Form: 8-K

Current report filing

July 29, 2009

Exhibit 99.1
         
(CALIFORNIA WATER SERVICE GROUP LOGO)
  NEWS RELEASE

CALIFORNIA WATER SERVICE GROUP
  (CWT LISTED NYSE LOGO)
1720 North First Street
San Jose, CA 95112-4598
July 29, 2009
For Immediate Release
Contact:   Marty Kropelnicki (408) 367-8200 (analysts)
Shannon Dean (310) 257-1435 (media)
CAL WATER ANNOUNCES RESULTS FOR THE 2ND QUARTER OF 2009
     SAN JOSE, CA — California Water Service Group (NYSE : CWT) today announced net income of $12.1 million, up 20% from $10.1 million in the second quarter of 2008, and earnings per common share (EPS) of $0.58, an increase of 21% over EPS of $0.48 in the same period last year.
     Revenues increased by $11.1 million, or 11%, to $116.7 million, with rate increases adding $19.2 million and water usage by new customers adding $3.4 million. These increases were offset by a decrease in water usage by existing customers and other charges totaling $11.1 million. The combined net effect of the water revenue adjustment mechanism (WRAM) and modified cost balancing account (MCBA) was a $0.4 million decrease in revenue. The WRAM is a ratemaking mechanism that decouples water sales from revenues and the MCBA is an account that allows Cal

 


 

Water to track and recover or refund changes in water production costs.
     Total operating expenses for the second quarter of 2009 increased by $9.6 million to $100.7 million. Water production costs increased by $1.4 million due to higher power costs and wholesale water rates. Administrative costs increased $5.6 million, due primarily to increases in pension, health, and legal expenses. Other operations expenses increased $1.6 million to $14.3 million, as a result of increases in costs of pumping and distributing water.
     Fewer water system repairs resulted in a $0.6 million decrease in maintenance expense, which was $4.3 million for the quarter. Depreciation expense increased $1.0 million to $10.3 million as a result of increases in capital expenditures. Taxes other than income increased $0.4 million to $3.9 million.
     Other income, net of income taxes, increased $1.1 million to $1.5 million. Interest expense increased $0.6 million to $5.3 million due to a new debt offering in April 2009.
     For the twelve months ended June 30, 2009, net income was $44.0 million and dilutive earnings per share were $2.11, compared to net income of $32.2 million and dilutive earnings per share of $1.55 for the same period in the prior year. Revenues for the trailing twelve months were $435.1 million, compared to $378.2 million for the same period last year.
     “The most important factor in our financial performance continues to be our ability to recover prudently incurred costs in rates, and our second quarter results were positively affected

 


 

by our approved rates in the 2007 General Rate Case filing,” said President and Chief Executive Officer Peter C. Nelson.
     “We also believe that the WRAM and MCBA are working effectively to facilitate water conservation and efficiency programs,” Nelson said.
     Rate-Related Matters
     On July 2, 2009, Cal Water filed a General Rate Case with the California Public Utility Commission for all California operations, beginning an 18-month review process. The filing requests an additional $70.6 million in 2011, followed by increases of $24.8 million in 2012 and 2013. The increased revenues are to cover expense increases and capital projects for 2011 through 2013. The Company cannot predict at this time the rate change the Commission will order in 2011.
     Interim rate increases, which are typically allowed in the second and third years following a General Rate Case, became effective on July 23, 2009 for 11 California Districts, which will add $9 million to annual revenues.
     Acquisitions and New Business
     In the second quarter of 2009, Cal Water received final approval from the California Public Utilities Commission on its acquisition of the Skyline County Water District, a 465-connection system adjacent to Cal Water’s Bear Gulch District.
     Other Information

 


 

     All stockholders and interested investors are invited to listen to the 2009 second quarter conference call on July 30, 2009, at 11:00 a.m. (EST), by dialing 1-866-871-4881 and keying in ID# 1369368. A replay of the call will be available from 2:00 p.m. (EST) July 30, 2009, through September 28, 2009, at 1-888-266-2081, ID# 1369368. The call, which will be hosted by President and CEO, Peter Nelson and Controller and Assistant Treasurer, Calvin L. Breed, will also be webcast under the investor relations tab at www.calwatergroup.com.
     California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company, Inc., CWS Utility Services, and HWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. Group’s common stock trades on the New York Stock Exchange under the symbol “CWT”.
     This news release contains forward-looking statements within the meaning established by the Private Securities Litigation Reform Act of 1995 (“Act”). The forward-looking statements are intended to qualify under provisions of the federal securities laws for “safe harbor” treatment established by the Act. Forward-looking statements are based on currently available information, expectations, estimates, assumptions and projections, and management’s judgment about the Company, the water utility industry and general economic conditions. Such words as expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such words or similar expressions are intended to identify forward-looking statements. The forward-looking statements are not guarantees of future performance. They are subject to uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors that may cause a result different than expected or anticipated include, but are not limited to:

 


 

governmental and regulatory commissions’ decisions; changes in regulatory commissions’ policies and procedures; the timeliness of regulatory commissions’ actions concerning rate relief; new legislation; electric power interruptions; increases in suppliers’ prices and the availability of supplies including water and power; fluctuations in interest rates; changes in environmental compliance and water quality requirements; acquisitions and our ability to successfully integrate acquired companies; the ability to successfully implement business plans; changes in customer water use patterns; the impact of weather on water sales and operating results; access to sufficient capital on satisfactory terms; civil disturbances or terrorist threats or acts, or apprehension about the possible future occurrences of acts of this type; the involvement of the United States in war or other hostilities; 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; and, other risks and unforeseen events. When considering forward-looking statements, you should keep in mind the cautionary statements included in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation to provide public updates of forward-looking statements.
     Additional information is available at our Web site at www.calwatergroup.com.
     Attachments (2).
###
Source: California Water Service Group

 


 

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
                 
    June 30,     December 31  
(In thousands, except per share data)   2009     2008  
ASSETS
               
Utility plant:
               
Utility plant
  $ 1,638,356     $ 1,583,079  
Less accumulated depreciation and amortization
    (492,989 )     (470,712 )
 
           
Net utility plant
    1,145,367       1,112,367  
 
           
Current assets:
               
Cash and cash equivalents
    41,498       13,869  
Receivables
               
Customers
    26,613       22,786  
Other
    20,299       12,071  
Unbilled revenue
    20,273       13,112  
Materials and supplies at average cost
    5,244       5,070  
Taxes, prepaid expense, and other assets
    10,565       12,890  
 
           
Total current assets
    124,492       79,798  
 
           
 
               
Other assets:
               
Regulatory assets
    198,064       198,293  
Goodwill
    3,906       3,906  
Other assets
    31,411       23,743  
 
           
Total other assets
    233,381       225,942  
 
           
 
  $ 1,503,240     $ 1,418,107  
 
           
 
               
CAPITALIZATION AND LIABILITIES
               
Capitalization:
               
Common stock, $.01 par value
  $ 207     $ 207  
Additional paid-in capital
    214,451       213,922  
Retained earnings
    191,098       188,820  
 
           
Total common stockholders’ equity
    405,756       402,949  
Preferred stock
    —       —  
Long-term debt, less current maturities
    383,500       287,498  
 
           
Total capitalization
    789,256       690,447  
 
           
 
               
Current liabilities:
               
Current maturities of long-term debt
    2,664       2,818  
Accounts payable
    48,344       41,772  
Notes payable
    12,000       40,000  
Accrued expenses and other liabilities
    38,202       38,606  
 
           
Total current liabilities
    101,210       123,196  
 
               
Unamortized investment tax credits
    2,392       2,392  
Deferred income taxes, net
    76,008       72,344  
Regulatory liability and Other
    83,282       83,312  
Pension and postretirement benefits other than pensions
    152,468       152,685  
Advances for construction
    179,566       176,163  
Contributions in aid of construction
    119,058       117,568  
Commitments and contingencies
               
 
           
 
  $ 1,503,240     $ 1,418,107  
 
           

 


 

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Three-Months ended:
                 
    June 30,     June 30,  
    2009     2008  
 
               
Operating revenue
  $ 116,667     $ 105,581  
 
           
Operating expenses:
               
Water production costs
    41,702       40,349  
Admistrative and General
    19,385       13,835  
Other operations
    14,331       12,766  
Maintenance
    4,313       4,947  
Depreciation and amortization
    10,282       9,276  
Income taxes
    6,789       6,442  
Property and other taxes
    3,911       3,484  
 
           
Total operating expenses
    100,713       91,099  
 
           
 
               
Net operating income
    15,954       14,482  
 
           
 
               
Other income and expenses:
               
Non-regulated revenue
    3,098       1,696  
Non-regulated expenses
    (720 )     (1,132 )
Gain on sale of non-utility property
    72       7  
Less: income taxes on other income and expenses
    (993 )     (219 )
 
           
 
    1,457       352  
 
           
 
               
Interest expense:
               
Interest Expense
    5,961       5,157  
Less: capitalized interest
    (640 )     (439 )
 
           
Net interest expense
    5,321       4,718  
 
           
 
               
Net income
  $ 12,090     $ 10,116  
 
           
Earnings per share
               
Basic
  $ 0.58     $ 0.48  
 
           
Diluted
  $ 0.58     $ 0.48  
 
           
Weighted average shares outstanding
               
Basic
    20,745       20,717  
 
           
Diluted
    20,767       20,741  
 
           
Dividends per share of common stock
  $ 0.2950     $ 0.2925  
 
           

 


 

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Six-Months ended:
                 
    June 30,     June 30,  
    2009     2008  
 
               
Operating revenue
  $ 203,280     $ 178,502  
 
           
Operating expenses:
               
Water production costs
    70,570       65,707  
Admistrative and General
    38,247       27,253  
Other operations
    26,786       24,831  
Maintenance
    8,947       9,060  
Depreciation and amortization
    20,480       18,498  
Income taxes
    8,021       6,616  
Property and other taxes
    7,999       7,223  
 
           
Total operating expenses
    181,050       159,188  
 
           
 
               
Net operating income
    22,230       19,314  
 
           
 
               
Other income and expenses:
               
Non-regulated revenue
    5,979       4,601  
Non-regulated expenses
    (3,362 )     (4,168 )
Gain on sale of non-utility property
    675       7  
Less: income taxes on other income and expenses
    (1,330 )     (170 )
 
           
 
    1,962       270  
 
           
 
               
Interest expense:
               
Interest Expense
    11,000       10,171  
Less: capitalized interest
    (1,319 )     (889 )
 
           
Net interest expense
    9,681       9,282  
 
           
 
               
Net income
  $ 14,511     $ 10,302  
 
           
 
               
Earnings per share
               
Basic
  $ 0.70     $ 0.49  
 
           
Diluted
  $ 0.70     $ 0.49  
 
           
Weighted average shares outstanding
               
Basic
    20,738       20,702  
 
           
Diluted
    20,763       20,726  
 
           
Dividends per share of common stock
  $ 0.5900     $ 0.5850