California Water Service Group Announces First Quarter 2010 Results

SAN JOSE, CA -- (MARKET WIRE) -- 04/28/10 -- California Water Service Group (NYSE: CWT) today announced net income of $2.0 million and earnings per share of $0.10 for the first quarter of 2010, compared to net income of $2.4 million and earnings per share of $0.12 for the first quarter of 2009.

Revenue for the first quarter increased $3.7 million, or 4%, to $90.3 million. Rate increases added $4.3 million and sales to new customers added $0.6 million, while decreased usage by existing customers and other charges reduced revenue by $1.2 million.

Total operating expenses for the first quarter of 2010 increased $2.2 million, or 3%, to $82.5 million. Water production costs increased $1.6 million, or 6%, due primarily to increases in wholesaler water prices and higher power costs. Administrative costs decreased $1.4 million, or 8%, to $17.4 million due to lower legal expense and other administrative costs compared with the prior year. Other operations expenses increased $1.1 million, or 9%, to $13.6 million, as a result of increases in expenses for water treatment, water quality, and costs associated with water distribution systems.

Maintenance expense increased 7%, or $0.3 million, to $4.9 million, compared to $4.6 million in the same period last year. Depreciation expense increased $0.6 million, or 6%, to $10.8 million, due to increases in utility plant. Taxes other than income decreased $ 0.2 million, or 5%, to $3.9 million.

Other income, net of income taxes, decreased $0.6 million to a net loss of $0.1 million. The largest single component of the change was due to business development expenses in the regulated utility business. Interest expense increased $1.3 million, or 30%, to $5.7 million, due to the debt issuance in April 2009.

According to President and Chief Executive Officer Peter C. Nelson, 1st quarter 2010 results were in line with management's expectations.

"We are in the third year of a three-year rate case cycle in California, which as planned, resulted in lower rate relief for the first quarter of 2010. We will continue to work diligently to control costs while providing excellent service, both of which will benefit stockholders and rate payers in 2010 and beyond," Nelson said.

All stockholders and interested investors are invited to listen to the 2010 first quarter conference call on April 29, 2010, at 11:00 a.m. (EDT), by dialing 1-866-961-7942 and keying in ID# 1442193. A replay of the call will be available from 2:00 p.m. (EDT) Thursday, April 29, 2010, through June 28, 2010 at 888-266-2081, ID# 1442193. The call, which will be hosted by President and CEO, Peter Nelson and Vice President and Chief Financial Officer, Martin A. Kropelnicki, will also be webcast under the investor relations tab at

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., CWS Utility Services, and HWS Utility Services, LLC. Together these companies provide regulated and non-regulated water service to nearly 2 million people in 100 California, Washington, New Mexico, and Hawaii communities. 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


(In thousands, except per share data)           March 31,    December 31,
                                                  2010           2009
                                              -------------  -------------
Utility plant:
     Utility plant                            $   1,749,688  $   1,709,062
     Less accumulated depreciation and
      amortization                                 (522,508)      (510,985)
                                              -------------  -------------
          Net utility plant                       1,227,180      1,198,077
                                              -------------  -------------

Current assets:
     Cash and cash equivalents                       11,352          9,866
          Customers                                  19,506         25,567
          Regulatory balancing accounts              11,772         10,513
          Other                                       6,829          9,043
     Unbilled revenue                                12,321         13,417
     Materials and supplies at average cost           5,807          5,530
     Taxes, prepaid expense, and other assets        22,696         18,305
                                              -------------  -------------
          Total current assets                       90,283         92,241
                                              -------------  -------------

Other assets:
     Regulatory assets                              211,802        204,104
     Goodwill                                         2,615          2,615
     Other assets                                    30,569         28,544
                                              -------------  -------------
          Total other assets                        244,986        235,263
                                              -------------  -------------
                                              $   1,562,449  $   1,525,581
                                              =============  =============

     Common stock, $.01 par value             $         208  $         208
     Additional paid-in capital                     215,800        215,528
     Retained earnings                              200,738        204,898
                                              -------------  -------------
          Total common stockholders' equity         416,746        420,634
     Long-term debt, less current maturities        381,048        374,269
                                              -------------  -------------
          Total capitalization                      797,794        794,903
                                              -------------  -------------

Current liabilities:
     Current maturities of long-term debt            12,987         12,953
     Short-term borrowings                           19,100         12,000
     Accounts payable
          Trade and other                            43,058         43,689
          Regulatory balancing accounts               2,104          2,430
     Accrued interest                                 9,101          4,258
     Accrued expenses and other liabilities          33,056         35,028
                                              -------------  -------------
          Total current liabilities                 119,406        110,358

Unamortized investment tax credits                    2,318          2,318
Deferred income taxes, net                           90,806         91,851
Pension and postretirement benefits other
 than pensions                                      143,723        137,127
Regulatory liability and Other                       90,946         85,780
Advances for construction                           186,045        185,027
Contributions in aid of construction                131,411        118,217
                                              -------------  -------------
                                              $   1,562,449  $   1,525,581
                                              =============  =============

(In thousands, except per share data)

For the Three-Months ended:
                                                March 31       March 31
                                                  2010           2009
                                              -------------  -------------

Operating revenue                             $      90,272  $      86,613
                                              -------------  -------------
Operating expenses:
        Water production costs                       30,454         28,868
        Administrative and General                   17,444         18,861
        Other operations                             13,567         12,456
    Maintenance                                       4,951          4,635
    Depreciation and amortization                    10,792         10,198
    Income taxes                                      1,403          1,232
    Property and other taxes                          3,903          4,088
                                              -------------  -------------
        Total operating expenses                     82,514         80,338
                                              -------------  -------------

        Net operating income                          7,758          6,275
                                              -------------  -------------

Other income and expenses:
    Non-regulated revenue                             3,422          2,881
    Non-regulated expenses                           (3,546)        (2,641)
    Gain on sale of non-utility property                  -            603
    Income taxes (expense) benefit on other
     income and expenses                                 55           (338)
                                              -------------  -------------
        Net other income (expense)                      (69)           505
                                              -------------  -------------

Interest expense:
    Interest Expense                                  6,490          5,038
    Less: capitalized interest                         (819)          (679)
                                              -------------  -------------
        Net interest expense                          5,671          4,359
                                              -------------  -------------

Net income                                    $       2,018  $       2,421
                                              =============  =============

Earnings per share
    Basic                                     $        0.10  $        0.12
                                              =============  =============
    Diluted                                   $        0.10  $        0.12
                                              =============  =============
Weighted average shares outstanding
    Basic                                            20,778         20,730
                                              =============  =============
    Diluted                                          20,793         20,759
                                              =============  =============
Dividends per share of common stock           $      0.2975  $      0.2950
                                              =============  =============