<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, 1996
FOR QUARTER ENDED. . . . . . . . . . . . . . . . . . . . . .ON FILE NO. 0-18677
DOMINGUEZ SERVICES CORPORATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<C> <S>
CALIFORNIA 33-0391161
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(STATE OF OTHER JURISDICTION (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
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
<TABLE>
<CAPTION>
PAGE NO.
--------
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<C> <S> <C>
(A) CONSOLIDATED INCOME STATEMENT FOR THE 3
THREE MONTHS ENDING SEPTEMBER 30, 1996
AND 1995
(B) CONSOLIDATED INCOME STATEMENT FOR THE 4
NINE MONTHS ENDING SEPTEMBER 30, 1996
AND 1995
(C) CONSOLIDATED INCOME STATEMENT FOR THE 5
TWELVE MONTHS ENDING SEPTEMBER 30, 1996
AND 1995
(D) CONSOLIDATED BALANCE SHEET AS OF 6
SEPTEMBER 30, 1996 AND CONSOLIDATED
BALANCE SHEET AS OF DECEMBER 31, 1995
(E) CONSOLIDATED STATEMENTS OF CASH FLOWS 7
FOR THE NINE MONTHS ENDING
SEPTEMBER 30, 1996 AND 1995
(F) CAPITALIZATION AND STOCKHOLDERS' EQUITY 8
AS OF SEPTEMBER 30, 1996
(G) NOTES TO CONSOLIDATED FINANCIAL 9
STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 9-10
FINANCIAL CONDITION AND RESULTS OF OPERATION
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURE 11
</TABLE>
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., KERN RIVER
VALLEY WATER COMPANIES (CONSOLIDATING KERNVILLE DOMESTIC WATER CO., ARDEN WATER
CO.,)
(A) CONSOLIDATED INCOME STATEMENT (UNAUDITED) - FISCAL QUARTER ENDING:
<TABLE>
<CAPTION>
FOR THE FOR THE
QUARTER ENDING QUARTER ENDING
SEPTEMBER 30, 1995 SEPTEMBER 30, 1996
------------------ -------------------
<S> <C> <C>
OPERATING REVENUE $7,404,372 $7,543,353
COSTS AND EXPENSES
OPERATING EXPENSES 6,026,528 6,129,554
INTEREST EXPENSES 172,005 171,021
OTHER EXPENSES, NET 22,696 732
TOTAL COSTS AND EXPENSES 6,221,229 6,301,307
INCOME FROM OPERATIONS 1,183,143 1,242,046
OTHER INCOME 131,464 9,631
INCOME BEFORE TAXES ON INCOME 1,314,607 1,251,677
PROVISION FOR TAXES ON INCOME 527,656 502,398
NET INCOME $786,951 $749,279
LESS PREFERRED DIVIDENDS --0-- 1,219
NET INCOME APPLICABLE TO COMMON SHARES $786,951 $748,060
EARNINGS PER COMMON SHARE $0.78 $0.75
DIVIDENDS PER COMMON SHARE $0.31 $0.29
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
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
OPERATING REVENUE $18,985,561 $19,243,278
COSTS AND EXPENSES
OPERATING EXPENSES 16,080,505 16,226,102
INTEREST EXPENSES 516,808 514,745
OTHER EXPENSES, NET 31,945 6,042
TOTAL COSTS AND EXPENSES 16,629,258 16,746,889
INCOME FROM OPERATIONS 2,356,303 2,496,389
OTHER INCOME 303,903 152,569
INCOME BEFORE TAXES ON INCOME 2,660,206 2,648,958
PROVISION FOR TAXES ON INCOME 1,067,753 1,063,239
NET INCOME $1,592,453 $1,585,719
LESS PREFERRED DIVIDENDS 1,219 3,657
NET INCOME APPLICABLE TO COMMON SHARES $1,591,234 $1,582,062
EARNINGS PER COMMON SHARE $1.58 $1.58
DIVIDENDS PER COMMON SHARE $0.93 $0.87
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
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
OPERATING REVENUE $25,228,605 $25,151,890
COSTS AND EXPENSES
OPERATING EXPENSES 21,860,906 21,566,187
INTEREST EXPENSES 685,196 702,443
OTHER EXPENSES, NET 33,090 (13,809)
TOTAL COSTS AND EXPENSES 22,579,192 22,254,821
INCOME FROM OPERATIONS 2,649,413 2,897,069
OTHER INCOME 491,775 352,781
INCOME BEFORE TAXES ON INCOME 3,141,188 3,249,850
PROVISION FOR TAXES ON INCOME 1,181,946 1,300,646
NET INCOME $1,959,242 $1,949,204
LESS PREFERRED DIVIDENDS 2,438 4,876
NET INCOME APPLICABLE TO COMMON SHARES $1,956,804 $1,944,328
EARNINGS PER COMMON SHARE $1.95 $1.94
DIVIDENDS PER COMMON SHARE $1.22 $1.145
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
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
<S> <C> <C>
ASSETS
PLANT AND EQUIPMENT $57,200,694 $57,094,383
DEPRECIATION ALLOWANCE (21,417,210) (20,312,058)
CONSTRUCTION WORK IN PROGRESS 2,939,207 291,478
----------- -----------
NET UTILITY PLANT 38,722,691 37,073,803
NON-UTILITY PROPERTY 135,133 149,138
CURRENT AND ACCRUED ASSETS 6,697,748 5,272,443
DEFERRED DEBITS 2,480,343 2,799,374
----------- -----------
$48,035,915 $45,294,758
----------- -----------
----------- -----------
LIABILITIES
CAPITAL STOCK:
CLASS A PREFERRED - PAR VALUE $25 PER SHARE
ALL SHARES WERE REDEEMED IN MARCH 1996 $--0-- $97,525
COMMON - PAR VALUE $1 PER SHARE
OUTSTANDING 1,004,370 SHARES 1,004,370 1,004,370
SURPLUS:
CAPITAL SURPLUS 2,507,502 2,512,379
EARNINGS RETAINED IN BUSINESS 12,053,960 11,379,913
----------- -----------
TOTAL CAPITAL 15,565,832 14,994,187
----------- -----------
LONG-TERM DEBT:
FIRST MORTGAGE BONDS 5,988,000 6,023,000
OTHER NOTES 2,051,506 1,250,335
----------- -----------
TOTAL LONG-TERM DEBT 8,039,506 7,273,335
----------- -----------
CURRENT PORTION LONG-TERM DEBT 58,000 81,000
CURRENT AND ACCRUED LIABILITIES 5,831,357 4,819,070
DEFERRED TAXES 3,803,870 3,696,565
ADVANCES FOR CONSTRUCTION 5,389,635 5,440,080
CONTRIBUTION IN AID OF CONSTRUCTION 6,133,071 6,055,354
DEFERRED CREDITS 3,214,644 2,935,167
----------- ------------
$48,035,915 $45,294,758
----------- ------------
----------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
(E) CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE FOR THE NINE
MONTHS ENDING MONTHS ENDING
SEPTEMBER 30, 1996 SEPTEMBER 30, 1995
------------------ ------------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME $1,592,453 $1,585,719
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED BY OPERATION ACTIVITIES:
DEPRECIATION AND AMORTIZATION 953,422 1,053,322
DEFERRED INCOME TAX AND ITC 107,305 125,559
CHANGE IN ASSETS AND LIABILITIES:
CUSTOMERS RECEIVABLE (688,971) (829,139)
OTHER RECEIVABLE 584,678 352,298
MATERIALS AND SUPPLIES 23,277 8,663
ACCOUNTS PAYABLE 243,865 386,088
INCOME TAXES PAYABLE 632,013 11,210
DEFERRED CREDITS 271,058 (129,557)
ALL OTHERS 191,225 576,462
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,910,325 3,140,625
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (2,758,917) (1,810,978)
--------- ---------
NET CASH USED FOR INVESTING ACTIVITIES (2,758,917) (1,810,978)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM CONTRIBUTIONS IN AID OF
CONSTRUCTION & ADVANCES 189,452 111,615
REPAYMENT OF LONG-TERM DEBT 766,171 111,609
DIVIDENDS PAID (935,283) (877,452)
STOCK REDEMPTION (97,525) --0--
CURRENT PORTION LONG-TERM DEBT (23,000) --0--
NET CASH USED BY FINANCING ACTIVITIES (100,185) (654,228)
--------- ---------
NET (DECREASE) INCREASE IN CASH $1,051,223 $675,419
CASH AT BEGINNING OF YEAR 751,606 1,427,321
--------- ---------
CASH AT END OF YEAR $1,802,829 $2,102,740
---------- ----------
---------- ----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
(F) CAPITALIZATION AND STOCKHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30, 1996
------------------
<S> <C>
DEBT:
LONG-TERM DEBT $8,097,506
CURRENT SINKING FUND REQUIREMENTS (58,000)
------
TOTAL DEBT MATURING IN MORE THAN TWELVE MONTHS $8,039,506
----------
----------
DEFERRED CREDITS $3,214,644
----------
----------
STOCKHOLDER'S EQUITY:
</TABLE>
<TABLE>
<CAPTION>
SHARES
ISSUED OR
OUTSTANDING AMOUNT
<S> <C> <C> <C>
COMMON STOCK $1 PAR VALUE 1,004,370 $1,004,370
CAPITAL IN EXCESS OF PAR VALUE
2,507,502
RETAINED EARNINGS:
BALANCE AT BEGINNING OF CURRENT FISCAL YEAR $11,396,790
NET INCOME 1,592,453
CASH DIVIDENDS:
COMMON STOCK @ $0.31 $934,064
PREFERRED STOCK CLASS A @ $0.3125 1,219 (935,283)
----- -------
BALANCE AT END OF INTERIM PERIOD 12,053,960
----------
TOTAL STOCKHOLDER'S EQUITY $15,565,832
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
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.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
For the quarter ended September 30, 1996, earnings per share were
$0.78, compared to $0.75 in the third quarter in 1995. Revenues for
the quarter ended September 30, 1996 were $7,404,372 and net income
was $786,951, compared to revenues of $7,543,353 and net income of
$749,279 for the same period last year.
On a nine months basis, earnings remained the same at $1.58 per share.
Revenues were $18,985,561 and net income was $1,592,453, compared to
1995's revenues of $19,243,278 and net income of $1,585,719.
For the twelve months ended September 30, 1996, earnings per share
were $1.95, up from $1.94 for the same period in 1995. Revenues for
the twelve months ended September 30, 1996 were $25,228,605 and net
income was $1,959,242, compared to revenues of $25,151,890 and net
income of $1,949,204 for the same period last year.
The Company posted higher earnings for the quarter despite a 5.5%
decrease in water sales from the same quarter last year. The decrease
is due to reduced water purchases by industrial water users. Higher
earnings are primarily attributable to proceeds from brokering water
rights leases.
As previously reported, the Company remains on track with its
strategic plan, which focuses on increasing the efficiency and growing
the business. Employee teams are delivering measurable improvements to
some of the Company's key business processes, thus strengthening the
core business and readying the Company for growth. Also enhancing the
Company's growth potential, the Company has finalized several more
service agreements in the Kern River Valley. The Company is also
actively pursuing other partnerships.
WATER QUALITY
As previously reported, the Company is required to participate in
EPA's data acquisition program known as the Information Collection
Rule (ICR) The Company has completed the monthly sampling required in
September and October.
9
<PAGE>
WATER SUPPLY
The water supply outlook is excellent. Statewide precipitation was
120% of normal through September, the end of the water year. The
reservoirs throughout the state held 119% of the historical averages
for September, and storage was 73% of total capacity. Early winter
storms are encouraging as the state starts a new water year.
Metropolitan Water District expects full deliveries from the Colorado
River, and water from the State Water Project will be available. The
Company is assured of having adequate supplies to meet South Bay
customers' demands for the next two years.
The Company continues to increase local well capacity in order to
mitigate the effects of water shortages and future imported water rate
increases. A new well will be drilled in 1997. All South Bay wells are
operational, producing approximately 50% of the system's supply. Local
well production continues at a 20-year high.
In the Kern River Valley and Antelope Valley, despite very high summer
temperatures, water supplies were adequate to meet demands.
DIVIDEND DECLARED
The Board of Directors has declared the Company's 135th consecutive
quarterly dividend at $0.31 per share on common stock to be paid on
December 15, 1996.
10
<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: November 12, 1996 By: /s/ John S. Tootle
--------------------------- ----------------------------
John S. Tootle
CFO, Vice-President Finance
11
<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 SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,802,829
<SECURITIES> 0
<RECEIVABLES> 3,422,664
<ALLOWANCES> (262,135)
<INVENTORY> 70,894
<CURRENT-ASSETS> 7,147,748
<PP&E> 60,139,901
<DEPRECIATION> 21,417,210
<TOTAL-ASSETS> 48,035,915
<CURRENT-LIABILITIES> 6,339,357
<BONDS> 5,988,000
0
0
<COMMON> 1,004,370
<OTHER-SE> 14,561,462
<TOTAL-LIABILITY-AND-EQUITY> 48,035,915
<SALES> 17,949,833
<TOTAL-REVENUES> 18,985,561
<CGS> 6,247,752
<TOTAL-COSTS> 14,760,425
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 94,083
<INTEREST-EXPENSE> 516,808
<INCOME-PRETAX> 2,660,206
<INCOME-TAX> 1,067,753
<INCOME-CONTINUING> 1,592,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,592,453
<EPS-PRIMARY> 1.58
<EPS-DILUTED> 1.58
</TABLE>
