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<SEC-DOCUMENT>0001125282-06-004549.txt : 20060802
<SEC-HEADER>0001125282-06-004549.hdr.sgml : 20060802
<ACCEPTANCE-DATETIME>20060802103332
ACCESSION NUMBER:		0001125282-06-004549
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20060802
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060802
DATE AS OF CHANGE:		20060802

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			AQUA AMERICA INC
		CENTRAL INDEX KEY:			0000078128
		STANDARD INDUSTRIAL CLASSIFICATION:	WATER SUPPLY [4941]
		IRS NUMBER:				231702594
		STATE OF INCORPORATION:			PA
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-06659
		FILM NUMBER:		06996503

	BUSINESS ADDRESS:	
		STREET 1:		762 LANCASTER AVE
		CITY:			BRYN MAWR
		STATE:			PA
		ZIP:			19010
		BUSINESS PHONE:		2155278000

	MAIL ADDRESS:	
		STREET 1:		762 LANCASTER AVE
		CITY:			BRYN MAWR
		STATE:			PA
		ZIP:			19010

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PHILADELPHIA SUBURBAN CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>p414312_8k.txt
<DESCRIPTION>FORM 8-K
<TEXT>
<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                   ----------

                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

        Date of report (Date of earliest event reported): August 2, 2006

                               Aqua America, Inc.
                 (Exact Name of Registrant Specified in Charter)

  Pennsylvania                    001-06659                       23-1702594
(State or Other               (Commission File                 (I.R.S. Employer
Jurisdiction of                    Number)                   Identification No.)
 Incorporation)

        762 West Lancaster Avenue
         Bryn Mawr, Pennsylvania                                  19010-3489
(Address of Principal Executive Offices)                          (Zip Code)

       Registrant's telephone number, including area code: (610) 527-8000

  ____________________________________________________________________________
          (Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

     [_]  Written communications pursuant to Rule 425 under the Securities Act
          (17 CFR 230.425)

     [_]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
          CFR 240.14a-12)

     [_]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
          Exchange Act (17 CFR 240.14d-2(b))

     [_]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
          Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On August 2, 2006, Aqua America, Inc. issued a press release announcing its
financial results for the quarter and six months ended June 30, 2006.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

          (d) Exhibits.

          99.1 Press Release, dated August 2, 2006, issued by Aqua America, Inc.


                                       -2-

<PAGE>

                                    SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        AQUA AMERICA, INC.


                                        By: ROY H. STAHL
                                            ------------------------------------
                                            Roy H. Stahl
                                            Executive Vice President and
                                            General Counsel

Dated: August 2, 2006


                                       -3-

<PAGE>

                                  Exhibit Index

Exhibit   Exhibit Description
- -------   -------------------
  99.1    Press Release, dated August 2, 2006, issued by Aqua America, Inc.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>p414312_ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>

                                                                    EXHIBIT 99.1

FOR RELEASE: August 2, 2006

                                                          CONTACT: Cheryl Hansen
                                                    Director, Investor Relations
                                                                    610.645.1084
                                                        clhansen@aquaamerica.com

                                                                    Donna Alston
                                                         Manager, Communications
                                                                    610.645.1095
                                                        dpalston@aquaamerica.com

              AQUA AMERICA REPORTS EARNINGS FOR SECOND QUARTER 2006

               RESULTS SHOW BENEFITS OF GEOGRAPHIC DIVERSIFICATION

        BOARD OF DIRECTORS INCREASES QUARTERLY DIVIDEND BY EIGHT PERCENT

BRYN MAWR, PA, AUGUST 2, 2006 - Aqua America, Inc. (NYSE: WTR) today reported
diluted earnings per share for the quarter ended June 30, 2006 of $0.17,
compared to $0.17 for the second quarter 2005. Corresponding net income
increased to $22.4 million from $22.2 million for the same period in 2005.

At its regularly scheduled meeting on August 1, 2006, the company's Board of
Directors voted to increase the quarterly common stock cash dividend to
shareholders by eight percent to $0.115 per share -- an annualized rate of $0.46
per share - to be effective with the September 1, 2006 cash dividend for
shareholders of record on August 18, 2006. This is the eighth consecutive year
in which Aqua America has increased its dividend above the stated five percent
target and the 16th dividend increase in 15 years. The Board of Directors
remains committed to establishing long-term value for the company's investors.

Second quarter 2006 operating revenues increased seven percent to $131.7 million
from $123.1 million for the same period in 2005, driven primarily by rate
increases and customer growth. The company benefited from the settlement of a
significant rate increase in its largest subsidiary, Aqua Pennsylvania, which
occurred late in the second quarter. Additionally, the increased demand caused
by hot, dry weather in the company's southern states was partially offset by the
reduced demand that resulted from rainy weather in the company's northern and
mid-Atlantic operations.

Aqua America Chairman and CEO Nicholas DeBenedictis said, "Geographic
diversification is working. This quarter's results illustrate how geographic
diversity can mitigate concentrated weather risk, one of our primary goals with
expanding to a multi-state footprint. Although several mid-Atlantic and northern
states received well above normal rainfall during the quarter, this was offset
by most of our southern states, which experienced hot, dry weather, thereby
facilitating the increased consumption which helped drive incremental revenues
during two key demand months, May and June."


                                                                               1

<PAGE>

Rate relief continues to be a major focus for 2006. On June 22, the Pennsylvania
Public Utility Commission awarded the company's largest subsidiary, Aqua
Pennsylvania, a nine percent increase in base rates equating to $24.9 million in
annualized revenues. The increase alleviates the regulatory lag that had been
impacting the subsidiary's earnings over the past several quarters. Rate awards
were also granted in July for five divisions in Maine for $539,000 and for the
Sarasota division in Florida for $429,000. Other rate awards are expected for
New Jersey, Illinois, Florida, Virginia and Missouri over the next six months.

For the six months ended June 30, 2006, operating revenues increased five
percent to $249.7 million from $237.1 million for the same period in 2005. The
company also reported first half 2006 net income of $39.0 million, down from
$41.1 million for the first half of 2005, and corresponding diluted earnings per
share of $0.30, compared to $0.32 for the same period in 2005.

Operations and maintenance expenses increased nine percent for the second
quarter 2006, compared to the second quarter of 2005, primarily due to the
impact of double-digit increases in water production costs (power,
transportation, chemicals) that are being driven up by the continuing rise in
oil and gas prices. Additionally, stock options were expensed this quarter - and
were not in 2005 - generating 18 percent of the total increase in operations and
maintenance expenses. The company also saw large year over year increases during
the second quarter in depreciation expense (18 percent) and interest expense (18
percent), both as a result of record capital investment made by the company on
needed infrastructure improvements and the increases in interest rates this past
year. The company expects many of these expenses to be fully recoverable in
rates.

DeBenedictis said, "Capital investment creates the basis for long-term
earnings growth and is a key facet of our strategy. Although we might experience
some earnings pressure between rate awards due to occasional regulatory lag - as
we expected in the first half of 2006 - we believe the long-term benefits of
increased shareholder value outweigh the short-term quarterly earnings impact."

During the first half of 2006, Aqua America completed nine acquisitions of both
water and wastewater systems and added one new septage hauling company in
southeastern Pennsylvania. The company also announced agreements to purchase the
Village of Manteno water system, a municipal water system in Illinois with
approximately 3,300 customers, and New York Water Service Corporation, which
serves approximately 45,000 customers in Long Island, New York. The acquisition
of New York Water Service is expected to close by the end of the year.

DeBenedictis said, "2006 will be an above average year for customer growth, as
the New York acquisition alone will expand the company's customer base by more
than five percent. The addition of the platform-building acquisition of New York
Water Service, which we expect to be immediately accretive, will give us the
scale for building rate base and future tuck-in growth in New York - both of
which can contribute to the company's long-term earnings growth."

The company's conference call with analysts will take place on Wednesday, August
2, 2006 at 11:00 a.m. Eastern Daylight Time. The call will be webcast live so
that interested parties may listen over the Internet by logging on to
www.aquaamerica.com. The conference call will be archived in the investor
relations section of the company's Web site for 90 days following the call.
Additionally, the call will be recorded and made available for replay at 12:00
p.m. on August 2, 2006 for 10 business days following the call. To access the
audio replay in the U.S., dial 888.203.1112 (passcode 4292829). For
international callers, dial 719.457.0820 (passcode 4292829).

Aqua America, Inc. is the largest U.S.-based publicly-traded water and
wastewater utility, serving more than 2.5 million residents in Pennsylvania,
Ohio, North Carolina, Illinois, Texas, Florida, New Jersey, Indiana, Virginia,
Maine, Missouri, New York, and South Carolina. Aqua America is listed on both
the New York and Philadelphia Stock Exchanges under the ticker symbol WTR.


                                                                               2

<PAGE>

This release contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, regarding, among other things,
the expected recovery of capital expenditures and expenses in rates, the timing
and amounts of rate recoveries, the success of Aqua America's acquisition
program, the timing of closing for certain acquisitions, the impact of Aqua
America's acquisitions and capital investment program, and increased
opportunities from acquisitions for further growth and to invest and earn a
return on infrastructure improvements. There are important factors that could
cause actual results to differ materially from those expressed or implied by
such forward-looking statements including: general economic business conditions,
unfavorable weather conditions, the success of certain cost containment
initiatives, changes in regulations or regulatory treatment, availability and
the cost of capital, the success of growth initiatives, and other factors
discussed in Aqua America's filings with the Securities and Exchange Commission.

                                      # # #

                                                                            WTRF

The following table shows selected operating data for the quarters and six
months ended June 30, 2006 and 2005 (in thousands, except per share data) for
Aqua America, Inc. All share and per share data have been restated to reflect
the December 1, 2005 four-for-three stock split.

                                                    (Unaudited)
                                     -----------------------------------------
                                        Quarter Ended        Six Months Ended
                                           June 30,              June 30,
                                     -------------------   -------------------
                                       2006       2005       2006       2005
                                     --------   --------   --------   --------
Operating revenues                   $131,749   $123,100   $249,698   $237,088
                                     ========   ========   ========   ========
Net income                           $ 22,386   $ 22,218   $ 38,950   $ 41,089
                                     ========   ========   ========   ========
Basic net income per share           $   0.17       0.17   $   0.30       0.32
                                     ========   ========   ========   ========
Diluted net income per share         $   0.17       0.17   $   0.30       0.32
                                     ========   ========   ========   ========
Average common shares outstanding:
   Basic                              129,860    127,851    129,522    127,602
                                     ========   ========   ========   ========
   Diluted                            130,952    129,498    130,734    129,214
                                     ========   ========   ========   ========


                                                                               3

<PAGE>

                       Aqua America, Inc. and Subsidiaries
           Consolidated Statements of Income and Comprehensive Income
                    (In thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                       Quarter Ended        Six Months Ended
                                                          June 30,              June 30,
                                                    -------------------   -------------------
                                                      2006       2005       2006       2005
                                                    --------   --------   --------   --------
<S>                                                 <C>        <C>        <C>        <C>
Operating revenues                                  $131,749   $123,100   $249,698   $237,088
Cost & expenses:
   Operations and maintenance                         55,433     50,891    106,749     98,200
   Depreciation                                       17,255     14,629     34,085     29,312
   Amortization                                          888      1,227      2,002      2,455
   Taxes other than income taxes                       8,084      7,760     16,151     15,757
                                                    --------   --------   --------   --------
Total                                                 81,660     74,507    158,987    145,724
                                                    --------   --------   --------   --------
Operating income                                      50,089     48,593     90,711     91,364
Other expense (income):
   Interest expense, net                              14,744     12,541     28,916     25,336
   Allowance for funds used during construction       (1,280)      (700)    (2,198)    (1,064)
   Gain on sale of other assets                         (476)       (24)      (743)      (505)
                                                    --------   --------   --------   --------
Income before income taxes                            37,101     36,776     64,736     67,597
Provision for income taxes                            14,715     14,558     25,786     26,508
                                                    --------   --------   --------   --------
Net income                                          $ 22,386   $ 22,218   $ 38,950   $ 41,089
                                                    ========   ========   ========   ========
Net income                                          $ 22,386   $ 22,218   $ 38,950   $ 41,089
Other comprehensive income, net of tax:
   Unrealized holding gain on certain investments        199         --        199         --
                                                    --------   --------   --------   --------
Comprehensive income                                $ 22,585   $ 22,218   $ 39,149   $ 41,089
                                                    ========   ========   ========   ========
Net income per common share:
   Basic                                            $   0.17   $   0.17   $   0.30   $   0.32
   Diluted                                          $   0.17   $   0.17   $   0.30   $   0.32
Average common shares outstanding:
   Basic                                             129,860    127,851    129,522    127,602
                                                    ========   ========   ========   ========
   Diluted                                           130,952    129,498    130,734    129,214
                                                    ========   ========   ========   ========
</TABLE>


                                                                               4

<PAGE>

                       Aqua America, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheets
                            (In thousands of dollars)
                                   (Unaudited)

                                                       June 30,    December 31,
                                                         2006          2005
                                                      ----------   ------------
Net property, plant and equipment                     $2,368,906    $2,279,950
Current assets                                           105,930        98,277
Regulatory assets and other assets                       237,958       256,819
                                                      ----------    ----------
                                                      $2,712,794    $2,635,046
                                                      ==========    ==========
Common stockholders' equity                           $  874,807    $  811,923
Long-term debt, excluding current portion                907,198       878,438
Current portion of long-term debt and loans payable      152,964       163,150
Other current liabilities                                 87,587       108,510
Deferred credits and other liabilities                   690,238       673,025
                                                      ----------    ----------
                                                      $2,712,794    $2,635,046
                                                      ==========    ==========


                                                                               5
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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