Segment Information

12 Months Ended

Dec. 31, 2013

Segment Information

Note 19: Segment Information

The Company has two operating segments referred to as the Regulated Businesses and Market-Based Operations segments. The Company’s chief operating decision maker regularly reviews the operating results of the Regulated Businesses and Market-Based Operations segments to assess segment performance and allocate resources. The evaluation of segment performance and the allocation of resources are based on several measures. The measure that is most consistent with that used by management is income from continuing operations before income tax.

The Regulated Businesses segment includes the Company’s 18 utility subsidiaries in continuing operations that provide water and wastewater services to customers in 16 U.S. states. With the exception of one company, each of these public utility subsidiaries is subject to regulation by public utility commissions and local governments. In addition to providing similar products and services and being subject to the public utility regulatory environment, each of the regulated subsidiaries has similar economic characteristics, production processes, types and classes of customers and water distribution or wastewater collection processes. Each of these companies is also subject to both federal and state regulation regarding the quality of water distributed and the discharge of wastewater residuals.

The Market-Based Operations segment is comprised of market-based businesses that provide a broad range of water and wastewater services and products including homeowner water and sewer line maintenance services, water and wastewater facility operations and maintenance services and products for cleansing water and wastewater and wastewater residuals management services.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. (See Note 2) The Regulated Businesses and Market-Based Operations segment information includes intercompany costs that are allocated by American Water Works Service Company, Inc. and intercompany interest that is charged by AWCC, which are eliminated to reconcile to the consolidated results of operations. Inter-segment revenues, which are primarily recorded at cost plus mark-up that approximates current market prices, include carbon regeneration services and leased office space, furniture and equipment provided by the Company’s market-based subsidiaries to its regulated subsidiaries. Other includes corporate costs that are not allocated to the Company’s subsidiaries, eliminations of inter-segment transactions, fair value adjustments and associated income and deductions related to the Acquisitions that have not been allocated to the segments for evaluation of segment performance and allocation of resource purposes. The adjustments related to the Acquisitions are reported in Other, as they are excluded from segment performance measures evaluated by management. The following table includes the Company’s summarized segment information:

	As of or for the Year Ended
	December 31, 2013
	Regulated		Market-Based
	Businesses		Operations		Other			Consolidated
Net operating revenues	$	2,593,918	$	325,463	$	(17,523	)	$	2,901,858
Depreciation and amortization		375,939		7,013		24,766			407,718
Total operating expenses, net		1,700,052		277,691		(21,734	)		1,956,009
Income from continuing operations before income taxes		654,834		50,637		(100,001	)		605,470
Total assets		13,429,087		286,048		1,354,398			15,069,533
Capital expenditures		973,301		6,951		0			980,252

	As of or for the Year Ended
	December 31, 2012
	Regulated		Market-Based
	Businesses		Operations		Other			Consolidated
Net operating revenues	$	2,564,434	$	330,329	$	(17,874	)	$	2,876,889
Depreciation and amortization		349,629		6,661		25,213			381,503
Total operating expenses, net		1,685,734		288,099		(21,917	)		1,951,916
Income from continuing operations before income taxes		649,117		45,817		(63,676	)		631,258
Total assets		12,680,856		260,255		1,777,865			14,718,976
Capital expenditures		921,500		7,074		0			928,574
Capital expenditures of discontinued operations
(included in above)		2,884		0		0			2,884

	As of or for the Year Ended
	December 31, 2011
	Regulated		Market-Based
	Businesses		Operations		Other			Consolidated
Net operating revenues	$	2,368,891	$	327,815	$	(30,470	)	$	2,666,236
Depreciation and amortization		321,540		6,822		23,459			351,821
Total operating expenses, net		1,609,276		290,768		(36,944	)		1,863,100
Income from continuing operations before income taxes		535,445		39,324		(71,089	)		503,680
Total assets		12,843,820		256,110		1,676,461			14,776,391
Assets of discontinued operations (included in total
assets above)		904,391		0		25,467			929,858
Capital expenditures		920,210		4,648		0			924,858
Capital expenditures of discontinued operations
(included in above)		21,052		86		0			21,138