Exhibit 99
[LOGO]
CALIFORNIA WATER
SERVICE GROUP
NEWS RELEASE
CALIFORNIA WATER SERVICE GROUP
1720 North First Street
San Jose, CA 95112-4598 July 23, 2003
For Immediate Release
Contact: Richard Nye (408) 367-8216 (analysts)
Shannon Dean (310) 257-1435 (media) 03GO8
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CAL WATER ANNOUNCES SECOND QUARTER 2003 RESULTS;
BOARD DECLARES 235H CONSECUTIVE QUARTERLY DIVIDEND
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SAN JOSE, CA - California Water Service Group (NYSE : CWT) today announced
second quarter net income of $4.6 million and earnings of $0.30 per share,
compared to net income of $6.6 million and earnings of $0.43 per share in the
second quarter of 2002.
According to President and Chief Executive Officer Peter C. Nelson, the
company's financial performance continues to be hampered by lower water usage
due to cool, wet weather and ongoing delays in receiving rate relief from the
California Public Utilities Commission ("Commission").
"In the second quarter, we continued to experience cooler than normal
temperatures and a good deal of unseasonable rain in our service areas. More
significantly, we continue to await considerable rate relief from the
Commission," he said.
Revenue for the quarter was $68.0 million, down $1.2 million or 1.7% from
the second quarter of 2002. A $4.5 million decrease in water sales to existing
customers was partially offset by $1.4 million in sales to new customers and
$1.9 million in rate increases.
Total operating expenses decreased 0.5%, or $0.3 million. Water production
costs decreased by $1.0 million, primarily due to lower usage and partially
offset by higher rates for water and power. Other operations expense increased
$1.4 million or 7%, due principally to increases in pension, health and other
benefits. Depreciation expense was higher by $0.4 million due to 2002 capital
expenditures driven by more stringent water quality standards. Income taxes
decreased $1.3 million due to lower profits.
According to Nelson, regulatory delays had the greatest impact on the
company's performance.
"We are still awaiting a decision on the 15 rate cases we submitted in July
2001. When the decision is finally issued, we anticipate that it will add at
least $12.8 million in annual revenues," he said.
In May, the company began collecting surcharges for some of its districts
to recover higher electricity costs incurred prior to November 29, 2001 but not
yet billed to customers. The surcharges approved thus far by the Commission will
add net revenue of $2.8 million, which will be collected from May 2003 through
June 2004. The Commission has also approved an additional $1.8 million in
surcharges to be collected from May 2004 through June 2005.
Pending applications to the Commission include general rate case filings
made in November 2002 and January 2003. The company cannot predict the amount or
the timing of CPUC decisions on those applications.
In a June 2003 decision, the Commission authorized water utilities to
request recovery of "balancing-type memorandum accounts," which are primarily
comprised of higher electricity costs incurred between November 29, 2001 and
December 31, 2002. Unlike the recovery of costs for the period prior to November
29, 2001, recovery for balances accrued during this period will be subject to
certain limitations. Prior to the June 2003 decision, water utilities had not
been allowed to request recovery of increased electricity costs for this period
at all. The company intends to request approximately $6
million in the third quarter, although it cannot predict the amount it will be
authorized to recover. A decision is expected from the Commission by the end of
2003.
Also in the third quarter of 2003, the company expects to file the third of
three filings to recover costs associated with the Bakersfield Treatment Plant,
which began operating in June 2003 and will add 20 million gallons of high
quality water per day to the Bakersfield supply. The third filing may or may not
impact 2003 revenues, depending upon the timing and amount authorized by the
Commission.
"We continue to be proactive in requesting rate relief, requesting timely
decisions on general rate case filings and requesting fair reimbursement for
balancing accounts." Nelson said.
At their meeting today, Directors declared the 235th consecutive quarterly
dividend on common stock in the amount of $0.28125. It is payable on August 15,
2003, to stockholders of record on August, 1, 2003. The regular dividend on
Series C preferred stock was also declared.
On Thursday, July 24, 2003, at 1 p.m. Pacific Standard Time (4 p.m. Eastern
Standard Time), the Company will conduct a teleconference call, at which time
management will provide comments about second quarter 2003 operating results and
other pertinent matters. Any stockholder or interested investor can listen to
the teleconference or a replay. The dial-in number to access the teleconference
is 1-877-679-9045, call ID #98736. Additional information about the call,
including replay information, is available at the Company's web site, at
www.calwater.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. and CWS Utility Services. Together
these companies provide regulated and non-regulated water service to over 2
million people in 99 California, Washington, New Mexico and Hawaii communities.
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: 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. The
Company assumes no obligation to provide public updates of forward-looking
statements.
Additional information is available at our Web site at www.calwater.com.
Attachments (3).
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited
(In thousands, except per share data) June 30, December 31,
2003 2002
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ASSETS
Utility plant:
Utility plant $ 1,054,394 $ 1,001,310
Less accumulated depreciation and amortization 316,121 304,322
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Net utility plant 738,273 696,988
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Current assets:
Cash and cash equivalents 992 1,063
Receivables 28,061 23,961
Unbilled revenue 10,039 7,969
Materials and supplies at average cost 2,800 2,760
Taxes and other prepaid expenses 5,571 7,234
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Total current assets 47,463 42,987
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Other assets:
Regulatory assets 52,703 46,089
Other assets 16,825 14,518
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Total other assets 69,528 60,607
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$ 855,264 $ 800,582
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CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value $ 152 $ 152
Additional paid-in capital 49,984 49,984
Retained earnings 144,416 149,215
Accumulated other comprehensive loss (134) (134)
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Total common stockholders' equity 194,418 199,217
Preferred stock 3,475 3,475
Long-term debt, less current maturities 270,918 250,365
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Total capitalization 468,811 453,057
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Current liabilities:
Current maturities of long-term debt 1,000 1,000
Short-term borrowings 50,058 36,379
Accounts payable 28,550 23,706
Accrued expenses and other liabilities 31,690 30,456
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Total current liabilities 111,298 91,541
Unamortized investment tax credits 2,819 2,774
Deferred income taxes 33,855 31,371
Regulatory and other liabilities 34,015 28,804
Advances for construction 119,549 115,459
Contributions in aid of construction 84,917 77,576
Commitments and contingencies
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$ 855,264 $ 800,582
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
Unaudited
For the three months ended: June 30, June 30,
2003 2002
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Operating revenue $67,994 $69,183
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Operating expenses:
Operations 45,693 45,330
Maintenance 3,063 2,935
Depreciation and amortization 5,838 5,389
Income taxes 3,314 4,573
Property and other taxes 2,538 2,551
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Total operating expenses 60,446 60,778
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Net operating income 7,548 8,405
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Other income and expenses:
Non-regulated income, net 559 508
Gain on sale of non-utility property 958 1,922
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1,517 2,430
Interest expense:
Long-term debt interest 4,039 3,837
Other interest 441 380
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Total interest expense 4,480 4,217
Net income $ 4,585 $ 6,618
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Earnings per share
Basic $ 0.30 $ 0.43
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Diluted $ 0.30 $ 0.43
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Weighted average shares outstanding
Basic 15,182 15,182
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Diluted 15,198 15,185
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Dividends per share of common stock $0.28125 $0.28000
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
Unaudited
For the six months ended: June 30, June 30,
2003 2002
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Operating revenue $119,305 $120,794
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Operating expenses:
Operations 83,453 80,032
Maintenance 6,316 5,355
Depreciation and amortization 11,598 10,783
Income taxes 2,761 5,852
Property and other taxes 5,003 5,014
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Total operating expenses 109,131 107,036
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Net operating income 10,174 13,758
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Other income and expenses:
Non-regulated income, net 1,169 891
Gain on sale of non-utility property 1,511 1,973
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2,680 2,864
Interest expense:
Long-term debt interest 8,217 7,369
Other interest 820 706
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Total interest expense 9,037 8,075
Net income $ 3,817 $ 8,547
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Earnings per share
Basic $ 0.25 $ 0.56
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Diluted $ 0.25 $ 0.56
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Weighted average shares outstanding
Basic 15,182 15,182
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Diluted 15,191 15,185
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Dividends per share of common stock $ 0.5625 $ 0.5600
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