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Aqua America 10-Q 2011
Form 10-Q
Table of Contents

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-Q
(Mark One)
     
þ   QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2011
     
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from                      to                     
Commission File Number 1-6659
AQUA AMERICA, INC.
(Exact name of registrant as specified in its charter)
     
Pennsylvania   23-1702594
     
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification No.)
     
762 W. Lancaster Avenue, Bryn Mawr, Pennsylvania   19010-3489
     
(Address of principal executive offices)   (Zip Code)
(610) 527-8000
(Registrant’s telephone number, including area code)
(Former Name, former address and former fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12(b)-2 of the Exchange Act.:
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (do not check if a smaller reporting company)    
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 27, 2011: 138,217,191
 
 

 

 


 

AQUA AMERICA, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
         
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Part I — Financial Information
 
       
       
 
       
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Part II — Other Information
 
       
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 Exhibit 10.52
 Exhibit 10.53
 Exhibit 10.54
 Exhibit 10.55
 Exhibit 10.56
 Exhibit 31.1
 Exhibit 31.2
 Exhibit 32.1
 Exhibit 32.2
 EX-101 INSTANCE DOCUMENT
 EX-101 SCHEMA DOCUMENT
 EX-101 CALCULATION LINKBASE DOCUMENT
 EX-101 LABELS LINKBASE DOCUMENT
 EX-101 PRESENTATION LINKBASE DOCUMENT
 EX-101 DEFINITION LINKBASE DOCUMENT

 

 


Table of Contents

Part 1 — Financial Information
Item 1.  
Financial Statements
AQUA AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except per share amounts)
(UNAUDITED)
                 
    March 31,     December 31,  
    2011     2010  
Assets
               
Property, plant and equipment, at cost
  $ 4,532,368     $ 4,488,195  
Less: accumulated depreciation
    1,035,565       1,020,395  
 
           
Net property, plant and equipment
    3,496,803       3,467,800  
 
           
Current assets:
               
Cash and cash equivalents
    7,259       5,934  
Accounts receivable and unbilled revenues, net
    79,132       85,881  
Income tax receivable
    33,600       33,600  
Deferred income taxes
    16,116       0  
Inventory, materials and supplies
    10,937       10,616  
Prepayments and other current assets
    9,849       10,846  
 
           
Total current assets
    156,893       146,877  
 
           
 
               
Regulatory assets
    222,958       217,376  
Deferred charges and other assets, net
    60,144       65,093  
Funds restricted for construction activity
    134,427       135,086  
Goodwill
    41,101       40,234  
 
           
 
  $ 4,112,326     $ 4,072,466  
 
           
Liabilities and Equity
               
Aqua America stockholders’ equity:
               
Common stock at $.50 par value, authorized 300,000,000 shares, issued 138,906,683 and 138,449,039 in 2011 and 2010
  $ 69,452     $ 69,223  
Capital in excess of par value
    673,605       664,369  
Retained earnings
    461,433       452,470  
Treasury stock, at cost, 698,108 and 673,472 shares in 2011 and 2010
    (12,875 )     (12,307 )
Accumulated other comprehensive income
    501       499  
 
           
Total Aqua America stockholders’ equity
    1,192,116       1,174,254  
 
               
Noncontrolling interest
    576       572  
 
           
 
               
Total equity
    1,192,692       1,174,826  
 
           
 
               
Long-term debt, excluding current portion
    1,530,092       1,531,976  
Commitments and contingencies
           
 
               
Current liabilities:
               
Current portion of long-term debt
    28,351       28,413  
Loans payable
    91,994       89,668  
Accounts payable
    29,471       45,382  
Accrued interest
    20,960       15,891  
Accrued taxes
    15,393       16,401  
Other accrued liabilities
    23,125       27,960  
 
           
Total current liabilities
    209,294       223,715  
 
           
 
               
Deferred credits and other liabilities:
               
Deferred income taxes and investment tax credits
    514,223       478,705  
Customers’ advances for construction
    66,679       66,966  
Regulatory liabilities
    37,599       35,921  
Other
    112,367       116,250  
 
           
Total deferred credits and other liabilities
    730,868       697,842  
 
           
Contributions in aid of construction
    449,380       444,107  
 
           
 
  $ 4,112,326     $ 4,072,466  
 
           
See notes to consolidated financial statements beginning on page 7 of this report.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(UNAUDITED)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
 
               
Operating revenues
  $ 171,324     $ 160,517  
 
               
Operating expenses:
               
Operations and maintenance
    67,325       67,601  
Depreciation
    27,293       26,200  
Amortization
    1,956       3,172  
Taxes other than income taxes
    13,765       12,860  
 
           
 
    110,339       109,833  
 
           
 
               
Operating income
    60,985       50,684  
 
               
Other expense (income):
               
Interest expense, net
    19,943       18,430  
Allowance for funds used during construction
    (1,977 )     (1,541 )
Gain on sale of other assets
    (121 )     (1,929 )
 
           
Income before income taxes
    43,140       35,724  
Provision for income taxes
    12,789       14,213  
 
           
Net income attributable to common shareholders
  $ 30,351     $ 21,511  
 
           
 
               
Net income attributable to common shareholders
  $ 30,351     $ 21,511  
Other comprehensive income, net of tax:
               
Unrealized holding gain on investments
    4       902  
Reclassification adjustment for gain reported in net income
    (2 )     (1,330 )
 
           
Comprehensive income
  $ 30,353     $ 21,083  
 
           
 
               
Net income per common share:
               
Basic
  $ 0.22     $ 0.16  
 
           
Diluted
  $ 0.22     $ 0.16  
 
           
 
               
Average common shares outstanding during the period:
               
Basic
    137,825       136,509  
 
           
Diluted
    138,384       136,800  
 
           
 
               
Cash dividends declared per common share
  $ 0.155     $ 0.145  
 
           
See notes to consolidated financial statements beginning on page 7 of this report.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CAPITALIZATION
(In thousands of dollars, except per share amounts)
(UNAUDITED)
                         
            March 31,     December 31,  
            2011     2010  
Aqua America stockholders’ equity:                
Common stock, $.50 par value
  $ 69,452     $ 69,223  
Capital in excess of par value
    673,605       664,369  
Retained earnings
    461,433       452,470  
Treasury stock, at cost
    (12,875 )     (12,307 )
Accumulated other comprehensive income
    501       499  
 
                   
Total Aqua America stockholders’ equity     1,192,116       1,174,254  
 
                       
Noncontrolling interest     576       572  
 
               
 
                       
Total equity     1,192,692       1,174,826  
 
                   
 
                       
Long-term debt:                
 
                       
Long-term debt of subsidiaries (substantially secured by utility plant):                
 
                       
 
  Interest Rate Range   Maturity Date Range                
 
  0.00% to 0.99%   2012 to 2034     6,469       6,632  
 
  1.00% to 1.99%   2011 to 2035     22,165       22,758  
 
  2.00% to 2.99%   2019 to 2029     13,217       13,461  
 
  3.00% to 3.99%   2016 to 2025     26,094       26,548  
 
  4.00% to 4.99%   2020 to 2043     367,776       367,854  
 
  5.00% to 5.99%   2011 to 2043     429,600       429,663  
 
  6.00% to 6.99%   2011 to 2036     78,237       78,232  
 
  7.00% to 7.99%   2012 to 2025     29,872       30,155  
 
  8.00% to 8.99%   2021 to 2025     34,186       34,260  
 
  9.00% to 9.99%   2011 to 2026     44,695       44,694  
 
  10.40%   2018     6,000       6,000  
 
                   
 
            1,058,311       1,060,257  
 
                       
Notes payable to bank under revolving credit agreement, variable rate, due May 2012
    65,000       65,000  
Unsecured notes payable:
               
Notes ranging from 4.62% to 4.87%, due 2013 through 2024
    193,000       193,000  
Notes ranging from 5.01% to 5.95%, due 2014 through 2037
    242,132       242,132  
 
                   
 
            1,558,443       1,560,389  
Current portion of long-term debt
    28,351       28,413  
 
                   
Long-term debt, excluding current portion
    1,530,092       1,531,976  
 
                   
Total capitalization
  $ 2,722,784     $ 2,706,802  
 
                   
See notes to consolidated financial statements beginning on page 7 of this report.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(In thousands of dollars)
(UNAUDITED)
                                                         
                                    Accumulated              
            Capital in                     Other              
    Common     Excess of     Retained     Treasury     Comprehensive     Noncontrolling        
    Stock     Par Value     Earnings     Stock     Income (Loss)     Interest     Total  
Balance at December 31, 2010
  $ 69,223     $ 664,369     $ 452,470     $ (12,307 )   $ 499     $ 572     $ 1,174,826  
Net income
                30,351                   4       30,355  
Unrealized holding gain on investments, net of income tax of $2
                            4             4  
Reclassification adjustment for gain reported in net income, net of income tax of $1
                            (2 )           (2 )
Dividends paid
                (21,388 )                       (21,388 )
Sale of stock (148,565 shares)
    71       2,964             166                   3,201  
Repurchase of stock (31,978 shares)
                      (734 )                 (734 )
Equity compensation plan forfeitures (855 shares)
    (1 )     1                                
Exercise of stock options (317,276 shares)
    159       4,748                               4,907  
Stock-based compensation
          970                               970  
Employee stock plan tax benefits
          553                               553  
 
                                         
Balance at March 31, 2011
  $ 69,452     $ 673,605     $ 461,433     $ (12,875 )   $ 501     $ 576     $ 1,192,692  
 
                                         
See notes to consolidated financial statements beginning on page 7 of this report.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of dollars)
(UNAUDITED)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Cash flows from operating activities:
               
Net income attributable to common shareholders
  $ 30,351     $ 21,511  
Adjustments to reconcile net income attributable to common shareholders to net cash flows from operating activities:
               
Depreciation and amortization
    29,249       29,372  
Deferred income taxes
    20,735       1,791  
Provision for doubtful accounts
    962       1,115  
Stock-based compensation
    970       946  
Gain on sale of utility system
    (2,452 )     0  
Gain on sale of other assets
    (121 )     (1,929 )
Net decrease in receivables, inventory and prepayments
    5,593       3,250  
Net (decrease) increase in payables, accrued interest, accrued taxes and other accrued liabilities
    (4,676 )     10,886  
Other
    (6,520 )     (2,860 )
 
           
Net cash flows from operating activities
    74,091       64,082  
 
           
Cash flows from investing activities:
               
Property, plant and equipment additions, including allowance for funds used during construction of $1,977 and $1,541
    (60,340 )     (67,174 )
Acquisitions of utility systems and other, net
    0       (205 )
Additions to funds restricted for construction activity
    (71 )     (980 )
Release of funds previously restricted for construction activity
    730       958  
Net proceeds from the sale of utility system and other assets
    3,237       3,031  
Proceeds from note receivable
    5,289       375  
Other
    (194 )     51  
 
           
Net cash flows used in investing activities
    (51,349 )     (63,944 )
 
           
Cash flows from financing activities:
               
Customers’ advances and contributions in aid of construction
    643       2,886  
Repayments of customers’ advances
    (987 )     (4,290 )
Net proceeds of short-term debt
    2,326       36,981  
Proceeds from long-term debt
    0       31,334  
Repayments of long-term debt
    (1,891 )     (48,881 )
Change in cash overdraft position
    (7,792 )     (9,362 )
Proceeds from issuing common stock
    3,201       3,075  
Proceeds from exercised stock options
    4,907       1,088  
Stock-based compensation windfall tax benefits
    298       110  
Repurchase of common stock
    (734 )     (344 )
Dividends paid on common stock
    (21,388 )     (19,818 )
 
           
Net cash flows used in financing activities
    (21,417 )     (7,221 )
 
           
 
               
Net increase (decrease) in cash and cash equivalents
    1,325       (7,083 )
Cash and cash equivalents at beginning of period
    5,934       21,869  
 
           
Cash and cash equivalents at end of period
  $ 7,259     $ 14,786  
 
           
See notes to consolidated financial statements beginning on page 7 of this report.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 1  
Basis of Presentation
The accompanying consolidated balance sheets and statements of capitalization of Aqua America, Inc. and subsidiaries (the “Company”) at March 31, 2011, the consolidated statements of income and comprehensive income for the three months ended March 31, 2011 and 2010, the consolidated statements of cash flow for the three months ended March 31, 2011 and 2010, and the consolidated statement of equity for the three months ended March 31, 2011, are unaudited, but reflect all adjustments, consisting of only normal recurring accruals, which are, in the opinion of management, necessary to present fairly the consolidated financial position, the consolidated changes in equity, the consolidated results of operations, and the consolidated cash flow for the periods presented. Because they cover interim periods, the statements and related notes to the financial statements do not include all disclosures and notes normally provided in annual financial statements and, therefore, should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2010. The results of operations for interim periods may not be indicative of the results that may be expected for the entire year. The December 31, 2010 consolidated balance sheet data presented herein was derived from the Company’s December 31, 2010 audited consolidated financial statements, but does not include all disclosures and notes normally provided in annual financial statements. Certain prior period amounts have been reclassified to conform to the current period presentation.
Note 2  
Goodwill
The following table summarizes the changes in the Company’s goodwill, by business segment:
                         
    Regulated              
    Segment     Other     Consolidated  
 
                       
Balance at December 31, 2010
  $ 36,113     $ 4,121     $ 40,234  
Goodwill acquired
    867             867  
 
                 
Balance at March 31, 2011
  $ 36,980     $ 4,121     $ 41,101  
 
                 

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 3  
Dispositions
The City of Fort Wayne, Indiana (“the City”) has authorized the acquisition by eminent domain of the northern portion of the utility system of one of the operating subsidiaries that the Company acquired in connection with the AquaSource acquisition in 2003. In 2008, the Company reached a settlement with the City to transition the northern portion of the system in 2008 upon receipt of the City’s initial valuation payment of $16,911. The settlement agreement specifically stated that the final valuation of the northern portion of the Company’s system will be determined through a continuation of the legal proceedings that were filed challenging the City’s valuation. On February 12, 2008, the Company turned over the northern portion of the system to the City upon receipt of the initial valuation payment. The proceeds received by the Company are in excess of the book value of the assets relinquished. No gain has been recognized due to the contingency over the final valuation of the assets. Once the contingency is resolved and the asset valuation is finalized, through the finalization of the litigation between the Company and the City of Fort Wayne, the amounts deferred will be recognized in the Company’s consolidated income statement. On March 16, 2009, oral argument was held on certain procedural aspects with respect to the valuation evidence that may be presented and whether the Company is entitled to a jury trial. On October 12, 2010, the Wells County Indiana Circuit Court ruled that the Company is not entitled to a jury trial, and that the Wells County judge should review the City of Fort Wayne Board of Public Works’ assessment based upon a “capricious, arbitrary or an abuse of discretion” standard. The Company disagreed with the Court’s decision and as such on November 11, 2010, requested that the Wells County Indiana Circuit Court certify those issues for an interim appeal. The Wells County Indiana Circuit Court granted that request and on March 7, 2011, the Indiana Court of Appeals granted the Company’s request to review the decision of those issues on appeal. Depending upon the outcome of all of the legal proceeding the Company may be required to refund a portion of the initial valuation payment, or may receive additional proceeds. The northern portion of the utility system relinquished represents approximately 0.50% of the Company’s total assets.
In March 2011, the Company sold a water and wastewater utility system in Texas for net proceeds of $3,118. The sale resulted in the recognition of a gain on the sale of these assets, net of expenses of $2,452. The gain is reported in the consolidated statements of income and comprehensive income as a reduction to operations and maintenance expense.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 4  
Fair Value of Financial Instruments
The carrying amount of current assets and liabilities that are considered financial instruments approximates their fair value as of the dates presented. The carrying amount and estimated fair value of the Company’s long-term debt are as follows:
                 
    March 31,     December 31,  
    2011     2010  
Carrying Amount
  $ 1,558,443     $ 1,560,389  
Estimated Fair Value
    1,472,703       1,483,816  
The fair value of long-term debt has been determined by discounting the future cash flows using current market interest rates for similar financial instruments of the same duration. The Company’s customers’ advances for construction and related tax deposits have a carrying value of $66,679 as of March 31, 2011, and $66,966 as of December 31, 2010. Their relative fair values cannot be accurately estimated because future refund payments depend on several variables, including new customer connections, customer consumption levels, and future rate increases. Portions of these non-interest bearing instruments are payable annually through 2026 and amounts not paid by the contract expiration dates become non-refundable. The fair value of these amounts would, however, be less than their carrying value due to the non-interest bearing feature.
Note 5  
Net Income per Common Share
Basic net income per common share is based on the weighted average number of common shares outstanding. Diluted net income per common share is based on the weighted average number of common shares outstanding and potentially dilutive shares. The dilutive effect of employee stock-based compensation is included in the computation of diluted net income per common share. The dilutive effect of stock-based compensation is calculated using the treasury stock method and expected proceeds upon exercise or issuance of the stock-based compensation. The following table summarizes the shares, in thousands, used in computing basic and diluted net income per common share:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
Average common shares outstanding during the period for basic computation
    137,825       136,509  
Dilutive effect of employee stock-based compensation
    559       291  
 
           
Average common shares outstanding during the period for diluted computation
    138,384       136,800  
 
           
For the three months ended March 31, 2011 and 2010, employee stock options to purchase 937,133 and 3,136,875 shares of common stock, respectively, were excluded from the calculations of diluted net income per share as the calculated proceeds from the options’ exercise were greater than the average market price of the Company’s common stock during these periods.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 6  
Stock-based Compensation
Under the Company’s 2009 Omnibus Equity Compensation Plan (the “2009 Plan”), as approved by the Company’s shareholders to replace the 2004 Equity Compensation Plan (the “2004 Plan”), stock options, stock units, stock awards, stock appreciation rights, dividend equivalents, and other stock-based awards may be granted to employees, non-employee directors, and consultants and advisors. The 2009 Plan authorizes 5,000,000 shares for issuance under the plan. A maximum of 50% of the shares available for issuance under the 2009 Plan may be issued as restricted stock and the maximum number of shares that may be subject to grants under the Plan to any one individual in any one year is 200,000. Awards under the 2009 Plan are made by a committee of the Board of Directors. At March 31, 2011, 4,160,076 shares underlying stock-based compensation awards were still available for grants under the 2009 Plan. No further grants may be made under the 2004 Plan.
Performance Share Units — A performance share unit (“PSU”) represents the right to receive a share of the Company’s common stock if specified performance goals are met over the three year performance period specified in the grant, subject to certain exceptions through the three year vesting period. Each grantee is granted a target award of PSUs, and may earn between 0% and 200% of the target amount depending on the Company’s performance against the performance goals. During the three months ended March 31, 2011, the Company recorded stock-based compensation related to PSUs as a component of operations and maintenance expense of $101. Prior to the first quarter of 2011, there were no grants of PSUs. The following table summarizes nonvested PSU transactions for the three months ended March 31, 2011:
                 
    Number     Weighted  
    of     Average  
    Share Units     Fair Value  
 
               
Nonvested share units at beginning of period
        $  
Granted
    109,375       24.38  
Performance criteria adjustment
    14,219       24.38  
Forfeited
           
Vested
           
Share unit awards issued
           
 
           
Nonvested share units at end of period
    123,594     $ 24.38  
 
           

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
The fair value of PSUs was estimated at the grant date based on the probability of satisfying the performance conditions associated with the PSUs using the Monte Carlo valuation method. The per unit weighted-average fair value at the date of grant for PSUs granted during the three months ended March 31, 2011 was $24.38. The fair value of each PSU grant is amortized into compensation expense on a straight-line basis over their respective vesting periods, which ranges from 24 to 36 months. The accrual of compensation costs is based on our estimate of the final expected value of the award, and is adjusted as required. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. The recording of compensation expense for PSUs has no impact on net cash flows.
Restricted Stock Units A restricted stock unit (“RSU”) represents the right to receive a share of the Company’s common stock. RSUs are eligible to be earned at the end of a specified restricted period, generally three years, beginning on the date of grant. During the three months ended March 31, 2011, the Company recorded stock-based compensation related to awards of RSUs as a component of operations and maintenance expense of $39. The Company assumes that forfeitures will be minimal, and recognizes forfeitures as they occur, which results in a reduction in compensation expense. Prior to the first quarter of 2011, there were no grants of RSUs. The following table summarizes nonvested RSU transactions for the three months ended March 31, 2011:
                 
    Number     Weighted  
    of     Average  
    Stock Units     Fair Value  
 
               
Nonvested stock units at beginning of period
        $  
Granted
    44,342       22.21  
Vested
           
Forfeited
           
 
           
Nonvested stock units at end of period
    44,342     $ 22.21  
 
           
Stock Options — The fair value of stock options is estimated at the grant date using the Black-Scholes option-pricing model. The following table provides compensation costs for stock-based compensation related to stock options granted in prior periods:
                 
    Three months ended March 31,  
    2011     2010  
Stock-based compensation for stock options within operations and maintenance expenses
  $ 440     $ 494  
Income tax benefit
    374       152  

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
There were no stock options granted during the three months ended March 31, 2011. The following table summarizes stock option transactions for the three months ended March 31, 2011:
                                 
            Weighted     Weighted        
            Average     Average     Aggregate  
            Exercise     Remaining     Intrinsic  
    Shares     Price     Life (years)     Value  
Options:
                               
Outstanding at beginning of period
    3,839,197     $ 19.54                  
Granted
                             
Forfeited
    (3,968 )     18.19                  
Expired
    (10,115 )     21.92                  
Exercised
    (317,276 )     15.47                  
 
                           
Outstanding at end of period
    3,507,838     $ 19.91       5.6     $ 13,565  
 
                       
 
                               
Exercisable at end of period
    3,018,724     $ 20.23       5.2     $ 11,124  
 
                       
Restricted Stock — During the three months ended March 31, 2011 and 2010, the Company recorded stock-based compensation related to restricted stock awards granted in prior periods as a component of operations and maintenance expense in the amounts of $389 and $452, respectively. The following table summarizes nonvested restricted stock transactions for the three months ended March 31, 2011:
                 
    Number     Weighted  
    of     Average  
    Shares     Fair Value  
 
               
Nonvested shares at beginning of period
    233,387     $ 17.62  
Granted
           
Vested
    (69,204 )     17.75  
Forfeited
    (855 )     17.23  
 
           
Nonvested share units at end of period
    163,328     $ 17.57  
 
           

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 7  
Pension Plans and Other Postretirement Benefits
The Company maintains qualified defined benefit pension plans, nonqualified pension plans and other postretirement benefit plans for certain of its employees. The net periodic benefit cost is based on estimated values and an extensive use of assumptions about the discount rate, expected return on plan assets, the rate of future compensation increases received by the Company’s employees, mortality, turnover, and medical costs. The following tables provide the components of net periodic benefit costs:
                 
    Pension Benefits  
    Three Months Ended  
    March 31,  
    2011     2010  
Service cost
  $ 1,044     $ 1,172  
Interest cost
    2,964       3,220  
Expected return on plan assets
    (2,596 )     (2,796 )
Amortization of prior service cost
    43       35  
Amortization of actuarial loss
    1,016       1,030  
Capitalized costs
    (857 )     (797 )
 
           
Net periodic benefit cost
  $ 1,614     $ 1,864  
 
           
                 
    Other  
    Postretirement Benefits  
    Three Months Ended  
    March 31,  
    2011     2010  
Service cost
  $ 376     $ 305  
Interest cost
    812       620  
Expected return on plan assets
    (621 )     (462 )
Amortization of transition obligation
    34       26  
Amortization of prior service cost
    (89 )     (67 )
Amortization of actuarial loss
    206       171  
Amortization of regulatory asset
    34       34  
Capitalized costs
    (155 )     (121 )
 
           
Net periodic benefit cost
  $ 597     $ 506  
 
           
The Company made cash contributions of $9,520 to its defined benefit pension plans during the first three months of 2011, and intends to make cash contributions of $7,620 to the plans during the remainder of 2011. In addition, the Company expects to make cash contributions of $2,012 for the funding of its other postretirement benefit plans during the remainder of 2011.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 8  
Taxes Other than Income Taxes
The following table provides the components of taxes other than income taxes:
                 
    Three Months Ended  
    March 31,  
    2011     2010  
 
               
Property
  $ 7,071     $ 6,526  
Capital stock
    882       866  
Gross receipts, excise and franchise
    2,316       2,220  
Payroll
    2,319       2,149  
Other
    1,177       1,099  
 
           
Total taxes other than income
  $ 13,765     $ 12,860  
 
           
Note 9  
Segment Information
The Company has identified fourteen operating segments and has one reportable segment named the “Regulated” segment. The reportable segment is comprised of thirteen operating segments for the Company’s water and wastewater regulated utility companies which are organized by the states where we provide these services. In addition, one segment is not quantitatively significant to be reportable and is comprised of the businesses that provide on-site septic tank pumping, sludge hauling services and certain other non-regulated water and wastewater services. This segment is included as a component of “Other” in the tables below. Also included in “Other” are corporate costs that have not been allocated to the Regulated segment and intersegment eliminations.
The following tables present the Company’s segment information:
                                                 
    Three Months Ended     Three Months Ended  
    March 31, 2011     March 31, 2010  
    Regulated     Other     Consolidated     Regulated     Other     Consolidated  
Operating revenues
  $ 168,365     $ 2,959     $ 171,324     $ 158,006     $ 2,511     $ 160,517  
Operations and maintenance expense
    66,259       1,066       67,325       66,058       1,543       67,601  
Depreciation
    27,652       (359 )     27,293       26,605       (405 )     26,200  
Operating income
    59,330       1,655       60,985       49,851       833       50,684  
Interest expense, net of AFUDC
    17,008       958       17,966       16,223       666       16,889  
Gain (loss) on sale of other assets
    75       46       121       (117 )     2,046       1,929  
Income tax
    12,651       138       12,789       13,844       369       14,213  
Net income attributable to common shareholders
    29,746       605       30,351       19,667       1,844       21,511  
Capital expenditures
    59,880       460       60,340       67,045       129       67,174  

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
                 
    March 31,     December 31,  
    2011     2010  
Total assets:
               
Regulated
    4,041,788       3,991,493  
Other and eliminations
    70,538       80,973  
 
           
Consolidated
  $ 4,112,326     $ 4,072,466  
 
           
Note 10  
Commitments and Contingencies
The Company is routinely involved in various disputes, claims, lawsuits and other regulatory and legal matters, including both asserted and unasserted legal claims, in the ordinary course of business. The status of each such matter, referred to herein as a loss contingency, is reviewed and assessed in accordance with applicable accounting rules regarding the nature of the matter, the likelihood that a loss will be incurred, and the amounts involved. As of March 31, 2011, the aggregate amount of $12,363 is accrued for loss contingencies and is reported in the Company’s consolidated balance sheet as other accrued liabilities and other liabilities. These accruals represent management’s best estimate of probable loss (as defined in the accounting guidance) for loss contingencies or the low end of a range of losses if no single probable loss can be estimated. For some loss contingencies, the Company is unable to estimate the amount of the probable loss or range of probable losses. While the final outcome of these loss contingencies cannot be predicted with certainty, and unfavorable outcomes could negatively impact the Company, at this time in the opinion of management, the final resolution of these matters are not expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows. Further, the Company has insurance coverage for certain of these loss contingencies, and as of March 31, 2011, estimates that approximately $2,617 of the amount accrued for these matters are probable of recovery through insurance, which amount is also reported in the Company’s consolidated balance sheet as deferred charges and other assets, net.
Note 11  
Income Taxes
As of March 31, 2011, the Company recorded a deferred tax asset for a Federal net operating loss (“NOL”) carryforward of $41,176, and for the Company’s Pennsylvania operating subsidiary a state NOL of $17,061. The Company believes the Federal and state NOL carryforwards are more likely than not to be recovered and require no valuation allowance. The Company’s Federal and state NOL carryforwards do not begin to expire until 2030 and 2031, respectively.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(In thousands of dollars, except per share amounts)
(UNAUDITED)
Note 12  
Recent Accounting Pronouncements
There have been no recent accounting pronouncements or changes in accounting pronouncements that the Company has adopted that would have a material impact on the Company’s consolidated results of operations or consolidated financial position during the three months ended March 31, 2011.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands of dollars, except per share amounts)
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this Quarterly Report contain, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address, among other things: our belief in our ability to renew our short-term lines of credit; the impact and the actions we may need to take if we are unable to obtain sufficient capital; the projected impact of various legal proceedings; the projected effects of recent accounting pronouncements; prospects, plans, objectives, expectations and beliefs of management, as well as information contained in this report where statements are preceded by, followed by or include the words “believes,” “expects,” “anticipates,” “plans,” “future,” “potential,” “probably,” “predictions,“intends,” “will,” “continue” or the negative of such terms or similar expressions. Forward-looking statements are based on a number of assumptions concerning future events, and are subject to a number of risks, uncertainties and other factors, many of which are outside our control, which could cause actual results to differ materially from those expressed or implied by such statements. These risks and uncertainties include, among others: the effects of regulation, abnormal weather, changes in capital requirements and funding, acquisitions, changes to the capital markets, and our ability to assimilate acquired operations, as well as those risks, uncertainties and other factors discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in such report. As a result, readers are cautioned not to place undue reliance on any forward-looking statements. We undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.
General Information
Nature of Operations - Aqua America, Inc. (“we” or “us”), a Pennsylvania corporation, is the holding company for regulated utilities providing water or wastewater services to what we estimate to be approximately 3 million people in Pennsylvania, Ohio, North Carolina, Illinois, Texas, New Jersey, New York, Florida, Indiana, Virginia, Maine, Missouri, and Georgia. Our largest operating subsidiary, Aqua Pennsylvania, Inc., provides water or wastewater services to approximately one-half of the total number of people we serve, who are located in the suburban areas in counties north and west of the City of Philadelphia and in 25 other counties in Pennsylvania. Our other subsidiaries provide similar services in 12 other states. In addition, we provide water and wastewater service through operating and maintenance contracts with municipal authorities and other parties close to our utility companies’ service territories as well as sludge hauling, septage and grease services, backflow prevention services, and certain other non-regulated water and wastewater services.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Aqua America, Inc., which prior to its name change in 2004 was known as Philadelphia Suburban Corporation, was formed in 1968 as a holding company for its primary subsidiary, Aqua Pennsylvania, Inc., formerly known as Philadelphia Suburban Water Company. In the early 1990s we embarked on a growth through acquisition strategy focused on water and wastewater operations. Our most significant transactions to date have been the merger with Consumers Water Company in 1999, the acquisition of the regulated water and wastewater operations of AquaSource, Inc. in 2003, the acquisition of Heater Utilities, Inc. in 2004, and the acquisition of New York Water Service Corporation in 2007. Since the early 1990s, our business strategy has been primarily directed toward the regulated water and wastewater utility industry and has extended our regulated operations from southeastern Pennsylvania to include operations in 12 other states.
Financial Condition
During the first three months of 2011, we had $60,340 of capital expenditures, and repaid debt and made sinking fund contributions and other loan repayments of $1,891. The capital expenditures were related to improvements to treatment plants, new and rehabilitated water mains, tanks, hydrants, and service lines, well and booster improvements, and other enhancements and improvements.
At March 31, 2011, we had $7,259 of cash and cash equivalents compared to $5,934 at December 31, 2010. During the first three months of 2011, we used the proceeds from internally generated funds, the sale of other assets, and the issuance of common stock, to fund the cash requirements discussed above and to pay dividends.
At March 31, 2011, our $95,000 unsecured revolving credit facility, which expires in May 2012, had $12,399 available for borrowing. At March 31, 2011, we had short-term lines of credit of $167,000, of which $75,006 was available. One of our short-term lines of credit is an Aqua Pennsylvania $100,000 364-day unsecured revolving credit facility with three banks, which is used to provide working capital, and as of March 31, 2011, $19,747 was available.
Our short-term lines of credit of $167,000 are subject to renewal on an annual basis. Although we believe we will be able to renew these facilities, there is no assurance that they will be renewed, or what the terms of any such renewal will be. The United States credit and liquidity crisis that occurred in 2008 and 2009 caused substantial volatility in capital markets, including credit markets and the banking industry, generally reduced the availability of credit from financing sources, and could re-occur in the future. If in the future, our credit facilities are not renewed or our short-term borrowings are called for repayment, we would have to seek alternative financing sources; however, there can be no assurance that these alternative financing sources would be available on terms acceptable to us. In the event we are not able to obtain sufficient capital, we may need to reduce our capital expenditures and our ability to pursue acquisitions that we may rely on for future growth could be impaired.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
The Company’s consolidated balance sheet historically has had a negative working capital position whereby routinely our current liabilities exceed our current assets. Management believes that internally generated funds along with existing credit facilities and the proceeds from the issuance of long-term debt and common stock will be adequate to provide sufficient working capital to maintain normal operations and to meet our financing requirements for at least the next twelve months.
Results of Operations
Analysis of First Quarter of 2011 Compared to First Quarter of 2010
Revenues increased $10,807 or 6.7% primarily due to additional revenues associated with increased water and wastewater rates of $7,960, increased water consumption as compared to the first quarter of 2010, and additional water and wastewater revenues of $573 associated with a larger customer base due to acquisitions.
Operations and maintenance expenses decreased by $276 or 0.4% primarily due to the gain on the sale of our utility system in Texas of $2,452, the effect of the write-off in the first quarter of 2010 of previously deferred regulatory expenses of $1,011, and decreased insurance expense of $919. Offsetting these decreases was increased water production costs of $1,380, an increase in postretirement benefits expenses of $770, increases in operating costs associated with acquired utility systems of $458, and normal increases in other operating costs. The increase in water production costs is primarily due to an increase in the cost of purchased water.
Depreciation expense increased $1,093 or 4.2% due to the utility plant placed in service since March 31, 2010.
Amortization decreased $1,216 primarily due to the additional expense recognized in the first quarter of 2010 of $1,635 resulting from the recovery of our costs associated with a completed rate filing in Texas.
Taxes other than income taxes increased by $905 or 7.0% primarily due to an increase in property taxes of $545, which is attributable to an increase in recoverable expenses associated with a rate award received in February 2010 for one of our states. In that state recovery of the property taxes began with the conclusion of the most recent rate proceeding whereas previously these taxes had been deferred pending the inclusion in future rates.
Interest expense increased by $1,513 or 8.2% primarily due to additional borrowings to finance capital projects, offset partially by decreased interest rates on long-term debt.
Allowance for funds used during construction (“AFUDC”) increased by $436 primarily due to an increase in the average balance of proceeds held from tax-exempt bond issuances that are restricted to funding certain capital projects.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
Gain on sale of other assets totaled $121 in the first quarter of 2011 and $1,929 in the first quarter of 2010. The decrease of $1,808 is principally due to a gain on the sale of an investment in the first quarter of 2010.
Our effective income tax rate was 29.6% in the first quarter of 2011 and 39.8% in the first quarter of 2010. The effective income tax rate decreased as a result of the recognition in 2011 of the net state income tax benefit of $4,328 associated with 100% bonus depreciation for qualifying capital additions.
Net income attributable to common shareholders increased by $8,840 or 41.1%, in comparison to the same period in 2010 primarily as a result of the factors described above. On a diluted per share basis, earnings increased $0.06 reflecting the change in net income attributable to common shareholders and a 1.2% increase in the average number of common shares outstanding. If earnings were adjusted to exclude the net state income tax benefit associated with 100% bonus depreciation, a non-GAAP financial measure, earnings would have increased by $0.03 per share, as compared to the first quarter of 2010. The increase in the number of shares outstanding is primarily a result of the additional shares sold or issued through our equity compensation plan, dividend reinvestment plan, and employee stock purchase plan.
Impact of Recent Accounting Pronouncements
There have been no recent accounting pronouncements or changes in accounting pronouncements that the Company has adopted that would have a material impact on the Company’s consolidated results of operations or consolidated financial position during the three months ended March 31, 2011.
Non-Generally Accepted Accounting Principle (“GAAP”) Financial Measures
In addition to reporting “net income attributable to common shareholders” and “net income per common share”, U.S. GAAP financial measures, we are presenting below “income attributable to common shareholders before net state income tax benefit associated with 100% bonus depreciation” and “income per common share before net state income tax benefit associated with 100% bonus depreciation”, which are considered non-GAAP financial measures. The Company is providing disclosure of the reconciliation of these non-GAAP measures to their most comparable GAAP financial measures. The Company believes that the non-GAAP financial measures provide investors the ability to measure the Company’s financial operating performance excluding the net state income tax benefit associated with 100% bonus depreciation, which is more indicative of the Company’s ongoing performance, and is more comparable to measures reported by other companies. The Company further believes that the presentation of these non-GAAP financial measures is useful to investors as a more meaningful way to compare the Company’s operating performance against its historical financial results and to assess the underlying profitability of our core business. As currently enacted, 100% bonus depreciation is in effect for qualifying capital additions placed in service from September 8, 2010 through December 31, 2011.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
(In thousands of dollars, except per share amounts)
                 
    Three Months Ended  
    March 31,  
    2011     2010  
 
               
Net income attributable to common shareholders (GAAP financial measure)
  $ 30,351     $ 21,511  
Less: Net state income tax benefit associated with 100% bonus depreciation
    4,328        
 
           
Income attributable to common shareholders before net state income tax benefit associated with 100% bonus depreciation (Non-GAAP financial measure)
  $ 26,023     $ 21,511  
 
           
 
               
Net income per common share (GAAP financial measure):
               
Basic
  $ 0.22     $ 0.16  
Diluted
  $ 0.22     $ 0.16  
 
               
Income per common share before net state income tax benefit associated with 100% bonus depreciation (Non-GAAP financial measure):
               
Basic
  $ 0.19     $ 0.16  
Diluted
  $ 0.19     $ 0.16  
 
               
Average common shares outstanding:
               
Basic
    137,825       136,509  
 
           
Diluted
    138,384       136,800  
 
           
Item 3.  
Quantitative and Qualitative Disclosures About Market Risk
We are subject to market risks in the normal course of business, including changes in interest rates and equity prices. There have been no significant changes in our exposure to market risks since December 31, 2010. Refer to Item 7A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for additional information.
Item 4.  
Controls and Procedures
  (a)  
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
  (b)  
Changes in Internal Control over Financial Reporting
No change in our internal control over financial reporting occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Part II. Other Information
Item 1.  
Legal Proceedings
The City of Fort Wayne, Indiana (the “City”) authorized the acquisition by eminent domain of the northern portion of the utility system of one of the Company’s operating subsidiaries in Indiana. In 2008, we reached a settlement agreement with the City to transition this portion of the system in 2008 upon receipt of the City’s initial valuation payment of $16,910,500. The settlement agreement specifically stated that the final valuation of the system will be determined through a continuation of the legal proceedings that were filed challenging the City’s valuation. On February 12, 2008, we turned over the northern portion of the system to the City upon receipt of the initial valuation payment. The proceeds received by the Company are in excess of the book value of the assets relinquished. No gain has been recognized due to the contingency over the final valuation of the assets. Once the contingency is resolved and the asset valuation is finalized, through the finalization of the litigation between the Company and the City of Fort Wayne, the amounts deferred will be recognized in the Company’s consolidated income statement. On March 16, 2009, oral argument was held before the Allen County Circuit Court on certain procedural aspects with respect to the valuation evidence that may be presented and whether we are entitled to a jury trial. On October 12, 2010, the Wells County Indiana Circuit Court ruled that the Company is not entitled to a jury trial, and that the Wells County judge should review the City of Fort Wayne Board of Public Works’ assessment based upon a “capricious, arbitrary or an abuse of discretion” standard. The Company disagreed with the Court’s decision and as such, on November 11, 2010, requested that the Wells County Indiana Circuit Court certify those issues for an interim appeal. The Wells County Circuit Court granted that request and on March 7, 2011, the Indiana Court of Appeals granted the Company’s request to review the decision of those issues on appeal. Depending upon the ultimate outcome of all of the legal proceedings we may be required to refund a portion of the initial valuation payment, or may receive additional proceeds. The northern portion of the system relinquished represented approximately 0.50% of Aqua America’s total assets.

 

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AQUA AMERICA, INC. AND SUBSIDIARIES
Item 1A.  
Risk Factors
There have been no material changes to the risks disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010 (“Form 10-K”) under “Part 1, Item 1A — Risk Factors.”
Item 2.  
Unregistered Sales of Equity Securities and Use of Proceeds
The following table summarizes Aqua America’s purchases of its common stock for the quarter ended March 31, 2011:
Issuer Purchases of Equity Securities
                                 
                    Total     Maximum  
                    Number of     Number of  
                    Shares     Shares  
                    Purchased     that May  
                    as Part of     Yet be  
    Total             Publicly     Purchased  
    Number     Average     Announced     Under the  
    of Shares     Price Paid     Plans or     Plan or  
Period   Purchased (1)     per Share     Programs     Programs (2)  
 
                               
January 1 – 31, 2011
    20,075     $ 23.28             548,278  
February 1 – 28, 2011
    7,136     $ 22.52             548,278  
March 1 – 31, 2011
    4,767     $ 22.47             548,278  
 
                       
Total
    31,978     $ 22.99             548,278  
 
                       
     
(1)  
These amounts consist of the following: (a) shares we purchased from employees who elected to have us withhold shares to pay certain withholding taxes upon the vesting of restricted stock awards granted to such employees; and (b) shares we purchased from employees who elected to pay the exercise price of their stock options (and then hold shares of the stock) upon exercise by delivering to us (and, thus, selling) shares of Aqua America common stock in accordance with the terms of our equity compensation plans that were previously approved by our shareholders and disclosed in our proxy statements. These features of our equity compensation plan are available to all employees who receive stock-based compensation under the plans. We purchased these shares at their fair market value, as determined by reference to the closing price of our common stock on the day of vesting of the restricted stock award or on the day prior to the option exercise.
 
(2)  
On August 5, 1997, our Board of Directors authorized a common stock repurchase program that was publicly announced on August 7, 1997, for up to 1,007,351 shares. No repurchases have been made under this program since 2000. The program has no fixed expiration date. The number of shares authorized for purchase was adjusted as a result of the stock splits affected in the form of stock distributions since the authorization date.

 

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Table of Contents

AQUA AMERICA, INC. AND SUBSIDIARIES
Item 6.  
Exhibits
The information required by this Item is set forth in the Exhibit Index hereto which is incorporated herein by reference.

 

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Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be executed on its behalf by the undersigned thereunto duly authorized.
May 9, 2011
         
 
  Aqua America, Inc.
 
Registrant
   
 
       
 
  Nicholas DeBenedictis
 
Nicholas DeBenedictis
   
 
  Chairman, President and    
 
  Chief Executive Officer    
 
       
 
  David P. Smeltzer
 
   
 
  David P. Smeltzer    
 
  Chief Financial Officer    

 

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Table of Contents

EXHIBIT INDEX
         
Exhibit No.   Description
       
 
  10.52    
2011 Annual Cash Incentive Compensation Plan
       
 
  10.53    
Form of Performance Share Unit Grant Agreement for Chief Executive Officer
       
 
  10.54    
Form of Performance Share Unit Grant Agreement for other Executive Officers
       
 
  10.55    
Form of Restricted Stock Unit Grant Agreement for Chief Executive Officer
       
 
  10.56    
Form of Restricted Stock Unit Grant Agreement for other Executive Officers
       
 
  31.1    
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934.
       
 
  31.2    
Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934.
       
 
  32.1    
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
       
 
  32.2    
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350.
       
 
  101.INS    
XBRL Instance Document
       
 
  101.SCH    
XBRL Taxonomy Extension Schema Document
       
 
  101.CAL    
XBRL Taxonomy Extension Calculation Linkbase Document
       
 
  101.DEF    
XBRL Taxonomy Extension Definition Linkbase Document
       
 
  101.LAB    
XBRL Taxonomy Extension Label Linkbase Document
       
 
  101.PRES    
XBRL Taxonomy Extension Presentation Linkbase Document

 

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