Welcome to the Aqua America Second Quarter 2008 Earnings Conference Call. Today's conference is being recorded. Now at this time, I would like to turn the conference over to Brian Dingerdissen, Director of Investor Relations. Please go ahead.

Thank you, Dwayne. Good morning everyone. Thank you for joining us for Aqua America's second quarter 2008 earnings conference call. If you did not receive a copy of the press release, you can find it by visiting the Investor Relations section of our website at aquaamerica.com or you can call Will Meade at 610-520-6309. There will also be a webcast of this event available at our site. At this time, I would also like to clarify the issue with the press release this morning. The first press release that went out had an incorrect date for the December 1 dividend for the record date. It should have said November 17th. A corrected release has since gone out. Yesterday's dividend release was correct that the record date for the dividend for December 1st was November 17th. Presenting today is Nick DeBenedictis, Chairman and President of Aqua America along with Dave Smeltzer, the company's Chief Financial Officer. As a reminder, some of the matters discussed during this call may include forward-looking statements that involve risks, uncertainties and other factors that may cause the actual results to be materially different from any future results expressed or implied by such forward-looking statements. Please refer to our most recent 10-K, 10-Q and other SEC filings for a description of such risks and uncertainties. During the course of this call, reference may be made to certain non-GAAP financial measures. Reconciliation of these non-GAAP to GAAP financial measures are posted in the Investor Relations section of the company's website. At this time, I would like to turn the call over to Nick for his formal remarks, after which we will open up the call for questions. Nick?

Thank you, Brian, and god morning everyone. This morning Aqua announced its earnings of $22.6 million for the quarter or $0.17, meeting First Call, but down a penny from last year. Also, yesterday, we released, after our Board meeting, the Board reviews in our strategic session in August. Reviews our annual business plan and future potentials and yesterday voted... a vote of confidence in our long-term growth business model by raising the dividend from $0.50 to $0.54 with the increase to go into effect in our December payment. And that's what Brian was just referring to, the record date to November 17th. That's an 8% increase, and I think it rewards our shareholders from a standpoint of this is the 10th consecutive year where we have been able to raise our dividend above our stated 5% target. That's our 18th increase in dividend in 17 years. That's a track record that very few companies have been able to achieve, and we're very proud of that. The biggest factor in our quarter is really flat revenues. Revenues were only up one-tenth of 1%. Obviously, it's hard to grow earnings if you can't grow revenues. And I want to address that, what happened and what we're doing and what we see as the future potential over the next two quarters. We were negatively affected by consumption generally, which basically was because of some wet weather in the Midwest and the drought declaration in North Carolina, which limited sales. And there was moderate weather good... one good month, one bad month in the Mid-Atlantic, which of course is our largest area. That was offset, however, almost equally by the increases in surcharges and rates and pricing. So the consumption and the rates really offset each other. And then the other offsetting factors, usually,…

The investment basin.

Sure. That one did show up on the gain on other sale. We had an investment in a start-up company that we undertook a couple of years ago and we decided to exit that investment last year or sometime in November I think it was. And we booked a petty sizable gain as a result of that investment that was called Basin Water. And between the add on the gain on the sale, which we don't have any more Basin Water this year and the idea that Henrico was sold and we booked a gain on that, but really is a reduction in O&M. And that's why I bring it up at this point in the call. That was about $0.02 in the fourth quarter. So if you're predicting on your forecasting, you have to look at that fourth quarter's earnings last year being $0.02 of non-recurring. Now, going back to where we think we can be growing revenues; therefore, growing earnings, first is of course in the acquisition area and in the customer growth area. The two ways you grow is unit growth or price growth. In the unit growth area, as I mentioned earlier, we are still seeing about a 1% to 1.5% organic growth that was in the 1.5% to 2% range not long ago. It starts falling rapidly in the third and fourth quarter of last year. So the comparisons going forward won't be... it wont' be as tough as they were in the first two quarters. But organic growth held up pretty well. I mean we were down, but not excessively in new units being put on our systems. And that includes the South and the North. So we're hopeful that things have stabilized now and hopefully start moving up again sometime at 9. Regarding…

[Operator Instructions]. Our first question will come from Tim Winter with Jesup & Lamont. Timothy M. Winter - Jesup & Lamont: Good morning, Nick. I've got a number of questions, one just house cleaning real quick. What was the actual number of shares that you issued and what was the price issued at?

New shares 1 million. Timothy M. Winter - Jesup & Lamont: Exactly 1 million?

Exactly 1 million. So that's what will show on the outstanding shares. But because of the cover of the shares that were... they were... I don't know what you call them... basically cover and shorts [ph] is really what it was. I don't know if that's the correct term, Tim. We issued 1 million and we covered about 1.7 million in shorts. And when you combine the full revenue we got, 33 million and instead you only issued 1 million shares, I very simplistically said we got 33 of share. And the 1 million that we have closed, I guess you could call it, we got 22 something. The rest was the transaction that we didn't actually need the shares since our cash generation [ph] was more than we had anticipated three years ago when we did this, or two years ago when we did it. And remember, we did it because we felt American was going to be coming out with their offering back in late '06 and we wanted to get into the market and get the number of shares we needed over the next two years out of the way. And that's why we did it and it turned out we didn't need all those shares. Timothy M. Winter - Jesup & Lamont: Worked out pretty well. As far as Pennsylvania, the rate case, I know that was a significant case. Can you give me a little detail... more details? I understand the allowed ROE was 11%, which I think is the highest it's been in some time.

Yes, I think... two things. First of all, it was fully litigated. Usually, we settle in Pennsylvania. So it's hard to tell what the ROE is when you settle. Pennsylvania, as you know, from a standpoint of water companies, is very progressive. They want infrastructure. As a matter of fact, the legislature just passed a bill, the biggest bill in the country as far as I know of 1 billion... I think it was 1.2 billion of new money going into infrastructure. They really feel that the water and wastewater systems have to be repaired in the state. So it's a trend I think more than just the Commission, and the entire legislature and Governor feel that way too. It's positive obviously. We won most of the cases... the litigated issues that the Consumer Advocate had bought up very fairly. Basically, they had an opinion, we had an opinion and judge sided with us on most of those, which helped us in the final award. And the ROE, we did get what we call bonus points for doing... buying small companies, fixing them up. The legislation allows if you'll take that risk and you're successful that the Commission can award you bonus points, which is apparently what happened in this proceeding. So, obviously, we think we were treated fairly by the Pennsylvania Commissions. Timothy M. Winter - Jesup & Lamont: So is there an official allowed ROE authorized?

Yes, 11. Timothy M. Winter - Jesup & Lamont: Okay.

But that included the bonus points, Tim. That's what I want to make sure you understood that. Timothy M. Winter - Jesup & Lamont: Okay, great. And then the --

Standpoint on an analysis, you can assume a 11% ROE on the rate base in Pennsylvania. Timothy M. Winter - Jesup & Lamont: Okay. And then the Florida cases, is that... how will that proceed here? Is there going to be a number of different districts decided at different times, or is it going to be somewhat of a uniform case with one decision? And when would you expect that? How much did you file and when would you expect a decision for this?

That's what we are hopeful for, but obviously that's up to the Commission. Florida has a process that it calls interim rates while you wait for the final rates. There's only 2 states that... I think there's only 2 of our 13 states to do it that way, but many states do it, New England and so on. So it's not unique to Florida. So there was an interim... as you know, there have been hearings held and our state President and our South President has been to every hearing and they are working on any issues that come up to transfer at some of those hearings. It's a very constructive process. And the commissioner actually attend all the hearings, which is very rare for commissioners to go to the public hearings. So we're hopeful that shows the interest of Florida in trying to get a good company to fix up some of the problems. And these were problem cases that we inherited that hadn't been in for rates since early 90s. A lot of them needed fix ups and meters were old and we're changing all the meters and all that type of thing. The process, the way I understand it, is that the interim rates are subject to bond and the case isn't decided until it's decided. And that's probably...is it 11 months? I don't know what the litigated range is in Florida, but they hold to a set range on when they agree on the case. The way we've asked for the decision is to look at it as we look at it in most of our other states, which is as one unit. But right now, they're all individual units that have to be merged into the one unit. Does that answer your question? Timothy M. Winter - Jesup & Lamont: Yes. Well, do you have a number of what the total number of revenues, annualized revenues you filed for for all of the --

Bob can give you that. I'll tell you what, if you don't mind after the call, I'll get you the exact number. Timothy M. Winter - Jesup & Lamont: Okay. That'll be fine. Thanks Nick.

And we will tell you what we got in the interim. I just don't know. Timothy M. Winter - Jesup & Lamont: Okay. Thank you.

[Operator Instructions]. We'll next go to Heike Doerr with Janney Montgomery Scott.

Good morning Nick.

Good morning.

I'm hoping we can do a little more big picture topics. So as we look at what the company's strategy had been, historically, we had used these four numbers 4, 7, 10, 5. I know we're shying away from the 4% customer growth and the dividend has been higher that 5% now for ten years. Can you maybe reframe how we should be looking at long-term growth strategies for the company. And as you try to fund more of your CapEx internally, does it make sense to be growing the dividend higher that this 5% level?

You sound like my Board members.

I'd be happy to take a seat.

Right. That's annually reviewed and it's always debated. You are exactly right. With the fact that we really don't have to sell stock, the fact that our yield is now very high compared to what it's been traditionally, but not overly excessive compared with most utilities. I think the yield of all the water companies now are in the 3% to 3.5% range, and I think electrics are probably in that range or maybe even a little higher, so. But we used to all be in the 2 range. So the stock price driving down and our continuing to raise dividends, it's given us a fair yield. I think those are realistic things to look at. But the bottom line is we want to build shareholder value. One way of building shareholder value is returning the profits in some reasonable way through either buy back some stock, which doesn't make sense if you're issuing stock at the time, or through dividends. So that's why we've relayed [ph] the dividend policy. We also have a number of long-term individual shareholders, and sometimes the demographic is the people who have already retired and are looking at dividends for their income. So we want to be careful not to abandon long-term shareholders who bought the stock with a intent in mind. So we wouldn't do anything drastic. But clearly, gets reviewed every year. Now I'll be glad to talk to you more in depth.

And we talked a little bit. I know you mentioned in the press release about the fuel costs coming down and the growth strategy of the company. When you look at sates that you acquired from AquaSource where you don't have a large presence, has divesting more systems... I'm thinking South Carolina and Missouri in particular, is that Is that something that's up for consideration to consider to kind of slim down states where it doesn't make sense?

The answer is everything in a portfolio is always under review, it's almost like a mutual fund. On the other hand, there's no way we would want to do anything in this position, so we make sure it's operating properly in fix, as our reputation is at stake, and that's why we put so much money. We've not been making money in this war [ph] as you know, but we're still doing all the fix ups at the... I think it's called the DCQ or something, but the EPA there one, and we've got into customer service billings are all up to the standards of the commission, so I think our reputation as a company nationally is at stake if we don't fix things before we decide if we're going to keep them or not.

Okay, that's helpful. And one last housekeeping item, perhaps this is a question for Dave. I know you guys had mentioned some of the charges that you took in the fourth quarter. The charges that were associated with the Florida case being tabled, that was a third quarter event. Can you refresh us what kind of charges there were as you refunded customers and I think wrote down some charges?

It was about a penny, but let me check. Yes, you're absolutely right. The third quarter is when Florida... just for other people on the call, last year [ph] we'd entered a case, had received interim rate relief, and I think it was like in an April timeframe, had been collecting the interim rates and then decided to withdraw the case in August so that we could refile it in a way that we thought had a more in line with what the Commission and their staff in the OPC expected from a company of our stature, which we have done. That caused us to write off legal expenses, rate case expenses and refund all the interim rates, which had been booked because when we got them, we thought they were good dollars. So Dave, I don't know what the total was, or whether if we can give them... Heike that later.

About $2.5 million.

Okay.

So there was a one penny charge in the third quarter and there were $0.02 of gains that you don't think will be repeated in the fourth quarter?

I think that's fair, right, Bob?

Okay, that's helpful. Thank you.

[Operator Instructions]. There are no further questions at this time. I'd like to turn the conference back to the speakers for closing comments.

No,that's it. Thank you everyone for listening.

Again, this does conclude today's conference call and we'd like to thank everyone gain for participating.