months of 2019, the Company generated $13,553 internally from operations as compared to the $14,410 it generated during the first nine months of 2018 primarily due to higher interest and income taxes paid and increased expenditures to replace customer-owned lead service lines (see Note 8 to the financial statements included herein).

Credit Lines

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, 2019, the Company maintained unsecured lines of credit aggregating $41,500 with four banks at interest rates of LIBOR plus 1.15% to LIBOR plus 1.25%. The Company had $6,958 in outstanding borrowings under its lines of credit as of September 30, 2019. The weighted average interest rate on line of credit borrowings as of September 30, 2019 was 3.29%.

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In the second quarter of 2019, the Company renewed its $13,000 and $11,000 committed lines of credit and extended the maturity date of each to May 2021, and it renewed its $7,500 committed line of credit and extended the maturity date to June 2021. In the third quarter of 2019, the Company renewed its $10,000 committed line of credit and extended the maturity date to September 2020.

The Company has taken steps to manage the risk of reduced credit availability. It has maintained committed lines of credit that cannot be called on demand and obtained a 2-year revolving maturity on most of its facilities. There is no guarantee that the Company will be able to obtain sufficient lines of credit with favorable terms in the future. If the Company is unable to obtain sufficient lines of credit or to refinance its line of credit borrowings with long-term debt or equity when necessary, it may have to eliminate or postpone capital expenditures. Management believes the Company will have adequate capacity under its current lines of credit to meet anticipated financing needs throughout 2019 and 2020.

Long-term Debt

The Company’s loan agreements contain various covenants and restrictions. Management believes it is currently in compliance with all of these restrictions. See Note 6 to the Company's Annual Report on Form 10-K for the year ended December 31, 2018 for additional information regarding these restrictions.

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The Company’s total long-term debt as a percentage of the total capitalization, defined as total common stockholders’ equity plus total long-term debt, was 43.9% as of September 30, 2019 and 43.2% as of December 31, 2018. The Company expects the debt to total capitalization ratio to increase with additional line of credit borrowings. The Company expects to allow the debt percentage to trend upward until it approaches fifty percent before considering additional equity. A debt to total capitalization ratio between forty-six and fifty percent has historically been acceptable to the PPUC in rate filings. Due to its ability to generate more cash internally, the Company has been able to keep its ratio below fifty percent.

Income Taxes, Deferred Income Taxes and Uncertain Tax Positions

The Company filed for a change in accounting method under the IRS TPR effective in 2014. Under the change in accounting method, the Company is permitted to deduct the costs of certain asset improvements that were previously being capitalized and depreciated for tax purposes as an expense on its income tax return. This ongoing deduction results in a reduction in the effective income tax rate, a net reduction in income tax expense, and a reduction in the amount of income taxes currently payable. It also results in increases to deferred tax liabilities and regulatory assets representing the appropriate book and tax basis difference on capital additions.

The Company’s effective tax rate will largely be determined by the level of eligible asset improvements expensed for tax purposes that would have been capitalized for tax purposes prior to the implementation of TPR.

The Company has a substantial deferred income tax asset primarily due to the excess accumulated deferred income taxes on accelerated depreciation from the 2017 Tax Act and the differences between the book and tax balances of the pension and deferred compensation plans. The Company does not believe a valuation allowance is required due to the expected generation of future taxable income during the periods in which those temporary differences become deductible.

The Company has seen an increase in its deferred income tax liability amounts primarily as a result of the accelerated and bonus depreciation deduction available for federal tax purposes which creates differences between book and tax depreciation expense. The Company expects this trend to continue as it makes significant investments in capital expenditures subject to accelerated depreciation or TPR, but at a more modest rate due to the elimination of bonus depreciation on qualified water and wastewater property.

The Company has determined there are no uncertain tax positions that require recognition as of September 30, 2019.

Common Stock

Common stockholders’ equity as a percent of the total capitalization was 56.1% as of September 30, 2019 and 56.8% as of December 31, 2018. The volume of share repurchases and line of credit borrowings, among other things, could reduce this percentage in the future. It is the Company’s general intent to target a ratio between fifty and fifty-four percent.

Credit Rating

On April 5, 2019, Standard & Poor’s affirmed the Company’s credit rating at A-, with a stable outlook and adequate liquidity. The Company’s ability to maintain its credit rating depends, among other things, on adequate and timely rate relief, which it has been successful in obtaining, its ability to fund capital expenditures in a balanced manner using both debt and equity and its ability to generate cash flow. The Company’s objectives are to continue to maximize its funds provided by operations and maintain a strong capital structure in order to be able to attract capital.

Physical and Cyber Security

The Company maintains security measures at its facilities, and collaborates with federal, state and local authorities and industry trade associations regarding information on possible threats and security measures for water and wastewater utility operations. The costs incurred are expected to be recoverable in water and wastewater rates and are not expected to have a material impact on its business, financial condition, or results of operations.

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The Company relies on information technology systems in connection with the operation of the business, especially with respect to customer service, billing, accounting, and in some cases, the monitoring and operation of treatment, storage and pumping facilities. In addition, the Company relies on these systems to track utility assets and to manage maintenance and construction projects, materials and supplies, and human resource functions. The information technology systems may be vulnerable to damage or interruption from cyber security attacks or other cyber-related events, including, but not limited to, power loss, computer systems failures, internet, telecommunications or data network failures, physical and electronic loss of data, computer viruses, intentional security breaches, hacking, denial of service actions, misappropriation of data, and similar events. In some cases, administration of certain functions may be outsourced to third-party service providers that could also be targets of cyber security attacks. A loss of these systems, or major problems with the operation of these systems, could harm the business, financial condition, and results of operations of the Company through the loss or compromise of customer, financial, employee, or operational data, disruption of billing, collections or normal field service activities, disruption of electronic monitoring and control of operational systems, and delays in financial reporting and other normal management functions.

Possible impacts associated with a cyber security attack or other events may include remediation costs related to lost, stolen, or compromised data, repairs to data processing systems, increased cyber security protection costs, adverse effects on our compliance with regulatory and environmental laws and regulation, including standards for drinking water, litigation, and reputational damage.

The Company has implemented processes, procedures and controls to prevent or limit the effect of these possible events, and maintains insurance to help defray costs associated with cyber security attacks. The Company has not experienced a material impact on business or operations from these attacks. Although the Company does not believe its systems are at a materially greater risk of cyber security attacks than other similar organizations and despite the implementation of robust security measures, the Company cannot provide assurance that the insurance will fully cover the costs of a cyber security event, and its robust security measures do not guarantee that reputation and financial results will not be adversely affected by such an incident.

Environmental Matters

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Critical Accounting Estimates

The methods, estimates, and judgments the Company used in applying its accounting policies have a significant impact on the results reported in its financial statements. The Company’s accounting policies require management to make subjective judgments because of the need to make estimates of matters that are inherently uncertain. The Company’s most critical accounting estimates include regulatory assets and liabilities, revenue recognition and accounting for its pension plans. There has been no significant change in accounting estimates or the method of estimation during the quarter ended September 30, 2019.

Off-Balance Sheet Arrangements

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. For risk management purposes, the Company uses a derivative financial instrument, an interest rate swap agreement discussed in Note 6 to the financial statements included herein. The Company does not engage in trading or other risk management activities, does not use other derivative financial instruments for any purpose, has no guarantees and does not have material transactions involving related parties.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4.

Controls and Procedures.

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, as amended, 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.

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.

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PART II - OTHER INFORMATION

Item 6.		Exhibits.
Exhibit No.	Description
3	Amended and Restated Articles of Incorporation. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 4, 2010.
3.1	Amended and Restated By-Laws. Incorporated herein by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 26, 2012.
10.1	Note Agreement relative to the $15,000,000 3.23% Senior Notes, dated October 1, 2019. Incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 2, 2019.
10.2	Loan Agreement between The York Water Company and Pennsylvania Economic Development Financing Authority entered into October 8, 2019 and dated as of September 1, 2019 relative to the $25,370,000 3.00% - 3.10% Exempt Facilities Revenue Refunding Bonds. Incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 9, 2019.
10.3	Trust Indenture entered into October 8, 2019 and dated as of September 1, 2019 between Pennsylvania Economic Development Financing Authority and Manufacturers and Traders Trust Company, as trustee. Incorporated herein by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 9, 2019.
31.1	Certification of Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
31.2	Certification of Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934.
32.1	Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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SIGNATURES

Pursuant to the requirements 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


	/s/ Jeffrey R. Hines
Date: November 7, 2019	Jeffrey R. Hines Principal Executive Officer



	/s/ Matthew E. Poff
Date: November 7, 2019	Matthew E. Poff Principal Financial and Accounting Officer

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I, Jeffrey R. Hines, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of The York Water Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2019

/s/ Jeffrey R. Hines

I, Matthew E. Poff, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of The York Water Company;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 7, 2019

Chief Financial Officer

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey R. Hines, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

THE YORK WATER COMPANY

Date: November 7, 2019

/s/ Jeffrey R. Hines

Chief Executive Officer

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of The York Water Company (the “Company”) on Form 10-Q for the period ending September 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Matthew E. Poff, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)); and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

THE YORK WATER COMPANY

Date: November 7, 2019

Chief Financial Officer

PART I	Financial Information

Item 1.	Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II	Other Information

Item 6.	Exhibits	28

Signatures		29

Date: November 7, 2019	/s/ Jeffrey R. Hines
	Jeffrey R. Hines
	President and CEO

Date: November 7, 2019	/s/ Matthew E. Poff
	Matthew E. Poff
	Chief Financial Officer