SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Amendment No. 2
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 25, 2000
CALIFORNIA WATER SERVICE GROUP
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13883 77-0448994
State of Incorporation Commission File No. IRS Employer ID Number
1720 North First Street, San Jose, CA 95112
Address, including Zip code, of registrant's principal executive office
(408) 367-8200
Registrant's telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not applicable
(b) Pro Forma Financial Information (Unaudited)
The unaudited pro forma condensed combined balance sheets as of
December 31, 1999 and March 31, 2000, and the unaudited pro forma
condensed combined statements of income for the three-years ended
December 31, 1999, 1998 and 1997, and for the three month period
ended March 31, 2000 and the notes thereto are filed as Exhibit 7.1
to this Amendment No. 2 and such exhibit is incorporated herein by
reference.
(c) Financial Information -- summary
Unaudited pro forma condensed combined balance sheets as of December
31, 1999 and March 31, 2000, and the unaudited pro forma condensed
combined statements of income for the three-years ended December 31,
1999, 1998 and 1997, and for the three month period ended March 31,
2000 and the notes thereto.
CALIFORNIA WATER SERVICE GROUP
Date: July 27, 2000 By: /s/ Peter C. Nelson
President and Chief Executive Officer
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FROMA CONDENSED COMBINED FINANCIAL INFORMATION
Summary
The merger between California Water Service Group ("Company") and Dominguez
Services Corporation ("Dominguez") was completed on May 25, 2000. Each
outstanding Dominguez common share was exchanged for 1.38 shares of Company
common stock. To complete the merger, the Company issued 2,210,254 new common
shares in exchange for the 1,601,679 outstanding Dominguez shares. The
acquisition was accounted for as a tax-free pooling of interests.
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information are based on
the historic financial statements of both the Company and Dominguez for the
years ended December 31, 1999, 1998 and 1997 included in their annual report on
Form 10-K and their quarterly report on Form 10-Q for the quarter ended March
31, 2000, and includes the pro forma adjustments to give effect as if the merger
had been completed as of the beginning of the earliest period presented. For
financial reporting purposes, the Merger was accounted for as a pooling of
interests. Accordingly, the assets and liabilities of Company and Dominguez have
been recorded at their historical amounts.
The information presented in the unaudited pro forma condensed combined
financial information has been prepared by the Company for illustrative purposes
only and is not necessarily indicative of the financial results that would have
occurred if the Merger had been completed as of the earliest date that financial
statements are presented, nor is the pro forma information indicative of
expected future results of the merged companies.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF DECEMBER 31, 1999
(Amounts in thousands)
CWT DOMZ Pro Forma
Historical Historical Adjustments Adjusted
ASSETS
Utility plant:
Utility plant $ 737,352 $ 75,334 $ 812,686
Less depreciation and amortization 221,998 26,298 248,296
---------------------------------------------------------
Net utility plant 515,354 49,036 564,390
Current assets:
Cash and cash equivalents 1,437 942 2,379
Receivables 15,574 3,536 19,110
Unbilled revenue 7,145 1,054 8,199
Materials and supplies at average cost 2,229 18 2,247
Taxes and other prepaid expenses 4,437 1,979 6,416
---------------------------------------------------------
Total current assets 30,822 7,529 38,351
Other assets:
Regulatory assets 36,458 983 37,441
Other deferred assets 4,984 341 5,325
---------------------------------------------------------
Total other assets 41,442 1,324 42,766
---------------------------------------------------------
$ 587,618 $ 57,889 $ 645,507
=========================================================
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock 129 1,564 (1,542) 151
Additional paid-in capital 44,881 2,917 1,542 49,340
Retained earnings 132,689 12,921 145,610
Accumulated other comprehensive loss (517) -- (517)
---------------------------------------------------------
Total common stockholders' equity 177,182 17,402 194,584
Preferred stock 3,475 3,475
Long-term debt, less current maturities 156,572 12,294 168,866
---------------------------------------------------------
Total capitalization 337,229 29,696 366,925
Current liabilities:
Current maturities of long-term debt 2,651 96 2,747
Short-term borrowings 13,599 400 13,999
Accounts payable 23,707 3,041 26,748
Accrued expenses and other liabilities 15,554 3,663 19,217
---------------------------------------------------------
Total current liabilities 55,511 7,200 62,711
---------------------------------------------------------
Unamortized investment tax credits 2,842 254 3,096
Deferred income taxes 21,427 4,369 25,796
Regulatory and other liabilities 18,001 4,543 22,544
Advances for construction 99,991 5,565 105,556
Contributions in aid of construction 52,617 6,262 58,879
---------------------------------------------------------
$ 587,618 $ 57,889 $ 645,507
=========================================================
See accompanying notes to unaudited pro forma condensed combined financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
(Amounts in thousands, except per share amounts)
CWT DOMZ Pro Forma
Historical Historical Adjustments Adjusted
Operating revenue $ 206,440 $ 28,497 $ 234,937
Operating expenses:
Operations and maintenance 139,297 22,829 290 162,416
Depreciation and amortization 15,802 1,444 17,246
Income taxes 12,176 1,439 (100) 13,515
Property and other taxes 8,555 583 9,138
----------------------------------------------------------
Total operating expenses 175,830 26,295 190 202,315
----------------------------------------------------------
Net operating income 30,610 2,202 (190) 32,622
Other income and expenses, net 2,510 1,004 3,514
----------------------------------------------------------
Income before interest expense 33,120 3,206 (190) 36,136
Interest expense:
Long-term debt interest 12,144 940 13,084
Other interest 1,057 24 1,081
----------------------------------------------------------
Total interest expense 13,201 964 14,165
----------------------------------------------------------
Net income before extraordinary item 19,919 2,242 (190) 21,971
Extraordinary item net of $100 of income taxes (190) 190
----------------------------------------------------------
Net income $ 19,919 $ 2,052 $ -- $ 21,971
==========================================================
Basic and diluted earnings per share of
common stock $ 1.53 $ 1.31 $ 1.44
==========================================================
Average number of common shares outstanding 12,936 1,561 593 15,090
Dilutive options outstanding 10 4 14
----------------------------------------------------------
Total dilutive common shares outstanding 12,936 1,571 597 15,104
==========================================================
See accompanying notes to unaudited condensed combined pro forma financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(Amounts in thousands, except per share amounts)
CWT DOMZ Pro Forma
Historical Historical Adjustments Adjusted
Operating revenue $ 189,659 $25,267 $ 214,926
Operating expenses:
Operations and maintenance 125,264 20,689 814 146,767
Depreciation and amortization 14,870 1,439 16,309
Income taxes 10,808 932 (315) 11,425
Property and other taxes 8,178 566 8,744
------------------------------------------------------------
Total operating expenses 159,120 23,626 499 183,245
------------------------------------------------------------
Net operating income 30,539 1,641 (499) 31,681
Other income and expenses, net 1,094 652 1,746
------------------------------------------------------------
Income before interest expense 31,633 2,293 (499) 33,427
Interest expense:
Long-term debt interest 11,259 866 12,125
Other interest 1,438 4 1,442
------------------------------------------------------------
Total interest expense 12,697 870 13,567
------------------------------------------------------------
Extraordinary item net of $315 of income taxes (499) 499
------------------------------------------------------------
Net income $ 18,936 $ 924 $ -- $ 19,860
============================================================
Basic and diluted earnings per share of
common stock $ 1.45 $ 0.61 $ 1.31
============================================================
Average number of common shares outstanding 12,936 1,506 572 15,014
Dilutive options outstanding 5 2 7
------------------------------------------------------------
Total dilutive common shares outstanding 12,936 1,511 574 15,021
============================================================
See accompanying notes to unaudited condensed combined pro forma financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Amounts in thousands, except per share amounts)
CWT DOMZ Pro Forma
Historical Historical Adjustments Adjusted
Operating revenue $198,347 $26,818 $ 225,165
Operating expenses:
Operations and maintenance 127,652 21,311 148,963
Depreciation and amortization 13,959 1,341 15,300
Income taxes 14,057 1,385 15,442
Property and other taxes 7,763 552 8,315
------------------------------------------------------------
Total operating expenses 163,431 24,589 188,020
------------------------------------------------------------
Net operating income 34,916 2,229 37,145
Other income and expenses, net 949 550 1,499
------------------------------------------------------------
Income before interest expense 35,865 2,779 38,644
Interest expense:
Long-term debt interest 11,405 613 12,018
Other interest 724 145 869
------------------------------------------------------------
Total interest expense 12,129 758 12,887
------------------------------------------------------------
Net income $ 23,736 $ 2,021 $ 25,757
============================================================
Basic and diluted earnings per share of
common stock $ 1.82 $ 1.34 $ 1.71
============================================================
Average number of common shares outstanding 12,936 1,506 572 15,014
Dilutive options outstanding
------------------------------------------------------------
Total dilutive common shares outstanding 12,936 1,506 572 15,014
============================================================
See accompanying notes to unaudited condensed combined pro forma financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
As of March 31, 2000
(In thousands)
CWT DOMZ Pro Forma
ASSETS Historical Historical Adjustments Adjusted
Utility plant:
Utility plant $ 742,257 $ 76,587 $ 818,844
Less depreciation and amortization 226,763 26,741 253,504
------------------------------------------------------------
Net utility plant 515,494 49,846 565,340
------------------------------------------------------------
Current assets:
Cash and cash equivalents 1,952 373 2,325
Receivables 12,710 1,502 14,212
Unbilled revenue 5,539 780 6,319
Materials and supplies at average cost 2,608 15 2,623
Taxes and other prepaid expenses 4,909 1,283 6,192
------------------------------------------------------------
Total current assets 27,718 3,953 31,671
------------------------------------------------------------
Other assets:
Regulatory assets 36,593 809 37,402
Other deferred assets 4,936 1,492 6,428
------------------------------------------------------------
Total other assets 41,529 2,301 43,830
------------------------------------------------------------
$ 584,741 $ 56,100 $ 640,841
============================================================
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 129 $ 1,564 (1,542) $ 151
Additional paid-in capital 44,881 2,917 1,542 49,340
Retained earnings 130,297 12,860 143,157
Accumulated other comprehensive loss (517) - (517)
------------------------------------------------------------
Total common stockholders equity 174,790 17,341 192,131
Preferred stock 3,475 - 3,475
Long-term debt, less current maturities 156,490 12,273 168,763
------------------------------------------------------------
Total capitalization 334,755 29,614 364,369
------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt 2,651 96 2,747
Short-term borrowings 16,299 - 16,299
Accounts payable 18,552 1,908 20,460
Accrued expenses and other liabilities 17,292 3,420 20,712
------------------------------------------------------------
Total current liabilities 54,794 5,424 60,218
------------------------------------------------------------
Unamortized investment tax credits 2,842 251 3,093
Deferred income taxes 21,965 4,414 26,379
Regulatory and other liabilities 18,001 4,732 22,733
Advances for construction 99,968 5,416 105,384
Contributions in aid of construction 52,416 6,249 58,665
------------------------------------------------------------
$ 584,741 $ 56,100 $ 640,841
============================================================
See accompanying notes to unaudited pro forma condensed combined financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the three months ended March 31
(In thousands, except per share amounts)
2000 1999
CWT DOMZ Pro Forma CWT DOMZ Pro Forma
Historical Historical Adjustments Adjusted Historical Historical Adjustments Adjusted
Operating revenue $ 40,495 $ 6,232 $ 46,727 $ 39,853 $ 5,804 $ 45,657
Operating expenses:
Operations and maintenance 29,221 4,923 34,144 27,467 4,745 35 32,247
Depreciation and amortization 4,097 374 4,471 4,074 388 4,462
Income taxes 736 215 951 1,387 161 (12) 1,536
Property and other taxes 2,085 174 2,259 2,063 148 2,211
-------------------- -------------------------------------------------------
36,139 5,686 41,825 34,991 5,442 23 40,456
-------------------- -------------------------------------------------------
Net operating income 4,356 546 4,902 4,862 362 (23) 5,201
Other income and expenses, net 299 9 308 1,077 128 1,205
-------------------- -------------------------------------------------------
Income before interest expense 4,655 555 5,210 5,939 490 (23) 6,406
-------------------- -------------------------------------------------------
Interest expense:
Long-term debt interest 3,072 224 3,296 2,853 206 3,059
Other interest 380 1 381 465 14 479
-------------------- -------------------------------------------------------
3,452 225 3,677 3,318 220 3,538
-------------------- -------------------------------------------------------
Net income before extraordinary item 1,203 330 1,533 2,621 270 (23) 2,868
-------------------- -------------------------------------------------------
Extraordinary item net of $12 of
income tax (23) 23
-------------------------------------------------------------------------------------------
Net income $ 1,203 $ 330 $ 1,533 $ 2,621 $ 247 $ - $ 2,868
===========================================================================================
Basic and diluted earnings per share
of common stock $ 0.09 $ 0.21 $ 0.10 $ 0.20 $ 0.16 $ 0.19
======== ======== ======== ======== ======== =======
Average number of common shares
outstanding 12,936 1,564 594 15,094 12,936 1,561 593 15,090
Dilutive options outstanding 10 4 14 10 4 14
---------------------------------------------- -----------------------------------------------
Total dilutive common shares
outstanding 12,936 1,574 598 15,108 12,936 1,571 597 15,104
============================================== ===============================================
See accompanying notes to unaudited condensed combined pro forma financial information.
CALIFORNIA WATER SERVICE GROUP
UNAUDITED NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Description of the Merger
The Merger between the Company and Dominguez was completed on May 25,
2000 after the California Public Utilities Commission granted its approval of
the merger. The boards of the Company and Dominguez originally approved the
merger agreement on November 13, 1998. The agreement was subsequently amended on
March 22, 1999. In accordance with the amended agreement, on the merger date
each outstanding Dominguez common share was exchanged for 1.38 shares of Company
common stock. To complete the merger, the Company issued 2,210,254 new common
shares in exchange for the 1,601,679 outstanding Dominguez shares. The merger
was accounted for as a pooling of interests.
Financial Information Presentation
Within the unaudited pro forma condensed combined financial information
headings, the Company is identified as "CWT" and Dominguez as "DOMZ".
The unaudited pro forma condensed combined financial information and
accompanying notes in this report are presented to show the impact on the
historic financial position and results of operations of the Company. The
financial information presented should be read in conjunction with the Company's
consolidated financial statements, including the notes thereto, as file on Form
8K-A Amendment No. 1 on August 4, 2000. Certain reclassifications were necessary
for consistency to the historic financial statements of the Company and
Dominguez in preparing the unaudited pro forma condensed combined financial
information presented in this report.
1. No material intercompany transactions took place between the Company,
including its subsidiaries, and Dominguez, including its subsidiaries,
during the periods presented.
2. All Company per share data has been restated to reflect the effective
2-for-1 stock split on December 31, 1997.
3. All Dominguez per share data has been restated to reflect the 3-for-2 stock
split on January 2, 1998.
4. Per share data presented in the unaudited pro forma condensed combined
financial information reflects the conversion of each share of Dominguez
common stock into Company common stock at an exchange rate of 1.38 Company
shares for each Dominguez share.
5. The unaudited pro forma condensed combined financial information is
presented as if the two companies were combined during all periods
presented.
6. For the year ended December 31, 1999, Dominguez reported an extraordinary
item related to merger expenses of $190,000, net of $100,000 of income
taxes. For the year ended December 31, 1998, Dominguez reported an
extraordinary item related to merger expenses of $499,000, net of $315,000
of income taxes. For the quarter ended March 31, 2000, Dominguez reported
an extraordinary item related to merger expenses of $23,000, net of $12,000
of income taxes. The extraordinary items have been reclassified in the pro
forma adjustment column of the related condensed combined statements of
income.
7. As reported in previous filings, certain cost synergies are anticipated to
be realized by the combined company. The unaudited pro forma condensed
combined financial information does not reflect any of the cost savings
that are estimated to be achieved from the merger.
8. The adjustments shown on the balance sheet pro forma adjustment column are
to reclassify the Dominguez paid in captial to common stock in accordance
with the Company's financial statement presentation.