As filed with the Securities and Exchange Commission on December 21, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933
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Philadelphia Suburban Corporation
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(Exact name of Registrant as specified in its charter)
Pennsylvania 4941 23-1702594
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(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification No.)
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
(610) 527-8000
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(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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Roy H. Stahl
Philadelphia Suburban Corporation
Senior Vice President and General Counsel
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
(610) 527-8000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
Linda L. Griggs, Esq.
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036
202/467-7000
Approximate date of commencement of proposed sale to the public: From time
to time after the effectiveness of the Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. /_/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. /_/
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /_/
CALCULATION OF REGISTRATION FEE
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Proposed maximum Proposed maximum
Title of each class of Amount to be offering price aggregate offering Amount of
securities to be registered registered (1) per unit price registration fee
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Common Stock, par value $0.50 per
per share........................ 2,000,000 $20 7/8 (2) $41,750,000(2) $11,022
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Preferred Stock, par value $1.00
per share(3)..................... 500,000 $100(4) $50,000,000(4) $13,200
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(1) This Registration Statement also covers any additional shares of common
stock which become issuable in connection with the shares registered for
sale hereby as a result of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of the
Registrant's outstanding shares of common stock.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee, based upon the average of the reported high and low sales
prices of shares of common stock on December 20, 1999.
(3) Includes such indeterminable number of shares of common stock that may be
issued from time to time upon conversion of the preferred stock.
(4) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(f)(2).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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PROSPECTUS
2,000,000 Shares of Common Stock
500,000 Shares of Preferred Stock
Philadelphia Suburban Corporation
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
(610) 527-8000
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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 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. 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 trades on the New York Stock Exchange under the symbol
"PSC." On December 20, 1999, the last reported sale price of our common
stock was $20-11/16 per share. As of December 20, 1999, we had 41,022,806
shares of our common stock outstanding. We do not intend to list the
preferred stock on any exchange or automated quotation system.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is
TABLE OF CONTENTS
Page
----
About This Prospectus................................................... 3
The Company............................................................. 3
Recent Developments..................................................... 6
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends...................................... 7
Selected Historical Financial Data...................................... 7
Description of the Securities........................................... 9
Shares Eligible for Future Sale......................................... 11
Where You Can Find More Information..................................... 12
Forward-Looking Statements.............................................. 12
Legal Matters........................................................... 13
Experts................................................................. 13
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, the "SEC," utilizing a "shelf" registration
process. Under this shelf process, we may offer and sell the securities
described in this prospectus as amended or supplemented in one or more offerings
to acquire other businesses, assets or securities. We provide information to you
about the securities in this prospectus and, when preferred stock is issued in
an acquisition, in a pricing supplement that contains the specific terms of that
series of preferred stock.
You should read both this prospectus and any pricing supplement together with
any additional information described under the heading "Where You Can Find More
Information" to learn about Philadelphia Suburban Corporation.
THE COMPANY
Philadelphia Suburban Corporation (referred to as "we" or "us") is the holding
company for regulated utilities providing water or wastewater services to
approximately 1.8 million people in Pennsylvania, Ohio, Illinois, New Jersey and
Maine. Our two primary subsidiaries are Philadelphia Suburban Water Company, a
regulated public utility that provides water or wastewater services to about 1
million residents in the suburban areas surrounding the City of Philadelphia,
and Consumers Water Company, a holding company for several regulated public
utility companies that provide water or wastewater service to about 800,000
residents in various communities in Pennsylvania, Ohio, Illinois, New Jersey and
Maine. We are among the largest investor-owned water utilities in the United
States based on the number of customers.
Philadelphia Suburban Water Company provides water service in a 482 square mile
service territory that is largely contiguous and lies in the suburban area west
and north of the City of Philadelphia. In addition, Philadelphia Suburban Water
Company provides water service to approximately 20,000 people through an
operating and maintenance contract with a municipal authority that is contiguous
to its service territory.
Consumers Water Company owns 100% of the voting stock of four water companies
and at least 96% of the voting stock of three water companies operating in
Pennsylvania, Ohio, Illinois, New Jersey and Maine. Consumers Water Company's
subsidiaries operate 27 divisions in these five states, providing water service
to approximately 800,000 people.
Subsidiaries of Philadelphia Suburban Water Company and Consumers Water Company
provide primarily domestic wastewater collection, treatment and disposal
services to approximately 28,000 people in Pennsylvania, Illinois and New
Jersey.
Our customer base is primarily residential, representing approximately 65% of
our total water sales. Substantially all of our customers are metered, which
allows us to measure our customers' water consumption. Water consumption per
customer is affected by local weather conditions during the year, especially
during the late spring and early summer. In general, during these seasons, an
extended period of dry weather increases consumption, while above average
rainfall decreases water consumption. Also, an increase in the average
temperature generally causes an increase in water consumption.
Excluding customers added through the acquisitions of several small water
systems, during the three-year period of 1996 through 1998, Philadelphia
Suburban Water Company's customer base grew at an annual compound rate of less
than 1%. Including acquisitions, Philadelphia Suburban Water Company's customer
base increased at an annual compound rate of 4.3% during this period. Consumers
Water Company's customer growth rate during this period was 1.4%. Our business
combination with Consumers Water Company on March 10, 1999 enables us to grow
through acquisitions in the areas where Consumers operates.
3
Water Supplies and Water Facilities
Our water utility operations obtain their water supplies from surface water
sources such as reservoirs, lakes, ponds, rivers and streams, in addition to
obtaining water from wells and purchasing water from other water suppliers. Less
than 5% of our water sales are purchased from other suppliers. We believe that
we have all of the necessary permits to obtain the water we distribute. Our
supplies are sufficient for anticipated daily demand and normal peak demand
under normal weather conditions.
We believe that the capacities of our water treatment, pumping and distribution
facilities are generally sufficient to meet the present requirements of our
customers. On a continuing basis, we make system improvements and additions to
capacity in response to changing regulatory standards, changing patterns of
consumption and increases in the number of customers. The various state
regulatory commissions have generally recognized the operating and capital costs
associated with these improvements in setting water rates.
Properties
Our properties consist of transmission and distribution mains and conduits,
water treatment plants, pumping facilities, wells, tanks, meters, supply lines,
dams, reservoirs, buildings, vehicles, land, easements, rights and other
facilities and equipment used for the operation of our systems, including the
collection, treatment, storage and distribution of water. Substantially all of
our properties are owned by our subsidiaries and are subject to liens of
mortgages and indentures. These liens secure bonds, notes and other evidences of
long-term indebtedness of our subsidiaries. For certain properties that we
acquired through the exercise of the power of eminent domain and certain other
properties we purchased, we hold title for water supply purposes only. We
believe that our properties are maintained in good condition and in accordance
with current standards of good waterworks industry practice.
Economic Regulation
Our water and wastewater utility operations are subject to regulation by their
respective state regulatory commissions, which have broad administrative power
and authority to regulate rates and charges, determine franchise areas and
conditions of service and authorize the issuance of securities. The regulatory
commissions also establish uniform systems of accounts and approve the terms of
contracts with affiliates and customers, acquisitions of other utility systems,
loans and the purchases or sales of property. The profitability of our utility
operations is influenced to a great extent by the timeliness and adequacy of
rate allowances in the various states in which we operate. Accordingly, we
maintain a rate case management capability to provide that the tariffs of our
utility operations reflect, to the extent practicable, current costs of
operations, capital, taxes, energy, materials and compliance with environmental
regulations. Rates for some divisions of our Ohio water utility can be fixed by
negotiated agreements with the municipalities that are served by those divisions
in lieu of regulatory approval from the Public Utility Commission of Ohio.
Currently, two of the four regulated divisions in Ohio are operating under such
rate ordinances.
In general, we believe that Philadelphia Suburban Corporation, Philadelphia
Suburban Water Company and Consumers Water Company's subsidiaries have valid
rights, free from unduly burdensome restrictions, to enable us to carry on our
business as presently conducted in the territories we now serve. The rights to
provide water or wastewater service to a particular franchised service territory
are generally non-exclusive, although the applicable regulatory commissions
usually allow only one utility to provide service to a given area. In some
instances, another water utility provides service to a separate area within the
same political subdivision served by one of our subsidiaries. In the states
where our subsidiaries operate, it is possible that portions of our
subsidiaries' operations could be acquired by municipal governments by one or
more of the following methods:
o eminent domain;
o the right of purchase given or reserved by a municipality or political
subdivision when the original franchise was granted; and
o the right of purchase given or reserved under the law of the state in
which the subsidiary was incorporated or from which it received its
permit.
4
The price to be paid upon such an acquisition by the municipal government is
usually determined in accordance with applicable law governing the taking of
lands and other property under eminent domain. In other instances, the price may
be negotiated, fixed by appraisers selected by the parties or computed in
accordance with a formula prescribed in the law of the state or in the
particular franchise or charter. Generally, our strategy is to acquire
additional water and wastewater systems, maintain our existing systems, and
actively oppose efforts by municipal governments to acquire any of our
operations, particularly for less than the fair market value of our operations
or where the municipal government seeks to acquire more than it is entitled to
under the applicable law or agreement.
Environmental Regulation
The primary federal and state laws affecting the provision of water and
wastewater services are the Clean Water Act, the Safe Drinking Water Act and the
regulations issued under these laws by the Environmental Protection Agency and
state environmental regulatory agencies. In addition, we are subject to the
federal and state laws affecting dam safety. These laws and regulations
establish criteria and standards for drinking water and for discharges into the
waters of the United States. The states have the right to establish criteria and
standards that are stricter than those established by the Environmental
Protection Agency. Some of the states where our subsidiaries operate have done
so. Other federal and state environmental laws and regulations in addition to
the Clean Water Act, the Safe Drinking Water Act and the dam safety regulations
affect the operations of our subsidiaries.
The Safe Drinking Water Act establishes criteria and procedures for the
Environmental Protection Agency to develop minimum national quality standards
for drinking water. Regulations issued pursuant to the Safe Drinking Water Act
set standards on the amount of certain inorganic and organic chemical
contaminants, microorganisms and radionuclides allowable in drinking water. The
1996 Amendments to the Safe Drinking Water Act require the Environmental
Protection Agency to analyze both the benefits and the costs of compliance when
considering new or stricter water quality criteria and standards. Current
requirements under the Safe Drinking Water Act are not expected to have a
material impact on our operations or financial condition. We may, in the future,
be required to change our method of treating drinking water at certain sources
of supply if additional regulations become effective.
The Clean Water Act regulates discharges from drinking water and wastewater
treatment facilities into the lakes, rivers, streams, and subsurface or sanitary
sewers. The Resource Conservation and Recovery Act regulates the handling and
disposal of residuals and solids from drinking water and wastewater treatment
facilities. Water treatment residuals and solids are a combination of the
chemicals used in the treatment process and the silt and other materials removed
from the raw water. Water treatment residuals and solids are either disposed of
in a storage facility, such as a lagoon or landfill, owned by the subsidiary, an
off-site facility not owned by the subsidiary, or a state-approved landfill or
municipal sewer system. Wastewater residuals and solids are disposed of in
approved landfills, transferred to larger wastewater treatment facilities or
applied to farm land. Additional capital expenditures and operating costs in
connection with the management and disposal of solids and residuals from our
water and wastewater facilities may be required in the future, particularly if
changes are made in the requirements of the applicable federal or state laws.
Our subsidiaries own sixteen major dams that are subject to the requirements of
the Federal and state regulations related to dam safety. All major dams undergo
an annual engineering inspection. We believe that all sixteen dams are
structurally sound and well-maintained.
In addition to the capital expenditures and costs currently anticipated, changes
in environmental regulations, enforcement policies and practices or related
matters may result in additional capital expenditures and costs. Capital
expenditures and costs required as a result of water quality
5
standards and environmental requirements generally have been recognized by state
public utility commissions as appropriate plant additions in establishing rates.
Our offices are located at 762 W. Lancaster Avenue, Bryn Mawr, Pennsylvania
19010, and our telephone number is 610/527-8000.
RECENT DEVELOPMENTS
We believe that there are many potential water system acquisition candidates
throughout the United States because of the fragmented nature of the water
utility industry. We believe the factors driving consolidation of these water
systems are:
o the benefits of economies of scale, including the development of
technological expertise that would not be feasible in a smaller
organization;
o increasingly stringent environmental regulations; and
o the need for capital investment.
We believe that acquisitions will continue to be an important source of growth
for us. We intend to continue to pursue acquisitions of municipally-owned and
investor-owned water systems of all sizes that provide services in areas
adjacent to our existing service territories or in new service areas. We engage
in continuing activities with respect to potential acquisitions, including
performing analyses and investigations of acquisition candidates, making
preliminary acquisition proposals and negotiating the terms of potential
acquisitions.
As of December 10, 1999, we have completed 17 acquisitions or other growth
ventures in 1999. Exclusive of the Consumers Water Company merger in March 1999,
these transactions have added 17,200 customers to our customer base. The largest
of these transactions was the acquisition of the water utility assets of
Bensalem Township in December 1999, which has added 15,400 customers. We are
actively exploring other opportunities to expand our utility operations through
acquisitions or otherwise.
6
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
Our ratio of earnings to combined fixed charges and preferred stock dividends
for each of the periods indicated is as follows:
Nine Months Ended
September 30, Year Ended December 31,
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1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends 2.80 3.38 3.20 2.60 2.46 2.57 2.39
For purposes of calculating the above ratio, earnings consist of income from
continuing operations to which has been added income taxes, minority interest
and fixed charges and from which is subtracted capitalized interest and
preferred stock dividends of consolidated subsidiaries. Fixed charges consist of
interest on all indebtedness (including capitalized interest), amortization of
debt expense and discount or premium, and the estimated interest portion of
rental expense charged to income. Preferred stock dividends consist of dividends
paid on preferred stock of subsidiaries.
SELECTED HISTORICAL FINANCIAL DATA
On March 10, 1999, we completed a merger with Consumers Water Company. The
merger was accounted for under the pooling-of-interests method of accounting.
Accordingly, our historical financial statements have been restated to include
the accounts and results of Consumers Water Company as if the merger had been
completed as of the beginning of the earliest period presented. Certain
reclassifications were made to the historical financial statements of the two
companies to conform presentations.
The following selected historical financial information should be read in
conjunction with our consolidated financial statements and notes thereto
contained in the documents described in the section titled "Where You Can Find
More Information."
The income statement data for the years ended December 31, 1998, 1997 and 1996,
and the balance sheet data as of December 31, 1998 and 1997, are derived from,
and are qualified by reference to, our audited consolidated financial
statements, the related notes and the independent auditors' report of KPMG LLP
included in the Current Report on Form 8-K filed on November 19, 1999. The
income statement data for the nine months ended September 30, 1999 and 1998 and
the balance sheet data as of September 30, 1999 are derived from, and are
qualified by reference to, our unaudited consolidated financial statements
included in our Quarterly Report on Form 10-Q for the period ended September 30,
1999. The income statement data for the years ended December 31, 1995 and 1994
and the balance sheet data as of September 30, 1998 and December 31, 1996, 1995
and 1994 are derived from our historical consolidated financial statements and
the historical consolidated financial statements of Consumers Water Company. In
our opinion, the interim historical financial data included herein have been
prepared pursuant to the rules and regulations of the SEC and reflect all
adjustments (consisting of normal recurring accruals) which are necessary to
fairly state the results for the interim periods presented. The results for
these interim periods do not necessarily indicate the results for the full
fiscal year.
7
SELECTED HISTORICAL FINANCIAL DATA (1)
(In thousands of dollars, except per share amounts)
As of or for the
Nine Months Ended As of or for the
September 30, Year Ended December 31,
----------------------- -------------------------------------------------------------
1999 (2) 1998 (3) 1998 (3) 1997 1996 1995 1994
---------- ---------- ---------- ---------- ---------- -------- --------
(unaudited) (unaudited) (unaudited)
INCOME STATEMENT DATA:
Operating revenues $ 194,091 $ 188,664 $ 250,718 $ 235,162 $ 216,313 $206,644 $189,033
Income from continuing operations 26,785 36,362 45,015 35,210 29,204 29,887 25,339
Net income 26,785 36,362 45,015 32,473 26,939 29,647 25,582
Net income available to
common stock 26,681 36,216 44,820 32,278 26,918 29,647 25,582
PER COMMON SHARE DATA: (4)
Basic income per share:
Income from continuing operations $ 0.65 $ 0.90 $ 1.11 $ 0.91 $ 0.78 $ 0.83 $ 0.73
Net income 0.65 0.90 1.11 0.84 0.72 0.83 0.74
Diluted income per share:
Income from continuing operations $ 0.65 $ 0.89 $ 1.10 $ 0.90 $ 0.77 $ 0.83 $ 0.73
Net income 0.65 0.89 1.10 0.83 0.71 0.82 0.73
PER COMMON SHARE DATA: (5)
Cash dividends paid per
common share 0.52 0.50 0.67 0.62 0.59 0.57 0.55
Cash dividends declared per
common share 0.52 0.33 0.50 0.79 0.59 0.57 0.55
Book value per share of
common share 8.79 8.48 8.53 7.70 7.44 7.21 6.96
BALANCE SHEET DATA: (6)
Total assets $1,202,001 $1,117,863 $1,156,733 $1,083,162 $1,038,926 $948,039 $857,597
Capitalization:
Long-term debt, including
current portion $ 444,951 $ 413,345 $ 416,290 $ 407,526 $ 403,524 $351,853 $285,730
Preferred stock with mandatory
redemption -- -- -- 4,214 5,643 7,143 10,000
Stockholders' equity 364,540 349,969 353,088 306,816 289,436 266,399 248,010
---------- ---------- ---------- ---------- ---------- -------- --------
Total capitalization $ 809,491 $ 763,314 $ 769,378 $ 718,556 $ 698,603 $625,395 $543,740
========== ========== ========== ========== ========== ======== ========
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(1) On March 10, 1999, we completed a merger with Consumers Water Company. The
merger has been accounted for as a pooling-of-interests and, accordingly,
the historical consolidated financial statements have been restated to
include the accounts and results of Consumers Water Company as if the
merger had been completed as of the beginning of the earliest period
presented.
(2) Income statement and per common share data for 1999 includes the following
March 1999 net charges: $6,134 ($6,334 pre-tax), or $0.15 per share, for
the Consumers Water Company merger-transaction costs and a charge for
related restructuring costs of $2,462 ($3,787 pre-tax), or $0.06 per share.
(3) Income statement and per common share data for 1998 includes the April 1998
net gain of $3,903 ($6,680 pre-tax), or $0.10 per share, on the sale of
Consumers Water Company's New Hampshire operations pursuant to the State's
condemnation statute.
(4) All per share data has been restated to give effect to the 4-for-3 stock
split, in the form of a stock distribution, paid on January 12, 1998 and
the 3-for-2 stock split, in the form of a stock distribution, paid on July
10, 1996.
(5) The cash dividend of $.1625, paid in March 1998, was declared in December
1997.
(6) The December 31, 1996 balance sheet data is unaudited.
8
DESCRIPTION OF THE SECURITIES
As of December 20, 1999 our authorized capital stock was 101,770,819 shares.
Those shares consisted of:
o 100,000,000 shares of our common stock, par value $0.50 per share, of
which 41,022,806 shares were outstanding; and
o 1,770,819 shares of preferred stock, par value $1.00 per share, of
which 17,600 shares of Series B were outstanding.
COMMON STOCK
Voting Rights
Holders of our common stock are entitled to one vote for each share held by them
at all meetings of the shareholders and are not entitled to cumulate their votes
for the election of directors.
Dividends
Holders of our common stock may receive dividends when declared by the board of
directors. Because we are a holding company, the funds we use to pay any
dividends on our common stock are derived predominantly from the dividends that
we receive from our subsidiaries, Philadelphia Suburban Water Company and
Consumers Water Company, and the dividends they receive from their subsidiaries.
Therefore, our ability to pay dividends to holders of our common stock depends
upon our subsidiaries' earnings, financial condition and ability to pay
dividends. We own 100% of the outstanding common stock of Philadelphia Suburban
Water Company and Consumers Water Company. Consumers Water Company owns 100% of
the voting stock of four water companies and at least 96% of the voting stock of
three water companies. Most of our subsidiaries are subject to regulation by
state utility commissions and the amounts of their earnings and dividends are
affected by the manner in which they are regulated. In addition, they are
subject to restrictions on the payment of dividends contained in our various
debt agreements. Under our most restrictive debt agreement, the amount available
for payment of dividends as of September 30, 1999 was approximately $144 million
of Philadelphia Suburban Water Company's retained earnings and $59 million of
Consumers Water Company's subsidiaries' retained earnings.
Liquidation Rights
In the event that we liquidate, dissolve or wind-up, the holders of our common
stock are entitled to share ratably in all of the assets that remain after we
pay our liabilities. This right is subject, however, to the prior distribution
rights of any outstanding preferred stock.
PREFERRED STOCK
The board of directors has the authority to divide the preferred stock into one
or more series and to fix and determine relative rights and preferences of the
shares of each series.
Series A Preferred Stock
Our preferred stock includes 100,000 authorized shares of Series A junior
participating preferred stock, authorized in connection with our shareholders'
rights plan, dated March 1, 1998. Holders of our common stock own one "right" to
purchase Series A junior participating preferred stock for each outstanding
share of our common stock. If certain events occur, each right would entitle the
holder to purchase from us one one-thousandth of a share of Series A junior
participating preferred stock at an exercise price of $90 per one one-thousandth
of a share, subject to adjustment.
Series B Preferred Stock
In 1996, the board of directors designated 32,200 shares as 6.05% Series B
preferred stock. In November 1996, we issued all 32,200 shares in connection
with an acquisition. In December 1998, 14,600 shares of this issue were called
for early redemption by the holders. In January 1999, these shares were redeemed
in cash at the liquidation value of $100 per share.
So long as any shares of the Series B preferred stock are outstanding, we may
not adopt any amendment to our articles of incorporation which would adversely
affect, in any material respect, the rights or preferences of the Series B
preferred stock without the affirmative vote of the holders of a majority of the
Series B preferred stock.
Holders of our Series B preferred stock are entitled to receive cumulative
quarterly dividends equal to $1.5125 per share. In the event that we liquidate,
dissolve or wind-up, holders of Series B preferred stock are entitled to receive
$100 per share plus an amount equal to any accrued but unpaid cumulative
dividends together with
9
any interest that has accrued on those dividends. Our Series B preferred stock
ranks senior to our Series A junior participating preferred stock and our common
stock with respect to the right to receive dividends and the right to the
distribution of our assets upon liquidation.
The Series B preferred stock is not convertible into any other class or series
of our capital stock. We have the right to redeem, in whole or in part, up to
6,440 shares of Series B preferred stock each year beginning on December 1, 2001
at a price equal to $100 per share plus any accrued and unpaid dividends
together with any interest on those dividends. Series B preferred stock is not
subject to or entitled to the benefit of a sinking fund.
Additional Series of Preferred Stock
Any additional series of preferred stock issued pursuant to this prospectus, as
supplemented, will be of equal rank to the Series B preferred stock and will
also rank senior to our Series A junior participating preferred stock and our
common stock with respect to the right to receive dividends and the right to the
distribution of our assets upon liquidation. The terms of the particular series
of preferred stock that we offer pursuant to this prospectus will be set forth
in a pricing supplement. The board of directors will fix or designate, in a
statement of designation that will be filed as an amendment to our articles of
incorporation, the rights, preferences, privileges and restrictions of that
particular series of preferred stock that we offer, including:
o dividend rights;
o voting rights;
o any conversion rights;
o terms of redemption; and
o liquidation preferences.
The description of our preferred stock contained in this prospectus and any
description that will be contained in a supplement discusses or will discuss the
important terms of each series of preferred stock. We urge you to read the
description of the terms of that series of preferred stock for any terms and
provisions that may be important to you.
STATE LAW ANTI-TAKEOVER PROVISIONS
We are subject to various anti-takeover provisions of the Pennsylvania Business
Corporation Law of 1988, as amended. Generally, these provisions are triggered
if any person or group acquires, or discloses an intent to acquire, 20% or more
of a corporation's voting power, unless the acquisition is under a registered
firm commitment underwriting or, in certain cases, approved by the board of
directors. These provisions:
o provide the other shareholders of the corporation with certain rights
against the acquiring group or person;
o prohibit the corporation from engaging in a broad range of business
combinations with the acquiring group or person; and
o restrict the voting and other rights of the acquiring person or group.
In addition, as permitted by Pennsylvania law, an amendment to our articles of
incorporation or other corporate action that is approved by shareholders may
provide mandatory special treatment for specified groups of nonconsenting
shareholders of the same class. For example, an amendment to our articles of
incorporation or a corporate action may provide that shares of common stock held
by designated shareholders of record must be cashed out at a price determined by
the corporation, subject to applicable dissenters' rights.
Certain provisions of our articles of incorporation and bylaws may have the
effect of discouraging unilateral tender offers or other attempts to take over
and acquire our business. These provisions might discourage some potentially
interested purchaser from attempting a unilateral takeover bid for us on terms
which some shareholders might favor. Our articles of incorporation require that
certain fundamental transactions must be approved by the holders of 75% of the
outstanding shares of our capital stock entitled to vote on the matter unless at
least 75% of the members of the board of directors has approved the transaction,
in which case the required shareholder approval will be the minimum approval
required by applicable law. The fundamental transactions that are subject to
this provision are those transactions that require approval by shareholders
under applicable law or the articles of incorporation. These transactions
include certain amendments of our articles of incorporation or bylaws, certain
sales or other dispositions of our assets, certain issuances of our capital
stock, or certain transactions involving our merger, consolidation, division,
reorganization, dissolution,
10
liquidation or winding up. Our articles of incorporation and bylaws provide
that:
o a special meeting of shareholders may only be called by the chairman,
the president, the board of directors or shareholders entitled to cast
a majority of the votes which all shareholders are entitled to cast at
the particular meeting;
o nominations for election of directors may be made by any shareholder
entitled to vote for election of directors if the name of the nominee
and certain information relating to the nominee is filed with our
secretary not less than 14 days nor more than 50 days before any
meeting of shareholders to elect directors; and
o certain advance notice procedures must be met for shareholder
proposals to be made at annual meetings of shareholders. These advance
notice procedures generally require a notice to be delivered not less
than 90 days nor more than 120 days before the anniversary date of the
immediately preceding annual meeting of shareholders.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is BankBoston, N.A.
SHARES ELIGIBLE FOR FUTURE SALE
The securities to be issued in connection with acquisitions have been registered
under the Securities Act of 1933, as amended. Individuals who are not affiliates
of the entity being acquired and who do not become our affiliates will not be
subject to the resale restrictions under Rule 145, promulgated under the
Securities Act. Unless otherwise contractually restricted, these individuals may
resell the securities immediately following the completion of an acquisition.
Individuals who are affiliates of the businesses that we acquire may not resell
securities registered under the registration statement to which this prospectus
relates except:
o in a registered offering;
o in compliance with Rule 145; or
o under another exemption from the registration requirements of the
federal securities law.
Affiliates are those persons who control, are controlled by or are under common
control with the acquired company and generally include directors, officers and
principal shareholders.
Generally, Rule 145 permits affiliates of the acquired company to sell
securities immediately following an acquisition in compliance with certain
volume limitations and manner of sale requirements. Under Rule 145, sales by
these affiliates during any three-month period cannot exceed the greater of:
o one percent of the shares of the class of securities outstanding; or
o the average weekly reported volume of trading in shares of that class
of securities on all national securities exchanges during the four
calendar weeks preceding the proposed sale.
These restrictions will cease to apply one year after the date of the
acquisition, provided that the person is not our affiliate and we are current in
our Exchange Act reporting requirements. Two years after an acquisition, an
affiliate of an acquired company may freely sell our securities as long as such
person has not been our affiliate for at least three months.
We do not intend to list our preferred stock on any securities exchange or
automated quotation system. Therefore, an affiliate of an acquired business who
resells shares of preferred stock that are not registered for resale during a
period in which the volume limitations of Rule 145 apply must not sell more than
one percent of the shares of the particular series of preferred stock then
outstanding or must rely on another exemption from the registration requirements
of the federal securities laws.
11
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of the registration statement we filed with the SEC. In
addition, we file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and, for a set fee, copy the
registration statement, including exhibits, and any of the other information we
file at the following SEC public reference facilities:
o 450 Fifth Street, N.W.
Washington, DC 20549
o Seven World Trade Center
Suite 1300
New York, New York 10048
o Citicorp Center
Suite 1400
500 West Madison Avenue
Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on these public
reference facilities. Our SEC filings are also available to the public over the
Internet at the SEC's website (http://www.sec.gov).
The SEC allows us to "incorporate by reference" the information in documents
that we file with them. This means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information in documents
that we file later with the SEC will automatically update and supersede this
information.
We incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act, until we issue all of the securities registered hereunder.
o Annual Report on Form 10-K for the year ended December 31, 1998;
o Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999;
o Current Reports on Form 8-K dated March 10, 1999 (as amended on May 5,
1999 and May 11, 1999), May 24, 1999, June 2, 1999 and November 19,
1999; and
o The description of our common stock and preferred stock which is
contained in the Form 8-A that we filed with the SEC on March 17,
1998, as amended by the Rights Agreement dated as of March 1, 1998
between Philadelphia Suburban Corporation and BankBoston, N.A., filed
as Exhibit 4.25 to our Annual Report on Form 10-K for the year ended
December 31, 1998 filed with the SEC on March 30, 1999.
You may request a copy of these filings, at no charge, by writing or telephoning
us at the following address:
Patricia M. Mycek, Secretary
Philadelphia Suburban Corporation
762 W. Lancaster Avenue
Bryn Mawr, PA 19010
610/527-8000
In making your investment decision, you should rely only on the information
provided in this prospectus, any supplement, the registration statement, and the
information incorporated by reference into this prospectus. We have not
authorized anyone else to provide you with different information. In addition,
you should not assume that the information in this prospectus or any other
document is accurate as of any date other than the date on the front of those
documents.
FORWARD-LOOKING STATEMENTS
This prospectus, any prospectus supplement and the documents that we incorporate
by reference may contain "forward-looking statements." Forward-looking
statements give our current expectations or forecasts of future events. You can
identify these statements by the fact that they do not relate strictly to
historical or current facts. They use words like "believe," "may," "will,"
"expect," "intend," "plan," "anticipate," "estimate" or "continue" and other
words and terms of similar meaning. In particular, these include statements
relating to acquisitions, our use of cash, projected capital expenditures,
liquidity and Year 2000 disclosure, including statements regarding readiness,
remediation, costs, risks and contingency plans.
Our forward-looking statements are based upon a number of assumptions concerning
future events, and are subject to a number of uncertainties and other factors,
many of which are outside of our control. Our actual results may differ
materially from our forward-looking statements for a number of reasons,
including the effects of regulation, abnormal weather,
12
changes in capital requirements and funding, acquisitions and the Year 2000
readiness of third parties with whom we deal. We do not undertake any obligation
to update or revise our forward-looking statements, whether as a result of new
information, future events or otherwise.
LEGAL MATTERS
The validity of the shares of common stock and preferred stock offered under
this prospectus will be passed upon by Morgan, Lewis & Bockius LLP.
EXPERTS
The consolidated financial statements of Philadelphia Suburban Corporation and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, have been incorporated by reference
into this prospectus from the Current Report on Form 8-K dated November 19,
1999 and in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
financial statements of Consumers Water Company as of December 31, 1998 and
1997 and for each of the years in the three-year period ended December 31, 1998,
incorporated by reference into this prospectus from our Current Report on Form
8-K dated March 10, 1999, as amended on May 5, 1999 and May 11, 1999, have been
audited by Arthur Andersen LLP, independent auditors, as stated in their
report, which is incorporated herein by reference. These financial statements
of Consumers Water Company have been incorporated by reference in reliance upon
the report of Arthur Andersen LLP given their authority as experts in
accounting and auditing.
13
We have not authorized any person to give any information or make any
representations other than those contained in this prospectus, and, if given or
made, you must not rely on any such information or representations as having
been authorized by us. This prospectus does not constitute an offer to sell or
the solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of our company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
Philadelphia Suburban
Corporation
PROSPECTUS
2,000,000 Shares of Common Stock
500,000 Shares of Preferred Stock
PART II
Information Not Required in Prospectus
Item 20. Indemnification of Officers and Directors.
Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), provide that a business corporation may indemnify
directors and officers against liabilities they may incur as such, provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation,
and, with respect to any criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. In general, the power to indemnify under these
sections does not exist in the case of actions against a director or officer by
or in the right of the corporation if the person otherwise entitled to
indemnification shall have been adjudged to be liable to the corporation unless
it is judicially determined that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnification for specified expenses. The corporation is required
to indemnify directors and officers against expenses they may incur in defending
actions against them in such capacities if they are successful on the merits or
otherwise in the defense of such actions.
Section 1713 of the BCL permits the shareholders to adopt a bylaw provision
relieving a director (but not an officer) of personal liability for monetary
damages except where (i) the director has breached the applicable standard of
care, and (ii) such conduct constitutes self-dealing, willful misconduct or
recklessness. The statute provides that a director may not be relieved of
liability for the payment of taxes pursuant to any federal, state or local law
or responsibility under a criminal statute. Section 4.01 of the Philadelphia
Suburban Corporation's (the "Company") Bylaws limits the liability of any
director of the Company to the fullest extent permitted by Section 1713 of the
BCL.
Section 1746 of the BCL grants a corporation broad authority to indemnify
its directors, officers and other agents for liabilities and expenses incurred
in such capacity, except in circumstances where the act or failure to act giving
rise to the claim for indemnification is determined by a court to have
constituted willful misconduct or recklessness. Article VII of the Company's
Bylaws provides indemnification of directors, officers and other agents of the
Company to the extent not otherwise permitted by Section 1741 of the BCL and
pursuant to the authority of Section 1746 of the BCL.
Article VII of the Bylaws provides, except as expressly prohibited by law,
an unconditional right to indemnification for expenses and any liability paid or
incurred by any director or officer of the Company, or any other person
designated by the Board of Directors as an indemnified representative, in
connection with any actual or threatened claim, action, suit or proceeding
(including derivative suits) in which he or she may be involved by reason of
being or having been a director, officer, employee or agent of the Company or,
at the request of the Company, of another corporation, partnership, joint
venture, trust, employee benefit plan or other entity. The Bylaws specifically
authorize indemnification against both judgments and amounts paid in settlement
of derivative suits, unlike Section 1742 of the BCL, which authorized
indemnification only of expenses incurred in defending a derivative action.
Article VII of the Bylaws also allows indemnification for punitive damages and
liabilities incurred under the federal securities laws.
II-1
Unlike the provisions of BCL Sections 1741 and 1742, Article VII does not
require the Company to determine the availability of indemnification by the
procedures or the standard of conduct specified in Sections 1741 and 1742 of the
BCL. A person who has incurred an indefinable expense or liability has a right
to be indemnified independent of any procedures or determinations that would
otherwise be required, and that right is enforceable against the Company as long
as indemnification is not prohibited by law. To the extent indemnification is
permitted only for a portion of a liability, the Bylaw provisions require the
Company to indemnify such portion. If the indemnification provided for in
Article VII is unavailable for any reason in respect of any liability or portion
thereof, the Bylaws require the Company to make a contribution toward the
liability. Indemnification rights under the Bylaws do not depend upon the
approval of any future Board of Directors.
Section 7.04 of the Company's Bylaws also authorizes the Company to further
effect or secure its indemnification obligations by entering into
indemnification agreements, maintaining insurance, creating a trust fund,
granting a security interest in its assets or property, establishing a letter of
credit, or using any other means that may be available from time to time.
The Company maintains, on behalf of its directors and officers, insurance
protection against certain liabilities arising out of the discharge of their
duties, as well as insurance covering the Company for indemnification payments
made to its directors and officers for certain liabilities. The premiums for
such insurance are paid by the Company.
Item 21. Exhibits, Financial Statement Schedules and Index to such Exhibits and
Schedules.
The exhibits filed as part of this registration statement are as follows:
Exhibit
Number Description
- ------- -----------
5 Opinion of Morgan, Lewis & Bockius LLP.
12 Computation of ratio of earnings to combined fixed charges and preferred
stock dividends.
23.1 Consent of KPMG LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 5).
24 Power of Attorney (set forth on signature page).
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
II-2
(i) To include in any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished
to the Commission by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be in the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) The undersigned registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c),
the issuer undertakes that such reoffering prospectus will contain the
information called for
II-3
by the applicable registration form with respect to reofferings by persons
who may be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
(d) The registrant undertakes that every prospectus: (i) that is filed pursuant
to paragraph (c) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this Form S-4, within one business day of
receipt of such request, and to send the incorporated documents by first
class mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment, Rule 424(c) supplement or information
incorporated by reference, all information concerning a material
transaction, and the company being acquired involved therein, that was not
the subject of and included in the registration statement when it became
effective.
(g) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of Montgomery, State of Pennsylvania, on December 7,
1999.
PHILADELPHIA SUBURBAN CORPORATION
By: /s/ Nicholas DeBenedictis
-----------------------------
Nicholas DeBenedictis
Chairman and President
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Nicholas
DeBenedictis and Roy H. Stahl, and both of them, either of whom may act without
the joinder of the other, as his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all
amendments to this Registration Statement on Form S-4, and to file the same,
with all exhibits thereto and all other documents in connection therewith, with
the Commission, granting unto said attorneys-in-fact and agents full power and
authority to perform each and every act and thing appropriate or necessary to be
done, as fully and for all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or their substitute or substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Nicholas DeBenedictis Chairman and President (principal executive December 7, 1999
- ----------------------------- officer) and Director
Nicholas DeBenedictis
/s/ David P. Smeltzer Senior Vice President - Finance and Chief December 7, 1999
- ----------------------------- Financial Officer
David P. Smeltzer (principal financial and accounting officer)
II-5
/s/ Michel Avenas Director December 7, 1999
- -----------------------------
Michel Avenas
/s/ Mary C. Carroll Director December 7, 1999
- -----------------------------
Mary C. Carroll
/s/ G. Fred DiBona, Jr. Director December 7, 1999
- -----------------------------
G. Fred DiBona, Jr.
/s/ Richard H. Glanton Director December 7, 1999
- -----------------------------
Richard H. Glanton, Esq.
/s/ Alan R. Hirsig Director December 7, 1999
- -----------------------------
Alan R. Hirsig
/s/ John F. McCaughan Director December 7, 1999
- -----------------------------
John F. McCaughan
/s/ John E. Menario Director December 7, 1999
- -----------------------------
John E. Menario
/s/ John E. Palmer Director December 7, 1999
- -----------------------------
John E. Palmer
/s/ Richard L. Smoot Director December 7, 1999
- -----------------------------
Richard L. Smoot
/s/ Robert O. Viets Director December 7, 1999
- -----------------------------
Robert O. Viets
/s/ Harvey J. Wilson Director December 7, 1999
- -----------------------------
Harvey J. Wilson
II-6
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
5 Opinion of Morgan, Lewis & Bockius LLP.
12 Computation of ratio of earnings to combined fixed charges and
preferred stock dividends.
23.1 Consent of KPMG LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Morgan, Lewis & Bockius LLP (contained in Exhibit 5).
24 Power of Attorney (set forth on signature page).
Exhibit 5
December 21, 1999
Philadelphia Suburban Corporation
762 W. Lancaster Avenue
Bryn Mawr, Pennsylvania 19010
Re: Issuance of Shares Pursuant to Registration Statement on Form S-4
Ladies and Gentlemen:
We have acted as counsel to Philadelphia Suburban Corporation, a Pennsylvania
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), of a Registration Statement on Form S-4 (the "Registration
Statement") relating to the offering by the Company of up to an aggregate of
2,000,000 shares of the Company's common stock, $0.50 par value per share (the
"Common Stock"), and 500,000 shares of the Company's preferred stock, $1.00 par
value per share (the "Preferred Stock," together with the Common Stock, the
"Shares"), which may be issued from time to time.
In so acting, we have examined originals, or copies certified or otherwise
identified to our satisfaction, of such documents, records, certificates and
other instruments of the Company as in our judgment are necessary or appropriate
for purposes of this opinion. We have assumed that the issuance of the Common
Stock will have been duly authorized and certificates evidencing the shares of
Common Stock will have been duly executed and delivered, against receipt of the
consideration approved by the Board of Directors of the Company or a committee
thereof which will be not less than the par value thereof. We have also assumed
that the issuance of any shares of a series of Preferred Stock will have been
duly authorized, the Board of Directors will have established the terms of such
series of Preferred Stock, authorized the transactions contemplated by the
Registration Statement, reserved for issuance any shares of Common Stock to be
issued in the future upon the exercise of any Preferred Stock of a series that
is convertible into Common Stock and filed a certificate of designation with
respect to such series of Preferred Stock with the Secretary of State of the
State of Pennsylvania and certificates evidencing the same will have been duly
executed and delivered, against receipt of consideration approved by the Board
of Directors of the Company or a committee thereof which will be not less than
the par value thereof.
Based upon the foregoing, we are of the opinion that the Shares, when and to the
extent issued and sold by the Company, will be duly authorized, validly issued,
fully paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the Registration
Statement and to the use of our name under the caption "Legal Matters" in the
Registration Statement. In giving such consent, we do not hereby admit that we
are acting within the category of persons whose consent is required under
Section 7 of the Act and the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
---------------------------
Morgan, Lewis & Bockius LLP
EXHIBIT 12
Philadelphia Suburban Corporation and Subsidiaries
Computation of Ratio of Earnings to Combined Fixed Charges and Preferrred Stock
Dividends
Nine Months Ended
September 30, Year Ended December 31,
--------------------- -------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
-------- -------- --------- -------- -------- -------- --------
Ratio of earnings to combined fixed
charges and preferred stock dividends:
Earnings:
Income from continuing operations
before income taxes and
minority interest $ 48,412 $ 60,576 $ 75,206 $ 57,717 $ 48,611 $ 49,743 $ 41,675
Add: combined fixed charges 26,093 24,970 33,543 34,860 31,953 30,089 27,744
Less: preferred stock dividends (98) (188) (260) (858) (1,058) (1,288) (1,680)
Less: capitalized interest (1,369) (861) (1,245) (937) (1,054) (1,334) (1,547)
-------- -------- --------- -------- -------- -------- --------
Total Earnings $ 73,038 $ 84,497 $ 107,244 $ 90,782 $ 78,452 $ 77,210 $ 66,192
======== ======== ========= ======== ======== ======== ========
Combined fixed charges:
Interest on all indebtedness $ 24,968 $ 23,728 $ 31,888 $ 32,664 $ 29,474 $ 27,594 $ 24,931
Amortization of debt expense 516 543 714 688 621 484 443
Interest attributable to rental
and lease expense 511 511 681 650 800 723 690
Preferred stock dividends 98 188 260 858 1,058 1,288 1,680
-------- -------- --------- -------- -------- -------- --------
Total combined fixed charges $ 26,093 $ 24,970 $ 33,543 $ 34,860 $ 31,953 $ 30,089 $ 27,744
======== ======== ========= ======== ======== ======== ========
Ratio of earnings to combined fixed
charges and preferred stock dividends 2.80 3.38 3.20 2.60 2.46 2.57 2.39
======== ======== ========= ======== ======== ======== ========
Exhibit 23.1
The Board of Directors
Philadelphia Suburban Corporation
We consent to incorporation by reference in this Registration Statement on Form
S-4 of Philadelphia Suburban Corporation of our report dated May 21, 1999,
relating to the consolidated balance sheets and statements of capitalization of
Philadelphia Suburban Corporation and subsidiaries as of December 31, 1998 and
1997 and the related consolidated statements of income and cash flow for each of
the years in the three-year period ended December 31, 1998 which report is
included in the report on Form 8-K filed by Philadelphia Suburban Corporation on
November 19, 1999 which is incorporated by reference in this registration
statement on Form S-4.
We also consent to the reference to our firm under the heading "Experts"
appearing elsewhere herein.
/S/ KPMG LLP
Philadelphia, Pennsylvania
December 21, 1999
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated, February 18, 1999
(except with respect to the matter discussed in Note 12, as to which the date is
March 10, 1999) on Consumers Water Company and to all references to our Firm
included in this registration statement. Our report dated February 18, 1999
(except with respect to the matter discussed in Note 12, as to which the date is
March 10, 1999) on Consumers Water Company previously included in the
Philadelphia Suburban Corporation's Form 8-K/A filed on May 5, 1999 is no longer
appropriate since restated financial statements have been presented giving
effect to a business combination accounted for as a pooling-of-interest.
/s/Arthur Andersen LLP
Boston, Massachusetts
December 21, 1999