SAN JOSE, Calif., July 24, 2002 — California Water Service Group announced second quarter 2002 earnings of $0.43 per share on net income of $6,618,000 compared to earnings of $0.38 per share on net income of $5,764,000 in the second quarter of 2001.
As explained below, this year's second quarter earnings includes $0.08 from surplus property sales. Last year's second quarter included $0.05 from a property sale.
For the twelve months ended June 30, 2002, earnings per share were $1.13 versus $1.21 for the twelve months ended June 30, 2001.
Revenue for the quarter increased 3% to $69,183,000, which is $2,225,000 higher than revenue in the same period last year. Revenue from water usage by existing customers decreased $544,000 due to cooler weather this year. However, the decline in revenue due to lower usage was offset by $2,259,000 of revenue from rate increases and $510,000 from water usage by 4,400 new customers.
"We are encouraged by the improvement shown by the second quarter operating results and expect continued progress for our Company through 2002," said Robert W. Foy, Chairman of the Board.
The rate increases adding to second quarter 2002 revenues include $730,000 for recovery of higher purchased power costs in four of the Company's 24 California regulated districts. Recovery of power costs in the other districts was not allowed by the California Public Utilities Commission ("Commission"), but will be considered in future general rate cases or as part of a separate Commission proceeding.
Total operating expenses increased 3% over the second quarter of 2001. Water production costs, which consist of purchased water, purchased power and pump taxes, rose 3 percent. Purchased power costs increased $747,000 or 16% due to increases in electric rates that became effective in January and May of 2001. Since mid-May 2002, power rates have been equivalent to those paid during the same period last year.
Purchased water costs decreased $73,000 because of reduced purchases during the quarter. Other operations expenses, including wages and related benefits, declined slightly compared to last year's second quarter as the Company continued its expense control efforts. There were 20 fewer employees at the end of the second quarter this year compared to the prior year.
According to Peter C. Nelson, President and Chief Executive Officer, the Company maintains its emphasis on cost control in response to regulatory delays in obtaining rate relief. "Our expense controls and strong budgetary efforts are yielding real benefits. Because the regulatory process is taking longer, it is critical that we maintain our focus on controlling costs," he said.
Other income increased $727,000 for the quarter, primarily as a result of the sale of surplus real estate. During 2002's second quarter, two surplus real estate properties were sold, adding $1,922,000 to other income. During the second quarter of 2001, a real estate sale added $1,177,000 to other income.
In July 2001, the Company filed general rate case applications for 15 of its 25 California districts and the General Office with the California Public Utilities Commission. Evidentiary hearings were completed in May. Decisions are anticipated in late September or early October.
At their meeting today, Directors declared the regular common stock quarterly dividend of $0.28 per share. This is the 231st consecutive quarterly dividend paid on Company stock. It is payable on August 19, 2002 to stockholders of record on August 5, 2002. The regular dividend on Series C preferred stock was also declared.
California Water Service Group is the parent company of California Water Service Company, Washington Water Service Company, New Mexico Water Service Company, and CWS Utility Services. The subsidiaries provide regulated and non-regulated water service to over 1.7 million people in 98 communities. The Company's common stock trades on the New York Stock Exchange under the symbol "CWT."
