XML 41 R25.htm IDEA: XBRL DOCUMENT v3.8.0.1
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
 12 Months Ended
Dec. 31, 2017
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
 
 
December 31,
(in thousands)
 
2017
 
2016
Assets
 
 

 
 

 
 
 
 
 
Cash and equivalents
 
$
48

 
$
32

Inter-company note receivables
 
45,955

 
76,931

Total current assets
 
46,003

 
76,963

 
 
 
 
 
Investments in subsidiaries
 
539,332

 
506,584

Deferred taxes and other assets
 
8,422

 
6,964

Total assets
 
$
593,757

 
$
590,511

 
 
 
 
 
Liabilities and Capitalization
 
 

 
 

 
 
 
 
 
Notes payable to bank
 
$
59,000

 
$
90,000

Income taxes payable
 
2,780

 
4,043

Inter-company payables
 
73

 
—

Deferred taxes and other liabilities
 
509

 
517

Total current liabilities
 
62,362

 
94,560

 
 
 
 
 
Income taxes payable and other liabilities
 
1,450

 
1,654

Total other liabilities
 
1,450

 
1,654

 
 
 
 
 
Common shareholders’ equity
 
529,945

 
494,297

Total capitalization
 
529,945

 
494,297

 
 
 
 
 
Total liabilities and capitalization
 
$
593,757

 
$
590,511

 
The accompanying condensed notes are an integral part of these condensed financial statements.
CONDENSED STATEMENTS OF INCOME 
 
 
For the Years Ended December 31,
(In thousands, except per share amounts)
 
2017
 
2016
 
2015
Operating revenues and other income
 
$
—

 
$
71

 
$
98

Operating expenses and other expenses
 
344

 
19

 
11

Income before equity in earnings of subsidiaries and income taxes
 
(344
)
 
52

 
87

 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
67,490

 
59,145

 
59,587

 
 
 
 
 
 
 
Income before income taxes
 
67,146

 
59,197

 
59,674

 
 
 
 
 
 
 
Income tax benefit
 
(2,221
)
 
(546
)
 
(810
)
 
 
 
 
 
 
 
Net income
 
$
69,367

 
$
59,743

 
$
60,484

 
 
 
 
 
 
 
Weighted Average Number of Common Shares Outstanding
 
36,638

 
36,552

 
37,389

Basic Earnings Per Common Share
 
$
1.88

 
$
1.63

 
$
1.61

 
 
 
 
 
 
 
Weighted Average Number of Diluted Common Shares Outstanding
 
36,844

 
36,750

 
37,614

Fully Diluted Earnings per Common Share
 
$
1.88

 
$
1.62

 
$
1.60

 
 
 
 
 
 
 
Dividends Paid Per Common Share
 
$
0.994

 
$
0.914

 
$
0.874

 
The accompanying condensed notes are an integral part of these condensed financial statements.
CONDENSED STATEMENTS OF CASH FLOWS
 
 
 
For the Years Ended December 31,
(in thousands)
 
2017
 
2016
 
2015
Cash Flows From Operating Activities
 
$
36,024

 
$
34,878

 
$
57,682

 
 
 
 
 
 
 
Cash Flows From Investing Activities:
 
 

 
 

 
 

Loans (made to)/repaid from, wholly-owned subsidiaries
 
30,500

 
(64,500
)
 
(12,000
)
Net cash provided (used) in investing activities
 
30,500

 
(64,500
)
 
(12,000
)
 
 
 
 
 
 
 
Cash Flows From Financing Activities:
 
 

 
 

 
 

Repurchase of Common Shares
 
—

 
—

 
(72,893
)
Proceeds from note payable to GSWC
 
—

 
—

 
20,700

Repayment of note payable to GSWC
 
—

 
—

 
(20,700
)
Proceeds from stock option exercises
 
909

 
235

 
1,198

Net change in notes payable to banks
 
(31,000
)
 
62,000

 
28,000

Dividends paid
 
(36,417
)
 
(33,408
)
 
(32,690
)
  Other
 
—

 
(9
)
 
(90
)
Net cash provided (used) in financing activities
 
(66,508
)
 
28,818

 
(76,475
)
 
 
 
 
 
 
 
Change in cash and equivalents
 
16

 
(804
)
 
(30,793
)
Cash and equivalents at beginning of period
 
32

 
836

 
31,629

 
 
 
 
 
 
 
Cash and equivalents at the end of period
 
$
48

 
$
32

 
$
836

 
The accompanying condensed notes are an integral part of these condensed financial statements.
Basis of Presentation
The accompanying condensed financial statements of AWR (parent) should be read in conjunction with the consolidated financial statements and notes thereto of American States Water Company and subsidiaries (“Registrant”) included in Part II, Item 8 of this Form 10-K.  AWR’s (parent) significant accounting policies are consistent with those of Registrant and its wholly owned subsidiaries, Golden State Water Company (“GSWC”) and American States Utility Services, Inc. ("ASUS"), except that all subsidiaries are accounted for as equity method investments.
 
Related-Party Transactions:
As further discussed in Note 2 — Notes Payable to Banks, AWR (parent) has access to a $150.0 million syndicated credit facility. AWR (parent) borrows under this facility and provides funds to its subsidiaries, in support of their operations. Any amounts owed to AWR (parent) for borrowings under this facility are reflected as inter-company receivables on the condensed balance sheets.  The interest rate charged to the subsidiaries is sufficient to cover AWR (parent)’s interest cost under the credit facility.
In October 2015, AWR issued interest bearing promissory notes (the "Notes") to GSWC and ASUS for $40 million and $10 million, respectively, which expire on May 23, 2018. Under the terms of the Notes, AWR may borrow from GSWC and ASUS amounts up to $40 million and $10 million, respectively, for working capital purposes. AWR agrees to pay any unpaid principal amounts outstanding under these notes, plus accrued interest. As of December 31, 2017 and 2016, there were no amounts outstanding under these notes.
AWR (parent) guarantees performance of ASUS's military privatization contracts and agrees to provide necessary resources, including financing, which are necessary to assure the complete and satisfactory performance of such contracts.
Note Payable to Banks
     AWR (parent) has access to a $150.0 million syndicated credit facility, which expires in May 2018. Management intends to renew the credit facility prior to its expiration. The aggregate effective amount that may be outstanding under letters of credit is $25.0 million.  AWR has obtained letters of credit, primarily for GSWC, in the aggregate amount of $6.3 million, with fees of 0.65% including: (i) a $5.4 million letter of credit related to American Recovery and Reinvestment Act funds received by GSWC for reimbursement of capital costs related to the installation of meters in GSWC’s Arden-Cordova water system, (ii) letters of credit in an aggregate amount of $340,000 as security for GSWC’s business automobile insurance policy, (iii) a letter of credit in an amount of $585,000 as security for the purchase of power, and (iv) a $15,000 irrevocable letter of credit pursuant to a franchise agreement with the City of Rancho Cordova.  Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. AWR was not required to maintain any compensating balances.

Loans can be obtained under this credit facility at the option of AWR and bear interest at rates based on credit ratings and Euro rate margins.  In May 2017, Standard and Poor’s Global Ratings (“S&P”) reaffirmed an A+ credit rating with a stable outlook on both AWR and GSWC. S&P’s debt ratings range from AAA (highest possible) to D (obligation is in default). In December 2017, Moody's Investors Service ("Moody's") affirmed its A2 rating with a revised rating outlook from stable to positive for GSWC.

At December 31, 2017, there was $59.0 million outstanding under this facility. At times, AWR (parent) borrows under this facility and provides loans to its subsidiaries in support of its operations, under terms that are similar to that of the credit facility.
 
AWR’s (parent) short-term borrowing activities (excluding letters of credit) for the years ended December 31, 2017 and 2016 were as follows:
 
 
December 31,
(in thousands, except percent)
 
2017
 
2016
Balance Outstanding at December 31,
 
$
59,000

 
$
90,000

Interest Rate at December 31,
 
2.28
%
 
1.46
%
Average Amount Outstanding
 
$
65,242

 
$
59,261

Weighted Average Annual Interest Rate
 
1.69
%
 
1.20
%
Maximum Amount Outstanding
 
$
102,500

 
$
96,000

 
All of the letters of credit are issued pursuant to the syndicated revolving credit facility. The syndicated revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum debt rating from Moody’s or S&P of Baa3 or BBB-, respectively. As of December 31, 2017, AWR was in compliance with these covenants with an interest coverage ratio of 7.54 times interest expense, a debt ratio of 0.42 to 1.00 and a debt rating of A+ by S&P.
Income Taxes
     AWR (parent) receives a tax benefit for expenses incurred at the parent-company level.  AWR (parent) also recognizes the effect of AWR’s consolidated California unitary apportionment, which is beneficial or detrimental depending on a combination of the profitability of AWR’s consolidated non-California activities as well as the proportion of its consolidated California sales to total sales.
Dividend from Subsidiaries
Dividends in the amount of $36.5 million, $33.8 million and $62.0 million were paid to AWR (parent) by its wholly owned subsidiaries during the years ended December 31, 2017, 2016 and 2015, respectively.