As Filed with the Securities and Exchange Commission on June 29, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to _________ to _________
Commission file number 1-6659
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k)
SAVINGS PLAN AND TRUST
PHILADELPHIA SUBURBAN CORPORATION
762 W. LANCASTER AVENUE
BRYN MAWR, PA 19010
1
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
The following audited financial statements are enclosed with this report:
Financial Statements and Supplemental Schedules as of December 31, 1998 and 1997
Exhibit Page
23.1 Consent of KPMG LLP 4
23.2 Consent of Arthur Andersen LLP 5
99.1 Financial Statements and Supplemental
Schedules as of December 31, 1998 and 1997 6
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Trustees of the Consumers Water Company Employees' 401(k) Savings Plan and
Trust, have duly caused this annual report to be signed by the undersigned
thereunto duly authorized.
Consumers Water Company
Employees' 401(k) Savings Plan And Trust
Trustees: Date
/s/ Roy H. Stahl 6-25-99
- ------------------------------- ------------------
Roy H. Stahl
/s/ David P. Smeltzer 6-25-99
- ------------------------------- ------------------
David P. Smeltzer
/s/ Robert G. Liptak 6-25-99
- ------------------------------- ------------------
Robert G. Liptak
3
EXHIBIT 23.1
The Board of Directors
Philadelphia Suburban Corporation
We consent to incorporation by reference in the registration statement
(No. 333-81085) on Form S-8 of Philadelphia Suburban Corporation of our
report dated June 25, 1999, relating to the statement of net assets available
for plan benefits of Consumers Water Company Employees' 401(k) Savings Plan
and Trust as of December 31, 1998, and the related statement of changes in
net assets available for plan benefits for the year then ended, and all related
supplemental schedules, which report appears in the December 31, 1998, annual
report on Form 11-K of Philadelphia Suburban Corporation.
/s/ KPMG LLP
Philadelphia, Pennsylvania
June 29, 1999
4
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 11-K of our report dated June 18, 1998 on Consumers Water
Company Employees' 401(k) Savings Plan. It should be noted that we have not
audited any financial statements of the company's 401(k) Savings Plan and Trust
subsequent to December 31, 1997 or performed any audit procedures subsequent to
the date of our report.
/s/ Arthur Andersen LLP
Boston, Massachusetts
June 28, 1999
5
EXHIBIT 99.1
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1998 AND 1997
(WITH INDEPENDENT AUDITORS' REPORTS THEREON)
6
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Indexed Financial Statements and Suppemental Schedules
December 31, 1998 and 1997
PAGE
----
INDEPENDENT AUDITORS' REPORTS 1
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS 3
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS 4
NOTES TO FINANCIAL STATEMENTS 6
SCHEDULE
1 - LINE 27(a) - SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES 12
2 - LINE 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS 13
All other schedules required to be filed with the Department of
Labor in accordance with the Employee Retirement Income Security
Act of 1974 are inapplicable and have been omitted.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Pension Committee
Consumers Water Company
We have audited the accompanying statements of net assets available for plan
benefits of Consumers Water Company Employees' 401(k) Savings Plan and Trust
(the Plan) as of December 31, 1998, and the related statements of changes in net
assets available for plan benefits for the year then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1998, and the changes in net assets available for plan benefits
for the year then ended in conformity with generally accepted accounting
principles.
Our audit was performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions are presented for the
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the resposibility of the Plan's management. The Fund Information
in the statement of changes in net assets available for plan benefits is
presented for purposes of additional analysis rather than to present the changes
in net assets available for plan benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated, in all material respects in relation to the basic financial
statements taken as a whole.
/s/ KPMG LLP
Philadelphia, Pennsylvania
June 25, 1999
1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Governance Committee of
Consumers Water Company:
We have audited the accompanying statements of net assets available for plan
benefits of the Consumers Water Company Employees' 401K Savings Plan and Trust
(the Plan) as of December 31, 1997 and 1996, and the related statement of
changes in net assets available for plan benefits, with fund information, for
the year ended December 31, 1997. These financial statements and supplemental
schedules, as listed in the accompanying index, are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements and supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in its net assets available for
plan benefits, with fund information, for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule of assets held for
investment purposes and schedule of reportable transactions are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The fund information in the
statement of changes in net assets available for benefits is presented for
purposes of additional analysis rather than to present the changes in net assets
available for plan benefits of each fund. These supplemental schedules and fund
information have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated, in all
material respects, in relation to the basic financial statements taken as a
whole.
/s/ Arthur Andersen LLP
Boston Massachusetts
June 18, 1998
2
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Statements of Net Assets Available for Plan Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Investments at fair value-
Mutual Funds
Select Investors Fund $8,878,513 $6,384,655
Balanced Investors Fund 2,999,616 2,589,119
Vista Investors Fund 315,012 519,264
Value Fund 507,185 420,560
Equity Index Fund 947,081 670,791
Income Trust
Benham Preservation Fund 2,140,910 2,331,448
Employer Common Stock 7,652,110 4,874,120
Loans due from participants 989,354 987,500
----------- -----------
Total Investments 24,429,781 18,777,457
Cash and cash equivalents 14,534 3,376
Receivables-
Employer contributions 328,959 370,828
Participants' contributions 116,314 114,506
Loans repayment receivable 35,917 80,691
Accrued dividend income 78,796 74,329
----------- -----------
Net assets available for plan benefits $25,004,301 $19,421,187
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------
Benham Select Balanced Employer Vista
Preservation Investors Investors Common Investors
Fund Fund Fund Stock Fund
<S> <C> <C> <C> <C> <C>
Additions:
Investment Income
Interest and dividends $ 123,112 $1,544,034 $ 359,253 $ 309,101 $ 119
Appreciation (depreciation) of investments -- 774,863 62,218 2,831,129 (33,032)
-----------------------------------------------------------------------
Total investment income 123,112 2,318,897 421,471 3,140,230 (32,913)
Contributions
Employer -- -- -- 328,959 --
Participants 215,259 552,296 273,410 86,612 79,965
-----------------------------------------------------------------------
Total contributions 215,259 552,296 273,410 415,571 79,965
-----------------------------------------------------------------------
Total additions 338,371 2,871,193 694,881 3,555,801 47,052
Deductions
Benefits paid to participants 555,112 461,329 243,875 951,801 61,182
Management fee 400 1,251 866 516 100
-----------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers (217,141) 2,408,613 450,140 2,603,484 (14,230)
Interfund transfers 51,621 147,396 (11,847) 603,763 (183,549)
-----------------------------------------------------------------------
Net increase (decrease) (165,520) 2,556,009 438,293 3,207,247 (197,779)
Net assets available for plan benefits:
Beginning of year 2,331,448 6,384,655 2,589,119 4,877,496 519,264
-----------------------------------------------------------------------
End of year $2,165,928 $8,940,664 $3,027,412 $8,084,743 $ 321,485
=======================================================================
<CAPTION>
Fund Information
--------------------------------------------------------------------
Equity
Value Index Loan
Fund Fund Account Other Total
<S> <C> <C> <C> <C> <C>
Additions:
Investment Income
Interest and dividends $ 85,110 $ 293 $ 46,099 $ -- $ 2,467,121
Appreciation (depreciation) of investments (48,599) 214,404 -- -- 3,800,983
--------------------------------------------------------------------
Total investment income 36,511 214,697 46,099 -- 6,268,104
Contributions
Employer -- -- -- -- 328,959
Participants 80,455 118,697 -- -- 1,406,694
--------------------------------------------------------------------
Total contributions 80,455 118,697 -- -- 1,735,653
-----------------------------------------------------------------------
Total additions 116,966 333,394 46,099 -- 8,003,757
Deductions
Benefits paid to participants 45,870 32,092 66,068 -- 2,417,329
Management fee 50 131 -- -- 3,314
--------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers 71,046 301,171 (19,969) -- 5,583,114
Interfund transfers 23,788 (12,641) 21,823 (640,354) --
--------------------------------------------------------------------
Net increase (decrease) 94,834 288,530 1,854 (640,354) 5,583,114
Net assets available for plan benefits:
Beginning of year 420,560 670,791 987,500 640,354 19,421,187
--------------------------------------------------------------------
End of year $515,394 $ 959,321 $989,354 $ -- $25,004,301
====================================================================
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
CONSUMER'S WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Fund Information
-----------------------------------------------------------------------
Benham Select Balanced Employer Vista
Preservation Investors Investors Common Investors
Fund Fund Fund Stock Fund
<S> <C> <C> <C> <C> <C>
Additions:
Investment Income
Interest and dividends $ 128,241 $1,020,731 $ 259,771 $ 227,357 $ 31,680
Appreciation (depreciation) of investments -- 537,409 112,798 411,729 (80,022)
-----------------------------------------------------------------------
Total investment income 128,241 1,558,140 372,569 639,086 (48,342)
Contributions
Employer -- -- -- -- --
Participants 237,368 436,419 259,968 109,167 103,267
-----------------------------------------------------------------------
Total contributions 237,368 436,419 259,968 109,167 103,267
-----------------------------------------------------------------------
Total additions 365,609 1,994,559 632,537 748,253 54,925
Deductions
Benefits paid to participants 379,407 542,483 306,649 421,602 36,281
Management fee 864 1,812 1,166 400 200
-----------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers (14,662) 1,450,264 324,722 326,251 18,444
Interfund transfers (40,256) 151,340 (203,147) 443,006 (143,943)
-----------------------------------------------------------------------
Net increase (decrease) (54,918) 1,601,604 121,575 769,257 (125,499)
Net assets available for plan benefits:
Beginning of year 2,386,366 4,783,051 2,467,544 4,108,239 644,763
-----------------------------------------------------------------------
End of year $2,331,448 $6,384,655 $2,589,119 $4,877,496 $ 519,264
=======================================================================
<CAPTION>
Fund Information
----------------------------------------------------------------------
Equity
Value Index Loan
Fund Fund Account Other Total
<S> <C> <C> <C> <C> <C>
Additions:
Investment Income
Interest and dividends $ 67,346 $ -- $ 48,412 $ 74,329 $ 1,857,867
Appreciation (depreciation) of investments 12,596 129,980 -- -- 1,124,490
----------------------------------------------------------------------
Total investment income 79,942 129,980 48,412 74,329 2,982,357
Contributions
Employer -- -- -- 370,828 370,828
Participants 54,148 72,644 -- 195,197 1,468,178
----------------------------------------------------------------------
Total contributions 54,148 72,644 -- 566,025 1,839,006
-----------------------------------------------------------------------
Total additions 134,090 202,624 48,412 640,354 4,821,363
Deductions
Benefits paid to participants 41,867 33,229 48,995 -- 1,810,513
Management fee -- 150 -- -- 4,592
----------------------------------------------------------------------
Net increase (decrease) prior to interfund
transfers 92,223 169,245 (583) 640,354 3,006,258
Interfund transfers 100,958 200,351 105,889 (614,198) --
----------------------------------------------------------------------
Net increase (decrease) 193,181 369,596 105,306 26,156 3,006,258
Net assets available for plan benefits:
Beginning of year 227,379 301,195 882,194 614,198 16,414,929
----------------------------------------------------------------------
End of year $420,560 $ 670,791 $987,500 $640,354 $19,421,187
======================================================================
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(1) MERGER WITH PHILADELPHIA SUBURBAN CORPORATION
On March 10, 1999, Consumers Water Company ("the Company") completed a
merger ("the Merger") with Philadelphia Suburban Corporation ("PSC"). The
Merger was effected pursuant to a June 27, 1998 merger agreement, as
amended and restated by the parties effective as of August 5, 1998.
Pursuant to the merger agreement, PSC issued 13,014,015 shares of common
stock to the shareholders of the Company, in exchange for all of the
outstanding stock of the Company, including those shares held in the
Consumers Water Company Employees' 401(k) Savings Plan and Trust ("the
Plan"). Each Consumers Water Company Shareholder received 1.432 shares of
PSC's Common Stock for each of the Company's Common shares. As a result of
the Merger, the Company became a wholly-owned subsidiary of PSC.
Subsequent to the conversion to PSC Common Stock, all employee and
employer contributions previously invested in the Company's Common Stock
will be invested in PSC's Common Stock.
DESCRIPTION OF PLAN
The following description of the Plan is provided for general information
purposes only. Participants should refer to the Plan agreement for more
complete information.
General
The Plan is a defined contribution plan covering substantially all
employees of the Company and its subsidiaries . An employee becomes
eligible to participate on January 1 of the year following the date on
which his or her employment commenced. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as
amended (ERISA).
An employee may not participate in the Plan if the employee is a
participant of a union with which the Employer has a collective bargaining
agreement directly or through an employee association, unless the
collective bargaining agreement between the Company and the union involved
specifically makes the Plan applicable to employees covered under such
collective bargaining agreements, provided that benefits have been a
subject of good faith bargaining between the Company and its employees.
Contributions
Participants may elect to contribute from 1% to 15% of their pretax
compensation pursuant to a salary deferral election, up to a maximum of
$10,000 and $9,500 in 1998 and 1997 respectively, as determined by
Internal Revenue Code ss.402(g)(1). Participants may change the rate of
their contribution or their investment elections. They may also make
transfers or suspend their contributions at any time. Under the Plan,
participants may contribute 1% to 9% of their compensation on an after-tax
basis to their voluntary accounts. In any Plan year, a participant's
aggregate contributions to the Plan (salary deferral amounts plus
after-tax voluntary contributions) may not exceed 15% of such
participant's compensation for the applicable Plan year.
The Plan provides for the Company to contribute an amount equal to 40% of
the pretax employee contribution, plus 20% of the after-tax employee
contribution, or combination thereof, up to $1,040 for each participant.
The Company's contributions consisted of stock in Consumers Water Company
and subsequent to March 10, 1998 consist of PSC Common Stock.
Participant Accounts
Each participant's account is credited with the participant's contribution
and allocations of (a) the Company's contribution and (b) Plan earnings.
Allocations are based on participant contributions or account balances, as
defined by the Plan document.
6
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(Continued)
Vesting
Each participant will always be 100% vested in all employee and Company
contributions.
Payment of Benefits
In the event a participant's employment is terminated by reason of death,
disability or termination of service, a participant's interest will be
distributed in a lump-sum payment. Withdrawals will be made in cash or
shares of Company stock, to the extent permitted by law. Under certain
circumstances, a participant may withdraw all or a portion of the employee
contributions while employed.
Loans Due from Participants
Participants may borrow funds from their account balance equal to the
lesser of $50,000 or half of their vested account balance for a period not
to exceed five years. Repayment is made by payroll deduction. During the
period covered by the report, all new and outstanding loans were issued at
5.5%.
Investment Options
Participants can direct, at the time they enroll in the Plan, that their
salary deferral and voluntary contributions be invested entirely in one of
the funds described below or divided among the funds. Subject to
compliance with applicable state and federal securities laws, the Plan
also permits participants to acquire an interest in the Company's Common
Stock (PSC Common Stock, subsequent to March 10, 1999). Participants may
change their investment instructions and reinvest their contributions in a
different fund or funds. A description of each investment option is
provided below:
The Benham Preservation Fund
This fund is invested in the Benham Preservation Fund, which is managed by
SEI Trust Co. The Fund is a stable value income trust in which principal
is protected from market volatility. The fund invests primarily in
guaranteed investment contracts issued by major financial institutions,
including banks and life insurance companies. The contracts are only
guaranteed with respect to the interest rate, not the principal.
The Select Investors Fund
This fund invests in the Select Investors Fund offered by American
Century. The fund's objective is primarily to provide capital growth with
some income. Stocks purchased by the fund are required to pay dividends,
but are chosen primarily for growth potential.
The Balanced Investors Fund
This fund invests in the Balanced Investors Fund offered by American
Century. The fund's objective is to provide for capital growth and current
income. The fund invests approximately 60% in common stock and 40% in
fixed-income securities.
Employer Common Stock
This fund invests in the common shares of the Company (PSC Common Stock
subsequent to March 10, 1999). The Plan purchases the shares in the open
market or directly from the Company (from PSC, subsequent to March 10,
1999).
7
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(Continued)
The Vista Investors Fund
This fund invests in the Vista Investors Fund offered by American Century.
The fund's objective is capital growth over time by investing in common
stocks considered to have better-than-average prospects for appreciation.
The Vista Investors Fund remains essentially fully invested in stocks at
all times.
The Value Fund
This fund invests in the Value Fund offered by American Century. The
fund's objective is long-term capital growth through investment in equity
securities of well-established companies believed to be undervalued at the
time of purchase. The fund invests primarily in domestic equity
securities, but also invests in other types of domestic or foreign
securities that help achieve the fund's objective.
The Equity Index Fund
This fund invests in the Barclays Global Investors Equity Index Fund. The
fund's objective is long-term capital appreciation through investment in
stocks to closely replicate the composition of the S&P 500 Index.
Termination of the Plan
Although the Company does not intend to terminate the Plan, it may do so
at its discretion, subject to the provisions of ERISA. All interests of
the participants would be distributed to them as determined by the
Committee (as hereinafter defined) and in accordance with applicable
provisions of the Internal Revenue Code.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accompanying financial statements have been prepared using the
accrual basis.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial
statements and disclosures. Actual results could differ from these
estimates.
Administration
The Plan is administered by a committee ("the Committee") consisting of
three individuals selected by, and who may be removed at any time by, the
Board of Directors of the Company. The Committee members may be employees
of the Company and may be participants in the Plan. The Committee members
receive no compensation from the Plan for their services in such capacity.
The Committee has extensive administrative powers in connection with the
Plan, including authority to interpret the provisions of the Plan, to
adopt rules for its administration and to make other decisions with
respect to the Plan.
The custodian for the Plan's funds invests the funds as directed by the
participants. The principal duties of the trustees are to receive all
contributions paid to the Plan and to make investments and pay benefits as
directed by the Committee. The assets of the Plan are held in the name of
the Trustees.
Substantially all of the administrative expenses of the Plan are paid by
the Company.
8
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(Continued)
Cash Equivalents
All highly liquid investments with a maturity of three months or less are
considered to be cash equivalents.
Investment Valuation
Each investment fund is valued as of each valuation date on the basis of
the investment fund's fair market value. The employer stock is valued at
market value. The Benham Preservation Fund is valued at contract value,
which approximates market value. Dividend income is recognized on the date
dividends are declared. Interest income is recorded on the accrual basis.
Purchases and sales of securities are recorded on a trade-date basis. The
accounts of all participants are adjusted as of each valuation date to
reflect the effects of income, realized and unrealized gains and losses
and expenses applicable to the investment funds where such accounts are
invested.
Reclassifications
Certain reclassifications were made to the 1997 financial statements to
conform with the 1998 presentation.
(4) INVESTMENTS
The fair market values of individual assets that represent 5% or more of
the Plan's net assets as of December 31, 1998 and 1997 are as follows:
1998
Selected Investors Fund $8,878,513
Balanced Investors Fund 2,999,616
Benham Preservation Fund 2,140,910
Employer Common Stock 7,652,110
1997
Selected Investors Fund $6,384,655
Balanced Investors Fund 2,589,119
Benham Preservation Fund 2,331,448
Employer Common Stock 4,874,120
9
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(Continued)
(5) FEDERAL INCOME TAX CONSEQUENCES
The Internal Revenue Service issued its latest determination letter dated
May 3, 1995, which stated that the Plan and related trust, as amended,
qualified under applicable provisions of the Internal Revenue Code (IRC)
and, therefore are exempt from federal income taxes. The Plan
administrator and the Plan's tax counsel believe that the Plan is designed
and is currently being operated in compliance with applicable requirements
of the IRC. Therefore, no provision for income taxes has been included in
the Plan's financial statements.
(6) RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for plan
benefits per the financial statements to Form 5500 at December 31, 1998
and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net assets available for plan benefits per the financial
statements $25,004,301 $19,421,187
Amounts allocated to withdrawing participants -- 119,011
----------- -----------
Net assets available for plan benefits per Form 5500 $25,004,302 $19,302,176
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to participants per
the financial statements to Form 5500 for the year ended December 31,
1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Benefits paid to participants per the financial statements $2,417,329 $ 1,180,513
Amounts allocated to withdrawing participants -- 119,011
---------- ------------
Benefits paid to participants per Form 5500 $2,417,329 $ 1,929,524
========== ============
</TABLE>
10
<PAGE>
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Notes to Financial Statements
December 31, 1998 and 1997
(Continued)
(7) YEAR 2000 (unaudited)
The Company is aware of the Year 2000 issue, related to the ability of
information technology to accurately process date and time data from, into
and between the twentieth and twenty-first centuries, and the years 1999
and 2000 and leap years. The Company has tested its internal Payroll and
Human Resources computer systems and believes these systems to be Year
2000 compliant. The Company has also contacted the firms providing
investment, administration and recordkeeping services for the Plan and,
based on the responses from these firms, believes that their systems with
respect to the Plan will be Year 2000 compliant.
11
<PAGE>
SCHEDULE 1
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Line 27a - Schedule of Assets Held for Investments Purposes
December 31, 1998
<TABLE>
<CAPTION>
Description
Issue of Investment Share/Units Cost Fair Value
----- ------------- ----------- ---- -----------
<S> <C> <C> <C> <C>
American Century Benham Preservation Fund 2,140,910 $ 2,140,910 $ 2,140,910
American Century Select Investors Fund 187,350 7,828,977 8,878,513
American Century Balanced Investors Fund 162,405 2,792,990 2,999,616
Consumers Water Company Common Stock* 243,407 4,481,780 7,652,110
American Century Vista Investors Fund 29,579 383,416 315,012
American Century Value Fund 83,832 561,093 507,185
Barclays Equity Index Fund 32,355 653,624 947,081
Loans due from participants* -- 989,354 989,354
----------- ----------
Total assets held for investment purposes $19,832,144 24,429,891
=========== ==========
</TABLE>
* Represents a party-in-interest to the Plan.
12
<PAGE>
SCHEDULE 2
CONSUMERS WATER COMPANY
EMPLOYEES' 401(k) SAVINGS PLAN AND TRUST
Line 27d -Schedule of Reportable Transactions
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Purchase Selling
Price Price Cost Net Gain
-------- ------- ---- --------
<S> <C> <C> <C> <C>
American Century
Benham Preservation Fund
Purchases $ 911,195 $ -- $ -- $ --
Sales -- 1,101,735 1,101,735 --
Select Investors Fund
Purchases 2,872,754 -- -- --
Sales -- 1,153,760 1,001,471 152,289
Balanced Investors Fund
Purchases 913,781 -- -- --
Sales -- 565,502 504,197 61,305
Consumers Water Company
Common Stock*
Purchases 2,067,827 -- -- --
Sales -- 2,109,810 1,833,102 276,708
</TABLE>
*Represents a party-in-interest to the Plan
13
