Exhibit 99
NEWS RELEASE
[CALWATER LOGO] CALIFORNIA WATER SERVICE GROUP
1720 North First Street
San Jose, CA 95112-4598 January 28, 2004
For Immediate Release
Contact: Richard Nye (408) 367-8216 (analysts)
Shannon Dean (310) 257-1435 (media)
CAL WATER ANNOUNCES INCREASED
REVENUES AND EARNINGS FOR 4TH QTR 2003;
BOARD INCREASES DIVIDEND TO $.2825
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SAN JOSE, CA - California Water Service Group (NYSE : CWT) today
announced fourth quarter 2003 net income of $7.0 million, up 146% over fourth
quarter 2002, and diluted earnings per share of $0.41, an increase of 116% over
the same period last year.
Revenue for the quarter increased $8.7 million or 14% to $69.6 million.
Adding to revenue were $6.5 million in rate increases, $1.8 million in sales to
new customers, and $0.4 million in increased sales to existing customers.
Operating expenses were $62.1 million, an increase of $6.6 million or
12% over the same period last year. The largest component of the increase was
income and other taxes, which rose $3.3 million. Expenses also increased in most
other categories, including purchased water, payroll, benefits, water treatment,
and depreciation.
Fourth quarter results were bolstered by surplus property sales, as the
company had pretax gains of $3.1 million compared to $1.0 million in the fourth
quarter of 2002.
Full Year 2003 Results
2003 net income was $19.4 million, compared to $19.1 million in 2002,
and diluted earnings per share were $1.21, compared to $1.25 in 2002. Earnings
per share decreased 3% because 1.750 million additional shares were issued in
August 2003.
Revenue for 2003 was $277.1 million, increasing $14.0 million or 5%,
due to rate increases of $12.6 million and $6.0 million in revenues from sales
to new customers. Partially offsetting these increases were decreased revenues
of $4.6 million from sales to existing customers, primarily due to higher
rainfall in the first half of 2003.
Total operating expenses increased by $14.5 million, or 6%, for the
year. The company incurred higher wholesaler rates and purchased more water; as
a result, water costs increased by $3.1 million. Other operating increases were
primarily in payroll and benefit costs ($5.5 million or 10%), water treatment
($1.2 million or 24%), maintenance ($1.1 million or 10%), and depreciation ($2.0
million or 9%).
Interest expense increased due to additional long-term debt incurred
during 2002 and in the first quarter of 2003. This was partially offset by
reduced interest expense from refinancing a portion of our long-term debt and
lower short-term debt levels due to pay downs made with funds obtained from the
equity offering.
Pretax gains from surplus property sales were $4.6 million, which was
$1.6 million higher than pretax gains in 2002.
The issuance of additional shares in August 2003 raised $43.8 million
of capital, which strengthened the balance sheet. The percentage of equity to
total capitalization increased from 44% to 47% as of December 31, 2002 and 2003
respectively.
President and CEO Peter C. Nelson characterized 2003 as a year in which
the company "turned a corner" and finally began to receive critical rate relief
in late 2003 from the California Public Utilities Commission ("Commission").
"For some time now, our financial performance has been significantly
impacted by a lack of timely decisions from the Commission, but we are now
seeing the results of fairer regulatory treatment. In 2003, we received approval
for rate increases that will add an annual $26 million in revenues, as well as
$9 million in surcharges collected over a 24-month period," Nelson said.
According to Nelson, because rate increases are not collected
retroactively, it takes time to see their full effect.
"Our fourth quarter results showed a big improvement, as most of the
2003 rate increases were in place for the entire quarter. With the rate
increases and gains from sales of surplus properties, we had a very good
quarter," he said.
In January 2004, the Commission approved an additional rate increase of
$4.2 million which became effective in January.
Pending applications to the Commission include general rate case
filings and recovery of "balancing-type memorandum accounts," which primarily
reflect electricity rate increases incurred in 2002. The company cannot predict
the amount or the timing of Commission decisions on pending filings.
Dividend Information
At their meeting yesterday, Directors increased the quarterly dividend
on common stock from $.28125 to $.2825, which marks the company's 37th
consecutive year the dividend has been increased. It is payable on February 21,
2004, to stockholders of record on February 7, 2004. The regular dividend on
Series C preferred stock was also declared.
Other Information
On Thursday, January 29, 2004, 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 fourth quarter and year-end 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 1-800-982-3654, call ID #359329. 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 communities 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: 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 (2).
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited
(In thousands, except per share data) December 31, December 31,
2003 2002
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ASSETS
Utility plant:
Utility plant $ 1,078,975 $ 1,001,310
Less accumulated depreciation and amortization 319,477 304,322
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Net utility plant 759,498 696,988
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Current assets:
Cash and cash equivalents 2,856 1,063
Receivables 23,559 23,961
Unbilled revenue 8,522 7,969
Materials and supplies 2,957 2,760
Taxes and other prepaid expenses 5,609 5,130
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Total current assets 43,503 40,883
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Other assets:
Regulatory assets 53,326 46,089
Other assets 16,708 14,518
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Total other assets 70,034 60,607
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$ 873,035 $ 798,478
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CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value $ 169 $ 152
Additional paid-in capital 93,748 49,984
Retained earnings 150,908 149,215
Accumulated other comprehensive loss (301) (134)
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Total common stockholders' equity 244,524 199,217
Preferred stock 3,475 3,475
Long-term debt, less current maturities 272,226 250,365
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Total capitalization 520,225 453,057
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Current liabilities:
Current maturities of long-term debt 904 1,000
Short-term borrowings 6,454 36,379
Accounts payable 23,776 23,706
Accrued expenses and other liabilities 32,430 28,352
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Total current liabilities 63,564 89,437
Unamortized investment tax credits 2,925 2,774
Deferred income taxes 38,005 31,371
Regulatory and other liabilities 35,835 28,804
Advances for construction 121,952 115,459
Contributions in aid of construction 90,529 77,576
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$ 873,035 $ 798,478
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CALIFORNIA WATER SERVICE GROUP
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share data)
Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
-------- -------- -------- --------
Operating revenue $ 69,626 $ 60,917 $277,128 $263,151
-------- -------- -------- --------
Operating expenses:
Operations 45,618 42,960 187,469 177,182
Maintenance 3,229 3,222 12,717 11,587
Depreciation and amortization 5,828 5,193 23,256 21,238
Income taxes 4,550 1,670 12,898 12,568
Property and other taxes 2,860 2,480 10,554 9,829
-------- -------- -------- --------
Total operating expenses 62,085 55,525 246,894 232,404
-------- -------- -------- --------
Net operating income 7,541 5,392 30,234 30,747
-------- -------- -------- --------
Other income and expenses:
Non-regulated income, net 305 770 2,097 2,187
Gain on sale of non-utility property 3,068 1,019 4,603 2,980
-------- -------- -------- --------
3,373 1,789 6,700 5,167
-------- -------- -------- --------
Interest expense, net 3,901 4,329 17,517 16,841
-------- -------- -------- --------
Net income $ 7,013 $ 2,852 $ 19,417 $ 19,073
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Earnings per share
Basic $ 0.41 $ 0.19 $ 1.21 $ 1.25
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Diluted $ 0.41 $ 0.19 $ 1.21 $ 1.25
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Weighted average shares outstanding
Basic 16,932 15,182 15,882 15,182
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Diluted 16,944 15,185 15,892 15,185
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Dividends per share of common stock $0.28125 $0.28000 $1.12500 $1.12000