<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
--------------------
MARCH 31, 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)
(310) 834-2625
Registrant's telephone number, including area code . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 March 31, 1995
and 1994
(b) Consolidated Income Statement for the 4
Twelve Months Ended March 31, 1995
and 1994
(c) Consolidated Balance Sheet as of 5
March 31, 1995 and Consolidated
Balance Sheet as of December 31, 1994
(d) Consolidated Statements of Cash Flows 6
for the Three Months Ended
March 31, 1995 and 1994
(e) Capitalization and Stockholders' Equity 7
as of March 31, 1995
(f) Notes to Consolidated Financial 8-9
Statements
Item 2. Management's Discussion and Analysis of 10
Financial Condition and Results of Operation
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature
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 Ending Quarter Ending
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Operating revenue. . . . . . . . . . . . . . . $5,094,292 $4,839,543
Costs and expenses
Operating expenses. . . . . . . . . . . . 4,544,395 4,299,114
Interest expense. . . . . . . . . . . . . 176,823 182,312
Other deductions, net . . . . . . . . . . 2,497 4,414
Total costs and expenses. . . . . . . . . 4,723,715 4,485,840
Income from operations . . . . . . . . . . . . 370,577 353,703
Other income . . . . . . . . . . . . . . . . 17,822 18,546
Income before taxes on income. . . . . . . . . 388,399 372,249
Provision for taxes on income. . . . . . . . . 155,896 149,400
Net income . . . . . . . . . . . . . . . . . . 232,503 222,849
Less preferred dividends. . . . . . . . . 1,219 1,219
Net income applicable to common
shares. . . . . . . . . . . . . . . . . . . . $231,284 $221,630
Earnings per common share. . . . . . . . . . . $0.23 $0.22
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) - Twelve Months Ending:
<TABLE>
<CAPTION>
For the Twelve For the Twelve
Months Ending Months Ending
Mar. 31, 1995 Mar. 31, 1994
------------- -------------
<S> <C> <C>
Operating revenues . . . . . . . . . . . . . . $24,941,481 $22,344,596
Cost and expenses
Operating expenses. . . . . . . . . . . 21,015,703 18,834,743
Interest expense. . . . . . . . . . . . 708,222 722,251
Other deductions,net. . . . . . . . . . 27,762 21,074
Total costs and expenses. . . . . . . . 21,751,687 19,578,068
Income from operations . . . . . . . . . . . . 3,189,794 2,766,528
Other income . . . . . . . . . . . . . . . . . 98,180 373,862
Income before taxes on income. . . . . . . . . 3,287,974 3,140,390
Provision for taxes on income. . . . . . . . . 1,345,793 1,193,830
Net income . . . . . . . . . . . . . . . . . . 1,942,181 1,946,560
Less preferred dividends. . . . . . . . 4,876 4,876
Net income applicable to common shares . . . . $1,937,305 $1,941,684
Earnings per common share. . . . . . . . . . . $1.93 $1.93
Dividends per common share . . . . . . . . . . $1.115 $1.070
Average common shares outstanding. . . . . . . 1,004,370 1,004,370
</TABLE>
See accompanying notes to Financial Statements.
4
<PAGE>
(c) Consolidated Balance Sheet (Unaudited)
<TABLE>
<CAPTION>
As of As of
March 31,1995 Dec. 31, 1994
------------- -------------
<S> <C> <C>
ASSETS
Plant and equipment . . . . . . . . . . $54,786,145 $54,787,402
Less allowance for depreciation . . . . 19,971,145 19,586,430
----------- -----------
Net plant and investments . . . . . . . 34,815,000 35,200,972
Construction work in progress . . . . . 1,354,841 748,375
----------- -----------
Net utility plant . . . . . . . . . . . 36,169,841 35,949,347
Non utility property. . . . . . . . . . 222,197 560,185
Current and accrued assets. . . . . . . 5,429,049 5,507,209
Deferred debits . . . . . . . . . . . . 4,113,531 3,980,480
----------- -----------
$45,934,618 $45,997,221
----------- -----------
----------- -----------
LIABILITIES
Capital stock
Class A preferred - par value $25 per share
Outstanding 3,901 shares in 1995 . . . . . $97,525 $97,525
Common - par value $1 per share
Outstanding 1,004,370 shares in 1995 . . . 1,004,370 1,004,370
Surplus:
Capital surplus . . . . . . . . . . . . 2,490,591 2,490,591
Earnings retained in business. . . . . . . 10,537,367 10,597,342
----------- -----------
Total capital . . . . . . . . . . . . . 14,129,853 14,189,828
----------- -----------
Long-term debt:
First mortgage bonds. . . . . . . . . . 6,083,000 6,083,000
Other notes . . . . . . . . . . . . . . 1,415,740 1,242,781
----------- -----------
Total long-term debt. . . . . . . . . . 7,498,740 7,325,781
----------- -----------
Current portion long-term debt . . . . . . 319,000 319,000
Current and accrued liabilities. . . . . . 4,640,085 4,776,055
Deferred taxes . . . . . . . . . . . . . . 2,936,493 2,894,640
Advances for construction. . . . . . . . . 5,330,364 5,334,557
Contributions in aid of
construction. . . . . . . . . . . . . . 6,208,900 6,263,605
Deferred credits . . . . . . . . . . . . . 4,871,183 4,893,755
----------- -----------
$45,934,618 $45,997,221
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to Financial Statements.
5
<PAGE>
(d) Consolidated Statements of Cash Flow (Unaudited)
<TABLE>
<CAPTION>
For the For the
3 Months Ended 3 Months Ended
March 31, 1995 March 31, 1994
-------------- --------------
<S> <C> <C>
Cash Flow from Operating Activities:
Net Income. . . . . . . . . . . . . . . . $232,503 $222,849
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and Amortization . . . . . . 371,723 305,248
Deferred Income Tax and ITC . . . . . . . 41,853 41,853
Change in Assets and Liabilities:
Customers Receivables . . . . . . . . . . 427,690 137,048
Other Receivables . . . . . . . . . . . . 71,700 (101,777)
Materials and Supplies. . . . . . . . . . 5,382 8,682
Accounts Payable. . . . . . . . . . . . . (302,164) (29,008)
Income Taxes Payable. . . . . . . . . . . (57,634) (92,837)
Deferred Credits. . . . . . . . . . . . . 244,748 127,049
All Other . . . . . . . . . . . . . . . . 208,357 140,253
---------- ----------
Net Cash Provided by Operating Activities. . . 1,244,158 759,360
---------- ----------
Cash Flows from Investing Activities:
Capital Expenditures. . . . . . . . . . . (595,208) (985,137)
Purchase Split Mountain / Mountain Shadows (10,001) -
---------- ----------
Net Cash Used for Investing Activities . . . . (605,209) (985,137)
---------- ----------
Cash Flows from Financing Activities:
Proceeds fr. Contributions in Aid of
Construction. . . . . . . . . . . . . . . (36,483) 72,580
Repayment of Long-Term Debt . . . . . . . 172,959 (7,997)
Dividends Paid. . . . . . . . . . . . . . (292,478) (277,421)
---------- ----------
Net Cash Used by Financing Activities. . . . . (156,002) (212,838)
---------- ----------
Net (Decrease) Increases in Cash . . . . . . . 482,947 (438,615)
Cash at Beginning of Year. . . . . . . . . . . 1,085,283 1,910,767
---------- ----------
Cash at End of Period. . . . . . . . . . . . . $1,568,230 $1,472,152
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to Financial Statements
6
<PAGE>
(e) Capitalization and Stockholders' Equity (Unaudited)
<TABLE>
<CAPTION>
As of
March 31, 1995
--------------
Amount
------
<S> <C>
Debt:
Long-term debt. . . . . . . . . . . . . . . . . . . . . . $7,817,740
Current sinking fund requirements. . . . . . . . . . . 319,000
----------
Total debt maturing in more than twelve months. . . . . . $7,498,740
----------
----------
Deferred credits . . . . . . . . . . . . . . . . . . . . . . $3,532,713
</TABLE>
Stockholders' Equity:
<TABLE>
<CAPTION>
Shares Issued
Or Outstanding Amount
-------------- -------
<S> <C> <C>
Non-convertible cumulative preferred stock
Class A, 5%, $25 par value. . . . . . . . . 3,901 $97,525
Common stock $1 par value. . . . . . . . . . . 1,004,370 1,004,370
Capital in excess of par value . . . . . . . . 2,490,591
Retained earnings:
Balance at beginning of current Fiscal Year 10,597,342
Net Income. . . . . . . . . . . . . . . . . 232,503
Cash dividends
Common stock @ $0.290 . . . . . . . . . 291,259
Preferred stock Class A @ $0.3125 . . . 1,219 (292,478)
--------- -----------
Balance at end of interim period . . . . . . . 10,537,367
-----------
Total Stockholders' Equity . . . . . . . . . . $14,129,853
-----------
-----------
</TABLE>
See accompanying notes to Financial Statement
7
<PAGE>
(f) 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.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
For the three months ended March 31, 1995, earnings per share
increased from $.22 to $.23 for the same period in 1994. On a twelve
month basis, earnings remained the same at $1.93 per share.
Revenues for the three months ended March 31, 1995, were $5,094,292
and net income was $232,503, compared to revenue of $4,839,543 and net
income of $222,849 for the same period last year. Earnings are up
slightly over last year due to the income from recent rate increases
in the utility subsidiaries and higher industrial water sales.
Although, first quarter results are positive, they are not necessarily
trendsetters.
WATER QUALITY
In response to heightened public awareness and concern, Dominguez and
other water providers nationwide have increased their vigilance
testing for (cryptosporidium, the contaminant that caused widespread
illness in Milwaukee in 1993). Dominguez is among many water suppliers
who have joined the Environmental Protection Agency (EPA) in the
Partnership for Safe Water, a group committed to ensuring the most
protective water systems possible. IT IS UNLIKELY THAT DOMINGUEZ
SYSTEMS WOULD CONTAIN CRYPTOSPORIDIUM. Groundwater supplies are
typically free of it due to natural soil filtration. Our only surface
water is imported by the Metropolitan Water District who tests,
treats, and filters extensively before delivering to our pipelines.
However, to ensure safety for our customers, Dominguez has tested for
Cryptosporidium and found none. As always, Dominguez will continue to
stay ahead of testing requirements. With concerns such as these, we
are pleased to continue our association with Dr. Herb Conrad, owner of
Ecological Systems Corporation.
WATER SUPPLY
In prior reports, we have mentioned the construction in El Segundo of
the water reclamation plant by the West Basin Municipal Water District
(WBMWD), which has assessed our customers for part of its
8
<PAGE>
construction costs. The plant is now operational and reclaimed water
is being served to WBMWD customers in their northern area of the South
Bay. The availability of reclaimed water in the WBMWD service area
should mitigate the impact of future droughts on the Company.
Dominguez continues to negotiate with major customers, whose
participation is critical to ensure that pipelines will be extended
into our service area by 1997.
Dominguez continues to increase local well capacity in order to
mitigate the effects of water shortages. Thanks to new wells in Kern
River Valley and Antelope Valley, these systems should have an
adequate supply.
Large amounts of rain and snowpack in northern California ensure us of
adequate supplies to meet South Bay customers demands. The water
supply outlook is as follows: South Bay's imported water supplier,
Metropolitan Water District (MWD), will be able to meet demand for at
least the next two years. Although reservoirs are near capacity, snow
pack in Northern California is still well above normal and MWD expects
full deliveries from the State Water Project. Colorado River water
will also be available.
REGULATORY
The cost of water will take a significant jump this year. The CPUC's
usual practice is to allow us to pass these costs on to our customers.
Permission to pass through increased costs is not automatic, and our
staff is currently preparing to file for such authorization. We
anticipate that we will be as successful, as in the prior years, to
protect our earnings.
On a state level, the legislature is holding hearings about the future
of the California Public Utilities Commission (CPUC). One bill has
been submitted that would remove water companies from the jurisdiction
of the CPUC and place them under the authority of the county. This is
being fought by your Company and the industry.
DIVIDEND INCREASE
The Board of Directors has declared the Company's 128th consecutive
quarterly dividend at $.29 per share on common stock to be paid on
June 15, 1995.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - No legal proceedings have been filed
against the registrant that have not
been previously reported.
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: May 12, 1995 By: /s/ JOHN S. TOOTLE
---------------------------------- --------------------------------
John S. Tootle
Vice-President Finance
10
<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 MARCH 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 1,568,230
<SECURITIES> 0
<RECEIVABLES> 2,156,519
<ALLOWANCES> (203,455)
<INVENTORY> 95,682
<CURRENT-ASSETS> 1,812,073
<PP&E> 56,363,183
<DEPRECIATION> 19,971,145
<TOTAL-ASSETS> 45,934,618
<CURRENT-LIABILITIES> 4,959,085
<BONDS> 0
<COMMON> 1,004,370
0
97,525
<OTHER-SE> 13,027,958
<TOTAL-LIABILITY-AND-EQUITY> 45,934,618
<SALES> 4,815,525
<TOTAL-REVENUES> 5,094,292
<CGS> 2,692,452
<TOTAL-COSTS> 4,112,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 37,386
<INTEREST-EXPENSE> 176,823
<INCOME-PRETAX> 388,399
<INCOME-TAX> 155,896
<INCOME-CONTINUING> 232,503
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232,503
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
