Exhibit 99.1
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NEWS RELEASE
CALIFORNIA WATER SERVICE
GROUP
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1720 North First Street
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August 1, 2007 |
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San Jose, CA 95112-4598
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For Immediate Release |
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Contact:
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Marty Kropelnicki (408) 367-8200 (analysts) |
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Shannon Dean (310) 257-1435 (media) |
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CAL WATER ANNOUNCES SECOND QUARTER 2007 RESULTS AND
COMPANY DECLARES 251ST CONSECUTIVE QUARTERLY DIVIDEND
SAN JOSE, CA — California Water Service Group (NYSE : CWT) today announced net income of
$7.7 million and earnings per common share of $0.37 for the second quarter of 2007, compared to net
income of $5.7 million and earnings of $0.31 per common share in the second quarter of 2006.
Revenues increased by $14.7 million, or 18%, to $95.8 million, benefiting from a $9.9 million
increase in water sales to existing customers, a $4.0 million increase in rates, and $0.8 million
in sales to new customers.
Total operating expenses for the second quarter of 2007 increased by $12.9 million, or 18%, to
$84.4 million. Included in this category is a $7.1 million increase in water production costs, due
largely to the increase in customer water usage and higher costs for wholesale water purchases.
Other operations expenses increased $1.9 million, or 8%, to $25.3 million, due partially to an
increase of $0.7 million in outside services for various initiatives, including preparation for the
2007 General Rate Case; $0.3 million for California Public Utilities Commission fees, which
are based upon revenues; and an increase of $0.2 million in general payroll increases that took effect
January 2007.
Maintenance expense increased by $1.8 million, or 53%, to $5.2 million for the quarter, due to
an increase in repairs to water mains and services.
Depreciation expense increased $0.7 million, or 10%, to $8.4 million, as a result of increases
in 2006 utility plant.
Property and taxes other than income taxes increased $0.4 million, or 13%, to $3.4 million, as
a result of higher franchise fees and property taxes, while total income taxes increased $1.3
million, or 32%, to $5.4 million because of higher pre-tax income.
Other income increased $0.4 million, or 88%, to $0.8 million, mainly due to interest on
short-term and other investments. There were no property sales in the second quarter of 2007,
compared to property sales of $0.3 million in the second quarter of 2006.
For the six months ended June 30, 2007, net income increased $2.8 million, or 42%, to $9.3
million, compared to $6.5 million for the same period in the previous year. Earnings per share
increased $0.10, or 27%, to $0.45, compared to $0.35 for the same period. Revenues for the six
months increased $21.0 million, or 14%, to $167.4 million, compared to $146.3 million for the same
period in the previous year.
“Continuing dry weather boosted our revenues in the second quarter of 2007, as did our
continued efforts to improve the process to recover cost increases in water rates,” said Peter C.
Nelson, President and Chief Executive Officer.
Nelson noted that during the quarter, the company prepared its 2007 General Rate Case (GRC)
for its company headquarters and eight districts. As part of this filing, the company requested
that it be allowed to recover certain corporate costs associated with health care and employee
welfare programs, Sarbanes-Oxley compliance, and general administration expenses. If the company
headquarters or centralized services application is approved and adopted by the Commission, Cal
Water will be allowed to recover these costs across all districts at once, thus greatly reducing
the delay in recovery that occurred previously when company headquarters
costs were phased into rates only as districts filed separate General Rates Cases on a three-year schedule.
Among the programs proposed by Cal Water in the centralized services filing were additional
programs to promote conservation. “We share the Commission’s commitment to encouraging wise water
use, and with the recent dry weather, our conservation efforts are more important than ever,”
Nelson said.
At their meeting on July 25, 2007, the Directors of California Water Service Group (NYSE:CWT)
declared the Company’s 251st consecutive quarterly dividend on common stock. The
quarterly dividend of $0.2900 will be payable on August 17, 2007, to stockholders of record on
August 6, 2007. The Board also declared a regular dividend on Series C preferred stock.
All stockholders and interested investors are invited to listen to the 2007 second quarter
conference call on August 2, 2007, at 11:00 a.m. (EDT), by dialing 1-866-253-5757 and keying in ID#
1100221. A replay of the call will be available from 2:00 p.m. (EDT) on August 2, 2007, through
October 1, 2007, at 888-266-2081, ID# 1100221. The call, which will be hosted by President and
Chief Executive Officer Peter C. Nelson and Vice President and Chief Financial Officer Martin A.
Kropelnicki, will also be webcast under the investor relations tab at www.calwatergroup.com.
California Water Service Group is the parent company of California Water Service Company,
Washington Water Service Company, New Mexico Water Service Company, Hawaii Water Service Company,
Inc., and CWS Utility Services. Together these companies provide regulated and non-regulated water
service to more than 2 million people in 100 California, Washington, New Mexico, and Hawaii
communities. The Group’s common stock trades on the New York Stock Exchange under the symbol
“CWT”.
This news release contains forward-looking statements within the meaning established by the
Private Securities Litigation Reform Act of 1995 (“Act”). The forward-looking statements are
intended to qualify under provisions of the federal securities laws for “safe harbor” treatment
established by the Act. Forward-looking statements are based on currently available information,
expectations, estimates, assumptions and projections, and management’s judgment about the Company,
the water utility industry and general economic conditions. Such words as
expects, intends, plans, believes, estimates, assumes, anticipates, projects, predicts, forecasts or variations of such
words or similar expressions are intended to identify forward-looking statements. The
forward-looking statements are not guarantees of future performance. They are subject to
uncertainty and changes in circumstances. Actual results may vary materially from what is contained in a forward-looking statement. Factors
that may cause a result different than expected or anticipated include, but are not limited to:
governmental and regulatory commissions’ decisions; changes in regulatory commissions’ policies and
procedures; the timeliness of regulatory commissions’ actions concerning rate relief; new
legislation; electric power interruptions; increases in suppliers’ prices and the availability of
supplies including water and power; fluctuations in interest rates; changes in environmental
compliance and water quality requirements; acquisitions and our ability to successfully integrate
acquired companies; the ability to successfully implement business plans; changes in customer
water use patterns; the impact of weather on water sales and operating results; access to
sufficient capital on satisfactory terms; civil disturbances or terrorist threats or acts, or
apprehension about the possible future occurrences of acts of this type; the involvement of the
United States in war or other hostilities; restrictive covenants in or changes to the credit
ratings on our current or future debt that could increase our financing costs or affect our ability
to borrow, make payments on debt or pay dividends; and, other risks and unforeseen events. When
considering forward-looking statements, you should keep in mind the cautionary statements included
in this paragraph, as well as the annual 10-K, Quarterly 10-Q, and other reports filed from
time-to-time with the Securities and Exchange Commission (SEC). The Company assumes no obligation
to provide public updates of forward-looking statements.
Additional information is available at our Web site at www.calwatergroup.com.
Attachments (3).
CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
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| (In thousands, except per share data) |
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June 30 |
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December 31 |
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2007 |
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2006 |
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ASSETS |
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Utility plant: |
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Utility plant |
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$ |
1,394,883 |
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$ |
1,344,415 |
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Less accumulated depreciation and amortization |
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(420,321 |
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(402,940 |
) |
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Net utility plant |
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974,562 |
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941,475 |
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Current assets: |
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Cash and cash equivalents |
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29,842 |
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60,312 |
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Receivables |
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Customers |
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23,050 |
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19,526 |
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Other |
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6,134 |
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6,700 |
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Unbilled revenue |
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14,698 |
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11,341 |
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Materials and supplies at average cost |
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4,742 |
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4,515 |
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Prepaid pension expense |
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— |
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1,696 |
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Taxes and other prepaid expenses |
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5,587 |
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5,534 |
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Total current assets |
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84,053 |
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109,624 |
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Other assets: |
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Regulatory assets |
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93,861 |
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93,785 |
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Other assets |
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22,008 |
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20,135 |
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Total other assets |
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115,869 |
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113,920 |
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$ |
1,174,484 |
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$ |
1,165,019 |
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CAPITALIZATION AND LIABILITIES |
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Capitalization: |
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Common stock, $.01 par value |
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$ |
207 |
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$ |
207 |
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Additional paid-in capital |
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211,681 |
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211,513 |
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Retained earnings |
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163,830 |
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166,582 |
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Total common stockholders’ equity |
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375,718 |
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378,302 |
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Preferred stock |
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3,475 |
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3,475 |
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Long-term debt, less current maturities |
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291,299 |
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291,814 |
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Total capitalization |
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670,492 |
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673,591 |
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Current liabilities: |
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Current maturities of long-term debt |
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1,778 |
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1,778 |
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Accounts payable |
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37,988 |
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33,130 |
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Accrued expenses and other liabilities |
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32,503 |
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35,317 |
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Total current liabilities |
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72,269 |
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70,225 |
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Unamortized investment tax credits |
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2,541 |
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2,541 |
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Deferred income taxes, net |
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69,472 |
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69,503 |
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Pension and postretirement benefits other than pensions |
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48,584 |
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48,584 |
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Regulatory and other liabilities |
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33,629 |
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33,411 |
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Advances for construction |
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165,819 |
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157,660 |
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Contributions in aid of construction |
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111,678 |
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109,504 |
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Commitments and contingencies |
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$ |
1,174,484 |
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$ |
1,165,019 |
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the three months ended:
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June 30, |
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June 30, |
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2007 |
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2006 |
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Operating revenue |
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$ |
95,782 |
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$ |
81,102 |
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Operating expenses: |
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Water production costs |
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37,271 |
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30,210 |
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Other operations |
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25,274 |
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23,399 |
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Maintenance |
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5,241 |
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3,432 |
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Depreciation and amortization |
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8,380 |
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7,640 |
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Income taxes |
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4,792 |
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3,753 |
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Property and other taxes |
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3,435 |
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3,045 |
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Total operating expenses |
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84,393 |
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71,479 |
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Net operating income |
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11,389 |
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9,623 |
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Other income and expenses: |
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Non-regulated revenue |
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3,423 |
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2,206 |
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Non-regulated expenses |
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(1,966 |
) |
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(1,800 |
) |
Gain (loss) on sale of non-utility property |
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(83 |
) |
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323 |
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Less: income taxes on other income and expenses |
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(560 |
) |
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(297 |
) |
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|
814 |
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|
432 |
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Interest expense: |
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Interest Expense |
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4,926 |
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4,970 |
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Less: capitalized interest |
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(450 |
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(625 |
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Net interest expense |
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4,476 |
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4,345 |
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Net income |
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$ |
7,727 |
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$ |
5,710 |
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Earnings per share |
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Basic |
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$ |
0.37 |
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$ |
0.31 |
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Diluted |
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$ |
0.37 |
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$ |
0.31 |
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Weighted average shares outstanding |
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Basic |
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20,666 |
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18,407 |
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Diluted |
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20,690 |
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18,427 |
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Dividends per share of common stock |
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$ |
0.2900 |
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$ |
0.2875 |
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CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
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| For the six months ended: |
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June 30, |
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June 30, |
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2007 |
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2006 |
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Operating revenue |
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$ |
167,352 |
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$ |
146,318 |
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Operating expenses: |
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Water production costs |
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63,084 |
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51,639 |
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Other operations |
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|
48,930 |
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|
47,187 |
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Maintenance |
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9,750 |
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|
7,330 |
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Depreciation and amortization |
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16,781 |
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|
15,349 |
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Income taxes |
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5,336 |
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4,041 |
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Property and other taxes |
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6,840 |
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6,221 |
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Total operating expenses |
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150,721 |
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131,767 |
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Net operating income |
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16,631 |
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|
14,551 |
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Other income and expenses: |
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Non-regulated revenue |
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6,465 |
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|
4,355 |
|
Non-regulated expenses |
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(3,717 |
) |
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|
(3,339 |
) |
Gain (loss) on sale of non-utility property |
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(83 |
) |
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|
348 |
|
Less: income taxes on other income and expenses |
|
|
(1,086 |
) |
|
|
(556 |
) |
|
|
|
|
|
|
|
|
|
|
1,579 |
|
|
|
808 |
|
|
|
|
|
|
|
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|
|
|
|
|
|
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Interest expense: |
|
|
|
|
|
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Interest Expense |
|
|
9,852 |
|
|
|
9,667 |
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Less: capitalized interest |
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(950 |
) |
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|
(850 |
) |
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|
|
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Net interest expense |
|
|
8,902 |
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|
8,817 |
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|
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|
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|
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Net income |
|
$ |
9,308 |
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$ |
6,542 |
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Earnings per share |
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Basic |
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$ |
0.45 |
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|
$ |
0.35 |
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Diluted |
|
$ |
0.45 |
|
|
$ |
0.35 |
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Weighted average shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
20,663 |
|
|
|
18,404 |
|
|
|
|
|
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Diluted |
|
|
20,687 |
|
|
|
18,427 |
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Dividends per share of common stock |
|
$ |
0.5800 |
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$ |
0.5750 |
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