Filed Pursuant to Rule 424(b)(5)
Registration No. 333-104290
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED APRIL 25, 2003)
1,700,000 SHARES
(AQUA AMERICA LOGO)
AQUA AMERICA, INC.
(FORMERLY PHILADELPHIA SUBURBAN CORPORATION)
COMMON STOCK
------------------
We are offering 1,700,000 shares of our common stock with this prospectus
supplement and the accompanying prospectus. Our common stock is listed on the
New York Stock Exchange and the Philadelphia Stock Exchange under the symbol
"WTR." The last reported sale price of our common stock on the New York Stock
Exchange on November 9, 2004 was $22.74 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THE ACCOMPANYING PROSPECTUS TO
READ ABOUT FACTORS THAT YOU SHOULD CONSIDER BEFORE BUYING OUR COMMON STOCK.
PER
SHARE TOTAL
------ -----------
Public offering price....................................... $22.70 $38,590,000
Underwriting discounts...................................... $ 0.86 $ 1,462,000
Proceeds, before expenses, to us............................ $21.84 $37,128,000
The underwriters also have an option to purchase up to 255,000 additional
shares from us at the public offering price, less the underwriting discounts and
commissions, within 30 days from the date of this prospectus supplement to cover
over-allotments.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The underwriters expect to deliver the shares on or about November 12,
2004.
------------------
A.G. EDWARDS JANNEY MONTGOMERY SCOTT LLC
------------------
The date of this prospectus supplement is November 9, 2004.
IMPORTANT NOTICE ABOUT INFORMATION IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, THE ACCOMPANYING PROSPECTUS (FILED UNDER OUR FORMER NAME
PHILADELPHIA SUBURBAN CORPORATION) AND THE DOCUMENTS WE HAVE INCORPORATED BY
REFERENCE IN THE ACCOMPANYING PROSPECTUS. WE HAVE NOT, AND THE UNDERWRITERS HAVE
NOT, AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THE SHARES OF COMMON STOCK IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION
PROVIDED BY THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR THE
INFORMATION WE HAVE PREVIOUSLY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
THAT IS INCORPORATED BY REFERENCE IN THE ACCOMPANYING PROSPECTUS IS ACCURATE AS
OF ANY DATE OTHER THAN THEIR RESPECTIVE DATES.
We provide information to you about this offering of shares of our common
stock in two parts. The first part is this prospectus supplement, which
describes the specific details regarding this offering. The second part is the
accompanying prospectus, which provides general information, some of which may
not apply to this offering. The accompanying prospectus refers to additional
documents we have filed, and may file in the future with the Securities and
Exchange Commission, which are incorporated by reference in the accompanying
prospectus. For purposes of this offering, references to the accompanying
prospectus also refer to the documents incorporated by reference therein,
including our Annual Report on Form 10-K for the year ended December 31, 2003,
our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004, June
30, 2004 and September 30, 2004 and our Current Reports on Form 8-K dated
January 16, 2004, February 25, 2004, May 12, 2004, as amended on Form 8-K/A on
June 9, 2004 and August 31, 2004, filed with the Securities and Exchange
Commission prior to the completion of this offering. If information in this
prospectus supplement is inconsistent with information in the accompanying
prospectus, you should rely on this prospectus supplement.
For purposes of this prospectus supplement and the accompanying prospectus,
when we refer to "us," "we," "our," "ours," or the "Company," we are describing
Aqua America, Inc. and its direct and indirect subsidiaries, unless the context
suggests otherwise.
TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
Forward-Looking Statements.................................. ii
Summary Information......................................... S-1
Use of Proceeds............................................. S-3
Price Range of Common Stock and Dividends................... S-4
Underwriting................................................ S-6
Legal Matters............................................... S-8
Experts..................................................... S-8
PROSPECTUS
About this Prospectus....................................... i
Forward-Looking Statements.................................. ii
Philadelphia Suburban Corporation........................... 1
Risk Factors................................................ 2
Use of Proceeds............................................. 4
Certain Ratios.............................................. 4
Description of Capital Stock................................ 4
Description of Depositary Shares............................ 7
Description of Debt Securities.............................. 8
Description of Common Stock Purchase Contracts and Common
Stock Purchase Units...................................... 15
Plan of Distribution........................................ 16
Where You Can Find More Information......................... 17
Legal Matters............................................... 18
Experts..................................................... 18
i
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus supplement, the accompanying
prospectus and the documents incorporated by reference in the accompanying
prospectus are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 made based upon, among other things, our current assumptions, expectations
and beliefs concerning future developments and their potential effect on us.
These forward-looking statements involve risks, uncertainties and other factors,
many of which are outside our control, that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. In some cases you can identify forward-looking statements where
statements are preceded by, followed by or include the words "believes,"
"expects," "anticipates," "plans" or similar expressions.
Given these uncertainties, you should not place undue reliance on these
forward-looking statements. You should read this prospectus supplement, the
accompanying prospectus and the documents incorporated by reference in the
accompanying prospectus completely and with the understanding that our actual
future results may be materially different from what we expect. These
forward-looking statements represent our estimates and assumptions only as of
the date of the applicable document. Except for our ongoing obligations to
disclose material information under the federal securities laws, we may not be
obligated to update these forward-looking statements, even though our situation
may change in the future. We qualify all of our forward-looking statements by
the cautionary statements set forth on pages ii and iii of the accompanying
prospectus.
ii
SUMMARY INFORMATION
This summary highlights material information contained elsewhere in this
prospectus supplement and contained or incorporated by reference in the
accompanying prospectus. Because it is a summary, it may not contain all of the
information that may be important to you. Before making an investment decision,
you should read carefully this entire prospectus supplement, the accompanying
prospectus as well as documents incorporated by reference therein. As you read
these documents, you should pay particular attention to the information in "Risk
Factors" beginning on page 2 of the accompanying prospectus and included in our
Annual Report on Form 10-K for the year ended December 31, 2003. Unless
otherwise indicated, the information in this prospectus supplement assumes that
the underwriters' over-allotment option is not exercised.
AQUA AMERICA, INC.
Aqua America, Inc. (formerly Philadelphia Suburban Corporation) is the
holding company for regulated utilities providing water or wastewater services
to more than 2.5 million people in 13 states, principally in Pennsylvania, Ohio,
North Carolina, Illinois, Texas, New Jersey, Florida and Indiana. Our largest
operating subsidiary provides water or wastewater services to approximately 1.3
million people in the suburban areas north and west of the City of Philadelphia
and in 21 other counties in Pennsylvania. In addition, we provide water and
wastewater services through operating and maintenance contracts with municipal
authorities and other parties close to our operating companies' service
territories. We are the largest U.S.-based publicly-traded water utility based
on number of people served.
Other Information
On January 16, 2004, Philadelphia Suburban Corporation changed its
corporate name to Aqua America, Inc. In addition, we changed our ticker symbol
from "PSC" to "WTR" on the New York Stock Exchange and Philadelphia Stock
Exchange on January 20, 2004.
------------------
Our principal executive office is located at 762 W. Lancaster Avenue, Bryn
Mawr, Pennsylvania 19010-3489, and our telephone number is 610-527-8000.
S-1
THE OFFERING
Company....................... Aqua America, Inc.
Securities offered............ 1,700,000 shares of common stock
Number of shares of common
stock outstanding after the
offering...................... 94,958,217 shares (1)
Current indicated annual
dividend per share............ $0.52 per share (2)
Cash dividends paid since..... 1944
Listing....................... New York Stock Exchange and Philadelphia Stock
Exchange (Symbol: WTR)
Use of proceeds............... We intend to use the net proceeds from this
offering of approximately $37.0 million, or
$42.6 million if the underwriters'
over-allotment option is exercised in full
(after our payment of underwriting discounts
and commissions and offering expenses), to
repay a portion of our PNC Bank, National
Association short-term debt. The balance of our
net proceeds will be used for working capital
and other general corporate purposes.
Risk Factors.................. See "Risk Factors" beginning on page 2 of the
accompanying prospectus for a discussion of
factors you should consider carefully before
deciding whether to invest in the shares of
common stock being offered by this prospectus
supplement.
------------
(1) The outstanding share information is based upon the number of outstanding
shares as of October 29, 2004.
(2) On August 3, 2004, our Board of Directors approved an 8.3% increase in our
quarterly cash dividend payable on December 1, 2004 to shareholders of
record on November 15, 2004 from $0.12 per share, or $0.48 per share on an
annualized basis, to $0.13 per share, or $0.52 per share on an annualized
basis. Purchasers of shares in this offering who remain holders on November
15, 2004 will be entitled to receive this dividend.
S-2
USE OF PROCEEDS
We intend to use the net proceeds from this offering of approximately $37.0
million, or $42.6 million if the underwriters' overallotment option is exercised
in full (after our payment of underwriting discounts and commissions and
offering expenses), to repay a portion of our PNC Bank, National Association
short-term debt. As of September 30, 2004, the interest rate on the short-term
debt was 2.3%. The balance of our net proceeds will be used for working capital
and other general corporate purposes.
S-3
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
PRICE RANGE OF COMMON STOCK
The following table shows the high and low intraday sales prices for our
common stock as reported on the New York Stock Exchange composite transactions
reporting system and the cash dividends per share paid for the periods
indicated. Our common stock is listed on the New York Stock Exchange and the
Philadelphia Stock Exchange under the symbol "WTR."
COMMON STOCK
---------------------------
HIGH LOW DIVIDENDS
------ ------ ---------
YEAR ENDED DECEMBER 31, 2002
First Quarter............................................. $19.69 $16.88 $0.106
Second Quarter............................................ 20.00 14.79 0.106
Third Quarter............................................. 16.24 12.82 0.106
Fourth Quarter............................................ 17.50 15.44 0.112
YEAR ENDED DECEMBER 31, 2003
First Quarter............................................. $17.83 $15.77 $0.112
Second Quarter............................................ 19.85 17.22 0.112
Third Quarter............................................. 20.07 18.28 0.112
Fourth Quarter............................................ 22.40 18.71 0.120
YEAR ENDED DECEMBER 31, 2004
First Quarter............................................. $22.85 $20.00 $0.120
Second Quarter............................................ 21.96 18.98 0.120
Third Quarter............................................. 22.22 18.90 0.120
Fourth Quarter (through November 9, 2004)................. 23.02 20.77 (1)
------------
(1) The fourth quarter dividend payment of $0.13 per share was declared on
August 3, 2004 and will be paid on December 1, 2004 to holders of record on
November 15, 2004.
On November 9, 2004, the last reported sale price of our common stock on
the New York Stock Exchange was $22.74 per share. As of November 3, 2004, there
were approximately 23,797 holders of record of our common stock.
DIVIDEND POLICY
On August 3, 2004, our Board of Directors approved an 8.3% increase in our
quarterly cash dividend from $0.12 per share to $0.13 per share, with this
increase to be effective for our cash dividend payable on December 1, 2004 to
shareholders of record on November 15, 2004. This represents an increase in the
dividend rate on an annualized basis from $0.48 per share to $0.52 per share
effective with the December 1, 2004 dividend payment. The increase in the
December 1, 2004 dividend is the 14th increase to our dividend payment that the
Board has approved in the past 13 years.
We or our predecessor companies have paid dividends each year since 1944.
We presently intend to pay quarterly cash dividends in the future on March 1,
June 1, September 1 and December 1, subject to our earnings and financial
condition, regulatory requirements and such other factors as our Board of
Directors may deem relevant.
We offer holders of record of less than 100,000 shares of our common stock
the opportunity to reinvest part or all of the dividend payments on their shares
of common stock through purchases of original issue common stock without payment
of any brokerage commission or service charge through our dividend reinvestment
and direct stock purchase plan. The purchase price for original issue shares of
common stock purchased through the reinvestment of dividends is 95% of the
average of the high and low prices of common
S-4
stock as reported on the New York Stock Exchange composite transactions
reporting system for each of the five trading days immediately preceding the
dividend payment date. This plan also permits shareholders and investors to
invest up to $250,000 annually in our common stock in the open market through
our transfer agent. At November 4, 2004, holders of 17.8% of our outstanding
shares of common stock participated in the dividend reinvestment portion of this
plan.
S-5
UNDERWRITING
We and the underwriters named below have entered into an underwriting
agreement concerning the shares being offered. Subject to conditions, each
underwriter has severally agreed to purchase the number of shares indicated in
the following table.
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
A.G. Edwards & Sons, Inc.................................... 935,000
Janney Montgomery Scott LLC................................. 765,000
---------
Total....................................................... 1,700,000
=========
The underwriting agreement provides that the obligations of the several
underwriters to purchase the shares of common stock offered hereby are subject
to certain conditions precedent and that the underwriters will purchase all of
the shares of common stock offered by this prospectus supplement, other than
those covered by the over-allotment option described below, if any of these
shares are purchased.
We have agreed to indemnify the underwriters against some specified types
of liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), and to contribute to payments the underwriters
may be required to make in respect of any of these liabilities.
Over-allotment Option. If the underwriters sell more shares than the total
number set forth in the table above, the underwriters have a 30-day option to
buy up to an additional 255,000 shares from us at the public offering price less
the underwriting discounts and commissions to cover these sales.
The underwriters may exercise this option only to cover over-allotments
made in connection with the sale of the common stock offered by this prospectus
supplement. To the extent that the underwriters exercise this option, each of
the underwriters will become obligated, subject to certain conditions, to
purchase approximately the same percentage of these additional shares of common
stock as the number of shares of common stock to be purchased by it in the above
table bears to the total number of shares of common stock offered by this
prospectus supplement. We will be obligated, pursuant to the option, to sell
these additional shares of common stock to the underwriters to the extent the
option is exercised. If any additional shares of common stock are purchased, the
underwriters will offer the additional shares on the same terms as otherwise set
forth herein.
Offering Price, Concessions and Reallowances. The underwriting discounts
and commissions per share are equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting discounts and commissions are 3.79% of the public
offering price. The following table shows the per share and total underwriting
discounts and commissions payable by us to the underwriters. These amounts are
shown assuming both no exercise and full exercise of the underwriters' option to
purchase from us up to an additional 255,000 shares:
PAID BY AQUA AMERICA, INC. NO EXERCISE FULL EXERCISE
-------------------------- ----------- -------------
Per share................................................... $ 0.86 $ 0.86
Total....................................................... $1,462,000 $1,681,300
We estimate that our total expenses of this offering, excluding
underwriting discounts and commissions, will be approximately $145,000. We have
been advised by the representatives that the underwriters propose to offer the
shares of common stock to the public at the public offering price set forth on
the cover of this prospectus supplement and to certain dealers at a price that
represents a concession not in excess of $0.51 per share under the public
offering price. Any of these dealers may resell any shares purchased from the
underwriters to other brokers or dealers at a discount of up to $0.10 per share
from the public offering price. After the public offering, the underwriters may
change the offering price and other selling terms.
Restrictions on Sales of Similar Securities. Each of our executive
officers and directors has agreed with the underwriters not to offer, sell,
contract to sell, hedge or otherwise dispose of, or enter into any transaction
S-6
that is designed to, or could be expected to, result in the disposition of any
shares of our common stock or other securities convertible into or exchangeable
or exercisable for shares of our common stock or derivatives of our common stock
owned by these persons prior to this offering or common stock issuable upon
exercise of options or warrants held by these persons for a period of 90 days
after the date of this prospectus supplement without the prior written consent
of A.G. Edwards & Sons, Inc. This consent may be given at any time without
public notice. This agreement does not apply to sales by our executive officers
and directors of up to 25,000 shares of our common stock in the aggregate that
occur more than 30 days after the date hereof, sales to us in connection with
the exercise of options or entrance into a stock trading plan in accordance with
the guidelines specified in Rule 10b5-1 of the Securities Exchange Act of 1934.
We have agreed that we will not issue, offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, or file with the
Securities and Exchange Commission a registration statement under the Securities
Act relating to, any shares of our common stock or securities convertible into
or exchangeable or exercisable for any shares of our common stock, or publicly
disclose the intention to make any offer, sale, pledge, disposition or filing,
without the prior written consent of A.G. Edwards & Sons, Inc. for a period of
90 days after the date of this prospectus supplement. This agreement does not
apply to grants of stock options or restricted stock pursuant to the terms of an
equity compensation or similar plan in effect on the date of the underwriting
agreement, up to 50,000 shares of common stock issued under our acquisition
shelf registration statement, up to 1,500,000 shares of common stock issued more
than 60 days after the date hereof in connection with acquisitions or to raise
funds therefor or the issuance of an unlimited amount of shares of our common
stock pursuant to the terms of our dividend reinvestment and direct stock
purchase plan.
Price Stabilization and Short Positions. In connection with this offering,
the underwriters may purchase and sell shares of our common stock in the open
market. These transactions may include short sales, purchases to cover positions
created by short sales and stabilizing transactions.
Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in the offering. Covered short sales
are sales made in an amount not greater than the underwriters' option to
purchase additional shares of common stock from us in this offering. The
underwriters may close out any covered short position by either exercising their
option to purchase additional shares or purchasing shares in the open market. In
determining the source of shares to close out the covered short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market as compared to the price at which they may
purchase shares through the over-allotment option.
Naked short sales are any sales in excess of the over-allotment option. The
underwriters must close out any naked short position by purchasing shares in the
open market. A naked short position is more likely to be created if underwriters
are concerned that there may be downward pressure on the price of the shares in
the open market prior to the completion of this offering.
Stabilizing transactions consist of various bids for or purchases of our
common stock made by the underwriters in the open market prior to the completion
of this offering.
The underwriters may impose a penalty bid. This occurs when a particular
underwriter repays to the other underwriters a portion of the underwriting
discount received by it because they have repurchased shares sold by or for the
account of that underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions may have
the effect of preventing or slowing a decline in the market price of our common
stock. Additionally, these purchases, along with the imposition of the penalty
bid, may stabilize, maintain or otherwise affect the market price of our common
stock. As a result, the price of our common stock may be higher than the price
that might otherwise exist in the open market. These transactions may be
effected on the New York Stock Exchange, in the over-the-counter market or
otherwise.
Some of the underwriters or their affiliates have provided investment
banking services to us in the past and may do so in the future. They receive
customary fees and commissions for these services. Mr. John
S-7
McCaughan, one of our directors, is also a director of the Penn Mutual Life
Insurance Company, the parent of Janney Montgomery Scott LLC.
In connection with this offering, certain of the underwriters or security
dealers may distribute the prospectus electronically.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. Certain
legal matters in connection with this offering will be passed upon for the
underwriters by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this prospectus
supplement by reference to our Annual Report on Form 10-K for the year ended
December 31, 2003, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
S-8
PROSPECTUS
$250,000,000
PHILADELPHIA SUBURBAN CORPORATION
COMMON STOCK
PREFERRED STOCK
COMMON STOCK PURCHASE CONTRACTS
COMMON STOCK PURCHASE UNITS
DEPOSITARY SHARES
DEBT SECURITIES
This prospectus relates to common stock, preferred stock, common stock
purchase contracts, common stock purchase units, depositary shares and debt
securities that Philadelphia Suburban Corporation may sell from time to time in
one or more offerings. The aggregate public offering price of the securities we
may sell in these offerings will not exceed $250,000,000. This prospectus will
allow us to issue securities over time. We will provide a prospectus supplement
each time we issue securities, which will inform you about the specific terms of
that offering and may also supplement, update or amend information contained in
this document. You should read this prospectus and each applicable prospectus
supplement carefully before you invest.
Our common stock is listed on the New York Stock Exchange and the
Philadelphia Stock Exchange under the symbol "PSC." The last reported sale price
of our common stock on the New York Stock Exchange on April 25, 2003 was $22.46
per share. We have not yet determined whether any of the other securities that
may be offered by this prospectus will be listed on any exchange, inter-dealer
quotation system or over-the-counter market. If we decide to seek listing of any
such securities upon issuance, the prospectus supplement relating to those
securities will disclose the exchange, quotation system or market on which the
securities will be listed.
INVESTING IN OUR SECURITIES INVOLVES RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 2 OF THIS PROSPECTUS. YOU SHOULD READ CAREFULLY THIS DOCUMENT AND ANY
APPLICABLE PROSPECTUS SUPPLEMENT BEFORE YOU INVEST.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is April 25, 2003.
TABLE OF CONTENTS
PAGE
----
About This Prospectus....................................... i
Forward-Looking Statements.................................. ii
Philadelphia Suburban Corporation........................... 1
Risk Factors................................................ 2
Use of Proceeds............................................. 4
Certain Ratios.............................................. 4
Description of Capital Stock................................ 4
Description of Depositary Shares............................ 7
Description of Debt Securities.............................. 8
Description of Common Stock Purchase Contracts and Common
Stock Purchase Units...................................... 15
Plan of Distribution........................................ 16
Where You Can Find More Information......................... 17
Legal Matters............................................... 18
Experts..................................................... 18
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may, from time to time, sell common stock, preferred
stock, common stock purchase contracts, common stock purchase units, depositary
shares and debt securities in one or more offerings. The aggregate public
offering price of the securities we sell in these offerings will not exceed
$250,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell any securities under this prospectus,
we will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement also may add, update
or change information contained in this prospectus. You should read this
prospectus and the applicable prospectus supplement together with the additional
information described below under the heading "Where You Can Find More
Information" before you decide whether to invest in the securities.
The registration statement (including the exhibits) of which this
prospectus is a part contains additional information about us and the securities
we may offer by this prospectus. Specifically, we have filed certain legal
documents that control the terms of the securities offered by this prospectus as
exhibits to the registration statement. We will file certain other legal
documents that will control the terms of the securities we may offer by this
prospectus as exhibits to the registration statement or to reports we file with
the SEC. The registration statement and the reports can be read at the SEC
website or at the SEC offices mentioned under the heading "Where You Can Find
More Information."
You should rely only upon the information contained in, or incorporated
into, this prospectus and the applicable prospectus supplement that contains
specific information about the securities we are offering. We have not
authorized any other person to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this document is accurate only as of the date on the front cover of
this document. Our business, financial condition, results of operations and
prospects may have changed since that date.
Except as otherwise provided in this prospectus, unless the context
otherwise requires, references in this prospectus to "we," "us" and "our" refer
to Philadelphia Suburban Corporation and its direct and indirect subsidiaries.
In addition, references to Pennsylvania Suburban Water refer to our wholly-owned
subsidiary, Pennsylvania Suburban Water Company, and its subsidiaries, and
references to Consumers Water refer to our wholly-owned subsidiary, Consumers
Water Company, and its subsidiaries. To understand our offering of these
securities fully, you should read this entire document carefully, including
particularly the "Risk Factors"
i
section and the documents identified in the section titled "Where You Can Find
More Information", as well as the applicable prospectus supplement that contains
specific information about the securities we are offering.
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus, or incorporated by reference in this
prospectus, are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 made based upon, among other things, our current assumptions, expectations
and beliefs concerning future developments and their potential effect on us.
These forward-looking statements involve risks, uncertainties and other factors,
many of which are outside our control, that may cause our actual results,
performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by these forward-looking
statements. In some cases you can identify forward-looking statements where
statements are preceded by, followed by or include the words "believes,"
"expects," "anticipates," "plans" or similar expressions. Forward-looking
statements in this prospectus and any related prospectus supplement, or
incorporated by reference in this prospectus and any related prospectus
supplement, include, but are not limited to, statements regarding:
- projected capital expenditures and related funding requirements;
- developments and trends in the water and wastewater utility industries;
- dividend payment projections;
- opportunities for future acquisitions and success of pending
acquisitions;
- the capacity of our water supplies and facilities;
- the development of new services and technologies by us or our
competitors;
- the availability of qualified personnel;
- general economic conditions;
- acquisition-related costs and synergies; and
- the forward-looking statements contained under the heading
"Forward-Looking Statements" in the section entitled "Management's
Discussion and Analysis" from the portion of our 2002 Annual Report to
Shareholders incorporated by reference herein and made a part hereof.
Because forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including but
not limited to:
- changes in general economic, business and financial market conditions;
- changes in government regulations and policies, including environmental
and public utility regulations and policies;
- changes in environmental conditions, including those that result in water
use restrictions;
- abnormal weather conditions;
- changes in capital requirements;
- changes in our credit rating;
- our ability to integrate businesses, technologies or services which we
may acquire;
- our ability to manage the expansion of our business;
- the extent to which we are able to develop and market new and improved
services;
- the effect of the loss of major customers;
ii
- our ability to retain the services of key personnel and to hire qualified
personnel as we expand;
- unanticipated capital requirements;
- increasing difficulties in obtaining insurance and increased cost of
insurance;
- cost overruns relating to improvements or the expansion of our
operations; and
- civil disturbance or terroristic threats or acts.
Given these uncertainties, you should not place undue reliance on these
forward-looking statements. You should read this prospectus, the documents that
we incorporate by reference in this prospectus and any applicable prospectus
supplement completely and with the understanding that our actual future results
may be materially different from what we expect. These forward-looking
statements represent our estimates and assumptions only as of the date of this
prospectus. Except for our ongoing obligations to disclose material information
under the federal securities laws, we are not obligated to update these
forward-looking statements, even though our situation may change in the future.
We qualify all of our forward-looking statements by these cautionary statements.
iii
PHILADELPHIA SUBURBAN CORPORATION
Philadelphia Suburban Corporation is the holding company for regulated
utilities providing water or wastewater services to approximately two million
people in Pennsylvania, Ohio, Illinois, New Jersey, Maine and North Carolina.
Our customer base is diversified among residential, commercial and industrial
water customers and wastewater customers. Residential customers make up the
largest component of our customer base, representing approximately two-thirds of
our total water revenues.
Our two primary subsidiaries are Pennsylvania Suburban Water Company, a
regulated public utility that provides water or wastewater services to
approximately 1.3 million residents in the suburban areas north and west of the
City of Philadelphia and in 18 other counties in Pennsylvania, and Consumers
Water Company, a holding company for several regulated public utility companies
that provide water or wastewater service to approximately 700,000 residents in
various communities in Ohio, Illinois, New Jersey and Maine. Other of our
smaller subsidiaries provide water or wastewater services in parts of
Pennsylvania, North Carolina and Ohio. Some of our subsidiaries provide
wastewater services to a population of approximately 40,000 people in
Pennsylvania, Illinois, New Jersey and North Carolina. In addition, we provide
water and wastewater service to approximately 45,000 people through operating
and maintenance contracts with municipal authorities and other parties close to
our operating companies' service territories. We are the largest U.S.-based
investor-owned water utility based on number of customers.
We believe that acquisitions will continue to be an important source of
growth for us. In 1999, we acquired Consumers Water Company which added
approximately 245,000 customers to our customer base in five states. Exclusive
of the Consumers Water Company acquisition, we have completed 92 acquisitions or
other growth ventures during the five years ended December 31, 2002 adding
approximately 75,400 customers to our customer base. We entered into a purchase
agreement with DQE, Inc. and AquaSource, Inc. dated July 29, 2002, as amended by
Amendment No. 1 dated March 4, 2003, pursuant to which we agreed to acquire four
operating water and wastewater subsidiaries of AquaSource, Inc. and assume
selected, integrated operating and maintenance contracts and related assets. The
purchase agreement provides for a target cash purchase price of approximately
$205 million subject to various adjustments. If the transaction is completed, we
will purchase operating utilities, including assets and franchises that serve
approximately 130,000 water and wastewater customer accounts in 11 states, and
selected water and wastewater operating contracts that serve approximately
40,000 customers in seven of these states. We are actively exploring other
opportunities to expand our utility operations through acquisitions and
otherwise.
With more than 50,000 community water systems and approximately 16,000
wastewater systems in the United States, the water industry is the most
fragmented of the major utility industries (i.e., the telephone, natural gas,
electric and water industries). We believe that there are many potential water
and wastewater system acquisition candidates. We believe the factors driving
consolidation of these systems are:
- the benefits of economies of scale;
- increasingly stringent environmental regulations;
- the need for capital investment; and
- the need for technological and managerial expertise.
Our principal executive office is located at 762 W. Lancaster Avenue, Bryn
Mawr, Pennsylvania 19010-3489, and our telephone number is 610-527-8000. Our
website may be accessed at www.suburbanwater.com. Neither the contents of our
website, nor any other website that may be accessed from our website, is
incorporated in or otherwise considered a part of this prospectus.
1
RISK FACTORS
You should carefully consider the following risk factors and the section
entitled "Forward-Looking Statements" before you decide to buy our securities.
OUR BUSINESS REQUIRES SIGNIFICANT CAPITAL EXPENDITURES AND THE RATES WE CHARGE
OUR CUSTOMERS ARE SUBJECT TO REGULATION. IF WE ARE UNABLE TO OBTAIN GOVERNMENT
APPROVAL OF OUR REQUESTS FOR RATE INCREASES, OR IF APPROVED RATE INCREASES ARE
UNTIMELY OR INADEQUATE TO COVER OUR INVESTMENTS, OUR PROFITABILITY MAY SUFFER.
The water utility business is capital intensive. On an annual basis, we
spend significant sums for additions to or replacement of property, plant and
equipment. Our ability to maintain and meet our financial objectives is
dependent upon the rates we charge our customers. These rates are subject to
approval by the public utility commissions of the states in which we operate. We
file rate increase requests, from time to time, to recover our investments in
utility plant and expenses. Once a rate increase petition is filed with a public
utility commission, the ensuing administrative and hearing process may be
lengthy and costly. The timing of our rate increase requests are therefore
partially dependent upon the estimated cost of the administrative process in
relation to the investments and expenses that we hope to recover through the
rate increase to the extent approved. We can provide no assurances that any
future rate increase request will be approved by the appropriate state public
utility commission; and, if approved, we cannot guarantee that these rate
increases will be granted in a timely or sufficient manner to cover the
investments and expenses for which we initially sought the rate increase.
OUR OPERATING COSTS COULD BE SIGNIFICANTLY INCREASED IN ORDER TO COMPLY WITH NEW
OR STRICTER REGULATORY STANDARDS IMPOSED BY FEDERAL AND STATE ENVIRONMENTAL
AGENCIES.
Our water and wastewater services are governed by various federal and state
environmental protection and health and safety laws and regulations, including
the federal Safe Drinking Water Act, the Clean Water Act and similar state laws,
and state and federal regulations issued under these laws by the United States
Environmental Protection Agency and state environmental regulatory agencies.
These laws and regulations establish, among other things, criteria and standards
for drinking water and for discharges into the waters of the United States and
states. Pursuant to these laws, we are required to obtain various environmental
permits from environmental regulatory agencies for our operations. We cannot
assure you that we have been or will be at all times in total compliance with
these laws, regulations and permits. If we violate or fail to comply with these
laws, regulations or permits, we could be fined or otherwise sanctioned by
regulators. Environmental laws and regulations are complex and change
frequently. These laws, and the enforcement thereof, have tended to become more
stringent over time. While we have budgeted for future capital and operating
expenditures to maintain compliance with them and our permits, it is possible
that new or stricter standards could be imposed that will raise our operating
costs. Although these costs may be recovered in the form of higher rates, there
can be no assurance that the various state public utility commissions that
govern our business would approve rate increases to enable us to recover such
costs. In summary, we cannot assure you that our costs of complying with, or
discharging liability under, current and future environmental and health and
safety laws will not adversely affect our business, results of operations or
financial condition.
OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS, WHICH COULD AFFECT DEMAND FOR
OUR WATER SERVICE AND OUR REVENUES.
Demand for our water during the warmer months is generally greater than
during cooler months due primarily to additional requirements for water in
connection with irrigation systems, swimming pools, cooling systems and other
outside water use. Throughout the year, and particularly during typically warmer
months, demand will vary with temperature and rainfall levels. In the event that
temperatures during the typically warmer months are cooler than normal, or if
there is more rainfall than normal, the demand for our water may decrease and
adversely affect our revenues.
2
DROUGHT CONDITIONS MAY IMPACT OUR ABILITY TO SERVE OUR CURRENT AND FUTURE
CUSTOMERS, AND MAY IMPACT OUR CUSTOMERS' USE OF OUR WATER, WHICH MAY ADVERSELY
AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We depend on an adequate water supply to meet the present and future
demands of our customers. Drought conditions could interfere with our sources of
water supply and could adversely affect our ability to supply water in
sufficient quantities to our existing and future customers. An interruption in
our water supply could have a material adverse effect on our financial condition
and results of operations. Moreover, governmental restrictions on water usage
during drought conditions may result in a decreased demand for our water, even
if our water reserves are sufficient to serve our customers during these drought
conditions, which may adversely affect our revenues and earnings.
AN IMPORTANT ELEMENT OF OUR GROWTH STRATEGY IS THE ACQUISITION OF WATER AND
WASTEWATER SYSTEMS. ANY PENDING OR FUTURE ACQUISITIONS WE DECIDE TO UNDERTAKE
MAY INVOLVE RISKS.
An important element of our growth strategy is the acquisition and
integration of water and wastewater systems in order to broaden our current, and
move into new, service areas. We will not be able to acquire other businesses if
we cannot identify suitable acquisition opportunities or reach mutually
agreeable terms with acquisition candidates. It is our intent, when practical,
to integrate any businesses we acquire with our existing operations. The
negotiation of potential acquisitions as well as the integration of acquired
businesses could require us to incur significant costs and cause diversion of
our management's time and resources. Future acquisitions by us could result in:
- dilutive issuances of our equity securities;
- incurrence of debt and contingent liabilities;
- fluctuations in quarterly results; and
- other acquisition-related expenses.
Some or all of these items could have a material adverse effect on our
business and our ability to finance our business. The businesses and other
assets we acquire in the future may not achieve sales and profitability that
justify our investment and any difficulties we encounter in the integration
process could interfere with our operations and reduce our operating margins. In
addition, as consolidation becomes more prevalent in the water and wastewater
industries, the prices for suitable acquisition candidates may increase to
unacceptable levels and limit our ability to grow through acquisitions.
CONTAMINATION TO OUR WATER SUPPLY MAY RESULT IN DISRUPTION IN OUR SERVICES AND
LITIGATION WHICH COULD ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION.
Our water supplies are subject to contamination, including contamination
from the development of naturally-occurring compounds, chemicals in groundwater
systems, pollution resulting from man-made sources and possible terrorist
attacks. In the event that our water supply is contaminated, we may have to
interrupt the use of that water supply until we are able to substitute the flow
of water from an uncontaminated water source. In addition, we may incur
significant costs in order to treat the contaminated source through expansion of
our current treatment facilities, or development of new treatment methods. If we
are unable to substitute water supply from an uncontaminated water source, or to
adequately treat the contaminated water source in a cost-effective manner, there
may be an adverse effect on our revenues, operating results and financial
condition. The costs we incur to decontaminate a water source or an underground
water system could be significant and could adversely affect our business,
operating results and financial condition and may be recoverable in rates. We
could also be held liable for consequences arising out of human exposure to
hazardous substances in our water supplies or other environmental damage. For
example, private plaintiffs have the right to bring personal injury or other
toxic tort claims arising from the presence of hazardous substances in our
drinking water supplies. Our insurance policies may not be sufficient to cover
the costs of these claims.
3
In addition to the potential pollution of our water supply as described
above, in the wake of the September 11, 2001 terrorist attacks and the ensuing
threats to the nation's health and security, we have taken steps to increase
security measures at our facilities and heighten employee awareness of threats
to our water supply. We have also tightened our security measures regarding the
delivery and handling of certain chemicals used in our business. We have and
will continue to bear increased costs for security precautions to protect our
facilities, operations and supplies. These costs may be significant. We are
currently not aware of any specific threats to our facilities, operations or
supplies; however, it is possible that we would not be in a position to control
the outcome of terrorist events should they occur.
WE DEPEND SIGNIFICANTLY ON THE SERVICES OF THE MEMBERS OF OUR SENIOR MANAGEMENT
TEAM, AND THE DEPARTURE OF ANY OF THOSE PERSONS COULD CAUSE OUR OPERATING
RESULTS TO SUFFER.
Our success depends significantly on the continued individual and
collective contributions of our senior management team. The loss of the services
of any member of our senior management or the inability to hire and retain
experienced management personnel could harm our operating results.
USE OF PROCEEDS
Unless we otherwise specify in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of the securities we may offer by
this prospectus to fund future acquisitions of municipally owned and
investor-owned water and wastewater systems, including the pending acquisition
of the regulated water and wastewater operations and related contract operations
of AquaSource, Inc., to integrate any businesses that we acquire into our
existing business, to purchase and maintain plant equipment, to repay
indebtedness due on October 24, 2003 which as of March 27, 2003 was outstanding
in principal amount of $22 million and on which interest was accruing at 2.33%
per annum, which we incurred in connection with the purchase of 1.2 million
shares of our common stock from Vivendi Environnement, S.A. and its affiliates
in October, 2002, as well as for working capital and other general corporate
purposes. Our management will have broad discretion in the allocation of net
proceeds from the sale of any securities sold by us.
CERTAIN RATIOS
Our ratio of earnings to fixed charges and ratio of earnings to combined
fixed charges and preferred stock dividends for the periods indicated below were
as follows:
YEAR ENDED DECEMBER 31,
--------------------------------
2002 2001 2000 1999 1998
---- ---- ---- ---- ----
Ratio of earnings to fixed charges.................. 3.56 3.37 3.03 2.74 3.22
Ratio of earnings to combined fixed charges and
preferred stock dividends......................... 3.56 3.37 3.03 2.73 3.20
The ratios of earnings to fixed charges and the ratios of earnings to
combined fixed charges and preferred stock dividends were computed by dividing
earnings by fixed charges and by combined fixed charges and preferred stock
dividends, respectively. For the purpose of these computations, earnings have
been calculated by adding fixed charges (excluding capitalized interest) to
income from continuing operations. Fixed charges consist of interest cost,
whether expensed or capitalized, amortization of deferred financing costs and
the estimated interest portion of rental expense charged to income.
DESCRIPTION OF CAPITAL STOCK
The following description of our capital stock sets forth material terms
and provisions of our common stock and preferred stock. You should read our
current amended and restated articles of incorporation for more detailed terms
of our capital stock.
4
As of March 21, 2003, our authorized capital stock was 101,770,819 shares,
consisting of:
- 100,000,000 shares of common stock, par value $0.50 per share, of which
68,060,196 shares were outstanding; and
- 1,770,819 shares of preferred stock, par value $1.00 per share, of which
1,720 shares of our Series B Preferred Stock were issued and outstanding
and 100,000 shares of our Series A Junior Participating Preferred Stock
were reserved for future issuance in connection with our shareholder
rights plan.
COMMON STOCK
VOTING RIGHTS
Holders of our common stock are entitled to one vote for each share held by
them at all meetings of the shareholders and are not entitled to cumulate their
votes for the election of directors.
DIVIDEND RIGHTS AND LIMITATIONS
Holders of our common stock may receive dividends when declared by our
board of directors. Because we are a holding company, the funds we use to pay
any dividends on our common stock are derived predominantly from the dividends
that we receive from our subsidiaries, Pennsylvania Suburban Water and Consumers
Water, and the dividends they receive from their subsidiaries. Therefore, our
ability to pay dividends to holders of our common stock depends upon our
subsidiaries' earnings, financial condition and ability to pay dividends. Most
of our subsidiaries are subject to regulation by state utility commissions and
the amounts of their earnings and dividends are affected by the manner in which
they are regulated. In addition, they are subject to restrictions on the payment
of dividends contained in their various debt agreements. Under our most
restrictive debt agreements, the amount available for payment of dividends to us
as of December 31, 2002 was approximately $225 million of Pennsylvania Suburban
Water's retained earnings and $45 million of Consumers Water's retained
earnings. Payment of dividends on our common stock is also subject to the
preferential rights of the holders of preferred stock to receive full cumulative
dividends, both past and current.
LIQUIDATION RIGHTS
In the event that we liquidate, dissolve or wind-up, the holders of our
common stock are entitled to share ratably in all of the assets that remain
after we pay our liabilities. This right is subject, however, to the prior
distribution rights of any outstanding preferred stock.
PREFERRED STOCK
Under our certificate of incorporation, we are authorized to issue up to
1,770,819 shares of preferred stock of which 32,200 shares have been designated
Series B Preferred Stock, $1.00 par value, and 100,000 shares have been
designated and reserved for issuance as Series A Junior Participating Preferred
Stock, $1.00 par value per share, in connection with our shareholder rights
plan. As of December 31, 2002, 1,720 shares of the Series B Preferred Stock were
outstanding.
Our board of directors has the authority, from time to time and without
further action by our shareholders, to divide our unissued capital stock into
one or more classes and one or more series within any class and to make
determinations of the designation and number of shares of any class or series
and determinations of the voting rights, preferences, limitations and special
rights, if any, of the shares of any class or series. The rights, preferences,
limitations and special rights of different classes of capital stock may differ
with respect to dividend rates, amounts payable on liquidation, voting rights,
conversion rights, redemption provisions, sinking fund provisions and other
matters. The rights, preferences, privileges and restrictions of each series may
be fixed by the designations of that series set forth in either a restated
version of the certificate of incorporation or a certificate of designations
relating to that series.
The issuance of preferred stock may have the effect of delaying, deferring
or preventing a change of control of us without further action by our
shareholders. The issuance of preferred stock with voting and
5
conversion rights may also adversely affect the voting power of the holders of
our common stock. In certain circumstances, an issuance of preferred stock could
have the effect of decreasing the market price of our common stock.
Whenever preferred stock is to be sold pursuant to this prospectus, we will
file a prospectus supplement relating to that sale which will specify:
- the number of shares in the series of preferred stock;
- the designation for the series of preferred stock by number, letter or
title that will distinguish the series from any other series of preferred
stock;
- the dividend rate, if any, and whether dividends on that series of
preferred stock will be cumulative, noncumulative or partially
cumulative;
- the voting rights of that series of preferred stock, if any;
- any conversion provisions applicable to that series of preferred stock;
- any redemption or sinking fund provisions applicable to that series of
preferred stock;
- the liquidation preference per share of that series of preferred stock;
and
- the terms of any other preferences or rights, if any, applicable to that
series of preferred stock.
SHAREHOLDER RIGHTS PLAN
Pursuant to our shareholders rights plan, current or future holders of our
common stock have the right to purchase a fraction of a share of our Series A
Junior Participating Preferred Stock for each of outstanding share of common
stock held by them. Upon the occurrence of certain events, each right would
entitle the holder to purchase from us one one-thousandth of a share of Series A
Junior Participating Preferred Stock at an exercise price of $90 per
one-thousandth of a share, subject to adjustment. The rights are exercisable in
certain circumstances, such as when a person or group acquires 20% or more of
our common stock or if the holder of 20% or more of our common stock engages in
certain transactions with us. In the latter case, the right to purchase Series A
Junior Participating Preferred Stock would be exercisable by each holder, but
not the acquiring person, to purchase shares of our common stock at a
substantial discount from the market price. Additionally, pursuant to our
shareholders rights plan, if, after the date that a person has become the holder
of 20% or more of our common stock, any person or group merges with us or
engages in certain other transactions with us, each holder of a right, other
than the acquirer, will have the right to purchase common stock of the surviving
corporation at a substantial discount from the market price. These rights are
subject to redemption by us in certain circumstances. These rights have no
voting or dividend rights and, until exercisable, cannot trade separately from
our common stock and have no dilutive effect on our earnings. This plan expires
on March 1, 2008.
ANTI-TAKEOVER PROVISIONS
PENNSYLVANIA STATE LAW PROVISIONS
We are subject to various anti-takeover provisions of the Pennsylvania
Business Corporation Law of 1988, as amended. Generally, these provisions are
triggered if any person or group acquires, or discloses an intent to acquire,
20% or more of a corporation's voting power, unless the acquisition is under a
registered firm commitment underwriting or, in certain cases, approved by the
board of directors. These provisions:
- provide the other shareholders of the corporation with certain rights
against the acquiring group or person;
- prohibit the corporation from engaging in a broad range of business
combinations with the acquiring group or person; and
- restrict the voting and other rights of the acquiring group or person.
6
In addition, as permitted by Pennsylvania law, an amendment to our articles
of incorporation or other corporate action that is approved by shareholders may
provide mandatory special treatment for specified groups of nonconsenting
shareholders of the same class. For example, an amendment to our articles of
incorporation or other corporate action may provide that shares of common stock
held by designated shareholders of record must be cashed out at a price
determined by the corporation, subject to applicable dissenters' rights.
ARTICLES OF INCORPORATION AND BYLAW PROVISIONS
Certain provisions of our articles of incorporation and bylaws may have the
effect of discouraging unilateral tender offers or other attempts to take over
and acquire our business. These provisions might discourage some potentially
interested purchaser from attempting a unilateral takeover bid for us on terms
which some shareholders might favor. Our articles of incorporation require that
certain fundamental transactions must be approved by the holders of 75% of the
outstanding shares of our capital stock entitled to vote on the matter unless at
least 50% of the members of the board of directors has approved the transaction,
in which case the required shareholder approval will be the minimum approval
required by applicable law. The fundamental transactions that are subject to
this provision are those transactions that require approval by shareholders
under applicable law or the articles of incorporation. These transactions
include certain amendments of our articles of incorporation or bylaws, certain
sales or other dispositions of our assets, certain issuances of our capital
stock, or certain transactions involving our merger, consolidation, division,
reorganization, dissolution, liquidation or winding up. Our articles of
incorporation and bylaws provide that:
- a special meeting of shareholders may only be called by the chairman, the
president, the board of directors or shareholders entitled to cast a
majority of the votes which all shareholders are entitled to cast at the
particular meeting;
- nominations for election of directors may be made by any shareholder
entitled to vote for election of directors if the name of the nominee and
certain information relating to the nominee is filed with our corporate
secretary not less than 14 days nor more than 50 days before any meeting
of shareholders to elect directors; and
- certain advance notice procedures must be met for shareholder proposals
to be made at annual meetings of shareholders. These advance notice
procedures generally require a notice to be delivered not less than 90
days nor more than 120 days before the anniversary date of the
immediately preceding annual meeting of shareholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is EquiServe Trust
Company, N.A.
DESCRIPTION OF DEPOSITARY SHARES
We may, at our option, offer fractional shares of our preferred stock,
rather than whole shares of our preferred stock. In the event we do so, we will
issue receipts for depositary shares, each of which will represent a fraction
(to be set forth in the prospectus supplement relating to offering of the
depositary shares) of a share of the related series of preferred stock.
The shares of our preferred stock represented by depositary shares will be
deposited under a deposit agreement between us and a bank or trust company
selected by us having its principal office in the United States and having a
combined capital and surplus of at least $50,000,000. Subject to the terms of
the deposit agreement, each owner of a depositary share will be entitled, in
proportion to the applicable fraction of a share of preferred stock, represented
by the depositary share to all of the rights and preferences of the preferred
stock represented by the depositary shares (including dividend, voting,
redemption, conversion and liquidation rights).
7
The above description of depositary shares is only a summary, is not
complete and is subject to, and is qualified in its entirety by the description
in the applicable prospectus supplement and the provisions of the deposit
agreement, which will contain the form of depository receipt. A copy of the
deposit agreement will be filed with the SEC as an exhibit to or incorporated by
reference in the registration statement of which this prospectus is a part.
DESCRIPTION OF DEBT SECURITIES
Please note that in this section entitled Description of Debt Securities,
references to "we," "us," "ours" or "our" refer only to Philadelphia Suburban
Corporation and not to its consolidated subsidiaries. Also, in this section,
references to holders mean those who own debt securities registered in their own
names, on the books that we maintain or the trustee maintains for this purpose,
and not those who own beneficial interests in debt securities registered in
street name or in debt securities issued in book-entry form through one or more
depositaries. Owners of beneficial interests in the debt securities should read
the section below entitled "--Book-Entry Procedures and Settlement."
GENERAL
The debt securities offered by this prospectus will be our unsecured
obligations, except as otherwise set forth in an accompanying prospectus
supplement, and will be either senior or subordinated debt. We will issue senior
debt under a senior debt indenture, and we will issue subordinated debt under a
subordinated debt indenture. We sometimes refer to the senior debt indenture and
the subordinated debt indenture individually as an indenture and collectively as
the indentures. We have filed forms of the indentures with the SEC as exhibits
to the registration statement of which this prospectus forms a part. You can
obtain copies of the indentures by following the directions outlined in "Where
You Can Find More Information," or by contacting the applicable indenture
trustee.
A form of each debt security, reflecting the particular terms and
provisions of a series of offered debt securities, will be filed with the SEC at
the time of the offering and incorporated by reference as exhibits to the
registration statement of which this prospectus forms a part.
The following briefly summarizes certain material provisions that may be
included in the indentures. Other terms, including pricing and related terms,
will be disclosed for a particular issuance in an accompanying prospectus
supplement. You should read the more detailed provisions of the applicable
indenture, including the defined terms, for provisions that may be important to
you. You should also read the particular terms of a series of debt securities,
which will be described in more detail in an accompanying prospectus supplement.
So that you may easily locate the more detailed provisions, the numbers in
parentheses below refer to sections in the applicable indenture or, if no
indenture is specified, to sections in each of the indentures. Wherever
particular sections or defined terms of the applicable indenture are referred
to, such sections or defined terms are incorporated into this prospectus by
reference, and the statement in this prospectus is qualified by that reference.
The trustee under each indenture will be determined at the time of issuance
of debt securities, and the name of the trustee will be provided in an
accompanying prospectus supplement.
The indentures provide that our senior or subordinated debt securities may
be issued in one or more series, with different terms, in each case as we
authorize from time to time. We also have the right to "reopen" a previous issue
of a series of debt securities by issuing additional debt securities of such
series without the consent of the holders of debt securities of the series being
reopened or any other series. Any additional debt securities of the series being
reopened will have the same ranking, interest rate, maturity and other terms as
the previously issued debt securities of that series. These additional debt
securities, together with the previously issued debt securities of that series,
will constitute a single series of debt securities under the terms of the
applicable indenture.
8
TYPES OF DEBT SECURITIES
We may issue fixed or floating rate debt securities.
Fixed rate debt securities will bear interest at a fixed rate described in
the prospectus supplement. This type includes zero coupon debt securities, which
bear no interest and are often issued at a price lower than the principal
amount. United States federal income tax consequences and other special
considerations applicable to any debt securities issued at a discount will be
described in the applicable prospectus supplement.
Upon the request of the holder of any floating rate debt security, the
calculation agent will provide the interest rate then in effect for that debt
security, and, if determined, the interest rate that will become effective on
the next interest reset date. The calculation agent's determination of any
interest rate, and its calculation of the amount of interest for any interest
period, will be final and binding in the absence of manifest error.
All percentages resulting from any interest rate calculation relating to a
debt security will be rounded upward or downward, as appropriate, to the next
higher or lower one hundred-thousandth of a percentage point. All amounts used
in or resulting from any calculation relating to a debt security will be rounded
upward or downward, as appropriate, to the nearest cent, in the case of U.S.
dollars, or to the nearest corresponding hundredth of a unit, in the case of a
currency other than U.S. dollars, with one-half cent or one-half of a
corresponding hundredth of a unit or more being rounded upward.
In determining the base rate that applies to a floating rate debt security
during a particular interest period, the calculation agent may obtain rate
quotes from various banks or dealers active in the relevant market, as described
in the prospectus supplement. Those reference banks and dealers may include the
calculation agent itself and its affiliates, as well as any underwriter, dealer
or agent participating in the distribution of the relevant floating rate debt
securities and its affiliates.
INFORMATION IN THE PROSPECTUS SUPPLEMENT
The prospectus supplement for any offered series of debt securities will
describe the following terms, as applicable:
- the title;
- whether the debt is senior or subordinated;
- whether the debt securities are secured or unsecured and, if secured, the
collateral securing the debt;
- the total principal amount offered;
- the percentage of the principal amount at which the debt securities will
be sold and, if applicable, the method of determining the price;
- the maturity date or dates;
- whether the debt securities are fixed rate debt securities or floating
rate debt securities;
- if the debt securities are fixed rate debt securities, the yearly rate at
which the debt security will bear interest, if any, and the interest
payment dates;
- if the debt security is an original issue discount debt security, the
yield to maturity;
- if the debt securities are floating rate debt securities, the interest
rate basis; any applicable index currency or maturity, spread or spread
multiplier or initial, maximum or minimum rate; the interest reset,
determination, calculation and payment dates; and the day count used to
calculate interest payments for any period;
- the date or dates from which any interest will accrue, or how such date
or dates will be determined, and the interest payment dates and any
related record dates;
9
- if other than in U.S. dollars, the currency or currency unit in which
payment will be made;
- the denominations in which the currency or currency unit of the
securities will be issuable if other than denominations of $1,000 and
integral multiples thereof;
- the terms and conditions on which the debt securities may be redeemed at
our option;
- any obligation we may have to redeem, purchase or repay the debt
securities at the option of a holder upon the happening of any event and
the terms and conditions of redemption, purchase or repayment;
- the names and duties of the trustee and any co-trustees, depositaries,
authenticating agents, calculation agents, paying agents, transfer agents
or registrars for the debt securities;
- any material provisions of the applicable indenture described in this
prospectus that do not apply to the debt securities;
- a discussion of United States federal income tax, accounting and special
considerations, procedures and limitations with respect to the debt
securities;
- whether and under what circumstances we will pay additional amounts to
holders in respect of any tax assessment or government charge, and, if
so, whether we will have the option to redeem the debt securities rather
than pay such additional amounts; and
- any other specific terms of the debt securities that are consistent with
the provisions of the indenture.
The terms on which a series of debt securities may be convertible into or
exchangeable for other of our securities or any other entity will be set forth
in the prospectus supplement relating to such series. Such terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the holder or at our option. The terms may include provisions pursuant to which
the number of other securities to be received by the holders of such series of
debt securities may be adjusted.
We will issue the debt securities only in registered form. As currently
anticipated, debt securities of a series will trade in book-entry form, and
global notes will be issued in physical (paper) form, as described below under
"--Book-Entry Procedures and Settlement." Unless otherwise provided in the
accompanying prospectus supplement, we will issue debt securities denominated in
U.S. dollars and only in denominations of $1,000 and integral multiples thereof.
The prospectus supplement relating to offered debt securities denominated
in a foreign or composite currency will specify the denomination of the offered
debt securities.
The debt securities may be presented for exchange, and debt securities
other than a global security may be presented for registration of transfer, at
the principal corporate trust office of the trustee named in the applicable
prospectus supplement. Holders will not have to pay any service charge for any
registration of transfer or exchange of debt securities, but we may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection with such registration of transfer (Section 3.05).
PAYMENT AND PAYING AGENTS
Distributions on the debt securities other than those represented by global
notes will be made in the designated currency against surrender of the debt
securities at the principal corporate trust office of the trustee named in the
applicable prospectus supplement. Payment will be made to the registered holder
at the close of business on the record date for such payment. Interest payments
will be made at the principal corporate trust office of the trustee named in the
applicable prospectus supplement, or by a check mailed to the holder at his
registered address. Payments in any other manner will be specified in the
applicable prospectus supplement.
CALCULATION AGENTS
Calculations relating to floating rate debt securities and indexed debt
securities will be made by the calculation agent, an institution that we appoint
as our agent for this purpose. We may appoint one of our affiliates as
calculation agent. We may appoint a different institution to serve as
calculation agent from time to
10
time after the original issue date of the debt security without your consent and
without notifying you of the change. The initial calculation agent will be
identified in the applicable prospectus supplement.
SENIOR DEBT
We may issue senior debt securities under the senior debt indenture. Senior
debt will rank on a basis equal in priority with all our other debt except our
subordinated debt.
SUBORDINATED DEBT
We may issue subordinated debt securities under the subordinated debt
indenture. Subordinated debt will rank subordinated and junior in right of
payment, to the extent set forth in the subordinated debt indenture, to all our
senior debt.
If we default in the payment of any principal of, or premium, if any, or
interest on any senior debt when it becomes due and payable after any applicable
grace period, then, unless and until the default is cured or waived or ceases to
exist, we cannot make a payment on account of or redeem or otherwise acquire the
subordinated debt securities.
If there is any insolvency, bankruptcy, liquidation or other similar
proceeding relating to us or our property, then all senior debt must be paid in
full before any payment may be made to any holders of subordinated debt
securities.
Furthermore, if we default in the payment of the principal of and accrued
interest on any subordinated debt securities that is declared due and payable
upon an event of default under the subordinated debt indenture, holders of all
our senior debt will first be entitled to receive payment in full in cash before
holders of such subordinated debt can receive any payments.
Except as may be otherwise set forth in an accompanying prospectus
supplement, senior debt means:
- the principal, premium, if any, and interest in respect of indebtedness
for money borrowed and indebtedness evidenced by securities, notes,
debentures, bonds or other similar instruments issued, including, as to
us, the senior debt securities;
- all capitalized lease obligations;
- all obligations representing the deferred purchase price of property; and
- all deferrals, renewals, extensions and refundings of obligations of the
type referred to above.
However, senior debt does not include:
- the subordinated debt securities;
- any indebtedness that by its terms is subordinated to, or ranks in
priority on an equal basis with, subordinated debt securities; and
- items of indebtedness (other than capitalized lease obligations) that
would not appear as liabilities on a balance sheet prepared in accordance
with accounting principles generally accepted in the United States of
America.
COVENANTS
The accompanying prospectus supplement will contain any covenants
applicable to the debt securities.
MODIFICATION OF THE INDENTURES
The indentures will provide that we and the relevant trustee may enter into
supplemental indentures to establish the form and terms of any new series of
debt securities without obtaining the consent of any holder of debt securities
(Section 9.01).
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We and the trustee may, with the consent of the holders of at least a
majority in aggregate outstanding principal amount of the debt securities of a
series, modify the applicable indenture or the rights of the holders of the
securities of such series.
No such modification may, without the consent of each holder of an affected
security:
- extend the fixed maturity of any such security;
- reduce the rate or change the time of payment of interest on such
security;
- reduce the principal amount of such securities or the premium, if any, on
such security;
- change any obligation of ours to pay additional amounts with respect to
such security;
- reduce the amount of the principal payable on acceleration of such
security if issued originally at a discount;
- adversely affect the right of repayment or repurchase of such security at
the option of the holder;
- reduce or postpone any sinking fund or similar provision with respect to
such security;
- change the currency or currency unit in which such security is payable or
the right of selection thereof;
- impair the right to sue for the enforcement of any payment with respect
to such security on or after the maturity of such security;
- reduce the percentage of the aggregate outstanding principal amount of
debt securities of the series referred to above whose holders need to
consent to the modification or a waiver without the consent of such
holders; or
- change any obligation of ours with respect to such security to maintain
an office or agency (Section 9.02).
DEFAULTS
Except as may be otherwise set forth in an accompanying prospectus
supplement, each indenture will provide that events of default regarding any
series of debt securities will be:
- our failure to pay for 30 days required interest on any debt security of
such series;
- our failure to pay principal or premium, if any, on any debt security of
such series when due;
- our failure to make any required scheduled installment payment for 30
days on debt securities of such series;
- our failure to perform for 90 days after notice any other covenant in the
relevant indenture other than a covenant included in the relevant
indenture solely for the benefit of a series of debt securities other
than such series; and
- certain events of bankruptcy or insolvency, whether voluntary or not
(Section 5.01).
Except as may be otherwise set forth in an accompanying prospectus
supplement, if an event of default regarding debt securities of any series
issued under the indentures should occur and be continuing, either the trustee
or the holders of 25% in the principal amount of outstanding debt securities of
such series may declare each debt security of that series due and payable
(Section 5.02). We may be required to file annually with the trustee a statement
of an officer as to the fulfillment by us of our obligations under the indenture
during the preceding year.
No event of default regarding one series of debt securities issued under an
indenture is necessarily an event of default regarding any other series of debt
securities.
Holders of a majority in aggregate principal amount of the outstanding debt
securities of any series will be entitled to control certain actions of the
trustee under the indentures and to waive past defaults regarding such
12
series (Sections 5.12 and 5.13). The holders of debt securities generally will
not be able to require the trustee to take any action, unless one or more of
such holders provides to the trustee reasonable security or indemnity (Section
6.02).
If an event of default occurs and is continuing regarding a series of debt
securities, the trustee may use any sums that it holds under the relevant
indenture for its own reasonable compensation and expenses incurred prior to
paying the holders of debt securities of such series (Section 5.06).
Before any holder of any series of debt securities may institute action for
any remedy, except payment on such holder's debt security when due, the holders
of not less than 25% in principal amount of the debt securities of that series
outstanding must request the trustee to take action. Holders must also offer and
give the satisfactory security and indemnity against liabilities incurred by the
trustee for taking such action (Sections 5.07 and 5.08).
DEFEASANCE
Except as may otherwise be set forth in an accompanying prospectus
supplement, after we have deposited with the trustee, cash or government
securities, in trust for the benefit of the holders sufficient to pay the
principal of, premium, if any, and interest on the debt securities of such
series when due, and satisfied certain other conditions, including receipt of an
opinion of counsel that holders will not recognize taxable gain or loss for
United States federal income tax purposes, then:
- we will be deemed to have paid and satisfied our obligations on all
outstanding debt securities of such series, which is known as defeasance
and discharge (Section 14.02); or
- we will cease to be under any obligation, other than to pay when due the
principal of, premium, if any, and interest on such debt securities,
relating to the debt securities of such series, which is known as
covenant defeasance (Section 14.03).
When there is a defeasance and discharge, the applicable indenture will no
longer govern the debt securities of such series, we will no longer be liable
for payments required by the terms of the debt securities of such series and the
holders of such debt securities will be entitled only to the deposited funds.
When there is a covenant defeasance, however, we will continue to be obligated
to make payments when due if the deposited funds are not sufficient.
GOVERNING LAW
Unless otherwise stated in the prospectus supplement, the debt securities
and the indentures will be governed by Pennsylvania law.
CONCERNING THE TRUSTEE UNDER THE INDENTURES
We may have banking and other business relationships with the trustee named
in the prospectus supplement, or any subsequent trustee, in the ordinary course
of business.
FORM, EXCHANGE AND TRANSFER
We will issue debt securities only in registered form; no debt securities
will be issued in bearer form. We will issue each debt security in book-entry
form only, unless otherwise specified in the applicable prospectus supplement.
We will issue any common stock issuable upon conversion of any debt security
being offered in both certificated and book-entry form, unless otherwise
specified in the applicable prospectus supplement. Debt securities in book-entry
form will be represented by a global security registered in the name of a
depositary, which will be the holder of all the debt securities represented by
the global security. Those who own beneficial interests in a global security
will do so through participants in the depositary's system, and the rights of
these indirect owners will be governed solely by the applicable procedures of
the depositary and its participants. Only the depositary will be entitled to
transfer or exchange a debt security in global form, since it
13
will be the sole holder of the debt security. These book-entry securities are
described below under "-- Book-Entry Procedures and Settlement."
If any debt securities are issued in non-global form or cease to be
book-entry securities (in the circumstances described in the next section), the
following will apply to them:
- The debt securities will be issued in fully registered form in
denominations stated in the prospectus supplement. You may exchange debt
securities for debt securities of the same series in smaller
denominations or combined into fewer debt securities of the same series
of larger denominations, as long as the total amount is not changed.
- You may exchange, transfer, present for payment or exercise debt
securities at the office of the relevant trustee or agent indicated in
the prospectus supplement. You may also replace lost, stolen, destroyed
or mutilated debt securities at that office. We may appoint another
entity to perform these functions or may perform them.
- You will not be required to pay a service charge to transfer or exchange
the debt securities, but you may be required to pay any tax or other
governmental charge associated with the transfer or exchange. The
transfer or exchange, and any replacement, will be made only if our
transfer agent is satisfied with your proof of legal ownership. The
transfer agent may also require an indemnity before replacing any debt
securities.
- If we have the right to redeem, accelerate or settle any debt securities
before their maturity or expiration, and we exercise that right as to
less than all those debt securities, we may block the transfer or
exchange of those debt securities during the period beginning 15 days
before the day we mail the notice of exercise and ending on the day of
that mailing, in order to freeze the list of holders to prepare the
mailing. We may also refuse to register transfers of or exchange any debt
security selected for early settlement, except that we will continue to
permit transfers and exchanges of the unsettled portion of any debt
security being partially settled.
- If fewer than all of the debt securities represented by a certificate
that are payable or exercisable in part are presented for payment or
exercise, a new certificate will be issued for the remaining amount of
securities.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Most offered debt securities will be book-entry (global) securities. Upon
issuance, all book-entry securities will be represented by one or more fully
registered global securities, without coupons. Each global security will be
deposited with, or on behalf of, The Depository Trust Company, or DTC, a
securities depository, and will be registered in the name of DTC or a nominee of
DTC. DTC will thus be the only registered holder of these debt securities.
Purchasers of debt securities may only hold interests in the global notes
through DTC if they are participants in the DTC system. Purchasers may also hold
interests through a securities intermediary -- banks, brokerage houses and other
institutions that maintain securities accounts for customers -- that has an
account with DTC or its nominee. DTC will maintain accounts showing the security
holdings of its participants, and these participants will in turn maintain
accounts showing the security holdings of their customers. Some of these
customers may themselves be securities intermediaries holding securities for
their customers. Thus, each beneficial owner of a book-entry security will hold
that debt security indirectly through a hierarchy of intermediaries, with DTC at
the top and the beneficial owner's own securities intermediary at the bottom.
The debt securities of each beneficial owner of a book-entry security will
be evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of the debt securities will generally not be
entitled to have the debt securities represented by the global securities
registered in its name and will not be considered the owner under the
declaration. In most cases, a beneficial owner will also not be able to obtain a
paper certificate evidencing the holder's ownership of debt securities. The
book-entry system
14
for holding securities eliminates the need for physical movement of certificates
and is the system through which most publicly traded common stock is held in the
United States. However, the laws of some jurisdictions require some purchasers
of securities to take physical delivery of their securities in definitive form.
These laws may impair the ability to transfer book-entry securities.
A beneficial owner of book-entry securities represented by a global
security may exchange the securities for definitive (paper) securities only if:
- DTC is unwilling or unable to continue as depositary for such global
security and we do not appoint a qualified replacement for DTC within 90
days; or
- We in our sole discretion decide to allow some or all book-entry
securities to be exchangeable for definitive securities in registered
form.
Unless we indicate otherwise, any global security that is exchangeable will
be exchangeable in whole for definitive securities in registered form, with the
same terms and of an equal aggregate principal amount. Definitive securities
will be registered in the name or names of the person or persons specified by
DTC in a written instruction to the registrar of the securities. DTC may base
its written instruction upon directions that it receives from its participants.
In this prospectus, for book-entry securities, references to actions taken
by security holders will mean actions taken by DTC upon instructions from its
participants, and references to payments and notices of redemption to security
holders will mean payments and notices of redemption to DTC as the registered
holder of the securities for distribution to participants in accordance with
DTC's procedures.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a clearing
corporation within the meaning of the New York Uniform Commercial Code and a
clearing agency registered under section 17A of the Securities Exchange Act of
1934. The rules applicable to DTC and its participants are on file with the SEC.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interest in the book-entry securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
DESCRIPTION OF COMMON STOCK PURCHASE CONTRACTS AND
COMMON STOCK PURCHASE UNITS
We may issue stock purchase contracts, representing contracts entitling or
obligating holders to purchase from us, and us to sell to the holders, a
specified number of shares or amount of common stock at a future date or dates.
The price per share of common stock may be fixed at the time each contract is
issued or may be determined by reference to a specific formula set forth in the
contract. Each common stock purchase contract may be issued separately or as a
part of a unit, which is referred to in this prospectus as a "common stock
purchase unit," each consisting of a common stock purchase contract and, as
security for the holder's obligation to purchase the common stock under the
contract, the following:
- our senior debt securities or subordinated debt securities described
under "Description of Debt Securities;"
- debt obligations of third parties, including U.S. Treasury securities;
- any other asset as security described in the applicable prospectus
supplement; or
- any combination of the foregoing.
Each common stock purchase contract may require us to make periodic
payments to the holder of the common stock purchase unit or vice versa, and such
payments may be unsecured or prefunded on some basis discussed in the applicable
prospectus supplement. Each common stock purchase contract may require holders
to secure their obligations thereunder in a specified manner and, in certain
circumstances, we may
15
deliver a newly issued prepaid common stock purchase contract, which is referred
to as a "prepaid security," upon release to a holder of any collateral securing
such holder's obligations under the original contract.
The applicable prospectus supplement will describe the terms of any common
stock purchase contract or common stock purchase unit and, if applicable,
prepaid security. The description in the prospectus supplement will not purport
to be complete and will be qualified in its entirety by reference to the
contracts, units, the collateral arrangements and depositary arrangements, if
applicable, relating to such contracts or units and, if applicable, the prepaid
securities and the documents pursuant to which such prepaid securities will be
issued. The applicable prospectus supplement will also describe the material
United States federal income tax considerations applicable to the common stock
purchase contracts and common stock purchase units.
PLAN OF DISTRIBUTION
We may sell the securities that we may offer by this prospectus:
- directly to one or more purchasers;
- through agents;
- to and through one or more underwriters;
- to and through one or more dealers; or
- through a combination of any such method of sale.
The distribution of securities pursuant to any applicable prospectus
supplement may be effected from time to time in one or more transactions either:
- at a fixed price or prices which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
We will describe in the prospectus supplement, the particular terms of the
offering of the securities, including the following: the names of any
underwriters, the purchase price and the proceeds we will receive from the sale,
any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers, any securities exchanges on which the
securities of the series may be listed, and any other information we think is
important.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent, who may be deemed to be an "underwriter" as that
term is defined in the Securities Act of 1933, as amended, or the Securities
Act, involved in the offer or sale of the securities for which this prospectus
is delivered will be named, and any commissions payable by us to that agent will
be set forth, in the prospectus supplement. Unless otherwise indicated in the
prospectus supplement, any agent will be acting on a best efforts basis for the
period of its appointment.
One or more firms, referred to as "remarketing firms," may also offer or
sell the securities, if the prospectus supplement so indicates, in connection
with a remarketing arrangement upon their purchase. Remarketing firms will act
as principals for their own accounts or as agents for us. These remarketing
firms will offer or sell the securities in accordance with the terms of the
securities. The prospectus supplement will identify any remarketing firm and the
terms of its agreement, if any, with us and will describe the remarketing firm's
compensation. Remarketing firms may be deemed to be underwriters in connection
with the securities they remarket. Remarketing firms may be entitled under
agreements that may be entered into with us to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act, and
may be customers of, engage in transactions with or perform services for us in
the ordinary course of business.
16
If an underwriter is, or underwriters are, utilized in the sale of
securities, we will execute an underwriting agreement with such underwriters at
the time of such sale to them. The securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, either at a fixed public
offering price, or at varying prices determined at the time of sale. The
securities may be either offered to the public through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
If a dealer is utilized in the sale of securities, we will sell the
securities to the dealer, as principal. The dealer, who may be deemed to be an
"underwriter" may then resell the securities to the public at varying prices to
be determined by such dealer at the time of resale. Any initial offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Underwriters, dealers and agents may be entitled, under agreements that may
be entered into with us, to indemnification by us against civil liabilities
arising out of this prospectus, including liabilities under the Securities Act,
or to contribution for payments which the agents or underwriters may be required
to make relating to those liabilities. Any agents and underwriters may be
customers of, engage in transactions with, or perform services for, us in the
ordinary course of business.
If so indicated in the applicable prospectus supplement, we will authorize
underwriters, dealers or other persons to solicit offers by certain institutions
to purchase the securities from us pursuant to contracts providing for payment
and delivery on a future date or dates set forth in the applicable prospectus
supplement. Institutions with which such contracts may be made may include, but
are not limited to, commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and others.
The obligations of any purchaser under any such contract will not be subject to
any conditions except that the purchase of any securities shall not at the time
of delivery be prohibited under the laws of the jurisdiction to which such
purchaser is subject, and if any of the securities being offered are also sold
to underwriters, we shall have sold to such underwriters the securities not for
delayed delivery. The underwriters, dealers and such other persons will not have
any responsibility with respect to the validity or performance of such
contracts. The prospectus supplement relating to such contracts will set forth
the price to be paid for the securities pursuant to such contracts, the
commissions payable for solicitation of such contracts and the date or dates in
the future for delivery of offered shares pursuant to such contracts.
To facilitate an offering of the securities, certain persons participating
in the offering may engage in transactions that stabilize, maintain, or
otherwise affect the price of the shares. This may include over-allotments or
short sales of the shares, which involves the sale by persons participating in
the offering of more shares than we have sold to them. In such circumstances,
such persons would cover the over-allotments or short positions by purchasing in
the open market or by exercising the over-allotment option granted to such
persons. In addition, such persons may stabilize or maintain the price of our
securities by bidding for or purchasing any of our securities in the open market
or by imposing penalty bids, whereby selling concessions allowed to dealers
participating in any such offering may be reclaimed if shares that they sold are
repurchased in connection with stabilization transactions. The effect of these
transactions may be to stabilize or maintain the market price of the shares at a
level above that which might otherwise prevail in the open market. Such
transactions, if commenced, may be discontinued at any time.
Any series of securities may be a new issue of securities with no
established trading market. Any underwriter may make a market in the securities,
but will not be obligated to do so, and may discontinue any market making at any
time without notice. We cannot and will not give any assurances as to the
liquidity of the trading market for any of our securities.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W.,
17
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. You may also obtain our SEC filings
from the SEC's website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. Statements made in this prospectus as to the
contents of any contract, agreement or other documents are not necessarily
complete, and, in each instance, we refer you to a copy of such document filed
as an exhibit to the registration statement, of which this prospectus is a part,
or otherwise filed with the SEC. The information incorporated by reference is
considered to be part of this prospectus. When we file information with the SEC
in the future, that information will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we will make with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 until we sell all of the securities
covered by this prospectus:
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
2002, including portions of our 2002 Annual Report to Shareholders and
our definitive Proxy Statement for the 2003 Annual Meeting of
Shareholders incorporated therein by reference;
- Our Current Report on Form 8-K filed on January 14, 2003; and
- The description of our common stock set forth in our Registration
Statement on Form 8-A, including any amendments or reports filed for the
purpose of updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
Philadelphia Suburban Corporation
762 W. Lancaster Avenue
Bryn Mawr, PA 19010-3489
Telephone: 610-527-8000
Attention: Roy H. Stahl, Corporate Secretary
You should rely only on the information contained in or incorporated by
reference in this prospectus and any supplements to this prospectus. We have not
authorized anyone to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. You
should not assume that the information provided in this prospectus or
incorporated by reference in this prospectus is accurate as of any date other
than the date on the front of this prospectus or the date of those documents.
Our business, financial condition, results of operations and prospects may have
changed since those dates.
LEGAL MATTERS
The validity of the securities that may be offered hereby will be passed
upon for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 2002
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
18
1,700,000 SHARES
(AQUA AMERICA LOGO)
AQUA AMERICA, INC.
COMMON STOCK
A.G. EDWARDS JANNEY MONTGOMERY SCOTT LLC
The date of this prospectus supplement is November 9, 2004.