Press Release

California Water Service Group Announces Second Quarter 2013 Results

SAN JOSE, CA--(Marketwired - Jul 31, 2013) -  California Water Service Group (NYSE: CWT) today announced net income of $13.5 million or $0.28 per diluted common share for the second quarter of 2013, compared to net income of $13.0 million or $0.31 per diluted common share for the second quarter of 2012. The year-to-year decrease in earnings per share is attributable to the dilutive effect of the stock offering completed in March 2013. 

Revenue for the second quarter of 2013 was $154.6 million, compared to revenue of $143.6 million in second quarter 2012. The increase in revenue is due primarily to an increase in usage of $9.6 million, net of WRAM, which includes a $3.6 million increase in accrued unbilled revenue. Rate increases added $3.8 million in revenue and the effect of other regulatory mechanisms decreased revenue by $2.4 million.

Total operating expenses for the second quarter of 2013 increased $9.9 million, or 7.9%, to $133.8 million. Water production costs increased $7.0 million, or 13.2%, to $59.6 million, due primarily to increased wholesaler water prices and increases in the quantity of water produced. Administrative and general expense and other operations expense increased $0.3 million, or 0.7%, to $40.2 million, due primarily to increased wage and employee benefit costs, which were partially offset by decreased conservation program expense. 

Maintenance expense decreased $0.4 million, or 9.0%, to $4.2 million, due primarily to a decrease in main and service repairs. Depreciation expense increased $0.8 million, or 5.7%, to $14.5 million due to 2012 capital additions. 

Other income, net of income taxes, decreased $0.2 million in the second quarter of 2013. Interest expense increased $0.4 million, or 5.7%, to $7.3 million due to a decrease in capitalized interest charged to construction projects.

According to Chairman and Chief Executive Officer Peter C. Nelson, second quarter results were in line with the company's expectations.

"Given the fact that 2013 is the third year of our General Rate Case cycle in California and we expect to receive only limited rate increases, we continue to focus on managing operating expenses and working toward the best outcome in our current General Rate Case filed in 2012," Nelson said.

"The Company continues to have productive settlement negotiations with the California Public Utilities Commission's Division of Ratepayer Advocates and other interested parties. Hearings on the case are scheduled to resume in August, and a final decision is expected to become effective at the end of 2013," he said.

All stockholders and interested investors are invited to listen to the second quarter 2013 conference call August 1, 2013 at 11 a.m. EDT by dialing 1-888-337-8198 and keying in ID # 2783716. A replay of the call will be available from 2 p.m. EDT on Thursday, August 1, 2013, through September 29, 2013, at 1-888-203-1112 and will 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 approximately 2 million people in more than 100 California, Washington, New Mexico, and Hawaii communities. Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available at our web site at www.calwatergroup.com.

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.

   
CALIFORNIA WATER SERVICE GROUP  
CONDENSED CONSOLIDATED BALANCE SHEETS  
Unaudited  
             
(In thousands, except per share data)   June 30,     December 31,  
    2013     2012  
ASSETS                
Utility plant:                
  Utility plant   $ 2,160,706     $ 2,096,363  
  Less accumulated depreciation and amortization     (670,452 )     (639,307 )
    Net utility plant     1,490,254       1,457,056  
                 
Current assets:                
  Cash and cash equivalents     38,668       38,790  
  Receivables: net of allowance for doubtful accounts of $714 for both periods presented                
    Customers     41,493       29,958  
    Regulatory balancing accounts     25,560       34,020  
    Other     14,335       11,943  
  Unbilled revenue     24,750       15,394  
  Materials and supplies at weighted average cost     5,720       5,874  
  Taxes, prepaid expenses, and other assets     13,550       10,585  
    Total current assets     164,076       146,564  
                 
Other assets:                
  Regulatory assets     353,910       344,419  
  Goodwill     2,615       2,615  
  Other assets     47,752       45,270  
    Total other assets     404,277       392,304  
    $ 2,058,607     $ 1,995,924  
                 
CAPITALIZATION AND LIABILITIES                
Capitalization:                
  Common stock, $.01 par value   $ 477     $ 419  
  Additional paid-in capital     327,628       221,013  
  Retained earnings     250,375       252,280  
    Total common stockholders' equity     578,480       473,712  
  Long-term debt, less current maturities     430,705       434,467  
    Total capitalization     1,009,185       908,179  
                 
Current liabilities:                
  Current maturities of long-term debt     48,040       46,783  
  Short-term borrowings     28,815       89,475  
  Accounts payable     57,158       47,199  
  Regulatory balancing accounts     4,717       5,018  
  Accrued interest     4,608       4,705  
  Accrued expenses and other liabilities     52,872       49,887  
    Total current liabilities     196,210       243,067  
                 
Unamortized investment tax credits     2,180       2,180  
Deferred income taxes, net     167,611       158,846  
Pension and postretirement benefits other than pensions     248,003       244,901  
Regulatory and other liabilities     88,578       92,593  
Advances for construction     186,202       187,584  
Contributions in aid of construction     160,638       158,574  
Commitments and contingencies     -       -  
    $ 2,058,607     $ 1,995,924  
                 
                 
   
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  
    2013     2012  
                 
Operating revenue   $ 154,555     $ 143,552  
Operating expenses:                
  Operations:                
    Water production costs     59,645       52,678  
    Administrative and general     23,155       22,167  
    Other operations     17,030       17,729  
  Maintenance     4,188       4,605  
  Depreciation and amortization     14,491       13,712  
  Income tax expense     9,548       9,062  
  Property and other taxes     5,715       3,977  
    Total operating expenses     133,772       123,930  
                 
    Net operating income     20,783       19,622  
                 
Other income and expenses:                
  Non-regulated revenue     3,215       4,051  
  Non-regulated expenses, net     (3,240 )     (3,695 )
  Income tax benefit (expense) on other income and expense     16       (138 )
    Net other (expense) income     (9 )     218  
                 
Interest expense:                
  Interest expense     7,803       7,821  
  Less: capitalized interest     (539 )     (946 )
    Net interest expense     7,264       6,875  
                 
Net income   $ 13,510     $ 12,965  
                 
Earnings per share                
  Basic   $ 0.28     $ 0.31  
  Diluted   $ 0.28     $ 0.31  
Weighted average shares outstanding                
  Basic     47,729       41,911  
  Diluted     47,760       41,911  
Dividends declared per share of common stock   $ 0.1600     $ 0.1575  
                 
                 
             
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  
    2013     2012  
                 
Operating revenue   $ 265,999     $ 260,301  
Operating expenses:                
  Operations:                
    Water production costs     101,342       91,630  
    Administrative and general     48,436       45,185  
    Other operations     32,675       41,555  
  Maintenance     8,321       10,365  
  Depreciation and amortization     29,120       27,663  
  Income tax expense     8,402       9,090  
  Property and other taxes     11,150       8,584  
    Total operating expenses     239,446       234,072  
                 
    Net operating income     26,553       26,229  
                 
Other income and expenses:                
  Non-regulated revenue     6,737       8,187  
  Non-regulated expenses, net     (5,657 )     (5,794 )
  Income tax (expense) on other income and expense     (435 )     (961 )
    Net other income     645       1,432  
                 
Interest expense:                
  Interest expense     15,840       15,460  
  Less: capitalized interest     (1,079 )     (1,849 )
    Net interest expense     14,761       13,611  
                 
Net income   $ 12,437     $ 14,050  
                 
Earnings per share                
  Basic   $ 0.28     $ 0.34  
  Diluted   $ 0.28     $ 0.34  
Weighted average shares outstanding                
  Basic     45,004       41,877  
  Diluted     45,034       41,877  
Dividends declared per share of common stock   $ 0.3200     $ 0.3150  
                 
                 

1720 North First Street
San Jose, CA 95112-4598

Contact:
Tom Smegal
(408) 367-8200 (analysts)

Shannon Dean
(310) 257-1435 (media)