Company: AWK
Filing Date: 2025-12-17
Form Type: S-4
Source: 0001193125-25-321389
Chunk: 219

Company: American Water Works Company, Inc.
Filing Date: 2025-12-17
Form: S-4
Chunk 219
---
A CONDENSED COMBINED FINANCIAL INFORMATION 1. Basis of Presentation The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of the SEC’s Regulation S-X and should be read in conjunction with the accompanying notes. See the description included in “ —Basis of Pro Forma Presentation” above for more information, which is deemed to be included in, and form a part of, this Note 1. The pro forma adjustments have been prepared as if the merger had been consummated on September 30, 2025, in the case of the unaudited pro forma condensed combined balance sheet, and, in the case of the unaudited pro forma condensed combined statements of operations, as if the merger had been consummated on January 1, 2024, the beginning of the earliest period presented in the unaudited pro forma condensed combined statements of operations. One-time direct and incremental transaction costs will be expensed as incurred under ASC 805 and are assumed to be cash settled. American Water plans to issue incremental short-term debt, consisting of commercial paper borrowings to finance transaction costs associated with the merger, and pro forma adjustments have been applied to give effect to this incremental issuance. 2. Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2025 The adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2025 are as follows:

| (A) | Reflects reclassification adjustments to conform Essential’s historical balances to the financial 
 statement presentation of American Water.                                                         |

| (B) | Reflects purchase price consideration as well as the purchase price allocation adjustments to record                                                                        
 Essential’s assets and liabilities at estimated fair value based on the consideration conveyed and the elimination of Essential’s historical shareholders’ equity balances. |

The preliminary purchase price was allocated among the identified assets to be acquired, based on a preliminary analysis. Goodwill is expected to be recognized as a result of the merger, which represents the excess of the fair value of consideration over the fair value of the underlying net assets of Essential. This was considered appropriate based on the determination that the merger would be accounted for as a business acquisition under ASC 805. The deferred income taxes represent the deferred tax impact associated with the incremental differences in book and tax basis created from the preliminary purchase price allocation. Deferred taxes associated with estimated fair value adjustments were calculated using the statutory corporate income tax rate of