x | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the quarterly period ended June 30, 2017 |
or |
¨ | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
for the transition period from to |
California | 95-4676679 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
630 E. Foothill Blvd, San Dimas, CA | 91773-1212 | |
(Address of Principal Executive Offices) | (Zip Code) |
California | 95-1243678 | |
(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | |
630 E. Foothill Blvd, San Dimas, CA | 91773-1212 | |
(Address of Principal Executive Offices) | (Zip Code) |
American States Water Company | Yes x No ¨ | |
Golden State Water Company | Yes x No ¨ |
American States Water Company | Yes x No ¨ | |
Golden State Water Company | Yes x No ¨ |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
Large accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer x | Smaller reporting company ¨ |
American States Water Company | Yes ¨ Nox | |
Golden State Water Company | Yes ¨ Nox |
• | the outcome of pending and future regulatory, legislative or other proceedings, investigations or audits, including decisions in GSWC's general rate cases and the results of independent audits of GSWC's construction contracting procurement practices or other independent audits of our costs; |
• | changes in the policies and procedures of the California Public Utilities Commission ("CPUC"); |
• | timeliness of CPUC action on rates; |
• | availability of GSWC's water supplies, which may be adversely affected by drought, changes in weather patterns in the West, contamination, and court decisions or other governmental actions restricting the use of water from the Colorado River, the California State Water Project, and/or pumping of groundwater; |
• | our ability to efficiently manage GSWC capital expenditures and operating and maintenance expenses within CPUC authorized levels and timely recover our costs through rates; |
• | the impact of opposition to GSWC rate increases on our ability to recover our costs through rates, including costs associated with construction of pipelines to connect to alternative sources of water, new wells to replace wells that are no |
• | the impact of opposition by GSWC customers to rate increases associated with tiered rate structures as well as potential future restrictions on water use mandated in California, which decreases adopted usage and increases customer rates; |
• | the impact of condemnation actions on future GSWC revenues and other aspects of our business if we do not receive adequate compensation for the assets acquired, or recovery of all charges associated with the condemnation of these assets, and the impact on future revenues if we are no longer entitled to any portion of the revenues generated from these assets; |
• | liabilities of GSWC associated with the inherent risks of damage to private property and injuries to employees and the public if they should come into contact with electrical current or equipment, including through downed power lines or equipment malfunctions, or if safe construction and maintenance work sites are not maintained; |
• | our ability to forecast the costs of maintaining GSWC’s aging water and electric infrastructure; |
• | our ability to recover increases in permitting costs and costs associated with negotiating and complying with the terms of our franchise agreements with cities and counties and other demands made upon us by the cities and counties in which GSWC operates; |
• | changes in accounting valuations and estimates, including changes resulting from our assessment of anticipated recovery of GSWC's regulatory assets, liabilities and revenues subject to refund or regulatory disallowances and the timing of such recovery, and the amounts set aside for uncollectible accounts receivable, inventory obsolescence, pensions and post-retirement liabilities, taxes and uninsured losses and claims, including general liability and workers' compensation claims; |
• | changes in environmental laws, health and safety laws and water and wastewater quality requirements and increases in costs associated with complying with these laws and requirements, including costs associated with GSWC's upgrading and building new water treatment plants, GSWC's disposing of residuals from our water treatment plants, handling and storing hazardous chemicals, compliance monitoring activities and GSWC's securing alternative supplies of water when necessary; |
• | our ability to obtain adequate, reliable and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our water and wastewater operations; |
• | our ability to attract, retain, train, motivate, develop and transition key employees; |
• | our ability to recover the costs associated with the contamination of GSWC’s groundwater supplies from parties responsible for the contamination or through the ratemaking process, and the time and expense incurred by us in obtaining recovery of such costs; |
• | adequacy of our electric division's power supplies and the extent to which we can manage and respond to the volatility of electricity and natural gas prices; |
• | our electric division's ability to comply with the CPUC’s renewable energy procurement requirements; |
• | changes in GSWC long-term customer demand due to changes in customer usage patterns as a result of conservation efforts, regulatory changes affecting demand such as mandatory restrictions on water use, new landscaping or irrigation requirements, recycling of water by customers or purchase of recycled water supplied by other parties, unanticipated population growth or decline, changes in climate conditions, general economic and financial market conditions and cost increases, which may impact our long-term operating revenues if we are unable to secure rate increases, if growth in the residential customer base does not occur to the extent necessary to offset the decline in per-customer residential usage or GSWC's customer base declines as a result of condemnation actions or the use of recycled or reclaimed water from other third-party sources; |
• | changes in accounting treatment for regulated utilities; |
• | effects of changes in or interpretations of tax laws, rates or policies; |
• | changes in estimates used in ASUS’s revenue recognition under the percentage of completion method of accounting for certain construction activities; |
• | termination, in whole or in part, of one or more of our military utility privatization contracts to provide water and/or wastewater services at military bases for the convenience of the U.S. government or for default; |
• | suspension or debarment for a period of time from contracting with the government due to violations of federal law or regulations in connection with military utility privatization activities; |
• | delays by the U.S. government in making timely payments to ASUS for water and/or wastewater services at military bases because of fiscal uncertainties over the funding of the U.S. government or otherwise; |
• | delays in obtaining redetermination of prices or economic price or equitable adjustments to our prices on one or more of our contracts to provide water and/or wastewater services at military bases; |
• | disallowance of costs on any of our contracts to provide water and/or wastewater services at military bases because of audits, cost reviews or investigations by contracting agencies; |
• | inaccurate assumptions used in preparing bids in our contracted services business or negotiating periodic price adjustments; |
• | failure of the wastewater systems that we operate on military bases resulting in untreated wastewater or contaminants spilling into nearby properties, streams or rivers; |
• | failure to comply with the terms of our military privatization contracts; |
• | failure of any of our subcontractors to perform services for us in accordance with the terms of our military privatization contracts; |
• | competition for new military privatization contracts; |
• | issues with the implementation, maintenance or upgrading of our information technology systems; |
• | general economic conditions which may impact our ability to recover infrastructure investments and operating costs from customers; |
• | explosions, fires, accidents, mechanical breakdowns, the disruption of information technology and telecommunication systems, human error and similar events that may occur while operating and maintaining water and electric systems in California or operating and maintaining water and wastewater systems on military bases under varying geographic conditions; |
• | the impact of storms, earthquakes, floods, mudslides, drought, wildfires, disease and similar natural disasters, or acts of terrorism or vandalism, that affect customer demand or that damage or disrupt facilities, operations or information technology systems owned by us, our customers or third parties on whom we rely; |
• | potential costs, lost revenues, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption due to a cyber-attack or other cyber incident; |
• | increases in the cost of obtaining insurance or in uninsured losses that may not be recovered in rates, including increases due to difficulties in obtaining insurance for certain risks, such as wildfires and earthquakes in California; |
• | restrictive covenants in our debt instruments or changes to our credit ratings on current or future debt that may increase our financing costs or affect our ability to borrow or make payments on our debt; and |
• | our ability to access capital markets and other sources of credit in a timely manner on acceptable terms. |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||
Property, Plant and Equipment | ||||||||
Regulated utility plant, at cost | $ | 1,672,559 | $ | 1,670,238 | ||||
Non-utility property, at cost | 13,936 | 13,441 | ||||||
Total | 1,686,495 | 1,683,679 | ||||||
Less - Accumulated depreciation | (531,292 | ) | (532,753 | ) | ||||
Net property, plant and equipment | 1,155,203 | 1,150,926 | ||||||
Other Property and Investments | ||||||||
Goodwill | 1,116 | 1,116 | ||||||
Other property and investments | 21,413 | 20,836 | ||||||
Total other property and investments | 22,529 | 21,952 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 2,124 | 436 | ||||||
Accounts receivable — customers (less allowance for doubtful accounts of $708 in 2017 and $702 in 2016) | 25,338 | 19,993 | ||||||
Unbilled receivable | 24,350 | 24,391 | ||||||
Receivable from the U.S. government | 10,900 | 8,467 | ||||||
Other accounts receivable (less allowance for doubtful accounts of $59 in 2017 and $62 in 2016) | 2,665 | 3,151 | ||||||
Income taxes receivable | 355 | 17,867 | ||||||
Materials and supplies, at average cost | 5,148 | 4,294 | ||||||
Regulatory assets — current | 40,849 | 43,296 | ||||||
Prepayments and other current assets | 4,951 | 3,735 | ||||||
Costs and estimated earnings in excess of billings on contracts | 32,856 | 41,245 | ||||||
Total current assets | 149,536 | 166,875 | ||||||
Regulatory and Other Assets | ||||||||
Regulatory assets | 104,645 | 102,985 | ||||||
Costs and estimated earnings in excess of billings on contracts | 23,324 | 22,687 | ||||||
Other | 7,416 | 5,068 | ||||||
Total regulatory and other assets | 135,385 | 130,740 | ||||||
Total Assets | $ | 1,462,653 | $ | 1,470,493 |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||
Capitalization | ||||||||
Common shares, no par value | ||||||||
Authorized: 60,000,000 shares | ||||||||
Outstanding: 36,644,758 shares in 2017 and 36,571,360 shares in 2016 | $ | 248,286 | $ | 247,232 | ||||
Earnings reinvested in the business | 264,739 | 247,065 | ||||||
Total common shareholders’ equity | 513,025 | 494,297 | ||||||
Long-term debt | 320,969 | 320,981 | ||||||
Total capitalization | 833,994 | 815,278 | ||||||
Current Liabilities | ||||||||
Notes payable to bank | 44,000 | 90,000 | ||||||
Long-term debt — current | 336 | 330 | ||||||
Accounts payable | 45,214 | 43,724 | ||||||
Income taxes payable | 11,726 | 149 | ||||||
Accrued other taxes | 7,275 | 9,112 | ||||||
Accrued employee expenses | 11,423 | 12,304 | ||||||
Accrued interest | 3,831 | 3,864 | ||||||
Unrealized loss on purchased power contracts | 4,493 | 4,901 | ||||||
Billings in excess of costs and estimated earnings on contracts | 414 | 2,263 | ||||||
Other | 11,742 | 11,297 | ||||||
Total current liabilities | 140,454 | 177,944 | ||||||
Other Credits | ||||||||
Advances for construction | 67,209 | 69,722 | ||||||
Contributions in aid of construction - net | 123,607 | 120,518 | ||||||
Deferred income taxes | 231,031 | 224,530 | ||||||
Unamortized investment tax credits | 1,471 | 1,529 | ||||||
Accrued pension and other postretirement benefits | 52,247 | 49,856 | ||||||
Other | 12,640 | 11,116 | ||||||
Total other credits | 488,205 | 477,271 | ||||||
Commitments and Contingencies (Note 8) | ||||||||
Total Capitalization and Liabilities | $ | 1,462,653 | $ | 1,470,493 |
Three Months Ended June 30, | ||||||||
(in thousands, except per share amounts) | 2017 | 2016 | ||||||
Operating Revenues | ||||||||
Water | $ | 80,734 | $ | 81,058 | ||||
Electric | 7,612 | 7,701 | ||||||
Contracted services | 24,849 | 23,195 | ||||||
Total operating revenues | 113,195 | 111,954 | ||||||
Operating Expenses | ||||||||
Water purchased | 17,937 | 15,835 | ||||||
Power purchased for pumping | 2,157 | 2,132 | ||||||
Groundwater production assessment | 4,931 | 3,968 | ||||||
Power purchased for resale | 2,308 | 2,216 | ||||||
Supply cost balancing accounts | (5,293 | ) | (2,517 | ) | ||||
Other operation | 8,172 | 6,917 | ||||||
Administrative and general | 20,458 | 21,288 | ||||||
Depreciation and amortization | 9,647 | 9,601 | ||||||
Maintenance | 3,606 | 3,635 | ||||||
Property and other taxes | 4,345 | 4,168 | ||||||
ASUS construction | 11,412 | 12,937 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Total operating expenses | 71,379 | 80,180 | ||||||
Operating Income | 41,816 | 31,774 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (5,926 | ) | (5,603 | ) | ||||
Interest income | 620 | 190 | ||||||
Other, net | 589 | 437 | ||||||
Total other income and expenses, net | (4,717 | ) | (4,976 | ) | ||||
Income before income tax expense | 37,099 | 26,798 | ||||||
Income tax expense | 14,307 | 10,056 | ||||||
Net Income | $ | 22,792 | $ | 16,742 | ||||
Weighted Average Number of Common Shares Outstanding | 36,624 | 36,554 | ||||||
Basic Earnings Per Common Share | $ | 0.62 | $ | 0.46 | ||||
Weighted Average Number of Diluted Shares | 36,825 | 36,752 | ||||||
Fully Diluted Earnings Per Common Share | $ | 0.62 | $ | 0.45 | ||||
Dividends Declared Per Common Share | $ | 0.242 | $ | 0.224 |
Six Months Ended June 30, | ||||||||
(in thousands, except per share amounts) | 2017 | 2016 | ||||||
Operating Revenues | ||||||||
Water | $ | 147,138 | $ | 147,370 | ||||
Electric | 18,114 | 18,274 | ||||||
Contracted services | 46,753 | 39,837 | ||||||
Total operating revenues | 212,005 | 205,481 | ||||||
Operating Expenses | ||||||||
Water purchased | 30,043 | 29,634 | ||||||
Power purchased for pumping | 3,754 | 3,764 | ||||||
Groundwater production assessment | 8,306 | 6,668 | ||||||
Power purchased for resale | 5,408 | 5,087 | ||||||
Supply cost balancing accounts | (7,042 | ) | (5,932 | ) | ||||
Other operation | 14,332 | 13,883 | ||||||
Administrative and general | 40,744 | 42,061 | ||||||
Depreciation and amortization | 19,330 | 19,392 | ||||||
Maintenance | 7,070 | 7,705 | ||||||
Property and other taxes | 8,911 | 8,546 | ||||||
ASUS construction | 22,896 | 21,666 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Total operating expenses | 145,451 | 152,474 | ||||||
Operating Income | 66,554 | 53,007 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (11,831 | ) | (11,226 | ) | ||||
Interest income | 879 | 362 | ||||||
Other, net | 1,053 | 618 | ||||||
Total other income and expenses, net | (9,899 | ) | (10,246 | ) | ||||
Income before income tax expense | 56,655 | 42,761 | ||||||
Income tax expense | 21,162 | 15,869 | ||||||
Net Income | $ | 35,493 | $ | 26,892 | ||||
Weighted Average Number of Common Shares Outstanding | 36,607 | 36,538 | ||||||
Basic Earnings Per Common Share | $ | 0.96 | $ | 0.73 | ||||
Weighted Average Number of Diluted Shares | 36,799 | 36,730 | ||||||
Fully Diluted Earnings Per Common Share | $ | 0.96 | $ | 0.73 | ||||
Dividends Declared Per Common Share | $ | 0.484 | $ | 0.448 |
Six Months Ended June 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 35,493 | $ | 26,892 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 19,450 | 19,759 | ||||||
Provision for doubtful accounts | 339 | 214 | ||||||
Deferred income taxes and investment tax credits | 5,948 | 6,476 | ||||||
Stock-based compensation expense | 1,634 | 1,460 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Other — net | (523 | ) | (188 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable — customers | (6,408 | ) | (1,765 | ) | ||||
Unbilled receivable | 41 | 1,533 | ||||||
Other accounts receivable | 489 | (208 | ) | |||||
Receivables from the U.S. government | (2,433 | ) | (1,975 | ) | ||||
Materials and supplies | (854 | ) | 121 | |||||
Prepayments and other assets | (1,102 | ) | (1,403 | ) | ||||
Costs and estimated earnings in excess of billings on contracts | 7,752 | (3,615 | ) | |||||
Regulatory assets | (3,855 | ) | (12,499 | ) | ||||
Accounts payable | 948 | 2,557 | ||||||
Income taxes receivable/payable | 29,089 | 8,803 | ||||||
Billings in excess of costs and estimated earnings on contracts | (1,849 | ) | 2,146 | |||||
Accrued pension and other post-retirement benefits | 2,864 | 2,554 | ||||||
Other liabilities | (3,283 | ) | (2,323 | ) | ||||
Net cash provided | 75,439 | 48,539 | ||||||
Cash Flows From Investing Activities: | ||||||||
Capital expenditures | (45,896 | ) | (65,334 | ) | ||||
Proceeds from sale of assets | 34,324 | — | ||||||
Other investing activities | 232 | (125 | ) | |||||
Net cash used | (11,340 | ) | (65,459 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Proceeds from stock option exercises | 524 | 126 | ||||||
Receipt of advances for and contributions in aid of construction | 5,144 | 2,075 | ||||||
Refunds on advances for construction | (2,868 | ) | (2,576 | ) | ||||
Retirement or repayments of long-term debt | (191 | ) | (169 | ) | ||||
Net change in notes payable to banks | (46,000 | ) | 35,500 | |||||
Dividends paid | (17,715 | ) | (16,369 | ) | ||||
Other financing activities | (1,305 | ) | (1,513 | ) | ||||
Net cash (used) provided | (62,411 | ) | 17,074 | |||||
Net increase in cash and cash equivalents | 1,688 | 154 | ||||||
Cash and cash equivalents, beginning of period | 436 | 4,364 | ||||||
Cash and cash equivalents, end of period | $ | 2,124 | $ | 4,518 | ||||
Non-cash transactions: | ||||||||
Accrued payables for investment in utility plant | $ | 17,777 | $ | 21,488 | ||||
Property installed by developers and conveyed | $ | 1,025 | $ | 4,345 |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||
Utility Plant | ||||||||
Utility plant, at cost | $ | 1,672,559 | $ | 1,670,238 | ||||
Less - Accumulated depreciation | (523,084 | ) | (524,927 | ) | ||||
Net utility plant | 1,149,475 | 1,145,311 | ||||||
Other Property and Investments | 19,299 | 18,719 | ||||||
Current Assets | ||||||||
Cash and cash equivalents | 1,544 | 209 | ||||||
Accounts receivable-customers (less allowance for doubtful accounts of $708 in 2017 and $702 in 2016) | 25,338 | 19,993 | ||||||
Unbilled receivable | 18,259 | 17,700 | ||||||
Other accounts receivable (less allowance for doubtful accounts of $59 in 2017 and 2016) | 1,988 | 1,959 | ||||||
Income taxes receivable from Parent | — | 21,856 | ||||||
Materials and supplies, at average cost | 4,437 | 3,724 | ||||||
Regulatory assets — current | 40,849 | 43,296 | ||||||
Prepayments and other current assets | 4,248 | 3,520 | ||||||
Total current assets | 96,663 | 112,257 | ||||||
Regulatory and Other Assets | ||||||||
Regulatory assets | 104,645 | 102,985 | ||||||
Other | 7,303 | 4,906 | ||||||
Total regulatory and other assets | 111,948 | 107,891 | ||||||
Total Assets | $ | 1,377,385 | $ | 1,384,178 |
(in thousands) | June 30, 2017 | December 31, 2016 | ||||||
Capitalization | ||||||||
Common Shares, no par value: | ||||||||
Authorized: 1,000 shares | ||||||||
Outstanding: 146 shares in 2017 and 2016 | $ | 240,920 | $ | 240,482 | ||||
Earnings reinvested in the business | 235,309 | 206,288 | ||||||
Total common shareholder’s equity | 476,229 | 446,770 | ||||||
Long-term debt | 320,969 | 320,981 | ||||||
Total capitalization | 797,198 | 767,751 | ||||||
Current Liabilities | ||||||||
Inter-company payable | 9,583 | 61,726 | ||||||
Long-term debt — current | 336 | 330 | ||||||
Accounts payable | 38,490 | 34,648 | ||||||
Income taxes payable to Parent | 3,269 | — | ||||||
Accrued other taxes | 7,229 | 8,870 | ||||||
Accrued employee expenses | 10,163 | 10,983 | ||||||
Accrued interest | 3,544 | 3,588 | ||||||
Unrealized loss on purchased power contracts | 4,493 | 4,901 | ||||||
Other | 11,399 | 10,925 | ||||||
Total current liabilities | 88,506 | 135,971 | ||||||
Other Credits | ||||||||
Advances for construction | 67,209 | 69,722 | ||||||
Contributions in aid of construction — net | 123,607 | 120,518 | ||||||
Deferred income taxes | 234,583 | 227,798 | ||||||
Unamortized investment tax credits | 1,471 | 1,529 | ||||||
Accrued pension and other postretirement benefits | 52,247 | 49,856 | ||||||
Other | 12,564 | 11,033 | ||||||
Total other credits | 491,681 | 480,456 | ||||||
Commitments and Contingencies (Note 8) | ||||||||
Total Capitalization and Liabilities | $ | 1,377,385 | $ | 1,384,178 |
Three Months Ended June 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Operating Revenues | ||||||||
Water | $ | 80,734 | $ | 81,058 | ||||
Electric | 7,612 | 7,701 | ||||||
Total operating revenues | 88,346 | 88,759 | ||||||
Operating Expenses | ||||||||
Water purchased | 17,937 | 15,835 | ||||||
Power purchased for pumping | 2,157 | 2,132 | ||||||
Groundwater production assessment | 4,931 | 3,968 | ||||||
Power purchased for resale | 2,308 | 2,216 | ||||||
Supply cost balancing accounts | (5,293 | ) | (2,517 | ) | ||||
Other operation | 7,096 | 6,156 | ||||||
Administrative and general | 16,007 | 16,999 | ||||||
Depreciation and amortization | 9,394 | 9,347 | ||||||
Maintenance | 3,049 | 3,243 | ||||||
Property and other taxes | 3,982 | 3,823 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Total operating expenses | 53,267 | 61,202 | ||||||
Operating Income | 35,079 | 27,557 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (5,775 | ) | (5,586 | ) | ||||
Interest income | 620 | 190 | ||||||
Other, net | 588 | 231 | ||||||
Total other income and expenses, net | (4,567 | ) | (5,165 | ) | ||||
Income before income tax expense | 30,512 | 22,392 | ||||||
Income tax expense | 12,149 | 8,722 | ||||||
Net Income | $ | 18,363 | $ | 13,670 |
Six Months Ended June 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Operating Revenues | ||||||||
Water | $ | 147,138 | $ | 147,370 | ||||
Electric | 18,114 | 18,274 | ||||||
Total operating revenues | 165,252 | 165,644 | ||||||
Operating Expenses | ||||||||
Water purchased | 30,043 | 29,634 | ||||||
Power purchased for pumping | 3,754 | 3,764 | ||||||
Groundwater production assessment | 8,306 | 6,668 | ||||||
Power purchased for resale | 5,408 | 5,087 | ||||||
Supply cost balancing accounts | (7,042 | ) | (5,932 | ) | ||||
Other operation | 11,649 | 12,239 | ||||||
Administrative and general | 31,305 | 33,515 | ||||||
Depreciation and amortization | 18,832 | 18,877 | ||||||
Maintenance | 5,970 | 6,782 | ||||||
Property and other taxes | 8,172 | 7,810 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Total operating expenses | 108,096 | 118,444 | ||||||
Operating Income | 57,156 | 47,200 | ||||||
Other Income and Expenses | ||||||||
Interest expense | (11,532 | ) | (11,156 | ) | ||||
Interest income | 857 | 360 | ||||||
Other, net | 1,053 | 412 | ||||||
Total other income and expenses, net | (9,622 | ) | (10,384 | ) | ||||
Income before income tax expense | 47,534 | 36,816 | ||||||
Income tax expense | 18,422 | 14,162 | ||||||
Net Income | $ | 29,112 | $ | 22,654 |
Six Months Ended June 30, | ||||||||
(in thousands) | 2017 | 2016 | ||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 29,112 | $ | 22,654 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 18,952 | 19,244 | ||||||
Provision for doubtful accounts | 342 | 221 | ||||||
Deferred income taxes and investment tax credits | 6,234 | 6,081 | ||||||
Stock-based compensation expense | 1,356 | 1,209 | ||||||
Gain on sale of assets | (8,301 | ) | — | |||||
Other — net | (566 | ) | (186 | ) | ||||
Changes in assets and liabilities: | ||||||||
Accounts receivable — customers | (6,408 | ) | (1,765 | ) | ||||
Unbilled receivable | (559 | ) | 870 | |||||
Other accounts receivable | (29 | ) | (89 | ) | ||||
Materials and supplies | (713 | ) | 413 | |||||
Prepayments and other assets | (625 | ) | (1,130 | ) | ||||
Regulatory assets | (3,855 | ) | (12,499 | ) | ||||
Accounts payable | 3,290 | 3,824 | ||||||
Inter-company receivable/payable | (643 | ) | (664 | ) | ||||
Income taxes receivable/payable from/to Parent | 25,125 | 6,505 | ||||||
Accrued pension and other post-retirement benefits | 2,864 | 2,554 | ||||||
Other liabilities | (3,000 | ) | (2,405 | ) | ||||
Net cash provided | 62,576 | 44,837 | ||||||
Cash Flows From Investing Activities: | ||||||||
Capital expenditures | (45,278 | ) | (64,216 | ) | ||||
Proceeds from sale of assets | 34,324 | — | ||||||
Other investing activities | 232 | (158 | ) | |||||
Net cash used | (10,722 | ) | (64,374 | ) | ||||
Cash Flows From Financing Activities: | ||||||||
Receipt of advances for and contributions in aid of construction | 5,144 | 2,075 | ||||||
Refunds on advances for construction | (2,868 | ) | (2,576 | ) | ||||
Retirement or repayments of long-term debt | (191 | ) | (169 | ) | ||||
Net change in inter-company borrowings | (51,500 | ) | 36,000 | |||||
Dividends paid | — | (16,600 | ) | |||||
Other financing activities | (1,104 | ) | (1,283 | ) | ||||
Net cash (used) provided | (50,519 | ) | 17,447 | |||||
Net increase (decrease) in cash and cash equivalents | 1,335 | (2,090 | ) | |||||
Cash and cash equivalents, beginning of period | 209 | 2,501 | ||||||
Cash and cash equivalents, end of period | $ | 1,544 | $ | 411 | ||||
Non-cash transactions: | ||||||||
Accrued payables for investment in utility plant | $ | 17,759 | $ | 21,488 | ||||
Property installed by developers and conveyed | $ | 1,025 | $ | 4,345 |
(dollars in thousands) | June 30, 2017 | December 31, 2016 | ||||||
GSWC | ||||||||
Water Revenue Adjustment Mechanism, net of Modified Cost Balancing Account | $ | 48,277 | $ | 47,340 | ||||
Costs deferred for future recovery on Aerojet case | 11,470 | 11,820 | ||||||
Pensions and other post-retirement obligations (Note 7) | 26,575 | 28,118 | ||||||
Derivative unrealized loss (Note 4) | 4,493 | 4,901 | ||||||
Flow-through taxes, net (Note 6) | 20,627 | 20,134 | ||||||
Low income rate assistance balancing accounts | 8,019 | 8,272 | ||||||
General rate case memorandum accounts | 13,780 | 13,929 | ||||||
Other regulatory assets | 17,016 | 17,633 | ||||||
Various refunds to customers | (4,763 | ) | (5,866 | ) | ||||
Total | $ | 145,494 | $ | 146,281 |
Basic: | For The Three Months Ended June 30, | For The Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 22,792 | $ | 16,742 | 35,493 | 26,892 | ||||||||||
Less: (a) Distributed earnings to common shareholders | 8,861 | 8,188 | 17,715 | 16,369 | ||||||||||||
Distributed earnings to participating securities | 48 | 50 | 91 | 94 | ||||||||||||
Undistributed earnings | 13,883 | 8,504 | 17,687 | 10,429 | ||||||||||||
(b) Undistributed earnings allocated to common shareholders | 13,807 | 8,453 | 17,597 | 10,369 | ||||||||||||
Undistributed earnings allocated to participating securities | 76 | 51 | 90 | 60 | ||||||||||||
Total income available to common shareholders, basic (a)+(b) | $ | 22,668 | $ | 16,641 | $ | 35,312 | $ | 26,738 | ||||||||
Weighted average Common Shares outstanding, basic | 36,624 | 36,554 | 36,607 | 36,538 | ||||||||||||
Basic earnings per Common Share | $ | 0.62 | $ | 0.46 | $ | 0.96 | $ | 0.73 |
Diluted: | For The Three Months Ended June 30, | For The Six Months Ended June 30, | ||||||||||||||
(in thousands, except per share amounts) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Common shareholders earnings, basic | $ | 22,668 | $ | 16,641 | $ | 35,312 | $ | 26,738 | ||||||||
Undistributed earnings for dilutive stock-based awards | 76 | 51 | 90 | 60 | ||||||||||||
Total common shareholders earnings, diluted | $ | 22,744 | $ | 16,692 | $ | 35,402 | $ | 26,798 | ||||||||
Weighted average common shares outstanding, basic | 36,624 | 36,554 | 36,607 | 36,538 | ||||||||||||
Stock-based compensation (1) | 201 | 198 | 192 | 192 | ||||||||||||
Weighted average common shares outstanding, diluted | 36,825 | 36,752 | 36,799 | 36,730 | ||||||||||||
Diluted earnings per Common Share | $ | 0.62 | $ | 0.45 | $ | 0.96 | $ | 0.73 |
For The Three Months Ended June 30, | For The Six Months Ended June 30, | |||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Fair value at beginning of the period | $ | (5,460 | ) | $ | (7,245 | ) | $ | (4,901 | ) | $ | (7,053 | ) | ||||
Unrealized gain on purchased power contracts | 967 | 2,312 | 408 | 2,120 | ||||||||||||
Fair value at end of the period | $ | (4,493 | ) | $ | (4,933 | ) | $ | (4,493 | ) | $ | (4,933 | ) |
June 30, 2017 | December 31, 2016 | |||||||||||||||
(dollars in thousands) | Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Financial liabilities: | ||||||||||||||||
Long-term debt—GSWC (1) | $ | 325,391 | $ | 425,791 | $ | 325,582 | $ | 423,124 |
For The Three Months Ended June 30, | ||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | SERP | ||||||||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Components of Net Periodic Benefits Cost: | ||||||||||||||||||||||||
Service cost | $ | 1,249 | $ | 1,316 | $ | 59 | $ | 68 | $ | 232 | $ | 200 | ||||||||||||
Interest cost | 1,985 | 2,026 | 85 | 97 | 223 | 186 | ||||||||||||||||||
Expected return on plan assets | (2,240 | ) | (2,460 | ) | (122 | ) | (122 | ) | — | — | ||||||||||||||
Amortization of prior service cost (benefit) | — | 12 | — | (9 | ) | 3 | 6 | |||||||||||||||||
Amortization of actuarial (gain) loss | 253 | 329 | (170 | ) | (150 | ) | 194 | 73 | ||||||||||||||||
Net periodic pension cost under accounting standards | 1,247 | 1,223 | (148 | ) | (116 | ) | 652 | 465 | ||||||||||||||||
Regulatory adjustment — deferred | 92 | 64 | — | — | — | — | ||||||||||||||||||
Total expense recognized, before surcharges and allocation to overhead pool | $ | 1,339 | $ | 1,287 | $ | (148 | ) | $ | (116 | ) | $ | 652 | $ | 465 |
For The Six Months Ended June 30, | ||||||||||||||||||||||||
Pension Benefits | Other Postretirement Benefits | SERP | ||||||||||||||||||||||
(dollars in thousands) | 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
Components of Net Periodic Benefits Cost: | ||||||||||||||||||||||||
Service cost | $ | 2,500 | $ | 2,548 | $ | 118 | $ | 136 | $ | 464 | $ | 400 | ||||||||||||
Interest cost | 3,952 | 3,956 | 170 | 194 | 446 | 372 | ||||||||||||||||||
Expected return on plan assets | (4,850 | ) | (4,920 | ) | (244 | ) | (244 | ) | — | — | ||||||||||||||
Amortization of prior service cost (benefit) | — | 24 | — | (18 | ) | 6 | 12 | |||||||||||||||||
Amortization of actuarial (gain) loss | 462 | 456 | (340 | ) | (300 | ) | 388 | 146 | ||||||||||||||||
Net periodic pension cost under accounting standards | 2,064 | 2,064 | (296 | ) | (232 | ) | 1,304 | 930 | ||||||||||||||||
Regulatory adjustment — deferred | 525 | 423 | — | — | — | — | ||||||||||||||||||
Total expense recognized, before surcharges and allocation to overhead pool | $ | 2,589 | $ | 2,487 | $ | (296 | ) | $ | (232 | ) | $ | 1,304 | $ | 930 |
Assets and Liabilities Sold: | ||||
(dollars in thousands) | As of June 8, 2017 | |||
Net utility plant, including CWIP | $ | 22,256 | ||
Accounts receivable | 721 | |||
Regulatory assets | 3,944 | |||
Assets sold | $ | 26,921 | ||
Advances for construction | $ | (366 | ) | |
Contributions in aid of construction — net | (532 | ) | ||
Liabilities directly associated with assets sold | $ | (898 | ) |
As Of And For The Three Months Ended June 30, 2017 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 80,734 | $ | 7,612 | $ | 24,849 | $ | — | $ | 113,195 | ||||||||||
Operating income (loss) | 33,552 | 1,527 | 6,740 | (3 | ) | 41,816 | ||||||||||||||
Interest expense, net | 4,805 | 350 | 82 | 69 | 5,306 | |||||||||||||||
Utility plant | 1,093,104 | 56,371 | 5,728 | — | 1,155,203 | |||||||||||||||
Depreciation and amortization expense (1) | 8,858 | 536 | 253 | — | 9,647 | |||||||||||||||
Income tax expense (benefit) | 11,710 | 439 | 2,347 | (189 | ) | 14,307 | ||||||||||||||
Capital additions | 20,593 | 978 | 331 | — | 21,902 |
As Of And For The Three Months Ended June 30, 2016 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 81,058 | $ | 7,701 | $ | 23,195 | $ | — | $ | 111,954 | ||||||||||
Operating income (loss) | 26,452 | 1,105 | 4,219 | (2 | ) | 31,774 | ||||||||||||||
Interest expense, net | 5,052 | 344 | 10 | 7 | 5,413 | |||||||||||||||
Utility plant | 1,048,127 | 53,734 | 5,276 | — | 1,107,137 | |||||||||||||||
Depreciation and amortization expense (1) | 8,840 | 507 | 254 | — | 9,601 | |||||||||||||||
Income tax expense (benefit) | 8,367 | 355 | 1,505 | (171 | ) | 10,056 | ||||||||||||||
Capital additions | 32,393 | 2,862 | 625 | — | 35,880 |
As Of And For The Six Months Ended June 30, 2017 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 147,138 | $ | 18,114 | $ | 46,753 | $ | — | $ | 212,005 | ||||||||||
Operating income (loss) | 52,816 | 4,340 | 9,405 | (7 | ) | 66,554 | ||||||||||||||
Interest expense, net | 9,950 | 725 | 156 | 121 | 10,952 | |||||||||||||||
Utility plant | 1,093,104 | 56,371 | 5,728 | — | 1,155,203 | |||||||||||||||
Depreciation and amortization expense (1) | 17,759 | 1,073 | 498 | — | 19,330 | |||||||||||||||
Income tax expense (benefit) | 17,195 | 1,227 | 3,208 | (468 | ) | 21,162 | ||||||||||||||
Capital additions | 43,577 | 1,701 | 618 | — | 45,896 |
As Of And For The Six Months Ended June 30, 2016 | ||||||||||||||||||||
GSWC | AWR | Consolidated | ||||||||||||||||||
(dollars in thousands) | Water | Electric | ASUS | Parent | AWR | |||||||||||||||
Operating revenues | $ | 147,370 | $ | 18,274 | $ | 39,837 | $ | — | $ | 205,481 | ||||||||||
Operating income (loss) | 43,860 | 3,340 | 5,811 | (4 | ) | 53,007 | ||||||||||||||
Interest expense, net | 10,127 | 669 | 17 | 51 | 10,864 | |||||||||||||||
Utility plant | 1,048,127 | 53,734 | 5,276 | — | 1,107,137 | |||||||||||||||
Depreciation and amortization expense (1) | 17,863 | 1,014 | 515 | — | 19,392 | |||||||||||||||
Income tax expense (benefit) | 12,953 | 1,209 | 2,078 | (371 | ) | 15,869 | ||||||||||||||
Capital additions | 60,534 | 3,682 | 1,118 | — | 65,334 |
June 30, | ||||||||
2017 | 2016 | |||||||
Total utility plant | $ | 1,155,203 | $ | 1,107,137 | ||||
Other assets | 307,450 | 299,162 | ||||||
Total consolidated assets | $ | 1,462,653 | $ | 1,406,299 |
Diluted Earnings per Share | ||||||||||||
Three Months Ended | ||||||||||||
6/30/2017 | 6/30/2016 | CHANGE | ||||||||||
Water | $ | 0.48 | $ | 0.36 | $ | 0.12 | ||||||
Electric | 0.02 | 0.01 | 0.01 | |||||||||
Contracted services | 0.12 | 0.07 | 0.05 | |||||||||
AWR (parent) | — | 0.01 | (0.01 | ) | ||||||||
Consolidated diluted earnings per share, as reported | $ | 0.62 | $ | 0.45 | $ | 0.17 |
Diluted Earnings per Share | ||||||||||||
Six Months Ended | ||||||||||||
6/30/2017 | 6/30/2016 | CHANGE | ||||||||||
Water | $ | 0.73 | $ | 0.58 | $ | 0.15 | ||||||
Electric | 0.06 | 0.04 | 0.02 | |||||||||
Contracted services | 0.16 | 0.10 | 0.06 | |||||||||
AWR (parent) | 0.01 | 0.01 | — | |||||||||
Consolidated diluted earnings per share, as reported | $ | 0.96 | $ | 0.73 | $ | 0.23 |
• | A decrease in the water gross margin of $3.2 million was not reflected in the results for the six months ended June 30, 2016 due to the delay by the CPUC in issuing a decision on the water general rate case. When the decision was issued in December 2016 with new rates retroactive to January 1, 2016, a cumulative downward adjustment of $5.2 million to the water gross margin was recorded in the fourth quarter of 2016 related to the first three quarters of 2016. Approximately $3.2 million of this amount, or $0.05 per share, would have lowered the water gross margin in the first half of 2016 had the CPUC decision been issued on time. |
• | In February 2017, the CPUC approved recovery of incremental drought-related items, which were previously expensed related to California's drought state of emergency. As a result of this approval, during the six months ended June 30, 2017 GSWC recorded a regulatory asset and a corresponding increase to pretax earnings of $1.5 million, of which $1.2 million was recorded as a reduction to operation-related expenses and approximately $260,000 of which was recorded as additional revenue. |
• | An overall increase in the water gross margin of approximately $0.01 per share due primarily to the CPUC-approved second-year rate increases effective January 1, 2017, partially offset by (i) the recognition in June 2016 of WRAM revenue, which had previously been deferred in 2015, as compared to amounts recognized in 2017, and (ii) the cessation of Ojai operations in June 2017. |
• | A decrease in operating expenses (excluding supply costs) of $2.0 million, or $0.03 per share, due mostly to lower legal fees and other outside services costs related to condemnation matters, as well as lower maintenance costs. |
• | An increase in interest and other income of $817,000, or $0.01 per share, due to amounts collected from developers on certain outstanding balances owed to GSWC and higher gains recorded on investments as compared to 2016. |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
OPERATING REVENUES | |||||||||||||||
Water | $ | 80,734 | $ | 81,058 | $ | (324 | ) | (0.4 | )% | ||||||
Electric | 7,612 | 7,701 | (89 | ) | (1.2 | )% | |||||||||
Contracted services | 24,849 | 23,195 | 1,654 | 7.1 | % | ||||||||||
Total operating revenues | 113,195 | 111,954 | 1,241 | 1.1 | % | ||||||||||
OPERATING EXPENSES | |||||||||||||||
Water purchased | 17,937 | 15,835 | 2,102 | 13.3 | % | ||||||||||
Power purchased for pumping | 2,157 | 2,132 | 25 | 1.2 | % | ||||||||||
Groundwater production assessment | 4,931 | 3,968 | 963 | 24.3 | % | ||||||||||
Power purchased for resale | 2,308 | 2,216 | 92 | 4.2 | % | ||||||||||
Supply cost balancing accounts | (5,293 | ) | (2,517 | ) | (2,776 | ) | 110.3 | % | |||||||
Other operation | 8,172 | 6,917 | 1,255 | 18.1 | % | ||||||||||
Administrative and general | 20,458 | 21,288 | (830 | ) | (3.9 | )% | |||||||||
Depreciation and amortization | 9,647 | 9,601 | 46 | 0.5 | % | ||||||||||
Maintenance | 3,606 | 3,635 | (29 | ) | (0.8 | )% | |||||||||
Property and other taxes | 4,345 | 4,168 | 177 | 4.2 | % | ||||||||||
ASUS construction | 11,412 | 12,937 | (1,525 | ) | (11.8 | )% | |||||||||
Gain on sale of assets | (8,301 | ) | — | (8,301 | ) | — | % | ||||||||
Total operating expenses | 71,379 | 80,180 | (8,801 | ) | (11.0 | )% | |||||||||
OPERATING INCOME | 41,816 | 31,774 | 10,042 | 31.6 | % | ||||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Interest expense | (5,926 | ) | (5,603 | ) | (323 | ) | 5.8 | % | |||||||
Interest income | 620 | 190 | 430 | 226.3 | % | ||||||||||
Other, net | 589 | 437 | 152 | 34.8 | % | ||||||||||
(4,717 | ) | (4,976 | ) | 259 | (5.2 | )% | |||||||||
INCOME BEFORE INCOME TAX EXPENSE | 37,099 | 26,798 | 10,301 | 38.4 | % | ||||||||||
Income tax expense | 14,307 | 10,056 | 4,251 | 42.3 | % | ||||||||||
NET INCOME | $ | 22,792 | $ | 16,742 | $ | 6,050 | 36.1 | % | |||||||
Basic earnings per Common Share | $ | 0.62 | $ | 0.46 | $ | 0.16 | 34.8 | % | |||||||
Fully diluted earnings per Common Share | $ | 0.62 | $ | 0.45 | $ | 0.17 | 37.8 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
WATER OPERATING REVENUES (1) | $ | 80,734 | $ | 81,058 | $ | (324 | ) | (0.4 | )% | ||||||
WATER SUPPLY COSTS: | |||||||||||||||
Water purchased (1) | $ | 17,937 | $ | 15,835 | $ | 2,102 | 13.3 | % | |||||||
Power purchased for pumping (1) | 2,157 | 2,132 | 25 | 1.2 | % | ||||||||||
Groundwater production assessment (1) | 4,931 | 3,968 | 963 | 24.3 | % | ||||||||||
Water supply cost balancing accounts (1) | (5,727 | ) | (3,064 | ) | (2,663 | ) | 86.9 | % | |||||||
TOTAL WATER SUPPLY COSTS | $ | 19,298 | $ | 18,871 | $ | 427 | 2.3 | % | |||||||
WATER GROSS MARGIN (2) | $ | 61,436 | $ | 62,187 | $ | (751 | ) | (1.2 | )% | ||||||
ELECTRIC OPERATING REVENUES (1) | $ | 7,612 | $ | 7,701 | $ | (89 | ) | (1.2 | )% | ||||||
ELECTRIC SUPPLY COSTS: | |||||||||||||||
Power purchased for resale (1) | $ | 2,308 | $ | 2,216 | $ | 92 | 4.2 | % | |||||||
Electric supply cost balancing accounts (1) | 434 | 547 | (113 | ) | (20.7 | )% | |||||||||
TOTAL ELECTRIC SUPPLY COSTS | $ | 2,742 | $ | 2,763 | $ | (21 | ) | (0.8 | )% | ||||||
ELECTRIC GROSS MARGIN (2) | $ | 4,870 | $ | 4,938 | $ | (68 | ) | (1.4 | )% | ||||||
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 6,439 | $ | 5,460 | $ | 979 | 17.9 | % | |||||||
Electric Services | 657 | 696 | (39 | ) | (5.6 | )% | |||||||||
Contracted Services | 1,076 | 761 | 315 | 41.4 | % | ||||||||||
Total other operation | $ | 8,172 | $ | 6,917 | $ | 1,255 | 18.1 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 14,277 | $ | 14,773 | $ | (496 | ) | (3.4 | )% | ||||||
Electric Services | 1,730 | 2,226 | (496 | ) | (22.3 | )% | |||||||||
Contracted Services | 4,449 | 4,284 | 165 | 3.9 | % | ||||||||||
AWR (parent) | 2 | 5 | (3 | ) | (60.0 | )% | |||||||||
Total administrative and general | $ | 20,458 | $ | 21,288 | $ | (830 | ) | (3.9 | )% |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 8,858 | $ | 8,840 | $ | 18 | 0.2 | % | |||||||
Electric Services | 536 | 507 | 29 | 5.7 | % | ||||||||||
Contracted Services | 253 | 254 | (1 | ) | (0.4 | )% | |||||||||
Total depreciation and amortization | $ | 9,647 | $ | 9,601 | $ | 46 | 0.5 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 2,883 | $ | 3,080 | $ | (197 | ) | (6.4 | )% | ||||||
Electric Services | 166 | 163 | 3 | 1.8 | % | ||||||||||
Contracted Services | 557 | 392 | 165 | 42.1 | % | ||||||||||
Total maintenance | $ | 3,606 | $ | 3,635 | $ | (29 | ) | (0.8 | )% |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 3,729 | $ | 3,585 | $ | 144 | 4.0 | % | |||||||
Electric Services | 253 | 238 | 15 | 6.3 | % | ||||||||||
Contracted Services | 363 | 345 | 18 | 5.2 | % | ||||||||||
Total property and other taxes | $ | 4,345 | $ | 4,168 | $ | 177 | 4.2 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 5,422 | $ | 5,238 | $ | 184 | 3.5 | % | |||||||
Electric Services | 353 | 348 | 5 | 1.4 | % | ||||||||||
Contracted Services | 82 | 11 | 71 | 645.5 | % | ||||||||||
AWR (parent) | 69 | 6 | 63 | 1,050.0 | % | ||||||||||
Total interest expense | $ | 5,926 | $ | 5,603 | $ | 323 | 5.8 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 617 | $ | 186 | $ | 431 | 231.7 | % | |||||||
Electric Services | 3 | 4 | (1 | ) | (25.0 | )% | |||||||||
Contracted Services | — | 1 | (1 | ) | (100.0 | )% | |||||||||
AWR (parent) | — | (1 | ) | 1 | (100.0 | )% | |||||||||
Total interest income | $ | 620 | $ | 190 | $ | 430 | 226.3 | % |
Three Months Ended June 30, 2017 | Three Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 11,710 | $ | 8,367 | $ | 3,343 | 40.0 | % | |||||||
Electric Services | 439 | 355 | 84 | 23.7 | % | ||||||||||
Contracted Services | 2,347 | 1,505 | 842 | 55.9 | % | ||||||||||
AWR (parent) | (189 | ) | (171 | ) | (18 | ) | 10.5 | % | |||||||
Total income tax expense | $ | 14,307 | $ | 10,056 | $ | 4,251 | 42.3 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
OPERATING REVENUES | |||||||||||||||
Water | $ | 147,138 | $ | 147,370 | $ | (232 | ) | (0.2 | )% | ||||||
Electric | 18,114 | 18,274 | (160 | ) | (0.9 | )% | |||||||||
Contracted services | 46,753 | 39,837 | 6,916 | 17.4 | % | ||||||||||
Total operating revenues | 212,005 | 205,481 | 6,524 | 3.2 | % | ||||||||||
OPERATING EXPENSES | |||||||||||||||
Water purchased | 30,043 | 29,634 | 409 | 1.4 | % | ||||||||||
Power purchased for pumping | 3,754 | 3,764 | (10 | ) | (0.3 | )% | |||||||||
Groundwater production assessment | 8,306 | 6,668 | 1,638 | 24.6 | % | ||||||||||
Power purchased for resale | 5,408 | 5,087 | 321 | 6.3 | % | ||||||||||
Supply cost balancing accounts | (7,042 | ) | (5,932 | ) | (1,110 | ) | 18.7 | % | |||||||
Other operation | 14,332 | 13,883 | 449 | 3.2 | % | ||||||||||
Administrative and general | 40,744 | 42,061 | (1,317 | ) | (3.1 | )% | |||||||||
Depreciation and amortization | 19,330 | 19,392 | (62 | ) | (0.3 | )% | |||||||||
Maintenance | 7,070 | 7,705 | (635 | ) | (8.2 | )% | |||||||||
Property and other taxes | 8,911 | 8,546 | 365 | 4.3 | % | ||||||||||
ASUS construction | 22,896 | 21,666 | 1,230 | 5.7 | % | ||||||||||
Gain on sale of assets | (8,301 | ) | — | (8,301 | ) | — | % | ||||||||
Total operating expenses | 145,451 | 152,474 | (7,023 | ) | (4.6 | )% | |||||||||
OPERATING INCOME | 66,554 | 53,007 | 13,547 | 25.6 | % | ||||||||||
OTHER INCOME AND EXPENSES | |||||||||||||||
Interest expense | (11,831 | ) | (11,226 | ) | (605 | ) | 5.4 | % | |||||||
Interest income | 879 | 362 | 517 | 142.8 | % | ||||||||||
Other, net | 1,053 | 618 | 435 | 70.4 | % | ||||||||||
(9,899 | ) | (10,246 | ) | 347 | (3.4 | )% | |||||||||
INCOME BEFORE INCOME TAX EXPENSE | 56,655 | 42,761 | 13,894 | 32.5 | % | ||||||||||
Income tax expense | 21,162 | 15,869 | 5,293 | 33.4 | % | ||||||||||
NET INCOME | $ | 35,493 | $ | 26,892 | $ | 8,601 | 32.0 | % | |||||||
Basic earnings per Common Share | $ | 0.96 | $ | 0.73 | $ | 0.23 | 31.5 | % | |||||||
Fully diluted earnings per Common Share | $ | 0.96 | $ | 0.73 | $ | 0.23 | 31.5 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
WATER OPERATING REVENUES (1) | $ | 147,138 | $ | 147,370 | $ | (232 | ) | (0.2 | )% | ||||||
WATER SUPPLY COSTS: | |||||||||||||||
Water purchased (1) | $ | 30,043 | $ | 29,634 | $ | 409 | 1.4 | % | |||||||
Power purchased for pumping (1) | 3,754 | 3,764 | (10 | ) | (0.3 | )% | |||||||||
Groundwater production assessment (1) | 8,306 | 6,668 | 1,638 | 24.6 | % | ||||||||||
Water supply cost balancing accounts (1) | (8,540 | ) | (7,577 | ) | (963 | ) | 12.7 | % | |||||||
TOTAL WATER SUPPLY COSTS | $ | 33,563 | $ | 32,489 | $ | 1,074 | 3.3 | % | |||||||
WATER GROSS MARGIN (2) | $ | 113,575 | $ | 114,881 | $ | (1,306 | ) | (1.1 | )% | ||||||
ELECTRIC OPERATING REVENUES (1) | $ | 18,114 | $ | 18,274 | $ | (160 | ) | (0.9 | )% | ||||||
ELECTRIC SUPPLY COSTS: | |||||||||||||||
Power purchased for resale (1) | $ | 5,408 | $ | 5,087 | $ | 321 | 6.3 | % | |||||||
Electric supply cost balancing accounts (1) | 1,498 | 1,645 | (147 | ) | (8.9 | )% | |||||||||
TOTAL ELECTRIC SUPPLY COSTS | $ | 6,906 | $ | 6,732 | $ | 174 | 2.6 | % | |||||||
ELECTRIC GROSS MARGIN (2) | $ | 11,208 | $ | 11,542 | $ | (334 | ) | (2.9 | )% | ||||||
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 10,283 | $ | 10,447 | $ | (164 | ) | (1.6 | )% | ||||||
Electric Services | 1,366 | 1,792 | (426 | ) | (23.8 | )% | |||||||||
Contracted Services | 2,683 | 1,644 | 1,039 | 63.2 | % | ||||||||||
Total other operation | $ | 14,332 | $ | 13,883 | $ | 449 | 3.2 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 27,790 | $ | 29,026 | $ | (1,236 | ) | (4.3 | )% | ||||||
Electric Services | 3,515 | 4,489 | (974 | ) | (21.7 | )% | |||||||||
Contracted Services | 9,434 | 8,539 | 895 | 10.5 | % | ||||||||||
AWR (parent) | 5 | 7 | (2 | ) | (28.6 | )% | |||||||||
Total administrative and general | $ | 40,744 | $ | 42,061 | $ | (1,317 | ) | (3.1 | )% |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 17,759 | $ | 17,863 | $ | (104 | ) | (0.6 | )% | ||||||
Electric Services | 1,073 | 1,014 | 59 | 5.8 | % | ||||||||||
Contracted Services | 498 | 515 | (17 | ) | (3.3 | )% | |||||||||
Total depreciation and amortization | $ | 19,330 | $ | 19,392 | $ | (62 | ) | (0.3 | )% |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 5,598 | $ | 6,433 | $ | (835 | ) | (13.0 | )% | ||||||
Electric Services | 372 | 349 | 23 | 6.6 | % | ||||||||||
Contracted Services | 1,100 | 923 | 177 | 19.2 | % | ||||||||||
Total maintenance | $ | 7,070 | $ | 7,705 | $ | (635 | ) | (8.2 | )% |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 7,630 | $ | 7,255 | $ | 375 | 5.2 | % | |||||||
Electric Services | 542 | 555 | (13 | ) | (2.3 | )% | |||||||||
Contracted Services | 739 | 736 | 3 | 0.4 | % | ||||||||||
Total property and other taxes | $ | 8,911 | $ | 8,546 | $ | 365 | 4.3 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 10,802 | $ | 10,478 | $ | 324 | 3.1 | % | |||||||
Electric Services | 730 | 678 | 52 | 7.7 | % | ||||||||||
Contracted Services | 166 | 19 | 147 | 773.7 | % | ||||||||||
AWR (parent) | 133 | 51 | 82 | 160.8 | % | ||||||||||
Total interest expense | $ | 11,831 | $ | 11,226 | $ | 605 | 5.4 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 852 | $ | 351 | $ | 501 | 142.7 | % | |||||||
Electric Services | 5 | 9 | (4 | ) | (44.4 | )% | |||||||||
Contracted Services | 10 | 2 | 8 | 400.0 | % | ||||||||||
AWR (parent) | 12 | — | 12 | — | % | ||||||||||
Total interest income | $ | 879 | $ | 362 | $ | 517 | 142.8 | % |
Six Months Ended June 30, 2017 | Six Months Ended June 30, 2016 | $ CHANGE | % CHANGE | ||||||||||||
Water Services | $ | 17,195 | $ | 12,953 | $ | 4,242 | 32.7 | % | |||||||
Electric Services | 1,227 | 1,209 | 18 | 1.5 | % | ||||||||||
Contracted Services | 3,208 | 2,078 | 1,130 | 54.4 | % | ||||||||||
AWR (parent) | (468 | ) | (371 | ) | (97 | ) | 26.1 | % | |||||||
Total income tax expense | $ | 21,162 | $ | 15,869 | $ | 5,293 | 33.4 | % |
• | FBWS - The fourth price redetermination for Fort Bliss, beginning October 1, 2015 and converting to an EPA filing mechanism beginning October 1, 2016, was implemented via modification in the first quarter of 2017. |
• | TUS - The EPA filing for Andrews Air Force Base, covering the period February 2017 through January 2018, was re-submitted to the government in the first quarter of 2017 and provides for an annualized inflationary increase in operations and maintenance (“O&M”) and renewal and replacement (“R&R”) fees. This filing is expected to be resolved in the third quarter of 2017. |
• | ODUS - The EPA filing for the Fort Lee privatization contract in Virginia, covering the one-year period beginning February 2017, and the EPA for the other bases that ODUS operates in Virginia, covering the one-year period beginning April 2017 were submitted to the government in the first quarter of 2017. Both filings provide for an annualized inflationary increase in O&M and R&R fees. The Fort Lee filing is expected to be finalized in the third quarter of 2017. The filing for the other ODUS bases was finalized in July 2017. |
• | PSUS - The EPA filing for the one-year period beginning February 2017 was submitted to the government in the first quarter of 2017 and provides for an annualized increase in both O&M and R&R fees. This filing was finalized in July 2017. |
• | ONUS - The third price redetermination with a conversion to an EPA filing mechanism for Fort Bragg, covering the period March 2016 through February 2017, together with an EPA filing for the one-year period beginning March 2017, was re-filed in the first quarter of 2017 and was settled in the second quarter of 2017. A modification implementing the settlement is expected in the third quarter of 2017. |
• | ECUS - ASUS assumed the operation of the water and wastewater systems at Eglin Air Force Base as of June 15, 2017. The initial value of the contract was estimated at approximately $510 million over the 50-year life of the contract. During the transition period, ASUS completed a detailed joint inventory study of the water and wastewater systems, which showed more assets than were reflected in the request for proposal. The initial value of the 50-year contract is subject to inventory and annual economic price adjustments. |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) | Maximum Number of Shares That May Yet Be Purchased under the Plans or Programs (3) | ||||||||||
April 1 – 30, 2017 | 1,510 | $ | 44.93 | — | — | |||||||||
May 1 – 31, 2017 | 62,192 | $ | 44.30 | — | — | |||||||||
June 1 – 30, 2017 | 5,243 | $ | 46.92 | — | — | |||||||||
Total | 68,945 | (2) | $ | 44.51 | — |
3.1 | By-Laws of American States Water Company incorporated by reference to Exhibit 3.1 of Registrant's Form 10-Q, filed August 6, 2012 (File No. 1-14431) | |
3.2 | By-laws of Golden State Water Company incorporated by reference to Exhibit 3.2 of Registrant's Form 8-K filed May 13, 2011 (File No. 1-14431) | |
3.3 | Amended and Restated Articles of Incorporation of American States Water Company, as amended, incorporated by reference to Exhibit 3.1 of Registrant's Form 8-K filed June 19, 2013 | |
3.4 | Restated Articles of Incorporation of Golden State Water Company, as amended, incorporated herein by reference to Exhibit 3.1 of Registrant's Form 10-Q for the quarter ended September 30, 2005 (File No. 1-14431) | |
4.1 | Indenture, dated September 1, 1993 between Golden State Water Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee, as supplemented, incorporated herein by reference to Exhibit 4.01 of Golden State Water Company Form S-3 filed December 12, 2008 (File No. 333-156112) | |
4.2 | Note Purchase Agreement dated as of October 11, 2005 between Golden State Water Company and Co-Bank, ACB incorporated by reference to Exhibit 4.1 of Registrant's Form 8-K filed October 13, 2005 (File No. 1-14431) | |
4.3 | Note Purchase Agreement dated as of March 10, 2009 between Golden State Water Company and Co-Bank, ACB, incorporated herein by reference to Exhibit 10.16 to Registrant's Form 10-K filed on March 13, 2009 (File No. 1-14431) | |
4.4 | Indenture dated as of December 1, 1998 between American States Water Company and The Bank of New York Mellon Trust Company, N.A., as supplemented by the First Supplemental Indenture dated as of July 31, 2009 incorporated herein by reference to Exhibit 4.1 of American States Water Company's Form 10-Q for the quarter ended June 30, 2009 (File No. 1-14431) | |
10.1 | Second Sublease dated October 5, 1984 between Golden State Water Company and Three Valleys Municipal Water District incorporated herein by reference to Registrant's Registration Statement on Form S-2, Registration No. 33-5151 | |
10.2 | Note Agreement dated as of May 15, 1991 between Golden State Water Company and Transamerica Occidental Life Insurance Company incorporated herein by reference to Registrant's Form 10-Q with respect to the quarter ended June 30, 1991 (File No. 1-14431) | |
10.3 | Schedule of omitted Note Agreements, dated May 15, 1991, between Golden State Water Company and Transamerica Annuity Life Insurance Company, and Golden State Water Company and First Colony Life Insurance Company incorporated herein by reference to Registrant's Form 10-Q with respect to the quarter ended June 30, 1991 (File No. 1-14431) | |
10.4 | Loan Agreement between California Pollution Control Financing Authority and Golden State Water Company, dated as of December 1, 1996 incorporated by reference to Exhibit 10.7 of Registrant's Form 10-K for the year ended December 31, 1998 (File No. 1-14431) | |
10.5 | Agreement for Financing Capital Improvement dated as of June 2, 1992 between Golden State Water Company and Three Valleys Municipal Water District incorporated herein by reference to Registrant's Form 10-K with respect to the year ended December 31, 1992 (File No. 1-14431) | |
10.6 | Water Supply Agreement dated as of June 1, 1994 between Golden State Water Company and Central Coast Water Authority incorporated herein by reference to Exhibit 10.15 of Registrant's Form 10-K with respect to the year ended December 31, 1994 (File No. 1-14431) | |
10.7 | 2003 Non-Employee Directors Stock Purchase Plan, as amended, incorporated herein by reference to Exhibit 10.4 to Registrant's Form 8-K filed on May 20, 2015 (File No. 1-14431) (2) | |
10.8 | Dividend Reinvestment and Common Share Purchase Plan incorporated herein by reference to American States Water Company Registrant's Form S-3D filed November 12, 2008 (File No. 1-14431) | |
10.9 | Form of Amended and Restated Change in Control Agreement between American States Water Company or a subsidiary and certain executives incorporated herein by reference to Exhibit 10.4 to Registrant's Form 8-K filed on November 21, 2014 (File No. 1-14431) (2) | |
10.10 | Golden State Water Company Pension Restoration Plan, as amended, incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on May 21, 2009 (File No. 1-14431) (2) | |
10.11 | American States Water Company 2000 Stock Incentive Plan, as amended, incorporated by reference to Exhibit 10.2 of Registrant's Form 8-K filed May 20, 2015 (File No. 1-14431) (2) | |
10.12 | Amended and Restated Credit Agreement between American States Water Company dated June 3, 2005 with Wells Fargo Bank, N.A., as Administrative Agent, as amended, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed October 28, 2016 | |
10.13 | Form of Indemnification Agreement for executive officers incorporated by reference to Exhibit 10.21 to Registrant's Form 10-K for the year ended December 31, 2006 (File No. 1-14431) (2) | |
10.14 | Form of Non-Qualified Stock Option Plan Agreement for officers and key employees for the 2000 Stock Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed on January 7, 2005 (File No. 1-14431) (2) | |
10.15 | Form of Non-Qualified Stock Option Plan Agreement for officers and key employees for the 2000 Stock Incentive Plan incorporated by reference to Exhibit 10.1 of Registrant's Form 10-Q for the period ended March 31, 2006 (File No. 1-14431) (2) | |
10.16 | Form of Directors Non-Qualified Stock Option Agreement for the 2003 Non-Employee Directors Plan incorporated by reference to Exhibit 10.1 to Registrant's Form 10-Q for the period ended September 30, 2006 (File No. 1-14431) (2) | |
10.17 | Form of Restricted Stock Unit Award Agreement for officers and key employees under the 2008 Stock Incentive Plan for restricted stock unit awards prior to January 1, 2011 incorporated by reference to Exhibit 10.4 of Registrant's Form 8-K filed on November 5, 2008 (File No. 1-14431) (2) | |
10.18 | 2008 Stock Incentive Plan, as amended, incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed March 25, 2016 (2) | |
10.19 | Form of Nonqualified Stock Option Agreement for officers and key employees for the 2008 Stock Incentive Plan incorporated herein by reference to Exhibit 10.3 to Registrant's Form 8-K filed November 21, 2014 (2) | |
10.20 | Policy Regarding the Recoupment of Certain Performance-Based Compensation Payments incorporated herein by reference to Exhibit 10.3 to the Registrant's Form 8-K filed on April 2, 2014 (2) | |
10.21 | Performance Incentive Plan incorporated herein by reference to Exhibit 10.1 to the Registrant's Form 8-K filed on May 20, 2015 (File No. 1-14431) (2) | |
10.22 | Officer Relocation Policy incorporated herein by reference to Exhibit 10.5 to the Registrant's Form 8-K filed on July 31, 2009 (2) | |
10.23 | Form of Non-Qualified Stock Option Award Agreement for officers and key employees under the 2008 Stock Incentive Plan for stock options granted after December 31, 2010 incorporated by reference to Exhibit 10.2 of Registrant's Form 8-K filed on February 4, 2011 (File No. 1-14431) (2) | |
10.24 | Form of Restricted Stock Unit Award Agreement for officers and key employees under the 2016 Stock Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant's Form 8-K filed on February 6, 2017 (File No. 1-14431) (2) | |
10.25 | Form of Indemnification Agreement for directors incorporated by reference herein to Exhibit 10.35 to the Registrant's Form 10-K for the period ended December 31, 2012 (1) (2) | |
10.26 | 2016 Short-Term Incentive Program incorporated by reference herein to Exhibit 10.3 to Registrant’s Form 8-K filed on March 25, 2016 (2) | |
10.27 | Form of 2016 Short-Term Incentive Award Agreement incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed March 25, 2016 (2) | |
10.28 | 2016 Stock Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed on May 19, 2016 (2) | |
10.29 | Form of 2014 Performance Award Agreement incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed January 31, 2014 (2) | |
10.30 | 2013 Non-Employee Directors Plan incorporated by reference herein to Exhibit 10.2 to the Registrant's Form 8-K filed on March 25, 2016 (2) | |
10.31 | 2014 Short-Term Incentive Program incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed April 2, 2014 (2) | |
10.32 | Form of 2014 Short-Term Incentive Agreement incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed April 2, 2014 (2) | |
10.33 | Form of Restricted Stock Unit Agreement for grants after December 31, 2014 under the 2008 Stock Incentive Plan incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed November 21, 2014 (2) | |
10.34 | Form of 2015 Performance Award Agreement incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed January 30, 2015 (2) | |
10.35 | 2015 Short-Term Incentive Program incorporated by reference herein to Exhibit 10.1 to the Registrant’s Form 8-K filed on March 27, 2015 (2) | |
10.36 | Form of 2015 Short-Term Incentive Award Agreement incorporated by reference to Exhibit 10.2 to Registrant's Form 8-K filed March 27, 2015 (2) | |
10.37 | Form of 2016 Performance Award Agreement incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed January 29, 2016 (2) | |
10.38 | Form of 2017 Performance Award Agreement incorporated by reference to Exhibit 10.2 of Registrant's Form 8-K filed on February 6, 2017 (2) | |
10.39 | 2017 Short-Term Incentive Program incorporated by reference to Exhibit 10.1 of Registrant's Form 8-K filed on March 31, 2017 (2) | |
10.40 | Form of 2017 Short-Term Incentive Agreement incorporated by reference to Exhibit 10.2 of Registrant's Form 8-K filed on March 31, 2017 (2) | |
31.10 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for AWR (1) | |
31.1.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for GSWC (1) | |
31.20 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for AWR (1) | |
31.2.1 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for GSWC (1) | |
32.10 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3) | |
32.20 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (3) | |
101.INS | XBRL Instance Document (3) | |
101.SCH | XBRL Taxonomy Extension Schema (3) | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase (3) | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase (3) | |
101.LAB | XBRL Taxonomy Extension Label Linkbase (3) | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase (3) | |
AMERICAN STATES WATER COMPANY (“AWR”): | |||
By: | /s/ EVA G. TANG | ||
Eva G. Tang | |||
Senior Vice President-Finance, Chief Financial | |||
Officer, Corporate Secretary and Treasurer | |||
GOLDEN STATE WATER COMPANY (“GSWC”): | |||
By: | /s/ EVA G. TANG | ||
Eva G. Tang | |||
Senior Vice President-Finance, Chief Financial | |||
Officer and Secretary | |||
Date: | August 2, 2017 |
Dated: | August 2, 2017 | By: | /s/ ROBERT J. SPROWLS | |
Robert J. Sprowls | ||||
President and Chief Executive Officer |
Dated: | August 2, 2017 | By: | /s/ EVA G. TANG | |
Eva G. Tang | ||||
Senior Vice President-Finance, Chief Financial | ||||
Officer, Corporate Secretary and Treasurer |
Dated: | August 2, 2017 | By: | /s/ ROBERT J. SPROWLS | |
Robert J. Sprowls | ||||
President and Chief Executive Officer |
Dated: | August 2, 2017 | By: | /s/ EVA G. TANG | |
Eva G. Tang | ||||
Senior Vice President-Finance, Chief Financial | ||||
Officer and Secretary |
/s/ ROBERT J. SPROWLS | |||
Robert J. Sprowls | |||
President and Chief Executive Officer | |||
Date: | August 2, 2017 |
/s/ EVA G. TANG | |||
Eva G. Tang | |||
Senior Vice President-Finance, Chief Financial Officer, | |||
Corporate Secretary and Treasurer | |||
Date: | August 2, 2017 |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 31, 2017 |
|
Document and Entity Information | ||
Entity Registrant Name | AMERICAN STATES WATER CO | |
Entity Central Index Key | 0001056903 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,644,758 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Common Stock, Shares Authorized | 60,000,000 | 60,000,000 |
Accounts receivable - customers, allowance for doubtful accounts | $ 708 | $ 702 |
Other accounts receivable, allowance for doubtful accounts | $ 59 | $ 62 |
Common Stock, Shares, Outstanding | 36,644,758 | 36,571,360 |
GOLDEN STATE WATER COMPANY | ||
Common Stock, Shares Authorized | 1,000 | 1,000 |
Accounts receivable - customers, allowance for doubtful accounts | $ 708 | $ 702 |
Other accounts receivable, allowance for doubtful accounts | $ 59 | $ 59 |
Common Stock, Shares, Outstanding | 146 | 146 |
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Operating Revenues | ||||
Water | $ 80,734 | $ 81,058 | $ 147,138 | $ 147,370 |
Electric | 7,612 | 7,701 | 18,114 | 18,274 |
Contracted services | 24,849 | 23,195 | 46,753 | 39,837 |
Total operating revenues | 113,195 | 111,954 | 212,005 | 205,481 |
Operating Expenses | ||||
Water purchased | 17,937 | 15,835 | 30,043 | 29,634 |
Power purchased for pumping | 2,157 | 2,132 | 3,754 | 3,764 |
Groundwater production assessment | 4,931 | 3,968 | 8,306 | 6,668 |
Power purchased for resale | 2,308 | 2,216 | 5,408 | 5,087 |
Supply cost balancing accounts | (5,293) | (2,517) | (7,042) | (5,932) |
Other operation | 8,172 | 6,917 | 14,332 | 13,883 |
Administrative and general | 20,458 | 21,288 | 40,744 | 42,061 |
Depreciation and amortization | 9,647 | 9,601 | 19,330 | 19,392 |
Maintenance | 3,606 | 3,635 | 7,070 | 7,705 |
Property and other taxes | 4,345 | 4,168 | 8,911 | 8,546 |
ASUS construction | 11,412 | 12,937 | 22,896 | 21,666 |
Gain on sale of assets | (8,301) | 0 | (8,301) | 0 |
Total operating expenses | 71,379 | 80,180 | 145,451 | 152,474 |
Operating Income | 41,816 | 31,774 | 66,554 | 53,007 |
Other Income and Expenses | ||||
Interest expense | (5,926) | (5,603) | (11,831) | (11,226) |
Interest income | 620 | 190 | 879 | 362 |
Other, net | 589 | 437 | 1,053 | 618 |
Total other income and expenses | (4,717) | (4,976) | (9,899) | (10,246) |
Income from operations before income tax expense | 37,099 | 26,798 | 56,655 | 42,761 |
Income tax expense | 14,307 | 10,056 | 21,162 | 15,869 |
Net Income | $ 22,792 | $ 16,742 | $ 35,493 | $ 26,892 |
Weighted Average Number of Common Shares Outstanding (in shares) | 36,624 | 36,554 | 36,607 | 36,538 |
Basic Earnings Per Common Share (in dollars per share) | $ 0.62 | $ 0.46 | $ 0.96 | $ 0.73 |
Weighted Average Number of Diluted Shares (in shares) | 36,825 | 36,752 | 36,799 | 36,730 |
Fully Diluted Earnings Per Common Share (in dollars per share) | $ 0.62 | $ 0.45 | $ 0.96 | $ 0.73 |
Dividends Paid Per Common Share (in dollars per share) | $ 0.242 | $ 0.2240 | $ 0.484 | $ 0.4480 |
GOLDEN STATE WATER COMPANY | ||||
Operating Revenues | ||||
Water | $ 80,734 | $ 81,058 | $ 147,138 | $ 147,370 |
Electric | 7,612 | 7,701 | 18,114 | 18,274 |
Total operating revenues | 88,346 | 88,759 | 165,252 | 165,644 |
Operating Expenses | ||||
Water purchased | 17,937 | 15,835 | 30,043 | 29,634 |
Power purchased for pumping | 2,157 | 2,132 | 3,754 | 3,764 |
Groundwater production assessment | 4,931 | 3,968 | 8,306 | 6,668 |
Power purchased for resale | 2,308 | 2,216 | 5,408 | 5,087 |
Supply cost balancing accounts | (5,293) | (2,517) | (7,042) | (5,932) |
Other operation | 7,096 | 6,156 | 11,649 | 12,239 |
Administrative and general | 16,007 | 16,999 | 31,305 | 33,515 |
Depreciation and amortization | 9,394 | 9,347 | 18,832 | 18,877 |
Maintenance | 3,049 | 3,243 | 5,970 | 6,782 |
Property and other taxes | 3,982 | 3,823 | 8,172 | 7,810 |
Gain on sale of assets | (8,301) | 0 | (8,301) | 0 |
Total operating expenses | 53,267 | 61,202 | 108,096 | 118,444 |
Operating Income | 35,079 | 27,557 | 57,156 | 47,200 |
Other Income and Expenses | ||||
Interest expense | (5,775) | (5,586) | (11,532) | (11,156) |
Interest income | 620 | 190 | 857 | 360 |
Other, net | 588 | 231 | 1,053 | 412 |
Total other income and expenses | (4,567) | (5,165) | (9,622) | (10,384) |
Income from operations before income tax expense | 30,512 | 22,392 | 47,534 | 36,816 |
Income tax expense | 12,149 | 8,722 | 18,422 | 14,162 |
Net Income | $ 18,363 | $ 13,670 | $ 29,112 | $ 22,654 |
Summary of Significant Accounting Policies: |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies: Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”) and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), Palmetto State Utility Services, Inc. (“PSUS”), Old North Utility Services, Inc. (“ONUS”), and Emerald Coast Utility Services ("ECUS")). The subsidiaries of ASUS are collectively referred to as the “Military Utility Privatization Subsidiaries.” GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water in California serving approximately 259,000 customers. GSWC also distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,000 customers through its Bear Valley Electric Service (“BVES”) division. Although GSWC has a diversified base of residential, industrial and other customers, revenues derived from commercial and residential water customers accounted for approximately 90% of total water revenues during the three and six months ended June 30, 2017 and 2016. The California Public Utilities Commission (“CPUC”) regulates GSWC’s water and electric businesses in matters including properties, rates, services, facilities and transactions by GSWC with its affiliates. AWR’s assets and operating income are primarily those of GSWC. ASUS, through its wholly owned subsidiaries, operates, maintains and performs construction activities (including renewal and replacement capital work) on water and/or wastewater systems at various United States military bases pursuant to 50-year firm fixed-price contracts. These contracts are subject to periodic price redeterminations or economic price adjustments and modifications for changes in circumstances, changes in laws and regulations and additions to the contract value for new construction of facilities at the military bases. There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or any of its wholly owned subsidiaries. Basis of Presentation: The consolidated financial statements and notes thereto are presented in a combined report filed by two separate Registrants: AWR and GSWC. References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. AWR owns all of the outstanding Common Shares of GSWC and ASUS. ASUS owns all of the outstanding Common Shares of the Military Utility Privatization Subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries, all of which are wholly owned. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. Inter-company transactions and balances have been eliminated in the AWR consolidated financial statements. The consolidated financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The December 31, 2016 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments consisting of normal, recurring items and estimates necessary for a fair statement of the results for the interim periods have been made. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2016 filed with the SEC. GSWC's Related Party Transactions: GSWC and ASUS provide and/or receive various support services to and from their parent, AWR, and among themselves. GSWC also allocates certain corporate office administrative and general costs to its affiliate, ASUS, using allocation factors approved by the CPUC. GSWC allocated corporate office administrative and general costs to ASUS of approximately $1.0 million during the three months ended June 30, 2017 and 2016, respectively, and approximately $2.0 million during the six months ended June 30, 2017 and 2016, respectively. In addition, AWR has a $150.0 million syndicated credit facility. AWR borrows under this facility and provides funds to its subsidiaries, GSWC and ASUS, in support of their operations. As of June 30, 2017, there was $44.0 million outstanding under this facility. The interest rate charged to GSWC and ASUS is sufficient to cover AWR’s interest expense under the credit facility. In October 2015, AWR issued interest-bearing promissory notes (the "Notes") to GSWC and ASUS for $40 million and $10 million, respectively, which expire on May 23, 2018. Under the terms of these Notes, AWR may borrow from GSWC and ASUS amounts up to $40 million and $10 million, respectively, for working capital purposes. AWR agrees to pay any unpaid principal amounts outstanding under these notes, plus accrued interest. As of June 30, 2017 and 2016, there were no amounts outstanding under these notes. Sales and Use Taxes: GSWC bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and use taxes are franchise fees, which GSWC pays to various municipalities (based on ordinances adopted by these municipalities) in order to use public rights of way for utility purposes. GSWC bills these franchise fees to its customers based on a CPUC-authorized rate for each ratemaking area as applicable. These franchise fees, which are required to be paid regardless of GSWC’s ability to collect them from its customers, are accounted for on a gross basis. GSWC’s franchise fees billed to customers and recorded as operating revenue were approximately $937,000 and $1.0 million for the three months ended June 30, 2017 and 2016, respectively, and $1.8 million and $1.9 million for the six months ended June 30, 2017 and 2016, respectively. When GSWC acts as an agent, and a tax is not required to be remitted if it is not collected from customers, the tax is accounted for on a net basis. Depending on the states in which their operations are conducted, the Military Utility Privatization Subsidiaries are also subject to certain state non-income tax assessments generally computed on a “gross receipts” or “gross revenues” basis. These non-income tax assessments are required to be paid regardless of whether the U.S. government reimburses these assessments under the 50-year contracts. The non-income tax assessments are accounted for on a gross basis and totaled $72,000 and $84,000 during the three months ended June 30, 2017 and 2016, respectively, and $121,000 and $146,000 for the six months ended June 30, 2017 and 2016, respectively. Recently Issued Accounting Pronouncements: In March 2016, the FASB issued Accounting Standard Update 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation - Stock Compensation. Under the new guidance, the tax effects related to share-based payments at settlement (or expiration) will be required to be recorded through the income statement rather than through equity, therefore increasing the volatility of income tax expense. The new standard also removes the requirement to delay recognition of a windfall tax benefit until an employer reduces its current taxes payable. It also permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for shared-based payment awards. Income tax benefits in excess of compensation costs or tax deficiencies for share-based compensation are recorded to the income tax provision, instead of to shareholders' equity, which can impact the effective tax rate. Registrant adopted the new standard effective January 1, 2017 (see Note 6). On a prospective basis, the excess tax benefits are classified as an operating activity along with other income tax cash flows on the statement of cash flows. In May 2014, the FASB issued updated accounting guidance on revenue recognition. Under this guidance, an entity recognizes revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects in exchange for the goods or services. The guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and adoption is not permitted earlier than 2017. The guidance allows entities to select one of two methods of adoption, either the full retrospective approach, meaning the guidance would be applied to all periods presented, or modified retrospective approach, meaning the cumulative effect of applying the guidance would be recognized as an adjustment to opening retained earnings at January 1, 2018, along with providing certain additional disclosures. Registrant intends to use the modified retrospective approach beginning January 1, 2018. Management continues to assess all potential impacts of the standard, and does not believe the new standard will have a material impact on GSWC's revenues for water and electric services. In instances where construction contracts contain more than one distinct good or service, as defined by the standard, the new standard may affect the timing of when AWR recognizes contracted services revenue. In February 2016, the FASB issued a new lease accounting standard, Leases (ASC 842). Under the new guidance, lessees will recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease). For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has not yet determined the effect of the standard on Registrant's financial statements. In March 2017, the FASB issued Accounting Standards Update 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the financial statement presentation of the cost of defined benefit pension plans and other retirement benefits. Under current GAAP, the components of net benefit cost for retirement plans (such as service cost, interest cost, expected return on assets, and the amortization of various deferred items), are aggregated as operating costs for financial statement presentation purposes. Under the new guidance, the service cost component will continue to be presented as operating costs, while all other components of net benefit cost will be presented outside of operating income. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its statements of income, and expects to adopt the standard beginning in 2018. In August 2016, the FASB issued updated accounting guidance on the classification of certain cash receipts and cash payments in the statement of cash flows, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. Registrant is currently evaluating the impact of this new standard on its consolidated cash flow statement. In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation-—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies existing guidance on when to account for the effect of a modification of a share-based payment award. Under the new guidance, the effects of a modification should be accounted for unless all of the following are met: (i) the modification does not change the fair value of the award; (ii) the vesting conditions are the same before and after the modification, and; (iii) the classification of the award as an equity instrument or as a liability instrument is the same classification immediately before the modification. For Registrant, these amendments will be effective January 1, 2018 and will be applied prospectively to an award modified on or after January 1, 2018. Registrant does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements. |
Regulatory Matters: |
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Regulated Operations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Matters | Regulatory Matters: In accordance with accounting principles for rate-regulated enterprises, Registrant records regulatory assets, which represent probable future recovery of costs from customers through the ratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the ratemaking process. At June 30, 2017, Registrant had approximately $56.2 million of regulatory assets, net of regulatory liabilities, not accruing carrying costs. Of this amount, $26.3 million relates to the underfunded position in Registrant's pension and other post-retirement obligations, $4.5 million relates to a memorandum account authorized by the CPUC to track unrealized gains and losses on BVES's purchase power contracts over the term of the contracts, and $20.6 million relates to deferred income taxes representing accelerated tax benefits flowed through to customers, which will be included in rates concurrently with recognition of the associated future tax expense. The remainder relates to other items that do not provide for or incur carrying costs. Regulatory assets represent costs incurred by GSWC for which it has received or expects to receive rate recovery in the future. In determining the probability of costs being recognized in other periods, GSWC considers regulatory rules and decisions, past practices, and other facts or circumstances that would indicate if recovery is probable. If the CPUC determines that a portion of GSWC’s assets are not recoverable in customer rates, GSWC must determine if it has suffered an asset impairment requiring it to write down the asset's value. Regulatory assets are offset against regulatory liabilities within each ratemaking area. Amounts expected to be collected or refunded in the next 12 months have been classified as current assets and current liabilities by ratemaking area. Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:
Regulatory matters are discussed in detail in the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2016 filed with the SEC. The discussion below focuses on significant matters and developments since December 31, 2016. Alternative-Revenue Programs: GSWC records the difference between what it bills its water customers and that which is authorized by the CPUC using the Water Revenue Adjustment Mechanism (“WRAM”) and Modified Cost Balancing Account (“MCBA”) accounts approved by the CPUC. The over- or under-collection of the WRAM is aggregated with the MCBA over- or under-collection for the corresponding ratemaking area and bears interest at the current 90-day commercial paper rate. GSWC has implemented surcharges to recover its WRAM/MCBA balances as of December 31, 2016. For the three months ended June 30, 2017 and 2016, surcharges (net of surcredits) of approximately $9.5 million and $5.0 million, respectively, were billed to customers to recover previously incurred under-collections in the WRAM/MCBA accounts. For the six months ended June 30, 2017 and 2016, surcharges (net of surcredits) of approximately $13.4 million and $6.4 million, respectively, were billed to customers. During the six months ended June 30, 2017, GSWC recorded additional net under-collections in the WRAM/MCBA accounts of $16.3 million due to higher than adopted supply costs as well as lower than adopted customer water usage. As of June 30, 2017, GSWC had an aggregated regulatory asset of $48.3 million which is comprised of a $30.0 million under-collection in the WRAM accounts and a $18.3 million under-collection in the MCBA accounts. As required by the accounting guidance for alternative revenue programs, GSWC is required to collect its WRAM balances, net of its MCBA, within 24 months following the year in which an under-collection is recorded. The recovery periods for the majority of GSWC's WRAM/MCBA balances are primarily within 24 months; however, as of December 31, 2015 there were some ratemaking areas that had recovery periods related to the 2015 WRAM balances that were greater than 24 months. As a result, during the fourth quarter of 2015, GSWC did not record $1.4 million of the 2015 WRAM under-collection balance as revenue. This amount is recognized as revenue in the periods in which it is determined that the amounts will be collected within 24 months and, therefore, approximately $320,000 and $910,000 was recognized during the first six months of 2017 and during the year ended December 31, 2016, respectively, with the remaining balance to be recognized in future periods. Water General Rate Case: In December 2016, the CPUC issued a decision in GSWC's water general rate case for all its water ratemaking areas and the general office to determine new rates for the years 2016, 2017 and 2018. The new rates approved were retroactive to January 1, 2016. However, because of the delay in issuing a decision, the CPUC ordered GSWC to bypass implementing 2016 rates and to implement 2017 rates after the correction of minor rate calculations in the December 2016 decision, which the CPUC completed and subsequently issued a final decision in March 2017. Any revenue shortfall due to differences between the actual rates charged in 2016 and early 2017 while the decision was still pending and the new rates adopted in the March 2017 final decision will be recovered through a rate surcharge. The new rates were implemented in April 2017. Because of the delay in the final decision, GSWC accumulated a net $9.9 million under-collection in its general rate case memorandum accounts as of June 30, 2017, representing the rate difference between interim rates and final rates authorized by the CPUC in March 2017, retroactive to January 1, 2016. Surcharges are expected to be implemented later in 2017 to recover the retroactive rate difference over approximately 12 - 24 months for the majority of GSWC's water ratemaking areas. Other Regulatory Matters: Formal Complaint Filed with the CPUC In June 2016, a third party filed a formal complaint with the CPUC against GSWC about a water main break that occurred in 2014 causing damage to a commercial building. Repairs to the building have been delayed for a variety of reasons, including a dispute and litigation between two of GSWC's insurance carriers regarding their respective coverage obligations, as well as questions as to the nature and extent of the building’s damage and the costs associated therewith. The complaint filed with the CPUC requests, among other things, that the CPUC investigate the main break, the damage to the commercial building and the delay of its repairs, and order GSWC to complete repairs immediately. GSWC believes it has reasonable defenses to the complaint filed with the CPUC. In July 2016, GSWC filed an answer to the formal complaint with the CPUC as well as a motion to dismiss the complaint. A CPUC decision on the formal complaint is expected during the third quarter of 2017. Previously, the owners of the commercial building filed suit in Ventura County Superior Court against GSWC for damages to the building. The bench trial of this lawsuit was completed on July 14, 2017, and the Ventura County Superior Court ruled in favor of the plaintiffs as to liability. The Court’s statement of decision, which will set forth the findings and damages, will be finalized and filed in the next 45- 60 days. GSWC believes it has sufficient insurance coverage to cover any judgment entered by the Court in this lawsuit. However, GSWC cannot predict the final outcome of the damages to be awarded by the Court, the dispute and litigation between its insurers, or the CPUC proceeding. GSWC does not believe the outcome will materially affect GSWC's consolidated results of operations, financial position or cash flows. |
Earnings per Share/Capital Stock: |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share/Capital Stock | Earnings per Share/Capital Stock: In accordance with the accounting guidance for participating securities and earnings per share (“EPS”), Registrant uses the “two-class” method of computing EPS. The “two-class” method is an earnings allocation formula that determines EPS for each class of common stock and participating security. AWR has participating securities related to restricted stock units that earn dividend equivalents on an equal basis with AWR’s Common Shares that have been issued under AWR's Stock Incentive Plans for employees and the Non-Employee Directors Stock Plans. In applying the “two-class” method, undistributed earnings are allocated to both common shares and participating securities. The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding used for calculating basic net income per share:
Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with stock options and restricted stock units granted under AWR’s Stock Incentive Plans for employees and the Non-Employee Directors Stock Plans, and net income. At June 30, 2017 and 2016, there were 91,634 and 142,402 options outstanding, respectively, under these Plans. At June 30, 2017 and 2016, there were also 208,059 and 227,364 restricted stock units outstanding, respectively, including performance shares awarded to officers of the Registrant. The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:
(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 91,634 and 142,402 stock options at June 30, 2017 and 2016, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 208,059 and 227,364 restricted stock units at June 30, 2017 and 2016, respectively, were included in the calculation of diluted EPS for the three and six months ended June 30, 2017 and 2016. No stock options outstanding at June 30, 2017 had an exercise price greater than the average market price of AWR’s Common Shares for the three and six months ended June 30, 2017. There were no stock options outstanding at June 30, 2017 or 2016 that were anti-dilutive. During the six months ended June 30, 2017 and 2016, AWR issued 73,398 and 52,212 common shares, for approximately $524,000 and $126,000, respectively, under Registrant’s Common Share Purchase and Dividend Reinvestment Plan, the 401(k) Plan, the 2000 and 2008 Stock Incentive Plans and the 2003 and 2013 Non-Employee Directors Stock Plans. During the three months ended June 30, 2017 and 2016, AWR paid quarterly dividends of approximately $8.9 million, or $0.242 per share, and $8.2 million, or $0.224 per share, respectively. During the six months ended June 30, 2017 and 2016, AWR paid quarterly dividends to shareholders of approximately $17.7 million, or $0.484 per share, and $16.4 million, or $0.448 per share, respectively. |
Derivative Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments | Derivative Instruments: Derivative financial instruments are used to manage exposure to commodity price risk. Commodity price risk represents the potential impact that can be caused by a change in the market value of a commodity. BVES purchases power under long-term contracts at a fixed cost depending on the amount of power and the period during which the power is purchased under such contracts. In December 2014, the CPUC approved an application that allowed BVES to immediately execute new long-term purchased power contracts with energy providers on December 9, 2014. BVES began taking power under these long-term contracts effective January 1, 2015 at a fixed cost over three- and five-year terms depending on the amount of power and the period during which the power is purchased under the contracts. The long-term contracts executed in December 2014 are subject to the accounting guidance for derivatives and require mark-to-market derivative accounting. Among other things, the CPUC also authorized GSWC to establish a regulatory asset and liability memorandum account to offset the mark-to-market entries required by the accounting guidance. Accordingly, all unrealized gains and losses generated from the purchased power contracts executed in December 2014 are deferred monthly into a non-interest bearing regulatory memorandum account that tracks the changes in fair value of the derivative throughout the term of the contract. As a result, these unrealized gains and losses do not impact GSWC’s earnings. As of June 30, 2017, there was a $4.5 million unrealized loss in the memorandum account for the purchased power contracts as a result of the drop in energy prices. The notional volume of derivatives remaining under these long-term contracts as of June 30, 2017 was approximately 276,000 megawatt hours. The accounting guidance for fair value measurements applies to all financial assets and financial liabilities that are measured and reported on a fair value basis. Under the accounting guidance, GSWC makes fair value measurements that are classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). To value the contracts, Registrant applies the Black-76 model, utilizing various inputs that include quoted market prices for energy over the duration of the contracts. The market prices used to determine the fair value for this derivative instrument were estimated based on independent sources such as broker quotes and publications that are not observable in or corroborated by the market. Registrant received one broker quote to determine the fair value of its derivative instruments. When such inputs have a significant impact on the measurement of fair value, the instruments are categorized as Level 3. Accordingly, the valuation of the derivatives on Registrant’s purchased power contract has been classified as Level 3 for all periods presented. The following table presents changes in the fair value of GSWC’s Level 3 derivatives for the three and six months ended June 30, 2017 and 2016:
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Fair Value of Financial Instruments: |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments: For cash and cash equivalents, accounts receivable, accounts payable and short-term debt, the carrying amount is assumed to approximate fair value due to the short-term nature of the amounts. Investments held in a Rabbi Trust for the supplemental executive retirement plan ("SERP") are measured at fair value and totaled $12.7 million as of June 30, 2017. All equity investments in the Rabbi Trust are Level 1 investments in mutual funds. The investments held in the Rabbi Trust are included in Other Property and Investments on Registrant's balance sheets. The table below estimates the fair value of long-term debt held by GSWC. The fair values as of June 30, 2017 and December 31, 2016 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. The interest rates used for the June 30, 2017 valuation decreased slightly as compared to December 31, 2016, increasing the fair value of long-term debt as of June 30, 2017. Changes in the assumptions will produce different results.
___________________ (1) Excludes debt issuance costs and redemption premiums. |
Income Taxes: |
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Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes: AWR's consolidated effective tax rate (“ETR”) was 38.6% and 37.5% for the three months ended June 30, 2017 and 2016, respectively, and was 37.4% and 37.1% for the six months ended June 30, 2017 and 2016, respectively. AWR’s ETR increased during the three and six months ended June 30, 2017 primarily due to the increase in GSWC's ETR. GSWC's ETR was 39.8% and 39.0% for the three months ended June 30, 2017 and 2016, respectively, and was 38.8% and 38.5% for the six months ended June 30, 2017 and 2016, respectively. GSWC's ETR increased and also deviated from the statutory rate due to state tax and differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (principally plant-, rate-case- and compensation-related items). As a regulated utility, GSWC treats certain temporary differences as flow-through adjustments in computing its income tax provision consistent with the income tax approach approved by the CPUC for ratemaking purposes. Flow-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase occurring in another period. Giving effect to these temporary differences as flow-through adjustments typically results in a greater variance between the ETR and the statutory federal income tax rate in any given period than would otherwise exist if GSWC were not required to account for its income taxes as a regulated enterprise. Change in Accounting Guidance: Effective January 1, 2017, Registrant adopted the new accounting standard addressing share-based payments (see Note 1). Under the new guidance, the tax effects related to share-based payments are required to be recorded through the income statement. Previously, tax benefits in excess of compensation cost ("windfalls") were recorded directly to equity and tax deficiencies ("shortfalls") were recorded to equity to the extent of any pool of windfall tax benefits from prior awards, with the remainder recognized in income tax expense. AWR and GSWC adopted the guidance effective January 1, 2017 and, therefore, all excess tax benefits resulting from share-based payments during the three and six months ended June 30, 2017 were reflected in the income statements. For the three months ended June 30, 2017, this reduced income tax expense by approximately $328,000 and $327,000 for AWR and GSWC, respectively. For the six months ended June 30, 2017, the reduction to income tax expense was approximately $740,000 and $701,000 for AWR and GSWC, respectively. |
Employee Benefit Plans: |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit Plans | Employee Benefit Plans: The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan and SERP for the three and six months ended June 30, 2017 and 2016 are as follows:
Registrant expects to contribute $6.5 million to its pension plan during 2017. Regulatory Adjustment: As authorized by the CPUC in the most recent water and electric general rate case decisions, GSWC utilizes two-way balancing accounts for its water and electric regions and the general office to track differences between the forecasted annual pension expenses in rates or expected to be in rates and the actual annual expense recorded by GSWC in accordance with the accounting guidance for pension costs. As of June 30, 2017, GSWC had a total $259,000 net under-collection in the two-way pension balancing accounts included as part of the pension regulatory asset (Note 2). |
Contingencies and Gain on Sale of Assets |
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contingencies and Gain on Sale of Assets | Contingencies and Gain on Sale of Assets: Condemnation of Properties: The laws of the State of California provide for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation, where doing so is necessary and in the public interest. In addition, these laws provide that the owner of utility property (i) may contest whether the condemnation is necessary and in the public interest, and (ii) is entitled to receive the fair market value of its property if the property is ultimately taken. Claremont System: In December 2014, the City of Claremont, California filed a complaint in eminent domain against GSWC. The trial determining the City of Claremont's right to seize the system by eminent domain concluded in August 2016. On December 9, 2016, the County of Los Angeles Superior Court issued a decision rejecting the City of Claremont’s attempt to take over GSWC’s Claremont water system. On February 2, 2017, the City of Claremont filed an appeal to the decision. Registrant is unable predict the outcome of the appeal. GSWC serves approximately 11,000 customers in Claremont. Ojai Water System and Gain on Sale of Assets: On April 12, 2017, the Board of Directors of Casitas Municipal Water District (“Casitas”) approved a settlement agreement with GSWC, and a group of citizens referred to as Ojai Friends of Locally Owned Water (“Ojai FLOW”), to resolve the eminent domain action and other litigation brought by Casitas and Ojai FLOW against GSWC. In accordance with the terms of the settlement agreement, on June 8, 2017 Casitas acquired the operating assets of GSWC’s 2,900-connection Ojai water system by eminent domain for $34.3 million in cash, including payments for customer receivables and regulatory assets, and Casitas and Ojai FLOW dismissed all claims against GSWC. As a result of this transaction, GSWC recorded a pretax gain of $8.3 million on the sale of the Ojai water system during the second quarter of 2017. The proceeds received from this transaction were used to repay a portion of GSWC’s short-term borrowings. On June 8, 2017, the closing date of the transaction, the assets and liabilities related to the Ojai water system acquired and assumed by Casitas were as follows:
Environmental Clean-Up and Remediation: GSWC has been involved in environmental remediation and cleanup at a plant site ("Chadron Plant") that contained an underground storage tank which was used to store gasoline for its vehicles. This tank was removed from the ground in July 1990 along with the dispenser and ancillary piping. Since then, GSWC has been involved in various remediation activities at this site. Analysis indicates that off-site monitoring wells may be necessary to document effectiveness of remediation. As of June 30, 2017, the total spent to clean-up and remediate GSWC’s plant facility was approximately $5.2 million, of which $1.5 million has been paid by the State of California Underground Storage Tank Fund. Amounts paid by GSWC have been included in rate base and approved by the CPUC for recovery. As of June 30, 2017, GSWC has a regulatory asset and an accrued liability for the estimated additional cost of $1.4 million to complete the cleanup at the site. The estimate includes costs for two years of continued activities of groundwater cleanup and monitoring, future soil treatment and site-closure-related activities. The ultimate cost may vary as there are many unknowns in remediation of underground gasoline spills and this is an estimate based on currently available information. Management believes it is probable that the estimated additional costs will be approved in rate base by the CPUC. Other Litigation: Registrant is also subject to other ordinary routine litigation incidental to its business, some of which may include claims for compensatory and punitive damages. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against, among other things, property, general liability, employment, and workers’ compensation claims incurred in the ordinary course of business. Insurance coverage may not cover certain claims involving punitive damages. However, Registrant does not believe the outcome from any pending suits or administrative proceedings will have a material effect on Registrant's consolidated results of operations, financial position or cash flows. |
Business Segments: |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segments | Business Segments: AWR has three reportable segments, water, electric and contracted services, whereas GSWC has two segments, water and electric. On a stand-alone basis, AWR has no material assets other than its investments in its subsidiaries. All activities of GSWC, a rate-regulated utility, are geographically located within California. Activities of ASUS and its subsidiaries are conducted in California, Georgia, Florida, Maryland, New Mexico, North Carolina, South Carolina, Texas and Virginia. Each of ASUS’s wholly owned subsidiaries is regulated, if applicable, by the state in which the subsidiary primarily conducts water and/or wastewater operations. Fees charged for operations and maintenance and renewal and replacement services are based upon the terms of the contracts with the U.S. government which have been filed, as appropriate, with the commissions in the states in which ASUS’s subsidiaries are incorporated. The tables below set forth information relating to GSWC’s operating segments, ASUS and its subsidiaries and other matters. Total assets by segment are not presented below, as certain of Registrant’s assets are not tracked by segment. The utility plant amounts are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash, and exclude U.S. government- and third-party contractor-funded capital expenditures for ASUS and property installed by developers and conveyed to GSWC.
(1) Depreciation computed on GSWC’s transportation equipment is recorded in other operating expenses and totaled $59,000 and $192,000 for the three months ended June 30, 2017 and 2016, respectively, and $120,000 and $367,000 for the six months ended June 30, 2017 and 2016, respectively. The following table reconciles total utility plant (a key figure for ratemaking) to total consolidated assets (in thousands):
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Summary of Significant Accounting Policies: (Policies) |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”) and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), Palmetto State Utility Services, Inc. (“PSUS”), Old North Utility Services, Inc. (“ONUS”), and Emerald Coast Utility Services ("ECUS")). The subsidiaries of ASUS are collectively referred to as the “Military Utility Privatization Subsidiaries.” GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water in California serving approximately 259,000 customers. GSWC also distributes electricity in several San Bernardino County mountain communities in California serving approximately 24,000 customers through its Bear Valley Electric Service (“BVES”) division. Although GSWC has a diversified base of residential, industrial and other customers, revenues derived from commercial and residential water customers accounted for approximately 90% of total water revenues during the three and six months ended June 30, 2017 and 2016. The California Public Utilities Commission (“CPUC”) regulates GSWC’s water and electric businesses in matters including properties, rates, services, facilities and transactions by GSWC with its affiliates. AWR’s assets and operating income are primarily those of GSWC. ASUS, through its wholly owned subsidiaries, operates, maintains and performs construction activities (including renewal and replacement capital work) on water and/or wastewater systems at various United States military bases pursuant to 50-year firm fixed-price contracts. These contracts are subject to periodic price redeterminations or economic price adjustments and modifications for changes in circumstances, changes in laws and regulations and additions to the contract value for new construction of facilities at the military bases. There is no direct regulatory oversight by the CPUC over AWR or the operations, rates or services provided by ASUS or any of its wholly owned subsidiaries. Basis of Presentation: The consolidated financial statements and notes thereto are presented in a combined report filed by two separate Registrants: AWR and GSWC. References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. AWR owns all of the outstanding Common Shares of GSWC and ASUS. ASUS owns all of the outstanding Common Shares of the Military Utility Privatization Subsidiaries. The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries, all of which are wholly owned. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. Inter-company transactions and balances have been eliminated in the AWR consolidated financial statements. The consolidated financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The December 31, 2016 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles ("GAAP") in the United States of America. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments consisting of normal, recurring items and estimates necessary for a fair statement of the results for the interim periods have been made. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2016 filed with the SEC. |
GSWC's Related Party Transactions | GSWC's Related Party Transactions: GSWC and ASUS provide and/or receive various support services to and from their parent, AWR, and among themselves. GSWC also allocates certain corporate office administrative and general costs to its affiliate, ASUS, using allocation factors approved by the CPUC. GSWC allocated corporate office administrative and general costs to ASUS of approximately $1.0 million during the three months ended June 30, 2017 and 2016, respectively, and approximately $2.0 million during the six months ended June 30, 2017 and 2016, respectively. In addition, AWR has a $150.0 million syndicated credit facility. AWR borrows under this facility and provides funds to its subsidiaries, GSWC and ASUS, in support of their operations. As of June 30, 2017, there was $44.0 million outstanding under this facility. The interest rate charged to GSWC and ASUS is sufficient to cover AWR’s interest expense under the credit facility. In October 2015, AWR issued interest-bearing promissory notes (the "Notes") to GSWC and ASUS for $40 million and $10 million, respectively, which expire on May 23, 2018. Under the terms of these Notes, AWR may borrow from GSWC and ASUS amounts up to $40 million and $10 million, respectively, for working capital purposes. AWR agrees to pay any unpaid principal amounts outstanding under these notes, plus accrued interest. As of June 30, 2017 and 2016, there were no amounts outstanding under these notes. |
Sales and Use Taxes | Sales and Use Taxes: GSWC bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and use taxes are franchise fees, which GSWC pays to various municipalities (based on ordinances adopted by these municipalities) in order to use public rights of way for utility purposes. GSWC bills these franchise fees to its customers based on a CPUC-authorized rate for each ratemaking area as applicable. These franchise fees, which are required to be paid regardless of GSWC’s ability to collect them from its customers, are accounted for on a gross basis. GSWC’s franchise fees billed to customers and recorded as operating revenue were approximately $937,000 and $1.0 million for the three months ended June 30, 2017 and 2016, respectively, and $1.8 million and $1.9 million for the six months ended June 30, 2017 and 2016, respectively. When GSWC acts as an agent, and a tax is not required to be remitted if it is not collected from customers, the tax is accounted for on a net basis. Depending on the states in which their operations are conducted, the Military Utility Privatization Subsidiaries are also subject to certain state non-income tax assessments generally computed on a “gross receipts” or “gross revenues” basis. These non-income tax assessments are required to be paid regardless of whether the U.S. government reimburses these assessments under the 50-year contracts. The non-income tax assessments are accounted for on a gross basis and totaled $72,000 and $84,000 during the three months ended June 30, 2017 and 2016, respectively, and $121,000 and $146,000 for the six months ended June 30, 2017 and 2016, respectively. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements: In March 2016, the FASB issued Accounting Standard Update 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718, Compensation - Stock Compensation. Under the new guidance, the tax effects related to share-based payments at settlement (or expiration) will be required to be recorded through the income statement rather than through equity, therefore increasing the volatility of income tax expense. The new standard also removes the requirement to delay recognition of a windfall tax benefit until an employer reduces its current taxes payable. It also permits entities to make an accounting policy election for the impact of forfeitures on the recognition of expense for shared-based payment awards. Income tax benefits in excess of compensation costs or tax deficiencies for share-based compensation are recorded to the income tax provision, instead of to shareholders' equity, which can impact the effective tax rate. Registrant adopted the new standard effective January 1, 2017 (see Note 6). On a prospective basis, the excess tax benefits are classified as an operating activity along with other income tax cash flows on the statement of cash flows. In May 2014, the FASB issued updated accounting guidance on revenue recognition. Under this guidance, an entity recognizes revenue when it transfers promised goods or services to customers in an amount that reflects what the entity expects in exchange for the goods or services. The guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and adoption is not permitted earlier than 2017. The guidance allows entities to select one of two methods of adoption, either the full retrospective approach, meaning the guidance would be applied to all periods presented, or modified retrospective approach, meaning the cumulative effect of applying the guidance would be recognized as an adjustment to opening retained earnings at January 1, 2018, along with providing certain additional disclosures. Registrant intends to use the modified retrospective approach beginning January 1, 2018. Management continues to assess all potential impacts of the standard, and does not believe the new standard will have a material impact on GSWC's revenues for water and electric services. In instances where construction contracts contain more than one distinct good or service, as defined by the standard, the new standard may affect the timing of when AWR recognizes contracted services revenue. In February 2016, the FASB issued a new lease accounting standard, Leases (ASC 842). Under the new guidance, lessees will recognize a right-of-use asset and a lease liability for virtually all leases (other than leases that meet the definition of a short-term lease). For income statement purposes, leases will be classified as either operating or finance. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has not yet determined the effect of the standard on Registrant's financial statements. In March 2017, the FASB issued Accounting Standards Update 2017-07, Compensation-Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes the financial statement presentation of the cost of defined benefit pension plans and other retirement benefits. Under current GAAP, the components of net benefit cost for retirement plans (such as service cost, interest cost, expected return on assets, and the amortization of various deferred items), are aggregated as operating costs for financial statement presentation purposes. Under the new guidance, the service cost component will continue to be presented as operating costs, while all other components of net benefit cost will be presented outside of operating income. The new guidance is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact of this new standard on its statements of income, and expects to adopt the standard beginning in 2018. In August 2016, the FASB issued updated accounting guidance on the classification of certain cash receipts and cash payments in the statement of cash flows, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is permitted. Registrant is currently evaluating the impact of this new standard on its consolidated cash flow statement. In May 2017, the FASB issued Accounting Standards Update 2017-09, Compensation-—Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies existing guidance on when to account for the effect of a modification of a share-based payment award. Under the new guidance, the effects of a modification should be accounted for unless all of the following are met: (i) the modification does not change the fair value of the award; (ii) the vesting conditions are the same before and after the modification, and; (iii) the classification of the award as an equity instrument or as a liability instrument is the same classification immediately before the modification. For Registrant, these amendments will be effective January 1, 2018 and will be applied prospectively to an award modified on or after January 1, 2018. Registrant does not expect the adoption of this guidance to have a significant impact on its consolidated financial statements. |
Regulatory Matters: (Tables) |
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Schedule of regulatory assets, less regulatory liabilities in the consolidated balance sheets for continuing operations | Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:
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Earnings per Share/Capital Stock: (Tables) |
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Schedule of reconciliation of Registrant's net income and weighted average Common Shares outstanding for calculating basic net income per share |
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Schedule of reconciliation of Registrant's net income and weighted average Common Shares outstanding for calculating diluted net income per share | The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:
(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 91,634 and 142,402 stock options at June 30, 2017 and 2016, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 208,059 and 227,364 restricted stock units at June 30, 2017 and 2016, respectively, were included in the calculation of diluted EPS for the three and six months ended June 30, 2017 and 2016. |
Derivative Instruments (Tables) |
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents changes in the fair value of GSWC’s Level 3 derivatives for the three and six months ended June 30, 2017 and 2016:
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Fair Value of Financial Instruments: (Tables) |
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Fair Value Disclosures [Text Block] | Fair Value of Financial Instruments: For cash and cash equivalents, accounts receivable, accounts payable and short-term debt, the carrying amount is assumed to approximate fair value due to the short-term nature of the amounts. Investments held in a Rabbi Trust for the supplemental executive retirement plan ("SERP") are measured at fair value and totaled $12.7 million as of June 30, 2017. All equity investments in the Rabbi Trust are Level 1 investments in mutual funds. The investments held in the Rabbi Trust are included in Other Property and Investments on Registrant's balance sheets. The table below estimates the fair value of long-term debt held by GSWC. The fair values as of June 30, 2017 and December 31, 2016 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. The interest rates used for the June 30, 2017 valuation decreased slightly as compared to December 31, 2016, increasing the fair value of long-term debt as of June 30, 2017. Changes in the assumptions will produce different results.
___________________ (1) Excludes debt issuance costs and redemption premiums. |
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Schedule of estimates of the fair value of long-term debt | The table below estimates the fair value of long-term debt held by GSWC. The fair values as of June 30, 2017 and December 31, 2016 were determined using rates for similar financial instruments of the same duration utilizing Level 2 methods and assumptions. The interest rates used for the June 30, 2017 valuation decreased slightly as compared to December 31, 2016, increasing the fair value of long-term debt as of June 30, 2017. Changes in the assumptions will produce different results.
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Employee Benefit Plans: (Tables) |
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Schedule of components of net periodic benefit costs, before allocation to the overhead pool, for Registrant's pension plan, postretirement plan, and SERP | The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan and SERP for the three and six months ended June 30, 2017 and 2016 are as follows:
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Contingencies and Gain on Sale of Assets (Tables) |
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Schedule of Other Assets and Other Liabilities | On June 8, 2017, the closing date of the transaction, the assets and liabilities related to the Ojai water system acquired and assumed by Casitas were as follows:
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Business Segments: (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of reporting segments information | The tables below set forth information relating to GSWC’s operating segments, ASUS and its subsidiaries and other matters. Total assets by segment are not presented below, as certain of Registrant’s assets are not tracked by segment. The utility plant amounts are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash, and exclude U.S. government- and third-party contractor-funded capital expenditures for ASUS and property installed by developers and conveyed to GSWC.
(1) Depreciation computed on GSWC’s transportation equipment is recorded in other operating expenses and totaled $59,000 and $192,000 for the three months ended June 30, 2017 and 2016, respectively, and $120,000 and $367,000 for the six months ended June 30, 2017 and 2016, respectively. |
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Schedule of reconciliation of total utility plant (a key figure for rate-making) to total consolidated assets | The following table reconciles total utility plant (a key figure for ratemaking) to total consolidated assets (in thousands):
|
Regulatory Matters: CPUC Rehearing Matter and Procurement Audits (Details) - USD ($) $ in Thousands |
6 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Water Revenue Adjustment Mechanism [Member] | GOLDEN STATE WATER COMPANY | ||||
Regulatory matters: | ||||
Deferred Revenue | $ 320 | $ 910 | $ 1,400 | |
Minimum | Other Regulatory Assets Net [Member] | ||||
Regulatory matters: | ||||
Timing of Court Decision | 45 days | |||
Minimum | General Rate Case Memorandum Accounts [Member] | GOLDEN STATE WATER COMPANY | ||||
Regulatory matters: | ||||
Regulatory Asset Recovery Periods | 12 months | |||
Maximum [Member] | Other Regulatory Assets Net [Member] | ||||
Regulatory matters: | ||||
Timing of Court Decision | 60 days | |||
Maximum [Member] | General Rate Case Memorandum Accounts [Member] | GOLDEN STATE WATER COMPANY | ||||
Regulatory matters: | ||||
Regulatory Asset Recovery Periods | 24 months |
Earnings per Share/Capital Stock: (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|||
Basic | ||||||
Net income | $ 22,792 | $ 16,742 | $ 35,493 | $ 26,892 | ||
Weighted Average Dividends Common Stock | 8,861 | 8,188 | 17,715 | 16,369 | ||
Less: Distributed earnings to participating securities | 48 | 50 | 91 | 94 | ||
Undistributed earnings | 13,883 | 8,504 | 17,687 | 10,429 | ||
Undistributed earnings allocated to common shareholders | 13,807 | 8,453 | 17,597 | 10,369 | ||
Undistributed earnings allocated to participating securities | 76 | 51 | 90 | 60 | ||
Total income available to common shareholders, basic | $ 22,668 | $ 16,641 | $ 35,312 | $ 26,738 | ||
Weighted average Common Shares outstanding, basic (in shares) | 36,624 | 36,554 | 36,607 | 36,538 | ||
Basic earnings per Common Share (in dollars per share) | $ 0.62 | $ 0.46 | $ 0.96 | $ 0.73 | ||
Diluted | ||||||
Total income available to common shareholders, basic | $ 22,668 | $ 16,641 | $ 35,312 | $ 26,738 | ||
Undistributed earnings for dilutive stock-based awards | 76 | 51 | 90 | 60 | ||
Total common shareholders earnings, diluted | $ 22,744 | $ 16,692 | $ 35,402 | $ 26,798 | ||
Weighted average Common Shares outstanding, basic (in shares) | 36,624 | 36,554 | 36,607 | 36,538 | ||
Stock-based compensation (in shares) | [1] | 201 | 198 | 192 | 192 | |
Weighted average common shares outstanding, diluted (in shares) | 36,825 | 36,752 | 36,799 | 36,730 | ||
Diluted earnings per Common Share (in dollars per share) | $ 0.62 | $ 0.45 | $ 0.96 | $ 0.73 | ||
|
Earnings per Share/Capital Stock: (Details 2) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Additional disclosure | ||||
Options outstanding (in shares) | 91,634 | 142,402 | 91,634 | 142,402 |
Anti-dilutive stock options not included in the computation of diluted EPS (in shares) | 0 | 0 | 0 | |
Common Shares issued under DRP and the 2000 and 2008 Employee Plans | 73,398 | 52,212 | ||
Value of Common Shares issued under DRP and the 2000 and 2008 Employee Plans | $ 524 | $ 126 | ||
Weighted Average Dividends Common Stock | $ 8,861 | $ 8,188 | 17,715 | 16,369 |
Dividends paid | $ 17,715 | $ 16,369 | ||
Quarterly dividends paid, per share of common stock (in dollars per share) | $ 0.242 | $ 0.2240 | $ 0.484 | $ 0.4480 |
Restricted Stock Units | ||||
Additional disclosure | ||||
Restricted stock units outstanding (in shares) | 208,059 | 227,364 | 208,059 | 227,364 |
Fair Value of Financial Instruments: (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
GOLDEN STATE WATER COMPANY | Reported Value Measurement | ||
Fair value of financial instruments | ||
Long-term Debt, Fair Value | $ 325,391 | $ 325,582 |
GOLDEN STATE WATER COMPANY | Estimate of Fair Value Measurement | ||
Fair value of financial instruments | ||
Long-term Debt, Fair Value | 425,791 | $ 423,124 |
Mutual Funds | Fair Value, Inputs, Level 1 | ||
Financial liabilities: | ||
Long-term debt-GSWC | $ 12,700 |
Income Taxes: (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
GOLDEN STATE WATER COMPANY | ||||
Effective income tax rate | ||||
ETRs (as a percent) | 39.80% | 39.00% | 38.80% | 38.50% |
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | $ 327 | $ 701 | ||
Consolidated Entities [Member] | ||||
Effective income tax rate | ||||
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | $ 328 | $ 740 | ||
Parent [Member] | ||||
Effective income tax rate | ||||
ETRs (as a percent) | 38.60% | 37.50% | 37.40% | 37.10% |
Contingencies and Gain on Sale of Assets Loss Contingencies Number of Customer Served (Details) |
6 Months Ended | |
---|---|---|
Jun. 08, 2017
USD ($)
|
Jun. 30, 2017
customer
|
|
Condemnation of Properties | GOLDEN STATE WATER COMPANY | City of Claremont | ||
Loss Contingencies [Line Items] | ||
Loss contingency number of customers served | customer | 11,000 | |
Ojai Water System | ||
Loss Contingencies [Line Items] | ||
Loss contingency number of customers served | $ | 2,900 |
Business Segments: (Details 2) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Details of reportable segment | |||||
Total utility plant | $ 1,155,203 | $ 1,107,137 | $ 1,155,203 | $ 1,107,137 | $ 1,150,926 |
Other assets | 307,450 | 299,162 | 307,450 | 299,162 | |
Total Assets | 1,462,653 | 1,406,299 | 1,462,653 | 1,406,299 | 1,470,493 |
GOLDEN STATE WATER COMPANY | |||||
Details of reportable segment | |||||
Depreciation on transportation equipment | 59 | $ 192 | 120 | $ 367 | |
Total utility plant | 1,149,475 | 1,149,475 | 1,145,311 | ||
Total Assets | $ 1,377,385 | $ 1,377,385 | $ 1,384,178 |
Subsequent Events: (Details) |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Contracts | ASUS | |
Subsequent Event [Line Items] | |
Period of fixed price contracts to operate and maintain the water and/or wastewater systems at various military bases | 50 years |
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