|
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
51-0063696
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of Each Class
|
|
Trading Symbol
|
|
Name of Each Exchange on Which Registered
|
Common stock, par value $0.01 per share
|
|
AWK
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
Emerging growth company
|
☐
|
|
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Class
|
|
Shares Outstanding as of October 24, 2019
|
|||
Common Stock, $0.01 par value per share
|
|
180,776,169
|
|
|
Page
|
|
|
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Item 1.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
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|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
|
•
|
the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates;
|
•
|
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;
|
•
|
changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts;
|
•
|
limitations on the availability of the Company’s water supplies or sources of water, or restrictions on its use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors;
|
•
|
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;
|
•
|
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;
|
•
|
the outcome of litigation and similar governmental and regulatory proceedings, investigations or actions;
|
•
|
the Company’s ability to appropriately maintain current infrastructure, including its operational and technology systems, and manage the expansion of its business;
|
•
|
exposure or infiltration of the Company’s technology and critical infrastructure systems, including the disclosure of sensitive, personal or confidential information contained therein, through physical or cyber attacks or other means;
|
•
|
the Company’s ability to obtain permits and other approvals for projects;
|
•
|
changes in the Company’s capital requirements;
|
•
|
the Company’s ability to control operating expenses and to achieve efficiencies in its operations;
|
•
|
the intentional or unintentional actions of a third party, including contamination of the Company’s water supplies or water provided to its customers;
|
•
|
the Company’s ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for its operations;
|
•
|
the Company’s ability to successfully meet growth projections for its regulated and market-based businesses, either individually or in the aggregate, and capitalize on growth opportunities, including its ability to, among other things:
|
•
|
acquire, close and successfully integrate regulated operations and market-based businesses;
|
•
|
enter into contracts and other agreements with, or otherwise obtain, new customers in the Company’s market-based businesses; and
|
•
|
realize anticipated benefits and synergies from new acquisitions;
|
•
|
risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations;
|
•
|
cost overruns relating to improvements in or the expansion of the Company’s operations;
|
•
|
the Company’s ability to maintain safe work sites;
|
•
|
the Company’s 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, the Company’s water transfer business focused on customers in the shale natural gas exploration and production market;
|
•
|
changes in general economic, political, business and financial market conditions;
|
•
|
access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures;
|
•
|
fluctuations in interest rates;
|
•
|
restrictive covenants in or changes to the credit ratings on the Company or any of its subsidiaries, or any of their current or future indebtedness, that could increase the Company’s financing costs or funding requirements or affect its ability to borrow, make payments on debt or pay dividends;
|
•
|
fluctuations in the value of benefit plan assets and liabilities that could increase the Company’s cost and funding requirements;
|
•
|
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 related to the enactment of the TCJA, the availability of tax credits and tax abatement programs, and the Company’s ability to utilize its U.S. federal and state income tax net operating loss (“NOL”) carryforwards;
|
•
|
migration of customers into or out of the Company’s service territories;
|
•
|
the use by municipalities of the power of eminent domain or other authority to condemn the systems of one or more of the Company’s utility subsidiaries, or the assertion by private landowners of similar rights against such utility subsidiaries;
|
•
|
any difficulty or inability to obtain insurance for the Company, its inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or its inability to obtain reimbursement under existing insurance programs and coverages for any losses sustained;
|
•
|
the incurrence of impairment charges related to the Company’s goodwill or other assets;
|
•
|
labor actions, including work stoppages and strikes;
|
•
|
the Company’s ability to retain and attract qualified employees;
|
•
|
civil disturbances or terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and
|
•
|
the impact of new, and changes to existing, accounting standards.
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
ASSETS
|
|||||||
Property, plant and equipment
|
$
|
23,807
|
|
|
$
|
23,204
|
|
Accumulated depreciation
|
(5,656
|
)
|
|
(5,795
|
)
|
||
Property, plant and equipment, net
|
18,151
|
|
|
17,409
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
94
|
|
|
130
|
|
||
Restricted funds
|
22
|
|
|
28
|
|
||
Accounts receivable, net
|
335
|
|
|
301
|
|
||
Unbilled revenues
|
187
|
|
|
186
|
|
||
Materials and supplies
|
46
|
|
|
41
|
|
||
Other
|
115
|
|
|
95
|
|
||
Total current assets
|
799
|
|
|
781
|
|
||
Regulatory and other long-term assets:
|
|
|
|
|
|
||
Regulatory assets
|
1,178
|
|
|
1,156
|
|
||
Operating lease right-of-use assets
|
109
|
|
|
—
|
|
||
Goodwill
|
1,576
|
|
|
1,575
|
|
||
Intangible assets
|
74
|
|
|
84
|
|
||
Postretirement benefit assets
|
150
|
|
|
155
|
|
||
Other
|
201
|
|
|
63
|
|
||
Total regulatory and other long-term assets
|
3,288
|
|
|
3,033
|
|
||
Total assets
|
$
|
22,238
|
|
|
$
|
21,223
|
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
CAPITALIZATION AND LIABILITIES
|
|||||||
Capitalization:
|
|
|
|
||||
Common stock ($0.01 par value; 500,000,000 shares authorized; 185,860,356 and 185,367,158 shares issued, respectively)
|
$
|
2
|
|
|
$
|
2
|
|
Paid-in-capital
|
6,695
|
|
|
6,657
|
|
||
Accumulated deficit
|
(123
|
)
|
|
(464
|
)
|
||
Accumulated other comprehensive loss
|
(46
|
)
|
|
(34
|
)
|
||
Treasury stock, at cost (5,090,726 and 4,683,156 shares, respectively)
|
(338
|
)
|
|
(297
|
)
|
||
Total common shareholders' equity
|
6,190
|
|
|
5,864
|
|
||
Long-term debt
|
8,640
|
|
|
7,569
|
|
||
Redeemable preferred stock at redemption value
|
6
|
|
|
7
|
|
||
Total long-term debt
|
8,646
|
|
|
7,576
|
|
||
Total capitalization
|
14,836
|
|
|
13,440
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Short-term debt
|
474
|
|
|
964
|
|
||
Current portion of long-term debt
|
29
|
|
|
71
|
|
||
Accounts payable
|
149
|
|
|
175
|
|
||
Accrued liabilities
|
490
|
|
|
556
|
|
||
Accrued taxes
|
78
|
|
|
45
|
|
||
Accrued interest
|
96
|
|
|
87
|
|
||
Other
|
172
|
|
|
196
|
|
||
Total current liabilities
|
1,488
|
|
|
2,094
|
|
||
Regulatory and other long-term liabilities:
|
|
|
|
|
|
||
Advances for construction
|
247
|
|
|
252
|
|
||
Deferred income taxes and investment tax credits
|
1,904
|
|
|
1,740
|
|
||
Regulatory liabilities
|
1,849
|
|
|
1,907
|
|
||
Operating lease liabilities
|
94
|
|
|
—
|
|
||
Accrued pension liabilities
|
399
|
|
|
390
|
|
||
Other
|
76
|
|
|
78
|
|
||
Total regulatory and other long-term liabilities
|
4,569
|
|
|
4,367
|
|
||
Contributions in aid of construction
|
1,345
|
|
|
1,322
|
|
||
Commitments and contingencies (See Note 9)
|
|
|
|
|
|
||
Total capitalization and liabilities
|
$
|
22,238
|
|
|
$
|
21,223
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues
|
$
|
1,013
|
|
|
$
|
976
|
|
|
$
|
2,708
|
|
|
$
|
2,590
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Operation and maintenance
|
395
|
|
|
390
|
|
|
1,132
|
|
|
1,085
|
|
||||
Depreciation and amortization
|
144
|
|
|
141
|
|
|
430
|
|
|
404
|
|
||||
General taxes
|
68
|
|
|
71
|
|
|
209
|
|
|
210
|
|
||||
(Gain) on asset dispositions and purchases
|
—
|
|
|
(18
|
)
|
|
(9
|
)
|
|
(20
|
)
|
||||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Total operating expenses, net
|
607
|
|
|
641
|
|
|
1,762
|
|
|
1,736
|
|
||||
Operating income
|
406
|
|
|
335
|
|
|
946
|
|
|
854
|
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest, net
|
(97
|
)
|
|
(89
|
)
|
|
(284
|
)
|
|
(259
|
)
|
||||
Non-operating benefit costs, net
|
4
|
|
|
5
|
|
|
12
|
|
|
10
|
|
||||
Other, net
|
5
|
|
|
4
|
|
|
23
|
|
|
12
|
|
||||
Total other income (expense)
|
(88
|
)
|
|
(80
|
)
|
|
(249
|
)
|
|
(237
|
)
|
||||
Income before income taxes
|
318
|
|
|
255
|
|
|
697
|
|
|
617
|
|
||||
Provision for income taxes
|
78
|
|
|
70
|
|
|
174
|
|
|
164
|
|
||||
Consolidated net income
|
240
|
|
|
185
|
|
|
523
|
|
|
453
|
|
||||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
||||
Net income attributable to common shareholders
|
$
|
240
|
|
|
$
|
187
|
|
|
$
|
523
|
|
|
$
|
455
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share: (a)
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
1.33
|
|
|
$
|
1.04
|
|
|
$
|
2.90
|
|
|
$
|
2.54
|
|
Diluted earnings per share: (a)
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
1.33
|
|
|
$
|
1.04
|
|
|
$
|
2.89
|
|
|
$
|
2.53
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
181
|
|
|
181
|
|
|
181
|
|
|
179
|
|
||||
Diluted
|
181
|
|
|
181
|
|
|
181
|
|
|
180
|
|
(a)
|
Amounts may not calculate due to rounding.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income attributable to common shareholders
|
$
|
240
|
|
|
$
|
187
|
|
|
$
|
523
|
|
|
$
|
455
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Amortization of actuarial loss, net of tax of $0 and $1 for the three months ended September 30, 2019 and 2018, respectively, and $1 and $2 for the nine months ended September 30, 2019 and 2018, respectively
|
1
|
|
|
2
|
|
|
2
|
|
|
6
|
|
||||
Foreign currency translation adjustment
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Unrealized gain (loss) on cash flow hedges, net of tax of $0 and $2 for the three months ended September 30, 2019 and 2018, respectively, and $(5) and $4 for the nine months ended September 30, 2019 and 2018, respectively
|
—
|
|
|
7
|
|
|
(13
|
)
|
|
13
|
|
||||
Net other comprehensive income (loss)
|
1
|
|
|
9
|
|
|
(12
|
)
|
|
19
|
|
||||
Comprehensive income attributable to common shareholders
|
$
|
241
|
|
|
$
|
196
|
|
|
$
|
511
|
|
|
$
|
474
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
523
|
|
|
$
|
453
|
|
Adjustments to reconcile to net cash flows provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
430
|
|
|
404
|
|
||
Deferred income taxes and amortization of investment tax credits
|
163
|
|
|
142
|
|
||
Provision for losses on accounts receivable
|
18
|
|
|
22
|
|
||
Gain on asset dispositions and purchases
|
(9
|
)
|
|
(20
|
)
|
||
Impairment charge
|
—
|
|
|
57
|
|
||
Pension and non-pension postretirement benefits
|
13
|
|
|
19
|
|
||
Other non-cash, net
|
(51
|
)
|
|
27
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables and unbilled revenues
|
(54
|
)
|
|
(70
|
)
|
||
Pension and postretirement benefit contributions
|
(23
|
)
|
|
(11
|
)
|
||
Accounts payable and accrued liabilities
|
(16
|
)
|
|
(23
|
)
|
||
Other assets and liabilities, net
|
(45
|
)
|
|
32
|
|
||
Impact of Freedom Industries settlement activities
|
(4
|
)
|
|
(40
|
)
|
||
Net cash provided by operating activities
|
945
|
|
|
992
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Capital expenditures
|
(1,115
|
)
|
|
(1,136
|
)
|
||
Acquisitions, net of cash acquired
|
(85
|
)
|
|
(381
|
)
|
||
Proceeds from sale of assets
|
17
|
|
|
33
|
|
||
Removal costs from property, plant and equipment retirements, net
|
(71
|
)
|
|
(61
|
)
|
||
Net cash used in investing activities
|
(1,254
|
)
|
|
(1,545
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from long-term debt
|
1,191
|
|
|
1,355
|
|
||
Repayments of long-term debt
|
(153
|
)
|
|
(330
|
)
|
||
Net short-term borrowings with maturities less than three months
|
(491
|
)
|
|
(341
|
)
|
||
Proceeds from issuance of common stock
|
—
|
|
|
183
|
|
||
Proceeds from issuances of employee stock plans and direct stock purchase plan, net of taxes paid of $11 and $7 for the nine months ended September 30, 2019 and 2018, respectively
|
13
|
|
|
8
|
|
||
Advances and contributions for construction, net of refunds of $25 and $20 for the nine months ended September 30, 2019 and 2018, respectively
|
16
|
|
|
15
|
|
||
Debt issuance costs
|
(11
|
)
|
|
(12
|
)
|
||
Make-whole premium on early debt redemption
|
—
|
|
|
(10
|
)
|
||
Dividends paid
|
(263
|
)
|
|
(237
|
)
|
||
Anti-dilutive share repurchases
|
(36
|
)
|
|
(45
|
)
|
||
Net cash provided by financing activities
|
266
|
|
|
586
|
|
||
Net (decrease) increase in cash, cash equivalents and restricted funds
|
(43
|
)
|
|
33
|
|
||
Cash, cash equivalents and restricted funds at beginning of period
|
159
|
|
|
83
|
|
||
Cash, cash equivalents and restricted funds at end of period
|
$
|
116
|
|
|
$
|
116
|
|
Non-cash investing activity:
|
|
|
|
||||
Capital expenditures acquired on account but unpaid as of the end of period
|
$
|
245
|
|
|
$
|
187
|
|
|
Common Stock
|
|
Paid-in-Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Total Shareholders' Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
|
|
|
Shares
|
|
At Cost
|
|
||||||||||||||||||
Balance as of December 31, 2018
|
185.4
|
|
|
$
|
2
|
|
|
$
|
6,657
|
|
|
$
|
(464
|
)
|
|
$
|
(34
|
)
|
|
(4.7
|
)
|
|
$
|
(297
|
)
|
|
$
|
5,864
|
|
Cumulative effect of change in accounting principle
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Stock-based compensation activity
|
0.2
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
3
|
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.3
|
)
|
|
(36
|
)
|
|
(36
|
)
|
||||||
Net other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
Balance as of March 31, 2019
|
185.6
|
|
|
$
|
2
|
|
|
$
|
6,668
|
|
|
$
|
(353
|
)
|
|
$
|
(47
|
)
|
|
(5.1
|
)
|
|
$
|
(338
|
)
|
|
$
|
5,932
|
|
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
170
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Stock-based compensation activity
|
0.1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Dividends ($0.50 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
||||||
Balance as of June 30, 2019
|
185.7
|
|
|
2
|
|
|
6,683
|
|
|
(273
|
)
|
|
(47
|
)
|
|
(5.1
|
)
|
|
(338
|
)
|
|
6,027
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
240
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Stock-based compensation activity
|
0.2
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
Net other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Dividends ($0.50 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
||||||
Balance as of September 30, 2019
|
185.9
|
|
|
$
|
2
|
|
|
$
|
6,695
|
|
|
$
|
(123
|
)
|
|
$
|
(46
|
)
|
|
(5.1
|
)
|
|
$
|
(338
|
)
|
|
$
|
6,190
|
|
|
Common Stock
|
|
Paid-in-Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Loss
|
|
Treasury Stock
|
|
Total Shareholders' Equity
|
||||||||||||||||||
|
Shares
|
|
Par Value
|
|
|
|
|
Shares
|
|
At Cost
|
|
||||||||||||||||||
Balance as of December 31, 2017
|
182.5
|
|
|
$
|
2
|
|
|
$
|
6,432
|
|
|
$
|
(723
|
)
|
|
$
|
(79
|
)
|
|
(4.1
|
)
|
|
$
|
(247
|
)
|
|
$
|
5,385
|
|
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
106
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
106
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Stock-based compensation activity
|
0.2
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(5
|
)
|
|
(1
|
)
|
||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|
(45
|
)
|
|
(45
|
)
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Balance as of March 31, 2018
|
182.7
|
|
|
$
|
2
|
|
|
$
|
6,438
|
|
|
$
|
(617
|
)
|
|
$
|
(75
|
)
|
|
(4.7
|
)
|
|
$
|
(297
|
)
|
|
$
|
5,451
|
|
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
162
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
162
|
|
||||||
Direct stock reinvestment and purchase plan
|
0.1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Employee stock purchase plan
|
0.1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Stock-based compensation activity
|
—
|
|
|
—
|
|
|
10
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Issuance of common stock
|
2.3
|
|
|
—
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183
|
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
Dividends ($0.455 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(81
|
)
|
||||||
Balance as of June 30, 2018
|
185.2
|
|
|
2
|
|
|
6,637
|
|
|
(537
|
)
|
|
(69
|
)
|
|
(4.7
|
)
|
|
(297
|
)
|
|
5,736
|
|
||||||
Net income attributable to common shareholders
|
—
|
|
|
—
|
|
|
—
|
|
|
187
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187
|
|
||||||
Direct stock reinvestment and purchase plan
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Employee stock purchase plan
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Stock-based compensation activity
|
0.1
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||
Dividends ($0.455 declared per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(82
|
)
|
||||||
Balance as of September 30, 2018
|
185.3
|
|
|
$
|
2
|
|
|
$
|
6,647
|
|
|
$
|
(432
|
)
|
|
$
|
(60
|
)
|
|
(4.7
|
)
|
|
$
|
(297
|
)
|
|
$
|
5,860
|
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Effect on the Consolidated Financial Statements
|
Accounting for Leases
|
|
Updated the accounting and disclosure guidance for leasing arrangements. Under this guidance, a lessee is 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 (“ROU”) 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. A package of optional transition practical expedients allows an entity not to reassess under the new guidance: (i) whether any expired or existing contracts as of the adoption date 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 expired or existing land easements as of the adoption date 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
|
|
Modified retrospective
|
|
See Note 12—Leases.
|
Targeted Improvements to Accounting for Hedging Activities
|
|
Updated the accounting and disclosure guidance for hedging activities, allowing 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
|
|
Modified retrospective for adjustments related to the measurement of ineffectiveness for cash flow hedges; prospective for the updated presentation and disclosure requirements.
|
|
The adoption did not have a material impact on the Consolidated Financial Statements.
|
Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
|
|
Designated the OIS rate based on SOFR as an eligible U.S. benchmark interest rate for the purposes of applying hedge accounting.
|
|
January 1, 2019
|
|
Prospective
|
|
The adoption did not have a material impact on the Consolidated Financial Statements.
|
Standard
|
|
Description
|
|
Date of Adoption
|
|
Application
|
|
Estimated Effect on the Consolidated Financial Statements
|
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 the impact on the Consolidated Financial Statements.
|
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 standard will not have a material impact on the Consolidated Financial Statements.
|
|
2019
|
|
2018
|
||||
Cash and cash equivalents
|
$
|
94
|
|
|
$
|
86
|
|
Restricted funds
|
22
|
|
|
29
|
|
||
Restricted funds included in other long-term assets
|
—
|
|
|
1
|
|
||
Cash, cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows
|
$
|
116
|
|
|
$
|
116
|
|
|
Revenues from Contracts with Customers
|
|
Other Revenues Not from Contracts with Customers (a)
|
|
Total Operating Revenues
|
||||||
Regulated Businesses:
|
|
|
|
|
|
||||||
Water services:
|
|
|
|
|
|
||||||
Residential
|
$
|
503
|
|
|
$
|
1
|
|
|
$
|
504
|
|
Commercial
|
188
|
|
|
—
|
|
|
188
|
|
|||
Fire service
|
37
|
|
|
—
|
|
|
37
|
|
|||
Industrial
|
38
|
|
|
—
|
|
|
38
|
|
|||
Public and other
|
64
|
|
|
—
|
|
|
64
|
|
|||
Total water services
|
830
|
|
|
1
|
|
|
831
|
|
|||
Wastewater services:
|
|
|
|
|
|
|
|||||
Residential
|
31
|
|
|
—
|
|
|
31
|
|
|||
Commercial
|
9
|
|
|
—
|
|
|
9
|
|
|||
Industrial
|
1
|
|
|
—
|
|
|
1
|
|
|||
Public and other
|
2
|
|
|
—
|
|
|
2
|
|
|||
Total wastewater services
|
43
|
|
|
—
|
|
|
43
|
|
|||
Miscellaneous utility charges
|
9
|
|
|
—
|
|
|
9
|
|
|||
Alternative revenue programs
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||
Lease contract revenue
|
—
|
|
|
1
|
|
|
1
|
|
|||
Total Regulated Businesses
|
882
|
|
|
1
|
|
|
883
|
|
|||
Market-Based Businesses
|
136
|
|
|
—
|
|
|
136
|
|
|||
Other
|
(5
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|||
Total operating revenues
|
$
|
1,013
|
|
|
$
|
—
|
|
|
$
|
1,013
|
|
(a)
|
Includes revenues associated with provisional rates, alternative revenue programs, lease contracts and intercompany rent, which are outside the scope of Accounting Standards Codification Topic 606, Revenue From Contracts With Customers (“ASC 606”), and accounted for under other existing GAAP.
|
|
Revenues from Contracts with Customers
|
|
Other Revenues Not from Contracts with Customers (a)
|
|
Total Operating Revenues
|
||||||
Regulated Businesses:
|
|
|
|
|
|
||||||
Water services:
|
|
|
|
|
|
||||||
Residential
|
$
|
1,296
|
|
|
$
|
1
|
|
|
$
|
1,297
|
|
Commercial
|
477
|
|
|
—
|
|
|
477
|
|
|||
Fire service
|
106
|
|
|
—
|
|
|
106
|
|
|||
Industrial
|
104
|
|
|
—
|
|
|
104
|
|
|||
Public and other
|
160
|
|
|
—
|
|
|
160
|
|
|||
Total water services
|
2,143
|
|
|
1
|
|
|
2,144
|
|
|||
Wastewater services:
|
|
|
|
|
|
|
|||||
Residential
|
88
|
|
|
—
|
|
|
88
|
|
|||
Commercial
|
23
|
|
|
—
|
|
|
23
|
|
|||
Industrial
|
2
|
|
|
—
|
|
|
2
|
|
|||
Public and other
|
10
|
|
|
—
|
|
|
10
|
|
|||
Total wastewater services
|
123
|
|
|
—
|
|
|
123
|
|
|||
Miscellaneous utility charges
|
27
|
|
|
—
|
|
|
27
|
|
|||
Alternative revenue programs
|
—
|
|
|
23
|
|
|
23
|
|
|||
Lease contract revenue
|
—
|
|
|
6
|
|
|
6
|
|
|||
Total Regulated Businesses
|
2,293
|
|
|
30
|
|
|
2,323
|
|
|||
Market-Based Businesses
|
402
|
|
|
—
|
|
|
402
|
|
|||
Other
|
(16
|
)
|
|
(1
|
)
|
|
(17
|
)
|
|||
Total operating revenues
|
$
|
2,679
|
|
|
$
|
29
|
|
|
$
|
2,708
|
|
(a)
|
Includes revenues associated with provisional rates, 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 as of January 1, 2019
|
$
|
14
|
|
Additions
|
14
|
|
|
Transfers to accounts receivable, net
|
(19
|
)
|
|
Balance as of September 30, 2019
|
$
|
9
|
|
|
|
||
Contract liabilities:
|
|
||
Balance as of January 1, 2019
|
$
|
20
|
|
Additions
|
52
|
|
|
Transfers to operating revenues
|
(42
|
)
|
|
Balance as of September 30, 2019
|
$
|
30
|
|
|
Defined Benefit Pension Plans
|
|
Foreign Currency Translation
|
|
Gain (Loss) on Cash Flow Hedges
|
|
Accumulated Other Comprehensive Loss
|
||||||||||||||||
|
Funded Status
|
|
Amortization of Prior Service Cost
|
|
Amortization of Actuarial Loss
|
|
|
|
|||||||||||||||
Balance as of December 31, 2018
|
$
|
(102
|
)
|
|
$
|
1
|
|
|
$
|
56
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(34
|
)
|
Other comprehensive loss before reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
(13
|
)
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
—
|
|
|
1
|
|
||||||
Net other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
2
|
|
|
(1
|
)
|
|
(13
|
)
|
|
(12
|
)
|
||||||
Balance as of September 30, 2019
|
$
|
(102
|
)
|
|
$
|
1
|
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(46
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of December 31, 2017
|
$
|
(140
|
)
|
|
$
|
1
|
|
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
$
|
(79
|
)
|
Other comprehensive income before reclassifications
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
||||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||||
Net other comprehensive income
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
13
|
|
|
19
|
|
||||||
Balance as of September 30, 2018
|
$
|
(140
|
)
|
|
$
|
1
|
|
|
$
|
55
|
|
|
$
|
1
|
|
|
$
|
23
|
|
|
$
|
(60
|
)
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
American Water Capital Corp.
|
|
Senior Notes—fixed rate
|
|
3.45%-4.15%
|
|
2029-2049
|
|
$
|
1,100
|
|
Other American Water subsidiaries
|
|
Private activity bonds and government funded debt—fixed rate
|
|
0.00%-4.23%
|
|
2021-2048
|
|
91
|
|
|
Total issuances
|
|
|
|
|
|
|
|
$
|
1,191
|
|
Company
|
|
Type
|
|
Rate
|
|
Maturity
|
|
Amount
|
||
American Water Capital Corp.
|
|
Senior Notes—fixed rate
|
|
7.21%
|
|
2019
|
|
$
|
25
|
|
American Water Capital Corp.
|
|
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%-6.20%
|
|
2019-2048
|
|
92
|
|
|
Other American Water subsidiaries
|
|
Mortgage bonds—fixed rate
|
|
5.48%-9.13%
|
|
2019-2021
|
|
28
|
|
|
Other American Water subsidiaries
|
|
Mandatorily redeemable preferred stock
|
|
8.49%
|
|
2036
|
|
1
|
|
|
Other American Water subsidiaries
|
|
Term loan
|
|
5.76%-5.81%
|
|
2021
|
|
6
|
|
|
Total retirements and redemptions
|
|
|
|
|
|
|
|
$
|
153
|
|
Derivative Instrument
|
|
Derivative Designation
|
|
Balance Sheet Classification
|
|
September 30, 2019
|
|
December 31, 2018
|
||||
Liability derivative:
|
|
|
|
|
|
|
|
|
|
|
||
Forward starting swaps
|
|
Cash flow hedge
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
14
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Components of net periodic pension benefit cost:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
7
|
|
|
$
|
8
|
|
|
$
|
21
|
|
|
$
|
25
|
|
Interest cost
|
21
|
|
|
19
|
|
|
62
|
|
|
57
|
|
||||
Expected return on plan assets
|
(23
|
)
|
|
(24
|
)
|
|
(68
|
)
|
|
(73
|
)
|
||||
Amortization of prior service credit
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
||||
Amortization of actuarial loss
|
8
|
|
|
6
|
|
|
24
|
|
|
20
|
|
||||
Net periodic pension benefit cost
|
$
|
12
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
$
|
29
|
|
|
|
|
|
|
|
|
|
||||||||
Components of net periodic other postretirement benefit credit:
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
7
|
|
Interest cost
|
4
|
|
|
5
|
|
|
11
|
|
|
16
|
|
||||
Expected return on plan assets
|
(5
|
)
|
|
(7
|
)
|
|
(14
|
)
|
|
(20
|
)
|
||||
Amortization of prior service credit
|
(9
|
)
|
|
(7
|
)
|
|
(26
|
)
|
|
(16
|
)
|
||||
Amortization of actuarial loss
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Net periodic other postretirement benefit credit
|
$
|
(8
|
)
|
|
$
|
(6
|
)
|
|
$
|
(23
|
)
|
|
$
|
(10
|
)
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
240
|
|
|
$
|
187
|
|
|
$
|
523
|
|
|
$
|
455
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding—Basic
|
181
|
|
|
181
|
|
|
181
|
|
|
179
|
|
||||
Effect of dilutive common stock equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Weighted-average common shares outstanding—Diluted
|
181
|
|
|
181
|
|
|
181
|
|
|
180
|
|
|
Carrying Amount
|
|
At Fair Value as of September 30, 2019
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
10
|
|
Long-term debt (excluding finance lease obligations)
|
8,666
|
|
|
7,717
|
|
|
416
|
|
|
1,664
|
|
|
9,797
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Carrying Amount
|
|
At Fair Value as of December 31, 2018
|
||||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|||||||||||
Preferred stock with mandatory redemption requirements
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
9
|
|
Long-term debt (excluding finance lease obligations)
|
7,638
|
|
|
5,760
|
|
|
433
|
|
|
1,728
|
|
|
7,921
|
|
|
At Fair Value as of September 30, 2019
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Restricted funds
|
$
|
22
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22
|
|
Rabbi trust investments
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
||||
Deposits
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Other investments
|
13
|
|
|
—
|
|
|
—
|
|
|
13
|
|
||||
Total assets
|
54
|
|
|
—
|
|
|
—
|
|
|
54
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Deferred compensation obligations
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total liabilities
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total assets
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
At Fair Value as of 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
|
|
|
For the Three Months Ended September 30, 2019
|
|
For the Nine Months Ended September 30, 2019
|
||||
Cash paid for amounts in lease liabilities (a)
|
$
|
3
|
|
|
$
|
12
|
|
Right-of-use assets obtained in exchange for new operating lease liabilities
|
—
|
|
|
119
|
|
(a)
|
Includes operating and financing cash flows from operating and finance leases.
|
|
As of September 30, 2019
|
|
Weighted-average remaining lease term:
|
|
|
Finance lease
|
7 years
|
|
Operating leases
|
18 years
|
|
|
|
|
Weighted-average discount rate:
|
|
|
Finance lease
|
12
|
%
|
Operating leases
|
4
|
%
|
|
Amount
|
||
2019
|
$
|
4
|
|
2020
|
15
|
|
|
2021
|
13
|
|
|
2022
|
12
|
|
|
2023
|
8
|
|
|
Thereafter
|
106
|
|
|
Total lease payments
|
158
|
|
|
Imputed interest
|
(53
|
)
|
|
Total
|
$
|
105
|
|
|
Amount
|
||
2019
|
$
|
17
|
|
2020
|
15
|
|
|
2021
|
12
|
|
|
2022
|
11
|
|
|
2023
|
6
|
|
|
Thereafter
|
80
|
|
|
Total
|
$
|
141
|
|
|
As of or for the Three Months Ended September 30, 2019
|
||||||||||||||
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
883
|
|
|
$
|
136
|
|
|
$
|
(6
|
)
|
|
$
|
1,013
|
|
Depreciation and amortization
|
132
|
|
|
9
|
|
|
3
|
|
|
144
|
|
||||
Total operating expenses, net
|
505
|
|
|
108
|
|
|
(6
|
)
|
|
607
|
|
||||
Interest, net
|
(74
|
)
|
|
1
|
|
|
(24
|
)
|
|
(97
|
)
|
||||
Income before income taxes
|
313
|
|
|
30
|
|
|
(25
|
)
|
|
318
|
|
||||
Provision for income taxes
|
77
|
|
|
7
|
|
|
(6
|
)
|
|
78
|
|
||||
Net income attributable to common shareholders
|
236
|
|
|
23
|
|
|
(19
|
)
|
|
240
|
|
||||
Total assets
|
19,787
|
|
|
1,060
|
|
|
1,391
|
|
|
22,238
|
|
||||
Capital expenditures
|
399
|
|
|
2
|
|
|
2
|
|
|
403
|
|
|
As of or for the Three Months Ended September 30, 2018
|
||||||||||||||
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
857
|
|
|
$
|
125
|
|
|
$
|
(6
|
)
|
|
$
|
976
|
|
Depreciation and amortization
|
128
|
|
|
9
|
|
|
4
|
|
|
141
|
|
||||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Total operating expenses, net
|
505
|
|
|
139
|
|
|
(3
|
)
|
|
641
|
|
||||
Interest, net
|
(71
|
)
|
|
—
|
|
|
(18
|
)
|
|
(89
|
)
|
||||
Income before income taxes
|
288
|
|
|
(14
|
)
|
|
(19
|
)
|
|
255
|
|
||||
Provision for income taxes
|
76
|
|
|
(5
|
)
|
|
(1
|
)
|
|
70
|
|
||||
Net income attributable to common shareholders
|
213
|
|
|
(7
|
)
|
|
(19
|
)
|
|
187
|
|
||||
Total assets
|
18,415
|
|
|
973
|
|
|
1,492
|
|
|
20,880
|
|
||||
Capital expenditures
|
373
|
|
|
2
|
|
|
22
|
|
|
397
|
|
|
As of or for the Nine Months Ended September 30, 2019
|
||||||||||||||
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,323
|
|
|
$
|
402
|
|
|
$
|
(17
|
)
|
|
$
|
2,708
|
|
Depreciation and amortization
|
394
|
|
|
26
|
|
|
10
|
|
|
430
|
|
||||
Total operating expenses, net
|
1,455
|
|
|
322
|
|
|
(15
|
)
|
|
1,762
|
|
||||
Interest, net
|
(221
|
)
|
|
3
|
|
|
(66
|
)
|
|
(284
|
)
|
||||
Income before income taxes
|
671
|
|
|
86
|
|
|
(60
|
)
|
|
697
|
|
||||
Provision for income taxes
|
169
|
|
|
22
|
|
|
(17
|
)
|
|
174
|
|
||||
Net income attributable to common shareholders
|
502
|
|
|
64
|
|
|
(43
|
)
|
|
523
|
|
||||
Total assets
|
19,787
|
|
|
1,060
|
|
|
1,391
|
|
|
22,238
|
|
||||
Capital expenditures
|
1,092
|
|
|
10
|
|
|
13
|
|
|
1,115
|
|
|
As of or for the Nine Months Ended September 30, 2018
|
||||||||||||||
|
Regulated Businesses
|
|
Market-Based Businesses
|
|
Other
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
2,267
|
|
|
$
|
339
|
|
|
$
|
(16
|
)
|
|
$
|
2,590
|
|
Depreciation and amortization
|
373
|
|
|
20
|
|
|
11
|
|
|
404
|
|
||||
Impairment charge
|
—
|
|
|
57
|
|
|
—
|
|
|
57
|
|
||||
Total operating expenses, net
|
1,420
|
|
|
323
|
|
|
(7
|
)
|
|
1,736
|
|
||||
Interest, net
|
(209
|
)
|
|
3
|
|
|
(53
|
)
|
|
(259
|
)
|
||||
Income before income taxes
|
656
|
|
|
20
|
|
|
(59
|
)
|
|
617
|
|
||||
Provision for income taxes
|
173
|
|
|
4
|
|
|
(13
|
)
|
|
164
|
|
||||
Net income attributable to common shareholders
|
484
|
|
|
18
|
|
|
(47
|
)
|
|
455
|
|
||||
Total assets
|
18,415
|
|
|
973
|
|
|
1,492
|
|
|
20,880
|
|
||||
Capital expenditures
|
1,050
|
|
|
9
|
|
|
77
|
|
|
1,136
|
|
•
|
During October 2019, the Company closed on the acquisitions of three regulated water and wastewater systems for a total aggregate purchase price of $137 million, highlighted by the acquisition of the water assets of Steelton Borough, Pennsylvania and Lake Station, Indiana, and the wastewater assets of the Township of Exeter, Pennsylvania. The acquired systems currently serve approximately 14,700 customers.
|
•
|
The Military Services Group (“MSG”) was awarded contracts for ownership, operation and maintenance of the water and wastewater systems at Joint Base San Antonio in Texas, effective September 26, 2019, and the United States Military Academy at West Point, New York, effective September 30, 2019. The contract awards include estimated aggregate revenues of approximately $967 million over a 50-year period, subject to annual economic price adjustments, and expand MSG’s footprint to 16 installations across the country. American Water was selected for both of the two water and wastewater utility privatization contracts awarded by the Department of Defense in fiscal year 2019, as discussed above.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Diluted earnings per share (GAAP):
|
|
|
|
|
|
|
|
||||||||
Net income attributable to common shareholders
|
$
|
1.33
|
|
|
$
|
1.04
|
|
|
$
|
2.89
|
|
|
$
|
2.53
|
|
Adjustments:
|
|
|
|
|
|
|
|
||||||||
Freedom Industries settlement activities
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|
(0.11
|
)
|
||||
Income tax impact
|
—
|
|
|
—
|
|
|
0.01
|
|
|
0.03
|
|
||||
Net adjustments
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
|
(0.08
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Gain on sale of portion of Contract Services Group contracts
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
|
(0.08
|
)
|
||||
Income tax impact
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
||||
Net adjustment
|
—
|
|
|
(0.06
|
)
|
|
—
|
|
|
(0.06
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Impairment charge
|
—
|
|
|
0.31
|
|
|
—
|
|
|
0.31
|
|
||||
Income tax impact
|
—
|
|
|
(0.08
|
)
|
|
—
|
|
|
(0.08
|
)
|
||||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(0.01
|
)
|
|
—
|
|
|
(0.01
|
)
|
||||
Net adjustment
|
—
|
|
|
0.22
|
|
|
—
|
|
|
0.22
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total net adjustments
|
—
|
|
|
0.16
|
|
|
(0.01
|
)
|
|
0.08
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted diluted earnings per share (non-GAAP)
|
$
|
1.33
|
|
|
$
|
1.20
|
|
|
$
|
2.88
|
|
|
$
|
2.61
|
|
•
|
$1.17 billion, of which the majority was in the Regulated Businesses for infrastructure improvements; and
|
•
|
$85 million for acquisitions in the Regulated Businesses, which added approximately 32,200 water and wastewater customers through September 30, 2019.
|
•
|
On October 9, 2019, the Company’s Pennsylvania subsidiary acquired the water assets of the Steelton Borough, Pennsylvania for $22 million. This system currently serves approximately 2,400 customers.
|
•
|
On October 22, 2019, the Company’s Indiana subsidiary acquired the water assets of Lake Station, Indiana for $21 million. This system currently serves approximately 3,300 customers.
|
•
|
On October 24, 2019, the Company’s Pennsylvania subsidiary also acquired the wastewater assets of the Township of Exeter, Pennsylvania for $94 million. This system currently serves approximately 9,000 customers.
|
•
|
Joint Base San Antonio is comprised of Randolph Air Force Base, Fort Sam Houston, Camp Bullis and Lackland Air Force Base. The installation spans 46,539 acres, across 11 geographically separated parcels of land, and directly or indirectly supports over 187,000 jobs across the state of Texas. The contract award includes estimated revenues of approximately $448 million over a 50-year period, subject to an annual economic price adjustment.
|
•
|
The United States Military Academy is located at West Point, New York, the oldest continuously operated Army post in the United States. The institution’s campus, central post and training areas expand across nearly16,000 acres, and is home to a student body of approximately 4,400 cadets. The total contract award includes estimated revenues of approximately $519 million over a 50-year period, subject to an annual economic price adjustment.
|
|
For the Twelve Months Ended September 30,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Total operation and maintenance expenses (a)
|
$
|
1,526
|
|
|
$
|
1,451
|
|
Less:
|
|
|
|
||||
Operation and maintenance expenses—Market-Based Businesses
|
398
|
|
|
346
|
|
||
Operation and maintenance expenses—Other (a)
|
(49
|
)
|
|
(40
|
)
|
||
Total operation and maintenance expenses—Regulated Businesses (a)
|
1,177
|
|
|
1,145
|
|
||
Less:
|
|
|
|
||||
Regulated purchased water expenses
|
133
|
|
|
134
|
|
||
Allocation of non-operation and maintenance expenses
|
32
|
|
|
30
|
|
||
Impact of Freedom Industries settlement activities (b)
|
(4
|
)
|
|
(20
|
)
|
||
Adjusted operation and maintenance expenses—Regulated Businesses (i)
|
$
|
1,016
|
|
|
$
|
1,001
|
|
|
|
|
|
||||
Total operating revenues
|
$
|
3,558
|
|
|
$
|
3,410
|
|
Less:
|
|
|
|
||||
Pro forma adjustment for impact of the TCJA (c)
|
—
|
|
|
40
|
|
||
Total pro forma operating revenues
|
3,558
|
|
|
3,370
|
|
||
Less:
|
|
|
|
||||
Operating revenues—Market-Based Businesses
|
540
|
|
|
455
|
|
||
Operating revenues—Other
|
(22
|
)
|
|
(22
|
)
|
||
Total pro forma operating revenues—Regulated Businesses
|
3,040
|
|
|
2,937
|
|
||
Less:
|
|
|
|
||||
Regulated purchased water revenues (d)
|
133
|
|
|
134
|
|
||
Adjusted pro forma operating revenues—Regulated Businesses (ii)
|
$
|
2,907
|
|
|
$
|
2,803
|
|
|
|
|
|
||||
Adjusted O&M efficiency ratio—Regulated Businesses (i) / (ii)
|
35.0
|
%
|
|
35.7
|
%
|
(a)
|
Includes the impact of the Company’s adoption of ASU 2017-07 on January 1, 2018.
|
(b)
|
Includes the impact of a settlement in 2018 with one of the Company’s general liability insurance carriers, and the reduction of the liability related to the Freedom Industries chemical spill in the first quarter of 2019.
|
(c)
|
Includes the estimated impact of the TCJA on operating revenues for the 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.
|
(d)
|
The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses.
|
(In millions)
|
During the Three Months Ended September 30, 2019
|
|
During the Nine Months Ended September 30, 2019
|
||||
General rate cases by state:
|
|
|
|
||||
Indiana (a)
|
$
|
4
|
|
|
$
|
4
|
|
Kentucky (effective June 28, 2019)
|
—
|
|
|
13
|
|
||
California (b)
|
—
|
|
|
4
|
|
||
New York (c)
|
—
|
|
|
4
|
|
||
West Virginia (effective February 25, 2019)
|
—
|
|
|
19
|
|
||
Maryland (effective February 5, 2019)
|
—
|
|
|
1
|
|
||
Total general rate cases
|
$
|
4
|
|
|
$
|
45
|
|
|
|
|
|
||||
Infrastructure surcharges by state:
|
|
|
|
||||
Tennessee (effective September 1, 2019)
|
$
|
1
|
|
|
$
|
1
|
|
New York (effective August 1, 2019)
|
2
|
|
|
2
|
|
||
New Jersey (effective July 1, 2019)
|
15
|
|
|
15
|
|
||
Pennsylvania (effective July 1, 2019 and April 1, 2019)
|
3
|
|
|
5
|
|
||
Missouri (effective June 24, 2019)
|
—
|
|
|
9
|
|
||
Illinois (effective January 1, 2019)
|
—
|
|
|
8
|
|
||
West Virginia (effective January 1, 2019)
|
—
|
|
|
2
|
|
||
Total infrastructure surcharges
|
$
|
21
|
|
|
$
|
42
|
|
(a)
|
The Company’s Indiana subsidiary received an order approving a joint settlement agreement with all major parties with respect to its general rate case filing, authorizing annualized incremental revenues of $4 million in the first rate year, effective July 1, 2019, and $13 million in the second rate year, effective approximately May 1, 2020.
|
(b)
|
The Company’s California subsidiary received approval for the second rate year (2019) step increase associated with its most recent general rate case authorization, effective May 11, 2019.
|
(c)
|
The Company’s New York subsidiary implemented its third step increase associated with its most recent general rate case authorization, effective April 1, 2019.
|
(In millions)
|
Date Filed
|
|
Amount
|
||
Pending infrastructure surcharge filings by state:
|
|
|
|
||
Missouri
|
August 26, 2019
|
|
$
|
6
|
|
West Virginia
|
June 28, 2019
|
|
4
|
|
|
Total pending infrastructure surcharge filings
|
|
|
$
|
10
|
|
•
|
In Illinois, the Governor signed a 10-year extension of the System’s Viability Act, Illinois’ fair market value legislation. In addition to extending the Act, the updated law removes the previous size restriction and allows all municipalities to take advantage of the benefits of the program.
|
•
|
Indiana Senate Enrolled Act 472 allows non-municipal utilities to benefit from full appraisal recovery of their assets in a sale.
|
•
|
Indiana House Enrolled Act 1406 established the first state appropriation for water infrastructure investment at $20 million per year.
|
•
|
Indiana Senate Enrolled Act 4 extends leveling legislation to require biannual water loss audits and establishes the state revolving fund administrator as the central coordinator for water issues in the state.
|
•
|
In Pennsylvania, House Bill 751, now Act 53 of 2019, allows water and wastewater utilities responsible for funding the income taxes on taxable contributions and advances to record the income taxes paid in accumulated deferred income taxes for accounting and ratemaking purposes.
|
•
|
In West Virginia, House Bill 117 allows qualified low income customers to apply for a 20% discount on their wastewater bill.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating revenues
|
$
|
1,013
|
|
|
$
|
976
|
|
|
$
|
37
|
|
|
$
|
2,708
|
|
|
$
|
2,590
|
|
|
$
|
118
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operation and maintenance
|
395
|
|
|
390
|
|
|
5
|
|
|
1,132
|
|
|
1,085
|
|
|
47
|
|
||||||
Depreciation and amortization
|
144
|
|
|
141
|
|
|
3
|
|
|
430
|
|
|
404
|
|
|
26
|
|
||||||
General taxes
|
68
|
|
|
71
|
|
|
(3
|
)
|
|
209
|
|
|
210
|
|
|
(1
|
)
|
||||||
(Gain) on asset dispositions and purchases
|
—
|
|
|
(18
|
)
|
|
18
|
|
|
(9
|
)
|
|
(20
|
)
|
|
11
|
|
||||||
Impairment charge
|
—
|
|
|
57
|
|
|
(57
|
)
|
|
—
|
|
|
57
|
|
|
(57
|
)
|
||||||
Total operating expenses, net
|
607
|
|
|
641
|
|
|
(34
|
)
|
|
1,762
|
|
|
1,736
|
|
|
26
|
|
||||||
Operating income
|
406
|
|
|
335
|
|
|
71
|
|
|
946
|
|
|
854
|
|
|
92
|
|
||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest, net
|
(97
|
)
|
|
(89
|
)
|
|
(8
|
)
|
|
(284
|
)
|
|
(259
|
)
|
|
(25
|
)
|
||||||
Non-operating benefit costs, net
|
4
|
|
|
5
|
|
|
(1
|
)
|
|
12
|
|
|
10
|
|
|
2
|
|
||||||
Other, net
|
5
|
|
|
4
|
|
|
1
|
|
|
23
|
|
|
12
|
|
|
11
|
|
||||||
Total other income (expense)
|
(88
|
)
|
|
(80
|
)
|
|
(8
|
)
|
|
(249
|
)
|
|
(237
|
)
|
|
(12
|
)
|
||||||
Income before income taxes
|
318
|
|
|
255
|
|
|
63
|
|
|
697
|
|
|
617
|
|
|
80
|
|
||||||
Provision for income taxes
|
78
|
|
|
70
|
|
|
8
|
|
|
174
|
|
|
164
|
|
|
10
|
|
||||||
Consolidated net income
|
240
|
|
|
185
|
|
|
55
|
|
|
523
|
|
|
453
|
|
|
70
|
|
||||||
Net loss attributable to noncontrolling interest
|
—
|
|
|
(2
|
)
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
2
|
|
||||||
Net income attributable to common shareholders
|
$
|
240
|
|
|
$
|
187
|
|
|
$
|
53
|
|
|
$
|
523
|
|
|
$
|
455
|
|
|
$
|
68
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating revenues
|
$
|
883
|
|
|
$
|
857
|
|
|
$
|
26
|
|
|
$
|
2,323
|
|
|
$
|
2,267
|
|
|
$
|
56
|
|
Operation and maintenance
|
310
|
|
|
314
|
|
|
(4
|
)
|
|
875
|
|
|
856
|
|
|
19
|
|
||||||
Depreciation and amortization
|
132
|
|
|
128
|
|
|
4
|
|
|
394
|
|
|
373
|
|
|
21
|
|
||||||
General taxes
|
64
|
|
|
66
|
|
|
(2
|
)
|
|
195
|
|
|
197
|
|
|
(2
|
)
|
||||||
(Gain) on asset dispositions and purchases
|
(1
|
)
|
|
(3
|
)
|
|
2
|
|
|
(9
|
)
|
|
(6
|
)
|
|
(3
|
)
|
||||||
Other income (expenses)
|
(64
|
)
|
|
(64
|
)
|
|
—
|
|
|
(196
|
)
|
|
(191
|
)
|
|
(5
|
)
|
||||||
Income before income taxes
|
313
|
|
|
288
|
|
|
25
|
|
|
671
|
|
|
656
|
|
|
15
|
|
||||||
Provision for income taxes
|
77
|
|
|
76
|
|
|
1
|
|
|
169
|
|
|
173
|
|
|
(4
|
)
|
||||||
Net income attributable to common shareholders
|
236
|
|
|
213
|
|
|
23
|
|
|
502
|
|
|
484
|
|
|
18
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Water services:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Residential
|
$
|
504
|
|
|
$
|
482
|
|
|
$
|
22
|
|
|
$
|
1,297
|
|
|
$
|
1,260
|
|
|
$
|
37
|
|
Commercial
|
188
|
|
|
183
|
|
|
5
|
|
|
477
|
|
|
468
|
|
|
9
|
|
||||||
Fire service
|
37
|
|
|
35
|
|
|
2
|
|
|
106
|
|
|
102
|
|
|
4
|
|
||||||
Industrial
|
38
|
|
|
40
|
|
|
(2
|
)
|
|
104
|
|
|
105
|
|
|
(1
|
)
|
||||||
Public and other
|
63
|
|
|
61
|
|
|
2
|
|
|
183
|
|
|
173
|
|
|
10
|
|
||||||
Total water services
|
830
|
|
|
801
|
|
|
29
|
|
|
2,167
|
|
|
2,108
|
|
|
59
|
|
||||||
Wastewater services
|
43
|
|
|
41
|
|
|
2
|
|
|
123
|
|
|
117
|
|
|
6
|
|
||||||
Other (a)
|
10
|
|
|
15
|
|
|
(5
|
)
|
|
33
|
|
|
42
|
|
|
(9
|
)
|
||||||
Total operating revenues
|
$
|
883
|
|
|
$
|
857
|
|
|
$
|
26
|
|
|
$
|
2,323
|
|
|
$
|
2,267
|
|
|
$
|
56
|
|
(a)
|
Includes other operating revenues consisting primarily of miscellaneous utility charges, fees and rents.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||
(Gallons in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Billed water services volumes:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential
|
50,962
|
|
|
52,963
|
|
|
(2,001
|
)
|
|
125,835
|
|
|
131,201
|
|
|
(5,366
|
)
|
Commercial
|
24,207
|
|
|
24,914
|
|
|
(707
|
)
|
|
60,840
|
|
|
62,428
|
|
|
(1,588
|
)
|
Industrial
|
10,423
|
|
|
10,752
|
|
|
(329
|
)
|
|
28,232
|
|
|
29,647
|
|
|
(1,415
|
)
|
Fire service, public and other
|
14,541
|
|
|
14,504
|
|
|
37
|
|
|
37,751
|
|
|
38,427
|
|
|
(676
|
)
|
Billed water services volumes
|
100,133
|
|
|
103,133
|
|
|
(3,000
|
)
|
|
252,658
|
|
|
261,703
|
|
|
(9,045
|
)
|
•
|
$26 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment in various states; a
|
•
|
$6 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; and a
|
•
|
$5 million increase in other operating revenues largely driven by a settlement agreement in the Company’s New York subsidiary during the third quarter of 2018; partially offset by a
|
•
|
$6 million decrease from the impacts of the TCJA, principally in the Company’s West Virginia subsidiary, where, during the third quarter of 2018, it was authorized to use a portion of the income tax savings resulting from the TCJA for accelerated recovery of certain regulatory assets, resulting in an increase in operating revenues and operation and maintenance expense during 2018; and a
|
•
|
$3 million decrease from lower water services demand and ongoing customer usage reductions from conservation.
|
•
|
$86 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment in various states; and a
|
•
|
$12 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; partially offset by a
|
•
|
$32 million decrease from lower water services demand, including $13 million driven by unusually wet weather conditions experienced in the Northeast and Midwest during the second quarter of 2019, and ongoing customer usage reductions from conservation; and a
|
•
|
$10 million decrease from the impacts of the TCJA, principally from the Company’s Missouri subsidiary’s 2018 general rate case decision which authorized the adjustment of customer rates, effective May 28, 2018, to reflect the income tax savings resulting from the TCJA.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Production costs
|
$
|
95
|
|
|
$
|
92
|
|
|
$
|
3
|
|
|
$
|
239
|
|
|
$
|
238
|
|
|
$
|
1
|
|
Employee-related costs
|
116
|
|
|
116
|
|
|
—
|
|
|
348
|
|
|
343
|
|
|
5
|
|
||||||
Operating supplies and services
|
57
|
|
|
60
|
|
|
(3
|
)
|
|
168
|
|
|
161
|
|
|
7
|
|
||||||
Maintenance materials and supplies
|
17
|
|
|
17
|
|
|
—
|
|
|
54
|
|
|
56
|
|
|
(2
|
)
|
||||||
Customer billing and accounting
|
15
|
|
|
17
|
|
|
(2
|
)
|
|
39
|
|
|
43
|
|
|
(4
|
)
|
||||||
Other
|
10
|
|
|
12
|
|
|
(2
|
)
|
|
27
|
|
|
15
|
|
|
12
|
|
||||||
Total
|
$
|
310
|
|
|
$
|
314
|
|
|
$
|
(4
|
)
|
|
$
|
875
|
|
|
$
|
856
|
|
|
$
|
19
|
|
•
|
$3 million decrease in operating supplies and services from lower contracted services during 2019, and costs incurred during 2018 related to a settlement agreement in the Company’s New York subsidiary and condemnation proceedings in Monterey, California; a
|
•
|
$2 million decrease in customer billing and accounting from a decrease in customer uncollectible expense; and a
|
•
|
$2 million decrease in other operation and maintenance expense from the impacts of the TCJA, where, during the third quarter of 2018, the Company’s West Virginia subsidiary was authorized to use a portion of the income tax savings resulting from the TCJA for accelerated recovery of certain regulatory assets, resulting in an increase in operating revenues and operation and maintenance expense during 2018; partially offset by a
|
•
|
$3 million increase in production costs from purchased water and chemical prices and usage increases.
|
•
|
$12 million increase in other operation and maintenance expense principally due to a $20 million benefit recorded in the second quarter of 2018, resulting from an insurance settlement related to the Freedom Industries chemical spill in West Virginia, offset in part by (i) a $4 million reduction to the liability related to the Freedom Industries chemical spill, recorded in the first quarter of 2019, and (ii) the accelerated recovery of certain regulatory assets in the Company’s West Virginia subsidiary during 2018, as discussed above; a
|
•
|
$7 million increase in operating supplies and services from higher software licensing costs, and expenses related to various projects in the Company’s California subsidiary, offset in part by costs in incurred during 2018 related to a settlement agreement in the Company’s New York subsidiary, as discussed above; and a
|
•
|
$5 million increase in employee-related costs from higher headcount and related compensation expense in support of the growth in the business, offset in part by lower pension service costs; partially offset by a
|
•
|
$4 million decrease in customer billing and accounting from a decrease in customer uncollectible expense.
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
||||||||||||
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating revenues
|
$
|
136
|
|
|
$
|
125
|
|
|
$
|
11
|
|
|
$
|
402
|
|
|
$
|
339
|
|
|
$
|
63
|
|
Operation and maintenance
|
98
|
|
|
87
|
|
|
11
|
|
|
292
|
|
|
256
|
|
|
36
|
|
||||||
Depreciation and amortization
|
9
|
|
|
9
|
|
|
—
|
|
|
26
|
|
|
20
|
|
|
6
|
|
||||||
(Gain) on asset dispositions and purchases
|
—
|
|
|
(14
|
)
|
|
14
|
|
|
—
|
|
|
(13
|
)
|
|
13
|
|
||||||
Impairment charge
|
—
|
|
|
57
|
|
|
(57
|
)
|
|
—
|
|
|
57
|
|
|
(57
|
)
|
||||||
Income before income taxes
|
30
|
|
|
(14
|
)
|
|
44
|
|
|
86
|
|
|
20
|
|
|
66
|
|
||||||
Provision for income taxes
|
7
|
|
|
(5
|
)
|
|
12
|
|
|
22
|
|
|
4
|
|
|
18
|
|
||||||
Net income attributable to common shareholders
|
23
|
|
|
(7
|
)
|
|
30
|
|
|
64
|
|
|
18
|
|
|
46
|
|
•
|
$8 million increase in MSG from the addition of two new contracts in 2018 (Wright-Patterson Air Force Base and Fort Leonard Wood) and higher capital upgrades at Picatinny Arsenal; a
|
•
|
$6 million increase in HOS from contract growth, including $2 million from the acquisition of Pivotal in the second quarter of 2018; partially offset by a
|
•
|
$4 million decrease in CSG from the sale of the majority of its O&M contracts in the third quarter of 2018.
|
•
|
$70 million increase in HOS from contract growth, including $61 million from the acquisition of Pivotal in the second quarter of 2018; and a
|
•
|
$15 million increase in MSG from the addition of two new contracts in 2018, as discussed above; partially offset by a
|
•
|
$17 million decrease in CSG from the sale of the majority of its O&M contracts in the third quarter of 2018; and a
|
•
|
$7 million decrease in Keystone from the exit of the construction business in the third quarter of 2018.
|
•
|
$8 million increase in HOS from the acquisition of Pivotal in the second quarter of 2018, as well as contract growth and increased claims expense; and a
|
•
|
$6 million increase in MSG from the addition of two new military contracts in 2018 and higher capital upgrades at Picatinny Arsenal, as discussed above; partially offset by a
|
•
|
$3 million decrease in CSG from the sale of the majority of its O&M contracts in the third quarter of 2018.
|
•
|
$48 million increase in HOS from the acquisition of Pivotal in the second quarter of 2018, as well as contract growth and increased claims expense; and a
|
•
|
$10 million increase in MSG from the addition of two new military contracts in 2018, as discussed above; partially offset by a
|
•
|
$16 million decrease in CSG from the sale of the majority of its O&M contracts in the third quarter of 2018; and a
|
•
|
$9 million decrease in Keystone from the exit of the construction business in the third quarter of 2018.
|
|
For the Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
(In millions)
|
|
|
|
||||
Net income
|
$
|
523
|
|
|
$
|
453
|
|
Add (less):
|
|
|
|
||||
Depreciation and amortization
|
430
|
|
|
404
|
|
||
Deferred income taxes and amortization of investment tax credits
|
163
|
|
|
142
|
|
||
Non-cash impairment charge
|
—
|
|
|
57
|
|
||
Other non-cash activities (a)
|
(29
|
)
|
|
48
|
|
||
Changes in working capital (b)
|
(85
|
)
|
|
(61
|
)
|
||
Settlement of cash flow hedges
|
(30
|
)
|
|
—
|
|
||
Pension and postretirement healthcare contributions
|
(23
|
)
|
|
(11
|
)
|
||
Impact of Freedom Industries settlement activities
|
(4
|
)
|
|
(40
|
)
|
||
Net cash flows provided by operations
|
$
|
945
|
|
|
$
|
992
|
|
(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, less the settlement of cash flow hedges.
|
|
For the Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
(In millions)
|
|
|
|
||||
Net capital expenditures
|
$
|
(1,115
|
)
|
|
$
|
(1,136
|
)
|
Acquisitions
|
(85
|
)
|
|
(381
|
)
|
||
Other investing activities, net (a)
|
(54
|
)
|
|
(28
|
)
|
||
Net cash flows used in investing activities
|
$
|
(1,254
|
)
|
|
$
|
(1,545
|
)
|
(a)
|
Includes removal costs from property, plant and equipment retirements and proceeds from sale of assets.
|
|
For the Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
(In millions)
|
|
|
|
||||
Proceeds from long-term debt
|
$
|
1,191
|
|
|
$
|
1,355
|
|
Repayments of long-term debt
|
(153
|
)
|
|
(330
|
)
|
||
Net proceeds from short-term borrowings
|
(491
|
)
|
|
(341
|
)
|
||
Proceeds from issuance of common stock
|
—
|
|
|
183
|
|
||
Dividends paid
|
(263
|
)
|
|
(237
|
)
|
||
Anti-dilutive stock repurchases
|
(36
|
)
|
|
(45
|
)
|
||
Other financing activities, net (a)
|
18
|
|
|
1
|
|
||
Net cash flows provided by financing activities
|
$
|
266
|
|
|
$
|
586
|
|
(a)
|
Includes proceeds from issuances of common stock under various employee stock plans and the dividend reinvestment plan, net of taxes paid, advances and contributions for construction, net of refunds, and debt issuance costs.
|
|
Credit Facility Commitments (a)
|
|
Available Credit Facility Capacity (a)
|
|
Letter of Credit Sublimit
|
|
Available Letter of Credit Capacity
|
|
Commercial Paper Limit
|
|
Available Commercial Paper Capacity
|
||||||||||||
(In millions)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
September 30, 2019
|
$
|
2,262
|
|
|
$
|
2,176
|
|
|
$
|
150
|
|
|
$
|
70
|
|
|
$
|
2,100
|
|
|
$
|
1,626
|
|
(a)
|
Includes amounts related to the revolving credit facility for Keystone. As of September 30, 2019, the total commitment under the Keystone revolving credit facility was $12 million, of which $6 million was available for borrowing, subject to compliance with a collateral base calculation.
|
Securities
|
|
Moody's Investors Service
|
|
Standard & Poor's Ratings Service
|
Rating outlook
|
|
Stable
|
|
Stable
|
Senior unsecured debt
|
|
Baa1
|
|
A
|
Commercial paper
|
|
P-2
|
|
A-1
|
Exhibit Number
|
|
Exhibit Description
|
3.1
|
|
|
3.2
|
|
|
10.1.1
|
|
|
10.1.2
|
|
|
*10.1.3
|
|
|
*31.1
|
|
|
*31.2
|
|
|
**32.1
|
|
|
**32.2
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
104
|
|
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
|
AMERICAN WATER WORKS COMPANY, INC.
|
|
(REGISTRANT)
|
By
|
/s/ SUSAN N. STORY
|
|
Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer)
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By
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/s/ M. SUSAN HARDWICK
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M. Susan Hardwick
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
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By
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/s/ MELISSA K. WIKLE
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Melissa K. Wikle
Vice President and Controller
(Principal Accounting Officer)
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By:
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/s/ SUSAN N. STORY
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Susan N. Story
|
|
President and Chief Executive Officer
(Principal Executive Officer)
|
By:
|
/s/ M. SUSAN HARDWICK
|
|
M. Susan Hardwick
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
By:
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/s/ SUSAN N. STORY
|
|
Susan N. Story
President and Chief Executive Officer
(Principal Executive Officer)
|
|
October 30, 2019
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By:
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/s/ M. SUSAN HARDWICK
|
|
M. Susan Hardwick
|
|
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
October 30, 2019
|