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☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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51-0063696
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1 Water Street, Camden, NJ
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08102-1658
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 16.
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•
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the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates;
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the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure, authorized return on equity, capital investment, system acquisitions, taxes, permitting and other decisions;
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•
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changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts;
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•
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limitations on the availability of our water supplies or sources of water, or restrictions on our use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors;
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changes in laws, governmental regulations and policies, including with respect to environmental, health and safety, water quality and emerging contaminants, public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections;
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•
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weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms and solar flares;
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•
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the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions;
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our ability to appropriately maintain current infrastructure, including our operational and technology systems, and manage the expansion of our business;
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exposure or infiltration of our critical infrastructure and our technology systems, including the disclosure of sensitive, personal or confidential information contained therein, through physical or cyber attacks or other means;
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our ability to obtain permits and other approvals for projects;
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•
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changes in our capital requirements;
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•
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our ability to control operating expenses and to achieve efficiencies in our operations;
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•
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the intentional or unintentional actions of a third party, including contamination of our water supplies or water provided to our customers;
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our ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our operations;
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our ability to successfully meet growth projections for our regulated and market-based businesses, either individually or in the aggregate, and capitalize on growth opportunities, including our ability to, among other things:
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•
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acquire, close and successfully integrate regulated operations and market-based businesses;
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enter into contracts and other agreements with, or otherwise obtain, new customers in our market-based businesses; and
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realize anticipated benefits and synergies from new acquisitions;
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risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations;
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cost overruns relating to improvements in or the expansion of our operations;
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•
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our ability to maintain safe work sites;
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our exposure to liabilities related to environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers, including, for example, our water transfer business focused on customers in the shale natural gas exploration and production market;
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•
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changes in general economic, political, business and financial market conditions;
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•
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access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures;
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•
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fluctuations in interest rates;
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•
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restrictive covenants in or changes to the credit ratings on us or our current or future debt that could increase our financing costs or funding requirements or affect our ability to borrow, make payments on debt or pay dividends;
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fluctuations in the value of benefit plan assets and liabilities that could increase our cost and funding requirements;
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•
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changes in federal or state general, income and other tax laws, including any further rules, regulations, interpretations and guidance by the U.S. Department of the Treasury and state or local taxing authorities (collectively, the “Related Interpretations”) related to the enactment of the TCJA, the availability of tax credits and tax abatement programs, and our ability to utilize our U.S. federal and state income tax net operating loss (“NOL”) carryforwards;
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•
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migration of customers into or out of our service territories;
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the use by municipalities of the power of eminent domain or other authority to condemn our systems, or the assertion by private landowners of similar rights against us;
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our difficulty or inability to obtain insurance, our inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or our inability to obtain reimbursement under existing insurance programs for any losses sustained;
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•
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the incurrence of impairment charges related to our goodwill or other assets;
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•
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labor actions, including work stoppages and strikes;
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•
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our ability to retain and attract qualified employees;
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•
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civil disturbances or terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and
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•
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the impact of new, and changes to existing, accounting standards.
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ITEM 1.
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BUSINESS
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Operating Revenues (in millions)
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Number of Customers (in thousands)
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|||||||||||||||||||||||
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Water (a)
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Wastewater
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Total
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% of Total
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Water
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Wastewater
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Total
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% of Total
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|||||||||||
New Jersey
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$
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682
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$
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41
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$
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723
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24.2
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%
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648
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|
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49
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697
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20.6
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%
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Pennsylvania
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627
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62
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689
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23.1
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%
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660
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65
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725
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21.4
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%
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Missouri
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309
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10
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319
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10.7
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%
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469
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14
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483
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14.3
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%
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Illinois
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277
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20
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297
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10.0
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%
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286
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35
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321
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9.5
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%
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California
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218
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3
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221
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7.4
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%
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176
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3
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179
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5.3
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%
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Indiana
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219
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—
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219
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7.3
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%
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305
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2
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307
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9.1
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%
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West Virginia
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143
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1
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144
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4.8
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%
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166
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1
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167
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4.9
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%
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|||
Total—Top Seven States
(b)
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2,475
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137
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2,612
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87.5
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%
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2,710
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169
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2,879
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85.1
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%
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Other states
(c)
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348
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24
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372
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12.5
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%
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472
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31
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503
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14.9
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%
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Total Regulated Businesses
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$
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2,823
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$
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161
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$
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2,984
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100.0
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%
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3,182
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200
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3,382
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100.0
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%
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(a)
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Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
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(b)
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Our “Top Seven States” are determined based upon operating revenues.
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(c)
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Includes our utilities in the following states: Georgia, Hawaii, Iowa, Kentucky, Maryland, Michigan, New York, Tennessee and Virginia.
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(a)
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Includes water revenues from public authorities and other utilities and community water systems under bulk contracts.
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(b)
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Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
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2018
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2017
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2016
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||||||||||||
(In thousands)
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Water
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Wastewater
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Water
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Wastewater
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Water
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Wastewater
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||||||
Residential
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2,892
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188
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2,872
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182
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2,846
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171
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Commercial
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222
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11
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221
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11
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220
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10
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Fire service
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48
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—
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47
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—
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45
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—
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Industrial
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4
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—
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4
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—
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4
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—
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Public and other
(a)
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16
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1
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|
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16
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—
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16
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—
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Total
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3,182
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|
|
200
|
|
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3,160
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|
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193
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3,131
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181
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(a)
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Includes public authorities and other utilities and community water and wastewater systems under bulk contracts. Bulk contracts, which are accounted for as a single customer in the table above, generally result in service to multiple customers.
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Regulatory Practices
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Description
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States Allowed
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Infrastructure replacement surcharges
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Allows rates to change periodically, outside a general rate case proceeding, to reflect recovery of capital investments made to replace infrastructure necessary to sustain safe, reliable services for our customers. These mechanisms typically involve periodic filings and reviews to ensure transparency.
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IA, IL, IN, MO, NJ, NY, PA, TN, VA, WV
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Future test year
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A test period used for setting rates, which begins with the date new rates are effective. This allows current or projected revenues, expenses and capital investments to be collected on a timelier basis.
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CA, HI, IA, IL, IN, KY, NY, PA, TN, VA
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Hybrid test year
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Allows an update to historical data for “known and measurable” changes that occur subsequent to the historical test year.
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MD, MO, NJ, WV
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Utility plant recovery mechanisms
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Allows recovery of the full return on utility plant costs during the construction period, instead of capitalizing an allowance for funds used during construction. In addition, some states allow the utility to seek pre-approval of certain capital projects and associated costs. In this pre-approval process, the PUC may assess the prudency of such projects.
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CA, IL, KY, NY, PA, TN, VA
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Expense mechanisms
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Allows changes in certain operating expenses, which may fluctuate based on conditions beyond the utility’s control, to be recovered outside of a general rate case proceeding or deferred until the next general rate case proceeding.
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CA, IL, MD, MO, NJ, NY, PA, TN, VA
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Revenue stability mechanisms
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Separates a utility’s cost recovery from the amount of water it sells to recover its fixed costs and ongoing infrastructure investment needs. Such a mechanism adjusts rates periodically to ensure that a utility’s revenue will be sufficient to cover its costs, regardless of sales volume, including recognition of declining sales resulting from reduced consumption, while providing an incentive for customers to use water more efficiently.
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CA, IL, NY
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Consolidated tariffs
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Use of a unified rate structure for water systems owned and operated by a single utility, which may or may not be physically interconnected. The consolidated tariff pricing structure may be used fully or partially in a state, and is generally used to prioritize capital investments and moderate the impact of periodic fluctuations in local costs, while lowering administrative costs for customers. Pennsylvania also permits a blending of water and wastewater revenue requirements.
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CA, IA, IL, IN, KY, MD, MO, NJ, NY, PA, VA, WV
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Surface Water
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Ground Water
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Purchased Water
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New Jersey
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71%
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24%
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5%
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Pennsylvania
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91%
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7%
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2%
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Missouri
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79%
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20%
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1%
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Illinois
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53%
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36%
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11%
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California
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—
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64%
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36%
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Indiana
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44%
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56%
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—
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West Virginia
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99%
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—
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1%
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•
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Homeowner Services Group
, which provides various warranty protection programs to residential and smaller commercial customers;
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•
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Military Services Group
, which enters into long-term contracts with the U.S. government to provide water and wastewater services on various military installations; and
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•
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Keystone Clearwater Solutions, LLC (“Keystone”), which provides customized water transfer services for shale natural gas exploration and production companies.
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•
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keep employees safe and injury-free, and develop each person to his or her full potential;
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•
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be a leader in environmental sustainability, caring for the planet, and leading the nation in outstanding water safety and quality;
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•
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deliver personalized customer service with empathy and care;
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•
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make communities better because we are there; and
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•
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be transparent, accessible and well-governed for our shareholders and investors.
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•
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Safety—The safety of our employees and our customers is the number one focus for American Water.
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•
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Customers—Our customers are at the center of everything we do, helping us to shape our strategic priorities. We challenge ourselves so that if our regulated utility customers had a choice of providers, we would want them to choose us.
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•
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People—Maintaining an environment which is open, transparent, diverse and inclusive, and where our people feel valued, included and accountable, is critical to our ability to serve our customers every day.
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•
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Operational Excellence—Our operational excellence strategy helps us to find better and more efficient ways to do business, and to provide safe, clean and affordable water services for our customers.
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•
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Growth—We believe that when companies grow, they can invest more in creating stable jobs, training, benefits, infrastructure and our communities. Our growth benefits all of our stakeholders, including our shareholders.
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•
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Energy Use
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•
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Lowered our greenhouse gas emissions through December 31, 2017 by approximately 31% since our base year of 2007 with a goal of reducing 40% by 2025.
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•
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Design, construct, operate and maintain our systems for efficiency and best practices.
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•
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Water Supply
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•
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Deconstructed the San Clemente Dam in California to restore the “run of the river” and we are building the Water Supply Project using marine life friendly slant wells.
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•
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Water Policy Leadership
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•
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Expect to spend between
$8.0 billion
and
$8.6 billion
on capital investments from 2019 to 2023 to address aging infrastructure, reduce or eliminate leaks, improve cyber and physical security, and increase resiliency of critical assets from the impacts of climate variability.
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•
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Scientists dedicated to research and partnering with water research foundations, on water quality and technology-water source monitoring.
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•
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Collaboration and partnerships with federal and state agencies to support effective environmental, health and safety and water quality standards and regulations.
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•
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Our People
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•
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During 2018, nearly 80,000 hours of safety training were completed by our employees.
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•
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During 2018, over 86% of our job requisitions had a diverse candidate pool, with more than 50% of transfers or promotions filled by minority, female, veteran or disabled individuals.
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•
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Our Customers
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•
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Achieved a customer satisfaction rating in the top quartile among our industry peer group.
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•
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Our Communities
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•
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More than 5,000 hours of Company-sponsored community service performed during 2018 by our employees.
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•
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Company-sponsored workplace giving campaigns with the United Way and Water For People.
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•
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Through annual contributions from the American Water Charitable Foundation, we focused on supporting our employees in their own charitable endeavors, providing support for disaster relief efforts, and providing funding for initiatives related to clean water, conservation, education and community sustainability.
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•
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Board and Committee
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•
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The Board of Directors and each of its committees are led by an independent, non-executive chairperson.
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•
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Board of Directors met 13 times in 2018.
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•
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Established the Safety, Environmental, Technology and Operations committee of the Board of Directors.
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•
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Diversity
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•
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We have achieved gender parity among the members of the Board of Directors.
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•
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Our average director tenure is approximately seven years.
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•
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Demonstrated & Representative Expertise
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•
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Our Board of Directors has demonstrated expertise, including experience in utilities, cybersecurity, financial services, serving as a public company CEO, operational and manufacturing, and global entity management.
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•
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using our research findings to communicate information to our customers on the actions they can take to manage Legionella (the Centers for Disease Control statistics indicate that water-associated disease from Legionella is on the rise, with exposure typically associated with customer-owned plumbing systems in large buildings);
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•
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aerial drone testing to detect harmful algal blooms and testing ultrasonic technology to help prevent taste and odor events and to eliminate cyanotoxins before they get to the water treatment plant;
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•
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the implementation of
water source assessment tools, including sensors and analytics,
to evaluate and track chemical storage and transport through watersheds and to detect source water contamination events; and
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•
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the implementation of activated carbon and biofiltration for the control of emerging contaminants.
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Name
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Age
|
|
Office and Experience
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Susan N. Story
|
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59
|
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President and Chief Executive Officer.
Ms. Story has served as President and Chief Executive Officer of the Company since May 2014. Ms. Story served as Senior Vice President and Chief Financial Officer of the Company from April 2013 until May 2014. Prior to joining American Water, she served as President and Chief Executive Officer of Southern Company Services, a subsidiary of Southern Company, from January 2011 until March 2013 and President and Chief Executive Officer of Gulf Power Company, also a subsidiary of Southern Company, from 2003 until December 2010. Since 2008, Ms. Story has served as a member of the Board of Directors of Raymond James Financial, Inc., a diversified financial services company, and as lead director since 2016. Since January 2017, Ms. Story has also served on the Board of Directors of Dominion Energy, Inc., a producer and transporter of energy.
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Brian Chin
|
|
45
|
|
Senior Vice President, Strategic Financial Planning.
Mr. Chin joined the Company as its Senior Vice President, Planning and Strategy Integration in June 2017. He has had his current title since February 15, 2019, and he also served as Interim Treasurer from October 26, 2018 until February 15, 2019. Prior to joining the Company, from May 2013 to April 2017, Mr. Chin served as the lead utility analyst for the North America research function at Bank of America Merrill Lynch. From 2001 to 2013, Mr. Chin worked in Electric Utilities Research at Citigroup. Within that period, Mr. Chin was the global head of Electric Utilities Research for Citigroup.
|
Melanie M. Kennedy
|
|
45
|
|
Senior Vice President, Human Resources.
Since March 1, 2017, Ms. Kennedy has served as the Company’s Senior Vice President, Human Resources. From August 2014 until February 2017, Ms. Kennedy served as Vice President, Human Resources of the Company, and from August 2012 to August 2014, she served as Director, Human Resources in the Company's Northeast Division. Ms. Kennedy initially joined the Company in 2007, and before that time, she practiced law for nine years.
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Walter J. Lynch
|
|
56
|
|
Executive Vice President and Chief Operating Officer.
Mr. Lynch has over 20 years of experience in the water and wastewater industry. He has served as the Company’s Executive Vice President and Chief Operating Officer since January 2016, as Chief Operating Officer of Regulated Operations from February 2010 to December 2015, and President of Regulated Operations from July 2008 to December 2015. Mr. Lynch joined the Company in 2001. Mr. Lynch is on the Board of Directors of the National Association of Water Companies and serves on its Executive Committee. In addition, Mr. Lynch also serves on the Water Research Foundation Board of Trustees.
|
James S. Merante
|
|
44
|
|
Vice President and Treasurer
. Mr. Merante was appointed as the Company's Vice President and Treasurer on February 15, 2019. Prior to that, Mr. Merante was Vice President, Internal Audit, from February 2018 to February 15, 2019, and served as Divisional Chief Financial Officer for the Company's Mid-Atlantic Division from July 2014 to February 2018. Prior to joining American Water, Mr. Merante served as Vice President of Operations for FSM, Inc., a private digital media company, from February 2010 until July 2014. Mr. Merante is licensed as a Certified Public Accountant in Pennsylvania.
|
Michael A. Sgro
|
|
60
|
|
Executive Vice President, General Counsel and Secretary.
Mr. Sgro has 25 years of experience in the water and wastewater industry. He has served as the Company’s Executive Vice President, General Counsel and Secretary since January 1, 2016 and its Senior Vice President, General Counsel and Secretary from February 2015 to January 2016. Prior to that, he served as the Company’s Interim General Counsel and Secretary from January 2015 until February 2015 and as Vice President, General Counsel and Secretary of American Water’s Northeast Division beginning in 2002.
|
Linda G. Sullivan
|
|
55
|
|
Executive Vice President and Chief Financial Officer.
Ms. Sullivan has served as the Company’s Executive Vice President and Chief Financial Officer since January 1, 2016 and the Company’s Senior Vice President and Chief Financial Officer from May 2014 to December 31, 2015. Prior to joining American Water, Ms. Sullivan served as the Senior Vice President and Chief Financial Officer of Southern California Edison Company, a subsidiary of Edison International, from July 2009 until May 2014, and Vice President and Controller of both Edison International and Southern California Edison Company, from July 2004 until July 2009. Ms. Sullivan is a Certified Public Accountant (inactive) and a Certified Management Accountant. On April 27, 2017, Ms. Sullivan was elected to the Board of Directors of NorthWestern Corporation, where she serves as the Chair of its Audit Committee and on its Human Resources Committee. In addition, Ms. Sullivan serves on the Board of Directors of University of Maryland University College Ventures and on its Audit & Finance Committee and is a member of the EPA’s Finance Advisory Board.
|
Name
|
|
Age
|
|
Office and Experience
|
Radhakrishnan Swaminathan
|
|
57
|
|
Executive Vice President, Chief Customer, Strategy and Technology Officer.
Mr. Swaminathan has served as our Executive Vice President, Chief Customer, Strategy and Technology Officer since November 1, 2018. Prior to that, he served as Senior Vice President, Chief Technology and Innovation Officer of the Company from November 1, 2017 to October 31, 2018. Mr. Swaminathan joined the Company in March 2016 as our Chief Technology and Innovation Officer. Prior to that, from October 2012 through February 2016, he served as Vice President and Chief Technology Officer, Energy, Natural Resources and Utilities, of WIPRO Technologies. Prior to that, he served as the Director of Smart Grid Technologies at NextEra Energy, Inc. from January 2009 through September 2012.
|
Loyd “Aldie” Warnock
|
|
59
|
|
Senior Vice President of External Affairs and Business Development.
Mr. Warnock has served as the Company’s Senior Vice President of External Affairs and Business Development since August 1, 2017. From April 2014 to July 31, 2017, Mr. Warnock served as the Company’s Senior Vice President of External Affairs, Communications and Public Policy. Prior to joining the Company, he served as Senior Vice President of External Affairs at Midwest Independent System Operator, Inc., a non-profit, self-governing organization, from March 2011 to April 2014. Prior to that, he served as Vice President of External Affairs for Allegheny Energy, Inc. from December 2005 to February 2011 and Senior Vice President of Governmental and Regulatory Affairs at Mirant Corporation from July 2004 to November 2005. Mr. Warnock serves on the Board of Directors of the National Association of Water Companies and on the Executive Advisory Board of the Mississippi State University College of Business.
|
Melissa K. Wikle
|
|
53
|
|
Vice President and Controller.
Ms. Wikle joined the Company in July 2016 as its Vice President and Controller, and assumed the duties of the Company’s principal accounting officer in August 2016. Prior to joining the Company, Ms. Wikle served as Corporate Controller and Chief Accounting Officer of Columbus McKinnon Corporation, a publicly-traded worldwide designer, manufacturer and marketer of material handling products, systems and services, since April 2011. Ms. Wikle is a Certified Public Accountant.
|
ITEM 1A.
|
RISK FACTORS
|
•
|
cover our expenses, including purchased water and costs of chemicals, fuel and other commodities used in our operations;
|
•
|
enable us to recover our investment; and
|
•
|
provide us with an opportunity to earn an appropriate rate of return on our investment.
|
•
|
making it more difficult for us to increase our rates and, as a consequence, to recover our costs or earn our expected rates of return;
|
•
|
changing the determination of the costs, or the amount of costs, that would be considered recoverable in rate cases;
|
•
|
restricting our ability to terminate our services to customers who owe us money for services previously provided or limiting our bill collection efforts;
|
•
|
requiring us to provide water or wastewater services at reduced rates to certain customers;
|
•
|
limiting or restricting our ability to acquire water or wastewater systems, purchase or dispose of assets or issue securities, or making it less cost-effective for us to do so;
|
•
|
negatively impacting the deductibility of expenses under federal or state tax laws, the amount of tax credits or tax abatement benefits that may be available, the amount of taxes owed, or the ability to utilize our net operating loss carryforwards;
|
•
|
changing regulations that affect the benefits we expected to receive when we began offering services in a particular area;
|
•
|
increasing the costs associated with complying with environmental, health, safety and water quality regulations to which our operations are subject;
|
•
|
changing or placing additional limitations on change in control requirements relating to any concentration of ownership of our common stock;
|
•
|
making it easier for governmental entities to convert our assets to public ownership via condemnation, eminent domain or other similar process, or for governmental agencies or private plaintiffs to assess liability against us for damages under these or similar processes;
|
•
|
placing limitations, prohibitions or other requirements with respect to the sharing of information and participation in transactions by or between a regulated subsidiary and us or our other affiliates, including Service Company and any of our other subsidiaries;
|
•
|
restricting or prohibiting our extraction of water from rivers, streams, reservoirs or aquifers; and
|
•
|
revoking or altering the terms of the CPCN issued to us by state PUCs.
|
•
|
increased frequency and duration of droughts;
|
•
|
increased precipitation and flooding;
|
•
|
increased frequency and severity of storms and other weather events;
|
•
|
challenges associated with changes in temperature or increases in ocean levels;
|
•
|
potential degradation of water quality;
|
•
|
decreases in available water supply and changes in water usage patterns;
|
•
|
increases in disruptions in service;
|
•
|
increased costs to repair damaged facilities; or
|
•
|
increased costs to reduce risks associated with the increasing frequency of natural events, including to improve the resiliency and reliability of our water production and delivery facilities and systems.
|
•
|
incurrence or assumption of debt, contingent liabilities and environmental liabilities of or with respect to an acquired business, including liabilities that were unknown at the time of acquisition;
|
•
|
failure to recover acquisition premiums;
|
•
|
unanticipated capital expenditures;
|
•
|
failure to maintain effective internal control over financial reporting;
|
•
|
recording goodwill and other intangible assets at values that ultimately may be subject to impairment charges;
|
•
|
fluctuations in quarterly results;
|
•
|
unanticipated acquisition-related expenses;
|
•
|
failure to realize anticipated benefits, such as cost savings and revenue enhancements; and
|
•
|
difficulties in assimilating personnel, benefits, services and systems.
|
•
|
power loss, computer systems failures, and internet, telecommunications or data network failures;
|
•
|
operator error or improper operation by, the negligent or improper supervision of, or the intentional acts of, employees and contractors;
|
•
|
physical and electronic loss of customer or employee data due to security breaches, cyber attacks, hacking, denial of services action, misappropriation of data or other property and similar events;
|
•
|
computer viruses; and
|
•
|
severe weather and other events, including without limitation, hurricanes, tornadoes, fires, floods, earthquakes and other disasters.
|
•
|
limiting our ability to obtain additional financing to fund future working capital requirements or capital expenditures;
|
•
|
exposing us to interest rate risk with respect to the portion of our indebtedness that bears interest at variable rates;
|
•
|
limiting our ability to pay dividends on our common stock or make payments in connection with our other obligations;
|
•
|
impairing our access to the capital markets for debt and equity;
|
•
|
requiring that an increasing portion of our cash flows from operations be dedicated to the payment of the principal and interest on our debt, thereby reducing funds available for future operations, dividends on our common stock or capital expenditures;
|
•
|
limiting our ability to take advantage of significant business opportunities, such as acquisition opportunities, and to react to changes in market or industry conditions; and
|
•
|
placing us at a competitive disadvantage compared to those of our competitors that have less debt.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
ITEM 2.
|
PROPERTIES
|
•
|
81
surface water treatment plants;
|
•
|
530
groundwater treatment plants;
|
•
|
10
combined (surface water and groundwater) treatment plants;
|
•
|
130
wastewater treatment plants;
|
•
|
51,000
miles of transmission, distribution and collection mains and pipes;
|
•
|
1,000
groundwater wells;
|
•
|
1,400
water and wastewater pumping stations;
|
•
|
1,300
treated water storage facilities; and
|
•
|
80
dams.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
For the Years Ended December 31,
|
||||||||||||||||||
(In millions, except per share data)
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statement of Operations data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
$
|
3,440
|
|
|
$
|
3,357
|
|
|
$
|
3,302
|
|
|
$
|
3,159
|
|
|
$
|
3,011
|
|
Net income attributable to common shareholders
(a)
|
567
|
|
|
426
|
|
|
468
|
|
|
476
|
|
|
430
|
|
|||||
Net income attributable to common shareholders per basic common share
(a)
|
$
|
3.16
|
|
|
$
|
2.39
|
|
|
$
|
2.63
|
|
|
$
|
2.66
|
|
|
$
|
2.40
|
|
Net income attributable to common shareholders per diluted common share
(a)
|
3.15
|
|
|
2.38
|
|
|
2.62
|
|
|
2.64
|
|
|
2.39
|
|
|||||
Balance Sheet data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
(b) (c)
|
$
|
21,223
|
|
|
$
|
19,482
|
|
|
$
|
18,482
|
|
|
$
|
17,241
|
|
|
$
|
16,038
|
|
Long-term debt and redeemable preferred stock at redemption value
(b)
|
7,576
|
|
|
6,498
|
|
|
5,759
|
|
|
5,874
|
|
|
5,442
|
|
|||||
Other data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
$
|
1.82
|
|
|
$
|
1.66
|
|
|
$
|
1.50
|
|
|
$
|
1.36
|
|
|
$
|
1.24
|
|
Net cash provided by operating activities
(d) (e)
|
1,386
|
|
|
1,449
|
|
|
1,289
|
|
|
1,195
|
|
|
1,122
|
|
|||||
Net cash used in investing activities
(e)
|
(2,036
|
)
|
|
(1,672
|
)
|
|
(1,590
|
)
|
|
(1,459
|
)
|
|
(1,029
|
)
|
|||||
Net cash provided by (used in) financing activities
(d) (e)
|
726
|
|
|
207
|
|
|
328
|
|
|
290
|
|
|
(104
|
)
|
|||||
Capital expenditures included in net cash used in investing activities
|
(1,586
|
)
|
|
(1,434
|
)
|
|
(1,311
|
)
|
|
(1,160
|
)
|
|
(956
|
)
|
(a)
|
In November 2014, we disposed of our Class B Biosolids operating segment by selling our subsidiary, Terratec Environmental Ltd (“Terratec”) in Ontario, Canada. The results of Terratec are presented as discontinued operations and, as such, have been excluded from Net income attributable to common shareholders in the table above, for the year ended December 31, 2014.
|
(b)
|
The information for the year ended December 31, 2014, has been revised to reflect the retrospective application of Accounting Standards Update 2015-15,
Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
, which was adopted by the Company as of December 31, 2015.
|
(c)
|
The information for the year ended December 31, 2014, has been revised to reflect the retrospective application of Accounting Standards Update 2015-17,
Balance Sheet Classification of Deferred Taxes
, which was adopted by the Company as of December 31, 2015.
|
(d)
|
The information for the years ended December 31, 2016, 2015 and 2014, has been revised to reflect the retrospective application of Accounting Standards Update 2016-09,
Improvements to Employee Share-Based Payment Accounting
, which was adopted by the Company as of January 1, 2017.
|
(e)
|
The information for the years ended December 31, 2016, 2015 and 2014, has been revised to reflect the retrospective application of Accounting Standards Update 2016-18,
Restricted Cash
, which was adopted by the Company as of December 31, 2017.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Diluted earnings per share (GAAP):
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.15
|
|
|
$
|
2.38
|
|
|
$
|
2.62
|
|
Adjustments:
|
|
|
|
|
|
||||||
Gain on sale of Contract Services Group contracts
|
(0.08
|
)
|
|
—
|
|
|
—
|
|
|||
Income tax impact
|
0.02
|
|
|
—
|
|
|
—
|
|
|||
Net adjustment
|
(0.06
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Keystone impairment charge
|
0.31
|
|
|
—
|
|
|
—
|
|
|||
Income tax impact
|
(0.08
|
)
|
|
—
|
|
|
—
|
|
|||
Net loss attributable to noncontrolling interest
|
(0.01
|
)
|
|
—
|
|
|
—
|
|
|||
Net adjustment
|
0.22
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Freedom Industries settlement and insurance recoveries
|
(0.11
|
)
|
|
(0.12
|
)
|
|
0.36
|
|
|||
Income tax impact
|
0.03
|
|
|
0.05
|
|
|
(0.14
|
)
|
|||
Net adjustment
|
(0.08
|
)
|
|
(0.07
|
)
|
|
0.22
|
|
|||
|
|
|
|
|
|
||||||
Early extinguishment of debt at the parent company
|
—
|
|
|
0.03
|
|
|
—
|
|
|||
Income tax impact
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|||
Net adjustment
|
—
|
|
|
0.02
|
|
|
—
|
|
|||
|
|
|
|
|
|
||||||
Impact of re-measurement from the TCJA
|
0.07
|
|
|
0.70
|
|
|
—
|
|
|||
Total net adjustments
|
0.15
|
|
|
0.65
|
|
|
0.22
|
|
|||
Adjusted diluted earnings per share (non-GAAP)
|
$
|
3.30
|
|
|
$
|
3.03
|
|
|
$
|
2.84
|
|
•
|
Purpose Driven—“We keep life flowing” is our trademark purpose, for our customers and our communities, because we provide the most precious of life’s critical needs.
|
•
|
People Powered—A company is its people. People who have a safe place to work, both physically and emotionally.
|
•
|
Customer Obsessed—Without customers, we don’t exist. They are why we are here.
|
•
|
Trusted Source of Everything Water— Best in class, ensuring we have safe, reliable and affordable water.
|
•
|
Safety—Safety is both a strategy and a value at American Water. We put safety first in everything that we do.
|
•
|
In
2018
, we:
|
•
|
finished the year with fewer employee injuries than the prior year, improving both our Occupational Safety and Health Administration Recordable Incident Rate (“ORIR”) and Days Away, Restricted or Transferred (“DART”) injury severity rate;
|
•
|
continued to
strengthen our safety culture as measured by employee responses to safety-related questions in the Company’s culture survey, and feedback from our in-person, labor-management conferences;
|
•
|
initiated a frontline safety leadership strategic action group, developed to provide recommendations to improve safety leadership training, tools, and engagement; and
|
•
|
championed, through our safety council which consists of management and labor employees, our annual Safety Day, the CEO Safety Award and other recognition programs.
|
•
|
Looking forward, we will:
|
•
|
strive toward zero workplace incidents and eliminate hazards to reduce the potential for incidents;
|
•
|
continue our focus on “near miss reporting” and promoting continuous learning and corrective action regarding potential safety hazards before incidents can occur;
|
•
|
improve toward the achievement of our ORIR and DART targets;
|
•
|
continue our focus on requiring contractors that perform work for the Company be held to the same safety standards as our employees; and
|
•
|
continue to promote the Company’s employee Stop Work Authority, where every employee is empowered to stop any work he or she perceives as unsafe, and to initiate a review to resolve concerns and to eliminate safety hazards.
|
•
|
Customer—Our customers are at the center of everything we plan and do. Customer input, their ideas and experiences will drive how we improve our processes and systems. We want to be the best, and if our customers have a choice as to who serves them, we want it to be us.
|
•
|
In
2018
, we:
|
•
|
achieved a customer satisfaction rating in the top quartile among our industry peer group;
|
•
|
expanded our customer experience initiative, designed to make it easier for customers to do business with us, and enhanced our quality of service through implementation and upgrades of technology tools; and
|
•
|
continued to make needed infrastructure investments while implementing operational efficiency improvements to keep customer bills affordable.
|
•
|
Looking forward, we will:
|
•
|
aim to achieve customer satisfaction and service quality ratings in the top quartile of service industries beyond the water and wastewater industry. We are implementing a multi-year plan to enhance technology and innovation in our customer experience through (i) leveraging secure artificial intelligence to better serve our customers, (ii) using online customer communities for immediate input and reactions before implementing programs, and (iii) mapping our most frequent customer interactions and re-working our internal processes to how customers want services; and
|
•
|
aim for top quartile ratings for drinking water quality and being an industry leader in system resiliency and environmental stewardship.
|
•
|
People—We are building an inclusive, diverse, fully-engaged, high performance workforce and culture, creating an environment where our people feel valued, included and accountable.
|
•
|
In
2018
, we:
|
•
|
continued to demonstrate our commitment to employees by expanding training and development across the Company, with virtually all employees completing at least 20 hours of formal training during
2018
;
|
•
|
expanded the executive leadership team to include key operational leaders across the Company to enable a broader operational focus and stronger communication throughout the organization;
|
•
|
reached a new,
five
-year national benefits agreement with approximately
3,200
of our union-represented employees, including their participation in the Company’s annual performance plan, which will align Company goals across all employees, as well as providing additional medical plan options for our employees and their families; and
|
•
|
simplified our performance management process to foster meaningful feedback conversations and ensure feedback is the focus of performance management.
|
•
|
Looking forward, we will:
|
•
|
implement a strategic workforce plan which will address the changing requirements of our business and our jobs, largely driven by our customer’s expectations and new technologies;
|
•
|
continue to improve inclusion and diversity of our overall employee population, ensuring our workforce is reflective of the customers and communities we serve;
|
•
|
implement a new and more frequent culture survey focused on employee insights into how American Water can become a better company to work for, and to implement recommendations with the goal of increasing employees’ likelihood to recommend American Water as a place to work; and
|
•
|
leverage technology to ensure our employees have the tools and resources they need to keep the customer at the center of everything that we plan and do.
|
•
|
Growth—We expect to continue to grow our businesses, with the majority of our growth to be achieved in our
Regulated Businesses
through (i) continued capital investment in our infrastructure to provide safe, clean, reliable and affordable water and wastewater services to our customers, and (ii) regulated acquisitions to expand our services to new customers. We also expect to continue to grow our
Market-Based Businesses
, which leverage our core water and wastewater competencies.
|
•
|
In
2018
,
we invested
$2.0 billion
in our
Regulated Businesses
and
Market-Based Businesses
.
|
•
|
$1.5 billion
capital investment in our
Regulated Businesses
, the majority for infrastructure improvements and replacements.
|
•
|
$33 million
to fund acquisitions in our
Regulated Businesses
, which added approximately
14,000
water and wastewater customers.
|
•
|
Entered into agreements as of January 31, 2019 for pending acquisitions to add approximately
61,000
customers including:
|
•
|
On
May 30, 2018
, our Pennsylvania subsidiary entered into an agreement to acquire the wastewater assets of Exeter Township, Pennsylvania, for approximately
$96 million
. This system currently serves approximately
9,000
customers. We are expecting to close this acquisition during the third quarter of 2019, pending regulatory approval.
|
•
|
On
April 13, 2018
, our Illinois subsidiary entered into an agreement to acquire the City of Alton, Illinois’ regional wastewater system for approximately
$54 million
. This system currently represents approximately
23,000
customers, comprised of approximately
11,000
customers in Alton and an additional
12,000
customers under bulk contracts in the nearby communities of Bethalto and Godfrey. In connection with the execution of the purchase agreement, our Illinois subsidiary made a
$5 million
non-escrowed deposit to the seller during January 2019. We are expecting to close this acquisition during the second quarter of 2019, pending regulatory approval.
|
•
|
We invested
$365 million
to acquire Pivotal, a leading provider of home warranty protection products and services for gas, electric and other service lines inside and around a home, heating and cooling systems, and home appliances. Pivotal, which joins our
Homeowner Services Group
, operates in
18
states with approximately
1.2 million
customer contracts at the time of acquisition.
|
•
|
Our
Military Services Group
was awarded a contract for ownership, operation and maintenance of the water and wastewater systems at Fort Leonard Wood in Missouri, effective
October 1, 2018
. Designated as the U.S. Army’s Maneuver Support Center of Excellence and the home to three U.S. Army schools, Fort Leonard Wood directly and indirectly supports
36,400
jobs across the state of Missouri. The contract award includes estimated revenues of approximately
$591 million
over a
50
-year period, subject to an annual economic price adjustment.
|
•
|
On
July 5, 2018
, we entered into an agreement for the sale of
22
of our
Contract Services Group
’s
33
O&M contracts to subsidiaries of Veolia Environnement S.A. for
$27 million
. We closed on the sale of
20
of the
22
contracts during the third quarter of 2018, and expect to close on the sale of the remaining
two
contracts, subject to customer consents, in the first half of 2019. We will retain
four
of our O&M contracts due to their proximity to our existing service areas, and expect the majority of our remaining O&M contracts to be sold to other parties, or expire within the next year.
|
•
|
As a result of operational and financial challenges encountered in the construction business of Keystone, the Company decided to exit this business line during the third quarter of 2018. This action, along with the exit of the water trucking business line during the first half of 2018, narrowed the scope of the Keystone business going forward, focusing solely on providing water transfer services. These factors prompted the impairment testing of Keystone’s goodwill and customer relationship intangible asset at September 30, 2018, resulting in a non-cash, after-tax, impairment charge of
$40 million
, net of noncontrolling interest. See
Note 8—Goodwill and Other Intangible Assets
in the Notes to the Consolidated Financial Statements for additional information.
|
•
|
Looking forward, we expect to invest between
$8.0 billion
to
$8.6 billion
from 2019 to 2023, including a range of
$1.7 billion
to
$1.8 billion
in
2019
. Our expected future investment includes:
|
•
|
capital investment for infrastructure improvements in our
Regulated Businesses
of
$7.3 billion
over the next five years, including
$1.6 billion
expected in
2019
;
|
•
|
growth from acquisitions in our
Regulated Businesses
to expand our water and wastewater customer base of between
$600 million
to
$1.2 billion
over the next five years, including a range of
$120 million
to
$240 million
expected in
2019
; and
|
•
|
strategic capital investments of approximately
$100 million
over the next five years, which consists primarily of intellectual property development and strategic growth opportunities in our
Market-Based Businesses
.
|
•
|
Operational Excellence—We continue to strive for industry-leading operational efficiency, driven largely by technology. Our technology investments are aimed at enhancing our customer experience and operational efficiency.
|
•
|
In
2018
:
|
•
|
our
Regulated Businesses
achieved an adjusted O&M efficiency ratio (a non-GAAP measure) of
35.6%
for the year ended
December 31, 2018
, compared to
35.3%
and
36.6%
for the years ended
December 31, 2017
and
2016
, respectively. The unfavorability in our adjusted O&M efficiency ratio in
2018
, when compared to
2017
, was primarily due to a settlement agreement in our New York subsidiary and higher expenses incurred from the colder weather experienced during the first quarter of 2018. The improvement in our adjusted O&M efficiency ratio in
2017
, when compared to
2016
, was attributable to both an increase in operating revenues and a decrease in O&M expenses;
|
•
|
we worked to decrease costs and deploy capital efficiently, including using trenchless technologies for pipeline rehabilitation and leveraging our buying power and strategic sourcing to drive cost savings;
|
•
|
we continued our commitment to water quality and the environment by leveraging new technologies; we now have advanced water quality sensors at all of our major drinking water intake sites and we are automating our reporting and compliance systems; and
|
•
|
we implemented other technology tools that will enhance communication, collaboration and mobility to help our employees work safely and efficiently, and enhance the customer experience.
|
•
|
Looking forward, we will focus on technology and efficiency to:
|
•
|
be the leader in optimizing technology deployment across the water and wastewater industry, with a keen focus on specific, innovative projects that will set us apart from other utilities; aiding us in serving our customers with greater ease, making us safer and helping us operate more efficiently; and
|
•
|
achieve our goal of an adjusted O&M efficiency ratio of
31.5%
by 2023.
|
|
For the Years Ended December 31,
|
||||||||||
(Dollars in millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Total operation and maintenance expenses
(a)
|
$
|
1,479
|
|
|
$
|
1,369
|
|
|
$
|
1,499
|
|
Less:
|
|
|
|
|
|
||||||
Operation and maintenance expenses—Market-Based Businesses
|
362
|
|
|
337
|
|
|
372
|
|
|||
Operation and maintenance expenses—Other
(a)
|
(42
|
)
|
|
(44
|
)
|
|
(38
|
)
|
|||
Total operation and maintenance expenses—Regulated Businesses
(a)
|
1,159
|
|
|
1,076
|
|
|
1,165
|
|
|||
Less:
|
|
|
|
|
|
||||||
Regulated purchased water expenses
|
133
|
|
|
128
|
|
|
122
|
|
|||
Allocation of non-operation and maintenance expenses
|
31
|
|
|
29
|
|
|
30
|
|
|||
Impact of Freedom Industries settlement activities
(b)
|
(20
|
)
|
|
(22
|
)
|
|
65
|
|
|||
Adjusted operation and maintenance expenses—Regulated Businesses
(i)
|
$
|
1,015
|
|
|
$
|
941
|
|
|
$
|
948
|
|
|
|
|
|
|
|
||||||
Total operating revenues
|
$
|
3,440
|
|
|
$
|
3,357
|
|
|
$
|
3,302
|
|
Less:
|
|
|
|
|
|
||||||
Pro forma adjustment for impact of the TCJA
(c)
|
—
|
|
|
166
|
|
|
161
|
|
|||
Total pro forma operating revenues
|
3,440
|
|
|
3,191
|
|
|
3,141
|
|
|||
Less:
|
|
|
|
|
|
||||||
Operating revenues—Market-Based Businesses
|
476
|
|
|
422
|
|
|
451
|
|
|||
Operating revenues—Other
|
(20
|
)
|
|
(23
|
)
|
|
(20
|
)
|
|||
Total operating revenues—Regulated Businesses
|
2,984
|
|
|
2,792
|
|
|
2,710
|
|
|||
Less:
|
|
|
|
|
|
||||||
Regulated purchased water revenues
(d)
|
133
|
|
|
128
|
|
|
122
|
|
|||
Adjusted operating revenues—Regulated Businesses
(ii)
|
$
|
2,851
|
|
|
$
|
2,664
|
|
|
$
|
2,588
|
|
|
|
|
|
|
|
||||||
Adjusted O&M efficiency ratio—Regulated Businesses
(i) / (ii)
|
35.6
|
%
|
|
35.3
|
%
|
|
36.6
|
%
|
NOTE
|
The adjusted O&M efficiency ratios previously reported for the years ended
December 31, 2017
and
2016
, were
33.8%
and
34.9%
, respectively, which did not include the adjustments for the items discussed in footnotes (a) and (c) below.
|
(a)
|
Includes the impact of the Company’s adoption of ASU 2017-07 on January 1, 2018. See
Note 2—Significant Accounting Policies
in the Notes to Consolidated Financial Statements for additional information.
|
(b)
|
Includes the impact of the binding global agreement in principle to settle claims in 2016, and settlements in 2017 and 2018 with two of our general liability insurance carriers in connection with the Freedom Industries chemical spill.
|
(c)
|
Includes the estimated impact of the TCJA on operating revenues for our Regulated Businesses for all periods presented prior to January 1, 2018, as if the lower federal corporate income tax rate was in effect for these periods. See
Note 7—Regulatory Assets and Liabilities
in the Notes to Consolidated Financial Statements for additional information.
|
(d)
|
The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses.
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
General rate cases by state:
|
|
|
|
|
|
|
|
|
|||
New Jersey
(a)
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Missouri
(effective May 28, 2018, July 22, 2016 and July 20, 2016)
|
33
|
|
|
—
|
|
|
5
|
|
|||
New York
(effective April 1, 2018 and June 1, 2017)
|
5
|
|
|
4
|
|
|
—
|
|
|||
Pennsylvania
(effective January 1, 2018)
|
62
|
|
|
—
|
|
|
—
|
|
|||
California
(b)
|
10
|
|
|
5
|
|
|
2
|
|
|||
Virginia
(c)
|
—
|
|
|
5
|
|
|
—
|
|
|||
Iowa
(effective March 27, 2017)
|
—
|
|
|
4
|
|
|
—
|
|
|||
Illinois
(effective January 1, 2017)
|
—
|
|
|
25
|
|
|
—
|
|
|||
Kentucky
(effective August 28, 2016)
|
—
|
|
|
—
|
|
|
7
|
|
|||
West Virginia
(effective February 25, 2016)
|
—
|
|
|
—
|
|
|
18
|
|
|||
Indiana
(effective January 29, 2016)
|
—
|
|
|
—
|
|
|
2
|
|
|||
Total general rate case authorizations
|
$
|
150
|
|
|
$
|
43
|
|
|
$
|
34
|
|
(a)
|
The effective date was June 15, 2018. As part of the resolution of the general rate case, our New Jersey customers will receive refunds for the amount of provisional rates implemented as of June 15, 2018 and collected that exceeded the final rate increase, plus interest.
|
(b)
|
On December 13, 2018, a settlement in our California subsidiary’s general rate case filing was approved, authorizing rates effective January 1, 2018. In 2017, step rates were effective January 13 through February 2. In 2016, step rates were effective January 1.
|
(c)
|
The effective date was May 24, 2017, authorizing the implementation of interim rates as of April 1, 2016.
|
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Infrastructure surcharges by state:
|
|
|
|
|
|
||||||
Missouri
(effective December 15, 2018 and December 15, 2017)
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
—
|
|
Tennessee
(effective April 10, 2018, March 14, 2017 and March 15, 2016)
|
1
|
|
|
2
|
|
|
2
|
|
|||
Indiana (
effective March 14, 2018, March 22, 2017 and May 4, 2016)
|
7
|
|
|
8
|
|
|
3
|
|
|||
Virginia
(effective March 1, 2018)
|
1
|
|
|
—
|
|
|
—
|
|
|||
Illinois
(a)
|
3
|
|
|
—
|
|
|
7
|
|
|||
West Virginia (
effective January 1, 2018 and January 1, 2017)
|
3
|
|
|
2
|
|
|
—
|
|
|||
New Jersey
(b)
|
—
|
|
|
14
|
|
|
19
|
|
|||
Pennsylvania
(c)
|
—
|
|
|
1
|
|
|
28
|
|
|||
Total infrastructure surcharge authorizations
|
$
|
21
|
|
|
$
|
33
|
|
|
$
|
59
|
|
(a)
|
In 2018, the effective date was January 1. In 2016,
$1 million
was effective January 1 and
$6 million
was effective August 1.
|
(b)
|
In 2017,
$10 million
was effective June 1 and
$4 million
was effective December 10. In 2016,
$9 million
was effective June 1 and
$10 million
was effective December 1.
|
(c)
|
In 2017, the effective date was January 1. In 2016,
$11 million
,
$2 million
,
$6 million
and
$9 million
were effective January 1, April 1, July 1 and October 1, respectively.
|
•
|
House File 2307 in Iowa and House Bill 1566 in Maryland allow a fair market value methodology to be included in rate base with respect to prospective acquisitions.
|
•
|
Senate Enrolled Act 362 in Indiana, which, similar to the Water Quality Accountability Act enacted in New Jersey in 2017, sets new operational standards and requirements for water and wastewater treatment plants in areas such as capital asset management, cost-benefit analysis and cybersecurity.
|
•
|
Senate Bill 705 in Missouri allows the Missouri Public Service Commission to approve a revenue stability mechanism (“RSM”) for water utilities. In an effort to encourage conservation, a RSM adjusts rates periodically to ensure that a utility’s revenue will be sufficient to cover its costs, and customers will not overpay for service.
|
•
|
Senate Bill 592 in Missouri changes the public vote requirement for the sale of a municipal water or wastewater system to a simple majority for more than 500 small towns. Historically, only larger communities required a simple majority, while smaller communities needed a two-thirds majority. This legislation increases the options for small towns, should they decide to address their water and sewer challenges through an asset sale.
|
•
|
Legislation was passed in Iowa that allows private water utilities to use a future test year approach in rate cases, decreasing potential regulatory lag and helping to spread out the time between rate cases.
|
•
|
In California, Assembly Bill 2179 changed the vote required to allow cities to sell sewer systems to a simple majority as compared to a two-thirds majority, and Assembly Bill 2339 allowed certain cities to sell water systems without an election.
|
•
|
Act 58 of 2018 in Pennsylvania allows public utilities to implement alternative rates and rate mechanisms in rate base proceedings. These alternative rates and rate mechanisms include, but are not limited to the following: revenue stability mechanisms, performance-based rates, formula rates, multi-year rate plans, or a combination of those mechanisms or other mechanisms. Petitions to establish alternative rate mechanisms are subject to PUC review and approval and can only be filed by a utility in a rate base proceeding.
|
•
|
On October 17, 2018, the Pennsylvania General Assembly passed legislation that allows an investor-owned water utility to include the replacement costs for customer-owned LSLs and customer-owned damaged wastewater laterals in rate base when replaced as part of a Pennsylvania Public Utility Commission approved program. The law became effective December 23, 2018. Prior to the new law, our Pennsylvania subsidiary sought the approval of the Pennsylvania Public Utility Commission to revise the Company’s rules to permit it to replace customer-owned LSLs and to recover associated costs. Our Pennsylvania subsidiary’s proposed replacement of customer-owned LSL program is being reviewed under the provisions of the new law.
|
•
|
On October 23, 2018, President Trump signed America’s Water Infrastructure Act of 2018. The legislation includes policies intended to improve water and wastewater system management and authorization for states to assess options for consolidation for systems that do not comply with the federal Safe Drinking Water Act and its rules and regulations. The legislation increases funding to water system funding programs, including the State Revolving Loan Fund program and the Water Infrastructure Finance and Innovation Act.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Operating revenues
|
$
|
3,440
|
|
|
$
|
3,357
|
|
|
$
|
3,302
|
|
|
$
|
83
|
|
|
2.5
|
|
|
$
|
55
|
|
|
1.7
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operation and maintenance
|
1,479
|
|
|
1,369
|
|
|
1,499
|
|
|
110
|
|
|
8.0
|
|
|
(130
|
)
|
|
(8.7
|
)
|
|||||
Depreciation and amortization
|
545
|
|
|
492
|
|
|
470
|
|
|
53
|
|
|
10.8
|
|
|
22
|
|
|
4.7
|
|
|||||
General taxes
|
277
|
|
|
259
|
|
|
258
|
|
|
18
|
|
|
6.9
|
|
|
1
|
|
|
0.4
|
|
|||||
(Gain) on asset dispositions and purchases
|
(20
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
25.0
|
|
|
(6
|
)
|
|
60.0
|
|
|||||
Impairment charge
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses, net
|
2,338
|
|
|
2,104
|
|
|
2,217
|
|
|
234
|
|
|
11.1
|
|
|
(113
|
)
|
|
(5.1
|
)
|
|||||
Operating income
|
1,102
|
|
|
1,253
|
|
|
1,085
|
|
|
(151
|
)
|
|
(12.1
|
)
|
|
168
|
|
|
15.5
|
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest, net
|
(350
|
)
|
|
(342
|
)
|
|
(325
|
)
|
|
(8
|
)
|
|
2.3
|
|
|
(17
|
)
|
|
5.2
|
|
|||||
Non-operating benefit costs, net
|
20
|
|
|
(9
|
)
|
|
(5
|
)
|
|
29
|
|
|
322.2
|
|
|
(4
|
)
|
|
80.0
|
|
|||||
Loss on early extinguishment of debt
|
(4
|
)
|
|
(7
|
)
|
|
—
|
|
|
3
|
|
|
(42.9
|
)
|
|
(7
|
)
|
|
100.0
|
|
|||||
Other, net
|
19
|
|
|
17
|
|
|
15
|
|
|
2
|
|
|
11.8
|
|
|
2
|
|
|
13.3
|
|
|||||
Total other income (expense)
|
(315
|
)
|
|
(341
|
)
|
|
(315
|
)
|
|
26
|
|
|
(7.6
|
)
|
|
(26
|
)
|
|
8.3
|
|
|||||
Income before income taxes
|
787
|
|
|
912
|
|
|
770
|
|
|
(125
|
)
|
|
(13.7
|
)
|
|
142
|
|
|
18.4
|
|
|||||
Provision for income taxes
|
222
|
|
|
486
|
|
|
302
|
|
|
(264
|
)
|
|
(54.3
|
)
|
|
184
|
|
|
60.9
|
|
|||||
Consolidated net income
|
565
|
|
|
426
|
|
|
468
|
|
|
139
|
|
|
32.6
|
|
|
(42
|
)
|
|
(9.0
|
)
|
|||||
Net loss attributable to noncontrolling interest
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(100.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to common shareholders
|
$
|
567
|
|
|
$
|
426
|
|
|
$
|
468
|
|
|
$
|
141
|
|
|
33.1
|
|
|
$
|
(42
|
)
|
|
(9.0
|
)
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Operating revenues
|
$
|
2,984
|
|
|
$
|
2,958
|
|
|
$
|
2,871
|
|
|
$
|
26
|
|
|
0.9
|
|
|
$
|
87
|
|
|
3.0
|
|
Operation and maintenance
|
1,159
|
|
|
1,076
|
|
|
1,165
|
|
|
83
|
|
|
7.7
|
|
|
(89
|
)
|
|
(7.6
|
)
|
|||||
Depreciation and amortization
|
500
|
|
|
462
|
|
|
440
|
|
|
38
|
|
|
8.2
|
|
|
22
|
|
|
5.0
|
|
|||||
General taxes
|
261
|
|
|
244
|
|
|
242
|
|
|
17
|
|
|
7.0
|
|
|
2
|
|
|
0.8
|
|
|||||
(Gain) on asset dispositions and purchases
|
(7
|
)
|
|
(16
|
)
|
|
(7
|
)
|
|
9
|
|
|
(56.3
|
)
|
|
(9
|
)
|
|
128.6
|
|
|||||
Interest, net
|
(280
|
)
|
|
(268
|
)
|
|
(256
|
)
|
|
(12
|
)
|
|
4.5
|
|
|
(12
|
)
|
|
4.7
|
|
|||||
Other income (expenses)
|
(247
|
)
|
|
(266
|
)
|
|
(257
|
)
|
|
19
|
|
|
(7.1
|
)
|
|
(9
|
)
|
|
3.5
|
|
|||||
Income before income taxes
|
826
|
|
|
925
|
|
|
775
|
|
|
(99
|
)
|
|
(10.7
|
)
|
|
150
|
|
|
19.4
|
|
|||||
Provision for income taxes
|
224
|
|
|
367
|
|
|
303
|
|
|
(143
|
)
|
|
(39.0
|
)
|
|
64
|
|
|
21.1
|
|
|||||
Net income attributable to common shareholders
|
602
|
|
|
559
|
|
|
472
|
|
|
43
|
|
|
7.7
|
|
|
87
|
|
|
18.4
|
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Water services:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
$
|
1,663
|
|
|
$
|
1,644
|
|
|
$
|
1,601
|
|
|
$
|
19
|
|
|
1.2
|
|
|
$
|
43
|
|
|
2.7
|
|
Commercial
|
616
|
|
|
601
|
|
|
582
|
|
|
15
|
|
|
2.5
|
|
|
19
|
|
|
3.3
|
|
|||||
Fire service
|
137
|
|
|
139
|
|
|
134
|
|
|
(2
|
)
|
|
(1.4
|
)
|
|
5
|
|
|
3.7
|
|
|||||
Industrial
|
136
|
|
|
137
|
|
|
134
|
|
|
(1
|
)
|
|
(0.7
|
)
|
|
3
|
|
|
2.2
|
|
|||||
Public and other
|
216
|
|
|
244
|
|
|
259
|
|
|
(28
|
)
|
|
(11.5
|
)
|
|
(15
|
)
|
|
(5.8
|
)
|
|||||
Total water services
|
2,768
|
|
|
2,765
|
|
|
2,710
|
|
|
3
|
|
|
0.1
|
|
|
55
|
|
|
2.0
|
|
|||||
Wastewater services
|
161
|
|
|
142
|
|
|
112
|
|
|
19
|
|
|
13.4
|
|
|
30
|
|
|
26.8
|
|
|||||
Other
(a)
|
55
|
|
|
51
|
|
|
49
|
|
|
4
|
|
|
7.8
|
|
|
2
|
|
|
4.1
|
|
|||||
Total operating revenues
|
$
|
2,984
|
|
|
$
|
2,958
|
|
|
$
|
2,871
|
|
|
$
|
26
|
|
|
0.9
|
|
|
$
|
87
|
|
|
3.0
|
|
(a)
|
Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
|||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
|||||||||||
(Gallons in millions)
|
|
|
|
|
|
|
Gallons
|
|
%
|
|
Gallons
|
|
%
|
|||||||
Billed water services volumes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Residential
|
172,827
|
|
|
174,420
|
|
|
174,599
|
|
|
(1,593
|
)
|
|
(0.9
|
)
|
|
(179
|
)
|
|
(0.1
|
)
|
Commercial
|
82,572
|
|
|
82,147
|
|
|
82,489
|
|
|
425
|
|
|
0.5
|
|
|
(342
|
)
|
|
(0.4
|
)
|
Industrial
|
38,432
|
|
|
39,404
|
|
|
38,465
|
|
|
(972
|
)
|
|
(2.5
|
)
|
|
939
|
|
|
2.4
|
|
Fire service, public and other
|
50,651
|
|
|
51,341
|
|
|
50,678
|
|
|
(690
|
)
|
|
(1.3
|
)
|
|
663
|
|
|
1.3
|
|
Total billed water services volumes
|
344,482
|
|
|
347,312
|
|
|
346,231
|
|
|
(2,830
|
)
|
|
(0.8
|
)
|
|
1,081
|
|
|
0.3
|
|
•
|
$149 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment in various states;
|
•
|
$22 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; and
|
•
|
$148 million
decrease from the impacts of the TCJA which have or are expected to benefit customers. This decrease is made up of two components: (i) a reserve on revenue billed during 2018, for the estimated income tax savings expected to benefit customers in future rates; and (ii) rate adjustments made in certain subsidiaries where our Regulators have authorized lower rates or offsets to regulatory assets or capital investments to pass the benefits to customers.
|
•
|
$81 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment in various states;
|
•
|
$43 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; and
|
•
|
$9 million increase from higher wastewater treatment volumes and an increase in private fire service connections; partially offset by a
|
•
|
$48 million decrease from lower water services demand, including a $15 million reduction due to warmer weather in 2016.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
|||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||
Production costs
|
$
|
313
|
|
|
$
|
298
|
|
|
$
|
288
|
|
|
$
|
15
|
|
|
5.0
|
|
$
|
10
|
|
|
3.5
|
|
Employee-related costs
|
451
|
|
|
431
|
|
|
431
|
|
|
20
|
|
|
4.6
|
|
—
|
|
|
—
|
|
|||||
Operating supplies and services
|
227
|
|
|
209
|
|
|
212
|
|
|
18
|
|
|
8.6
|
|
(3
|
)
|
|
(1.4
|
)
|
|||||
Maintenance materials and supplies
|
81
|
|
|
70
|
|
|
73
|
|
|
11
|
|
|
15.7
|
|
(3
|
)
|
|
(4.1
|
)
|
|||||
Customer billing and accounting
|
60
|
|
|
51
|
|
|
54
|
|
|
9
|
|
|
17.6
|
|
(3
|
)
|
|
(5.6
|
)
|
|||||
Other
|
27
|
|
|
17
|
|
|
107
|
|
|
10
|
|
|
58.8
|
|
(90
|
)
|
|
(84.1
|
)
|
|||||
Total
|
$
|
1,159
|
|
|
$
|
1,076
|
|
|
$
|
1,165
|
|
|
$
|
83
|
|
|
7.7
|
|
$
|
(89
|
)
|
|
(7.6
|
)
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||
Purchased water
|
$
|
133
|
|
|
$
|
128
|
|
|
$
|
122
|
|
|
$
|
5
|
|
|
3.9
|
|
$
|
6
|
|
|
4.9
|
Fuel and power
|
91
|
|
|
89
|
|
|
87
|
|
|
2
|
|
|
2.2
|
|
2
|
|
|
2.3
|
|||||
Chemicals
|
52
|
|
|
47
|
|
|
47
|
|
|
5
|
|
|
10.6
|
|
—
|
|
|
—
|
|||||
Waste disposal
|
37
|
|
|
34
|
|
|
32
|
|
|
3
|
|
|
8.8
|
|
2
|
|
|
6.3
|
|||||
Total
|
$
|
313
|
|
|
$
|
298
|
|
|
$
|
288
|
|
|
$
|
15
|
|
|
5.0
|
|
$
|
10
|
|
|
3.5
|
•
|
$5 million
increase in purchased water from higher prices in our California subsidiary;
|
•
|
$5 million
increase in chemicals from higher usage, the result of wet weather conditions in 2018, primarily in the Northeast and Mid-Atlantic; and
|
•
|
$3 million
increase in waste disposal from higher sludge removal costs, primarily in our New Jersey subsidiary.
|
•
|
$6 million
increase in purchased water from higher usage in our California subsidiary, the result of the California water usage restrictions, which were mandated in 2015 due to the state’s extreme drought, being lifted in the second quarter of 2017; and
|
•
|
$2 million
increase in waste disposal from higher sludge removal costs in our Illinois and Missouri subsidiaries.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
|||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||||
Salaries and wages
|
$
|
349
|
|
|
$
|
334
|
|
|
$
|
336
|
|
|
$
|
15
|
|
|
4.5
|
|
$
|
(2
|
)
|
|
(0.6
|
)
|
Pensions
|
19
|
|
|
14
|
|
|
18
|
|
|
5
|
|
|
35.7
|
|
(4
|
)
|
|
(22.2
|
)
|
|||||
Group insurance
|
57
|
|
|
57
|
|
|
56
|
|
|
—
|
|
|
—
|
|
1
|
|
|
1.8
|
|
|||||
Other benefits
|
26
|
|
|
26
|
|
|
21
|
|
|
—
|
|
|
—
|
|
5
|
|
|
23.8
|
|
|||||
Total
|
$
|
451
|
|
|
$
|
431
|
|
|
$
|
431
|
|
|
$
|
20
|
|
|
4.6
|
|
$
|
—
|
|
|
—
|
|
•
|
$15 million
increase in salaries and wages to support growth of the business, as well as an increase in overtime related to a higher volume of main breaks during the first quarter of 2018, the result of harshly frigid weather in the Midwest, Northeast and parts of the Mid-Atlantic; and
|
•
|
$5 million
increase in pensions from an authorized change in regulatory recovery of pension expense in our Pennsylvania subsidiary.
|
•
|
$5 million
increase in other benefits from higher employer 401(k) savings plan contributions and an increase in training costs; partially offset by a
|
•
|
$4 million
decrease in pensions from higher capitalization rates in 2017.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Operating revenues
|
$
|
476
|
|
|
$
|
422
|
|
|
$
|
451
|
|
|
$
|
54
|
|
|
12.8
|
|
|
$
|
(29
|
)
|
|
(6.4
|
)
|
Operation and maintenance
|
362
|
|
|
337
|
|
|
372
|
|
|
25
|
|
|
7.4
|
|
|
(35
|
)
|
|
(9.4
|
)
|
|||||
Depreciation and amortization
|
29
|
|
|
18
|
|
|
15
|
|
|
11
|
|
|
61.1
|
|
|
3
|
|
|
20.0
|
|
|||||
(Gain) on asset dispositions and purchases
|
(13
|
)
|
|
—
|
|
|
(1
|
)
|
|
(13
|
)
|
|
(100.0
|
)
|
|
1
|
|
|
(100.0
|
)
|
|||||
Impairment charge
|
57
|
|
|
—
|
|
|
—
|
|
|
57
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|||||
Income before income taxes
|
41
|
|
|
66
|
|
|
65
|
|
|
(25
|
)
|
|
(37.9
|
)
|
|
1
|
|
|
1.5
|
|
|||||
Provision for income taxes
|
11
|
|
|
28
|
|
|
26
|
|
|
(17
|
)
|
|
(60.7
|
)
|
|
2
|
|
|
7.7
|
|
|||||
Net loss attributable to noncontrolling interest
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
(100.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to common shareholders
|
32
|
|
|
38
|
|
|
39
|
|
|
(6
|
)
|
|
(15.8
|
)
|
|
(1
|
)
|
|
(2.6
|
)
|
•
|
$76 million increase in our
Homeowner Services Group
from contract growth, including $67 million from the acquisition of Pivotal on
June 4, 2018
; and
|
•
|
$6 million increase in Keystone from an increase in water transfer operations resulting from market recovery in the shale natural gas industry; partially offset by a
|
•
|
$16 million decrease in our
Military Services Group
from lower capital upgrades; and
|
•
|
$14 million decrease in our
Contract Services Group
from the sale of the majority of our O&M contracts to subsidiaries of Veolia Environnement S.A. during the third quarter of 2018.
|
•
|
$56 million decrease in our
Military Services Group
from lower capital upgrades, largely driven by reduced military base budgets and the completion of a large project in the first half of 2017 at Fort Polk; and
|
•
|
$6 million decrease in our
Contract Services Group
from the completion of several O&M contracts during 2017; partially offset by a
|
•
|
$18 million increase in our
Homeowner Services Group
from contract growth, as well as expansion into new geographic areas and price increases for existing customers; and
|
•
|
$16 million increase in Keystone due to an increase in operations resulting from market recovery in the shale natural gas industry.
|
|
For the Years Ended December 31,
|
|
Increase (Decrease)
|
|
Increase (Decrease)
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018 vs. 2017
|
|
2017 vs. 2016
|
||||||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Production costs
|
$
|
32
|
|
|
$
|
37
|
|
|
$
|
35
|
|
|
$
|
(5
|
)
|
|
(13.5
|
)
|
|
$
|
2
|
|
|
5.7
|
|
Employee-related costs
|
104
|
|
|
97
|
|
|
94
|
|
|
7
|
|
|
7.2
|
|
|
3
|
|
|
3.2
|
|
|||||
Operating supplies and services
|
142
|
|
|
121
|
|
|
165
|
|
|
21
|
|
|
17.4
|
|
|
(44
|
)
|
|
(26.7
|
)
|
|||||
Maintenance materials and supplies
|
69
|
|
|
67
|
|
|
68
|
|
|
2
|
|
|
3.0
|
|
|
(1
|
)
|
|
(1.5
|
)
|
|||||
Other
|
15
|
|
|
15
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
50.0
|
|
|||||
Total
|
$
|
362
|
|
|
$
|
337
|
|
|
$
|
372
|
|
|
$
|
25
|
|
|
7.4
|
|
|
$
|
(35
|
)
|
|
(9.4
|
)
|
•
|
$7 million
increase in employee-related costs mainly in our
Homeowner Services Group
related to the acquisition of Pivotal on
June 4, 2018
, partly offset by lower costs in our
Contract Services Group
resulting from the sale of the majority of our O&M contracts during the third quarter of 2018; and
|
•
|
$21 million
increase in operating supplies and services from the acquisition of Pivotal and higher advertising and marketing expense in our
Homeowner Services Group
, as well as an increase in water transfer operations in Keystone, offset in part by lower capital upgrades in our
Military Services Group
and the sale of the majority of our
Contract Services Group
’s O&M contracts during the third quarter of 2018, as discussed above; partially offset by a
|
•
|
$5 million
decrease in production costs from lower purchased water and chemical usage in our
Contract Services Group
resulting from the sale of the majority of our O&M contracts during the third quarter of 2018.
|
•
|
$44 million
decrease in operating supplies and services from lower capital upgrades in our
Military Services Group
, as discussed above, as well as lower advertising and marketing expense in our
Homeowner Services Group
; partially offset by a
|
•
|
$3 million
increase in employee-related costs from higher headcount in Keystone from an increase in operations, as discussed above, offset in part in our
Contract Services Group
from the completion of several O&M contracts during 2017; and
|
•
|
$5 million
increase in other (operating and maintenance expense) from an increase in customer uncollectible expense in our
Homeowner Services Group
resulting from contract growth in 2017.
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net income
|
$
|
565
|
|
|
$
|
426
|
|
|
$
|
468
|
|
Add (less):
|
|
|
|
|
|
||||||
Depreciation and amortization
|
545
|
|
|
492
|
|
|
470
|
|
|||
Deferred income taxes and amortization of investment tax credits
|
195
|
|
|
462
|
|
|
295
|
|
|||
Non-cash impairment charge
|
57
|
|
|
—
|
|
|
—
|
|
|||
Other non-cash activities
(a)
|
56
|
|
|
16
|
|
|
35
|
|
|||
Changes in working capital
(b)
|
30
|
|
|
123
|
|
|
9
|
|
|||
Pension and postretirement benefit contributions
|
(22
|
)
|
|
(48
|
)
|
|
(53
|
)
|
|||
Impact of Freedom Industries settlement activities
|
(40
|
)
|
|
(22
|
)
|
|
65
|
|
|||
Net cash flows provided by operating activities
|
$
|
1,386
|
|
|
$
|
1,449
|
|
|
$
|
1,289
|
|
(a)
|
Includes provision for losses on accounts receivable, (gain) on asset dispositions and purchases, pension and non-pension postretirement benefits and other non-cash, net. Details of each component can be found on the Consolidated Statements of Cash Flows.
|
(b)
|
Changes in working capital include changes to receivables and unbilled revenues, accounts payable and accrued liabilities, and other current assets and liabilities, net.
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Net capital expenditures
|
$
|
(1,586
|
)
|
|
$
|
(1,434
|
)
|
|
$
|
(1,311
|
)
|
Acquisitions
|
(398
|
)
|
|
(177
|
)
|
|
(204
|
)
|
|||
Other investing activities, net
(a)
|
(52
|
)
|
|
(61
|
)
|
|
(75
|
)
|
|||
Net cash flows used in investing activities
|
$
|
(2,036
|
)
|
|
$
|
(1,672
|
)
|
|
$
|
(1,590
|
)
|
(a)
|
Includes removal costs from property, plant and equipment retirements and proceeds from sale of assets.
|
|
For the Years Ended December 31,
|
||||||||||
(In millions)
|
2018
|
|
2017
|
|
2016
|
||||||
Transmission and distribution
|
$
|
572
|
|
|
$
|
551
|
|
|
$
|
568
|
|
Treatment and pumping
|
231
|
|
|
171
|
|
|
151
|
|
|||
Services, meter and fire hydrants
|
303
|
|
|
281
|
|
|
297
|
|
|||
General structure and equipment
|
371
|
|
|
281
|
|
|
202
|
|
|||
Sources of supply
|
26
|
|
|
54
|
|
|
59
|
|
|||
Wastewater
|
83
|
|
|
96
|
|
|
34
|
|
|||
Total capital expenditures
|
$
|
1,586
|
|
|
$
|
1,434
|
|
|
$
|
1,311
|
|
•
|
The majority of cash paid for acquisitions pertained to the
$365 million
purchase of Pivotal within our
Homeowner Services Group
.
|
•
|
Paid
$33 million
for
15
water and wastewater systems, representing approximately
14,000
customers.
|
•
|
Received
$35 million
for the sale of assets, including
$27 million
for the sale of the majority of the O&M contracts in our
Contract Services Group
during the third quarter of 2018.
|
•
|
The majority of cash paid for acquisitions pertained to the
$159 million
purchase of the wastewater collection and treatment system assets of the Municipal Authority of the City of McKeesport, Pennsylvania (the “McKeesport system”), excluding a
$5 million
non-escrowed deposit made in 2016.
|
•
|
Paid
$18 million
for
16
water and wastewater systems, excluding the McKeesport system and Shorelands (a stock-for-stock transaction), representing approximately
7,000
customers.
|
•
|
Received
$15 million
for the sale of assets.
|
•
|
Paid
$199 million
for
15
water and wastewater systems, representing approximately
42,000
customers.
|
•
|
Made a non-escrowed deposit of
$5 million
related to the McKeesport system acquisition.
|
•
|
Received
$9 million
for the sale of assets.
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
(In millions)
|
|
|
|
|
|
||||||
Proceeds from long-term debt
|
$
|
1,358
|
|
|
$
|
1,395
|
|
|
$
|
553
|
|
Repayments of long-term debt
|
(526
|
)
|
|
(896
|
)
|
|
(144
|
)
|
|||
Net proceeds from short-term borrowings
|
60
|
|
|
55
|
|
|
221
|
|
|||
Proceeds from issuance of common stock
|
183
|
|
|
—
|
|
|
—
|
|
|||
Dividends paid
|
(319
|
)
|
|
(289
|
)
|
|
(261
|
)
|
|||
Anti-dilutive stock repurchases
|
(45
|
)
|
|
(54
|
)
|
|
(65
|
)
|
|||
Other financing activities, net
(a)
|
15
|
|
|
(4
|
)
|
|
24
|
|
|||
Net cash flows provided by financing activities
|
$
|
726
|
|
|
$
|
207
|
|
|
$
|
328
|
|
(a)
|
Includes proceeds from issuances of common stock under various employee stock plans and our dividend reinvestment plan, net of taxes paid, advances and contributions for construction, net of refunds, and debt issuance costs and make-whole premium on early debt redemption.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
(a)
|
|
Senior notes—fixed rate
|
|
3.75%-4.20%
|
|
2028-2048
|
|
$
|
1,325
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
(b)
|
|
0.00%-5.00%
|
|
2021-2048
|
|
33
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,358
|
|
(a)
|
This indebtedness is considered “debt” for purposes of a support agreement between American Water and AWCC, the Company’s wholly owned finance subsidiary, which serves as a functional equivalent of a guarantee by American Water of AWCC’s payment obligations under such indebtedness.
|
(b)
|
Approximately
$29 million
of this debt relates to the New Jersey Environmental Infrastructure Financing Program.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
5.62%-6.25%
|
|
2018-2022
|
|
$
|
501
|
|
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-2.90%
|
|
2021-2031
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.50%
|
|
2018-2047
|
|
18
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
9.13%
|
|
2021
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
4.83%-5.69%
|
|
2021
|
|
3
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
526
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
2.95%-3.75%
|
|
2027-2047
|
|
$
|
1,350
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-1.44%
|
|
2020-2037
|
|
31
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
3.92%
|
|
2020
|
|
3
|
|
|
Other American Water subsidiaries
|
|
Term Loan
|
|
4.48%-4.98%
|
|
2021
|
|
11
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,395
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
5.62%-6.09%
|
|
2017-2021
|
|
$
|
844
|
|
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-2.90%
|
|
2021-2031
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.38%
|
|
2017-2041
|
|
15
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
7.08%
|
|
2017
|
|
33
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
4.31%-5.31%
|
|
2021
|
|
1
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
896
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
3.00%-4.00%
|
|
2026-2046
|
|
$
|
550
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.00%-1.36%
|
|
2026-2037
|
|
3
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
553
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount (in millions)
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
5.52%
|
|
2016
|
|
$
|
37
|
|
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-2.90%
|
|
2021-2031
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.30%
|
|
2016-2041
|
|
104
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
144
|
|
(In millions)
|
Credit Facility Commitment
|
|
Available Credit Facility Capacity
|
|
Letter of Credit Sublimit
|
|
Available Letter of Credit Capacity
|
|
Commercial Paper Limit
|
|
Available Commercial Paper Capacity
|
||||||||||||
December 31, 2018
|
$
|
2,262
|
|
|
$
|
2,177
|
|
|
$
|
150
|
|
|
$
|
69
|
|
|
$
|
2,100
|
|
|
$
|
1,146
|
|
December 31, 2017
|
1,762
|
|
|
1,673
|
|
|
150
|
|
|
66
|
|
|
1,600
|
|
|
695
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Total common shareholders' equity
|
40.4
|
%
|
|
41.0
|
%
|
|
42.1
|
%
|
Long-term debt and redeemable preferred stock at redemption value
|
52.4
|
%
|
|
49.6
|
%
|
|
46.4
|
%
|
Short-term debt and current portion of long-term debt
|
7.2
|
%
|
|
9.4
|
%
|
|
11.5
|
%
|
Total
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Securities
|
|
Moody’s Investors Service
|
|
Standard & Poor’s Ratings Service
|
Rating Outlook
|
|
Negative
|
|
Stable
|
Senior unsecured debt
|
|
A3
|
|
A
|
Commercial paper
|
|
P-2
|
|
A-1
|
(In millions)
|
Total
|
|
1 year or less
|
|
2-3 years
|
|
4-5 years
|
|
More than 5 years
|
||||||||||
Long-term debt obligations
(a)
|
$
|
7,655
|
|
|
$
|
72
|
|
|
$
|
335
|
|
|
$
|
184
|
|
|
$
|
7,064
|
|
Interest on long-term debt
(b)
|
5,832
|
|
|
352
|
|
|
688
|
|
|
648
|
|
|
4,144
|
|
|||||
Operating lease obligations
(c)
|
141
|
|
|
17
|
|
|
27
|
|
|
17
|
|
|
80
|
|
|||||
Purchase water obligations
(d)
|
957
|
|
|
65
|
|
|
130
|
|
|
121
|
|
|
641
|
|
|||||
Other purchase obligations
(e)
|
637
|
|
|
637
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension plan obligations
(f)
|
156
|
|
|
31
|
|
|
64
|
|
|
61
|
|
|
—
|
|
|||||
Other obligations
(g)
|
924
|
|
|
312
|
|
|
255
|
|
|
62
|
|
|
295
|
|
|||||
Total
|
$
|
16,302
|
|
|
$
|
1,486
|
|
|
$
|
1,499
|
|
|
$
|
1,093
|
|
|
$
|
12,224
|
|
NOTE
|
The above table reflects only financial obligations and commitments. Therefore, performance obligations associated with our
Market-Based Businesses
are not included in the above amounts. Also, uncertain tax positions of
$97 million
are not reflected in this table as we cannot predict when open tax years will close with completed examinations. See
Note 14—Income Taxes
in the Notes to Consolidated Financial Statements.
|
(a)
|
Represents sinking fund obligations, debt maturities, capital lease obligations and preferred stocks with mandatory redemption requirements.
|
(b)
|
Represents expected interest payments on outstanding long-term debt and interest on preferred stock with mandatory redemption requirements. Amounts reported may differ from actual due to future financing of debt.
|
(c)
|
Represents future minimum payments under non-cancelable operating leases, primarily for the lease of motor vehicles, buildings, land and other equipment including water facilities and systems constructed by partners under the Public-Private Partnerships described below.
|
(d)
|
Represents future payments under water purchase agreements for minimum quantities of water.
|
(e)
|
Represents the open purchase orders as of
December 31, 2018
for goods and services purchased in the ordinary course of business.
|
(f)
|
Represents contributions expected to be made to pension for the years
2019
through
2023
.
|
(g)
|
Includes an estimate of advances for construction to be refunded, capital expenditures estimated to be required under legal and binding contractual obligations, contracts entered into for energy purchases, a liability associated with a conservation agreement, and service agreements.
|
•
|
recording of regulatory liabilities from the re-measurement of the Company’s deferred income taxes, and the uncertainty of regulatory treatment in various jurisdictions in which the Company currently operates;
|
•
|
allocation to our subsidiaries of interest deductibility at the parent;
|
•
|
bonus depreciation deductions for assets constructed and placed in service during the period from September 28, 2017 through December 31, 2017; and
|
•
|
normalization periods for our re-measured deferred taxes.
|
•
|
Discount Rate—The discount rate is used in calculating the present value of benefits, which are based on projections of benefit payments to be made in the future. The objective in selecting the discount rate is to measure the single amount that, if invested at the measurement date in a portfolio of high-quality debt instruments, would provide the necessary future cash flows to pay the accumulated benefits when due.
|
•
|
Expected Return on Plan Assets (“EROA”)—Management projects the future return on plan assets considering prior performance, but primarily based upon the plans’ mix of assets and expectations for the long-term returns on those asset classes. These projected returns reduce the net benefit costs we record currently.
|
•
|
Rate of Compensation Increase—Management projects employees’ pay increases, which are used to project employees’ pension benefits at retirement.
|
•
|
Health Care Cost Trend Rate—Management projects the expected increases in the cost of health care.
|
•
|
Mortality—Management retained the Society of Actuaries RP-2014 mortality base table, which provides rates of mortality in 2006, but adopted the new MP-2018 mortality improvement scale to gradually adjust future mortality rates downward due to increased longevity in each year after 2006.
|
|
|
2019 Target Allocation
|
|
Percentage of Plan Assets as of December 31,
|
|||||
Asset Category
|
|
|
2018
|
|
2017
|
||||
Equity securities
|
|
43
|
%
|
|
42
|
%
|
|
44
|
%
|
Fixed income
|
|
50
|
%
|
|
52
|
%
|
|
49
|
%
|
Real Estate
|
|
5
|
%
|
|
5
|
%
|
|
5
|
%
|
Real estate investment trusts (“REITs”)
|
|
2
|
%
|
|
1
|
%
|
|
2
|
%
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
|
2019 Target Allocation (a)
|
|
Percentage of Plan Assets as of December 31,
|
|||||
Asset Category
|
|
|
2018
|
|
2017
|
||||
Equity securities
|
|
14
|
%
|
|
17
|
%
|
|
35
|
%
|
Fixed income
|
|
86
|
%
|
|
83
|
%
|
|
65
|
%
|
REITs
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
(a)
|
Includes the American Water Postretirement Medical Benefits Bargaining Plan, the New York Water Service Corporation Postretirement Medical Benefits Bargaining Plan, the American Water Postretirement Medical Benefits Non-Bargaining Plan, and the American Water Life Insurance Trust.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
Page
|
Audited Consolidated Financial Statements
|
|
/s/ PricewaterhouseCoopers LLP
|
Philadelphia, Pennsylvania
|
February 19, 2019
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|||||||
Property, plant and equipment
|
$
|
23,204
|
|
|
$
|
21,716
|
|
Accumulated depreciation
|
(5,795
|
)
|
|
(5,470
|
)
|
||
Property, plant and equipment, net
|
17,409
|
|
|
16,246
|
|
||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
130
|
|
|
55
|
|
||
Restricted funds
|
28
|
|
|
27
|
|
||
Accounts receivable, net
|
301
|
|
|
272
|
|
||
Unbilled revenues
|
186
|
|
|
212
|
|
||
Materials and supplies
|
41
|
|
|
41
|
|
||
Other
|
95
|
|
|
113
|
|
||
Total current assets
|
781
|
|
|
720
|
|
||
Regulatory and other long-term assets:
|
|
|
|
||||
Regulatory assets
|
1,156
|
|
|
1,061
|
|
||
Goodwill
|
1,575
|
|
|
1,379
|
|
||
Intangible assets
|
84
|
|
|
9
|
|
||
Postretirement benefit asset
|
155
|
|
|
—
|
|
||
Other
|
63
|
|
|
67
|
|
||
Total regulatory and other long-term assets
|
3,033
|
|
|
2,516
|
|
||
Total assets
|
$
|
21,223
|
|
|
$
|
19,482
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
CAPITALIZATION AND LIABILITIES
|
|||||||
Capitalization:
|
|
|
|
||||
Common stock ($0.01 par value, 500,000,000 shares authorized, 185,367,158 and 182,508,564 shares issued, respectively)
|
$
|
2
|
|
|
$
|
2
|
|
Paid-in-capital
|
6,657
|
|
|
6,432
|
|
||
Accumulated deficit
|
(464
|
)
|
|
(723
|
)
|
||
Accumulated other comprehensive loss
|
(34
|
)
|
|
(79
|
)
|
||
Treasury stock, at cost (4,683,156 and 4,064,010 shares, respectively)
|
(297
|
)
|
|
(247
|
)
|
||
Total common shareholders' equity
|
5,864
|
|
|
5,385
|
|
||
Long-term debt
|
7,569
|
|
|
6,490
|
|
||
Redeemable preferred stock at redemption value
|
7
|
|
|
8
|
|
||
Total long-term debt
|
7,576
|
|
|
6,498
|
|
||
Total capitalization
|
13,440
|
|
|
11,883
|
|
||
Current liabilities:
|
|
|
|
||||
Short-term debt
|
964
|
|
|
905
|
|
||
Current portion of long-term debt
|
71
|
|
|
322
|
|
||
Accounts payable
|
175
|
|
|
195
|
|
||
Accrued liabilities
|
556
|
|
|
630
|
|
||
Taxes accrued
|
45
|
|
|
33
|
|
||
Interest accrued
|
87
|
|
|
73
|
|
||
Other
|
196
|
|
|
167
|
|
||
Total current liabilities
|
2,094
|
|
|
2,325
|
|
||
Regulatory and other long-term liabilities:
|
|
|
|
||||
Advances for construction
|
252
|
|
|
271
|
|
||
Deferred income taxes, net
|
1,718
|
|
|
1,551
|
|
||
Deferred investment tax credits
|
22
|
|
|
22
|
|
||
Regulatory liabilities
|
1,907
|
|
|
1,664
|
|
||
Accrued pension expense
|
390
|
|
|
384
|
|
||
Accrued postretirement benefit expense
|
—
|
|
|
40
|
|
||
Other
|
78
|
|
|
66
|
|
||
Total regulatory and other long-term liabilities
|
4,367
|
|
|
3,998
|
|
||
Contributions in aid of construction
|
1,322
|
|
|
1,276
|
|
||
Commitments and contingencies (See Note 16)
|
|
|
|
|
|
||
Total capitalization and liabilities
|
$
|
21,223
|
|
|
$
|
19,482
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating revenues
|
$
|
3,440
|
|
|
$
|
3,357
|
|
|
$
|
3,302
|
|
Operating expenses:
|
|
|
|
|
|
||||||
Operation and maintenance
|
1,479
|
|
|
1,369
|
|
|
1,499
|
|
|||
Depreciation and amortization
|
545
|
|
|
492
|
|
|
470
|
|
|||
General taxes
|
277
|
|
|
259
|
|
|
258
|
|
|||
(Gain) on asset dispositions and purchases
|
(20
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|||
Impairment charge
|
57
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses, net
|
2,338
|
|
|
2,104
|
|
|
2,217
|
|
|||
Operating income
|
1,102
|
|
|
1,253
|
|
|
1,085
|
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest, net
|
(350
|
)
|
|
(342
|
)
|
|
(325
|
)
|
|||
Non-operating benefit costs, net
|
20
|
|
|
(9
|
)
|
|
(5
|
)
|
|||
Loss on early extinguishment of debt
|
(4
|
)
|
|
(7
|
)
|
|
—
|
|
|||
Other, net
|
19
|
|
|
17
|
|
|
15
|
|
|||
Total other income (expense)
|
(315
|
)
|
|
(341
|
)
|
|
(315
|
)
|
|||
Income before income taxes
|
787
|
|
|
912
|
|
|
770
|
|
|||
Provision for income taxes
|
222
|
|
|
486
|
|
|
302
|
|
|||
Consolidated net income
|
565
|
|
|
426
|
|
|
468
|
|
|||
Net loss attributable to noncontrolling interest
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to common shareholders
|
$
|
567
|
|
|
$
|
426
|
|
|
$
|
468
|
|
|
|
|
|
|
|
||||||
Basic earnings per share:
(a)
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.16
|
|
|
$
|
2.39
|
|
|
$
|
2.63
|
|
Diluted earnings per share:
(a)
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
3.15
|
|
|
$
|
2.38
|
|
|
$
|
2.62
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
180
|
|
|
178
|
|
|
178
|
|
|||
Diluted
|
180
|
|
|
179
|
|
|
179
|
|
(a)
|
Amounts may not calculate due to rounding.
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Net income attributable to common shareholders
|
$
|
567
|
|
|
$
|
426
|
|
|
$
|
468
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Change in employee benefit plan funded status, net of tax of $20, $2 and $(14) in 2018, 2017 and 2016, respectively
|
60
|
|
|
7
|
|
|
(21
|
)
|
|||
Pension amortized to periodic benefit cost:
|
|
|
|
|
|
||||||
Actuarial loss, net of tax of $3, $5 and $4 in 2018, 2017 and 2016, respectively
|
7
|
|
|
7
|
|
|
6
|
|
|||
Pension reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act
|
(22
|
)
|
|
—
|
|
|
—
|
|
|||
Foreign currency translation adjustment
|
—
|
|
|
(1
|
)
|
|
—
|
|
|||
Unrealized (loss) gain on cash flow hedges, net of tax of $0, $(4) and $10 in 2018, 2017 and 2016, respectively
|
(2
|
)
|
|
(6
|
)
|
|
17
|
|
|||
Cash flow hedges reclassification from accumulated other comprehensive loss of tax effects resulting from the Tax Cuts and Jobs Act
|
2
|
|
|
—
|
|
|
—
|
|
|||
Net other comprehensive income
|
45
|
|
|
7
|
|
|
2
|
|
|||
Comprehensive income attributable to common shareholders
|
$
|
612
|
|
|
$
|
433
|
|
|
$
|
470
|
|
|
For the Years Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
565
|
|
|
$
|
426
|
|
|
$
|
468
|
|
Adjustments to reconcile to net cash flows provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
545
|
|
|
492
|
|
|
470
|
|
|||
Deferred income taxes and amortization of investment tax credits
|
195
|
|
|
462
|
|
|
295
|
|
|||
Provision for losses on accounts receivable
|
33
|
|
|
29
|
|
|
27
|
|
|||
Gain on asset dispositions and purchases
|
(20
|
)
|
|
(16
|
)
|
|
(10
|
)
|
|||
Impairment charge
|
57
|
|
|
—
|
|
|
—
|
|
|||
Pension and non-pension postretirement benefits
|
23
|
|
|
57
|
|
|
54
|
|
|||
Other non-cash, net
|
20
|
|
|
(54
|
)
|
|
(36
|
)
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Receivables and unbilled revenues
|
(17
|
)
|
|
21
|
|
|
(31
|
)
|
|||
Pension and non-pension postretirement benefit contributions
|
(22
|
)
|
|
(48
|
)
|
|
(53
|
)
|
|||
Accounts payable and accrued liabilities
|
25
|
|
|
38
|
|
|
60
|
|
|||
Other assets and liabilities, net
|
22
|
|
|
64
|
|
|
(20
|
)
|
|||
Impact of Freedom Industries settlement activities
|
(40
|
)
|
|
(22
|
)
|
|
65
|
|
|||
Net cash provided by operating activities
|
1,386
|
|
|
1,449
|
|
|
1,289
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Capital expenditures
|
(1,586
|
)
|
|
(1,434
|
)
|
|
(1,311
|
)
|
|||
Acquisitions, net of cash acquired
|
(398
|
)
|
|
(177
|
)
|
|
(204
|
)
|
|||
Proceeds from sale of assets
|
35
|
|
|
15
|
|
|
9
|
|
|||
Removal costs from property, plant and equipment retirements, net
|
(87
|
)
|
|
(76
|
)
|
|
(84
|
)
|
|||
Net cash used in investing activities
|
(2,036
|
)
|
|
(1,672
|
)
|
|
(1,590
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from long-term debt
|
1,358
|
|
|
1,395
|
|
|
553
|
|
|||
Repayments of long-term debt
|
(526
|
)
|
|
(896
|
)
|
|
(144
|
)
|
|||
Net short-term borrowings with maturities less than three months
|
60
|
|
|
55
|
|
|
221
|
|
|||
Issuance of common stock
|
183
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuances of employee stock plans and direct stock purchase plan, net of taxes paid of $8, $11 and $13 in 2018, 2017 and 2016, respectively
|
16
|
|
|
15
|
|
|
13
|
|
|||
Advances and contributions for construction, net of refunds of $22, $22 and $31 in 2018, 2017 and 2016, respectively
|
21
|
|
|
28
|
|
|
16
|
|
|||
Debt issuance costs and make-whole premium on early debt redemption
|
(22
|
)
|
|
(47
|
)
|
|
(5
|
)
|
|||
Dividends paid
|
(319
|
)
|
|
(289
|
)
|
|
(261
|
)
|
|||
Anti-dilutive share repurchases
|
(45
|
)
|
|
(54
|
)
|
|
(65
|
)
|
|||
Net cash provided by financing activities
|
726
|
|
|
207
|
|
|
328
|
|
|||
Net increase (decrease) in cash and cash equivalents and restricted funds
|
76
|
|
|
(16
|
)
|
|
27
|
|
|||
Cash and cash equivalents and restricted funds at beginning of period
|
83
|
|
|
99
|
|
|
72
|
|
|||
Cash and cash equivalents and restricted funds at end of period
|
$
|
159
|
|
|
$
|
83
|
|
|
$
|
99
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||||
Interest, net of capitalized amount
|
$
|
332
|
|
|
$
|
338
|
|
|
$
|
327
|
|
Income taxes, net of refunds of $0 in 2018, 2017 and 2016
|
$
|
38
|
|
|
$
|
30
|
|
|
$
|
16
|
|
Non-cash investing activity:
|
|
|
|
|
|
||||||
Capital expenditures acquired on account but unpaid as of year end
|
$
|
181
|
|
|
$
|
204
|
|
|
$
|
171
|
|
Acquisition financed by treasury stock
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
Common Stock
|
|
|
|
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Total S
hare
holders' Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
Paid-in Capital
|
|
Accumulated Deficit
|
|
|
Shares
|
|
At Cost
|
|
||||||||||||||||
Balance as of December 31, 2015
|
180.9
|
|
|
$
|
2
|
|
|
$
|
6,351
|
|
|
$
|
(1,073
|
)
|
|
$
|
(88
|
)
|
|
(2.6
|
)
|
|
$
|
(143
|
)
|
|
$
|
5,049
|
|
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
468
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
468
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Stock-based compensation activity
|
0.7
|
|
|
—
|
|
|
25
|
|
|
(1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
19
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.0
|
)
|
|
(65
|
)
|
|
(65
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Dividends ($1.50 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(267
|
)
|
||||||
Balance as of December 31, 2016
|
181.8
|
|
|
$
|
2
|
|
|
$
|
6,388
|
|
|
$
|
(873
|
)
|
|
$
|
(86
|
)
|
|
(3.7
|
)
|
|
$
|
(213
|
)
|
|
$
|
5,218
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
426
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Stock-based compensation activity
|
0.5
|
|
|
—
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(7
|
)
|
|
15
|
|
||||||
Acquisitions via treasury stock
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
27
|
|
|
34
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
(54
|
)
|
|
(54
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Dividends ($1.66 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(297
|
)
|
||||||
Balance as of December 31, 2017
|
182.5
|
|
|
$
|
2
|
|
|
$
|
6,432
|
|
|
$
|
(723
|
)
|
|
$
|
(79
|
)
|
|
(4.1
|
)
|
|
$
|
(247
|
)
|
|
$
|
5,385
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
567
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
567
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Stock-based compensation activity
|
0.4
|
|
|
—
|
|
|
26
|
|
|
(1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
20
|
|
||||||
Issuance of common stock
|
2.3
|
|
|
—
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(45
|
)
|
|
(45
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Dividends ($1.82 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
||||||
Balance as of December 31, 2018
|
185.4
|
|
|
$
|
2
|
|
|
$
|
6,657
|
|
|
$
|
(464
|
)
|
|
$
|
(34
|
)
|
|
(4.7
|
)
|
|
$
|
(297
|
)
|
|
$
|
5,864
|
|
|
2018
|
|
2017
|
||||
Cash and cash equivalents
|
$
|
130
|
|
|
$
|
55
|
|
Restricted funds
|
28
|
|
|
27
|
|
||
Restricted funds included in other long-term assets
|
1
|
|
|
1
|
|
||
Cash and cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows
|
$
|
159
|
|
|
$
|
83
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Allowance for other funds used during construction
|
$
|
24
|
|
|
$
|
19
|
|
|
$
|
15
|
|
Allowance for borrowed funds used during construction
|
13
|
|
|
8
|
|
|
6
|
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Effect on the Consolidated Financial Statements
|
Revenue from Contracts with Customers
|
|
Changes the criteria for recognizing revenue from a contract with a customer. Replaces existing guidance on revenue recognition, including most industry-specific guidance. The objective is to provide a single, comprehensive revenue recognition model for all contracts with customers to improve comparability within industries, across industries and across capital markets. The underlying principle is that an entity will recognize revenue to depict the transfer of goods and services to customers at an amount the entity expects to be entitled to in exchange for those goods or services. The guidance also requires a number of disclosures regarding the nature, amount, timing and uncertainty of revenue and the related cash flows.
|
|
January 1, 2018
|
|
Modified retrospective
|
|
The adoption had no material impact on the Consolidated Financial Statements. Additional disclosures were added in the Notes to Consolidated Financial Statements. See Note 3—Revenue Recognition for additional information.
|
Clarifying the Definition of a Business
|
|
Updated the accounting guidance to clarify the definition of a business, with the objective of assisting entities with evaluating whether transactions should be accounted for as acquisitions, or disposals, of assets or businesses.
|
|
January 1, 2018
|
|
Prospective
|
|
The adoption had no material impact on the Consolidated Financial Statements.
|
Improving the Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost
|
|
Updated authoritative guidance to require the service cost component of net periodic benefit cost to be presented in the same income statement line item(s) as other employee compensation costs arising from services rendered during the period. The remaining components of net periodic benefit cost are required to be presented separately from the service cost component, in an income statement line item outside of operating income. Also, the guidance only allows for the service cost component to be eligible for capitalization. The updated guidance does not impact the accounting for net periodic benefit costs as regulatory assets or liabilities.
|
|
January 1, 2018
|
|
Retrospective for the presentation of the service cost component and the other components of net periodic benefit costs on the Consolidated Statements of Operations; prospective for the limitation of capitalization to only the service cost component of net periodic benefit costs in total assets.
|
|
The Company presented in the current period, and reclassified in the prior periods, net periodic benefit costs, other than the service cost component, in non-operating benefit costs, net on the Consolidated Statements of Operations.
|
Simplifying the Test for Goodwill Impairment
|
|
Updated authoritative guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments in the update, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying value exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.
|
|
August 31, 2018
|
|
Prospective
|
|
See Note 8—Goodwill and Other Intangible Assets for additional information.
|
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract
|
|
Updated the accounting and disclosure guidance for cloud computing arrangements that are service contracts. Under this guidance, implementation costs incurred in cloud computing arrangements and in developing or obtaining internal-use software follow the same capitalization requirements. The accounting for the service element of the arrangement remains unchanged.
|
|
September 30, 2018
|
|
Prospective
|
|
The adoption had no material impact on the Consolidated Financial Statements.
|
Changes to the Disclosure Requirements for Defined Benefit Plans
|
|
Updated the disclosure requirements for defined benefit plans. The guidance removes the requirement to disclose the amounts in accumulated other comprehensive income to be recognized as net periodic benefit cost, the effects of a one percent change in assumed healthcare costs and a number of other disclosures. The guidance clarifies that projected benefit obligations and accumulated benefit obligations should be disclosed, and adds disclosure requirements for the weighted average interest crediting rates for promised interest crediting rates and an explanation of the reasons for significant gains and losses related to changes in the benefit obligation.
|
|
December 31, 2018
|
|
Retrospective
|
|
The adoption had no material impact on the Consolidated Financial Statements.
|
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
|
|
Permits an entity to reclassify tax effects in accumulated other comprehensive income (“AOCI”) as a result of the TCJA, to retained earnings.
|
|
December 31, 2018
|
|
In the period of adoption.
|
|
See Note 14—Income Taxes for additional information.
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Estimated Effect on the Consolidated Financial Statements
|
Accounting for Leases
|
|
Updated the accounting and disclosure guidance for leasing arrangements. Under this guidance, a lessee will be required to recognize the following for all leases, excluding short-term leases, at the commencement date: (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the guidance, lessor accounting is largely unchanged. A package of optional transition practical expedients allows an entity not to reassess under the new guidance (i) whether any existing contracts are or contain leases (ii) lease classification, and (iii) initial direct costs. Additional optional transition practical expedients are available which allow an entity not to evaluate existing land easements if the easements were not previously accounted for as leases, and to apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment in the opening balance of retained earnings in the period of adoption.
|
|
January 1, 2019; early adoption permitted
|
|
Modified retrospective
|
|
The adoption will result in recording operating lease right-of-use assets of approximately $118 million and operating lease liabilities of approximately $116 million on the Consolidated Balance Sheets. The immaterial difference between the operating lease right-of-use assets and operating lease liabilities will be recorded as an adjustment to retained earnings. The Company has defined a process and implemented internal controls and software to meet the accounting and reporting requirements of the guidance and did not elect early adoption for the standard. The Company will elect all practical expedients available under the new lease accounting and disclosure guidance. The practical expedient related to land easements allowed the Company to carry forward accounting treatment for existing land easements, which is to record easements as land and land rights in utility plant.
|
Targeted Improvements to Accounting for Hedging Activities
|
|
Updated the accounting and disclosure guidance for hedging activities, which allows for more financial and nonfinancial hedging strategies to be eligible for hedge accounting. Under this guidance, a qualitative effectiveness assessment is permitted for certain hedges if an entity can reasonably support an expectation of high effectiveness throughout the term of the hedge, provided that an initial quantitative test establishes that the hedge relationship is highly effective. Also, for cash flow hedges determined to be highly effective, all changes in the fair value of the hedging instrument will be recorded in other comprehensive income, with a subsequent reclassification to earnings when the hedged item impacts earnings.
|
|
January 1, 2019; early adoption permitted
|
|
Modified retrospective for adjustments related to the measurement of ineffectiveness for cash flow hedges; prospective for the updated presentation and disclosure requirements.
|
|
The adoption will not have a material impact on the Consolidated Financial Statements based upon the Company’s hedging activities as of the most recent balance sheet date.
|
Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
|
|
Designates the OIS rate based on SOFR as an eligible U.S. benchmark interest rate for the purposes of applying hedge accounting.
|
|
January 1, 2019; early adoption permitted
|
|
Prospective
|
|
The adoption will not have a material impact on the Consolidated Financial Statements based upon the Company’s hedging activities as of the most recent balance sheet date.
|
Measurement of Credit Losses on Financial Instruments
|
|
Updated the accounting guidance on reporting credit losses for financial assets held at amortized cost basis and available-for-sale debt securities. Under this guidance, expected credit losses are required to be measured based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. Also, this guidance requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down.
|
|
January 1, 2020; early adoption permitted
|
|
Modified retrospective
|
|
The Company is evaluating any impact on its Consolidated Financial Statements, as well as the timing of adoption.
|
Changes to the Disclosure Requirements for Fair Value Measurement
|
|
Updated the disclosure requirements for fair value measurement. The guidance removes the requirements to disclose transfers between Level 1 and Level 2 measurements, the timing of transfers between levels, and the valuation processes for Level 3 measurements. Disclosure of transfers into and out of Level 3 measurements will be required. The guidance adds disclosure requirements for the change in unrealized gains and losses in other comprehensive income for recurring Level 3 measurements, as well as the range and weighted average of significant unobservable inputs used to develop Level 3 measurements.
|
|
January 1, 2020; early adoption permitted
|
|
Prospective for added disclosures and for the narrative description of measurement uncertainty; retrospective for all other amendments.
|
|
The Company does not expect the adoption to have a material impact on its Consolidated Financial Statements, and the Company is evaluating the timing of adoption.
|
|
Revenues from Contracts with Customers
|
|
Other Revenues Not from Contracts with Customers (a)
|
|
Total Operating Revenues
|
||||||
Regulated Businesses:
|
|
|
|
|
|
||||||
Water services:
|
|
|
|
|
|
||||||
Residential
|
$
|
1,663
|
|
|
$
|
—
|
|
|
$
|
1,663
|
|
Commercial
|
616
|
|
|
—
|
|
|
616
|
|
|||
Fire service
|
137
|
|
|
—
|
|
|
137
|
|
|||
Industrial
|
136
|
|
|
—
|
|
|
136
|
|
|||
Public and other
|
197
|
|
|
—
|
|
|
197
|
|
|||
Total water services
|
2,749
|
|
|
—
|
|
|
2,749
|
|
|||
Wastewater services:
|
|
|
|
|
|
|
|||||
Residential
|
115
|
|
|
—
|
|
|
115
|
|
|||
Commercial
|
30
|
|
|
—
|
|
|
30
|
|
|||
Industrial
|
2
|
|
|
—
|
|
|
2
|
|
|||
Public and other
|
14
|
|
|
—
|
|
|
14
|
|
|||
Total wastewater services
|
161
|
|
|
—
|
|
|
161
|
|
|||
Miscellaneous utility charges
|
48
|
|
|
—
|
|
|
48
|
|
|||
Alternative revenue programs
|
—
|
|
|
19
|
|
|
19
|
|
|||
Lease contract revenue
|
—
|
|
|
7
|
|
|
7
|
|
|||
Total Regulated Businesses
|
2,958
|
|
|
26
|
|
|
2,984
|
|
|||
Market-Based Businesses
|
476
|
|
|
—
|
|
|
476
|
|
|||
Other
|
(17
|
)
|
|
(3
|
)
|
|
(20
|
)
|
|||
Total operating revenues
|
$
|
3,417
|
|
|
$
|
23
|
|
|
$
|
3,440
|
|
(a)
|
Includes revenues associated with alternative revenue programs, lease contracts and intercompany rent which are outside the scope of ASC 606 and accounted for under other existing GAAP.
|
|
Amount
|
||
Contract assets:
|
|
||
Balance at January 1, 2018
|
$
|
35
|
|
Additions
|
18
|
|
|
Transfers to accounts receivable, net
|
(39
|
)
|
|
Balance at December 31, 2018
|
$
|
14
|
|
|
|
||
Contract liabilities:
|
|
||
Balance at January 1, 2018
|
$
|
25
|
|
Additions
|
52
|
|
|
Transfers to operating revenues
|
(57
|
)
|
|
Balance at December 31, 2018
|
$
|
20
|
|
|
June 4, 2018 (as initially reported)
|
|
Measurement Period Adjustments
|
|
June 4, 2018 (as adjusted)
|
||||||
Identifiable assets acquired:
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
23
|
|
|
$
|
(1
|
)
|
|
$
|
22
|
|
Other current assets
|
1
|
|
|
1
|
|
|
2
|
|
|||
Property, plant and equipment
|
21
|
|
|
1
|
|
|
22
|
|
|||
Intangible assets
|
96
|
|
|
(6
|
)
|
|
90
|
|
|||
Total identifiable assets acquired
|
141
|
|
|
(5
|
)
|
|
136
|
|
|||
Liabilities assumed:
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Other current liabilities
|
(14
|
)
|
|
2
|
|
|
(12
|
)
|
|||
Long-term liabilities
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Total liabilities assumed
|
(20
|
)
|
|
2
|
|
|
(18
|
)
|
|||
Net identifiable assets acquired
|
121
|
|
|
(3
|
)
|
|
118
|
|
|||
Goodwill
|
242
|
|
|
5
|
|
|
247
|
|
|||
Net assets acquired
|
$
|
363
|
|
|
$
|
2
|
|
|
$
|
365
|
|
|
Amount
|
||
Intangible asset class:
|
|
||
Customer relationships
|
$
|
78
|
|
Other intangible assets
|
12
|
|
|
Total intangible assets
|
$
|
90
|
|
|
2018
|
|
2017
|
|
Range of Remaining Useful Lives
|
|
Weighted Average Useful Life
|
||||
Utility plant:
|
|
|
|
|
|
|
|
||||
Land and other non-depreciable assets
|
$
|
155
|
|
|
$
|
151
|
|
|
|
|
|
Sources of supply
|
821
|
|
|
798
|
|
|
2 to 127 Years
|
|
47 years
|
||
Treatment and pumping facilities
|
3,607
|
|
|
3,356
|
|
|
3 to 101 Years
|
|
40 years
|
||
Transmission and distribution facilities
|
10,164
|
|
|
9,583
|
|
|
9 to 149 Years
|
|
70 years
|
||
Services, meters and fire hydrants
|
4,008
|
|
|
3,754
|
|
|
5 to 90 Years
|
|
31 years
|
||
General structures and equipment
|
1,625
|
|
|
1,458
|
|
|
3 to 109 Years
|
|
15 years
|
||
Waste collection
|
943
|
|
|
904
|
|
|
5 to 114 Years
|
|
60 years
|
||
Waste treatment, pumping and disposal
|
570
|
|
|
557
|
|
|
3 to 139 Years
|
|
41 years
|
||
Construction work in progress
|
593
|
|
|
585
|
|
|
|
|
|
||
Total utility plant
|
22,486
|
|
|
21,146
|
|
|
|
|
|
||
Nonutility property
|
718
|
|
|
570
|
|
|
3 to 50 Years
|
|
6 years
|
||
Total property, plant and equipment
|
$
|
23,204
|
|
|
$
|
21,716
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Balance as of January 1
|
$
|
(42
|
)
|
|
$
|
(40
|
)
|
|
$
|
(39
|
)
|
Amounts charged to expense
|
(33
|
)
|
|
(29
|
)
|
|
(27
|
)
|
|||
Amounts written off
|
34
|
|
|
30
|
|
|
29
|
|
|||
Recoveries of amounts written off
|
(4
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|||
Balance as of December 31
|
$
|
(45
|
)
|
|
$
|
(42
|
)
|
|
$
|
(40
|
)
|
|
2018
|
|
2017
|
||||
Deferred pension expense
|
$
|
362
|
|
|
$
|
285
|
|
Removal costs recoverable through rates
|
292
|
|
|
269
|
|
||
Regulatory balancing accounts
|
110
|
|
|
113
|
|
||
San Clemente Dam project costs
|
85
|
|
|
89
|
|
||
Debt expense
|
70
|
|
|
67
|
|
||
Purchase premium recoverable through rates
|
56
|
|
|
57
|
|
||
Deferred tank painting costs
|
42
|
|
|
42
|
|
||
Make-whole premium on early extinguishment of debt
|
33
|
|
|
27
|
|
||
Other
|
106
|
|
|
112
|
|
||
Total regulatory assets
|
$
|
1,156
|
|
|
$
|
1,061
|
|
|
2018
|
|
2017
|
||||
Income taxes recovered through rates
|
$
|
1,279
|
|
|
$
|
1,242
|
|
Removal costs recovered through rates
|
309
|
|
|
315
|
|
||
Postretirement benefit liability
|
209
|
|
|
33
|
|
||
Pension and other postretirement benefit balancing accounts
|
46
|
|
|
48
|
|
||
TCJA reserve on revenue
|
36
|
|
|
—
|
|
||
Other
|
28
|
|
|
26
|
|
||
Total regulatory liabilities
|
$
|
1,907
|
|
|
$
|
1,664
|
|
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Consolidated
|
||||||||||||||||||||||
|
Cost
|
|
Accumulated Impairment
|
|
Cost
|
|
Accumulated Impairment
|
|
Cost
|
|
Accumulated Impairment
|
|
Total Net
|
||||||||||||||
Balance as of January 1, 2017
|
$
|
3,458
|
|
|
$
|
(2,332
|
)
|
|
$
|
327
|
|
|
$
|
(108
|
)
|
|
$
|
3,785
|
|
|
$
|
(2,440
|
)
|
|
$
|
1,345
|
|
Goodwill from acquisitions
|
29
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
|||||||
Measurement period adjustments
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||||
Balance as of December 31, 2017
|
$
|
3,492
|
|
|
$
|
(2,332
|
)
|
|
$
|
327
|
|
|
$
|
(108
|
)
|
|
$
|
3,819
|
|
|
$
|
(2,440
|
)
|
|
$
|
1,379
|
|
Goodwill from acquisitions
|
2
|
|
|
—
|
|
|
247
|
|
|
—
|
|
|
249
|
|
|
—
|
|
|
249
|
|
|||||||
Goodwill impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
(53
|
)
|
|
—
|
|
|
(53
|
)
|
|
(53
|
)
|
|||||||
Balance as of December 31, 2018
|
$
|
3,494
|
|
|
$
|
(2,332
|
)
|
|
$
|
574
|
|
|
$
|
(161
|
)
|
|
$
|
4,068
|
|
|
$
|
(2,493
|
)
|
|
$
|
1,575
|
|
|
2017
|
|
Acquisitions
|
|
Impairments
|
|
Other
|
|
2018
|
||||||||||
Customer relationships
|
$
|
12
|
|
|
$
|
78
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
86
|
|
Other intangible assets
|
2
|
|
|
12
|
|
|
—
|
|
|
(1
|
)
|
|
13
|
|
|||||
Total gross carrying value
|
$
|
14
|
|
|
$
|
90
|
|
|
$
|
(4
|
)
|
|
$
|
(1
|
)
|
|
$
|
99
|
|
|
2017
|
|
Amortization
|
|
Impairments
|
|
Other
|
|
2018
|
||||||||||
Customer relationships
|
$
|
(4
|
)
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
Other intangible assets
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|||||
Total accumulated amortization
|
$
|
(5
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
(15
|
)
|
Total intangible assets, net
|
$
|
9
|
|
|
|
|
|
|
|
|
$
|
84
|
|
|
Amount
|
||
2019
|
$
|
15
|
|
2020
|
13
|
|
|
2021
|
11
|
|
|
2022
|
10
|
|
|
2023
|
7
|
|
|
Defined Benefit Plans
|
|
Foreign Currency Translation
|
|
Gain (Loss) on Cash Flow Hedge
|
|
Accumulated Other Comprehensive Loss
|
||||||||||||||||
|
Employee Benefit Plan Funded Status
|
|
Amortization of Prior Service Cost
|
|
Amortization of Actuarial Loss
|
|
|
|
|||||||||||||||
Beginning balance as of January 1, 2017
|
$
|
(147
|
)
|
|
$
|
1
|
|
|
$
|
42
|
|
|
$
|
2
|
|
|
$
|
16
|
|
|
$
|
(86
|
)
|
Other comprehensive income (loss) before reclassification
|
7
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(6
|
)
|
|
—
|
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net other comprehensive income (loss)
|
7
|
|
|
—
|
|
|
7
|
|
|
(1
|
)
|
|
(6
|
)
|
|
7
|
|
||||||
Ending balance as of December 31, 2017
|
$
|
(140
|
)
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(79
|
)
|
Other comprehensive income (loss) before reclassification
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
58
|
|
||||||
TCJA tax effects reclassified from accumulated other comprehensive loss
|
(22
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(20
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net other comprehensive income
|
38
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
45
|
|
||||||
Ending balance as of December 31, 2018
|
$
|
(102
|
)
|
|
$
|
1
|
|
|
$
|
56
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(34
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||||
December
|
$
|
0.455
|
|
|
$
|
0.415
|
|
|
$
|
0.375
|
|
September
|
$
|
0.455
|
|
|
$
|
0.415
|
|
|
$
|
0.375
|
|
June
|
$
|
0.455
|
|
|
$
|
0.415
|
|
|
$
|
0.375
|
|
March
|
$
|
0.415
|
|
|
$
|
0.375
|
|
|
$
|
0.34
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Stock options
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
2
|
|
RSUs and PSUs
|
15
|
|
|
9
|
|
|
8
|
|
|||
Nonqualified employee stock purchase plan
|
1
|
|
|
1
|
|
|
1
|
|
|||
Stock-based compensation
|
17
|
|
|
11
|
|
|
11
|
|
|||
Income tax benefit
|
(5
|
)
|
|
(4
|
)
|
|
(4
|
)
|
|||
Stock-based compensation expense, net of tax
|
$
|
12
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
2.09
|
%
|
|||
Expected volatility
|
—
|
%
|
|
—
|
%
|
|
15.89
|
%
|
|||
Risk-free interest rate
|
—
|
%
|
|
—
|
%
|
|
1.15
|
%
|
|||
Expected life (years)
|
0
|
|
|
0
|
|
|
4.0
|
|
|||
Exercise price
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
65.25
|
|
Grant date fair value per share
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6.61
|
|
|
Shares (in thousands)
|
|
Weighted Average Exercise Price (per share)
|
|
Weighted Average Remaining Life (years)
|
|
Aggregate Intrinsic Value
|
|||||
Options outstanding as of December 31, 2017
|
711
|
|
|
$
|
53.51
|
|
|
3.67
|
|
$
|
29
|
|
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited or expired
|
(7
|
)
|
|
65.15
|
|
|
|
|
|
|||
Exercised
|
(187
|
)
|
|
49.32
|
|
|
|
|
|
|||
Options outstanding as of December 31, 2018
|
517
|
|
|
$
|
54.92
|
|
|
2.96
|
|
$
|
19
|
|
Options exercisable as of December 31, 2018
|
(434
|
)
|
|
$
|
52.93
|
|
|
2.76
|
|
$
|
16
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Intrinsic value
|
$
|
9
|
|
|
$
|
10
|
|
|
$
|
18
|
|
Exercise proceeds
|
7
|
|
|
11
|
|
|
15
|
|
|||
Income tax benefit realized
|
2
|
|
|
3
|
|
|
6
|
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value (per share)
|
|||
Non-vested total as of December 31, 2017
|
89
|
|
|
$
|
67.48
|
|
Granted
|
107
|
|
|
82.75
|
|
|
Vested
|
(57
|
)
|
|
72.11
|
|
|
Forfeited
|
(6
|
)
|
|
74.34
|
|
|
Non-vested total as of December 31, 2018
|
133
|
|
|
$
|
77.44
|
|
|
Shares (in thousands)
|
|
Weighted Average Grant Date Fair Value (per share)
|
|||
Non-vested total as of December 31, 2017
|
281
|
|
|
$
|
67.33
|
|
Granted
|
165
|
|
|
72.50
|
|
|
Vested
|
(122
|
)
|
|
58.18
|
|
|
Forfeited
|
(16
|
)
|
|
73.87
|
|
|
Non-vested total as of December 31, 2018
|
308
|
|
|
$
|
73.39
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Expected volatility
|
17.23
|
%
|
|
17.40
|
%
|
|
15.90
|
%
|
|||
Risk-free interest rate
|
2.36
|
%
|
|
1.53
|
%
|
|
0.91
|
%
|
|||
Expected life (years)
|
3.0
|
|
|
3.0
|
|
|
3.0
|
|
|||
Grant date fair value per share
|
$
|
73.62
|
|
|
$
|
72.81
|
|
|
$
|
77.16
|
|
|
Rate
|
|
Weighted Average Rate
|
|
Maturity
|
|
2018
|
|
2017
|
||||
Long-term debt of AWCC:
(a)
|
|
|
|
|
|
|
|
|
|
||||
Senior notes—fixed rate
|
2.95%-8.27%
|
|
4.26%
|
|
2019-2048
|
|
$
|
6,116
|
|
|
$
|
5,292
|
|
Private activity bonds and government funded debt—fixed rate
|
1.79%-6.25%
|
|
5.45%
|
|
2021-2040
|
|
192
|
|
|
193
|
|
||
Long-term debt of other American Water subsidiaries:
|
|
|
|
|
|
|
|
|
|
||||
Private activity bonds and government funded debt—fixed rate
(b)
|
0.00%-6.20%
|
|
4.54%
|
|
2019-2048
|
|
727
|
|
|
712
|
|
||
Mortgage bonds—fixed rate
|
3.92%-9.71%
|
|
7.41%
|
|
2019-2039
|
|
606
|
|
|
607
|
|
||
Mandatorily redeemable preferred stock
|
8.47%-9.75%
|
|
8.60%
|
|
2019-2036
|
|
8
|
|
|
10
|
|
||
Capital lease obligations
|
12.91%
|
|
12.91%
|
|
2026
|
|
1
|
|
|
1
|
|
||
Term loan
|
5.60%-5.63%
|
|
5.62%
|
|
2021
|
|
6
|
|
|
9
|
|
||
Long-term debt
|
|
|
|
|
|
|
7,656
|
|
|
6,824
|
|
||
Unamortized debt premium, net
(c)
|
|
|
|
|
|
|
7
|
|
|
9
|
|
||
Unamortized debt issuance costs
|
|
|
|
|
|
|
(16
|
)
|
|
(13
|
)
|
||
Less current portion of long-term debt
|
|
|
|
|
|
|
(71
|
)
|
|
(322
|
)
|
||
Total long-term debt
|
|
|
|
|
|
|
$
|
7,576
|
|
|
$
|
6,498
|
|
(a)
|
This indebtedness is considered “debt” for purposes of a support agreement between American Water and AWCC, which serves as a functional equivalent of a guarantee by American Water of AWCC’s payment obligations under such indebtedness.
|
(b)
|
Includes
$3 million
and
$5 million
of variable rate debt as of
December 31, 2018
and
2017
, respectively, with variable-to-fixed interest rate swaps ranging between
3.93%
and
4.72%
. This debt was assumed via an acquisition in 2013.
|
(c)
|
Primarily fair value adjustments previously recognized in acquisition purchase accounting.
|
|
Amount
|
||
2019
|
$
|
72
|
|
2020
|
32
|
|
|
2021
|
303
|
|
|
2022
|
26
|
|
|
2023
|
159
|
|
|
Thereafter
|
7,064
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
AWCC
(a)
|
|
Senior notes—fixed rate
|
|
3.75%-4.20%
|
|
2028-2048
|
|
$
|
1,325
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
(b)
|
|
0.00%-5.00%
|
|
2021-2048
|
|
33
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,358
|
|
(a)
|
Approximately
$29 million
of this debt relates to the New Jersey Environmental Infrastructure Financing Program.
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
AWCC
|
|
Senior notes—fixed rate
|
|
5.62%-6.25%
|
|
2018-2022
|
|
$
|
501
|
|
AWCC
|
|
Private activity bonds and government funded debt—fixed rate
|
|
1.79%-2.90%
|
|
2021-2031
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-5.50%
|
|
2018-2047
|
|
18
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
9.13%
|
|
2021
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%-9.18%
|
|
2031-2036
|
|
2
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
4.83%-5.69%
|
|
2021
|
|
3
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
526
|
|
Derivative Instrument
|
|
Derivative Designation
|
|
Balance Sheet Classification
|
|
2018
|
|
2017
|
||
Liability derivative:
|
|
|
|
|
|
|
|
|
||
Forward starting swaps
|
|
Cash flow hedge
|
|
Other current liabilities
|
|
14
|
|
|
3
|
|
|
Credit Facility Commitment (a)
|
|
Available Credit Facility Capacity (a)
|
|
Letter of Credit Sublimit
|
|
Available Letter of Credit Capacity
|
|
Commercial Paper Limit
|
|
Available Commercial Paper Capacity
|
||||||||||||
December 31, 2018
|
$
|
2,262
|
|
|
$
|
2,177
|
|
|
$
|
150
|
|
|
$
|
69
|
|
|
$
|
2,100
|
|
|
$
|
1,146
|
|
December 31, 2017
|
1,762
|
|
|
1,673
|
|
|
150
|
|
|
66
|
|
|
1,600
|
|
|
695
|
|
(a)
|
Includes amounts related to the revolving credit facility of Keystone. As of
December 31, 2018
, the total commitment under the Keystone revolving credit facility was
$12 million
, of which
$8 million
was available for borrowing, subject to compliance with a collateral base calculation.
|
|
2018
|
|
2017
|
||||
Average borrowings
|
$
|
1,029
|
|
|
$
|
779
|
|
Maximum borrowings outstanding
|
1,905
|
|
|
1,135
|
|
||
Weighted average interest rates, computed on daily basis
|
2.28
|
%
|
|
1.24
|
%
|
||
Weighted average interest rates, as of December 31
|
2.84
|
%
|
|
1.61
|
%
|
|
2018
|
|
2017
|
|
2016
|
||||||
Gross receipts and franchise
|
$
|
112
|
|
|
$
|
110
|
|
|
$
|
106
|
|
Property and capital stock
|
120
|
|
|
105
|
|
|
106
|
|
|||
Payroll
|
33
|
|
|
31
|
|
|
32
|
|
|||
Other general
|
12
|
|
|
13
|
|
|
14
|
|
|||
Total general taxes
|
$
|
277
|
|
|
$
|
259
|
|
|
$
|
258
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Current income taxes:
|
|
|
|
|
|
||||||
State
|
$
|
26
|
|
|
$
|
25
|
|
|
$
|
20
|
|
Federal
|
1
|
|
|
(1
|
)
|
|
1
|
|
|||
Total current income taxes
|
$
|
27
|
|
|
$
|
24
|
|
|
$
|
21
|
|
Deferred income taxes:
|
|
|
|
|
|
||||||
State
|
$
|
33
|
|
|
$
|
50
|
|
|
$
|
24
|
|
Federal
|
163
|
|
|
413
|
|
|
258
|
|
|||
Amortization of deferred investment tax credits
|
(1
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|||
Total deferred income taxes
|
195
|
|
|
462
|
|
|
281
|
|
|||
Provision for income taxes
|
$
|
222
|
|
|
$
|
486
|
|
|
$
|
302
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Income tax at statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Increases (decreases) resulting from:
|
|
|
|
|
|
|||
State taxes, net of federal taxes
|
5.5
|
%
|
|
5.4
|
%
|
|
3.8
|
%
|
TCJA
|
1.5
|
%
|
|
13.7
|
%
|
|
—
|
%
|
Other, net
|
0.2
|
%
|
|
(0.8
|
)%
|
|
0.4
|
%
|
Effective tax rate
|
28.2
|
%
|
|
53.3
|
%
|
|
39.2
|
%
|
|
2018
|
|
2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Advances and contributions
|
$
|
402
|
|
|
$
|
395
|
|
Tax losses and credits
|
131
|
|
|
196
|
|
||
Regulatory income tax assets
|
339
|
|
|
327
|
|
||
Pension and other postretirement benefits
|
91
|
|
|
96
|
|
||
Other
|
44
|
|
|
49
|
|
||
Total deferred tax assets
|
1,007
|
|
|
1,063
|
|
||
Valuation allowance
|
(14
|
)
|
|
(13
|
)
|
||
Total deferred tax assets, net of allowance
|
$
|
993
|
|
|
$
|
1,050
|
|
Deferred tax liabilities:
|
|
|
|
|
|||
Property, plant and equipment
|
$
|
2,537
|
|
|
$
|
2,429
|
|
Deferred pension and other postretirement benefits
|
77
|
|
|
69
|
|
||
Other
|
97
|
|
|
103
|
|
||
Total deferred tax liabilities
|
2,711
|
|
|
2,601
|
|
||
Total deferred tax liabilities, net of deferred tax assets
|
$
|
(1,718
|
)
|
|
$
|
(1,551
|
)
|
|
Amount
|
||
Balance as of January 1, 2017
|
$
|
169
|
|
Increases in current period tax positions
|
8
|
|
|
Decreases in prior period measurement of tax positions
|
(71
|
)
|
|
Balance as of December 31, 2017
|
$
|
106
|
|
Increases in current period tax positions
|
13
|
|
|
Decreases in prior period measurement of tax positions
|
(22
|
)
|
|
Balance as of December 31, 2018
|
$
|
97
|
|
|
Amount
|
||
Balance as of January 1, 2016
|
$
|
8
|
|
Decreases in current period tax positions
|
(2
|
)
|
|
Balance as of December 31, 2016
|
$
|
6
|
|
Decreases in current period tax positions
|
7
|
|
|
Balance as of December 31, 2017
|
$
|
13
|
|
Increases in current period tax positions
|
1
|
|
|
Balance as of December 31, 2018
|
$
|
14
|
|
Asset Category
|
|
2019 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2018
|
||||||||||
Cash
|
|
|
|
$
|
24
|
|
|
$
|
24
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
2
|
%
|
|
Equity securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
297
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
20
|
%
|
|||||
U.S. small cap
|
|
|
|
76
|
|
|
70
|
|
|
6
|
|
|
—
|
|
|
5
|
%
|
|||||
International
|
|
|
|
256
|
|
|
2
|
|
|
132
|
|
|
122
|
|
|
17
|
%
|
|||||
Real estate fund
|
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
4
|
%
|
|||||
REITs
|
|
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
1
|
%
|
|||||
Fixed income securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
181
|
|
|
167
|
|
|
14
|
|
|
—
|
|
|
12
|
%
|
|||||
Corporate bonds
|
|
|
|
491
|
|
|
—
|
|
|
491
|
|
|
—
|
|
|
33
|
%
|
|||||
Mortgage-backed securities
|
|
|
|
11
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
1
|
%
|
|||||
Municipal bonds
|
|
|
|
28
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
2
|
%
|
|||||
Long duration bond fund
|
|
|
|
7
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Guarantee annuity contracts
|
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
3
|
%
|
|||||
Total
|
|
100
|
%
|
|
$
|
1,499
|
|
|
$
|
567
|
|
|
$
|
702
|
|
|
$
|
230
|
|
|
100
|
%
|
Asset Category
|
|
2018 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2017
|
||||||||||
Cash
|
|
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity Securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
344
|
|
|
344
|
|
|
—
|
|
|
—
|
|
|
21
|
%
|
|||||
U.S. small cap
|
|
|
|
84
|
|
|
79
|
|
|
5
|
|
|
—
|
|
|
5
|
%
|
|||||
International
|
|
|
|
295
|
|
|
2
|
|
|
149
|
|
|
144
|
|
|
18
|
%
|
|||||
Real estate fund
|
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
5
|
%
|
|||||
REITs
|
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
2
|
%
|
|||||
Fixed income securities:
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
200
|
|
|
180
|
|
|
20
|
|
|
—
|
|
|
12
|
%
|
|||||
Corporate bonds
|
|
|
|
519
|
|
|
—
|
|
|
519
|
|
|
—
|
|
|
31
|
%
|
|||||
Mortgage-backed securities
|
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Municipal bonds
|
|
|
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
|
2
|
%
|
|||||
Long duration bond fund
|
|
|
|
8
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Guarantee annuity contracts
|
|
|
|
48
|
|
|
—
|
|
|
—
|
|
|
48
|
|
|
3
|
%
|
|||||
Total
|
|
100
|
%
|
|
$
|
1,649
|
|
|
$
|
620
|
|
|
$
|
751
|
|
|
$
|
278
|
|
|
100
|
%
|
|
Level 3
|
||
Balance as of January 1, 2018
|
$
|
278
|
|
Actual return on assets
|
(23
|
)
|
|
Purchases, issuances and settlements, net
|
(25
|
)
|
|
Balance as of December 31, 2018
|
$
|
230
|
|
|
Level 3
|
||
Balance as of January 1, 2017
|
$
|
140
|
|
Actual return on assets
|
2
|
|
|
Purchases, issuances and settlements, net
|
136
|
|
|
Balance as of December 31, 2017
|
$
|
278
|
|
Asset Category
|
|
2019 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of December 31, 2018
|
||||||||||
Bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
International
|
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
4
|
%
|
|||||
Fixed income securities:
|
|
98
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
179
|
|
|
178
|
|
|
1
|
|
|
—
|
|
|
47
|
%
|
|||||
Corporate bonds
|
|
|
|
141
|
|
|
—
|
|
|
141
|
|
|
—
|
|
|
37
|
%
|
|||||
Municipal bonds
|
|
|
|
9
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
3
|
%
|
|||||
Long duration bond fund
|
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Future and option contracts
(a)
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
%
|
|||||
Total bargain VEBA
|
|
100
|
%
|
|
$
|
382
|
|
|
$
|
214
|
|
|
$
|
151
|
|
|
$
|
17
|
|
|
100
|
%
|
Non-bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
43
|
|
|
43
|
|
|
—
|
|
|
—
|
|
|
35
|
%
|
|||||
International
|
|
|
|
24
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
20
|
%
|
|||||
Fixed income securities:
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund
(a)
|
|
|
|
52
|
|
|
—
|
|
|
52
|
|
|
—
|
|
|
45
|
%
|
|||||
Total non-bargain VEBA
|
|
100
|
%
|
|
$
|
122
|
|
|
$
|
70
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
100
|
%
|
Life VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities:
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
67
|
%
|
|||||
Fixed income securities:
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund
(a)
|
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
33
|
%
|
|||||
Total life VEBA
|
|
100
|
%
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
Total
|
|
100
|
%
|
|
$
|
507
|
|
|
$
|
287
|
|
|
$
|
203
|
|
|
$
|
17
|
|
|
100
|
%
|
(a)
|
Includes cash for margin requirements.
|
Asset Category
|
|
2018 Target Allocation
|
|
Total
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
Significant Observable Inputs (Level 2)
|
|
Significant Unobservable Inputs (Level 3)
|
|
Percentage of Plan Assets as of 12/31/2017
|
||||||||||
Bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
18
|
|
|
$
|
18
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
44
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
10
|
%
|
|||||
International
|
|
|
|
51
|
|
|
51
|
|
|
—
|
|
|
—
|
|
|
12
|
%
|
|||||
Fixed income securities:
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. Treasury securities and government bonds
|
|
|
|
48
|
|
|
21
|
|
|
27
|
|
|
—
|
|
|
11
|
%
|
|||||
Corporate bonds
|
|
|
|
233
|
|
|
—
|
|
|
233
|
|
|
—
|
|
|
55
|
%
|
|||||
Municipal bonds
|
|
|
|
26
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
6
|
%
|
|||||
Long duration bond fund
|
|
|
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
1
|
%
|
|||||
Future and option contracts
(a)
|
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
5
|
%
|
|||||
Total bargain VEBA
|
|
100
|
%
|
|
$
|
426
|
|
|
$
|
140
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
100
|
%
|
Non-bargain VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
53
|
|
|
53
|
|
|
—
|
|
|
—
|
|
|
37
|
%
|
|||||
U.S. small cap
|
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
4
|
%
|
|||||
International
|
|
|
|
47
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
33
|
%
|
|||||
Fixed income securities:
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund
(a)
|
|
|
|
36
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
26
|
%
|
|||||
Total non-bargain VEBA
|
|
100
|
%
|
|
$
|
142
|
|
|
$
|
142
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
Life VEBA:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash
|
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
Equity securities:
|
|
70
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
U.S. large cap
|
|
|
|
3
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
38
|
%
|
|||||
Fixed income securities:
|
|
30
|
%
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Core fixed income bond fund
(a)
|
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
62
|
%
|
|||||
Total life VEBA
|
|
100
|
%
|
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
100
|
%
|
Total
|
|
100
|
%
|
|
$
|
576
|
|
|
$
|
290
|
|
|
$
|
286
|
|
|
$
|
—
|
|
|
100
|
%
|
(a)
|
Includes cash for margin requirements.
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Change in benefit obligation:
|
|
|
|
|
|
|
|
||||||||
Benefit obligation as of January 1,
|
$
|
2,034
|
|
|
$
|
1,864
|
|
|
$
|
614
|
|
|
$
|
610
|
|
Service cost
|
34
|
|
|
33
|
|
|
8
|
|
|
10
|
|
||||
Interest cost
|
76
|
|
|
80
|
|
|
20
|
|
|
26
|
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Plan amendments
|
(23
|
)
|
|
—
|
|
|
(174
|
)
|
|
—
|
|
||||
Actuarial (gain) loss
|
(153
|
)
|
|
118
|
|
|
(89
|
)
|
|
(9
|
)
|
||||
Acquisitions
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
||||
Gross benefits paid
|
(76
|
)
|
|
(70
|
)
|
|
(29
|
)
|
|
(26
|
)
|
||||
Federal subsidy
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Benefit obligation as of December 31,
|
$
|
1,892
|
|
|
$
|
2,034
|
|
|
$
|
353
|
|
|
$
|
614
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets as of January 1,
|
$
|
1,649
|
|
|
$
|
1,443
|
|
|
$
|
576
|
|
|
$
|
525
|
|
Actual return on plan assets
|
(97
|
)
|
|
227
|
|
|
(40
|
)
|
|
69
|
|
||||
Employer contributions
|
24
|
|
|
42
|
|
|
(2
|
)
|
|
6
|
|
||||
Plan participants' contributions
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
||||
Acquisitions
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid
|
(77
|
)
|
|
(70
|
)
|
|
(29
|
)
|
|
(26
|
)
|
||||
Fair value of plan assets as of December 31,
|
$
|
1,499
|
|
|
$
|
1,649
|
|
|
$
|
507
|
|
|
$
|
576
|
|
Funded value as of December 31,
|
$
|
(393
|
)
|
|
$
|
(385
|
)
|
|
$
|
154
|
|
|
$
|
(38
|
)
|
Amounts recognized on the balance sheet:
|
|
|
|
|
|
|
|
||||||||
Noncurrent asset
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
155
|
|
|
$
|
2
|
|
Current liability
|
(3
|
)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
||||
Noncurrent liability
|
(390
|
)
|
|
(384
|
)
|
|
(1
|
)
|
|
(40
|
)
|
||||
Net amount recognized
|
$
|
(393
|
)
|
|
$
|
(385
|
)
|
|
$
|
154
|
|
|
$
|
(38
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net actuarial loss
|
$
|
431
|
|
|
$
|
416
|
|
|
$
|
83
|
|
|
$
|
108
|
|
Prior service cost (credit)
|
(22
|
)
|
|
2
|
|
|
(291
|
)
|
|
(140
|
)
|
||||
Net amount recognized
|
$
|
409
|
|
|
$
|
418
|
|
|
$
|
(208
|
)
|
|
$
|
(32
|
)
|
|
|
|
|
|
|
|
|
||||||||
Regulatory assets (liabilities)
|
$
|
352
|
|
|
$
|
270
|
|
|
$
|
(208
|
)
|
|
$
|
(32
|
)
|
Accumulated other comprehensive income
|
57
|
|
|
148
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
409
|
|
|
$
|
418
|
|
|
$
|
(208
|
)
|
|
$
|
(32
|
)
|
|
Projected Benefit Obligation Exceeds the Fair Value of Plans' Assets
|
||||||
|
2018
|
|
2017
|
||||
Projected benefit obligation
|
$
|
1,892
|
|
|
$
|
2,034
|
|
Fair value of plan assets
|
1,499
|
|
|
1,649
|
|
||
|
|
|
|
||||
|
Accumulated Benefit Obligation Exceeds the Fair Value of Plans' Assets
|
||||||
|
2018
|
|
2017
|
||||
Accumulated benefit obligation
|
$
|
1,768
|
|
|
$
|
1,888
|
|
Fair value of plan assets
|
1,499
|
|
|
1,649
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||
2019 expected employer contributions:
|
|
|
|
||||
To plan trusts
|
$
|
31
|
|
|
$
|
—
|
|
To plan participants
|
2
|
|
|
—
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
Expected Benefit Payments
|
|
Expected Benefit Payments
|
|
Expected Federal Subsidy Payments
|
||||||
2019
|
$
|
102
|
|
|
$
|
27
|
|
|
$
|
1
|
|
2020
|
107
|
|
|
27
|
|
|
1
|
|
|||
2021
|
111
|
|
|
28
|
|
|
1
|
|
|||
2022
|
115
|
|
|
28
|
|
|
1
|
|
|||
2023
|
120
|
|
|
28
|
|
|
1
|
|
|||
2024-2028
|
634
|
|
|
136
|
|
|
6
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
2018
|
|
2017
|
|
2016
|
|
2018
|
|
2017
|
|
2016
|
Weighted average assumptions used to determine December 31 benefit obligations:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
4.38%
|
|
3.75%
|
|
4.28%
|
|
4.32%
|
|
3.73%
|
|
4.26%
|
Rate of compensation increase
|
3.00%
|
|
3.02%
|
|
3.07%
|
|
N/A
|
|
N/A
|
|
N/A
|
Medical trend
|
N/A
|
|
N/A
|
|
N/A
|
|
graded from
|
|
graded from
|
|
graded from
|
|
|
|
|
|
|
|
6.75% in 2019
|
|
7.00% in 2018
|
|
7.00% in 2017
|
|
|
|
|
|
|
|
to 5.00% in 2026+
|
|
to 4.50% in 2026+
|
|
to 5.00% in 2021+
|
Weighted average assumptions used to determine net periodic cost:
|
|
|
|
|
|
|
|
|
|
|
|
Discount rate
|
3.75%
|
|
4.28%
|
|
4.66%
|
|
4.23%
|
|
4.26%
|
|
3.66%
|
Expected return on plan assets
|
5.95%
|
|
6.49%
|
|
7.02%
|
|
4.77%
|
|
5.09%
|
|
5.37%
|
Rate of compensation increase
|
3.02%
|
|
3.07%
|
|
3.10%
|
|
N/A
|
|
N/A
|
|
N/A
|
Medical trend
|
N/A
|
|
N/A
|
|
N/A
|
|
graded from
|
|
graded from
|
|
graded from
|
|
|
|
|
|
|
|
7.00% in 2018
|
|
7.00% in 2017
|
|
6.50% in 2016
|
|
|
|
|
|
|
|
to 4.50% in 2026+
|
|
to 5.00% in 2021+
|
|
to 5.00% in 2021+
|
NOTE
|
“N/A” in the table above means assumption is not applicable.
|
|
2018
|
|
2017
|
|
2016
|
||||||
Components of net periodic pension benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
34
|
|
|
$
|
33
|
|
|
$
|
32
|
|
Interest cost
|
76
|
|
|
80
|
|
|
80
|
|
|||
Expected return on plan assets
|
(97
|
)
|
|
(93
|
)
|
|
(95
|
)
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
1
|
|
|
1
|
|
|
1
|
|
|||
Actuarial (gain) loss
|
27
|
|
|
34
|
|
|
27
|
|
|||
Net periodic pension benefit cost
|
$
|
41
|
|
|
$
|
55
|
|
|
$
|
45
|
|
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
|
|
|
|
|
|
||||||
Current year actuarial (gain) loss
|
(60
|
)
|
|
(7
|
)
|
|
21
|
|
|||
Amortization of actuarial gain (loss)
|
(7
|
)
|
|
(7
|
)
|
|
(6
|
)
|
|||
Total recognized in other comprehensive income
|
$
|
(67
|
)
|
|
$
|
(14
|
)
|
|
$
|
15
|
|
Total recognized in net periodic benefit cost and other comprehensive income
|
$
|
(26
|
)
|
|
$
|
41
|
|
|
$
|
60
|
|
Components of net periodic other postretirement benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
8
|
|
|
$
|
10
|
|
|
$
|
12
|
|
Interest cost
|
20
|
|
|
26
|
|
|
28
|
|
|||
Expected return on plan assets
|
(26
|
)
|
|
(26
|
)
|
|
(27
|
)
|
|||
Amortization of:
|
|
|
|
|
|
||||||
Prior service cost (credit)
|
(23
|
)
|
|
(18
|
)
|
|
(9
|
)
|
|||
Actuarial (gain) loss
|
3
|
|
|
10
|
|
|
5
|
|
|||
Net periodic other postretirement benefit cost
|
$
|
(18
|
)
|
|
$
|
2
|
|
|
$
|
9
|
|
|
Amount
|
||
2019
|
$
|
65
|
|
2020
|
65
|
|
|
2021
|
65
|
|
|
2022
|
64
|
|
|
2023
|
57
|
|
|
Thereafter
|
641
|
|
|
2018
|
|
2017
|
|
2016
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to common shareholders
|
$
|
567
|
|
|
$
|
426
|
|
|
$
|
468
|
|
|
|
|
|
|
|
||||||
Denominator:
|
|
|
|
|
|
|
|
|
|||
Weighted average common shares outstanding—Basic
|
180
|
|
|
178
|
|
|
178
|
|
|||
Effect of dilutive common stock equivalents
|
—
|
|
|
1
|
|
|
1
|
|
|||
Weighted average common shares outstanding—Diluted
|
180
|
|
|
179
|
|
|
179
|
|
|
Carrying Amount
|
|
December 31, 2018
|
||||||||||||||||
|
|
L
e
vel 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Long-term debt (excluding capital lease obligations)
|
7,638
|
|
|
5,760
|
|
|
433
|
|
|
1,728
|
|
|
7,921
|
|
|
Carrying Amount
|
|
December 31, 2017
|
||||||||||||||||
|
|
L
e
vel 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
14
|
|
Long-term debt (excluding capital lease obligations)
|
6,809
|
|
|
4,846
|
|
|
976
|
|
|
1,821
|
|
|
7,643
|
|
|
December 31, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Restricted funds
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29
|
|
Rabbi trust investments
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Deposits
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Other investments
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total assets
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation obligations
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Mark-to-market derivative liabilities
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||
Total liabilities
|
17
|
|
|
14
|
|
|
—
|
|
|
31
|
|
||||
Total assets (liabilities)
|
$
|
33
|
|
|
$
|
(14
|
)
|
|
$
|
—
|
|
|
$
|
19
|
|
|
December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Restricted funds
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
28
|
|
Rabbi trust investments
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
||||
Deposits
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Other investments
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total assets
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation obligations
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Mark-to-market derivative liabilities
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total liabilities
|
17
|
|
|
3
|
|
|
—
|
|
|
20
|
|
||||
Total assets (liabilities)
|
$
|
33
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
30
|
|
|
At Fair Value as of December 31, 2018
|
|
|
||||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
2018 Impairment Charge
|
||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Keystone goodwill
(a)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
$
|
38
|
|
|
$
|
53
|
|
Keystone intangible asset
(a)
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
|
4
|
|
|||||
Total
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
41
|
|
|
$
|
57
|
|
(a)
|
As of December 31, 2017, Keystone’s goodwill balance was
$91 million
and its intangible asset balance was
$8 million
. Subsequent to the impairment charge recorded in the third quarter of 2018, Keystone’s goodwill and intangible asset balances were
$38 million
and
$3 million
, respectively, as of December 31, 2018.
|
|
Amount
|
||
2019
|
$
|
17
|
|
2020
|
15
|
|
|
2021
|
12
|
|
|
2022
|
11
|
|
|
2023
|
6
|
|
|
Thereafter
|
80
|
|
|
2018
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,984
|
|
|
$
|
476
|
|
|
$
|
(20
|
)
|
|
$
|
3,440
|
|
Depreciation and amortization
|
500
|
|
|
29
|
|
|
16
|
|
|
545
|
|
||||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Total operating expenses, net
|
1,912
|
|
|
441
|
|
|
(15
|
)
|
|
2,338
|
|
||||
Interest, net
|
(280
|
)
|
|
4
|
|
|
(74
|
)
|
|
(350
|
)
|
||||
Income before income taxes
|
826
|
|
|
41
|
|
|
(80
|
)
|
|
787
|
|
||||
Provision for income taxes
|
224
|
|
|
11
|
|
|
(13
|
)
|
|
222
|
|
||||
Net income attributable to common shareholders
|
602
|
|
|
32
|
|
|
(67
|
)
|
|
567
|
|
||||
Total assets
|
18,680
|
|
|
999
|
|
|
1,544
|
|
|
21,223
|
|
||||
Capital expenditures
|
1,477
|
|
|
13
|
|
|
96
|
|
|
1,586
|
|
|
2017
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,958
|
|
|
$
|
422
|
|
|
$
|
(23
|
)
|
|
$
|
3,357
|
|
Depreciation and amortization
|
462
|
|
|
18
|
|
|
12
|
|
|
492
|
|
||||
Total operating expenses, net
|
1,766
|
|
|
360
|
|
|
(22
|
)
|
|
2,104
|
|
||||
Interest, net
|
(268
|
)
|
|
3
|
|
|
(77
|
)
|
|
(342
|
)
|
||||
Income before income taxes
|
925
|
|
|
66
|
|
|
(79
|
)
|
|
912
|
|
||||
Provision for income taxes
|
366
|
|
|
28
|
|
|
92
|
|
|
486
|
|
||||
Net income attributable to common shareholders
|
559
|
|
|
38
|
|
|
(171
|
)
|
|
426
|
|
||||
Total assets
|
17,602
|
|
|
599
|
|
|
1,281
|
|
|
19,482
|
|
||||
Capital expenditures
|
1,316
|
|
|
18
|
|
|
100
|
|
|
1,434
|
|
|
2016
|
||||||||||||||
|
Regulated
Businesses |
|
Market-Based
Businesses |
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,871
|
|
|
$
|
451
|
|
|
$
|
(20
|
)
|
|
$
|
3,302
|
|
Depreciation and amortization
|
440
|
|
|
15
|
|
|
15
|
|
|
470
|
|
||||
Total operating expenses, net
|
1,840
|
|
|
391
|
|
|
(14
|
)
|
|
2,217
|
|
||||
Interest, net
|
(256
|
)
|
|
2
|
|
|
(71
|
)
|
|
(325
|
)
|
||||
Income before income taxes
|
775
|
|
|
65
|
|
|
(70
|
)
|
|
770
|
|
||||
Provision for income taxes
|
303
|
|
|
26
|
|
|
(27
|
)
|
|
302
|
|
||||
Net income attributable to common shareholders
|
472
|
|
|
39
|
|
|
(43
|
)
|
|
468
|
|
||||
Total assets
|
16,405
|
|
|
637
|
|
|
1,440
|
|
|
18,482
|
|
||||
Capital expenditures
|
1,274
|
|
|
18
|
|
|
19
|
|
|
1,311
|
|
|
2018
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Operating revenues
|
$
|
761
|
|
|
$
|
853
|
|
|
$
|
976
|
|
|
$
|
850
|
|
Operating income
|
217
|
|
|
302
|
|
|
335
|
|
|
248
|
|
||||
Net income attributable to common shareholders
|
106
|
|
|
162
|
|
|
187
|
|
|
112
|
|
||||
Basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
0.60
|
|
|
$
|
0.90
|
|
|
$
|
1.04
|
|
|
$
|
0.62
|
|
Diluted earnings per share:
(a)
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
0.59
|
|
|
0.91
|
|
|
1.04
|
|
|
0.62
|
|
(a)
|
Amounts may not sum due to rounding.
|
|
2017
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Operating revenues
|
$
|
756
|
|
|
$
|
844
|
|
|
$
|
936
|
|
|
$
|
821
|
|
Operating income
|
230
|
|
|
310
|
|
|
432
|
|
|
281
|
|
||||
Net income attributable to common shareholders
|
93
|
|
|
131
|
|
|
203
|
|
|
(1
|
)
|
||||
Basic earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
0.52
|
|
|
$
|
0.74
|
|
|
$
|
1.14
|
|
|
$
|
(0.01
|
)
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
0.52
|
|
|
0.73
|
|
|
1.13
|
|
|
—
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
(a)
|
The following documents have been filed as a part of this Form 10-K:
|
1.
|
The financial statements listed in the “Index to Consolidated Financial Statements” contained in
Item 8—Financial Statements and Supplementary Data
of this Form 10-K are hereby incorporated by reference in response to this Item 15(a).
|
2.
|
Financial statement schedules have been omitted since they are either not required or are not applicable as the information is otherwise included in the financial statements or notes thereto.
|
3.
|
Exhibits. The list of documents contained in “Exhibit Index” in Part IV of this Form 10-K is incorporated by reference in response to this Item 15(a). The warranties, representations and covenants contained in any of the agreements included or incorporated by reference herein or which appear as exhibits hereto should not be relied upon by buyers, sellers or holders of the Company’s or its subsidiaries’ securities and are not intended as warranties, representations or covenants to any individual or entity except as specifically set forth in such agreement.
|
ITEM 16.
|
FORM 10-K SUMMARY
|
Exhibit
Number
|
|
Exhibit Description
|
2.1#
|
|
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
|
4.12
|
|
|
4.13
|
|
|
4.14
|
|
|
4.15
|
|
|
4.16
|
|
|
4.17
|
|
|
10.1
|
|
|
10.2
|
|
|
10.3
|
|
|
10.4
|
|
|
10.5.1*
|
|
|
10.5.2*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.6.1*
|
|
|
10.6.2*
|
|
|
10.7*
|
|
|
10.8*
|
|
|
10.9.1*
|
|
|
10.9.2*
|
|
|
10.9.3*
|
|
|
10.9.4*
|
|
|
10.10*
|
|
|
10.11.1*
|
|
|
10.11.2*
|
|
|
10.12.1*
|
|
|
10.12.2*
|
|
|
10.12.3*
|
|
|
10.13.1*
|
|
|
10.13.2*
|
|
|
10.13.3*
|
|
|
10.13.4*
|
|
|
10.13.5*
|
|
|
10.13.6*
|
|
|
10.13.7*
|
|
|
10.13.8*
|
|
|
10.13.9*
|
|
|
10.13.10*
|
|
|
10.13.11*
|
|
|
10.13.12*
|
|
|
10.13.13*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.13.14*
|
|
|
10.13.15*
|
|
|
10.13.16*
|
|
|
10.13.17*
|
|
|
10.13.18*
|
|
|
10.13.19*
|
|
|
10.13.20*
|
|
|
10.13.21*
|
|
|
10.13.22*
|
|
|
10.13.23*
|
|
|
10.13.24*
|
|
|
10.13.25*
|
|
|
10.13.26*
|
|
|
10.13.27*
|
|
|
10.13.28*
|
|
|
10.13.29*
|
|
|
10.13.30*
|
|
|
10.13.31*
|
|
|
10.13.32*
|
|
|
10.13.33*
|
|
|
10.13.34*
|
|
|
10.13.35*
|
|
|
10.13.36*
|
|
|
10.13.37*
|
|
|
10.13.38*
|
|
|
10.13.39*
|
|
|
10.13.40*
|
|
|
10.13.41*
|
|
|
10.13.42*
|
|
Exhibit
Number
|
|
Exhibit Description
|
10.13.43*
|
|
|
10.13.44*
|
|
|
10.13.45*
|
|
|
10.13.46*
|
|
|
10.13.47*
|
|
|
10.13.48*
|
|
|
10.13.49*
|
|
|
10.14*
|
|
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
32.2
|
|
|
101
|
|
The following financial statements from American Water Works Company, Inc.’s Annual Report on Form 10-K for the period ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income; (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Shareholders’ Equity; and (vi) the Notes to Consolidated Financial Statements (filed herewith).
|
*
|
Denotes a management contract or compensatory plan or arrangement.
|
#
|
Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted schedules and exhibits to the SEC upon request.
|
AMERICAN WATER WORKS COMPANY, INC.
|
|
B
Y
:
|
/s/ SUSAN N. STORY
|
|
Susan N. Story
|
|
President and Chief Executive Officer
|
/s/ SUSAN N. STORY
|
|
/s/ JEFFREY N. EDWARDS
|
Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer and Director)
|
|
Jeffrey N. Edwards
(Director)
|
/s/ LINDA G. SULLIVAN
|
|
/s/ MARTHA CLARK GOSS
|
Linda G. Sullivan
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
Martha Clark Goss
(Director)
|
/s/ MELISSA K. WIKLE
|
|
/s/ VERONICA M. HAGEN
|
Melissa K. Wikle
Vice President and Controller
(Principal Accounting Officer)
|
|
Veronica M. Hagen
(Director)
|
/s/ JULIA L. JOHNSON
|
|
/s/ KARL F. KURZ
|
Julia L. Johnson
(Director)
|
|
Karl F. Kurz
(Director)
|
/s/ GEORGE MacKENZIE
|
|
/s/ JAMES G. STAVRIDIS
|
George MacKenzie
(Director)
|
|
James G. Stavridis
(Director)
|
Plan Year
|
Aggregate Value of Equity Awards (LTPP)
|
Vesting Date
|
2019
|
125 % of base salary
|
1/3rd annually on January 31, 2020, 2021 and 2022
|
2020
|
125 % of base salary
|
1/3rd annually on January 31, 2021, 2022 and 2023
|
2021
|
125 % of base salary
|
1/3 on January 31, 2022
1/3 on January 31, 2023
1/3 on March 31, 2023
|
2022
|
125 % of base salary
|
1/3 on January 31, 2023
2/3 on March 31, 2023
|
2023
|
125 % of base salary
|
All vest on March 31, 2023
|
•
|
Aqua America, Inc.
|
•
|
Suez North America
|
•
|
Aquarion
|
•
|
Veolia
|
•
|
Inframark
|
•
|
Utilities Inc.
|
•
|
EPCOR Utilities Inc.
|
•
|
SouthWest Water Company
|
•
|
Liberty Utilities
|
/s/ MELANIE KENNEDY
|
|
/s/ RADHAKRISHNAN SWAMINATHAN
|
Melanie Kennedy
Senior Vice President Human Resources
American Water Works Service Company, Inc.
|
|
Radhakrishnan Swaminathan
|
Dated:
November 1, 2018
|
|
Dated:
October 31, 2018
|
Entity Name
|
|
Entity Type
|
|
Jurisdiction of Organization
|
American Industrial Water LLC
|
|
Limited Liability Company
|
|
Ohio
|
American Lake Water Company
|
|
Corporation
|
|
Illinois
|
American Water – Acciona Agua LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water (USA), LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Canada Corp.
|
|
Corporation
|
|
Ontario
|
American Water Capital Corp.
|
|
Corporation
|
|
Delaware
|
American Water Carbon Services Corp.
|
|
Corporation
|
|
Ontario
|
American Water Enterprises Holding, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Enterprises, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Military Services, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Operations and Maintenance, LLC
|
|
Limited Liability Company
|
|
Texas
|
American Water Resources Holdings, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources of Florida, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources of Texas, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Resources, LLC
|
|
Limited Liability Company
|
|
Virginia
|
American Water Services CDM, Inc.
|
|
Corporation
|
|
Washington
|
American Water Services, LLC
|
|
Limited Liability Company
|
|
Delaware
|
American Water Works Service Company, Inc.
|
|
Corporation
|
|
Delaware
|
AWI, Inc.
|
|
Corporation
|
|
Delaware
|
AWIP Holdings LLC
|
|
Limited Liability Company
|
|
Delaware
|
AW Technologies, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Bluefield Valley Water Works Company
|
|
Corporation
|
|
Virginia
|
California-American Water Company
|
|
Corporation
|
|
California
|
Cocoa Properties I, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Edison Water Company
|
|
Corporation
|
|
New Jersey
|
EMC American Water Canada Inc.
|
|
Corporation
|
|
Canada
|
Environmental Disposal Corporation
|
|
Corporation
|
|
New Jersey
|
Environmental Management, LLC
|
|
Limited Liability Company
|
|
Missouri
|
E’town Properties, Inc.
|
|
Corporation
|
|
Delaware
|
E’town Services L.L.C.
|
|
Limited Liability Company
|
|
New Jersey
|
Hawaii-American Water Company
|
|
Corporation
|
|
Nevada
|
Illinois-American Water Company
|
|
Corporation
|
|
Illinois
|
Indiana-American Water Company, Inc.
|
|
Corporation
|
|
Indiana
|
Iowa-American Water Company
|
|
Corporation
|
|
Delaware
|
Kentucky-American Water Company
|
|
Corporation
|
|
Kentucky
|
Keystone Clearwater Solutions, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Laurel Oak Properties Corporation
|
|
Corporation
|
|
Delaware
|
Liberty Water Company
|
|
Corporation
|
|
New Jersey
|
Maryland-American Water Company
|
|
Corporation
|
|
Maryland
|
Michigan-American Water Company
|
|
Corporation
|
|
Michigan
|
Missouri-American Water Company
|
|
Corporation
|
|
Missouri
|
Mt. Ebo Sewage Works, Inc.
|
|
Corporation
|
|
New York
|
New Jersey-American Water Company, Inc.
|
|
Corporation
|
|
New Jersey
|
New York American Water Company, Inc.
|
|
Corporation
|
|
New York
|
OMI/Thames Water Stockton, Inc.
|
|
Corporation
|
|
Delaware
|
Entity Name
|
|
Entity Type
|
|
Jurisdiction of Organization
|
One Water Street LLC
|
|
Limited Liability Company
|
|
New Jersey
|
Pennsylvania-American Water Company
|
|
Corporation
|
|
Pennsylvania
|
Pivotal Home Solutions, LLC
|
|
Limited Liability Company
|
|
Delaware
|
Prism-Berlie (Windsor) Limited
|
|
Corporation
|
|
Ontario
|
Tennessee-American Water Company
|
|
Corporation
|
|
Tennessee
|
TWH LLC
|
|
Limited Liability Company
|
|
Delaware
|
TWNA, Inc.
|
|
Corporation
|
|
Delaware
|
Virginia-American Water Company
|
|
Corporation
|
|
Virginia
|
Water Solutions Holdings, LLC
|
|
Limited Liability Company
|
|
Delaware
|
West Virginia-American Water Company
|
|
Corporation
|
|
West Virginia
|
Whitlock Farms Water Corp., Inc.
|
|
Corporation
|
|
New York
|
/s/ PricewaterhouseCoopers LLP
|
Philadelphia, Pennsylvania
|
February 19, 2019
|
By:
|
/s/ SUSAN N. STORY
|
|
Susan N. Story
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/s/ LINDA G. SULLIVAN
|
|
Linda G. Sullivan
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
By:
|
/s/ SUSAN N. STORY
|
|
Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer)
|
|
February 19, 2019
|
By:
|
/s/ LINDA G. SULLIVAN
|
|
Linda G. Sullivan
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
|
February 19, 2019
|