Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 28, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | AWK | |
Entity Registrant Name | American Water Works Company, Inc. | |
Entity Central Index Key | 1,410,636 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 177,902,408 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
ASSETS | ||
Property, plant and equipment | $ 19,058 | $ 18,504 |
Accumulated depreciation | (4,741) | (4,571) |
Property, plant and equipment, net | 14,317 | 13,933 |
Current assets: | ||
Cash and cash equivalents | 52 | 45 |
Restricted funds | 23 | 21 |
Accounts receivable, net | 240 | 255 |
Unbilled revenues | 286 | 267 |
Materials and supplies | 42 | 38 |
Other | 48 | 31 |
Total current assets | 691 | 657 |
Regulatory and other long-term assets: | ||
Regulatory assets | 1,306 | 1,271 |
Goodwill | 1,313 | 1,302 |
Other | 79 | 78 |
Total regulatory and other long-term assets | 2,698 | 2,651 |
TOTAL ASSETS | 17,706 | 17,241 |
Capitalization: | ||
Common stock ($0.01 par value, 500,000,000 shares authorized, 181,620,003 and 180,907,483 shares outstanding, respectively) | 2 | 2 |
Paid-in-capital | 6,382 | 6,351 |
Accumulated deficit | (921) | (1,073) |
Accumulated other comprehensive loss | (96) | (88) |
Treasury stock, at cost (3,721,496 and 2,625,112 shares, respectively) | (214) | (143) |
Total common stockholders' equity | 5,153 | 5,049 |
Long-term debt | 5,850 | 5,862 |
Redeemable preferred stock at redemption value | 11 | 12 |
Total long-term debt | 5,861 | 5,874 |
Total capitalization | 11,014 | 10,923 |
Current liabilities: | ||
Short-term debt | 950 | 628 |
Current portion of long-term debt | 54 | 54 |
Accounts payable | 148 | 126 |
Accrued liabilities | 377 | 493 |
Taxes accrued | 39 | 26 |
Interest accrued | 61 | 62 |
Other | 111 | 144 |
Total current liabilities | 1,740 | 1,533 |
Regulatory and other long-term liabilities: | ||
Advances for construction | 309 | 349 |
Deferred income taxes, net | 2,430 | 2,310 |
Deferred investment tax credits | 23 | 24 |
Regulatory liabilities | 406 | 402 |
Accrued pension expense | 341 | 342 |
Accrued postretirement benefit expense | 167 | 169 |
Other | 89 | 68 |
Total regulatory and other long-term liabilities | 3,765 | 3,664 |
Contributions in aid of construction | 1,187 | 1,121 |
Commitments and contingencies (see Note 8) | ||
TOTAL CAPITALIZATION AND LIABILITIES | $ 17,706 | $ 17,241 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2016 | Dec. 31, 2015 |
Statement Of Financial Position [Abstract] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares outstanding | 181,620,003 | 180,907,483 |
Treasury Stock, shares | 3,721,496 | 2,625,112 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income Statement [Abstract] | ||||
Operating revenues | $ 827 | $ 782 | $ 1,570 | $ 1,480 |
Operating expenses: | ||||
Operation and maintenance | 351 | 336 | 699 | 660 |
Depreciation and amortization | 115 | 109 | 231 | 216 |
General taxes | 64 | 60 | 130 | 124 |
Gain on asset dispositions and purchases | (2) | (1) | (3) | (2) |
Total operating expenses, net | 528 | 504 | 1,057 | 998 |
Operating income | 299 | 278 | 513 | 482 |
Other income (expense): | ||||
Interest, net | (81) | (76) | (161) | (151) |
Other, net | 7 | 2 | 9 | 6 |
Total other income (expense) | (74) | (74) | (152) | (145) |
Income from continuing operations before income taxes | 225 | 204 | 361 | 337 |
Provision for income taxes | 88 | 81 | 142 | 134 |
Net income attributable to common stockholders | $ 137 | $ 123 | $ 219 | $ 203 |
Basic earnings per share: | ||||
Net income attributable to common stockholders | $ 0.77 | $ 0.69 | $ 1.23 | $ 1.13 |
Diluted earnings per share: | ||||
Net income attributable to common stockholders | $ 0.77 | $ 0.68 | $ 1.23 | $ 1.13 |
Weighted average common shares outstanding: | ||||
Basic | 178 | 180 | 178 | 180 |
Diluted | 178 | 180 | 178 | 180 |
Dividends declared per common share | $ 0.375 | $ 0.34 | $ 0.375 | $ 0.34 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income attributable to common stockholders | $ 137 | $ 123 | $ 219 | $ 203 |
Pension amortized to periodic benefit cost: | ||||
Actuarial loss, net of tax of $1 for the three months and $2 for the six months | 2 | 2 | 3 | 3 |
Foreign currency translation adjustment | (1) | (1) | ||
Unrealized loss on cash flow hedges, net of tax of $(6) and $0 for the three months and $(7) and $0 for the six months | (10) | (11) | ||
Net other comprehensive income (loss) | (9) | 2 | (8) | 2 |
Comprehensive income attributable to common stockholders | $ 128 | $ 125 | $ 211 | $ 205 |
Consolidated Statements of Com6
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Actuarial loss, tax | $ 1 | $ 1 | $ 2 | $ 2 |
Unrealized loss on cash flow hedge, tax | $ (6) | $ 0 | $ (7) | $ 0 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 219 | $ 203 |
Adjustments to reconcile to net cash flows provided by operating activities: | ||
Depreciation and amortization | 231 | 216 |
Deferred income taxes and amortization of investment tax credits | 134 | 127 |
Provision for losses on accounts receivable | 9 | 14 |
Gain on asset dispositions and purchases | (3) | (2) |
Pension and non-pension postretirement benefits | 31 | 31 |
Other non-cash, net | (32) | (17) |
Changes in assets and liabilities: | ||
Receivables and unbilled revenues | (13) | (72) |
Pension and non-pension postretirement benefit contributions | (28) | (26) |
Accounts payable and accrued liabilities | 22 | (50) |
Other assets and liabilities, net | (52) | (6) |
Net cash provided by operating activities | 518 | 418 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (597) | (479) |
Acquisitions | (24) | (41) |
Proceeds from sale of assets and securities | 2 | 5 |
Removal costs from property, plant and equipment retirements, net | (44) | (46) |
Net funds restricted | (2) | (6) |
Net cash used in investing activities | (665) | (567) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from long-term debt | 2 | 8 |
Repayments of long-term debt | (13) | (6) |
Proceeds from short-term borrowings with maturities greater than three months | 60 | |
Net short-term borrowings with maturities less than three months | 321 | 311 |
Proceeds from issuances of employee stock plans and DRIP | 18 | 13 |
Advances and contributions for construction, net of refunds of $12 and $11, respectively | 12 | 13 |
Debt issuance costs | (1) | (2) |
Dividends paid | (127) | (117) |
Anti-dilutive stock repurchase | (65) | (13) |
Tax benefit realized from equity compensation | 7 | 4 |
Net cash provided by financing activities | 154 | 271 |
Net increase in cash and cash equivalents | 7 | 122 |
Cash and cash equivalents as of beginning of period | 45 | 23 |
Cash and cash equivalents as of end of period | 52 | 145 |
Non-cash investing activity: | ||
Capital expenditures acquired on account but unpaid as of end of period | $ 167 | $ 192 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Statement Of Cash Flows [Abstract] | ||
Advances and contributions for construction, net of refunds | $ 12 | $ 11 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Millions | Total | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock |
Beginning Balance at Dec. 31, 2014 | $ 4,915 | $ 2 | $ 6,302 | $ (1,296) | $ (82) | $ (11) |
Beginning Balance (in shares) at Dec. 31, 2014 | 179,500,000 | (200,000) | ||||
Cumulative effect of change in accounting principle | (8) | (8) | ||||
Net income attributable to common stockholders | 203 | 203 | ||||
Direct stock reinvestment and purchase plan | 3 | 3 | ||||
Employee stock purchase plan | 2 | 2 | ||||
Stock-based compensation activity | 11 | 17 | $ (6) | |||
Stock-based compensation activity (in shares) | 600,000 | (100,000) | ||||
Repurchases of common stock | (13) | $ (13) | ||||
Repurchase of common stock (in shares) | (300,000) | |||||
Net other comprehensive income (loss) | 2 | 2 | ||||
Dividends | (61) | (61) | ||||
Ending Balance at Jun. 30, 2015 | 5,054 | $ 2 | 6,324 | (1,162) | (80) | $ (30) |
Ending Balance (in shares) at Jun. 30, 2015 | 180,100,000 | (600,000) | ||||
Beginning Balance at Dec. 31, 2015 | 5,049 | $ 2 | 6,351 | (1,073) | (88) | $ (143) |
Beginning Balance (in shares) at Dec. 31, 2015 | 180,900,000 | (2,600,000) | ||||
Net income attributable to common stockholders | 219 | 219 | ||||
Direct stock reinvestment and purchase plan | 3 | 3 | ||||
Employee stock purchase plan | 3 | 3 | ||||
Stock-based compensation activity | 19 | 25 | $ (6) | |||
Stock-based compensation activity (in shares) | 700,000 | (100,000) | ||||
Repurchases of common stock | $ (65) | $ (65) | ||||
Repurchase of common stock (in shares) | (1,000,000) | (1,000,000) | ||||
Net other comprehensive income (loss) | $ (8) | (8) | ||||
Dividends | (67) | (67) | ||||
Ending Balance at Jun. 30, 2016 | $ 5,153 | $ 2 | $ 6,382 | $ (921) | $ (96) | $ (214) |
Ending Balance (in shares) at Jun. 30, 2016 | 181,600,000 | (3,700,000) |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | Note 1: Basis of Presentation The unaudited consolidated financial statements provided in this report include the accounts of American Water Works Company, Inc. and all of in which a controlling interest is maintained The Consolidated Balance Sheet as of December 31, 2015 is derived from the Company's audited consolidated financial statements as of December 31, 2015. The unaudited financial statements and notes included in this report should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (“Form 10-K”) which provides a more complete discussion of the Company’s accounting policies, financial position, operating results and other matters. The results of operations for interim periods are not necessarily indicative of the results that may be expected for the year, due primarily to the seasonality of the Company’s operations. |
New Accounting Pronouncements
New Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2016 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
New Accounting Pronouncements | Note 2: New Accounting Pronouncements The following recently issued accounting standard has been adopted by the Company as of June 30, 2016: Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements (or Other Significant Matters) Accounting for Fees Paid in a Cloud Computing Arrangement Clarified accounting guidance for fees paid in a cloud computing arrangement. Software license elements in a cloud computing arrangement should be accounted for consistent with other software licenses. A cloud computing arrangement without a software license is accounted for as a service contract. January 1, 2016 Prospective Adoption of this standard did not impact the Company’s results of operations, financial position or cash flows. The following recently issued accounting standards are not yet required to be adopted by the Company as of June 30, 2016: Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements (or Other Significant Matters) Simplification of Employee Share-Based Payment Accounting Simplified accounting and disclosure requirements for share-based payment awards. The updated guidance addresses: (i) the recognition of excess tax benefits and deficiencies; (ii) the classification of excess tax benefits and taxes paid on the Consolidated Statements of Cash Flows; (iii) election of an accounting policy for forfeitures; and (iv) the amount an employer can withhold to cover income taxes and still qualify for equity classification. January 1, 2017; early adoption permitted Alternative transition methods available The Company is evaluating the effect on the financial statements, related disclosures and timing of adoption. Revenue from Contracts with Customers Provided new accounting guidance for revenue recognition replacing most existing guidance, including industry-specific guidance. Upon adoption, a company will recognize revenue for the transfer of goods or services to customers equal to the amount it expects to be entitled to receive for those goods or services. The guidance also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. January 1, 2018; early adoption permitted Alternative transition methods available The Company is evaluating the effect on the financial statements, related disclosures and method of adoption. The Company does not expect to early adopt. Accounting for Leases Updated the accounting and disclosure guidance for leasing arrangements. Under this guidance, a lessee will be required to recognize the following for all leases, excluding short-term leases, at the commencement date: (i) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the guidance, lessor accounting is largely unchanged. January 1, 2019; early adoption permitted Modified retrospective The Company is evaluating the effect on the financial statements, related disclosures and the timing of adoption. Measurement of Credit Losses Updated the accounting guidance on reporting credit losses for financial assets held at amortized cost basis and available-for-sale debt securities. Under this guidance, expected credit losses are required to be measured based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. Also, this guidance requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. January 1, 2020; early adoption permitted Modified retrospective The Company is evaluating the effect on the financial statements, related disclosures and the timing of adoption. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2016 | |
Business Combinations [Abstract] | |
Acquisitions | Note 3: Acquisitions During the six months ended June 30, 2016, the Company incurred $24 in acquisition costs, including an aggregate purchase price of $23, net of cash received, for ten closed acquisitions of various regulated water and wastewater systems. Assets acquired, principally utility plant, totaled $30. Liabilities assumed totaled $17, including $8 of contributions in aid of construction and $6 of other long-term liabilities. The Company recorded additional goodwill of $11 associated with two of its acquisitions, which is reported in its Regulated Businesses segment and is expected to be fully deductible for tax purposes. The Company recognized a bargain purchase gain of $1 associated with two of its acquisitions, which was deferred as a regulatory liability. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Note 4: Stockholders’ Equity Accumulated Other Comprehensive Loss The following table presents changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2016 and 2015, respectively: Defined Benefit Plans Accumulated Employee Benefit Funded Amortization of Prior Service Cost Amortization of Actuarial Loss Foreign Currency Translation Loss on Cash Flow Hedges Other Comprehensive Loss Beginning balance as of January 1, 2016 $ (126 ) $ 1 $ 36 $ 2 $ (1 ) $ (88 ) Other comprehensive loss before reclassifications — — — — (11 ) (11 ) Amounts reclassified from accumulated other comprehensive loss — — 3 — — 3 Net other comprehensive income (loss) — — 3 — (11 ) (8 ) Ending balance as of June 30, 2016 $ (126 ) $ 1 $ 39 $ 2 $ (12 ) $ (96 ) Beginning balance as of January 1, 2015 $ (116 ) $ 1 $ 31 $ 3 $ (1 ) $ (82 ) Other comprehensive loss before reclassifications — — — (1 ) — (1 ) Amounts reclassified from accumulated other comprehensive loss — — 3 — — 3 Net other comprehensive income (loss) — — 3 (1 ) — 2 Ending balance as of June 30, 2015 $ (116 ) $ 1 $ 34 $ 2 $ (1 ) $ (80 ) The Company does not reclassify the amortization of defined benefit pension cost components from accumulated other comprehensive loss directly to net income in its entirety. These accumulated other comprehensive income (loss) components are included in the computation of net periodic pension cost. (See Note 7) The amortization of the loss on cash flow hedges is reclassified to net income attributable to common stockholders during the period incurred and is included in interest, net in the accompanying Consolidated Statements of Operations. (See Note 6) Anti-dilutive Stock Repurchase Program In February 2015, the Company’s Board of Directors authorized an anti-dilutive stock repurchase program, which allowed the Company to purchase up to 10.0 shares of its outstanding common stock over an unrestricted period of time. During the six months ended June 30, 2016, the Company repurchased 1.0 shares of common stock in the open market at an aggregate cost of $65 under the program. As of June 30, 2016, there were 6.8 shares of common stock available for repurchase under the program. |
Stock Based Compensation
Stock Based Compensation | 6 Months Ended |
Jun. 30, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock Based Compensation | Note 5: Stock Based Compensation Stock Options During the six months ended June 30, 2016, the Company granted non-qualified stock options to certain employees under the Company’s 2007 Omnibus Equity Compensation Plan (the “2007 Plan”). Stock options have a maximum term of seven years, are granted with exercise prices equal to the fair market value of the Company’s common stock on the date of grant, vest ratably over a three-year service period beginning January 1 of the year of the grant and generally are subject to the employee’s continued employment with the Company. Stock options granted are valued using the Black-Scholes option-pricing model. The following table presents the weighted-average assumptions used in the Black-Scholes option-pricing model and the resulting weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2016: Dividend yield 2.09 % Expected volatility 15.89 % Risk-free interest rate 1.15 % Expected life (years) 4.0 Exercise price $ 65.15 Grant date fair value per share $ 6.59 The grant date fair value is amortized through expense over the requisite service period using the straight-line method. As of June 30, 2016, $3 of total unrecognized compensation cost related to the non-vested stock options is expected to be recognized over the weighted-average period of 1.9 years. The table below summarizes stock option activity for the six months ended June 30, 2016: Shares (in thousands) Weighted- Average Price Weighted- Average Life Aggregate Intrinsic Value Options outstanding as of January 1, 2016 1,187 $ 39.70 3.9 $ 24 Granted 339 65.15 Forfeited or expired (28 ) 58.12 Exercised (374 ) 33.17 Options outstanding as of June 30, 2016 1,124 $ 49.10 4.5 $ 40 Exercisable as of June 30, 2016 543 $ 39.11 3.1 $ 25 The following table summarizes additional information regarding stock options exercised for the six months ended June 30, 2016 and 2015: 2016 2015 Intrinsic value $ 13 $ 6 Exercise proceeds 12 8 Income tax benefit 4 2 Restricted Stock Units (“RSUs”) During the six months ended June 30, 2016, the Company granted RSUs, both with and without performance conditions, to certain employees and RSUs without performance conditions to non-employee directors under the 2007 Plan. The RSUs without performance conditions generally vest ratably over a three-year service period beginning January 1 of the year of grant and are valued at the market value of the Company’s common stock on the date of grant. The RSUs with performance conditions include those with internal performance measures, and separately, certain market thresholds and vest ratably over a three-year performance period beginning January 1 of the year of grant (the “Performance Period”). Distribution of the performance shares is contingent upon the achievement of internal performance measures and, separately, certain market thresholds over the Performance Period. The RSUs with internal performance measures are valued at the market value of the Company’s common stock on the date of grant. The RSUs granted with market conditions are valued using the Monte Carlo simulation model. The following table presents the weighted-average assumptions used in the Monte Carlo simulation model for RSUs with market conditions granted during the six months ended June 30, 2016: Expected volatility 15.90 % Risk-free interest rate 0.91 % Expected life (years) 3.0 Grant date fair value per share $ 76.88 During 2013, the Company granted selected employees RSUs with performance conditions (the “2013 RSUs”) comprised of internal performance measures and, separately, market thresholds expressed in the form of a relative total shareholder return. An aggregate of 128 thousand of the 2013 RSUs vested in January 2016. The terms of the 2013 RSUs specified that, so long as the participant continued to be employed by the Company during the Performance Period and to the extent the performance conditions were achieved, the RSUs would vest at target; if the performance conditions were surpassed, up to 175% of the target number of shares would be distributed; and to the extent that the performance thresholds were not met, the award would be forfeited. In January 2016, an additional 74 thousand RSUs were granted and immediately vested because performance thresholds associated with the 2013 RSUs were exceeded. The table below summarizes RSU activity for the six months ended June 30, 2016: Shares (in thousands) Weighted-Average Grant Date Fair Value (per share) Non-vested total as of January 1, 2016 436 $ 46.97 Granted 142 69.58 Performance share adjustment 74 39.89 Vested (a) (250 ) 42.58 Forfeited (14 ) 60.04 Non-vested total as of June 30, 2016 388 $ 56.25 (a) Includes 202 thousand shares related to the 2013 RSUs and 48 thousand shares related to RSUs without performance conditions that vested during the six months ended June 30, 2016. The following table summarizes additional information regarding RSUs issued during the six months ended June 30, 2016 and 2015: 2016 2015 Intrinsic value $ 15 $ 16 Income tax benefit 2 2 The grant date fair value of the restricted stock awards that vest ratably and have market and/or performance and service conditions are amortized through expense over the requisite service period using the graded-vesting method. RSUs that have no performance conditions are amortized through expense over the requisite service period using the straight-line method. As of June 30, 2016, $8 of total unrecognized compensation cost related to the non-vested RSUs is expected to be recognized over the weighted-average remaining life of 1.3 years. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Note 6: Long-Term Debt The following long-term debt was issued during the six months ended June 30, 2016: Company Type Rate Maturity Amount Other American Water subsidiaries Private activity bonds and government funded debt — 1.36% 2026 $ 2 The following long-term debt was retired through sinking fund provisions, optional redemptions or payment at maturity during the six months ended June 30, 2016: Company Type Rate Maturity Amount American Water Capital Corp. (a) Private activity bonds and government funded debt—fixed rate 1.79%-2.90% 2021-2031 $ 1 Other American Water subsidiaries Private activity bonds and government funded debt—fixed rate 0.00%-5.30% 2016-2041 11 Other American Water subsidiaries Mandatorily redeemable preferred stock 8.49% 2036 1 Total retirements and redemptions $ 13 (a) American Water Capital Corp. , which is a wholly owned subsidiary of the Company, has a support agreement with the Company that, under certain circumstances, is the functional equivalent of a guarantee The Company has three forward starting swap agreements with an aggregate notional amount of $225 to reduce interest rate exposure on debt expected to be issued in 2017. The forward starting swap agreements terminate in December 2017 and have an average fixed rate of 2.29%. The Company has designated the forward starting swap agreements as cash flow hedges and the initial fair value, in addition to any subsequent changes in fair value, are recognized in accumulated other comprehensive loss. Upon termination, the cumulative gain or loss recorded in accumulated other comprehensive loss will be amortized through interest, net over the term of the issued debt. The Company has an interest rate swap to hedge $100 of its 6.085% fixed-rate debt maturing in 2017. The Company pays variable interest of six-month LIBOR plus 3.422% and the interest rate swap matures with the fixed-rate debt in 2017. The Company has designated the interest rate swap as a fair value hedge accounted for at fair value with gains or losses, as well as the offsetting gains or losses on the hedged item, recognized in interest, net. The net loss recognized by the Company was de minimis for the three and six months ended June 30, 2016 and 2015. The Company has employed interest rate swaps to fix the interest cost on a portion of its variable-rate debt with an aggregate notional amount of $8. The Company has designated these instruments as economic hedges accounted for at fair value with gains or losses recognized in interest, net. The gain recognized by the Company was de minimis for the three and six months ended June 30, 2016 and 2015. No ineffectiveness was recognized for the six months ended June 30, 2016 and 2015 related to hedging instruments. The following table provides a summary of the gross fair value for the Company’s derivative asset and liabilities, as well as the location of the asset and liability balances in the Consolidated Balance Sheets: Derivative Instruments Derivative Designation Balance Sheet Classification June 30, 2016 December 31, 2015 Asset Derivative Interest rate swap Fair value hedge Other long-term assets $ 2 $ 2 Liability Derivatives Forward starting swaps Cash flow hedge Other long-term liabilities $ 18 $ — Interest rate swap Economic hedge (non-designated) Other long-term liabilities 1 1 |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 6 Months Ended |
Jun. 30, 2016 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension and Other Postretirement Benefits | Note 7: Pension and Other Postretirement Benefits The following table provides the components of net periodic benefit costs: For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Components of net periodic pension benefit cost Service cost $ 8 $ 10 $ 16 $ 19 Interest cost 20 18 40 37 Expected return on plan assets (24 ) (25 ) (48 ) (49 ) Amortization of actuarial loss 7 7 14 13 Net periodic pension benefit cost $ 11 $ 10 $ 22 $ 20 Components of net periodic other postretirement benefit cost Service cost $ 3 $ 4 $ 6 $ 7 Interest cost 8 7 15 15 Expected return on plan assets (7 ) (7 ) (13 ) (13 ) Amortization of prior service credit — — (1 ) (1 ) Amortization of actuarial loss 1 2 2 3 Net periodic other postretirement benefit cost $ 5 $ 6 $ 9 $ 11 The Company contributed $17 to its defined benefit pension plans in the first six months of 2016 and expects to contribute $16 during the remainder of 2016. In addition, the Company contributed $11 for the funding of its other postretirement plans in the first six months of 2016 and expects to contribute $11 during the remainder of 2016. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 8: Commitments and Contingencies Commitments On March 29, 2016, Pennsylvania-American Water Company (“PAWC”) entered into an asset purchase agreement with the Sewer Authority of the City of Scranton (“SSA”) to acquire substantially all of the wastewater collection and treatment system assets of the SSA’s system for a total stated purchase price of $195, which includes approximately $38 in assumed cash to be transferred at closing. The SSA is currently subject to a consent decree with the U.S. Environmental Protection Agency (“EPA”) and the Pennsylvania Department of Environmental Protection (“PaDEP”), which requires the SSA to complete significant upgrades to its sewer system at an estimated cost of $140. As a part of the purchase, PAWC will be required to cause the consent decree to be amended to allow it to assume the obligations and liabilities of the SSA thereunder. The acquisition closing is subject to the approval of the Pennsylvania Public Utility Commission, and, with respect to the amendment of the consent decree, the consent of the EPA, PaDEP, the U.S. Department of Justice and the U.S. District Court for the Middle District of Pennsylvania. The Company is working to close this transaction by September 30, 2016. Contingencies The Company is routinely involved in legal actions in the normal conduct of its business. As of June 30, 2016, the Company has accrued approximately $7 of probable loss contingencies and has estimated that the maximum amount of losses associated with reasonably possible loss contingencies is $54. For certain matters, the Company is unable to estimate possible losses. West Virginia Elk River Freedom Industries Chemical Spill On January 9, 2014, a chemical storage tank owned by Freedom Industries, Inc. leaked two substances, 4-methylcyclohexane methanol, or MCHM, and PPH/DiPPH, a mix of polyglycol ethers, into the Elk River near the West Virginia-American Water Company (“WVAWC”) treatment plant intake in Charleston, West Virginia. After having been alerted to the leak of MCHM by the West Virginia Department of Environmental Protection, WVAWC took immediate steps to gather more information about MCHM, augment its treatment process as a precaution, and begin consultations with federal, state and local public health officials. As soon as possible after it was determined that the augmented treatment process would not fully remove the MCHM, a joint decision was reached in consultation with the West Virginia Bureau for Public Health to issue a “Do Not Use” order for all of its approximately 93,000 customer accounts in parts of nine West Virginia counties served by the Charleston treatment plant. The order addressed the use of water for drinking, cooking, washing and bathing, but did not affect continued use of water for sanitation and fire protection. Over the next several days, WVAWC and an interagency team of state and federal officials engaged in extensive sampling and testing to determine if levels of MCHM were below one part per million (1 ppm), a level that the U.S. Centers for Disease Control and Prevention (“CDC”) and the EPA indicated would be protective of public health. Beginning on January 13, 2014, based on the results of the continued testing, the Do Not Use order was lifted in stages to help ensure the water system was not overwhelmed by excessive demand, which could have caused additional water quality and service issues. By January 18, 2014, none of WVAWC’s customers were subject to the Do Not Use order, although CDC guidance suggesting that pregnant women avoid consuming the water until the chemicals were at non-detectable levels remained in place. In addition, based on saved samples taken on or before January 18, 2014, PPH/DiPPH was no longer detected in the water supply as of January 18, 2014. On February 21, 2014, WVAWC announced that all points of testing throughout its water distribution system indicated that levels of MCHM were below 10 parts per billion (10 ppb). The interagency team established 10 ppb as the “non-detect” level of MCHM in the water distribution system based on the measurement capabilities of the multiple laboratories used. WVAWC continued to work with laboratories to test down to below 2 ppb of MCHM and announced on March 3, 2014, that it had cleared the system to below this level. To date, there are 69 pending cases against WVAWC with respect to this matter in the United States District Court for the Southern District of West Virginia or West Virginia Circuit Courts in Kanawha, Boone and Putnam counties. Fifty-three of the state court cases naming WVAWC, and one case naming both WVAWC and American Water Works Service Company, Inc. (“AWWSC,” and together with WVAWC and the Company, the “American Water Defendants”) were removed to the United States District Court for the Southern District of West Virginia. On December 17, 2015, the federal district court entered orders remanding 52 of the previously removed cases back to the West Virginia Circuit Courts for further proceedings (two of the previously removed cases had been dismissed in the interim). Following that order, seven additional cases were filed against WVAWC in West Virginia Circuit Courts in Kanawha and Putnam counties with respect to this matter. On January 28, 2016, all of the state court cases were referred to West Virginia’s Mass Litigation Panel for further proceedings. On June 6, 2016, plaintiffs filed a second amended consolidated class action complaint the Four of the cases pending before the federal district court were consolidated for purposes of discovery, and an amended consolidated class action complaint for those cases (the “Federal action”) was filed on December 9, 2014 by several plaintiffs who allegedly suffered economic losses, loss of use of property and tap water or other specified adverse consequences as a result of the Freedom Industries spill, on behalf of a purported class of all persons and businesses supplied with, using, or exposed to water contaminated with Crude MCHM and provided by WVAWC in Logan, Clay, Lincoln, Roane, Jackson, Boone, Putnam, and Kanawha Counties and the Culloden area of Cabell County, West Virginia as of January 9, 2014. The amended consolidated complaint names several individuals and corporate entities as defendants, including the American Water Defendants. The plaintiffs seek unspecified damages for alleged business or economic losses; unspecified damages or a mechanism for recovery to address a variety of alleged costs, loss of use of property, personal injury and other consequences allegedly suffered by purported class members; punitive damages and certain additional relief, including the establishment of a medical monitoring program to protect the purported class members from an alleged increased risk of contracting serious latent disease. On April 9, 2015, the court in the Federal action denied a motion to dismiss all claims against the Company for lack of personal jurisdiction. A separate motion to dismiss filed by AWWSC and WVAWC (and joined by the Company) asserting various legal defenses in the Federal action was resolved by the court on June 3, 2015. The court dismissed three causes of action but denied the motion to dismiss with respect to the remaining causes of actions and allowed the plaintiffs to continue to pursue the various claims for damages alleged in their amended consolidated complaint. On July 6, 2015, the plaintiffs filed a motion seeking certification of a class defined to include persons who resided in dwellings served by the KVTP on January 9, 2014, persons who owned businesses served by the KVTP on January 9, 2014, and hourly employees who worked for such businesses. The plaintiffs sought a class-wide determination of liability against the American Water Defendants, among others, and of damages to the three groups of plaintiffs as a result of the “Do Not Use” order issued after the Freedom Industries spill. On October 8, 2015, the court in the Federal action granted in part and denied in part the plaintiffs’ class certification motion. The court certified a class addressing the alleged fault of Eastman Chemical for tort claims and the alleged fault of the American Water Defendants for tort and breach of contract claims, as well as the comparative fault of Freedom Industries. However, the court granted the joint motion by defendants to exclude certain expert testimony, disallowing the testimony of plaintiffs’ economic damages experts, and denied class certification as to any damages, including punitive damages. Thus, determination or quantification of damages, if any, would be made in subsequent proceedings on an individual basis. On December 17, 2015, the court in the Federal action originally entered a scheduling order that provided for the trial on class issues to begin in July 2016. During the first week of January 2016, three additional cases were filed against one or more of the American Water Defendants, as well as others, in the U.S. District Court for the Southern District of West Virginia with respect to this matter. On March 25, 2016, the court in the Federal action entered an order extending the schedule for events through briefing related to dispositive motions and expert challenges and noting that further events in the case would be set by additional orders to be issued by the court in due course. On May 10, 2016, each of the parties in the Federal action filed motions for summary judgment and motions to exclude experts, followed by responses on June 3, 2016 and final reply memoranda on June 16, 2016. On July 7, 2016, the court in the Federal action rescheduled the trial to begin on October 25, 2016. Court-directed mediations were held at the end of September 2015 and June 2016 with the assistance of private mediators. Representatives of the American Water Defendants, Eastman Chemical, and the plaintiffs in both the Federal action and the state actions, as well as insurance carriers for certain of the defendants, participated in these mediation sessions. No resolution was reached and no further mediation discussions have been scheduled to date. Additionally, investigations with respect to the matter have been initiated by the Chemical Safety Board, the U.S. Attorney’s Office for the Southern District of West Virginia, the West Virginia Attorney General, and the Public Service Commission of West Virginia (the “PSC”). As a result of the U.S. Attorney’s Office investigation, Freedom Industries and six former Freedom Industries employees (three of whom also were former owners of Freedom Industries), pled guilty to violations of the federal Clean Water Act. On May 21, 2014, the PSC issued an Order initiating a General Investigation into certain matters relating to WVAWC's response to the Freedom Industries spill. Three parties have intervened in the proceeding, including the Consumer Advocate Division of the PSC and two attorney-sponsored groups, including one sponsored by some of the plaintiffs’ counsel involved in the civil litigation described above. WVAWC has filed testimony regarding its response to the spill and is subject to discovery from PSC staff and the intervenors as part of the General Investigation. Several disputes have arisen between WVAWC and the intervenors regarding, among other things, the scope of the discovery and the maintenance of confidentiality with regard to certain WVAWC emergency planning documents. In addition, the intervenors and PSC staff filed expert testimony in support of their assertions that WVAWC did not act reasonably with respect to the Freedom Industries spill, and WVAWC has asserted that some of the testimony is outside the scope of the PSC proceeding. On May 23, 2016, the PSC entered an order setting a procedural schedule and ruling on outstanding motions related to discovery and the scope of testimony. Hearings have been scheduled to begin on November 15, 2016. The Company believes that the causes of action asserted against the American Water Defendants in the lawsuits described above are without merit and continues to vigorously defend itself in these proceedings. Given the current stage of these proceedings, the Company cannot reasonably estimate the amount of any reasonably possible losses or a range of such losses related to these proceedings. Missouri Infrastructure System Replacement Surcharge Litigation On March 8, 2016, the Western District of the Missouri Court of Appeals ruled that the Missouri Public Service Commission (“MoPSC”) did not have statutory authority to issue an order in June 2015 approving an infrastructure system replacement surcharge (“ISRS”) for Missouri-American Water Company (“MAWC”), a wholly owned subsidiary of the Company. The court held that the MoPSC’s June 2015 order authorizing the ISRS increase was invalid because St. Louis County did not have a population of at least one million residents, as Other than as described in the “Contingencies” subsection of this Note 8, the Company believes that damages or settlements to be paid by the Company, if any, in claims or actions will not, individually or in the aggregate, have a material adverse effect on the Company. |
Earnings Per Common Share
Earnings Per Common Share | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | N ote 9: Earnings per Common Share The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share (“EPS”) calculations: For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Numerator Net income attributable to common stockholders $ 137 $ 123 $ 219 $ 203 Denominator Weighted average common shares outstanding — 178 180 178 180 Effect of dilutive common stock equivalents — — — — Weighted average common shares outstanding—Diluted 178 180 178 180 The effect of dilutive common stock equivalents is related to the RSUs and non-qualified stock options granted under the 2007 Plan, and shares purchased under the Company’s Nonqualified Employee Stock Purchase Plan. |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Assets and Liabilities | Note 10: Fair Value of Financial Assets and Liabilities Fair Value of Financial Instruments The Company used the following methods and assumptions to estimate its fair value disclosures for financial instruments: Current assets and current liabilities—The carrying amounts reported in the accompanying Consolidated Balance Sheets for current assets and current liabilities, including revolving credit debt, due to the short-term maturities and variable interest rates, approximate their fair values. Preferred stock with mandatory redemption requirements and long-term debt—The fair values of preferred stock with mandatory redemption requirements and long-term debt are categorized within the fair value hierarchy based on the inputs that are used to value each instrument. The fair value of long-term debt classified as Level 1 is calculated using quoted prices in active markets. Level 2 instruments are valued using observable inputs and Level 3 instruments are valued using observable and unobservable inputs. The fair values of instruments classified as Level 2 and 3 are determined by a valuation model that is based on a conventional discounted cash flow methodology and utilizes assumptions of current market rates. As a portion of the Company’s debts do not trade in active markets, the Company calculated a base yield curve using a risk-free rate (a U.S. Treasury securities yield curve) plus a credit spread that is based on the following two factors: (i) an average of the Company’s own publicly-traded debt securities and (ii) the current market rates for U.S. Utility A debt securities. The Company used these yield curve assumptions to derive a base yield for the Level 2 and Level 3 securities. Additionally, the Company adjusted the base yield for specific features of the debt securities including call features, coupon tax treatment and collateral for the Level 3 instruments. The carrying amounts, including fair value adjustments previously recognized in acquisition purchase accounting and a fair value adjustment related to the Company’s interest rate swap fair value hedge (which is classified as Level 2 in the fair value hierarchy), and fair values of the financial instruments were as follows: Carrying At Fair Value as of June 30, 2016 Amount Level 1 Level 2 Level 3 Total Preferred stock with mandatory redemption requirements $ 12 $ — $ — $ 18 $ 18 Long-term debt (excluding capital lease obligations) 5,902 3,617 1,455 2,068 7,140 Carrying At Fair Value as of December 31, 2015 Amount Level 1 Level 2 Level 3 Total Preferred stock with mandatory redemption requirements $ 13 $ — $ — $ 18 $ 18 Long-term debt (excluding capital lease obligations) 5,914 3,397 1,419 1,941 6,757 Recurring Fair Value Measurements The following table presents assets and liabilities measured and recorded at fair value on a recurring basis and their level in the fair value hierarchy: At Fair Value as of June 30, 2016 Level 1 Level 2 Level 3 Total Assets: Restricted funds $ 30 $ — $ — $ 30 Rabbi trust investments 12 — — 12 Deposits 6 — — 6 Mark-to-market derivative asset — 2 — 2 Total assets 48 2 — 50 Liabilities: Deferred compensation obligation 12 — — 12 Mark-to-market derivative liabilities — 19 — 19 Total liabilities 12 19 — 31 Total net assets (liabilities) $ 36 $ (17 ) $ — $ 19 At Fair Value as of December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Restricted funds $ 27 $ — $ — $ 27 Rabbi trust investments 12 — — 12 Deposits 1 — — 1 Mark-to-market derivative asset — 2 — 2 Other investments 4 — — 4 Total assets 44 2 — 46 Liabilities: Deferred compensation obligation 11 — — 11 Mark-to-market derivative liability — 1 — 1 Total liabilities 11 1 — 12 Total net assets $ 33 $ 1 $ — $ 34 Restricted funds—The Company’s restricted funds primarily represent proceeds received from financings for the construction and capital improvement of facilities and from customers for future services under operations and maintenance projects. The proceeds of these financings are held in escrow until the designated expenditures are incurred. Long-term restricted funds of $6 were included in other long-term assets as of June 30, 2016 and December 31, 2015. Rabbi trust investments—The Company’s rabbi trust investments consist primarily of equity and fixed income indexed funds from which supplemental executive retirement plan benefits and deferred compensation obligations can be paid. The Company includes these assets in other long-term assets. Deposits—Deposits include escrow funds and certain other deposits held in trust. The Company includes cash deposits in other current assets. Deferred compensation obligations—The Company’s deferred compensation plans allow participants to defer certain cash compensation into notional investment accounts. The Company includes such plans in other long-term liabilities. The value of the Company’s deferred compensation obligations is based on the market value of the participants’ notional investment accounts. The notional investments are comprised primarily of mutual funds, which are based on observable market prices. Mark-to-market derivative asset and liability—The Company utilizes fixed-to-floating interest-rate swaps, typically designated as fair-value hedges, to achieve a level of variable-rate debt as a percentage of total debt. The Company also employs derivative financial instruments in the form of variable-to-fixed interest rate swaps and forward starting interest rate swaps, classified as economic hedges and cash flow hedges, respectively, in order to fix the interest cost on existing or forecasted debt. The Company uses a calculation of future cash inflows and estimated future outflows, which are discounted, to determine the current fair value. Additional inputs to the present value calculation include the contract terms, counterparty credit risk, interest rates and market volatility. The Company includes the mark-to-market derivative assets and liability in other long-term assets and other long-term liabilities, respectively. Other investments—Other investments primarily represent money market funds used for active employee benefits. The Company includes other investments in other current assets. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Note 11: Segment Information The Company operates its businesses primarily through one reportable segment, the Regulated Businesses segment. The Company also operates businesses that provide a broad range of related and complementary water and wastewater services in non-regulated markets, which includes four operating segments that individually do not meet the criteria of a reportable segment. These four non-reportable operating segments are collectively presented as our “Market-Based Businesses”. “Other” includes corporate costs that are not allocated to the Company’s operating segments, eliminations of inter-segment transactions, fair value adjustments and associated income and deductions related to acquisitions that have not been allocated to the operating segments for evaluation of performance and allocation of resource purposes. As of or for the Three Months Ended June 30, 2016 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 716 $ 115 $ (4 ) $ 827 Depreciation and amortization 109 4 2 115 Total operating expenses, net 434 98 (4 ) 528 Interest, net (63 ) 1 (19 ) (81 ) Income from continuing operations before income taxes 221 22 (18 ) 225 Provision for income taxes 86 9 (7 ) 88 Net income attributable to common stockholders 135 13 (11 ) 137 Total assets 15,780 523 1,403 17,706 As of or for the Three Months Ended June 30, 2015 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 687 $ 100 $ (5 ) $ 782 Depreciation and amortization 102 1 6 109 Total operating expenses, net 428 83 (7 ) 504 Interest, net (61 ) 1 (16 ) (76 ) Income from continuing operations before income taxes 199 18 (13 ) 204 Provision for income taxes 77 6 (2 ) 81 Net income attributable to common stockholders 122 12 (11 ) 123 Total assets (a) 14,778 329 1,489 16,596 As of or for the Six Months Ended June 30, 2016 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 1,350 $ 229 $ (9 ) $ 1,570 Depreciation and amortization 217 7 7 231 Total operating expenses, net 864 202 (9 ) 1,057 Interest, net (127 ) 1 (35 ) (161 ) Income from continuing operations before income taxes 364 32 (35 ) 361 Provision for income taxes 142 13 (13 ) 142 Net income attributable to common stockholders 222 19 (22 ) 219 Total assets 15,780 523 1,403 17,706 As of or for the Six Months Ended June 30, 2015 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 1,302 $ 187 $ (9 ) $ 1,480 Depreciation and amortization 202 2 12 216 Total operating expenses, net 852 159 (13 ) 998 Interest, net (122 ) 1 (30 ) (151 ) Income from continuing operations before income taxes 333 30 (26 ) 337 Provision for income taxes 130 11 (7 ) 134 Net income attributable to common stockholders 203 19 (19 ) 203 Total assets (a) 14,778 329 1,489 16,596 (a) The information has been revised to reflect the retrospective application of ASU 2015-15 Presentation of Debt Issuance Costs and ASU 2015-17 Income Taxes, which were early adopted in 2015. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 12: Subsequent Events On July 1, 2016, the Company entered into a forward starting swap agreement with a notional amount of $75 to reduce interest rate exposure on debt expected to be issued in 2017. The forward starting swap agreement terminates in December 2017 and has a fixed rate of 1.9%. |
New Accounting Pronouncements (
New Accounting Pronouncements (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
New Accounting Pronouncements | The following recently issued accounting standard has been adopted by the Company as of June 30, 2016: Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements (or Other Significant Matters) Accounting for Fees Paid in a Cloud Computing Arrangement Clarified accounting guidance for fees paid in a cloud computing arrangement. Software license elements in a cloud computing arrangement should be accounted for consistent with other software licenses. A cloud computing arrangement without a software license is accounted for as a service contract. January 1, 2016 Prospective Adoption of this standard did not impact the Company’s results of operations, financial position or cash flows. The following recently issued accounting standards are not yet required to be adopted by the Company as of June 30, 2016: Standard Description Date of Adoption Application Effect on the Consolidated Financial Statements (or Other Significant Matters) Simplification of Employee Share-Based Payment Accounting Simplified accounting and disclosure requirements for share-based payment awards. The updated guidance addresses: (i) the recognition of excess tax benefits and deficiencies; (ii) the classification of excess tax benefits and taxes paid on the Consolidated Statements of Cash Flows; (iii) election of an accounting policy for forfeitures; and (iv) the amount an employer can withhold to cover income taxes and still qualify for equity classification. January 1, 2017; early adoption permitted Alternative transition methods available The Company is evaluating the effect on the financial statements, related disclosures and timing of adoption. Revenue from Contracts with Customers Provided new accounting guidance for revenue recognition replacing most existing guidance, including industry-specific guidance. Upon adoption, a company will recognize revenue for the transfer of goods or services to customers equal to the amount it expects to be entitled to receive for those goods or services. The guidance also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. January 1, 2018; early adoption permitted Alternative transition methods available The Company is evaluating the effect on the financial statements, related disclosures and method of adoption. The Company does not expect to early adopt. Accounting for Leases Updated the accounting and disclosure guidance for leasing arrangements. Under this guidance, a lessee will be required to recognize the following for all leases, excluding short-term leases, at the commencement date: (i) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the guidance, lessor accounting is largely unchanged. January 1, 2019; early adoption permitted Modified retrospective The Company is evaluating the effect on the financial statements, related disclosures and the timing of adoption. Measurement of Credit Losses Updated the accounting guidance on reporting credit losses for financial assets held at amortized cost basis and available-for-sale debt securities. Under this guidance, expected credit losses are required to be measured based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets. Also, this guidance requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a direct write-down. January 1, 2020; early adoption permitted Modified retrospective The Company is evaluating the effect on the financial statements, related disclosures and the timing of adoption. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The following table presents changes in accumulated other comprehensive loss by component, net of tax, for the six months ended June 30, 2016 and 2015, respectively: Defined Benefit Plans Accumulated Employee Benefit Funded Amortization of Prior Service Cost Amortization of Actuarial Loss Foreign Currency Translation Loss on Cash Flow Hedges Other Comprehensive Loss Beginning balance as of January 1, 2016 $ (126 ) $ 1 $ 36 $ 2 $ (1 ) $ (88 ) Other comprehensive loss before reclassifications — — — — (11 ) (11 ) Amounts reclassified from accumulated other comprehensive loss — — 3 — — 3 Net other comprehensive income (loss) — — 3 — (11 ) (8 ) Ending balance as of June 30, 2016 $ (126 ) $ 1 $ 39 $ 2 $ (12 ) $ (96 ) Beginning balance as of January 1, 2015 $ (116 ) $ 1 $ 31 $ 3 $ (1 ) $ (82 ) Other comprehensive loss before reclassifications — — — (1 ) — (1 ) Amounts reclassified from accumulated other comprehensive loss — — 3 — — 3 Net other comprehensive income (loss) — — 3 (1 ) — 2 Ending balance as of June 30, 2015 $ (116 ) $ 1 $ 34 $ 2 $ (1 ) $ (80 ) |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Summary of Weighted Average Assumptions | The following table presents the weighted-average assumptions used in the Black-Scholes option-pricing model and the resulting weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2016: Dividend yield 2.09 % Expected volatility 15.89 % Risk-free interest rate 1.15 % Expected life (years) 4.0 Exercise price $ 65.15 Grant date fair value per share $ 6.59 |
Summary of Stock Option Activity | The table below summarizes stock option activity for the six months ended June 30, 2016: Shares (in thousands) Weighted- Average Price Weighted- Average Life Aggregate Intrinsic Value Options outstanding as of January 1, 2016 1,187 $ 39.70 3.9 $ 24 Granted 339 65.15 Forfeited or expired (28 ) 58.12 Exercised (374 ) 33.17 Options outstanding as of June 30, 2016 1,124 $ 49.10 4.5 $ 40 Exercisable as of June 30, 2016 543 $ 39.11 3.1 $ 25 |
Weighted-Average Assumptions used in Monte Carlo Simulation Model and Weighted-Average Grant Date Fair Value of Restricted Stock Units Granted | The following table presents the weighted-average assumptions used in the Monte Carlo simulation model for RSUs with market conditions granted during the six months ended June 30, 2016: Expected volatility 15.90 % Risk-free interest rate 0.91 % Expected life (years) 3.0 Grant date fair value per share $ 76.88 The table below summarizes RSU activity for the six months ended June 30, 2016: Shares (in thousands) Weighted-Average Grant Date Fair Value (per share) Non-vested total as of January 1, 2016 436 $ 46.97 Granted 142 69.58 Performance share adjustment 74 39.89 Vested (a) (250 ) 42.58 Forfeited (14 ) 60.04 Non-vested total as of June 30, 2016 388 $ 56.25 |
Stock Options | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Additional Information to Stock Options Activity | The following table summarizes additional information regarding stock options exercised for the six months ended June 30, 2016 and 2015: 2016 2015 Intrinsic value $ 13 $ 6 Exercise proceeds 12 8 Income tax benefit 4 2 |
Restricted Stock Units | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Additional Information to Stock Options Activity | (a) Includes 202 thousand shares related to the 2013 RSUs and 48 thousand shares related to RSUs without performance conditions that vested during the six months ended June 30, 2016. The following table summarizes additional information regarding RSUs issued during the six months ended June 30, 2016 and 2015: 2016 2015 Intrinsic value $ 15 $ 16 Income tax benefit 2 2 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Long-Term Debt Issued | The following long-term debt was issued during the six months ended June 30, 2016: Company Type Rate Maturity Amount Other American Water subsidiaries Private activity bonds and government funded debt — 1.36% 2026 $ 2 |
Long-Term Debt Retired Through Sinking Fund Provisions, Optional Redemptions or Payments at Maturities | The following long-term debt was retired through sinking fund provisions, optional redemptions or payment at maturity during the six months ended June 30, 2016: Company Type Rate Maturity Amount American Water Capital Corp. (a) Private activity bonds and government funded debt—fixed rate 1.79%-2.90% 2021-2031 $ 1 Other American Water subsidiaries Private activity bonds and government funded debt—fixed rate 0.00%-5.30% 2016-2041 11 Other American Water subsidiaries Mandatorily redeemable preferred stock 8.49% 2036 1 Total retirements and redemptions $ 13 1. American Water Capital Corp. , which is a wholly owned subsidiary of the Company, has a support agreement with the Company that, under certain circumstances, is the functional equivalent of a guarantee |
Summary of Gross Fair Value Derivative Asset and Liabilities | The following table provides a summary of the gross fair value for the Company’s derivative asset and liabilities, as well as the location of the asset and liability balances in the Consolidated Balance Sheets: Derivative Instruments Derivative Designation Balance Sheet Classification June 30, 2016 December 31, 2015 Asset Derivative Interest rate swap Fair value hedge Other long-term assets $ 2 $ 2 Liability Derivatives Forward starting swaps Cash flow hedge Other long-term liabilities $ 18 $ — Interest rate swap Economic hedge (non-designated) Other long-term liabilities 1 1 |
Pension and Other Postretirem26
Pension and Other Postretirement Benefits (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Compensation And Retirement Disclosure [Abstract] | |
Components of Net Periodic Benefit Costs | The following table provides the components of net periodic benefit costs: For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Components of net periodic pension benefit cost Service cost $ 8 $ 10 $ 16 $ 19 Interest cost 20 18 40 37 Expected return on plan assets (24 ) (25 ) (48 ) (49 ) Amortization of actuarial loss 7 7 14 13 Net periodic pension benefit cost $ 11 $ 10 $ 22 $ 20 Components of net periodic other postretirement benefit cost Service cost $ 3 $ 4 $ 6 $ 7 Interest cost 8 7 15 15 Expected return on plan assets (7 ) (7 ) (13 ) (13 ) Amortization of prior service credit — — (1 ) (1 ) Amortization of actuarial loss 1 2 2 3 Net periodic other postretirement benefit cost $ 5 $ 6 $ 9 $ 11 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerator and Denominator for Basic and Diluted Earnings Per Share | The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share (“EPS”) calculations: For the Three Months Ended June 30, For the Six Months Ended June 30, 2016 2015 2016 2015 Numerator Net income attributable to common stockholders $ 137 $ 123 $ 219 $ 203 Denominator Weighted average common shares outstanding — 178 180 178 180 Effect of dilutive common stock equivalents — — — — Weighted average common shares outstanding—Diluted 178 180 178 180 |
Fair Value of Financial Asset28
Fair Value of Financial Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Carrying Amounts and Fair Values of Financial Instruments | The carrying amounts, including fair value adjustments previously recognized in acquisition purchase accounting and a fair value adjustment related to the Company’s interest rate swap fair value hedge (which is classified as Level 2 in the fair value hierarchy), and fair values of the financial instruments were as follows: Carrying At Fair Value as of June 30, 2016 Amount Level 1 Level 2 Level 3 Total Preferred stock with mandatory redemption requirements $ 12 $ — $ — $ 18 $ 18 Long-term debt (excluding capital lease obligations) 5,902 3,617 1,455 2,068 7,140 Carrying At Fair Value as of December 31, 2015 Amount Level 1 Level 2 Level 3 Total Preferred stock with mandatory redemption requirements $ 13 $ — $ — $ 18 $ 18 Long-term debt (excluding capital lease obligations) 5,914 3,397 1,419 1,941 6,757 |
Fair Value Measurements of Assets and Liabilities on Recurring Basis | Recurring Fair Value Measurements The following table presents assets and liabilities measured and recorded at fair value on a recurring basis and their level in the fair value hierarchy: At Fair Value as of June 30, 2016 Level 1 Level 2 Level 3 Total Assets: Restricted funds $ 30 $ — $ — $ 30 Rabbi trust investments 12 — — 12 Deposits 6 — — 6 Mark-to-market derivative asset — 2 — 2 Total assets 48 2 — 50 Liabilities: Deferred compensation obligation 12 — — 12 Mark-to-market derivative liabilities — 19 — 19 Total liabilities 12 19 — 31 Total net assets (liabilities) $ 36 $ (17 ) $ — $ 19 At Fair Value as of December 31, 2015 Level 1 Level 2 Level 3 Total Assets: Restricted funds $ 27 $ — $ — $ 27 Rabbi trust investments 12 — — 12 Deposits 1 — — 1 Mark-to-market derivative asset — 2 — 2 Other investments 4 — — 4 Total assets 44 2 — 46 Liabilities: Deferred compensation obligation 11 — — 11 Mark-to-market derivative liability — 1 — 1 Total liabilities 11 1 — 12 Total net assets $ 33 $ 1 $ — $ 34 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Segment Reporting [Abstract] | |
Summarized Segment Information | The following tables include the Company’s summarized segment information: As of or for the Three Months Ended June 30, 2016 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 716 $ 115 $ (4 ) $ 827 Depreciation and amortization 109 4 2 115 Total operating expenses, net 434 98 (4 ) 528 Interest, net (63 ) 1 (19 ) (81 ) Income from continuing operations before income taxes 221 22 (18 ) 225 Provision for income taxes 86 9 (7 ) 88 Net income attributable to common stockholders 135 13 (11 ) 137 Total assets 15,780 523 1,403 17,706 As of or for the Three Months Ended June 30, 2015 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 687 $ 100 $ (5 ) $ 782 Depreciation and amortization 102 1 6 109 Total operating expenses, net 428 83 (7 ) 504 Interest, net (61 ) 1 (16 ) (76 ) Income from continuing operations before income taxes 199 18 (13 ) 204 Provision for income taxes 77 6 (2 ) 81 Net income attributable to common stockholders 122 12 (11 ) 123 Total assets (a) 14,778 329 1,489 16,596 As of or for the Six Months Ended June 30, 2016 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 1,350 $ 229 $ (9 ) $ 1,570 Depreciation and amortization 217 7 7 231 Total operating expenses, net 864 202 (9 ) 1,057 Interest, net (127 ) 1 (35 ) (161 ) Income from continuing operations before income taxes 364 32 (35 ) 361 Provision for income taxes 142 13 (13 ) 142 Net income attributable to common stockholders 222 19 (22 ) 219 Total assets 15,780 523 1,403 17,706 As of or for the Six Months Ended June 30, 2015 Regulated Businesses Market-Based Businesses Other Consolidated Operating revenues $ 1,302 $ 187 $ (9 ) $ 1,480 Depreciation and amortization 202 2 12 216 Total operating expenses, net 852 159 (13 ) 998 Interest, net (122 ) 1 (30 ) (151 ) Income from continuing operations before income taxes 333 30 (26 ) 337 Provision for income taxes 130 11 (7 ) 134 Net income attributable to common stockholders 203 19 (19 ) 203 Total assets (a) 14,778 329 1,489 16,596 (a) The information has been revised to reflect the retrospective application of ASU 2015-15 Presentation of Debt Issuance Costs and ASU 2015-17 Income Taxes, which were early adopted in 2015. |
Reconciliation of Numerator and
Reconciliation of Numerator and Denominator for Basic and Diluted Earnings Per Share (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to common stockholders | $ 137 | $ 123 | $ 219 | $ 203 |
Weighted average common shares outstanding—Basic | 178 | 180 | 178 | 180 |
Weighted average common shares outstanding—Diluted | 178 | 180 | 178 | 180 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Millions | 6 Months Ended | ||
Jun. 30, 2016USD ($)Investment | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Business Acquisition [Line Items] | |||
Purchase price | $ 24 | $ 41 | |
Goodwill | 1,313 | $ 1,302 | |
Regulated Water And Wastewater Systems | |||
Business Acquisition [Line Items] | |||
Acquisition cost | $ 24 | ||
Business acquisition, number of companies acquired | Investment | 10 | ||
Purchase price | $ 23 | ||
Purchase price allocation, assets acquired | 30 | ||
Purchase price allocation, liabilities assumed | 17 | ||
Contributions in aid of construction | 8 | ||
Other long-term liabilities related to purchase price allocation | 6 | ||
Goodwill | 11 | ||
Bargain purchase gain recognized | $ 1 |
Changes in Accumulated Other Co
Changes in Accumulated Other Comprehensive Loss by Component, Net of Tax (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | $ (88) | $ (82) | ||
Other comprehensive income (loss) before reclassifications | (11) | (1) | ||
Amounts reclassified from accumulated other comprehensive loss | 3 | 3 | ||
Net other comprehensive income (loss) | $ (9) | $ 2 | (8) | 2 |
Accumulated other comprehensive income (loss) Ending balance | (96) | (80) | (96) | (80) |
Employee Benefit Plan Funded Status | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | (126) | (116) | ||
Accumulated other comprehensive income (loss) Ending balance | (126) | (116) | (126) | (116) |
Amortization of Prior Service Cost | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | 1 | 1 | ||
Accumulated other comprehensive income (loss) Ending balance | 1 | 1 | 1 | 1 |
Amortization of Actuarial Loss | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | 36 | 31 | ||
Amounts reclassified from accumulated other comprehensive loss | 3 | 3 | ||
Net other comprehensive income (loss) | 3 | 3 | ||
Accumulated other comprehensive income (loss) Ending balance | 39 | 34 | 39 | 34 |
Foreign Currency Translation | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | 2 | 3 | ||
Other comprehensive income (loss) before reclassifications | (1) | |||
Net other comprehensive income (loss) | (1) | |||
Accumulated other comprehensive income (loss) Ending balance | 2 | 2 | 2 | 2 |
Loss on Cash Flow Hedge | ||||
Accumulated Other Comprehensive Income Loss [Line Items] | ||||
Accumulated other comprehensive income (loss) Beginning balance | (1) | (1) | ||
Other comprehensive income (loss) before reclassifications | (11) | |||
Net other comprehensive income (loss) | (11) | |||
Accumulated other comprehensive income (loss) Ending balance | $ (12) | $ (1) | $ (12) | $ (1) |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ in Millions | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Feb. 28, 2015 | |
Stockholders Equity Note [Line Items] | |||
Shares of common stock repurchased | 1,000,000 | ||
Aggregate cost of shares repurchased | $ 65 | $ 13 | |
Share of common stock available for repurchase | 6,800,000 | ||
Maximum | |||
Stockholders Equity Note [Line Items] | |||
Shares available under the program to purchase outstanding common stock | 10,000,000 |
Stock Based Compensation - Addi
Stock Based Compensation - Additional Information (Details) - USD ($) shares in Thousands, $ in Millions | 1 Months Ended | 6 Months Ended | |
Jan. 31, 2016 | Jun. 30, 2016 | ||
Stock Options | 2007 Omnibus Equity Compensation Plan | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Maximum terms | 7 years | ||
Vesting period | 3 years | ||
Unrecognized compensation cost | $ 3 | ||
Weighted-average period (in years) | 1 year 10 months 24 days | ||
Stock Options | 2007 Omnibus Equity Compensation Plan | Minimum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 1 year | ||
Stock Options | 2007 Omnibus Equity Compensation Plan | Maximum | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Restricted Stock Units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Vesting period | 3 years | ||
Unrecognized compensation cost | $ 8 | ||
Weighted-average period (in years) | 1 year 3 months 18 days | ||
Number of vested | [1] | 250 | |
Number of grants | 142 | ||
2013 RSUs | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Number of vested | 128 | 202 | |
Number of grants | 74 | ||
Restricted shares granted | The terms of the 2013 RSUs specified that, so long as the participant continued to be employed by the Company during the Performance Period and to the extent the performance conditions were achieved, the RSUs would vest at target; if the performance conditions were surpassed, up to 175% of the target number of shares would be distributed; and to the extent that the performance thresholds were not met, the award would be forfeited. | ||
[1] | Includes 202 thousand shares related to the 2013 RSUs and 48 thousand shares related to RSUs without performance conditions that vested during the six months ended June 30, 2016 |
Summary of Weighted-Average Ass
Summary of Weighted-Average Assumptions (Details) - Stock Options | 6 Months Ended |
Jun. 30, 2016$ / shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Dividend yield | 2.09% |
Expected volatility | 15.89% |
Risk-free interest rate | 1.15% |
Expected life (years) | 4 years |
Exercise price | $ 65.15 |
Grant date fair value per share | $ 6.59 |
Summary of Stock Option Activit
Summary of Stock Option Activity (Details) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Options outstanding as of January 1, 2016 | 1,187 | |
Granted | 339 | |
Forfeited or expired | (28) | |
Exercised | (374) | |
Options outstanding as of June 30, 2016 | 1,124 | 1,187 |
Exercisable as of June 30, 2016 | 543 | |
Weighted Average Exercise Price (per share), Options outstanding at January 1, 2016 | $ 39.70 | |
Weighted Average Exercise Price (per share), Granted | 65.15 | |
Weighted Average Exercise Price (per share), Forfeited or expired | 58.12 | |
Weighted Average Exercise Price (per share), Exercised | 33.17 | |
Weighted Average Exercise Price (per share), Options outstanding at June 30, 2016 | 49.10 | $ 39.70 |
Weighted Average Exercise Price (per share), Options exercisable at June 30, 2016 | $ 39.11 | |
Weighted Average Remaining Life (years), Options outstanding | 4 years 6 months | 3 years 10 months 24 days |
Weighted Average Remaining Life (years), Exercisable at June 30 , 2016 | 3 years 1 month 6 days | |
Aggregate intrinsic Value, Options outstanding at January 1, 2016 | $ 24 | |
Aggregate intrinsic Value, Options outstanding at June 30, 2016 | 40 | $ 24 |
Aggregate intrinsic Value, Exercisable at June 30, 2016 | $ 25 |
Additional Information to Stock
Additional Information to Stock Options Exercised (Details) - Stock Options - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Intrinsic value | $ 13 | $ 6 |
Exercise proceeds | 12 | 8 |
Income tax benefit | $ 4 | $ 2 |
Weighted-Average Assumptions Us
Weighted-Average Assumptions Used in Monte Carlo Simulation Model (Details) - Restricted Stock Units | 6 Months Ended |
Jun. 30, 2016$ / shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Expected volatility | 15.90% |
Risk-free interest rate | 0.91% |
Expected life (years) | 3 years |
Grant date fair value per share | $ 76.88 |
Summary of Restricted Stock Uni
Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units shares in Thousands | 6 Months Ended | |
Jun. 30, 2016$ / sharesshares | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Non-vested total as of January 1, 2016 | shares | 436 | |
Granted | shares | 142 | |
Performance share adjustment | shares | 74 | |
Vested | shares | (250) | [1] |
Forfeited | shares | (14) | |
Non-vested total as of June 30, 2016 | shares | 388 | |
Weighted-average grant date fair value (per share), non-vested total beginning balance | $ / shares | $ 46.97 | |
Weighted-average grant date fair value (per share), granted | $ / shares | 69.58 | |
Weighted-average grant date fair value (per share), Performance share adjustment | $ / shares | 39.89 | |
Weighted-average grant date fair value (per share), vested | $ / shares | 42.58 | |
Weighted-average grant date fair value (per share), forfeited | $ / shares | 60.04 | |
Weighted-average grant date fair value (per share), non-vested total ending balance | $ / shares | $ 56.25 | |
[1] | Includes 202 thousand shares related to the 2013 RSUs and 48 thousand shares related to RSUs without performance conditions that vested during the six months ended June 30, 2016 |
Summary of Restricted Stock U40
Summary of Restricted Stock Unit Activity (Parenthetical) (Details) - shares shares in Thousands | 1 Months Ended | 6 Months Ended |
Jan. 31, 2016 | Jun. 30, 2016 | |
2013 RSUs | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Shares vested | 128 | 202 |
RSUs Without Performance Conditions | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Shares vested | 48 |
Additional Information to Sto41
Additional Information to Stock Options Activity (Details) - Restricted Stock Units - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Intrinsic value | $ 15 | $ 16 |
Income tax benefit | $ 2 | $ 2 |
Long-Term Debt Issued (Details)
Long-Term Debt Issued (Details) - Other American Water subsidiaries - Private activity bonds and government funded debt - Fixed rate $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Debt Instrument [Line Items] | |
Interest Rate | 1.36% |
Maturity Date | 2,026 |
Total issuances | $ 2 |
Long-Term Debt Retired Through
Long-Term Debt Retired Through Sinking Fund Provisions, Optional Redemptions or Payments at Maturities (Details) - Debt retired during the year $ in Millions | 6 Months Ended | |
Jun. 30, 2016USD ($) | ||
Debt Instrument [Line Items] | ||
Total retirements and redemptions | $ 13 | |
Other American Water subsidiaries | Mandatorily redeemable preferred stock | ||
Debt Instrument [Line Items] | ||
Interest Rate | 8.49% | |
Maturity Date, Maximum | 2,036 | |
Total retirements and redemptions | $ 1 | |
Fixed rate two | American Water Capital Corp. | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Maturity Date, Minimum | 2,021 | [1] |
Maturity Date, Maximum | 2,031 | [1] |
Total retirements and redemptions | $ 1 | [1] |
Fixed rate two | Other American Water subsidiaries | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Maturity Date, Minimum | 2,016 | |
Maturity Date, Maximum | 2,041 | |
Total retirements and redemptions | $ 11 | |
Fixed rate two | Minimum | American Water Capital Corp. | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 1.79% | [1] |
Fixed rate two | Minimum | Other American Water subsidiaries | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 0.00% | |
Fixed rate two | Maximum | American Water Capital Corp. | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 2.90% | [1] |
Fixed rate two | Maximum | Other American Water subsidiaries | Private activity bonds and government funded debt | ||
Debt Instrument [Line Items] | ||
Interest Rate | 5.30% | |
[1] | American Water Capital Corp., which is a wholly owned subsidiary of the Company, has a support agreement with the Company that, under certain circumstances, is the functional equivalent of a guarantee. This indebtedness is considered “debt” for purposes of this support agreement. |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) | 6 Months Ended | |
Jun. 30, 2016USD ($)Agreement | Jun. 30, 2015USD ($) | |
Debt Instrument [Line Items] | ||
Number of forward starting swap agreements | Agreement | 3 | |
Hedging instruments ineffectiveness | $ 0 | $ 0 |
6.085% Senior Notes | ||
Debt Instrument [Line Items] | ||
Maturity Date, Maximum | 2,017 | |
Forward Starting Swap Agreements | ||
Debt Instrument [Line Items] | ||
Derivate instrument notional amount | $ 225,000,000 | |
Derivative agreement termination year | 2017-12 | |
Derivative average fixed interest rate | 2.29% | |
Interest Rate Swap | ||
Debt Instrument [Line Items] | ||
Interest Rate | 6.085% | |
Derivative description of variable rate basis | six-month LIBOR plus 3.422 | |
Maturity Date, Maximum | 2,017 | |
Interest Rate Swap | 6.085% Senior Notes | ||
Debt Instrument [Line Items] | ||
Derivate instrument notional amount | $ 100,000,000 | |
Interest Rate Swap | Variable Rate | ||
Debt Instrument [Line Items] | ||
Derivate instrument notional amount | $ 8,000,000 | |
Interest Rate Swap | London Interbank Offered Rate (LIBOR) [Member] | ||
Debt Instrument [Line Items] | ||
Debt, basis spread on variable rate | 3.422% |
Summary of Gross Fair Value Der
Summary of Gross Fair Value Derivative Asset and Liabilities (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Interest Rate Swap | Economic hedge (non-designated) | Other long-term liabilities | ||
Derivative [Line Items] | ||
Derivative Liabilities | $ 1 | $ 1 |
Interest Rate Swap | Fair value hedge | Other long-term assets | ||
Derivative [Line Items] | ||
Derivative Asset | 2 | $ 2 |
Forward starting swaps | Cash flow hedge | Other long-term liabilities | ||
Derivative [Line Items] | ||
Derivative Liabilities | $ 18 |
Schedule of Net Periodic Benefi
Schedule of Net Periodic Benefit Cost Components (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Pension Plan Asset | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | $ 8 | $ 10 | $ 16 | $ 19 |
Interest cost | 20 | 18 | 40 | 37 |
Expected return on plan assets | (24) | (25) | (48) | (49) |
Amortization of actuarial loss | 7 | 7 | 14 | 13 |
Net periodic pension benefit cost | 11 | 10 | 22 | 20 |
Other Postretirement Benefit Cost | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost | 3 | 4 | 6 | 7 |
Interest cost | 8 | 7 | 15 | 15 |
Expected return on plan assets | (7) | (7) | (13) | (13) |
Amortization of prior service credit | (1) | (1) | ||
Amortization of actuarial loss | 1 | 2 | 2 | 3 |
Net periodic pension benefit cost | $ 5 | $ 6 | $ 9 | $ 11 |
Pension and Other Postretirem47
Pension and Other Postretirement Benefits - Additional Information (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2016USD ($) | |
Pension Plan Asset | |
Defined Benefit Plan Disclosure [Line Items] | |
Company contributions | $ 17 |
Expected contributions during the remainder of 2016 | 16 |
Other Postretirement Benefit Cost | |
Defined Benefit Plan Disclosure [Line Items] | |
Company contributions | 11 |
Expected contributions during the remainder of 2016 | $ 11 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Millions | Mar. 29, 2016USD ($) | Dec. 17, 2015Claim | Jun. 03, 2015Claim | Jun. 30, 2016USD ($)CustomerAccountClaim | Dec. 09, 2014Claim |
Commitments And Contingencies [Line Items] | |||||
Loss contingency, probable loss | $ | $ 7 | ||||
Number of customer accounts | CustomerAccount | 93,000 | ||||
Loss contingency, number of pending claims | Claim | 52 | 69 | |||
Loss contingency, number of dismissed claims | Claim | 2 | ||||
WVAWC [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, number of pending claims | Claim | 53 | ||||
Loss contingency, number of additional claims | Claim | 7 | ||||
WVAWC And AWWSC [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, number of pending claims | Claim | 1 | ||||
Federal Action | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, number of pending claims | Claim | 4 | ||||
Loss contingency, number of dismissed claims | Claim | 3 | ||||
Maximum | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, possible loss | $ | $ 54 | ||||
Maximum | Missouri-American Water Company | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, possible loss | $ | 26 | ||||
Minimum | Missouri-American Water Company | |||||
Commitments And Contingencies [Line Items] | |||||
Loss contingency, possible loss | $ | $ 0 | ||||
Wastewater Collection And Treatment System | Asset Purchase Agreement | |||||
Commitments And Contingencies [Line Items] | |||||
Amount of purchase price | $ | $ 195 | ||||
Transfer of cash by acquiree | $ | 38 | ||||
Sewer system upgrades, estimated cost | $ | $ 140 |
Carrying Amounts and Fair Value
Carrying Amounts and Fair Values of Financial Instruments (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, carrying amount | $ 12 | $ 13 |
Long-term debt (excluding capital lease obligations), carrying amount | 5,902 | 5,914 |
Preferred stock with mandatory redemption requirements, fair value | 18 | 18 |
Long-term debt (excluding capital lease obligations), fair value | 7,140 | 6,757 |
Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Long-term debt (excluding capital lease obligations), fair value | 3,617 | 3,397 |
Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Long-term debt (excluding capital lease obligations), fair value | 1,455 | 1,419 |
Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Preferred stock with mandatory redemption requirements, fair value | 18 | 18 |
Long-term debt (excluding capital lease obligations), fair value | $ 2,068 | $ 1,941 |
Fair Value Measurements of Asse
Fair Value Measurements of Assets and Liabilities on Recurring Basis (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Restricted funds | $ 30 | $ 27 |
Rabbi trust investments | 12 | 12 |
Deposits | 6 | 1 |
Mark-to-market derivative asset | 2 | 2 |
Other investments | 4 | |
Total assets | 50 | 46 |
Deferred compensation obligation | 12 | 11 |
Mark-to-market derivative liabilities | 19 | 1 |
Total liabilities | 31 | 12 |
Total net assets (liabilities) | 19 | 34 |
Level 1 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Restricted funds | 30 | 27 |
Rabbi trust investments | 12 | 12 |
Deposits | 6 | 1 |
Other investments | 4 | |
Total assets | 48 | 44 |
Deferred compensation obligation | 12 | 11 |
Total liabilities | 12 | 11 |
Total net assets (liabilities) | 36 | 33 |
Level 2 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Mark-to-market derivative asset | 2 | 2 |
Total assets | 2 | 2 |
Mark-to-market derivative liabilities | 19 | 1 |
Total liabilities | 19 | 1 |
Total net assets (liabilities) | $ (17) | $ 1 |
Fair Values of Financial Instru
Fair Values of Financial Instruments - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2016 | Dec. 31, 2015 |
Fair Value Disclosures [Abstract] | ||
Long term restricted funds | $ 6 | $ 6 |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2016Segment | |
Segment Reporting [Abstract] | |
Number of Reportable Segments | 1 |
Number of non-reportable operating segments for market-based businesses | 4 |
Summarized Segment Information
Summarized Segment Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |||
Segment Reporting Information [Line Items] | |||||||
Operating revenues | $ 827 | $ 782 | $ 1,570 | $ 1,480 | |||
Depreciation and amortization | 115 | 109 | 231 | 216 | |||
Total operating expenses, net | 528 | 504 | 1,057 | 998 | |||
Interest, net | (81) | (76) | (161) | (151) | |||
Income from continuing operations before income taxes | 225 | 204 | 361 | 337 | |||
Provision for income taxes | 88 | 81 | 142 | 134 | |||
Net income attributable to common stockholders | 137 | 123 | 219 | 203 | |||
Total assets | 17,706 | 16,596 | [1] | 17,706 | 16,596 | [1] | $ 17,241 |
Operating Segments | Regulated Businesses | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating revenues | 716 | 687 | 1,350 | 1,302 | |||
Depreciation and amortization | 109 | 102 | 217 | 202 | |||
Total operating expenses, net | 434 | 428 | 864 | 852 | |||
Interest, net | (63) | (61) | (127) | (122) | |||
Income from continuing operations before income taxes | 221 | 199 | 364 | 333 | |||
Provision for income taxes | 86 | 77 | 142 | 130 | |||
Net income attributable to common stockholders | 135 | 122 | 222 | 203 | |||
Total assets | 15,780 | 14,778 | [1] | 15,780 | 14,778 | [1] | |
Operating Segments | Market-Based Businesses | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating revenues | 115 | 100 | 229 | 187 | |||
Depreciation and amortization | 4 | 1 | 7 | 2 | |||
Total operating expenses, net | 98 | 83 | 202 | 159 | |||
Interest, net | 1 | 1 | 1 | 1 | |||
Income from continuing operations before income taxes | 22 | 18 | 32 | 30 | |||
Provision for income taxes | 9 | 6 | 13 | 11 | |||
Net income attributable to common stockholders | 13 | 12 | 19 | 19 | |||
Total assets | 523 | 329 | [1] | 523 | 329 | [1] | |
Other | |||||||
Segment Reporting Information [Line Items] | |||||||
Operating revenues | (4) | (5) | (9) | (9) | |||
Depreciation and amortization | 2 | 6 | 7 | 12 | |||
Total operating expenses, net | (4) | (7) | (9) | (13) | |||
Interest, net | (19) | (16) | (35) | (30) | |||
Income from continuing operations before income taxes | (18) | (13) | (35) | (26) | |||
Provision for income taxes | (7) | (2) | (13) | (7) | |||
Net income attributable to common stockholders | (11) | (11) | (22) | (19) | |||
Total assets | $ 1,403 | $ 1,489 | [1] | $ 1,403 | $ 1,489 | [1] | |
[1] | The information has been revised to reflect the retrospective application of ASU 2015-15 Presentation of Debt Issuance Costs and ASU 2015-17 Income Taxes, which were early adopted in 2015. |
Subsequent Event - Additional I
Subsequent Event - Additional Information (Details) - Subsequent Event - Forward Starting Swap Agreements - USD ($) | Jul. 02, 2016 | Jul. 01, 2016 |
Subsequent Event [Line Items] | ||
Derivate instrument notional amount | $ 75,000,000 | |
Derivative agreement termination year | 2017-12 | |
Derivative fixed interest rate | 1.90% |