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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission File
number 1-6659
PHILADELPHIA SUBURBAN CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1702594
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010
- --------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including
area code: (610)-527-8000
----------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------
Common stock, par value $.50 per share New York Stock Exchange, Inc.
Philadelphia Stock Exchange Inc.
Securities registered pursuant to Section
12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes x No
------- --------
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of March 1, 1996. $231,749,555
For purposes of determining this amount only, registrant has defined
affiliates as including (a) the executive officers named in Part I of
this 10-K report, (b) all directors of registrant, and (c) each
shareholder that has informed registrant by March 1, 1996, that it has
sole or shared voting power of 5% or more of the outstanding common
stock of registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of March 1, 1996. 12,238,871
Documents incorporated by reference
(1) Portions of registrant's 1995 Annual Report to shareholders have
been incorporated by reference into Parts I and II of this Form 10-K
Report.
(2) Portions of the Proxy Statement, relative to the May 16, 1996
annual meeting of shareholders of registrant, to be filed within 120
days after the end of the fiscal year covered by this Form 10-K Report,
have been incorporated by reference into Part III of this Form 10-K
Report.
PART I
Item 1. Business
--------
Philadelphia Suburban Corporation ("PSC" or the "Registrant"), a
Pennsylvania corporation, was incorporated in 1968. The information appearing in
"Management's Discussion and Analysis" from the portions of PSC's 1995 Annual
Report to shareholders filed as Exhibit 13.3 to this Form 10-K Report is
incorporated by reference herein.
The business of PSC is conducted almost entirely through its subsidiary
Philadelphia Suburban Water Company ("PSW"), a regulated public utility. PSW
supplies water to 264,865 residential, commercial, industrial and public
customers. PSW's contiguous service territory is approximately 406 square miles,
comprising a large portion of the suburban area west and north of the City of
Philadelphia. This territory is primarily residential in nature and is
completely metered, except for fire hydrant service. Based on the 1990 census,
PSW estimates that the total number of persons currently served is approximately
850,000. Excluding the customers that were added at the time of acquisitions in
the last three years, customer accounts have grown at an average rate of
approximately .6% per annum for the last three years.
Operating revenues during the twelve months ended December 31, 1995 were
derived approximately as follows:
67.1% from residential customers
20.6% from commercial customers
4.3% from industrial customers
1.1% from public customers
6.4% from fire protection services
.5% from sales to other water utilities and
miscellaneous customers
------
100.0%
======
PSW has completed ten water system acquisitions in the last four years.
In May 1995, PSW purchased the franchise rights and the water utility assets of
Media Borough ("Media"). The Media system covers a 23 square mile service area
contiguous to PSW's service territory. In addition, PSW purchased the franchise
rights and the water utility assets of four smaller water systems in 1995 that
cover a combined service territory of four square miles. The annual revenues
from these systems approximate $4,750,000, and related revenues included in the
consolidated financial statements were $2,820,000 for 1995.
In December 1994, PSW acquired the franchise rights and the water
utility assets of two privately owned water companies. In December 1993, PSW
acquired the water utility assets and franchise rights of the Borough of
Malvern. In December 1992, PSW acquired the water utility assets of the West
Whiteland Township and the Uwchlan Township Municipal Authority water systems.
Combined, the five systems acquired before 1995 added 43 square miles of service
territory adjacent to PSW's existing service territory and had revenues of
approximately $2,731,000 in 1995.
PSW has also entered into preliminary agreements to acquire six
additional water systems for a combined purchase price of approximately
$20,600,000, including, subject to final negotiations, the issuance of up to
$5,000,000 of the Company's preferred stock. These systems are adjacent or near
to PSW's service territory. The combined annual revenues of these systems are
approximately $2,900,000. In addition, PSW continues to hold discussions with
several other water systems that are near or adjacent to its service territory.
2
Item 1, Continued
Selected operating statistics. Set forth below is a table showing certain
selected operating statistics for PSW for the past three years.
Revenues from water sales (000's omitted) 1995 1994 1993
---- ---- ----
Residential $ 78,082 $ 69,545 $ 66,183
Commercial 24,016 23,020 19,970
Industrial 4,990 5,175 4,568
Public 1,252 1,257 1,027
Fire protection 7,421 7,054 5,912
Other 617 848 1,095
Tax Surcharge (credit) (505) (97) 706
--------- --------- --------
Total $115,873 $106,802 $ 99,461
======== ======== ========
Water sales (million gallons)
Residential 17,610 16,577 16,729
Commercial 7,983 7,804 7,441
Industrial 1,919 2,085 1,985
Public 335 324 294
Fire protection - metered 51 55 60
Other 124 261 401
-------- -------- --------
Total 28,022 27,106 26,910
======== ======== ========
System delivery by source
(million gallons)
Surface (including Upper Merion
reservoir) 26,904 25,386 24,635
Wells 4,830 5,037 5,466
Purchased 2,077 2,356 2,446
-------- -------- --------
Total 33,811 32,779 32,547
======== ======== ========
Number of metered customers
(end of year)
Residential 248,500 234,624 232,684
Commercial 11,725 10,777 10,720
Industrial 848 833 832
Public 775 688 696
Fire protection 3,006 2,596 2,248
Other 11 15 15
-------- -------- --------
Total 264,865 249,533 247,195
======== ======== ========
Average consumption per
customer in gallons 109,084 109,001 110,368
======== ======== ========
3
Item 1, Continued
Water supplies and usage. PSW derives its principal supply of water from
the Schuylkill River, seven rural streams which are tributaries of the
Schuylkill and Delaware Rivers, and the Upper Merion Reservoir, a former quarry
now impounding groundwater. All of these are either within or adjacent to PSW's
service territory. PSW acquired the right to remove water from these sources,
and in connection with such rights, PSW has secured the necessary regulatory
approvals. PSW has five impounding reservoirs and has five treatment and pumping
facilities to provide storage and treatment of these surface water supplies.
The Pennsylvania Department of Environmental Protection ("DEP") has
regulatory power with respect to sources of supply and the construction,
operation and safety practices for certain dams and other water containment
structures under the Pennsylvania Dam Safety and Encroachments Act of 1979.
PSW's dams are in compliance with these requirements in all material respects.
PSW's surface supplies are supplemented by 38 wells. PSW also has
interconnections with: the Chester Water Authority, which permits PSW to
withdraw up to 6.4 million gallons per day ("mgd"); the Bucks County Water and
Sewer Authority, which provides for a supply of up to 7.0 mgd; and the West
Chester Area Municipal Authority, which provides up to 1.0 mgd. Agreements
regarding the first two interconnections require PSW to purchase certain
minimum amounts of water. PSW believes it possesses all the necessary permits
to obtain its supply of water from the sources indicated above.
The minimum safe yield of all sources of supply described above, based on
low stream flows of record with respect to surface supplies, is as follows:
Surface supplies 93.8 mgd
Upper Merion Reservoir 7.2
Wells 15.4
Purchased supplies 8.2
-----
Total 124.6 mgd
=====
During periods of normal precipitation, the safe yield is more than the
minimum shown above. Under normal operating conditions, PSW can deliver a
maximum of 144 mgd to its distribution system for short periods of time. The
average daily sendout for 1995, 1994 and 1993 was 92.6, 89.8 and 89.1 mgd,
respectively.
The maximum demand ever placed upon PSW's facilities for one month
occurred during August 1995, when sendout averaged 109.3 mgd. The peak day of
record occurred during July 1995 when water use reached 121.8 mgd.
Actual water usage (as measured by the water meters installed at each
service location) is less than the amount of water delivered into the system due
to leaks, PSW's operational use of water, fire hydrant usage and other similar
uses. Water consumption per customer is affected by local weather conditions
during the year. In general, during the late spring and summer, an increase in
rainfall reduces water consumption, while a decrease in rainfall increases it.
Also, an increase in the average temperature generally causes an increase in
water consumption.
Energy supplies. PSW does all of its pumping using electric power
purchased from PECO Energy Company. Energy supplies have been sufficient to meet
customer demand.
4
Item 1, Continued
Water shortages. The Delaware River Basin, which is the drainage area of
the Delaware River from New York State to Delaware, periodically experiences
water shortages during the summer months. To the extent that the reservoirs in
the upper part of the Basin are affected by a lack of precipitation, the
Delaware River Basin Commission (the "DRBC") may impose either voluntary or
mandatory water use restrictions on portions or all of the Basin. The
Commonwealth of Pennsylvania (the "Commonwealth") also has the authority to
impose similar restrictions on a county-by-county basis.
PSW's raw water supplies have been adequate to meet customer demand for
the past five years principally because of its five impounding reservoirs.
However, PSW's customers may be required to comply with the Commonwealth and
DRBC water use restrictions, even if PSW's supplies are adequate.
In September 1995, the Governor of the Commonwealth declared a drought
emergency in the counties served by PSW. The drought emergency imposed a
mandatory ban on all nonessential water usage by PSW's customers. Because the
order was issued toward the end of the summer months, when nonessential and
recreational use of water has traditionally declined, the restriction did not
have a significant impact on PSW revenues. The drought emergency was lifted by
the end of 1995. Throughout the drought emergency, PSW maintained adequate
storage levels of treated water and had sufficient quantities of raw water. No
other drought restrictions were imposed by the Commonwealth or DRBC in the last
three years.
Regulation by the Pennsylvania Public Utility Commission. PSW is subject
to regulation by the Pennsylvania Public Utility Commission ("PUC") which has
jurisdiction with respect to rates, service, accounting procedures, issuance of
securities, acquisitions and other matters.
Under applicable Pennsylvania statutes, PSW has rights granted under its
Articles of Incorporation and by certificates of public convenience from the PUC
authorizing it to conduct its present operations in the manner in which such
operations are now conducted and in the territory in which it now renders
service, to exercise the right of eminent domain and to maintain its mains in
the streets and highways of such territory. Such rights are generally
nonexclusive, although it has been the practice of the PUC to allow only one
water company to actually provide service to a given area. Consequently, PSW is
subject to competition only with respect to potential customers located on the
fringe of areas that it presently serves who also may have access to the service
of another water supplier, or where other water service opportunities exist
(including non-utility Companies with riparian rights or access to an adequate
supply from a neighboring facility).
In 1993, the PUC initiated a rulemaking procedure intended to facilitate
the development of practical standards by which water mains should be extended
to "bona fide service applicants", typically existing homes or businesses in
need of a reliable public water supply. In December 1995, the PUC issued a final
rulemaking, reflecting the position that the primary costs of such extensions
should be justified by anticipated revenues. Generally, construction costs
beyond those justified by anticipated revenues must be borne by the applicant.
Under the proposal, PSW is required to invest approximately $4,000 per customer
in a main extension prior to requiring any customer contribution. The Commission
selected this threshold because revenues from an average customer offset the
interest, depreciation and incremental operating expense associated with the
investment.
5
Item 1, Continued
Water Quality & Environmental Issues. PSW is subject to regulation of
water quality by the U.S. Environmental Protection Agency ("EPA") under the
Federal Safe Drinking Water Act (the "SDWA") and by the Pennsylvania Department
of Environmental Protection ("DEP") under the Pennsylvania Safe Drinking Water
Act. The SDWA provides for the establishment of minimum water quality standards,
as well as governmental authority to specify the type of treatment process to be
used for public drinking water. PSW is presently in compliance with all
standards and treatment requirements promulgated to date.
The EPA has an ongoing directive to issue additional regulations under
the SDWA. The directive was clarified in 1986 when Congress amended the SDWA to
require, among other revisions, disinfection of all drinking water, additional
maximum contaminant level ("MCL") specifications, and filtration of all surface
water supplies. PSW has already installed the necessary equipment to provide for
the disinfection of the drinking water throughout the system and is monitoring
for the additional specified contaminants. PSW's surface water supplies are
filtered.
In addition, the 1986 SDWA Amendments require the EPA to promulgate MCLs
for many chemicals not previously regulated. EPA has to date promulgated MCLs
for numerous additional contaminants and is required to mandate further MCLs
every three years. Promulgation of additional MCLs by the EPA in the future
may require PSW to change some of its treatment techniques, however, PSW
believes that the currently proposed MCLs will not have a significant impact
on its capital requirements or operating expenses. A bill amending and
reauthorizing the SDWA has been passed by the United States Senate and is
pending in the United States House of Representatives. If the bill passed by
the Senate becomes law, it would direct the EPA to establish standards based
upon occurrence and health risks and establishes a schedule for many standards
which were proposed previously. The SWDA reauthorization package includes
specific provisions for radon, arsenic and sulfates. The reauthorization of
SWDA is not expected to have a material impact on PSW's operations or
financial condition. PSW may, in the future, have to change its method of
treating drinking water at certain of its sources of supply if additional
regulations become effective.
In 1991, EPA promulgated final regulations for lead and copper (the "Lead
and Copper Rule"). Under the Lead and Copper Rule, large water utilities are
required to conduct corrosion control studies and to sample certain high-risk
customer homes to determine the extent of treatment techniques that may be
required. PSW conducted the two required rounds of sampling in 1992 and did not
exceed the EPA action levels for either lead or copper. Additional sampling will
be required in the future. PSW has developed a corrosion control program for its
surface sources of supply and does not foresee the need to make any major
additional treatment changes or capital expenditures as a result of the Lead and
Copper Rule.
On January 1, 1993, new federal regulations ("Phase II") became effective
for certain volatile organics, herbicides, pesticides and inorganic parameters.
All required Phase II monitoring was completed in 1995. In the few cases where
Phase II contaminants were detected, concentrations were below MCLs. Future
monitoring will be required, but no major treatment modifications are
anticipated as a result of these regulations.
6
Item 1, Continued
The EPA is expected to issue, in 1996, the first rule of a three rule
package addressing Disinfection By-Products ("DBP"). DBP's are chemicals
formed during the drinking water treatment process. The first rule is an
Information Collection Rule designed to collect data to be used in developing
the other two rulemakings.
PSW is also subject to other environmental statutes administered by the
EPA and DEP. These include the Federal Clean Water Act and the Resource
Conservation and Recovery Act ("RCRA"). Under the Federal Clean Water Act, the
Company must obtain National Pollutant Discharge Elimination System ("NPDES")
permits for discharges from its treatment stations. PSW currently maintains five
NPDES permits relating to its water treatment plants, which are subject to
renewal every five years. During the past five years, PSW has installed the
required waste water treatment facilities and presently meets all NPDES
requirements. Although management recognizes that permit renewal may become more
difficult if more stringent guidelines are imposed, no significant obstacles to
permit renewal are presently foreseen.
Under RCRA, PSW is subject to specific regulations regarding the solid
waste generated from the water treatment process. The DEP promulgated a "Final
Rulemaking" for solid waste (Residual Waste Management) in July 1992. PSW has
retained an engineering consultant to assist with the extensive monitoring,
record keeping and reporting required under these regulations. A preliminary
application for permitting has been filed, and formal permitting of these
facilities should be completed in 1996 in accordance with regulatory
requirements.
Where PSW is required to make certain capital investments in order to
maintain its compliance with any of the various regulations discussed above, it
is management's belief that all such expenditures would be fully recoverable in
PSW's water rates. However, the capital costs, under current law, would have to
be financed prior to their inclusion in PSW's rate structure, and the resulting
rate increases would not necessarily be timely.
Employee Relations
------------------
As of December 31, 1995, the Registrant employed a total of 535 persons.
Hourly employees of PSW are represented by the International Brotherhood of
Firemen and Oilers, Local No. 473. The contract with the union was renewed on
December 1, 1994 for a three-year period. Management considers its employee
relations to be satisfactory.
Item 2. Properties.
-----------
The Registrant believes that the facilities used in the operation of its
business is generally in excellent condition in terms of suitability, adequacy
and utilization.
7
Item 2, Continued
The property of PSW consists of a waterworks system devoted to the
collection, storage, treatment and distribution of water in its service
territory. Management considers that its properties are maintained in good
operating condition and in accordance with current standards of good waterworks
practice. The following table summarizes the principal physical properties owned
by PSW:
No. of Square Feet
Location Buildings Description Floor Area
- -------- --------- ----------- -----------
Pennsylvania 6 Office & warehouse 174,185
Pennsylvania 16 Pumping stations and
treatment buildings 169,200
Pennsylvania 22 Well stations App. 600 ea.
Pennsylvania 16 Well stations App. 150 ea.
Pennsylvania 42 Booster stations App. 1,100 ea.
In addition, PSW also owns 52 storage facilities for treated water
throughout its service territory with a combined capacity of 147.0 million
gallons and five surface water impounding reservoirs. The water utility also
owns approximately 3,180 miles of transmission and distribution mains, has
264,865 active metered services and 12,150 fire hydrants.
PSW's properties referred to herein, with certain minor exceptions
which do not materially interfere with their use, are owned and are subject to
the lien of an Indenture of Mortgage dated as of January 1, 1941, as
supplemented. In the case of properties acquired through the exercise of the
power of eminent domain and certain properties acquired through purchase, it has
title only for water supply purposes.
The Registrant's corporate offices are leased from PSW and located in
Bryn Mawr, Pennsylvania.
Item 3. Legal Proceedings
-----------------
There are no pending legal proceedings to which the Registrant or any
of its subsidiaries is a party or to which any of their properties is the
subject that present a reasonable likelihood of a material adverse impact on the
Registrant. As previously reported, there were two proceedings which arose from
a fire in a warehouse in Newark, New Jersey, where hazardous substances were
alleged to have been stored. PSW was involved or potentially involved because it
was alleged that, out of more than 2,000 drums of material at the warehouse, one
of the drums had originated from PSW. One of these proceedings has been
dismissed and the other has been settled with PSW paying a nominal amount.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of security holders during the
fourth quarter of 1995.
Information with respect to the executive officers of the Company is
contained in Item 10 hereof and is hereby incorporated by reference herein.
8
PART II
-------
Item 5. Market for the Registrant's Common Stock and Related Security
Holder Matters
-------------------------------------------------------------
The Company's common stock is traded on the New York Stock Exchange
and the Philadelphia Stock Exchange. As of March 1, 1996, there were
approximately 12,265 holders of record of the Company's common stock.
The following selected quarterly financial data of the Company is in
thousands of dollars, except for per share amounts:
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
------ ------- ------- ------- -----
1995
Earned revenues $25,712 $28,827 $32,355 $30,150 $117,044
Operating expenses 11,766 12,357 13,793 13,786 51,702
Income, continuing operations 3,315 4,659 5,732 4,324 18,030
Income per share, continuing
operations .28 .39 .48 .35 1.50
Income, discontinued operations -- -- -- 370 370
Income per share, discontinued
operations -- -- -- .03 .03
Net income 3,315 4,659 5,732 4,694 18,400
Net income per share .28 .39 .48 .38 1.53
Dividend paid per share .28 .28 .29 .29 1.14
Price range of common stock
- high 18.25 18.75 18.63 21.50 21.50
- low 17.38 17.63 17.63 18.00 17.38
1994
Earned revenues $24,849 $26,730 $28,849 $28,208 $108,636
Operating expenses 12,056 12,001 12,511 13,728 50,296
Net income 2,949 4,035 4,897 3,757 15,638
Net income per share .26 .35 .42 .32 1.35
Dividend paid per share .27 .27 .28 .28 1.10
Price range of common stock
- high 19.63 18.50 19.38 18.75 19.63
- low 17.38 17.13 17.50 17.25 17.13
Following is a recent history of income from continuing operations and
dividends of the Company:
Income per
share from
Cash dividend continuing Payout
per share operations ratio
------------- ---------- ------
1991 $1.00 $1.29 78%
1992 1.04 1.23 85
1993 1.07 1.27 84
1994 1.10 1.35 81
1995 1.14 1.50 76
9
Item 5, Continued
Dividends have averaged approximately 81% of income from continuing
operations during this period. In August 1995, the annual dividend increased by
3.6% to $1.16 beginning with the September 1995 dividend.
Item 6. Selected Financial Data
-----------------------
The information appearing in the section captioned "Summary of Selected
Financial Data" from the portions of the Company's 1995 Annual Report to
shareholders filed as Exhibit 13.3 to this Form 10-K Report is incorporated by
reference herein.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
---------------------------------------------------------------
The information appearing in the section captioned "Management's
Discussion and Analysis" from the portions of the Company's 1995 Annual Report
to shareholders filed as Exhibit 13.3 to this Form 10-K Report is incorporated
by reference herein.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Information appearing under the captions "Consolidated Statements of
Income", "Consolidated Balance Sheets", "Consolidated Cash Flow Statements" and
"Notes to Consolidated Financial Statements" from the portions of the Company's
1995 Annual Report to shareholders filed as Exhibit 13.3 to this Form 10-K
Report is incorporated by reference herein. Also, the information appearing in
the section captioned "Reports on Financial Statements" from the portions of the
Company's 1995 Annual Report to shareholders filed as Exhibit 13.3 to this Form
10-K Report is incorporated by reference herein.
Item 9. Disagreements on Accounting and Financial Disclosure
----------------------------------------------------
None.
10
PART III
--------
Item 10. Directors and Executive Officers of the Registrant
--------------------------------------------------
Directors of the Registrant
- ---------------------------
The information appearing in the section captioned "Information
Regarding Nominees and Directors" of the Proxy Statement relating to the May 16,
1996, annual meeting of shareholders of the Company, to be filed within 120 days
after the end of the fiscal year covered by this Form 10-K Report, is
incorporated by reference herein.
Executive Officers of the Registrant
- ------------------------------------
The following table and the notes thereto set forth information with
respect to the executive officers of the Registrant, including their names,
ages, positions with the Registrant and business experience during the last five
years:
Position with the Registrant
Name Age and date of election (1)
---- --- ----------------------------
Nicholas DeBenedictis 50 President and Chairman (May 1993 to
present); President and Chief Executive
Officer (July 1992 to May 1993);
Chairman and Chief Executive Officer,
Philadelphia Suburban Water Company
(July 1992 to Present); President,
Philadelphia Suburban Water Company
(February 1995 to present) (2)
Richard R. Riegler 49 Senior Vice President - Operations,
Philadelphia Suburban Water Company
(April 1989 to present) (3)
Roy H. Stahl 43 Senior Vice President and General
Counsel (April 1991 to present) (4)
Michael P. Graham 47 Senior Vice President - Finance and
Treasurer (March 1993 to present) (5)
Morrison Coulter 59 Senior Vice President - Production,
Philadelphia Suburban Water Company
(February 1996 to present); Vice
President - Production, Philadelphia
Suburban Water Company (April 1989 to
February 1996) (6)
(1) In addition to the capacities indicated, the individuals named in the above
table hold other offices or directorships with subsidiaries of the Registrant.
Officers serve at the discretion of the Board of Directors.
11
Item 10, Continued
(2) Mr. DeBenedictis was Secretary of the Pennsylvania Department of
Environmental Resources from 1983 to 1986. From December 1986 to April 1989,
he was President of the Greater Philadelphia Chamber of Commerce. Mr.
DeBenedictis was Senior Vice President for Corporate and Public Affairs of
Philadelphia Electric Company from April 1989 to June 1992.
(3) Mr. Riegler was Chief Engineer of Philadelphia Suburban Water Company from
1982 to 1984. He then served as Vice President and Chief Engineer from 1984 to
1986 and Vice President of Operations from 1986 to 1989.
(4) From January 1984 to August 1985, Mr. Stahl was Corporate Counsel, from
August 1985 to May 1988 he was Vice President - Administration and Corporate
Counsel of the Registrant, and from May 1988 to April 1991 he was Vice President
and General Counsel of the Registrant.
(5) Mr. Graham was Controller of the Company from 1984 to September 1990, and
from September 1990 to May 1991 he was Chief Financial Officer and Treasurer.
From May 1991 to March 1993, Mr. Graham was Vice President - Finance and
Treasurer.
(6) Mr. Coulter was Superintendent of Pumping Facilities from 1971 to 1982. From
1982 to 1987 he served as Manager - Electrical/Mechanical Department and from
1987 to 1989 he was Assistant Vice President - Production.
Item 11. Management Remuneration
-----------------------
The information appearing in the sections captioned "Compensation of
Directors and Executive Officers" of the Proxy Statement relating to the May 16,
1996, annual meeting of shareholders of the Company, to be filed within 120 days
after the end of the fiscal year covered by this Form 10-K Report, is
incorporated by reference herein.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The information appearing in the sections captioned "Ownership of
Common Stock" of the Proxy Statement relating to the May 16, 1996, annual
meeting of shareholders of the Company, to be filed within 120 days after the
end of the fiscal year covered by this Form 10-K Report, is incorporated by
reference herein.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The information appearing in the sections captioned "Other Remuneration
and Certain Transactions" of the Proxy Statement relating to the May 16, 1996,
annual meeting of shareholders of the Company, to be filed within 120 days after
the end of the fiscal year covered by this Form 10-K Report, is incorporated by
reference herein.
12
PART IV
-------
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
Financial Statements. The following is a list of the consolidated financial
statements of the Company and its subsidiaries and supplementary data
incorporated by reference in Item 8 hereof:
Management's Report
Independent Auditors' Report
Consolidated Balance Sheets - December 31, 1995 and 1994
Consolidated Statements of Income - 1995, 1994 and 1993
Consolidated Statements of Cash Flow - 1995, 1994, and 1993
Notes to Consolidated Financial Statements
Financial Statement Schedules. The financial statement schedules, or
supplemental schedules, filed as part of this annual report on Form 10-K are
omitted because they are not applicable or not required, or because the required
information is included in the consolidated financial statements or notes
thereto.
Reports on Form 8-K. The Company filed no report on Form 8-K during the quarter
ended December 31, 1995.
Exhibits, Including Those Incorporated by Reference. The following is a list of
exhibits filed as part of this annual report on Form 10-K. Where so indicated by
footnote, exhibits which were previously filed are incorporated by reference.
For exhibits incorporated by reference, the location of the exhibit in the
previous filing is indicated in parenthesis. The page numbers listed refer to
page number where such exhibits are located using the sequential numbering
system specified by Rules 0-3 and 403.
13
EXHIBIT INDEX
Exhibit No. Page No.
- ----------- --------
3.1 Amended and Restated Articles of Incorporation, as --
amended (1) (Exhibit 3.1)
3.2 By-Laws, as amended (1) (Exhibit 3.2) --
4.1 Indenture of Mortgage dated as of January 1, 1941 --
between Philadelphia Suburban Water Company and The
Pennsylvania Company for Insurance on Lives and
Granting Annuities(now First Pennsylvania Bank, N.A.),
as Trustee, with supplements thereto through the
Twentieth Supplemental Indenture dated as of August 1,
1983 (2) (Exhibits 4.1 through 4.16)
4.2 Revolving Credit Agreement between Philadelphia Suburban --
Water Company and Mellon Bank (East) National Association
dated as of February 16, 1990 (3) (Exhibit 4.3)
4.3 First Amendment to Revolving Credit Agreement between --
Philadelphia Suburban Water Company and Mellon Bank
N.A. dated as of September 1, 1992 (1) (Exhibit 4.3)
4.4 Preferred Stock Agreement between Philadelphia Suburban --
Water Company and Provident Life and Accident Insurance
Company dated as of January 1, 1991 (3) (Exhibit 4.4)
4.5 Indenture dated as of July 1, 1988 between Philadelphia --
Suburban Corporation and the Philadelphia National
Bank, as Trustee. (4) (Exhibit 4)
4.6 Form of Rights Agreement, dated as of February 19, 1988, --
between Philadelphia Suburban Corporation and
Mellon Bank (East) National Association, as amended
by Amendment No. 1. (5) (Exhibit 1)
4.7 Agreement to furnish copies of other long-term debt --
instruments (1) (Exhibit 4.7)
4.8 Twenty-first Supplemental Indenture dated as of August 1, --
1985 (6) (Exhibit 4.2)
4.9 Twenty-second Supplemental Indenture dated as of April 1, --
1986 (7) (Exhibit 4.3)
4.10 Twenty-third Supplemental Indenture dated as of April 1, --
1987 (8) (Exhibit 4.4)
4.11 Twenty-fourth Supplemental Indenture dated as of June 1, --
1988 (9) (Exhibit 4.5)
4.12 Twenty-fifth Supplemental Indenture dated as of --
January 1, 1990 (10) (Exhibit 4.6)
14
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
4.13 Twenty-sixth Supplemental Indenture dated as of November --
1, 1991 (11) (Exhibit 4.12)
4.14 Twenty-seventh Supplemental Indenture dated as of June 1, --
1992 (1) (Exhibit 4.14)
4.15 Twenty-eighth Supplemental Indenture dated as of April 1, --
1993 (12) (Exhibit 4.15)
4.16 Revolving Credit Agreement between Philadelphia --
Suburban Water Company and Mellon Bank, N.A., PNC Bank
National Association, First Fidelity Bank, N.A.
and Meridian Bank, N.A. dated as of March 17, 1994
(12) (Exhibit 4.16)
4.17 Twenty-Ninth Supplemental Indenture dated as of March 30, --
1995 (14) (Exhibit 4.17)
4.18 Thirtieth Supplemental Indenture dated as of August 15, --
1995 (15) (Exhibit 4.18)
10.1 1982 Stock Option Plan, as amended and restated effective --
May 21, 1992* (1) (Exhibit 10.1)
10.2 1988 Stock Option Plan, as amended and restated effective --
May 21, 1992* (1) (Exhibit 10.2)
10.3 Executive Incentive Award Plan, as amended March 21, --
1989 and February 6, 1990* (10) (Exhibit 10.3)
10.4 Excess Benefit Plan for Salaried Employees, effective --
December 1, 1989* (10) (Exhibit 10.4)
10.5 Supplemental Executive Retirement Plan, effective --
December 1, 1989* (10) (Exhibit 10.5)
10.6 Supplemental Executive Retirement Plan, effective March --
15, 1992* (1) (Exhibit 10.6)
10.7 1993 Incentive Compensation Plan* (1) (Exhibit 10.7) --
10.8 Employment letter agreement with Mr. Nicholas --
DeBenedictis* (1) (Exhibit 10.8)
10.9 1994 Incentive Compensation Program* (12) (Exhibit 10.9) --
10.10 1994 Equity Compensation Plan, as amended by Amendment 20
1994-1*
10.11 1995 Incentive Compensation Plan* (13) (Exhibit 10.11) --
10.12 Placement Agency Agreement between Philadelphia --
Suburban Water Company and PaineWebber Incorporated
dated as of March 30, 1995 (14) (Exhibit 10.12)
15
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
10.13 Bond Purchase Agreement among the Delaware County --
Industrial Development Authority, Philadelphia
Suburban Water Company and Legg Mason Wood Walker,
Incorporated dated August 24, 1995 (15) (Exhibit 10.13)
10.14 Construction and Financing Agreement between the --
Delaware County Industrial Development Authority and
Philadelphia Suburban Water Company dated as of August
15, 1995 (15) (Exhibit 10.14)
10.15 1996 Annual Cash Incentive Compensation Plan* 32
13.1 Selected portions of Annual Report to shareholders --
for the year ended December 31, 1993 incorporated
by reference in Annual Report on Form 10-K for
the year ended December 31, 1993 (12) (Exhibit 13.1)
13.2 Selected portions of Annual Report to shareholders --
for the year ended December 31, 1994 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1994 (13) (Exhibit 13.2)
13.3 Selected portions of Annual Report to shareholders 37
for the year ended December 31, 1995 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1995
21. Subsidiaries of Philadelphia Suburban Corporation 72
23. Consent of Independent Auditors 73
24. Power of Attorney (set forth as a part of this report) 18
27. Financial Data Schedule 74
16
- Notes -
Documents Incorporated by Reference
(1) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1992
(2) Indenture of Mortgage dated as of January 1, 1941 with supplements
thereto through the Twentieth Supplemental Indenture dated as of
August 1, 1983 were filed as an Exhibit to Annual Report on Form 10-K
for the year ended December 31, 1983.
(3) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1990.
(4) Filed as Exhibit 4 to the Registration Statement on Form S-3 filed
with the Securities and Exchange Commission on June 14, 1988.
(5) Filed as Exhibit 1 to the Registration Statement on Form 8-A filed
with the Securities and Exchange Commission on March 1, 1988, with
respect to the New York Stock Exchange, and on November 9, 1988, with
respect to the Philadelphia Stock Exchange.
(6) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1985.
(7) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1986.
(8) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1987.
(9) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1988.
(10) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1989.
(11) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1991.
(12) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1993.
(13) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1994.
(14) Filed as an Exhibit to Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995.
(15) Filed as an Exhibit to Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
* Indicates management contract or compensatory plan or arrangement.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHILADELPHIA SUBURBAN CORPORATION
By /s/ Nicholas DeBenedictis
--------------------------------------
Nicholas DeBenedictis
President and Chairman
Date: March 25, 1996
Pursuant to the requirements of the Securities and Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Each person in so signing also makes, constitutes and appoints Nicholas
DeBenedictis, President and Chairman of Philadelphia Suburban Corporation,
Michael P. Graham, Senior Vice President - Finance and Treasurer of Philadelphia
Suburban Corporation, and each of them, his or her true and lawful
attorneys-in-fact, in his or her name, place and stead to execute and cause to
be filed with the Securities and Exchange Commission any and all amendments to
this report.
18
John H. Austin, Jr. John W. Boyer, Jr.
- ----------------------------- ---------------------------------------
John H. Austin, Jr. John W. Boyer, Jr.
Director Director
Mary C. Carroll Nicholas DeBenedictis
- ----------------------------- ---------------------------------------
Mary C. Carroll Nicholas DeBenedictis
Director President and Chairman
(principal executive
officer) and Director
G. Fred DiBona, Jr. Claudio Elia
- ----------------------------- ---------------------------------------
G. Fred DiBona, Jr. Claudio Elia
Director Director
Richard H. Glanton Michael P. Graham
- ----------------------------- ---------------------------------------
Richard H. Glanton Michael P. Graham
Director Senior Vice President-Finance and
Treasurer (principal financial and
accounting officer)
Joseph C. Ladd John F. McCaughan
- ----------------------------- ---------------------------------------
Joseph C. Ladd John F. McCaughan
Director Director
Harvey J. Wilson
- -----------------------------
Harvey J. Wilson
Director
19