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Aqua America Inc. Reports Operating Results (10-K)

February 25, 2011 | About:
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10qk

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Aqua America Inc. (WTR) filed Annual Report for the period ended 2010-12-31.

Aqua America Inc. has a market cap of $3.07 billion; its shares were traded at around $22.31 with a P/E ratio of 24.8 and P/S ratio of 4.6. The dividend yield of Aqua America Inc. stocks is 2.8%. Aqua America Inc. had an annual average earning growth of 7% over the past 10 years. GuruFocus rated Aqua America Inc. the business predictability rank of 5-star.Hedge Fund Gurus that owns WTR: Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns WTR: Chuck Royce of Royce& Associates, Mario Gabelli of GAMCO Investors, John Keeley of Keeley Fund Management.

Highlight of Business Operations:

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 Companys operating subsidiaries in Indiana. We challenged whether the City was following the correct legal procedures in connection with the Citys attempted condemnation, but the Indiana Supreme Court, in an opinion issued in June 2007, supported the Citys position. In October 2007, the Citys Board of Public Works approved proceeding with its process to condemn the northern portion of our utility system at a preliminary price based on the Citys valuation. In October 2007, we filed an appeal with the Allen County Circuit Court challenging the Board of Public Works valuation on several bases. In November 2007, the City Council authorized the taking of this portion of our system and the payment of $16,910,500 based on the Citys valuation of the system. In January 2008, we reached a settlement agreement with the City to transition this portion of the system in February 2008 upon receipt of the Citys 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 Citys 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 Indiana Utility Regulatory Commission also reviewed and acknowledged the transfer of the Certificate of Territorial Authority for the northern portion of the system to the City. 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. The net book value of the assets relinquished has been removed from the consolidated balance sheet and the difference between the net book value and the initial payment received has been deferred and is recorded in other accrued liabilities on the Companys consolidated balance sheet. 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 Companys 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 disagrees with the Courts 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 has granted that request and on January 14, 2011, the Company filed a request with the Indiana Court of Appeals to review the decision of those issues on appeal. The Company continues to evaluate its legal options with respect to this decision. 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 Americas total assets.

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