PHILADELPHIA SUBURBAN CORP, S-3, 1995-11-15

PHILADELPHIA SUBURBAN CORP
S-3, 1995-11-15
WATER SUPPLY

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As filed with the Securities and Exchange Commission on November 15, 1995
Registration No. 33-

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

REGISTRATION STATEMENT
ON FORM S-3*
Under
THE SECURITIES ACT OF 1933

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 Lancaster Avenue
Bryn Mawr, PA 19010
(215) 527-8000
(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 Lancaster Avenue
Bryn Mawr, PA 19010
(215) 527-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
N. JEFFREY KLAUDER
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
(215) 963-5694

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement is declared effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.

CALCULATION OF REGISTRATION FEE

Title of securities Amount to be Proposed maximum offering Proposed maximum Amount of
to be registered registered price per share* aggregate offering price* registration fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

Common Stock, par value 200,000 $19.50 $3,900,000 $780.00
$.50 per share (1)

</TABLE>

(1) Includes associated purchase rights

(*) Estimated pursuant to paragraphs (c) and (h) of Rule 457 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 November 8, 1995, as reported on the New York Stock Exchange.

-----------------------

* Pursuant to Rule 429, the Prospectus which forms a part of this
Registration Statement shall also relate to shares of Common Stock
registered for issuance and sale pursuant to the Company's earlier
Registration Statements on Form S-3 (File No. 33-54292) and Form S-3
(File No. 33-54941).

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.

<PAGE>

P R O S P E C T U S

PHILADELPHIA SUBURBAN CORPORATION
CUSTOMER STOCK PURCHASE PLAN
Shares of Common Stock (Par Value $.50)

-----------------------

The Customer Stock Purchase Plan (the "Plan") of Philadelphia Suburban
Corporation (the "Company") provides the residential customers of the Company's
subsidiary, Philadelphia Suburban Water Company ("PSW"), with a simple and
convenient method of purchasing shares of Common Stock of the Company.

Residential customers of PSW may participate in the Plan by purchasing
Common Stock directly from the Company during four Subscription Periods: March 1
- - March 15; June 1 -June 15; September 1 - September 15; and December 1 -
December 15.

Shares purchased under the Plan will be original issue shares or treasury
shares. The purchase price of shares issued under the Plan will be an amount
equal to 100% of the average of the high and low sale prices as reported in New
York Stock Exchange ("NYSE") - Composite Transactions for the Company's Common
Stock for the five trading days immediately preceding the Subscription Period.

Shares purchased under the Plan will automatically participate in the
Company's Dividend Reinvestment and Optional Stock Purchase Plan (the "DRP").
The DRP is described in the DRP Prospectus which is attached and included as
part of this Prospectus (see Pages A1-A18). Certificates for shares purchased
under the Plan will not be issued to the purchaser, but will be deposited in the
purchaser's DRP account. Customers may terminate their participation in the DRP,
or may receive certificates for shares held in the DRP, at any time by written
notice to such effect delivered to the Agent. Dividends on shares held in the
DRP, including shares purchased under the Plan, will thus be received in the
form of additional shares of the Company's Common Stock rather than in the form
of cash.

The outstanding shares of the Company's Common Stock are, and the
additional shares offered hereby will be, listed on the New York and
Philadelphia Stock Exchanges.

The Company administers the Plan at its own expense. The Company will
receive all of the net proceeds from the sale of the Common Stock.

As of the date hereof, 908,318 shares of Common Stock have been registered
and remain available for sale under the Plan.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date of this Prospectus is November ___, 1995

<PAGE>

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. 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 the Company since the date hereof. This Prospectus does
not constitute an offer or solicitation by anyone in any jurisdiction in which
said offer or solicitation is not qualified or in which the person making such
offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation.

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TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 3

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . . . . . . 3

THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ADVANTAGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
PURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 8
CERTIFICATES FOR SHARES . . . . . . . . . . . . . . . . . . . . . . 8
CUSTOMERS' ACCOUNTS AND RECORDS . . . . . . . . . . . . . . . . . . 8
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . . . . . . . . 9

USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . 10

PRICE RANGE OF COMMON STOCK AND DIVIDENDS. . . . . . . . . . . . . . . . 12

EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

</TABLE>

<PAGE>

AVAILABLE INFORMATION

Philadelphia Suburban Corporation (the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Information as of particular dates concerning directors and
officers, their remuneration and any material interest of such persons in
transactions with the Company is disclosed in proxy statements distributed to
shareholders of the Company and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices
located at Seven World Trade Center, New York, New York 10048 and Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained in person from the Public Reference
Section of the Commission at its principal office located at 450 Fifth Street,
N.W., Washington, D.C. 25049, at prescribed rates. The Common Stock of the
Company is listed on the New York and the Philadelphia Stock Exchanges, and
reports, proxy material and other information concerning the Company may be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and the Philadelphia Stock Exchange, Inc., 1900 Market
Street, Philadelphia, Pennsylvania 19103.

This Prospectus constitutes a part of a registration statement on Form S-3
(herein, together with all exhibits thereto, referred to as the "Registration
Statement") filed by the Company with the Commission under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Reference is hereby made to the
Registration Statement and to the exhibits thereto for further information with
respect to the Company and the securities offered hereby. Copies of the
Registration Statement and the exhibits thereto are on file at the offices of
the Commission and may be obtained upon payment of the prescribed fee or may be
examined without charge at the public reference facilities of the Commission
described above. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.

-----------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31,
1994 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995,
June 30, 1995 and September 30, 1995, filed by the Company with the Commission,
are incorporated herein by reference. All reports and other documents
subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus shall be deemed to
be incorporated by reference herein and to be a part hereof from the date of the
filing of such reports and documents. Any statement contained in a document, all
or a portion of which is incorporated or deemed to be incorporated by reference
herein, shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The information relating to the Company contained in this Prospectus
summarizes, is based upon, or refers to, information and financial statements
contained in one or more of the documents incorporated by reference herein;
accordingly, such information contained herein is qualified in its entirety by
reference to such documents and should be read in conjunction therewith.

The Company will provide without charge to each person to whom this
Prospectus is delivered a copy of any or all of such documents which are
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the documents that
this Prospectus incorporates). Written or oral requests for copies should be
directed to Patricia M. Mycek, Secretary, Philadelphia Suburban Corporation, 762
Lancaster Avenue, Bryn Mawr, Pennsylvania 19010, (610) 645-1013 or (610)
645-1020.

<PAGE>

THE COMPANY

The Company is a holding company whose principal subsidiary, Philadelphia
Suburban Water Company ("PSW"), is a regulated public utility engaged in the
collection, storage, treatment, distribution and sale of water to approximately
262,000 residential, industrial, commercial public and other customers in its
service area. PSW's service area covers approximately 400 square miles in the
western and northern suburbs of Philadelphia, Pennsylvania. The service area is
nearly all contiguous, primarily residential in nature and is completely metered
except for fire hydrant service. As of December 31, 1994, PSW was the fourth
largest investor-owned water utility in the United States based on number of
customers.

The Company was incorporated in Pennsylvania in 1968 and its executive
offices are located at 762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010,
telephone number (610) 527-8000.

Future Business Strategy

Consistent with the Company's focus on its water utility business, in
December 1992, PSW acquired the water utility assets of the West Whiteland
Township and the Uwchlan Township Municipal Authority water systems for
$9,128,257 in cash and the issuance of $1,776,947 in debt. The acquisition of
these water systems added approximately 6,900 customers and 40 square miles of
contiguous service territory adjacent to PSW's service area. In December 1993,
PSW acquired the water utility assets of the Borough of Malvern for $1,323,000
in cash. The acquisition of this water system added approximately 860 customers
and one square mile to PSW's service area. In December 1994, PSW acquired the
franchise rights and water utility assets of two privately owned water companies
for a total of $612,500 in cash. In May 1995, PSW acquired the water utility and
related assets of Media Borough for $25,711,000 in cash and the assumption of
$1,100,000 in liabilities. The acquisition of this water system added
approximately 13,500 customers and 23 square miles to PSW's service area. The
Company is actively exploring opportunities to expand its water service area
through acquisitions or otherwise and from time to time may be in the process of
making proposals or negotiating documents relating to such transactions.

THE PLAN

The following questions and answers constitute the Company's Customer Stock
Purchase Plan (the "Plan"):

PURPOSE

1. What is the purpose of the Plan?

The purpose of the Plan is to provide residential utility customers of PSW
(the "Customers") with a simple and convenient method of investing in shares of
the Company's Common Stock. Also, shares of Common Stock sold under the Plan
will be purchased from the Company. Accordingly, the Company will receive
additional funds that will be used for general corporate purposes.

<PAGE>

ADVANTAGES

2. What are the advantages to Customers of the Plan?

The purchase of shares of Common Stock by Customers will increase ownership
in the Company by residents in the charter territory served by PSW without the
brokerage costs to the Shareholders traditionally associated with such
offerings.

ADMINISTRATION

3. Who administers and interprets the Plan?

The Company administers and interprets the Plan, keeps the records of the
Plan, and performs other duties relating to the Plan. There are no brokerage
fees charged by the Company in connection with purchases made pursuant to the
Plan, and the Company absorbs all of the administrative expense of the Plan.
However, charges will be incurred by the Customer upon the sale of the
Customer's shares and certain fees may be charged to Customers by brokers when
shares are held by brokers. All correspondence to the Company should be directed
to:

Corporate Secretary
Philadelphia Suburban Corporation
762 Lancaster Avenue
Bryn Mawr, PA 19010

The Company has delegated certain of its administrative responsibilities
under the Plan to the Company's registrar and transfer agent, Mellon Bank N.A.
(the "Agent"). The Agent issues the stock certificates, keeps the records of the
Shareholder accounts and performs all duties as registrar and transfer agent.
All correspondence, questions or other communications regarding the issuance of
certificates or shareholders' accounts (see Questions 15 and 16) should be
directed to:

Mellon Bank N.A.
P.O. Box 750
Pittsburgh, PA 15230
1-800-205-8314

PARTICIPATION

4. Who is eligible to enroll?

All residential Customers are eligible to participate in the Plan,
including all adult members of households served by PSW. Water consumers in the
charter territory served by PSW who are not customers, such as renters and
condominium owners, may participate in the Plan, except that groups of
individuals such as tenant associations are not eligible to participate.

A Customer may enroll under the Plan in his or her own name, in the joint
name of the Customer and another person, or in his or her name as custodian or
trustee for another person, by marking the Customer Authorization Form in the
appropriate manner. Customers may also establish an Individual Retirement
Account ("IRA") and enroll under the Plan in the name of his or her IRA and
contribute or roll over amounts to the IRA through a Plan Account.

<PAGE>

5. How does an eligible Customer participate and make an investment?

An investment is made by forwarding a check or money order payable to
Philadelphia Suburban Corporation with a completed Customer Authorization Form
to the Company during a Subscription Period (see Question 7). On the next
Investment Date (see Question 9), the full amount of cash will be invested in
full and fractional shares of Common Stock (see Question 15 concerning
fractional shares). A Customer Authorization Form is enclosed with this
Prospectus or may be obtained from the Company by writing the Company (see
Question 3) or telephoning the Company at (610) 645-1013 or (610) 645-1036.

6. What rules apply to Individual Retirement Accounts?

You may use the Plan to establish an IRA to hold shares of Common Stock and
to make contributions to the IRA to purchase shares of Common Stock. You may
also roll over or transfer an existing IRA or other qualified plan distribution
in cash into an IRA under the Plan to purchase the Company's Common Stock. After
being furnished with a copy of the Prospectus, you may open an IRA by completing
and signing an IRA Enrollment Form and returning it to the Agent with an initial
contribution of at least $25. IRA Enrollment Forms are available upon request
from the Agent. All of the provisions of the Plan apply equally to IRA accounts
under the Plan, including when purchases can be made and the limitations on the
number of shares that can be purchased. All shares of Common Stock purchased
through an IRA will be treasury shares.

The annual administrative fee of $25 charged for maintaining an IRA account
will be paid by the Company.

7. Are there restrictions on when a Customer may purchase Common Stock under
the Plan?

Yes. A Customer may purchase shares of Common Stock under the Plan only
during the following four Subscription Periods: March 1 - March 15; June 1 -
June 15; September 1 - September 15; and December 1 - December 15. The Company
may periodically give advance notice of a Subscription Period and may cancel a
Subscription Period without notice. The 400,000 shares available to be purchased
each year for as long as the Plan continues will be available on a first-come,
first-served basis. For the March 1 - 15, June 1 - June 15 and September 1 -
September 15 Subscription Periods, the maximum number of shares sold during the
Subscription Period will be 100,000; whereas for the December 1 - December 15
Subscription Period, the maximum number of shares sold will be equal to the
difference between 400,000 and the number of shares sold during to the March 1 -
March 15, June 1 - June 15 and September 1 - September 15 Subscription Periods
(the "Subscription Period Sales Limit"). All requests to purchase stock will be
honored through the close of business on the last day of the Subscription Period
or the day the Subscription Period Sales Limit is reached, whichever occurs
first. Checks or money orders received after that time will be returned. The
Company, at its sole discretion, may change the Subscription Period Sales Limit
at any time.

8. Are there limits to the amount a customer may invest?

Yes. A Customer may invest a minimum of $250 each Subscription Period. The
maximum investment a Customer is permitted to make under the Plan during any one
calendar year is $30,000.

<PAGE>

PURCHASES

9. When will payments be invested?

To be invested, an appropriately-completed Customer Authorization Form and
the related payment must be received at the Company's offices by 5:00 p.m. on
the last day of the Subscription Period or on the day upon which the
Subscription Period Sales Limit is reached, whichever occurs first. Funds
received after that time will be returned, without interest. Customers have an
unconditional right to obtain the return of any payments up to 5:00 p.m. on the
last day of the Subscription Period or the day upon which the Subscription
Period Sales Limit is reached, whichever occurs first. Requests for return of
money must be made in writing and received by the Company prior to the cut-off
time.

The Plan, as nominee of the Customer making a purchase of Common Stock,
will first become the record holder of the Common Stock purchased during a
Subscription Period at the close of business on the first business day after the
close of the Subscription Period or the day upon which the Subscription Period
Sales Limit is reached, whichever occurs first (the "Investment Date").

10. Will interest be paid on payments under the Plan?
No. No interest will be credited or paid on payments received or held by
the Company under the Plan.

11. What is the source of shares purchased under the Plan?

Shares purchased under the Plan will be authorized but unissued shares or
treasury shares of Common Stock of the Company. Treasury shares are shares which
were previously issued by the Company, but which have been reacquired by the
Company. From time to time, the Company may acquire additional shares for its
treasury account which may be purchased in open market or other transactions.
These treasury shares will be available to be sold under the Plan.

12. What will be the price of shares purchased under the Plan?

The purchase price for shares sold under the Plan will be an amount equal
to 100% of the average of the high and low sale prices as reported in the New
York Stock Exchange ("NYSE")-Composite Transactions for the Company's Common
Stock for the five trading days immediately preceding the Subscription Period
(see Question 7).

13. How many shares of Common Stock will be purchased?

The number of shares to be purchased for each Customer will depend on the
amount to be invested by that Customer and the purchase price of the Company's
stock (see Question 12).

A Customer may not specify the number of shares to be purchased or the
price at which shares are to be purchased, or otherwise seek to restrict or
control purchases made pursuant to the Plan.

14. Will dividends be paid on Common Stock if the Investment Date coincides
with a dividend payment date?

No. Normal dividend payment dates are the first day of March, June,
September and December. To receive the dividend, a person must be a shareholder
of record on the record date for a dividend as set by the Board of Directors
(generally at least 10 business days preceding the payment date) so as to allow
a sufficient time for the Company to process dividend payments. Therefore, if
the Investment Date and dividend payment date were the same, the Customer would
not be entitled to any dividend payment with respect to the Common Stock
purchased on the Investment Date.

<PAGE>

FRACTIONAL SHARES

15. Will fractional shares be credited to a Customer's account?

Yes, any remaining funds which are insufficient to purchase a full share of
Common Stock will be used to credit fractional shares to the Customer's account
along with the full shares. Shares purchased by Customers under the Plan will be
automatically deposited in the Dividend Reinvestment and Optional Stock Purchase
Plan (the "DRP"). The DRP is described in the DRP Prospectus which is attached
and included as part of this Prospectus (see Pages A1-A17]). Under the DRP, a
fractional share will be computed to four decimal places and will participate
proportionately in all subsequent dividends. Customers who do not wish to
participate in the DRP may terminate participation at any time by written notice
to such effect delivered to Agent (see Questions 27 and 28 in DRP Prospectus).
Customers may also, at any time, elect partial dividend reinvestment by
withdrawing any number of full shares held in the DRP account by written notice
to such effect delivered to the Agent (see Questions 15 and 27 in the DRP
Prospectus). Upon termination of the DRP account, Customers will receive
certificates representing full shares and any fractional shares credited to the
Customers' account will be paid in cash at the average of the high and low price
of the Company's Common Stock on the NYSE-Composite Transactions on the date of
receipt by the Agent of the request for issuance of certificates.

CERTIFICATES FOR SHARES

16. Will certificates be issued for shares purchased under the Plan?

No. Common Stock purchased under the Plan will be automatically deposited
in the Company's DRP. A copy of the DRP Prospectus is attached and included as
part of this Prospectus or may be obtained by writing or calling the Company
(see Question 3). All full and fractional shares purchased under the Plan will
be held by the Agent in its name or the name of its nominee for safekeeping at
no charge.

A customer in the Plan may, at any time, upon written request to the Agent,
withdraw any or all of the whole shares of Common Stock credited to his or her
account, and certificates for such shares of Common Stock will be issued to such
Customer. Certificates will be issued in the name in which the account under the
Plan was opened. Any remaining full shares of Common Stock for which
certificates are not requested and any fractional shares of Common Stock will
continue to be held in the Customer's account under the DRP.

Certificates for fractional shares of Common Stock will not be issued under
any circumstances.

CUSTOMERS' ACCOUNTS AND RECORDS

17. What information will the Customer receive?

A statement of the Customer's account describing the number of shares
purchased, the price per share, and the total shares accumulated under the Plan,
will be mailed to the Customer as soon as practicable after completion of each
investment for the Customer's account. After receipt of this Statement, the
Customer may request issuance of certificates for the full shares and a check
for fractional shares by signing the upper portion of the statement and
returning this portion to the Agent.

A shareholder account will be opened by the Company's transfer agent for
Customers who become new shareholders as a result of their purchase of Common
Stock under the Plan. The account will be opened in accordance with the
Customer's instructions on the Customer Authorization Form. All joint accounts
will be "Joint Tenants" unless otherwise instructed by the Customer.

<PAGE>

OTHER INFORMATION

18. What is the responsibility of the Company and Agent under this Plan?

In administering the Plan, neither the Company nor the Agent nor any agent
of either of them will be liable for any act done in good faith, without
negligence, or for any good faith omission to act, including, without
limitation, any claim of liability arising out of failure to terminate a
Customer's participation in the Plan upon such person's death prior to receipt
of legally sufficient instructions with respect thereto.

19. Does participation in the Plan involve any risk?

The risk to Customers who participate in the Plan is the same as with any
other investment in shares of Common Stock of the Company. It should be
recognized that a Customer who purchases Common Stock under the Plan loses any
advantage otherwise available from being able to select the timing of his
investment. It should also be recognized that, like any investment, the Company
cannot assure the Customer of a profit or protect the Customer against a loss on
the shares purchased under the Plan.

20. May the Plan be changed or discontinued?

The Company reserves the right to suspend, modify or terminate the Plan at
any time, including in the event of an oversubscription (see Question 21), and
to interpret and regulate the Plan as it deems to be necessary or desirable in
connection with the operation of the Plan.

All questions as to the validity, form, eligibility and acceptance of
subscriptions will be determined solely by the Company, which determinations
will be final and binding. No alternative, conditional or contingent
subscriptions will be accepted. The Company reserves the absolute right to
reject any or all subscriptions for any reason. The Company also reserves the
right to waive any irregularities or conditions, and the Company's
interpretations of the terms and conditions of the Plan shall be final and
binding.

21. What happens if participation exceeds the number of shares the Company has
available for issuance under the Plan?

In the event of an oversubscription to purchase shares under the Plan, the
Company will honor all payments received through the close of business on the
day the Subscription Period Sales Limit is reached. All payments received after
that time will be returned. The Company, in its sole discretion, may change the
number of shares to be allocated under the Plan.

FEDERAL INCOME TAX CONSEQUENCES

22. What is the tax treatment of dividends received by a Customer with respect
to shares purchased by the customer pursuant to the Plan?

A Customer will recognize taxable income in the full amount of any
dividends paid by the Company with respect to the shares purchased by the
Customer pursuant to the Plan. Customers who also participate in the DRP should
refer to the DRP Prospectus for details (see Questions 42, 43 and 44 in the DRP
Prospectus). If you are using the Plan to establish or contribute to an IRA, you
should consult a tax or financial advisor regarding special tax rules applicable
to IRAs.

23. What is the tax treatment of any payment received by a Customer upon the
sale of shares purchased by the Customer pursuant to the Plan?

Assuming that the shares are held as capital assets, a Customer who
receives any payment for the sale of shares purchased by the Customer pursuant
to the Plan will recognize either short-term or long-term capital gain or loss,
depending on his particular circumstances, the tax basis of his shares, and the
period of time he has held his shares. Federal law requires the Company to
notify the Internal Revenue Service (the "IRS") of all sales of stock made under
the Plan during the year. If a Customer sells any shares purchased under the
Plan, he will be sent a form 1099B for each sale pursuant to federal income tax
regulations.

<PAGE>

USE OF PROCEEDS

The net proceeds from the sale of shares will be used for general corporate
purposes.

DESCRIPTION OF CAPITAL STOCK

The following is a summary of certain provisions of the Company's Articles
of Incorporation, as amended, insofar as these provisions affect the Common
Stock. This summary is subject in all respects to the provisions of said
Articles, which are an exhibit to the Registration Statement of which this
Prospectus constitutes a part, and is qualified in its entirety by reference
thereto.

Authorized and Outstanding Stock

The aggregate number of shares the Company has authority to issue is
21,770,819 shares, divided into 20,000,000 shares of Common Stock, par value
$.50 per share, and 1,770,819 shares of Series Preferred Stock, par value $1.00
per share, including the Series A Junior Participating Preferred Stock (the
"Series A Preferred Stock") referred to under "Shareholders Rights Plan." The
Board of Directors has authority to divide the Series Preferred Stock into one
or more series and has broad authority to fix and determine relative rights and
preferences of the shares of each such series.

As of September 30, 1995, 12,072,988 shares of the Common Stock were issued
and outstanding, and no shares of Series A Preferred Stock were outstanding. In
addition, options to purchase 547,218 shares under the Company's Stock Option
Plans were outstanding as of that date.

Dividend Rights

Holders of shares of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. Since the Company is a
holding company, the funds required by the Company to enable it to pay dividends
on its Common Stock are derived predominantly from the dividends paid to the
Company by PSW. The Company's ability to pay dividends, therefore, is dependent
upon the earnings, financial condition and ability to pay dividends of PSW. PSW
is subject to regulation by the Public Utility Commission (the "PUC"), and the
amounts of its earnings and dividends are affected by the manner in which it is
regulated by the PUC. In addition, PSW is subject to restrictions on the payment
of dividends contained in its various debt agreements. Under PSW's most
restrictive debt agreement, the amount available for payment of dividends by PSW
as of December 31, 1994 was approximately $67 million.

Liquidation Rights

In the event of liquidation, dissolution or winding up of the Company, the
holders of shares of Common Stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior distribution rights of
Preferred Stock, if any, then outstanding.

Voting Rights

Holders of 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.

<PAGE>

Shareholders Rights Plan

Holders of the Common Stock own, and the holders of the shares of Common
Stock issued in this offering will receive, one right (a "Right") to purchase
Series A Preferred Stock for each outstanding share of Common Stock. The rights
are issued pursuant to a Shareholders Rights Plan. Upon the occurrence of
certain events, each Right would entitle the holder to purchase from the Company
one one-hundredth of a share of Series A Preferred Stock at an exercise price of
$70 per one-hundredth of a share, subject to adjustment. The Rights are
exercisable in certain circumstances if a person or group acquires 25% or more
of the Company's Common Stock or if the holder of 25% or more of the Company's
Common Stock engages in certain transactions with the Company. In that case,
each Right would be exercisable by each holder, other than the acquiring person,
to purchase shares of Common Stock of the Company at a substantial discount from
the market price. In addition, if, after the date that a person has become the
holder of 25% or more of the Company's Common Stock, any person or group merges
with the Company or engages in certain other transactions with the Company, each
Right entitles the holder, other than the acquirer, to purchase common stock of
the surviving corporation at a substantial discount from the market price. The
Rights are subject to redemption by the Company in certain circumstances. The
Rights have no voting or dividend rights and, until exercisable, cannot trade
separately from the Common Stock and have no dilative effect on the earnings of
the Company.

Each share of Series A Preferred Stock will entitle the holder to 100 votes
per share on all matters submitted to a vote by shareholders, subject to
adjustment in the event of certain changes in the number of outstanding shares
of Common Stock. Each share of Series A Preferred Stock will be entitled to a
preferential quarterly dividend, preferred payments on liquidation, and, in the
event of certain transactions in which shares of Common Stock are exchanged for
or changed into other securities, cash or property, will be entitled to receive
100 times the aggregate amount of such items into which or for which each share
of Common Stock is changed or exchanged. The shares of Series A Preferred Stock
are not redeemable.

State Law Anti-takeover Provisions

The Company is subject to various provisions of the Pennsylvania Business
Corporation Law of 1988, as amended, which are triggered, in general, if any
person or group acquires, or discloses an intent to acquire, 20% or more of the
voting power of a covered corporation, other than pursuant to a registered firm
commitment underwriting or, in certain cases, pursuant to the approving vote of
the board of directors. These provisions provide the other shareholders of the
corporation with certain rights against such person or group; prohibit the
corporation from engaging in any of a broad range of business combinations with
such person or group; and restrict such person's or group's voting and other
rights. In addition, an amendment of the corporation's articles or other
corporate action, if approved by shareholders generally, may provide mandatory
special treatment for specified groups of nonconsenting shareholders of the same
class by providing, for example, that shares of common stock held only by
designated shareholders of record, and no other shares of common stock shall be
cashed out at a price determined by the corporation, subject to applicable
dissenters' rights.

Certain provisions of the Company's Articles and Bylaws may have the effect
of discouraging unilateral tender offers or other attempts to take over and
acquire the business of the Company. These provisions might discourage some
potentially interested purchaser from attempting a unilateral takeover bid for
the Company on terms which some shareholders might favor. The Company's Articles
require that certain fundamental transactions must be approved by the holders of
75% of the outstanding shares of capital stock of the Company entitled to vote
on the matter unless at least 75% of the members of the Board of Directors of
the Company has approved the transaction, in which case the required shareholder
approval will be the minimum approval required by applicable law. The
fundamental transactions which are subject to this provision are those
transactions which require approval by the shareholders of the Company under
applicable law or the Articles of the Company, including certain amendments of
the Articles or Bylaws of the Company, certain sales or other dispositions of
the assets of the Company, certain issuances of capital stock of the Company, or
certain transactions involving the merger, consolidation, division,
reorganization, dissolution, liquidation or winding up of the Company. The
Company's Bylaws prohibit a nominee from being elected a director of the Company
unless the name of the nominee, and certain information relating to the nominee,
is filed with the Secretary of the Company not less than 14 days nor more than
50 days prior to the annual or special meeting at which such person is to be a
candidate for director.

<PAGE>

No Preemptive Rights

Neither the Common Stock nor any other class of securities of the Company
has any preemptive rights.

Transfer Agent and Registrar

The Transfer Agent and Registrar for the Common Stock is Mellon Bank N.A.

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Company's Common Stock is listed for trading on the NYSE under the
symbol PSC. The following table shows the range of high and low closing prices
per share of the Company's Common Stock as reported by NYSE and the per share
dividends paid on the Common Stock for the periods indicated.

High Low
Price Price Dividends
----- ----- ---------

1993
First Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 18 1/4 15 5/8 0.26
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3/8 17 1/4 0.27
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 20 3/4 18 1/8 0.27
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . 20 1/8 17 3/4 0.27

1994
First Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5/8 17 1/2 0.27
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1/2 17 1/8 0.27
Third Quarter (through July 29, 1994). . . . . . . . . . . . . . . 19 3/8 17 1/2 0.28
Fourth Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3/4 17 1/4 0.28

1995
First Quarter. . . . . . . . . . . . . . . . . . . . . . . . . . . 18 1/4 17 3/8 0.28
Second Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3/4 17 5/8 0.28
Third Quarter . . . . . . . . . . . . . . . . . . . . . . . . . . 18 5/8 17 5/8 0.29
Fourth Quarter (through November 1, 1995). . . . . . . . . . . . . 19 3/8 18 0.29

</TABLE>

On November 1, 1995, the closing price of the Company's stock on the NYSE
was $19 1/4. Based upon that price, the dividend yield on the Common Stock
(annual dividend divided by the stock price per share) is 6.0% per annum.
Investors should consider that the price of the Company's Common Stock
fluctuates from time to time which will affect the return from an investment in
the Common Stock. Investors should obtain a recent price for the Common Stock.
In addition, while the Company or its predecessors has paid an uninterrupted
dividend for the past 49 years, dividends are paid only at the discretion of the
Company's Board of Directors based on the financial condition and results of
operations of the Company from time to time and the payment of dividends is
limited by the terms of certain debt agreements to which the Company is a party.
(See the Long-term Debt and Loans Payable Note to the Consolidated Financial
Statements contained in the Company's 1994 Annual Report to Shareholders, a copy
of which is available by contacting the Company.)

- -------------------------------

* On August 1, 1995, the Board of Directors of the Company increased its
quarterly dividend rate to $29 per share of Common Stock and declared a
cash dividend payable on September 1, 1995 to holders of record on
August 15, 1995.

<PAGE>

EXPERTS

The consolidated financial statements of Philadelphia Suburban Corporation
and its subsidiaries as of December 31, 1994 and 1993 and for each of the
years in the three-year period ended December 31, 1994, incorporated by
reference herein and elsewhere in the registration statement have been
incorporated herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein and upon the authority of said firm as
experts in accounting and auditing.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.

<PAGE>

P R O S P E C T U S

PHILADELPHIA SUBURBAN CORPORATION
DIVIDEND REINVESTMENT AND OPTIONAL STOCK PURCHASE PLAN
Shares of Common Stock (Par Value $.50)

-----------------------

The Dividend Reinvestment and Optional Stock Purchase Plan (the "Plan") of
Philadelphia Suburban Corporation (the "Company") provides each holder of shares
of the Company's Common Stock with a convenient and economical way of purchasing
additional shares of Common Stock through the automatic reinvestment of cash
dividends of Common Stock and/or through optional cash payments. Any holder of
record of shares of Common Stock is eligible to participate and may invest a
minimum of $25.00 and a maximum of $10,000 annually during four Subscription
Periods (March 1 - March 15; June 1 - June 15; September 1 - September 15; and
December 1 - December 15). Persons who are not shareholders may become
participants by making an initial investment of $500 for the purchase of shares
of Common Stock.

Participants in the Plan may elect to have all or a designated portion of
the cash dividends received on their first 15,000 shares of the Company's Common
Stock reinvested in Common Stock.

The purchase price of shares of Common Stock purchased with reinvested
dividends will be an amount equal to 95% of the average of the high and low sale
prices for the Common Stock as reported in the New York Stock Exchange
("NYSE")-Composite Transactions for each of the five trading days immediately
preceding the Dividend Reinvestment Investment Date. Shares purchased for
Participants' accounts with reinvested dividends will generally be original
issue or treasury shares acquired from the Company. However, the Company
reserves the right to purchase shares for the Plan on the open market.

The purchase price of shares of Common Stock purchased through optional
cash investments will be an amount equal to 100% of the average of the high and
low sale prices as reported in the NYSE-Composite Transactions for the Company's
Common Stock for the five trading days immediately preceding the Subscription
Period. Shares purchased for Participants' accounts through optional cash
investments under the Plan will be original issue or treasury shares acquired
from the Company. Purchase of additional shares through optional cash
investments under the Plan may be made only during a Subscription Period.

If a shareholder is participating in the Company's previous Dividend
Reinvestment Plan, the shareholder will be automatically enrolled in the Plan
with respect to all shares of Common Stock registered in his or her name, unless
such shareholder instructs the Plan's administrator in writing to terminate or
to alter the amount of his or her participation.

The outstanding shares of the Company's Common Stock are, and the
additional shares offered hereby will be, listed on the New York and
Philadelphia Stock Exchanges.

The Company will receive all of the net proceeds from the sale of the
Common Stock.

As of the date hereof, 708,318 shares of Common Stock have been registered
and remain available for sale under the Plan.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Date of this Prospectus is November __, 1994

<PAGE>

-----------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----
<S> <C>

Available Information. . . . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference. . . . . . . 3
The Company. . . . . . . . . . . . . . . . . . . . . . . . . 4
The Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Purpose. . . . . . . . . . . . . . . . . . . . . . . . . 5
Advantages . . . . . . . . . . . . . . . . . . . . . . . 5
Administration . . . . . . . . . . . . . . . . . . . . . 5
Participation in Plan. . . . . . . . . . . . . . . . . . 6
Participation in Optional Stock Purchase . . . . . . . . 6
Participation in Dividend Reinvestment . . . . . . . . . 7
Full and Fractional Shares . . . . . . . . . . . . . . . 9
Certificates for Shares. . . . . . . . . . . . . . . . . 9
Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Participants' Accounts and Records . . . . . . . . . . . 10
Change in Manner of Participation. . . . . . . . . . . . 10
Terminating Participation. . . . . . . . . . . . . . . . 10
Other Information. . . . . . . . . . . . . . . . . . . . 11
Federal Income Tax Consequences. . . . . . . . . . . . . 12
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . 13
Description of Capital Stock . . . . . . . . . . . . . . . . 13
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . 15
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . 15

</TABLE>

<PAGE>

AVAILABLE INFORMATION

-------------------

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

<PAGE>

THE COMPANY

The Company was incorporated in Pennsylvania in 1968 and its executive
offices are located at 762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010,
telephone number (610) 527-8000.

Future Business Strategy

THE PLAN

A shareholder who was participating in the Company's previous Dividend
Reinvestment and Optional Stock Purchase Plan will be automatically enrolled in
the Plan unless such shareholder gives notice to the contrary. The following
questions and answers constitute the Company's Dividend Reinvestment and
Optional Stock Purchase Plan (the "Plan"):

<PAGE>

PURPOSE

1. What is the purpose of the Plan?

The purpose of the Plan is to provide shareholders of record of the
Company's Common Stock with a convenient and economical way to reinvest cash
dividends and/or make optional cash investments to purchase additional shares of
the Company's Common Stock and to provide persons with a convenient way to
become shareholders of the Company.

Since the reinvestment of dividends and the purchase of additional shares
will provide funds to be retained by the Company in exchange for the issuance of
new shares of Common Stock or treasury shares, the Company will receive
additional funds through the Plan that will be used from time to time for
general corporate purposes.

ADVANTAGES

2. What are some of the advantages of the Plan?

Participants in the Plan may elect to have all or a designated portion of
cash dividends received on their first 15,000 shares of Common Stock
automatically reinvested each dividend payment (see Question 7) and/or build
their ownership in the Company through additional cash investment. The 15,000
share reinvestment limitation, however, will not apply to the Company's pension
plan or any of its other employee benefit plans. Participants in the Plan will
pay an amount equal to 95% of the purchase price for shares when reinvesting all
or a designated portion of their cash dividends, subject to the 15,000 share
reinvestment limitation per dividend payment (see Question 21). Participants in
the Plan will pay an amount equal to 100% of the purchase price for shares when
purchasing additional shares through the cash investment option available under
the Plan (see Question 12). The 15,000 share reinvestment limitation will apply
to all shares of Common Stock beneficially owned by a Participant.

All service charges and any brokerage commissions in connection with
purchases under the Plan will be paid by the Company.

The Plan permits fractions of shares as well as full shares to be credited
to the Participants' accounts. In addition, dividends with respect to such
fractions, as well as with respect to full shares, will be credited to
Participants' accounts and reinvested in new shares of Common Stock under the
Plan.

ADMINISTRATION

3. Who administers the Plan for Participants?

The Company administers and interprets the Plan, keeps the records of the
Plan and sends statements of account to Participants, and performs other duties
relating to the Plan. There are no brokerage fees charged by the Company in
connection with the reinvestment of dividends, and the Company absorbs all of
the administrative expenses of the Plan. However, charges will be incurred by a
Participant upon the sale of his shares (see Questions 30, 31 and 32), and
certain fees may be charged to participants by brokers when shares are held by
brokers. All correspondence to the Company should be directed to:

Corporate Secretary
Philadelphia Suburban Corporation
762 Lancaster Avenue
Bryn Mawr, PA 19010

<PAGE>

The Company has delegated certain of its administrative responsibilities
under the Plan to Mellon Bank N.A. (the "Agent"), which acts as agent for the
participating holders of Common Stock under an arrangement which may be
terminated by the Company or the Agent at any time. The Agent maintains a
continuing record of all Participants' accounts, sends statements of account to
each Participant (see Questions 25 and 26), and performs other duties relating
to the Plan. The Agent will hold for safekeeping the certificates for shares
purchased for each Participant under the Plan until termination of the
shareholder's participation in the Plan, or until a written request is received
from the Participant for withdrawal of the shares.

Should Mellon Bank N.A. cease to act as the Agent under the Plan, the
Company may designate another agent or may perform these administrative duties
itself. In such event, all references herein to Mellon shall be deemed to be
references to the Company or such other agent as the Company may designate.

All correspondence, notices, questions or other communications regarding
transactions under the Plan should be addressed to:

Mellon Bank N.A.
P. O. Box 750
Pittsburgh, PA 15230
1-800-205-8314

PARTICIPATION IN PLAN

4. Who is eligible to participate in the Plan?

All shareholders of record of the Company's Common Stock are eligible to
participate in the Plan. In addition, persons who are not shareholders may
become participants by making an initial investment in the Company's Common
Stock of $500 ("Qualified New Shareholders") during a Subscription Period (see
Question 7). The Company does not have any formal or informal understanding with
financial intermediaries regarding their participation in the Plan and the
extent of the participation of financial intermediaries under the Plan cannot be
determined at this time.

5. How does an eligible shareholder participate?

Shareholders of record may join the Plan at any time by signing the
appropriate Authorization Form and returning it to the proper office.
Authorization Forms designating optional stock purchases should be mailed to the
Company (see Question 3). Authorization Forms designating dividend reinvestment
should be mailed to the Agent (see Question 3).

Qualified New Shareholders may join the Plan at the time of their initial
purchase of Common Stock by forwarding a check or money order payable to
Philadelphia Suburban Corporation with a completed Direct Stock Purchase
Authorization Form to the Company during a Subscription Period (see Question 7).

An Authorization Form will be mailed to all new holders of record of Common
Stock by the Agent and may be obtained at any time by written request to the
Agent (see Question 3). Authorization Forms may also be obtained by contacting
the Corporate Secretary, Philadelphia Suburban Corporation, 762 Lancaster
Avenue, Bryn Mawr, Pa. 19010, telephone (610) 645-1013 or (610) 645-1036.

<PAGE>

PARTICIPATION IN OPTIONAL STOCK PURCHASE

6. How does an eligible shareholder participate?

An investment is made by forwarding to the Company a check or money order
payable to Philadelphia Suburban Corporation with a completed Authorization
Form. On the next Optional Stock Purchase Investment Date (see Question 9), the
full amount of cash will be invested in full and fractional shares. Whenever
optional cash investments are made, such payments must be accompanied by a
completed Authorization Form and must be sent to the Company (see Question 3).

7. Are there restrictions when purchases may be made under Optional Stock
Purchase?

Yes. Optional purchases of Common Stock under the Plan are restricted to
the following four Subscription Periods: March 1-March 15; June 1-June 15;
September 1-September 15; and December 1-December 15.

8. Are there limits to the amount a participant may invest?

Yes. The minimum optional purchase is $25 per Subscription Period and the
maximum during any one calendar year is $10,000. The Company does not anticipate
granting waivers of the maximum optional purchase limit of $10,000 during any
one Subscription Period. The payment made by a Qualified New Shareholder for the
initial purchase of Common Stock is included in the maximum optional purchase
limit during the calendar year of purchase, reducing such annual maximum on a
dollar for dollar basis.

9. When will payments be invested?

To be invested, an appropriately-completed Optional Stock Purchase
Authorization Form and the related payment must be received by the Company by
5:00 p.m. on the last day of the Subscription Period to be invested. Funds
received after the cut-off time will be returned.

The Plan, as nominee of the Participant making a purchase of Common Stock,
will first become the record holder of the Common Stock purchased during a
Subscription Period at the close of the business on the first business day after
the close of the Subscription Period (the "Optional Stock Purchase Investment
Date").

Participants have an unconditional right to obtain the return of any
payments up to 5:00 p.m. on the last day of the Subscription Period. Requests
for return must be made in writing and received by the Company prior to the
cut-off time.

10. Will interest be paid on cash investments prior to the Investment Date?

No. No interest will be credited or paid on payments received or held by
the Company under the Plan.

11. What is the source of shares purchased under Optional Stock Purchase?

Shares purchased under Optional Stock Purchase will be authorized but
unissued shares or treasury shares of Common Stock of the Company. Treasury
shares are shares which were previously issued by the Company, but which have
been reacquired by the Company. From time to time, the Company may acquire
additional shares for its treasury account which may be purchased in open market
or other transactions. These treasury shares will be available to be sold under
the Plan.

12. What will be the price of shares purchased under Optional Stock Purchase?

The purchase price for shares acquired pursuant to optional purchases under
the Plan will be an amount equal to the average of the high and low sale prices
as reported in the New York Stock Exchange ("NYSE")-Composite Transactions for
the Company's Common Stock for the five trading days immediately preceding the
Subscription Period.

<PAGE>

13. How many shares of Common Stock will be purchased?

The number of shares to be purchased for each Participant as of any
Optional Stock Purchase Investment Date will depend on the amount to be invested
by that Participant and the purchase price of the Company's stock (see Question
12).

14. What rules apply to Individual Retirement Accounts?

An annual administrative fee of $25 charged for maintaining an IRA account
will be paid by the Company.

PARTICIPATION IN DIVIDEND REINVESTMENT

15. How does dividend reinvestment work?

The Agent will receive all cash dividends payable on the Company's Common
Stock registered in the name of the Participant and designated by the
Participant on the Authorization Form to be reinvested. The Agent will apply all
such cash dividends to the purchase of additional shares of Common Stock for the
Participant's account, subject to the 15,000 share reinvestment limitation per
dividend payment.

At the Company's direction, such purchases of shares for dividend
reinvestment will be made by purchasing authorized but unissued or treasury
shares of Common Stock from the Company or by purchasing already issued shares
from third parties on any securities exchange where such shares are traded, in
the over-the-counter market, or by negotiated transactions and may be on such
terms as to price, delivery and otherwise, and may be executed through such
brokers, as the Agent may determine. If the Company determines to cause the
Agent to purchase already issued shares from third parties, the Agent may
purchase such shares.

The cash dividends, if any, payable to a shareholder Participant and not to
be reinvested will be forwarded to the Participant in accordance with customary
procedure in effect at the time.

16. What does the Authorization Form provide?

The Authorization Form for participation in dividend reinvestment serves
both to initiate participation in the Plan and to appoint the Agent to act for
the Participant in buying shares of Common Stock. Specifically, the
Authorization Form provides for the purchase of shares of Common Stock through
the following two investment options:

(i) "FULL DIVIDEND REINVESTMENT," directs the Company to pay to the Agent
for reinvestment the Participant's cash dividends on all of the shares of Common
Stock then or subsequently registered in the Participant's name (the "Record
Shares"), subject to the 15,000 share reinvestment limitation per dividend
payment. Any excess cash dividends above such 15,000 share reinvestment
limitation will be paid in cash to the Participant.

(ii) "PARTIAL DIVIDEND REINVESTMENT," directs the Company to pay to the
Agent for reinvestment cash dividends on the number of Record Shares designated
by the Participant on the Authorization Form

<PAGE>

or, if less, the number of Record Shares which are owned by the Participant,
subject, of course, to the 15,000 share reinvestment limitation per dividend
payment.

Authorization Forms for dividend reinvestment should be returned to the
Agent (see Question 3). If an Authorization Form is returned with no
instructions checked, the Participant's selection of the full dividend
reinvestment option will be assumed.

17. When may a shareholder join Dividend Reinvestment?

Shareholders of record may join the Plan at any time and will become a
Participant when the Agent receives the signed Authorization Form designating
dividend reinvestment. Participation in dividend reinvestment will start with
the next dividend payable after receipt of an appropriately-completed
Authorization Form, provided that the Form is received at least five business
days before the record date for that dividend and the shareholder has been a
shareholder of record no less than fifteen days prior to the record date for
that dividend. Should the Authorization Form not arrive until after a record
date for a dividend or if the shareholder has held his or her shares less than
fifteen days prior to the record date for a dividend, participation will begin
with the next dividend payment.

18. Must all dividends on shares credited to a Participant's account under
Dividend Reinvestment be reinvested?

Yes. Regardless of the investment option chosen, all cash dividends on
shares held in the Plan for all Participants are automatically reinvested in
additional shares of Common Stock, subject to the 15,000 share reinvestment
limitation per dividend payment.

19. How many shares of Common Stock will be purchased for Participants?

The number of shares to be purchased will depend on the amount of cash
dividends to be reinvested, and the price of the shares of Common Stock
purchased for the Participant's account.

A Participant may not specify the number of shares to be purchased or the
price at which shares are to be purchased, or otherwise seek to restrict or
control purchases by the Agent.

20. When will shares of Common Stock be purchased under Dividend Reinvestment?

The Investment Date for the reinvestment of dividends shall be the dividend
payment date ("Dividend Reinvestment Investment Date") (see Question 36). If the
Dividend Reinvestment Investment Date is not a business day or the Company's
Common Stock does not trade on that day, then the Dividend Reinvestment
Investment Date shall be the next business day on which the Company's Common
Stock trades.

For shares purchased in the open market, the Agent, at its sole discretion,
will determine the exact timing of purchases made for allocation to the accounts
of Participants in the Plan. However, the Agent shall make every effort to
invest all dividends promptly after the receipt of the proceeds, and in no event
later than 30 days after such receipt, except where temporary curtailment or
suspension of purchases is necessary to comply with provisions of the federal
securities laws.

21. What will be the price per share of Common Stock purchased under
Dividend Reinvestment?

The purchase price for shares purchased with reinvested dividends will be
an amount equal to 95% of the average of the high and low sale prices for such
shares as reported in the NYSE-Composite Transactions for each of the five
trading days immediately preceding the Dividend Reinvestment Investment Date
(see Question 20).

<PAGE>

FULL AND FRACTIONAL SHARES

22. Will fractional shares be credited to a Participant's account?

Yes. If the amount of the Participant's cash dividend and/or additional
payment is not equal to an exact number of full shares, a fraction of a share
will be credited to the Participant's account, along with the full shares. A
fractional share will be computed to four decimal places and will participate
proportionately in all subsequent dividends.

CERTIFICATES FOR SHARES

23. Will certificates be issued for shares purchased under the Plan?

No. Shares purchased under the Plan will be held by the Agent in its name
or the name of its nominee. A Participant in the Plan may, at any time, upon
written request to the Agent, withdraw any or all of the whole shares of Common
Stock credited to his or her account, and certificates for such shares of Common
Stock will be issued to such Participant. Certificates will be issued in the
name in which the account under the Plan was opened. Any remaining full shares
of Common Stock for which certificates are not requested and any fractional
shares of Common Stock will continue to be held in the Participant's account
under the Plan.

Certificates for fractional shares of Common Stock will not be issued under
any circumstances.

COSTS

24. Are there any expenses to the Participant in connection with
participation in the Plan?

All costs of administering the Plan are to be paid by the Company, except
when a Participant withdraws from the Plan or the Company terminates the Plan
(see Questions 30, 31 and 32).

PARTICIPANTS' ACCOUNTS AND RECORDS

25. What information will the Participant receive?

A statement of the Participant's account describing the cash dividends
and/or optional cash payments received, the number of shares purchased, the
discounted price per share, the fair market value price per share, and the total
shares accumulated under the Plan, will be mailed to the Participant as soon as
practicable after completion of each investment for the Participant's account.

In addition, each Participant will receive copies of the same
communications sent to record and beneficial holders of Common Stock of the
Company each year, including the Company's interim reports, annual reports,
notice of annual meeting and proxy statement, as well as any income tax
information for reporting dividends paid or reinvested.

<PAGE>

26. In whose name will accounts be maintained and certificates registered
when issued?

A Participant's plan account will be maintained in the name or names which
appear on the Company's shareholder records.

A certificate for shares, when delivered to a Participant, will be
registered in the name or names in which the account is maintained. Upon written
request, certificates can be registered and issued in names other than the
account name, provided that the request bears the signature of the Participant
or Participants and the signature(s) are guaranteed by a commercial bank or a
member firm of the NYSE.

CHANGE IN MANNER OF PARTICIPATION

27. How may a Participant change the manner of his participation?

A Participant may change the extent to which he participates in the Plan by
completing a new Authorization Form to indicate the manner of his future
participation and sending it to the Agent. Changes with respect to dividend
reinvestment will become effective with respect to the next dividend payment if
the appropriately-completed Authorization Form is received by the Agent prior to
the record date for that dividend.

TERMINATING PARTICIPATION

28. Can a Participant withdraw shares from his or her account without
terminating participation in the Plan?

Yes. A Participant may at any time withdraw any number of full shares held
in the account by written request to the Agent without terminating participation
in the Plan. A certificate for shares withdrawn will be issued to the
Participant without charge.

29. How and when may a Participant terminate participation in the Plan?

Participation in the Plan may be terminated by the Participant at any time
by written notice to such effect delivered to the Agent. To be effective for any
given dividend payment, the notice of termination must be received by the Agent
by at least five business days prior to the dividend record date. 30. What
happens when a Participant terminates participation?

Upon termination, the Agent will promptly cause to be sent to the
Participant a certificate representing the number of full shares credited to the
Participant's account. In every case of termination, any fractional shares
credited to the Participant's account will be paid in cash at the average of the
high and low price of the Company's Common Stock on the NYSE-Composite
Transactions on the date of receipt by the Agent of the notice of termination,
less any applicable brokerage commissions.

Participation in the Plan shall also automatically terminate upon receipt
by the Agent of written notice satisfactory to the Agent of the Participant's
death. Shares accumulated under the Plan and any dividends subsequently received
by the Agent upon such shares shall be held by the Agent until such time as it
receives written direction as to disposition from the Participant's duly
appointed legal representative.

31. May a Participant receive cash in lieu of full share certificates upon
termination of participation?

Yes. The Participant may request, in his or her written notification of
termination, that the Agent sell all full and fractional shares held in the
account under the Plan in which case the Agent will sell the shares and deliver
the proceeds, less brokerage commissions and any taxes payable in connection
with the sale, to the Participant.

32. May a Participant sell his or her Record Shares and still remain in the
Plan?

If a Participant should sell or transfer all of his or her Record Shares of
Common Stock, the Agent, at its discretion, may continue to reinvest the
dividends on the shares credited to his or her account under the Plan until
notified in writing by the Participant to withdraw from the Plan, or may
terminate the Participant's Plan participation and sell all of the shares
credited to the Participant's account. Upon termination, the Agent will remit to
the former Participant the proceeds from any sale, less any related brokerage
commission and applicable taxes, and payment for any fractional shares.

<PAGE>

33. What happens if a Participant sells or transfers some but not all of
the Common Stock credited to the Participant's account?

If a Participant is reinvesting dividends on only a portion of his or her
Record Shares, the Common Stock sold or transferred will be considered to be the
shares receiving cash dividends to the extent possible. Dividend reinvestment
will only be reduced when the number of shares of Common Stock sold or
transferred exceeds the number of shares receiving cash dividends. For example,
if a Participant owns 1,000 shares of Common Stock and has authorized dividends
on 600 of those shares to be reinvested under the Plan, such Participant could
sell up to 400 of his or her Record Shares without reducing the number of shares
which participate in the dividend reinvestment feature of the Plan.

34. May a Participant stop reinvesting the dividends from his record shares
and receive them in cash and still remain in the Plan?

Yes. A Participant who terminates the reinvestment of dividends paid on his
or her Record Shares, may leave shares acquired through the Plan in the
Participant's Plan account. Dividends paid on shares left in the Plan will
continue to be automatically reinvested.

35. When may a shareholder re-enroll in the Plan?

Generally, a shareholder may again become a Participant at any time.
However, the Company reserves the right to reject any Authorization Form from a
previous Participant on grounds of excessive enrolling and termination. This
reservation is intended to minimize administrative expenses and to encourage use
of the Plan as a long-term investment service.

OTHER INFORMATION

36. What are the dividend payment and record dates?

Anticipated dividend payment dates are the first day of March, June,
September and December. The record date usually precedes the dividend payment
date by 10 business days.

37. How will a Participant's shares be voted at annual meetings of
shareholders?

The Agent will obtain voting instructions from the Participant for all full
and fractional shares which are held by the Agent for the Participant's account
on the record date established by the Company for determining shareholders
entitled to vote. In the absence of voting instructions from the Participant,
shares accumulated under the Plan will not be voted.

38. What happens if the Company issues a stock dividend, declares a stock
split or has a rights offering?

Any stock dividends or split shares distributed by the Company on shares
held by the Agent for the Participant will be credited to the Participant's
account. In the event that the Company makes available to its common
shareholders rights to purchase additional shares, debentures or other
securities, the Agent will sell such rights accruing on shares held by the Agent
for Participants and invest the proceeds in Common Stock of the Company prior to
or with the next regular cash dividend.

A Participant who wishes to exercise purchase rights must request that a
stock certificate be sent to him by the Agent prior to the record date for the
rights offering.

39. Can a Participant pledge shares credited to his/her account?

<PAGE>

No. Shares in a Participant's account in the Plan may not be pledged or
otherwise encumbered unless withdrawn from the account.

40. What is the responsibility of the Company or the Agent under the Plan?

In administering the Plan, neither the Company nor the Agent nor any agent
of either of them, will be liable for any act done in good faith, without
negligence, or for any omission to act including, without limitation, any claims
for liability arising out of failure to terminate the Participant's account upon
his death prior to receipt of notice in writing of such death and with respect
to the prices at which shares are purchased or sold for the Participant's
account and the times such purchases or sales are made.

41. Does participation in the Plan involve any risk?

The risk to Participants is the same as with any other investment in shares
of Common Stock of the Company. It should be recognized that a Participant loses
any advantage otherwise available from being able to select the timing of his
investment. It should also be recognized that, like any investment, the Company
cannot assure the Participant of a profit or protect the Participant against a
loss on the shares purchased by the Participant under the Plan.

42. May the Plan be changed or terminated?

The Company reserves the right to suspend or terminate the Plan at any
time. It also reserves the right to make modifications or amendments to the
Plan. Notice of any such suspension, termination, modification or amendment will
be sent to all Participants.

FEDERAL INCOME TAX CONSEQUENCES

43. What is the tax treatment of dividends received by Participant?

A Participant will be treated for federal income tax purposes as having
received, on each dividend payment date, the full amount of dividends reinvested
in shares as a cash dividend equal in amount to the fair market value of the
purchased shares on the dividend payment date, even though that amount is not
actually received in cash. Therefore, Participants will recognize taxable income
in the full amount of the purchased shares. FOR EXAMPLE, in the event of a
dividend pursuant to which a participant receives common stock whose fair market
value on the dividend payment date is $100.00 (i.e., a cash equivalent of
$95.00), the Participant will be taxable on the full $100.00 in value received
pursuant to the dividend. The Internal Revenue Service (the "IRS") taxes the
Participant based on the fair market value of shares received on the dividend
payment date. This formula for determining a Participant's tax basis is
different from the formula used to determine the purchase price for shares
purchased with reinvested dividends. The purchase price for shares purchased
with reinvested dividends is 95% of the average of the high and low sale prices
reported in the NYSE- Composite Transactions for each of the five trading days
immediately preceding the Dividend Reinvestment Investment Date (see Question
21).

44. What provision is made for Participants whose dividends are subject to
income tax withholding?

In the case of those Participants whose dividends are subject to United
States income tax backup withholding, the Agent will apply the net amount of
their dividends, after the deduction for taxes, to the purchase of shares of
Common Stock. As a general matter, backup withholding is required, at a rate of
31 percent, if (1) the Participant fails to furnish its taxpayer identification
number (the "TIN") to the Company as required, (2) the IRS notifies the Company
that the TIN furnished by the Participant is incorrect, (3) the IRS notifies the
Company that the Participant has failed properly to report certain payments as
required, or (4) the Participant fails to certify, when and as required to do
so, that it is not subject to backup withholding.

<PAGE>

45. What is the tax treatment of cash received by a Participant upon the
sale of shares purchased by the Participant pursuant to the Plan?

Assuming that the shares are held as capital assets, a Participant who
receives a cash payment for any full or fractional shares then held in his Plan
account will recognize either short-term or long-term capital gain or loss,
depending on his particular circumstances, the tax basis of his shares, and the
period of time he has held his shares. Federal law requires the Company to
notify the IRS of all sales of stock made under the Plan during the year. If a
Participant sells any shares from the Plan, he will be sent a Form 1099B for
each share pursuant to federal income tax regulations.

USE OF PROCEEDS

The net proceeds from the sale of authorized but unissued stock and
treasury stock will be used for general corporate purposes.

DESCRIPTION OF CAPITAL STOCK

Authorized and Outstanding Stock

Dividend Rights

Liquidation Rights

<PAGE>

Voting Rights

Holders of 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.

Shareholders Rights Plan

State Law Anti-takeover Provisions

<PAGE>

No Preemptive Rights

Neither the Common Stock nor any other class of securities of the Company
has any preemptive rights.

Transfer Agent and Registrar

The Transfer Agent and Registrar for the Common Stock is Mellon Bank N.A.

EXPERTS

The consolidated financial statements of Philadelphia Suburban Corporation
and its subsidiaries as of December 31, 1994 and 1993 and for each of the years
in the three-year period ended December 31, 1994, incorporated by reference
herein and elsewhere in the registration statement have been incorporated herein
and in the registration statement in reliance upon the report of KPMG Peat
Marwick LLP, independent certified public accountants, incorporated by reference
herein and upon the authority of said firm as experts in accounting and
auditing.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for the
Company by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania.

<PAGE>

PHILADELPHIA SUBURBAN CORPORATION
DIVIDEND REINSTATEMENT AUTHORIZATION FORM

I hereby authorize Philadelphia Suburban Corporation (the "Company") to pay
to Mellon Bank (East) N.A. (the "Agent") for my account, cash dividends payable
to me on the shares of Common Stock of the Company now and hereafter registered
in my name, or credited to my account under the Dividend Reinvestment Plan and
Optional Stock Purchase Plan (the "Plan") in accordance with the elections on
the reverse side hereof. If I sign this authorization but do not make any
election, then dividends on all shares registered in my name, subject to the
15,000 share reinvestment limitation per dividend payment, will be paid to the
Agent for reinvestment.

I hereby appoint the Agent as my agent, subject to the terms and conditions
of the Plan as set forth in the Prospectus with respect to the Plan, and
authorize the Agent, to reinvest dividends in the Common Stock of the Company in
accordance with the elections specified on the reverse side hereof.

I understand that I may change my investment option under the Plan at any
time by signing and returning to the Agent a subsequent Authorization Form
specifying an option which differs from my then current participation under the
Plan.

This authorization and appointment is given with the understanding that I
may terminate it at any time by notifying the Agent, in writing, of my desire to
terminate my participation under the Plan.

**THIS IS NOT A PROXY**

- --------------------------------------------------------------------------------
**IMPORTANT** READ INSTRUCTIONS ON REVERSE SIDE
BEFORE COMPLETING AND SIGNING

I wish to enroll in the Dividend Reinvestment and Optional Stock Purchase Plan
of Philadelphia Suburban Corporation (the "Plan") as checked below. (If (ii) is
checked you must also insert the number of shares):

(i) FULL DIVIDEND REINVESTMENT - reinvest cash dividends on all shares of
Common Stock now or hereafter registered in my/our name(s) subject to
the 15,000 share reinvestment limitation per dividend payment.

(ii) PARTIAL DIVIDEND REINVESTMENT - reinvest dividends on
________ shares of Common Stock registered in my/our name(s)
subject to the 15,000 share reinvestment limitation per dividend
payment.

Signature:___________________________ Signature:*______________________________

Name (Print):________________________ Name (Print):____________________________

Address:_______________________________________________________________________

Dated:__________________________________

*If the shares are held jointly, both shareholders must sign the Authorization
Form.

<PAGE>

PHILADELPHIA SUBURBAN CORPORATION
OPTIONAL STOCK PURCHASE
AUTHORIZATION FORM

I, a shareholder of Philadelphia Suburban Corporation (the "Company"),
hereby authorize the Company, Mellon Bank (East) N.A. (the "Agent") or any
successor Agent, under the terms and conditions of the Dividend Reinvestment and
Optional Stock Purchase Plan (the "Plan"), to establish an account as indicated
below, and apply the enclosed cash payment to the purchase of shares of Common
Stock of the Company as provided for in the Plan. I hereby acknowledge receipt
of the Prospectus with respect to the Plan and agree to the terms and conditions
stated therein. This authorization may be revoked at any time prior to the end
of the Subscription Period by notifying the Company in writing.

**THIS IS NOT A PROXY**

- --------------------------------------------------------------------------------

**IMPORTANT** READ INSTRUCTIONS ON REVERSE SIDE
BEFORE COMPLETING AND SIGNING

Enclosed is my check in the amount of $_______ ($25 minimum; $10,000 maximum
annually) payable to Philadelphia Suburban Corporation.

<TABLE>

<S> <C>
- ------------------------------------------- ------------------------------------------------
Shareholder signature Shareholder signature*

- ------------------------------------------- ------------------------------------------------
Name (Print) Name (Print)

- -------------------------------------------
Address

- ------------------------------------------- ------------------------------------------------
Daytime Telephone No. Social Security No.

- ------------------------------------------- ------------------------------------------------
Date Shareholder Account No.

</TABLE>

*If the shareholder account is to be a joint account, both shareholders must
sign the Authorization Form. All joint accounts will be registered as "Joint
Tenants" unless otherwise specified.

Make checks payable to Philadelphia Suburban Corporation and mail to:
Philadelphia Suburban Corporation, 762 Lancaster Avenue, Bryn Mawr, PA 19010,
Attn: Corporate Secretary.

<PAGE>

PHILADELPHIA SUBURBAN CORPORATION
DIRECT STOCK PURCHASE
AUTHORIZATION FORM

I hereby authorize Philadelphia Suburban Corporation (the "Company"),
Mellon Bank (East) N.A. (the "Agent") or any successor Agent, under the terms
and conditions of the Dividend Reinvestment and Optional Stock Purchase Plan
(the "Plan"), to establish an account as indicated below, and apply the enclosed
cash payment to the purchase of shares of Common Stock of the Company as
provided for in the Plan. I hereby acknowledge receipt of the Prospectus with
respect to the Plan and agree to the terms and conditions stated therein. This
authorization may be revoked at any time prior to the end of the Subscription
Period by notifying the Company in writing.

**THIS IS NOT A PROXY**

- -------------------------------------------------------------------------------
**IMPORTANT** READ INSTRUCTIONS ON REVERSE SIDE
BEFORE COMPLETING AND SIGNING

Enclosed is my check in the amount of $_______ ($500 minimum) payable to
Philadelphia Suburban Corporation.

<TABLE>

<S> <C>
- ------------------------------------------- ------------------------------------------------
Shareholder signature Shareholder signature*

- ------------------------------------------- ------------------------------------------------
Name (Print) Name (Print)

- -------------------------------------------
Address

- ------------------------------------------- ------------------------------------------------
Daytime Telephone No. Social Security No.

- ------------------------------------------- ------------------------------------------------
Date Shareholder Account No.

</TABLE>

*If the shareholder account is to be a joint account, both shareholders must
sign the Authorization Form. All joint accounts will be registered as "Joint
Tenants" unless otherwise specified.

Make checks payable to Philadelphia Suburban Corporation and mail to:
Philadelphia Suburban Corporation, 762 Lancaster Avenue, Bryn Mawr, PA 19010,
Attn: Corporate Secretary.

<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table shows the estimated expenses of the issuance and
distribution of the securities offered hereby:

<TABLE>

<S> <C>
Securities and Exchange Commission Registration Fee .............. $ 780
Printing and Engraving ........................................... 8,000
Accounting Services .............................................. 4,000
Legal Services ................................................... 5,000
NYSE Listing Fees ................................................ 1,500
PHSE Listing Fees ................................................ 1,250
Transfer Agent Fees .............................................. 1,800
Total ....................................................... $ 22,530

</TABLE>

Item 15. Indemnification of Directors and Officers

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 Company's 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.

<PAGE>

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.

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 indemnifiable 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 16. Exhibits, Financial Statement Schedules and Index to such Exhibits
and Schedules

The exhibits filed as part of this registration statement are as follows:

<S> <C>
Exhibit
Number Description
- ------ -------------------------------------------
4.1 Articles of Incorporation of Registrant(1)
4.2 Bylaws of Registrant(2)
4.3 Rights Agreement (3)
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of
securities when issued.*
23.1 Consent of Morgan, Lewis & Bockius LP
(included in its opinion filed as Exhibit 5.1 hereto).
23.2 Consent of KPMG Peat Marwick LLP.*
24.1 Powers of Attorney (included on the signature page).

- ----------
* Filed herewith
(1) Incorporated by reference from Annual Report on Form 10-K for the
Year Ended December 31, 1992,
(Exhibit No. 3.1)
(2) Incorporated by reference from Annual Report on Form 10-K for the
Year Ended December 31, 1992,
(Exhibit No. 3.2)
(3) Incorporated by reference from Current Report on Form 8-K,
dated February 26, 1988 (Exhibit No. 1)

</TABLE>

<PAGE>

Item 17. Undertakings

(1) The undersigned registrant hereby undertakes to file, during any period
in which offers or sales are being made, a post-effective amendment to this
Registration Statement:

(i) to include 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 this 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 this
Registration Statement; and

(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;

Provided, however, that the undertakings set forth in paragraphs 1(i) and 1(ii)
above do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange
Act that are incorporated by reference in this Registration Statement.

(2) The undersigned registrant hereby undertakes 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
relative 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.

(3) The undersigned registrant hereby undertakes to remove from
registration by means of a post-effective amendment any of the securities being
registered hereby which remain unsold at the termination of the offering.

(4) The undersigned registrant hereby undertakes that, for the purpose 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 this
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.

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 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.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Bryn Mawr,
Commonwealth of Pennsylvania, on this 15th day of November, 1995.

PHILADELPHIA SUBURBAN CORPORATION

By: /s/ Nicholas DeBenedictis
Nicholas DeBenedictis
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by or on behalf of the following
persons in the capacities and on the dates indicated.

<S> <C> <C>
Signature Title Date

/s/ Nicholas DeBenedictis Director, Chairman and Chief November 15, 1995
- -------------------------
Nicholas DeBenedictis Executive Officer (Principal
Executive Officer)

/s/ Michael P. Graham Senior Vice President --
- ------------------------- Finance November 13, 1995
Michael P. Graham and Treasurer (Principal
Financial and Accounting Officer)

/s/ John H. Austin, Jr. Director November 15, 1995
- -------------------------
John H. Austin, Jr.

/s/ G. Fred DiBona Director November 15, 1995
- -------------------------
G. Fred DiBona

/s/ John W. Boyer, Jr. Director November 15, 1995
- -------------------------
John W. Boyer, Jr.

/s/ Mary C. Carroll Director November 15, 1995
- -------------------------
Mary C. Carroll

/s/ Claudio Elia Director November 15, 1995
- -------------------------
Claudio Elia

/s/ Joseph C. Ladd Director November 15, 1995
- -------------------------
Joseph C. Ladd

/s/ John F. McCaughan Director November 15, 1995
- -------------------------
John F. McCaughan

/s/ Harvey J. Wilson Director November 15, 1995
- -------------------------
Harvey J. Wilson

</TABLE>

<PAGE>

INDEX TO EXHIBITS

<S> <C> <C>
Exhibit Sequentially
Number Exhibit Numbered Page
4.1 - Articles of Incorporation of Registrant(1)
4.2 - Bylaws of Registrant(2)
4.3 - Rights Agreement (3)
5.1 - Opinion of Morgan, Lewis & Bockius LLP
23.1 - Consent of KPMG Peat Marwick LLP
23.2 - Consent of Morgan, Lewis & Bockius LLP
(included as part of Exhibit 5.1)
</TABLE>

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(1) Incorporated by reference from Annual Report on Form 10-K for the
Year Ended December 31, 1992,
(Exhibit No. 3.1)
(2) Incorporated by reference from Annual Report on Form 10-K for the
Year Ended December 31, 1992,
(Exhibit No. 3.2)
(3) Incorporated by reference from Current Report on Form 8-K,
dated February 26, 1988 (Exhibit No. 1)

<PAGE>

November 15, 1995

Philadelphia Suburban Corporation
762 Lancaster Avenue
Bryn Mawr, Pennsylvania 19010

Re: Philadelphia Suburban Corporation - Registration
Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to Philadelphia Suburban Corporation,
a Pennsylvania corporation (the "Company"), in connection with the preparation
of a registration statement on Form S-3 (the "Registration Statement") filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to the issuance under the Company's Dividend
Reinvestment and Optional Stock Purchase Plan of up to 400,000 shares (the
"Shares") of the Company's common stock, par value $.50 per share. We have
examined such records, documents, statutes and decisions as we have deemed
relevant in rendering this opinion.

Our opinion set forth below is limited to the Business
Corporation Law of the Commonwealth of Pennsylvania.

In our opinion, the Shares, when issued and sold as described
in the Registration Statement, will be legally issued, fully paid and
non-assessable.

We hereby consent to the use of this opinion as Exhibit 5 to
the Registration Statement. In giving such opinion, we do not thereby admit that
we are acting within the category of persons whose consent is required under
Section 7 of the Act or the rules or regulations of the Securities and Exchange
Commission thereunder.

Very truly yours,

/s/ Morgan, Lewis & Bockius, LLP

<PAGE>

KPMG Peat Marwick LLP

1600 Market Street
Philadelphia, PA 19103-7212

The Board of Directors
Philadelphia Suburban Corporation:

We consent to the use of our report on the consolidated financial statements
of Philadelphia Suburban Corporation as of December 31 1994 and 1993 and for
each of the years in the three year period ended December 31, 1994 included
in the 1994 Annual Report on Form 10-K incorporated herein by reference, and
to the reference to our firm under the heading "Experts" in the prospectus.
Our report refers to the adoption of the provisions of Financial Accounting
Standards Board Statements of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" and No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions".

/s/ KPMG Peat Marwick LLP

Philadelphia, Pennsylvania
November 13, 1995