

	December 31,
(in thousands)	2019		2018
Assets

Cash and equivalents	$	310	$	34
Intercompany note receivables	185,094		76,072
Total current assets	185,404		76,106

Investments in subsidiaries	616,725		574,330
Deferred taxes and other assets	9,548		8,769
Total assets	$	811,677	$	659,205

Liabilities and Capitalization

Notes payable to bank	$	5,000	$	—
Income taxes payable	3,259		3,672
Other liabilities	274		291
Total current liabilities	8,533		3,963

Notes payable to bank	200,000		$	95,500
Deferred taxes and other liabilities	1,614		1,519
Total other liabilities	201,614		97,019

Common shareholders’ equity	601,530		558,223
Total capitalization	601,530		558,223

Total liabilities and capitalization	$	811,677	$	659,205



	For the Years Ended December 31,
(In thousands, except per share amounts)	2019			2018			2017
Operating revenues and other income	$	—		$	—		$	—
Operating expenses and other expenses	314			305			344
Income before equity in earnings of subsidiaries and income taxes	(314		)	(305		)	(344		)

Equity in earnings of subsidiaries	83,947			63,651			67,490

Income before income taxes	83,633			63,346			67,146

Income tax benefit	(709		)	(525		)	(2,221		)

Net income	$	84,342		$	63,871		$	69,367

Weighted Average Number of Common Shares Outstanding	36,814			36,733			36,638
Basic Earnings Per Common Share	$	2.28		$	1.73		$	1.88

Weighted Average Number of Diluted Common Shares Outstanding	36,964			36,936			36,844
Fully Diluted Earnings per Common Share	$	2.28		$	1.72		$	1.88

Dividends Paid Per Common Share	$	1.160		$	1.060		$	0.994



	For the Years Ended December 31,
(in thousands)	2019			2018			2017
Cash Flows From Operating Activities	$	40,459		$	79,877		$	36,024

Cash Flows From Investing Activities:
Loans (made to)/repaid from, wholly-owned subsidiaries	(107,500		)	(30,500		)	30,500
Increase in investment of subsidiary	—			(47,500		)	—
Net cash provided (used) in investing activities	(107,500		)	(78,000		)	30,500

Cash Flows From Financing Activities:
Proceeds from stock option exercises	519			546			909
Net change in notes payable to banks	109,500			36,500			(31,000		)
Dividends paid	(42,702		)	(38,937		)	(36,417		)
Net cash provided (used) in financing activities	67,317			(1,891		)	(66,508		)

Change in cash and equivalents	276			(14		)	16
Cash and equivalents at beginning of period	34			48			32

Cash and equivalents at the end of period	$	310		$	34		$	48

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.

As further discussed in Note 2 — Notes Payable to Banks, AWR (parent) currently has access to a $225.0 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.

AWR (parent) has access to a credit facility in order to provide funds to its subsidiaries, GSWC and ASUS, in support of their operations. In March 2019, AWR amended this credit facility to increase its borrowing capacity from $150.0 million to $200.0 million, and in October 2019 further amended the credit facility to temporarily increase its borrowing capacity to $225.0 million, effective until June 30, 2020. In February 2020, AWR received a binding commitment from its lender for the option to revise the temporary increase of the credit facility to $260.0 million through the end of 2020. When needed, AWR will be able to exercise this commitment and have immediate access to the additional funds. On December 31, 2020, the borrowing capacity will revert to $200.0 million. Amy amounts borrowed up to $200.0 million will be due in May 2023, and any amounts borrowed in excess of $200.0 million will be due in 2020.

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 December 2019, 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 May 2019, Moody's Investors Service ("Moody's") affirmed its A2 rating with a revised outlook from positive to stable for GSWC.

At December 31, 2019, there was $205.0 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) borrowing activities (excluding letters of credit) for the years ended December 31, 2019 and 2018 were as follows:



	December 31,
(in thousands, except percent)	2019			2018
Balance Outstanding at December 31,	$	205,000		$	95,500
Interest Rate at December 31,	2.44		%	3.19		%
Average Amount Outstanding	$	167,392		$	69,559
Weighted Average Annual Interest Rate	2.88		%	2.66		%
Maximum Amount Outstanding	$	205,500		$	95,500

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, 2019, 2018 and 2017, AWR was in compliance with these covenants. As of

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.

Dividends in the amount of $42.7 million, $79.0 million and $36.5 million were paid to AWR (parent) by its wholly owned subsidiaries during the years ended December 31, 2019, 2018 and 2017, respectively.