SJW Corp. (NYSE:SJW) today reported operating revenue for the year ended December 31, 2010 of $215.6 million versus $216.1 million for the year ended December 31, 2009, a decrease of $0.5 million. The decrease in revenue was primarily attributable to a decline in customer water usage of $5.5 million, partially offset by cumulative rate increases of $5.0 million.

Net income was $24.4 million for the year ended December 31, 2010, compared to $15.2 million for the year ended December 31, 2009. Diluted earnings per common share for the year ended December 31, 2010 were $1.30, compared to $0.81 per share in 2009. The Company sold 907,392 shares of California Water Service Group stock during the year ended December 31, 2010, which contributed $0.60 per share to results. No sales of California Water Service Group stock occurred during the same period in 2009.

Water production costs for the year ended December 31, 2010 were $76.6 million versus $83.5 million in 2009, a decrease of $6.9 million. The decline in water production costs is primarily attributable to $4.6 million in lower customer water usage and $3.0 million in savings due to greater surface water supply, offset by $0.7 million in higher per unit costs paid for power.

Operating expenses, excluding water production costs and income taxes, for the year ended December 31, 2010 were $101.0 million versus $92.9 million for 2009, an increase of $8.1 million. This increase was primarily attributable to an impairment loss of $3.6 million in 2010 on a real estate investment in Tennessee, $2.7 million in higher depreciation and amortization, $2.4 million in administrative and general expenses largely related to higher benefit, salary and pension costs, and $0.9 million in other operating expenses, offset by a decrease of $0.9 million in maintenance expenses and $0.6 million in taxes other than income tax expense. Income tax expense decreased $1.3 million for the year ended December 31, 2010 to $9.0 million from $10.3 million for the year ended December 31, 2009 as a result of the tax benefit recognized on the impairment of our real estate investment. Total operating expense, including water production costs, for the year ended December 31, 2010 was $186.5 million, compared to total operating expense of $186.7 million in 2009.

Fourth Quarter Financial Results

Operating revenue for the fourth quarter ended December 31, 2010 was $50.8 million versus $48.6 million for the same period in 2009, an increase of $2.2 million. The increase was attributable to $1.2 million in cumulative rate increases, $0.6 million in higher customer water usage, $0.3 million in higher revenue from real estate operations and $97,000 from new customers.

Net income was $8.1 million for the fourth quarter ended December 31, 2010, compared to $2.6 million for the same period in 2009. Diluted earnings per common share were $0.43 for the quarter ended December 31, 2010, compared to $0.14 per share for the same period in 2009. The Company sold 684,280 shares of California Water Service Group stock during the fourth quarter ended December 31, 2010, which contributed $0.46 per share to results. No sales of California Water Service Group stock occurred during the same period in 2009.

Water production costs for the fourth quarter of 2010 were $18.0 million versus $17.4 million for the same period in 2009, an increase of $0.6 million. Higher customer water usage and decreased surface water supply contributed to the increase.

Operating expenses, excluding water production costs and income taxes, for the fourth quarter of 2010 were $29.2 million versus $23.4 million for the same period in 2009, an increase of $5.8 million. This was attributable to increases of $3.6 million of impairment loss on a real estate investment in Tennessee, $1.4 million in administrative and general expenses, $617,000 in depreciation and amortization, $328,000 in other operating expenses, and $103,000 in taxes other than income tax expense, partially offset by a decrease of $208,000 in maintenance expenses. Income tax expense decreased $1.8 million for the fourth quarter in 2010 to a benefit of $321,000 from $1.5 million in expense for the same period in 2009 due to the tax benefit recognized on the real estate investment impairment loss. Total operating expense for the quarter ended December 31, 2010, was $47.0 million compared to $42.3 million in the period ended December 31, 2009.

Other comprehensive loss in 2010 was $10.8 million and $8.2 million, net of tax, for the full year and fourth quarter of 2010, respectively, due to a change in the market value of the investment in California Water Service Group of $44,000 and the recognition of unrealized holding gains of $10.8 million that were reclassified out of accumulated other comprehensive income due to the sale of California Water Service Group stock.

SJW Corp. management will discuss the annual and fourth quarter results in a webcast presentation available to interested parties from the Company’s website, www.sjwater.com, at 10:00 A.M. Pacific Time on Wednesday, February 23, 2011. The webcast will be accessible until April 25, 2011.

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 INCOME

AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except per share data)
 
 

THREE MONTHS ENDED
   

TWELVE MONTHS ENDED

DECEMBER 31

DECEMBER 31
 

2010
     

2009
       

2010
     

2009
 
OPERATING REVENUE $ 50,752     48,556 $ 215,638     216,097
 
OPERATING EXPENSE:
Operation:
Purchased water 9,829 9,753 43,557 45,317
Power 1,579 1,339 6,429 6,582
Groundwater extraction charge   6,645       6,360         26,614       31,635
Total water production costs 18,053 17,452 76,600 83,534
 
Administrative and general 8,225 6,824 30,134 27,658
Other 4,968 4,640 18,752 17,861
Maintenance 3,282 3,490 12,242 13,172
Taxes other than income 2,088 1,985 7,907 8,549
Depreciation and amortization 7,068 6,451 28,331 25,643
Impairment on real estate investment 3,597 - 3,597 -
Income taxes   (321 )     1,469         8,964       10,280
Total operating expense   46,960       42,311         186,527       186,697
 
OPERATING INCOME 3,792 6,245 29,111 29,400
Gain on sale of California Water Service
Group stock, net of taxes of
$5,945 and $7,776 in 2010 8,555 - 11,190 -
Interest on long-term debt and other   (4,229 )     (3,625 )       (15,895 )     (14,229 )
NET INCOME $ 8,118       2,620       $ 24,406       15,171
 
Other comprehensive loss, net $ (8,220 )     (1,375 )     $ (10,828 )     (6,236 )
COMPREHENSIVE INCOME/(LOSS) $ (102 )     1,245       $ 13,578       8,935
 
 
Earnings per share
-Basic $ 0.45 0.14 $ 1.32 0.82
-Diluted 0.43 0.14 1.30 0.81
 
 
Dividends per share $ 0.17 0.17 $ 0.68 0.66
 
 
Weighted average shares outstanding
-Basic 18,541,194 18,498,920 18,531,458 18,486,536
-Diluted 18,754,884 18,703,127 18,742,315 18,680,458
       
 

SJW CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands)
 

DECEMBER 31

DECEMBER 31
ASSETS

2010
     

2009
UTILITY PLANT:
Land $ 8,579 $ 8,558
Depreciable plant and equipment 1,004,689 913,071
Construction in progress 10,103 11,119
Intangible assets   13,538         11,278
Total utility plant 1,036,909 944,026
Less accumulated depreciation and amortization   322,102         298,921
Net utility plant 714,807 645,105
REAL ESTATE INVESTMENT: 88,943 88,000
Less accumulated depreciation and amortization   8,854         7,188
Net real estate investment   80,089         80,812
CURRENT ASSETS:
Cash and equivalents 1,730 1,416
Accounts receivable and accrued unbilled utility revenue 33,835 24,004
Prepaid expenses and other   2,462         2,590
Total current assets   38,027         28,010
OTHER ASSETS:
Investment in California Water Service Group 7,177 40,500
Debt issuance costs, net of accumulated amortization 4,308 3,098
Regulatory assets 87,721 78,525
Other   3,233         2,424
  102,439         124,547
$ 935,362       $ 878,474
 
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 9,662 $ 9,635
Additional paid-in capital 23,443 22,046
Retained earnings 219,568 207,888
Accumulated other comprehensive income   2,359         13,187
Total shareholders' equity 255,032 252,756
Long-term debt, less current portion   295,704         246,879
Total capitalization   550,736         499,635
CURRENT LIABILITIES:
Line of credit 4,000 5,800
Current portion of long-term debt 1,133 1,081
Accrued groundwater extraction charge and
purchased water 4,359 4,496
Purchased power 495 486
Accounts payable 5,487 6,562
Accrued interest 5,244 4,979
Other current liabilities   8,437         8,554
Total current liabilities 29,155 31,958
 
DEFERRED INCOME TAXES AND CREDITS 107,961 102,381
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS
IN AID OF CONSTRUCTION 190,155 190,506
POSTRETIREMENT BENEFIT PLANS 50,213 47,484
OTHER NONCURRENT LIABILITIES   7,142         6,510
$ 935,362       $ 878,474

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