Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2001, for Philadelphia Suburban Corporation (PSC), a holding company for regulated water and wastewater utilities serving approximately 2 million people across six states. The filing includes unaudited consolidated financial statements and management discussion.
Key Financial Metrics
| Metric | Q1 2001 | Q1 2000 |
|---|---|---|
| Operating Revenues | $70,193 | $64,208 |
| Operating Income | $28,944 | $24,777 |
| Net Income | $13,112 | $10,273 |
| Net Income Available to Common Stock | $13,085 | $10,246 |
| Diluted EPS | $0.24 | $0.20 |
| Operating Cash Flow | $8,973 | $12,952 |
| Capital Expenditures | $19,809 | $19,691 |
| Total Debt (Long-term + Current) | $487,805 | $484,712 |
| Cash and Equivalents | $7,468 | $6,481 |
Liquidity: As of March 31, 2001, the company had short-term lines of credit totaling $190,402, with $77,990 available.
Material Changes vs. Prior Period
- Revenue Growth: Operating revenues increased 9.3% ($5,985) driven by rate increases and acquisitions, partially offset by lower water consumption.
- Profitability: Net income available to common stock rose 27.7% ($2,839). Diluted EPS increased 20.0% to $0.24.
- Expense Trends: Operations and maintenance expenses rose 5.0% due to acquisitions and wage increases. Depreciation increased 8.5% due to new plant assets. Taxes other than income taxes decreased 6.6% due to reduced Pennsylvania tax assessments and rates.
- Non-Operating Items: A significant gain on the sale of other assets ($2,791) contributed to income, primarily from land sales.
- Cash Flow: Operating cash flow decreased to $8,973 from $12,952, largely due to an $11,465 payment for the Competitive Transition Charge (CTC).
Outlook, Risks, and Unusual Items
- Regulatory Asset (CTC): The company paid $11,465 to settle its allocable share of Competitive Transition Charges with PECO Energy Company. This amount is recorded as a regulatory asset and will be recovered through future water rates over 10 years.
- Rate Increases: In Q1 2001, subsidiaries received rate increases totaling $4,168 annually. Additional increases of $119 were approved in April 2001.
- Acquisitions: Four systems were acquired in Q1 2001 for $424 cash and stock issuance. A wastewater system in Delaware County, PA, was purchased in April 2001 for $3,700 cash.
- Debt Management: Operating subsidiaries issued $3,321 in long-term debt at rates between 1% and 3.24% to reduce short-term debt balances.
- Forward-Looking Risks: Management notes risks related to regulation, abnormal weather, capital requirements, and acquisitions. No material legal proceedings are pending.
Investor Verification Checklist
- Verify the recovery timeline and rate impact of the $11,465 Competitive Transition Charge regulatory asset.
- Confirm the integration and revenue contribution of the four Q1 2001 acquisitions and the April 2001 Media Borough wastewater purchase.
- Monitor the utilization of the $77,990 available credit line against projected capital expenditures.
- Review the impact of the 2000 stock offering and acquisition-related share issuances on future earnings per share dilution.
- Assess the sustainability of the 9.3% revenue growth given the offsetting decrease in water consumption.