<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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F O R M 1 0 - Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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FOR QUARTER ENDED MARCH 31, 1996 ON FILE NO. 0-18677
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DOMINGUEZ SERVICES CORPORATION
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 33-0391161
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(STATE OF OTHER JURISDICTION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21718 SOUTH ALAMEDA STREET, LONG BEACH, CALIFORNIA 90810
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 834-2625
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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 .
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(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
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DOMINGUEZ SERVICES CORPORATION
INDEX
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PAGE NO.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(a) CONSOLIDATED INCOME STATEMENT FOR THE THREE MONTHS 3
ENDED MARCH 31, 1996 AND 1995
(b) CONSOLIDATED INCOME STATEMENT FOR THE TWELVE MONTHS 4
ENDED MARCH 31, 1996 AND 1995
(c) CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND 5
CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1995
(d) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE 6
MONTHS ENDED MARCH 31, 1996 AND 1995
(e) CAPITALIZATION AND STOCKHOLDERS' EQUITY AS OF 7
MARCH 31, 1996
(f) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 8-9
AND RESULTS OF OPERATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURE 10
2
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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:
FOR THE FOR THE
QUARTER ENDING QUARTER ENDING
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
OPERATING REVENUE $5,225,268 $5,021,542
COSTS AND EXPENSES
OPERATING EXPENSES 4,692,437 4,468,194
INTEREST EXPENSES 172,024 176,823
OTHER EXPENSES, NET 5,960 2,497
TOTAL COSTS AND EXPENSES 4,870,421 $4,647,514
INCOME FROM OPERATIONS 354,847 374,028
OTHER INCOME 96,974 14,371
INCOME BEFORE TAXES ON INCOME 451,821 388,399
PROVISION FOR TAXES ON INCOME 181,352 155,896
NET INCOME 270,469 232,503
LESS PREFERRED DIVIDENDS 1,219 1,219
NET INCOME APPLICABLE TO COMMON SHARES $269,250 $231,284
EARNINGS PER COMMON SHARE $0.27 $0.23
DIVIDENDS PER COMMON SHARE $0.31 $0.29
AVERAGE COMMON SHARES OUTSTANDING 1,004,370 1,004,370
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
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(b) CONSOLIDATED INCOME STATEMENT (UNAUDITED) - TWELVE MONTHS ENDING:
FOR THE TWELVE FOR THE TWELVE
MONTHS ENDING MONTHS ENDING
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
OPERATING REVENUE $25,690,049 $23,898,597
COSTS AND EXPENSES
OPERATING EXPENSES 22,055,526 20,582,534
INTEREST EXPENSES 678,334 708,222
OTHER EXPENSES, NET 10,650 27,512
TOTAL COSTS AND EXPENSES 22,744,510 21,318,268
INCOME FROM OPERATIONS 2,945,539 2,580,329
OTHER INCOME 247,823 707,645
INCOME BEFORE TAXES ON INCOME 3,193,362 3,287,974
PROVISION FOR TAXES ON INCOME 1,202,888 1,345,793
NET INCOME 1,990,474 1,942,181
LESS PREFERRED DIVIDENDS 4,876 4,876
NET INCOME APPLICABLE TO COMMON SHARES $1,985,598 $1,937,305
EARNINGS PER COMMON SHARE $1.98 $1.93
DIVIDENDS PER COMMON SHARE $1.18 $1.115
AVERAGE COMMON SHARES OUTSTANDING 1,004,370 1,004,370
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
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(c) CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF AS OF
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
ASSETS
PLANT AND EQUIPMENT $57,135,596 $57,094,383
DEPRECIATION ALLOWANCE (20,709,083) (20,312,058)
CONSTRUCTION WORK IN PROGRESS 1,219,996 291,478
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NET UTILITY PLANT 37,646,509 37,073,803
NONUTILITY PROPERTY 138,646 149,138
CURRENT AND ACCRUED ASSETS 4,909,476 5,272,443
DEFERRED DEBITS 2,470,446 2,799,374
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$45,165,077 $45,294,758
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LIABILITIES
CAPITAL STOCK:
CLASS A PREFERRED - PAR VALUE $25
PER SHARE
NO OUTSTANDING SHARES IN 1996 $--0-- $97,525
COMMON - PAR VALUE $1 PER SHARE
OUTSTANDING 1,004,370 SHARES 1,004,370 1,004,370
SURPLUS:
CAPITAL SURPLUS 2,508,467 2,512,379
EARNINGS RETAINED IN BUSINESS 11,337,808 11,379,913
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TOTAL CAPITAL 14,850,645 14,994,187
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LONG-TERM DEBT:
FIRST MORTGAGE BONDS 6,023,000 6,023,000
OTHER NOTES 1,245,201 1,250,335
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TOTAL LONG-TERM DEBT 7,268,201 7,273,335
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CURRENT PORTION LONG-TERM DEBT 81,000 81,000
CURRENT AND ACCRUED LIABILITIES 4,518,113 4,819,070
DEFERRED TAXES 3,719,000 3,696,565
ADVANCES FOR CONSTRUCTION 5,650,713 5,440,080
CONTRIBUTION IN AID OF CONSTRUCTION 6,048,513 6,055,354
DEFERRED CREDITS 3,028,892 2,935,167
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$45,165,077 $45,294,758
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----------- -----------
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
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(d) CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
FOR THE FOR THE
QUARTER ENDING QUARTER ENDING
MARCH 31, 1996 MARCH 31, 1995
-------------- --------------
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME $270,469 $232,503
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATION ACTIVITIES:
DEPRECIATION AND AMORTIZATION 354,063 371,723
DEFERRED INCOME TAX AND ITC 22,435 41,853
CHANGE IN ASSETS AND LIABILITIES:
CUSTOMERS RECEIVABLE 336,631 427,690
OTHER RECEIVABLE 690,070 71,700
MATERIALS AND SUPPLIES 8,447 5,382
ACCOUNTS PAYABLE (590,658) (302,164)
INCOME TAXES PAYABLE 238,210 (57,634)
DEFERRED CREDITS 102,170 244,748
ALL OTHERS 49,732 208,357
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NET CASH PROVIDED BY OPERATING ACTIVITIES 1,481,569 1,244,158
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CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (973,643) (595,208)
PURCHASE SUBSIDIARIES --0-- (10,001)
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NET CASH USED FOR INVESTING ACTIVITIES (973,643) (605,209)
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CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM CONTRIBUTIONS IN AID OF
CONSTRUCTION 257,853 (36,483)
REPAYMENT OF LONG TERM DEBT (5,134) 172,959
DIVIDENDS PAID (312,574) (292,478)
STOCK REDEMPTION (78,225) --0--
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NET CASH USED BY FINANCING ACTIVITIES (138,080) (156,002)
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NET INCREASE IN CASH 369,846 482,947
CASH AT BEGINNING OF YEAR 751,606 1,085,283
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CASH AT END OF YEAR $1,121,452 $1,568,230
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SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
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(e) CAPITALIZATION AND STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
AS OF
MARCH 31, 1996
--------------
<S> <C> <C> <C>
DEBT:
LONG-TERM DEBT $7,349,201
CURRENT SINKING FUND REQUIREMENTS (81,000)
----------
TOTAL DEBT MATURING IN MORE THAN TWELVE MONTHS $7,268,201
----------
----------
DEFERRED CREDITS $3,028,892
----------
----------
STOCKHOLDER'S EQUITY: SHARES
ISSUED OR
OUTSTANDING AMOUNT
----------- ------
COMMON STOCK $1 PAR VALUE 1,004,370 $1,004,370
CAPITAL IN EXCESS OF PAR VALUE 2,508,467
RETAINED EARNINGS:
BALANCE AT BEGINNING OF CURRENT FISCAL YEAR $11,379,913
NET INCOME 270,469
CASH DIVIDENDS:
COMMON STOCK @ $0.31 $311,355
PREFERRED STOCK CLASS A @ $0.3125 1,219 (312,574)
----- ---------
BALANCE AT END OF INTERIM PERIOD 11,337,808
----------
TOTAL STOCKHOLDER'S EQUITY $14,850,645
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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, 1996, earnings per share
increased from $.23 to $.27 for the same period in 1995. Revenues for
the three months ended March 31, 1996, were $5,225,268 and net income
was $270,469, compared to revenues of $5,021,542 and net income of
$232,503 for the same period last year.
For the twelve months ended March 31, 1996, earnings per share
increased from $1.93 to $1.98 for the same period in 1995. Revenues
for the twelve months ended March 31, 1996, were $25,690,049 and net
income was $1,990,474, compared to revenues of $23,898,597 and net
income of $1,942,181 for the same period last year.
The Company posted higher revenues and earnings despite a 2.3%
decrease in water sales. Increased revenues are due in large measure
to a rate increase authorized in 1995 by the California Public
Utilities Commission (CPUC) to cover higher water costs. Higher
earnings are primarily attributable to proceeds from brokering water
rights leases.
As part of the Company's strategic repositioning, Dominguez will sell
the remaining assets of its non-utility subsidiary, Hydro-Metric
Corporation. We expect to complete the transaction by the end of
April with no material effect on the Company's financial statements.
As of March 15, 1996, the Company redeemed all its outstanding Class A
Preferred Shares.
WATER QUALITY
Due to recent publicity regarding methyltertiarybutylether (MTBE)
found in water systems in Southern California, the Company sampled its
groundwater supply and found no trace of this contaminant. The Company
continues to test its water supply to ensure compliance with current
and anticipated federal and state water quality standards.
8
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WATER SUPPLY
The water supply outlook is encouraging. Large amounts of rain and
snow pack in northern California assure us of an adequate supply to
meet South Bay customers' demands for the next two years. Although
this year's runoff is slightly less than in the prior year, reservoirs
are near capacity and snow pack in Northern California is still well
above normal. MWD expects full deliveries from the State Water
Project. Colorado River water will also be available.
The Company continues to increase local well capacity in order to
mitigate the effects of water shortages and future imported water rate
increases.
In the Kern River Valley and Antelope Valley, ground water levels
indicate that these systems should have an adequate water supply for
1996.
DIVIDEND INCREASE
The Board of Directors has declared the Company's 133rd consecutive
quarterly dividend at $.31 per share on common stock to be paid on
June 15, 1996.
9
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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: By:
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John S. Tootle
CFO, Vice-President Finance
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDING MARCH
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,121,452
<SECURITIES> 0
<RECEIVABLES> 2,398,788
<ALLOWANCES> (263,861)
<INVENTORY> 85,724
<CURRENT-ASSETS> 4,909,476
<PP&E> 58,355,592
<DEPRECIATION> 20,709,083
<TOTAL-ASSETS> 45,165,077
<CURRENT-LIABILITIES> 4,600,078
<BONDS> 6,023,000
0
0
<COMMON> 1,004,370
<OTHER-SE> 13,845,310
<TOTAL-LIABILITY-AND-EQUITY> 45,165,077
<SALES> 5,030,381
<TOTAL-REVENUES> 5,225,268
<CGS> 1,615,230
<TOTAL-COSTS> 4,244,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 48,545
<INTEREST-EXPENSE> 172,024
<INCOME-PRETAX> 451,821
<INCOME-TAX> 181,352
<INCOME-CONTINUING> 270,469
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 270,469
<EPS-PRIMARY> 0.27
<EPS-DILUTED> 0.27
</TABLE>
