Exhibit 99.1

 

 

NEWS RELEASE

(CALIFORNIA WATER SERVICE GROUP)

 

 

1720 North First Street

San Jose, CA 95112-4598

 

 

 

 

Contact:

Tom Smegal (408) 367-8200 (analysts)

Shannon Dean (310) 257-1435 (media)

November 6, 2012

 

CALIFORNIA WATER SERVICE GROUP ANNOUNCES RESULTS FOR THE 3rd QUARTER OF 2012

 

SAN JOSE, CA  –  California Water Service Group (NYSE : CWT) today announced net income of $29.8 million and earnings per share of $0.71 for the third quarter of 2012, compared to net income of $20.9 million and earnings per share of $0.50 in the third quarter of 2011.   Included in earnings per share was a $0.15 nonrecurring income tax benefit related to 2011 and prior years due to required tax regulation changes.

 

Operating revenue for the third quarter increased $8.9 million, or 5.2%, to $178.1 million compared to the third quarter of 2011.  Sales to new customers added $0.3 million, general rate increases added $4.3 million, offset rate increases to recover increases in purchased water costs added $4.1 million, and increased usage by existing customers and other activities added $0.2 million.

 

Total operating expenses for the third quarter of 2012 increased $2.6 million, or 1.9%, to $141.8 million.  Water production costs increased $4.9 million, or 7.9%, to $66.5 million, primarily due to wholesale water rate increases.  Administrative costs increased $2.3 million, or 10.5%, to $23.9 million, due primarily to labor and benefit

 

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expenses.  Changes in pension costs for regulated California operations do not affect earnings because the Company is allowed by the California Public Utilities Commission (CPUC) to track pension cost changes in a balancing account for future recovery which creates a corresponding change to operating revenues. Other operations expenses increased $0.2 million, or 0.9%, to $17.7 million, due primarily to increases in conservation, water treatment and water quality expenses.  Conservation program expenses in California do not affect earnings because they are tracked in a balancing account for future recovery which creates a corresponding change to operating revenues.

 

Maintenance expense decreased $0.3 million, or 5.9 %, to $4.4 million.   Depreciation expense increased $1.0 million, or 7.8% to $13.7 million, due to increases in utility plant.   Income taxes charged to operating expenses and other income and expenses decreased $3.8 million due to a nonrecurring income tax benefit related to 2011 and prior years for repairs costs previously capitalized for book and income tax purposes.  Effective January 1, 2012, the corporate federal income tax repairs and maintenance deduction for qualified tangible property became mandatory for property placed into service during 2012 and prior years.  The new tax regulations require the Company to deduct a significant amount of costs previously capitalized for book and tax purposes.  The amount of the Company’s 2011 and prior years repairs and maintenance deduction was finalized and recorded during the third quarter of 2012.

 

Other income, net of income taxes, increased $2.4 million to $0.6 million, due primarily to an unrealized mark-to-market gain associated with the change in value of long-term assets held by the Company’s non-qualified retirement plans.  Interest expense decreased $0.1 million, or 1.5% to $7.2 million due to lower interest rates on short-term borrowings.

 

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“Our third quarter earnings are in line with our expectations, given the impact of the new tax rule and positive mark-to-market adjustment.  More important for the long term is our continued success in operating within our budget and obtaining timely recovery of prudently incurred costs in water rates.  Our team continues to focus on these key areas,” said Peter C. Nelson, Chairman of the Board and CEO.

 

Other Information

 

All stockholders and interested investors are invited to listen to the 2012 third quarter conference call on 11 a.m. ET on Wednesday, November 7, 2012, which can be accessed by dialing 1-888-539-3696 and keying in ID# 6942093.  A replay of the call will be available from 2:00 p.m. ET on Wednesday, November 7, 2012, through January 6, 2013, at 888-203-1112, ID# 6942093.   The call, which will be hosted by Chairman and Chief Executive Officer Peter C. Nelson, President and Chief Operating Officer Martin A. Kropelnicki, and Vice President, Chief Financial Officer and Treasurer Thomas F. Smegal, 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.  California Water Service Group’s common stock trades on the New York Stock Exchange under the symbol “CWT.”

 

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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 website at www.calwatergroup.com.

 

Attachments (2).

 

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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(In thousands, except per share data)

 

 

 

September 30,

 

December 31,

 

 

 

2012

 

2011

 

ASSETS

 

 

 

 

 

Utility plant:

 

 

 

 

 

Utility plant

 

$

2,065,679

 

$

1,960,381

 

Less accumulated depreciation and amortization

 

(622,553

)

(579,262

)

Net utility plant

 

1,443,126

 

1,381,119

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

16,971

 

27,203

 

Receivables

 

 

 

 

 

Customers

 

48,087

 

28,418

 

Regulatory balancing accounts

 

33,171

 

21,680

 

Other

 

12,277

 

6,422

 

Unbilled revenue

 

23,474

 

15,068

 

Materials and supplies at average cost

 

6,029

 

5,913

 

Taxes, prepaid expense, and other assets

 

10,089

 

9,184

 

Total current assets

 

150,098

 

113,888

 

Other assets:

 

 

 

 

 

Regulatory assets

 

334,000

 

319,898

 

Goodwill

 

2,615

 

2,615

 

Other assets

 

45,994

 

37,067

 

Total other assets

 

382,609

 

359,580

 

 

 

$

1,975,833

 

$

1,854,587

 

 

 

 

 

 

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

Capitalization:

 

 

 

 

 

Common stock, $.01 par value; 68,000 shares authorized, 41,905 and 41,817, outstanding in 2012 and 2011, respectively

 

$

419

 

$

418

 

Additional paid-in capital

 

220,642

 

219,572

 

Retained earnings

 

253,875

 

229,839

 

Total common stockholders’ equity

 

474,936

 

449,829

 

Long-term debt, less current maturities

 

479,460

 

481,632

 

Total capitalization

 

954,396

 

931,461

 

Current liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

6,677

 

6,533

 

Short-term borrowings

 

60,675

 

47,140

 

Accounts payable

 

58,839

 

48,923

 

Regulatory balancing accounts

 

5,533

 

2,655

 

Accrued interest

 

11,046

 

4,756

 

Accrued expenses and other liabilities

 

47,464

 

41,868

 

Total current liabilities

 

190,234

 

151,875

 

Unamortized investment tax credits

 

2,254

 

2,254

 

Deferred income taxes, net

 

164,245

 

116,368

 

Pension and postretirement benefits other than pensions

 

234,432

 

232,110

 

Regulatory liability and Other

 

87,037

 

79,050

 

Advances for construction

 

188,249

 

187,278

 

Contributions in aid of construction

 

154,986

 

154,191

 

 

 

$

1,975,833

 

$

1,854,587

 

 



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)

 

 

 

September 30,

 

September 30,

 

For the Three-Months ended:

 

2012

 

2011

 

 

 

 

 

 

 

Operating revenue

 

$

178,135

 

$

169,254

 

Operating expenses:

 

 

 

 

 

Operations:

 

 

 

 

 

Water production costs

 

66,489

 

61,593

 

Administrative and General

 

23,925

 

21,646

 

Other operations

 

17,658

 

17,506

 

Maintenance

 

4,377

 

4,651

 

Depreciation and amortization

 

13,720

 

12,729

 

Income taxes

 

10,387

 

15,881

 

Property and other taxes

 

5,218

 

5,170

 

Total operating expenses

 

141,774

 

139,176

 

 

 

 

 

 

 

Net operating income

 

36,361

 

30,078

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

Non-regulated revenue

 

3,756

 

3,425

 

Non-regulated expenses, net

 

(2,697

)

(6,489

)

Income tax (expense) benefit on other income and expenses

 

(422

)

1,254

 

Net other income

 

637

 

(1,810

)

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Interest Expense

 

8,024

 

8,007

 

Less: capitalized interest

 

(798

)

(674

)

Net interest expense

 

7,226

 

7,333

 

 

 

 

 

 

 

Net income

 

$

29,772

 

$

20,935

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

Basic

 

$

0.71

 

$

0.50

 

Diluted

 

$

0.71

 

$

0.50

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

41,905

 

41,780

 

Diluted

 

41,905

 

41,789

 

Dividends per share of common stock

 

$

0.15750

 

$

0.15375

 

 



 

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Unaudited

(In thousands, except per share data)

 

 

 

September 30,

 

September 30,

 

For the Nine-Months ended:

 

2012

 

2011

 

 

 

 

 

 

 

Operating revenue

 

$

438,436

 

$

398,800

 

Operating expenses:

 

 

 

 

 

Operations:

 

 

 

 

 

Water production costs

 

158,119

 

138,296

 

Administrative and General

 

69,110

 

62,702

 

Other operations

 

59,213

 

47,879

 

Maintenance

 

14,742

 

15,138

 

Depreciation and amortization

 

41,383

 

37,690

 

Income taxes

 

19,477

 

23,278

 

Property and other taxes

 

13,802

 

14,236

 

Total operating expenses

 

375,846

 

339,219

 

 

 

 

 

 

 

Net operating income

 

62,590

 

59,581

 

 

 

 

 

 

 

Other income and expenses:

 

 

 

 

 

Non-regulated revenue

 

11,943

 

11,497

 

Non-regulated expenses, net

 

(8,491

)

(13,360

)

Income tax (expense) benefit on other income and expenses

 

(1,383

)

776

 

Net other income

 

2,069

 

(1,087

)

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Interest Expense

 

23,484

 

24,556

 

Less: capitalized interest

 

(2,647

)

(1,906

)

Net interest expense

 

20,837

 

22,650

 

 

 

 

 

 

 

Net income

 

$

43,822

 

$

35,844

 

 

 

 

 

 

 

Earnings per share

 

 

 

 

 

Basic

 

$

1.05

 

$

0.86

 

Diluted

 

$

1.05

 

$

0.86

 

Weighted average shares outstanding

 

 

 

 

 

Basic

 

41,886

 

41,743

 

Diluted

 

41,886

 

41,756

 

Dividends per share of common stock

 

$

0.47250

 

$

0.46125