CONFORMED COPY
FORM 10-Q Page 1 of 18
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 1-3437-2
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AMERICAN WATER WORKS COMPANY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 51-0063696
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1025 Laurel Oak Road, Voorhees, New Jersey 08043
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(Address of principal executive offices) (Zip Code)
(856) 346-8200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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At August 1, 2001, the number of shares of common stock, $1.25 par value,
outstanding was 99,610,369 shares.
Page 2 FORM 10-Q
PART I FINANCIAL INFORMATION
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Item 1. Financial Statements
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AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statements of Income and Comprehensive Income
and of Retained Earnings (Unaudited)
(In thousands, except per share amounts)
Three Months Ended
June 30,
2001 2000
-------- --------
CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
Operating revenues $363,878 $346,409
-------- --------
Operating expenses
Operation and maintenance 160,476 154,270
Depreciation and amortization 45,069 40,589
General taxes 32,465 31,539
-------- --------
Total operating expenses 238,010 226,398
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Operating income 125,868 120,011
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Other income (deductions)
Interest (48,544) (47,728)
Allowance for other funds used during
construction 1,185 1,800
Allowance for borrowed funds used
during construction 1,088 1,397
Amortization of debt expense (710) (708)
Preferred dividends of subsidiaries (742) (795)
Other, net 3,066 234
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Total other income (deductions) (44,657) (45,800)
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Income before income taxes 81,211 74,211
Provision for income taxes 31,830 29,072
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Net income 49,381 45,139
Dividends on preferred stocks 146 996
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Net income to common stock 49,235 44,143
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Other comprehensive income (loss), net of tax
Unrealized loss on securities (2,463) (31,002)
Reclassification adjustment for gain included
in net income (2,052) -
-------- --------
Other comprehensive income (loss), net of tax ( 4,515) (31,002)
-------- --------
Comprehensive income $ 44,720 $ 13,141
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Page 3 FORM 10-Q
Three Months Ended
June 30,
2001 2000
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Average shares of basic common stock outstanding 99,256 97,816
Basic and diluted earnings per common share on
average shares outstanding $ 0.50 $ 0.45
========== ==========
CONSOLIDATED RETAINED EARNINGS
Balance at April 1 $1,069,927 $1,005,216
Add - net income 49,381 45,139
- treasury stock issuances, net 406 (944)
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1,119,714 1,049,411
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Deduct - dividends paid
Preferred stock 32 882
Preference stock 114 114
Common stock - $.235 per share in 2001;
$.225 per share in 2000 23,297 21,998
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23,443 22,994
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Balance at June 30 $1,096,271 $1,026,417
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The accompanying information and notes are an integral part of these
financial statements.
Page 4 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statements of Income and Comprehensive Income
and of Retained Earnings (Unaudited)
(In thousands, except per share amounts)
Six Months Ended
June 30,
2001 2000
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CONSOLIDATED INCOME AND COMPREHENSIVE INCOME
Operating revenues $680,305 $654,168
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Operating expenses
Operation and maintenance 311,299 298,628
Depreciation and amortization 89,429 80,413
General taxes 65,776 64,668
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Total operating expenses 466,504 443,709
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Operating income 213,801 210,459
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Other income(deductions)
Interest (97,141) (94,474)
Allowance for other funds used during
construction 2,266 4,506
Allowance for borrowed funds used
during construction 2,067 3,279
Amortization of debt expense (1,388) (1,390)
Preferred dividends of subsidiaries (1,525) (1,593)
Other, net 2,395 (1,074)
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Total other income (deductions) (93,326) (90,746)
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Income before income taxes 120,475 119,713
Provision for income taxes 47,633 47,491
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Net income 72,842 72,222
Dividends on preferred stocks 292 1,992
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Net income to common stock 72,550 70,230
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Other comprehensive income (loss), net of tax
Unrealized loss on securities (4,457) (23,206)
Reclassification adjustment for gain included
in net income (2,052) -
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Other comprehensive income (loss), net of tax ( 6,509) (23,206)
-------- --------
Comprehensive income $ 66,041 $ 47,024
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Page 5 FORM 10-Q
Six Months Ended
June 30,
2001 2000
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Average shares of basic common stock outstanding 99,066 97,647
Basic and diluted earnings per common share on
average shares outstanding $ 0.73 $ 0.72
========== ==========
CONSOLIDATED RETAINED EARNINGS
Balance at January 1 $1,069,486 $1,001,029
Add - net income 72,842 72,222
- treasury stock issuances, net 744 (944)
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1,143,072 1,072,307
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Deduct - dividends paid
Preferred stock 64 1,764
Preference stock 228 228
Common stock - $.47 per share in 2001;
$.45 per share in 2000 46,509 43,898
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46,801 45,890
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Balance at June 30 $1,096,271 $1,026,417
========== ==========
The accompanying information and notes are an integral part of these
financial statements.
Page 6 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Balance Sheet (Unaudited)
(In thousands)
June 30 December 31
2001 2000
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ASSETS
Property, plant and equipment
Utility plant - at original cost less
accumulated depreciation $ 5,312,984 $ 5,202,833
Utility plant acquisition adjustments, net 73,193 75,294
Non-utility property, net of accumulated
depreciation 44,603 37,831
Excess of cost of investments in
subsidiaries over book equity at
acquisition, net 54,754 55,590
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Total property, plant and equipment 5,485,534 5,371,548
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Current assets
Cash and cash equivalents 17,772 28,571
Customer accounts receivable 110,638 103,975
Allowance for uncollectible accounts (2,965) (2,575)
Unbilled revenues 99,215 83,878
Miscellaneous receivables 17,178 15,117
Materials and supplies 22,614 20,683
Deferred vacation pay 13,936 10,923
Other 18,128 17,124
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Total current assets 296,516 277,696
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Regulatory and other long-term assets
Regulatory asset - income taxes
recoverable through rates 216,053 216,652
Other investments 62,142 73,997
Debt and preferred stock expense 47,140 47,630
Deferred pension expense 27,115 23,479
Deferred postretirement benefit expense 9,724 10,129
Deferred business services project costs 24,380 4,796
Deferred tank painting costs 16,528 16,829
Restricted funds 8,590 8,343
Other 95,856 83,699
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Total regulatory and other long-term assets 507,528 485,554
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TOTAL ASSETS $ 6,289,578 $ 6,134,798
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Page 7 FORM 10-Q
June 30 December 31
2001 2000
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CAPITALIZATION AND LIABILITIES
Capitalization
Common stockholders' equity $ 1,711,786 $ 1,669,677
Preferred stocks without mandatory
redemption requirements 11,673 11,673
Preferred stocks of subsidiaries with
mandatory redemption requirements 30,962 32,902
Preferred stocks of subsidiaries without
mandatory redemption requirements 8,118 8,118
Long-term debt
American Water Works Company, Inc. 159,000 159,000
Subsidiaries 2,213,488 2,112,165
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Total capitalization 4,135,027 3,993,535
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Current liabilities
Short-term debt 418,351 412,179
Current portion of long-term debt 140,307 161,395
Accounts payable 37,735 52,447
Taxes accrued, including federal income 53,393 25,960
Interest accrued 42,507 42,641
Accrued vacation pay 14,203 11,564
Other 59,428 67,865
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Total current liabilities 765,924 774,051
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Regulatory and other long-term liabilities
Advances for construction 221,094 216,125
Deferred income taxes 607,842 605,343
Deferred investment tax credits 39,380 40,098
Accrued pension expense 58,081 50,414
Accrued postretirement benefit expense 13,531 13,930
Other 40,525 37,823
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Total regulatory and other long-term
liabilities 980,453 963,733
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Contributions in aid of construction 408,174 403,479
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Commitments and contingencies -- --
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TOTAL CAPITALIZATION AND LIABILITIES $ 6,289,578 $ 6,134,798
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The accompanying information and notes are an integral part of these
financial statements.
Page 8 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Consolidated Statement of Cash Flows (Unaudited)
(In thousands)
Six Months Ended
June 30,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 72,842 $ 72,222
Adjustments
Depreciation and amortization 89,429 80,413
Provision for deferred income taxes 6,255 10,637
Provision for losses on accounts receivable 4,555 4,174
Allowance for other funds used during
construction (2,266) (4,506)
Employee benefit expenses greater (less)
than funding (280) 8,615
Employee stock plan expenses 2,192 (47)
Deferred business services project expenses (19,584) -
Deferred tank painting costs (1,854) (945)
Deferred rate case expense (1,240) (904)
Amortization of deferred charges 7,344 6,358
Other, net (1,371) (6,955)
Changes in assets and liabilities, net
Accounts receivable (12,889) (17,859)
Unbilled revenues (15,337) (14,989)
Other current assets (2,935) (7,120)
Accounts payable (14,712) (29,240)
Taxes accrued, including federal income 27,433 19,485
Interest accrued (134) (886)
Other current liabilities (8,437) (22,505)
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Net cash from operating activities 129,011 95,948
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CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures (153,488) (161,306)
Allowance for other funds used during
construction 2,266 4,506
Acquisitions (54,173) (48,951)
Proceeds from the disposition of property,
plant and equipment 711 1,758
Removal costs from property, plant and
equipment retirements (5,090) (2,905)
Restricted funds (247) 11,720
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Net cash used in investing activities (210,021) (195,178)
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Page 9 FORM 10-Q
Six Months Ended
June 30,
2001 2000
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt $146,765 $ 43,706
Proceeds from common stock 21,109 18,291
Purchase of common stock for treasury (386) (4,616)
Net borrowings under
line-of-credit agreements 6,172 92,322
Advances and contributions for construction,
net of refunds 12,936 15,477
Debt issuance costs (1,114) (1,760)
Repayment of long-term debt (66,530) (17,702)
Redemption of preferred stocks (1,940) (550)
Dividends paid (46,801) (45,890)
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Net cash from financing activities 70,211 99,278
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Net increase (decrease) in cash and
cash equivalents (10,799) 48
Cash and cash equivalents at January 1 28,571 43,100
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Cash and cash equivalents at June 30 $17,772 $ 43,148
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Cash paid during the period for:
Interest, net of capitalized amount $ 98,521 $ 97,392
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Income taxes $ 27,154 $ 21,814
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Common stock issued in lieu of cash in connection with the Employees' Stock
Ownership Plan, the Savings Plan for Employees and the 2000 Stock Award and
Incentive Plan totaled $1,488 in 2000.
Common stock placed into treasury in connection with the Employees Stock
Ownership Plan, the Savings Plan for Employees and 2000 Stock Award and
Incentive Plan totaled $1,774 in 2001 and $4,871 in 2000.
The accompanying information and notes are an integral part of these
financial statements.
Page 10 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Information Accompanying Financial Statements (Unaudited)
(In thousands, except share and per share amounts)
June 30 December 31
2001 2000
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Preferred stocks without mandatory redemption requirements
Cumulative preferred stock - $25 par value
5% series (one-tenth of a vote per share)
- 101,777 shares outstanding $ 2,544 $ 2,544
Cumulative preference stock - $25 par value
Authorized - 750,000 shares
5% series (non-voting) - 365,158 shares
outstanding 9,129 9,129
Cumulative preferential stock - $35 par value
Authorized - 3,000,000 shares
(one-tenth of a vote per share)-
no outstanding shares -- --
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$ 11,673 $ 11,673
========== ===========
Common stockholders' equity
Common stock - $1.25 par value
Authorized - 300,000,000 shares
Issued - 99,574,353 shares in 2001;
98,819,845 shares in 2000 $ 124,468 $ 123,525
Paid-in capital 475,523 454,568
Retained earnings 1,096,271 1,069,486
Accumulated other comprehensive income 18,794 25,303
Unearned compensation (778) (359)
Treasury stock at cost - 92,243 shares in
2001; 129,216 shares in 2000 (2,492) (2,846)
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$1,711,786 $ 1,669,677
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At June 30, 2001, common shares reserved for issuance in connection with the
Company's stock plans were 80,865,863 shares for the Stockholder Rights Plan,
2,063,772 shares for the Dividend Reinvestment and Stock Purchase Plan,
565,493 shares for the Employees' Stock Ownership Plan and 532,381 shares for
the Savings Plan for Employees. Up to 4,254,367 shares of common stock may be
issued under the 2000 Stock Award and Incentive Plan, of which approximately
3,300,000 shares were available to be granted at June 30, 2001.
Page 11 FORM 10-Q
AMERICAN WATER WORKS COMPANY, INC. AND SUBSIDIARY COMPANIES
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Notes to Consolidated Financial Statements (Unaudited)
NOTE 1 -- Financial Statement Presentation
The information presented in this Form 10-Q is unaudited. In the opinion of
management the information reported reflects all adjustments, consisting of
normal recurring adjustments, which were necessary to a fair statement of the
results for the periods reported. Certain reclassifications have been made
to conform previously reported data to the current presentation.
NOTE 2 -- Acquisitions
CITY OF COATESVILLE PENNSYLVANIA WATER AND WASTEWATER SYSTEMS
On March 22, 2001 the Company's subsidiary in Pennsylvania completed the
purchase of the City of Coatesville Authority's water and wastewater utility
systems for $48.225 million. These systems provide water service to 8,600
customers and wastewater service to 6,500 customers.
Note 3 -- Pending Acquisitions
WATER AND WASTEWATER ASSETS OF CITIZENS COMMUNICATIONS
On October 15, 1999, the Company entered into an agreement to acquire all of
the water and wastewater utility assets of Citizens Communications Company
(formerly Citizens Utilities Company) (NYSE:CZN) for $835 million in cash and
debt. Citizens provides water and wastewater service to 305,000 customers in
Arizona, California, Illinois, Indiana, Ohio and Pennsylvania. For the
latest fiscal year ended December 31, 2000, the operations being acquired had
revenues of approximately $110 million.
Regulatory agencies in Pennsylvania, Indiana, Illinois, Ohio, and Arizona
have approved the acquisition of Citizen's water and wastewater assets in
those states and on August 7, 2001 an Administrative Law Judge issued a
proposed order approving the acquisition in California. A decision from the
California Public Utilities Commission is anticipated during the third
quarter of 2001.
AZURIX NORTH AMERICA AND AZURIX INDUSTRIALS
On August 2, 2001 the Company entered into an agreement to acquire Azurix
North America Corp. and Azurix Industrials Corp. for approximately $150
million in cash and debt. Closing is expected to occur during the fourth
quarter of 2001.
Azurix North America and Azurix Industrials are wholly-owned subsidiaries of
Azurix Corp. and provide a range of water and wastewater services, including
operations and maintenance, engineering, carbon regeneration, underground
infrastructure rehabilitation and residuals management.
Azurix North America and Azurix Industrials, which had revenues totaling
approximately $160 million in 2000, have approximately 1,050 employees and
operate facilities serving an end-user population of approximately 2 million
people across North America.
NOTE 4 -- New Accounting Standards
On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), as amended. The statement establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS
133 was issued by the Financial Accounting Standards Board in June of 1998
and requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value.
Page 12 FORM 10-Q
This new accounting standard did not have any effect on the Company's
financial position or results of operations. The Company's contracts that
meet the definition of a derivative are for normal purchases and normal
sales, are expected to result in a physical delivery, and are of quantities
expected to be used or sold over a reasonable period in the normal course of
business. The Company has no hedging activities.
On July 20, 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141)
and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Under SFAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have
indefinite lives will continue to be amortized over their useful lives (but
not to exceed 40 years). The amortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, the Company is
required to adopt SFAS 142 effective January 1, 2002. The Company is
currently evaluating the effect that adoption of the provisions of SFAS 142
that are effective January 1, 2002 will have on its results of operations and
financial position.
Also on June 30, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations," (SFAS 143) on the accounting for obligations
associated with the retirement of long-lived assets. SFAS 143 requires a
liability to be recognized in the financial statements for retirement
obligations meeting specific criteria. Measurement of the initial obligation
is to approximate fair value with an equivalent amount recorded as an
increase in the value of the capitalized asset. The asset will be
depreciable in accordance with normal depreciation policy and the liability
will be increased, with a charge to the income statement, until the
obligation is settled. SFAS 143 is effective for fiscal years beginning
after June 15, 2002. The Company is currently evaluating the effect that
adoption of the provisions of SFAS 143 will have on its results of operations
and financial position.
Page 13 FORM 10-Q
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
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Results of Operations
---------------------
Operating revenues for the second quarter and the first six months of 2001
were higher than for the same periods of 2000 by 5% and 4%, respectively.
Increased revenues were the result of increased water sales to 44,000 new
customers added since June 30, 2000 and authorized increases in charges for
water service.
Water sales volume during the second quarter of 2001 increased 1% to 83.3
billion gallons from 82.5 billion gallons in the second quarter of 2000. The
158.7 billion gallons of sales volume for the first six months of 2001 was
slightly greater than the 158.5 billion gallons sold in the same period of
2000.
During 2001, eight utility subsidiaries have received rate orders which are
expected to provide approximately $16.9 million in additional annual
revenues. Five subsidiaries have rate increase applications on file before
regulatory agencies which, if granted in full, would provide approximately
$57 million in additional annual revenues. The largest portion of this total
is from two separate requests filed by Pennsylvania-American and West
Virginia-American at $39 million and $12 million, respectively.
A decision in the West Virginia case is expected in the fourth quarter of
this year. The Pennsylvania case should be decided in the first quarter of
2002.
Operating expenses in the second quarter and the first six months of 2001
were 5% higher compared to the same periods in 2000. Operation and
maintenance expenses increased by 4% in the second quarter and the first six
months when compared to the same periods in 2000. A portion of the expense
increase was associated with customer growth. The increases in depreciation
expense for the quarter and first six months were related to the Company's
ongoing program of utility plant construction.
Interest expense rose by 2% in the second quarter and 3% in the first six
months of 2001 compared to the same periods in 2000, due to an increase in
total debt to fund construction of new water service assets. The total
allowance for funds used (equity and borrowed) during construction ("AFUDC")
recorded in the second quarter of 2001 was $2.3 million, compared to $3.2
million in the second quarter of 2000. AFUDC for the first six months of
2001 was $4.3 million compared to $7.8 million for the same period in 2000.
The utility subsidiaries record AFUDC to the extent permitted by the
regulatory authorities. During the second quarter of 2001 the Company sold a
portion of its telecommunication company investments and realized a pre-tax
gain of $3.4 million in other income.
Income taxes increased in the second quarter and first six months of 2001
when compared to the comparable periods in 2000, as a result of increased
earnings in 2001.
Page 14 FORM 10-Q
Net income to common stock was $49.2 million for the second quarter of 2001
compared with $44.1 million for the same period in 2000. Net income to
common stock for the first six months of 2001 was $72.6 million compared with
$70.2 million for the first six months of 2000.
Other comprehensive loss was $4.5 million and $6.5 million in the second
quarter and first six months of 2001, respectively, compared to other
comprehensive loss of $31.0 million and $23.2 million in the same periods in
2000. The Company's other comprehensive income or loss represents the
unrealized gain or loss on passive investments in publicly traded securities.
Capital Resources and Liquidity
-------------------------------
During the first six months of 2001, 732,324 shares of common stock were
issued in connection with the Dividend Reinvestment and Stock Purchase Plan,
and 22,184 shares were issued for non-qualified stock options that were
exercised. Also, 159,692 non-qualified stock options were granted in
connection with the 2000 Stock Award and Inventive Plan during the first six
months of 2001.
The Company issued 96,136 shares of common stock out of treasury during the
first six months of 2001 in connection with the Employees' Stock Ownership
Plan, the Savings Plan for Employees and the 2000 Stock Award and Incentive
Plan.
On March 29, 2001 the Company's financing subsidiary, American Water Capital
Corp. (AWCC) closed on its inaugural long-term debt financing of $140
million. The securities issued are senior unsecured notes carrying an
interest rate of 6.87% maturing on March 29, 2011. The proceeds were loaned
to nine utility subsidiaries to repay short-term debt. In the first six
months of 2001, the Company invested $7.2 million in the common stock of two
subsidiaries.
The Company and its subsidiaries plan to fund construction programs, continue
acquisitions, and repay short-term debt and maturing bonds with cash from
operations and from the issuance of approximately $100 million of long-term
debt during the remainder of 2001. In addition, during 2001 the Company plans
to arrange financing of approximately $1 billion to fund the acquisition of
the Citizens Communications water and wastewater assets, and the acquisition
of Azurix North America and Azurix Industrials. Management intends to fund
these transactions permanently through a combination of long-term debt and
equity or hybrid equity securities. Excluding any short-term debt incurred
in connection with the pending transactions, the combined amount of short-
term debt and bonds maturing within one year is expected to decline to
approximately $420 million in 2001.
Page 15 FORM 10-Q
New Accounting Standards
------------------------
On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133), as amended. The statement establishes accounting and
reporting standards for derivative instruments and hedging activities. SFAS
133 was issued by the Financial Accounting Standards Board in June of 1998
and requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those
instruments at fair value.
This new accounting standard did not have any effect on the Company's
financial position or results of operations. The Company's contracts that
meet the definition of a derivative are for normal purchases and normal
sales, are expected to result in a physical delivery, and are of quantities
expected to be used or sold over a reasonable period in the normal course of
business. The Company has no hedging activities.
On July 20, 2001, the Financial Accounting Standards Board issued Statements
of Financial Accounting Standards No. 141, "Business Combinations" (SFAS 141)
and No. 142, "Goodwill and Other Intangible Assets" (SFAS 142). SFAS 141
requires all business combinations initiated after June 30, 2001 to be
accounted for using the purchase method. Under SFAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have
indefinite lives will continue to be amortized over their useful lives (but
not to exceed 40 years). The amortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. With respect to
goodwill and intangible assets acquired prior to July 1, 2001, the Company is
required to adopt SFAS 142 effective January 1, 2002. The Company is
currently evaluating the effect that adoption of the provisions of SFAS 142
that are effective January 1, 2002 will have on its results of operations and
financial position.
Also on June 30, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations," (SFAS 143) on the accounting for obligations
associated with the retirement of long-lived assets. SFAS 143 requires a
liability to be recognized in the financial statements for retirement
obligations meeting specific criteria. Measurement of the initial obligation
is to approximate fair value with an equivalent amount recorded as an
increase in the value of the capitalized asset. The asset will be
depreciable in accordance with normal depreciation policy and the liability
will be increased, with a charge to the income statement, until the
obligation is settled. SFAS 143 is effective for fiscal years beginning
after June 15, 2002. The Company is currently evaluating the effect that
adoption of the provisions of SFAS 143 will have on its results of operations
and financial position.
Page 16 FORM 10-Q
Forward Looking Information
---------------------------
Forward looking statements in this report, including, without limitation,
statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the U.S. Private Securities Litigation Reform Act
of 1995. These forward looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from
any future results, performance or achievements expressed or implied by such
forward looking statements. These factors include, among others, the
following: the success of pending applications for rate increases; inability
to obtain, or to meet conditions imposed for, regulatory approval of pending
acquisitions; weather conditions that tend to extremes of temperature or
duration; availability, terms and development of capital; business abilities
and judgment of personnel; changes in, or the failure to comply with
governmental regulations, particularly those affecting the environment and
water quality; competition; success of operating initiatives, advertising and
promotional efforts; existence of adverse publicity or litigation; changes in
business strategy or plans; quality of management; general economic and
business conditions; and other factors described in filings of the Company
with the SEC. The Company undertakes no obligation to publicly update or
revise any forward looking statement, whether as a result of new information,
future events or otherwise.
Page 17 FORM 10-Q
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
B. Reports on Form 8-K
-------------------
No report on Form 8-K was filed by the registrant during the quarter ended
June 30, 2001.
Page 18 FORM 10-Q
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN WATER WORKS COMPANY, INC.
Date August 14, 2001 \s\Ellen C. Wolf
---------------------- ------------------------------------------
Vice President and Chief Financial Officer
(Authorized Officer)
Date August 14, 2001 \s\Robert D. Sievers
---------------------- ------------------------------------------
Comptroller
(Chief Accounting Officer)