Attached files
| file | filename |
|---|---|
| EX-99.1 - PRESS RELEASE, DATED SEPTEMBER 19, 2011 - American Water Works Company, Inc. | d233829dex991.htm |
| 8-K - FORM 8-K - American Water Works Company, Inc. | d233829d8k.htm |
 Institutional Presentation
Bank of America Merrill Lynch
Power and Gas Leaders Conference
September 20, 2011
Exhibit 99.2 |
 2
Certain statements in this presentation are forward-looking statements
within the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are predictions based on our current
expectations and assumptions regarding future events and may relate to, among
other things, our future financial performance, including return on
equity performance, our growth and portfolio optimization strategies, our projected capital
expenditures and related funding requirements, our ability to repay debt, our ability
to finance current operations and growth initiatives,
the
impact
of
legal
proceedings
and
potential
fines
and
penalties,
business
process
and
technology
improvement
initiatives, trends in our industry, regulatory or legal developments or rate
adjustments. Actual results could differ materially because of factors such as
decisions of governmental and regulatory bodies, including decisions to raise or lower rates; the
timeliness
of
regulatory
commissions’
actions
concerning
rates;
changes
in
laws,
governmental
regulations
and
policies,
including environmental, health and water quality and public utility regulations and
policies; weather conditions, patterns or events, including drought or
abnormally high rainfall; changes in customer demand for, and patterns of use of, water, such as
may
result
from
conservation
efforts;
significant
changes
to
our
business
processes
and
corresponding
technology;
our
ability to appropriately maintain current infrastructure; our ability to obtain
permits and other approvals for projects; changes in our capital requirements;
our ability to control operating expenses and to achieve efficiencies in our operations; our ability
to obtain adequate and cost-effective supplies of chemicals, electricity, fuel,
water and other raw materials that are needed for our operations; our ability
to successfully acquire and integrate water and wastewater systems that are complementary to our
operations and the growth of our business or dispose of assets or lines of business
that are not complementary to our operations and the growth of our business;
cost overruns relating to improvements or the expansion of our operations;
changes in general economic, business and financial market conditions; access to
sufficient capital on satisfactory terms; fluctuations in interest rates;
restrictive covenants in or changes to the credit ratings on our current or future debt that could
increase our financing costs or affect our ability to borrow, make payments on debt
or pay dividends; fluctuations in the value of benefit plan assets and
liabilities that could increase our cost and funding requirements; our ability to utilize our U.S. and
state net operating loss carryforwards; migration of customers into or out of our
service territories; difficulty in obtaining insurance at acceptable rates and
on acceptable terms and conditions; the incurrence of impairment charges ability to retain
and attract qualified employees; and civil disturbance, or terrorist threats or acts
or public apprehension about future disturbances or terrorist threats or
acts. Any forward-looking statements we make, speak only as of the date of
this presentation. Except as required by law, we specifically disclaim any
undertaking or intention to publicly update or revise any forward-looking statements, whether as a
result
of
new
information,
future
events,
changed
circumstances
or
otherwise.
Cautionary Statement Concerning Forward-Looking
Statements
September 2011 |
 September
2011 3
Regulated
Businesses
provide earnings
stability
Solid track record
of Shareholder
Value creation
Continued growth
opportunities
driven by industry
needs
Stable Dividend
Growth
American
Water
NYSE: AWK
American Water’s Value Proposition |
 American Water: The Premier Water Services Provider
in North America
Largely residential
customer base promotes
consistent operating
results
Geographic presence
hedges both weather and
regulatory risk
Scale enables multiple
growth opportunities
across service areas
4
September 2011 |
 September 2011
0.40
0.45
0.50
0.55
0.60
0.65
AWK Beta
Total Shareholder Return : American Water vs. Indices
(September
13,
2010
–
September
13,
2011)
5
Shareholder Return
LTM
American Water
S&P 500
Dow Jones Utilities
+30.9%
+6.7%
+10.9%
80%
90%
100%
110%
120%
130%
140%
150%
160%
AWK
DJ Util
S&P 500
Source: Thomson Reuters |
 The
US Water Industry |
 The
U.S. Water Industry 7
Key
Water
Sector
Themes
Aging
Infrastructure
Fragmented
Industry
Increasing
Environmental
Requirements
Capital
Availability
Technology
September 2011 |
 September 2011
There is Increasing Public Awareness of Water and
Wastewater Issues
8 |
 American Water |
 September 2011
American Water’s Regulated Presence
10
States where we recently expanded our Regulated Operations States we are in process of exiting
Regulated Operations |
 September 2011
11
Recovery Received*
Rate Cases Filed
Infrastructure Charges
Rate Cases
$180.1
$313.9
$158.9
$206.2
(in millions of dollars)
(in millions of dollars)
$107.5
$312.7
$33.1
$222.9
Continuing Effort to Earn an Appropriate Rate of Return on
Prudent Investments
•
2010 Recovery Received includes $1.5 million of additional annualized revenues in
California associated with its Motion for reconsideration and rate base addition for cases
finalized in 2009
•
Recovery Received reflects final orders issued, and does not include Interim rate
increases. $277.2
$129.3
•
As of August 26, 2011: $314.6 million in annualized revenue
requests from 9 outstanding rate cases
•
In 2011 American Water received average ROE of 10.1% |
 September 2011
Regulated Operations Growth: Investing in Needed
Infrastructure
(1)
Net
capex
defined
as
gross
capex
less
advances
and
contributions
in aid of construction.
Capital Expenditure Framework
Net Capex
(1)
by category
Ongoing Capital Expenditure program
of $800 million to $1 billion per year
Capital program focused on
Infrastructure replacement
Capacity projects
Source of supply needs
Acquisitions
Major projects
Pittsburgh, PA
Short Hills, NJ
Warsaw, IN
Hopewell, VA
Peoria, IL
12
Quality of
Service, 19%
Other, 6%
Asset Renewal,
40%
Capacity
Expansion, 20%
Regulatory
Compliance, 15% |
 13
American Water is Actively Addressing Regulatory
Lag that Impact Returns on Investments
= Recognition of regulatory lag in rate cases requested, but not
yet obtained
•
= Recognition of regulatory lag in rate cases that exist today
Note: Each of these tools is designed and applied differently in
each state and subject to regulatory change
Pending Rate
Cases
Declining
Usage
Decoupling
Distribution
Surcharges
Balancing/
Trackers
Adjustment
Clauses
California
Iowa
New York
Pennsylvania
Indiana
Missouri
Ohio
New Jersey
September 2011 |
 American Water’s Portfolio Optimization Initiatives
•
Balanced Portfolio Analysis
•
Focus Achieving Authorized Rates
of Return
•
Monetize Non-Producing Assets
•
Focused Capital Resources
•
Selective Acquisition Opportunities
•
Leverage Internal Growth
14
Focus on
Value Drivers
Drive Profitability and
Returns
Explore Opportunities for
Long-Term Success
Optimizing
Long-term Value
Through
Proactive
Management
Redeploy Value Into Core
Growth Markets
Continue to Lower Costs
September 2011 |
 AZ
$265M
(2)
(1)An approximation of rate base as of December 30, 2010 , which includes Net
Utility Plant not yet included in rate base pending rate case filings/outcomes
(2)Rate base approved in rate cases by respective commissions
(3)Most recent transactions (AZ, NM, OH and NY) subject to closing risk and
regulatory approval 15
TX
$5.5M
(2)
NM
$34M
(2)
NY
$42M
(3)
MO
$3M
(2)
OH
$70M
(3)
Rate Base
(1)
= $8.3 Bn
Portfolio Optimization: Rate Base Inflows and
Outflows
Proceeds of $470 mm from New Mexico and Arizona transactions
will be used to lower debt or finance Capital Expenditures
September 2011 |
 16
American Water’s Market-Based Operations Continue
to Generate Opportunities for Growth
(1)
Includes 137 AWM and 48 EMC projects
(2)
Includes 16 AWM projects
Contract Operations
Military Bases Privatization
•
Over $2 Billion in Revenues Backlog
Contract Operations
•
Over 200 contracts
(1)
•
Serving 3.1 Million people
•
25 industrial contracts
Design, Build,Operate
•
20 current projects
(2)
Homeowner Services
Over 870,000 contracts
17 States
Emerging Technologies
Desalination plant
•
Tampa Bay Seawater, FL
Water Reuse; 22 Projects; 7 States
•
Gillette Stadium, MA
•
Battery Park, NY
•
Butterball Turkey, NC
Regulated-Like
Complementary
Value-Added
Services
For 2010, American Water reported $311.8 million of
Market-Based Operations revenues
September 2011 |
 September 2011
17
2011 Guidance: Solid Growth Powers Increased
Earnings Guidance, as Adjusted, to $1.75 -
$1.82
Note: Changes in events, or circumstances beyond the Company’s control or that
it cannot anticipate could materially impact the EPS guidance and could result in actual results being significantly above
or
below
this
outlook.
In
addition
to
the
cautionary
statements
herein,
Investors
are
advised
to
review
the
risk
factors
in
the
Company’s
10-K
and
other
filed
financial
documents
when
making
investment
decisions
Previous Guidance
$1.65 -
$1.75
Key Drivers
New Guidance
$1.75 -
$1.82
•
Cost efficiencies
•
Continued low interest rate
environment
•
Favorable early summer
weather
in
Northeast
•
Favorable summer weather
in Midwest states
The 2011 EPS Guidance, as adjusted, does not recognize the benefit to net income and
earnings per share of the cessation of depreciation for discontinued
operations in Arizona, New Mexico, Texas and Ohio, which is estimated to be
approximately $0.09 for 2011 |
 September 2011
Investment Thesis: Sustained 7-10% EPS Growth
Future Growth
New Services
Regulated Investments
Acquisitions
Operational Excellence/
Efficiencies
ROE improvement
Long Term Growth
Conceptual Representation
18
September 2011 |
 Financial Update |
 September 2011
American Water: Solid 2011 Results
Cash Flow From Operations
(in millions)
Net Income*
(in millions)
Operating Revenues
(in millions)
$634.9
$1,192.9
$674.2
$1,276.1
$0.0
$500.0
$1,000.0
$1,500.0
2nd Quarter
YTD
2010
2011
$100.9
$262.4
$121.5
$297.9
$0.0
$200.0
$400.0
2nd Quarter
YTD
Earnings Per Share*
$72.8
$103.6
$84.6
$131.9
$0.0
$50.0
$100.0
$150.0
2nd Quarter
YTD
2010
2011
$0.42
$0.59
$0.48
$0.75
$0.00
$0.20
$0.40
$0.60
$0.80
2nd Quarter
YTD
2010
2011
*Net Income and EPS include the cessation of depreciation that favorably affected
net income by $3.2 million after tax, or $0.02 per share and $7.9 million after tax and $0.04 per share for
the three and six months ended June 30, 2011, respectively, on assets under
agreement for sale .
2010
2011
20
Regulated O&M Efficiency Ratio improved 220 bps
for the six months ended June 30, 2011* |
 September 2011
21
American Water Continues to Improve Return on
Equity
(1)
to Shareholders
10 % -
10.5 %
ROE
(5)
1.
ROE calculation excludes impairment , SOX, divestiture and other
2.
2008, 2009 and 2010 reflect net income as there was no discontinued operations in
these periods 3.
2011 is adjusted for cessation of depreciation associated with assets of
discontinued operations 4.
Parent company debt as of June 30, 2011
5.
Range of allowed ROE
1.1%
Parent Co.
Debt
(4)
Opportunity
(2)
(2)
(2)
(3)
4.73%
5.28%
6.49%
6.95%
2008
2009
2010
LTM
6/30/11
Allowed
ROE
American Water continues to close ROE Gap |
 September 2011
1)
Water Companies Include: AWR, CTWS, CWT, MSEX, SJW,
WTR, YORW.
2)
Gas Companies include ATO, LG, GAS, NWN, PNY, SJI, SWX,
WGL.
3)
Regulated Electric Companies include HE, NU, TE, LNT, XEL,
SO, CNP, PCG, SCG, POR, DUK, UIL, PGN, AEP.
4)
Average
monthly
dividend
yield
for
2008
–
2010
period.
5)
Non GAAP: American Water EPS adjusted to exclude impairment
charges.
American Water’s Past Performance and Future Growth
Expectations Compare Very Favorably vs Water, Electric
and Gas Peers
Source: Thomson Reuters
* For AWK represents 7-10% Long Term EPS CAGR market guidance .
All other data from First Call Consensus Estimates
** as of 9/13/11
Note: Consensus Estimates are calculated by First Call based on the earnings
projections made by the analysts
who
cover
companies
noted
(other
than
AWK).
Please
note
that
any
opinions,
estimates
or
forecasts regarding performance made by these analysts (and therefore the
Consensus estimate numbers) are theirs alone and do not represent opinions,
forecasts or predictions of American Water or its management.
2008 –
2010
EPS CAGR + Average Dividend Yield
(4)
Total Shareholder Return
(Long Term Expected EPS Growth* and
Dividend Yield**)
22 |
 September 2011
P/E Compared with Total Return
Source: Thomson Reuters
* PE data as of September 2011
American Water’s Higher Growth Expectations are not
Fully Reflected in its PE Multiple
Forward P/E
Expected Total Return
23 |
 September 2011
Recent Dividend History
•
Key component of American
Water’s total shareholder return
proposition
•
Dividend Growth –
Board of
Directors increased dividend 5%
to $0.23 or $0.92 annualized
•
Dividend Yield –
3.19% at
9/13/11
•
Growth in Dividend reflects
growth in Net Income
24
Quarterly Dividend Rate Increases |
 25
Regulated
Businesses
provide earnings
stability
Solid track record
of Shareholder
Value creation
Continued growth
opportunities
driven by industry
needs
Stable Dividend
Growth
American Water’s Value Proposition
American
Water
NYSE: AWK
September 2011 |
 September 2011
Investor
Relations
Contacts:
Ed Vallejo
Vice President –
Investor Relations
Edward.vallejo@amwater.com
Muriel Lange
Manager –
Investor Relations
Muriel.lange@amwater.com
Tel: 856-566-4005
Fax: 856-782-2782
26 |
 Appendix |
 September 2011
Water Utility Expenditures
28
Water vs Other Utility Expenditures
Water Use in the Home |
 September 2011
Rate of Return Regulation in the United States
Prudent Investment Drives Need for Rate Cases
Operating
Expenses
Taxes, Depr &
Amortization
WACC
Establish
Rate
Base
Allowed
Return
Allowed
Return
Revenue
Requirement
Step 2
Step 1
+
+
x
=
=
29
American Water has experience in securing appropriate rates of
return and promoting constructive regulatory frameworks
|
 September 2011
AW Parent
Company
Equity
Debt
Equity (Capex)
Operating Expenses
Debt
Regulatory
Treatment
Net Income
Impact
•
Neutral, if interest costs
are deemed prudent
and fair to the
consumer by regulator
How is Net Income Generated in Rate of Return Regulation?
Pass Through
1:1
Pass Through
1:1
Return of
(Depreciation)
Return on Equity
(ROE)
Debt
Equity
•
Neutral, if all operating
expenses are deemed
prudent and fair to the
consumer by regulator
•
Depreciation is neutral
if all depreciable assets
are in rate base
•
Rate Base x Earned
ROE + Gross Up for
Taxes is Added
Revenue
* Assuming no regulatory lag between rate cases
30
If all assets are included in the Company’s Rate Base and all operating
expenses are deemed prudent and recoverable by regulator, Company earns
allowed ROE* |
 September 2011
31
Rate Cases Awaiting Final Order
Docket /
Annualized Revenue
ROE
Rate Base
Filing
Case Number
Date Filed
Increase Filed
Requested
(Filed)
Status
California
A 10-07-007
07/01/10
37.3
10.20%
409.6
3
Arizona
W-01303A-10-0448
11/03/10
20.4
11.50%
149.2
2
Hawaii
2010-0313
02/22/11
1.8
11.85%
25.2
3
Pennsylvania
R-2011-2232243
04/29/11
70.7
11.50%
2,096.2
2
New York
11-W-0200
04/29/11
9.6
11.50%
126.9
2
Iowa
RPU-2011-0001
04/29/11
5.1
11.35%
88.9
5
Indiana
44022
05/02/11
20.4
11.50%
733.4
2
New Mexico
11-00196-UT
05/18/11
2.6
11.75%
33.6
2
Missouri
WR-2011-0037
06/30/11
42.9
11.50%
849.1
2
Ohio
11-4161-WS-AIR
07/01/11
8.3
11.50%
92.3
1
New Jersey
WR11070460
07/29/11
95.5
11.50%
2,059.7
1
Total
314.6
$
6,664.1
$
Note: Above excludes rate case file in 2007 for Hawaii for which interim
rates have been in effect since October 2008 Index of Rate Case Status
1 -
Case Filed
2 -
Discovery (Data Requests, Investigation)
3 -
Negotiations / Evidentiary Hearings / Briefings
4 -
Recommended order issued / settlement reached, without interim rates
5 -
Interim rates in effect, awaiting final order
General Rate Cases Awaiting Final Order (as of September 2011)
|
 September 2011
Rate Cases and Infrastructure Charges Awarded That Will Have an
Impact
on
2011
Results
(As
of
September
2011)
32
Annualized
($ in millions)
Effective Date
ROE
Increase to
for new rates
Granted
Revenue
General Rate Cases:
Illinois
4/23/2010
10.38%
41.4
$
New Mexico (Edgewood) **
5/10/2010
10.00%
0.5
Indiana
5/3/2010
10.00%
31.5
Virginia (Eastern)
5/8/2010
10.50%
0.6
Ohio **
5/19/2010
9.34%
2.6
Missouri
7/1/2010
10.00%
28.0
California (Sac, LA, Lark)
7/1/2010
10.20%
14.6
Michigan
7/1/2010
10.50%
0.2
Kentucky
10/1/2010
9.70%
18.8
New Jersey
1/1/2011
10.30%
39.9
Pennsylvania Wastewater
1/1/2011
10.60%
8.4
Arizona **
1/1/2011
9.50%
14.7
Tennessee
4/5/2011
10.00%
5.6
West Virginia
4/19/2011
9.75%
5.1
Virginia
4/6/2011*
10.20%
4.8
*
Subtotal -
General Rate Cases
216.7
$
Infrastructure Charges:
Pennsylvania
19.3
Indiana
5.4
Missouri
6.3
Illinois
1.7
Other
1.6
Subtotal -
Infrastructure Charges
34.3
$
Total
251.0
$
* Includes non-jurisdictional components of approximately $0.5 million. The
effective dates the
specific
customers
and
were
either
August
2010
or
January
1,
2011.
** In process of being sold |
 September 2011
American Water Continues to Educate Consumers
about Needed Infrastructure Investments
•
Open houses/tours
•
Speaking forums
•
News releases/op-eds
•
Media pitching
•
Bill inserts
•
Flyers
•
Advertising
•
Community events
•
Public official meetings
•
White papers
33 |
 Infrastructure Surcharges: A Viable Mechanism to
Address Regulatory Lag
•
Infrastructure Surcharges allow companies to recover
infrastructure replacement costs without necessity of filing
full rate proceeding
•
States that currently allow use of infrastructure surcharges
Pennsylvania
Indiana
Illinois
Ohio
•
Surcharges are typically reset to zero when new base rates
become effective and incorporate the costs of the previous
surcharge investments
Delaware
New York
Missouri (St Louis County)
California -
Trial basis
34
September 2011 |
 September 2011
Case in Point: Increased Investment in Pennsylvania’s
Infrastructure
35 |
 September 2011
36
Marcellus Shale: Possible Opportunities for
Growth
•
Marcellus Shale formation covers 2/3
of Pennsylvania
•
363 trillion cubic feet of natural gas is
estimated to be captured in
Pennsylvania’s shale formation
•
Many of the 390 communities that we
serve are in areas where drilling is
taking place
•
PAW is currently selling water to gas
drillers at 29 distribution points in
Pennsylvania, primarily in Western PA
and some in Northeast PA
•
PAW sold 115.3 million gallons of
water to gas drillers from January
through June of 2011, producing
$702,000 in revenues
•
3,792 Marcellus Shale wells drilled
from 2008 to July 2011
Pennsylvania American Water Service Areas with DEP Bureau oil
and gas Marcellus Shale wells drilled between 2008-2011
Realizing additional revenues from water sales to drilling
companies while remaining vigilant in protecting our water sources
|
 September 2011
Debt
Maturities
(as
of
6/30/2011)
37
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2011 -
2015
2016 -
2020
2021 -
2025
2026 -
2030
2031 -
2035
2036 -
2040
* Excludes Preferred Stock with Mandatory Redemptions and Capital Leases
Weighted Average Interest Rates
Parent Company Debt
5.3%
5.9%
5.9%
6.4%
6.3%
6.0%
$100
million
of
Parent
Company
debt
swapped
from
6.085%
to
6
month
LIBOR
+
3.422% |
 September 2011
Financial
Tables:
GAAP
and
Non-GAAP
Measures,
Rate
Base
Rate Base as of June 30, 2011
(1)
($ in Thousands)
Net Utility Plant
$10,463,211
Less
Advances for Construction
396,440
CIAC –
Contributions in Aid of Construction
940,819
Deferred income taxes
1,163,854
Deferred investment tax credits
30,198
Sub Total
$2,531,311
Rate Base
TOTAL
$7,931,900
(1) An approximation of rate base, which includes Net Utility Plant not yet
included in rate base pending rate case filings/outcomes 38
Net
Income
(Loss)
–
Earnings
per
Share
Excluding Impairment Charge
(A Non-GAAP Unaudited Number)*
Historical
For the Year Ended December 31,
($ in thousands, except per share data)
2008
2009
2010
Net income (Loss)
($562,421)
($233,083)
$267,827
Add: Impairment
750,000
450,000
0
Net income excluding impairment charge before associated
tax benefit
187,579
216,917
267,827
Less: Income tax benefit relating to impairment charge
11,525
6,976
0
Net income excluding impairment charge
$176,054
$209,941
$267,827
Basic earnings per common share excluding impairment
charge:
Net income excluding impairment charge
$1.10
$1.25
$1.53
Diluted earnings per common share excluding impairment
charge:
Net income excluding impairment charge
$1.10
$1.25
$1.53
*A Non-GAAP number, excluding net impairment charges for 2009 and 2008 of
$(443,024) and $(738,475), respectively. |
 Income Statement
Three Months Ended
June
30,
Six Months Ended
June
30,
2011
2010
2011
2010
Operating revenues
$
674,248
$
634,910
$
1,276,070
$
1,192,930
Operating expenses
Operation and maintenance
332,310
314,016
647,677
614,599
Depreciation and amortization
87,654
81,695
174,603
162,754
General taxes
53,096
50,889
108,815
103,743
Loss (gain) on sale of assets
28
26
296
(45)
Total operating expenses, net
473,088
446,626
931,391
881,051
Operating income
201,160
188,284
344,679
311,879
Other income (expenses)
Interest, net
(78,504)
(78,444)
(154,724)
(156,888)
Allowance for other funds used during construction
2,535
2,305
5,363
4,414
Allowance for borrowed funds used during construction
1,198
1,194
2,402
2,547
Amortization of debt expense
(1,255)
(735)
(2,547)
(1,927)
Other, net
679
1,987
(475)
2,059
Total other income (expenses)
(75,347)
(73,693)
(149,981)
(149,795)
Income from continuing operations before income taxes
125,813
114,591
194,698
162,084
Provision for income taxes
51,160
46,570
79,315
64,880
Income from continuing operations
74,653
68,021
115,383
97,204
Income from discontinued operations, net of tax
9,913
4,730
16,515
6,355
Net income
$
84,566
$
72,751
$
131,898
$
103,559
Basic earnings per common share: (a)
Income from continuing operations
$ 0.43
$ 0. 39
$ 0.66
$ 0.56
Income from discontinued operations, net of tax
$ 0.06
0.03
$ 0.09
0.04
Net income
$ 0.48
$ 0.42
$ 0.75
$ 0.59
Diluted earnings per common share: (a)
Income from continuing operations
$ 0.42
$ 0. 39
$ 0.65
$ 0.56
Income from discontinued operations, net of tax
$ 0.06
$ 0.03
$ 0.09
$ 0.04
Net income
$ 0.48
$ 0.42
$ 0.75
$ 0.59
Average common shares outstanding during the period:
Basic
175,469
174,774
175,364
174,747
Diluted
176,436
174,850
176,273
174,820
Dividends per common share
$
0.45
$
0.21
$
0.67
$
0.42
(a) Amounts may not sum due to rounding
39
September 2011 |
 September 2011
Reconciliation Tables
In thousands
2011
2010
2011
2010
Total Regulated Operation and Maintenance Expenses
271,383
$
261,711
$
536,336
$
512,964
$
Less: Regulated Purchased Water Expenses
25,565
26,063
46,380
46,421
Adjusted Regulated Operation and Maintenance Expenses (a)
245,818
$
235,648
$
489,956
$
466,543
$
Total Regulated Operating Revenues
594,441
$
566,002
$
1,122,722
$
1,055,457
$
Less: Regulated Purchased Water Revenues*
25,565
26,063
46,380
46,421
Adjusted Regulated Operating Revenues (b)
568,876
$
539,939
$
1,076,342
$
1,009,036
$
Regulated Operations and Maintenance Efficiency Ratio = (a)/(b)
43.2%
43.6%
45.5%
46.2%
*As revenues not tracked in this manner, calculation assumes that purchased water revenues approximate
purchased water expenses Six Months Ended
June 30,
Regulated Operations and Maintenance Efficiency Ratio (A Non-GAAP, unaudited measure)*
Three Months Ended
June 30,
40
*
O&M Efficiency Ratio (A Non-GAAP, unaudited measure) = operating and
maintenance expenses / revenues, adjusted to eliminate revenues and expenses
related to purchased water . * Quarterly data reflects the effect of
discontinued operations. |
 September 2011
Reconciliation Tables
41
* Net
Income
and
EPS
include
the
cessation
of
depreciation
worth
$3.2
million
after
tax,
or
$0.02
per
share
and
$7.9
million
after
tax
and
$0.04
per
share
for
the three and six months ended June 30, 2011, respectively, on assets under
agreement for sale . In thousands
Three Months Ended
Six Months Ended
June 30,
June 30,
2011
2011
Net income
84,566
$
131,898
$
Less: Cessation of depreciation, net of tax
3,159
7,888
Net income, exclusive of the cessation of depreciation associated with assets
of discontinued operations
81,407
$
124,010
$
Basic earnings per common share:
GAAP net income
$0.48
$0.75
Diluted earnings per common share:
GAAP net income
$0.48
$0.75
Basic earnings per common share:
Adjusted net income
$0.46
$0.71
Diluted earnings per common share:
Adjusted net income
$0.46
$0.70
Net income, exclusive of the cessation of depreciation associated with assets
of discontinued operations (a Non-GAAP, unaudited measure)*
|
 September 2011
Balance Sheet Reconciliation for ROE
Return on Equity*
In thousands
LTM
Ended
6/30/11
Total LTM Net income
$ 296,166
Less: Cessation of depreciation, net of tax
7,888
LTM net income, exclusive of the cessation of depreciation associated with assets
of discontinued operations (a) $ 288,278
Common Stockholders equity
$ 4,157,920
Cessation adjustment
7,888
Common Stockholders equity, adjusted (b)
$ 4,150,032
LTM Adjusted ROE % = (a)/(b)
6.95%
* 2011 net income is adjusted for cessation of depreciation associated with assets of
discontinued operations; there were no discontinued operations in prior
periods. 42 |