<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
F O R M 1 0 - Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
---------------------
SEPTEMBER 30, 1995
For Quarter Ended. . . . . . . . . . . . . . . .Commission file No. 0-18677
DOMINGUEZ SERVICES CORPORATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0391161
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(State of other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
21718 SOUTH ALAMEDA STREET, LONG BEACH, CALIFORNIA 90810
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code . .. . . . . . (310) 834-2625
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES __X__. 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 close of the period covered by this report. Common
stock (one class) - 1,004,370
<PAGE>
DOMINGUEZ SERVICES CORPORATION
INDEX
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Consolidated Income Statement for the 3
Three Months Ended September 30, 1995
and 1994
(b) Consolidated Income Statement for the 4
Nine Months Ended September 30, 1995
and 1994
(c) Consolidated Income Statement for the 5
Twelve Months Ended September 30, 1995
and 1994
(d) Consolidated Balance Sheet as of 6
September 30, 1995 and Consolidated
Balance Sheet as of December 31, 1994
(e) Consolidated Statements of Cash Flows 7
for the Nine Months Ended
September 30, 1995 and 1994
(f) Capitalization and Stockholders' Equity 8
as of September 30, 1995
(g) Notes to Consolidated Financial 9
Statements
Item 2. Management's Discussion and Analysis of 10-11
Financial Condition and Results of Operation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on form 8-K 12
Signatures
2
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Company or group of companies for which report is filed: Dominguez Services
Corporation, Dominguez Water Corporation, Antelope Valley Water Co., Kernville
Domestic Water Co., Arden Water Co., Hydro-Metric Service Corporation.
(a) Consolidated Income Statement (Unaudited) - Fiscal Quarter Ending:
<TABLE>
<CAPTION>
FOR THE FOR THE
QUARTER ENDED QUARTER ENDED
SEPT. 30, 1995 SEPT. 30, 1994
-------------- --------------
<S> <C> <C>
Operating Revenue. . . . . . . . . . . . . . . $7,551,966 $7,735,767
Costs and Expenses
Operating Expenses. . . . . . . . . . . . 6,154,954 6,369,339
Interest Expense. . . . . . . . . . . . . 171,021 163,781
Other deductions, net . . . . . . . . . . 732 21,867
Total Costs and Expenses. . . . . . . . . 6,326,707 6,554,987
Income from operations . . . . . . . . . . . . 1,225,259 1,180,780
Other income (loss). . . . . . . . . . . . . . $26,418 27,358
Income before taxes on income. . . . . . . . . 1,251,677 1,208,138
Provision for taxes on income. . . . . . . . . 502,398 514,741
Net income . . . . . . . . . . . . . . . . . . $749,279 $693,397
Less preferred dividends. . . . . . . . . 1,219 1,219
Net income applicable to common
shares . . . . . . . . . . . . . . . . . . $748,060 $692,178
Earnings per common share. . . . . . . . . . . $0.74 $0.69
Dividends per common share . . . . . . . . . . $0.290 $0.275
Average common shares outstanding. . . . . . . 1,004,370 1,004,370
</TABLE>
See accompanying notes to Financial Statements
3
<PAGE>
(b) Consolidated Income Statement (Unaudited) - Nine Months Ending:
<TABLE>
<CAPTION>
FOR THE NINE FOR THE NINE
MONTHS ENDING MONTHS ENDING
SEPT. 30, 1995 SEPT. 30, 1994
-------------- --------------
<S> <C> <C>
Operating Revenues . . . . . . . . . . . . . $19,514,501 $18,442,610
Cost and Expenses
Operating Expenses. . . . . . 16,403,902 15,285,287
Interest Expense. . . . . . . 514,745 526,013
Other deductions, net . . . . 6,042 48,955
Total Costs and Expenses. . . 16,924,689 15,860,255
Income from operations . . . . . . . . . . . 2,589,812 2,582,355
Other income . . . . . . . . . . . . . . . . 59,146 88,577
Income before taxes on income. . . . . . . . 2,648,958 2,670,932
Provision for taxes on income. . . . . . . . 1,063,239 1,101,890
Net Income . . . . . . . . . . . . . . . . . $1,585,719 $1,569,042
Less preferred dividends. . . 3,657 3,657
Net income applicable to common shares . . . $1,582,062 $1,565,385
Earnings per common share. . . . . . . . . . $1.58 $1.56
Dividends per common share . . . . . . . . . $0.870 $0.825
Average common shares outstanding. . . . . . 1,004,370 1,004,370
</TABLE>
See accompanying notes to Financial Statements
4
<PAGE>
(c) Consolidated Income Statement (Unaudited) - Twelve Months Ending:
<TABLE>
<CAPTION>
FOR THE TWELVE FOR THE TWELVE
MONTHS ENDING MONTHS ENDING
SEPT. 30, 1995 SEPT. 30, 1994
-------------- --------------
<S> <C> <C>
Operating Revenues . . . . . . . . . . . . . $25,758,623 $23,688,378
Cost and Expenses
Operating Expenses. . . . . . 21,934,037 19,991,756
Interest Expense. . . . . . . 702,443 704,725
Other deductions, net . . . . (13,484) 50,589
Total Costs and Expenses. . . 22,622,996 20,747,070
Income from operations . . . . . . . . . . . 3,135,627 2,941,308
Other income . . . . . . . . . . . . . . . . 69,223 374,588
Income before taxes on income. . . . . . . . 3,204,850 3,315,896
Provision for taxes on income. . . . . . . . 1,275,937 1,299,325
Net Income . . . . . . . . . . . . . . . . . $1,928,913 $2,016,571
Less preferred dividends. . . 4,876 4,876
Net income applicable to common shares . . . $1,924,037 $2,011,695
Earnings per common share. . . . . . . . . . $1.92 $2.00
Dividends per common share . . . . . . . . . $1.145 $1.090
Average common shares outstanding. . . . . . 1,004,370 1,004,370
</TABLE>
See accompanying notes to Financial Statements
5
<PAGE>
(d) Consolidated Balance Sheet (Unaudited):
<TABLE>
<CAPTION>
AS OF AS OF
SEPT. 30, 1995 DEC. 31, 1994
-------------- -------------
<S> <C> <C>
ASSETS
Plant and Equipment . . . . . . . . . . $54,763,966 $54,787,402
Less allowance for depreciation . . . . 20,798,168 19,586,430
------------ -----------
Net plant and investments . . . . . . . 33,965,798 35,200,972
Construction work in progress . . . . . 2,604,569 748,375
------------ -----------
Net utility plant . . . . . . . . . . . 36,570,367 35,949,347
Non utility property. . . . . . . . . . 168,665 560,185
Current and accrued assets. . . . . . . 7,660,470 5,507,209
Deferred debits . . . . . . . . . . . . 2,779,003 2,635,590
------------ -----------
$47,178,505 $44,652,331
------------ -----------
------------ -----------
LIABILITIES
Capital stock
Class A Preferred - par value $25 per share
Outstanding 3,901 shares. . . . . . . . $97,525 $97,525
Common - par value $1 per share
Outstanding 1,004,370 shares. . . . . . 1,004,370 1,004,370
Surplus:
Capital Surplus. . . . . . . . . . 2,512,371 2,490,591
Earnings retained in business . . . . . 11,305,609 10,597,342
------------ -----------
Total Capital. . . . . . . . . . . 14,919,875 14,189,828
------------ -----------
Long-term debt:
First mortgage bonds . . . . . . . 6,025,000 6,083,000
Other Notes. . . . . . . . . . . . 1,412,390 1,242,781
------------ -----------
Total Long-term debt . . . . . . . 7,437,390 7,325,781
------------ -----------
Current portion long-term debt. . . . . 319,000 319,000
Current and accrued liabilities . . . . 6,367,959 4,776,055
Deferred taxes. . . . . . . . . . . . . 3,688,624 3,563,065
Advances for construction . . . . . . . 5,418,061 5,334,557
Contributions and in aid of
construction . . . . . . . . . . . 6,122,201 6,263,605
Deferred credits. . . . . . . . . . . . 2,905,395 2,880,440
------------ -----------
$47,178,505 $44,652,331
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to Financial Statements
6
<PAGE>
(e) Consolidated Statements of Cash Flow (Unaudited):
<TABLE>
<CAPTION>
FOR THE FOR THE
NINE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30, 1995 SEPT. 30, 1994
----------------- -----------------
<S> <C> <C>
Cash Flows from operating activities:
Net Income . . . . . . . . . . . . . . $1,585,719 $1,569,042
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and Amortization. . . . . 1,087,412 963,657
Deferred Income Tax and ITC. . . . . . 125,559 125,559
Change in Assets and Liabilities:
Customers Receivables. . . . . . . . . (829,139) (869,848)
Other Receivables. . . . . . . . . . . 352,298 540,760
Materials and Supplies . . . . . . . . 8,663 4,176
Accounts Payable . . . . . . . . . . . 386,088 838,886
Income Taxes Payable . . . . . . . . . 11,210 (61,747)
Deferred Credits . . . . . . . . . . . (129,557) 125,704
All Other. . . . . . . . . . . . . . . 918,500 88,836
----------- -----------
Net Cash Provided by Operating Activities. . . . . 3,516,753 3,325,025
----------- -----------
Cash flows from investing activities:
Capital Expenditures . . . . . . . . . (1,810,978) (2,202,030)
Assets Acquisitions. . . . . . . . . . -- (10,002)
----------- -----------
Net Cash Used for Investing Activities . . . . . . (1,810,978) (2,212,032)
----------- -----------
Cash Flow from financing activities:
Proceeds from Contributions in Aid
of Construction . . . . . . . . . . . 77,525 (6,346)
Repayment of Long Term Debt. . . . . . 111,609 (79,726)
Dividends Paid . . . . . . . . . . . . (877,452) (832,264)
----------- -----------
Net Cash Used by Financing Activities. . . . . . . (688,318) (918,336)
----------- -----------
Net Increase in Cash . . . . . . . . . . . . . . . 1,017,457 194,657
Cash at Beginning of Year. . . . . . . . . . . . . 1,085,283 1,910,767
----------- -----------
Cash at End of Period. . . . . . . . . . . . . . . $2,102,740 $2,105,424
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to Financial Statements
7
<PAGE>
(f) Capitalization and Stockholders' Equity (Unaudited):
<TABLE>
<CAPTION>
AS OF
SEPT. 30, 1995
--------------
AMOUNT
--------------
<S> <C>
Debt:
Long-term debt . . . . . . . . . . . . . . . . . . . $7,756,390
Current sinking fund requirements . . . . . . . . 319,000
---------
Total debt maturing in more than twelve months . . . $7,437,390
---------
---------
Deferred credits . . . . . . . . . . . . . . . . . . . . . . . . $2,907,295
---------
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES ISSUED
OR OUTSTANDING AMOUNT
-------------- ---------
<S> <C> <C>
Stockholders' Equity:
Non-convertible cumulative preferred stock
Class A, 5%, $25 par value . . . . . . 3,901 $97,525
Common stock . . . . . . . . . . . . . . . . . . . 1,004,370 $1,004,370
Capital in excess of par value . . . . . . . . . . $2,512,371
----------
----------
Retained earnings:
Balance at beginning of current
Fiscal Year. . . . . . . . . . . . . $10,597,342
Net Income. . . . . . . . . . . . . 1,585,719
Cash dividends
Common stock @ $0.87 . . . . . 873,795
Preferred stock Class A @ $0.9375 . 3,687
-----------
Balance at end of interim period . . . . . . . . . $11,346,267
-----------
-----------
Total Stockholders' Equity . . . . . . . . . . . . $14,919,875
-----------
-----------
</TABLE>
See accompanying notes to Financial Statement
8
<PAGE>
(g) Notes to Consolidated Financial Statements (Unaudited):
1. In the opinion of management, information furnished herein
reflects adjustments necessary for a fair presentation of the
financial position and results of operations for the interim
periods.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
Earnings per share for the quarter ended September 30, 1995, were
$0.74, compared to $0.69 in the third quarter of 1994. Revenues were
$7,551,966 and net income was $748,060 this quarter, compared to last
year third quarter revenues of $7,735,767 and net income of $692,178.
Despite the fact that water sales for the quarter are slightly higher,
revenues dropped due to less income from leasing of water rights. Third
quarter earnings were higher by $.10 per share due to reversal of accrued
litigation costs for the claims of the widow and estate of a deceased
employee who was shot to death by another employee in early 1994. The
Company's insurance carrier has settled the claims with no adverse
financial impact on the company.
Revenues for nine months are $19,514,501 and net income is
$1,582,062, compared to prior year revenues of $18,442,610 and net income
of $1,565,385. Increased revenues are due to 10% greater water sales and
higher water rates in the South Bay which are partially offset by lower
income from leasing water rights. Operating expenses were higher for the
period partially due to higher water costs as difficulty with Company's
wells production forced the Company to purchase higher priced imported
water.
Last quarter we reported higher water costs from the Metropolitan
Water District of Southern California (MWD) and the West Basin Municipal
Water District (WBMWD), which were estimated at $1.5 million. Since then,
the California Public Utilities Commission has authorized the company to
collect all but $100,000 of its requested increase through higher water
rates. We do expect year-end earnings to exceed industry averages.
As previously reported, the company is working to bring recycled
water to our industrial and landscape customer in early 1997. Management
is working closely with our supplier, WBMWD, and our largest potential
customer, ARCO Los Angeles Refinery, in a long and complicated series of
negotiations regarding water quality, capital costs, and water pricing.
There are still unresolved issues, which make it problematical for
pipeline and facilities construction to begin in the spring of 1996.
Almost 80% of our demand for reclaimed water will come from ARCO, so
reaching agreement with them is an important step in reaching our goal of
adding recycled water to our sources of supply while maintaining our
margins on water sales.
The California Water Association, of which the company is an active
member, sponsored legislation, which has passed, to ensure fair
regulatory treatment of gains made from the sale of land no longer used
for utility business. Fairness dictates that such gains belong to the
shareholder, however, recent CPUC decisions have awarded various
percentages to rate payers.
10
<PAGE>
The Board of Directors has completed and announced the company's
search for C.W. Porter's successor. Brian J. Brady will assume
responsibilities of president and chief executive officer on November 6,
1995. C.W. Porter will remain chairman of the board until his retirement
in early January, at which time Mr. Brady will undertake that role as
well.
Brian J. Brady comes to Dominguez Services Corporation with 24
years of experience in the utility industry. Previously, he served the
City of Anaheim as assistant general manager of the Public Utility
Department, where he directed electric and water system operations. Prior
to his work at the City of Anaheim, Mr. Brady served Southern California
Edison in a number of capacities. Mr. Brady holds a Bachelor of Science
degree in engineering from Loyola Marymount University and a Master of
Business Administration from the University of Southern California. He is
also a registered engineer.
October 5, 1995, the Board of Directors announced the Company's
130th consecutive quarterly dividend at $0.290 per share on common stock
to be paid on December 15, 1995.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company's insurance carrier has settled the claims of the widow
and estate of a deceased employee who was shot to death by another
employee in early 1994. The terms of the settlement will have no
adverse financial impact on the Company.
ITEM 6. OTHER
An 8-K report was not required for either
1. Material unusual charges or credits to income during the
most recently completed fiscal quarter, or
2. A change in independent accountants during the period.
The information furnished reflects all adjustments which, in the opinion
of management, are necessary to the fair statement of the results of the
interim periods.
DOMINGUEZ SERVICES CORPORATION
Date: November 13, 1995 By: /s/ John S. Tootle
---------------------- -------------------------
John S. Tootle
Vice-President--Finance
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENT FOR THE PERIOD
ENDING JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,102,740
<SECURITIES> 0
<RECEIVABLES> 3,453,994
<ALLOWANCES> (244,101)
<INVENTORY> 92,401
<CURRENT-ASSETS> 7,660,470
<PP&E> 57,368,535
<DEPRECIATION> 20,798,168
<TOTAL-ASSETS> 47,178,505
<CURRENT-LIABILITIES> 6,686,959
<BONDS> 6,025,000
<COMMON> 1,004,370
0
97,525
<OTHER-SE> 13,720,455
<TOTAL-LIABILITY-AND-EQUITY> 47,178,505
<SALES> 18,010,565
<TOTAL-REVENUES> 19,514,501
<CGS> 8,944,043
<TOTAL-COSTS> 15,117,289
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 13,570
<INTEREST-EXPENSE> 514,745
<INCOME-PRETAX> 2,648,958
<INCOME-TAX> 1,063,239
<INCOME-CONTINUING> 1,585,719
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,585,719
<EPS-PRIMARY> 1.58
<EPS-DILUTED> 1.58
</TABLE>
