XML 43 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
 12 Months Ended
Dec. 31, 2018
Condensed Financial Information of Parent Company Only Disclosure [Abstract]  
SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF PARENT
CONDENSED BALANCE SHEETS
 
 
December 31,
(in thousands)
 
2018
 
2017
Assets
 
 

 
 

 
 
 
 
 
Cash and equivalents
 
$
34

 
$
48

Intercompany note receivables
 
76,072

 
45,955

Total current assets
 
76,106

 
46,003

 
 
 
 
 
Investments in subsidiaries
 
574,330

 
539,332

Deferred taxes and other assets
 
8,769

 
8,422

Total assets
 
$
659,205

 
$
593,757

 
 
 
 
 
Liabilities and Capitalization
 
 

 
 

 
 
 
 
 
Notes payable to bank
 
$
—

 
$
59,000

Income taxes payable
 
3,672

 
2,780

Intercompany payable
 
—

 
73

Deferred taxes and other liabilities
 
291

 
509

Total current liabilities
 
3,963

 
62,362

 
 
 
 
 
Notes payable to bank
 
95,500

 
—

Income taxes payable and other liabilities
 
1,519

 
1,450

Total other liabilities
 
97,019

 
1,450

 
 
 
 
 
Common shareholders’ equity
 
558,223

 
529,945

Total capitalization
 
558,223

 
529,945

 
 
 
 
 
Total liabilities and capitalization
 
$
659,205

 
$
593,757

 
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)
 
2018
 
2017
 
2016
Operating revenues and other income
 
$
—

 
$
—

 
$
71

Operating expenses and other expenses
 
305

 
344

 
19

Income before equity in earnings of subsidiaries and income taxes
 
(305
)
 
(344
)
 
52

 
 
 
 
 
 
 
Equity in earnings of subsidiaries
 
63,651

 
67,490

 
59,145

 
 
 
 
 
 
 
Income before income taxes
 
63,346

 
67,146

 
59,197

 
 
 
 
 
 
 
Income tax benefit
 
(525
)
 
(2,221
)
 
(546
)
 
 
 
 
 
 
 
Net income
 
$
63,871

 
$
69,367

 
$
59,743

 
 
 
 
 
 
 
Weighted Average Number of Common Shares Outstanding
 
36,733

 
36,638

 
36,552

Basic Earnings Per Common Share
 
$
1.73

 
$
1.88

 
$
1.63

 
 
 
 
 
 
 
Weighted Average Number of Diluted Common Shares Outstanding
 
36,936

 
36,844

 
36,750

Fully Diluted Earnings per Common Share
 
$
1.72

 
$
1.88

 
$
1.62

 
 
 
 
 
 
 
Dividends Paid Per Common Share
 
$
1.060

 
$
0.994

 
$
0.914

 
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)
 
2018
 
2017
 
2016
Cash Flows From Operating Activities
 
$
79,877

 
$
36,024

 
$
34,878

 
 
 
 
 
 
 
Cash Flows From Investing Activities:
 
 

 
 

 
 

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

 
(64,500
)
  Increase in investment of subsidiary
 
(47,500
)
 
—

 
—

Net cash provided (used) in investing activities
 
(78,000
)
 
30,500

 
(64,500
)
 
 
 
 
 
 
 
Cash Flows From Financing Activities:
 
 

 
 

 
 

Proceeds from stock option exercises
 
546

 
909

 
235

Net change in notes payable to banks
 
36,500

 
(31,000
)
 
62,000

Dividends paid
 
(38,937
)
 
(36,417
)
 
(33,408
)
  Other
 
—

 
—

 
(9
)
Net cash provided (used) in financing activities
 
(1,891
)
 
(66,508
)
 
28,818

 
 
 
 
 
 
 
Change in cash and equivalents
 
(14
)
 
16

 
(804
)
Cash and equivalents at beginning of period
 
48

 
32

 
836

 
 
 
 
 
 
 
Cash and equivalents at the end of period
 
$
34

 
$
48

 
$
32

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 revolving 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.
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 credit facility, which expires in May 2023. 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 $940,000, with fees of 0.65% including: (i) letters of credit in an aggregate amount of $340,000 as security for GSWC’s business automobile insurance policy; (ii) a letter of credit in an amount of $585,000 as security for the purchase of power; and (iii) 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 July 2018, Standard and Poor’s Global Ratings (“S&P”) affirmed 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 January 2019, Moody's Investors Service ("Moody's") affirmed its A2 rating with a positive outlook for GSWC.

At December 31, 2018, there was $95.5 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) borrowing activities (excluding letters of credit) for the years ended December 31, 2018 and 2017 were as follows:
 
 
December 31,
(in thousands, except percent)
 
2018
 
2017
Balance Outstanding at December 31,
 
$
95,500

 
$
59,000

Interest Rate at December 31,
 
3.19
%
 
2.28
%
Average Amount Outstanding
 
$
69,559

 
$
65,242

Weighted Average Annual Interest Rate
 
2.66
%
 
1.69
%
Maximum Amount Outstanding
 
$
95,500

 
$
102,500


 
All of the letters of credit are issued pursuant to the revolving credit facility. The revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum debt rating from Moody’s or S&P of Baa3 or BBB-, respectively. As of December 31, 2018, AWR was in compliance with these covenants with an interest coverage ratio of 6.23 times interest expense, a debt ratio of 0.43 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 $79.0 million, $36.5 million and $33.8 million were paid to AWR (parent) by its wholly owned subsidiaries during the years ended December 31, 2018, 2017 and 2016, respectively.