News Column

SJW Corp. Announces 2013 Annual and Fourth Quarter Financial Results

February 20, 2014

SAN JOSE, Calif.--(BUSINESS WIRE)-- SJW Corp. (NYSE: SJW) today reported operating revenue for the year ended December 31, 2013 of $276.9 million versus $261.5 million for the year ended December 31, 2012, an increase of $15.4 million. The increase in revenue was attributable to $6.1 million in cumulative rate increases, $5.4 million in higher customer water usage, the net recognition of certain balancing and memorandum accounts of $1.4 million, which management has determined are probable of future recovery or refund and $1.3 million in revenue from new customers. In addition, the Company earned $1.2 million in higher revenue from real estate operations.

Water production expenses for the year ended December 31, 2013 were $120.8 million compared to $107.3 million in 2012, an increase of $13.5 million. The increase in water production expenses was attributable to $8.6 million in higher per unit costs for purchased water, groundwater extraction and energy charges and $5.2 million in higher customer water usage. These increases were offset by $275,000 in lower expenses due to an increase in the availability of surface water supply. Operating expenses, excluding water production expenses, increased $3.6 million to $102.6 million from $99 million. The increase was due to $1.9 million of higher depreciation expense, $902,000 in higher administrative and general expenses, $614,000 in higher taxes other than income taxes, and an increase of $198,000 in maintenance expenses.

Other, net includes a pre-tax gain on the sale of a real estate investment property in Connecticut of approximately $1.1 million.

The effective consolidated income tax rates were 39% and 41% for the years ended December31, 2013 and 2012, respectively.

Net income was $22.4 million for the year ended December31, 2013, compared to $22.3 million for the same period in 2012. Diluted earnings per share were $1.12 for the year ended December31, 2013, compared to $1.18 per diluted share for the same period in 2012.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December31, 2013 was $67.3 million versus $62.4 million for the same period in 2012, an increase of $4.9 million. The increase was attributable to $5.3 million in higher customer water usage, $1.9 million in cumulative rate increases, and $1.2 million in higher revenue from real estate operations and new customers. These increases were offset by a decrease of $3.5 million related to the year-over-year change in the net recognition of certain balancing and memorandum accounts.

Water production expenses for the fourth quarter of 2013 were $29.6 million compared to $23.1 million in 2012, an increase of $6.5 million. The increase in water production expenses was attributable to $3.5 million in higher customer water usage, $2.5 million in higher per unit costs for purchased water, groundwater extraction and energy charges, and $543,000 in higher expenses due to a decrease in the use of available surface water supply. Operating expenses, excluding water production expenses, increased $1.1 million to $26.3 million from $25.2 million. The increase was primarily due to $684,000 in general and administrative expenses, and $517,000 of higher depreciation expense, partially offset by $227,000 in lower maintenance expenses.

The effective consolidated income tax rates were 32% and 42% for the quarter ended December31, 2013 and 2012, respectively. Income tax expense included the release of a $500,000 tax contingency reserve.

Net income was $4.7 million for the fourth quarter ended December31, 2013, compared to $5.9 million in 2012. Diluted earnings per share were $0.23 in the quarter ended December31, 2013, compared to $0.31 per diluted share for the same period in 2012.

Diluted earnings per share for the quarter and year-to-date ended December31, 2013 includes the weighted average effect of 1,421,000 new shares of common stock issued in April of 2013.

SJW Corp. is a publicly traded holding company headquartered in San Jose, California. SJW Corp. is the parent company of San Jose Water Company, SJWTX, Inc., Texas Water Alliance Limited, and SJW Land Company. Together, San Jose Water Company and SJWTX, Inc. provide water service to more than one million people in San Jose, California and nearby communities and in Canyon Lake, Texas and nearby communities. SJW Land Company owns and operates commercial real estate investments.

This press release may contain certain forward-looking statements including but not limited to statements relating to SJW Corp.'s plans, strategies, objectives, expectations and intentions, which are made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of SJW Corp. to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.Results for a quarter are not indicative of results for a full year due to seasonality and other factors.Other factors that may cause actual results, performance or achievements to materially differ are described in SJW Corp.'s most recent reports on Form 10-K, Form 10-Q and Form 8-K filed with the Securities and Exchange Commission.SJW Corp. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

SJW Corp.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands, except shares and per share data)

Three months ended December 31,Twelve months ended December 31,
2013 20122013 2012
OPERATING REVENUE $ 67,262 62,449 $ 276,869 261,547
OPERATING EXPENSE:
Production Expenses:
Purchased water 13,700 11,978 63,225 66,106
Power 1,883 1,354 7,619 5,796
Groundwater extraction charges 10,670 6,883 37,927 23,940
Other production expenses 3,398 2,934 12,073 11,445
Total production expenses 29,651 23,149 120,844 107,287
Administrative and general 11,429 10,745 43,714 42,812
Maintenance 3,590 3,817 13,548 13,350
Property taxes and other non-income taxes 2,548 2,452 10,317 9,703
Depreciation and amortization 8,693 8,176 35,039 33,098
Total operating expense 55,911 48,339 223,462 206,250
OPERATING INCOME 11,351 14,110 53,407 55,297
Interest expense (4,935 ) (4,997 ) (19,922 ) (20,185 )
Other, net 472 1,131 3,034 2,748
Income before income taxes 6,888 10,244 36,519 37,860
Provision for income taxes 2,211 4,320 14,135 15,542
NET INCOME 4,677 5,924 22,384 22,318
Other comprehensive income, net 627 (53 ) 1,077 36
COMPREHENSIVE INCOME $ 5,304 5,871 $ 23,461 22,354
EARNINGS PER SHARE
Basic $ 0.23 0.32 $ 1.13 1.20
Diluted $ 0.23 0.31 $ 1.12 1.18
DIVIDENDS PER SHARE $ 0.18 0.18 $ 0.73 0.71
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 20,164 18,671 19,775 18,635
Diluted 20,362 18,857 19,971 18,839

SJW Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

December 31,

2013

December 31,

2012

ASSETS
Utility plant:
Land $ 10,418 10,156
Depreciable plant and equipment 1,254,586 1,166,220
Construction in progress 30,846 24,298
Intangible assets 18,341 15,561
Total utility plant 1,314,191 1,216,235
Less accumulated depreciation and amortization 415,453 384,675
Net utility plant 898,738 831,560
Real estate investments 78,477 74,232
Less accumulated depreciation and amortization 10,658 9,045
Net real estate investments 67,819 65,187
CURRENT ASSETS:
Cash and cash equivalents 2,299 2,522
Accounts receivable and accrued unbilled utility revenue 34,189 29,944
Long-lived assets held-for-sale

7,768

Prepaid expenses and other 3,164 2,677
Total current assets 39,652 42,911
OTHER ASSETS:
Investment in California Water Service Group 8,885 7,067
Debt issuance costs and other, net of accumulated amortization 5,176 5,226
Regulatory assets, net 83,543 130,488
Other 6,173 5,060
103,777 147,841
$ 1,109,986 1,087,499
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 10,505 9,724
Additional paid-in capital 63,017 26,117
Retained earnings 244,266 236,453
Accumulated other comprehensive income 3,387 2,310
Total shareholders' equity 321,175 274,604
Long-term debt, less current portion 334,997 335,598
Total capitalization 656,172 610,202
CURRENT LIABILITIES:
Line of credit 22,400 15,300
Current portion of long-term debt 554 5,392
Accrued groundwater extraction charge, purchased water and purchased power 7,781 5,072
Accounts payable 12,587 8,481
Accrued interest 5,369 5,355
Other current liabilities 10,504 9,507
Total current liabilities 59,195 49,107
DEFERRED INCOME TAXES AND CREDITS 142,111 149,013

ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION

202,303 196,743
POSTRETIREMENT BENEFIT PLANS 43,496 73,425
OTHER NONCURRENT LIABILITIES 6,709 9,009
$ 1,109,986 1,087,499





SJW Corp.

Suzy Papazian, 408-279-7961

Corporate Secretary/Attorney





Source: SJW Corp.


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