SAN JOSE, Calif., Jan. 30, 2003 -- California Water Service Group on Thursday announced year-end 2002 earnings per share of $1.25 and net income of $19,073,000, compared to earnings per share of $0.97 and net income of $14,965,000 in 2001.
For the year, revenue was $263,151,000, a 7% increase over 2001. Favorable weather resulted in increased water sales to existing customers, adding $6,887,000 to revenue. Also adding to revenue was $2,813,000 in sales to new customers and $6,631,000 in rate increases.
Total operating expenses increased by 5% in 2002, reflecting increases in both purchased water and purchased power costs. Purchased water costs rose because higher quantities were purchased to meet customer demand and wholesale suppliers' rates increased in several districts. Purchased power costs increased because more power was needed to pump higher quantities of well water and because power rates were higher in the first five months of the year compared to 2001.
Other operations expense increased because of wage and related benefit increases effective at the start of the year, state and federal income tax increases, and higher depreciation expense. Offsetting these increased costs was a reduction in maintenance expense resulting from lower expenditures for main repairs and work at pump stations.
In 2002, other income was lower than last year because the Company sold $884,000 less in surplus property than it did in 2001. However, results from the non-regulated contract business improved and offset a portion of the lower property sales.
Interest costs for the year increased by $1.4 million as a result of the issuance of additional long-term debt. Some savings were realized from refinancing several series of first mortgage bonds with lower interest cost senior notes.
Fourth Quarter Results
Fourth quarter net income was $2,852,000 or $0.19 per share, compared to $3,060,000 or $0.20 last year. Earnings per share in 2002 include $0.04 from surplus property sales, compared to $0.10 from surplus property sales in 2001.
Revenue for the period was $60,917,000, an 8 percent increase over the same period last year. Usage by existing customers added $2,856,000 to revenue, while sales to new customers contributed $822,000 and rate increases added $695,000.
Total operating expenses increased 6 percent over the fourth quarter of 2001. Water production costs were 9 percent higher because of a one-time refund of $1,389,000 from wholesale suppliers in the fourth quarter of 2001. There was no similar refund in 2002. Other operations expense increases included wage and related benefits increases that were effective at the start of the year. Lower maintenance expenses and income taxes partially offset these increases.
The bond refinancing program undertaken in the fourth quarter offset a portion of the interest cost on new debt. The Company expects the refinancing program to save approximately $1.5 million on an annual basis when completed in 2003.
Pending Rate Case Applications
The Company filed general rate applications for 14 of its 25 California districts plus the General Office operation in mid-2001. The California Public Utilities Commission has finally issued a draft decision on the applications, and is expected to issue a final decision in the first or second quarter of 2003. If the draft decision were adopted without modification, it would increase annual revenue by $12.8 million. The Company has also applied to recover increases in purchased water and electricity costs incurred prior to November 29, 2001, and not yet billed to customers. The Company anticipates decisions on those requests, which total $4.6 million, late in the first quarter 2003. An additional $1.7 million will be requested later in the first quarter of 2003. In January 2003, the Company was authorized step rate increases in several California districts totaling $1.6 million in annual revenue. Decisions on the general rate case applications submitted in 2002 are not expected until late this summer.
Dividend Information
At their meeting, Directors increased the annual dividend on common stock from $1.12 to $1.125. The increase is the Company's 36th consecutive annual dividend increase. It is payable on February 21, 2003 to stockholders of record on February 7, 2003. The regular dividend on Series C preferred stock was also declared.
Additional information is available at the Company's website: www.calwater.com.
Other Information
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 operating companies provide regulated and non-regulated water service to over 2 million people in 98 communities. The Company's common stock trades on the New York Stock Exchange under the symbol "CWT".
