CONFORMED COPY
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the fiscal year ended December 31, 2001
--------------------------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
------------------- ---------------------
Commission File Number 1-3437-2
----------------------------------------------------
A: Full title of the plan and the address of the plan, if different from
that of the issuer named below:
SAVINGS PLAN FOR EMPLOYEES OF AMERICAN WATER WORKS
COMPANY, INC. AND ITS DESIGNATED SUBSIDIARIES
B: Name of issuer of the Securities held pursuant to the plan and the
address of its principal executive office:
AMERICAN WATER WORKS COMPANY, INC.
1025 LAUREL OAK ROAD
VOORHEES, NEW JERSEY 08043
Form 11-K
Page 2
INDEX
Signature 3
Report of Independent Accountants 6
Audited Plan Financial Statements and Schedules
Prepared in Accordance With The Financial Reporting
Requirements of ERISA 7 to 17
Exhibit Index 18
Form 11-K
Page 3
SIGNATURE
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Retirement Plan Committee has duly caused this annual report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Date June 27, 2002 \s\ Robert D. Sievers
------------------ --------------------------------------
Robert D. Sievers
Member, Retirement Plan Committee
Form 11-K
Page 4
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Financial Statements
And
Supplemental Schedules
December 31, 2001 and 2000
Form 11-K
Page 5
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Index to the Financial Statements and
Supplemental Schedules
PAGE
Report of Independent Accountants 1
Statement of Net Assets Available for Benefits as
of December 31, 2001 and 2000 2
Statement of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 2001 and 2000 3
Notes to Financial Statements 4-9
Supplemental Schedules:*
Schedule of Assets (Held at End of Year) Schedule I
Schedule of Reportable Transactions for the Year
Ended December 31, 2001 Schedule II
* Other schedules required by 29 CFR 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
Form 11-K
Page 6
Report Of Independent Accountants
To the Participants and Administrator
of the Savings Plan for Employees of
American Water Works Company, Inc.
and Its Designated Subsidiaries
In our opinion, the accompanying statement of net assets available for
benefits and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of the Savings Plan for Employees of American Water Works
Company, Inc. and Its Designated Subsidiaries (the "Plan") at December 31,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are
the responsibility of the Plan's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing
standards generally accepted in the United States of America, which require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules of
Assets (Held at End of Year) and of Reportable Transactions are presented
for the purpose of additional analysis and are not a required part of the
basic financial statements but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
June 14, 2002
Form 11-K
Page 7
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Statement of Net Assets Available for Benefits
December 31,
-----------------------------
2001 2000
------------ ------------
Assets
Investments (See Note 3) $134,730,781 $100,685,352
Receivables:
Employer's contribution 285,478 272,390
Participants' contributions 1,058,847 1,106,424
Accrued interest and dividends 15,570 11,226
------------ ------------
Net assets available for benefits $136,090,676 $102,075,392
============ ============
The accompanying notes are an integral part of these financial statements.
Form 11-K
Page 8
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Statement of Changes in Net Assets Available for Benefits
December 31,
---------------------------
2001 2000
------------ ------------
Additions to net assets attributed to:
Investment income:
Interest and dividends $ 2,910,669 $ 2,937,004
Net appreciation in fair
value of investments (See Note 3) 12,242,528 5,382,495
Net asset transfers in (See Note 11) 6,885,016 1,903,611
------------ -----------
$22,038,213 $10,223,110
------------ -----------
Contributions:
Employer's 3,410,856 2,958,055
Participants' 13,269,495 12,718,976
------------ -----------
16,680,351 15,677,031
------------ -----------
Total additions 38,718,564 25,900,141
------------ -----------
Deductions from net assets attributed to:
Benefits paid to participants 4,703,280 4,668,459
------------ -----------
Total deductions 4,703,280 4,668,459
------------ -----------
Net increase 34,015,284 21,231,682
Net assets at beginning of year 102,075,392 80,843,710
------------ ------------
Net assets at end of year $136,090,676 $102,075,392
============ ============
The accompanying notes are an integral part of these financial statements.
Form 11-K
Page 9
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Notes to Financial Statements
NOTE 1 - DESCRIPTION OF PLAN
----------------------------
The following description of the Savings Plan for Employees of American Water
Works Company, Inc. and Its Designated Subsidiaries (the "Plan") provides only
general information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution 401(k) savings plan covering most full
and part-time employees of American Water Works Company, Inc. and its
designated subsidiary companies (the "Company"). Eligible participants who are
not included in a bargaining unit may enroll as soon as administratively
possible. Effective July 1, 2001, eligible participants who are included in a
bargaining unit may enroll as soon as administratively possible. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974 ("ERISA").
Contributions
During 2000 and through June 30, 2001, participants could contribute 15% of
their annual compensation. The Company matched 50% of the first 4% of these
contributions. Effective July 1, 2001, the maximum contribution rate was
increased to 20%, and the Company began matching 50% of the first 5% of
participant contributions. All Company matching contributions are invested in
American Water Works Company, Inc. common stock. Contributions are subject to
certain limitations.
Participant Accounts
With the exception of the Company's contributions to the Plan, each
participant may elect to have their contributions invested in any of the
investment options offered by the Plan in multiples of 1%. The Plan provides
for a diversification option that permits participants at age 50 to move assets
attributable to Company matching contributions to any of the Plan's investment
options. Each participant's account is credited with the participant's
contributions and an allocation of the Company's contributions and Plan
earnings. Allocations are based on participant contributions or account
balances, as defined in the Plan. Benefits to which a participant is entitled
are the benefits that can be provided from the participant's vested account.
Form 11-K
Page 10
Vesting
Prior to July 1, 2001, the Plan allowed for immediate 100% vesting of
participant and Company contributions and earnings thereon, of all participants
who are not included in a bargaining unit. Effective July 1, 2001, the Plan
allows for immediate 100% vesting of the account balances of all participants
who are included in a bargaining unit.
Payment of Benefits
Participants may, upon attaining 591/2 years of age, elect to withdraw all
or a portion of the value of their account. Upon termination of service for
any reason, participants may elect to withdraw the value of their account, roll
that account value over into a qualified plan or individual retirement account
or defer this distribution until age 65. In all cases, unless earlier
withdrawn, participants will receive the balance in their account upon the
earlier of attaining age 65 if not then working for the Company, retirement
after reaching age 65, death or total disability. Participants hired before
July 1, 1999 may elect to receive a lump sum amount equal to the value of their
account, an annuity, or a combination of both. Participants hired (or employed
via a future acquisition and not covered by a prorated optional form of
benefit) on or after July 1, 1999 may only receive a lump sum distribution. The
Plan permits withdrawals on after-tax and rollover contributions at any time
without restrictions.
Forfeitures
Upon termination of employment, any unvested portion of an employee's
account shall be placed in a suspense account for a period of five years, at
which time amounts held in suspense are forfeited. Forfeitures are used to
reduce employer contributions. Amounts held in suspense for the year ended
December 31, 2001 were $5,624.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
Basis and Presentation
----------------------
The Plan's financial statements are presented on the accrual basis of
accounting.
Use of Estimates
----------------
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
Form 11-K
Page 11
management to make estimates and assumptions that affect amounts reported in
the financial statements. Actual results could differ from those estimates.
Valuation of Investments
------------------------
Plan investments are stated at fair value. The Company stock is valued at
its quoted market price on the valuation date. Shares of registered investment
companies are valued at quoted market prices which represent the net asset
value of shares held by the Plan at year-end. Collective income funds are
valued by the fund sponsor based on quoted market prices of the underlying
investments.
Purchases and sales of securities are recorded on a trade date basis.
Interest income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
The Plan presents in the statement of changes in net assets available for
benefits the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses and the unrealized
appreciation (depreciation) on those investments.
Contributions
-------------
Participant contributions are recorded in the period during which the
Company makes payroll deductions from the Plan participants' earnings.
Matching Company contributions are recorded in the same period.
Payment of Benefits
-------------------
Participants' benefits are recognized in the Plan financial statements when
paid.
NOTE 3 - INVESTMENTS
--------------------
The following presents investments that represent 5 percent or more of the
Plan's net assets.
Form 11-K
Page 12
December 31,
-------------------------
2001 2000
------------ ------------
Registered investment companies:
PIMCO Total Return Fund, 1,044,650 and
723,016 shares, respectively $10,927,036 $ 7,512,135
Collective income funds:
Merrill Lynch Equity Index Trust, 430,963
and 358,520 shares, respectively 34,735,623 32,901,349
Merrill Lynch Retirement Preservation
Trust, 9,926,533 and 7,617,869 shares,
respectively 9,926,533 7,617,869
Common stock:
American Water Works Company, Inc.
(Nonparticipant-directed), 1,583,801 and
1,393,217 shares, respectively 66,123,703 40,925,756
During 2001 and 2000, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the years) appreciated
(depreciated) in value as follows:
Year Ended
December 31,
--------------------------
2001 2000
----------- ----------
Registered investment companies $(2,574,158) $(2,074,633)
Collective income funds (3,738,745) (3,380,179)
Common stock 18,555,431 10,837,307
----------- -----------
Net appreciation in fair value $12,242,528 $ 5,382,495
=========== ===========
Form 11-K
Page 13
NOTE 4 - NONPARTICIPANT-DIRECTED INVESTMENTS
--------------------------------------------
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments is as
follows:
December 31,
----------------------------
2001 2000
------------ ------------
Net Assets:
Investment in American Water Works
Company, Inc. common stock $ 66,123,703 $ 40,925,756
Employer's contribution receivable 285,478 272,390
Participants' contributions receivable 275,922 224,060
------------ ------------
Net assets available for benefits $ 66,685,103 $ 41,422,206
============ ============
Changes in Net Assets:
Dividend income $ 1,453,172 $ 1,221,297
Net appreciation in fair value of
investments 18,555,431 10,837,307
Employer contributions 3,410,856 2,958,055
Participants' contributions 3,000,092 2,546,969
Loan repayments from participants 343,854 249,662
------------ ------------
Total additions 26,763,405 17,813,290
------------ ------------
Benefit payments to participants 1,934,013 1,780,369
Loans to participants 529,685 441,856
------------ ------------
Total deductions 2,463,698 2,222,225
Interfund transfers 963,190 (464,510)
------------ ------------
Net increase 25,262,897 15,126,555
Net assets at beginning of year 41,422,206 26,295,651
------------ ------------
Net assets at end of year $ 66,685,103 $ 41,422,206
============ ============
Form 11-K
Page 14
NOTE 5 - PARTICIPANT LOANS
-----------------------------
Under the terms of the Plan, participants may borrow from their accounts a
minimum of $1,000 up to a maximum of the lesser of $50,000 or 50% of their
contributions to the Plan including earnings thereon. Loans are generally for
a period not to exceed five years, payable in equal monthly installments,
secured by the balance in the participant's account, and bear interest at a
rate of prime plus 1%. Interest rates on loans outstanding ranged from 6% to
10.5% and 8.25% to 10.75% for the years ended December 31, 2001 and 2000,
respectively. The maximum personal residence loan term is fifteen years for
new loans, and prepayment of loans is permitted. Principal and interest is
paid ratably through payroll deductions.
NOTE 6 - HARDSHIP WITHDRAWALS
-----------------------------
Participants may withdraw all or part of their pre-tax contributions
(excluding earnings) only under certain hardship conditions. A hardship
withdrawal can only be requested after withdrawal of all rollover contributions
and any loans available under the Plan have been obtained. Hardship withdrawals
cannot be returned to the Plan and contributions cannot be made to the Plan for
12 months after a hardship withdrawal has been made.
The Plan permits withdrawals on after-tax and rollover contributions at any
time without restrictions.
NOTE 7 - ADMINISTRATIVE EXPENSES
--------------------------------
Although it has no obligation to do so, the Company paid substantially all
administrative expenses of the Plan.
NOTE 8 - PLAN TERMINATION
-------------------------
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate
the Plan subject to the provisions of ERISA.
NOTE 9 - FEDERAL INCOME TAX STATUS
----------------------------------
The Internal Revenue Service has determined and informed the Company by a
letter dated March 14, 2002, that the Plan and related trusts are designed in
accordance with applicable sections of the Internal Revenue Code ("IRC") and
are, therefore, not subject to tax under present income tax law. The Plan has
Form 11-K
Page 15
been amended since receipt of the determination letter. However, the Plan
administrator believes that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC. In
addition, management is not aware of any course of action or series of events
that have occurred that might adversely affect the Plan's qualified status.
NOTE 10 - RELATED PARTY TRANSACTIONS
------------------------------------
Certain Plan investments are shares of mutual funds and units of collective
income funds managed by Merrill Lynch Trust Company. Merrill Lynch Trust
Company is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions.
The Plan is interpreted and administered by a Retirement Plan Committee
comprised of five members of management of American Water Works Company.
NOTE 11 - NET ASSET TRANSFERS IN
---------------------------------
On September 29, 2000, net assets of $1,903,611 from the Continental Water
Company Group Employee Savings Plan for Northwest Indiana Water Company and
Northern Illinois Water Company merged with and into the Plan.
On October 1, 2001, net assets of $6,885,016 from the Continental Water
Company Group Employee Savings Plan for Long Island Water Company and St. Louis
County Water Company Employee Savings Plan merged with and into the Plan.
Form 11-K
Page 16
Schedule I
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Schedule of Assets
(Held at End of Year)
December 31, 2001
-----------------------------------------------------------------------------
Current
Shares/Units Issue Cost Value
------------ -------- ------------ ------------
N/A Cash and cash equivalents $ 32,417 $ 32,417
Registered investment companies:
1,044,650 PIMCO Total Return Fund 10,714,958 10,927,036
157,363 Franklin Small Cap Growth Fund-Class A 5,361,827 4,905,039
78,459 Van Kampen Emerging Growth Fund 5,510,027 3,320,391
172,821 Merrill Lynch International
Index Fund* 1,922,577 1,489,716
Collective income funds:
430,963 Merrill Lynch Equity Index Trust* 38,079,607 34,735,623
9,926,533 Merrill Lynch Retirement Preservation
Trust* 9,926,533 9,926,533
Common Stock:
1,583,801 American Water Works Company, Inc.* 39,091,502 66,123,703
Interest Rate
-------------
6% to 10.5% Participants' loans receivable - 3,270,323
------------ ------------
$110,639,448 $134,730,781
============ ============
*Represents "party-in-interest" for the purposes of Form 5500.
Form 11-K
Page 17
Schedule II
SAVINGS PLAN FOR EMPLOYEES OF
AMERICAN WATER WORKS COMPANY, INC.
AND ITS DESIGNATED SUBSIDIARIES
Schedule of Reportable Transactions
For the Year Ended December 31, 2001
(Individual or series of transactions in one issue aggregating 5%
or more of the value of Plan assets as of January 1, 2001)*
---------------------------------------------------------------------------
Identity Number Current Value
of Party of Purchase Sales Cost of on Transaction Net
Involved Description Transactions Price Proceeds Assets Date Gain/(Loss)
-------- --------------- ------------ ---------- ---------- ---------- -------------- ----------
American American Water 144 $11,561,578 - - $11,561,578 -
Water Works Company,
Works Inc.
Company, Common Stock 283 - $8,287,675 $8,021,411 8,287,675 $266,264
Inc.
*Other investment fund transactions are participant-directed, and therefore do not need to be considered for
purposes of preparing this supplemental schedule.
Form 11-K
Page 18
EXHIBIT INDEX
Exhibit
Number Description
------- ----------------------------------
23 Consent of Independent Accountants
Exhibit 23 Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-52309) of American Water Works Company, Inc. of
our report dated June 14, 2002 relating to the financial statements of the
Savings Plan for Employees of American Water Works Company, Inc. and Its
Designated Subsidiaries, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
June 27, 2002