<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 10 - Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
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MARCH 31, 1997
For Quarter Ended . . . . . . . . . . . . . . . . . . . . . on 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 .
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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 3
Three Months Ending March 31, 1997
and 1996
(b) Consolidated Income Statement for the 4
Twelve Months Ending March 31, 1997
and 1996
(c) Consolidated Balance Sheet as of 5
March 31, 1997 and Consolidated
Balance Sheet as of December 31, 1996
(d) Consolidated Statements of Cash Flows 6
for the Three Months Ended
March 31, 1997 and 1996
(e) Capitalization and Stockholders' Equity 7
as of March 31, 1997
(f) Notes to Consolidated Financial 8
Statements
Item 2. Management's Discussion and Analysis of 8-9
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 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 Company, Antelope Valley Water Company, Kern River
Valley Water Company (Consolidating Kernville Domestic Water Co. and Arden
Water Co.) and DSC Investments.
(a) Consolidated Income Statement (Unaudited) - Fiscal Quarter ending:
For the For the
Quarter Ending Quarter Ending
March 31, 1997 March 31, 1996
-------------- --------------
Operating revenue $5,168,027 $5,225,268
Costs and expenses
Operating expenses 4,580,072 4,692,437
Interest expenses 185,137 172,024
Other expenses, net 7,187 5,960
Total costs and expenses 4,772,396 4,870,421
Income from operations 395,631 354,847
Other income 77,103 96,974
Income before taxes on income 472,734 451,821
Provision for taxes on income 189,770 181,352
Net income $282,964 $270,469
Less preferred dividends --0-- 1,219
Net income applicable to common shares $282,964 $269,250
Earnings per common share $0.28 $0.27
Dividends per common share $0.325 $0.31
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, 1997 March 31, 1996
-------------- --------------
Operating revenue $24,647,545 $25,690,049
Costs and expenses
Operating expenses 21,080,642 22,055,526
Interest expenses 672,377 678,334
Other expenses, net 33,889 10,650
Total costs and expenses 21,786,908 22,744,510
Income from operations 2,860,637 2,945,539
Other income 455,543 247,823
Income before taxes on income 3,316,180 3,193,362
Provision for taxes on income 1,322,387 1,202,888
Net income $1,993,793 $1,990,474
Less preferred dividends --0-- 4,876
Net income applicable to common shares $1,993,793 $1,985,598
Earnings per common share $1.98 $1.98
Dividends per common share $1.255 $1.18
Average common shares outstanding 1,004,370 1,004,370
See accompanying notes to financial statements.
4
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(d) Consolidated Balance Sheet (Unaudited)
As of As of
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS
Plant and equipment $59,642,560 $59,652,271
Depreciation allowance (21,504,376) (21,079,569)
Construction work in progress 909,952 427,280
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Net utility plant 39,048,136 38,999,982
Non-utility property 569,865 530,461
Current and accrued assets 5,906,257 5,004,365
Deferred debits 2,328,304 2,339,991
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$47,852,562 $46,874,799
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LIABILITIES
Capital stock:
Class A preferred - par value
$25 per share
No outstanding shares in 1997 $--0-- $--0--
and 1996
Common - par value $1 per share
Outstanding 1,004,370 shares 1,004,370 1,004,370
Surplus:
Capital surplus 2,507,502 2,507,502
Earnings retained in business 12,071,171 12,114,573
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Total capital 15,583,043 15,626,445
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Long-term debt:
First mortgage bonds 5,212,000 5,212,000
Other notes 1,835,474 1,838,637
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Total long-term debt 7,047,474 7,050,637
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Interim debt 1,500,000 800,000
Current portion long-term debt 834,000 834,000
Current and accrued liabilities 4,529,721 4,303,365
Deferred taxes 3,946,134 3,903,699
Advances for construction 5,407,964 5,405,329
Contribution in aid of construction 6,029,989 6,075,881
Deferred credits 2,974,237 2,875,443
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$47,852,562 $46,874,799
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See accompanying notes to financial statements.
5
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(e) Consolidated Statements of Cash Flow (Unaudited)
For the For the
Quarter Ending Quarter Ending
March 31, 1997 March 31, 1996
-------------- --------------
Cash Flow from Operating Activities:
Net income $282,964 $270,469
Adjustments to reconcile net income to net
cash provided by operation activities:
Depreciation and amortization 380,948 354,063
Deferred income tax and ITC 42,435 22,435
Change in assets and liabilities:
Customers receivable (113,884) 336,631
Other receivable (463,106) 690,070
Materials and supplies --0-- 8,447
Accounts payable (42,139) (590,658)
Income taxes payable 119,493 238,210
Deferred credits 107,186 102,170
Other 177,689 49,732
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Net Cash Provided by Operating Activities 491,586 1,481,569
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Cash Flows from Investing Activities:
Capital expenditures (472,969) (973,643)
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Net Cash used for Investing Activities (472,969) (973,643)
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Cash Flows from Financing Activities:
Proceeds from contributions in aid of
construction & advances 3,897 257,853
Repayment of long-term debt (3,163) (5,134)
Dividends paid (326,421) (312,574)
Preferred stock redemption --0-- (78,225)
Proceeds from interim debt 700,000 --0--
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Net Cash Used by Financing Activities 374,313 (138,080)
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Net Increase in Cash $392,930 $369,846
Cash at Beginning of Year 708,817 751,606
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Cash at End of Year $1,101,747 $1,121,452
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See accompanying notes to financial statements.
6
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(f) Capitalization and Stockholders' Equity (Unaudited)
As of
March 31, 1997
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Debt:
Long-term debt $7,881,474
Current sinking fund requirements (834,000)
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Total debt maturing in more than twelve months $7,047,474
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----------
Deferred credits $2,974,237
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Stockholder's equity: Shares
issued or
outstanding Amount
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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 $12,114,628
Net income 282,964
Cash dividends:
Common stock @ $0.325 (326,421)
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Balance at end of interim period 12,071,171
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Total stockholder's equity $15,583,043
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-----------
See accompanying notes to financial statements.
7
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(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 March 31, 1997, earnings per share were $0.28,
compared to $0.27 in the first quarter in 1996. Revenues for the
quarter ended March 31, 1997 were $5,168,027 and net income was
$282,964, compared to revenues of $5,225,268 and net income of
$270,469 for the same period last year.
For the twelve months ended March 31,1997, earnings per share were
$1.98, compared to $1.98 for the same period in 1996. Revenues for
the twelve months ended March 31, 1997 were $24,647,545 and net income
was $1,993,793, compared to revenues of $25,690,049 and net income of
$1,990,474 for the same period last year.
The decline in sales was partially offset by higher rates in the South
Bay, where Dominguez increased charges by approximately 1.6 percent to
recover higher costs charged by our wholesale supplier. However, the
water bills of Dominguez residential customers are still lower than
those charged by other leading Southern California water utilities,
according to industry data, which is an indication of our efficient
operations and rigorous cost discipline.
Water brokering income declined but was offset by the increase of
income from Chemical Services Company.
WATER QUALITY
As previously reported, the federal Safe Drinking Water Act (SDWA) was
re-authorized in 1996. Under the SDWA, the Company is subject to
regulation by the United States Environmental Protection Agency (EPA)
and the California Department of Health Services. The Company is
required to complete monthly water sampling in a data acquisition
program known as the Information Collection Rule (ICR).
During the quarter, the Company determined that one of its Subsidiary
water systems sources exceeded the state and federal standard for
radioactivity. The Company has ceased using this water source and is
providing customers with an alternative source.
WATER SUPPLY
8
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As of March 1997, the water supply outlook is favorable. California
State Water Project (SWP) reservoirs remain full. MWD also indicates
that a full compliment of Colorado River Water is available. Dominguez
expects an ample supply of import water to be at hand for 1997.
Dominguez anticipates that the West Basin Municipal Water District
Recycle Project will be delivering recycled water to a limited number
of South Bay customers in 1997. Dominguez' margins will remain equal
to that of replaced potable sales.
DIVIDEND INCREASED
The Board of Directors has declared the Company's 137th consecutive
quarterly dividend at $0.325 per share on common stock to be paid on
June 15, 1997.
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:_______________________________
John S. Tootle
CFO, 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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,101,747
<SECURITIES> 0
<RECEIVABLES> 2,956,250
<ALLOWANCES> (304,181)
<INVENTORY> 46,385
<CURRENT-ASSETS> 5,906,257
<PP&E> 60,552,512
<DEPRECIATION> 21,504,376
<TOTAL-ASSETS> 47,852,562
<CURRENT-LIABILITIES> 6,863,721
<BONDS> 5,212,000
0
0
<COMMON> 1,004,370
<OTHER-SE> 14,578,673
<TOTAL-LIABILITY-AND-EQUITY> 47,852,562
<SALES> 4,844,457
<TOTAL-REVENUES> 5,168,027
<CGS> 2,226,882
<TOTAL-COSTS> 4,172,624
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 46,480
<INTEREST-EXPENSE> 185,137
<INCOME-PRETAX> 472,734
<INCOME-TAX> 189,770
<INCOME-CONTINUING> 282,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 282,964
<EPS-PRIMARY> 0.28
<EPS-DILUTED> 0.28
</TABLE>
