Filed Pursuant to Rule 424(b)(3)
Registration No. 333-93243
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 12, 2000
2,218,946 SHARES OF COMMON STOCK
500,000 SHARES OF PREFERRED STOCK
[AQUA America logo omitted]
AQUA AMERICA, INC.
(FORMERLY PHILADELPHIA SUBURBAN CORPORATION)
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
(610) 527-8000
o We will offer and sell from time to time, in one or more offerings,
shares of our common stock or our preferred stock to acquire other
businesses, assets or securities. We expect that the terms of the
acquisitions involving the issuances of securities covered by this
prospectus supplement and the accompanying prospectus will be
determined by direct negotiations with the owners or controlling
persons of the businesses, assets or securities that we seek to
acquire.
o The shares of our common stock and the shares of our preferred stock
that we issue at the time we make these acquisitions will be valued
at prices reasonably related to the market price of our common stock
at either the time we enter into the agreement for the acquisition
or the time we complete the acquisitions.
o We do not expect that underwriting discounts or commissions will be
paid in connection with the issuances of the shares under this
prospectus supplement and the accompanying prospectus. However,
finders' fees may be paid in connection with certain acquisitions.
Any person receiving these fees may be deemed an underwriter within
the meaning of the Securities Act of 1933.
o Our common stock is listed on the New York Stock Exchange and the
Philadelphia Stock Exchange under the symbol "WTR." The last
reported sale price of our common stock on the New York Stock
Exchange on May 27, 2005 was $27.49 per share. As of May 27, 2005,
we had 95,941,856 shares of our common stock outstanding. We do not
intend to list the preferred stock on any exchange or automated
quotation system.
SEE "RISK FACTORS" BEGINNING ON PAGE S-1 OF THIS PROSPECTUS SUPPLEMENT
TO READ ABOUT THE FACTORS YOU SHOULD CONSIDER BEFORE MAKING AN INVESTMENT
DECISION WITH RESPECT TO OUR COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus supplement is May 31, 2005.
AQUA AMERICA, INC.
Aqua America, Inc. (formerly Philadelphia Suburban Corporation) is the
holding company for regulated utilities providing water or wastewater services
to more than 2.5 million people in 13 states, principally in Pennsylvania, Ohio,
North Carolina, Illinois, Texas, New Jersey, Florida and Indiana, as of May 31,
2005. Our largest operating subsidiary provides water or wastewater services to
approximately 1.3 million people in the suburban areas north and west of the
City of Philadelphia and in 21 other counties in Pennsylvania, as of May 31,
2005. In addition, we provide water and wastewater services through operating
and maintenance contracts with municipal authorities and other parties close to
our operating companies' service territories. We are the largest U.S.-based
publicly-traded water utility based on number of people served.
Other information
On January 16, 2004, Philadelphia Suburban Corporation changed its
corporate name to Aqua America, Inc. In addition, we changed our ticker symbol
from "PSC" to "WTR" on the New York Stock Exchange and the Philadelphia Stock
Exchange on January 20, 2004.
RISK FACTORS
OUR BUSINESS REQUIRES SIGNIFICANT CAPITAL EXPENDITURES AND THE RATES WE CHARGE
OUR CUSTOMERS ARE SUBJECT TO REGULATION. IF WE ARE UNABLE TO OBTAIN GOVERNMENTAL
APPROVAL OF OUR REQUESTS FOR RATE INCREASES, OR IF APPROVED RATE INCREASES ARE
UNTIMELY OR INADEQUATE TO COVER OUR INVESTMENTS, OUR PROFITABILITY MAY SUFFER.
The water utility business is capital intensive. On an annual basis, we
spend significant sums for additions to or replacement of property, plant and
equipment. Our ability to maintain and meet our financial objectives is
dependent upon the rates we charge our customers. These rates are subject to
approval by the public utility commissions or similar regulatory bodies in the
states in which we operate. We file rate increase requests, from time to time,
to recover our investments in utility plant and expenses. Once a rate increase
petition is filed with a public utility commission, the ensuing administrative
and hearing process may be lengthy and costly. The timing of our rate increase
requests are therefore partially dependent upon the estimated cost of the
administrative process in relation to the investments and expenses that we hope
to recover through the rate increase to the extent approved. We can provide no
assurances that any future rate increase request will be approved by the
appropriate state public utility commission; and, if approved, we cannot
guarantee that these rate increases will be granted in a timely or sufficient
manner to cover the investments and expenses for which we initially sought the
rate increase.
OUR OPERATING COSTS COULD BE SIGNIFICANTLY INCREASED IN ORDER TO COMPLY WITH NEW
OR STRICTER REGULATORY STANDARDS IMPOSED BY FEDERAL AND STATE ENVIRONMENTAL
AGENCIES.
Our water and wastewater services are governed by various federal and
state environmental protection and health and safety laws and regulations,
including the federal Safe Drinking Water Act, the Clean Water Act and similar
state laws, and federal and state regulations issued under these laws by the
United States Environmental Protection Agency and state environmental regulatory
agencies. These laws and regulations establish, among other things, criteria and
standards for drinking water and for discharges into the waters of the United
States and states. Pursuant to these laws, we are required to obtain various
environmental permits from environmental regulatory agencies for our operations.
We cannot assure you that we have been or will be at all times in total
compliance with these laws, regulations and permits. If we violate or fail to
comply with these laws, regulations or permits, we could be fined or otherwise
sanctioned by regulators. Environmental laws and regulations are complex and
change frequently. These laws, and the enforcement thereof, have tended to
become more stringent over time. While we have budgeted for future capital and
operating expenditures to maintain compliance with these laws and our permits,
it is possible that new or stricter standards could be imposed that will raise
our operating costs. Although these costs may be recovered in the form of higher
rates, there can be no assurance that the various state public utility
commissions or similar regulatory bodies that govern our business would approve
rate increases to enable us to recover such costs. In summary, we cannot assure
you that our costs of complying with, or discharging liability under, current
and future environmental and health and safety laws will not adversely affect
our business, results of operations or financial condition.
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OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS, WHICH COULD AFFECT DEMAND FOR
OUR WATER SERVICE AND OUR REVENUES.
Demand for our water during the warmer months is generally greater than
during cooler months due primarily to additional requirements for water in
connection with irrigation systems, swimming pools, cooling systems and other
outside water use. Throughout the year, and particularly during typically warmer
months, demand will vary with temperature and rainfall levels. In the event that
temperatures during the typically warmer months are cooler than normal, or if
there is more rainfall than normal, the demand for our water may decrease and
adversely affect our revenues.
DROUGHT CONDITIONS MAY IMPACT OUR ABILITY TO SERVE OUR CURRENT AND FUTURE
CUSTOMERS, AND MAY IMPACT OUR CUSTOMERS' USE OF OUR WATER, WHICH MAY ADVERSELY
AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We depend on an adequate water supply to meet the present and future
demands of our customers. Drought conditions could interfere with our sources of
water supply and could adversely affect our ability to supply water in
sufficient quantities to our existing and future customers. An interruption in
our water supply could have a material adverse effect on our financial condition
and results of operations. Moreover, governmental restrictions on water usage
during drought conditions may result in a decreased demand for our water, even
if our water reserves are sufficient to serve our customers during these drought
conditions, which may adversely affect our revenues and earnings.
AN IMPORTANT ELEMENT OF OUR GROWTH STRATEGY IS THE ACQUISITION OF WATER AND
WASTEWATER SYSTEMS. ANY FUTURE ACQUISITIONS WE DECIDE TO UNDERTAKE MAY INVOLVE
RISKS.
An important element of our growth strategy is the acquisition and
integration of water and wastewater systems in order to broaden our current, and
move into new, service areas. We will not be able to acquire other businesses if
we cannot identify suitable acquisition opportunities or reach mutually
agreeable terms with acquisition candidates. It is our intent, when practical,
to integrate any businesses we acquire with our existing operations. The
negotiation of potential acquisitions as well as the integration of acquired
businesses could require us to incur significant costs and cause diversion of
our management's time and resources. Future acquisitions by us could result in:
o dilutive issuances of our equity securities;
o incurrence of debt and contingent liabilities;
o failure to have effective internal control over financial
reporting;
o fluctuations in quarterly results; and
o other acquisition-related expenses.
Some or all of these items could have a material adverse effect on our
business and our ability to finance our business and comply with regulatory
requirements. The businesses we acquire in the future may not achieve sales and
profitability that would justify our investment and any difficulties we
encounter in the integration process, including in the integration of controls
necessary for internal control and financial reporting, could interfere with our
operations, reduce our operating margins and adversely affect our internal
controls. In addition, as consolidation becomes more prevalent in the water and
wastewater industries, the prices for suitable acquisition candidates may
increase to unacceptable levels and limit our ability to grow through
acquisitions.
CONTAMINATION TO OUR WATER SUPPLY MAY RESULT IN DISRUPTION IN OUR SERVICES AND
LITIGATION WHICH COULD ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION.
Our water supplies are subject to contamination, including
contamination from the development of naturally-occurring compounds, chemicals
in groundwater systems, pollution resulting from man-made sources, such as MtBE,
and possible terrorist attacks. In the event that our water supply is
contaminated, we may have to interrupt the use of that water supply until we are
able to substitute the flow of water from an uncontaminated water source. In
addition, we may incur significant costs in order to treat the contaminated
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source through expansion of our current treatment facilities, or development of
new treatment methods. If we are unable to substitute water supply from an
uncontaminated water source, or to adequately treat the contaminated water
source in a cost-effective manner, there may be an adverse effect on our
revenues, operating results and financial condition. The costs we incur to
decontaminate a water source or an underground water system could be significant
and could adversely affect our business, operating results and financial
condition and may not be recoverable in rates. We could also be held liable for
consequences arising out of human exposure to hazardous substances in our water
supplies or other environmental damage. For example, private plaintiffs have the
right to bring personal injury or other toxic tort claims arising from the
presence of hazardous substances in our drinking water supplies. Our insurance
policies may not be sufficient to cover the costs of these claims. In addition
to the potential pollution of our water supply as described above, in the wake
of the September 11, 2001 terrorist attacks and the ensuing threats to the
nation's health and security, we have taken steps to increase security measures
at our facilities and heighten employee awareness of threats to our water
supply. We have also tightened our security measures regarding the delivery and
handling of certain chemicals used in our business. We have and will continue to
bear increased costs for security precautions to protect our facilities,
operations and supplies. These costs may be significant. We are currently not
aware of any specific threats to our facilities, operations or supplies;
however, it is possible that we would not be in a position to control the
outcome of terrorist events should they occur.
WE DEPEND SIGNIFICANTLY ON THE SERVICES OF MEMBERS OF OUR MANAGEMENT TEAM, AND
THE DEPARTURE OF ANY OF THOSE PERSONS COULD CAUSE OUR OPERATING RESULTS TO
SUFFER.
Our success depends significantly on the continued individual and
collective contributions of our management team. The loss of the services of any
member of our management team or the inability to hire and retain experienced
management personnel could harm our operating results.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference room at 450 Fifth Avenue, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. You may also obtain our SEC filings from the SEC's web
site at www.sec.gov or by visiting our web site at www.aquaamerica.com.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus supplement and the accompanying
prospectus and later information filed with the SEC will update and supersede
this information. We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until we issue all of the
securities covered by this prospectus supplement and the accompanying
prospectus.
o Our Annual Report on Form 10-K for the year ended December 31, 2004.
o Our Quarterly Report on Form 10-Q for the period ending March 31,
2005.
o Our Current Reports on Form 8-K filed on January 21, 2005, March 7,
2005 and May 25, 2005.
o The description of our common stock set forth in our Registration
Statement on Form 8-A, including any amendments or reports filed for
the purpose of updating such description.
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You may request a copy of any documents that we incorporate by
reference at no cost by telephoning 1-610-527-8000 or writing us at the
following address:
Aqua America, Inc.
Investor Relations
762 W. Lancaster Avenue
Bryn Mawr, PA 19010
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone else to provide you with different information. You should
not assume that the information in this prospectus supplement or the
accompanying prospectus or incorporated by reference herein or therein is
accurate as of any date other than the date of those documents. Our business,
financial condition, results of operations and prospectus may have changed since
those dates.
EXPERTS
The financial statements and management's assessment of the effectiveness of
internal control over financial reporting (which is included in Management's
Report on Internal Control over Financial Reporting) incorporated in this
prospectus supplement by reference to the Annual Report on Form 10-K for the
year ended December 31, 2004 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, an independent registered public accounting firm,
given on the authority of said firm as experts in auditing and accounting.
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