-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V5H0dF7x3WfbnlZmB3y2Yj7ruJzlnqq//aeyZI6jLgoaeRHOysATURSyXMkPTKjC iGH7hUMP3Ys2r52Ofxb6Tw== 0000912057-00-024123.txt : 20000516 0000912057-00-024123.hdr.sgml : 20000516 ACCESSION NUMBER: 0000912057-00-024123 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOMINGUEZ SERVICES CORP CENTRAL INDEX KEY: 0000860673 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 330391161 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-71957 FILM NUMBER: 630814 BUSINESS ADDRESS: STREET 1: 21718 S ALAMEDA ST CITY: LONG BEACH STATE: CA ZIP: 90810 BUSINESS PHONE: 3108342625 MAIL ADDRESS: STREET 1: 21718 SOUTH ALAMEDA ST STREET 2: 21718 SOUTH ALAMEDA ST CITY: LONG BEACH STATE: CA ZIP: 90810 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------------------ F O R M 1 0 - Q Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 ------------------------------------------ March 31, 2000 For Quarter Ended..........................................on file No. 0-18677 DOMINGUEZ SERVICES CORPORATION ............................................................................... (Exact name of registrant as specified in its charter) CALIFORNIA 33-0391161 ............................................................................... (State of other jurisdiction (I.R.S. Employer incorporation or organization) Identification No.) 21718 SOUTH ALAMEDA STREET, LONG BEACH, CALIFORNIA 90810 ............................................................................... (Address of principal executive offices) (Zip Code) (310) 834-2625 Registrant's telephone number, including area code............................. ............................................................................... Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO --------- --------- (APPLICABLE ONLY TO CORPORATE ISSUERS): Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common stock (one class) - 1,563,779 DOMINGUEZ SERVICES CORPORATION
INDEX PAGE NO. PART I - FINANCIAL INFORMATION Item 1. Financial Statements (a) Consolidated Income Statement for the 3 Three Months Ending March 31, 2000 and 1999 (b) Consolidated Income Statement for the 4 Twelve Months Ending March 31, 2000 and 1999 (c) Consolidated Balance Sheet as of 5 March 31, 2000 and Consolidated Balance Sheet as of December 31, 1999 (d) Consolidated Statements of Cash Flows 6 for the Three Months Ending March 31, 2000 and 1999 (e) Capitalization and Stockholders' Equity 7 as of March 31, 2000 (f) Notes to Consolidated Financial 8 Statements Item 2. Management's Discussion and Analysis of 8-12 Financial Condition and Results of Operation PART II - OTHER INFORMATION Item 1. Legal Proceedings 13 Item 6. Exhibits and Reports on Form 8-K 13 Signature 13
2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements Company or group of companies for which report is filed: Dominguez Services Corporation, Dominguez Water Company, Antelope Valley Water Company, Kern River Valley Water Company (Consolidating Kernville Domestic Water Company and Arden Water Company), Redwood Valley Water Company and DSC Investments. (a) Consolidated Income Statement (Unaudited) - Fiscal Quarter ending:
FOR THE FOR THE QUARTER ENDING QUARTER ENDING MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- Operating revenue $6,231,863 $5,804,331 Costs and expenses Operating expenses 5,449,242 5,270,843 Interest expenses 246,178 234,698 Total costs and expenses 5,695,420 5,505,541 Income from operations 536,443 298,790 Other income and deductions 30,151 142,641 Income before taxes on income 566,594 441,431 Provision for taxes on income 236,775 171,675 Income before extraordinary item 329,819 269,756 Extraordinary item, net of tax - 22,895 - ------ Net income $329,819 $246,861 ======== ======== Net income applicable to common shares $329,819 $246,861 Earnings per common share (basic & diluted) $0.21 $0.16 Dividends per common share $0.25 $0.24 Average common shares outstanding, basic 1,563,779 1,560,979 Average common shares outstanding, diluted 1,574,292 1,570,869
See accompanying notes to financial statements. 3 (b) Consolidated Income Statement (Unaudited) - Twelve Months Ending:
FOR THE TWELVE FOR THE TWELVE MONTHS ENDING MONTHS ENDING MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- Operating revenue $28,924,294 $25,633,996 Costs and expenses Operating expenses 25,035,577 23,086,907 Interest expenses 975,252 891,500 Total costs and expenses 26,010,829 23,978,407 Income from operations 2,913,465 1,655,589 Other income and deductions 891,823 709,283 Income before taxes on income 3,805,288 2,364,872 Provision for taxes on income 1,503,826 932,975 Income before extraordinary item 2,301,462 1,431,897 Extraordinary item, net of tax 166,792 521,416 ------- ------- Net income applicable to common shares $2,134,670 $910,481 ========== ======== Earnings per common share (basic and diluted) $1.37 $0.60 Earnings per common share (basic and diluted) $1.36 $0.60 Dividends per common share $0.97 $0.93 Average common shares outstanding, basic 1,549,462 1,520,129 Average common shares outstanding, diluted 1,572,091 1,567,407
See accompanying notes to financial statements. 4 (c) Consolidated Balance Sheet (Unaudited)
AS OF AS OF MARCH 31, 2000 DECEMBER 31, 1999 -------------- ----------------- ASSETS Plant and equipment $74,411,757 $74,398,156 Depreciation allowance (26,741,697) (26,298,422) ------------ ------------ Net utility plant 47,670,060 48,099,734 Construction work in progress 2,176,191 920,971 Non-utility property 137,878 137,155 Current and accrued assets 3,952,443 6,378,563 Deferred debits 2,163,541 2,148,960 ------------ ------------ $56,100,113 $57,685,383 ============ ============ LIABILITIES Capital stock: Common - par value $1 per share Outstanding 1,563,779 shares $1,563,779 $1,563,779 Surplus: Capital surplus 2,916,977 2,916,977 Earnings retained in business 12,860,195 12,921,323 ------------ ------------ Total capital 17,340,951 17,402,079 ------------ ------------ Long-term debt: First mortgage bonds 9,000,000 9,000,000 Other notes 3,273,329 3,294,212 ------------ ------------ Total long-term debt 12,273,329 12,294,212 ------------ ------------ Current portion long-term 96,000 96,000 debt Interim debt - 400,000 Current and accrued liabilities 5,328,009 6,471,125 Deferred taxes 4,665,072 4,622,997 Advances for construction 5,415,766 5,565,307 Contribution in aid of construction 6,249,221 6,262,577 Deferred credits 4,731,765 4,571,086 ------------ ------------ $56,100,113 $57,685,383 ============ ============
See accompanying notes to financial statements. 5 (d) Consolidated Statements of Cash Flow (Unaudited)
FOR THE THREE FOR THE THREE MONTHS ENDING MONTHS ENDING MARCH 31, 2000 MARCH 31, 1999 -------------- -------------- Cash Flow from Operating Activities: Net income $329,819 $246,861 Adjustments to reconcile net income to net cash provided by operation activities: Depreciation and amortization 394,167 423,238 Deferred income tax and ITC 42,075 42,075 Change in assets and liabilities: Customers receivable 571,864 (296,398) Other receivable 1,225,732 (182,383) Materials and supplies 3,000 3,000 Accounts payable (1,133,257) (491,544) Income taxes payable 123,317 108,975 Deferred credits 146,098 114,785 Other (28,477) 396,018 ----------- --------- Net Cash Provided by Operating Activities 1,674,338 364,627 ----------- --------- Cash Flows from Investing Activities: Capital expenditures (1,268,821) (808,550) ----------- --------- Net Cash used in Investing Activities (1,268,821) (808,550) ----------- --------- Cash Flows from Financing Activities: Proceeds from contributions in aid of construction & advances (162,897) (49,613) Repayment of long-term debt (20,883) (26,623) Dividends paid (390,945) (374,634) Proceeds from interim debt (400,000) 350,000 ----------- --------- Net Cash used in Financing Activities (974,725) (100,870) ----------- --------- Net Decrease in Cash ($569,209) ($544,793) Cash at Beginning of Year 942,307 708,764 ----------- --------- Cash at End of Year $373,098 $163,971 =========== =========
See accompanying notes to financial statements. 6 (e) Capitalization and Stockholders' Equity (Unaudited)
AS OF MARCH 31, 2000 -------------- Debt: Long-term debt $12,369,329 Current sinking fund requirements (96,000) ----------- Total debt maturing in more than twelve months $12,273,329 ===========
SHARES STOCKHOLDER'S EQUITY: ISSUED OR OUTSTANDING AMOUNT ----------- ------ Common stock $1 par value 1,563,779 $1,563,779 Capital in excess of par value 2,916,977 Retained earnings: Balance at beginning of current fiscal year $12,921,322 Net income 329,818 Cash dividends: Common stock @ $0.24 (390,945) --------- Balance at end of interim period 12,860,195 ----------- Total stockholders' equity $17,340,951 ===========
See accompanying notes to financial statements. 7 (g) Notes to Consolidated Financial Statements (Unaudited) 1. In the opinion of management, information furnished herein reflects adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods. 2. Business Segments: The following table lists the profit and assets for each segment of the Company:
NON- THREE MONTHS ENDED REGULATED REGULATED OTHER TOTAL ------------------ --------- --------- ----- ----- MARCH 31, 2000 Operating revenue $6,231,863 -- -- $6,231,863 Extraordinary item, net of tax -- -- -- -- Other income 76,966 37,520 -- 114,486 Segment net income 323,913 5,906 -- 329,819 Segment assets 54,863,678 1,236,435 -- 56,100,113 March 31, 1999 Operating revenue $5,804,331 -- -- $5,804,331 Extraordinary item, net of tax -- -- 22,895 22,895 Other income 57,888 160,459 -- 218,347 Segment net income 198,405 71,351 (22,895) 246,861 Segment assets 53,102,612 1,227,023 -- 54,329,635
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. Dominguez Services Corporation (the Company) has two wholly-owned subsidiaries: Dominguez Water Company and its operating subsidiaries (Dominguez), which are involved in regulated water supply and distribution, and DSC Investments, which is involved in non-regulated, water-related services and investments. FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements to encourage registrants to provide prospective information about their companies without fear of litigation so long as the statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement. Words such as "estimates," "expects," "anticipates," "plans," "believes," "projects," and similar expressions identify forward-looking statements. 8 Certain statements in this Form 10-Q are forward-looking and, as such, involve risk and uncertainty. Uncertainties arise from management estimates about weather, environmental issues, legal contingencies and other matters which management cannot predict or are outside of their control, such as Y2K compliance by the Company's vendors. Actual results may vary from those projected or implied. This Form 10-Q should be read in conjunction with the Company's 1999 Annual Report on Form 10-K which includes: consolidated financial statements and footnote disclosures prepared in accordance with generally accepted accounting principles; management's discussion and analysis of financial condition and results of operations; and a detailed description of the Company's business. MERGER AGREEMENT As previously reported, the Company and California Water Service Group ("CWSG") have entered into a merger agreement. Under terms of the agreement, the Company shareholders will receive CWSG common stock yielding an equivalent value of approximately $33.75 per share. The precise conversion ratio and equivalent value will depend upon the average price of CWSG stock for a twenty-day trading period preceding the merger's closing date. To achieve the $33.75 exchange value, the exchange ratio can vary between 1.25 and 1.49 shares of CWSG stock for each Company share. All approvals necessary to complete the merger have been granted, except that of the California Public Utilities Commission ("CPUC"). A draft decision recommending approval of the merger was issued by the assigned CPUC Administrative Law Judge ("ALJ") and adopted by the assigned Commissioner. The Commission's new President requested additional time to consider the merger and subsequently circulated an alternate decision to that of the ALJ. The alternate decision recommends against approval of the merger, on the basis that a demonstration of ratepayer benefit has not been provided. However, the alternate decision, if approved, would leave the proceeding open to provide the Company and CWSG and opportunity to provide additional evidence that ratepayers will benefit from the merger. The Company expects that at the Commission's May 18, 2000 meeting, the ALJ's decision along with the alternation decision will be considered by the full Commission. The Company is convinced that ratepayers will benefit from the merger and remains committed to obtaining the Commissions' approval. While the Commission is expected to consider the merger at its May 18, 2000 meeting, it is possible that the decision process could extend beyond that time frame. 9 RESULTS OF FIRST QUARTER OPERATIONS For the quarter ended March 31, 2000, basic and diluted earnings per share were $0.21, compared to $0.16 in the same period in 1999. Revenues for the quarter ended March 31, 2000, were $6,231,863 and net income was $329,819, compared to revenues of $5,804,331 and net income of $246,861 for the same period last year. For the twelve months ended March 31, 2000, basic and diluted earnings per share were $1.38, compared to $0.60 in the same period in 1999. Revenues for the twelve months ended March 31, 2000 were $28,924,294 and net income was $2,134,670, compared to revenues of $25,633,966 and net income of $910,481 for the same period last year. Water sales for the first three months of the year increased by 9.8% from the same period last year. Revenues increased by 7.4%, or $428,000, from $5,804,331 to $6,231,863. During the same time, Dominguez South Bay sales increased by 10.3% from the same period last year. Dominguez South Bay purchased 4,341 acre feet, an increase of 1.4% from the 4,282 acre feet purchased during the same period year, and pumped 4,052 acre feet during the first three months of the year, an increase of 7.8% from the 3,758 acre feet pumped during the same period last year. Total variable expenses for Dominguez South Bay were $3,159,297, up 5.5% from $2,995,666 for the same period last year. Overall, higher sales from Dominguez South Bay contributed $202,000 in additional operational income compared to the same period last year. WATER QUALITY Dominguez is subject to water quality regulations promulgated by the United States Environmental Protection Agency (EPA) and the California Department of Health Services (DHS). Both groundwater and purchased water are subject to extensive analysis. With occasional minor exceptions, the Company meets all current primary drinking water standards. Dominguez is subject to other applicable environmental regulations related to the handling, storage and disposal of hazardous materials. Dominguez is currently in compliance with all such regulations. 10 WATER SUPPLY As of April 1, 2000, the water supply outlook is good. California State Water Project (SWP) reservoirs are at levels that allow the SWP to supply 100% of the contractor requests for 2000. MWD has not yet indicated if a full compliment of Colorado River Water is available. Dominguez expects an ample supply of imported water to be available for 2000. Dominguez began selling recycled water at the end of 1999. Over the next several years, Dominguez anticipates converting additional industrial and irrigation users to recycled water. Margins on recycled water sales are equal to those of replaced potable sales. YEAR 2000 The Company successfully transitioned from 1999 to 2000 without technology or customer service disruptions as a result of preparation efforts by our employees. Year 2000 ("Y2K") project teams were assembled to ensure the Company's Y2K preparedness. The estimated cost for Y2K preparedness was approximately $36,000. The Company has existing contingency plans in place for events such as extreme heat, storms, equipment failures, and accidents. Y2K contingency plans were based on the framework of existing emergency management system preparation and scenario development, and addressed the most reasonably likely worst case scenarios that could occur in the event that various Y2K issues are not resolved in a timely manner. Contingency planning is an ongoing process, which the Company continues to perform. DIVIDEND INCREASED The Board of Directors has declared the Company's 149th consecutive quarterly dividend at $0.25 per share on common stock, to be paid on June 15, 2000, to shareholders of record as of June 1, 2000. 11 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS - No legal proceedings have been filed against the registrant that have not been previously reported. Item 6. OTHER An 8-K report was not required for either. 1. Material unusual charges or credits to income during the most recently completed fiscal quarter, or 2. A change in independent accountants during the period. The information furnished reflects all adjustments which, in the opinion of management, are necessary to the fair statement of the results of the interim periods. DOMINGUEZ SERVICES CORPORATION Date: May 12, 2000 By: /s/ John S. Tootle ---------------------------------- ----------------------------------- John S. Tootle CFO, Vice-President Finance 12 EX-27 2 EXHIBIT 27
5 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 373,097 0 2,619,042 (336,845) 15,244 3,952,443 74,400,632 26,741,697 56,100,113 5,424,009 12,273,329 0 0 1,563,779 15,777,172 56,100,113 5,857,660 6,231,863 3,234,042 5,449,242 0 0 246,178 566,594 236,775 329,819 0 0 0 329,819 0.21 0.21
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