Exhibit 99
[CALIFORNIA WATER SERVICE GROUP LOGO]
[CWT Listed NYSE Logo]
NEWS RELEASE
CALIFORNIA WATER SERVICE GROUP
1720 North First Street
San Jose, CA 95112-4598 July 28, 2004
For Immediate Release
Contact: Richard D. Nye (408) 367-8216 (analysts)
Shannon Dean (310) 257-1435 (media)
CAL WATER ANNOUNCES SECOND QUARTER 2004 RESULTS;
BOARD DECLARES 239TH CONSECUTIVE QUARTERLY DIVIDEND
- --------------------------------------------------------------------------------
SAN JOSE, CA - California Water Service Group (NYSE : CWT) today announced net
income of $10.1 million and earnings of $0.59 per share for the second quarter
of 2004, compared to net income of $4.6 million and earnings of $0.30 per share
in the second quarter of 2003.
Revenue for the second quarter increased $20.8 million, or 31%, to
$88.8 million. Rate increases added $9.7 million to revenue and sales to new
customers added $1.7 million. Sales to existing customers were also higher,
increasing $9.4 million over the same period last year.
Total operating expenses for the second quarter increased 24%, or $14.3
million. Water production costs increased 28%, primarily due to increased water
usage and rate increases by wholesale water suppliers. Other operations expenses
increased by 12% as a result of increased costs for water treatment, insurance,
labor, regulatory fees, and employee benefits. Depreciation expense increased
12% due to increases in 2003 capital expenditures. Income tax expense doubled
due to the higher pre-tax income.
There was no effect from property sales for the current quarter, while
gains of $1.0 million were posted in the second quarter of 2003.
"Our second quarter water sales were positively affected by hot, dry
weather, which increased sales over the same period last year. Also, our
3
improved results reflected rate relief we received from the California Public
Utilities Commission," said President and Chief Executive Officer Peter C.
Nelson.
On July 8, 2004, the California Public Utilities Commission (CPUC), in
approving a rate increase of $1.1 million for the Salinas district, found that
the Company should be fined $75,000 and reduced the return on equity by 50 basis
points for the Salinas district as a result of the Company not properly
reporting the acquisition of three small water systems. The time frame for the
return on equity reduction is expected to be one year. The decision closes a
proceeding in which the CPUC's Office of Ratepayer Advocates had recommended a
penalty of nearly $10 million for the reporting error.
Including the Salinas decision, the CPUC has authorized rate increases
totaling approximately $10 million in annual revenues year-to-date.
At their meeting today, Directors declared the 239th consecutive
quarterly dividend on common stock in the amount of $0.2825. It is payable on
August 20, 2004, to stockholders of record on August 9, 2004. The regular
dividend on Series C preferred stock was also declared.
Investors are invited to listen to the Company's analyst
teleconference, which is scheduled for 4:00 p.m. EDT / 1:00 p.m. PDT on July 29,
2004. The call-in number is 1-866-206-5917 and the ID No. is 485611. A replay is
available through August 5, 2004, by calling 1-888-266-2081 and entering pass
code 485611.
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
more than 2 million people in 100 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,
4
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; the ability to satisfy requirements
related to the Sarbanes Oxley Act section 404 and other regulation on internal
controls; 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.calwatergroup.com.
Attachments (3).
###
5
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited
(In thousands, except per share data) June 30, December 31,
2004 2003
----------- -----------
ASSETS
Utility plant:
Utility plant $ 1,106,534 $ 1,078,975
Less accumulated depreciation
and amortization 331,150 319,477
----------- -----------
Net utility plant 775,384 759,498
----------- -----------
Current assets:
Cash and cash equivalents 24,109 2,856
Customer receivables 23,095 18,434
Other receivables 13,608 5,125
Unbilled revenue 13,108 8,522
Materials and supplies 3,225 2,957
Taxes and other prepaid expenses 6,934 5,609
----------- -----------
Total current assets 84,079 43,503
----------- -----------
Regulatory assets 54,747 53,326
Other assets 18,228 16,708
----------- -----------
$ 932,438 $ 873,035
=========== ===========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value $ 183 $ 169
Additional paid-in capital 130,636 93,748
Retained earnings 152,764 150,908
Accumulated other comprehensive loss (301) (301)
----------- -----------
Total common stockholders' equity 283,282 244,524
Preferred stock 3,475 3,475
Long-term debt, less current maturities 271,968 272,226
----------- -----------
Total capitalization 558,725 520,225
----------- -----------
Current liabilities:
Current maturities of long-term debt 846 904
Short-term borrowings -- 6,454
Accounts payable 28,624 23,776
Accrued expenses and other liabilities 36,406 32,430
----------- -----------
Total current liabilities 65,876 63,564
Unamortized investment tax credits 2,925 2,925
Deferred income taxes 48,144 38,005
Regulatory and other liabilities 38,100 35,835
Advances for construction 126,642 121,952
Contributions in aid of construction 92,026 90,529
Commitments and contingencies -- --
----------- -----------
$ 932,438 $ 873,035
=========== ===========
6
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,
2004 2003
------- --------
Operating revenue 88,845 $67,994
------- --------
Operating expenses:
Operations 55,450 45,693
Maintenance 3,032 3,063
Depreciation and amortization 6,521 5,838
Income taxes 6,844 3,314
Property and other taxes 2,915 2,538
------- --------
Total operating expenses 74,762 60,446
------- --------
Net operating income 14,083 7,548
------- --------
Other income and expenses:
Non-regulated income, net 573 559
Gain on sale of non-utility property 0 958
------- --------
Total other income and expenses 573 1,517
Interest expense:
Interest expense 4,752 5,090
Less capitalized interest 150 610
------- --------
Total interest expense 4,602 4,480
Net income 10,054 $ 4,585
======= ========
Earnings per share
Basic 0.59 $ 0.30
======= ========
Diluted 0.59 $ 0.30
======= =======
Weighted average shares outstanding
Basic 16,965 15,182
======= ========
Diluted 16,983 15,198
======= ========
Dividends per share of common stock 0.28250 $0.28125
======= ========
7
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,
2004 2003
-------- --------
Operating revenue $149,085 $119,305
-------- --------
Operating expenses:
Operations 96,948 83,453
Maintenance 6,213 6,316
Depreciation and amortization 13,039 11,598
Income taxes 7,802 2,761
Property and other taxes 5,609 5,003
-------- --------
Total operating expenses 129,611 109,131
-------- --------
Net operating income 19,474 10,174
-------- --------
Other income and expenses:
Non-regulated income, net 1,123 1,169
Gain on sale of non-utility property 1 1,511
-------- --------
Total other income and expenses 1,124 2,680
Interest expense:
Interest expense 9,398 9,947
Less capitalized interest 300 910
-------- --------
Total interest expense 9,098 9,037
Net income $ 11,500 $ 3,817
======== ========
Earnings per share
Basic $ 0.67 $ 0.25
======== ========
Diluted $ 0.67 $ 0.25
======== ========
Weighted average shares outstanding
Basic 16,949 15,182
======== ========
Diluted 16,967 15,191
======== ========
Dividends per share of common stock $0.56500 $0.56250
======== ========
8