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Aqua America reports increased net income for third quarter 2005
Ten percent dividend increase and four-for-three stock split

BRYN MAWR, Pa.--(BUSINESS WIRE)--Nov. 9, 2005--Aqua America, Inc.
(NYSE:WTR) today reported net income for the quarter ended September
30, 2005 grew to $27.9 million, a 16 percent increase from $24.1 million in the third quarter of 2004. Diluted earnings per share for the quarter increased to $0.29, up 12 percent from $0.26 for the same period in 2004, on four percent more shares outstanding.

Operating revenues increased 14 percent to $136.8 million for the third quarter of 2005 from $120.3 million in the same period in 2004. The revenue increase is primarily due to the result of the benefits received from major rate awards in key states during the third quarter of 2004 and a return to more normal levels of water consumption over the same period last year. Aqua America Chairman and CEO Nicholas DeBenedictis said, "The weather during the months of May to September
has a direct impact on customers' incremental water demand. During these key months, weather extremes such as hot, dry weather or cool, wet weather can have a positive or negative impact, respectively, on our financial results. This summer's weather could be classified as more normal overall."

For the nine months ended September 30, 2005, operating revenues totaled $373.9 million, an increase of 14 percent from $326.6 million for the nine months ended September 30, 2004. The year-to-date revenue growth was driven by significant rate decisions during the third quarter of 2004 and also positively impacted by the benefits of customer growth due primarily to the larger acquisitions in mid 2004.

Net income for the first nine months of 2005 increased 20 percent to $69.0 million from $57.5 million and corresponding diluted earnings per share increased 16 percent to $0.71 from $0.61 in the same period last year.

DeBenedictis said, "The company's financial performance year-to-date has been exceptional, aided by the favorable events in mid 2004, namely the acquisitions of Heater Utilities (North Carolina) and Florida Water Services (Florida) and significant rate awards in some of our larger states. These events, supplemented by our normal growth-through-acquisition and capital investment strategy, have
provided favorable comparisons over the past four quarters and now will be part of the company's growing asset and earnings base going forward. Our long-term goals have consistently been seven percent revenue growth and 10 percent earnings growth. While we are pleased that the favorable comparisons have allowed us to exceed these targets year-to-date, our long-term objectives remain the same."

On August 2, 2005, the Board of Directors voted to increase the December 1, 2005 common stock cash dividend to shareholders by 10 percent, which on an annualized basis is equivalent to a $0.05 increase above the current annual dividend rate of $0.52 to $0.57 per share. Additionally, the Board approved, for the sixth time in nine years, a stock split to be effected in the form of a four-for-three (33 1/3 percent) stock distribution. The increased quarterly cash
dividend of $0.1425 per share, from $0.13 per share, and the subsequent stock split will be effected with the December 1, 2005 cash dividend payment and is available to shareholders of record as of November 17, 2005. As a result of the stock split, the new quarterly cash dividend rate will be $0.1069 per share on the increased number of shares resulting from the stock distribution, or $0.4276 per share on an annualized basis. This cash dividend increase is the company's
15th in 14 years.

The company's ratio of operating and maintenance expenses to revenues (efficiency ratio) for the third quarter of 2005 was 38.5 percent, an improvement from 41.3 percent in the second quarter of 2005. Year-to-date September 30, 2005, the company's efficiency ratio also improved to 40.4 percent from 40.7 percent for the same period in 2004. DeBenedictis said, "Our efficiency ratio is an important measure and an ongoing focus of management. We work toward continuous improvement of our controllable expenses, which helps offset expenses
that are trending upward, such as healthcare and pension costs."

Consistent with Aqua America's long-term growth-through-acquisition strategy, the company has completed 28 acquisitions year-to-date in 2005 in the states in which it operates. DeBenedictis said, "These small system acquisitions are the bread and butter upon which our long-term growth strategy was founded. We use
these small acquisitions to perpetuate our growth and consolidation of the fragmented water industry through the regulated model - buying underperforming assets, fixing them and then obtaining a fair regulated return for our investment through the rate-making process."

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 for 10 business days after the call, beginning at 12:00 p.m. Wednesday, November 9, 2005 through Wednesday, November 23, 2005. To access the audio replay in the U.S., dial (888)-203-1112 (PIN# 4941886). For international callers, dial (719)-457-0820 (PIN# 4941886).

Aqua America, Inc. is the largest U.S.-based publicly-traded water 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.