American Water Works (AWK) 10-K risk factor changes: FY2017 vs FY2016

| [removed: |] • | cover our expenses, including purchased water and costs of chemicals, fuel and other commodities used in our operations; |

| [removed: |] • | enable us to recover our investment; and |

| [removed: |] • | provide us with an opportunity to earn an appropriate rate of return on our investment. |

[removed: State] [added: Some state] PUCs are empowered to impose financial penalties, fines and other sanctions for non-compliance with applicable rules and regulations.

[removed: Our operations and] [added: | • | increasing] the [removed: quality of water we supply are subject to extensive] [added: costs associated with complying with] environmental, [removed: water quality and health and] [added: health,] safety [removed: laws] and [removed: regulations.][added: water quality regulations to which our operations are subject; |]

[removed: Compliance with] [added: Our operations and the quality of water we supply are subject to extensive and] increasingly stringent [added: environmental, water quality and health and safety] laws and [removed: regulations] [added: regulations, including with respect to emerging contaminants, compliance with which] could impact our operating [removed: costs;] [added: costs,] and violations of [removed: such laws and regulations] [added: which] could subject us to substantial liabilities and costs, as well as damage to our reputation.

Although we may seek to recover ongoing compliance costs in our [added: Regulated Businesses through customer] rates, there can be no guarantee that the various state PUCs or similar regulatory bodies that govern our Regulated Businesses would approve rate increases that would enable us to recover such costs or that such costs will not materially and adversely affect our financial condition, results of operations, cash flows and liquidity.

Furthermore, [removed: while we seek to protect our drinking water from these contaminants by implementing multi-step treatment processes, reviewing research on these contaminants, and developing appropriate mitigation techniques for new contaminants where feasible or appropriate,] given the rapid pace at which emerging contaminants are being created and/or discovered, we may not be able to detect and/or mitigate all such substances in our drinking water [removed: system,] [added: system or supplies,] which could have a material adverse impact on our financial condition, results of operations and reputation.

Supply issues, such as drought, overuse of sources of water, the protection of threatened species or habitats, [added: contamination] or other factors may limit the availability of ground and surface water.

For example, in our Monterey County, California operations, we are seeking to augment our sources of water supply, principally to comply with an October 20, 2009 cease and desist order (the “2009 Order”), as amended by an order in July 2016 (the “2016 Order”), of the SWRCB that requires Cal Am to significantly decrease its diversions from the Carmel River in accordance with a reduction schedule [removed: which was extended to] [added: that terminates on] December 31, 2021 (the “2021 Deadline”).

See Item 3—Legal [removed: Proceedings] [added: Proceedings—Alternative Water Supply] in [removed: this report,] [added: Lieu of Carmel River Diversions,] which includes additional information regarding this matter.

For example, [removed: eight] [added: ten of our] state PUCs permit rates to be adjusted outside of the rate case application process through surcharges that address certain capital investments, such as replacement of aging infrastructure.

Furthermore, in setting rates, [removed: a number] [added: nine] of [added: our] state PUCs allow us to use future test years, which extend beyond the date a rate request is filed to allow for current or projected revenues, expenses and investments to be reflected in rates on a more timely basis.

| [removed: |] • | making it more difficult for us to raise our rates and, as a consequence, to recover our costs or earn our expected rates of return; |

| [removed: |] • | changing the determination of the costs, or the amount of costs, that would be considered recoverable in rate cases; |

| [removed: |] • | restricting our ability to terminate our services to customers who owe us money for services previously provided or limiting our bill collection efforts; |

| [removed: |] • | requiring us to provide water or wastewater services at reduced rates to certain customers; |

| [removed: |] • | limiting or restricting our ability to acquire water or wastewater systems, purchase or dispose of assets or issue securities, or making it less cost-effective for us to do so; |

| [removed: |] • | negatively impacting the deductibility of expenses under federal or state tax laws, the amount of tax credits or tax abatement benefits that may be available, the amount of taxes owed, or the ability to utilize our net operating loss carryforwards; |

| [removed: |] • | changing regulations that affect the benefits we expected to receive when we began offering services in a particular area; |

| [removed: |] • | changing or placing additional limitations on change in control requirements relating to any concentration of ownership of our common stock; |

| [removed: |] • | making it easier for governmental entities to convert our assets to public ownership via [added: condemnation,] eminent [removed: domain;] [added: domain or other similar process, or for governmental agencies or private plaintiffs to assess liability against us for damages under these or similar processes;] |

| [removed: |] • | placing limitations, prohibitions or other requirements with respect to the sharing of information and participation in transactions by or between a regulated subsidiary and us or our other affiliates, including Service Company and any of our other subsidiaries; |

| [removed: |] • | restricting or prohibiting our extraction of water from rivers, streams, reservoirs or aquifers; and |

| [removed: |] • | revoking or altering the terms of the certificates of public convenience and necessity (or similar authorizations) issued to us by state PUCs. |

[removed: Furthermore, the results of the November 2016] [added: In addition, new] Federal, state and local [removed: elections have generated some uncertainty as to certain future new or] [added: laws,] changes in existing laws, rules or regulations, or administrative interpretations [removed: thereof.][added: thereof, could impact us.]

[removed: At this time,] [added: Moreover,] we are unable to determine or predict the potential impacts, if any, of [removed: such] [added: any other] new or amended laws, rules or regulations, or interpretations thereof, to the extent they may be ultimately enacted, adopted or issued, on us or our businesses, financial [removed: condition and] [added: condition,] results of [removed: operations.][added: operations, cash flows and liquidity.]

Service disruptions caused by severe weather [removed: conditions] [added: conditions, climate variability patterns] or natural disasters may disrupt our operations [removed: and economic conditions may] [added: or] reduce the demand for [added: our] water services, [removed: either of] which could adversely affect our financial condition, results of operations, cash flows and liquidity.

Service interruptions due to severe [removed: weather] [added: weather, climate variability patterns] and other natural events are possible across all our businesses.

These [removed: include] [added: include, among other things,] storms, freezing conditions, high wind conditions, hurricanes, tornadoes, earthquakes, landslides, [added: wildfires,] coastal and intercoastal floods or high water conditions, including those in or near designated flood plains, severe electrical storms and solar flares.

[removed: In addition, adverse] [added: Adverse] economic conditions [added: or other factors] can cause our customers, particularly industrial customers, to curtail operations.

A curtailment of operations by an industrial customer would typically result in reduced water [removed: usage.][added: usage by that customer.]

Any decrease in demand resulting from difficult economic conditions [added: affecting these industrial customers] could adversely affect our financial condition and results of operations.

As examples, drought conditions [removed: have] [added: had] persisted in California over a five-year period, [removed: and, more recently, have] [added: and had] been declared in New [removed: Jersey.][added: Jersey in 2016.]

Some scientific experts are predicting a worsening of weather volatility in the [removed: future.][added: future associated with climate variability.]

The issue of climate [removed: change] [added: variability] is receiving [removed: increased] [added: increasing] attention worldwide.

Many climate [removed: change] [added: variability] predictions, if true, present several potential challenges to water and wastewater utilities, such as: [removed: increased frequency and duration of droughts, increased precipitation and flooding, potential degradation of water quality, and changes in demand for services.]

Because of the uncertainty of weather volatility related to climate [removed: change,] [added: variability,] we cannot predict its potential impact on our business, financial condition, results of operations, cash flows and liquidity.

We invest significant amounts of capital to add, replace and maintain property, plant and [removed: equipment.][added: equipment, and to improve aging infrastructure.]

In [removed: 2016,] [added: 2017,] we invested [removed: $1.3] [added: $1.4] billion in net Company-funded capital improvements.

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New legislation, regulations, government policies or court decisions, including without limitation with respect to federal and state income and other tax laws, can materially affect our operations, results of operations and cash flows.

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On December 22, 2017, the TCJA was signed into law, which, among other things, enacted significant and complex changes to the Internal Revenue Code of 1986, including a reduction in the maximum U.S. federal corporate income tax rate from 35% to 21% as of January 1, 2018, and certain other provisions related specifically to the public utility industry, including continuation of interest expense deductibility, the exclusion from utilizing bonus depreciation and the normalization of deferred income taxes.

The enactment of the TCJA required a re-measurement of our deferred income taxes that materially impacted our 2017 results of operations and financial position.

We have assumed that the predominant majority of our deferred tax assets and liabilities at our utility subsidiaries will remain subject to a normalization method of accounting pursuant to the U.S. tax code or applicable PUC regulations and that we will be able to deduct for U.S. federal corporate income tax purposes substantially all of our interest expense, based upon our interpretation of U.S. tax law debt allocation methodologies , at the TCJA’s 21% corporate tax rate.

The adoption or issuance of any Related Interpretations that impact these assumptions or with respect to provisions related specifically to the public utility industry or to corporate taxpayers in general may also impact our future financial performance, including our results of operations, cash flows and liquidity, which impacts will largely be determined through future regulatory proceedings.

All of our 14 jurisdictions subject to economic regulation have opened formal proceedings related to the TCJA, and we have open rate cases in three of them.

At this time, we cannot predict the impacts of any Related Interpretations, if and when issued, on us, or the regulatory treatment of the TCJA in each of our regulatory jurisdictions.

Tariffs in place or cost recovery proceedings with respect to our Regulated Businesses may not provide reimbursement to us, in whole or in part, for any of these impacts.

In 2017, these droughts were declared concluded, but other droughts that may occur from time to time may result in the imposition of voluntary or mandatory water use targets, rationing restrictions, water conservation regulations, and requirements to minimize water system leaks.

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New legislation, regulations, government policies or court decisions can materially affect our operations.

| | • | increasing the costs associated with complying with environmental, health, safety and water quality regulations to which our operations are subject; |

In May 2016, the Governor of California issued an executive order that retained existing water use restrictions, but required state agencies to adjust, among other things, water conservation regulations through the end of January 2017 to account for differentiation in water supply conditions throughout the state, to adopt new water use targets as part of a permanent framework for urban water usage and conservation, to prohibit permanently practices that waste potable water and to direct actions that minimize significant water system leaks.

Moreover, in October 2016, a drought warning was declared in 14 northern and central New Jersey counties by the New Jersey Department of Environmental Protection, and while mandatory use restrictions have not presently been adopted, residents, business and other institutions in the affected areas have been urged to use water sparingly.

Changing severe weather patterns could require additional expenditures to reduce the risk associated with any increasing storm, flood and drought occurrences.

In addition, we could be limited in our ability to both pursue growth and pay dividends in accordance with our dividend policy.

In order to fund construction expenditures, acquisitions, principal and interest payments on our indebtedness, and dividends at the level currently anticipated under our dividend policy, we expect that we will need additional financing.

The ability to obtain financing at reasonable rates is contingent upon our credit ratings and general market conditions.

Moreover, if we are deemed liable for any damage caused by overflow or disposal operations, our losses might not be covered by insurance, and such losses may make it difficult for us to secure insurance at acceptable rates in the future.

Litigation and regulatory proceedings are subject to inherent uncertainties and unfavorable rulings can and do occur.

An important part of our growth strategy is the acquisition of water and wastewater systems.

Any further acquisitions we undertake may involve risks.

| | • | issuances of our equity securities; |

In addition, our competitors may impede our growth by purchasing water utilities adjacent to or near our existing service areas, thereby impairing our ability to geographically expand the affected service areas.

Competing governmental entities, utilities, environmental or social activist groups, and strategic and financial buyers have challenged, and may in the future challenge, our efforts to acquire new companies and/or service areas.

Our growth could be hindered if we are not able to compete effectively for new companies and/or service areas with other companies or strategic and financial buyers that have lower costs of operations.

Moreover, our efforts to resist the condemnation or process may not be successful.

While we continue to implement, upgrade and replace our operational technology and IT systems, a number of our mission- and business-critical IT systems are older, such as our SCADA (supervisory control and data acquisition) system.

Over the past several years,

[removed: Executive] Overview

[removed: Through its subsidiaries,] American Water is the largest and most geographically [removed: diverse investor-owned] [added: diverse,] publicly-traded water and wastewater utility company in the United States, as measured by both operating revenues and population served.

We employ approximately [removed: 6,800] [added: 6,900] professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in [removed: 47] [added: 46] states, the District of Columbia and Ontario, Canada.

Our primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, [removed: industrial] [added: industrial, public authority, fire service] and [removed: other customers, including] sale for resale [added: customers, collectively presented as our “Regulated Businesses.” Our utilities operate in 16 states] and [removed: public authority customers.][added: serve approximately 3.4 million customers, based on the number of active service connections to our water and wastewater networks.]

Our Regulated Businesses [removed: that provide these services] are generally subject to economic regulation by certain state utility commissions or other entities engaged in utility [removed: regulation.][added: regulation, collectively referred to as PUCs.]

We also operate several [added: market-based] businesses that provide a broad range of related and complementary water and wastewater services [removed: in] [added: within] four operating segments that individually do not meet the criteria of a reportable segment in accordance with GAAP.

These [removed: four] [added: four,] non-reportable operating segments are collectively presented as our Market-Based Businesses, which is consistent with how management assesses the results of these businesses.

[removed: 2016] Strategic Focus [removed: &] [added: and 2017] Achievements

| [removed: |] • | [removed: In 2016, we] achieved [added: both] a customer satisfaction rating [removed: in the top quartile among our water industry peers] and [removed: achieved] a service quality rating [removed: of 85%, which also placed us] in the top quartile [removed: compared to] [added: among] our water industry peers; |

| [removed: |] • | [removed: We launched a comprehensive] [added: expanded our] customer experience [removed: initiative] [added: initiative,] designed to [removed: enhance our quality of service and] make it easier for customers to do business with [removed: us;] [added: us, and enhanced our quality of service through implementation and upgrades of technology tools; and] |

| [removed: |] • | [removed: We] continued to make needed infrastructure investment while implementing operational efficiency improvements to keep customer rates [removed: affordable; and] [added: affordable.] |

| [removed: |] • | [removed: Growth – We] [added: In 2017, we] invested [removed: $1.5 billion in 2016;] [added: $1.7 billion,] a record level of annual investment since the Company went public in [removed: 2008 including:] [added: 2008, and $200 million more than 2016, which had previously been a record year for investment. Our 2017 investment included:] |

| [removed: |] • | [removed: $1.3 billion] [added: $1.4 billion,] of which the majority was in our Regulated Businesses [removed: primarily to improve infrastructure;] [added: for infrastructure replacements] and [added: improvements; and] |

[removed: Our] [added: | • | our Regulated Businesses achieved an] adjusted O&M efficiency ratio [added: (a non-GAAP measure) of 33.8%] for the year ended December 31, [removed: 2016 was 34.9%,] [added: 2017,] compared to [removed: 35.9%] [added: 34.9%] and [removed: 36.7%] [added: 35.9%] for the years ended December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] respectively. [added: The continued improvement in our adjusted O&M efficiency ratio in 2017 was attributable to both an increase in operating revenues and a decrease in O&M expenses (see the following table). The improvement in the 2016 adjusted O&M efficiency ratio over the 2015 ratio was primarily attributable to an increase in operating revenues; |]

Our adjusted O&M efficiency ratio is defined as our regulated [removed: O&M] [added: operation and maintenance] expenses divided by [added: our] regulated operating revenues, where both [removed: O&M] [added: operation and maintenance] expenses and operating revenues were adjusted to eliminate purchased water expense.

Additionally, from [removed: the O&M] [added: operation and maintenance] expenses, we [added: have] excluded the allocable portion of [removed: non-O&M] [added: non-operation and maintenance] support services [removed: cost,] [added: costs,] mainly depreciation and general [removed: taxes] [added: taxes,] that are reflected in [removed: the] [added: our] Regulated Businesses segment as [removed: O&M expenses] [added: operation and maintenance expenses,] but for consolidated financial reporting [removed: purposes] [added: purposes,] are categorized within other line items in the accompanying Consolidated Statements of Operations.

[removed: In addition to the standard adjustments to the O&M efficiency ratio for] [added: For] the [removed: year] [added: years] ended December 31, [added: 2017 and] 2016, we have also excluded from [removed: operating revenues] [added: operation] and [removed: O&M] [added: maintenance] expenses the impact [removed: from the binding global agreement in principle related to the] [added: of certain] Freedom Industries chemical spill [removed: in West Virginia.][added: settlement activities.]

We excluded all [added: of] the above items from the calculation as we believe such items are not reflective of management’s ability to increase efficiency of [removed: the Company’s] [added: our] regulated operations.

We evaluate our operating performance using this [removed: measure] [added: ratio] because [removed: management believes] [added: we believe] it [removed: is a direct measure of the] [added: directly measures] improvement [removed: to] [added: in] the efficiency of our [removed: Regulated Businesses’] [added: regulated] operations.

[removed: The] [added: Our adjusted] O&M efficiency ratio is not a GAAP financial measure and may not be comparable to other companies’ operating [removed: measures] [added: measures,] and should not be used in place of the GAAP information provided elsewhere in this [removed: report.][added: Form 10-K.]

The following table provides the calculation [added: of our adjusted O&M efficiency ratio] and [added: a] reconciliation that compares [removed: O&M] [added: operation and maintenance] expenses and operating revenues, [added: each] as determined in accordance with GAAP, to those amounts utilized in the calculation of our adjusted O&M efficiency [removed: ratio for the years ended December 31:][added: ratio:]

| | [removed: | 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [added: (Dollars in millions)] | | [removed: (in millions)] | | | | | | | | | | | [added: $ | | | | % | | | $ | | | | % | |]

| Total operation and maintenance expenses | [removed: |] $ | [removed: 1,504] [added: 1,378] | | | $ | [removed: 1,404] [added: 1,504] | | | $ | [removed: 1,350] [added: 1,404] | |

| Less: | | | | | | | | | | | | [removed: |]

| Operation and maintenance expenses—Market-Based Businesses | [removed: |] [added: 337] | [removed: 372] | | | [added: 372] | [removed: 358] | | | [added: 358] | [removed: 289] | |

| Operation and maintenance expenses—Other | [removed: |] [added: (50] | [removed: (44] | ) | | [added: (44] | [removed: (49] | ) | | [added: (49] | [removed: (51] | ) |

| Total [removed: regulated] operation and maintenance [removed: expenses |] [added: expenses—Regulated Businesses] | [added: 1,091] | [removed: 1,176] | | | [added: 1,176] | [removed: 1,095] | | | [added: 1,095] | [removed: 1,112] | |

| Regulated purchased water expenses | [removed: |] [added: 128] | [removed: 122] | | | [added: 122] | [removed: 117] | | | [added: 117] | [removed: 122] | |

| Allocation of non-operation and maintenance expenses | [removed: |] [added: 29] | [removed: 30] | | | [added: 30] | [removed: 35] | | | [added: 35] | [removed: 39] | |

| Adjusted [removed: regulated] operation and maintenance [removed: expenses (a) |] [added: expenses—Regulated Businesses (i)] | $ | [removed: 959] [added: 956] | | | $ | [removed: 943] [added: 959] | | | $ | 943 | |

| Total operating revenues | [removed: |] $ | [removed: 3,302] [added: 3,357] | | | $ | [removed: 3,159] [added: 3,302] | | | $ | [removed: 3,011] [added: 3,159] | |

| Operating revenues—Market-Based Businesses | [removed: |] [added: 422] | [removed: 451] | | | [added: 451] | [removed: 434] | | | [added: 434] | [removed: 355] | |

| Operating revenues—Other | [removed: |] [added: (23] | [removed: (20] | ) | | [added: (20] | [removed: (18] | ) | | [removed: |] (18 | [added: |] ) |

| Total [removed: regulated] operating [removed: revenues |] [added: revenues—Regulated Businesses] | [added: 2,958] | [removed: 2,871] | | | [added: 2,871] | [removed: 2,743] | | | [added: 2,743] | [removed: 2,674] | |

| Regulated purchased water [removed: revenues* |] [added: revenues (b)] | [added: 128] | [removed: 122] | | | [added: 122] | [removed: 117] | | | [added: 117] | [removed: 122] | |

| [removed: Add: |] [added: Add (less):] | | | | | | | | | | | |

| Adjusted [removed: regulated] operating [removed: revenues (b) |] [added: revenues—Regulated Businesses (ii)] | $ | [removed: 2,749] [added: 2,830] | | | $ | [removed: 2,626] [added: 2,749] | | | $ | [removed: 2,570] [added: 2,626] | |

| Adjusted O&M efficiency [removed: ratio (a)/(b) |] [added: ratio—Regulated Businesses (i) / (ii)] | [added: 33.8] | [removed: 34.9] | % | | [added: 34.9] | [removed: 35.9] | % | | [added: 35.9] | [removed: 36.7] | % |

| [removed: | *] [added: (b)] | [removed: Note] [added: The] calculation assumes [added: regulated] purchased water revenues approximate [added: regulated] purchased water expenses. |

We also operate market-based businesses within four operating segments, providing a broad range of related and complementary water and wastewater services to military bases, municipalities, oil and gas exploration and production companies, as well as commercial, industrial and residential customers.

| Net income attributable to common stockholders | $ | 2.38 | | | $ | 2.62 | | | $ | 2.64 | |

| Non-GAAP adjustments: | | | | | | | | | | | |

| Impact of Freedom Industries settlement activities | (0.12 | | ) | | 0.36 | | | | — | | |

| Net non-GAAP adjustment | (0.07 | | ) | | 0.22 | | | | — | | |

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| Early extinguishment of debt at the parent company | 0.03 | | | | — | | | | — | | |

| Income tax impact | (0.01 | | ) | | — | | | | — | | |

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| Impact of re-measurement from the Tax Cuts and Jobs Act | 0.70 | | | | — | | | | — | | |

| Total net non-GAAP adjustments | 0.65 | | | | 0.22 | | | | — | | |

Included in the 2017 amount was: (i) an after-tax benefit of $13 million, or $0.07 per diluted share, resulting from an insurance settlement with one of our general liability insurance carriers related to the Freedom Industries chemical spill; (ii) an after-tax charge of $4 million, or $(0.02) per diluted share, resulting from the early extinguishment of debt at the parent company; and (iii) a non-cash, after-tax re-measurement charge of $125 million, or $0.70 per diluted share, resulting from the impact of the change in the federal tax rate on the Company’s deferred income taxes from the enactment of the TCJA on December 22, 2017.

For additional information, see Item 3—Legal Proceedings—West Virginia Elk River Freedom Industries Chemical Spill.

Excluding these items, adjusted diluted earnings per share (a non-GAAP measure) was $3.03 for the year ended December 31, 2017, an increase of $0.19 per diluted share, or 6.7%, as compared to the prior year.

This increase was primarily due to continued growth in our Regulated Businesses, largely driven by infrastructure investment, acquisitions and organic growth, combined with growth in our Market-Based Businesses from our Homeowner Services Group and Keystone.

These increases were partially offset by lower water services demand in 2017 in our Regulated Businesses, attributable in part to overall warmer weather in 2016, as well as lower capital upgrades in our Military Services Group.

Adjusted diluted earnings per share represents a non-GAAP financial measure and means diluted earnings per share, calculated in accordance with GAAP, excluding the impact of: (i) the third quarter of 2017 insurance settlement related to the Freedom Industries chemical spill; (ii) the early extinguishment of debt at the parent company in the third quarter of 2017; (iii) the non-cash, after-tax re-measurement charge in the fourth quarter of 2017 resulting from the impact of the change in the federal tax rate on the Company’s deferred income taxes from enactment of the TCJA; and (iv) the fourth quarter of 2016 binding global agreement in principle to settle claims related to the Freedom Industries chemical spill.

Although management uses this non-GAAP financial measure internally to evaluate our results of operations, we do not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider them as indicators of performance.

Our strategy, which is driven by our vision and core values, will continue to be anchored on our five central themes:

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| • | Customer—Our customers are at the center of everything we do. We want to be the best, and if our customers have a choice as to who serves them, we want it to be us. |

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| • | In 2017, we: |

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| • | Looking forward, we will: |

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| • | target the achievement of customer satisfaction and service quality targets in the top quartile of service industries, beyond the water and wastewater industry. We have a three year plan to enhance technology and innovation in our customer experience through: (i) leveraging secure artificial intelligence to better serve our customers; (ii) using on-line customer communities for immediate input and reactions before rolling out programs; and (iii) mapping our most frequent customer interactions and re-working our internal processes to how the customer wants services; and |

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Certain federal and state governments also regulate environmental, health and safety, and water quality matters.

Our Regulated Businesses provide services in 16 states and serve approximately 3.3 million customers based on the number of active service connections to our water and wastewater networks.

For 2016, our focus was anchored on five central strategic themes:

| | • | Customer – One of our core values is putting our customers at the center of everything we do. |

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| | • | Our drinking water system quality was 21 times better than the industry average. |

| | • | Safety – The health and safety of our employees, customers and the public is both a strategy and a value. |

| | • | In 2016, our focus continued on putting safety first. We finished 2016 with fewer employee injuries than in the prior year, we enhanced accident prevention and risk mitigation through our “near miss” reporting program and we achieved a stronger safety culture as measured by employee responses in the Company’s culture survey. Our safety council, consisting of management and labor employees from across the Company, continued their mission of developing and implementing recommendations to reinforce the Company’s commitment to safety. In addition, we hold our vendors accountable to the same safety standards as our Company. |

| | • | People – Our employees and culture are paramount to our success. |

| | • | In 2016, we continued to demonstrate our commitment to employees by providing safety and technical training throughout the Company and expanding training and development offerings for supervisors and individual employees. We enhanced and developed robust succession plans for key leadership roles across the company and we continued to provide competitive compensation and benefits to retain and attract a highly skilled and diverse workforce. |

| | • | $199 million for completed regulated acquisitions, adding approximately 42,000 water and wastewater customers. Included was the purchase of substantially all of the wastewater collection and treatment assets of the Sewer Authority of the City of Scranton by Pennsylvania-American Water Company (“PAWC”) on December 29, 2016. This acquisition alone added approximately 31,000 wastewater customers in the City of Scranton and Dunmore Borough, Pennsylvania. |

| | • | In addition to the acquisitions that closed in 2016 adding approximately 42,000 water and wastewater customers discussed above, we also entered into a number of agreements for which the closing of the transactions remain pending. These pending transactions represent the potential addition of approximately 40,000 new water and wastewater customers. The largest of the pending acquisitions include: |

| | ▪ | Shorelands Water Company, New Jersey: Shorelands currently provides water service to approximately 11,000 customers in Monmouth County, New Jersey. On August 2, 2016, we agreed to acquire all of the capital stock of Shorelands Water Company (“Shorelands”) in exchange for an equivalent value of our common stock. The maximum number of shares of our common stock to be exchanged upon closing of this acquisition will be less than 500,000 and will be based upon the average price of our common stock. The closing of this acquisition is subject to the satisfaction of various conditions and compliance by the parties with certain covenants, including obtaining the approval of the New Jersey Board of Public Utilities. The Company is seeking to close the acquisition in the first half of 2017. |

| | ▪ | Municipal Authority of the City of McKeesport, Pennsylvania: The system currently represents approximately 22,000 wastewater customers. On September 9, 2016, PAWC signed an asset purchase agreement to acquire substantially all of the wastewater collection and treatment system assets of the Municipal Authority of the City of McKeesport, Pennsylvania for approximately $156 million, subject to certain adjustments provided in the agreement. In connection with the execution of this agreement, a $5 million non-escrowed deposit was also paid. The closing of this acquisition is subject to the satisfaction of various conditions and covenants, including obtaining the approval of the Pennsylvania Public Utility Commission. We are seeking to close this acquisition in the second half of 2017. |

| | • | Technology and Operational Efficiency – We drove continued cost savings into our businesses. |

| | • | Our Regulated Businesses achieved an adjusted O&M efficiency ratio (a non-GAAP measure) of 34.9% in 2016; |

The improvement in the 2016 adjusted O&M efficiency ratio over the 2015 ratio was primarily attributable to an increase in revenue.

The improvement in the 2015 adjusted O&M efficiency ratio over the 2014 ratio was attributable to both an increase in revenue and decreases in O&M expenses.

Also, for the year ended December 31, 2014, we have also excluded from operating revenues and O&M expenses the estimated impact to revenue and O&M attributable to changes in consumption as a result of abnormal weather and the costs associated with the Freedom Industries chemical spill, as applicable.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Impact of Freedom Industries chemical spill in West Virginia | | — | | | | — | | | | | 10 | |

| Impact of binding global agreement in principle | | | 65 | | | — | | | | — | | |

| Estimated impact of weather | | — | | | | — | | | | | (2 | ) |

| Impact of Freedom Industries chemical spill in West Virginia | | — | | | | — | | | | | 1 | |

| Estimated impact of weather | | — | | | | — | | | | | 17 | |

| | • | We implemented an enterprise resource planning system in our Market-Based Businesses to integrate and enhance operations, customer service and support services; and |

| | • | We initiated a strategic technology program designed to leverage technological advancements to enhance customer experience, drive operational efficiency, provide data integration and analytics, and enhance security. In addition, we implemented improved technology tools to enhance communication, collaboration and mobility, including a new comprehensive technology roadmap that will help our operations and support employees in providing even better customer experiences in the future. |

| Income from continuing operations | | $ | 2.62 | | | $ | 2.64 | | | $ | 2.39 | |

| Loss from discontinued operations, net of tax (a) | | | — | | | | — | | | | (0.04 | ) |

| Impact of the binding global agreement in principle (b) | | | 0.36 | | | | — | | | | — | |

| Adjusted diluted earnings per share | | $ | 2.84 | | | $ | 2.64 | | | $ | 2.35 | |

| | (a) | Discontinued operations represents the 2014 sale of our Terratec line of business, which was part of our Market-Based Businesses. The loss from discontinued operations, net of tax, reflected in the 2014 financial results includes the loss on the sale, an income tax valuation allowance and the 2014 operating results of the entity prior to the sale. See Note 3—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for further details on our discontinued operations. |

| | (b) | See Item 3—Legal Proceedings and Note 15—Commitments and Contingencies in the Notes to Consolidated Financial Statements included in Item 8—Consolidated Financial Statements in this Form 10-K. |

Excluding this charge, income from continuing operations increased $0.20 per diluted share, or approximately 7.6%.

This increase was mainly due to continued strong growth in our Regulated Businesses.

We believe this non-GAAP measure will allow for better evaluation of the operating performance of the business and facilitate a meaningful comparison of our results in the current year to those in prior years.

The table below provides rate authorizations effective from 2014 through 2016.

| Indiana (a) | $ | 2 | | | $ | 5 | | | $ | — | |

| Missouri (c) | | 5 | | | | — | | | | — | |

| Kentucky (d) | | 7 | | | | — | | | | — | |

As of December 31, [removed: 2016,] [added: 2017,] a hypothetical increase of interest rates by 1% associated with our short-term borrowings would result in [removed: a $9] [added: an $8] million increase in short-term interest expense.

The Company has [removed: four] [added: two] forward starting swap agreements with an aggregate notional amount of [removed: $300] [added: $200] million to reduce interest rate exposure on debt expected to be issued in [removed: 2017.][added: 2018.]

The forward starting swap agreements terminate in [removed: December 2017] [added: November 2018] and have an average fixed rate of [removed: 2.20%.][added: 2.59%.]

The fair value of the forward starting swaps at December 31, [removed: 2016] [added: 2017] was [removed: $27] [added: in a loss position of $3] million.

A hypothetical [removed: 1.00%] [added: 1%] adverse change in interest rates would result in a decrease in the fair value of our forward starting swaps of approximately [removed: $65] [added: $32] million at December 31, [removed: 2016.][added: 2017.]

Changes to the retirement trust asset [removed: value] [added: values] can impact the Company’s pension and other benefits expense, funded status and future minimum funding requirements.

[removed: Our] [added: We also expect our] risk [removed: is] [added: to be] reduced through our ability to recover pension and other benefit costs through rates.

In addition, [removed: as a result of the downturn in the economy and heightened sensitivity of the impact of additional rate increases on certain customers,] there can be no assurances that regulators will grant sufficient rate authorizations.

Changes in interest rates can impact retirement liabilities.

We aim to reduce risk through asset diversification and by investing in long duration fixed-income securities that have a duration similar to that of our pension liabilities, seeking to hedge some of the interest rate sensitivity of our liabilities.

That way, if interest rates fall and liabilities increase, we expect that the fixed-income assets in our retirement trust will also increase in value.

| | |

In July 2010, we entered into an interest rate swap agreement with a notional amount of $100 million.

This agreement effectively converted the interest on $100 million of outstanding 6.085% fixed rate debt maturing 2017 to a variable rate of six-month LIBOR plus 3.422%.

We entered into this interest rate swap to mitigate interest cost at the parent company relating to debt that was incurred by our prior owners and was not used in any manner to finance the cash needs of our subsidiaries.

The interest rate swap reduced interest expense by $2 million for the years ended December 31, 2016, 2015 and 2014.

As the swap interest rates are fixed through April 2017, a hypothetical 1% increase in the interest rates associated with the interest rate swap agreement would result in a $1 million increase in interest expense for the year ended December 31, 2016.

This calculation holds all other variables constant and assumes only the discussed changes in interest rates.

In addition, pension and other benefits liabilities decrease as fixed income asset values decrease (fixed income yields rise) since the rate at which we discount pension and other retirement trust asset future obligations is highly correlated to fixed income yields.

[removed: Through its subsidiaries,] [added: With a history dating back to 1886,] American Water is the largest and most geographically [removed: diverse investor-owned] [added: diverse,] publicly-traded water and wastewater utility company in the United States, as measured by both operating revenues and population served.

We also operate several market-based businesses that provide a broad range of related and complementary water and wastewater [removed: services.][added: services within four operating segments that individually do not meet the criteria of a reportable segment in accordance with generally accepted accounting principles in the United States (“GAAP”).]

[removed: We] [added: A holding company originally incorporated in Delaware in 1936, we] employ approximately [removed: 6,800] [added: 6,900] professionals who provide drinking water, wastewater and other related services to an estimated 15 million people in [removed: 47] [added: 46] states, the District of Columbia and Ontario, Canada.

Throughout this Annual Report on Form [removed: 10-K,] [added: 10-K (this “Form 10-K”),] unless the context otherwise requires, references to “we,” “us,” “our,” the “Company,” and “American Water” mean American Water Works Company, Inc. and its subsidiaries, taken together as a whole.

The largest component of the Company’s business includes rate regulated subsidiaries that provide water and wastewater [removed: services to customers in 16 states,] [added: services,] collectively presented as our “Regulated [removed: Businesses”.][added: Businesses.” We conduct the majority of our business through the Regulated Businesses segment.]

These [removed: four] [added: four,] non-reportable operating segments are collectively presented as our “Market-Based Businesses,” which is consistent with how management assesses the results of these businesses.

[removed: Additional information can be found in] [added: See] Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 19—Segment Information in the Notes to Consolidated Financial [removed: Statements.][added: Statements for additional information.]

Our primary business involves the ownership of utilities that provide water and wastewater services to residential, commercial, [removed: industrial] [added: industrial, public authority, fire service] and [removed: other customers, including] sale for resale [removed: and public authority] customers.

[removed: Our Regulated Businesses that provide these services operate in approximately 1,600 communities in 16 states in the United States and] [added: Services provided by our utilities] are generally subject to economic regulation by certain state utility commissions or other entities engaged in utility regulation, [added: collectively] referred to as Public Utility Commissions [removed: (“PUCs”).][added: (“PUCs” or “Regulators”).]

Certain [removed: federal and] [added: federal,] state [added: and local] governments also regulate environmental, health and safety, and water quality matters.

[removed: Our] [added: Operating revenues for our] Regulated Businesses [removed: segment’s operating revenues] were [removed: $2,871] [added: $2,958] million for [removed: 2016, $2,743] [added: 2017, $2,871] million for [removed: 2015] [added: 2016] and [removed: $2,674] [added: $2,743] million for [removed: 2014,] [added: 2015,] accounting for [removed: 86.9%, 86.8%] [added: 88%, 87%] and [removed: 88.8%,] [added: 87%,] respectively, of [added: the Company’s] total operating revenues for the same periods.

The following table [added: geographically] summarizes our Regulated Businesses’ operating [removed: revenues,] [added: revenues and the] number of customers [removed: and estimated population served] [added: we serve] by [removed: state,] [added: type of service,] each as of and for the year ended December 31, [removed: 2016:][added: 2017:]

| | Operating Revenues (In millions) | | | | [removed: % of Total] | | | | [removed: Number of Customers (In thousands)] | | | | [removed: %] [added: | | | Number] of [removed: Total] [added: Customers (In thousands)] | | | | [removed: Estimated Population Served (In millions)] | | | | [removed: % of Total] | | |

| [removed: | (a)] [added: (c)] | Includes [removed: data from] our utilities in the following states: Georgia, Hawaii, Iowa, Kentucky, Maryland, Michigan, New York, Tennessee and Virginia. |

Typically, we do not own the water itself, which is held in public trust and is allocated to us through [removed: contracts] [added: contracts, permits] and allocation rights granted by federal and state agencies or through the ownership of water rights pursuant to local law.

We are dependent on defined sources of water supply and obtain our water supply from surface water sources such as reservoirs, lakes, rivers and streams; from [removed: ground water] [added: groundwater] sources, such as wells and aquifers; and water purchased from third party water suppliers.

The following chart depicts [removed: the] [added: our] sources of water supply as of December 31, [removed: 2016:][added: 2017:]

[removed: ][added: ]

The percentages of water supply by source type for our top seven states [removed: based on our Regulated Businesses operating revenues] for [removed: 2016] [added: 2017] were as follows:

| | Surface Water | | [removed: | |] Ground Water | | [removed: | |] Purchased Water | [removed: | |]

| New Jersey | [removed: | 72 | % | | | 23 | %] [added: 72%] | | [added: 24%] | [removed: 5] | [removed: %] [added: 4%] |

| Pennsylvania | [removed: | 91 | % | | | 7 | %] [added: 91%] | | [added: 7%] | [removed: 2] | [removed: %] [added: 2%] |

| West Virginia | [removed: | 99 | %] [added: 100%] | | — | | [removed: | | | 1 | %] [added: —] |

Drought, governmental restrictions, overuse of sources of water, the protection of threatened species or habitats, [removed: contamination,] [added: contamination] or other factors may limit the availability of ground and surface water.

The geographic diversity of our service areas may mitigate some of the economic [removed: effect] [added: effects] on the water supply associated with weather extremes we might encounter in any particular service territory.

In order to ensure that we have adequate water supply, we use long-term planning processes and maintain contingency plans to minimize the potential impact on service [removed: through] [added: caused by climate variability and] a wide range of weather fluctuations.

The Water Supply Project includes the construction of a desalination plant, owned by California-American Water [removed: Company,] [added: Company (“Cal Am”),] our wholly owned [removed: subsidiary (“Cal Am”), which includes] [added: subsidiary, and] the construction of wells that would supply water to the desalination plant.

[added: In] addition, the Water Supply Project also includes Cal Am’s purchase of water from a groundwater replenishment project [removed: (the “GWR Project”)] between the Monterey Regional Water Pollution Control Agency [removed: (“MRWPCA”)] and the Monterey Peninsula Water Management District [removed: (“MPWMD”).][added: (the “MPWMD”).]

Economic Regulation and Rate Making [removed: Process]

The operations of our Regulated Businesses are generally subject to [added: economic] regulation [removed: and oversight] by [removed: their respective] [added: PUCs in the] state [removed: PUCs,] [added: in which they operate,] with the primary responsibility of the PUCs to promote the overall public interest by balancing the interest of customers and utility investors.

The timing of rate case filings is typically determined by either periodic requirements in the regulatory jurisdiction or by the utility’s need to increase its revenue [removed: requirement] to recover capital investment costs, changes in operating revenues, operating costs or other market conditions.

| Infrastructure replacement surcharges | | Allows rates to change periodically, outside a general rate proceeding, to reflect recovery of investments made to replace infrastructure necessary to sustain safe, reliable [removed: and affordable] services for our [removed: customer.] [added: customers.] These mechanisms typically involve [removed: an upfront review of overall multi-year investment plans as well as] periodic filings and [removed: reviews] [added: reviews,] to ensure transparency. | | [added: IA,] IL, IN, MO, NJ, NY, PA, TN, [added: VA,] WV |

| Future test year | | A test period used for setting rates, that begins with the date new rates are effective. This allows current or projected revenues, expenses and investments to be collected on a [removed: more timely] [added: timelier] basis. | | CA, HI, IL, IN, KY, NY, PA, TN, VA |

| Utility plant recovery mechanisms | | Allows recovery of the full return on utility plant costs during the construction period, instead of capitalizing an allowance for funds used during construction. In addition, some [removed: states, such as Indiana,] [added: states] allow the utility to seek pre-approval of certain capital projects and associated costs. In this pre-approval process, the PUC may assess the prudency of such projects. | | CA, IL, KY, [removed: NY] [added: NY,] PA, TN, VA |

| Revenue stability mechanisms | | Separates a water [removed: utility's] [added: utility’s] cost recovery from the amount of water it sells to recover its fixed costs and on-going infrastructure investment needs. Such a mechanism adjusts rates periodically to ensure that a [removed: utility's] [added: utility’s] revenue will be sufficient to cover its costs regardless of sales volume, [added: including recognition of declining sales resulting from reduced consumption,] while providing an incentive for customers to use water more efficiently. | | CA, IL, NY |

| Consolidated tariffs | | Use of a unified rate structure for [removed: multiple] water systems owned and operated by a single utility, which may or may not be physically interconnected. The consolidated tariff pricing structure may be used fully or partially in a state and is generally used to [added: prioritize capital investments and] moderate the impact of periodic fluctuations in local costs while lowering administrative costs for customers. Pennsylvania also permits a blending of water and wastewater [removed: rate structures.] [added: revenue requirements.] | | IA, IL, IN, KY, MD, MO, NJ, PA, [added: VA,] WV |

We pursue or seek enhancement to these regulatory practices to facilitate efficient recovery of our costs and [removed: investments,] [added: investments] in order to [added: continue to] provide safe, reliable and affordable services to our customers.

We also support [added: full optionality for municipalities, including] state legislation that enables the consolidation of the largely fragmented water and wastewater [removed: industries.][added: industries through fair market valuations of purchased property and the consolidation of water and wastewater rates.]

A customer is [added: defined as] a person, [removed: corporation,] [added: business,] municipality or any other entity that purchases our water or wastewater services as of the last business day of a reporting period.

[removed: Also, a] [added: One] single customer may purchase our services for use by multiple individuals or [removed: businesses in] [added: businesses, as is] the case [removed: of] [added: in] many homes, apartment complexes, businesses and governmental entities.

References to “parent company” mean American Water Works Company, Inc., without its subsidiaries.

Our utilities operate in approximately 1,600 communities in 16 states in the United States, with approximately 3.4 million active customer connections to our water and wastewater networks.

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | Water (a) | | | | Wastewater | | | | Total | | | | % of Total | | | Water | | | Wastewater | | | Total | | | % of Total | |

| New Jersey | $ | 698 | | | $ | 41 | | | $ | 739 | | | 25.0 | % | | 639 | | | 48 | | | 687 | | | 20.5 | % |

| Pennsylvania | 617 | | | | 44 | | | | 661 | | | | 22.3 | % | | 658 | | | 64 | | | 722 | | | 21.5 | % |

| Illinois | 284 | | | | 20 | | | | 304 | | | | 10.3 | % | | 284 | | | 33 | | | 317 | | | 9.5 | % |

| Missouri | 280 | | | | 9 | | | | 289 | | | | 9.8 | % | | 466 | | | 13 | | | 479 | | | 14.3 | % |

| Indiana | 222 | | | | — | | | | 222 | | | | 7.5 | % | | 302 | | | — | | | 302 | | | 9.0 | % |

| California | 219 | | | | 3 | | | | 222 | | | | 7.5 | % | | 175 | | | 3 | | | 178 | | | 5.3 | % |

| West Virginia | 143 | | | | 1 | | | | 144 | | | | 4.9 | % | | 166 | | | 1 | | | 167 | | | 5.0 | % |

| Total - Top Seven States (b) | 2,463 | | | | 118 | | | | 2,581 | | | | 87.3 | % | | 2,690 | | | 162 | | | 2,852 | | | 85.1 | % |

| Other states (c) | 353 | | | | 24 | | | | 377 | | | | 12.7 | % | | 470 | | | 31 | | | 501 | | | 14.9 | % |

| Total Regulated Businesses | $ | 2,816 | | | $ | 142 | | | $ | 2,958 | | | 100.0 | % | | 3,160 | | | 193 | | | 3,353 | | | 100.0 | % |

| | |

| (a) | Includes Other operating revenues, consisting primarily of fees, miscellaneous service charges and rents. |

| | |

| --- | --- |

| (b) | Our “Top Seven States” are determined based upon operating revenues. |

| | |

| --- | --- |

The following chart depicts the allocation of our Regulated Businesses’ operating revenue by type, including a breakout of the total water services revenues by class of customer, for the year ended December 31, 2017:

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

| (a) | In 2017, we acquired substantially all of the wastewater collection and treatment system assets of the Municipal Authority of the City of McKeesport, Pennsylvania (the “McKeesport system”). This acquisition included approximately 22,000 customer equivalents in total; comprised of 11,000 customer connections, which are reflected in the 2017 residential customer count in the table above, as well as service to an additional 11,000 customers under bulk contracts to 13 municipalities in Allegheny County, Pennsylvania. |

Customer growth in our Regulated Businesses is primarily driven by: (i) adding new customers to our customer base through acquisitions of water and/or wastewater utility systems; (ii) organic population growth (or decline) in our authorized service areas; and (iii) sale of water to other water utilities and community water systems.

Capital Investment

On an annual basis, approximately 2 trillion gallons of treated water are lost in the United States through more than 240,000 main breaks at an estimated cost of $2.6 billion.

This represents approximately 20% of all treated water in the country.

In addition, every year approximately 900 billion gallons of untreated sewage is discharged into the country’s rivers and streams.

As documented in the American Water Works Association’s (the “AWWA”) Buried No Longer: Confronting America’s Water Infrastructure Challenge, restoring the country’s existing water systems as they reach the end of their useful lives and expanding them to serve a growing population will cost at least $1 trillion between 2011 and 2035, if we are to maintain current levels of water service.

To address the growing infrastructure needs in the areas we serve, we plan to invest $7.2 billion over the next five years, including a range of $1.4 billion to $1.5 billion in 2018, for capital improvements to our Regulated Businesses’ water and wastewater infrastructure, largely aimed for pipe replacement and upgrading aging water and wastewater treatment facilities.

We have proactively doubled our pipe renewal rate over a five year period, from 2011 to 2016, from a 250 year replacement cycle to a 120 year replacement cycle, which we anticipate will enable us to replace nearly 2,000 miles of mains and collection pipes over the next five years.

In addition, during this same five year period, capital investment in treatment plants, storage tanks and other key, above-ground facilities has increased over 10%, further addressing aging infrastructure and emerging regulatory compliance needs.

The program attempts to minimize “regulatory lag,” the time between the occurrence of an event that triggers a change in the utility’s revenue requirement and its recognition in rates.

With a history dating back to 1886, American Water Works Company, Inc. is a holding company originally incorporated in Delaware in 1936.

Operating Segments

We conduct the majority of our business through the Regulated Businesses segment.

We also operate market-based businesses within four operating segments that individually do not meet the criteria of a reportable segment in accordance with generally accepted accounting principles in the United States (“GAAP”).

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| New Jersey | $ | 730 | | | | 25.4 | % | | | 671 | | | | 20.3 | % | | | 2.7 | | | | 22.1 | % |

| Pennsylvania | | 639 | | | | 22.3 | % | | | 709 | | | | 21.4 | % | | | 2.3 | | | | 18.8 | % |

| Missouri | | 288 | | | | 10.0 | % | | | 476 | | | | 14.4 | % | | | 1.5 | | | | 12.3 | % |

| Illinois | | 275 | | | | 9.6 | % | | | 315 | | | | 9.5 | % | | | 1.3 | | | | 10.7 | % |

| Indiana | | 212 | | | | 7.4 | % | | | 300 | | | | 9.1 | % | | | 1.3 | | | | 10.7 | % |

| California | | 211 | | | | 7.4 | % | | | 176 | | | | 5.3 | % | | | 0.7 | | | | 5.7 | % |

| West Virginia | | 142 | | | | 4.9 | % | | | 169 | | | | 5.1 | % | | | 0.5 | | | | 4.1 | % |

| Subtotal (Top Seven States) | | 2,497 | | | | 87.0 | % | | | 2,816 | | | | 85.0 | % | | | 10.3 | | | | 84.4 | % |

| Other (a) | | 374 | | | | 13.0 | % | | | 496 | | | | 15.0 | % | | | 1.9 | | | | 15.6 | % |

| Total Regulated Businesses | $ | 2,871 | | | | 100.0 | % | | | 3,312 | | | | 100.0 | % | | | 12.2 | | | | 100.0 | % |

| --- | --- | --- |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Missouri | | 80 | % | | | 19 | % | | | 1 | % |

| Illinois | | 53 | % | | | 36 | % | | | 11 | % |

| Indiana | | 44 | % | | | 55 | % | | | 1 | % |

| California | — | | | | | 66 | % | | | 34 | % |

In

The program attempts to minimize the delay, or “regulatory lag” between the time our Regulated Businesses make a capital investment or incur an operating expense increase, and the time when those costs are reflected in rates.

The management team at each of our utilities accounts for the time required for the regulatory process, and files rate cases with the goal of obtaining rates that reflect as closely as possible the cost of providing service at the time the rates become effective.

Legislation in certain states has generally enabled sales between interested parties, has allowed a reasonable market valuation of purchased property, and has enabled consolidation of water and wastewater rates.

In 2016, residential customers accounted for 91.1% of our customer base, 59.0% of the billed water sales and 55.5% of the operating revenues of our Regulated Businesses.

The majority of new meters are able to support future advances in electronic meter reading.

Customer growth in our Regulated Businesses is primarily driven by the following factors:

| | • | adding new customers to our regulated customer base by acquiring water and/or wastewater utility systems; |

| | • | organic population growth or decline in our authorized service areas; and |

| | • | the sale of water to other community water systems. |

Pursuing tuck-ins has been and continues to be a fundamental part of our growth strategy.

However, varying summer weather conditions can impact our third quarter financial results.

Summer weather that is hotter and drier than average generally increases operating revenues and operating income.

All or portions of our regulated subsidiaries’ utility assets could be acquired by state, municipal or other government entities through one or more of the following methods:

| | • | the right of purchase given or reserved by a municipality or political subdivision when the original certificate of public convenience and necessity was granted; and |

| | • | the right of purchase given or reserved under the law of the state in which the utility subsidiary was incorporated or from which it received its certificate. |

We actively monitor condemnation activities that may affect us as developments occur.

We do not believe that condemnation poses a material threat to our ability to operate our Regulated Businesses, either individually or taken as a whole.

Construction of new assets are funded by the U.S. DoD as additional work under the contract.

[removed: On] [added: In] July [removed: 19,] 2016, at the request of Cal Am and several Monterey County government agencies, the SWRCB issued [removed: an order (the “2016 Order”)] [added: the 2016 Order] approving a five-year extension of the deadline to comply with the 2009 Order, to December 31, 2021.

[removed: On] [added: In] November [removed: 29,] 2016, the Water Ratepayers Association of the Monterey Peninsula, a citizens’ advocacy group, filed an action in Sacramento County Superior Court against the SWRCB and its board members, and naming Cal Am as the real party in interest, seeking to reverse the extension of the 2009 Order, to rescind the designation by the California Public Utilities Commission (the “CPUC”) of Cal Am as the public utility water provider to the Monterey Peninsula, and to appoint a receiver to oversee Cal Am’s compliance with the 2009 Order, with ultimate transfer to a public entity.

This [removed: lawsuit] [added: motion] is pending.

In December 2010, the CPUC approved the RDP, which was to be implemented through a Water Purchase Agreement and ancillary agreements (collectively, the “Agreements”) among the Marina Coast Water District (“MCWD”), the [removed: MCWRA] [added: Monterey County Water Resources Agency (“MCWRA”)] and Cal Am.

In 2011, due to a conflict of interest concerning a former member of [removed: the] MCWRA’s Board of Directors, MCWRA stated that the Agreements were void, and, as a result, Cal Am terminated the Agreements.

[removed: On] [added: In] March [removed: 23,] 2016, the Supreme Court of California granted MCWD’s petition for review of the CPUC [removed: approval.][added: approval, and following the court’s disposition of a related issue in another case, MCWD’s petition for review of the CPUC-approved settlement agreement was remanded to the CPUC, and remains pending.]

In October 2012, Cal Am filed a Complaint for Declaratory Relief against MCWRA and [removed: MCWD] [added: MCWD,] which was ultimately transferred to the San Francisco County Superior Court, seeking a determination as to whether the Agreements are void as a result of the alleged conflict of interest.

[removed: On] [added: In] November [removed: 10,] 2016, the Supreme Court of California denied MCWD’s final appeal of this judgment, which allows further proceedings to determine the amount of damages that may be awarded in the proceeding.

In July 2015, Cal Am and MCWRA filed a Complaint in San Francisco County Superior Court against MCWD and RMC Water and [removed: Environment,] [added: Environment (“RMC”),] a private engineering consulting [removed: firm (“RMC”),] [added: firm,] seeking to recover compensatory damages in excess of $10 million associated with the failure of the RDP, as well as punitive and treble damages, statutory penalties and attorneys’ fees.

In December 2015, the court consolidated all of these complaints into a single action, [removed: which remains pending.][added: and trial in this matter has been scheduled for June 18, 2018.]

The Water Supply Project is intended to reduce water diversions from the Carmel River and involves construction of a desalination plant, owned by Cal Am, and purchase of water by Cal Am from [added: a groundwater replenishment project (the “GWR Project”) between] the [removed: GWR Project.][added: Monterey Regional Water Pollution Control Agency and the MPWMD.]

In November 2014, the California Coastal Commission (the “Coastal Commission”) approved coastal development permits for the test slant well, enabling Cal Am to construct [removed: the portion that will be under state lands (beneath] [added: and operate] the [removed: ocean floor).][added: test slant well.]

[removed: On] [added: In] September [removed: 15,] 2016, the court denied MCWD’s petition with respect to all claims, except claims related to those raised in the December 2014 petitions discussed above.

Based on the foregoing, Cal Am estimates that the earliest date by which the Water Supply Project desalination plant could be completed is sometime in [removed: 2019.][added: 2021.]

On January 9, 2014, a chemical storage tank owned by Freedom Industries, Inc. leaked two substances, 4-methylcyclohexane [removed: methanol, or MCHM,] [added: methanol (“MCHM”),] and PPH/DiPPH, a mix of polyglycol ethers, into the Elk River near the WVAWC treatment plant intake in Charleston, West Virginia.

Following the Freedom Industries chemical spill, numerous lawsuits were filed against WVAWC and certain other Company-affiliated entities (collectively, the “American Water Defendants”) with respect to this matter in the U.S. District Court for the Southern District of West Virginia or West Virginia Circuit Courts in Kanawha, Boone and Putnam counties, and to date, [removed: 73] [added: more than 70] cases remain pending.

[removed: On] [added: In] January [removed: 28,] 2016, all of the then-filed state court cases were referred to West Virginia’s Mass Litigation Panel for further proceedings, which have been stayed [added: until April 22, 2018] pending the [removed: negotiation by the parties and] approval by the court in the Federal action of a global agreement to settle all of such cases, as described below.

[removed: On] [added: In] October [removed: 31,] 2016, the court in the Federal action approved the preliminary [removed: binding] principles, terms and conditions of [removed: the Settlement] [added: a binding global agreement in principle to settle claims] among the American Water Defendants, and all class members, putative class members, claimants and potential [removed: claimants (collectively, the “Plaintiffs”),] [added: claimants,] arising out of the Freedom Industries chemical spill.

The [removed: terms of the] Settlement [removed: propose] [added: proposes] a global [removed: federal and state] resolution of all [added: federal and state] litigation and potential claims against the American Water Defendants and their insurers.

[removed: A claimant may] [added: Under federal class action rules, claimants had the right, until December 8, 2017, to] elect to opt out of [removed: any] [added: the] final [removed: settlement agreement,] [added: Settlement,] in which case such claimant [removed: will] [added: would] not receive any benefit from or be bound by the terms of the Settlement.

Under the terms and conditions of the Settlement and [removed: any subsequent final] [added: the proposed amended] settlement agreement, the American Water Defendants have not admitted, and will not admit, any fault or liability for any of the allegations made by the Plaintiffs in any of the actions to be resolved.

Two of [removed: these] [added: the Company’s general liability] insurance carriers, which provide an aggregate of $50 million in insurance coverage to the Company under these policies, [removed: were requested, but presently have not agreed,] [added: had been originally requested] to participate in the [removed: Settlement.][added: Settlement at the time of the initial filing of the binding agreement in principle with the court in the Federal action, but did not agree to do so at that time.]

The Company and WVAWC [removed: are] [added: continue to pursue] vigorously [removed: pursuing] their rights to insurance coverage [removed: from these non-participating carriers] for [removed: any] contributions by WVAWC to the [removed: Settlement.][added: Settlement in mandatory arbitration with the remaining non-participating carrier.]

[removed: In this regard,] WVAWC filed a lawsuit against one of these carriers alleging that the carrier’s failure to agree to participate in the Settlement [removed: constitutes] [added: constituted] a breach of [removed: contract, and the Company is pursuing mandatory arbitration against the other non-participating carrier.][added: contract.]

Despite these efforts, the Company may not ultimately be successful in obtaining full or further reimbursement under [removed: these] [added: this] insurance [removed: policies] [added: policy] for amounts that WVAWC may be required to contribute to the Settlement.

The [removed: preliminary terms of the] [added: proposed] Settlement [removed: intend to] [added: would] establish a two-tier settlement fund for the payment of claims, comprised of (i) a simple claim fund, which is also referred to as the “guaranteed fund,” of $76 million, of which [removed: $51] [added: $29] million will be contributed by WVAWC, including insurance deductibles, and [removed: $25] [added: $47] million would be contributed by [removed: one] [added: two] of the Company’s general liability insurance carriers, and (ii) an individual review claim fund of up to $50 million, of which up to $14 million would be contributed by WVAWC and [added: up to] $36 million would be contributed by a number of the Company’s general liability insurance carriers.

As a result of these events, [added: in] the [added: third quarter of 2016, the] Company recorded a charge to earnings, net of insurance receivables, of $65 million ($39 million [removed: after-tax) in the third quarter of 2016.][added: after-tax).]

Furthermore, under the terms of the Settlement, WVAWC has agreed that it will not seek rate recovery from the [removed: Public Service Commission of West Virginia] [added: PSC] for approximately $4 million in direct response costs expensed in 2014 by WVAWC relating to the Freedom Industries chemical spill as well as for amounts paid by WVAWC under the Settlement.

The $36 million to be contributed by a number of the Company’s general liability insurance carriers to the individual review claim fund, as noted above, is from higher layers of the insurance structure than the [removed: two] insurance [removed: carriers] [added: carrier] that [removed: were] [added: was] requested, but presently [removed: have] [added: has] not agreed, to participate in the Settlement.

Any recovery by WVAWC or the Company from the [added: remaining] non-participating [removed: carriers] [added: carrier] would reimburse WVAWC for its contributions to the guaranteed fund.

Following the notice period, [added: on January 9, 2018,] the court in the Federal action [removed: would hold] [added: held] a fairness hearing to consider final approval of the [removed: Settlement.][added: Settlement, which was continued on February 1, 2018 to address certain open matters.]

There can be no assurance that the [removed: court in] [added: Settlement will not be amended further or that] the [removed: Federal action] [added: court] will provide its [added: final] approval as to any agreement negotiated between the parties reflecting the terms of the Settlement.

Nevertheless, WVAWC and the Company are unable to predict the outcome of any lawsuit against the American Water Defendants brought or maintained by a claimant that [removed: elects] [added: has elected] to opt out of the Settlement, and any such outcome or outcomes could have a material adverse effect on the [removed: Company's] [added: Company’s] financial condition, results of operations, cash flows, liquidity and reputation.

Other Related [removed: Investigations][added: Proceedings]

Additionally, investigations [added: were initiated] with respect to the matter [removed: have been initiated] by the U.S. Chemical Safety and Hazard Investigation Board (the “CSB”), the U.S. Attorney’s Office for the Southern District of West Virginia, the West Virginia Attorney General, and the [removed: Public Service Commission of West Virginia (the “PSC”).][added: PSC.]

[removed: On] [added: In] September [removed: 28,] 2016, the CSB issued and adopted its investigation report in which it recommended that the Company conduct additional source water protection activities.

WVAWC and the Company are unable to predict the outcome of the ongoing government investigations or [added: actions or] any legislative initiatives that might affect WVAWC’s water utility operations.

It is possible that some litigation and other proceedings could be decided unfavorably to the Company, and that any such unfavorable decisions could have a material adverse effect on its business, financial condition, results of [removed: operations,] [added: operations] and cash flows.

In May 2017, Cal Am and the SWRCB filed demurrers to the action, and on June 12, 2017, the court entered an order sustaining those demurrers and dismissing the action with prejudice.

On December 21, 2017, RMC filed a Motion for Summary Judgment and a hearing on such motion is scheduled for March 15, 2018.

On December 6, 2017, MCWD filed a Motion for Judgment on the Pleadings and a hearing on such motion took place on February 2, 2018.

On February 5, 2018, the court dismissed Cal Am’s and MCWRA’s tort law claims against MCWD, and allowed Cal Am leave to amend its breach of contract claims against MCWD.

The court’s decision does not impact Cal Am’s and MCWRA’s tort claims against RMC.

Cal Am and MCWRA were given until February 19, 2018 to amend their breach of contract claims.

Cal Am and MCWRA are considering their responses to the order, including an appeal to the California Court of Appeal.

A final report is expected at the end of the first quarter of 2018.

The permits would have expired on February 28, 2018, at which time Cal Am would have been required to decommission the test slant well, but because Cal Am could use the test slant well as one of the slant wells for the Water Supply Project, it sought an amendment of its coastal development permits to allow the test slant well to remain in place and be maintained on site until February 28, 2019.

The Coastal Commission approved the permit amendment on December 13, 2017.

The required lease obtained from the California State Lands Commission (the “State Lands Commission”), as amended, after a two-year extension granted on November 29, 2017, is to expire on December 16, 2019.

On July 13, 2017, the Coastal Commission adopted a consent agreement and cease and desist order requiring sand mining operations on the property on which intake wells will be located to cease by the end of 2020 and the property to be sold to either a non-profit or governmental entity.

The consent agreement strictly limits future use of the property but preserves Cal Am’s existing property rights and allows uses consistent with existing easements and other rights of record.

The CPUC held hearings from October 25 through November 3, 2017 on Cal Am’s request for a certificate of public convenience and necessity for the Water Supply Project.

This request remains pending.

On October 3, 2017, after conducting a trial for all matters raised in MCWD’s November 2015 challenge, other than claims that had been denied by the court in September 2016, the court denied MCWD’s claims with respect to these matters.

On January 12, 2018, MCWD filed a notice of appeal of the court’s judgment.

California Public Utilities Commission Residential Rate Design Proceeding

In December 2016, the CPUC issued a final decision in a proceeding involving Cal Am adopting a new residential rate design for Cal Am’s Monterey District.

The decision allowed for recovery by Cal Am of $32 million in under-collections in the water revenue adjustment mechanism/modified cost balancing account (“WRAM/MCBA”) over a five-year period, plus interest, and modified existing conservation and rationing plans.

In its decision, the CPUC noted concern regarding Cal Am’s residential tariff administration, specifically regarding the lack of verification of customer-provided information about the number of residents per household.

This information was used for generating billing determinants under the tiered rate system.

As a result, the CPUC kept this proceeding open to address several issues, including whether Cal Am’s residential tariff administration violated a statute, rule or CPUC decision, and if so, whether a penalty should be imposed.

On February 24, 2017, Cal Am, the MPWMD, the CPUC’s Office of Ratepayer Advocates, and the Coalition of Peninsula Businesses filed for CPUC approval of a joint settlement agreement (the “Joint Settlement Agreement”), which among other things, proposed to resolve the CPUC’s residential tariff administration concerns by providing for a waiver by Cal Am of $0.5 million of cost recovery for residential customers through the WRAM/MCBA in lieu of a penalty.

Approval of the Joint Settlement Agreement, which is required for it to take effect, remains pending before the CPUC.

On March 28, 2017, the administrative law judge assigned to the proceeding issued a ruling stating there was sufficient evidence to conclude, on a preliminary basis, that Cal Am’s administration of the residential tariff violated certain provisions of the California Public Utilities Code and a CPUC decision.

The ruling ordered Cal Am to show cause why it should not be penalized for these administrative violations and directed the settling parties to address whether the cost recovery waiver in the Joint Settlement Agreement was reasonable compared to a potential penalty range described by the administrative law judge.

During hearings held on April 13-14, 2017, the administrative law judge clarified that this potential penalty range is $3 million to $179 million (calculated as a continuing violation dating back to 2000 and applying penalties of up to $20,000 per day until January 1, 2012 and penalties of up to $50,000 per day thereafter, reflecting a 2012 change to the relevant statute).

The administrative law judge also noted that a per diem penalty may not be appropriate, as Cal Am’s monthly billing practices did not allow Cal Am to update customer-provided information for billing purposes on a daily basis.

Hearings before the administrative law judge in this matter were held in August, September and November 2017.

Cal Am also submitted additional testimony on the issue of whether Cal Am should be penalized, and if so, the reasonable amount of any such penalty.

This proceeding remains pending, and the CPUC has set a statutory deadline of September 30, 2018 for the completion of the proceeding.

The court in the Federal action has continued the start of the trial indefinitely pending ongoing settlement approval activities.

Proposed Global Class Action Settlement

On April 27, 2017, the parties filed with the court in the Federal action a proposed settlement agreement providing details of the terms of the settlement of these matters and requesting that the court in the Federal action grant preliminary approval of such settlement.

On July 6, 2017, the court in the Federal action issued an opinion denying without prejudice the joint motion for preliminary approval of the Settlement.

On August 25, 2017, the parties filed a proposed amended settlement agreement and related materials addressing the matters set forth in the July 6, 2017 order.

On September 21, 2017, the court in the Federal action issued an order granting preliminary approval of a settlement class and proposed class action settlement (the “Settlement”) with respect to claims against the American Water Defendants by all putative class members (collectively, the “Plaintiffs”) for all claims and potential claims arising out of the Freedom Industries chemical spill.

As of January 31, 2018, less than 100 of the 225,000 estimated putative Plaintiffs have submitted opt-out notices.

The deadline to file a claim in the Settlement is February 21, 2018.

Action on the petition has been deferred pending consideration and disposition of a related issue in another case.

On March 17, 2016, the CPUC’s Energy Division issued a notice of further schedule delays for the Water Supply Project’s environmental review, with environmental certification currently scheduled for completion in November 2017.

In January 2015, Cal Am obtained from the California State Lands Commission (the “State Lands Commission”) a required lease as to the state lands.

In October 2015, the Coastal Commission approved an amendment to Cal Am’s coastal development permits.

On July 7, 2016, the court in the Federal action scheduled trial to begin on October 25, 2016, but the court delayed the start of the trial pending ongoing settlement negotiations between the parties and has since granted a continuance of the trial until March 21, 2017.

The Mass Litigation Panel has also stayed its proceedings until May 1, 2017.

WVAWC Binding Global Agreement in Principle to Settle Claims

The proposed aggregate pre-tax amount of the Settlement is $126 million, of which $65 million would be contributed by WVAWC, and the remainder would be contributed by certain of the Company’s general liability insurance carriers.

The Company has general liability insurance under a series of policies underwritten by a number of individual carriers.

Following the court’s October 31 approval, the parties have continued to negotiate the details of the Settlement.

If preliminary approval of the Settlement is obtained, notice of the terms of the Settlement would then be provided to members of the settlement class.

In May 2014, the PSC issued an Order initiating a General Investigation into certain matters relating to WVAWC's response to the Freedom Industries chemical spill.

Three parties intervened in the proceeding, including the Consumer Advocate Division of the PSC and two attorney-sponsored groups, including one sponsored by some of the plaintiffs’ counsel involved in the civil litigation described above.

On January 26, 2017, WVAWC and the other parties agreed to resolve the General Investigation and filed a joint stipulation with the PSC containing the terms of the settlement.

The parties to the joint stipulation filed a proposed order with the PSC on February 8, 2017.

The Company provided written comments to the CSB’s report suggesting that the recommendation made to the Company would be better directed to the EPA in order to promote industry-wide implementation of the CSB’s recommendation.

On February 15, 2017, the Company filed its response to the CSB’s recommendation.

The CSB has indicated that it may consider issuing a supplemental report on the Freedom Industries chemical spill.

For the fiscal year ended December 31, [removed: 2016][added: 2017]

| Delaware | [removed: |] 51-0063696 |

| (State or other jurisdiction of incorporation or organization) | [removed: |] (I.R.S. Employer Identification No.) |

| 1025 Laurel Oak Road, Voorhees, NJ | [removed: |] 08043 |

| (Address of principal executive offices) | [removed: |] (Zip Code) |

Securities registered pursuant to Section 12(g) of the Act: [added: None.]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated [removed: filer or] [added: filer,] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and “small] [added: filer,” “smaller] reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.:

| Non-accelerated filer | | ☐ | [added: (do not check if a smaller reporting company)] | [removed: Small] [added: Smaller] reporting company | | ☐ |

Common Stock, $0.01 par [removed: value—$13,463,200,000] [added: value—$12,477,500,000] as of June 30, [removed: 2016] [added: 2017] (solely for purposes of calculating this aggregate market value, American Water has defined its affiliates to include (i) those persons who were, as of June 30, [removed: 2016,] [added: 2017,] its executive officers, directors or known beneficial owners of more than 10% of its common stock, and (ii) such other persons who were deemed, as of June 30, [removed: 2016,] [added: 2017,] to be controlled by, or under common control with, American Water or any of the persons described in clause (i) above).

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date: Common Stock, $0.01 par value per [removed: share—178,214,748] [added: share—178,551,923] shares as of February [removed: 16, 2017.][added: 15, 2018.]

Portions of the American Water Works Company, Inc. definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days after December 31, [removed: 2016] [added: 2017] are incorporated by reference into Part III of this report.

| [Forward-Looking [removed: Statements](#FORWARDLOOKING_STATEMENTS)] [added: Statements](#s16A92E65CAA0816C474BA5C6478DA200)] | | [removed: 1] [added: [1](#s16A92E65CAA0816C474BA5C6478DA200)] |

| Item 1. | [removed: [Business](#BUSINESS)] [added: [Business](#s3995070D2FAD3783637FA5C647E05DF3)] | [removed: 3] [added: [3](#s3995070D2FAD3783637FA5C647E05DF3)] |

| Item 1A. | [Risk [removed: Factors](#Risk_Factors)] [added: Factors](#sF4F9373041970545373FA5C6481282DD)] | [removed: 15] [added: [18](#sF4F9373041970545373FA5C6481282DD)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#UNRESOLVED_STAFF_COMMENTS)] [added: Comments](#s43CF9B443ACAC74AE890A5C6483452EE)] | [removed: 29] [added: [33](#s43CF9B443ACAC74AE890A5C6483452EE)] |

| Item 2. | [removed: [Properties](#PROPERTIES)] [added: [Properties](#sAC729B22D1C2C3290C95A5C6486656FE)] | [removed: 29] [added: [33](#sAC729B22D1C2C3290C95A5C6486656FE)] |

| Item 3. | [Legal [removed: Proceedings](#LEGAL_PROCEEDINGS)] [added: Proceedings](#sE604089CE47CB815687FA5C64887B4D7)] | [removed: 30] [added: [34](#sE604089CE47CB815687FA5C64887B4D7)] |

| Item 4. | [Mine Safety [removed: Disclosures](#Mine_Safety_Disclosures)] [added: Disclosures](#sCC703163AD9982A83FA6A5C648B993B4)] | [removed: 33] [added: [39](#sCC703163AD9982A83FA6A5C648B993B4)] |

| | [Part [removed: II](#PART_II)] [added: I](#s03A205E83F1FCC7CF2D4A5C647BFA6F8)] | |

| Item 5. | [Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#MARKET_FOR_REGISTRANT)] [added: Securities](#sC6E552DFD898873D7796A5C6490C2905)] | [removed: 34] [added: [40](#sC6E552DFD898873D7796A5C6490C2905)] |

| Item 6. | [Selected Financial [removed: Data](#Selected_Financial_Data)] [added: Data](#sEF2364F3EBA507AA52BBA5C6492E413A)] | [removed: 35] [added: [41](#sEF2364F3EBA507AA52BBA5C6492E413A)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#MANAGEMENT_DISCUSSION)] [added: Operations](#sD7138A949E6B66BF1978A5C64960EE22)] | [removed: 35] [added: [42](#sD7138A949E6B66BF1978A5C64960EE22)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#QUANTITATIVE_AND)] [added: Risk](#s4871AC9745E20D77DD5BA5C64981BBE1)] | [removed: 64] [added: [74](#s4871AC9745E20D77DD5BA5C64981BBE1)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#FINANCIAL_STATEMENTS)] [added: Data](#sF908B0CCF410CD2A6E3AA5C649B3093B)] | [removed: 66] [added: [76](#sF908B0CCF410CD2A6E3AA5C649B3093B)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#itemm9)] [added: Disclosure](#s218C17DEE752158A4CCEA5C651516BC3)] | [removed: 113] [added: [126](#s218C17DEE752158A4CCEA5C651516BC3)] |

| Item 9A. | [Controls and [removed: Procedures](#CONTROLS_AND_PROCEDURES)] [added: Procedures](#s0FF633511F54B3E369B7A5C6518365D5)] | [removed: 113] [added: [126](#s0FF633511F54B3E369B7A5C6518365D5)] |

| Item 9B. | [Other [removed: Information](#OTHER_INFORMATION)] [added: Information](#sEC1CA29AED3704A930D5A5C651A4B31B)] | [removed: 114] [added: [126](#sEC1CA29AED3704A930D5A5C651A4B31B)] |

| | [Part [removed: III](#PART_III)] [added: III](#s4F4A15D1926CCAD8AF65A5C651D666B0)] | |

| Item 10. | [Directors, Executive Officers of the Registrant and Corporate [removed: Governance](#DIRECTORS_EXECUTIVE_OFFICERS)] [added: Governance](#s5943ED055DEE0FEB7A75A5C651F887B3)] | [removed: 115] [added: [128](#s5943ED055DEE0FEB7A75A5C651F887B3)] |

| Item 11. | [Executive [removed: Compensation](#EXECUTIVE_COMPENSATION)] [added: Compensation](#s68E415C10B2C2C4B95E3A5C6522AEB58)] | [removed: 115] [added: [128](#s68E415C10B2C2C4B95E3A5C6522AEB58)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#SECURITY_OWNERSHIP)] [added: Matters](#s9D6D29C88E9E435C030FA5C6524BFE91)] | [removed: 115] [added: [128](#s9D6D29C88E9E435C030FA5C6524BFE91)] |

| Item 13. | [Certain Relationships and Related Transactions and Director [removed: Independence](#CERTAIN_RELATIONSHIPS)] [added: Independence](#sA1D68EFD2D6DF77319ACA5C6527D5FB5)] | [removed: 115] [added: [128](#sA1D68EFD2D6DF77319ACA5C6527D5FB5)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#PRINCIPAL_ACCOUNTANT_FEES)] [added: Services](#s8E5810EF39B9ADE6A7F9A5C6529E9381)] | [removed: 115] [added: [128](#s8E5810EF39B9ADE6A7F9A5C6529E9381)] |

| | [Part [removed: IV](#PART_IV)] [added: II](#s524EE610292866D3810CA5C648DA99FB)] | |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#EXHIBITS_AND_FINANCIAL)] [added: Schedules](#s63E8AA9814AD4C03336FA5C652F270BF)] | [removed: 115] [added: [129](#s63E8AA9814AD4C03336FA5C652F270BF)] |

| Item 16. | [Form 10-K [removed: Summary](#FORM_10K_SUMMARY)] [added: Summary](#s4657A1BED58D39334168A5C65324D537)] | [removed: 116] [added: [129](#s4657A1BED58D39334168A5C65324D537)] |

| [Exhibit [removed: Index](#Exhibit_Index)] [added: Index](#s69BB210CFCC93E809EAAA5C65377262C)] | | [removed: 118] [added: [130](#s69BB210CFCC93E809EAAA5C65377262C)] |

We have made statements in Item 1—Business, Item 1A—Risk Factors, and Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in other sections of this [removed: Annual Report on] Form [removed: 10-K (“Form 10-K”),] [added: 10-K,] or incorporated certain statements by reference into this Form 10-K, that are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995.

In some cases, these forward-looking statements can be identified by words with prospective meanings such as “intend,” “plan,” “estimate,” “believe,” “anticipate,” “expect,” “predict,” “project,” “assume,” “forecast,” [added: “likely,” “uncertain,”] “outlook,” “future,” “pending,” “goal,” “objective,” “potential,” “continue,” “seek to,” “may,” “can,” “should,” “will” and “could” or the negative of such terms or other variations or similar expressions.

10-K 1 a12312017-awkx10kdocument.htm AWK - 12.31.2017 10-K

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| | | | | Emerging growth company | | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| | [Part IV](#s2B49B5D11ACDA61CFB65A5C652D04400) | |

| [Signatures](#s5AD1FD6D908D814C763BA5C65345ACFA) | | [134](#s5AD1FD6D908D814C763BA5C65345ACFA) |

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| • | limitations on the availability of our water supplies or sources of water, or restrictions on our use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors; |

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10-K 1 awk-10k_20161231.htm AWK-10K-20161231

| --- | --- | --- |

None.

| | | |

| | [Part I](#PARTI) | |

| [Signatures](#SIGNATURES) | | 117 |

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Our properties consist [removed: of] [added: primarily of: (i) water and wastewater treatment plants; (ii) mains and pipes used for] transmission, distribution and collection [removed: pipes,] [added: of] water and [added: wastewater; (iii) wells and other sources of water supply, such as reservoirs; (iv) water and] wastewater [removed: treatment plants,] pumping [removed: wells, tanks, meters, supply lines, dams, reservoirs,] [added: stations; (v) meters and fire hydrants; (vi) general structures, including] buildings, [removed: vehicles, land, easements,] [added: dams and treated water storage facilities; (vii) land and easements; (viii) vehicles; (ix)] software rights [removed: and] [added: and; (x)] other [removed: facilities] [added: equipment] and [removed: equipment.][added: facilities, the majority of which are used directly in the operation of our systems.]

Substantially all of our properties are owned by our subsidiaries, [removed: and] [added: with] a [removed: substantial portion of our property is] [added: large percentage] subject to liens of our mortgage bonds.

We lease our corporate offices, [removed: equipment and furniture,] located in Voorhees, New [removed: Jersey] [added: Jersey, equipment and furniture] from certain of our wholly owned subsidiaries.

We have ongoing infrastructure renewal programs in all states in which our Regulated Businesses [removed: segment] operate.

These programs consist of both [added: the] rehabilitation of existing mains and [removed: other equipment] [added: equipment,] and [added: the] replacement of mains and [removed: other] equipment that [removed: are] [added: have been] damaged or have reached, or are near, the end of their useful service lives.

The properties of our Market-Based Businesses consist mainly of office furniture and IT [removed: equipment] [added: equipment,] and are primarily located in New Jersey.

Approximately [removed: 51%] [added: 52%] of all properties that we own are located in New Jersey and Pennsylvania.

The properties of our Regulated Businesses consist mainly of:

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| • | 72 surface water treatment plants; |

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| • | 527 groundwater treatment plants; |

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| • | 8 combined (surface water and groundwater) treatment plants; |

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| • | 127 wastewater treatment plants; |

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| • | 50,382 miles of transmission, distribution and collection mains and pipes; |

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| • | 1,103 groundwater wells; |

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| • | 1,428 water and wastewater pumping stations; |

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| • | 1,313 treated water storage facilities; and |

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| • | 80 dams. |

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Our properties are used for the operation of our systems, including the collection, treatment, storage and distribution of water, and the collection and treatment of wastewater.

The properties of our Regulated Businesses segment primarily include 80 dams and 81 surface water treatment plants along with approximately 522 groundwater treatment plants, 1,022 groundwater wells, 121 wastewater treatment facilities, 1,284 treated water storage facilities, 1,433 pumping stations, and 49,635 miles of mains and collection pipes.

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Since April 23, 2008, our common stock has traded on the [removed: NYSE] [added: New York Stock Exchange (“NYSE”)] under the symbol “AWK.” The following table summarizes the per share range of the high and low intraday sales prices of our common stock as reported on the NYSE and the per share cash dividends paid and [removed: declared for the years ended December 31, 2016 and 2015:][added: declared:]

| | | Intraday Market Prices | | | | | | | | Per Share [added: Dividends Paid] | | | | Per Share [added: Dividends Declared (a)] | | |

| 2016 | | High | | | | Low | | | | [removed: Dividends Paid] | | | | [removed: Dividends Declared] | | |

| Third Quarter | | [removed: |] 85.24 | | | | 72.12 | | | | 0.375 | | | | 0.375 | | [added: |]

| Second Quarter | | [removed: |] 84.54 | | | | 68.09 | | | | 0.375 | | | | 0.375 | | [added: |]

| First Quarter | | [removed: |] 70.10 | | | | 58.90 | | | | 0.34 | | | | — | | [added: |]

As of February [removed: 16, 2017,] [added: 15, 2018,] there were [removed: 178,214,748] [added: 178,551,923] shares of common stock outstanding held by approximately [removed: 2,608] [added: 2,644] record holders.

Holders of our common stock are entitled to receive dividends when they are declared by [removed: the] [added: our] Board of Directors.

In February 2015, [removed: the] [added: our] Board of Directors authorized an anti-dilutive common stock repurchase program to mitigate the dilutive effect of shares issued through our dividend reinvestment, employee stock purchase and executive compensation activities.

From April 1, 2015, the date repurchases under the anti-dilutive stock repurchase program commenced, through December 31, [removed: 2016,] [added: 2017,] the Company repurchased an aggregate of [removed: 3,250,000] [added: 3,950,000] shares of common stock under the program, including [removed: 1,000,000] [added: 700,000] shares repurchased during the first half of [removed: 2016.][added: 2017.]

There were no repurchases of common stock in the last half of [removed: 2016.][added: 2017.]

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| 2017 | | High | | | | Low | | | | | | | | | | |

| Fourth Quarter | | $ | 92.37 | | | $ | 80.89 | | | $ | 0.415 | | | $ | 0.83 | |

| Third Quarter | | 83.14 | | | | 77.36 | | | | 0.415 | | | | 0.415 | | |

| Second Quarter | | 82.89 | | | | 74.63 | | | | 0.415 | | | | 0.415 | | |

| First Quarter | | 78.73 | | | | 69.96 | | | | 0.375 | | | | — | | |

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| | | Intraday Market Prices | | | | | | | | Per Share Dividends Paid | | | | Per Share Dividends Declared (a) | | |

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| (a) | Dividends declared during the three months ended December 31, 2017 and 2016, include quarterly dividends payable December 1 and March 1. |

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| 2015 | | High | | | | Low | | | | Dividends Paid | | | | Dividends Declared | | |

| Fourth Quarter | | $ | 61.20 | | | $ | 54.62 | | | $ | 0.34 | | | $ | 0.68 | |

| Third Quarter | | | 55.63 | | | | 48.52 | | | | 0.34 | | | | 0.34 | |

| Second Quarter | | | 55.67 | | | | 48.36 | | | | 0.34 | | | | 0.34 | |

| First Quarter | | | 57.48 | | | | 51.84 | | | | 0.31 | | | | — | |

On November 17, 2016, 19,629 shares of common stock were issued by the Company in a transaction not involving a public offering of securities, which transaction was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof.

The shares were issued to one holder as consideration for assets acquired and liabilities assumed by Cal Am.

| [removed: |] (In millions, except per share data) | [added: 2017] | | | | [added: 2016] | | | | [added: 2015] | | | | [added: 2014] | | | | [added: 2013] | | [added: |]

| Operating revenues | $ | [removed: 3,302] [added: 3,357] | | | $ | [removed: 3,159] [added: 3,302] | | | $ | [removed: 3,011] [added: 3,159] | | | $ | [removed: 2,879] [added: 3,011] | | | $ | [removed: 2,854] [added: 2,879] | |

| Income from continuing operations [added: (a)] | [removed: $] [added: 426] | [added: | | |] 468 | | | [removed: $] | 476 | | | [removed: $] | 430 | | | [removed: $] | 371 | | | [removed: $ | 374 | |]

| Income from continuing operations per basic common share [added: (a)] | $ | [removed: 2.63] [added: 2.39] | | | $ | [removed: 2.66] [added: 2.63] | | | $ | [removed: 2.40] [added: 2.66] | | | $ | [removed: 2.08] [added: 2.40] | | | $ | [removed: 2.12] [added: 2.08] | |

| Income from continuing operations per diluted common share [added: (a)] | [removed: $] [added: 2.38] | [added: | | |] 2.62 | | | [removed: $] | 2.64 | | | [removed: $] | 2.39 | | | [removed: $] | 2.07 | | | [removed: $ | 2.10 | |]

| Total assets [removed: (a)] (b) [added: (c)] | $ | [removed: 18,482] [added: 19,482] | | | $ | [removed: 17,241] [added: 18,482] | | | $ | [removed: 16,038] [added: 17,241] | | | $ | [removed: 15,064] [added: 16,038] | | | $ | [removed: 14,713] [added: 15,064] | |

| Long-term debt and redeemable preferred stock at redemption value [removed: (a)] [added: (b)] | [removed: $] [added: 6,498] | [added: | | |] 5,759 | | | [removed: $] | 5,874 | | | [removed: $] | 5,442 | | | [removed: $] | 5,225 | | | [removed: $ | 5,203 | |]

| [removed: Aggregate] [added: Cash] dividends declared per common share | $ | [removed: 1.50] [added: 1.66] | | | $ | [removed: 1.36] [added: 1.50] | | | $ | [removed: 1.24] [added: 1.36] | | | $ | [removed: 1.12] [added: 1.24] | | | $ | [removed: 0.98] [added: 1.12] | |

| Capital expenditures included in [added: net] cash [removed: flows] used in investing activities | [removed: $] [added: (1,434] | [removed: (1,311] | ) | | [removed: $] [added: (1,311] | [removed: (1,160] | ) | | [removed: $] [added: (1,160] | [removed: (956] | ) | | [removed: $] [added: (956] | [removed: (980] | ) | | [removed: $] [added: (980] | [removed: (929] | ) |

[removed: NOTE:] [added: | (a) |] In November 2014, we disposed of our Class B Biosolids operating segment by selling our subsidiary, Terratec Environmental Ltd (“Terratec”) in Ontario, Canada. [added: The results of Terratec are presented as discontinued operations and, as such, have been excluded from Income from continuing operations for the years ended December 31, 2014 and 2013. |]

| [removed: | (a)] [added: (b)] | The information for [removed: 2014, 2013] [added: the years ended December 31, 2014] and [removed: 2012] [added: 2013,] has been revised to reflect the retrospective application of Accounting Standard Update [removed: 2015-15] [added: 2015-15,] Presentation of Debt Issuance Costs, which was adopted by the Company as of December 31, 2015. |

| [removed: | (b)] [added: (c)] | The information for [removed: 2014, 2013] [added: the years ended December 31, 2014] and [removed: 2012] [added: 2013,] has been revised to reflect the retrospective application of Accounting Standard Update [removed: 2015-17] [added: 2015-17,] Income Taxes, which was adopted by the Company as of December 31, 2015. |

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| Net cash provided by operating activities (d) (e) (f) | 1,449 | | | | 1,289 | | | | 1,195 | | | | 1,122 | | | | 956 | | |

| Net cash used in investing activities (f) | (1,672 | | ) | | (1,590 | | ) | | (1,459 | | ) | | (1,029 | | ) | | (1,068 | | ) |

| Net cash provided by (used in) financing activities (d) (e) (f) | 207 | | | | 328 | | | | 290 | | | | (104 | | ) | | 104 | | |

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| (d) | The information for the years ended December 31, 2016, 2015, 2014 and 2013, has been revised to reflect the retrospective application of Accounting Standard Update 2016-09, Improvements to Employee Share-Based Payment Accounting, which was adopted by the Company as of January 1, 2017. |

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| (e) | The information for the year ended December 31, 2013, has been revised to reflect the retrospective application of Accounting Standard Update 2016-15, Classification of Certain Cash Receipts and Cash Payments, which was adopted by the Company as of December 31, 2017. |

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| (f) | The information for the years ended December 31, 2016, 2015, 2014 and 2013, has been revised to reflect the retrospective application of Accounting Standard Update 2016-18, Statement of Cash Flows (Topic 230) - Restricted Cash, which was adopted by the Company as of December 31, 2017. |

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| | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |

| Cash flows provided by operating activities | $ | 1,276 | | | $ | 1,179 | | | $ | 1,097 | | | $ | 896 | | | $ | 956 | |

The results of Terratec are presented as discontinued operations and, as such, have been excluded from continuing operations for the years ended December 31, 2014, 2013 and 2012.

See Note 3—Acquisitions and Divestitures in the Notes to Consolidated Financial Statements for additional details on our discontinued operations.

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| | [removed: |] Page [removed: Number] |

| Audited Consolidated Financial Statements | | [removed: |]

| [Report of Independent Registered Public Accounting [removed: Firm](#Report_of_Independent) |] [added: Firm](#sC1B7E798A51E12721C58A5C649D4551E)] | [removed: 67] [added: [77](#sC1B7E798A51E12721C58A5C649D4551E)] |

| [Consolidated Balance Sheets as of December 31, [removed: 2016] [added: 2017] and [removed: 2015](#Consolidated_Balance_Sheets) |] [added: 2016](#sF9DE057645CCB36C5679A5C639B6E6A9)] | [removed: 68] [added: [79](#sF9DE057645CCB36C5679A5C639B6E6A9)] |

| [Consolidated Statements of Operations for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#Consolidated_Statements_of_Operations) |] [added: 2015](#s296AD90D3193E57B6530A5C639E69B33)] | [removed: 70] [added: [81](#s296AD90D3193E57B6530A5C639E69B33)] |

| [Consolidated Statements of Comprehensive Income for the years ended December 31, [added: 2017,] 2016, [removed: 2015,] and [removed: 2014](#Consolidated_Statements_of_Comprehensive) |] [added: 2015](#s57B836DD8FD9B4236EF1A5C63B2C2C36)] | [removed: 71] [added: [82](#s57B836DD8FD9B4236EF1A5C63B2C2C36)] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#Consolidated_Statements_of_Cash_Flows) |] [added: 2015](#s71CBCB0EAA6C9421BA78A5C63C0155C4)] | [removed: 72] [added: [83](#s71CBCB0EAA6C9421BA78A5C63C0155C4)] |

| [Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014](#Changes_in_Stockholders_Equity) |] [added: 2015](#s6C039D422E70AB4B1369A5C63A469C81)] | [removed: 73] [added: [84](#s6C039D422E70AB4B1369A5C63A469C81)] |

| [Notes to Consolidated Financial [removed: Statements](#Notes_to_Consolidated) |] [added: Statements](#s1016318E0181991C1B52A5C64B765C26)] | [removed: 74] [added: [85](#s1016318E0181991C1B52A5C64B765C26)] |

To the Board of Directors and [removed: Shareholders] [added: Stockholders] of

In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of operations, of comprehensive income, of cash flows, and of changes in stockholders’ equity] [added: referred to above] present fairly, in all material respects, the financial position of [removed: American Water Works Company, Inc. and Subsidiary Companies at] [added: the Company as of] December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]

The Company's management is responsible for these [added: consolidated] financial statements, for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on [removed: these] [added: the Company’s consolidated] financial statements and on the Company's internal control over financial reporting based on our [removed: integrated] audits.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.

Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]

| [removed: |] [added: Balance as of] December [removed: 31,] [added: 31] | [added: $] | [added: (42] | [added: )] | [removed: December 31,] | [added: $] | [added: (40] | [added: ) | | $ | (39 | ) |]

| | [added: 2017 | | | |] 2016 | | | | 2015 | | |

| Property, plant and equipment | $ | [removed: 19,954] [added: 21,716] | | | $ | [removed: 18,504] [added: 19,954] | |

| Accumulated depreciation | [added: (5,470] | [removed: (4,962] | ) | | [added: (4,962] | [removed: (4,571] | ) |

| Property, plant and equipment, net | [added: 16,246] | [removed: 14,992] | | | [added: 14,992] | [removed: 13,933] | |

| Cash and cash equivalents | [added: 55] | [removed: 75] | | | [added: 75] | [removed: 45] | |

| Restricted funds | [added: 27] | [removed: 20] | | | [added: 20] | [removed: 21] | |

| Accounts receivable, net | [added: 272] | [removed: 269] | | | [added: 269] | [removed: 255] | |

| Unbilled revenues | [added: 212] | [removed: 263] | | | [added: 263] | [removed: 267] | |

| Materials and supplies | [added: 41] | [removed: 39] | | | [added: 39] | [removed: 38] | |

| Other | [added: 113] | [removed: 118] | | | [added: 118] | [removed: 31] | |

| Total current assets | [added: 720] | [removed: 784] | | | [added: 784] | [removed: 657] | |

| Regulatory assets | [added: 1,061] | [removed: 1,289] | | | [added: 1,289] | [removed: 1,271] | |

| Goodwill | [added: 1,379] | [removed: 1,345] | | | [added: 1,345] | [removed: 1,302] | |