Edgar Filing: Golden State Water CO

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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2012

o Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission file number 001-14431

American States Water Company

(Exact Name of Registrant as Specified in Its Charter)

California		95-4676679
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

630 E. Foothill Blvd, San Dimas, CA		91773-1212
(Address of Principal Executive Offices)		(Zip Code)

(909) 394-3600

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Commission file number 001-12008

Golden State Water Company

(Exact Name of Registrant as Specified in Its Charter)

California		95-1243678
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

630 E. Foothill Blvd, San Dimas, CA		91773-1212
(Address of Principal Executive Offices)		(Zip Code)

(909) 394-3600

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

American States Water Company		Yes x No o
Golden State Water Company		Yes x No o

Indicate by check mark whether Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or such shorter period that the Registrant was required to submit and post such files).

American States Water Company		Yes x No o
Golden State Water Company		Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

American States Water Company

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Smaller reporting company o

Golden State Water Company

Large accelerated filer o

Accelerated filer o

Non-accelerated filer x

Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

American States Water Company		Yes ¨ No x
Golden State Water Company		Yes ¨ No x

As of May 4, 2012, the number of Common Shares outstanding, of American States Water Company was 18,858,505 shares. As of May 4, 2012, all of the 146 outstanding Common Shares of Golden State Water Company were owned by American States Water Company.

Golden State Water Company meets the conditions set forth in General Instruction (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form, in part, with the reduced disclosure format for Golden State Water Company.

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AMERICAN STATES WATER COMPANY

and

GOLDEN STATE WATER COMPANY

FORM 10-Q

INDEX

Part I	Financial Information

Item 1:	Financial Statements	1

	Consolidated Balance Sheets of American States Water Company as of March 31, 2012 and December 31, 2011	3

	Consolidated Statements of Income of American States Water Company for the Three Months Ended March 31, 2012 and 2011	5

	Consolidated Statements of Cash Flow of American States Water Company for the Three Months Ended March 31, 2012 and 2011	6

	Balance Sheets of Golden State Water Company as of March 31, 2012 and December 31, 2011	7

	Statements of Income of Golden State Water Company for the Three Months Ended March 31, 2012 and 2011	9

	Statements of Cash Flow of Golden State Water Company for the Three Months Ended March 31, 2012 and 2011	10

	Notes to Consolidated Financial Statements	11

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4:	Controls and Procedures	41


Part II	Other Information

Item 1:	Legal Proceedings	42

Item 1A:	Risk Factors	42

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3:	Defaults Upon Senior Securities	42

Item 4:	Mine Safety Disclosure	42

Item 5:	Other Information	42

Item 6:	Exhibits	43

	Signatures	47

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PART I

Item 1. Financial Statements

General

The basic financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.

Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments consisting of normal recurring items and estimates necessary for a fair statement of results for the interim period have been made.

It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto in the latest Annual Report on Form 10-K of American States Water Company and its wholly owned subsidiary, Golden State Water Company.

Filing Format

American States Water Company (hereinafter “AWR”) is the parent company of Golden State Water Company (hereinafter “GSWC”) and American States Utility Services, Inc. (hereinafter “ASUS”) and its subsidiaries.

This quarterly report on Form 10-Q is a combined report being filed by two separate Registrants: AWR and GSWC. For more information, please see Note 1 to the Notes to Consolidated Financial Statements and the heading entitled General in Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations. References in this report to “Registrant” are to AWR and GSWC collectively, unless otherwise specified. GSWC makes no representations as to the information contained in this report relating to AWR and its subsidiaries, other than GSWC.

Forward-Looking Statements

This Form 10-Q and the documents incorporated herein contain forward-looking statements intended to qualify for the “safe harbor” from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current estimates, expectations and projections about future events and assumptions regarding these events and include statements regarding management’s goals, beliefs, plans or current expectations, taking into account the information currently available to management. Forward-looking statements are not statements of historical facts. For example, when we use words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “may” and other words that convey uncertainty of future events or outcomes, we are making forward-looking statements. We are not able to predict all the factors that may affect future results. We caution you that any forward-looking statements made by us are not guarantees of future performance and that actual results may differ materially from those in our forward-looking statements. Some of the factors that could cause future results to differ materially from those expressed or implied by our forward-looking statements, or from historical results, include, but are not limited to:

· The outcome of pending and future regulatory, legislative or other proceedings, investigations or audits, including decisions in our general rate cases and the results of independent audits of our construction contracting procurement practices

· Changes in the policies and procedures of the California Public Utilities Commission or CPUC

· Timeliness of CPUC action on rates

· Our ability to efficiently manage capital expenditures and operating and maintenance expenses within CPUC authorized levels and timely recover our costs through rates

· Our ability to forecast the costs of maintaining our aging water infrastructure

· Our ability to recover increases in permitting costs and in costs associated with negotiating and complying with the terms of our franchise agreements with cities and counties and other demands made upon us by the cities and counties in which GSWC operates

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· Changes in accounting valuations and estimates, including changes resulting from changes in our assessment of anticipated recovery of regulatory assets, liabilities and revenues subject to refund or regulatory disallowances

· Changes in environmental laws and water quality and wastewater requirements and increases in costs associated with complying with these laws and requirements

· Availability of water supplies, which may be adversely affected by changes in weather patterns, contamination and court decisions or other governmental actions restricting use of water from the Colorado River, transportation of water to our service areas through the State Water Project or pumping of groundwater

· Our ability to recover the costs associated with the contamination of our groundwater supplies from parties responsible for the contamination or through the ratemaking process and the time and expense incurred by us in obtaining recovery of such costs

· Adequacy of our power supplies and the extent to which we can manage and respond to the volatility of electric and natural gas prices

· Our ability to comply with the CPUC’s renewable energy procurement requirements

· Changes in customer demand due to unanticipated population growth or decline, changes in climate conditions, general economic and financial market conditions, cost increases and conservation

· Changes in accounting treatment for regulated utilities

· Changes in estimates used in our revenue recognition under the percentage of completion method of accounting for our construction activities at our contracted services business

· Termination, in whole or in part, of our contracts to provide water and/or wastewater services at military bases for the convenience of the U.S. government or for default.

· Delays in obtaining redetermination of prices or equitable adjustments to our prices on our contracts to provide water and/or wastewater services at military bases

· Disallowance of costs on our contracts to provide water and/or wastewater services at military bases as a result of audits, cost review or investigations by contracting agencies

· Inaccurate assumptions used in preparing bids in our contracted services business

· Failure of the collection or sewage systems that we operate on military bases resulting in untreated wastewater or contaminants spilling into nearby properties, streams or rivers

· Failure to comply with the terms of our military privatization contracts

· Failure of any of our subcontractors to perform services for us in accordance with the terms of our military privatization contracts

· Implementation, maintenance and upgrading of our information technology systems

· General economic conditions which may impact our ability to recover revenue from customers

· Explosions, fires, accidents, mechanical breakdowns, the disruption of information technology and telecommunication systems, human error and similar events that may occur while operating and maintaining a water and electric system in California or operating and maintaining water and wastewater systems on military bases under varying geographic conditions

· The impact of storms, earthquakes, floods, mudslides, drought, wildfires, disease and similar natural disasters, or acts of terrorism or vandalism, that affect customer demand or that damage or disrupt facilities, operations or information technology systems owned by us, our customers or third parties on whom we rely

· Restrictive covenants in our debt instruments or changes to our credit ratings on current or future debt that may increase our financing costs or affect our ability to borrow or make payments on our debt

· Our ability to access capital markets and other sources of credit in a timely manner on acceptable terms

Please consider our forward-looking statements in light of these risks (which are more fully disclosed in our 2011 Annual Report on Form 10-K) as you read this Form 10-Q. We qualify all of our forward-looking statement by these cautionary statements.

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AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)

(in thousands)	March 31, 2012			December 31, 2011
Property, Plant and Equipment
Regulated utility plant, at cost	$	1,312,620		$	1,302,589
Non utility property, at cost	8,235			7,747
Total	1,320,855			1,310,336
Less - Accumulated depreciation	(423,020		)	(413,836		)
Net property, plant and equipment	897,835			896,500

Other Property and Investments
Goodwill	1,116			1,116
Other property and investments	11,968			11,803
Total other property and investments	13,084			12,919

Current Assets
Cash and cash equivalents	6,558			1,315
Accounts receivable — customers (less allowance for doubtful accounts of $753 in 2012 and $715 in 2011)	18,869			20,399
Unbilled revenue	16,969			16,188
Receivable from the U.S. government (less allowance for doubtful accounts of $0 in 2012 and 2011)	12,908			7,584
Other accounts receivable (less allowance for doubtful accounts of $367 in 2012 and $333 in 2011)	10,008			12,181
Income taxes receivable	14,256			20,537
Materials and supplies, at average cost	4,797			3,070
Regulatory assets — current	36,213			36,362
Prepayments and other current assets	5,439			3,959
Costs and estimated earnings in excess of billings on uncompleted contracts	36,015			34,466
Deferred income taxes — current	9,840			9,540
Total current assets	171,872			165,601

Regulatory and Other Assets
Regulatory assets	144,470			143,595
Costs and estimated earnings in excess of billings on uncompleted contracts	411			598
Receivable from the U.S. government (less allowance for doubtful accounts of $0 in 2012 and 2011)	6,446			6,660
Deferred income taxes	11			15
Other	12,500			12,474
Total regulatory and other assets	163,838			163,342

Total Assets	$	1,246,629		$	1,238,362

The accompanying notes are an integral part of these consolidated financial statements

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AMERICAN STATES WATER COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)

(in thousands)	March 31, 2012		December 31, 2011
Capitalization
Common shares, no par value	$	234,846	$	233,306
Earnings reinvested in the business	180,173		175,360
Total common shareholders’ equity	415,019		408,666
Long-term debt	340,374		340,395
Total capitalization	755,393		749,061

Current Liabilities
Notes payable to banks	—		2,000
Long-term debt — current	247		291
Accounts payable	38,097		37,873
Income taxes payable	1,654		332
Accrued employee expenses	10,607		8,659
Accrued interest	6,430		3,938
Unrealized loss on purchased power contracts	7,506		7,611
Billings in excess of costs and estimated earnings on uncompleted contracts	28,557		26,973
Other	14,274		16,693
Total current liabilities	107,372		104,370

Other Credits
Advances for construction	75,563		75,353
Contributions in aid of construction - net	99,763		100,037
Deferred income taxes	128,635		128,963
Unamortized investment tax credits	1,950		1,972
Accrued pension and other postretirement benefits	70,518		68,353
Billings in excess of costs and estimated earnings on uncompleted contracts	534		3,272
Other	6,901		6,981
Total other credits	383,864		384,931

Commitments and Contingencies (Note 8)	—		—

Total Capitalization and Liabilities	$	1,246,629	$	1,238,362

The accompanying notes are an integral part of these consolidated financial statements

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AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED MARCH 31, 2012 AND 2011
(Unaudited)

	Three Months Ended March 31,
(in thousands, except per share amounts)	2012			2011
Operating Revenues
Water	$	65,957		$	64,326
Electric	10,813			10,724
Contracted services	29,878			19,257
Total operating revenues	106,648			94,307

Operating Expenses
Water purchased	9,552			8,661
Power purchased for pumping	1,556			1,536
Groundwater production assessment	3,323			2,626
Power purchased for resale	3,191			3,875
Supply cost balancing accounts	3,437			5,079
Other operation expenses	7,426			6,917
Administrative and general expenses	16,585			18,419
Depreciation and amortization	10,490			9,737
Maintenance	3,331			3,726
Property and other taxes	4,105			3,552
ASUS construction expenses	20,285			12,184
Total operating expenses	83,281			76,312

Operating Income	23,367			17,995

Other Income and Expenses
Interest expense	(6,070		)	(5,744		)
Interest income	215			137
Other	229			80
Total other income and expenses	(5,626		)	(5,527		)

Income from continuing operations before income tax expense	17,741			12,468
Income tax expense	7,626			5,513
Income from continuing operations	10,115			6,955

Income from discontinued operations, net of tax	—			634

Net Income	$	10,115		$	7,589

Basic Earnings Per Common Share
Income from continuing operations	$	0.53		$	0.37
Income from discontinued operations	—			0.03
Net Income	$	0.53		$	0.40

Fully Diluted Earnings Per Share
Income from continuing operations	$	0.53		$	0.37
Income from discontinued operations	—			0.03
Net Income	$	0.53		$	0.40

Weighted Average Number of Shares Outstanding	18,831			18,648
Weighted Average Number of Diluted Shares	18,973			18,778

Dividends Declared Per Common Share	$	0.28		$	0.26

The accompanying notes are an integral part of these consolidated financial statements

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AMERICAN STATES WATER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Unaudited)

	Three Months Ended March 31,
(in thousands)	2012			2011
Cash Flows From Operating Activities:
Net income	$	10,115		$	7,589
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,490			9,718
Provision for doubtful accounts	653			238
Deferred income taxes and investment tax credits	(2		)	(3,322		)
Stock-based compensation expense	542			402
Other — net	(140		)	(120		)
Changes in assets and liabilities:
Accounts receivable — customers	911			609
Unbilled revenue	(781		)	(1,584		)
Other accounts receivable	1,989			(1,410		)
Receivable from the U.S. government	(5,110		)	(4,734		)
Materials and supplies	(1,727		)	(281		)
Prepayments and other current assets	(1,480		)	1,086
Regulatory assets — supply cost balancing accounts	3,437			5,079
Costs and estimated earnings in excess of billings on uncompleted contracts	(1,362		)	1,442
Other assets (including other regulatory assets)	(5,120		)	(3,482		)
Accounts payable	2,745			89
Income taxes receivable/payable	7,603			5,193
Billings in excess of costs and estimated earnings on uncompleted contracts	(1,154		)	18
Accrued pension and other postretirement benefits	3,145			2,292
Other liabilities	1,836			1,937
Net cash provided	26,590			20,759

Cash Flows From Investing Activities:
Construction expenditures	(14,967		)	(17,474		)
Net cash used	(14,967		)	(17,474		)

Cash Flows From Financing Activities:
Proceeds from issuance of Common Shares and stock option exercises	1,403			455
Receipt of advances for and contributions in aid of construction	538			1,187
Refunds on advances for construction	(499		)	(921		)
Repayments of long-term debt	(65		)	(70		)
Net change in notes payable to banks	(2,000		)	—
Dividends paid	(5,277		)	(4,849		)
Other — net	(480		)	(292		)
Net cash used	(6,380		)	(4,490		)
Net increase in cash and cash equivalents	5,243			(1,205		)
Cash and cash equivalents, beginning of period	1,315			5,494
Cash and cash equivalents, end of period	6,558			4,289
Less cash and cash equivalents of discontinued operations	—			1,918
Cash and cash equivalents of continuing operations	$	6,558		$	2,371

The accompanying notes are an integral part of these consolidated financial statements

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GOLDEN STATE WATER COMPANY
BALANCE SHEETS
ASSETS
(Unaudited)

(in thousands)	March 31, 2012			December 31, 2011
Utility Plant
Utility plant, at cost	$	1,312,620		$	1,302,589
Less - Accumulated depreciation	(419,561		)	(410,644		)
Net utility plant	893,059			891,945

Other Property and Investments	9,794			9,626

Current Assets
Cash and cash equivalents	4,595			—
Accounts receivable-customers (less allowance for doubtful accounts of $753 in 2012 and $715 in 2011)	18,869			20,399
Unbilled revenue	16,969			16,188
Inter-company receivable	1,287			785
Other accounts receivable (less allowance for doubtful accounts of $290 in 2012 and 2011)	6,062			7,755
Income taxes receivable from Parent	14,154			19,914
Materials and supplies, at average cost	2,003			1,926
Regulatory assets — current	36,213			36,362
Prepayments and other current assets	4,983			3,710
Deferred income taxes — current	8,798			8,497
Total current assets	113,933			115,536

Regulatory and Other Assets
Regulatory assets	144,470			143,595
Other accounts receivable	1,988			1,838
Other	10,672			10,843
Total regulatory and other assets	157,130			156,276

Total Assets	$	1,173,916		$	1,173,383

The accompanying notes are an integral part of these financial statements

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GOLDEN STATE WATER COMPANY
BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)

(in thousands)	March 31, 2012		December 31, 2011
Capitalization
Common shares, no par value	$	228,962	$	228,936
Earnings reinvested in the business	158,229		155,870
Total common shareholder’s equity	387,191		384,806
Long-term debt	340,374		340,395
Total capitalization	727,565		725,201

Current Liabilities
Long-term debt — current	247		291
Accounts payable	26,073		31,227
Accrued employee expenses	9,339		7,544
Accrued interest	6,430		3,938
Unrealized loss on purchased power contracts	7,506		7,611
Other	13,673		16,162
Total current liabilities	63,268		66,773

Other Credits
Advances for construction	75,563		75,353
Contributions in aid of construction — net	99,763		100,037
Deferred income taxes	128,489		128,815
Unamortized investment tax credits	1,950		1,972
Accrued pension and other postretirement benefits	70,518		68,353
Other	6,800		6,879
Total other credits	383,083		381,409

Commitments and Contingencies (Note 8)	—		—

Total Capitalization and Liabilities	$	1,173,916	$	1,173,383

The accompanying notes are an integral part of these financial statements

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GOLDEN STATE WATER COMPANY
STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED MARCH 31, 2012 AND 2011
(Unaudited)

	Three Months Ended March 31,
(in thousands)	2012			2011
Operating Revenues
Water	$	65,957		$	64,326
Electric	10,813			10,724
Total operating revenues	76,770			75,050

Operating Expenses
Water purchased	9,552			8,661
Power purchased for pumping	1,556			1,536
Groundwater production assessment	3,323			2,626
Power purchased for resale	3,191			3,875
Supply cost balancing accounts	3,437			5,079
Other operating expenses	6,649			5,714
Administrative and general expenses	13,452			14,862
Depreciation and amortization	10,220			9,516
Maintenance	2,940			2,984
Property and other taxes	3,743			3,159
Total operating expenses	58,063			58,012

Operating Income	18,707			17,038

Other Income and Expenses
Interest expense	(6,009		)	(5,613		)
Interest income	210			135
Other	229			78
Total other income and expenses	(5,570		)	(5,400		)

Income from operations before income tax expense	13,137			11,638

Income tax expense	5,755			5,236

Net Income	$	7,382		$	6,402

The accompanying notes are an integral part of these financial statements

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GOLDEN STATE WATER COMPANY
STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011
(Unaudited)

	Three Months Ended March 31,
(in thousands)	2012			2011
Cash Flows From Operating Activities:
Net income	$	7,382		$	6,402
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,220			9,516
Provision for doubtful accounts	619			225
Deferred income taxes and investment tax credits	(5		)	(3,480		)
Stock-based compensation expense	341			315
Other — net	(174		)	(113		)
Changes in assets and liabilities:
Accounts receivable — customers	911			520
Unbilled revenue	(781		)	(1,526		)
Other accounts receivable	1,543			1,729
Materials and supplies	(77		)	(134		)
Prepayments and other current assets	(1,273		)	950
Regulatory assets — supply cost balancing accounts	3,437			5,079
Other assets (including other regulatory assets)	(5,038		)	(3,628		)
Accounts payable	(2,633		)	(1,516		)
Inter-company receivable/payable	(502		)	157
Income taxes receivable/payable from/to Parent	5,760			4,238
Accrued pension and other postretirement benefits	3,145			2,292
Other liabilities	1,614			1,380
Net cash provided	24,489			22,406

Cash Flows From Investing Activities:
Construction expenditures	(14,479		)	(16,822		)
Net cash used	(14,479		)	(16,822		)

Cash Flows From Financing Activities:
Receipt of advances for and contributions in aid of construction	538			1,187
Refunds on advances for construction	(499		)	(910		)
Repayments of long-term debt	(65		)	(70		)
Net change in inter-company borrowings	—			(1,000		)
Dividends paid	(5,000		)	(5,000		)
Other — net	(389		)	(237		)
Net cash used	(5,415		)	(6,030		)

Net increase in cash and cash equivalents	4,595			(446		)
Cash and cash equivalents, beginning of period	—			1,541
Cash and cash equivalents, end of period	$	4,595		$	1,095

The accompanying notes are an integral part of these financial statements

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AMERICAN STATES WATER COMPANY AND SUBSIDIARIES

AND

GOLDEN STATE WATER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 — Summary of Significant Accounting Policies:

Nature of Operations: American States Water Company (“AWR”) is the parent company of Golden State Water Company (“GSWC”) and American States Utility Services, Inc. (“ASUS”) (and its subsidiaries, Fort Bliss Water Services Company (“FBWS”), Terrapin Utility Services, Inc. (“TUS”), Old Dominion Utility Services, Inc. (“ODUS”), Palmetto State Utility Services, Inc. (“PSUS”) and Old North Utility Services, Inc. (“ONUS”)). The subsidiaries of ASUS may be collectively referred to herein as the “Military Utility Privatization Subsidiaries.” AWR was also the parent company of Chaparral City Water Company (“CCWC”) until the completion of the sale of CCWC to EPCOR Water (USA) Inc. on May 31, 2011.

GSWC is a public utility engaged principally in the purchase, production, distribution and sale of water in California serving approximately 256,000 customers. GSWC also distributes electricity in several San Bernardino Mountain communities in California serving approximately 23,000 customers. The California Public Utilities Commission (“CPUC”) regulates GSWC’s water and electric businesses, including properties, rates, services, facilities and other matters. AWR’s assets and operating income are primarily those of GSWC.

ASUS performs water and wastewater services, including the operation, maintenance, renewal and replacement of water and/or wastewater systems on a contract basis. Through its wholly owned subsidiaries, ASUS operates and maintains the water and/or wastewater systems at various military bases pursuant to 50-year firm, fixed-price contracts, which are subject to periodic price redeterminations and modifications for changes in circumstances, and changes in laws and regulations. There is no direct regulatory oversight by the CPUC over AWR or the operation, rates or services provided by ASUS or any of its wholly owned subsidiaries.

Basis of Presentation: The consolidated financial statements and notes thereto are being presented in a combined report being filed by two separate Registrants: AWR and GSWC. References in this report to “Registrant” are to AWR and GSWC, collectively, unless otherwise specified. Certain prior period amounts have been reclassified to conform to the 2012 financial statement presentation.

The consolidated financial statements of AWR include the accounts of AWR and its subsidiaries, all of which are wholly owned. These financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. Inter-company transactions and balances have been eliminated in the AWR consolidated financial statements. The operational results of CCWC for the periods presented are reported in discontinued operations, net of transaction costs.

The consolidated financial statements included herein have been prepared by Registrant, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The December 31, 2011 condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. The preparation of the consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal, recurring items and estimates necessary for a fair statement of the results for the interim periods, have been made. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2011 filed with the SEC.

GSWC’s Related Party Transactions: GSWC and other subsidiaries provide and receive various services to and from their parent, AWR, and among themselves. In addition, AWR has a $100.0 million syndicated credit facility. AWR borrows under this facility and provides funds to its subsidiaries, including GSWC, in support of their operations. Any amounts owed to AWR for borrowings under this facility are included in inter-company payables on GSWC’s balance sheet. The interest rate charged to GSWC and other affiliates is sufficient to cover AWR’s interest cost under the credit facility. GSWC also allocates certain corporate office administrative and general costs to its affiliate, ASUS, using allocation factors mandated by the CPUC. Through May 31, 2011, GSWC also allocated costs to CCWC.

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Sales and Use Taxes: GSWC bills certain sales and use taxes levied by state or local governments to its customers. Included in these sales and use taxes are franchise fees, which GSWC pays to various municipalities (based on ordinances adopted by these municipalities) in order to use public right of way for utility purposes. GSWC bills these franchise fees to its customers based on a CPUC-authorized rate. These franchise fees, which are required to be paid regardless of GSWC’s ability to collect from the customer, are accounted for on a gross basis. GSWC’s franchise fees billed to customers and recorded as operating revenue were approximately $784,000 and $700,000 for the three months ended March 31, 2012 and 2011, respectively. When GSWC acts as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis.

Depending on the state in which the operations are conducted, ASUS and its subsidiaries are also subject to certain state non-income tax assessments generally computed on a “gross receipts” or “gross revenues” basis. These non-income tax assessments are required to be paid regardless of whether the subsidiary is reimbursed by the U.S. government for these assessments under its 50-year contracts with the U.S. government. The non-income tax assessments are accounted for on a gross basis and totaled $155,000 and $194,000 during the three months ended March 31, 2012 and 2011, respectively.

Recently Adopted Accounting Pronouncements: In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income (“ASU 2011-05”). Under ASU 2011-05, an entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Under both options, an entity will be required to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. In December 2011, the FASB issued Accounting Standards Update No. 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 (“ASU 2011-12”), which deferred the requirement to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income while the FASB further deliberates this aspect of the proposal. The adoption of the new guidance did not have any impact on Registrant’s consolidated financial statements.

In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment (“ASU 2011-08”). Under ASU 2011-08, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, an entity determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, performing the two-step impairment test is not required. The guidance does not change how an entity measures a goodwill impairment loss, and is therefore not expected to affect the information reported to users of an entity’s financial statements. The guidance also includes examples of events and circumstances that an entity should consider in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of the new guidance did not have any impact on Registrant’s consolidated financial statements.

In December 2011, the FASB issued Accounting Standards Update No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). The ASU 2011-11 amendments require companies to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 is required to be applied retrospectively for all prior periods presented and is effective for annual periods for fiscal years beginning on or after January 1, 2013, and interim periods within those annual fiscal years. Registrant does not expect adoption of this standard to have a material impact on its consolidated results of operations and financial condition.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on Registrant’s consolidated financial statements upon adoption.

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Note 2 — Regulatory Matters:

In accordance with accounting principles for rate-regulated enterprises, Registrant records regulatory assets, which represent probable future recovery of costs from customers through the ratemaking process, and regulatory liabilities, which represent probable future refunds that are to be credited to customers through the ratemaking process. At March 31, 2012, Registrant had approximately $84.3 million of regulatory assets, net of regulatory liabilities not accruing carrying costs. Of this amount, $53.9 million relates to the underfunded positions of the pension and other post-retirement obligations, $16.4 million relates to deferred income taxes representing accelerated tax benefits flowed through to customers, which will be included in rates concurrently with recognition of the associated future tax expense, and $7.5 million relates to a memorandum account authorized by the CPUC to track unrealized gains and losses on GSWC’s purchase power contract over the life of the contract. The remainder relates to other items that do not provide for or incur carrying costs. Regulatory assets, less regulatory liabilities, included in the consolidated balance sheets are as follows:

(dollars in thousands)	March 31, 2012			December 31, 2011
GSWC
Electric supply cost balancing account	$	6,987		$	8,347
Water Revenue Adjustment Mechanism, net of Modified Cost Balancing Account	40,561			39,112
Base Revenue Requirement Adjustment Mechanism	4,477			4,053
Costs deferred for future recovery on Aerojet case	16,935			17,173
Pensions and other post-retirement obligations	56,546			56,960
Derivative unrealized loss (Note 4)	7,506			7,611
Flow-through taxes, net (Note 6)	16,388			17,032
Electric transmission line abandonment costs	2,372			2,428
Asset retirement obligations	2,794			2,793
Low income rate assistance balancing accounts	7,017			6,194
General rate case memorandum accounts	11,284			12,922
Santa Maria adjudication memorandum accounts	3,689			3,662
Bay Point balancing accounts	5,619			5,752
Other regulatory assets, net	9,462			8,409
Various refunds to customers	(10,954		)	(12,491		)
Total	$	180,683		$	179,957

Regulatory matters are discussed in detail in the consolidated financial statements and the notes thereto included in the Form 10-K for the year ended December 31, 2011 filed with the SEC. The discussion below focuses on significant matters and changes since December 31, 2011. Changes in regulatory assets since December 31, 2011 were due primarily to surcharges in place during the three months ended March 31, 2012 designed to recover the costs from customers through the ratemaking process. Changes in regulatory liabilities were due primarily to refunds made to customers during the three months ended March 31, 2012 through the ratemaking process.

Alternative-Revenue Programs:

GSWC records the difference between what it bills its water customers and that which is authorized by the CPUC using the Water Revenue Adjustment Mechanism (“WRAM”) and Modified Cost Balancing Account (“MCBA”) accounts approved by the CPUC. GSWC has implemented surcharges to recover its WRAM balances, net of the MCBA. For the three months ended March 31, 2012 and 2011, surcharges of $3.4 million and $1.6 million, respectively, were billed to customers to decrease previously incurred under-collections in the WRAM, net of MCBA, accounts. As of March 31, 2012, GSWC has a net aggregated regulatory asset of $40.6 million which is comprised of a $62.2 million under-collection in the WRAM accounts and $21.6 million over-collection in the MCBA accounts.

Based on CPUC guidelines, recovery periods relating to GSWC’s WRAM/MCBA balances range between 12 and 36 months, with the majority being 24 months. As required by the accounting guidance for alternative revenue programs, GSWC is required to collect its WRAM, net of its MCBA, within 24 months following the year in which they are recorded. In September 2010, GSWC, along with other California water utilities, filed an application with the CPUC to modify the recovery period of its WRAM and MCBA to 18 months or less. In April 2012, the CPUC issued a final decision which, among other things, sets the recovery period for under-collection balances that are up to 15% of adopted annual revenues at 18 months or less. For under-collection balances greater than 15%, the recovery period is 19 to 36 months. GSWC does not currently have any balances over 15% of adopted annual revenues. In addition to adopting a new amortization schedule, the final decision sets a cap on total net WRAM/MCBA surcharges in any given calendar year of 10% of the last authorized revenue requirement. The cap shall be effective following the first test year of each applicant’s pending or next general rate case. For GSWC, the cap will be applied to its 2013 WRAM balances filed in early 2014. The cap requirement set forth in the final decision will not impact GSWC’s 2012 and prior year WRAM/MCBA balances. Surcharges are currently in place to recover the WRAM/MCBA balances from 2009, 2010 and 2011, totaling approximately $60 million, of which $24 million has been collected through the end of March 31, 2012.

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In April 2012, BVES filed with the CPUC for recovery of its 2011 Base Revenue Requirement Adjustment Mechanism (“BRRAM”) balance. The filing requests a 36-month surcharge, with the amounts collected through December 2013 to be applied to the BRRAM under-collections. The amount collected during the remainder of the 36-month period would be for recovery of a $1.6 million increase in the BVES revenue requirement representing the difference between the allocated general office costs authorized by the CPUC in its November 2010 decision on the Region II, Region III and general office rate case, and what is currently in BVES’ rates for allocated general office costs. As authorized by the CPUC, the $1.6 million has also been included in the BRRAM for recovery through the requested surcharge; however, these costs are not considered an alternative revenue program. A decision on the BRRAM filing is expected by the end of the second quarter of 2012.

Other Regulatory Matters:

La Serena Plant Improvement Project:

In January 2008, the CPUC approved Region I’s general rate case effective for years 2008, 2009 and 2010. The rates authorized by the CPUC in the decision included the costs of the La Serena plant improvement project as part of the utility rate base. Subsequent to the issued decision, the CPUC’s Division of Ratepayer Advocates (“DRA”) requested a rehearing on whether these costs were reasonable. The CPUC granted a limited rehearing, which was consolidated into GSWC’s Region II, Region III, and general office rate case, in order to consider whether it is reasonable to include in Region I’s rate base approximately $3.5 million of costs incurred in connection with the La Serena Plant Improvement Project. In November 2010, as part of GSWC’s Region II, Region III and general office rate case decision, the CPUC disallowed a portion of the La Serena plant improvement costs from utility customer rates. The CPUC found that the disallowed portion of the costs were attributable to providing service to new development and should have been recovered from the customers in the new development. As a result of the CPUC’s decision, in 2010 GSWC recorded a charge of $2.2 million, which included the disallowance of certain capital costs for the La Serena Plant Improvement Project and the related revenues earned on those capital costs that will be refunded to customers.

In December 2010, DRA filed a motion for rehearing on this matter, contending that the CPUC erred in assigning a portion of the La Serena plant improvement costs to GSWC utility customers and requested that all of the capital costs related to the La Serena plant improvement project be disallowed. In July 2011, the CPUC granted DRA’s request for rehearing. The rehearing will also address deferred rate case costs and the methodology for allocation of general office costs to GSWC’s affiliate, ASUS. Hearings on these matters are expected in the third or fourth quarter of 2012. At this time, management cannot predict the outcome of the rehearing or determine the estimated loss or range of loss, if any.

Changes in Tax Law:

The Small Business Jobs Act of 2010 and the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (“Tax Relief Acts”) extended 50% bonus depreciation for qualifying property through 2012 and created 100% bonus depreciation for qualifying property placed in service between September 9, 2010 and December 31, 2011.

In June 2011, the CPUC adopted a resolution that requires water utilities to file advice letters implementing a one-way memorandum account to track the revenue effects associated with the Tax Relief Acts, which may reduce revenue requirements in future rate case proceedings. The effective date of the memorandum account established by the resolution is April 14, 2011. More specifically, the memorandum account established by the resolution tracks on a CPUC-jurisdictional, revenue requirement basis: (a) decreases in each impacted utility’s revenue requirement resulting from increases in its deferred tax reserve; and (b) other direct changes in the revenue requirement resulting from taking advantage of the Tax Relief Acts. This resolution also authorizes impacted utilities to use savings from this new tax law to invest in certain additional, needed utility infrastructure, not otherwise funded in rates, within a time frame shorter than would be practicable through the formal application or advice letter processes. The establishment of a memorandum account does not change rates, nor guarantee that rates will be changed in the future. This mechanism simply allows the CPUC to determine at a future date whether rates should be changed. GSWC has evaluated the potential impact of this resolution and does not expect it to have a material impact on its consolidated financial statements in 2012.

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Renewables Portfolio Standard

GSWC’s BVES division has been regularly filing compliance reports with the CPUC regarding its purchases of energy from renewable energy resources. The filings have indicated that BVES has not achieved interim target purchase levels of renewable energy resources and thus, on its face, might be subject to a potential penalty. However, BVES expects that the CPUC will waive any potential fines in accordance with the CPUC’s flexible compliance rules due to its efforts to procure renewable resources. Accordingly, no provision for loss has been recorded in the financial statements as of March 31, 2012.

In June 2011, GSWC’s BVES filed an application with the CPUC to recover $1.2 million in legal and outside service costs incurred during the period September 1, 2007 through March 31, 2011 in connection with seeking to procure renewable energy resources. In March 2012, the CPUC approved the application. Accordingly, a regulatory asset of $1.3 million, including accrued interest, was recorded in March 2012 and a 12- month surcharge will be implemented during the second quarter of 2012.

CPUC Subpoena

On June 27, 2011 GSWC executed a settlement agreement with the Division of Water and Audits (“DWA”) to resolve an investigation of certain work orders and charges paid to a specific contractor used previously by GSWC for numerous construction projects estimated to total $24.0 million over a period of 14 years. On December 15, 2011, the CPUC approved the settlement agreement. Among other things, the settlement resolves all disputes and disagreements between GSWC and DWA and generally releases GSWC from any claim, known or unknown, foreseen or unforeseen, that arose or may have arisen as a result of the CPUC staff’s investigation into GSWC’s procurement practices as they related to contracts with this specific contractor. The settlement provides for refunds to customers totaling $9.5 million to be made over a period of 12-36 months, as well as a reduction in rate-base and other rate adjustments totaling $3.0 million. In addition, a penalty of $1.0 million was imposed due to GSWC’s failure to disclose the issue to the CPUC as the CPUC believes was required. The penalty was paid by GSWC to the CPUC on January 31, 2012. During 2010, in anticipation of this settlement agreement, GSWC recorded a $13.5 million loss contingency reserve. As a result of the settlement, management does not expect future increases in the reserve related to this specific contractor. The surcredits went into effect on March 1, 2012. Refunds totaling $147,000 were made to customers during the three months ended March 31, 2012.

Finally, as part of the settlement agreement, GSWC agreed to be subject to three separate independent audits of its procurement practices over a period of ten years from the date the settlement was approved by the CPUC. The audits will cover GSWC’s procurement practices from 1994 forward and could result in further disallowances of costs. The cost of the audits will be borne by shareholders and may not be recovered by GSWC in rates to customers. At this time, management cannot predict the outcome of these audits or determine the estimated loss or range of loss, if any, resulting from these audits.

Note 3 — Earnings per Share/Capital Stock:

In accordance with the accounting guidance for participating securities and earnings per share (“EPS”), Registrant uses the “two-class” method of computing EPS. The “two-class” method is an earnings allocation formula that determines EPS for each class of common stock and participating security. AWR has participating securities related to stock options and restricted stock units that earn dividend equivalents on an equal basis with AWR’s Common Shares (the “Common Shares”) that have been issued under AWR’s 2000 Stock Incentive Plan and 2008 Stock Incentive Plan (the “2000 and 2008 Employee Plans”) and the 2003 Non-Employee Directors Plan (the “2003 Directors Plan”). In applying the “two-class” method, undistributed earnings are allocated to both common shares and participating securities.

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The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating basic net income per share:

Basic	For The Three Months Ended March 31,
(in thousands, except per share amounts)	2012		2011
Net income from continuing operations	$	10,115	$	6,955
Net income from discontinued operations	—		634
Total net income	10,115		7,589
Less: (a) Distributed earnings to common shareholders	5,273		4,849
Distributed earnings to participating securities	35		29
Undistributed earnings	4,807		2,711

(b) Undistributed earnings allocated to common shareholders	4,775		2,694
Undistributed earnings allocated to participating securities	32		17

Total income available to common shareholders, basic (a)+(b)	$	10,048	$	7,543

Weighted average Common Shares outstanding, basic	18,831		18,648

Basic earnings per Common Share:
Income from continuing operations	$	0.53	$	0.37
Income from discontinued operations	—		0.03
Net Income	$	0.53	$	0.40

Diluted EPS is based upon the weighted average number of Common Shares, including both outstanding shares and shares potentially issuable in connection with stock options granted under Registrant’s 2000 and 2008 Employee Plans, and the 2003 Directors Plan, and net income. At March 31, 2012 and 2011, there were 566,406 and 717,898 options outstanding, respectively, under these Plans. At March 31, 2012 and 2011, there were also 147,078 and 131,762 restricted stock units outstanding, respectively.

The following is a reconciliation of Registrant’s net income and weighted average Common Shares outstanding for calculating diluted net income per share:

Diluted	For The Three Months Ended March 31,
(in thousands, except per share amounts)	2012		2011
Common shareholders earnings, basic	$	10,048	$	7,543
Undistributed earnings for dilutive stock options	32		17
Total common shareholders earnings, diluted	$	10,080	$	7,560

Weighted average common shares outstanding, basic	18,831		18,648
Stock-based compensation (1)	142		130
Weighted average common shares outstanding, diluted	18,973		18,778

Diluted earnings per Common Share:
Income from continuing operations	$	0.53	$	0.37
Income from discontinued operations	—		0.03
Net Income	$	0.53	$	0.40

(1) In applying the treasury stock method of reflecting the dilutive effect of outstanding stock-based compensation in the calculation of diluted EPS, 456,318 and 290,932 stock options at March 31, 2012 and 2011, respectively, were deemed to be outstanding in accordance with accounting guidance on earnings per share. All of the 147,078 and 131,762 restricted stock units at March 31, 2012 and 2011, respectively, were included in the calculation of diluted EPS for the three months ended March 31, 2012 and 2011.

Stock options of 110,013 and 336,625 were outstanding at March 31, 2012 and 2011, respectively, but not included in the computation of diluted EPS because the related option exercise price was greater than the average market price of AWR’s Common Shares for the three months ended March 31, 2012 and 2011. Stock options of 75 and 90,341 were outstanding at March 31, 2012 and 2011, respectively, but not included in the computation of diluted EPS because they were anti-dilutive.

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During the three months ended March 31, 2012 and 2011, Registrant issued 69,512 and 26,551 Common Shares, for approximately $1,403,000 and $455,000, respectively, under Registrant’s Common Share Purchase and Dividend Reinvestment Plan, the 401(k) Plan, the 2000 and 2008 Employee Plans, and the 2003 Directors Plan. In addition, Registrant purchased 221,932 and 72,238 Common Shares on the open market during the three months ended March 31, 2012 and 2011, respectively, under Registrant’s 401(k) Plan and the Common Share Purchase and Dividend Reinvestment Plan. The Common Shares purchased by Registrant were used to satisfy the requirements of these plans.

During the three months ended March 31, 2012 and 2011, AWR paid quarterly dividends of approximately $5.3 million, or $0.28 per share, and $4.8 million, or $0.26 per share, respectively.

Note 4 — Derivative Instruments:

GSWC purchases certain power at a fixed cost depending on the amount of power and the period during which the power is purchased under a purchased power contract. The contract is subject to the accounting guidance for derivatives and requires mark-to-market derivative accounting. The CPUC has authorized GSWC to establish a regulatory asset and liability memorandum account to offset the entries required by the accounting guidance. Accordingly, all unrealized gains and losses generated from the purchased power contract are deferred on a monthly basis into a non-interest bearing regulatory memorandum account that tracks the changes in fair value of the derivative throughout the term of the contract, having no impact on GSWC’s earnings. Upon expiration of the purchased power contract, the balance in this regulatory memorandum account will be zero.

As of March 31, 2012 there was a $7.5 million cumulative unrealized loss which has been included in the memorandum account.

On January 12, 2012, GSWC executed a new purchased power master agreement. The agreement is subject to CPUC approval. If approved, GSWC will be able to purchase 12 megawatts (“MWs”) of base load energy at a fixed price to be negotiated upon CPUC approval of the agreement. GSWC plans to file for approval of the agreement with the CPUC in 2012. GSWC also intends to request CPUC approval of a regulatory asset and liability memorandum account for the new contract to offset the entries required by the accounting guidance on derivatives.

The accounting guidance for fair value measurements applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. Under the accounting guidance, GSWC makes fair value measurements that are classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability, or

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Registrant’s valuation model utilizes various inputs that include quoted market prices for energy over the duration of the contract. The market prices used to determine the fair value for this derivative instrument were estimated based on independent sources such as broker quotes and publications that are not observable in or corroborated by the market. Registrant receives one broker quote to determine the fair value of its derivative instrument. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized in Level 3. Accordingly, the valuation of the derivative on Registrant’s purchased power contract has been classified as Level 3 for all periods presented.

The following table presents changes in the fair value of the derivative for the three months ended March 31, 2012 and 2011.

	For the Three Months Ended March 31,
(dollars in thousands)	2012			2011
Balance, at beginning of the period	$	(7,611	)	$	(6,850	)
Unrealized gain (loss) on purchased power contracts	105			(24		)
Balance, at end of the period	$	(7,506	)	$	(6,874	)

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Note 5 — Fair Value of Financial Instruments:

For cash and cash equivalents, accounts receivable, accounts payable and short-term debt, the carrying amount is assumed to approximate fair value due to the short-term nature of the amounts. The table below estimates the fair value of long-term debt held by GSWC. Rates available to GSWC at March 31, 2012 and December 31, 2011 for debt with similar terms and remaining maturities were used to estimate fair value for long-term debt. The interest rates used for the March 31, 2012 valuation increased as compared to December, 31, 2011, reducing the fair value of long-term debt as of March 31, 2012. Changes in the assumptions will produce differing results.

	March 31, 2012				December 31, 2011
(dollars in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial liabilities:
Long-term debt—GSWC	$	340,621	$	395,737	$	340,686	$	437,275

As previously discussed in Note 4, the accounting guidance for fair value measurements establishes a framework for measuring fair value and requires fair value measurements to be classified and disclosed in one of three levels. The following tables set forth by level, within the fair value hierarchy, GSWC’s long-term debt measured at fair value as of March 31, 2012 (dollars in thousands):

	Level 1		Level 2		Level 3	Total
Long-term debt—GSWC	$	245,305	$	150,432	—	$	395,737

Note 6 — Income Taxes:

As a regulated utility, GSWC treats certain temporary differences as flow-through adjustments in computing its income tax provision consistent with the income tax approach approved by the CPUC for ratemaking purposes. Flow-through adjustments increase or decrease tax expense in one period, with an offsetting decrease or increase occurring in another period. Giving effect to these temporary differences as flow-through adjustments typically results in a greater variance between the effective tax rate (“ETR”) and the statutory federal income tax rate in any given period than would otherwise exist if GSWC were not required to account for its income taxes as a regulated enterprise. The GSWC ETRs deviated from the statutory rate primarily due to state taxes and differences between book and taxable income that are treated as flow-through adjustments in accordance with regulatory requirements (principally plant-, rate-case- and compensation-related items), as well as nondeductible permanent items.

Changes in Tax Law:

The Tax Relief Acts extended bonus depreciation for qualifying property through 2012. As a result, Registrant’s current tax expense for 2011 and 2012 reflects benefits from the Tax Relief Acts. Although these law changes reduce AWR’s current taxes payable, they do not reduce its total income tax expense or ETR.

Note 7 — Employee Benefit Plans:

The components of net periodic benefit costs, before allocation to the overhead pool, for Registrant’s pension plan, postretirement plan, and Supplemental Executive Retirement Plan (“SERP”) for the three months ended March 31, 2012 and 2011 are as follows:

	Pension Benefits						Other Postretirement Benefits						SERP
(dollars in thousands)	2012			2011			2012			2011			2012		2011
Components of Net Periodic Benefits Cost:
Service cost	$	1,719		$	1,383		$	112		$	107		$	183	$	150
Interest cost	1,676			1,623			136			153			122		116
Expected return on plan assets	(1,636		)	(1,586		)	(90		)	(74		)	—		—
Amortization of transition	—			—			105			105			—		—
Amortization of prior service cost (benefit)	30			30			(50		)	(50		)	40		40
Amortization of actuarial loss	778			298			—			—			77		34
Net periodic pension cost under accounting standards	2,567			1,748			213			241			422		340
Regulatory adjustment — deferred	(566		)	(92		)	—			—			—		—
Total expense recognized, before allocation to overhead pool	$	2,001		$	1,656		$	213		$	241		$	422	$	340

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Registrant expects to contribute approximately $6.1 million and $500,000 to the pension and postretirement medical plans in 2012, respectively. No contributions were made to these plans during the three months ended March 31, 2012. In April 2012, Registrant contributed $1.8 million to the pension plan.

Regulatory Adjustment:

In November 2010, the CPUC authorized GSWC to establish a two-way balancing account, effective January 1, 2010, for its three water regions and the general office to track differences between the forecasted annual pension expenses adopted in rates for 2010, 2011 and 2012 and the actual annual expense to be recorded by GSWC in accordance with the accounting guidance for pension costs. As of March 31, 2012, GSWC has included a $2.6 million under-collection in the two-way pension balancing account recorded as a regulatory asset (Note 2).

Note 8 — Contingencies:

Water Quality-Related Litigation:

Perchlorate and/or Volatile Organic Compounds (“VOC”) have been detected in certain wells servicing GSWC’s South San Gabriel System. GSWC filed suit in federal court, along with two other affected water purveyors and the San Gabriel Basin Water Quality Authority, together known as the “Water Entities”, against some of those allegedly responsible for the contamination of two of GSWC’s wells and those of the other affected water purveyors. In response to the filing of the lawsuit, the Potentially Responsible Party (“PRP”) defendants filed motions to dismiss the suit or strike certain portions of the suit. The judge issued a ruling on April 1, 2003 granting in part and denying in part the PRP’s motions. A key ruling of the court was that the water purveyors, including GSWC, by virtue of their ownership of wells contaminated with hazardous chemicals are themselves PRPs under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). GSWC has amended its suit to claim certain affirmative defenses as an “innocent” party under CERCLA. GSWC is presently unable to predict an estimate range of loss, if any, in the event that GSWC is deemed to be a PRP, or on GSWC’s ability to fully recover from the PRPs, past and future costs associated with the treatment of these wells. On August 29, 2003, the US Environmental Protection Agency (“EPA”) issued Unilateral Administrative Orders (“UAO”) against 41 parties deemed responsible for polluting the groundwater in portions of the San Gabriel Valley from which those impacted GSWC wells draw water. The UAO requires these parties to remediate the contamination.

On October 12, 2004, the judge in the lawsuit stayed the matter in order to allow the parties to explore settlement and appointed a special master to oversee mandatory settlement discussions between the PRPs and the Water Entities. EPA has also conducted settlement discussions with several PRPs regarding the UAO. The Water Entities and EPA have worked closely to coordinate their settlement discussions under the auspices of the special master in order to arrive at a complete resolution of all issues affecting the lawsuit and the UAO. Settlements have been reached with a majority of the PRPs.

On March 28, 2011, the Court lifted the stay and the matter has proceeded in litigation. The EPA filed a separate complaint against the remaining PRPs and their matter was consolidated with those filed by the Water Entities. Since October 17, 2011 several 30-day stays were granted to continue settlement discussions. During these 30-day stays, EPA and the Water Entities have successfully reached settlements with most of the remaining PRPs. On January 15, 2012, the stay was lifted and the case entered discovery phase as settlement negotiations with the remaining few PRPs are progressing. Registrant believes it will reach settlements with all the PRPs. However, Registrant is presently unable to predict the ultimate outcome of this matter.

Condemnation of Properties:

The laws of the State of California provide for the acquisition of public utility property by governmental agencies through their power of eminent domain, also known as condemnation, where doing so is necessary and in the public interest. In addition, these laws provide: (i) that the owner of utility property may contest whether the condemnation is actually necessary and in the public interest, and (ii) that the owner is entitled to receive the fair market value of its property if the property is ultimately taken.

Although the City of Claremont, California (the “City”) located in GSWC’s Region III, has not initiated the formal condemnation process pursuant to California law, the City has expressed various concerns to GSWC about rates charged by GSWC and the effectiveness of the CPUC’s rate-setting procedures. On January 5, 2012, the Claremont City council members directed staff to pursue analysis required for potential acquisition of the water system and allocated funds from its general reserve for such analysis. GSWC serves approximately 11,000 customers in Claremont.

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The Town of Apple Valley (the “Town”) abandoned its activities related to a potential condemnation of GSWC’s water system serving the Town in 2007. However, in January 2011, the Town Council directed staff to update the previously prepared financial feasibility study for the acquisition of GSWC’s water systems. The Town also created a Blue Ribbon Water Commission (“BRWC”) to provide recommendations on the items pending before the CPUC associated with the two water companies (including GSWC) serving the Town. The BRWC recommended against acquisition at this time based on current economic conditions. The Town has not yet made a decision based on the recommendation. GSWC’s Apple Valley water systems serve approximately 2,900 customers.

In April 2011, an organization called Ojai FLOW (Friends of Locally Owned Water) started a local campaign for the Casitas Municipal Water District to purchase GSWC’s Ojai water system. The Ojai City Council passed a resolution supporting the efforts of Ojai FLOW at their regular meeting on April 26, 2011. In May 2011, Ojai FLOW submitted a petition with over 1,800 signatures to the Casitas Municipal Water District supporting the recommended acquisition of GSWC’s Ojai water system. The Casitas Municipal Water District’s Water Resources Committee is presently considering the proposal by Ojai FLOW. GSWC serves approximately 3,000 customers in Ojai.

Except for the City of Claremont, Town of Apple Valley and the City of Ojai, Registrant is currently not involved in activities related to the potential condemnation of any of its water customer service areas or in its BVES customer service area. No formal condemnation proceedings have been filed against any of the Registrant’s service areas during the past three years.

Santa Maria Groundwater Basin Adjudication:

In 1997, the Santa Maria Valley Water Conservation District (“plaintiff”) filed a lawsuit against multiple defendants, including GSWC, the City of Santa Maria, and several other public water purveyors. The plaintiff’s lawsuit sought an adjudication of the Santa Maria Groundwater Basin (the “Basin”). A stipulated settlement of the lawsuit has been reached, subject to CPUC approval. The settlement, among other things, if approved by the CPUC, would preserve GSWC’s historical pumping rights and secure supplemental water rights for use in case of drought or other reductions in the natural yield of the Basin. GSWC, under the stipulation, has a right to 10,000 acre-feet of groundwater replenishment provided by the Twitchell Project, a storage and flood control reservoir project operated by the Santa Maria Valley Conservation District. A monitoring and annual reporting program has been established to allow the parties to responsibly manage the Basin and to respond to shortage conditions. If severe water shortage conditions are found over a period of five years, the management area engineer will make findings and recommendations to alleviate such shortages. In the unlikely case that the Basin experiences severe shortage conditions, the court has the authority to limit GSWC’s groundwater production to 10,248 acre-feet per year, based on developed water in the Basin. Over the last five years, GSWC’s average groundwater production has been 10,140 acre-feet per year.

On February 11, 2008, the court issued its final judgment, which approves and incorporates the stipulation. The judgment awards GSWC prescriptive rights to groundwater against the non-stipulating parties. In addition, the judgment grants GSWC the right to use the Basin for temporary storage and to recapture 45 percent of the return flows that are generated from its importation of State Water Project water. Pursuant to this judgment, the court retains jurisdiction over all of the parties to make supplemental orders or to amend the judgment as necessary. On March 20, 2008, the non-stipulating parties filed notices of appeal. In August 2010, the appellants filed their opening briefs. Registrant is unable to predict the outcome of the appeal.

Aerojet Note Receivable:

Pursuant to a settlement agreement with Aerojet relating to groundwater contamination in GSWC’s Rancho Cordova system, GSWC has a note receivable which is scheduled to be paid by Aerojet in installments over five years beginning in December 2009. As of December 31, 2011, GSWC has received from Aerojet a total of $7.3 million including interest as payments under the terms of the 2004 settlement agreement. As of March 31, 2012, the unpaid portion of the note receivable is $4.1 million, comprised of $3.2 million in principal and $0.9 million in accrued interest. At this time, management believes the note receivable from Aerojet is fully collectible and has not provided a reserve for uncollectible amounts as of March 31, 2012.

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Environmental Clean-Up and Remediation:

Chadron Plant: GSWC has been involved in environmental remediation and clean-up at a plant site (“Chadron Plant”) that contained an underground storage tank which was used to store gasoline for its vehicles. This tank was removed from the ground in July 1990 along with the dispenser and ancillary piping. Since then, GSWC has been involved in various remediation activities at this site. Recent site assessments have been conducted which showed that there was more gasoline at higher concentrations spread over a larger area than previously measured. Remediation is estimated to take two more years, followed by at least one year of monitoring and reporting. As of March 31, 2012, the total spent to clean-up and remediate GSWC’s plant facility was approximately $3.5 million, of which $1.5 million has been paid by the State of California Underground Storage Tank Fund. Amounts paid by GSWC have been included in rate-base and approved by the CPUC for recovery.

As of March 31, 2012, GSWC has an accrued liability for the estimated additional cost of $1.2 million to complete the clean-up at the site. The ultimate cost may vary as there are many unknowns in remediation of underground gasoline spills and this is an estimate based on currently available information. Management also believes it is probable that the estimated additional costs will be approved in rate base by the CPUC.

Other Litigation:

Registrant is also subject to other ordinary routine litigation incidental to its business. Management believes that rate recovery, proper insurance coverage and reserves are in place to insure against property, general liability and workers’ compensation claims incurred in the ordinary course of business. Registrant is unable to predict an estimate of the loss, if any, resulting from any pending suits or administrative proceedings.

Note 9 — Discontinued Operations:

On May 31, 2011, AWR sold CCWC to EPCOR Water (USA) Inc. for a total purchase price of $35.2 million, including the assumption of approximately $5.6 million of long-term debt. AWR received approximately $29.6 million in cash, which was used primarily to pay down short-term borrowings. The completion of the sale generated a gain (net of taxes and transaction costs) of approximately $2.2 million during 2011. A summary of discontinued operations presented in the consolidated statements of income for the three months ended March 31, 2011 are as follows (dollars in thousands):

	2011
Operating revenues	$	1,921
Operating expenses	791
Operating income	1,130
Interest expense, net	(83		)
Income before income taxes	1,047
Income tax expense	408
Net income	639
Transaction costs, net of taxes	(5		)
Income from discontinued operations (1)	$	634

(1) Corporate overhead costs allocated to CCWC, totaling $250,000 for the three months ended March 31, 2011, have been excluded from discontinued operations and included as part of continuing operations as they continue to be incurred primarily at GSWC.

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Note 10 — Business Segments

AWR has three reportable segments, water, electric and contracted services, whereas GSWC has two segments, water and electric. Within the segments, AWR has two continuing principal business units: water and electric service utility operations conducted through GSWC, and a contracted services unit conducted through ASUS and its subsidiaries. All activities of GSWC are geographically located within California. The operating activities of CCWC have been included in discontinued operations as described in Note 9. All activities of CCWC were located in the state of Arizona. GSWC is, and CCWC was, a rate-regulated utility. AWR has no material assets other than its investments in its subsidiaries on a stand-alone basis.

Activities of ASUS and its subsidiaries are conducted in California, Maryland, southeast New Mexico, North Carolina, South Carolina, Texas, and Virginia. Each of ASUS’s wholly owned subsidiaries is regulated by the state in which the subsidiary primarily conducts water and/or wastewater operations. Fees charged for operation and maintenance and renewal and replacement services are based upon the terms of the contracts with the U.S. government which have been filed with the commissions in the states in which ASUS’s subsidiaries are incorporated.

The tables below set forth information relating to GSWC’s operating segments, ASUS and its subsidiaries, and other matters. Certain assets, revenues and expenses have been allocated in the amounts set forth. The identifiable assets are net of respective accumulated provisions for depreciation. Capital additions reflect capital expenditures paid in cash and exclude property installed by developers and conveyed to GSWC and through May 31, 2011 for CCWC.

	As Of And For The Three Months Ended March 31, 2012
	GSWC				ASUS		AWR			Consolidated
(dollars in thousands)	Water		Electric		Contracts		Parent			AWR
Operating revenues	$	65,957	$	10,813	$	29,878	$	—		$	106,648
Operating income (loss)	14,851		3,856		4,741		(81		)	23,367
Interest expense, net	5,406		393		54		2			5,855
Identifiable assets	853,533		39,526		4,776		—			897,835
Depreciation and amortization expense	9,597		623		270		—			10,490
Capital additions	13,940		539		488		—			14,967

	As Of And For The Three Months Ended March 31, 2011
	GSWC				CCWC			ASUS		AWR			Consolidated
(dollars in thousands)	Water		Electric		Water			Contracts		Parent			AWR
Operating revenues	$	64,326	$	10,724	$	—		$	19,257	$	—		$	94,307
Operating income (loss)	15,098		1,940		(250		)(1)	1,258		(51		)	17,995
Interest expense, net	5,101		377		—			84		45			5,607
Identifiable assets	826,703		37,437		—			3,849		—			867,989
Depreciation and amortization expense	8,956		560		—			221		—			9,737
Net income (loss) from discontinued operations	—		—		639		(2)	—		(5		)(3)	634
Capital additions	16,213		609		174			478		—			17,474

(1) Operating income (loss) includes CCWC’s allocated corporate overhead costs that are now primarily at GSWC.

(2) In accordance with the accounting guidance relating to assets held for sale, Registrant did not record depreciation expense for CCWC in 2011.

(3) Included in discontinued operations for the three months ended March 31, 2011 are direct transaction costs of $8,000 ($5,000 after tax) for legal and consulting services in connection with the sale of CCWC.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

The following discussion and analysis provides information on AWR’s consolidated operations and assets and where necessary, includes specific references to AWR’s individual segments and/or other subsidiaries: GSWC, ASUS and its subsidiaries, or AWR’s former subsidiary, CCWC. Included in the following analysis is a discussion of water and electric margins. Water and electric margins are computed by taking total revenues, less total supply costs. Registrant uses these margins and related percentages as an important measure in evaluating its operating results. Registrant believes this measure is a useful internal benchmark in evaluating the performance of GSWC. The discussions and tables included in the following analysis also present Registrant’s operations in terms of earnings per share by business segment. Registrant believes that the disclosure of earnings per share by business segment provides investors with clarity surrounding the performance of its differing services and information that could be indicative of future performance for each business segment. Registrant reviews these measurements regularly and compares them to historical periods and to its operating budget as approved. However, these measures, which are not presented in accordance with Generally Accepted Accounting Principles (“GAAP”), may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to operating income or earnings per share, which are determined in accordance with GAAP. A reconciliation of water and electric margins to the most directly comparable GAAP measures are included in the table under the section titled “Operating Expenses: Supply Costs.” Reconciliations to AWR’s diluted earnings per share are included in the discussions under the sections titled “Summary Results by Segment.”

Overview

Registrant’s revenues, operating income and cash flows are earned primarily through delivering potable water to homes and businesses, through its contracted services business for the operation and maintenance and renewal and replacement of water and/or wastewater systems for the U.S. government at various military bases, and through the delivery of electricity in the Big Bear area of San Bernardino County, California. Rates charged to GSWC customers are determined by the CPUC. These rates are intended to allow recovery of operating costs and a reasonable rate of return on capital. Registrant plans to continue to seek additional rate increases in future years from the CPUC to recover operating and supply costs and receive reasonable returns on invested capital. Capital expenditures in future years at GSWC are expected to remain at much higher levels than depreciation expense. When necessary, Registrant obtains funds from external sources in the capital markets and through bank borrowings.

All of the current operation and maintenance contracts with the U.S. government are 50-year firm, fixed-price contracts with prospective price redeterminations. Additional revenues generated by contract operations are primarily dependent on new construction activities under contract modifications. As a result, ASUS is subject to risks that are different than those of GSWC.

Some of the factors that affect Registrant’s financial performance are described in Item 1. Financial Statements, Forward-Looking Statements.

Summary of First Quarter Results by Segment

The table below sets forth the first quarter diluted earnings per share by business segment from continuing operations:

	Diluted Earnings per Share
	3 Months Ended
	3/31/2012			3/31/2011		CHANGE

Water	$	0.28		$	0.29	$	(0.01	)
Electric	0.11			0.04		0.07
Contracted services	0.15			0.04		0.11
AWR (parent)	(0.01		)	—		(0.01		)
Totals from continuing operations, as reported	$	0.53		$	0.37	$	0.16

For the three months ended March 31, 2012, fully diluted earnings from continuing operations were $0.53 per common share, compared to $0.37 per fully diluted common share for the three months ended March 31, 2011, an increase of $0.16 per share.

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For the three months ended March 31, 2012, diluted earnings per share from water operations decreased by $0.01 to $0.28 per share, as compared to $0.29 per share for the same period of 2011. Impacting the comparability of the two periods were the following items:

· An increase in the water margin of approximately $1.8 million, or $0.06 per share, during the three months ended March 31, 2012 as compared to the same period in 2011 primarily due to CPUC-approved third year rate increases for Regions II and III effective January 1, 2012, and an increase in consumption by customers not subject to our conservation tiered rates. Billed water consumption for the first quarter of 2012 increased by approximately 7.0% as compared to the same period in 2011.

· An increase in operating expenses (other than supply costs) by approximately $1.8 million, or $0.06 per share, due primarily to increases in: (i) other operation expenses of $912,000 due to higher labor and other employee benefits, transportation expenses, conservation costs and bad debt expense, and (ii) depreciation expense of $641,000 resulting from additions to utility plant.

· An overall increase in interest and other non-operating expenses (net of interest income) of $153,000, or $0.01 per share, due primarily to the issuance of $62.0 million in long-term notes in April 2011.

For the three months ended March 31, 2012, diluted earnings from electric operations increased by $0.07 per share as compared to the same period in 2011 due, in large part, to the CPUC’s approval of GSWC’s application to recover $1.2 million in legal and outside services costs incurred from September 2007 through March 2011 in connection with its efforts to procure renewable energy resources. As a result, in March 2012 GSWC recorded a $1.2 million, or $0.04 per share, reduction in legal and outside services costs which had previously been expensed as incurred. Excluding the impact of this item, electric earnings increased by $0.03 per share during the three months ended March 31, 2012 due primarily to: (i) an increase in the electric margin of $624,000, or $0.02 per share, as compared to the same period in 2011, and (ii) a lower effective income tax rate which increased earnings by $0.01 per share.

For the three months ended March 31, 2012, diluted earnings from contracted services increased by $0.11 per share as compared to the same period in 2011 due primarily to an increase in construction activities at Fort Bragg in North Carolina. There was significant progress made on a major water and wastewater pipeline replacement project as a result of better than expected weather conditions at Fort Bragg during the first three months of 2012. This project is estimated to be completed in 2014.

Diluted earnings for AWR (parent) decreased by $0.01 per share for the three months ended March 31, 2012 due to higher state taxes as compared to the same period in 2011 resulting from state unitary tax principles. AWR (parent) records the tax effects of the members of the AWR group joining in filing federal consolidated and state combined returns. The increase in contracted services’ income resulted in higher state taxes in 2012 recorded at AWR (parent) under unitary tax principles.

The tables below set forth summaries of the first quarter results of continuing operations by segment (amounts in thousands):

	Operating Revenues								Pretax Operating Income
	3 Months		3 Months						3 Months			3 Months
	Ended		Ended		$		%		Ended			Ended			$			%
	3/31/2012		3/31/2011		CHANGE		CHANGE		3/31/2012			3/31/2011			CHANGE			CHANGE

Water	$	65,957	$	64,326	$	1,631	2.5	%	$	14,851		$	14,848		$	3		0.0	%
Electric	10,813		10,724		89		0.8	%	3,856			1,940			1,916			98.8	%
Contracted services	29,878		19,257		10,621		55.2	%	4,741			1,258			3,483			276.9	%
AWR (parent)	—		—		—		—		(81		)	(51		)	(30		)	58.8	%
Totals from operation	$	106,648	$	94,307	$	12,341	13.1	%	$	23,367		$	17,995		$	5,372		29.9	%

The following discussion and analysis provide information on AWR’s consolidated operations and where necessary, includes specific references to AWR’s individual segments and/or other continuing subsidiaries: GSWC and ASUS and its subsidiaries, and the discontinued operations of CCWC.

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Consolidated Results of Operations — Three Months Ended March 31, 2012 and 2011 (amounts in thousands):

	3 Months			3 Months
	Ended			Ended			$			%
	3/31/2012			3/31/2011			CHANGE			CHANGE
OPERATING REVENUES
Water	$	65,957		$	64,326		$	1,631		2.5	%
Electric	10,813			10,724			89			0.8	%
Contracted services	29,878			19,257			10,621			55.2	%
Total operating revenues	106,648			94,307			12,341			13.1	%

OPERATING EXPENSES
Water purchased	9,552			8,661			891			10.3	%
Power purchased for pumping	1,556			1,536			20			1.3	%
Groundwater production assessment	3,323			2,626			697			26.5	%
Power purchased for resale	3,191			3,875			(684		)	-17.7	%
Supply cost balancing accounts	3,437			5,079			(1,642		)	-32.3	%
Other operation expenses	7,426			6,917			509			7.4	%
Administrative and general expenses	16,585			18,419			(1,834		)	-10.0	%
Depreciation and amortization	10,490			9,737			753			7.7	%
Maintenance	3,331			3,726			(395		)	-10.6	%
Property and other taxes	4,105			3,552			553			15.6	%
ASUS construction expenses	20,285			12,184			8,101			66.5	%
Total operating expenses	83,281			76,312			6,969			9.1	%

OPERATING INCOME	23,367			17,995			5,372			29.9	%

OTHER INCOME AND EXPENSES
Interest expense	(6,070		)	(5,744		)	(326		)	5.7