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SJW Corp. Announces Third Quarter Financial Results

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SAN JOSE, Calif.--(BUSINESS WIRE)--

SJW Corp. (NYSE: SJW) today reported financial results for the third quarter ended September 30, 2012. Operating revenue was $82.4 million in the quarter compared to $73.9 million in 2011. The $8.5 million increase in revenue reflects cumulative rate increases of $6.3 million, $1.8 million in higher customer water usage and $406,000 from new customers compared to a year ago.

Net income was $10.1 million and diluted earnings per common share were $0.53, compared to $8.2 million and $0.44 per share, respectively, in the third quarter of 2011.

Water production costs for the quarter ended September 30, 2012 were $36.6 million compared to $32.0 million in 2011, an increase of $4.6 million. The increase in water production costs is primarily attributable to $2.6 million in higher per unit costs for purchased water and groundwater extraction charges, $1.7 million in higher costs due to a decrease in available surface water supply and $328,000 in higher customer water usage.

Operating expenses, excluding water production costs, for the third quarter were $24.9 million compared to $23.4 million in 2011. The increase of $1.5 million reflects an additional $891,000 of administrative and general expenses primarily due to higher payroll and benefit costs, $485,000 of higher depreciation expense and $80,000 higher maintenance expenses. The effective consolidated income tax rate was 41% and 39% for the three-month periods ended September 30, 2012 and 2011, respectively.

Year-to-date operating revenue increased by $22.5 million to $199.1 million from $176.6 million in the first nine months of 2012. The increase was attributable to $13.6 million in cumulative rate increases, $7.7 million in higher customer water usage and $907,000 in revenue from new customers. In addition, the Company earned $305,000 in higher revenue from real estate operations.

Year-to-date net income was $16.4 million, compared to $14.3 million in 2011. Diluted earnings per share were $0.87 in the first nine months of 2012, compared to $0.76 per diluted share for the same period in 2011.

Year-to-date water production costs increased to $84.1 million from $69.7 million in 2011. The $14.4 million increase was primarily attributable to $5.4 million in higher per unit costs for purchased water and groundwater extraction charges, $5.2 million in higher costs due to a decrease in available surface water supply and $3.8 million in higher customer water usage. Operating expenses, excluding water production costs, increased $4.8 million to $73.8 million from $69 million. The increase was due to an increase in administrative and general expenses of $2.9 million primarily due to higher payroll and benefit costs, $1.5 million of higher depreciation expense, $644,000 in higher taxes other than income taxes, partially offset by a decrease of $322,000 in maintenance expenses. The effective consolidated income tax rate was 41% and 40% for the nine-month periods ended September 30, 2012 and 2011, respectively.

The Directors of SJW Corp. today declared a quarterly dividend on common stock of $0.1775 per share. The dividend is payable on December 3, 2012 to shareholders of record on November 5, 2012.

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 regulated and nonregulated 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. The results for a quarter are not indicative of results for a full year due to seasonality and other factors. Certain 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 per share data)

       
Three months ended
September 30,
Nine months ended
September 30,
2012 2011 2012 2011
OPERATING REVENUE $ 82,374   73,914   $ 199,098   176,617  
OPERATING EXPENSE:
Production Costs:
Purchased water 22,768 19,182 54,128 39,279
Power 2,274 1,979 4,442 4,366
Groundwater extraction charges 8,672 7,824 17,057 17,632
Other production costs 2,914   3,030   8,511   8,442  
Total production costs 36,628 32,015 84,138 69,719
Administrative and general 10,773 9,882 32,067 29,176
Maintenance 3,411 3,331 9,533 9,855
Property taxes and other non-income taxes 2,397 2,397 7,251 6,607
Depreciation and amortization 8,288   7,803   24,922   23,389  
Total operating expense 61,497   55,428   157,911   138,746  
OPERATING INCOME 20,877 18,486 41,187 37,871
Interest on long-term debt and other (3,927 ) (4,911 ) (13,571 ) (13,985 )
Income before income taxes 16,950 13,575 27,616 23,886
Provision for income taxes 6,866   5,360   11,222   9,610  
NET INCOME 10,084   8,215   16,394   14,276  
Other comprehensive income, net 41   (227 ) 89   (210 )
COMPREHENSIVE INCOME $ 10,125   7,988   $ 16,483   14,066  
 
EARNINGS PER SHARE
Basic $ 0.54 0.44 $ 0.88 0.77
Diluted $ 0.53 0.44 $ 0.87 0.76
DIVIDENDS PER SHARE $ 0.18 0.17 $ 0.53 0.52
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 18,648 18,587 18,629 18,578
Diluted 18,854 18,803 18,833 18,788
 

SJW Corp.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

   
September 30,
2012
December 31,
2011
ASSETS
Utility plant:
Land $ 8,993 8,852
Depreciable plant and equipment 1,139,878 1,070,016
Construction in progress 27,013 18,527
Intangible assets 15,561   14,732
Total utility plant 1,191,445 1,112,127
Less accumulated depreciation and amortization 378,960   355,914
Net utility plant 812,485   756,213
 
Real estate investments 73,604 89,099
Less accumulated depreciation and amortization 8,697   10,557
Net real estate investments 64,907   78,542
CURRENT ASSETS:
Cash and cash equivalents 6,684 26,734
Accounts receivable and accrued unbilled utility revenue 42,973 33,853
Long-lived assets held-for-sale 7,768
Prepaid expenses and other 4,650   8,328
Total current assets 62,075   68,915
OTHER ASSETS:
Investment in California Water Service Group 7,182 7,032
Debt issuance costs, net of accumulated amortization 5,015 4,865
Regulatory assets, net 119,248 119,248
Other 4,407   3,995
135,852   135,140
$ 1,075,319   1,038,810
 
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 9,715 9,684
Additional paid-in capital 25,708 24,552
Retained earnings 233,870 227,494
Accumulated other comprehensive income 2,362   2,274
Total shareholders' equity 271,655 264,004
Long-term debt, less current portion 335,779   343,848
Total capitalization 607,434   607,852
CURRENT LIABILITIES:
Current portion of long-term debt 5,410 838
Accrued groundwater extraction charge, purchased water and purchased power 10,710 6,212
Accounts payable 17,566 7,417
Accrued interest 5,534 5,376
Other current liabilities 11,690   8,445
Total current liabilities 50,910   28,288
 
DEFERRED INCOME TAXES AND CREDITS 143,245 135,036
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF
CONSTRUCTION 192,231 190,668
POSTRETIREMENT BENEFIT PLANS 72,708 68,855
OTHER NONCURRENT LIABILITIES 8,791   8,111
$ 1,075,319   1,038,810

SJW Corp.
Suzy Papazian, 408-279-7961
Corporate Secretary/Attorney

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