American States Water Company Announces Earnings for the Three and Six Months Ended June 30, 2004.SAN DIMAS, Calif. -- American States Water Company (NYSE NYSE See: New York Stock Exchange :AWR AWR Automatic Workload Repository (Oracle database) AWR Applied Wave Research (El Segundo, CA) AWR Adventist World Radio AWR Advanced Warranty Replacement AWR American Warmblood Registry ) today reported basic and fully diluted earnings of $0.44 per share for the three months ended June 30, 2004 as compared to basic and fully diluted earnings of $0.19 per share reported for the same period ended June 30, 2003. Basic and fully diluted earnings were $0.52 and $0.51 per share, respectively, for the six months ended June 30, 2004 as compared to basic and fully diluted earnings of $0.39 per share reported for the same period ended June 30, 2003. Commenting on the results, President and Chief Executive Officer Floyd E. Wicks said, "The reported earnings reflect the results of receiving favorable decisions and rate increases from the California Public Utilities Commission The California Public Utilities Commission (CPUC; also often commonly referred to as simply the PUC) [1] is a state Public Utilities Commission which regulates privately-owned utilities in the state of California, including electric power, ("CPUC CPUC California Public Utilities Commission CPUC Current Procurement Unit Cost "). This quarter reflects the full effects of an increase in our Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, Water Company ("SCW SCW Spanish Civil War SCW Syktyvkar (Russia) SCW Supercritical Water SCW Supercritical Water Oxidation SCW SEABEE Combat Warfare SCW Shibuya Custom Works (Western Arms Airsoft) SCW Sucking Chest Wound ") Region III service area that we had expected in the beginning of 2003 but, in fact, did not become effective until March 2004. It is important to note that recently approved rate increases will continue to provide additional revenues for the remainder of 2004 and additional increases in 2005, subject to an earnings test. Additionally, as reported in our July 13, 2004, press release, the CPUC issued a favorable decision on July 8, 2004, regarding a settlement agreement between SCW and the City of Santa Monica Santa Monica (săn`tə mŏn`ĭkə), city (1990 pop. 86,905), Los Angeles co., S Calif., on Santa Monica Bay; inc. 1886. Tourism and retailing are important, and the city has motion-picture, biotechnology, and software industries. , which resulted in a $5.2 million net pre-tax increase in operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. during this quarter." "Just last week, the CPUC issued a proposed decision adopting a settlement agreement SCW reached with the Office of Ratepayer rate·pay·er n. One that pays rates: utility ratepayers. ratepayer Noun a person who pays local rates on a building Noun 1. Advocates of the CPUC. If approved, it will provide for increased revenues totaling $15.4 million over a three-year period in the Region II customer service area of SCW, of which $5.2 million is expected to be approved in the third quarter of 2004 and be retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question. A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a to January 1, 2004. Also last week, the CPUC issued another proposed decision in three customer service areas of SCW's Region I, with annual rate increases of $382,000. We are eager to continue this positive working relationship with the CPUC that will be both equitable and timely." Second Quarter 2004 Results Total operating revenues operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. of $59.3 million for the second quarter of 2004 increased by $7.5 million compared to revenues of $51.8 million recorded in the second quarter of 2003. Of the total increase in revenues, water revenues increased by 15.9% due to rate increases in Region III of SCW that were effective in March 2004, as well as a 14% increase in water consumption resulting from warmer temperatures in most of SCW's service areas during 2004 as compared to 2003. Electric revenues increased by 1.8% due to increased consumption. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. increased by 9.8% to $48.7 million for the three months ended June 30, 2004 as compared to the $44.4 million recorded for the same period in 2003. The increases reflect higher purchased water costs caused by the need to replace groundwater supply due to wells being removed from service for water quality and mechanical reasons as well as increased consumption. The higher operating expenses also reflect increases in: (i) the supply-cost balancing accounts due to the recording of $2.2 million of net over-collections in the memorandum supply-cost accounts filed with the CPUC in the second quarter of 2004; (ii) the unrealized loss Unrealized Loss A loss that results from holding onto an asset rather than cashing it in and officially taking the loss. Notes: Let's say you own a stock that is down 50%, but you haven't sold it to realize the loss yet. This is said to be an unrealized loss. on purchased power contracts, and (iii) taxes on income. These increases were partially offset by a $5.2 million net increase in operating income as a result of the CPUC's favorable July 8, 2004, decision ("Decision"), as mentioned above. SCW and the City of Santa Monica ("City") reached a settlement agreement in which SCW sold its Charnock Basin ("Basin") water rights to the City and assigned to the City its rights against all potentially responsible parties In environmental law a potentially responsible party is a possible polluter who may eventually be held liable under the U.S. Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for the contamination or misuse of a particular property or resource. who stored, transported and dispensed gasoline containing methyl tertiary butyl butyl /bu·tyl/ (bu´t'l) a hydrocarbon radical, C4H9. bu·tyl n. A hydrocarbon radical, C4H9. butyl a hydrocarbon radical, C4H9. ether ether, in chemistry ether, any of a number of organic compounds whose molecules contain two hydrocarbon groups joined by single bonds to an oxygen atom. (MTBE MTBE Methyl-tert-butyl-ether Surgery An aliphatic ether that rapidly dissolves cholesterol stones in vivo, introduced under local anesthesia via a percutaneous transhepatic cholecystectomy catheter, as a non-invasive method for treating gallstones; after injection, ) in underground storage tanks An Underground Storage Tank (UST), in United States environmental law, is a tank and any underground piping connected to the tank that has at least 10 percent of its combined volume underground. , pipelines or other related infrastructure in the Basin. The total proceeds of $5.7 million from the sale and the assignment of rights were offset by an impairment loss of $482,000 associated with assets removed from rate base, pursuant to the Decision, resulting in a $5.2 million net pre-tax increase in operating income. The City also indemnified SCW from related claims. Other income increased to $538,000 for the three months ended June 30, 2004, as compared to $31,000 for the same period in 2003. This was largely due to a change in SCW's estimate of customer refunds associated with lease revenues from the City of Folsom. Interest charges decreased by 2.5% to $4.4 million for the quarter ended June 30, 2004, as compared to interest charges of $4.5 million for the quarter ended June 30, 2003. The decrease is due primarily to the repayment of $12.5 million of long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. in October of 2003, offset by an increase in short-term borrowings. Year-To-Date 2004 Results Total operating revenues of $106.0 million for the six months ended June 30, 2004, increased by $7.5 million compared to $98.5 million recorded for the six months ended June 30, 2003. Of the total increase in revenues, water revenues increased by 7.8% due to rate increases in Region III of SCW that were effective in March 2004, as well as a 6.6% increase in water consumption resulting from warmer temperatures in most of SCW's service areas during 2004 as compared to 2003. Electric revenues increased by 5.8% due to increased consumption. Total operating expenses increased by 7.6% to $89.8 million for the six months ended June 30, 2004 as compared to the $83.5 million recorded for the same period in 2003, reflecting higher purchased water costs, and an increase in the supply-cost balancing account, as discussed above in the second quarter results. The increases are also due to higher administrative and general expenses resulting from increased outside legal and consulting services, as well as increased pension and benefit costs, a decrease in the unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on purchased power contracts, and an increase in taxes on income. These increases were offset by a $5.2 million net pre-tax increase in operating income during the second quarter of 2004, as discussed above. Other income increased to $455,000 for the six months ended June 30, 2004 as compared to $31,000 for the same period in 2003 for the reason discussed previously in the quarter results. Interest charges decreased by 3.9% to $8.7 million for the six months ended June 30, 2004, as compared to $9.1 million for the six months ended June 30, 2003. The decrease is due primarily to the repayment of $12.5 million of long-term debt in October of 2003 and recovery of carrying costs Carrying costs Costs that increase with increases in the level of investment in current assets. for the Water Quality OII OII Oxford Internet Institute (UK) OII Office of Innovation and Improvement OII Occupational Injury or Illness OII Open Information Interchange OII Online Innovation Institute OII Operations-Intelligence Interface matter authorized by the CPUC, partially offset by the increases in short-term borrowings. Other Certain matters discussed in this news release with regard to the Company's expectations may be forward-looking statements that involve risks and uncertainties. The assumptions and risk factors that could cause actual results to differ materially include those described in the Company's Form 10-Q Form 10-Q See 10-Q. and Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the Securities and Exchange Commission. Q2 2004 Earnings Release Conference Call The Company will host a conference call today, Wednesday, July 28, 2004, at 11:00 a.m. Pacific Time (PT), during which management will be making a brief presentation focusing on the Company's results, strategies, and operating trends. Interested parties can listen to the conference call over the Internet by logging onto www.aswater.com. The call will also be recorded and replayed beginning Wednesday, July 28, 2004, at 2:00 p.m. PT and will run through Wednesday, August 11, 2004. The dial-in number for the audio replay is 888-203-1112, Passcode 696750. American States Water Company ("AWR") is the parent company of Southern California Water Company, American States Utility Services, Inc. and Chaparral City Water Company. Through its subsidiaries, AWR provides water service to 1 out of 30 Californians located within 75 communities throughout 10 counties in Northern, Coastal and Southern California and to approximately 12,000 customers in the city of Fountain Hills, Arizona Fountain Hills is a town in Maricopa County, Arizona, USA. It incorporated as an independent municipality in 1989, after spending most of its history as a master planned development on the far northern end of (now neighboring) Scottsdale. and portions of Scottsdale, Arizona Scottsdale (O'odham Vaṣai S-vaṣonĭ) is a city in Maricopa County, Arizona, United States, adjacent to Phoenix. Scottsdale has become internationally recognized as a premier and posh tourist destination, while maintaining its own identity and culture as " . The Company distributes electricity to approximately 22,000 customers in the Big Bear recreational area of California and contracts with various municipalities in both California and Arizona to provide services to an additional 97,000 customers.
American States Water Company
Consolidated
Comparative Condensed Balance Sheets
(in thousands)
June 30, Dec. 31,
2004 2003
(Unaudited)
Assets
Utility Plant-Net $621,862 $602,298
Other Property and Investments 22,171 22,120
Current Assets 44,070 58,359
Regulatory and Other Assets 73,323 74,698
$761,426 $757,475
Capitalization and Liabilities
Capitalization $445,061 $442,286
Current Liabilities 92,752 95,898
Other Credits 223,613 219,291
$761,426 $757,475
Condensed Statements of Income
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
(Unaudited) (Unaudited)
Operating Revenues $59,344 $51,817 $105,995 $98,493
Operating Expenses:
Operations 39,471 34,900 70,457 62,789
Unrealized (gain) loss on
power purchased contracts 76 (1,557) (481) (1,274)
Gain on sale of water rights (5,675) -- (5,675) --
Maintenance 2,609 2,299 4,936 4,249
Depreciation and
amortization 5,073 4,945 10,250 9,892
Taxes on income 5,086 1,790 6,028 3,785
Property and other taxes 2,105 2,021 4,331 4,078
Total operating expenses 48,745 44,398 89,846 83,519
Net operating income 10,599 7,419 16,149 14,974
Other income, net of taxes 538 31 455 31
Interest Charges 4,427 4,539 8,748 9,104
Net Income $6,710 $2,911 $7,856 $5,901
Earnings Available for Common
Shareholders $6,710 $2,911 $7,856 $5,901
Weighted Average Shares
Outstanding 15,248 15,201 15,236 15,196
Basic Earnings Per Common
Share $0.44 $0.19 $0.52 $0.39
Weighted Average Diluted
Shares 15,269 15,247 15,265 15,224
Diluted Earnings Per Share $0.44 $0.19 $0.51 $0.39
Dividends Paid Per Common
Share $0.221 $0.221 $0.442 $0.442
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