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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, 1998 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 Identification No.)
incorporation or organization)
762 W. Lancaster Avenue,
Bryn Mawr, Pennsylvania 19010-3489
- ---------------------------------------- -------------------------------------
(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 ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 11, 1999. $721,807,021
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 11, 1999, that it
has sole or shared voting power of 5% or more of the outstanding
common stock of registrant.
The number of shares outstanding of each of the registrant's classes of common
stock as of March 11, 1999. 40,812,334
Documents incorporated by reference
(1) Portions of registrant's 1998 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 20, 1999 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 1998 Annual
Report to Shareholders filed as Exhibit 13.6 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 approximately 300,000 residential, commercial, industrial and
public customers. PSW's service territory covers 481 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 for
water service, except for fire hydrant service. In addition, PSW provides water
service to approximately 6,600 customers through an operating and maintenance
contract with a municipal authority which is contiguous to its service
territory. Based on the 1990 census, PSW estimates that the total number of
persons currently served is approximately 1,000,000. Excluding the customers
that were added at the time of acquisitions in the last three years, customer
accounts have grown at an average annual rate of approximately 1.1% for the last
three years. Including acquisitions, the customer base increased at an annual
compound growth rate of 4.3% over the last three years.
Operating revenues during the twelve months ended December 31, 1998 were
derived approximately as follows:
65.4% from residential customers
21.7% from commercial customers
4.3% from industrial customers
1.4% from public customers
6.2% from fire protection services
1.0% from sales to other water utilities and
miscellaneous customers
-----
100.0%
=====
On March 10, 1999, the Company and Consumers Water Company ("Consumers")
completed a merger with and into a wholly-owned subsidiary of the Company. The
merger was effected pursuant to the June 27, 1998 merger agreement, which was
amended and restated by the parties effective as of August 5, 1998. The merger
was completed after the transaction received the approvals from the state
utility commissions in each state in which the companies operate. The
shareholders of each company approved the merger at special meetings held on
November 16, 1998. Pursuant to the merger agreement, the Company issued
13,014,015 shares of common stock in exchange for all of the outstanding stock
of Consumers. Consumers common shareholders received 1.432 shares of the
Company's Common Stock for each Consumers common share and Consumers preferred
shareholders received 5.649 shares of the Company's Common Stock for each
preferred share. The merger will be accounted for as a pooling-of-interests
under Accounting Principles Board Opinion No. 16. Consumers serves approximately
226,000 customers in service territories covering parts of Pennsylvania, Ohio,
Illinois, New Jersey and Maine. Because the merger was not completed until after
December 31, 1998, the financial information, operating data and discussions
contained in this report, unless indicated or captioned otherwise, relate to the
Company without consideration to the impact of the merger.
During 1998, PSW made the following acquisitions and obtained related
service territory rights: in January, the water utility assets of West Chester
Area Municipal Authority; in April, the water system assets of Brandywine
Hospital; in June, the Flying Hills Water Company; and in November, the water
system assets of the Greenhills Corporate Center. The systems acquired in 1998
incorporate 17 square miles of service area contiguous or near PSW's existing
territory. The total purchase price for the four water systems acquired in 1998
was $24,498,000 in cash and 42,000 shares of the Company's Common Stock. The
annual revenues from these systems approximate $4,800,000, and revenues included
in the consolidated financial statements during the period owned by PSW were
$4,627,000. During 1998, PSW entered into a long-term water
2
Item 1, Continued
sale agreement and an agreement with a local township to serve a one square mile
territory: in March, PSW entered into a 25-year water sale agreement with
Warwick Township Water and Sewer Authority for the sale of water to supplement
its water supply; and in April, PSW entered into an agreement with Bensalem
Township, Bucks County to provide water service to a new development in the
Township. Once fully developed over time, the annual revenues from these
agreements are anticipated to approximate $500,000.
Since December 1992, PSW has acquired 25 local water systems and two small
wastewater utilities. During 1997, PSW made the following acquisitions and
obtained related service territory rights: in January, the water utility assets
of Cherry Water Company; in September, the water utility assets of Perkiomen
Township Authority; and in September, both the water and wastewater utility
assets of the Peddler's View Utility Company. During 1996, PSW made the
following acquisitions and obtained related service territory rights: in
October, the water utility assets of Hatboro Borough Authority; in November,
Utility Group Services Corporation ("UGS") which owned three water utilities and
a wastewater utility; in December, the water utility assets of Bristol Borough
Water and Sewer Authority; and at various times during 1996 the water utility
assets of three smaller water systems. During various times in 1995, 1994, 1993,
and 1992 PSW acquired the water utility assets of ten water systems. Combined,
the 21 water systems and two wastewater systems acquired since December 1992 and
prior to 1998 added 136 square miles of service territory near or adjacent to
PSW's service territory and had revenues of $17,886,000 in 1998.
3
Item 1, Continued
Selected operating statistics. Set forth below is a table showing certain
selected operating statistics for PSW for the past three years.
1998 1997 1996
-----------------------------------------
C>
Revenues from water sales (000's omitted)
Residential $ 96,244 $ 87,783 $ 79,056
Commercial 32,029 27,807 26,504
Industrial 6,297 5,126 4,823
Public 2,108 1,496 1,373
Fire protection 9,096 8,323 8,140
Other 1,442 995 438
Tax Surcharge (credit) (101) - (1)
Distribution System Improvement Charge 229 1,104 -
-----------------------------------------
Total $147,344 $ 132,634 $ 120,333
=========================================
Water sales (million gallons)
Residential 19,941 19,142 17,228
Commercial 9,313 8,819 8,236
Industrial 2,471 2,302 1,768
Public 496 396 354
Fire protection - metered 69 73 84
Other 821 750 25
-----------------------------------------
Total 33,111 31,482 27,695
=========================================
System delivery by source (million gallons)
Surface (including Upper Merion
reservoir) 31,438 29,470 27,278
Wells 6,237 6,378 5,136
Purchased 2,025 2,023 2,055
-----------------------------------------
Total 39,700 37,871 34,469
=========================================
Number of metered customers (end of year)*
Residential 278,436 268,550 265,746
Commercial 15,032 13,512 13,422
Industrial 744 708 716
Public 919 823 797
Fire protection 4,710 3,911 3,449
Other 9 12 11
-----------------------------------------
Total 299,850 287,516 284,141
=========================================
Average consumption per
customer in gallons 112,745 110,143 103,206
=========================================
* Excludes customers served under operating and maintenance contracts.
4
Item 1, Continued
Water supplies and usage. PSW's principal supply of water is surface water
from the Schuylkill River, Delaware River, eight 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 holds the appropriate water
rights and regulatory approvals to use these sources. PSW has six impounding
reservoirs and has eight 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. PSW's dams
are in compliance with these requirements in all material respects.
PSW's surface supplies are supplemented by 61 wells. PSW also has
interconnections with: the Chester Water Authority, which provides for a maximum
supply of up to 6.75 million gallons per day ("mgd"); and the Bucks County Water
and Sewer Authority, which provides for a supply of up to 7.0 mgd. Agreements
regarding these 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 all of the sources described 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 119.3 mgd
Wells 23.7
Purchased supplies 8.5
------
Total 151.5 mgd
======
During periods of normal precipitation, the water available is more than
the minimum shown above. Under normal operating conditions, PSW can deliver a
maximum of 175.9 mgd to its distribution system for short periods of time. The
average daily sendout for 1998, 1997 and 1996 was 108.8, 103.8 and 94.2 mgd,
respectively.
The maximum demand ever placed upon PSW's facilities for one month occurred
during August 1998, when sendout averaged 121.7 mgd. The peak day of record
occurred during July 1997 when water use reached 142.5 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 extended periods of dry weather
increases consumption. 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 and
energy supplies have been sufficient to meet PSW's customer demand. In December
1996, the Governor of Pennsylvania signed into law the Electricity Generation
Customer Choice and Competition Act ("Electric Act") which provides for the
restructuring of the electric utility industry in Pennsylvania. The Electric Act
requires the unbundling of electric services into separate generation,
transmission and distribution services with open competition for generation. PSW
has negotiated an electric supply contract with a provider and believes that the
provider has the resources and supply adequate to meet PSW's demand.
5
Item 1, Continued
Adequacy of water supplies. The Delaware River Basin, which is the drainage
area of the Delaware River from New York State to Delaware, periodically
experiences water shortages, particularly 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 six 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 December 1998 and October 1997, the DRBC issued drought warnings for the
Delaware River Basin which includes PSW's service territory. The DRBC lifted the
drought warnings in February 1999 and January 1998, respectively. Under a
drought warning, the DRBC asks for voluntary restrictions on water use,
particularly non-essential uses of water. 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. The drought emergency was lifted by the end of 1995. Because
these actions were issued at times other than the summer months, when
nonessential and recreational use of water has traditionally declined, the
restrictions did not have a significant impact on PSW revenues. Throughout the
drought warnings and drought emergency described above, 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
preceding five 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 has
been subject to competition only with respect to potential customers who also
may have access to the service of another water supplier, wells, 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 supported by anticipated revenues and borne by the utility. Generally,
construction costs beyond those supported by anticipated revenues must be borne
by the applicant. The formula used to determine a utility's investment requires
that revenues from the bona fide service applicant offset the interest,
depreciation and incremental operating expense associated with the investment.
Under the rule, PSW is required to invest $4,000 per bona fide service applicant
in a main extension prior to requiring any customer contribution.
In 1996, the PUC approved a mechanism, the Distribution System
Improvement Charge ("DSIC"), which allows Pennsylvania water utilities to add a
surcharge to their water bills to offset the additional depreciation and capital
costs associated with certain non-revenue producing, non-expense reducing
capital expenditures related to replacing and rehabilitating distribution
systems. The DSIC mechanism is intended to eliminate many of the disincentives
faced by water utilities in rehabilitating their distribution systems. These
disincentives, often referred to as regulatory lag, are due to the rate making
process which, prior to the establishment of the DSIC mechanism, required water
utilities to absorb all of the depreciation and capital costs of these projects
between base rate increases without the benefit of additional revenues. The DSIC
may be adjusted quarterly based on additional qualified capital expenditures
made in the previous quarter, but may never exceed 5% of the base rates in
effect. The PUC limits use of the DSIC to periods when a company's return on
equity is less than a benchmark it establishes each quarter. The DSIC is reset
to zero when new base rates that reflect the costs of those additions become
effective.
6
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 current
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. All PSW's surface water supplies are
filtered.
On August 6, 1996, the President signed into law the reauthorization of the
SDWA. The new Act places a greater emphasis on the cost/benefit of regulating
additional substances by requiring definitive research on the impact of such
regulations. The reauthorized SDWA focuses regulations on contaminants known to
be of public health concern based on occurrence, health risks and cost benefit
considerations. The new Act eliminated the previous requirement of the 1986 SDWA
Amendments that had required the EPA to promulgate MCL's for many chemicals not
previously regulated and mandated further MCL's every three years. The new Act
also specifies that the EPA shall study radon, arsenic and sulfates and propose
respective rulemakings in 1999, 2000 and 2001 if these chemicals are deemed to
be a threat to public health. The reauthorized SDWA 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 again in
1997. The results of both studies 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, 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 MCL's. Future
monitoring will be required, but no major treatment modifications are
anticipated as a result of these regulations.
In May 1996, the EPA issued the first rule of a three-rule package
addressing Disinfection By-Products ("DBP") and monitoring of disease-causing
micro-organisms. DBP's are chemicals formed during the drinking water treatment
process. The first rule is an Information Collection Rule ("ICR") designed to
collect data to be used in developing further rules. As required, PSW began
sampling under the requirements of the ICR in July 1997 and completed the ICR
phase in December 1998. Studies by the EPA on the data collected may result in
new treatment standards and processes. In December 1998, the EPA issued
additional rules concerning DBP and PSW meets the requirements of these new
rules.
PSW is also subject to other environmental statutes administered by the EPA
and DEP. These include the Federal Clean Water Act ("FCWA") and the Resource
Conservation and Recovery Act ("RCRA"). Under the FCWA, the Company must obtain
National Pollutant Discharge Elimination System ("NPDES") permits for discharges
from its water treatment stations. PSW currently maintains six NPDES permits
relating to its water treatment plants, which are subject to renewal every five
years. PSW 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.
7
Item 1, Continued
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'
obtained the permits for its three residual waste disposal sites in accordance
with regulatory requirements. The terms of the permits are for a period of ten
years and the renewals are due in 2008.
PSW operates the Little Washington Wastewater Company ("LWW"), a wastewater
utility which serves approximately 500 customers in two service territories that
are located within the service territory of PSW. LWW is subject to regulation by
the EPA and DEP, and is subject to environmental statutes, including FCWA and
RCRA. LWW currently maintains permits for its wastewater treatment stations in
accordance with FCWA and is presently in compliance with all standards and
treatment requirements promulgated to date.
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 rates. However, under current law, such capital investments would have to
be financed prior to their inclusion in PSW's rate structure, and the resulting
rate increases would not necessarily be timely.
Year 2000
Overview
The Company is actively pursuing a Year 2000 Program (the "Program"). The
objective of the Program is to provide reasonable assurance that the Company's
critical systems and processes that impact the Company's ability to deliver
water to its customers will not experience significant interruptions that would
interfere with such water service or result in a material business impairment
that would have an adverse impact to the Company's operations, liquidity or
financial condition as a result of the Year 2000 issue. For purposes of the
Program, the Year 2000 issue is defined as whether information technology
accurately processes date and time data from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculations.
The Company's systems and processes being reviewed include: (i) internal systems
and processes, consisting of software, databases, information technology
hardware and imbedded microprocessors; and (ii) relationships with third
parties. The Program involves a systematic approach to the Year 2000 issue
consisting of the following steps: (i) inventorying the component elements of
the Company's systems and processes; (ii) assessing whether there are Year 2000
issues with such systems and processes; (iii) remediation of systems and
processes that are identified as having Year 2000 issues; (iv) testing the
remediation measures that are implemented; and (v) developing contingency plans.
In addition to the Company's Program, the PUC has instituted a formal proceeding
for the purpose of determining all matters concerning Year 2000 compliance of
all jurisdictional fixed utilities, which would include the Company's primary
subsidiary, PSW. The PUC is requiring that utilities affirmatively demonstrate
that their mission-critical systems will be Year 2000 compliant by March 31,
1999 or provide the PUC with detailed contingency plans for the continuation of
utility service throughout the transition from the twentieth to the twenty-first
century, including leap year. PSW has responded to the PUC's initial
questionnaire concerning Year 2000 compliance and intends to comply with the
PUC's requirements.
The Company's State of Readiness
Internal Systems and Processes - The Company is evaluating its systems and
processes based on a prioritization of the risks they pose to the overall
objectives of the Program. Therefore, different systems and processes are in
different phases of the overall Program. An inventory of all critical systems
and processes was completed in November 1998. An assessment of Year 2000 issues
for the Company's critical systems was completed in December 1998. As a result
of the assessment, it was determined that none of the internal systems and
processes directly related to the treatment and distribution of water to its
customers would be significantly affected by the Year 2000 issue. Some financial
and office systems may be affected and the remediation or replacement and
testing of these systems has started. It is anticipated that remediation or
replacement and testing of these systems will be completed by mid-1999.
Relationships with Third Parties - The Company's relationships with third
parties that may be affected by the Year 2000 issue may be classified into three
categories: customers; suppliers; and third party software vendors. Based on
1998 revenues, approximately 65% of the Company's revenues are from residential
customers, 21% from commercial customers (consisting primarily of apartments,
colleges,
8
Item 1, Continued
hospitals, small businesses and municipalities), and 6% from fire protection
services. It is not anticipated that water use by customers in these categories
will be significantly affected by the Year 2000 issue. The Company's industrial
customers represent approximately 4% of its total 1998 revenues and the Company
intends to contact its largest industrial customers to determine whether they
anticipate any adverse effect on their demand for water as a result of the Year
2000 issue. No single customer accounted for more than one percent of the
Company's 1998 revenues. The Company has contacted its key suppliers to
determine their Year 2000 compliance status and the responses received to date
indicate that such suppliers are or intend to be Year 2000 compliant. Because of
the substantial electric power requirements of the Company's water treatment and
distribution systems, electric power supply may be the most critical supplier
relationship. To date, the Company's electric supplier, which is also subject to
the PUC's review, has indicated that it expects to be Year 2000 compliant by
October 31, 1999. Third party vendors of critical software systems have been
contacted regarding the compliance status of their software and either the
vendors have represented that their software packages are compliant or the
software is being remedied as part of the Company's Year 2000 Program.
The Costs to Address the Company's Year 2000 Issues
The Company estimates its cost to date for its Year 2000 Program to be
approximately $3,200,000 which includes the costs to develop a new customer
billing system that the Company is implementing to provide added capacity and
capabilities. The Company presently estimates that it will spend an additional
amount of approximately $1,500,000 to bring all of its critical systems into
compliance.
The Risks of the Company's Year 2000 Issues
A material Year 2000 noncompliance could result in an interruption in, or
failure of, certain normal business activities or operations. Such noncompliance
could materially and adversely affect the Company's water service and results of
operations, liquidity and financial condition. Because of the uncertainty
inherent in the Year 2000 issue, due primarily from the uncertainty of the Year
2000 readiness of third party suppliers, the Company is unable to determine at
this time whether the consequences of Year 2000 noncompliances will have a
material impact on the Company. The Company's Year 2000 Program is expected to
significantly reduce the Company's level of uncertainty about the Year 2000
issue and, in particular, about the Year 2000 compliance and readiness of its
key vendors and suppliers. The Company believes that, with the completion of its
Program, the possibility of significant interruptions of normal operations
should be reduced.
The Company's Contingency Plans
The Company is evaluating contingency plans in the event that any critical
systems or processes or vender relationships cannot be verified as Year 2000
compliant by March 1999. Contingency plans may also be developed for certain
other critical systems, notwithstanding a determination of their Year 2000
compliance, if such systems would have a significant effect on the Company's
ability to deliver water to its customers. The Company intends to complete its
contingency planning process for its mission critical systems by March 1999.
Forward-looking Statements
The statements in the Company's Year 2000 disclosure contain
forward-looking statements and should be read in conjunction with the Company's
disclosure under the "Forward-looking Statements" section "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Employee Relations
As of December 31, 1998, the Registrant employed a total of 542 full-time
persons. Hourly employees of PSW are represented by the International
Brotherhood of Firemen and Oilers, Local No. 473. The contract with the union
expires on December 1, 2001. Management considers its employee relations to be
good.
9
Item 2. Properties.
The Registrant believes that the facilities used in the operation of its
business are in good condition in terms of suitability, adequacy and
utilization.
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 7 Office & warehouse 179,413
Pennsylvania 19 Pumping stations and
treatment buildings 235,200
Pennsylvania 23 Well stations Approx. 600 ea.
Pennsylvania 38 Well stations Approx. 150 ea.
Pennsylvania 52 Booster stations Approx. 1,100 ea.
In addition, PSW also owns 77 storage facilities for treated water
throughout its service territory with a combined capacity of 167.54 million
gallons and six surface water impounding reservoirs. The water utility also owns
approximately 3,523 miles of transmission and distribution mains, has 299,850
active metered services and 14,388 fire hydrants.
PSW's properties referred to herein, with certain minor exceptions which do
not materially interfere with their use, are owned by PSW 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 various legal proceedings in which the Company is involved.
Although the results of legal proceedings cannot be predicted with certainty,
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.
10
Item 4. Submission of Matters to a Vote of Security Holders
Information with respect to the executive officers of the Company is
contained in Item 10 hereof and is hereby incorporated by reference herein.
Results of Vote of Security Holders
The Special Meeting of Shareholders of PSC was held on November 16, 1998 at
the headquarters of the Company, 762 W. Lancaster Avenue, Bryn Mawr,
Pennsylvania, pursuant to the Notice sent on or about October 2, 1998 to all
shareholders of record at the close of business on September 18, 1998. At that
meeting, the shareholders were asked to act upon the following proposals:
1. Approval of the Amended and Restated Agreement and Plan of Merger, dated
as of August 5, 1998 (the "Merger Agreement"), by and among PSC, Consumers
Acquisition Company ("Acquisition") and Consumers Water Company ("Consumers"),
providing for the merger of Consumers with and into Acquisition, a wholly-owned
subsidiary of PSC.
For Against Abstentions
---------- ------- -----------
20,029,416 188,612 177,946
2. Approval of an amendment to PSC's Articles of Incorporation increasing
the authorized shares of PSC common stock, par value $.50 per share from
40,000,000 to 100,000,000.
For Against Abstentions
---------- ------- -----------
18,675,085 1,511,642 209,247
3. Approval of an amendment to PSC's 1994 Equity Compensation Plan (the
"Equity Compensation Plan") to increase from 1,900,000 to 2,900,000, the
aggregate authorized shares of the PSC Common Stock that may be issued or
transferred under the Equity Compensation Plan and to adopt certain other
amendments to the terms of the Equity Compensation Plan necessary for the
issuance of options to holders of options to purchase Consumers Common Stock
pursuant to the Merger Agreement.
For Against Abstentions
---------- ------- -----------
18,620,728 1,357,866 417,380
11
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 11, 1999, there were approximately
20,642 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:
Total
First Second Third Fourth Year
-------------------------------------------------------------------
1998
- --------------------------------------------------------------------------------------------------------------------
Operating revenues $34,276 $37,341 $41,656 $37,704 $ 150,977
Operations and maintenance 13,668 14,020 14,714 15,772 58,174
Net income available to common
stock 5,706 7,435 9,022 6,461 28,624
Basic net income per common share 0.21 0.27 0.33 0.23 1.04
Diluted net income per common share 0.21 0.27 0.32 0.23 1.03
Dividend paid per common share 0.1625 0.1625 0.1700 0.1700 0.6650
Price range of common stock
- high 25.75 22.56 28.19 30.06 30.06
- low 19.56 18.88 20.50 23.00 18.88
1997
- --------------------------------------------------------------------------------------------------------------------
Operating revenues $31,021 $33,315 $36,754 $35,081 $ 136,171
Operations and maintenance 13,068 13,295 14,466 15,070 55,899
Net income available to common
stock 4,460 5,778 7,323 5,432 22,993
Basic net income per common share 0.17 0.23 0.28 0.21 0.89
Diluted net income per common share 0.17 0.22 0.28 0.21 0.88
Dividend paid per common share 0.152 0.152 0.159 0.159 0.622
Price range of common stock
- high 15.47 15.10 18.00 22.18 22.18
- low 11.72 11.44 14.07 15.10 11.44
High and low prices of the Company's common stock are as reported on the New
York Stock Exchange Composite Tape.
12
Item 5, Continued
Following is a recent history of income from continuing operations and common
dividends of the Company:
- -----------------------------------------------------------------------------
Basic
income per
share from Dividend
Cash dividend continuing payout
per common share operations ratio
- -----------------------------------------------------------------------------
1994 $ 0.55 $ 0.68 81%
1995 0.57 0.75 76%
1996 0.59 0.79 75%
1997 0.62 0.89 70%
1998 0.67 1.04 64%
- -----------------------------------------------------------------------------
Dividends have averaged approximately 72% of income from continuing
operations during this period. In 1998, the dividend rate increased by 4.6%. As
a result, beginning with the dividend payable in September 1998, the annual
dividend rate increased to $.68 per share.
Item 6. Selected Financial Data
The information appearing in the section captioned "Summary of Selected
Financial Data" from the portions of the Company's 1998 Annual Report to
Shareholders filed as Exhibit 13.6 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 1998 Annual Report to
Shareholders filed as Exhibit 13.6 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"
"Consolidated Statements of Capitalization" and "Notes to Consolidated Financial
Statements" from the portions of the Company's 1998 Annual Report to
Shareholders filed as Exhibit 13.6 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 1998 Annual
Report to Shareholders filed as Exhibit 13.6 to this Form 10-K Report is
incorporated by reference herein.
Item 9. Disagreements on Accounting and Financial Disclosure
None.
13
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 20, 1999,
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
herein by reference.
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 53 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 January 1999) (2)
Morrison Coulter 62 President, Philadelphia Suburban Water Company
(January 1999 to present); Senior Vice
President - Production, Philadelphia Suburban
Water Company (February 1996 to January 1999);
Vice President - Production, Philadelphia
Suburban Water Company (April 1989 to February
1996) (3)
Richard R. Riegler 52 Senior Vice President - Engineering and
Environmental Affairs (January 1999 to
present); Senior Vice President - Operations,
Philadelphia Suburban Water Company (April
1989 to January 1999) (4)
Roy H. Stahl 46 Senior Vice President and General Counsel
(April 1991 to present) (5)
Michael P. Graham 50 Senior Vice President - Finance and Treasurer
(March 1993 to present) (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.
(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. 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.
(4) 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.
14
Item 10, Continued
(5) 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.
(6) 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.
Item 11. Executive Compensation
The information appearing in the sections captioned "Executive
Compensation" of the Proxy Statement relating to the May 20, 1999, 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 herein
by reference.
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 20, 1999, 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 herein by
reference.
Item 13. Certain Relationships and Related Transactions
The information appearing in the sections captioned "Certain Relationships
and Related Transactions" of the Proxy Statement relating to the May 20 1999,
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
herein by reference.
15
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, 1998 and 1997
Consolidated Statements of Income - 1998, 1997 and 1996
Consolidated Statements of Cash Flow - 1998, 1997, and 1996
Consolidated Statements of Capitalization - December 31, 1998 and 1997
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.
Current Report on Form 8-K filed on November 18, 1998, responding to Item 5,
Other Events. (Related to the November 16, 1998 Special Meeting of the Company's
Shareholders pursuant to the Notice sent on or about October 2, 1998 to all
shareholders of record at the close of business on September 18, 1998 concerning
the approval of three proposals, including the approval of the merger with
Consumers).
Current Report on Form 8-K filed on March 12, 1999, responding to Item 2,
Acquisition or Disposition of Assets; Item 5, Other Events; and Item 7,
Financial Statements and Exhibits. (Related to the March 10, 1999 consummation
of the previously announced agreement to merge Consumers Water Company with and
into a wholly-owned subsidiary of PSC).
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 parentheses. The page numbers listed refer to
page numbers where such exhibits are located using the sequential numbering
system specified by Rules 0-3 and 403.
16
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 (17) (Exhibit 3.2) -
3.3 Amendment to Amended and Restated Articles of -
Incorporation, as amended, to increase the number
of authorized shares to 41,770,819 and to
provide that 40,000,000 of such shares be
shares of Common Stock (17) (Exhibit 3.3)
3.4 Amendment to Amended and Restated Articles of -
Incorporation, as amended, designating the
Series B Preferred Stock (17) (Exhibit 3.4)
3.5 Amendment to Section 3.03 and addition of Section 3.17 -
to Bylaws (19) (Exhibits 1 and 2)
3.6 Amendment to Amended and Restated Articles of -
Incorporation, designating the terms of the Series A
Junior Participating Preferred Shares (21) (Exhibit 3.6)
3.7 Amendment to Amended and Restated Articles of Incorporation, -
to increase the number of authorized shares to 101,770,819
and to provide that 100,000,000 of such shares be shares of
Common Stock (23) (Annex E)
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)
17
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
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)
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 Union National Bank, N.A.
and CoreStates 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)
4.19 First Amendment to Revolving Credit Agreement dated as of May -
22, 1995, between Philadelphia Suburban Water Company and
Mellon Bank, N.A., PNC Bank National Association, First Fidelity
National Bank, N.A., Meridian Bank, N.A. dated as of March 17,
1994 (17) (Exhibit 4.19)
4.20 Second Amendment to Revolving Credit Agreement dated as of July -
21, 1995, between Philadelphia Suburban Water Company and
Mellon Bank, N.A., PNC Bank National Association, First Fidelity
National Bank, N.A., Meridian Bank, N.A. dated as of March 17,
1994 (17) (Exhibit 4.20)
4.21 Third Amendment to Revolving Credit Agreement dated as of December -
20, 1996, between Philadelphia Suburban Water Company and
Mellon Bank, N.A., PNC Bank National Association, First Union
National Bank, N.A., CoreStates Bank, N.A. dated as of March 17,
1994 (17) (Exhibit 4.21)
4.22 Thirty-First Supplemental Indenture dated as of July 1, -
1997 (18) (Exhibit 4.22)
4.23 Fourth Amendment to Revolving Credit Agreement dated as of January 15, -
1998, between Philadelphia Suburban Water Company and
Mellon Bank, N.A., PNC Bank National Association, First Union
National Bank, N.A., and CoreStates Bank, N.A. dated as of
March 17,1994 (21) (Exhibit 4.23)
18
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
4.24 Rights Agreement, dated as of March 1, 1998 between Philadelphia -
Suburban Corporation and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (20) (Exhibit 1)
4.25 Rights Agreement, dated as of March 1, 1998 between Philadelphia 25
Suburban Corporation and BankBoston, N.A., as Rights Agent
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 -
1994-1* (16) (Exhibit 10.10)
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)
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* (16) -
(Exhibit 13.4)
10.16 Amendment 1994-2 to 1994 Equity Compensation -
Plan, as amended* (17) (Exhibit 10.16)
10.17 1997 Annual Cash Incentive Compensation Plan* (17) (Exhibit 10.17) -
10.18 Agreement among Philadelphia Suburban Corporation, -
Philadelphia Suburban Water Company and Nicholas
DeBenedictis, dated as of January 1, 1997* (17) (Exhibit 10.18)
19
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
10.19 Agreement among Philadelphia Suburban Corporation, -
Philadelphia Suburban Water Company and Roy H.
Stahl, dated as of January 1, 1997* (17) (Exhibit 10.19)
10.20 Agreement among Philadelphia Suburban Corporation, -
Philadelphia Suburban Water Company and Michael P.
Graham, dated as of January 1, 1997* (17) (Exhibit 10.20)
10.21 Agreement among Philadelphia Suburban Corporation, -
Philadelphia Suburban Water Company and Richard R.
Riegler, dated as of January 1, 1997* (17) (Exhibit 10.21)
10.22 Agreement among Philadelphia Suburban Corporation, -
Philadelphia Suburban Water Company and Morrison
Coulter, dated as of January 1, 1997* (17) (Exhibit 10.22)
10.23 Philadelphia Suburban Corporation Amended and
Restated Executive Deferral Plan* (17) (Exhibit 10.23) -
10.24 Philadelphia Suburban Corporation Deferred -
Compensation Plan Master Trust Agreement
with PNC Bank, National Association, dated
as of December 31, 1996* (17) (Exhibit 10.24)
10.25 First Amendment to Supplemental Executive Retirement -
Plan* (17) (Exhibit 10.25)
10.26 Placement Agency Agreement between Philadelphia -
Suburban Water Company and A.G. Edwards and Sons,
Inc., Janney Montgomery Scott Inc., HSBC Securities,
Inc., and PaineWebber Incorporated (18) (Exhibit 10.26)
10.27 1998 Annual Cash Incentive Compensation Plan* (21) -
(Exhibit 10.27)
10.28 Philadelphia Suburban Corporation Director Deferral Plan* 83
10.29 Amendment No. 1 dated as of February 1, 1999 to Agreement 90
among Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Nicholas DeBenedictis,
dated as of January 1, 1997*
10.30 Amendment No. 1 dated as of February 1, 1999 to Agreement 91
among Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Roy H. Stahl, dated as of
January 1, 1997*
10.31 Amendment No. 1 dated as of February 1, 1999 to Agreement 92
among Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Michael P. Graham,
dated as of January 1, 1997*
10.32 Amendment No. 1 dated as of February 1, 1999 to Agreement 93
among Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Richard R. Riegler, dated
as of January 1, 1997*
10.33 Amendment No. 1 dated as of February 1, 1999 to Agreement 94
among Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Morrison Coulter, dated
as of January 1, 1997*
20
EXHIBIT INDEX, Continued
Exhibit No. Page No.
- ----------- --------
10.34 1999 Annual Cash Incentive Compensation Plan* 95
10.35 The Philadelphia Suburban Corporation 1994 Equity -
Compensation Plan (as Amended and Restated
Effective March 3, 1998)* (22) (Exhibit A)
10.36 Amendment 1998-1 to The Philadelphia Suburban -
Corporation 1994 Equity Compensation Plan*
(23) (Annex F)
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 -
for the year ended December 31, 1995 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1995 (16) (Exhibit 13.3)
13.4 Selected portions of Annual Report to Shareholders -
for the year ended December 31, 1996 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1996 (17) (Exhibit 13.4)
13.5 Selected portions of Annual Report to Shareholders -
for the year ended December 31, 1997 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1997 (21) (Exhibit 13.5)
13.6 Selected portions of Annual Report to Shareholders 100
for the year ended December 31, 1998 incorporated
by reference in Annual Report on Form 10-K for the
year ended December 31, 1998
21. Subsidiaries of Philadelphia Suburban Corporation 143
23. Consent of Independent Auditors 144
24. Power of Attorney (set forth as a part of this report) 23
27. Financial Data Schedule 145
21
- 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.
(16) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1995.
(17) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1996.
(18) Filed as an Exhibit to Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997.
(19) Filed as an Exhibit to Form 8-K filed August 7, 1997.
(20) Filed as Exhibit 1 to the Registration Statement on Form 8-A filed on
March 17, 1998.
(21) Filed as an Exhibit to Annual Report on Form 10-K for the year ended
December 31, 1997.
(22) Filed as Exhibit A to definitive Proxy Statement dated April 7, 1998.
(23) Filed as an Annex to Registration Statement on Form S-4 filed on September
11, 1998.
* Indicates management contract or compensatory plan or arrangement.
22
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 29, 1999
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.
23
/s/ Mary C. Carroll /s/ Nicholas DeBenedictis
- --------------------------------------- -------------------------------------
Mary C. Carroll Nicholas DeBenedictis
Director President and Chairman
(principal executive officer)
and Director
/s/ G. Fred DiBona, Jr. /s/ Richard H. Glanton
- --------------------------------------- -------------------------------------
G. Fred DiBona, Jr. Richard H. Glanton
Director Director
/s/ Michael P. Graham /s/ Alan Hirsig
- --------------------------------------- -------------------------------------
Michael P. Graham /s/ Alan Hirsig
Senior Vice President-Finance and Director
Treasurer (principal financial and
accounting officer)
/s/ John F. McCaughan /s/ Richard L. Smoot
- --------------------------------------- -------------------------------------
John F. McCaughan Richard L. Smoot
Director Director
/s/ Harvey J. Wilson
- ---------------------------------------
Harvey J. Wilson
Director
24