(Source: Business Wire)American Water Works Company, Inc. (NYSE: AWK), the largest investor-owned U.S. water and wastewater utility company, today reported results for the third quarter ended September 30, 2009. For the quarter, the company reported operating revenues of $680.0 million, a 1.2 percent increase of $7.8 million over the same period in 2008. Net income in the third quarter was $91.6 million, or $0.52 per basic and diluted common share, compared with $88.2 million or $0.55 per basic and diluted common share in the third quarter of 2008.

"The results of this quarter were impacted by one of the wetter summers experienced by much of the country," said Don Correll, president and CEO of American Water. "Eleven out of 20 of our regulated state operations experienced either above average rainfall, cooler temperatures, or in most cases, both. Despite the weather, we achieved an increase in both revenues and net income as we continue to execute our core strategies."

The company's Regulated Businesses revenues increased by $17.6 million, or 2.9 percent, in the third quarter 2009, largely a result of recent recognition of prudent investment through rate awards. Total volume of water sold decreased 7.4 percent for the quarter ended September 30, 2009, or 9.1 billion gallons from the same period in 2008, largely as a result of weather. This decrease in volume of water sold resulted in an estimated decrease of $44.2 million in revenues and approximately $23.7 million in net income, or $0.14 per basic and diluted common share.

The company's Non-regulated Businesses' revenues decreased by $8.6 million or 11.7 percent for the third quarter, compared to the same period in 2008. The decrease was primarily attributable to lower revenues in the Contract Operations Group.

Operating expenses for the three-month period ended September 30, 2009, totaled $465.6 million, an increase of $5.1 million or 1.1 percent over the same period in 2008. This was primarily driven by increased pension and other post-employment benefits expenses of $6.4 million and depreciation of $6.5 million. These increases were offset by lower costs in contract operations of $9.4 million.

Net cash provided by operating activities for the nine months ended September 30, 2009, increased approximately $78.6 million or 20 percent to $471.6 million.

Construction expenditures for the nine months ended September 30, 2009, were $592.9 million compared to $714.6 million in the prior year period. The company anticipates investing approximately $800 million in construction and other capital projects in 2009.

"American Water is committed to delivering reliable service to its customers," said Correll. "We are making infrastructure investments across this country and in fact, recently reached a significant milestone in our current largest capital project. Our 31-mile watermain and 20 million gallon a day treatment plant project in Kentucky is more than 70 percent complete. This approximately $162 million project will ensure a sustainable supply for Central Kentucky for years to come and is another example of our commitment to providing water solutions."

During the three months ended September 30, 2009, capital resource requirements were met with internally generated cash, commercial paper issuance, debt offerings, and access to bank credit lines. The company issued $53.2 million in new tax-exempt bonds during the third quarter 2009 at rates ranging from 1.27 percent to 6.25 percent. Additionally, the company remarketed, at fixed rates, $23.3 million in tax-exempt bonds at 6.25 percent during the third quarter 2009.

The company received authorizations for additional annualized revenues from general rate cases of $16.8 million in the third quarter 2009, which brings the total for the first nine months of the year to $31.4 million. As of September 30, 2009, the company was awaiting final orders for general rate cases in 10 states, requesting $258.0 million in total additional annual revenues.

Subsequent to the quarter's end, the company settled its rate case in Pennsylvania, which grants an increase of approximately $30.8 million in annual revenue in addition to the approximately $23.0 million previously received through infrastructure surcharges. The company also filed a rate request in Missouri, which will generate an additional $48.7 million in additional revenue if approved as filed.

The extent to which requested rate increases will be granted by the applicable regulatory agencies will vary.

American Water announced two major military contracts during the quarter. Its Military Services Group was awarded contracts for the operation and maintenance of the water and the wastewater systems at Fort Belvoir, Virginia and Fort Meade, Maryland.

"American Water was extremely pleased to be awarded both contracts," said Correll. "We will now be serving ten installations across the country and our growing portfolio clearly demonstrates our commitment to providing military bases with solutions to best manage their systems and delivering reliable water and wastewater services."

American Water also announced the completion of a secondary public offering of 40.25 million shares of its common stock, priced at $19.25 per share, on August 18. In the offering, all the shares were sold by RWE, with all proceeds going to RWE. RWE's ownership has been reduced to 23.5 percent of American Water's outstanding shares of common stock.

Also during the third quarter, the Board of Directors increased American Water's quarterly cash dividend payment by five percent from $0.20 to $0.21 per share on July 31, 2009. On October 30, the Board declared its second dividend of $0.21 per share.

Non-GAAP Financial Measures

This press release includes a presentation of "Net income excluding impairment charge," "Basic income per common share excluding impairment charge," "Diluted net income per common share excluding impairment charge," and "Operating expenses excluding impairment charge." Each of these items is derived from our consolidated financial information but is not presented in our financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP). The items constitute "non-GAAP financial measures" under Securities and Exchange Commission rules. These non-GAAP financial measures supplement our GAAP disclosures and should not be considered an alternative to the GAAP measure.

Management believes that the presentation of these adjusted measures is useful to investors because it provides a means of evaluating the company's operating performance without giving effect to an impairment charge, which has been triggered principally by market factors that are largely out of the control of management and do not reflect the day-to-day operations of the company. Moreover, management believes that this presentation facilitates comparisons between the company and other companies in its industry. In preparing operating plans, budgets and forecasts, and in assessing historical performance, management relies, in part, on trends in the company's historical results, exclusive of impairment charges.

Set forth below are tables that reconcile the non-GAAP financial measures to the most directly comparable GAAP financial measure.

Third Quarter 2009 Earnings Conference Call

The third quarter 2009 earnings conference call will take place Monday, November 9, 2009, at 9:00 a.m. Eastern Time.