☒ | 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.) |
1025 Laurel Oak Road, Voorhees, NJ | 08043 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
(Do not check if a smaller reporting company) | Emerging growth company | ☐ |
Class | Outstanding as of July 26, 2018 | |
Common Stock, $0.01 par value per share | 180,492,198 shares (excludes 4,683,156 treasury shares as of July 26, 2018) |
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• | 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 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; |
• | 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, including matters related to the Freedom Industries chemical spill in West Virginia and the approved global class action settlement related to this chemical spill; |
• | our ability to appropriately maintain current infrastructure, including our operational and information technology (“IT”) systems, and manage the expansion of our business; |
• | exposure or infiltration of our critical infrastructure, operational technology and IT systems, including the disclosure of sensitive or confidential information contained therein, through physical or cyber attacks or other means; |
• | our ability to obtain permits and other approvals for projects; |
• | changes in our capital requirements; |
• | our ability to control operating expenses and to achieve efficiencies in our operations; |
• | the intentional or unintentional actions of a third party, including contamination of our water supplies or water provided to our customers; |
• | our ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our operations; |
• | our ability to successfully meet growth projections for our business and capitalize on growth opportunities, including our 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 our 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 our operations; |
• | our ability to maintain safe work sites; |
• | 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 service and management solutions that are 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 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; |
• | fluctuations in the value of benefit plan assets and liabilities that could increase our 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 our ability to utilize our U.S. federal and state income tax net operating loss (“NOL”) carryforwards; |
• | migration of customers into or out of our service territories; |
• | 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; |
• | 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; |
• | the incurrence of impairment charges related to our goodwill or other assets; |
• | labor actions, including work stoppages and strikes; |
• | our 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. |
June 30, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Property, plant and equipment | $ | 22,361 | $ | 21,716 | |||
Accumulated depreciation | (5,584 | ) | (5,470 | ) | |||
Property, plant and equipment, net | 16,777 | 16,246 | |||||
Current assets: | |||||||
Cash and cash equivalents | 68 | 55 | |||||
Restricted funds | 27 | 27 | |||||
Accounts receivable, net | 324 | 272 | |||||
Unbilled revenues | 212 | 212 | |||||
Materials and supplies | 42 | 41 | |||||
Other | 160 | 113 | |||||
Total current assets | 833 | 720 | |||||
Regulatory and other long-term assets: | |||||||
Regulatory assets | 1,069 | 1,061 | |||||
Goodwill | 1,621 | 1,379 | |||||
Intangible assets | 101 | 9 | |||||
Other | 70 | 67 | |||||
Total regulatory and other long-term assets | 2,861 | 2,516 | |||||
Total assets | $ | 20,471 | $ | 19,482 |
June 30, 2018 | December 31, 2017 | ||||||
CAPITALIZATION AND LIABILITIES | |||||||
Capitalization: | |||||||
Common stock ($0.01 par value, 500,000,000 shares authorized, 185,173,388 and 182,508,564 shares issued, respectively) | $ | 2 | $ | 2 | |||
Paid-in-capital | 6,637 | 6,432 | |||||
Accumulated deficit | (537 | ) | (723 | ) | |||
Accumulated other comprehensive loss | (69 | ) | (79 | ) | |||
Treasury stock, at cost (4,683,156 and 4,064,010 shares, respectively) | (297 | ) | (247 | ) | |||
Total common stockholders' equity | 5,736 | 5,385 | |||||
Long-term debt | 6,345 | 6,490 | |||||
Redeemable preferred stock at redemption value | 7 | 8 | |||||
Total long-term debt | 6,352 | 6,498 | |||||
Total capitalization | 12,088 | 11,883 | |||||
Current liabilities: | |||||||
Short-term debt | 1,649 | 905 | |||||
Current portion of long-term debt | 364 | 322 | |||||
Accounts payable | 139 | 195 | |||||
Accrued liabilities | 530 | 630 | |||||
Taxes accrued | 48 | 33 | |||||
Interest accrued | 69 | 73 | |||||
Other | 152 | 167 | |||||
Total current liabilities | 2,951 | 2,325 | |||||
Regulatory and other long-term liabilities: | |||||||
Advances for construction | 263 | 271 | |||||
Deferred income taxes, net | 1,617 | 1,551 | |||||
Deferred investment tax credits | 22 | 22 | |||||
Regulatory liabilities | 1,713 | 1,664 | |||||
Accrued pension expense | 397 | 384 | |||||
Accrued post-retirement benefit expense | 38 | 40 | |||||
Other | 84 | 66 | |||||
Total regulatory and other long-term liabilities | 4,134 | 3,998 | |||||
Contributions in aid of construction | 1,298 | 1,276 | |||||
Commitments and contingencies (See Note 11) | |||||||
Total capitalization and liabilities | $ | 20,471 | $ | 19,482 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Operating revenues | $ | 853 | $ | 844 | $ | 1,614 | $ | 1,600 | |||||||
Operating expenses: | |||||||||||||||
Operation and maintenance | 348 | 347 | 695 | 681 | |||||||||||
Depreciation and amortization | 134 | 126 | 263 | 250 | |||||||||||
General taxes | 69 | 63 | 139 | 131 | |||||||||||
Gain on asset dispositions and purchases | — | (2 | ) | (2 | ) | (2 | ) | ||||||||
Total operating expenses, net | 551 | 534 | 1,095 | 1,060 | |||||||||||
Operating income | 302 | 310 | 519 | 540 | |||||||||||
Other income (expense): | |||||||||||||||
Interest, net | (86 | ) | (85 | ) | (170 | ) | (170 | ) | |||||||
Non-operating benefit costs, net | 2 | (2 | ) | 5 | (5 | ) | |||||||||
Other, net | 4 | 3 | 8 | 6 | |||||||||||
Total other income (expense) | (80 | ) | (84 | ) | (157 | ) | (169 | ) | |||||||
Income before income taxes | 222 | 226 | 362 | 371 | |||||||||||
Provision for income taxes | 60 | 95 | 94 | 147 | |||||||||||
Net income attributable to common stockholders | $ | 162 | $ | 131 | $ | 268 | $ | 224 | |||||||
Basic earnings per share: (a) | |||||||||||||||
Net income attributable to common stockholders | $ | 0.90 | $ | 0.74 | $ | 1.50 | $ | 1.26 | |||||||
Diluted earnings per share: (a) | |||||||||||||||
Net income attributable to common stockholders | $ | 0.91 | $ | 0.73 | $ | 1.50 | $ | 1.26 | |||||||
Weighted-average common shares outstanding: | |||||||||||||||
Basic | 179 | 178 | 179 | 178 | |||||||||||
Diluted | 179 | 179 | 179 | 179 | |||||||||||
Dividends declared per common share | $ | 0.455 | $ | 0.415 | $ | 0.455 | $ | 0.415 |
(a) | Amounts may not calculate due to rounding. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income attributable to common stockholders | $ | 162 | $ | 131 | $ | 268 | $ | 224 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Pension amortized to periodic benefit cost: | |||||||||||||||
Actuarial loss, net of tax of $2 and $1 for the three months and $1 and $2 for the six months ended June 30, 2018 and 2017, respectively | 6 | 2 | 4 | 4 | |||||||||||
Foreign currency translation adjustment | — | — | — | (1 | ) | ||||||||||
Unrealized gain (loss) on cash flow hedges, net of tax of $0 and $(3) for the three months ended and $2 and $(1) for the six months ended June 30, 2018 and 2017, respectively | — | (5 | ) | 6 | (2 | ) | |||||||||
Net other comprehensive income (loss) | 6 | (3 | ) | 10 | 1 | ||||||||||
Comprehensive income attributable to common stockholders | $ | 168 | $ | 128 | $ | 278 | $ | 225 |
For the Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
Net income | $ | 268 | $ | 224 | |||
Adjustments to reconcile to net cash flows provided by operating activities: | |||||||
Depreciation and amortization | 263 | 250 | |||||
Deferred income taxes and amortization of investment tax credits | 82 | 137 | |||||
Provision for losses on accounts receivable | 12 | 11 | |||||
Gain on asset dispositions and purchases | (2 | ) | (2 | ) | |||
Pension and non-pension post-retirement benefits | 16 | 29 | |||||
Other non-cash, net | (2 | ) | (50 | ) | |||
Changes in assets and liabilities: | |||||||
Receivables and unbilled revenues | (41 | ) | (3 | ) | |||
Pension and non-pension post-retirement benefit contributions | — | (23 | ) | ||||
Accounts payable and accrued liabilities | (54 | ) | (46 | ) | |||
Other assets and liabilities, net | (17 | ) | (3 | ) | |||
Net cash provided by operating activities | 525 | 524 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
Capital expenditures | (739 | ) | (602 | ) | |||
Acquisitions, net of cash acquired | (377 | ) | (9 | ) | |||
Proceeds from sale of assets | 7 | 4 | |||||
Removal costs from property, plant and equipment retirements, net | (40 | ) | (28 | ) | |||
Net cash used in investing activities | (1,149 | ) | (635 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
Proceeds from long-term debt | 15 | 20 | |||||
Repayments of long-term debt | (119 | ) | (6 | ) | |||
Net short-term borrowings with maturities less than three months | 746 | 268 | |||||
Proceeds from issuances of employee stock plans and direct stock purchase plan | 12 | 16 | |||||
Proceeds from issuance of common stock | 183 | — | |||||
Advances and contributions for construction, net of refunds of $16 and $11 for the six months ended June 30, 2018 and 2017, respectively | 7 | 12 | |||||
Dividends paid | (155 | ) | (141 | ) | |||
Anti-dilutive share repurchases | (45 | ) | (54 | ) | |||
Taxes paid related to employee stock plans | (6 | ) | (10 | ) | |||
Net cash provided by financing activities | 638 | 105 | |||||
Net (decrease) increase in cash and cash equivalents and restricted funds | 14 | (6 | ) | ||||
Cash and cash equivalents and restricted funds at beginning of period | 83 | 99 | |||||
Cash and cash equivalents and restricted funds at end of period | $ | 97 | $ | 93 | |||
Non-cash investing activity: | |||||||
Capital expenditures acquired on account but unpaid as of end of period | $ | 180 | $ | 145 | |||
Acquisition financed by treasury stock | $ | — | $ | 33 |
Common Stock | Paid-in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders' 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 stockholders | — | — | — | 268 | — | — | — | 268 | |||||||||||||||||||||
Direct stock reinvestment and purchase plan | 0.1 | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||
Employee stock purchase plan | 0.1 | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||
Stock-based compensation activity | 0.2 | — | 14 | (1 | ) | — | (0.1 | ) | (5 | ) | 8 | ||||||||||||||||||
Issuance of common stock | 2.3 | — | 183 | — | — | — | — | 183 | |||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | (0.5 | ) | (45 | ) | (45 | ) | ||||||||||||||||||
Net other comprehensive income | — | — | — | — | 10 | — | — | 10 | |||||||||||||||||||||
Dividends | — | — | — | (81 | ) | — | — | — | (81 | ) | |||||||||||||||||||
Balance as of June 30, 2018 | 185.2 | $ | 2 | $ | 6,637 | $ | (537 | ) | $ | (69 | ) | (4.7 | ) | $ | (297 | ) | $ | 5,736 | |||||||||||
Common Stock | Paid-in-Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total Stockholders' Equity | ||||||||||||||||||||||||
Shares | Par Value | Shares | At Cost | ||||||||||||||||||||||||||
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 stockholders | — | — | — | 224 | — | — | — | 224 | |||||||||||||||||||||
Direct stock reinvestment and purchase plan | 0.1 | — | 5 | — | — | — | — | 5 | |||||||||||||||||||||
Employee stock purchase plan | — | — | 4 | — | — | — | — | 4 | |||||||||||||||||||||
Stock-based compensation activity | 0.4 | — | 13 | — | — | (0.1 | ) | (7 | ) | 6 | |||||||||||||||||||
Acquisitions via treasury stock | — | — | 6 | — | — | 0.4 | 27 | 33 | |||||||||||||||||||||
Repurchases of common stock | — | — | — | — | — | (0.7 | ) | (54 | ) | (54 | ) | ||||||||||||||||||
Net other comprehensive income | — | — | — | — | 1 | — | — | 1 | |||||||||||||||||||||
Dividends | — | — | — | (74 | ) | — | — | — | (74 | ) | |||||||||||||||||||
Balance as of June 30, 2017 | 182.3 | $ | 2 | $ | 6,416 | $ | (702 | ) | $ | (85 | ) | (4.1 | ) | $ | (247 | ) | $ | 5,384 |
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. The primary impact was the additional disclosures required 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 Post-Retirement Benefit Cost | Updated authoritative guidance requires 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 income statement; 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 period, net periodic benefit costs, other than the service cost component, in Non-operating benefit costs, net on the Consolidated Statements of Operations. |
Standard | Description | Date of Adoption | Application | Estimated Effect on the Consolidated Financial Statements | ||||
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income | Permits an entity to reclassify tax effects stranded in accumulated other comprehensive income as a result of the Tax Cuts and Jobs Act (the “TCJA”) to retained earnings. | January 1, 2019; early adoption permitted | In the period of adoption or retrospective. | The Company is evaluating the impact on its Consolidated Financial Statements, as well as the timing of adoption. | ||||
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 Company has not yet quantified the impact of recognizing right-of-use assets and lease liabilities but is evaluating the impact on its Consolidated Financial Statements. The Company has defined a process to meet the accounting and reporting requirements of the guidance and is assessing lease arrangements. The Company expects to elect all practical expedients available under the new lease accounting and disclosure guidance. | ||||
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 Company does not expect the adoption to have a material impact on its Consolidated Financial Statements based on its hedging activities as of the balance sheet date. The Company is evaluating the timing of adoption. | ||||
Simplification of Goodwill Impairment Testing | Updated authoritative guidance which simplifies 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. | January 1, 2020; early adoption permitted | Prospective | The Company is evaluating any impact on its Consolidated Financial Statements, as well as the timing of adoption. | ||||
Measurement of Credit Losses | 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. |
2018 | 2017 | ||||||
Cash and cash equivalents | $ | 68 | $ | 64 | |||
Restricted funds | 27 | 28 | |||||
Restricted funds included in other long-term assets | 2 | 1 | |||||
Cash and cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows | $ | 97 | $ | 93 |
(In millions) | Revenues from Contracts with Customers | Other Revenues Not from Contracts with Customers (a) | Total Operating Revenues | ||||||||
Regulated Businesses: | |||||||||||
Water services: | |||||||||||
Residential | $ | 410 | $ | — | $ | 410 | |||||
Commercial | 152 | — | 152 | ||||||||
Industrial | 34 | — | 34 | ||||||||
Public and other | 85 | — | 85 | ||||||||
Total water services | 681 | — | 681 | ||||||||
Wastewater services: | |||||||||||
Residential | 27 | — | 27 | ||||||||
Commercial | 7 | — | 7 | ||||||||
Industrial | — | — | — | ||||||||
Public and other | 4 | — | 4 | ||||||||
Total wastewater services | 38 | — | 38 | ||||||||
Miscellaneous utility charges | 12 | — | 12 | ||||||||
Alternative revenue programs | — | 11 | 11 | ||||||||
Lease contract revenue | — | 2 | 2 | ||||||||
Total Regulated Businesses | 731 | 13 | 744 | ||||||||
Market-Based Businesses | 114 | — | 114 | ||||||||
Other | (5 | ) | — | (5 | ) | ||||||
Total operating revenues | $ | 840 | $ | 13 | $ | 853 |
(a) | Includes revenues associated with alternative revenue programs and lease contracts which are outside the scope of ASC 606 and accounted for under other existing GAAP. |
(In millions) | Revenues from Contracts with Customers | Other Revenues Not from Contracts with Customers (a) | Total Operating Revenues | ||||||||
Regulated Businesses: | |||||||||||
Water services: | |||||||||||
Residential | $ | 778 | $ | — | $ | 778 | |||||
Commercial | 285 | — | 285 | ||||||||
Industrial | 65 | — | 65 | ||||||||
Public and other | 165 | — | 165 | ||||||||
Total water services | 1,293 | — | 1,293 | ||||||||
Wastewater services: | |||||||||||
Residential | 54 | — | 54 | ||||||||
Commercial | 14 | — | 14 | ||||||||
Industrial | 1 | — | 1 | ||||||||
Public and other | 7 | — | 7 | ||||||||
Total wastewater services | 76 | — | 76 | ||||||||
Miscellaneous utility charges | 23 | — | 23 | ||||||||
Alternative revenue programs | — | 14 | 14 | ||||||||
Lease contract revenue | — | 4 | 4 | ||||||||
Total Regulated Businesses | 1,392 | 18 | 1,410 | ||||||||
Market-Based Businesses | 214 | — | 214 | ||||||||
Other | (10 | ) | — | (10 | ) | ||||||
Total operating revenues | $ | 1,596 | $ | 18 | $ | 1,614 |
(a) | Includes revenues associated with alternative revenue programs and lease contracts which are outside the scope of ASC 606 and accounted for under other existing GAAP. |
(In millions) | |||
Contract assets: | |||
Balance at January 1, 2018 | $ | 35 | |
Additions | 13 | ||
Transfers to accounts receivable, net | (33 | ) | |
Balance at June 30, 2018 | $ | 15 | |
Contract liabilities: | |||
Balance at January 1, 2018 | $ | 25 | |
Additions | 36 | ||
Transfers to operating revenues | (34 | ) | |
Balance at June 30, 2018 | $ | 27 |
June 4, 2018 | |||
Identifiable assets: | |||
Accounts receivable | $ | 23 | |
Other current assets | 1 | ||
Property, plant and equipment | 21 | ||
Intangible assets | 96 | ||
Total identifiable assets | 141 | ||
Liabilities assumed: | |||
Accounts payable and accrued liabilities | (5 | ) | |
Other current liabilities | (3 | ) | |
Non-current portion of warranty reserve | (11 | ) | |
Other long-term liabilities | (1 | ) | |
Total liabilities assumed | (20 | ) | |
Net identifiable assets acquired | 121 | ||
Goodwill | 242 | ||
Net assets acquired | $ | 363 |
Defined Benefit Plans | Foreign Currency Translation | Gain on Cash Flow Hedges | Accumulated Other Comprehensive Loss | ||||||||||||||||||||
Employee Benefit Plan Funded Status | Amortization of Prior Service Cost | Amortization of Actuarial (Gain) Loss | |||||||||||||||||||||
Beginning balance as of December 31, 2017 | $ | (140 | ) | $ | 1 | $ | 49 | $ | 1 | $ | 10 | $ | (79 | ) | |||||||||
Other comprehensive income before reclassifications | — | — | — | — | 6 | 6 | |||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | — | 4 | — | — | 4 | |||||||||||||||||
Net other comprehensive income (loss) | — | — | 4 | — | 6 | 10 | |||||||||||||||||
Ending balance as of June 30, 2018 | $ | (140 | ) | $ | 1 | $ | 53 | $ | 1 | $ | 16 | $ | (69 | ) | |||||||||
Beginning balance as of December 31, 2016 | $ | (147 | ) | $ | 1 | $ | 42 | $ | 2 | $ | 16 | $ | (86 | ) | |||||||||
Other comprehensive loss before reclassifications | — | — | — | (1 | ) | (2 | ) | (3 | ) | ||||||||||||||
Amounts reclassified from accumulated other comprehensive loss | — | — | 4 | — | — | 4 | |||||||||||||||||
Net other comprehensive income (loss) | — | — | 4 | (1 | ) | (2 | ) | 1 | |||||||||||||||
Ending balance as of June 30, 2017 | $ | (147 | ) | $ | 1 | $ | 46 | $ | 1 | $ | 14 | $ | (85 | ) |
Company | Type | Rate | Maturity | Amount | ||||||
Other American Water subsidiaries | Private activity bonds and government funded debt—fixed rate (a) | 0.00%-5.00% | 2021-2048 | $ | 15 | |||||
Total issuances | $ | 15 |
Company | Type | Rate | Maturity | Amount | ||||||
American Water Capital Corp. | Senior Notes—fixed rate | 6.25% | 2018 | $ | 110 | |||||
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%-5.40% | 2018-2041 | 4 | ||||||
Other American Water subsidiaries | Mortgage bonds—fixed rate | 9.13% | 2021 | 1 | ||||||
Other American Water subsidiaries | Term Loan | 4.83%-5.69% | 2021 | 2 | ||||||
Other American Water subsidiaries | Mandatorily redeemable preferred stock | 8.49% | 2036 | 1 | ||||||
Total retirements and redemptions | $ | 119 |
Derivative Instruments | Derivative Designation | Balance Sheet Classification | June 30, 2018 | December 31, 2017 | ||||||||
Asset derivative: | ||||||||||||
Forward starting swaps | Cash flow hedge | Other current assets | $ | 9 | $ | — | ||||||
Liability derivative: | ||||||||||||
Forward starting swaps | Cash flow hedge | Other current liabilities | $ | 3 | $ | 3 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Components of net periodic pension benefit cost: | |||||||||||||||
Service cost | $ | 8 | $ | 8 | $ | 17 | $ | 17 | |||||||
Interest cost | 19 | 20 | 38 | 40 | |||||||||||
Expected return on plan assets | (24 | ) | (23 | ) | (49 | ) | (47 | ) | |||||||
Amortization of actuarial loss | 7 | 9 | 14 | 18 | |||||||||||
Net periodic pension benefit cost | $ | 10 | $ | 14 | $ | 20 | $ | 28 | |||||||
Components of net periodic other post-retirement benefit (credit) cost: | |||||||||||||||
Service cost | $ | 2 | $ | 2 | $ | 5 | $ | 5 | |||||||
Interest cost | 5 | 6 | 11 | 13 | |||||||||||
Expected return on plan assets | (6 | ) | (6 | ) | (13 | ) | (13 | ) | |||||||
Amortization of prior service credit | (4 | ) | (4 | ) | (9 | ) | (9 | ) | |||||||
Amortization of actuarial loss | 1 | 2 | 2 | 5 | |||||||||||
Net periodic other post-retirement benefit (credit) cost | $ | (2 | ) | $ | — | $ | (4 | ) | $ | 1 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to common stockholders | $ | 162 | $ | 131 | $ | 268 | $ | 224 | |||||||
Denominator: | |||||||||||||||
Weighted-average common shares outstanding—Basic | 179 | 178 | 179 | 178 | |||||||||||
Effect of dilutive common stock equivalents | — | 1 | — | 1 | |||||||||||
Weighted-average common shares outstanding—Diluted | 179 | 179 | 179 | 179 |
Carrying Amount | At Fair Value as of June 30, 2018 | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Preferred stock with mandatory redemption requirements | $ | 9 | $ | — | $ | — | $ | 11 | $ | 11 | |||||||||
Long-term debt (excluding capital lease obligations) | 6,706 | 4,529 | 839 | 1,739 | 7,107 | ||||||||||||||
Carrying Amount | At Fair Value as of December 31, 2017 | ||||||||||||||||||
Level 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 |
At Fair Value as of June 30, 2018 | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets: | |||||||||||||||
Restricted funds | $ | 29 | $ | — | $ | — | $ | 29 | |||||||
Rabbi trust investments | 15 | — | — | 15 | |||||||||||
Deposits | 3 | — | — | 3 | |||||||||||
Mark-to-market derivative assets | — | 9 | — | 9 | |||||||||||
Other investments | 3 | — | — | 3 | |||||||||||
Total assets | 50 | 9 | — | 59 | |||||||||||
Liabilities: | |||||||||||||||
Deferred compensation obligations | 17 | — | — | 17 | |||||||||||
Mark-to-market derivative liabilities | — | 3 | 3 | ||||||||||||
Total liabilities | 17 | 3 | — | 20 | |||||||||||
Total net assets (liabilities) | $ | 33 | $ | 6 | $ | — | $ | 39 |
At Fair Value as of 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 net assets (liabilities) | $ | 33 | $ | (3 | ) | $ | — | $ | 30 |
As of or for the Three Months Ended June 30, 2018 | |||||||||||||||
Regulated Businesses | Market-Based Businesses | Other | Consolidated | ||||||||||||
Operating revenues | $ | 744 | $ | 114 | $ | (5 | ) | $ | 853 | ||||||
Depreciation and amortization | 123 | 7 | 4 | 134 | |||||||||||
Total operating expenses, net | 453 | 98 | — | 551 | |||||||||||
Interest, net | (69 | ) | 2 | (19 | ) | (86 | ) | ||||||||
Income before income taxes | 226 | 18 | (22 | ) | 222 | ||||||||||
Provision for income taxes | 59 | 5 | (4 | ) | 60 | ||||||||||
Net income attributable to common stockholders | 167 | 13 | (18 | ) | 162 | ||||||||||
Total assets | 18,197 | 818 | 1,456 | 20,471 | |||||||||||
Capital expenditures | 347 | 1 | 27 | 375 |
As of or for the Three Months Ended June 30, 2017 | |||||||||||||||
Regulated Businesses | Market-Based Businesses | Other | Consolidated | ||||||||||||
Operating revenues | $ | 746 | $ | 103 | $ | (5 | ) | $ | 844 | ||||||
Depreciation and amortization | 119 | 4 | 3 | 126 | |||||||||||
Total operating expenses, net | 450 | 89 | (5 | ) | 534 | ||||||||||
Interest, net | (67 | ) | 1 | (19 | ) | (85 | ) | ||||||||
Income before income taxes | 230 | 15 | (19 | ) | 226 | ||||||||||
Provision for income taxes | 90 | 7 | (2 | ) | 95 | ||||||||||
Net income attributable to common stockholders | 140 | 9 | (18 | ) | 131 | ||||||||||
Total assets | 16,982 | 570 | 1,414 | 18,966 | |||||||||||
Capital expenditures | 289 | 3 | 40 | 332 |
As of or for the Six Months Ended June 30, 2018 | |||||||||||||||
Regulated Businesses | Market-Based Businesses | Other | Consolidated | ||||||||||||
Operating revenues | $ | 1,410 | $ | 214 | $ | (10 | ) | $ | 1,614 | ||||||
Depreciation and amortization | 245 | 11 | 7 | 263 | |||||||||||
Total operating expenses, net | 915 | 184 | (4 | ) | 1,095 | ||||||||||
Interest, net | (138 | ) | 3 | (35 | ) | (170 | ) | ||||||||
Income before income taxes | 368 | 34 | (40 | ) | 362 | ||||||||||
Provision for income taxes | 97 | 9 | (12 | ) | 94 | ||||||||||
Net income attributable to common stockholders | 271 | 25 | (28 | ) | 268 | ||||||||||
Total assets | 18,197 | 818 | 1,456 | 20,471 | |||||||||||
Capital expenditures | 677 | 7 | 55 | 739 |
As of or for the Six Months Ended June 30, 2017 | |||||||||||||||
Regulated Businesses | Market-Based Businesses | Other | Consolidated | ||||||||||||
Operating revenues | $ | 1,405 | $ | 206 | $ | (11 | ) | $ | 1,600 | ||||||
Depreciation and amortization | 236 | 8 | 6 | 250 | |||||||||||
Total operating expenses, net | 886 | 183 | (9 | ) | 1,060 | ||||||||||
Interest, net | (133 | ) | 1 | (38 | ) | (170 | ) | ||||||||
Income before income taxes | 384 | 25 | (38 | ) | 371 | ||||||||||
Provision for income taxes | 150 | 10 | (13 | ) | 147 | ||||||||||
Net income attributable to common stockholders | 234 | 15 | (25 | ) | 224 | ||||||||||
Total assets | 16,982 | 570 | 1,414 | 18,966 | |||||||||||
Capital expenditures | 542 | 4 | 56 | 602 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | The Company completed the acquisition of Pivotal Home Solutions (“Pivotal”), a leading provider of home warranty protection products and services, for $363 million. This transaction was financed with approximately 50% debt and 50% equity, and included the Company’s election to physically settle the equity forward sale agreements entered into on April 11, 2018, resulting in the issuance of 2,320,000 shares of our common stock, in exchange for aggregate net proceeds of $183 million. See Note 4—Acquisitions in the Notes to the Consolidated Financial Statements for further discussion. |
• | Effective July 16, 2018, the court issued its final approval of the global settlement related to the Freedom Industries chemical spill in West Virginia. Also, on June 1, 2018, the Company settled with its remaining general liability insurance carrier relating to this matter, resulting in a $20 million benefit for the Company. With these issues resolved, our West Virginia subsidiary’s contribution to the $126 million settlement is $23 million, net of insurance recoveries. See Note 11—Commitments and Contingencies in the Notes to the Consolidated Financial Statements for further discussion. |
• | Our Pennsylvania subsidiary entered into an agreement to acquire the wastewater assets of Exeter Township, Pennsylvania, a system that serves nearly 9,000 customers, for approximately $96 million. |
• | On July 5, 2018, the Company entered into an agreement for the sale of the majority of our Contract Operations Group to subsidiaries of Veolia Environnement S.A. for $27 million. The sale agreement includes the transfer of 23 of our Contract Operations Group’s 33 O&M contracts and is expected to fully close by the end of 2018. |
• | Every five years, we negotiate national health and welfare benefits with our union-represented employees. On July 31, 2018, a new, five-year national benefits agreement was ratified, covering approximately 3,200 of our union-represented employees, which includes 17 labor unions and 69 collective bargaining agreements. Some highlights of the new agreement include union-represented employees’ participation in the Company’s cash-based annual performance plan, changes to certain retiree medical benefits and additional medical plan options for our employees and their families. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Diluted earnings per share (GAAP): | |||||||||||||||
Net income attributable to common stockholders | $ | 0.91 | $ | 0.73 | $ | 1.50 | $ | 1.26 | |||||||
Non-GAAP adjustment: | |||||||||||||||
Impact of Freedom Industries settlement activities | (0.11 | ) | — | (0.11 | ) | — | |||||||||
Income tax impact | 0.03 | — | 0.03 | — | |||||||||||
Total net non-GAAP adjustment | (0.08 | ) | — | (0.08 | ) | — | |||||||||
Adjusted diluted earnings per share (non-GAAP) | $ | 0.83 | $ | 0.73 | $ | 1.42 | $ | 1.26 |
• | $713 million, of which the majority was in our Regulated Businesses for infrastructure improvements; |
• | $363 million to fund the acquisition of Pivotal, as discussed in further detail below; and |
• | $14 million to fund acquisitions in our Regulated Businesses, which added approximately 5,600 water and wastewater customers. |
For the Twelve Months Ended June 30, | |||||||
(In millions) | 2018 | 2017 | |||||
Total operation and maintenance expenses (a) | $ | 1,383 | $ | 1,487 | |||
Less: | |||||||
Operation and maintenance expenses—Market-Based Businesses | 334 | 351 | |||||
Operation and maintenance expenses—Other (a) | (40 | ) | (37 | ) | |||
Total operation and maintenance expenses—Regulated Businesses (a) | 1,089 | 1,173 | |||||
Less: | |||||||
Regulated purchased water expenses | 133 | 123 | |||||
Allocation of non-operation and maintenance expenses | 29 | 27 | |||||
Impact of Freedom Industries settlement activities (b) | (42 | ) | 65 | ||||
Adjusted operation and maintenance expenses—Regulated Businesses (i) | $ | 969 | $ | 958 | |||
Total operating revenues | $ | 3,371 | $ | 3,332 | |||
Less: | |||||||
Pro forma adjustment for impact of the TCJA (c) | 87 | 164 | |||||
Total pro forma operating revenues | 3,284 | 3,168 | |||||
Less: | |||||||
Operating revenues—Market-Based Businesses | 430 | 428 | |||||
Operating revenues—Other | (22 | ) | (22 | ) | |||
Total pro forma operating revenues—Regulated Businesses | 2,876 | 2,762 | |||||
Less: | |||||||
Regulated purchased water revenues (d) | 133 | 123 | |||||
Adjusted pro forma operating revenues—Regulated Businesses (ii) | $ | 2,743 | $ | 2,639 | |||
Adjusted O&M efficiency ratio—Regulated Businesses (i) / (ii) | 35.3 | % | 36.3 | % |
NOTE | The adjusted O&M efficiency ratio previously reported for the twelve months ended June 30, 2017 was 34.5%, 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 the Consolidated Financial Statements for further discussion. |
(b) | Includes the impact of the binding global agreement in principle to settle claims in 2016, and settlements with two of our general liability insurance carriers in 2017 and 2018. |
(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 5—Regulatory Liabilities in the Notes to the Consolidated Financial Statements for further discussion. |
(d) | The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses. |
(In millions) | For the Three Months Ended June 30, 2018 | For the Six Months Ended June 30, 2018 | |||||
General rate cases by state: | |||||||
Missouri (effective May 28, 2018) | $ | 33 | $ | 33 | |||
Pennsylvania (effective January 1, 2018) | — | 62 | |||||
Total general rate cases | $ | 33 | $ | 95 | |||
Infrastructure surcharges by state: | |||||||
Tennessee (effective April 10, 2018) | $ | 1 | $ | 1 | |||
Indiana (effective March 14, 2018) | — | 7 | |||||
Virginia (effective March 1, 2018) | — | 1 | |||||
Illinois (effective January 1, 2018) | — | 3 | |||||
West Virginia (effective January 1, 2018) | — | 3 | |||||
Total infrastructure surcharges | $ | 1 | $ | 15 |
• | 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 Stabilization 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. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Operating revenues | $ | 853 | $ | 844 | $ | 9 | 1.1 | % | $ | 1,614 | $ | 1,600 | $ | 14 | 0.9 | % | |||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||
Operation and maintenance | 348 | 347 | 1 | 0.3 | % | 695 | 681 | 14 | 2.1 | % | |||||||||||||||||||
Depreciation and amortization | 134 | 126 | 8 | 6.3 | % | 263 | 250 | 13 | 5.2 | % | |||||||||||||||||||
General taxes | 69 | 63 | 6 | 9.5 | % | 139 | 131 | 8 | 6.1 | % | |||||||||||||||||||
Gain on asset dispositions and purchases | — | (2 | ) | 2 | 100.0 | % | (2 | ) | (2 | ) | — | — | % | ||||||||||||||||
Total operating expenses, net | 551 | 534 | 17 | 3.2 | % | 1,095 | 1,060 | 35 | 3.3 | % | |||||||||||||||||||
Operating income | 302 | 310 | (8 | ) | (2.6 | )% | 519 | 540 | (21 | ) | (3.9 | )% | |||||||||||||||||
Other income (expenses): | |||||||||||||||||||||||||||||
Interest, net | (86 | ) | (85 | ) | (1 | ) | 1.2 | % | (170 | ) | (170 | ) | — | — | % | ||||||||||||||
Non-operating benefit costs, net | 2 | (2 | ) | 4 | (200.0 | )% | 5 | (5 | ) | 10 | (200.0 | )% | |||||||||||||||||
Other, net | 4 | 3 | 1 | 33.3 | % | 8 | 6 | 2 | 33.3 | % | |||||||||||||||||||
Total other income (expenses) | (80 | ) | (84 | ) | 4 | (4.8 | )% | (157 | ) | (169 | ) | 12 | (7.1 | )% | |||||||||||||||
Income before income taxes | 222 | 226 | (4 | ) | (1.8 | )% | 362 | 371 | (9 | ) | (2.4 | )% | |||||||||||||||||
Provision for income taxes | 60 | 95 | (35 | ) | (36.8 | )% | 94 | 147 | (53 | ) | (36.1 | )% | |||||||||||||||||
Net income attributable to common stockholders | $ | 162 | $ | 131 | $ | 31 | 23.7 | % | $ | 268 | $ | 224 | $ | 44 | 19.6 | % |
• | $36 million increase in our Regulated Businesses from authorized rate increases and increases from water and wastewater acquisitions, organic growth and higher water services demand due to weather; and |
• | $11 million increase in our Market-Based Businesses from an increase in operations for Keystone as a result of market recovery in the shale natural gas industry, and an increase in our Homeowner Services Group from contract growth and the acquisition of Pivotal on June 4, 2018, offset in part by the expiration of certain contracts in our Contract Operations Group and lower capital upgrades in our Military Services Group; partially offset by a |
• | $38 million decrease in our Regulated Businesses from the impacts of the TCJA which have or are expected to benefit our customers. |
• | $75 million increase in our Regulated Businesses from authorized rate increases and increases from water and wastewater acquisitions, organic growth, and higher water services demand due to weather; and |
• | $8 million increase in our Market-Based Businesses from an increase in operations for Keystone as a result of market recovery in the shale natural gas industry, and an increase in our Homeowner Services Group from contract growth and the acquisition of Pivotal on June 4, 2018, offset in part by the expiration of certain contracts in our Contract Operations Group and lower capital upgrades in our Military Services Group; partially offset by a |
• | $70 million decrease in our Regulated Businesses from the impacts of the TCJA which have or are expected to benefit our customers. |
• | $5 million increase in our Market-Based Businesses from an increase in operations for Keystone, as discussed above, and the acquisition of Pivotal on June 4, 2018, offset in part by a decrease in our Contract Operations Group from the expiration of certain contracts; and |
• | $9 million decrease in our Regulated Businesses from 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 increases in production and other costs primarily driven by growth in the business. |
• | $12 million increase in our Regulated Businesses from an increase in price and usage of purchase water and chemicals, along with an increase in employee-related costs and maintenance materials and supplies, related to the higher volume of main breaks and paving expense experienced in the first quarter of 2018, offset in part by 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; partially offset by a |
• | $3 million decrease in our Market-Based Businesses from the expiration of certain contracts in our Contract Operations Group and lower capital upgrades in our Military Services Group, as well as lower claims expense in our Homeowner Services Group, driven by operational efficiencies gained through improved planning and relationship management of key contractor partnerships, offset in part by an increase in operations for Keystone, as discussed above, and the acquisition of Pivotal on June 4, 2018. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Operating revenues | $ | 744 | $ | 746 | $ | (2 | ) | (0.3 | )% | $ | 1,410 | $ | 1,405 | $ | 5 | 0.4 | % | ||||||||||||
Operation and maintenance | 264 | 273 | (9 | ) | (3.3 | )% | 542 | 530 | 12 | 2.3 | % | ||||||||||||||||||
Depreciation and amortization | 123 | 119 | 4 | 3.4 | % | 245 | 236 | 9 | 3.8 | % | |||||||||||||||||||
General taxes | 66 | 60 | 6 | 10.0 | % | 131 | 123 | 8 | 6.5 | % | |||||||||||||||||||
Income before income taxes | 226 | 230 | (4 | ) | (1.7 | )% | 368 | 384 | (16 | ) | (4.2 | )% | |||||||||||||||||
Provision for income taxes | 59 | 90 | (31 | ) | (34.4 | )% | 97 | 150 | (53 | ) | (35.3 | )% | |||||||||||||||||
Net income attributable to common stockholders | 167 | 140 | 27 | 19.3 | % | 271 | 234 | 37 | 15.8 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Water services: | |||||||||||||||||||||||||||||
Residential | $ | 410 | $ | 413 | $ | (3 | ) | (0.7 | )% | $ | 778 | $ | 772 | $ | 6 | 0.8 | % | ||||||||||||
Commercial | 152 | 151 | 1 | 0.7 | % | 285 | 279 | 6 | 2.2 | % | |||||||||||||||||||
Industrial | 34 | 35 | (1 | ) | (2.9 | )% | 65 | 67 | (2 | ) | (3.0 | )% | |||||||||||||||||
Public and other | 85 | 88 | (3 | ) | (3.4 | )% | 165 | 168 | (3 | ) | (1.8 | )% | |||||||||||||||||
Total water services | 681 | 687 | (6 | ) | (0.9 | )% | 1,293 | 1,286 | 7 | 0.5 | % | ||||||||||||||||||
Wastewater services | 38 | 36 | 2 | 5.6 | % | 76 | 70 | 6 | 8.6 | % | |||||||||||||||||||
Other (a) | 25 | 23 | 2 | 8.7 | % | 41 | 49 | (8 | ) | (16.3 | )% | ||||||||||||||||||
Total operating revenues | $ | 744 | $ | 746 | $ | (2 | ) | (0.3 | )% | $ | 1,410 | $ | 1,405 | $ | 5 | 0.4 | % |
(a) | Includes revenues from miscellaneous utility charges, alternative revenue programs and lease contracts. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||
(Gallons in millions) | |||||||||||||||||||||||
Billed water services volumes: | |||||||||||||||||||||||
Residential | 40,783 | 41,575 | (792 | ) | (1.9 | )% | 78,238 | 77,560 | 678 | 0.9 | % | ||||||||||||
Commercial | 19,767 | 19,817 | (50 | ) | (0.3 | )% | 37,514 | 36,880 | 634 | 1.7 | % | ||||||||||||
Industrial | 9,198 | 9,679 | (481 | ) | (5.0 | )% | 18,895 | 18,557 | 338 | 1.8 | % | ||||||||||||
Public and other | 12,343 | 12,342 | 1 | — | % | 23,923 | 23,835 | 88 | 0.4 | % | |||||||||||||
Billed water services volumes | 82,091 | 83,413 | (1,322 | ) | (1.6 | )% | 158,570 | 156,832 | 1,738 | 1.1 | % |
• | $38 million decrease from the impacts of the TCJA which have or are expected to benefit our customer rates. This decrease is made up of two primary components: (i) a reserve on revenue billed during the second quarter of 2018, for the estimated income tax savings resulting from the TCJA, which is expected to benefit our customers in future rates; and (ii) rate adjustments made in certain subsidiaries where our Regulators have authorized an approach to pass the benefits from the lower income tax rate to our customers; partially offset by a |
• | $28 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment growth in various states; |
• | $5 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; and a |
• | $2 million increase from higher water services demand, largely driven by warmer and drier weather in the Midwest. |
• | $50 million increase from authorized rate increases, including infrastructure surcharges, principally to fund infrastructure investment growth in various states; |
• | $14 million increase from water and wastewater acquisitions, as well as organic growth in existing systems; |
• | $6 million increase from higher water services demand, including $2 million driven by warmer and drier weather in the second quarter of 2018; |
• | $3 million increase from surcharges and other operating revenues, primarily in our Pennsylvania subsidiary; partially offset by a |
• | $70 million decrease from the impacts of the TCJA which have or are expected to benefit our customer rates. This decrease is made up of two primary components: (i) a reserve on revenue billed during the first half of 2018, for the estimated income tax savings resulting from the TCJA, which is expected to benefit our customers in future rates; and (ii) rate adjustments made in certain subsidiaries where our Regulators have authorized an approach to pass the benefits from the lower income tax rate to our customers. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Production costs | $ | 77 | $ | 74 | $ | 3 | 4.1 | % | $ | 146 | $ | 137 | $ | 9 | 6.6 | % | |||||||||||||
Employee-related costs | 110 | 108 | 2 | 1.9 | % | 227 | 214 | 13 | 6.1 | % | |||||||||||||||||||
Operating supplies and services | 53 | 51 | 2 | 3.9 | % | 101 | 99 | 2 | 2.0 | % | |||||||||||||||||||
Maintenance materials and supplies | 17 | 16 | 1 | 6.3 | % | 39 | 34 | 5 | 14.7 | % | |||||||||||||||||||
Customer billing and accounting | 16 | 13 | 3 | 23.1 | % | 26 | 23 | 3 | 13.0 | % | |||||||||||||||||||
Other | (9 | ) | 11 | (20 | ) | (181.8 | )% | 3 | 23 | (20 | ) | (87.0 | )% | ||||||||||||||||
Total | $ | 264 | $ | 273 | $ | (9 | ) | (3.3 | )% | $ | 542 | $ | 530 | $ | 12 | 2.3 | % |
• | $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; partially offset by a |
• | $3 million increase in production costs from purchased water price and usage increases in our California subsidiary; |
• | $5 million combined increase in employee-related costs, operating supplies and services, and maintenance materials and supplies from acquisitions and growth of the business; and |
• | $3 million increase in customer billing and accounting from an increase in customer uncollectible expense and higher call volumes experienced at our customer service centers. |
• | $9 million increase in production costs from purchased water price and usage increases in our California subsidiary, along with an increase in chemical costs and usage; |
• | $13 million increase in employee-related costs from an increase in headcount, mainly due to acquisitions, and compensation expense in support of the 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; |
• | $5 million increase in maintenance materials and supplies from a higher volume of main breaks and paving expense in the first quarter of 2018, driven by the colder weather experienced; and |
• | $3 million increase in customer billing and accounting from an increase in customer uncollectible expense and higher call volumes experienced at our customer service centers; partially offset by 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. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase (Decrease) | 2018 | 2017 | Increase (Decrease) | ||||||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||||||
Operating revenues | $ | 114 | $ | 103 | $ | 11 | 10.7 | % | $ | 214 | $ | 206 | $ | 8 | 3.9 | % | |||||||||||||
Operation and maintenance | 89 | 84 | 5 | 6.0 | % | 169 | 172 | (3 | ) | (1.7 | )% | ||||||||||||||||||
Income before income taxes | 18 | 15 | 3 | 20.0 | % | 34 | 25 | 9 | 36.0 | % | |||||||||||||||||||
Provision for income taxes | 5 | 7 | (2 | ) | (28.6 | )% | 9 | 10 | (1 | ) | (10.0 | )% | |||||||||||||||||
Net income attributable to common stockholders | 13 | 9 | 4 | 44.4 | % | 25 | 15 | 10 | 66.7 | % |
• | $9 million increase in Keystone from an increase in operations as a result of market recovery in the shale natural gas industry; and |
• | $7 million increase in our Homeowner Services Group from contract growth and the acquisition of Pivotal on June 4, 2018; partially offset by a |
• | $3 million decrease in our Contract Operations Group from the expiration of certain contracts; and |
• | $2 million decrease in our Military Services Group from lower capital upgrades, largely driven by reduced military base budgets. |
• | $13 million increase in Keystone from an increase in operations as a result of market recovery in the shale natural gas industry; and |
• | $8 million increase in our Homeowner Services Group from contract growth and the acquisition of Pivotal on June 4, 2018; partially offset by a |
• | $9 million decrease in our Military Services Group from lower capital upgrades, largely driven by reduced military base budgets; and |
• | $5 million decrease in our Contract Operations Group from the expiration of certain contracts. |
• | $10 million increase in Keystone from an increase in operations, as discussed above; and |
• | $3 million increase from the acquisition of Pivotal on June 4, 2018; partially offset by a |
• | $5 million decrease in our Contract Operations Group from the expiration of certain contracts; and |
• | $2 million decrease in our Homeowner Services Group from lower claims expense, driven by operational efficiencies gained through improved planning and relationship management of key contractor partnerships. |
• | $8 million decrease in our Military Services Group from lower capital upgrades, as discussed above; |
• | $6 million decrease in our Contract Operations Group from the expiration of certain contracts; and |
• | $6 million decrease in our Homeowner Services Group from lower claims expense, driven by operational efficiencies gained through improved planning and relationship management of key contractor partnerships; partially offset by a |
• | $13 million increase in Keystone from an increase in operations, as discussed above; and |
• | $4 million increase related to the acquisition of Pivotal on June 4, 2018. |
For the Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Net income | $ | 268 | $ | 224 | |||
Add (less): | |||||||
Depreciation and amortization | 263 | 250 | |||||
Deferred income taxes and amortization of investment tax credits | 82 | 137 | |||||
Other non-cash activities (a) | 24 | (12 | ) | ||||
Changes in working capital (b) | (112 | ) | (52 | ) | |||
Pension and post-retirement healthcare contributions | — | (23 | ) | ||||
Net cash flows provided by operations | $ | 525 | $ | 524 |
(a) | Includes provision for losses on accounts receivable, gain on asset dispositions and purchases, pension and non-pension post-retirement benefits expense and other non-cash, net. Details of each component can be found in 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 Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Net capital expenditures | $ | (739 | ) | $ | (602 | ) | |
Acquisitions | (377 | ) | (9 | ) | |||
Other investing activities, net (a) | (33 | ) | (24 | ) | |||
Net cash flows used in investing activities | $ | (1,149 | ) | $ | (635 | ) |
(a) | Includes removal costs from property, plant and equipment retirements, net, and proceeds from sale of assets and securities. |
For the Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(In millions) | |||||||
Proceeds from long-term debt | $ | 15 | $ | 20 | |||
Repayments of long-term debt | (119 | ) | (6 | ) | |||
Net proceeds from short-term borrowings | 746 | 268 | |||||
Proceeds from issuance of common stock | 183 | — | |||||
Dividends paid | (155 | ) | (141 | ) | |||
Anti-dilutive stock repurchases | (45 | ) | (54 | ) | |||
Other financing activities, net (a) | 13 | 18 | |||||
Net cash flows provided by financing activities | $ | 638 | $ | 105 |
(a) | Includes proceeds from issuances of common stock under various employee stock plans and our dividend reinvestment plan, advances and contributions for construction, net of refunds, and taxes paid related to employee stock plans. |
Credit Facilities Commitment (a) | Available Credit Facility Capacity (a) | Letter of Credit Sublimit | Available Letter of Credit Capacity | Commercial Paper Limit | Available Commercial Paper Capacity | ||||||||||||||||||
(In millions) | |||||||||||||||||||||||
June 30, 2018 | $ | 2,262 | $ | 2,172 | $ | 150 | $ | 63 | $ | 2,100 | $ | 451 |
(a) | Includes amounts related to the revolving credit facility of Keystone. As of June 30, 2018, the total commitment under the Keystone revolving credit facility was $12 million, of which $9 million was available for borrowing, subject to compliance with a collateral base calculation. At June 30, 2018, there were no outstanding borrowings under this credit facility. |
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 |
Exhibit Number | Exhibit Description | |
2.1 | ||
3.1 | ||
3.2 | ||
*10.1 | ||
10.2 | ||
10.3 | ||
10.4 | ||
*31.1 | ||
*31.2 | ||
**32.1 | ||
**32.2 | ||
*99.1 | ||
*101 | The following financial statements from American Water Works Company, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018, filed with the Securities and Exchange Commission on August 1, 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 Stockholders’ Equity; and (vi) the Notes to Consolidated Financial Statements. |
AMERICAN WATER WORKS COMPANY, INC. | |
(REGISTRANT) | |
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/ MELISSA K. WIKLE |
Melissa K. Wikle Vice President and Controller (Principal Accounting Officer) |
Number of Stock Units, and Dividend Equivalents, to be Further Deferred (All Must Be Deferred) | Original Specified Date (Election Must Be Made at Least 12 Months Prior to the Specified Date) | Deferred Date (Must be a date that is at least 5 years later than the Original Specified Date) |
100% | August 14, 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) | |
August 1, 2018 |
By: | /s/ LINDA G. SULLIVAN |
Linda G. Sullivan | |
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |
August 1, 2018 |
2013 | 2014 | 2015 | 2016 | 2017 | For the Six Months Ended June 30, 2018 | |||||||||||||
Income from continuing operations before income taxes | 608 | 710 | 782 | 770 | 912 | 362 | ||||||||||||
Fixed Charges: | ||||||||||||||||||
Interest, dividend on mandatory redeemable preferred shares and amortization of debt discount and expenses and premium on all indebtedness | 315 | 305 | 316 | 331 | 350 | 178 | ||||||||||||
Interest factor in rentals | 8 | 7 | 7 | 8 | 9 | 5 | ||||||||||||
Total fixed charges | 323 | 312 | 323 | 339 | 359 | 183 | ||||||||||||
Income from continuing operations plus fixed charges | 931 | 1,022 | 1,105 | 1,109 | 1,271 | 545 | ||||||||||||
Ratio of pre-tax income to net income | 1.64 | 1.65 | 1.64 | 1.65 | 2.14 | 1.35 | ||||||||||||
Total fixed charges | 323 | 312 | 323 | 339 | 359 | 183 | ||||||||||||
Ratio of earnings to fixed charges | 2.88 | 3.27 | 3.42 | 3.27 | 3.54 | 2.98 |
2013 | 2014 | 2015 | 2016 | 2017 | For the Six Months Ended June 30, 2018 | |||||||||||||
Income (loss) before income taxes | — | — | — | — | — | — | ||||||||||||
Fixed Charges: | ||||||||||||||||||
Interest, dividend on mandatory redeemable preferred shares and amortization of debt discount and expenses and premium on all indebtedness | 226 | 215 | 229 | 247 | 273 | 141 | ||||||||||||
Interest factor in rentals | — | — | — | — | — | — | ||||||||||||
Total fixed charges | 226 | 215 | 229 | 247 | 273 | 141 | ||||||||||||
Income (loss) plus fixed charges | 226 | 215 | 229 | 247 | 273 | 141 | ||||||||||||
Ratio of pre-tax income to net income | — | — | — | — | — | — | ||||||||||||
Total fixed charges | 226 | 215 | 229 | 247 | 273 | 141 | ||||||||||||
Ratio of earnings to fixed charges | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 26, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | AWK | |
Entity Registrant Name | American Water Works Company, Inc. | |
Entity Central Index Key | 0001410636 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 180,492,198 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 185,173,388 | 182,508,564 |
Treasury Stock, shares (in shares) | 4,683,156 | 4,064,010 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income attributable to common stockholders | $ 162 | $ 131 | $ 268 | $ 224 |
Pension amortized to periodic benefit cost: | ||||
Actuarial loss, net of tax of $2 and $1 for the three months and $1 and $2 for the six months ended June 30, 2018 and 2017, respectively | 6 | 2 | 4 | 4 |
Foreign currency translation adjustment | 0 | 0 | 0 | (1) |
Unrealized gain (loss) on cash flow hedges, net of tax of $0 and $(3) for the three months ended and $2 and $(1) for the six months ended June 30, 2018 and 2017 | 0 | (5) | 6 | (2) |
Net other comprehensive income (loss) | 6 | (3) | 10 | 1 |
Comprehensive income attributable to common stockholders | $ 168 | $ 128 | $ 278 | $ 225 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Actuarial (gain) loss, tax | $ 2 | $ 1 | $ 1 | $ 2 |
Unrealized gain on cash flow hedges, tax | $ 0 | $ (3) | $ 2 | $ (1) |
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 268 | $ 224 |
Adjustments to reconcile to net cash flows provided by operating activities: | ||
Depreciation and amortization | 263 | 250 |
Deferred income taxes and amortization of investment tax credits | 82 | 137 |
Provision for losses on accounts receivable | 12 | 11 |
Gain on asset dispositions and purchases | (2) | (2) |
Pension and non-pension post-retirement benefits | 16 | 29 |
Other non-cash, net | (2) | (50) |
Changes in assets and liabilities: | ||
Receivables and unbilled revenues | (41) | (3) |
Pension and non-pension post-retirement benefit contributions | 0 | (23) |
Accounts payable and accrued liabilities | (54) | (46) |
Other assets and liabilities, net | (17) | (3) |
Net cash provided by operating activities | 525 | 524 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (739) | (602) |
Acquisitions, net of cash acquired | (377) | (9) |
Proceeds from sale of assets | 7 | 4 |
Removal costs from property, plant and equipment retirements, net | (40) | (28) |
Net cash used in investing activities | (1,149) | (635) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from long-term debt | 15 | 20 |
Repayments of long-term debt | (119) | (6) |
Net short-term borrowings with maturities less than three months | 746 | 268 |
Proceeds from issuances of employee stock plans and direct stock purchase plan | 12 | 16 |
Proceeds from issuance of common stock | 183 | 0 |
Advances and contributions for construction, net of refunds of $16 and $11 for the six months ended June 30, 2018 and 2017, respectively | 7 | 12 |
Dividends paid | (155) | (141) |
Anti-dilutive share repurchases | (45) | (54) |
Taxes paid related to employee stock plans | (6) | (10) |
Net cash provided by financing activities | 638 | 105 |
Net (decrease) increase in cash and cash equivalents and restricted funds | 14 | (6) |
Cash and cash equivalents and restricted funds at beginning of period | 83 | 99 |
Cash and cash equivalents and restricted funds at end of period | 97 | 93 |
Non-cash investing activity: | ||
Capital expenditures acquired on account but unpaid as of end of period | 180 | 145 |
Acquisition financed by treasury stock | $ 0 | $ 33 |
Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Statement of Cash Flows [Abstract] | ||
Advances and contributions for construction, refunds | $ 16 | $ 11 |
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) shares in Millions, $ in Millions |
Total |
Common Stock |
Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Treasury Stock |
---|---|---|---|---|---|---|
Beginning balance (in shares) at Dec. 31, 2016 | 181.8 | (3.7) | ||||
Beginning balance at Dec. 31, 2016 | $ 5,218 | $ 2 | $ 6,388 | $ (873) | $ (86) | $ (213) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Cumulative effect of change in accounting principle | 21 | 21 | ||||
Net income attributable to common stockholders | 224 | 224 | ||||
Direct stock reinvestment and purchase plan (in shares) | 0.1 | |||||
Direct stock reinvestment and purchase plan | 5 | 5 | ||||
Employee stock purchase plan | 4 | 4 | ||||
Stock-based compensation activity (in shares) | 0.4 | (0.1) | ||||
Stock-based compensation activity | 6 | 13 | $ (7) | |||
Acquisitions via treasury stock | 33 | 6 | $ 27 | |||
Acquisitions via treasury stock (in shares) | 0.4 | |||||
Repurchases of common stock (in shares) | (0.7) | |||||
Repurchases of common stock | (54) | $ (54) | ||||
Net other comprehensive income | 1 | 1 | ||||
Dividends | 74 | 74 | ||||
Ending balance (in shares) at Jun. 30, 2017 | 182.3 | (4.1) | ||||
Ending balance at Jun. 30, 2017 | 5,384 | $ 2 | 6,416 | (702) | (85) | $ (247) |
Beginning balance (in shares) at Dec. 31, 2017 | 182.5 | (4.1) | ||||
Beginning balance at Dec. 31, 2017 | 5,385 | $ 2 | 6,432 | (723) | (79) | $ (247) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income attributable to common stockholders | 268 | 268 | ||||
Direct stock reinvestment and purchase plan (in shares) | 0.1 | |||||
Direct stock reinvestment and purchase plan | 4 | 4 | ||||
Stock Issued During Period, Shares, Employee Stock Purchase Plans | 0.1 | |||||
Employee stock purchase plan | 4 | 4 | ||||
Stock-based compensation activity (in shares) | 0.2 | (0.1) | ||||
Stock-based compensation activity | 8 | 14 | (1) | $ (5) | ||
Issuance of common stock (in shares) | 2.3 | |||||
Issuance of common stock | 183 | 183 | ||||
Acquisitions via treasury stock | $ 0 | |||||
Repurchases of common stock (in shares) | (0.6) | (0.5) | ||||
Repurchases of common stock | $ (45) | $ (45) | ||||
Net other comprehensive income | 10 | 10 | ||||
Dividends | 81 | 81 | ||||
Ending balance (in shares) at Jun. 30, 2018 | 185.2 | (4.7) | ||||
Ending balance at Jun. 30, 2018 | $ 5,736 | $ 2 | $ 6,637 | $ (537) | $ (69) | $ (297) |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 1: Basis of Presentation The unaudited Consolidated Financial Statements provided in this report include the accounts of American Water Works Company, Inc. and all of its subsidiaries (collectively, “American Water” or the “Company”), in which a controlling interest is maintained after the elimination of intercompany accounts and transactions. The unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting, and with the rules and regulations for reporting on Quarterly Reports on Form 10-Q (“Form 10-Q”). Accordingly, they do not contain certain information and disclosures required by GAAP for comprehensive financial statements. In the opinion of management, all adjustments necessary for a fair statement of the financial position as of June 30, 2018, and results of operations and cash flows for all periods presented have been made. All adjustments are of a normal, recurring nature, except as otherwise disclosed. The unaudited Consolidated Financial Statements and Notes included in this report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”), which provides a more complete discussion of the Company’s accounting policies, financial position, operating results and other matters. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the year, primarily due to the seasonality of the Company’s operations. |
Significant Accounting Policies |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies | Note 2: Significant Accounting Policies New Accounting Standards The Company adopted the following accounting standards as of January 1, 2018:
The following recently issued accounting standards have not yet been adopted by the Company as of June 30, 2018:
Cash, Cash Equivalents and Restricted Funds The following table provides a reconciliation of the cash, cash equivalents and restricted funds as presented on the Consolidated Balance Sheets, to the sum of such amounts presented on the Consolidated Statements of Cash Flows for the periods ended June 30:
Reclassifications Certain reclassifications have been made to prior periods in the accompanying Consolidated Financial Statements and Notes to conform to the current presentation. |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Note 3: Revenue Recognition On January 1, 2018, the Company adopted Accounting Standards Codification Topic 606, Revenue From Contracts With Customers, and all related amendments (collectively, “ASC 606” or the “standard”), using the modified retrospective approach, applied to contracts which were not completed as of January 1, 2018. Under this approach, periods prior to the adoption date have not been restated and continue to be reported under the accounting standards in effect for those periods. The Company’s revenue associated with alternative revenue programs and lease contracts are outside the scope of ASC 606 and accounted for under other existing GAAP. Under ASC 606, a performance obligation is a promise within a contract to transfer a distinct good or service, or a series of distinct goods and services, to a customer. Revenue is recognized when performance obligations are satisfied and the customer obtains control of promised goods or services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for goods or services. Under the standard, a contract’s transaction price is allocated to each distinct performance obligation. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identifies the contracts with a customer; (ii) identifies the performance obligations within the contract, including whether they are distinct and capable of being distinct in the context of the contract; (iii) determines the transaction price; (iv) allocates the transaction price to the performance obligations in the contract; and (v) recognizes revenue when, or as, the Company satisfies each performance obligation. The Company’s revenues from contracts with customers are discussed below. Customer payments for contracts are generally due within 30 days of billing and none of the contracts with customers have payment terms that exceed one year; therefore, the Company elected to apply the significant financing component practical expedient and no amount of consideration has been allocated as a financing component. See Note 14—Segment Information for further discussion of the Company’s operating segments. Regulated Businesses Revenue Revenue from the Company’s Regulated Businesses is generated primarily from water and wastewater services delivered to customers. These contracts contain a single performance obligation, the delivery of water and wastewater services, as the promise to transfer the individual good or service is not separately identifiable from other promises within the contract and, therefore, is not distinct. Revenues are recognized over time, as services are provided. There are generally no significant financing components or variable consideration. Revenues include amounts billed to customers on a cycle basis, and unbilled amounts calculated based on estimated usage from the date of the meter reading associated with the latest customer bill, to the end of the accounting period. The amounts that the Company has a right to invoice are determined by each customer’s actual usage, an indicator that the invoice amount corresponds directly to the value transferred to the customer. The Company elected to use the right to invoice and the disclosure of remaining performance obligations practical expedients for these revenues. Market-Based Businesses Revenue Through various protection programs, the Company provides fixed fee services to domestic homeowners and smaller commercial customers to protect against repair costs for interior and external water and sewer lines, interior electric and gas lines, heating and cooling systems, water heaters, power surge protection and other related services. Most of the contracts have a one-year term and each service is a separate performance obligation, satisfied over time, as the customers simultaneously receive and consume the benefits provided from the service. Customers are obligated to pay for the protection programs ratably over 12 months or via a one-time, annual fee, with revenues recognized ratably over time for these services. Advances from customers are deferred until the performance obligation is satisfied. The Company elected to use the disclosure of remaining performance obligations practical expedients for these revenues. The Company’s Market-Based Businesses also have long-term, fixed fee contracts to operate and maintain water and wastewater facilities with the U.S. government on various military bases and facilities owned by municipal and industrial customers, as well as shorter-term contracts that provide water management solutions for shale natural gas companies and customers in the water services market. Billing and revenue recognition for the fixed fee revenues occurs ratably over the term of the contract, as customers simultaneously receive and consume the benefits provided by the Company. Additionally, these contracts allow the Company to make capital improvements to underlying infrastructure, which are initiated through separate modifications or amendments to the original contract, whereby stand-alone, fixed pricing is separately stated for each improvement. The Company has determined that these capital improvements are separate performance obligations, with revenue recognized over time based on performance completed at the end of each reporting period. The Company elected to use the significant financing component practical expedient for these contract revenues. Losses on contracts are recognized during the period in which the loss first becomes probable and estimable. Revenues recognized during the period in excess of billings on construction contracts are recorded as unbilled revenues, with billings in excess of revenues recorded as other current liabilities until the recognition criteria are met. Changes in contract performance and related estimated contract profitability may result in revisions to costs and revenues, and are recognized in the period in which revisions are determined. Disaggregated Revenues The following table summarizes the Company’s operating revenues disaggregated for the three months ended June 30, 2018:
The following table summarizes of the Company’s operating revenues disaggregated for the six months ended June 30, 2018:
Contract Balances Contract assets and contract liabilities are the result of timing differences between revenue recognition, billings and cash collections. In the Company’s Market-Based Businesses, certain contracts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals or upon achievement of contractual milestones. Contract assets are recorded when billing occurs subsequent to revenue recognition, and are reclassified to accounts receivable when billed and the right to consideration becomes unconditional. Contract liabilities are recorded when the Company receives advances from customers prior to satisfying contractual performance obligations, particularly for construction contracts and home warranty protection program contracts, and are recognized as revenue when the associated performance obligations are satisfied. Contract assets are included in unbilled revenues and contract liabilities are in included in other current liabilities on the Consolidated Balance Sheets as of June 30, 2018. The following table summarizes the changes in contract assets and liabilities for the six months ended June 30, 2018:
Remaining Performance Obligations Remaining performance obligations (“RPOs”) represent revenues the Company expects to recognize in the future from contracts that are in progress. As of June 30, 2018, the Company’s operation and maintenance and capital improvement contracts in the Market-Based Businesses have RPOs. Contracts with the U.S. government for work on various military bases expire between 2051 and 2068 and have RPOs of $3.8 billion as of June 30, 2018, as measured by estimated remaining contract revenue. Such contracts are subject to customary termination provisions held by the U.S. government, prior to the agreed-upon contract expiration. Contracts with municipalities and commercial customers expire between 2018 and 2038 and have RPOs of $686 million as of June 30, 2018, as measured by estimated remaining contract revenue. Approximately $44 million of RPOs were eliminated in conjunction with the sale of 17 of the Company’s Contract Operations Group’s contracts to subsidiaries of Veolia Environnement S.A. on July 13, 2018. See Note 15—Subsequent Events for further discussion of this transaction. |
Acquisitions |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Note 4: Acquisitions Regulated Acquisitions During the six months ended June 30, 2018, the Company closed on six acquisitions of various regulated water and wastewater systems for a total aggregate purchase price of $14 million. Assets acquired in these acquisitions, principally utility plant, totaled $15 million. Liabilities assumed, primarily contributions in aid of construction, totaled $1 million. Pivotal Home Solutions Acquisition On June 4, 2018, the Company, through its subsidiary American Water Enterprises, LLC, completed the acquisition of Pivotal Home Solutions (“Pivotal”). Pivotal is headquartered in Naperville, Illinois, and is a provider of home warranty protection products and services, operating in 18 states with approximately 1.2 million customer contracts. Pivotal is complementary to the Company’s Homeowner Services Group product offerings and enhances its presence in the home warranty solutions markets through utility partnerships. The results of Pivotal are being consolidated into the Homeowner Services Group operating segment. The total purchase price of the acquisition was $363 million, net of cash received. This amount included an estimated $8 million in working capital, which is subject to adjustment based on a post-closing working capital determination. The transaction was funded by borrowings through the Company’s commercial paper program and the issuance of common stock, as described below. This acquisition is being accounted for as a business combination which requires, among other things, the assets acquired and the liabilities assumed to be recognized at their fair values at the acquisition date. The purchase price allocation is based upon preliminary information and is subject to change upon the completion of formal valuations and other reviews and assessments which will occur no later than one year after the acquisition date. The following table provides the preliminary purchase price allocation for the Pivotal acquisition as of June 4, 2018:
Preliminary intangible assets, mainly composed of customer relationships, are amortized over their expected benefit periods of up to 18 years, with a weighted average life of approximately four years. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized, and represents the expected revenue and cost synergies of the combined business and assembled workforce of Pivotal. The goodwill is included in the Company’s Homeowner Services Group reporting unit, within the Market-Based Businesses, and is deductible for income tax purposes. Pivotal’s revenue and net loss included in the Company’s Consolidated Statements of Operations for the three and six months ended June 30, 2018, did not have material impact to the overall consolidated financial operations of the Company. Equity Forward Transaction and Common Stock Issuance On April 11, 2018, the Company effected an equity forward transaction by entering into a forward sale agreement with each of two forward purchasers in connection with a public offering of 2,320,000 shares of the Company’s common stock. In the equity forward transaction, the forward purchasers, or an affiliate, borrowed an aggregate of 2,320,000 shares of the Company’s common stock from third parties and sold them to the underwriters in the public offering. On June 7, 2018, the Company elected to fully and physically settle both forward sale agreements, resulting in the issuance of a total of 2,320,000 shares of its common stock at a price of $79.01 per share, for aggregate net proceeds of $183 million. The net proceeds of the transaction were used to finance a portion of the purchase price of the Pivotal acquisition described above. Highlighted Pending Acquisitions On April 13, 2018, the Company’s Illinois subsidiary entered into an agreement to acquire the City of Alton, Illinois’ regional wastewater system for approximately $54 million. This system currently serves approximately 23,000 customer equivalents, comprised of approximately 11,000 direct connections in Alton and service to an additional 12,000 customers under bulk contracts in the nearby communities of Bethalto and Godfrey. The Company is expecting to close this acquisition by the end of the first quarter of 2019, pending regulatory approval. On May 30, 2018, the Company’s Pennsylvania subsidiary entered into an agreement to acquire the wastewater assets of Exeter Township, Pennsylvania for approximately $96 million. This system currently serves nearly 9,000 customers and the Company is expecting to close this acquisition by the end of the first quarter of 2019, pending regulatory approval. |
Regulatory Liabilities |
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Jun. 30, 2018 | |
Regulated Operations [Abstract] | |
Regulatory Liabilities | Note 5: Regulatory Liabilities On December 22, 2017, the TCJA was signed into law, which, among other things, enacted significant and complex changes to the Internal Revenue Code of 1986, including a reduction in the federal corporate income tax rate from 35% to 21% as of January 1, 2018. During the first half of 2018, the Company’s fourteen regulatory jurisdictions began to consider the impacts of the TCJA. As of June 30, 2018, the Company has adjusted rates to reflect the lower income tax rate in four states and in one state, the tax savings is being used for additional capital investment; the other jurisdictions remain pending. With respect to excess accumulated deferred income taxes, regulators that have addressed the matter have agreed with the Company’s overall timeline of passing the excess back to customers beginning no earlier than 2019, when the Company is able to produce the amortization schedule using the average rate assumption method. The Company generally expects its regulated customers to benefit from the tax savings resulting from the TCJA. As a result, the Company has recorded a $54 million reserve on revenue during the six months ended June 30, 2018, for the estimated tax savings resulting from the TCJA, with a corresponding regulatory liability, of which the current portion is $17 million (recorded in other current liabilities), and the long-term portion is $37 million (recorded in regulatory liabilities). We cannot predict how each jurisdiction may calculate the amount of credits due to customers. If any of the Company’s regulatory jurisdictions determines the credits due to customers are higher than the expected reduction to income tax expense, this would result in an adverse impact to results of operations and cash flows. |
Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Note 6: Stockholders' Equity Accumulated Other Comprehensive Loss The following table presents changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2018 and 2017, respectively:
The Company does not reclassify the amortization of defined benefit pension cost components from accumulated other comprehensive loss directly to net income in its entirety, as a portion of these costs have been capitalized as a regulatory asset. These accumulated other comprehensive income loss components are included in the computation of net periodic pension cost. See Note 10—Pension and Other Post-Retirement Benefits for further discussion. The amortization of the gain on cash flow hedges is reclassified to net income during the period incurred and is included in interest, net in the accompanying Consolidated Statements of Operations. Anti-dilutive Stock Repurchase Program During the six months ended June 30, 2018, the Company repurchased 0.6 million shares of common stock in the open market at an aggregate cost of $45 million under the anti-dilutive stock repurchase program authorized by the Company’s Board of Directors in 2015. As of June 30, 2018, there were 5.5 million shares of common stock available for repurchase under the program. Equity Forward Transaction See Note 4—Acquisitions for discussion relating to the forward sale agreements entered into by the Company on April 11, 2018, and the subsequent settlement of these agreements on June 7, 2018. |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Note 7: Long-Term Debt The following long-term debt was issued during the six months ended June 30, 2018:
(a) Approximately $14 million of this debt relates to the New Jersey Environmental Infrastructure Financing Program. The following long-term debt was retired through sinking fund provisions, optional redemptions or payment at maturity during the six months ended June 30, 2018:
The Company has four forward starting swap agreements, of which two were entered into on May 22, 2018, each with a notional amount of $100 million, to reduce interest rate exposure on debt expected to be issued in 2018. These forward starting swap agreements terminate in November 2018, and have an average fixed rate of 2.87%. The Company has designated these forward starting swap agreements as cash flow hedges with their fair value recorded in accumulated other comprehensive gain or loss. Upon termination, the cumulative gain or loss recorded in accumulated other comprehensive gain or loss will be amortized through interest, net over the term of the new debt. The Company has employed interest rate swaps to fix the interest cost on a portion of its variable-rate debt with an aggregate notional amount of $5 million. The Company has designated these interest rate swaps as economic hedges accounted for at fair value with gains or losses deferred as a regulatory asset or regulatory liability. The net gain recognized by the Company for the three and six months ended June 30, 2018 and 2017 was de minimis. No ineffectiveness was recognized on hedging instruments for the three and six months ended June 30, 2018 and 2017. The following table provides a summary of the gross fair value for the Company’s derivative asset and liabilities, as well as the location of the asset and liability balances on the Consolidated Balance Sheets:
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Short-Term Debt |
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Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Short-Term Debt | Note 8: Short-Term Debt On March 21, 2018, American Water Capital Corp. (“AWCC”) and its lenders amended and restated the credit agreement with respect to AWCC’s revolving credit facility to increase the maximum commitments under the facility to $2.25 billion from $1.75 billion and to extend the expiration date of the facility to March 2023 from June 2020. The facility is used principally to support AWCC’s commercial paper program and to provide a sub-limit of up to $150 million for letters of credit. As of June 30, 2018, no amounts were borrowed by AWCC under the credit agreement, except with respect to the letters of credit issued under the $150 million letter of credit sub-limit. Subject to satisfying certain conditions, the credit agreement also permits AWCC to increase the maximum commitment under the facility by up to an aggregate of $500 million and to request extensions of its expiration date for up to two one-year periods. The financial covenants with respect to the facility remained unchanged from the credit agreement in effect on December 31, 2017. On March 21, 2018, AWCC increased the maximum aggregate principal amount of borrowings authorized under its commercial paper program from $1.60 billion to $2.10 billion. As of June 30, 2018, AWCC had $1.65 billion in commercial paper outstanding. The weighted-average interest rate on AWCC short-term borrowings for three months ended June 30, 2018 and 2017 was approximately 2.34% and 1.24%, respectively. The weighted-average interest rate on AWCC short-term borrowings for the six months ended June 30, 2018 and 2017 was approximately 2.15% and 1.14%, respectively. |
Income Taxes |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 9: Income Taxes The Company’s effective income tax rate was 27.0% and 41.8% for the three months ended June 30, 2018 and 2017, respectively, and 26.0% and 39.5% for the six months ended June 30, 2018 and 2017, respectively. The decrease in the Company’s effective income tax rate primarily resulted from the reduction in the federal corporate income tax rate from 35% to 21% as of January 1, 2018, from the enactment of the TCJA. There were no significant adjustments recorded during the six months ended June 30, 2018 pursuant to Staff Accounting Bulletin 118. |
Pension and Other Post-Retirement Benefits |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Postretirement Benefits | Note 10: Pension and Other Post-Retirement Benefits The following table provides the components of net periodic benefit (credit) costs:
The Company made less than $1 million of contributions for the funding of its defined benefit pension plans for the three and six months ended June 30, 2018, and made contributions of $10 million and $20 million for the three and six months ended June 30, 2017, respectively. In addition, the Company made no contributions for the funding of its other post-retirement plans for the three and six months ended June 30, 2018, and made contributions of $2 million and $3 million for the three and six months ended June 30, 2017, respectively. The Company expects to make pension and post-retirement contributions to the plan trusts of up to $30 million during the remainder of 2018. |
Commitments and Contingencies |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 11: Commitments and Contingencies Contingencies The Company is routinely involved in legal actions incident to the normal conduct of its business. As of June 30, 2018, the Company has accrued approximately $136 million of probable loss contingencies and has estimated that the maximum amount of losses associated with reasonably possible loss contingencies that can be reasonably estimated is $25 million. For certain matters, claims and actions, the Company is unable to estimate possible losses. The Company believes that damages or settlements, if any, recovered by plaintiffs in such matters, claims or actions, other than as described in this Note 11—Commitments and Contingencies, will not have a material adverse effect on the Company. West Virginia Elk River Freedom Industries Chemical Spill Global Class Action Litigation Settlement On June 8, 2018, the U.S. District Court for the Southern District of West Virginia granted final approval of a settlement class and global class action settlement (the “Settlement”) for all claims and potential claims by all putative class members (collectively, the “Plaintiffs”) arising out of the January 2014 Freedom Industries, Inc. chemical spill in West Virginia. The effective date of the Settlement is July 16, 2018. Under the terms and conditions of the Settlement, West Virginia-American Water Company (“WVAWC”) and certain other Company affiliated entities (collectively, the “American Water Defendants”) have not admitted, and will not admit, any fault or liability for any of the allegations made by the Plaintiffs in any of the actions that were resolved. Under federal class action rules, claimants had the right, until December 8, 2017, to elect to opt out of the final Settlement. Less than 100 of the 225,000 estimated putative class members opted out from the Settlement, and these claimants will not receive any benefit from or be bound by the terms of the Settlement. On June 1, 2018, the Company and its remaining non-participating general liability insurance carrier settled for a payment to the Company of $20 million, out of a maximum of $25 million in potential coverage under the terms of the relevant policy, in exchange for a full release by the American Water Defendants of all claims against the insurance carrier related to the Freedom Industries chemical spill. As a result, the aggregate pre-tax amount to be contributed by WVAWC of the $126 million Settlement with respect to the Company, net of insurance recoveries, is $23 million. As of June 30, 2018, the settlement amount of $126 million, less advance payments made by the Company under the terms of the Settlement, is reflected in Accrued Liabilities, and the offsetting insurance receivables are reflected in Other Current Assets on the Consolidated Balance Sheet. On July 17, 2018, the Company funded WVAWC’s contributions to the guaranteed fund portion of the Settlement through existing sources of liquidity. Other Related Proceedings On March 16, 2017, the Lincoln County (West Virginia) Commission (the “LCC”) passed a county ordinance entitled the “Lincoln County, WV Comprehensive Public Nuisance Investigation and Abatement Ordinance.” The ordinance establishes a mechanism that Lincoln County believes will allow it to pursue criminal or civil proceedings for the “public nuisance” it alleges was caused by the Freedom Industries chemical spill. On April 20, 2017, the LCC filed a civil complaint in Lincoln County circuit court against WVAWC and certain other defendants not affiliated with the Company, alleging that the Freedom Industries chemical spill caused a public nuisance in Lincoln County. The complaint seeks an injunction against WVAWC that would require the creation of various databases and public repositories of documents related to the Freedom Industries chemical spill, as well as further study and risk assessments regarding the alleged exposure of Lincoln County residents to the released chemicals. On June 12, 2017, the West Virginia Mass Litigation Panel entered an order granting a motion to transfer this case to its jurisdiction and stayed the case consistent with the existing stay order. The LCC has elected to opt out of the Settlement. On January 26, 2018, the LCC filed a motion seeking to lift the stay imposed by the Mass Litigation Panel. On March 5, 2018, this motion was denied. WVAWC believes that this lawsuit is without merit and intends to vigorously contest the claims and allegations raised in the complaint. California Public Utilities Commission Residential Rate Design Proceeding On July 12, 2018, the California Public Utilities Commission (the “CPUC”) adopted the April 9, 2018 presiding officer’s decision that resolved the CPUC’s residential tariff administration proceeding. The adoption provides for a waiver by California-American Water Company, a wholly owned subsidiary of the Company, of $0.5 million of cost recovery for residential customers through the water revenue adjustment mechanism/modified cost balancing account, in lieu of a penalty. Dunbar, West Virginia Water Main Break Class Action Litigation On the evening of June 23, 2015, a 36-inch pre-stressed concrete transmission water main, installed in the early 1970s, failed. The water main is part of WVAWC’s West Relay pumping station located in the City of Dunbar. The failure of the main caused water outages and low pressure to up to approximately 25,000 WVAWC customers. In the early morning hours of June 25, 2015, crews completed a repair, but that same day, the repair developed a leak. On June 26, 2015, a second repair was completed and service was restored that day to approximately 80% of the impacted customers, and to the remaining approximately 20% by the next morning. The second repair showed signs of leaking but the water main was usable until June 29, 2015 to allow tanks to refill. The system was reconfigured to maintain service to all but approximately 3,000 customers while a final repair was completed safely on June 30, 2015. Water service was fully restored by July 1, 2015 to all customers affected by this event. On June 2, 2017, a class action complaint was filed in West Virginia Circuit Court in Kanawha County against WVAWC on behalf of a purported class of residents and business owners who lost water service or pressure as a result of the Dunbar main break. The complaint alleges breach of contract by WVAWC for failure to supply water, violation of West Virginia law regarding the sufficiency of WVAWC’s facilities and negligence by WVAWC in the design, maintenance and operation of the water system. The plaintiffs seek unspecified alleged damages on behalf of the class for lost profits, annoyance and inconvenience, and loss of use, as well as punitive damages for willful, reckless and wanton behavior in not addressing the risk of pipe failure and a large outage. On October 12, 2017, WVAWC filed with the court a motion seeking to dismiss all of the plaintiffs’ counts alleging statutory and common law tort claims. Furthermore, WVAWC asserted that the PSC, and not the court, has primary jurisdiction over allegations involving violations of the applicable tariff, the public utility code and related rules. On May 30, 2018, the court, at a hearing, denied WVAWC’s motion to apply the primary jurisdiction doctrine. The court will issue a written order on the motion to dismiss, and has set a trial date of August 26, 2019. The Company and WVAWC believe that WVAWC has valid, meritorious defenses to the claims raised in this class action complaint. WVAWC is vigorously defending itself against these allegations. Given the current stage of this proceeding, the Company cannot reasonably estimate the amount of any reasonably possible losses or a range of such losses related to this proceeding. |
Earnings Per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Common Share | Note 12: Earnings per Common Share The following table is a reconciliation of the numerator and denominator for basic and diluted earnings per share (“EPS”) calculations:
The effect of dilutive common stock equivalents is related to outstanding stock options, restricted stock units and performance stock units granted under the 2007 and the 2017 Omnibus Equity Compensation Plans, as well as shares purchased under the Company’s nonqualified employee stock purchase plan. Less than one million share-based awards were excluded from the computation of diluted EPS for the three and six months ended June 30, 2018 and 2017 because their effect would have been anti-dilutive under the treasury stock method. Equity Forward Transaction and Common Stock Issuance See Note 4—Acquisitions for discussion regarding the forward sale agreements entered into by the Company on April 11, 2018, and the physical settlement of these agreements on June 7, 2018. |
Fair Value of Financial Assets and Liabilities |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Assets and Liabilities | Note 13: Fair Value of Financial Assets and Liabilities Fair Values of Financial Instruments The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Current assets and current liabilities—The carrying amounts reported on the Consolidated Balance Sheets for current assets and current liabilities, including revolving credit debt, due to the short-term maturities and variable interest rates, approximate their fair values. Preferred stock with mandatory redemption requirements and long-term debt—The fair values of preferred stock with mandatory redemption requirements and long-term debt are categorized within the fair value hierarchy based on the inputs that are used to value each instrument. The fair value of long-term debt classified as Level 1 is calculated using quoted prices in active markets. Level 2 instruments are valued using observable inputs and Level 3 instruments are valued using observable and unobservable inputs. The fair values of instruments classified as Level 2 and Level 3 are determined by a valuation model that is based on a conventional discounted cash flow methodology and utilizes assumptions of current market rates. As a majority of the Company’s debt is not traded in active markets, the Company calculated a base yield curve using a risk-free rate (a U.S. Treasury securities yield curve) plus a credit spread that is based on the following two factors: an average of the Company’s own publicly-traded debt securities and the current market rates for U.S. Utility A debt securities. The Company used these yield curve assumptions to derive a base yield for the Level 2 and Level 3 securities. Additionally, the Company adjusted the base yield for specific features of the debt securities, including call features, coupon tax treatment and collateral for the Level 3 instruments. The following table presents the carrying amounts, including fair value adjustments previously recognized in acquisition purchase accounting and a fair value adjustment related to the Company’s interest rate swap fair value hedge (which is classified as Level 2 in the fair value hierarchy), and the fair values of the financial instruments:
Recurring Fair Value Measurements The following table presents assets and liabilities measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of June 30, 2018 and December 31, 2017 respectively:
Restricted funds—The Company’s restricted funds primarily represent proceeds received from financings for the construction and capital improvement of facilities and from customers for future services under operations, maintenance and repair projects. Long-term restricted funds of $2 million and $1 million were included in other long-term assets as of June 30, 2018 and December 31, 2017, respectively. Rabbi trust investments—The Company’s rabbi trust investments consist of equity and index funds from which supplemental executive retirement plan benefits and deferred compensation obligations can be paid. The Company includes these assets in other long-term assets. Deposits—Deposits include escrow funds and certain other deposits held in trust. The Company includes cash deposits in other current assets. Deferred compensation obligations—The Company’s deferred compensation plans allow participants to defer certain cash compensation into notional investment accounts. The Company includes such plans in other long-term liabilities. The value of the Company’s deferred compensation obligations is based on the market value of the participants’ notional investment accounts. The notional investments are comprised primarily of mutual funds, which are based on observable market prices. Mark-to-market derivative assets and liabilities—The Company utilizes fixed-to-floating interest-rate swaps, typically designated as fair-value hedges, to achieve a targeted level of variable-rate debt as a percentage of total debt. The Company also employs derivative financial instruments in the form of variable-to-fixed interest rate swaps and forward starting interest rate swaps, classified as economic hedges and cash flow hedges, respectively, in order to fix the interest cost on existing or forecasted debt. The Company uses a calculation of future cash inflows and estimated future outflows, which are discounted, to determine the current fair value. Additional inputs to the present value calculation include the contract terms, counterparty credit risk, interest rates and market volatility. Other investments—Other investments primarily represent money market funds used for active employee benefits. The Company includes other investments in other current assets. |
Segment Information |
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Segment Information | Note 14: Segment Information The Company operates its businesses primarily through one reportable segment, the Regulated Businesses segment. The Company also operates businesses that provide a broad range of related and complementary water and wastewater services in non-regulated markets, which includes four operating segments that individually do not meet the criteria of a reportable segment. These four non-reportable operating segments are collectively presented as the “Market-Based Businesses.” “Other” includes corporate costs that are not allocated to the Company’s operating segments, eliminations of inter-segment transactions, fair value adjustments and associated income and deductions related to the acquisitions that have not been allocated to the operating segments for evaluation of performance and allocation of resource purposes. The following tables include the Company’s summarized segment information:
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Subsequent Events |
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Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15: Subsequent Events On July 5, 2018, the Company entered into an agreement for the sale of the majority of its Contract Operations Group to subsidiaries of Veolia Environnement S.A. for $27 million. The sale agreement includes the transfer of 23 of the Contract Operations Group’s 33 O&M contracts. The Company closed on the sale of 17 of the 23 contracts on July 13, 2018, and expects to close on the remaining contracts, subject to customer consents, by the end of 2018. On July 31, 2018, a new, five-year national benefits health and welfare agreement was ratified, covering approximately 3,200 of the Company’s union-represented employees, which includes 17 labor unions and 69 collective bargaining agreements. Most of the benefits under this new agreement will become effective on January 1, 2019, and include, among other things, union-represented employees’ participation in the Company’s cash-based annual performance plan, additional medical plan options and changes to certain retiree medical benefits which will require the Company to re-measure its other postretirement benefit plan obligation during the third quarter of 2018. |
Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Standards | The Company adopted the following accounting standards as of January 1, 2018:
The following recently issued accounting standards have not yet been adopted by the Company as of June 30, 2018:
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Reclassification | Reclassifications Certain reclassifications have been made to prior periods in the accompanying Consolidated Financial Statements and Notes to conform to the current presentation. |
Significant Accounting Policies Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of the cash and cash equivalents and restricted funds | The following table provides a reconciliation of the cash, cash equivalents and restricted funds as presented on the Consolidated Balance Sheets, to the sum of such amounts presented on the Consolidated Statements of Cash Flows for the periods ended June 30:
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Revenue Recognition (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes the Company’s operating revenues disaggregated for the three months ended June 30, 2018:
The following table summarizes of the Company’s operating revenues disaggregated for the six months ended June 30, 2018:
The following table summarizes the changes in contract assets and liabilities for the six months ended June 30, 2018:
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Acquisitions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Purchase Price Allocation | The following table provides the preliminary purchase price allocation for the Pivotal acquisition as of June 4, 2018:
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Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2018 and 2017, respectively:
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Long-Term Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt Issued | The following long-term debt was issued during the six months ended June 30, 2018:
(a) Approximately $14 million of this debt relates to the New Jersey Environmental Infrastructure Financing Program |
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Long-Term Debt Retired Through Sinking Fund Provisions, Optional Redemptions or Payments at Maturities | The following long-term debt was retired through sinking fund provisions, optional redemptions or payment at maturity during the six months ended June 30, 2018:
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Gross Fair Value Derivative Asset and Liabilities | The following table provides a summary of the gross fair value for the Company’s derivative asset and liabilities, as well as the location of the asset and liability balances on the Consolidated Balance Sheets:
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Pension and Other Post-Retirement Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Costs | The following table provides the components of net periodic benefit (credit) costs:
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Earnings Per Common Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Numerator and Denominator for Basic and Diluted Earnings Per Share | The following table is a reconciliation of the numerator and denominator for basic and diluted earnings per share (“EPS”) calculations:
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Fair Value of Financial Assets and Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying Amounts and Fair Values of Financial Instruments | The following table presents the carrying amounts, including fair value adjustments previously recognized in acquisition purchase accounting and a fair value adjustment related to the Company’s interest rate swap fair value hedge (which is classified as Level 2 in the fair value hierarchy), and the fair values of the financial instruments:
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Fair Value Measurements of Assets and Liabilities on Recurring Basis | The following table presents assets and liabilities measured and recorded at fair value on a recurring basis and their level within the fair value hierarchy as of June 30, 2018 and December 31, 2017 respectively:
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summarized Segment Information | The following tables include the Company’s summarized segment information:
|
Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|---|---|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ||||
Cash and cash equivalents | $ 68 | $ 55 | $ 64 | |
Restricted funds | 27 | 27 | 28 | |
Restricted funds included in other long-term assets | 2 | 1 | ||
Cash and cash equivalents and restricted funds as presented on the Consolidated Statements of Cash Flows | $ 97 | $ 83 | $ 93 | $ 99 |
Revenue Recognition Disaggregated Revenues (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | $ 840 | $ 1,596 | ||
Other operating income | 13 | 18 | ||
Operating revenues | 853 | $ 844 | 1,614 | $ 1,600 |
Service, Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | (5) | (10) | ||
Operating revenues | (5) | (10) | ||
Regulated Businesses | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 731 | 1,392 | ||
Alternative revenue programs | 11 | 14 | ||
Lease contract revenue | 2 | 4 | ||
Other operating income | 13 | 18 | ||
Operating revenues | 744 | 1,410 | ||
Regulated Businesses | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 681 | 1,293 | ||
Operating revenues | 681 | 1,293 | ||
Regulated Businesses | Wastewater Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 38 | 76 | ||
Operating revenues | 38 | 76 | ||
Regulated Businesses | Miscellaneous Utility Charge | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 12 | 23 | ||
Operating revenues | 12 | 23 | ||
Market-Based Businesses | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 114 | 214 | ||
Operating revenues | 114 | 214 | ||
Residential | Regulated Businesses | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 410 | 778 | ||
Operating revenues | 410 | 778 | ||
Residential | Regulated Businesses | Wastewater Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 27 | 54 | ||
Operating revenues | 27 | 54 | ||
Commercial | Regulated Businesses | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 152 | 285 | ||
Operating revenues | 152 | 285 | ||
Commercial | Regulated Businesses | Wastewater Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 7 | 14 | ||
Operating revenues | 7 | 14 | ||
Industrial | Regulated Businesses | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 34 | 65 | ||
Operating revenues | 34 | 65 | ||
Industrial | Regulated Businesses | Wastewater Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 0 | 1 | ||
Operating revenues | 0 | 1 | ||
Public and Other | Regulated Businesses | Water Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 85 | 165 | ||
Operating revenues | 85 | 165 | ||
Public and Other | Regulated Businesses | Wastewater Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue from contract | 4 | 7 | ||
Operating revenues | $ 4 | $ 7 |
Revenue Recognition Contract Assets and Liabilities (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Contract assets: | |
Contract asset, beginning | $ 35 |
Additions | 13 |
Transfers to accounts receivable, net | (33) |
Contract asset, ending | 15 |
Contract liabilities: | |
Contract liability, beginning | 25 |
Additions | 36 |
Transfers to operating revenues | (34) |
Contract liability, ending | $ 27 |
Revenue Recognition (Details) $ in Millions |
Jul. 13, 2018
Contract
|
Jun. 30, 2018
USD ($)
|
---|---|---|
U.S. Government | Market-Based Businesses | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation | $ 3,800 | |
Municipalities and Commercial | Market-Based Businesses | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation | 686 | |
Veolia North America Operating Services, LLC | Contract Operations Group | Municipalities and Commercial | Market-Based Businesses | ||
Disaggregation of Revenue [Line Items] | ||
Revenue, remaining performance obligation | $ 44 | |
Subsequent Event | Veolia North America Operating Services, LLC | Contract Operations Group | ||
Disaggregation of Revenue [Line Items] | ||
Contracts, closed | Contract | 17 |
Acquisitions - Additional Information (Details) $ / shares in Units, CustomerAccount in Thousands, $ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 04, 2018
USD ($)
CustomerAccount
state
|
May 30, 2018
USD ($)
CustomerAccount
|
Apr. 13, 2018
USD ($)
CustomerAccount
|
Jun. 30, 2018
USD ($)
Acquisition
|
Apr. 11, 2018
USD ($)
forward_purchaser
$ / shares
shares
|
|
Business Acquisition [Line Items] | |||||
Number of forward purchasers | forward_purchaser | 2 | ||||
Forward sale agreement, number of shares authorized (shares) | shares | 2,320,000 | ||||
Forward sale agreement, share price (USD per share) | $ / shares | $ 79.01 | ||||
Forward sale agreement, net proceeds | $ 183 | ||||
Pivotal | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 363 | ||||
Purchase price allocation, assets acquired | 141 | ||||
Purchase price allocation, liabilities assumed | $ 20 | ||||
Number of states in which entity operates | state | 18 | ||||
Number of customer accounts | CustomerAccount | 1,200 | ||||
Working capital | $ 8 | ||||
Alton, Illinois Wastewater | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 54 | ||||
Number of customer accounts | CustomerAccount | 23 | ||||
Exeter Township, Pennsylvania Wastewater Assets | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 96 | ||||
Number of customer accounts | CustomerAccount | 9 | ||||
Regulated Water And Wastewater Systems | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, number of companies acquired | Acquisition | 6 | ||||
Purchase price | $ 14 | ||||
Purchase price allocation, assets acquired | 15 | ||||
Purchase price allocation, liabilities assumed | $ 1 | ||||
Direct Connections | Alton, Illinois Wastewater | |||||
Business Acquisition [Line Items] | |||||
Number of customer accounts | CustomerAccount | 11 | ||||
Bulk Contracts | Alton, Illinois Wastewater | |||||
Business Acquisition [Line Items] | |||||
Number of customer accounts | CustomerAccount | 12 |
Acquisitions Purchase Price Allocation (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Jun. 04, 2018 |
Dec. 31, 2017 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Goodwill | $ 1,621 | $ 1,379 | |
Pivotal | |||
Business Acquisition [Line Items] | |||
Accounts receivable | $ 23 | ||
Other current assets | 1 | ||
Property, plant and equipment | 21 | ||
Intangible assets | 96 | ||
Total identifiable assets | 141 | ||
Accounts payable and accrued liabilities | (5) | ||
Other current liabilities | (3) | ||
Non-current portion of warranty reserve | (11) | ||
Other long-term liabilities | (1) | ||
Total liabilities assumed | (20) | ||
Net identifiable assets acquired | 121 | ||
Goodwill | 242 | ||
Net assets acquired | $ 363 |
Acquisitions Intangible Assets Acquired (Details) - Customer relationships - Pivotal |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Minimum | |
Business Acquisition [Line Items] | |
Intangible assets, remaining amortization period | 4 years |
Maximum | |
Business Acquisition [Line Items] | |
Intangible assets, remaining amortization period | 18 years |
Regulatory Liabilities (Details) $ in Millions |
Jun. 30, 2018
USD ($)
state
|
---|---|
Regulatory Liabilities [Line Items] | |
Number of proceedings | state | 14 |
Deferred revenue | $ 54 |
Regulatory liabilities, current | |
Regulatory Liabilities [Line Items] | |
Regulatory liabilities | 17 |
Regulatory liabilities, noncurrent | |
Regulatory Liabilities [Line Items] | |
Regulatory liabilities | $ 37 |
Stockholders' Equity - Changes in Accumulated Other Comprehensive Loss by Component (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 5,385 | $ 5,218 |
Ending balance | 5,736 | 5,384 |
Employee Benefit Plan Funded Status | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (140) | (147) |
Ending balance | (140) | (147) |
Amortization of Prior Service Cost | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 1 | 1 |
Ending balance | 1 | 1 |
Amortization of Actuarial (Gain) Loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 49 | 42 |
Amounts reclassified from accumulated other comprehensive loss | 4 | 4 |
Net other comprehensive income (loss) | 4 | 4 |
Ending balance | 53 | 46 |
Foreign Currency Translation | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 1 | 2 |
Other comprehensive income before reclassifications | (1) | |
Net other comprehensive income (loss) | (1) | |
Ending balance | 1 | 1 |
Gain (Loss) on Cash Flow Hedges | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 10 | 16 |
Other comprehensive income before reclassifications | 6 | (2) |
Net other comprehensive income (loss) | 6 | (2) |
Ending balance | 16 | 14 |
Accumulated Other Comprehensive Loss | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (79) | (86) |
Other comprehensive income before reclassifications | 6 | (3) |
Amounts reclassified from accumulated other comprehensive loss | 4 | 4 |
Net other comprehensive income (loss) | 10 | 1 |
Ending balance | $ (69) | $ (85) |
Stockholders' Equity - Additional Information (Details) - USD ($) shares in Millions, $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Equity [Abstract] | ||
Shares of common stock repurchased (in shares) | 0.6 | |
Aggregate cost of shares repurchased | $ 45 | $ 54 |
Share of common stock available for repurchase (in shares) | 5.5 |
Long-Term Debt - Issued (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Debt Instrument [Line Items] | ||
Total issuances | $ 15 | $ 20 |
Other American Water subsidiaries | Private activity bonds and government funded debt | Fixed rate | ||
Debt Instrument [Line Items] | ||
Total issuances | $ 15 | |
Other American Water subsidiaries | Private activity bonds and government funded debt | Minimum | Fixed rate | ||
Debt Instrument [Line Items] | ||
Interest rate | 0.00% | |
Maturity date | 2021 | |
Other American Water subsidiaries | Private activity bonds and government funded debt | Maximum | Fixed rate | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.00% | |
Maturity date | 2048 | |
New Jersey Environmental Infrastructure Financing Program | ||
Debt Instrument [Line Items] | ||
Total issuances | $ 14 |
Long-Term Debt - Retired Through Sinking Fund Provisions, Optional Redemptions or Payments at Maturities (Details) - Debt instrument, redemption, period one $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Debt Instrument [Line Items] | |
Total retirements and redemptions | $ 119 |
Other American Water subsidiaries | Mandatorily redeemable preferred stock | |
Debt Instrument [Line Items] | |
Interest rate | 8.49% |
Maturity date | 2036 |
Total retirements and redemptions | $ 1 |
Other American Water subsidiaries | Mortgage bonds | |
Debt Instrument [Line Items] | |
Interest rate | 9.13% |
Maturity date | 2021 |
Total retirements and redemptions | $ 1 |
Other American Water subsidiaries | Term loan | |
Debt Instrument [Line Items] | |
Maturity date | 2021 |
Total retirements and redemptions | $ 2 |
Other American Water subsidiaries | American Water Capital Corp. | Senior notes | |
Debt Instrument [Line Items] | |
Interest rate | 6.25% |
Maturity date | 2018 |
Total retirements and redemptions | $ 110 |
Minimum | Other American Water subsidiaries | Term loan | |
Debt Instrument [Line Items] | |
Interest rate | 4.83% |
Maximum | Other American Water subsidiaries | Term loan | |
Debt Instrument [Line Items] | |
Interest rate | 5.69% |
Fixed rate two | Other American Water subsidiaries | American Water Capital Corp. | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Total retirements and redemptions | $ 1 |
Fixed rate two | Minimum | Other American Water subsidiaries | American Water Capital Corp. | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Interest rate | 1.79% |
Maturity date | 2021 |
Fixed rate two | Maximum | Other American Water subsidiaries | American Water Capital Corp. | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Interest rate | 2.90% |
Maturity date | 2031 |
Fixed rate three | Other American Water subsidiaries | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Total retirements and redemptions | $ 4 |
Fixed rate three | Minimum | Other American Water subsidiaries | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Interest rate | 0.00% |
Maturity date | 2018 |
Fixed rate three | Maximum | Other American Water subsidiaries | Private activity bonds and government funded debt | |
Debt Instrument [Line Items] | |
Interest rate | 5.40% |
Maturity date | 2041 |
Long-Term Debt - Additional Information (Details) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
forward_starting_swap_agreement
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
forward_starting_swap_agreement
|
Jun. 30, 2017
USD ($)
|
May 22, 2018
forward_starting_swap_agreement
|
|
Debt Instrument [Line Items] | |||||
Number of forward starting swap agreements | forward_starting_swap_agreement | 4 | 4 | 2 | ||
Debt instrument maturity month and year | 2018-12 | ||||
Fair value hedge ineffectiveness | $ 0 | $ 0 | $ 0 | $ 0 | |
Forward starting swap agreements | |||||
Debt Instrument [Line Items] | |||||
Derivative average fixed interest rate | 2.87% | 2.87% | |||
Derivative termination month and year | 2018-11 | ||||
Designated as Hedging Instrument | Forward starting swap agreements | |||||
Debt Instrument [Line Items] | |||||
Derivate instrument notional amount | $ 100,000,000 | $ 100,000,000 | |||
Interest Costs | Designated as Hedging Instrument | Interest rate swap | |||||
Debt Instrument [Line Items] | |||||
Derivate instrument notional amount | $ 5,000,000 | $ 5,000,000 |
Long-Term Debt - Summary of Gross Fair Value Derivative Asset and Liabilities (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative [Line Items] | ||
Mark-to-market derivative asset | $ 9 | |
Cash flow hedge | Forward starting swaps | Other current assets | ||
Derivative [Line Items] | ||
Mark-to-market derivative asset | 9 | $ 0 |
Cash flow hedge | Forward starting swaps | Other current liabilities | ||
Derivative [Line Items] | ||
Derivative liabilities | $ 3 | $ 3 |
Short-Term Debt (Details) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017 |
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017 |
Mar. 21, 2018
USD ($)
|
Mar. 20, 2018
USD ($)
|
|
American Water Capital Corp. | ||||||
Short-term Debt [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 500,000,000 | $ 500,000,000 | ||||
Number of extensions allowed under credit facility instances | 2 | |||||
Number of extensions allowed under credit facility, duration | 1 year | |||||
Commercial paper maximum borrowing capacity | $ 1,600,000,000 | $ 2,100,000,000 | ||||
Commercial paper | $ 1,650,000,000 | $ 1,650,000,000 | ||||
Interest rate | 2.34% | 1.24% | 2.15% | 1.14% | ||
Revolving Credit Facility | Letter of Credit | ||||||
Short-term Debt [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 150,000,000 | $ 150,000,000 | ||||
Revolving Credit Facility | American Water Capital Corp. | ||||||
Short-term Debt [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 2,250,000,000 | $ 1,750,000,000 | ||||
Proceeds from lines of credit | $ 0 |
Income Taxes - Additional Information (Details) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 27.00% | 41.80% | 26.00% | 39.50% |
Pension and Other Post-Retirement Benefits - Schedule of Net Periodic Benefit Cost Components (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Pension Plan Asset | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 8 | $ 8 | $ 17 | $ 17 |
Interest cost | 19 | 20 | 38 | 40 |
Expected return on plan assets | (24) | (23) | (49) | (47) |
Amortization of actuarial loss | 7 | 9 | 14 | 18 |
Net periodic pension benefit cost | 10 | 14 | 20 | 28 |
Other Postretirement Benefit Cost | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 2 | 2 | 5 | 5 |
Interest cost | 5 | 6 | 11 | 13 |
Expected return on plan assets | (6) | (6) | (13) | (13) |
Amortization of prior service credit | (4) | (4) | (9) | (9) |
Amortization of actuarial loss | 1 | 2 | 2 | 5 |
Net periodic pension benefit cost | $ (2) | $ 0 | $ (4) | $ 1 |
Pension and Other Post-Retirement Benefits - Additional Information (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Pension Plan Asset | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Company contributions | $ 1,000,000 | $ 10,000,000 | $ 1,000,000 | $ 20,000,000 |
Expected contributions | 30,000,000 | 30,000,000 | ||
Other Postretirement Benefit Cost | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Company contributions | 0 | $ 2,000,000 | 0 | $ 3,000,000 |
Expected contributions | $ 45,000,000 | $ 45,000,000 |
Commitments and Contingencies - Additional Information (Details) Customer in Thousands |
6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jul. 12, 2018
USD ($)
|
Jun. 08, 2018
USD ($)
putative_plaintiff
|
Jun. 01, 2018
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2015
Customer
|
Jun. 27, 2015 |
Jun. 26, 2015 |
Jun. 23, 2015
Customer
|
|
Commitments And Contingencies [Line Items] | ||||||||
Loss contingency, probable loss | $ 136,000,000 | |||||||
WVAWC | Dunbar | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Number of customers impacted due to failure of main that caused water outages and low pressure | Customer | 25 | |||||||
Percentage of impacted customers to which service was restored | 20.00% | 80.00% | ||||||
Number of customers for whom system was reconfigured to maintain service while a final repair was completed | Customer | 3 | |||||||
Case Against Insurance Carrier | WVAWC | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Payments for legal settlements | $ 20,000,000 | |||||||
Damages sought, value | $ 25,000,000 | |||||||
Binding Agreement | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Amount of settlement | $ 126,000,000 | 126,000,000 | ||||||
Binding Agreement | WVAWC | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Amount of settlement | $ 23,000,000 | |||||||
Minimum | WVAWC | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Number of putative plaintiffs that have submitted opt-out notices | putative_plaintiff | 100 | |||||||
Maximum | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Loss contingency, possible loss | $ 25,000,000 | |||||||
Maximum | WVAWC | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Number of putative plaintiffs that have submitted opt-out notices | putative_plaintiff | 225,000 | |||||||
Subsequent Event | California Public Utilities Commission Residential Rate Design Proceeding | Cal Am | ||||||||
Commitments And Contingencies [Line Items] | ||||||||
Waiver of cost recovery for residential customers | $ 500,000 |
Earnings Per Common Share Earnings Per Share - Reconciliation of Numerator and Denominator for Basic and Diluted Earnings Per Share (Details) - USD ($) shares in Millions, $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to common stockholders | $ 162 | $ 131 | $ 268 | $ 224 |
Weighted-average common shares outstanding - Basic (per share) | 179 | 178 | 179 | 178 |
Effect of dilutive common stock equivalents (per shares) | 0 | 1 | 0 | 1 |
Weighted-average common shares outstanding - Diluted (per share) | 179 | 179 | 179 | 179 |
Earnings Per Common Share (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Maximum | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 1 | 1 | 1 | 1 |
Fair Value of Financial Assets and Liabilities - Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Carrying Amount | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, carrying amount | $ 9 | $ 10 |
Long-term debt (excluding capital lease obligations), carrying amount | 6,706 | 6,809 |
Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, fair value | 11 | 14 |
Long-term debt (excluding capital lease obligations), fair value | 7,107 | 7,643 |
Fair Value | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, fair value | 0 | 0 |
Long-term debt (excluding capital lease obligations), fair value | 4,529 | 4,846 |
Fair Value | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, fair value | 0 | 0 |
Long-term debt (excluding capital lease obligations), fair value | 839 | 976 |
Fair Value | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, fair value | 11 | 14 |
Long-term debt (excluding capital lease obligations), fair value | $ 1,739 | $ 1,821 |
Fair Value of Financial Assets and Liabilities - Measurements of Assets and Liabilities on Recurring Basis (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets: | ||
Restricted funds | $ 29 | $ 28 |
Rabbi trust investments | 15 | 15 |
Deposits | 3 | 4 |
Mark-to-market derivative asset | 9 | |
Other investments | 3 | 3 |
Total assets | 59 | 50 |
Liabilities: | ||
Deferred compensation obligations | 17 | 17 |
Mark-to-market derivative liability | 3 | 3 |
Total liabilities | 20 | 20 |
Total net assets (liabilities) | 39 | 30 |
Level 1 | ||
Assets: | ||
Restricted funds | 29 | 28 |
Rabbi trust investments | 15 | 15 |
Deposits | 3 | 4 |
Mark-to-market derivative asset | 0 | |
Other investments | 3 | 3 |
Total assets | 50 | 50 |
Liabilities: | ||
Deferred compensation obligations | 17 | 17 |
Mark-to-market derivative liability | 0 | 0 |
Total liabilities | 17 | 17 |
Total net assets (liabilities) | 33 | 33 |
Level 2 | ||
Assets: | ||
Restricted funds | 0 | 0 |
Rabbi trust investments | 0 | 0 |
Deposits | 0 | 0 |
Mark-to-market derivative asset | 9 | |
Other investments | 0 | 0 |
Total assets | 9 | 0 |
Liabilities: | ||
Deferred compensation obligations | 0 | 0 |
Mark-to-market derivative liability | 3 | 3 |
Total liabilities | 3 | 3 |
Total net assets (liabilities) | 6 | (3) |
Level 3 | ||
Assets: | ||
Restricted funds | 0 | 0 |
Rabbi trust investments | 0 | 0 |
Deposits | 0 | 0 |
Mark-to-market derivative asset | 0 | |
Other investments | 0 | 0 |
Total assets | 0 | 0 |
Liabilities: | ||
Deferred compensation obligations | 0 | 0 |
Mark-to-market derivative liability | 0 | |
Total liabilities | 0 | 0 |
Total net assets (liabilities) | $ 0 | $ 0 |
Fair Value of Financial Assets and Liabilities - Additional Information (Details) - USD ($) $ in Millions |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Long term restricted funds | $ 2 | $ 1 |
Segment Information - Additional Information (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
Segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
Number of operating segments | 4 |
Segment Information - Summarized Segment Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Segment Reporting Information [Line Items] | |||||
Operating revenues | $ 853 | $ 844 | $ 1,614 | $ 1,600 | |
Depreciation and amortization | 134 | 126 | 263 | 250 | |
Total operating expenses, net | 551 | 534 | 1,095 | 1,060 | |
Interest, net | (86) | (85) | (170) | (170) | |
Income before income taxes | 222 | 226 | 362 | 371 | |
Provision for income taxes | 60 | 95 | 94 | 147 | |
Net income attributable to common stockholders | 162 | 131 | 268 | 224 | |
Total assets | 20,471 | 18,966 | 20,471 | 18,966 | $ 19,482 |
Capital expenditures | 375 | 332 | 739 | 602 | |
Regulated Businesses | |||||
Segment Reporting Information [Line Items] | |||||
Operating revenues | 744 | 1,410 | |||
Market-Based Businesses | |||||
Segment Reporting Information [Line Items] | |||||
Operating revenues | 114 | 214 | |||
Operating Segments | Regulated Businesses | |||||
Segment Reporting Information [Line Items] | |||||
Operating revenues | 744 | 746 | 1,410 | 1,405 | |
Depreciation and amortization | 123 | 119 | 245 | 236 | |
Total operating expenses, net | 453 | 450 | 915 | 886 | |
Interest, net | (69) | (67) | (138) | (133) | |
Income before income taxes | 226 | 230 | 368 | 384 | |
Provision for income taxes | 59 | 90 | 97 | 150 | |
Net income attributable to common stockholders | 167 | 140 | 271 | 234 | |
Total assets | 18,197 | 16,982 | 18,197 | 16,982 | |
Capital expenditures | 347 | 289 | 677 | 542 | |
Operating Segments | Market-Based Businesses | |||||
Segment Reporting Information [Line Items] | |||||
Operating revenues | 114 | 103 | 214 | 206 | |
Depreciation and amortization | 7 | 4 | 11 | 8 | |
Total operating expenses, net | 98 | 89 | 184 | 183 | |
Interest, net | 2 | 1 | 3 | 1 | |
Income before income taxes | 18 | 15 | 34 | 25 | |
Provision for income taxes | 5 | 7 | 9 | 10 | |
Net income attributable to common stockholders | 13 | 9 | 25 | 15 | |
Total assets | 818 | 570 | 818 | 570 | |
Capital expenditures | 1 | 3 | 7 | 4 | |
Other | |||||
Segment Reporting Information [Line Items] | |||||
Operating revenues | (5) | (5) | (10) | (11) | |
Depreciation and amortization | 4 | 3 | 7 | 6 | |
Total operating expenses, net | 0 | (5) | (4) | (9) | |
Interest, net | (19) | (19) | (35) | (38) | |
Income before income taxes | (22) | (19) | (40) | (38) | |
Provision for income taxes | (4) | (2) | (12) | (13) | |
Net income attributable to common stockholders | (18) | (18) | (28) | (25) | |
Total assets | 1,456 | 1,414 | 1,456 | 1,414 | |
Capital expenditures | $ 27 | $ 40 | $ 55 | $ 56 |
Subsequent Events (Details) - Subsequent Event $ in Millions |
Jul. 31, 2018
Labor_union
Union_represented_employee
collective_bargaining_agreement
|
Jul. 13, 2018
Contract
|
Jul. 05, 2018
USD ($)
Contract
|
---|---|---|---|
Subsequent Event [Line Items] | |||
Agreement, term | 5 years | ||
Number of union represented employees | Union_represented_employee | 3,200 | ||
Number of labor unions | Labor_union | 17 | ||
Number of collective bargaining agreement | collective_bargaining_agreement | 69 | ||
Contract Operations Group | Veolia North America Operating Services, LLC | |||
Subsequent Event [Line Items] | |||
Sale of business | $ | $ 27 | ||
Contracts, transferred out | 23 | ||
Contracts | 33 | ||
Contracts, closed | 17 |
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