How American Water Grows Earnings

AMERICAN WATER *Amounts may not sum due to rounding Reconciliation Table: Adjusted Return on Equity LTM LTM June 30, 2018 June 30, 2019 Net Income Adjustments: Freedom Industries activities Early Debt Extinguishment at Parent Keystone Impairment Contract Services Gain on Sale $470 $582 (42) (4) 6 54 (14) Tax Impact for items above Re-measurement from Tax Reform 11 (11) 125 12 Adjusted Net Income from Continuing Operations (a) $570 $619 Shareholders' equity $5,736 $6,027 Adjustments: Freedom Industries activities (42) (4) Early Debt Extinguishment at Parent 6 Keystone Impairment 54 Contract Services Gain on Sale (14) Tax Impact for items above Re-measurement from Tax Reform 11 (11) 125 12 Adjusted Shareholders' Equity (b) $5,836 $6,064 Adjusted Return on Equity (a/b) 9.8% 10.2% 46

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