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SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
 12 Months Ended
Dec. 31, 2022
Condensed Financial Information Disclosure [Abstract]  
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
 December 31,
(in thousands)20222021
Assets  
Cash and equivalents$93 $51 
Income taxes receivable20 — 
Intercompany note receivables159,582 79,722 
Total current assets159,695 79,773 
Investments in subsidiaries799,802 774,751 
Deferred taxes and other assets9,891 9,620 
Total assets$969,388 $864,144 
Liabilities and Capitalization  
Notes payable to bank$255,500 $— 
Income taxes payable2,158 1,765 
Other liabilities454 309 
Total current liabilities258,112 2,074 
Notes payable to bank— 174,500 
Deferred taxes and other liabilities1,727 1,623 
Total other liabilities1,727 176,123 
Common shareholders’ equity709,549 685,947 
Total capitalization709,549 685,947 
Total liabilities and capitalization$969,388 $864,144 
 
The accompanying condensed notes are an integral part of these condensed financial statements.
CONDENSED STATEMENTS OF INCOME 
 For the Years Ended December 31,
(In thousands, except per share amounts)202220212020
Operating revenues and other income$— $— $— 
Operating expenses and other expenses2,093 542 90 
Loss before equity in earnings of subsidiaries and income taxes(2,093)(542)(90)
Equity in earnings of subsidiaries79,892 94,808 86,307 
Income before income taxes77,799 94,266 86,217 
Income tax benefit(597)(81)(208)
Net income$78,396 $94,347 $86,425 
Weighted Average Number of Common Shares Outstanding36,955 36,921 36,880 
Basic Earnings Per Common Share$2.12 $2.55 $2.34 
Weighted Average Number of Diluted Common Shares Outstanding37,039 37,010 36,995 
Fully Diluted Earnings per Common Share$2.11 $2.55 $2.33 
Dividends Paid Per Common Share$1.525 $1.40 $1.28 
 
The accompanying condensed notes are an integral part of these condensed financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
 
 For the Years Ended December 31,
(in thousands)202220212020
Cash Flows From Operating Activities$56,398 $36,799 $47,307 
Cash Flows From Investing Activities:   
Loans (made to)/repaid from, wholly-owned subsidiaries(81,000)(46,000)151,000 
  Increase in investment of subsidiary — — (60,000)
Net cash (used in) provided by investing activities(81,000)(46,000)91,000 
Cash Flows From Financing Activities:   
Proceeds from stock option exercises— — 30 
Net change in notes payable to banks81,000 60,500 (91,000)
Proceeds from note payable to GSWC— (26,000)(6,000)
Repayment of note payable to GSWC— 26,000 6,000 
Dividends paid(56,356)(51,689)(47,206)
Net cash provided by (used in) financing activities24,644 8,811 (138,176)
Change in cash and equivalents42 (390)131 
Cash and equivalents at beginning of period51 441 310 
Cash and equivalents at the end of period$93 $51 $441 
 
The accompanying condensed notes are an integral part of these condensed financial statements.


 
Note 1 — Basis of Presentation
The accompanying condensed financial statements of AWR (parent) should be read in conjunction with the consolidated financial statements and notes thereto of American States Water Company and subsidiaries (“Registrant”) included in Part II, Item 8 of this Form 10-K.  AWR’s (parent) significant accounting policies are consistent with those of Registrant and its wholly owned subsidiaries, Golden State Water Company (“GSWC”), Bear Valley Electric Service, Inc. (“BVESI”) and American States Utility Services, Inc. (“ASUS”), except that all subsidiaries are accounted for as equity method investments. 
Related-Party Transactions:
As further discussed in Note 2 — Notes Payable to Banks, AWR (parent) currently has access to a $280.0 million revolving credit facility that expires in May 2023. AWR (parent) borrows under this facility and provides funds to GSWC and ASUS in support of their operations. Any amounts owed to AWR (parent) for borrowings under this facility are reflected as intercompany receivables on the condensed balance sheets.  The interest rate charged to the subsidiaries is sufficient to cover AWR (parent)’s interest cost under the credit facility.
In October 2020, AWR (parent) issued an interest bearing promissory note to GSWC, which expires in May 2023. Under the terms of the note, AWR (parent) may borrow from GSWC amounts up to $30.0 million for working capital purposes. AWR (parent) agrees to pay any unpaid principal amounts outstanding under this note, plus accrued interest. During 2021 and 2020, AWR borrowed and repaid a total of $26.0 million and $6.0 million, respectively, from GSWC under the terms of the note. There were no borrowings or repayments during 2022. As of December 31, 2021 and 2022, there were no amounts outstanding under this note.
In January 2023, the Board of Directors approved the issuance of one GSWC Common Share to AWR for $10.0 million. Proceeds from the stock issuance was used to pay down its intercompany borrowings owed to AWR.
AWR (parent) guarantees performance of ASUS’s military privatization contracts and agrees to provide necessary resources, including financing, which are necessary to assure the complete and satisfactory performance of such contracts.
Note 2 — Note Payable to Banks
On April 22, 2022, AWR’s credit facility was amended to increase the borrowing capacity from $200.0 million to $280.0 million. The amendment also changed the benchmark interest rate from the London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”). The change in benchmark rates has not had a material impact on its financing costs.
The aggregate effective amount that may be outstanding under letters of credit is $25.0 million.  AWR has obtained letters of credit for AWR and GSWC in the aggregate amount of $639,000 at fees of 0.65%. Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. AWR is not required to maintain any compensating balances.
Given that AWR’s credit agreement will expire in May 2023, the outstanding borrowings under the credit facility of $255.5 million as of December 31, 2022 have been classified as a current liability on AWR’s Consolidated Balance Sheet, thus creating a negative working-capital condition for AWR of $245.2 million. Management plans to either renew and extend AWR’s credit facility or to enter into a new credit facility prior to its expiration date, and is confident, given AWR's history in obtaining revolving credit facilities to meet its working-capital needs, that AWR will be able to do so with the needed borrowing capacities required to run its operations. Management believes that execution of its plan is probable based on Registrant’s ability to generate consistent cash flows, its A+ credit ratings, its relationships with lenders, and its history of successfully raising debt necessary to fund its operations. As of March 1, 2023, AWR does not have sufficient liquidity or capital resources to repay its credit facility without, extending its existing credit facility, entering into a new credit facility, or issuing new debt or equity.
Loans may be obtained under this credit facility at the option of AWR and bear interest at rates based on credit ratings and SOFR margins.  In June 2022, Standard and Poor’s Global Ratings (“S&P”) affirmed an A+ credit rating. In March 2021, S&P affirmed its negative outlook for AWR. S&P’s debt ratings range from AAA (highest possible) to D (obligation is in default).
AWR’s (parent) borrowing activities (excluding letters of credit) for the years ended December 31, 2022 and 2021 were as follows:
 December 31,
(in thousands, except percent)20222021
Balance Outstanding at December 31,$255,500 $174,500 
Interest Rate at December 31,5.07 %0.78 %
Average Amount Outstanding213,758 139,926 
Weighted Average Annual Interest Rate2.56 %0.91 %
Maximum Amount Outstanding$255,500 $174,500 
All of the letters of credit are issued pursuant to the revolving credit facility. The revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum debt rating from Moody’s or S&P of Baa3 or BBB-, respectively. As of December 31, 2022, 2021 and 2020, AWR was in compliance with these covenants. As of December 31, 2022, AWR had an interest coverage ratio of 6.32 times interest expense, a debt ratio of 0.51 to 1.00 and a debt rating of A+ by S&P.
Note 3 — Income Taxes
AWR (parent) receives a tax benefit for expenses incurred at the parent-company level.  AWR (parent) also recognizes the effect of AWR’s consolidated California unitary apportionment, which is beneficial or detrimental depending on a combination of the profitability of AWR’s consolidated non-California activities as well as the proportion of its consolidated California sales to total sales.
Note 4 — Dividend from Subsidiaries
Cash dividends in the amount of $56.4 million, $38.3 million and $47.3 million were paid to AWR (parent) by its wholly owned subsidiaries during the years ended December 31, 2022, 2021 and 2020, respectively.