PART I  

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):  

January 25, 2006




CALIFORNIA WATER SERVICE GROUP

(Exact name of registrant as specified in its charter)




  Delaware  

  1-13883  

  77-0448994

(State or other jurisdiction

     

 (Commission      

          (I.R.S. Employer

       of Incorporation)

 File Number)

         Identification No.)



  1720 North First Street, San Jose, CA  

  95112

    (Address of principal executive offices)

(Zip Code)



Registrant’s telephone number, including area code

1-408-367-8200



Not Applicable

(Former name or former address, if changed since last report)



Check the appropriate box below if the form 8-K filing is intended to simultaneously satisfy the filing obligation 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 240.14a-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 ))






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Item 2.02 Results of Operations and Financial Condition.




On January 25, 2006, the registrant issued the press release attached to this report as Exhibit 99, which  reports on the results of operations for the quarter and year ended December 31, 2005.



Item 9.01 Financial Statements and Exhibits.



(c) Exhibits.



The list of exhibits called for by this Item is incorporated by reference to the exhibit index to this report.








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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.



CALIFORNIA WATER SERVICE GROUP

(Registrant)




Date: January 25, 2006

By:

/s/ John S. Tootle

     John S. Tootle

     Acting Vice President,

     Chief Financial Officer and Treasurer




 



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Exhibit Index




Exhibit No.

Description


99

Press release of the registrant dated January 25, 2006 which announces the unaudited results of operations for the fourth quarter and full year of 2005, an increase in the Company’s annual dividend and record and payable dates for the quarterly dividend.



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NEWS RELEASE

 

CALIFORNIA WATER SERVICE GROUP

1720 North First Street

San Jose, CA 95112-4598

January 25, 2006

For Immediate Release


Contact:

John Tootle    (408) 367-8215 (analysts)

Shannon Dean (310) 257-1435 (media)


CAL WATER ANNOUNCES INCREASED  

REVENUES AND EARNINGS FOR 4TH QTR AND YEAR-END 2005;

BOARD DECLARES 61ST CONSECUTIVE ANNUAL DIVIDEND

 


SAN JOSE, CA  –  California Water Service Group (NYSE : CWT) today announced unaudited financial results for the fourth quarter and the full year 2005.  Net income of $5.8 million for the fourth quarter of 2005 was up 56% over the same period in 2004, and diluted earnings per share of $0.32 were up from $0.20 posted for the fourth quarter of 2004.  

Revenue for the quarter increased $8.5 million or 12% to $77.8 million.  Adding to revenue was $3.3 million in rate increases, $0.9 million in sales to new customers, and $4.3 million in revenue from increased sales to existing customers.    

Total operating expenses for the quarter were $69.9 million, an increase of 13% or $8.0 million over the same period in 2004.  Water production costs were up 12% due to higher water sales resulting from drier weather during the fourth quarter.  Other operations expense was up 1% due to higher medical benefit and pension costs.  

Maintenance expense increased 16% due to repairs and maintenance of wells, water treatment equipment, and mains.  Depreciation expense increased 13% due to a higher investment in depreciable utility plant and changes in depreciation expense authorized by the California Public Utilities Commission.  



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Interest expense remained the same as in 2004. Income taxes increased approximately $3.2 million due to the increase in net income and a higher effective tax rate as a result of higher deferred income tax charges.  

Other income was up $1.7 million from the same period in 2004, and included a $1.5 million gain from the sale of a property that was no longer necessary and useful in serving utility customers.  

Full Year 2005 Results

2005 net income was $27.2 million, compared to $26.0 million in 2004, and 2005 diluted earnings per share were $1.47, compared to $1.46 in 2004.    

 Revenue for 2005 was $320.7 million, increasing $5.2 million or 2%, due to $12.3 million in rate increases and $3.8 million in revenues from sales to new customers.  Partially offsetting these increases were decreased revenues of $10.9 million from sales to existing customers, primarily due to higher rainfall in the first half of 2005.  

Total operating expenses increased $6.8 million, or 3%, for the year.  Due primarily to lower customer usage resulting from cool, wet weather, water production costs decreased 3% in 2005 compared to 2004.  Other operations expense increased 2% for the year, or $1.7 million, due to higher medical costs and increases in payroll.

Maintenance expense increased by $2.0 million or 15% due to cost increases related to repairs of water treatment equipment, water mains, and wells in 2005.  Depreciation increased 10% due to a larger investment in depreciable utility plant and changes in depreciation expense authorized by the California Public Utilities Commission.

Interest expense decreased 1% due to no short-term borrowings in 2005.  Income tax increased approximately $2.9 million, due to higher net income and a higher effective tax rate as a result of higher deferred income tax charges.

2005 total year results benefited from $2.2 million in gains from sales of properties no longer used and necessary in providing utility services.  In comparison, surplus property sales were negligible in 2004.    



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“Considering the impact that the weather had on our water sales, I am very pleased with our performance for 2005.  In 2005, we continued to see an improvement in the regulatory climate as we received timely rate relief.  We also added 350 customer connections in New Mexico through the acquisition of Cypress Gardens water system, which grows that subsidiary by 6%,” said President and Chief Executive Officer Peter C. Nelson.

“Looking ahead, I am hopeful that the regulatory environment in California will continue to improve and confident that we will continue to successfully execute our growth strategy.  Moreover, I believe that we will continue to deliver solid results by staying focused on serving customers, operating efficiently, and making wise investments in our infrastructure,” he said.  

Dividend Information  

At their meeting today, Directors increased the dividend on common stock from $1.14 to $1.15, which marks the company’s 39th consecutive annual dividend increase and the 61st consecutive annual dividend. The quarterly dividend of $0.2875 per common share is payable on February 17, 2006, to stockholders of record on February 6, 2006.  The regular dividend on Series C preferred stock was also declared.

Other Information

On Thursday, January 26, 2006, at 1 p.m. Pacific Standard Time (4 p.m. Eastern Standard Time), the Company will conduct a teleconference call, at which time management will provide comments about fourth quarter  and year-end 2005 operating results and other pertinent matters.  Any stockholder or interested investor can listen to the teleconference or a replay.  The dial-in number to access the teleconference is 1-866-206-6509, call ID #834386.  Additional information about the call, including replay information, is available at the Company’s web site, at .  In addition the final audited financial statements will be reported in the Company’s 10-K filing.

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



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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; changes in accounting valuations and estimates; 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.  The Company assumes no obligation to provide public updates of forward-looking statements.


 

Additional information is available online at www.calwatergroup.com.

Attachments (2).   

###


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CALIFORNIA WATER SERVICE GROUP 

   

CONDENSED CONSOLIDATED BALANCE SHEETS 

   

(In thousands, except per share data)

    

Unaudited 

December 31,

 

December 31,

   

2005

 

2004

ASSETS 

    

Utility plant: 

    
 

Utility plant 

 $            1,229,067 

 

 $             1,144,074 

 

Less accumulated depreciation and amortization 

                  372,359 

 

                   343,769 

   

                  856,708 

 

                   800,305 

Current assets: 

   
 

Cash and cash equivalents 

                      9,533 

 

                     18,820 

 

Receivables, net of allowances for uncollectible accounts of

$272 at December 31, 2005 and $ 287 at December 31, 2004 

   
 

            Customers 

                    16,061 

 

                     15,867 

 

            Income taxes 

                        -- 

 

                       7,298 

 

            Other 

                      4,700 

 

                       3,147 

 

Unbilled revenue 

                    11,445 

 

                       9,307 

 

Materials and supplies, at average cost 

                      4,182 

 

                       3,161 

 

Prepaid pension expense 

                      1,696 

 

                       3,671 

 

Taxes and other prepaid expenses 

                      4,607 

 

                       9,122 

  

                     Total current assets 

                    52,224 

 

                     70,393 

Regulatory assets 

                    58,213 

 

                     53,477 

Other assets 

 

                    20,127 

 

                     18,678 

   

 $               987,272 

 

 $                942,853 

      

CAPITALIZATION AND LIABILITIES 

   

Capitalization: 

   
 

Common stock, $.01 par value 

 $                      184 

 

 $                       184 

 

Additional paid-in capital 

                 131,991 

 

                 131,271 

 

Retained earnings 

                 162,968 

 

                 156,851 

 

Accumulated other comprehensive loss 

                    (1,202)

 

                       (701)

  

Total common stockholders' equity 

                 293,941 

 

                 287,605 

 

Preferred stock 

                     3,475 

 

                     3,475 

 

Long-term debt, less current maturities 

                 274,142 

 

                 274,821 

  

Total capitalization 

                 571,558 

 

                 565,901 

Current liabilities: 

   
 

Current maturities of long-term debt 

                    1,133 

 

                    1,100 

 

Short-term borrowings 

                         -- 

 

                         -- 

 

Accounts payable 

                  30,097 

 

                  19,745 

 

Accrued expenses and other liabilities 

                  39,563 

 

                  36,367 

  

Total current liabilities 

                  70,793 

 

                  57,212 

      

Unamortized investment tax credits 

                    2,615 

 

                    2,721 

Deferred income taxes 

                  63,920 

 

                  54,826 

Regulatory and other liabilities 

                  36,586 

 

                  35,986 

Advances for construction 

                141,842 

 

                131,292 

Contributions in aid of construction 

                  99,958 

 

                  94,915 

Commitments and contingencies 

                         -- 

 

                         - 

   

 $               987,272 

 

 $                942,853 



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CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

     

Unaudited 

     
   

For the three months ended:

 

For the twelve months ended:

 

December 31,

December 31,

 

December 31,

December 31,

   

2005

2004

 

2005

2004

        

Operating revenue 

$             77,840 

 $            69,378 

 

$           320,728 

$           315,567 

Operating expenses: 

     
 

Water production costs 

27,245 

24,367 

 

115,665 

119,143 

 

Other operations 

22,632 

22,378 

 

88,687 

87,006 

 

Maintenance 

3,921 

3,375 

 

15,216 

13,228 

 

Depreciation and amortization 

7,442 

6,557 

 

28,731 

26,114 

 

Income taxes 

5,435 

2,232 

 

20,007 

17,085 

 

Property and other taxes 

3,175 

2,957 

 

12,613 

11,508 

  

Total operating expenses 

69,850 

61,867 

 

280,918 

274,084 

        
  

Net operating income 

7,990 

7,511 

 

39,809 

41,483 

        

Other income and expenses: 

     
  

Non-regulated income, net 

740 

603 

 

2,863 

2,375 

  

Gain on sale of non-utility property 

1,522 

                        -- 

 

2,250 

  

Total other income and expenses 

2,262 

603 

 

5,113 

2,383 

        

Interest expense: 

     
 

Interest expense 

4,641 

4,651 

 

18,600 

18,664 

 

Less capitalized interest 

225 

274 

 

900 

824 

  

Total interest expense 

$               4,416 

4,377 

 

17,700 

17,840 

        

Net income 

 $               5,836 

 $              3,737 

 

$             27,223 

$             26,026 

        

Earnings per share 

     
 

Basic 

 $                 0.32 

 $                0.20 

 

$                 1.47 

$                 1.46 

 

Diluted 

 $                 0.32 

 $                0.20 

 

$                 1.47 

$                 1.46 

Weighted average shares outstanding 

     
 

Basic 

18,390 

18,350 

 

18,379 

17,652 

 

Diluted 

18,409 

18,377 

 

18,402 

17,674 

Dividends per share of common stock 

 $             0.2850 

 $            0.2825 

 

$                 1.14 

$                 1.13 

        
        




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