[CAL LOGO OMITTED] NEWS RELEASE
CALIFORNIA WATER SERVICE GROUP [GRAPHIC OMITTED]
1720 North First Street
San Jose, CA 95112-4598 July 27, 2005
Contact: Richard D. Nye (408) 367-8216 (analysts)
Shannon Dean (310) 257-1435 (media)
CAL WATER ANNOUNCES SECOND QUARTER 2005 RESULTS;
BOARD DECLARES 243rd CONSECUTIVE QUARTERLY DIVIDEND
AND APPOINTS NEW VICE PRESIDENT, ENGINEERING & WATER QUALITY
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SAN JOSE, CA - California Water Service Group (NYSE : CWT) today announced net
income of $7.6 million and earnings of $0.41 per share for the second quarter of
2005, compared to net income of $10.1 million and earnings of $0.59 per share in
the second quarter of 2004.
Revenue for the second quarter decreased $7.4 million, or 8%, to $81.5
million. Rate increases added $2.5 million to revenue and sales to new customers
added $0.9 million. These increases were offset by a $10.8 million decrease in
sales to existing customers resulting from cooler temperatures and higher than
normal rainfall.
"Our results continue to be hampered by cool weather and an unusual amount
of precipitation. In California, we had 2.5 inches of rain in the second
quarter, compared to less than one-third of an inch in the second quarter of
2004. Long term, the above-average precipitation replenishes the state's
underground aquifers and reservoirs; in the short term, however, it decreases
sales and impacts our earnings," said President and Chief Executive Officer
Peter C. Nelson.
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"Despite the rain, we continue to execute our strategy by aggressively
pursuing fair regulatory treatment, operating efficiently, adding customers, and
providing excellent service, and we expect to see improved results when the
weather heats up and sales rise," Nelson said.
Total operating expenses for the second quarter decreased 6%, or $4.6
million. Water production costs decreased 12% due to the decrease in water
usage. Other operations expenses were comparable to those incurred in the second
quarter of 2004. Maintenance expense increased 24%, reflecting work done on
wells, pumping equipment, water treatment equipment, mains, and meters.
Depreciation expense increased 7% due to increases in 2004 capital expenditures.
Income taxes were 25% lower due to lower pre-tax income.
Other income increased $0.2 million, or 34%, primarily due to interest from
short term investments. There were minimal gains from property sales for either
quarter.
On July 21, 2005, the California Public Utilities Commission (CPUC)
approved the Company's 2004 General Rate Case filing (GRC), which will increase
revenues by $7.6 million on an annual basis. The decision is substantially the
same as the proposed decision announced on June 28, 2005. The GRC includes 8 of
the Company's 24 districts and nearly 50% of the Company's California customers.
The new rates were effective July 26, 2005.
At their meeting today, Directors declared the 243rd consecutive quarterly
dividend on common stock in the amount of $0.2850. It is payable on August 19,
2005, to stockholders of record on August 8, 2005. The regular dividend on
Series C preferred stock was also declared.
The Board also appointed Michael J. Rossi as Vice President, Engineering &
Water Quality, effective October 1, 2005. Currently California Water Service
Company's Chief Engineer, Rossi began his career with the Company in 1977. He
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holds a Bachelor of Science Degree in Civil Engineering and a Master of Science
Degree in Business Administration, both earned at San Jose State University. He
is also a registered civil engineer and state-certified water treatment and
water distribution operator.
Robert R. Guzzetta, who currently holds the position, was appointed as Vice
President of Operations. He will succeed Raymond H. Taylor, who is retiring
after 23 years of service.
At the same time, the Board approved additional changes in responsibilities
of three other officers of the Company. Dan L. Stockton, current Vice President
of Information Systems, was appointed Vice President, Corporate Development &
Corporate Secretary; Paul G. Ekstrom, currently Vice President, Customer Service
& Corporate Secretary, was appointed Vice President, Customer Service &
Information Systems; and Francis S. Ferraro, currently Vice President,
Regulatory Matters & Corporate Development, was appointed Vice President,
Regulatory & Corporate Relations. All changes will be effective October 1, 2005.
"These key leadership changes further position the Company to achieve
its objectives," Nelson said.
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 28,
2005. The call-in number is 1-866-814-1919 and the ID No. is 733669. A replay is
available through September 25, 2005, by calling 1-888-266-2081 and entering
pass code 733669.
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.
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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, including decisions on proper disposition
of property; 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 and other regulations 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 (2).
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands, except per share data) June 30, December 31,
2005 2004
----------- ------------
ASSETS
Utility plant:
Utility plant $ 1,177,272 $ 1,144,074
Less accumulated depreciation and amortization 358,184 343,769
----------- -----------
819,088 800,305
----------- -----------
Current assets:
Cash and cash equivalents 19,243 18,820
Receivables, net of allowances for uncollectible accounts
of $286 at June 30, 2005 and $ 287 at December 31, 2004
Customers 18,331 15,867
Income taxes 363 7,298
Other 4,629 3,147
Unbilled revenue 13,601 9,307
Materials and supplies, at average cost 3,834 3,161
Prepaid pension expense 281 3,671
Taxes and other prepaid expenses 5,501 9,122
----------- -----------
Total current assets 65,783 70,393
----------- -----------
Regulatory assets 55,174 53,477
Other assets 19,646 18,678
----------- -----------
$ 959,691 $ 942,853
=========== ===========
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock, $.01 par value $ 184 $ 184
Additional paid-in capital 131,510 131,271
Retained earnings 154,574 156,851
Accumulated other comprehensive loss (701) (701)
----------- -----------
Total common stockholders' equity 285,567 287,605
Preferred stock 3,475 3,475
Long-term debt, less current maturities 274,538 274,821
----------- -----------
Total capitalization 563,580 565,901
----------- -----------
Current liabilities:
Current maturities of long-term debt 1,144 1,100
Short-term borrowings -- --
Accounts payable 30,096 19,745
Accrued expenses and other liabilities 37,868 36,367
----------- -----------
Total current liabilities 69,108 57,212
Unamortized investment tax credits 2,721 2,721
Deferred income taxes 56,710 54,826
Regulatory and other liabilities 36,170 35,986
Advances for construction 136,010 131,292
Contributions in aid of construction 95,392 94,915
Commitments and contingencies -- --
----------- -----------
$ 959,691 $ 942,853
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Unaudited
For the three months ended: For the six months ended:
June 30, June 30, June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Operating revenue $ 81,457 $ 88,845 $141,760 $149,085
-------- -------- -------- --------
Operating expenses:
Water production costs 29,395 33,563 49,215 54,724
Other operations 21,804 21,887 43,747 42,224
Maintenance 3,759 3,032 7,418 6,213
Depreciation and amortization 7,006 6,521 14,002 13,039
Income taxes 5,148 6,844 5,603 7,802
Property and other taxes 3,092 2,915 6,057 5,609
-------- -------- -------- --------
Total operating expenses 70,204 74,762 126,042 129,611
-------- -------- -------- --------
Net operating income 11,253 14,083 15,718 19,474
-------- -------- -------- --------
Other income and expenses:
Non-regulated income, net 705 573 1,343 1,123
Gain on sale of non-utility property 61 -- 59 1
-------- -------- -------- --------
Total other income and expenses 766 573 1,402 1,124
-------- -------- -------- --------
Interest expense:
Interest expense 4,653 4,752 9,299 9,398
Less capitalized interest 225 150 450 300
-------- -------- -------- --------
Total interest expense 4,428 4,602 8,849 9,098
-------- -------- -------- --------
Net income $ 7,591 $ 10,054 $ 8,271 $ 11,500
======== ======== ======== ========
Earnings per share
Basic $ 0.41 $ 0.59 $ 0.45 $ 0.67
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Diluted $ 0.41 $ 0.59 $ 0.45 $ 0.67
======== ======== ======== ========
Weighted average shares outstanding
Basic 18,373 16,965 18,372 16,949
======== ======== ======== ========
Diluted 18,407 16,983 18,404 16,967
======== ======== ======== ========
Dividends per share of common stock $ 0.2850 $ 0.2825 $ 0.5700 $ 0.5650
======== ======== ======== ========
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