<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
___
|_X_| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
___
|___| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to __________________
Commission file number 0-464
CALIFORNIA WATER SERVICE COMPANY
(Exact name of registrant as specified in its charter)
California 94-0362795
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1720 North First Street, San Jose, Ca. 95112
(Address of principal executive offices) (Zip Code)
1-408-451-8200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common shares outstanding as of May 8, 1995 - 6,247,034
This Form 10-Q contains a total of 10 pages.
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PART I - FINANCIAL INFORMATION
CALIFORNIA WATER SERVICE COMPANY
ITEM 1 FINANCIAL STATEMENTS BALANCE SHEET
MARCH 31, 1995 Dec. 31, 1994
In Thousands
ASSETS
Utility plant $565,174 $559,180
Less depreciation (154,358) (151,285)
Net utility plant 410,816 407,895
Current assets:
Cash and cash equivalents 941 1,301
Accounts receivable 10,964 13,161
Unbilled revenue 4,791 5,992
Materials and supplies 3,117 3,018
Taxes and other prepaid expenses 3,643 3,927
Total current assets 23,456 27,399
Regulatory assets 24,183 24,135
Other deferred charges 4,745 4,799
$463,200 $464,228
CAPITALIZATION AND LIABILITIES
Capitalization:
Common shareholders' equity:
Common stock $ 42,800 $ 42,800
Retained earnings 99,462 101,647
Total common shareholders' equity 142,262 144,447
Preferred stock without mandatory
redemption provision 3,475 3,475
First mortgage bonds 128,944 128,944
Total capitalization 274,681 276,866
Current liabilities:
Short-term borrowings 6,750 7,000
Accounts payable 12,159 12,231
Accrued expenses and other liabilities 11,487 10,897
Total current liabilities 30,396 30,128
Unamortized investment tax credits 3,265 3,265
Deferred income taxes 12,733 12,445
Advances for construction 92,573 92,190
Contributions in aid of construction 38,085 37,867
Regulatory liabilities 11,467 11,467
$463,200 $464,228
2
See accompanying notes on page 5
CALIFORNIA WATER SERVICE COMPANY
STATEMENT OF INCOME
March 31
1995 1994
In Thousands
FOR THE THREE MONTHS ENDED:
Operating revenue $30,416 $30,579
Operating expenses:
Operations 19,594 19,111
Maintenance 1,861 1,939
Depreciation 2,859 2,737
Federal income taxes 523 756
State Income taxes 160 220
Property and other taxes 1,734 1,652
26,731 26,415
Net operating income 3,685 4,164
Other income and expenses:
Interest and amortization on first
mortgage bonds 2,637 2,651
Other income and expenses, net 9 118
2,646 2,769
Net income l,039 1,395
Preferred dividends 38 38
Net income available for common stock $ 1,001 $1,357
Weighted average shares outstanding 6,247 5,693
Earnings per share of common stock $ 0.16 $ 0.24
Dividends per share of common stock $ 0.51 $ 0.49-1/2
3
See accompanying notes on page 5
CALIFORNIA WATER SERVICE COMPANY
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED:
In Thousands
MARCH 31
1995 1994
Operating activities:
Net income $ 1,039 $ 1,395
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,859 2,737
Regulatory assets and liabilities, net (48) (59)
Deferred income taxes and investment tax credits 288 397
Change in assets and liabilities:
Accounts receivable 2,197 784
Unbilled revenue 1,201 1,157
Materials and supplies (99) (18)
Taxes and other prepaid expenses 284 388
Accounts payable (72) 760
Accrued expenses and other liabilities 590 696
Other changes, net 206 307
Net adjustments 7,406 7,149
Net cash provided by operating activities 8,445 8,544
Investing activities:
Utility plant expenditures (6,177) (6,131)
Financing activities:
Net short-term borrowings (250) (1,500)
Proceeds from issuance of common stock 0 304
Advances for construction 1,149 1,281
Contributions in aid of construction 465 421
Refunds of advances for construction (768) (816)
Dividends (3,224) (2,854)
Net cash used for financing activities (2,628) (3,164)
Change in cash and cash equivalents (360) (751)
Cash and cash equivalents at start of period 1,301 1,461
Cash and cash equivalents at end of period $ 941 $ 710
See accompanying notes on page 5
4
Notes:
1. Due to the seasonal nature of the water business, the results for
interim periods are not indicative of the results for a twelve month
period.
2. The interim financial information is unaudited. In the opinion of
management, the accompanying financial statements reflect all
adjustments which are necessary to provide a fair statement of the
results for the periods covered. The adjustments consist only of
normal recurring adjustments.
3. Earnings per share are calculated on the weighted average number of
common shares outstanding during the period and net income
available for common stock as shown on the Statement of Income.
4. Refer to 1994 Annual Report on Form 10-K for a summary of signifi-
cant accounting policies and detailed information regarding the
financial statements.
5
PART I
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF FIRST QUARTER OPERATIONS
Net income for the first quarter was $1,039,000, equivalent to $.16 per
common share, a decline of $.08 from 1994's $.24 per share. The decrease in
net income was primarily attributable to unusually heavy rainfall during the
first quarter this year, compared to less than normal precipitation in the
prior year's first quarter. Operating revenue decreased $163,000 to
$30,416,000. The heavy rainfall caused a seven percent decline in average
consumption to 47.3 Ccf., resulting in $1,655,000 less revenue. This decline
was partially offset by additional revenue due to customer rate changes
totaling $1,327,000, and $165,000 from new customers. At quarter end there
were 365,700 customers, a 2,450 increase from March 31, 1994.
Operating expenses increased $316,000. Water production was 14,812 million
gallons equal to 89% of 1994's first quarter production. Water production
costs, consisting of purchased water, purchased power and pump taxes, decreased
$420,000 or four percent during the quarter because of reduced customer usage.
The decrease in production costs would have been greater except for increases
6
in some wholesalers' water delivery costs and an increased pump tax rate in the
Bakersfield district.
Other operations expense increased 10% or $903,000 during the quarter due
primarily to increases in payroll and related benefits, and increased postage
costs.
Income taxes declined $293,000 because of lower taxable income. Other taxes
increased $82,000 due to increased payroll taxes resulting from higher wages
paid and an increase in some city franchise fees and business licenses.
LIQUIDITY
Total interest expense decreased $55,000. Interest and amortization on first
mortgage bonds decreased $14,000 during the quarter due to a reduction in the
principal amount of first mortgage bonds outstanding. The principal reduction
resulted from required bond sinking fund payments made in the fourth quarter of
1994. Short term borrowings under the Company's bank line of credit were less
during the first quarter of 1995 than in 1994 resulting in a $41,000 decline in
interest expense. There was $6,750,000 outstanding under the $30 million bank
credit line at March 31, 1995 compared to $13,500,000 at the end of the first
quarter in 1994.
The Company plans to issue $20 million of senior notes during the fourth
quarter. The Company currently has California Public Utilities Commission
(Commission) authorization to issue up to $20 million of first mortgage bonds
and will file for modification of that authorization so that senior notes may
be issued.
7
WATER SUPPLY
California's water supply will be more than adequate for 1995 because of
this winter's heavy precipitation. Some areas of the state have received
nearly double normal precipitation. Groundwater aquifers, which supply about
half of the Company's water, have benefited from the rainfall. Storage in
state reservoirs is above average. It is anticipated that there will be
storage carryover from this year into 1996.
REGULATORY MATTERS
In early February, hearings before the Commission regarding the 1994 rate
case filings were completed. The rate cases involved six districts,
representing 15 percent of the Company's customers. While the Company has
requested a 12 percent rate of return, the Commission staff has recommended
10.9 percent. A decision from the full Commission is anticipated in June.
The Company is planning to file 1995 rate cases for five districts representing
47 percent of the total customers. Hearing for this series of rate cases are
anticipated to be held in early 1996 with a decision from the Commission
expected by mid 1996.
8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required to be filed by Item 601 of Regulation S-K.
None
(b) No reports on Form 8-K have been filed during the quarter ended
March 31, 1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CALIFORNIA WATER SERVICE COMPANY
Registrant
/s/ Gerald F. Feeney
Gerald F. Feeney
Vice President, Chief Financial Officer
and Treasurer
May 8, 1995
9
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