-----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, Qm9EGag3g1hFvzpNZv2rBCziriM+IpNm43vW303FFDgE5hltjvdI1p1kVj+XgTA9 cGhGyGxcze2EqbFRJUL8Tg== 0001047469-97-004320.txt : 19971113 0001047469-97-004320.hdr.sgml : 19971113 ACCESSION NUMBER: 0001047469-97-004320 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD 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: 000-18677 FILM NUMBER: 97715911 BUSINESS ADDRESS: STREET 1: 21718 S ALAMEDA STREET CITY: LONG BEACH STATE: CA ZIP: 90810 BUSINESS PHONE: 3108342625 MAIL ADDRESS: 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 ------------------------------------------- SEPTEMBER 30, 1997 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) - 1,004,370 DOMINGUEZ SERVICES CORPORATION INDEX PAGE NO. PART I - FINANCIAL INFORMATION Item 1. Financial Statements (a) Consolidated Income Statement for the 3 Three Months Ending September 30, 1997 and 1996 (b) Consolidated Income Statement for the 4 Nine Months Ending September 30, 1997 and 1996 (c) Consolidated Income Statement for the 5 Twelve Months Ending September 30, 1997 and 1996 (d) Consolidated Balance Sheet as of 6 September 30, 1997 and Consolidated Balance Sheet as of December 31, 1996 (e) Consolidated Statements of Cash Flows 7 for the Nine Months Ending September 30, 1997 and 1996 (f) Capitalization and Stockholders' Equity 8 as of September 30, 1997 (g) Notes to Consolidated Financial 9 Statements Item 2. Management's Discussion and Analysis of 9-10 Financial Condition and Results of Operation PART II - OTHER INFORMATION Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature 11 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 Co., Kern River Valley Water Company (Consolidating Kernville Domestic Water Company and Arden Water Company) and DSC Investments. (a) Consolidated Income Statement (Unaudited) - Fiscal Quarter ending:
FOR THE FOR THE QUARTER ENDING QUARTER ENDING SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 ------------------ ------------------ Operating revenue $8,170,627 $7,404,372 Costs and expenses Operating expenses 6,784,654 6,026,528 Interest expenses 194,162 172,005 Other expenses, net 10,004 22,696 Total costs and expenses 6,988,820 6,221,229 Income from operations 1,181,807 1,183,143 Other income 168,833 131,464 Income before taxes on income 1,350,640 1,314,607 Provision for taxes on income 542,105 527,656 Net income 808,535 $786,951 Less preferred dividends --0-- --0-- Net income applicable to common shares 808,535 $786,951 Earnings per common share $0.80 $0.78 Dividends per common share $0.325 $0.31 Average common shares outstanding 1,004,370 1,004,370
See accompanying notes to financial statements. 3 (b) Consolidated Income Statement (Unaudited) - Nine Months Ending: FOR THE NINE FOR THE NINE MONTHS ENDING MONTHS ENDING SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 ------------------ ------------------ Operating revenue $20,339,562 $18,985,561 Costs and expenses Operating expenses 17,366,725 16,080,505 Interest expenses 593,685 516,808 Other expenses, net 31,474 31,945 Total costs and expenses 17,991,884 16,629,258 Income from operations 2,347,678 2,356,303 Other income 356,740 303,903 Income before taxes on income 2,704,418 2,660,206 Provision for taxes on income 1,085,605 1,067,753 Net income 1,618,813 $1,592,453 Less preferred dividends --0-- 1,219 Net income applicable to common shares 1,618,813 $1,591,234 Earnings per common share $1.61 $1.58 Dividends per common share $0.975 $0.93 Average common shares outstanding 1,004,370 1,004,370 See accompanying notes to financial statements. 4 (c) Consolidated Income Statement (Unaudited) - Twelve Months Ending: FOR THE TWELVE FOR THE TWELVE MONTHS ENDING MONTHS ENDING SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 ------------------ ------------------ Operating revenue 26,058,787 $25,228,605 Costs and expenses Operating expenses 22,479,227 21,860,906 Interest expenses 736,141 685,196 Other expenses, net 33,889 33,090 Total costs and expenses 23,249,257 22,579,192 Income from operations 2,809,530 2,649,413 Other income 529,949 491,775 Income before taxes on income 3,339,479 3,141,188 Provision for taxes on income 1,331,821 1,181,946 Net income 2,007,658 $1,959,242 Less preferred dividends --0-- 2,438 Net income applicable to common shares $2,007,658 $1,956,804 Earnings per common share $2.00 $1.95 Dividends per common share $1.285 $1.22 Average common shares outstanding 1,004,370 1,004,370 See accompanying notes to financial statements. 5 (d) Consolidated Balance Sheet (Unaudited)
AS OF AS OF SEPTEMBER 30, 1997 DECEMBER 31, 1996 ------------------ ----------------- ASSETS Plant and equipment $59,707,787 $59,652,271 Depreciation allowance (22,321,061) (21,079,569) Construction work in progress 2,620,329 427,280 ----------- ----------- Net utility plant 40,007,055 38,999,982 Non-utility property 554,436 530,461 Current and accrued assets 6,921,231 5,004,365 Deferred debits 2,338,002 2,339,991 ----------- ----------- $49,820,724 $46,874,799 ----------- ----------- ----------- ----------- LIABILITIES Capital stock: Class A preferred - par value $25 per share No outstanding shares in 1997 & 1996 $--0-- $--0-- Common - par value $1 per share Outstanding 1,004,370 shares 1,004,370 1,004,370 Surplus: Capital surplus 2,507,502 2,507,502 Earnings retained in business 12,754,179 12,114,573 ----------- ----------- Total capital 16,266,051 15,626,445 ----------- ----------- Long-term debt: First mortgage bonds 4,000,000 5,212,000 Other notes 2,239,455 1,838,637 ----------- ----------- Total long-term debt 6,239,455 7,050,637 ----------- ----------- Interim debt 1,750,000 800,000 Current portion long-term debt 43,000 834,000 Current and accrued liabilities 6,864,879 4,303,365 Deferred taxes 3,911,004 3,903,699 Advances for construction 5,213,823 5,405,329 Contribution in aid of construction 6,372,089 6,075,881 Deferred credits 3,160,423 2,875,443 ----------- ----------- $49,820,724 $46,874,799 ----------- ----------- ----------- -----------
See accompanying notes to financial statements. 6 (e) Consolidated Statements of Cash Flow (Unaudited)
FOR THE NINE FOR THE NINE MONTHS ENDING MONTHS ENDING SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 ------------------ ------------------ Cash Flow from Operating Activities: Net income $1,618,813 $1,592,453 Adjustments to reconcile net income to net cash provided by operation activities: Depreciation and amortization 1,110,000 953,422 Deferred income tax and ITC 7,305 107,305 Change in assets and liabilities: Customers receivable (493,455) (688,971) Other receivable (816,177) 584,678 Materials and supplies 4,323 23,277 Accounts payable 945,957 243,865 Income taxes payable 900,125 632,013 Deferred credits 277,323 271,058 All others 118,125 191,225 ---------- ---------- Net Cash Provided by Operating Activities 3,672,339 3,140,625 ---------- ---------- Cash Flows from Investing Activities: Capital expenditures (2,289,414) (2,758,917) ---------- ---------- Net Cash used for Investing Activities (2,289,414) (2,758,917) ---------- ---------- Cash Flows from Financing Activities: Proceeds from contributions in aid of construction & advances 245,840 189,452 Repayment of long-term debt (811,182) 766,171 Dividends paid (979,262) (935,283) Stock redemption --0-- (97,525) Current portion long-term debt (791,000) (23,000) Proceeds from interim debt 950,000 --0-- Net Cash Used by Financing Activities (1,385,604) (100,185) ---------- ---------- Net (Decrease) Increase in Cash ($2,679) $1,051,223 Cash at Beginning of Year 708,817 751,606 ---------- ---------- Cash at End of Year $706,138 $1,802,829 ---------- ---------- ---------- ----------
See accompanying notes to financial statements. 7 (f) Capitalization and Stockholders' Equity (Unaudited)
AS OF SEPTEMBER 30, 1997 ------------------ Debt: Long-term debt $6,282,455 Current sinking fund requirements (43,000) ---------- Total debt maturing in more than twelve months $6,239,455 ---------- ---------- Deferred credits $3,160,423 ---------- ---------- Stockholder's equity: SHARES ISSUED OR OUTSTANDING AMOUNT ----------- ------ Common stock $1 par value 1,004,370 $1,004,370 Capital in excess of par value 2,507,502 Retained earnings: Balance at beginning of current fiscal year $12,114,628 Net income 1,618,813 Cash dividends: Common stock @ $0.325 (979,262) ----------- Balance at end of interim period 12,754,179 ----------- Total stockholder's equity $16,266,051 ----------- -----------
See accompanying notes to financial statements. 8 (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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. For the quarter ended September 30, 1997, earnings per share were $.80, compared to $0.78 in the third quarter of 1996. Revenues for the quarter ended September 30, 1997, were $8,170,627 and net income was $808,535, compared to revenues of $7,404,372 and net income of $786,951 for the same period last year. For the nine months ended September 30, 1997, earnings per share were $1.61, compared to $1.58 for the same period in 1996. Revenues were $20,339,562 and net income was $1,618,813, compared to revenues of $18,985,561 and net income of $1,591,234 for the same period last year. For the twelve months ended September 30, 1997, earnings per share were $2.00, up from $1.95 for the same period in 1996. Revenues for the twelve months ended September 30, 1997, were $26,058,787 and net income was $2,007,658, compared to revenues of $25,228,605 and net income of $1,956,804 for the same period last year. The 7% increase in gross revenues for the first nine months is a result of higher rates in the South Bay and increased water sales. However, this increase was offset by higher water costs and related operating expenses. Net income remained essentially unchanged. Dominguez increased rates by approximately 1.6% to recover higher costs charged by our wholesale supplier. However, according to industry data, water bills of South Bay residential customers are still lower than those charged by other leading Southern California water utilities, which is an indication of our efficient operations and rigorous cost discipline. For the first nine months of the year, residential sales increased by 2.6%, business sales increased by 10%, and industrial sales increased by 2%, all compared to the same period last year. Overall, sales increased 4% over last year. The Company completed the integration of the Countrywood Water Company into Kern River Valley operations in the third quarter. In addition, Dominguez received the approval of the California Public Utilities Commission (CPUC) to purchase Southlake Water Company, also located in the Kern River Valley area. The Southlake purchase was completed in October. 9 The Company also looks forward to developing a presence in northern California. In early August, Dominguez signed a letter of intent to purchase Lucerne Water Company, which serves nearly 1,300 customers in Sonoma County, for approximately 28,061 shares of stock. The Company is now in the due diligence process. The Company has received the approval from the CPUC to increase borrowings by $5,000,000. The bond issue will be used to retire our higher cost debt. LEGISLATION AND REGULATORY AFFAIRS New legislation was signed into California law during the third quarter which will have a positive impact on the Company's acquisition of small water systems. Under the new law, SB 1268, purchasers of water utilities can use fair-market value of acquired assets, as opposed to the often dated and far-lower values on the books, for rate-making purposes. The CPUC has initiated a proceeding to develop guidelines necessary to implement the law and to investigate other regulatory issues unique to the water industry. WATER QUALITY As previously reported, the federal Safe Drinking Water Act (SDWA) was re-authorized in 1996. Under the SDWA, the Company is subject to regulation by the United States Environmental Protection Agency (EPA) and the California Department of Health Services. The Company is participating in a monthly water sampling data acquisition program known as the Information Collection Rule (ICR) along with many other large water utilities. WATER SUPPLY As of September 1997, the water supply outlook is still favorable. California State Water Project (SWP) reservoirs remain at adequate levels for projected demands for the remainder of the year. MWD also indicates that a full compliment of Colorado River Water is available. Dominguez expects an ample supply of imported water to be available for the remainder of 1997. Dominguez anticipates that the West Basin Municipal Water District Recycled Water Project will be delivering recycled water to a limited number of South Bay customers in 1998. Dominguez' margins will remain equal to those of replaced potable sales. DIVIDEND DECLARED The Board of Directors declared the Company's 139th consecutive quarterly dividend in the amount of $0.325 per share on common stock, to be paid on December 15, 1997. 10 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: By: ------------------------ ---------------------------- John S. Tootle CFO, Vice-President Finance 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDING SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1996 JAN-01-1997 SEP-30-1997 706,138 0 3,375,097 (343,457) 42,062 6,921,231 62,328,116 22,321,061 49,820,824 8,657,885 6,239,455 0 0 1,004,370 15,261,675 49,820,824 18,830,951 20,339,562 7,582,691 15,920,946 0 100,420 593,685 2,704,418 1,085,605 1,618,813 0 0 0 1,618,813 1.61 1.61
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