California Water Service Group Announces Results for the 3rd Quarter of 2013

SAN JOSE, CA--(Marketwired - Nov 5, 2013) - California Water Service Group (NYSE: CWT) today announced net income of $29.2 million and earnings per share of $0.61 for the third quarter of 2013, compared to net income of $29.8 million and earnings per share of $0.71 for the third quarter of 2012. The year-to-year decrease in earnings per share was primarily attributable to the dilutive effect of the stock offering completed in March 2013.

During the third quarter of 2013, State of California enterprise zone tax credits for the periods 2008 to 2013 and current year equipment repairs and maintenance state income tax deductions contributed $4.1 million to net income. During the third quarter of 2012, mains repairs and maintenance state income tax deductions contributed $6.2 million to net income.

Revenue for the third quarter of 2013 was $184.4 million, compared to revenue of $178.1 million in third quarter of 2012. The increase in revenue was due primarily to an increase in water usage of $4.0 million, net of WRAM, which includes a $1.1 million increase in accrued unbilled revenue. Rate increases added $3.5 million in revenue and the effect of other regulatory mechanisms decreased revenue by $1.2 million.

Total operating expenses for the third quarter of 2013 increased by $6.8 million, or 4.8%, to $148.6 million. Water production costs increased by $4.1 million, or 6.2%, to $70.6 million, primarily due to wholesale water rate increases and increased sales to existing customers. Administrative costs increased $0.7 million, or 3.1%, to $24.7 million, due primarily to increases in labor and health care expenses; these increases were partially offset by a reduction in conservation program expenses. Other operations expenses remained unchanged at $17.7 million.

Maintenance expense increased $0.2 million, or 4.5%, to $4.6 million, due to an increase in main and service repair. Depreciation expense increased $0.8 million, or 5.7%, to $4.6 million due to 2012 capital additions.

Other income and expenses, net of income taxes, decreased $0.1 million primarily due to a decrease in unrealized gains associated with the Company's non-qualified retirement plans. Interest expense decreased by $0.1 million, or 1.1%, to $7.1 million.

According to President and Chief Executive Officer Martin A. Kropelnicki, core results for the third quarter are in line with expectations and reflect the Company's budget discipline.

"We have remained diligent in our efforts to operate within budget, which is particularly critical given the fact that we are in the third year of our three-year rate case cycle in California. I am also pleased with our progress to reach a settlement agreement with parties to our 2012 General Rate Case that will enable us to recover costs, make critical infrastructure investment, and address affordability issues, assuming it is approved by the California Public Utilities Commission as proposed," he said. 

Cal Water Files Settlement Agreement on 2012 General Rate Case
On October 31, 2013, the Company announced that its largest subsidiary, California Water Service Company (Cal Water), had reached a settlement agreement with the California Public Utilities Commission's Office of Ratepayer Advocates and other parties to its 2012 General Rate Case. The Commission may or may not approve the settlement agreement; it is expected to issue a final decision in early 2014. If the settlement agreement were adopted as proposed, it would add $45 million in total revenues in 2014 and an estimated $10 million in 2015 and 2016. Cal Water would be authorized to invest $447 million in infrastructure improvements over three years in order to provide safe, reliable water service to customers throughout the state. It would also be allowed to increase the discount for qualified low-income customers and the Rate Support Fund discount for customers residing in higher cost service areas. For additional information, visit www.cpuc.ca.gov. 

Other Information
All stockholders and interested investors are invited to listen to the 2013 third quarter conference call on 11 a.m. ET on Wednesday, November 6, 2013, which can be accessed by dialing 1-888-503-8169 or 1-719-325-2315 and keying in ID# 9201217. A replay of the call will be available from 2:00 p.m. ET on Wednesday, November 6, 2013, through January 6, 2014, at 1-888-203-1112 or 1-719-457-0820, ID# 9201217. The call, which will be hosted by President and Chief Executive Officer Martin A. Kropelnicki, and Vice President and Chief Financial Officer Thomas F. Smegal, 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., CWS Utility Services, and HWS Utility Services. Together these companies provide regulated and non-regulated water service to nearly 2 million people in California, Washington, New Mexico, and Hawaii. California Water Service Group's common stock trades on the New York Stock Exchange under the symbol "CWT." Additional information is available on our website at www.calwatergroup.com.

 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 would, 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.

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(In thousands, except per share data)				September 30,				December 31,
				2013				2012
ASSETS
Utility plant:
	Utility plant			$	2,190,573			$	2,096,363
	Less accumulated depreciation and amortization				(685,351	)			(639,307	)
		Net utility plant			1,505,222				1,457,056
Current assets:
	Cash and cash equivalents				48,847				38,790
	Receivables: net of allowance for doubtful accounts of $815 as of September 30, 2013 and $714 as of December 31, 2012
		Customers			42,979				29,958
		Regulatory balancing accounts			27,047				34,020
		Other			9,802				11,943
	Unbilled revenue				25,815				15,394
	Materials and supplies at weighted average cost				5,689				5,874
	Taxes, prepaid expenses, and other assets				10,373				10,585
		Total current assets			170,552				146,564
Other assets:
	Regulatory assets				354,879				344,419
	Goodwill				2,615				2,615
	Other assets				50,165				45,270
		Total other assets			407,659				392,304
				$	2,083,433			$	1,995,924
CAPITALIZATION AND LIABILITIES
Capitalization:
	Common stock, $.01 par value			$	477			$	419
	Additional paid-in capital				327,890				221,013
	Retained earnings				271,887				252,280
		Total common stockholders' equity			600,254				473,712
	Long-term debt, less current maturities				430,227				434,467
		Total capitalization			1,030,481				908,179
Current liabilities:
	Current maturities of long-term debt				48,013				46,783
	Short-term borrowings				11,515				89,475
	Accounts payable				60,414				47,199
	Regulatory balancing accounts				1,699				5,018
	Accrued interest				10,656				4,705
	Accrued expenses and other liabilities				64,716				49,887
		Total current liabilities			197,013				243,067
Unamortized investment tax credits					2,180				2,180
Deferred income taxes, net					168,091				158,846
Pension and postretirement benefits other than pensions					247,335				244,901
Regulatory and other liabilities					91,185				92,593
Advances for construction					184,879				187,584
Contributions in aid of construction					162,269				158,574
Commitments and contingencies					-				-
				$	2,083,433			$	1,995,924

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Three-Months ended:
				September 30				September 30
				2013				2012
Operating revenue				$	184,404			$	178,135
Operating expenses:
	Operations:
		Water production costs			70,614				66,489
		Administrative and general			24,670				23,925
		Other operations			17,657				17,658
	Maintenance				4,575				4,377
	Depreciation and amortization				14,505				13,720
	Income taxes				11,165				10,387
	Property and other taxes				5,414				5,218
		Total operating expenses			148,600				141,774
		Net operating income			35,804				36,361
Other income and expenses:
	Non-regulated revenue				3,649				3,756
	Non-regulated expenses, net				(2,825	)			(2,697	)
	Income tax (expense) on other income and expenses				(330	)			(422	)
		Net other income			494				637
Interest expense:
	Interest expense				7,687				8,024
	Less: capitalized interest				(540	)			(798	)
		Net interest expense			7,147				7,226
Net income				$	29,151			$	29,772
Earnings per share
	Basic			$	0.61			$	0.71
	Diluted			$	0.61			$	0.71
Weighted average shares outstanding
	Basic				47,737				41,905
	Diluted				47,770				41,905
Dividends declared per share of common stock				$	0.1600			$	0.1575

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited
(In thousands, except per share data)
For the Nine-Months ended:
				September 30				September 30
				2013				2012
Operating revenue				$	450,403			$	438,436
Operating expenses:
	Operations:
		Water production costs			171,956				158,119
		Administrative and general			73,106				69,110
		Other operations			50,332				59,213
	Maintenance				12,896				14,742
	Depreciation and amortization				43,625				41,383
	Income taxes				19,567				19,477
	Property and other taxes				16,564				13,802
		Total operating expenses			388,046				375,846
		Net operating income			62,357				62,590
Other income and expenses:
	Non-regulated revenue				10,386				11,943
	Non-regulated expenses, net				(8,482	)			(8,491	)
	Income tax (expense) on other income and expenses				(765	)			(1,383	)
		Net other income			1,139				2,069
Interest expense:
	Interest expense				23,527				23,484
	Less: capitalized interest				(1,619	)			(2,647	)
		Net interest expense			21,908				20,837
Net income				$	41,588			$	43,822
Earnings per share
	Basic			$	0.91			$	1.05
	Diluted			$	0.90			$	1.05
Weighted average shares outstanding
	Basic				45,927				41,886
	Diluted				45,957				41,886
Dividends declared per share of common stock				$	0.4800			$	0.4725

1720 North First Street
San Jose, CA 95112-4598