<PAGE> 1
As filed with the Securities and Exchange Commission on January 14, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT
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
(610) 527-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
ROY H. STAHL
Philadelphia Suburban Corporation
Senior Vice President and General Counsel
762 Lancaster Avenue
Bryn Mawr, PA 19010
(610) 527-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
N. JEFFREY KLAUDER DAVID P. FALCK
Morgan, Lewis & Bockius LLP Winthrop, Stimson, Putnam & Roberts
2000 One Logan Square One Battery Park Plaza
Philadelphia, PA 19103-6993 New York NY 10005
(215) 963-5000 (212) 858-1000
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 (the "Securities Act"), other than securities offered
only in connection with dividend or interest reinvestment plans, check the
following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Title of each class of Amount to Proposed maximum Proposed maximum Amount of
securities to be registered be registered offering price per share (3) aggregate offering price (3) registration fee
<S> <C> <C> <C> <C>
Common Stock, $.50 1,250,000 Shares (2) $21.22 $26,525,000 $7,824.88
par value (1)
</TABLE>
(1) Includes associated Preferred Stock purchase rights.
(2) Includes 150,000 shares subject to an over-allotment option granted to
the Underwriters
(3) Based upon the average of the reported high and low sales prices of
shares of Common Stock reported on the New York Stock Exchange
Composite Tape on January 13, 1998, estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457(c).
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> 2
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED JANUARY 14, 1998
PROSPECTUS
1,100,000 SHARES
PHILADELPHIA SUBURBAN CORPORATION
COMMON STOCK
The outstanding shares of the Common Stock of Philadelphia Suburban
Corporation (the "Company") are, and the shares offered hereby will be, listed
on the New York and Philadelphia Stock Exchanges under the symbol "PSC". The
reported last sale price of the Common Stock on the New York Stock Exchange
Composite Tape on January 13, 1998 was $21.22 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
------ -------------- ----------
<S> <C> <C> <C>
Per Share........................ $____ $____ $____
Total (3)........................ $______ $______ $______
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses of the offering payable by the Company
estimated at $184,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up
to 150,000 additional shares of Common Stock on the same terms as set
forth above to cover over-allotments, if any. If such option is
exercised in full, the total Price to Public, Underwriting Discounts
and Commissions and Proceeds to the Company will be $______, $______,
and $_____ respectively. Additionally, the per share Underwriting
Discount will be increased and the per share Proceeds to the Company
will be decreased by the amount of any dividend declared by the
Company and payable on the shares of Common Stock initially sold to
the Underwriters but not payable on the shares subject to such option.
See "Underwriting."
The shares of Common Stock are being offered by the several Underwriters named
herein, subject to prior sale, when, as and if accepted by them and subject to
certain conditions. It is expected that certificates for the shares of Common
Stock offered hereby will be made available for delivery on or about
___________, 1998, at the office of A.G. Edwards & Sons, Inc., 1 North
Jefferson, St. Louis, MO 63103.
A.G. EDWARDS & SONS, INC.
EDWARD D. JONES & CO., L.P.
, 1998
<PAGE> 4
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING SYNDICATE COVERING TRANSACTIONS AND THE IMPOSITION OF A PENALTY
BID. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
AVAILABLE INFORMATION
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"). 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, Suite 1300, New York, New York 10048 and
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. 20549, at prescribed rates. Additionally, such material may be
obtained at the web site the Commission maintains at "http://www.sec.gov", which
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. 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, PA 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,
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,
1996, the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1997, June 30, 1997 and September 30, 1997 and the Company's Current Reports
on Form 8-K dated August 5, 1997 and December 2, 1997 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 and
prior to the termination of the offering of the Common Stock hereunder 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) 527-8000.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere, or incorporated by
reference, in this Prospectus. Except as otherwise indicated herein, all
information in this Prospectus, including share and per share data, (i) reflects
the 4-for-3 stock split in the form of a stock distribution effective January
12, 1998 and (ii) assumes the Underwriters' over-allotment option is not
exercised.
THE COMPANY
Philadelphia Suburban Corporation ("PSC" or 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 294,000 residential, industrial,
commercial, public and other customers (including 6,000 customers of a municipal
authority operated by PSW) in 93 municipalities in Southeastern Pennsylvania.
PSW's 464 square mile service territory is located within four counties north
and west of the City of Philadelphia. The population of PSW's service territory
is approximately 900,000. The population of the four counties is approximately
2,200,000. The service area is nearly all contiguous, primarily residential and
is completely metered except for fire hydrant service. As of December 31, 1996,
PSW was the fourth largest investor-owned water utility in the United States
based on the number of customers. PSW accounts for over 98% of PSC's
consolidated revenues and net income. Non-utility subsidiaries account for the
remaining 2% of consolidated revenues and net income and include the operation
of a data center and contract operation of water systems.
Since December 1992, PSW has acquired 21 local water systems and 2 small
wastewater utilities that have added approximately 39,500 customers and 135
square miles to PSW's service territory. The annual compound growth rate in
customers over the past five years has been 3.3% including both acquisitions and
normal growth on PSW's water system. In addition, PSW has entered into an
agreement to acquire the water utility assets of the West Chester Area Municipal
Authority and has entered into a letter of intent to acquire the Flying Hills
Water Company. These acquisitions will add approximately 8,900 customers and 17
square miles to PSW's service territory. Closing on these acquisitions is
expected to occur in the first quarter of 1998. The Company is actively
exploring other opportunities to expand its water utility operations through
acquisitions or otherwise. See "Recent Developments." While acquisitions in
recent years have been adjacent or close to PSW's existing service territory,
the Company may, in the future, acquire systems in other geographic locations.
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Common Stock offered (1).................................. 1,100,000 shares
Common Stock to be outstanding after the
offering............................................... 27,312,472 shares (2)
Common Stock price range (January 1, 1997
through January 13, 1998).............................. $22.69 - $11.44
Common Stock dividend..................................... The indicated annual dividend rate is $.65 per share, paid
quarterly (3)
New York Stock Exchange symbol............................ PSC
Use of proceeds........................................... $19,000,000 of the net proceeds will be used to fund an
investment in PSW and will be used by PSW to reduce
debt and redeem preferred stock. The balance of the net
proceeds will be used to reduce debt of the Company.
</TABLE>
(1) Includes associated Preferred Stock Purchase Rights. See "Description
of Capital Stock -- Shareholders Rights Plan."
(2) As of January 5, 1998. Does not include any shares of Common Stock that
may have been issued after that date pursuant to the Company's employee
benefit plans.
(3) On December 2, 1997, the Company's Board of Directors increased the
quarterly dividend rate to $.1625 per share and declared a cash
dividend in such amount, payable March 1, 1998. Holders, as of the
record date on February 13, 1998, of the Common Stock offered hereby
will be entitled to receive this dividend.
3
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[This Page Intentionally Left Blank]
4
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SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------- ---------------------------------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Earned revenues $101,090 $122,503 $117,044 $108,636 $101,244
Operating income 43,149 49,290 46,109 40,845 37,430
Net income available to common stock
Continuing operations (1) 17,561 19,757 18,030 15,638 13,835
Discontinued operations -- 965 370 -- --
-------- -------- -------- -------- --------
Total $ 17,561 $ 20,722 $ 18,400 $ 15,638 $ 13,835
======== ======== ======== ======== ========
PER COMMON SHARE DATA:
Net income per common share
Continuing operations $ 0.67 $ 0.78 $ 0.75 $ 0.68 $ 0.64
Discontinued operations -- 0.04 0.02 -- --
-------- -------- -------- -------- --------
Total $ 0.67 $ 0.82 $ 0.77 $ 0.68 $ 0.64
======== ======== ======== ======== ========
Cash dividends paid per common share $ 0.463 $ 0.593 $ 0.570 $ 0.550 $ 0.535
Average common and common equivalent
shares outstanding 26,212 25,398 24,026 23,122 21,711
OPERATING DATA:
Total water sold (millions of gallons) 23,262 27,695 28,022 27,106 26,910
Number of metered water customers 286,981 284,141 264,865 249,533 247,195
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Capitalization
Long-term debt (3) $231,543 $229,962 $188,985 $153,082 $150,176
Preferred stock of PSW with mandatory redemption (3) 4,215 5,643 7,143 10,000 10,000
Preferred stock of Company 3,220 3,220 -- -- --
Common stockholders' equity 188,962 176,795 156,976 143,795 135,934
-------- -------- -------- -------- --------
Total capitalization (3) $427,940 $415,620 $353,104 $306,877 $296,110
======== ======== ======== ======== ========
Total assets $599,303 $582,944 $518,051 $460,062 $440,935
Property, plant & equipment, net 516,736 502,938 436,905 385,709 366,230
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
------------------------------------------------------
ACTUAL AS ADJUSTED(2)
---------------------- ----------------------
Amount Percent Amount Percent
------ ------- ------ -------
<S> <C> <C> <C> <C>
CAPITALIZATION:
Long-term debt(3)
First mortgage bonds of PSW $196,200 $206,200
Revolving credit debt of PSW 33,708 8,923
Other 1,635 1,635
----- -----
Total 231,543 54.1% 216,758 50.3%
Preferred stock of PSW with
mandatory redemption (3) 4,215 1.0% -- 0.0%
Preferred stock of Company 3,220 0.8% 3,220 0.7%
Common Stockholders' equity
Paid-in capital 134,086 156,415
Retained earnings 54,876 54,876
------ --------
Total 188,962 44.1% 211,291 49.0%
-------- ----- -------- -----
Total capitalization (3) $427,940 100.0% $431,269 100.0%
======== ===== ======== =====
Total assets $599,303 $599,303
======== ========
Short-term debt (4) $ 10,070 $ 6,741
======== ========
</TABLE>
All share and per share data as presented have been adjusted for the 4-for-3
common stock split effective January 12, 1998 in the form of a stock
distribution.
(1) After provision for dividends on preferred stock.
(2) Adjusted to reflect (i) the sale of the Common Stock offered hereby for
estimated net proceeds of approximately $22,329, (ii) the private
placement in October 1997 of $10,000 of First Mortgage Bonds of PSW,
(iii) the application of approximately $29,000 of the proceeds of such
sale and placement to reduce the outstanding revolving credit debt of
PSW, and redeem the Preferred Stock of PSW with mandatory redemption
and (iv) the application of the remaining proceeds to reduce debt of
the Company. See "Use of Proceeds."
(3) Includes current portion of long-term debt and preferred stock of PSW.
See "Use of Proceeds."
(4) Loans payable to banks under short-term lines of credit.
5
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[INSERT MAP OF SERVICE AREA]
6
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THE WATER UTILITY INDUSTRY
Of the major utility industries in the U.S. (telephone, natural gas,
electric and water), the water industry is the most fragmented with over 55,000
water systems. The systems range in size from large municipally-owned systems,
like the City of Philadelphia water system with over 486,000 customers, to small
systems where a few customers share a common well. In Pennsylvania alone, the
Company believes there are over 2,400 public water systems.
Companies in the water industry, both municipally-owned and
investor-owned, are expected by customers and regulators to provide reliable
water service at affordable prices while meeting stringent federal and state
water quality standards. Continued capital investment is necessary to (1) repair
and replace aging water distribution infrastructure, (2) expand existing systems
in response to community growth and development, and (3) invest in new
technology to meet water quality standards. In its First Report to Congress in
January 1997, the United States Environmental Protection Agency estimated that
the nation's water systems must invest a minimum of $138.4 billion over the next
20 years to meet the requirements of The Safe Drinking Water Act of 1974, as
amended.
THE COMPANY
Philadelphia Suburban Corporation ("PSC" or 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 294,000 residential, industrial,
commercial, public and other customers (including 6,000 customers of a municipal
authority operated by PSW) in 93 municipalities in Southeastern Pennsylvania.
PSW's 464 square mile service territory is located within four counties north
and west of the City of Philadelphia. The population of PSW's service territory
is approximately 900,000. The population of the four counties is approximately
2,200,000. The service area is nearly all contiguous, primarily residential and
is completely metered except for fire hydrant service. As of December 31, 1996,
PSW was the fourth largest investor-owned water utility in the United States
based on the number of customers. PSW accounts for over 98% of PSC's
consolidated revenues and net income. Non-utility subsidiaries account for the
remaining 2% of consolidated revenues and net income and include the operation
of a data center and contract operation of water systems.
The Company was incorporated in Pennsylvania in 1968 and its executive
offices are located at 762 Lancaster Avenue, Bryn Mawr, Pennsylvania 19010, and
its telephone number is (610) 527-8000.
Since December 1992, PSW has acquired 21 local water systems and 2
small wastewater utilities that have added approximately 39,500 customers and
135 square miles to PSW's service territory. The annual compound growth rate in
customers over the past five years has been 3.3% including both acquisitions and
normal growth on PSW's water system. In addition, PSW has entered into an
agreement to acquire the water utility assets of the West Chester Area Municipal
Authority and has entered into a letter of intent to acquire the Flying Hills
Water Company. These acquisitions will add approximately 8,900 customers and 17
square miles to PSW's service territory. Closing on these acquisitions is
expected to occur in the first quarter of 1998. The Company is actively
exploring other opportunities to expand its water utility operations through
acquisitions or otherwise. See "Recent Developments." While acquisitions in
recent years have been adjacent or close to PSW's existing service territory,
the Company may, in the future, acquire systems in other geographic locations.
Acquisition Strategy
The Company believes that there are many potential water system
acquisition candidates because of the fragmented nature of the water utility
industry and that consolidation will be facilitated by (1) the benefits of
economies of scale, (2) effective management, and (3) the capital intensive
nature of the business. The Company believes acquisitions will continue to be an
important source of growth for the Company. The Company intends to continue to
pursue acquisitions of municipally-owned and investor-owned water systems of all
sizes that provide services in areas adjacent to the Company's existing service
territory or in new service areas. The Company engages in continuing activities
with respect to potential acquisitions, including performing analyses and
investigations of acquisition candidates, making preliminary acquisition
proposals and negotiating the terms of potential acquisitions. Except as
described below under "Recent Developments - Acquisitions", the Company is not
currently a party to any definitive agreement or binding letter of intent with
respect to a material acquisition. No assurance can be given that the Company
will be able to identify and acquire such businesses on acceptable terms or that
such acquisitions will be accretive to earnings.
7
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RECENT DEVELOPMENTS
Acquisitions
The Company has agreed to purchase the franchise rights and the water
utility assets of West Chester Area Municipal Authority ("West Chester") and has
entered into a letter of intent to acquire the Flying Hills Water Company
("Flying Hills") in two unrelated transactions for a combined purchase price of
approximately $22,400,000 in cash and approximately 45,000 shares of PSC Common
Stock. The transactions, which are subject to final negotiations and the
approval of the Pennsylvania Public Utility Commission ("PUC"), are expected to
be completed in the first quarter of 1998. The West Chester system is contiguous
to PSW's existing service territory. The Flying Hills system is in Berks County
near Reading, Pennsylvania and is 16 miles from the nearest edge of PSW's
system. These systems cover 17 square miles and have approximately 8,900
customers. The annual revenues of these systems approximates $4,700,000.
Employee Relations
In December 1997, PSW and the International Brotherhood of Firemen and
Oilers, Local 473, which represents a majority of PSW's hourly employees,
reached agreement on a new four year labor agreement. The new contract calls for
wage increases of 3.75%, 3.5%, 3.5% and 3.75% per year effective on December 1,
1997, 1998, 1999 and 2000, respectively.
Rates and Regulation
PSW is subject to regulation by the PUC, which has jurisdiction with
respect to rates, service, accounting procedures, issuance of securities,
acquisitions and other matters. In October 1997, the PUC approved a settlement
of PSW's most recent rate request, filed in April 1997. The settlement between
PSW, the Pennsylvania Office of the Consumer Advocate, the PUC staff and the
Pennsylvania Small Business Advocate allowed PSW to increase its base rates by
an average of 7.3%. In addition, PSW has agreed to not file another base rate
request prior to April 1999, absent extraordinary circumstances. The base rate
increase, which was effective on October 26, 1997, was designed to increase
annual revenues by approximately $9,300,000.
In 1996, the PUC approved a mechanism, the Distribution System
Improvement Charge ("DSIC"), which allows Pennsylvania water utilities to add a
surcharge to their water bills to offset the additional depreciation and capital
costs associated with certain non-revenue producing, non-expense reducing
capital expenditures related to replacing and rehabilitating distribution
systems. The DSIC may be adjusted quarterly based on the previous quarter's
qualified capital expenditures, but may never exceed 5% of the base rates in
effect. PSW began charging a DSIC of 0.5% in the first quarter of 1997. Based on
subsequent qualified capital expenditures, the DSIC was increased to 1.0% in the
second quarter, 1.4% in the third quarter and 1.82% for the portion of the
fourth quarter prior to the effective date of the new base rate increase. The
DSIC is reset to zero when new base rates that reflect the costs of the related
expenditures become effective. Total revenues associated with the DSIC in the
first nine months of 1997 were $942,000.
Pending Deregulation of Electric Industry
During 1997, the total costs for electric power purchased by the
Company amounted to $8,575,000. In December 1996, the Governor of Pennsylvania
signed into law the Electricity Generation Customer Choice and Competition Act
("Electric Act") which provides for the restructuring of the electric utility
industry in Pennsylvania. The Electric Act requires the unbundling of electric
services into separate generation, transmission and distribution services with
open competition for generation. Beginning in November 1997, approximately 18%
of PSW's electricity requirements were selected to be included in the State's
pilot implementation program. Prior to the pilot program, PSW had purchased all
of its electricity from PECO Energy Company ("PECO"). For electric accounts in
the pilot program, the electricity will be purchased from HorizonOne Electric, a
PECO affiliate. The total electric costs for the twelve-month period prior to
the pilot program for the accounts selected were approximately $1,020,000. The
Company estimates that the electric rates during participation in the pilot
program will be approximately 10% to 12% lower than the former rates. Since
electric usage is dependent on water demand, the exact savings related to the
pilot program cannot be determined at this time. A recent ruling by the PUC
provides that after completion of the pilot program on December 31, 1998, 66% of
PECO's electric accounts, including the accounts in the pilot program and others
to be selected in a lottery, will be permitted to choose the electricity
generator of their choice. The Electric Act will be completely phased in on
January 1, 2001 at which point all electric accounts will be allowed to select
their electric supplier. The PUC ruling is subject to appeal by PECO and others.
8
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Financial Results (First Nine Months of 1997 Compared to First Nine Months
of 1996)
Revenues increased by $10,286,000 or 11.3% primarily as a result of an
increase in water sales associated with the hot, dry weather experienced during
the summer of 1997 and $4,270,000 of water revenues from the 1996 acquisitions.
In addition, water revenues included $942,000 from the DSIC.
Costs and expenses increased by $4,095,000 or 7.6%, of which $3,388,000 was
primarily due to higher production costs resulting from the increased volume of
water sold in the third quarter, additional operating expenses of the water
systems acquired in 1996, and increased wage and insurance expenses, partially
offset by the effects of the mild 1997 winter which resulted in fewer main
breaks and reduced maintenance expenses. Depreciation also increased by $908,000
reflecting utility plant placed in service, including the assets from the
acquisitions, in the past year.
USE OF PROCEEDS
The net proceeds from the sale of the 1,100,000 shares of Common Stock
offered hereby, after deducting the underwriting discount and offering expenses,
are estimated to be $22,329,200 ($25,399,200 if the Underwriters' over-allotment
option is exercised in full). The Company expects to invest $19,000,000 of the
net proceeds of the offering in PSW as a contribution to the capital of PSW. The
Company expects that PSW will use these proceeds to reduce outstanding
indebtedness under its revolving credit agreement incurred for capital
expenditures, for acquisitions of water systems and for the retirement of
approximately $4,214,500 of PSW's 8.66% Series 1 Cumulative Preferred Stock with
Mandatory Redemption. The principal amount outstanding under the revolving
credit agreement on January 9, 1998 was $26,843,000. Interest on outstanding
balances under the revolving credit agreement is based, at PSW's option, on the
prime rate, an adjusted federal funds rate, an adjusted certificate of deposit
rate corresponding to the interest period selected, an adjusted Euro-Rate
corresponding to the interest period selected or at rates offered by the banks.
As of January 9, 1998, the interest rate on the principal amount outstanding
under the revolving credit agreement was 6.23%. The balance of the net proceeds
will be used to reduce short-term debt of the Company.
CAPITAL REQUIREMENTS AND FUNDING
PSW's 1998 capital program is estimated to be $55,000,000, of which
$33,400,000 is for DSIC qualified projects. The 1998 capital program is expected
to be financed, along with $2,448,000 of sinking fund obligations and $4,214,500
of preferred stock redemptions, through internally-generated funds, bank
borrowings, equity investments from the Company and issuance of new long-term
debt. PSW has increased its capital spending for infrastructure rehabilitation
in response to the DSIC. Should the DSIC be discontinued for any reason, which
is not anticipated, PSW would likely reduce its capital program significantly.
Future utility construction in the period 1999 through 2002 is estimated to
require aggregate expenditures of approximately $200,000,000. The majority of
the utility construction during this period is expected to be for DSIC qualified
projects. The Company anticipates that approximately 50% of these expenditures
will require external financing including the additional issuance of Common
Stock through the Company's dividend reinvestment plan and possible future
public equity offerings. The estimates discussed above do not include any
amounts for possible future acquisitions of water systems or the financing
necessary to support them.
PSW's ability to finance its future construction programs, as well as its
acquisition activities, depends on its ability to attract the necessary external
financing and maintain or increase internally-generated funds. Rate orders
permitting compensatory rates of return on invested capital and timely rate
adjustments will be required to allow PSW to achieve an adequate level of
earnings to enable it to secure the capital it will need and to maintain
satisfactory debt coverage ratios.
FORWARD - LOOKING STATEMENTS
Certain matters discussed under "The Company," "Use of Proceeds" and
"Capital Requirements and Funding" in this Prospectus may include
forward-looking statements that involve risks and uncertainties. These
forward-looking statements are based on a variety of assumptions made by
management regarding future circumstances over which the Company may have little
or no control. Actual results may differ materially from these forward-looking
statements for a number of reasons, including (i) the effects of regulation,
(ii) changes in capital requirements and funding, and (iii) acquisitions.
9
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The following table shows the high and low sale prices per share of
Common Stock as reported on the New York Stock Exchange Composite Tape for the
periods indicated and also shows the cash dividends paid per share during such
periods.
<TABLE>
<CAPTION>
1996 HIGH LOW QUARTERLY CASH
DIVIDENDS PAID
<S> <C> <C> <C>
First Quarter............ $11.57 $10.26 $0.1448
Second Quarter........... 12.57 11.25 0.1448
Third Quarter............ 12.94 11.63 0.1519
Fourth Quarter........... 14.91 12.38 0.1519
-------
$0.5934
=======
1997
First Quarter............ $15.47 $11.72 $0.1519
Second Quarter........... 15.10 11.44 0.1519
Third Quarter............ 18.00 14.07 0.1594
Fourth Quarter........... 22.18 15.10 0.1594
-------
$0.6226
=======
1998
First Quarter (through
January 13, 1998)...... $22.69 $20.72 $0.1625*
=======
</TABLE>
* On December 2, 1997, the Company's Board of Directors increased the
quarterly dividend rate to $.1625 per share and declared a cash
dividend in such amount, payable March 1, 1998. Holders, as of the
record date on February 13, 1998, of the Common Stock offered hereby
will be entitled to receive this dividend.
The Company or its predecessor companies have paid dividends each year since
1944. The Company presently intends to pay quarterly cash dividends in the
future, subject to its earnings and financial condition, regulatory requirements
and such other factors as the Board of Directors of the Company may deem
relevant. See "Description of Capital Stock--Dividend Rights" for a description
of limitations on the payment of cash dividends.
See the cover page of this Prospectus for the last sale price of the
Company's Common Stock on a recent date. As of December 31, 1997 there were
approximately 13,894 holders of record of the Common Stock.
The Company offers the holders of record of its Common Stock the
opportunity to reinvest part or all of the dividend payments on their shares of
Common Stock through purchases of original issue Common Stock without payment
of any brokerage commission or service charge through its Dividend Reinvestment
and Direct Stock Purchase Plan (the "Plan"). The purchase price for original
issue shares of Common Stock purchased through the reinvestment of dividends is
95% of the average of the high and low prices of the Common Stock as reported in
the NYSE-Composite Transactions for each of the five trading days immediately
preceding the dividend payment date. The Plan also permits shareholders and
investors to invest up to $30,000 annually in the Company's Common Stock in the
open market through the Company's transfer agent. At December 1, 1997, holders
of 23% of the shares of Common Stock outstanding participated in the dividend
reinvestment portion of the Plan.
10
<PAGE> 13
DESCRIPTION OF CAPITAL STOCK
The Company has the authority to issue an aggregate of 41,770,819
shares. This includes 40,000,000 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 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 series.
During 1996, the Board of Directors designated 32,200 shares as 6.05% Series B
Preferred Stock and in November 1996, the Company issued all of these shares in
connection with an acquisition.
As of December 31, 1997, 26,204,339 shares of Common Stock were issued
and outstanding, and 32,200 shares of 6.05% Series B Preferred Stock were
outstanding. In addition, options to purchase 969,737 shares of Common Stock
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 therefore. 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 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 the most restrictive debt agreement, the
amount available for payment of dividends by PSW as of December 31, 1997 was
approximately $120 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. Under terms of
the Series B Preferred Stock, the holders thereof are entitled in the event of a
liquidation, dissolution or winding up of the Company, to receive out of the
Company's assets legally available for distribution to its shareholders, an
amount per share of $100.00 plus an amount equal to any accrued but unpaid
cumulative dividends and any interest accrued thereon.
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. 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 Junior Participating Preferred Stock
("Series A Preferred Stock") for each outstanding share of Common Stock. The
rights are issued pursuant to a Shareholders Rights Plan (the "Current 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 dilutive effect on the earnings of the Company. The current Plan expires on
March 1, 1998.
At the meeting of the Board of Directors scheduled for February 3,
1998, management is expected to recommend that the Board of Directors adopt a
new Shareholder Rights Plan (the "New Plan") to replace the Current Plan. The
New Plan, which would expire on March 1, 2008, would be substantially the same
as the Current Plan except that the beneficial ownership threshold that would
trigger the exercisability of the rights issued to purchase Company Common Stock
would be reduced from 25% of the outstanding Common Stock to approximately 20%
of the outstanding Common Stock.
11
<PAGE> 14
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 (i) shareholders from calling a special meetings of
the Company's shareholders, (ii) 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 any meeting of the shareholders called for the
election of directors, and (iii) shareholder proposals to be made at annual
meetings of shareholders unless certain advance notice procedures are met, which
generally require a notice to be delivered not less than 90 days nor more than
120 days prior to the anniversary date of the immediately preceding annual
meeting of shareholders.
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 ChaseMellon Shareholder Services, L.L.C.
12
<PAGE> 15
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement, dated the date hereof, each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell to such Underwriter, the
number of shares of Common Stock set forth opposite the name of such
Underwriter:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
<S> <C>
A.G. Edwards & Sons, Inc...................................
Edward D. Jones & Co., L.P................................
---------
Total 1,100,000
=========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken; provided that under certain circumstances
involving a default of Underwriters, less than all of such shares may be
purchased.
The Underwriters, for whom A.G. Edwards & Sons, Inc. and Edward D.
Jones & Company, L.P. are acting as Representatives, propose to offer part of
the shares directly to the public at the public offering price set forth on the
coverage page of this Prospectus and part of the shares to certain dealers at a
price which represents a concession not in excess of $. per share under the
public offering price. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $. per share to certain other dealers. After the
shares of Common Stock are released for sale to the public, the offering price
and other selling terms may from time to time be varied by the Underwriters.
The Company has agreed that, for a period of 90 days from the date of
this Prospectus, it will not, without the prior written consent of the
Underwriters, offer, sell, contract to sell or otherwise dispose of any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or grant any options or warrants to purchase
Common Stock, except for the Plan and pursuant to the Company's employee benefit
plans.
The Company has granted to the Underwriters an option, exercisable for
30 days from the date of this Prospectus, to purchase up to 150,000 additional
shares of Common Stock at the price to public set forth on the coverage page of
this Prospectus minus the underwriting discounts and commissions determined in
the manner described on the cover page hereof. The Underwriters may exercise
such option solely for the purpose of covering over-allotments, if any, in
connection with the offering of the shares offered hereby. To the extent such
option is exercised, each Underwriter will be obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number of shares set forth opposite each Underwriter's name in the
preceding table bears to the total number of shares listed in such table.
In connection with this offering, certain Underwriters and selling
group members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in accordance
with Rule 104 of Regulation M under the Exchange Act, pursuant to which such
persons may bid for or purchase Common Stock for the purpose of stabilizing its
market price. The Underwriters also may create a short position for their
respective accounts by selling more Common Stock in connection with this
offering than they are committed to purchase from the Company and in such case
may purchase Common Stock in the open market following completion of this
offering to cover all or a portion of such short position. The Underwriters may
also cover all or a portion of such short position by exercising the
Underwriters' over-allotment option referred to above. In addition, A.G. Edwards
& Sons, Inc. on behalf of the Underwriters, may impose
13
<PAGE> 16
"penalty bids" under contractual arrangements with the Underwriters whereby it
may reclaim from an Underwriter (or dealer participating in this offering) for
the account of the Underwriters, the selling concession with respect to Common
Stock that is distributed in this offering but subsequently purchased for the
account of the Underwriters in the open market. Any of the transactions
described in this paragraph may result in the maintenance of the price of the
Common Stock at a level above that which might otherwise prevail in the open
market. None of the transactions described in this paragraph is required, and,
if they are undertaken, they may be discontinued at any time.
A.G. Edwards & Sons, Inc. is a party to an agreement with the Company
pursuant to which it acts as a placement agent for the Company's issuance of
Medium-Term Notes. A.G. Edwards & Sons, Inc. also is acting as financial advisor
to the Company in connection with the Company's adoption of the new Shareholder
Rights Plan, as described under "Description of Capital Stock" above.
14
<PAGE> 17
LEGAL OPINIONS
Certain legal matters with respect to this offering are being passed
upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania,
and for the Underwriters by Winthrop, Stimson, Putnam & Roberts, New York, New
York.
EXPERTS
The consolidated financial statements of Philadelphia Suburban
Corporation and subsidiaries as of December 31, 1996 and 1995, and for each of
the years in the three-year period ended December 31, 1996, have been
incorporated by reference 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 authority of said firm
as experts in accounting and auditing.
15
<PAGE> 18
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE UNDERWRITERS OR BY ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY A SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED
HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
Available Information................................................................................................. 2
Incorporation of Certain
Documents by Reference.............................................................................................. 2
Prospectus Summary.................................................................................................... 3
The Water Utility Industry............................................................................................ 7
The Company........................................................................................................... 7
Recent Developments................................................................................................... 8
Use of Proceeds....................................................................................................... 9
Capital Requirements and Funding...................................................................................... 9
Forward-Looking Statements............................................................................................ 9
Price Range of Common Stock
and Dividends....................................................................................................... 10
Description of Capital Stock.......................................................................................... 11
Underwriting.......................................................................................................... 13
Legal Opinions........................................................................................................ 15
Experts............................................................................................................... 15
</TABLE>
1,100,000 SHARES
PHILADELPHIA
SUBURBAN
CORPORATION
PROSPECTUS
, 1998
A.G. EDWARDS & SONS, INC.
EDWARD D. JONES & CO., L.P.
<PAGE> 19
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>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee............. $7,880
Printing and Engraving.......................................... $50,000
Accounting Services............................................. $25,000
Legal Services.................................................. $70,000
NYSE Listing Fees............................................... $4,380
PHSE Listing Fees............................................... $1,250
Transfer Agent Fees............................................. $5,000
Miscellaneous................................................... $20,490
-------
Total.................................................. $184,000
</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.
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
II-1
<PAGE> 20
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:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
1.1 Form of Underwriting Agreement**
4.1 Articles of Incorporation (1)
4.2 By-laws of Registrant, as amended (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 LLP (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).*
- ---------------
</TABLE>
* Filed herewith
** To be filed by amendment
(1) Incorporated by reference from the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1992 (Exhibit No.
3.1).
(2) Incorporated by reference from the Registrant's Annual Report
on Form 10-K for the Year Ended December 31, 1992 (Exhibit No.
3.2) and the Registrant's Current Report on Form 8-K dated
August 5, 1997.
(3) Incorporated by reference from the Registrant's Current Report
on Form 8-K dated February 26, 1988 (Exhibit No. 1) and
Current Report on Form 8-K dated May 19, 1988 (Exhibit No. 1).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in 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.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to
II-2
<PAGE> 21
be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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 bonafide offering thereof.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
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
14th day of January, 1998.
PHILADELPHIA SUBURBAN CORPORATION
By:
--------------------------------------
Nicholas DeBenedictis
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person in so signing also makes,
constitutes and appoints Roy H. Stahl and Michael P. Graham and each of them
acting alone, his or her true and lawful attorney-in-fact, with full power of
substitution, to execute and cause to be filed with the Securities and Exchange
Commission, any and all amendments or post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, as the Registrant deems appropriate.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Chairman and President January 14, 1998
- ------------------------------ (Principal Executive Officer)
Nicholas DeBenedictis
Senior Vice President -- Finance January 14, 1998
- ------------------------------ and Treasurer (Principal Financial
Michael P. Graham and Accounting Officer)
Director January 14, 1998
- ------------------------------
John H. Austin, Jr.
Director January 14, 1998
- ------------------------------
G. Fred DiBona, Jr.
Director January 14, 1998
- ------------------------------
John W. Boyer, Jr.
Director January 14, 1998
- ------------------------------
Mary C. Carroll
Director January 14, 1998
- ------------------------------
Alan R. Hirsig
Director January 14, 1998
- ------------------------------
Richard H. Glanton, Esq.
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
<S> <C> <C>
Director January 14, 1998
- ------------------------------
John F. McCaughan
Director January 14, 1998
- ------------------------------
Richard L. Smoot
Director January 14, 1998
- ------------------------------
Harvey J. Wilson
</TABLE>
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
- ------ ------- -------------
<S> <C> <C>
1.1 - Form of Underwriting Agreement **
5.1 - Opinion of Morgan, Lewis & Bockius LLP *
23.1 - Consent of Morgan, Lewis & Bockius LLP (included as part of
Exhibit 5.1) *
23.2 - Consent of KPMG Peat Marwick LLP *
24.1 - Powers of Attorney (included on the signature page) *
- -------------------
* Filed herewith
**To be filed by Amendment
</TABLE>
<PAGE> 1
EXHIBIT 5.1
January 14, 1998
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 (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), relating to the public offering of an aggregate
of 1,250,000 shares (the "Shares") of the common stock, par value $.50 per
share, of the Company (the "Common Stock"), including 150,000 shares subject to
an overallotment option, to be sold in a public offering (the "Offering")
through the underwriters (the "Underwriters") named in the underwriting
agreement to be entered into between the Company and the Underwriters (the
"Underwriting Agreement").
In this connection, we have reviewed (a) the Registration Statement; (b) the
Company's Articles of Incorporation and the Company's Bylaws; (c) certain
records of the Company's corporate proceedings as reflected in its minute books;
and (d) the form of Underwriting Agreement. In our examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals and the conformity with the original of all documents
submitted to us as copies thereof. We have also assumed that the Public Offering
Committee of the Board of Directors of the Company has taken all necessary
action to authorize the issuance of the shares of Common Stock under the
Underwriting Agreement in accordance with the authority given to such Committee
by the Board of Directors of the Company.
Based upon the foregoing, we are of the opinion that the Shares to be sold by
the Company as described in the Registration Statement, when and to the extent
purchased by the Underwriters in accordance with the Underwriting Agreement,
will be validly issued, fully paid and nonassessable shares of Common Stock of
the Company.
<PAGE> 2
Philadelphia Suburban Corporation
January 14, 1998
Page 2
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement and to all references to our firm in the Registration Statement. In
giving such consent, we do not thereby admit that we are acting within the
category of persons whose consent is required under Section 7 of the Act and the
rules and regulations of Commission thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE> 1
EXHIBIT 23.2
The Board of Directors
Philadelphia Suburban Corporation:
We consent to incorporation by reference in this Registration Statement on Form
S-3 of Philadelphia Suburban Corporation of our report dated February 3, 1997,
relating to the consolidated balance sheets and statements of capitalization of
Philadelphia Suburban Corporation and subsidiaries as of December 31, 1996 and
1995 and the related consolidated statements of income and cash flows for each
of the years in the three-year period ended December 31, 1996 which report is
incorporated by reference in the December 31, 1996 Annual Report on Form 10-K of
Philadelphia Suburban Corporation.
We also consent to the reference to our firm under the heading "Experts"
appearing elsewhere herein.
KPMG Peat Marwick LLP
Philadelphia, Pennsylvania
January 14, 1998
