##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 11-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 1-6659
  Aqua America, Inc.
401(k) Plan




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##### 



Aqua America, Inc. 401(k) Plan   Table of Contents
December 31, 2010 and 2009
 PageReport of Independent Registered Public Accounting Firm
    
    
    1Financial StatementsStatements of Net Assets Available for Benefits
    
    
    2Statements of Changes in Net Assets Available for Benefits
    
    
    3Notes to Financial Statements
    
    
    4Supplementary SchedulesSchedule H, Line 4(i)  Schedule of Assets (Held at End of Year)
    
    
    18Schedule H, Line 4(j)  Schedule of Reportable Transactions
    
    
    20Signature
    
    
    21Exhibit Index
    
    
    22Exhibit 23.1




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Report of Independent Registered Public Accounting Firm
 
      June 24, 2011




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##### Table of Contents



Aqua America, Inc. 401(k) Plan
 
 Statements of Net Assets Available for Benefits
 December 31, 2010 and 2009
 2010
    
    
    2009AssetsInvestments, at fair value
    
    $
    126,378,579
    
    
    $
    102,770,902Cash and cash equivalents
    
    
    1,142
    
    
    
    55,493Employer contributions receivable
    
    
    901,089
    
    
    
    641,341Participants contributions receivable
    
    
    109,147
    
    
    
    93,340Notes receivable from participants
    
    
    2,964,431
    
    
    
    2,719,563Total receivables
    
    
    3,974,667
    
    
    
    3,454,244Total Assets
    
    
    130,354,388
    
    
    
    106,280,639LiabilitiesExcess participant contributions payable
    
    
    92,337
    
    
    
    50,229Net assets reflecting all investments at fair value
    
    
    130,262,051
    
    
    
    106,230,410Adjustment from fair value to contract value
for fully benefit-responsive investment contracts
    
    
    (1,036,666
    )
    
    
    (145,540
    )Net Assets Available for Benefits
    
    $
    129,225,385
    
    
    $
    106,084,870
 See notes to financial statements.
  2




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Aqua America, Inc. 401(k) Plan
 
 Statements of Changes in Net Assets Available for Benefits
  2010
    
    
    2009Investment IncomeInterest and dividends
    
    $
    2,898,379
    
    
    $
    2,618,160Net appreciation in fair value of investments
    
    
    16,895,085
    
    
    
    7,873,579Total Investment Income
    
    
    19,793,464
    
    
    
    10,491,739Interest Income on Notes Receivable from Participants
    
    
    144,720
    
    
    
    156,219ContributionsEmployer
    
    
    2,315,311
    
    
    
    2,190,514Participants
    
    
    5,883,485
    
    
    
    5,631,632Participant rollovers
    
    
    122,585
    
    
    
    401,620Other
    
    
    25,000
    
    
    
    25,000Total Contributions
    
    
    8,346,381
    
    
    
    8,248,766Plan Transfers fromNew York Water Service Corporation Union 401(k) Plan
    
    
    2,069,201
    
    
    
    Total Additions
    
    
    30,353,766
    
    
    
    18,896,724Benefits Paid to Participants
    
    
    (7,185,171
    )
    
    
    (4,677,750
    )Administrative Expenses
    
    
    (28,080
    )
    
    
    (11,660
    )Total Deductions
    
    
    (7,213,251
    )
    
    
    (4,689,410
    )Net Increase in Net Assets Available for Benefits
    
    
    23,140,515
    
    
    
    14,207,314Net Assets Available for Benefits  Beginning of Year
    
    
    106,084,870
    
    
    
    91,877,556Net Assets Available for Benefits  End of Year
    
    $
    129,225,385
    
    
    $
    106,084,870
 See notes to financial statements.
  3




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Aqua America, Inc. 401(k) Plan
 
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan
  General
   Eligibility
  
    
    Group 1 Covered Employee: any covered employee who was a participant in
the Aqua America, Inc. Thrift Plan on December 31, 2007; any covered
non-union employee of New York Water Service Corporation who was hired
before December 31, 2006; and any covered employee of Aqua New York of Sea
Cliff, Inc, who was hired before April 30, 2007.
 
    
    Group 2 Covered Employee: any covered employee who was a participant in
the Aqua America, Inc. Employees 401(k) Savings Plan and Trust on December
31, 2007.
 
    
    Group 3 Covered Employee: any covered employee who was a participant in
the Plan on December 31, 2007; any covered employee hired by Aqua New York
of Sea Cliff, Inc. hired after the date Aqua New York of Sea Cliff, Inc.
became an affiliate of Aqua America, Inc; any person who is a covered
employee of any other entity that becomes an affiliate of Aqua America,
Inc. on or after April 1, 2003 and that adopts the Plan as a participating
employer; any covered employee hired or rehired on or after April 1, 2003
(except an employee rehired after March 2003 and prior to August 6, 2003
who was eligible to participate in another 401(k) plan of an employer; and
any employee, other than an employee classified as a seasonal employee
shall become a participant in the Plan on the later of the employees
employment commencement date or the date on which the employee becomes a
covered employee.
  4




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan (Continued)
 Eligibility (Continued)
 
    
    Group 4 Covered Employee: any covered employee who was a participant in
the Personal Savings Plan for Local 473 Employees of the Philadelphia
Suburban Division of Aqua Pennsylvania, Inc. on December 31, 2007.
 
    
    Group 5 Covered Employee: any covered employee who is a participant in
the New York Water Service Corporation Union 401(k) Plan on October 5, 2010
and any employee hired by New York Water Services Corporation who is a
member of the New York union (Utility Workers Union of America, AFL-CIO,
Local 355).
  Contributions
   Employer Matching Contributions
  
    
    Groups 1 and 3: The Company will make a matching contribution equal
to 50% of the first 6% of a participants compensation which is
contributed to the Plan on a pre-tax basis. Matching contributions
will be made to the Plan in the form of cash that is used for the
purchase of Aqua America, Inc. common stock.
 
    
    Group 2: The Company will make a matching contribution equal to 40%
of a participants compensation which is contributed to the Plan on a
pre-tax basis, up to a maximum of $1,040 per year.
  5




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan (Continued)
 Contributions (Continued)
 
    
    Group 4: The Company will make a matching contribution equal to 50%
of the first 4% of a participants compensation which is contributed to
the Plan on a pre-tax basis.
 
    
    Group 5: Participants are not eligible for a Company match.
 Discretionary Contributions
  Employer Profit Sharing Contributions
  Employer Performance Contributions
  Excess Contributions
   6




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan (Continued)
 Contributions (Continued)
  Other Contributions
  Participants Accounts
  Vesting
  Years of Service *
    
    % VestedLess than 2
    
    
    0
    %2 but less than 3
    
    
    20
    %3 but less than 4
    
    
    40
    %4 but less than 5
    
    
    60
    %5 but less than 6
    
    
    80
    %6 or more
    
    
    100
    %
 *
    
    A year of service for vesting purposes means each plan year (the calendar year)
in which the participant is credited with 1,000 or more hours of service.  7




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan (Continued)
 Common Stock Fund
  Investment Options
  Payment of Benefits
  Notes Receivable from Participants
  Plan Forfeitures
   8




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 1  Description of Plan (Continued)
 Plan Amendment or Termination
  Note 2  Summary of Significant Accounting Policies
  Basis of Accounting
   Use of Estimates
  Administration
   9




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 2  Summary of Significant Accounting Policies (Continued)
   Investment Valuation
     Investment Fees
   10




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 2  Summary of Significant Accounting Policies (Continued)
 Notes Receivable from Participants
  Payments of Benefits
  Income Taxes
  Recent Accounting Pronouncements
  Note 3  Fair Value Measurements
  
    
    Level 1: unadjusted quoted prices in active markets for identical assets or
liabilities that the Plan has the ability to access;
 
    
    Level 2: inputs other than Level 1 that are observable, either directly or
indirectly, such as quoted market prices in active markets for similar assets
or liabilities, quoted prices for identical or similar assets or liabilities in
non-active markets, or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or
liabilities; or
 
    
    Level 3: inputs that are unobservable and significant to the fair value
measurement.
    11




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 3  Fair Value Measurements (Continued)
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalRegistered investment companiesGrowth funds
    
    $
    43,577,366
    
    
    $
    
    
    
    $
    
    
    
    $
    43,577,366Balanced funds
    
    
    25,959,998
    
    
    
    
    
    
    
    
    
    
    
    25,959,998Fixed income funds
    
    
    3,805,055
    
    
    
    
    
    
    
    
    
    
    
    3,805,055Value funds
    
    
    2,262,953
    
    
    
    
    
    
    
    
    
    
    
    2,262,953Other funds
    
    
    42,943
    
    
    
    
    
    
    
    
    
    
    
    42,94375,648,315
    
    
    
    
    
    
    
    
    
    
    
    75,648,315Aqua America, Inc. common stock
    
    
    40,026,583
    
    
    
    
    
    
    
    
    
    
    
    40,026,583Guaranteed investment contract
    
    
    
    
    
    
    
    
    
    
    2,732,303
    
    
    
    2,732,303Common/collective trust fund
    
    
    
    
    
    
    7,971,378
    
    
    
    
    
    
    
    7,971,378Total investments at fair value
    
    $
    115,674,898
    
    
    $
    7,971,378
    
    
    $
    2,732,303
    
    
    $
    126,378,579
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalRegistered investment companiesGrowth funds
    
    $
    34,685,209
    
    
    $
    
    
    
    $
    
    
    
    $
    34,685,209Balanced funds
    
    
    22,196,808
    
    
    
    
    
    
    
    
    
    
    
    22,196,808Fixed income funds
    
    
    3,337,565
    
    
    
    
    
    
    
    
    
    
    
    3,337,565Value funds
    
    
    1,417,870
    
    
    
    
    
    
    
    
    
    
    
    1,417,870Other funds
    
    
    33,377
    
    
    
    
    
    
    
    
    
    
    
    33,37761,670,829
    
    
    
    
    
    
    
    
    
    
    
    61,670,829Aqua America, Inc. common stock
    
    
    32,334,002
    
    
    
    
    
    
    
    
    
    
    
    32,334,002Guaranteed investment contract
    
    
    
    
    
    
    
    
    
    
    2,607,165
    
    
    
    2,607,165Common/collective trust fund
    
    
    
    
    
    
    6,158,906
    
    
    
    
    
    
    
    6,158,906Total investments at fair value
    
    $
    94,004,831
    
    
    $
    6,158,906
    
    
    $
    2,607,165
    
    
    $
    102,770,902
  12




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 3  Fair Value Measurements (Continued)
  Guaranteed investment contract2010
    
    
    2009Balance, beginning of year
    
    $
    2,607,165
    
    
    $
    3,028,405Unrealized gains relating to
instruments still held at the
reporting date
    
    
    810,873
    
    
    
    235,984Purchases, sales, issuances,
and settlements (net)
    
    
    (685,735
    )
    
    
    (657,224
    )Balance, end of year
    
    $
    2,732,303
    
    
    $
    2,607,165
   13




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 4  Investments
  Investments
    
    2010
    
    
    2009Investments at fair value, by reference to quoted market prices:Registered investment companies:T. Rowe Price 2015 Fund
    
    $
    13,558,530
    *
    
    $
    11,991,867
    *T. Rowe Price 2020 Fund
    
    
    14,236,801
    *
    
    
    12,242,619
    *T. Rowe Price 2025 Fund
    
    
    10,690,175
    *
    
    
    8,377,961
    *T. Rowe Price 2030 Fund
    
    
    8,010,749
    *
    
    
    6,282,903
    *Other registered investment companies
    
    
    29,152,060
    
    
    
    22,785,479Total Registered Investment Companies
    
    
    75,648,315
    
    
    
    61,670,829Common Stock:Aqua America, Inc. Common Stock
    
    
    40,026,583
    *
    
    
    32,334,002
    *Total Investments at Fair Value, by Reference
to Quoted Market Prices
    
    
    115,674,898
    
    
    
    94,004,831Investments at fair value, by reference to other inputs:Guaranteed investment contract:Aetna Life Insurance Company Fixed Income Account
    
    
    2,732,303
    **
    
    
    2,607,165
    **Common/collective trust fund:T. Rowe Price Stable Value Fund
    
    
    7,971,378
    *,***
    
    
    6,158,906
    *,***Total Investments at Fair Value
    
    $
    126,378,579
    
    
    $
    102,770,902
 *
    
    Investments represented 5% or more of the Plans net assets available for benefits in the
respective Plan year.**
    
    Contract value of $1,960,840 and $2,646,575 as of 2010 and 2009, respectively.***
    
    Contract value of $7,706,175 and $5,973,956 as of 2010 and 2009, respectively.  2010
    
    
    2009Aqua America, Inc. common stock
    
    $
    9,057,587
    
    
    $
    (5,603,791
    )Registered investment companies
    
    
    7,837,498
    
    
    
    13,477,370Total
    
    $
    16,895,085
    
    
    $
    7,873,579
  14




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 5  Investment Contract with Insurance Company
      15




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##### Table of Contents



Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 6  Nonparticipant-Directed Investments
  2010
    
    
    2009Net Assets:Aqua America, Inc. common stock
    
    $
    33,325,689
    
    
    $
    26,630,044Employer contribution receivable
    
    
    26,667
    
    
    
    23,038Total
    
    $
    33,352,356
    
    
    $
    26,653,082Changes in Net Assets:Contributions
    
    $
    1,692,748
    
    
    $
    1,570,412Interest and dividends
    
    
    854,561
    
    
    
    796,762Net appreciation (depreciation)
    
    
    7,537,460
    
    
    
    (4,525,225
    )Interfund transfers
    
    
    (1,880,474
    )
    
    
    (1,562,604
    )Benefits paid to participants
    
    
    (1,505,021
    )
    
    
    (652,879
    )Total
    
    $
    6,699,274
    
    
    $
    (4,373,534
    )
 Note 7  Related Party and Party-in-Interest Transactions
  Note 8  Tax Status
   16




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Aqua America, Inc. 401(k) Plan
 Notes to Financial Statements
 December 31, 2010 and 2009
 Note 8  Tax Status (Continued)
  Note 9  Subsequent Event
  Note 10  Reconciliation to Form 5500
  2010
    
    
    2009Investments at fair value per the financial statements
    
    $
    126,378,579
    
    
    $
    102,770,902Adjustment from fair value to contract value for fully
benefit-responsive investment contract
    
    
    (1,036,666
    )
    
    
    (145,540
    )Investments at contract value per Form 5500
    
    $
    125,341,913
    
    
    $
    102,625,362
  17




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Aqua America, Inc. 401(k) Plan
 
 Schedule of Assets (Held at End of Year)
 Form 5500  Schedule H  Line 4i
 EIN: 23-1702594
 PN: 005
 December 31, 2010
 Current(a)
    
    Identity of Issue (b)
    
    Description of Investment (c)
    
    Cost (d)
    
    
    Value (e)Growth funds:American Funds EuroPacific Growth Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    $
    1,690,326Columbia Small-Cap Growth Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    700,927Munder Mid-Cap Core Growth Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    702,942*
    
    T. Rowe Price Growth Stock Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,166,395*
    
    T. Rowe Price Retirement 2020 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    14,236,801*
    
    T. Rowe Price Retirement 2025 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    10,690,175*
    
    T. Rowe Price Retirement 2030 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    8,010,749*
    
    T. Rowe Price Retirement 2035 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    2,899,071*
    
    T. Rowe Price Retirement 2040 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,958,272*
    
    T. Rowe Price Retirement 2045 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    962,666*
    
    T. Rowe Price Retirement 2050 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    279,047*
    
    T. Rowe Price Retirement 2055 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    279,995Balanced funds:Davis New York Venture Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    768,100Dodge & Cox International Stock Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    864,646Fidelity Balanced Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,703,121Kinetics Water Infrastructure Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    33,938*
    
    T. Rowe Price Retirement 2005 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,374,775*
    
    T. Rowe Price Retirement 2010 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    3,570,515*
    
    T. Rowe Price Retirement 2015 Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    13,558,530Vanguard 500 Index Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,033,269
  18




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Aqua America, Inc. 401(k) Plan
 Schedule of Assets (Held at End of Year)
 Form 5500  Schedule H  Line 4i
 EIN: 23-1702594
 PN: 005
 December 31, 2010
 Current(a)
    
    Identity of Issue (b)
    
    Description of Investment (c)
    
    Cost (d)
    
    
    Value (e)Balanced funds (continued):Vanguard Mid-Cap Index Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    762,280Vanguard Small-Cap Index Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    577,550Vanguard Total International Stock Index Fund, Inv.
    
    Registered Investment Company
    
    
    N/A
    
    
    
    916,053*
    
    T. Rowe Price Retirement Income Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    797,221Value funds:Alliance NFJ Small Cap Value Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    1,012,903Goldman Sachs Mid-Cap Value Fund, Instl.
    
    Registered Investment Company
    
    
    N/A
    
    
    
    536,707Vanguard Windsor II Fund, Inv.
    
    Registered Investment Company
    
    
    N/A
    
    
    
    713,343Fixed income funds:PIMCO Total Return Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    3,805,055Other funds:*
    
    T. Rowe Price Prime Reserve Fund
    
    Registered Investment Company
    
    
    N/A
    
    
    
    42,943*,**
    
    Aetna Life Insurance Company Fixed Income Account
    
    Guaranteed Investment Contract
    
    
    N/A
    
    
    
    1,960,840*, ***
    
    T. Rowe Price Stable Value Fund
    
    Common/Collective Trust Fund
    
    
    N/A
    
    
    
    7,706,175*
    
    Aqua America, Inc.
    
    Common Stock
    
    
    21,779,817
    
    
    
    40,026,583Participant Loans
    
    Participant Loans (interest rate 4.25% to 10.0%)
    
    
    0
    
    
    
    2,964,431$
    128,306,344
 *
    
    Represents party-in-interest to the Plan.**
    
    Fair value = $2,732,303.***
    
    Fair value = $7,971,378.N/A
    
    Historical cost has not been presented as investment is participant directed.  19




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Aqua America, Inc. 401(k) Plan  Schedule of Reportable Transactions
Form 5500  Schedule H  Line 4j
EIN: 23-1702594
PN: 005
Year Ended December 31, 2010
 Current ValuePurchase
    
    
    Selling
    
    
    
    
    
    
    of Asset onIdentity of Party Involved (a)
    
    Description of Asset (b)
    
    
    Price (c)
    
    
    Price (d)
    
    
    Cost (g)
    
    
    Transaction Date (h)
    
    
    Net Gain (i)Single Transaction
    
    
    
    
    
    None
    
    None
    
    None
    
    None
    
    NoneSeries of Transactions* Aqua America, Inc.
    
    Common stock
    
    $
    3,681,252
    
    
    $
    
    
    
    $
    3,681,252
    
    
    $
    3,681,252
    
    
    $
    * Aqua America, Inc.
    
    Common stock
    
    
    
    
    
    
    5,046,258
    
    
    
    3,336,170
    
    
    
    5,046,258
    
    
    
    1,710,088
 *
    
    Represents a party-in-interest to the Plan.  20




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##### Table of Contents



Aqua America, Inc. 401(k) PlanDate:  June 24, 2011

/s/ Roy H. StahlRoy H. StahlSecretary
Aqua America, Inc. Pension Committee  21




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##### Table of Contents



ExhibitNo.
    
    Description23.1
    
    
    Consent of ParenteBeard LLC
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