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Philadelphia Suburban Corporation Announces Record Operating Results for the Quarter and Year.

    Business Editors

      BRYN MAWR, Pa.--(BUSINESS WIRE)--Feb. 7, 2001--Philadelphia
Suburban Corporation (NYSE:PSC) today reported its quarterly and
year-end results for the periods ending December 31, 2000.
      Net income available to common stock in the fourth quarter grew
29.6 percent to $12.4 million versus 1999's fourth quarter net income
of $9.6 million. Rate awards granted this year in Pennsylvania, Ohio
and Maine, and the continuation of PSC's successful
growth-through-acquisition strategy, including the liquidation of its
holdings in E'Town (water) Corporation, contributed to the increase in
net income available to common stock for the quarter.
      Water sales in the fourth quarter of 2000 returned to normal after
experiencing a decline as a result of a wet summer. Earnings per share
grew 21.1 percent for the quarter to $.23 per share versus $.19 the
prior year on more shares outstanding as a result of the company's 1.7
million share equity offering in September 2000.
      For the year, diluted net income per share increased 44.3 percent
to $1.01 versus $.70 in 1999, calculated on an increased average
number of shares outstanding. 1999 net income was negatively impacted
by $.17 per share as a result of costs related to the merger with
Consumers Water Company in March 1999, while 2000 earnings were
positively impacted by the partial regulatory recovery of those costs.
      Absent the impacts from transaction ccosts, earnings from
operations increased 11.5 percent to $.97 per diluted share for the
year ended December 31, 2000, versus $.87 the prior year, with
corresponding income increasing by 12.7 percent to $50.5 million
versus $44.9 million in the prior year.
      Despite unfavorable weather patterns, revenues for the year
increased by 7.1 percent to $275.5 million as compared to $257.3
million reported in 1999 as a result of rate adjustments and
previously mentioned growth initiatives. Overall customer growth for
the year was 4 percent, closing the year with 579,219 customers.
      PSC had another good year of containing costs, even with higher
electric and fuel costs. Although operations and maintenance (O&M)
expenses increased three percent in comparison to 1999, PSC continues
to lower O&M expenses as a percentage of revenue. Overall, O & M costs
for 2000 represent only 36.9 percent of revenue versus 38.4 percent in
1999, a decrease of 150 basis points.
      This record operating expense margin speaks to the company's
ability to continue to contain costs, while growing revenues.
      Commenting on the year, Chairman and President Nicholas
DeBenedictis said, "2000 was a challenging year for PSC due to
unfavorable weather conditions. However, rate recovery and the
continued success of the company's growth-through-acquisition program
allowed PSC to recognize healthy earnings despite the weather. The
company experienced reduced water consumption during the third quarter
as a result of lower temperatures and 45 percent more rain than
typical in the company's primary service area. In addition to a wet
summer, expenses were adversely impacted by severe winter weather
conditions causing more than a 40 percent increase in repairs to water
mains in 2000."
      PSC was able to enhance net income per share as a result of sale
of shares of E'Town Corporation, which had been acquired as part of
PSC's growth strategy to evaluate potential acquisition opportunities.
The gain realized as a result of the sale of E'Town, was a unique
aspect of PSC's growth strategy.
      According to DeBenedictis, "An aggressive growth strategy
sometimes produces gains regardless of whether the deal goes through
as envisioned. This is the reason we continued to hold the E'Town
shares as an investment even after it became clear a merger was not
appropriate for us."
      PSC entered its sixth state with the announcement in the fourth
quarter of its acquisition of MidSouth Utilities, Inc. in Sherrills
Ford, North Carolina. The company recently announced the completion of
its second acquisition in North Carolina, Hydraulics, Ltd., which
serves over 16,000 residents.
      In addition to entering its sixth state, PSC announced the
acquisition of four Pennsylvania water utilities during the quarter.
Three of the companies are located in northeastern Pennsylvania
(Pocono area) and the other is located in northwestern Pennsylvania.
      "This merger creates four new subsidiaries under PSC and extends
operations in both the northeastern and northwestern quadrants of
Pennsylvania, " said DeBenedictis. Expansion into the northeastern and
northwestern Pennsylvania areas will provide PSC with additional
growth opportunities in and around the new areas of its service
territory. Additionally, these areas will benefit from PSC's in-house
water quality expertise and its history of environmental compliance.
      PSC is one of the nation's largest and most profitable
investor-owned water utilities serving approximately two million
residents in Pennsylvania, Illinois, Ohio, New Jersey, Maine, and
North Carolina.
      PSC is a publicly-traded company listed on both the New York and
Philadelphia Stock Exchanges under the ticker symbol "PSC" and has
been committed to the preservation and improvement of the environment
throughout its history, which spans more than 100 years.
      The company's quarterly conference call with analysts will be at
10:00 a.m. Eastern Standard Time today. Interested parties may listen
to the conference call over the Internet by logging onto
www.suburbanwater.com. The call will be recorded and replayed
beginning 12:00 PM, Wednesday, February 7, 2001, and will run until
12:00 PM, Friday, February 9, 2001.
      The dial-in telephone number for the audio replay is 402/220-9917
(pin number 4461).

      This release contains certain forward-looking statements involving
risks and uncertainties and other factors that may cause actual
results to be materially different from any future results expressed
or implied by such forward-looking statements.
      These factors include, among others, the following: general
economic business conditions; unfavorable weather conditions; the
success of certain cost containment initiatives; changes in
regulations or regulatory treatment; availability and cost of capital;
and the success of growth initiatives.

      The following table shows the comparative operating revenues, net
income available to common stock and net income per common share for
PSC for the quarters and years ended December 31, 2000 and 1999 (in
thousands, except per share data). All share and per share data have
been restated to reflect the recent five-for-four stock split effected
in the form of a stock distribution.
-0-
*T



                               (Unaudited)
                              Quarter Ended            Year Ended
                               December 31,           December 31,
                            ------------------   --------------------
                              2000      1999        2000       1999
                              ----      ----        ----       ----
Operating revenues          $ 69,198  $ 63,037   $ 275,538  $ 257,326

Income from
 operations exclusive
 of net merger
 recovery (costs)           $ 12,434  $  9,594   $  50,548  $  44,871
Merger recovery
 (costs), net               $   --    $   --     $   2,236  $  (8,596)
Net income available
 to common stock            $ 12,434  $  9,594   $  52,784  $  36,275

Income per common
 share from operations
 exclusive of net
 merger recovery (costs):

 Basic                      $   0.23  $   0.19   $    0.98  $    0.88
 Diluted                    $   0.23  $   0.19   $    0.97  $    0.87

Net income per
 common share:

 Basic                      $   0.23  $   0.19   $    1.02  $    0.71
 Diluted                    $   0.23  $   0.19   $    1.01  $    0.70

Average shares
 outstanding:

 Basic                        53,164    51,232      51,807     51,080
 Diluted                      53,778    51,643      52,331     51,631


Note: The recovery (charge) for merger costs is related to the March
    1999 merger with Consumers Water Company.



          Philadelphia Suburban Corporation and Subsidiaries
      Consolidated Statements of Income and Comprehensive Income
               (In thousands, except per share amounts)

                          (Unaudited)
                         Quarter Ended               Year Ended
                          December 31,              December 31,
                          ------------              ------------
                        2000        1999          2000         1999
                     ---------    ---------    ---------    ---------

Operating revenues   $  69,198    $  63,037    $ 275,538    $ 257,326

Cost & expenses:
 Operations and
  maintenance           27,426       27,185      101,741       98,758
 Depreciation            8,315        7,820       32,271       30,612
 Amortization              654          302        1,829        1,291
 Taxes other
  than income
  taxes                  5,481        5,030       22,520       21,833
 Restructuring
  costs (recovery)        --           --         (1,136)       3,787
                     ---------    ---------    ---------    ---------
Total costs
 and expenses           41,876       40,337      157,225      156,281
                     ---------    ---------    ---------    ---------

Operating income        27,322       22,700      118,313      101,045
Interest
 expense, net           10,233        8,730       40,360       33,698
Gain on sale
 of securities          (2,491)        --         (3,552)        --
Minority interest           27           17          103           93
Allowance for
 funds used
 during
 construction             (428)        (626)      (2,688)      (1,995)
Merger transaction
 costs (recovery)         --           --         (2,905)       6,334
                     ---------    ---------    ---------    ---------
Income before
 income taxes           19,981       14,579       86,995       62,915
Provision for
 income taxes            7,521        4,980       34,105       26,531
                     ---------    ---------    ---------    ---------
Net income              12,460        9,599       52,890       36,384
Dividends on
 preferred stock            26            5          106          109
                     ---------    ---------    ---------    ---------
Net income
 available to
 common stock        $  12,434    $   9,594    $  52,784    $  36,275
                     =========    =========    =========    =========

Net income           $  12,460    $   9,599    $  52,890    $  36,384
Other
 comprehensive
 income (loss),
 net of tax               (704)         952       (1,094)       2,020
                     ---------    ---------    ---------    ---------

Comprehensive
 income              $  11,756    $  10,551    $  51,796    $  38,404
                     =========    =========    =========    =========

Income from
 operations,
 exclusive of
 net merger
 (costs)
 recovery            $  12,434    $   9,594    $  50,548    $  44,871
 Merger (costs)
  recovery, net           --           --          2,236       (8,596)
                     ---------    ---------    ---------    ---------
Net income
 available for
 common stock        $  12,434    $   9,594    $  52,784    $  36,275
                     =========    =========    =========    =========

Net income
 per common
 share:
 Basic               $    0.23    $    0.19    $    1.02    $    0.71
 Diluted             $    0.23    $    0.19    $    1.01    $    0.70

Income per
 common share
 from operations,
 exclusive of
 net merger
 (costs) recovery:
 Basic               $    0.23    $    0.19    $    0.98    $    0.88
 Diluted             $    0.23    $    0.19    $    0.97    $    0.87

Average shares
 outstanding:
 Basic                  53,164       51,232       51,807       51,080
                     =========    =========    =========    =========
 Diluted                53,778       51,643       52,331       51,631
                     =========    =========    =========    =========


          Philadelphia Suburban Corporation and Subsidiaries
                      Consolidated Balance Sheets
          (In thousands of dollars, except per share amounts)


                                          December 31,    December 31,
                                             2000            1999
                                          -----------     -----------
    Assets
Property, plant and
 equipment, at cost                       $ 1,536,162     $ 1,393,027
Less accumulated
 depreciation                                 284,735         257,663
                                          -----------     -----------
 Net property, plant and equipment          1,251,427       1,135,364
                                          -----------     -----------

Current assets:
 Cash and cash equivalents                      4,575           4,658
 Accounts receivable and
  unbilled revenues, net                       51,223          44,399
 Inventory, materials
  and supplies                                  4,352           3,948
 Prepayments and other
  current assets                                7,054           6,520
                                          -----------     -----------
  Total current assets                         67,204          59,525
                                          -----------     -----------

Regulatory assets                              65,369          58,287
Deferred charges and
 other assets, net                             26,396          27,629
                                          -----------     -----------
                                          $ 1,410,396     $ 1,280,805
                                          ===========     ===========
    Liabilities and
     Stockholders' Equity
Stockholders' equity:
 6.05% Series B cumulative
  preferred stock                         $     1,760     $     1,760
 Common stock at $.50 par
  value, authorized 100,000,000
  shares, issued 54,520,300 and
  51,880,796 in 2000 and 1999                  27,260          20,814
 Capital in excess of par value               291,013         251,440
 Retained earnings                            123,911         101,533
 Minority interest                              2,823           2,604
 Treasury stock, 844,376 and
  615,038 shares in 2000 and 1999             (15,346)        (11,270)
 Accumulated other
  comprehensive income                            926           2,020
                                          -----------     -----------

  Total stockholders' equity                  432,347         368,901
                                          -----------     -----------


Long-term debt, excluding
 current portion                              465,295         413,752

Commitments                                      --              --

Current liabilities:
 Current portion of long-term debt             15,943          12,194
 Loans payable                                 88,994         103,069
 Accounts payable                              20,635          24,286
 Accrued interest                              10,199           8,994
 Accrued taxes                                 17,366          12,689
 Other accrued liabilities                     23,364          22,581
                                          -----------     -----------
  Total current liabilities                   176,501         183,813
                                          -----------     -----------

Deferred credits and
 other liabilities:
 Deferred income taxes and
  investment tax credits                      150,167         136,528
 Customers' advances for
  construction                                 58,718          59,494
 Other                                          7,202           8,434
                                          -----------     -----------
  Total deferred credits
   and other liabilities                      216,087         204,456
                                          -----------     -----------

Contributions in aid
 of construction                              120,166         109,883
                                          -----------     -----------
                                          $ 1,410,396     $ 1,280,805
                                          ===========     ===========

    --30--KMK/ph*

    CONTACT: Philadelphia Suburban Corporation, Bryn Mawr
             Keya W. Epps, 610/645-1084
             eppsk@suburbanwater.com
              or
             Donna Alston, 610/645-1095
             alstond@suburbanwater.com

    KEYWORD: PENNSYLVANIA
    INDUSTRY KEYWORD: UTILITIES EARNINGS
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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