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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 9, 2006
AMERICAN STATES WATER COMPANY
(Exact name of registrant as specified in its charter)
California 001-14431 95-4676679
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
630 East Foothill Blvd.
San Dimas, California 91773
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (909) 394-3600
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GOLDEN STATE WATER COMPANY
(Exact name of registrant as specified in its charter)
California 001-12008 95-1243678
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
630 East Foothill Blvd.
San Dimas, California 91773
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (909) 394-3600
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing requirement of the registrant under any of the
following provisions (see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the exchange Act (17 CFR
14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Section 2-Financial Information
Item 2.02. Results of Operations and Financial Condition
On August 9, 2006 American States Water Company released earnings for the three
and six months ended June 30, 2006. A copy of the Company's press release is
attached hereto as Exhibit 99.1.
This Form 8-K and the attached exhibits are furnished to, but not filed with,
the Securities and Exchange Commission.
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Section 9-Financial Statements and Exhibits
Item 9.01. Financial Statements and Exhibits
The following exhibit is furnished hereunder:
Exhibit 99.1 Press Release dated August 9, 2006
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN STATES WATER COMPANY
Date: August 9, 2006 /s/ Robert J. Sprowls
--------------------------------------------
Robert J. Sprowls
Sr. Vice President, Chief Financial Officer,
Treasurer and Corporate Secretary
EXHIBIT INDEX
Exhibit No. Description
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99.1 Press Release dated August 9, 2006
Exhibit 99.1
American States Water Company Announces Earnings for the Three and
Six Months Ended June 30, 2006
SAN DIMAS, Calif.--(BUSINESS WIRE)--Aug. 9, 2006--American States
Water Company (NYSE:AWR) today reported basic and fully diluted
earnings of $0.36 per share for the quarter ended June 30, 2006, as
compared to $0.34 per share for the quarter ended June 30, 2005. Basic
and fully diluted earnings were $0.71 per share for the six months
ended June 30, 2006, as compared to basic and fully diluted earnings
of $0.57 and $0.56 per share, respectively, for the six months ended
June 30, 2005.
Second Quarter 2006 Results
Net income for the second quarter ended June 30, 2006 increased by
9.3% to $6.3 million compared to $5.7 million for the same period in
2005. Significantly impacting the second quarter results were: (i) an
unrealized loss of $923,000, or ($0.03) per share, on purchased power
contracts, as compared to an unrealized gain of $459,000, or $0.02 per
share, for last year's second quarter; (ii) a 6.3% decrease in billed
water consumption in the three months ended June 30, 2006, negatively
impacted earnings by $0.04 per share; (iii) water rate increases which
added approximately $1.2 million to revenues, or $0.04 per share,
partially offset by higher expenses as discussed below; (iv) a 14.1%
increase in electric consumption for the second quarter of 2006,
increased earnings by about $0.02 per share; and (v) a lower effective
income tax rate which increased second quarter earnings by $0.06 per
share resulting from a $400,000 tax benefit relating to a refund from
the Internal Revenue Service ("IRS") received in May 2006, and
differences between book and taxable income that are treated as
flow-through adjustments in accordance with regulatory requirements.
Total operating revenues were $62.1 million for the second quarter
of 2006, an increase of $1.6 million compared to revenues of $60.5
million recorded in the second quarter of 2005. Water revenues
reflected a decrease of 0.8% when compared to the prior year's
results, due to a 6.3% decrease, or $1.7 million, in billed water
consumption due to cooler weather conditions. Partially offsetting the
decrease in consumption was a $1.2 million increase in water revenues
for the second quarter of 2006 resulting from rate increases. Electric
revenues increased by 15.4% to $7.0 million compared to $6.1 million
for the three months ended June 30, 2005, primarily as a result of a
14.1% increase in consumption due to winter weather conditions which
allowed the ski resorts to remain open well into May. Rate increases
in April 2005 also contributed to the increase in electric revenues
for the second quarter of 2006.
Other operating revenues increased by 129.4% to $2.0 million for
the three months ended June 30, 2006 compared to $867,000 for the
three months ended June 30, 2005. The increase was due primarily to an
additional $841,000 of revenues generated by American States Utility
Services, Inc. ("ASUS") from the operation of water and wastewater
systems pursuant to new contracts at military bases in Maryland and
Virginia. Additionally, revenues increased as a result of a decision
issued by the California Public Utilities Commission ("CPUC") on April
13, 2006 that enabled Golden State Water Company ("GSWC") to record
water rights lease revenues, received from the City of Folsom
subsequent to January 2004, as income. Prior to that decision, any
lease revenues that GSWC collected in 2004 and 2005 were included in a
regulatory liability account with no amounts recognized as revenue,
pending the outcome of the April, '06 CPUC Decision. For the second
quarter of 2006, GSWC recorded additional water lease revenues of
$299,000.
Total operating expenses increased by 6.1% to $48.0 million
compared to $45.3 million for the same period in 2005. Significant
items that increased operating expenses were: (i) a 10.6% increase in
the cost of power purchased for pumping and a 21.5% increase in
groundwater production assessments due to more wells in service for
pumping during the second quarter of 2006; (ii) a $1.4 million
decrease in the pretax unrealized gain on purchased power contracts
reflecting decreases in current forward market prices since last
quarter; (iii) a 19.9% increase in the cost of power purchased for
resale due to higher customer demand; (iv) an increase of 12.8% for
other operating expenses primarily from higher operating costs at the
new military bases in Maryland and Virginia; (v) a 15.5% increase in
depreciation and amortization expense reflecting the addition of $100
million to utility plant in 2005; (vi) an increase of 30.7% in
maintenance expense due to increased well maintenance for GSWC and
increases in well treatment and emergency repair costs; and (vii) a
10.3% increase in property and other taxes due to higher property
values and payroll taxes. Partially offsetting these increases were:
(i) an 11.1% decrease in purchased water costs due to lower customer
demand and less purchased water needed to replace wells temporarily
out of service; (ii) a decrease in the provision for supply cost
balancing account, partially reflecting a CPUC decision in April 2006
which eliminated the earnings tests; and (iii) a decrease of 6.1% in
administrative and general expenses primarily resulting from a
favorable CPUC decision that allowed GSWC to reclassify $709,000 in
legal costs as a regulatory asset.
Interest expense increased by 11.2% to $5.3 million compared to
$4.8 million for the same quarter in 2005. The increase is due to the
issuance of $40 million of additional long-term debt in October 2005
and increased interest rates on short-term debt, partially offset by a
decrease in short-term debt balances.
Interest income increased to $963,000 for the three months ended
June 30, 2006 due to: (i) interest accrual on the $8.0 million
settlement with Aerojet General Corporation ("Aerojet") totaling
$110,000, which will be paid over a five year period beginning in
December 2009; (ii) accrued interest of $270,000 on the uncollected
balance of the Aerojet litigation memorandum account authorized by the
CPUC; (iii) interest income of $381,000 related to an IRS refund
received in May 2006; and (iv) interest earned on a short-term surplus
of cash.
Income tax expense decreased by 27.2% to $3.4 million compared to
$4.7 million for the three months ended June 30, 2005 due, in part, to
a decrease in pretax income of 7.2% and a decrease in the effective
income tax rate ("ETR") for the three months ended June 30, 2006. The
variance between the ETR and the statutory tax rate is primarily the
result of differences between book and taxable income that are treated
as flow-through adjustments in accordance with regulatory
requirements. During the second quarter of 2006, AWR received a
refund, with interest, from a previously filed refund claim with the
IRS. Consequently, in the second quarter of 2006, AWR recorded a tax
benefit of $400,000 related to this refund.
Year to Date 2006 Results
The increase in earnings for the first six months of 2006 in
comparison to the prior year reflects primarily: (i) an April 13, 2006
CPUC decision enabling GSWC to transfer about $2.3 million of water
rights lease revenues received from the City of Folsom for 2004 and
2005 from a regulatory liability account, into operating revenues
which added about $2.9 million or approximately $0.10 per share to
income; (ii) an increase in ASUS's pretax operating income of $1.6
million or $0.05 per share due primarily to the profit recognition and
reimbursement for special projects at Fort Bliss; (iii) a $1.7 million
increase in interest income, or $0.06 per share as a result of accrued
interest on the Aerojet litigation memorandum account balance and the
interest on a tax refund received in May 2006; (iv) the lower
effective tax rate effect on earnings reflecting an increase of $0.09
per share; and (v) an increase in water revenues due to higher
consumption and rate increases. Offsetting these increases was a
significant decline in the cumulative unrealized gain on purchased
power contracts due to lower forward energy prices during the first
six months of 2006. The unrealized loss on purchased power contracts
decreased pretax income by approximately $3.1 million, or $0.11 per
share in 2006, as compared to an unrealized gain on purchased power
contracts of $3.5 million which increased earnings by $0.12 per share
during the same period in 2005.
Total operating revenues of $122.7 million for the first six
months of 2006 increased by $12.4 million compared to revenues of
$110.3 million recorded in the same period of 2005, an increase of
11.2%. Of the total increase in revenues, water revenues increased by
6.5% due to rate increases and slightly higher consumption in 2006
resulting from weather changes. Electric revenues increased by 13.4%
reflecting rate increases in April 2005 and a 9.7% increase in
consumption.
Other operating revenues increased 256.2% to $6.1 million during
the first six months of 2006 primarily due to the recording of water
rights lease revenues from the City of Folsom from January 2004 to
June 2006 of $2.9 million in total, as discussed earlier. In addition,
an increase of $1.5 million in revenue reflects: (i) recording of Fort
Bliss Water Services Company ("FBWS") revenue of approximately
$565,000 during the six months ended June 30, 2006, based on the
percentage of completion method for contract revenue recognition for
several projects at Fort Bliss; and (ii) additional revenues totaling
$1.1 million generated from operating the water and wastewater systems
at new military bases in Maryland and Virginia which began operations
in early 2006.
Total operating expenses for the first six months of 2006
increased to $94.6 million as compared to the $83.5 million recorded
for the same period in 2005, reflecting: (i) a $6.6 million decrease
in an unrealized gain on purchased power contracts discussed above;
(ii) a 9.5% increase in the cost of power purchased for pumping and a
14.8% increase in the groundwater production assessment, due to an
increase in customer demand and increased pumping volume resulting
from more wells in service for pumping in 2006; (iii) a 14.1% increase
in the cost of power purchased for resale to customers in GSWC's Bear
Valley Electric division reflecting higher customer demand; (iv) an
increase in other operating expenses of 2.9% to $10.6 million due
primarily to the commencement of operation of the water and wastewater
systems at new military bases in Maryland and Virginia; (v) a 15.0%
increase in depreciation and amortization expense reflecting, among
other things, the effects of closing approximately $100 million of
additions to utility plant during 2005; (vi) an 18.6% increase in
maintenance expense to $5.7 million due principally to an increase in
required maintenance on GSWC's wells and water supply sources at all
regions and increases in well treatment and emergency repair costs;
(vii) a 10.6% increase in property and other taxes to $5.0 million,
reflecting additional property taxes and payroll taxes; and (viii) a
net pre-tax gain of $760,000 on a settlement reached with the Fountain
Hills Sanitary District ("FHSD") in February 2005 for the capping of
two Chaparral City Water Company ("CCWC") wells in order to facilitate
FHSD's ability to secure certain permits. Pursuant to the settlement
agreement, CCWC agreed to permanently remove from service and cap one
of its wells, and cap another well which had never been used as a
potable source of supply. There was no similar gain in the same period
of 2006.
The increases in operating expenses were partially offset by: (i)
a decrease in purchased water costs of 3.5% to $19.3 million,
reflecting primarily a favorable change in the supply mix caused by
less purchased water needed to replace groundwater supply lost, as
discussed above; and (ii) a decrease of $866,000 for the six months
ended June 30, 2006 in the provision for supply cost balancing
accounts reflecting primarily the elimination of the earnings tests by
the CPUC.
Interest expense increased by 10.3% to $10.5 million primarily due
to $40 million of additional debt issued in October 2005, offset
partially by a decrease in short-term debt. However, the effect of the
decrease in short-term bank loan balances was also partially offset by
higher interest rates.
Interest income increased to $1.8 million due to: (i) interest
income accrual of $218,000 on the $8.0 million settlement with
Aerojet; (ii) interest accrued on the balance of the Aerojet
litigation memorandum account totaling $862,000; (iii) interest income
of $381,000 related to a tax refund received in May 2006; and (iv)
interest earned on a short-term surplus of cash.
Although there was an increase in pretax income of 11.7%, income
tax expense decreased by 8.0% to $7.3 million compared to $7.9 million
as a result of flow-through adjustments and an IRS refund claim
discussed previously.
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
Securities and Exchange Commission.
Second Quarter 2006 Earnings Release Conference Call -- The
Company will host a conference call today, Wednesday, August 9, 2006
at 11:00 a.m. Pacific Time (PT), during which management will be
making a brief presentation focusing on the Company's second quarter
results, strategies, and operating trends.
Interested parties can listen to the conference call over the
Internet by logging on to www.aswater.com. The call will also be
recorded and replayed beginning Wednesday, August 9, 2006 at 3:00 p.m.
PT and will run through Wednesday, August 16, 2006. The dial-in number
for the audio replay is (800) 642-1687, Passcode 3184913.
American States Water Company is the parent of Golden State Water
Company, American States Utility Services, Inc. and Chaparral City
Water Company. Through its subsidiaries, AWR provides water service to
1 out of 30 Californians located within 75 communities throughout 10
counties in Northern, Coastal and Southern California, approximately
254,000 customers and to approximately 13,000 customers in the city of
Fountain Hills, Arizona and a small portion of Scottsdale, Arizona.
The Company also distributes electricity to approximately 23,000
customers in the Big Bear recreational area of California. Through its
non-regulated subsidiary, American States Utility Services, the
Company contracts with municipalities, the U.S. government and private
entities to provide various services, including billing and meter
reading, water marketing and operation and maintenance of water and
wastewater systems at various military installations throughout the
United States.
American States Water Company
Consolidated
Comparative Condensed Balance Sheets
June 30, December 31,
(in thousands) 2006 2005
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(Unaudited)
Assets
Utility Plant-Net $ 731,402 $ 713,225
Other Property and Investments 21,494 21,581
Current Assets 68,728 68,866
Regulatory and Other Assets 77,433 73,105
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$ 899,057 $ 876,777
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Capitalization and Liabilities
Capitalization $ 542,624 $ 532,499
Current Liabilities 76,667 77,585
Other Credits 279,766 266,693
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$ 899,057 $ 876,777
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Condensed Statements of Income
(in thousands, except per Three Months Ended Six Months Ended
share amounts) June 30, June 30,
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2006 2005 2006 2005
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(Unaudited) (Unaudited)
Operating Revenues $ 62,138 $60,532 $122,745 $110,345
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Operating Expenses:
Operations $ 23,880 $23,682 $ 45,662 $ 45,060
Unrealized loss (gain) on
purchased power contracts 923 (459) 3,078 (3,474)
Administration and general
expenses 10,902 11,608 22,015 21,909
Maintenance 3,246 2,484 5,719 4,822
Depreciation and
amortization 6,610 5,725 13,092 11,389
Property and other taxes 2,475 2,244 5,018 4,539
Gain on settlement for
removal of wells 0 0 0 (760)
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Total operating expenses $ 48,036 $45,284 $ 94,584 $ 83,485
Operating income $ 14,102 $15,248 $ 28,161 $ 26,860
Interest expense (5,347) (4,809) (10,515) (9,534)
Interest income 963 35 1,776 56
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Income From Operations Before
Income Tax Expense $ 9,718 $10,474 $ 19,422 $ 17,382
Income tax expense 3,449 4,739 7,252 7,883
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Net Income $ 6,269 $ 5,735 $ 12,170 $ 9,499
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Weighted Average Shares
Outstanding 16,881 16,773 16,844 16,769
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Earnings Per Common Share $ 0.36 $ 0.34 $ 0.71 $ 0.57
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Weighted Average Diluted
Shares 16,947 16,834 16,905 16,821
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Earnings Per Diluted Share $ 0.36 $ 0.34 $ 0.71 $ 0.56
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Dividends Declared Per Common
Share $ 0.225 $ 0.225 $ 0.450 $ 0.450
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CONTACT: American States Water Company
Robert J. Sprowls, (909) 394-3600, ext. 647