American States Water Company Announces Earnings for the Fourth Quarter and the Year 2008
The following table provides diluted earnings per share (“EPS”), as adjusted (a non-GAAP financial measure), for 2008 and 2007 to remove the effects of certain one-time items and/or non-cash items.
Fourth Quarter | Twelve Months | ||||||||||||||
2008 | 2007 | 2008 | 2007 | ||||||||||||
Diluted EPS, as reported | $ | 0.16 | $ | 0.35 | $ | 1.26 | $ | 1.61 | |||||||
Adjusted by: |
|||||||||||||||
(1) Goodwill impairment charge |
0.27 |
- |
0.27 |
- |
|||||||||||
(2) Unrealized gain on purchased power contracts |
(0.03 |
) |
(0.02 |
) |
(0.05 |
) |
(0.07 |
) |
|||||||
(3) Retroactive revenues for the prior three quarters in 2007 |
- |
(0.11 |
) |
- |
- |
||||||||||
Diluted EPS, as adjusted (a non-GAAP financial measure) * |
$ |
0.40 |
$ |
0.22 |
$ |
1.48 |
$ |
1.54 |
*Adjusted diluted EPS excludes a goodwill impairment charge, unrealized
gains on purchased power contracts and retroactive revenues associated
with a 2007 decision issued by the
Fourth Quarter Results, as reported
The
(1) A goodwill impairment charge of
(2) The unrealized gain on purchased power contracts increased pretax
income by
(3) A favorable decision issued by the CPUC on
In summary, removing the effects of the items discussed above, adjusted
diluted EPS was
-
Excluding the effects of the CPUC decision discussed above, the dollar
water margin increased by
$2.6 million , or$0.09 per share, during the fourth quarter of 2008 due primarily to increased water rates approved by the CPUC effectiveJanuary 1, 2008 . -
American States Utility Services, Inc. (“ASUS”), an AWR subsidiary, recorded pretax operating income (before interest expense) of$1.6 million for contracted services during the fourth quarter of 2008, an increase of$3.2 million , or$0.11 per share, as compared to the fourth quarter of 2007 due primarily to an increase in construction activities at the various military bases and a decrease of$677,000 in bad debt expense due to favorable subsequent cash receipts. -
A significant decrease in the effective income tax rate due to changes
between book and taxable income that are treated as flow-through
adjustments in accordance with regulatory requirements favorably
impacted earnings by
$0.08 per share during the fourth quarter of 2008 as compared to the same quarter of 2007. -
Higher other operating expenses at GSWC during the fourth quarter of
2008, primarily consisting of other operating expenses and
administrative and general expenses, contributed to an overall
decrease of
$0.10 per diluted share to the results of operations.
Total operating revenues increased by
(in thousands) | 2008 | 2007 | $ | Change | % Change | ||||||||||||
Water | $ | 61,112 | $ | 61,284 | $ | (172 | ) | (0.3 | %) | ||||||||
Electric | 6,670 | 7,161 | (491 | ) | (6.9 | %) | |||||||||||
Contracted services | 16,420 | 5,567 | 10,853 | 195.0 | % | ||||||||||||
Total operating revenues | $ | 84,202 | $ | 74,012 | $ | 10,190 | 13.8 | % |
Water revenues for the fourth
quarter of 2008 decreased by
Although the recording of the WRAM added
Electric revenues from GSWC’s Bear
Valley Electric Division decreased by 6.9% to
Contracted services revenues are
composed of construction revenues and management fees for operating and
maintaining the water and/or wastewater systems at certain military
bases. Such revenues increased by
Total operating expenses for the
fourth quarter of 2008, increased by
In summary, the table below sets forth pretax operating income by segment for the fourth quarter:
(in thousands) | 2008 | 2007 | $ | Change | % Change | ||||||||||||||
Water | $ | 5,802 | $ | 16,971 | ($11,169 | ) | (65.8 | %) | |||||||||||
Electric | 261 | 564 | (303 | ) | (53.7 | %) | |||||||||||||
Contracted services | 1,578 | (1,587 | ) | 3,165 | 199.6 | % | |||||||||||||
AWR parent | (21 | ) | (49 | ) | 28 | (57.1 | %) | ||||||||||||
Total pretax operating income | $ | 7,620 | $ | 15,899 | ($8,279 | ) | (52.1 | %) |
Interest expense remained flat at
Interest income decreased by
Income tax expense for the fourth quarter of 2008 decreased to a benefit
of
Year-to-Date 2008 Results, as Reported
Net income for the twelve months ended
Revenues for the year ended
GSWC’s water sales in 2008 decreased by approximately 5% as compared to
2007, or
Although ASUS had favorable results for the fourth quarter of 2008, the
financial performance of ASUS’ contracted service operations at military
bases for the twelve months of 2008 negatively impacted the Company’s
earnings. This was due to increases in operating expenses primarily
incurred at two bases in
Capital expenditures were
Non-GAAP Financial Measures
This press release includes a presentation of “Diluted EPS, as adjusted”
which excludes a goodwill impairment charge, unrealized gains on
purchased power contracts, and retroactive revenues associated with a
2007 CPUC decision during the fourth quarter of 2007. Each of these
items are derived from consolidated financial information but not
presented in our financial statements that are prepared in accordance
with Generally Accepted Accounting Principles in
Management believes that the presentation of these adjusted measures is useful to investors because it provides a means of evaluating the Company's operating performance without giving effect to a goodwill impairment charge and unrealized gains on purchased contracts, which have been triggered principally by market factors that are largely out of the control of management and do not reflect the day-to-day operations of the Company. In addition, the fourth quarter of 2007 is adjusted to remove the effects of retroactive revenues based on a CPUC decision due to delays by the CPUC in processing our general rate cases which is also out of the control of management. Moreover, management believes that this presentation facilitates comparisons between the Company and other companies in its industry but again may not be comparable to similarly titled non-GAAP financial measures of other registrants. In preparing operating plans, budgets and forecasts, and in assessing historical performance, management relies, in part, on trends in the Company's historical results, exclusive of impairment charges, unrealized gains/losses on purchased power contracts, and certain CPUC decisions.
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 and Form 10-K filed with the
Fourth Quarter and Full Year 2008 Earnings Release Conference Call
- The Company will host a conference call today,
American States Water Company | ||||||||||||||||||||||
Consolidated | ||||||||||||||||||||||
Comparative Condensed Balance Sheets |
||||||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||||
(in thousands) | 2008 | 2007 | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Assets | ||||||||||||||||||||||
Utility Plant-Net | $ | 825,262 | $ | 776,379 | ||||||||||||||||||
Goodwill | 4,610 | 11,354 | ||||||||||||||||||||
Other Property and Investments | 10,689 | 10,245 | ||||||||||||||||||||
Current Assets | 90,614 | 63,015 | ||||||||||||||||||||
Regulatory and Other Assets | 130,112 | 102,905 | ||||||||||||||||||||
$ | 1,061,287 | $ | 963,898 | |||||||||||||||||||
Capitalization and Liabilities | ||||||||||||||||||||||
Capitalization | $ | 577,039 | $ | 569,355 | ||||||||||||||||||
Current Liabilities | 137,397 | 94,251 | ||||||||||||||||||||
Other Credits | 346,851 | 300,292 | ||||||||||||||||||||
$ | 1,061,287 | $ | 963,898 | |||||||||||||||||||
Condensed Statements of Income | Three months ended | Twelve months ended | ||||||||||||||||||||
(in thousands, except per share amounts) | December 31, | December 31, | ||||||||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||
Operating Revenues | $ | 84,202 | $ | 74,012 | $ | 318,718 | $ | 301,370 | ||||||||||||||
Operating Expenses: | ||||||||||||||||||||||
Supply Costs | $ | 19,993 | $ | 19,798 | $ | 80,897 | $ | 78,211 | ||||||||||||||
Unrealized gain on purchased power contracts | (788 | ) | (522 | ) | (1,554 | ) | (2,100 | ) | ||||||||||||||
Other operating expenses | 7,661 | 7,215 | 30,076 | 27,375 | ||||||||||||||||||
Administrative and general expenses | 16,639 | 14,177 | 62,716 | 52,637 | ||||||||||||||||||
Maintenance | 3,762 | 4,556 | 16,331 | 15,779 | ||||||||||||||||||
Depreciation and amortization | 8,077 | 7,325 | 31,562 | 28,941 | ||||||||||||||||||
Property and other taxes | 3,092 | 2,661 | 12,312 | 11,254 | ||||||||||||||||||
ASUS construction expenses | 10,446 | 2,893 | 23,872 | 22,125 | ||||||||||||||||||
Goodwill impairment charge | 7,700 | - | 7,700 | - | ||||||||||||||||||
Net loss (gain) on sale of property | - | 10 | - | (584 | ) | |||||||||||||||||
Total operating expenses |
$ | 76,582 | $ | 58,113 | $ | 263,912 | $ | 233,638 | ||||||||||||||
Operating income | $ | 7,620 | $ | 15,899 | $ | 54,806 | $ | 67,732 | ||||||||||||||
Interest expense | (5,230 | ) | (5,169 | ) | (21,330 | ) | (21,582 | ) | ||||||||||||||
Interest income | 408 | 629 | 1,837 | 2,371 | ||||||||||||||||||
Other | (20 | ) | 65 | 71 | 299 | |||||||||||||||||
Income From Operations Before Income Tax Expenses | $ | 2,778 | $ | 11,424 | $ | 35,384 | $ | 48,820 | ||||||||||||||
Income tax (benefit) expense | (88 | ) | 5,329 | 13,379 | 20,790 | |||||||||||||||||
Net Income | $ | 2,866 | $ | 6,095 | $ | 22,005 | $ | 28,030 | ||||||||||||||
Weighted Average Shares Outstanding |
17,292 |
17,210 | 17,262 | 17,121 | ||||||||||||||||||
Earnings Per Common Share | $ |
0.16 |
$ | 0.36 | $ | 1.27 | $ | 1.62 | ||||||||||||||
Weighted Average Diluted Shares |
17,416 |
17,273 | 17,394 | 17,177 | ||||||||||||||||||
Earnings Per Diluted Share | $ |
0.16 |
$ | 0.35 | $ | 1.26 | $ | 1.61 | ||||||||||||||
Dividends Declared Per Common Share | $ | 0.250 | $ | 0.250 | $ | 1.000 | $ | 0.955 |
Source:
American States Water Company
Eva G. Tang
Senior Vice
President-Finance, Chief Financial Officer,
Treasurer and Corporate
Secretary
909-394-3600, ext. 707