* Revenues increased by $103.8 million year-over-year to $2.4 billion despite
record-wet weather in 2009
* Net Income totaled $209.9 million, or $1.25 per share for 2009, excluding
goodwill impairment charge (a non-GAAP financial measure)
* Net loss totaled $233.1 million or $1.39 per diluted share for 2009, including
goodwill impairment charge
* Company is awarded annualized rate increases of approximately $80.9 million
* RWE completed divestiture in 2009
* Company announces earnings guidance for 2010: establishes range between $1.30
and $1.40 per share

VOORHEES, N.J.–(Business Wire)–
American Water Works Company, Inc. (NYSE: AWK), the largest investor-owned U.S.
water and wastewater utility company, today reported results for the fourth
quarter and year ended December 31, 2009. For the quarter, the company reported
operating revenues of $597.8 million, a $29.3 million or 5.2 percent increase
over the same period in 2008. For the year, the company reported operating
revenues of $2.4 billion, a 4.4 percent increase over 2008 revenues of $2.3
billion.

Net income in the fourth quarter was $36.4 million, or $0.21 per basic and
diluted common share, compared with $36.4 million or $0.23 per basic and diluted
common share in the fourth quarter of 2008. For the year, including goodwill
impairment charges, the company reported a net loss of $233.1 million, or $1.39
per basic and diluted common share, compared with a loss of $562.4 million, or
$3.52 per basic and diluted common share in 2008. Excluding goodwill impairment
charges, net income for 2009 was $209.9 million, or $1.25 per basic and diluted
common share, compared with $176.1 million, or $1.10 per basic and diluted share
in 2008, a 13.6 percent year-over-year increase in earnings per share.

“We are pleased with the solid results of the quarter and year,” said Don
Correll, president and CEO of American Water. “We faced challenges from the
weather and the economy in 2009, yet we have grown our revenues, cash flow and
excluding an impairment charge early on in the year primarily related to the
weak stock market, we grew earnings per share by 13.6 percent.”

In the fourth quarter 2009, the company`s Regulated Businesses` revenues
increased by $30.4 million or 6.0 percent over the prior year`s period. For the
year, the company`s Regulated Businesses` revenues increased by $124.6 million
or 6.0 percent over the prior year. The increases in both the quarter and the
year were primarily a result of recognition of prudent investment through rate
awards.Largely due torecord-breaking wet, cool weather in many of American
Water`s regulated states, lower demand offset rate increases in 2009. Total
volume of water sold decreased 6.2 percent for the quarter compared to the prior
year`s fourth quarter and 5.8 percent for the year compared to 2008.

The company`s Non-regulated Businesses` revenues increased by $0.6 million, or
0.8 percent, for the fourth quarter of 2009 as compared to the prior year`s
fourth quarter and decreased by $14.5 million, or 5.3 percent, for the year
compared to 2008. The decrease was primarily attributable to lower revenues in
the Contract Operations Group and the Applied Water Management Group, partially
offset by increased revenues in the Homeowner Services Group.

Operating expenses for the three-month period ended December 31, 2009, totaled
$460.5 million, an increase of $21.0 million or 4.8 percent over the same period
in 2008. For the year, operating expenses, excluding a goodwill impairment
charge (a non-GAAP financial measure), totaled $1.8 billion, an increase of
$43.3 million or 2.4 percent. The increase for both the quarter and year were
primarily driven by increased cost of production, pension and other
post-employment benefits expenses and depreciation.

Net cash provided by operating activities for the year ended December 31, 2009,
increased approximately $44.0 million or 8.0 percent to $596.2 million. American
Water received a $35.0 million federal income tax refund, including interest in
the fourth quarter of 2008. Excluding the effect of this refund, 2009 cash flows
from operating activities increased $79.0 million or 15.3 percent over 2008.

Capital expenditures for the year ended December 31, 2009, were $785.3 million
compared to $1.0 billion in the prior year period.

“American Water continued its commitment to delivering reliable service to its
customers in 2009,” said Correll. “Reports from both the Environmental
Protection Agency and the American Society of Civil Engineers relay that our
country`s water and wastewater infrastructure is facing a trillion dollar
challenge and is in serious need of repair. American Water, through proactive,
prudent investment has spent nearly two billion dollars in the last two years
alone to help ensure the reliability of our water and wastewater services.”

To fund American Water`s ongoing capital program, repay short-term debt from the
prior year, and return value to its shareholders through a dividend, the company
received net proceeds of $242.3 million from its common equity issuance,
incurred $722.9 million of incremental debt and used its cash flow from
operations. The company issued $28.5 million in new tax-exempt bonds during the
fourth quarter 2009, adding to a total of $179.9 million in tax-exempt bonds
issued for the year. Additionally, the company remarketed, at fixed rates,
$237.9 million in tax-exempt bonds during the fourth quarter 2009 and $339.0
million for the year.

The company received authorizations for additional annualized revenues from
general rate cases of $49.5 million in the fourth quarter 2009, which brings the
total for the year to $80.9 million.As of December 31, 2009, the company was
awaiting final orders for general rate cases in nine states, requesting $218.9
million in total additional annual revenues. The extent to which requested rate
increases will be granted by the applicable regulatory agencies will vary.

American Water continued to grow its business in 2009. Most recently, the
company`s subsidiary, American Water Enterprises, acquired Environmental
Management Corporation (EMC). EMC has more than 50 contracts with industrial and
municipal customers in the United States and Canada. During the year, the
company also acquired several systems located in Pennsylvania, Indiana and West
Virginia. With a combined purchase price of approximately $7.8 million, the
newly acquired systems serve a total of nearly 5,000 people. The U.S. Department
of Defense also continued to recognize American Water as a powerful solutions
provider by awarding the company military base water and wastewater systems
contracts. After earning several major contracts over the last two years, the
company now serves approximately 400,000 servicemen and women, their families
and support staff on bases across the U.S.

“American Water`s growth during 2009 reflects a successful year of providing
water solutions,” said Correll. “From major military contracts to multiple
acquisitions of water systems in need of repair, our experience and size allows
us to offer innovative solutions to communities facing water quality, quantity
and economic challenges.”

In 2009, the divestiture of American Water stock by RWE was completed.

Also during the fourth quarter, the Board of Directors declared a quarterly cash
dividend of $0.21 per common share. In 2009, the Board increased American
Water`s quarterly cash dividend payment by five percent from $0.20 to $0.21 per
share. Dividends paid totaled $0.82 per common share for the year.

2010 Earnings Guidance

In order to enhance transparency for its investors, American Water has issued
earnings guidance for 2010. The company`s 2010 earnings are estimated to be in
the range of $1.30 to $1.40 per share. The company`s earnings forecasts are
subject to numerous risks, including those described under “Forward-Looking
Statements” below and under “Risk Factors” in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2009.

Non-GAAP Financial Measures

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

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

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

Fourth Quarter and Year-End 2009 Earnings Conference Call

The fourth quarter and year-end 2009 earnings conference call will take place
Monday, March 1, 2010, at 9:00 a.m. Eastern Time. Interested parties may listen
over the Internet by logging on to the Investor Relations page of the company`s
Web site at www.amwater.com.

Following the earnings conference call, an audio archive of the call will be
available through March 8, 2010, by dialing 303-590-3030 for U.S. and
international callers. The access code for replay is 4204123. The online archive
of the webcast will be available through March 31, 2010, by accessing the
Investor Relations page of the company`s Web site located at www.amwater.com.

About American Water

Founded in 1886, American Water is the largest investor-owned U.S. water and
wastewater utility company. With headquarters in Voorhees, N.J., the company
employs more than 7, 000 dedicated professionals who provide drinking water,
wastewater and other related services to approximately 16 million people in 35
states and Ontario and Manitoba, Canada.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release are forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are predictions based on
our current expectations and assumptions regarding future events and may relate
to, among other things, our future financial performance, including earnings,
our growth strategies, our ability to finance current operations and growth
initiatives, trends in our industry, regulatory or legal developments or rate
adjustments. Actual results could differ materially because of factors such as
the decisions of governmental and regulatory bodies, including decisions to
raise or lower rates; the timeliness of regulatory commissions` actions
concerning rates; changes in laws, governmental regulations and policies,
including environmental, health and water quality and public utility regulations
and policies; weather conditions, patterns or events, including drought or
abnormally high rainfall; changes in customer demand for, and patterns of use
of, water, such as may result from conservation efforts; our ability to
appropriately maintain current infrastructure and manage the expansion of our
business; our ability to obtain permits for projects; changes in our capital
requirements; our ability to control operating expenses and to achieve
efficiencies in our operations; our ability to obtain adequate and
cost-effective supplies of chemicals, electricity, fuel, water and other raw
materials that are needed for our operations; our ability to successfully
acquire and integrate water and wastewater systems that are complementary to our
operations and the growth of our business; cost overruns relating to
improvements or the expansion of our operations; changes in general economic,
business and financial market conditions; significant changes to our business
processes and corresponding technology; access to sufficient capital on
satisfactory terms; fluctuations in interest rates; restrictive covenants in or
changes to the credit ratings on our current or future debt that could increase
our financing costs or affect our ability to borrow, make payments on debt or
pay dividends; fluctuations in the value of benefit plan assets and liabilities
that could increase our cost and funding requirements; the incurrence of
impairment charges; migration of customers into or out of our service
territories; difficulty in obtaining insurance at acceptable rates and on
acceptable terms and conditions; ability to retain and attract qualified
employees; and civil disturbance, labor strikes or terrorist threats or acts or
public apprehension about future disturbances or terrorist threats or acts.

For further information regarding risks and uncertainties associated with
American Water`s business, please refer to American Water`s annual, quarterly
and periodic SEC filings. The Company undertakes no duty to update any
forward-looking statement.

American Water Works Company, Inc. and Subsidiary Companies

Consolidated Statements of Operations (Unaudited)
In thousands except per share data

Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008

Operating revenues $ 597,837 $ 568,551 $ 2,440,703 $ 2,336,928

Operating expenses
Operation and maintenance 338,494 319,735 1,324,355 1,303,798
Depreciation and amortization 77,301 71,662 294,240 271,261
General taxes 44,448 48,065 199,262 199,139
Gain on sale of assets 213 39 (763 ) (374 )
Impairment charge – – 450,000 750,000
Total operating expenses, net 460,456 439,501 2,267,094 2,523,824

Operating income (loss) 137,381 129,050 173,609 (186,896 )

Other income (deductions)
Interest, net (76,754 ) (72,437 ) (296,545 ) (285,155 )
Allowance for other funds used during construction 2,278 4,127 11,486 14,497
Allowance for borrowed funds used during construction 1,687 2,108 7,224 8,171
Amortization of debt expense (1,489 ) (1,535 ) (6,647 ) (5,895 )
Other, net (187 ) 3,309 (792 ) 4,684
Total other income (deductions) (74,465 ) (64,428 ) (285,274 ) (263,698 )

Income (loss) before income taxes 62,916 64,622 (111,665 ) (450,594 )
Provision for income taxes 26,545 28,215 121,418 111,827
Net income (loss) $ 36,371 $ 36,407 $ (233,083 ) $ (562,421 )

Basic earnings per common share: $ 0.21 $ 0.23 $ (1.39 ) $ (3.52 )

Diluted earnings per common share: $ 0.21 $ 0.23 $ (1.39 ) $ (3.52 )

Average common shares outstanding during the period:
Basic 174,631 159,990 168,164 159,967
Diluted 174,778 160,045 168,164 159,967

Dividends per common share $ 0.21 $ 0.20 $ 0.82 $ 0.40

American Water Works Company, Inc. and Subsidiary Companies

Condensed Consolidated Balance Sheet Information (Unaudited)
In thousands

December 31, December 31,
2009 2008

Cash and cash equivalents $ 22,256 $ 9,542
Other current assets 476,871 408,133
Total property, plant and equipment 10,677,393 10,123,928
Total regulatory and other long-term assets 2,276,131 2,690,215
Total Assets $ 13,452,651 $ 13,231,818
Short-term debt $ 119,497 $ 479,010
Current portion of long-term debt 54,068 175,822
Other current liabilities 433,827 449,928
Long-term debt 5,312,126 4,648,213
Total regulatory and other long-term liabilities 2,554,437 2,460,872
Contributions in aid of construction 973,280 911,415
Total stockholders’ equity 4,005,416 4,106,558
Total Capitalization and Liabilities $ 13,452,651 $ 13,231,818

Operating Expenses Excluding Impairment Charge (A Non-GAAP, Unaudited Number)
In thousands

Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008

Total operating expenses, net $ 460,456 $ 439,501 $ 2,267,094 $ 2,523,824
Less:Impairment charge – – 450,000 750,000
Total operating expenses excluding impairment charge $ 460,456 $ 439,501 $ 1,817,094 $ 1,773,824

Net Income (Loss) Excluding Impairment Charge (A Non-GAAP, Unaudited Number)
In thousands

Three Months Ended Years Ended
December 31, December 31,
2009 2008 2009 2008

Net income (loss) $ 36,371 $ 36,407 $ (233,083 ) $ (562,421 )
Add:Impairment charge – – 450,000 750,000
Net income excluding impairment charge before associated tax benefit 36,371 36,407 216,917 187,579
Less: Income tax benefit relating to impairment charge – – 6,976 11,525
Net income excluding impairment charge $ 36,371 $ 36,407 $ 209,941 $ 176,054

Basic earnings per common share excluding impairment charge: $ 0.21 $ 0.23 $ 1.25 $ 1.10

Diluted earnings per common share excluding impairment charge: $ 0.21 $ 0.23 $ 1.25 $ 1.10

American Water Works Company, Inc.
Edward Vallejo
Vice President, Investor Relations
856-566-4005
edward.vallejo@amwater.com
or
Maureen Duffy
Director, Communications
856-309-4546
maureen.duffy@amwater.com

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