Cal Water Announces First Quarter 2005 Results; Board Declares 242nd C

    Business Editors

    SAN JOSE, Calif.--(BUSINESS WIRE)--April 27, 2005--California Water Service Group (NYSE:CWT) today announced net income of $0.7 million and earnings of $0.03 per share for the first quarter of 2005, compared to net income of $1.4 million or $0.08 per share in the first quarter of 2004.
    Revenue was basically flat for the quarter at $60.3 million. Rate increases added $2.0 million to revenue and sales to new customers added $0.8 million, but higher than average precipitation resulted in a $2.8 million decline in sales to existing customers.
    According to President and Chief Executive Officer Peter C. Nelson, first quarter 2005 results were lower principally due to reduced usage from higher rainfall. In addition, significant credits were received from certain wholesale suppliers in the first quarter of 2004 which were not received in the first quarter of 2005.
    "The first quarter is typically a low earnings period for us because of the weather, and we experienced heavy rainfall in the Southern California districts," Nelson said. "Our continued efforts to secure fair and timely rate relief, add customers, and operate efficiently will be critical to our performance for the year," he said.
    Total operating expenses for the first quarter of 2005 increased 2%, or $1.0 million. Water production costs decreased by $1.3 million or 6%, because less water was produced as a result of higher rainfall. Included in the first quarter of 2004 was a credit received from certain wholesale water suppliers in Southern California for $1.4 million and a charge for $0.8 million to resolve a meter reading malfunction matter in the Stockton district. First quarter 2005 water production costs did not contain similar items.
    Excluding water production costs, other operations expenses increased $1.6 million or 8%. The increased expenses were primarily due to costs associated with payroll, medical claims, pension, and outside services.
    Maintenance expense increased $0.5 million, or 15%, for the quarter due to higher repair costs for mains and pumping equipment. Depreciation expense increased $0.5 million, or 7%, due to 2004 capital expenditures. Income taxes were lower by $0.5 million, or 53%, due to lower taxable income. Property and other taxes increased $0.3 million or 10%.
    At their meeting today, Directors declared the 242nd consecutive quarterly dividend on common stock. The quarterly dividend of $0.285 is payable on May 20, 2005, to stockholders of record on May 9, 2005. 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, Hawaii Water Service Company, Inc., and CWS Utility Services. Together these companies provide regulated and non-regulated water service to more than 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: governmental and regulatory commissions' decisions, including decisions on proper disposition of property; changes in regulatory commissions' policies and procedures; the timeliness of regulatory commissions' actions concerning rate relief; new legislation; the ability to satisfy requirements related to the Sarbanes-Oxley Act and other regulations on internal controls; 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. For additional information relating to the risks of the Company's business see "Risk Factors" in the Company's Annual Report on Form 10-K. The Company assumes no obligation to provide public updates of forward-looking statements.
    Additional information is available at our Web site at www.calwatergroup.com.

CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED BALANCE SHEETS Unaudited (In thousands, except per share data) March 31, December 31, 2005 2004 ------------------------- ASSETS Utility plant: Utility plant $1,160,399 $1,144,074 Less accumulated depreciation and amortization 350,884 343,769 ----------- ----------- Net utility plant 809,515 800,305 ----------- ----------- Current assets: Cash and cash equivalents 28,298 18,820 Receivables: Customers 13,626 15,867 Income taxes - 7,298 Other 3,422 3,147 Unbilled revenue 8,391 9,307 Materials and supplies at average cost 3,396 3,161 Prepaid pension expense 1,976 3,671 Taxes and other prepaid expenses 7,866 9,122 ----------- ----------- Total current assets 66,975 70,393 ----------- ----------- Regulatory assets 54,325 53,477 Other assets 19,575 18,678 ----------- ----------- $950,390 $942,853 =========== =========== CAPITALIZATION AND LIABILITIES Capitalization: Common stock, $.01 par value $184 $184 Additional paid-in capital 131,418 131,271 Retained earnings 152,257 156,851 Accumulated other comprehensive loss (701) (701) ----------- ----------- Total common stockholders' equity 283,158 287,605 Preferred stock 3,475 3,475 Long-term debt, less current maturities 274,414 274,821 ----------- ----------- Total capitalization 561,047 565,901 ----------- ----------- Current liabilities: Current maturities of long-term debt 1,100 1,100 Short-term borrowings - - Accounts payable 23,134 19,745 Accrued expenses and other liabilities 42,545 36,367 ----------- ----------- Total current liabilities 66,779 57,212 Unamortized investment tax credits 2,721 2,721 Deferred income taxes 54,555 54,826 Regulatory and other liabilities 36,072 35,986 Advances for construction 133,906 131,292 Contributions in aid of construction 95,310 94,915 Commitments and contingencies - - ----------- ----------- $950,390 $942,853 =========== ===========

CALIFORNIA WATER SERVICE GROUP CONDENSED CONSOLIDATED STATEMENTS OF INCOME Unaudited (In thousands, except per share data)

For the three months ended: March 31, March 31, 2005 2004 -----------------------

Operating revenue $60,303 $60,240 -------- ----------- Operating expenses: Water production costs 19,821 21,161 Other operations 21,943 20,337 Maintenance 3,658 3,181 Depreciation and amortization 6,996 6,518 Income taxes 455 958 Property and other taxes 2,965 2,694 -------- ----------- Total operating expenses 55,838 54,849 -------- -----------

Net operating income 4,465 5,391 -------- -----------

Other income and expenses: Non-regulated income, net 638 550 Gain (loss) on sale of non-utility property (2) 1 -------- ----------- Total other income and expenses 636 551 -------- -----------

Interest expense: Interest expense 4,646 4,646 Less: capitalized interest 225 150 -------- ----------- Total interest expense 4,421 4,496 -------- -----------

Net income $680 $1,446 ======== ===========

Earnings per share Basic $0.03 $0.08 ======== =========== Diluted $0.03 $0.08 ======== =========== Weighted average shares outstanding Basic 18,371 16,932 ======== =========== Diluted 18,403 16,953 ======== =========== Dividends per share of common stock $0.2850 $0.2825 ======== ===========

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CONTACT: California Water Service Group Richard Nye, 408-367-8216 (analysts) Shannon Dean, 310-257-1435 (media)

KEYWORD: CALIFORNIA INDUSTRY KEYWORD: UTILITIES EARNINGS DIVIDEND SOURCE: California Water Service Group

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