Ladies and gentlemen, thank you for standing by. Today is March 12, 2012. Welcome to the American States Water Company Conference Call discussing the fourth quarter 2011 results. If you have not received a copy of this morning's news release announcing earnings for the quarter, please call (909) 394-3600 extension 651, and one will be faxed or emailed to you. If you would like to listen to the replay of this call, it will begin this afternoon at approximately 2 p.m. Pacific Time and run through Monday, March 19, 2012. After logging on to the website, click the Investors button at the top of the page. The archive is located just above the Stock Quote section. [Operator Instructions] As a reminder, this call will be recorded and will be limited to no more than 1 hour. At this time, I would like to turn the call over to Eva Tang, Chief Financial Officer of American States Water Company.

Thank you, Emily. Welcome, everyone, and thank you for joining us today. On the call with me is our President and CEO, Bob Sprowls. I would like to first remind you that certain matters discussed during this conference call may be forward-looking statements intended to qualify for the Safe Harbor for liability established by the Private Securities Litigation Reform Act of 1995. Please review a description of our company's risks and uncertainties in our most recent Form 10-K and Form 10-Q on file with the Securities and Exchange Commission. Please also refer to our earnings release in the Form 10-K issued early -- earlier today for details regards to our earnings and financial information. I'm very pleased to note that 2011 was a year of a strong financial performance with increases in revenues, net income and cash flow. For 2011, we reported net income of $45.9 million compared to $32.2 million for 2010. Net income from continuing operations was $42 million, representing an increase of $10.9 million compared to 2010. Diluted earnings from continuing operations were $2.23 per share for 2011 as compared to $1.66 per share for 2010. I would like to remind you that earnings for 2010 were impacted by a pretax charge of $0.55 per share recorded for the impairment of assets and loss contingencies resulting from regulatory matters and $0.19 per share of pretax income for contract modifications that were retroactive received by our contracted services business of American States Utility Services or ASUS. Excluding the effects of these 2 items, 2011 diluted earnings from continuing operations increased by $0.21 or 10.4% over 2010's adjusted earnings of $2.02 per share. For 2011, our operating revenues increased by $20.3 million or 5.1% to $419 million -- $419.3 million. Excluding the impact of the 2010 contract modifications received…

Thank you, Eva. Hello, ladies and gentlemen. I'm extremely pleased with our strong performance in 2011. The company was able to achieve solid financial results for the year. The company has grown its revenues from continuing operations to nearly $420 million in 2011 from $261 million in 2006, which represents a 5-year compound annual growth rate of 10%. Our net income from continuing operations has grown at a compound annual growth rate of 14% over that same 5-year period from $21.9 million in 2006 to $42.0 million in 2011. I'm also pleased to announce that on January 31, 2012, the Board of Directors of American States Water approved a quarterly cash dividend of $0.28 per share on the common shares of the company. For more than 57 consecutive years, American States Water Company shareholders have received an increase in their aggregate annual dividend. We are among only a handful of companies on the New York Stock Exchange that can boast of such a long period of dividend increases. Our focus for the dividend going forward is to achieve a 5-year compound annual growth rate of at least 5% over the long term. In 2012 and going forward, we will continue to focus on driving operational efficiency to minimize cost to our customers, maintaining a customer service culture, executing a well-managed capital expenditure and infrastructure replacement program and timely recovery of costs through rates and price redeterminations. Now, I'll discuss the status of key regulatory filings and other matters for the company. On May 2, 2011, Golden State Water Company filed its cost of capital application. On November 2, 2011, we entered into a settlement agreement with all parties in that proceeding, including the Division of Ratepayer Advocates. If approved by the PUC, the settlement will authorize a return on equity…

[Operator Instructions] We will begin with Michael Roomberg of Ladenburg.

So, Bob and Eva, just a quick question on the outlook for construction in your ASUS business in 2012. Clearly, an elevated level of construction was the key driver of earnings growth in that business in 2011. Can you just give us an idea of what your expectations are for activity levels going forward in 12?

Sure. We think it will be consistent with what we saw in 2011, at least. These things are a bit unpredictable, but it seems like we've worked out some of the bugs in terms of getting these things moving. So I think that's a good sign.

Okay. And then on the mandatory audits that you have agreed to. Can you talk about the expenses for those audits? How they've -- where in the quarter compared to your expectations and kind of how we should think about that going forward?

This is as a result of the settlement with the ...

The settlement agreement, yes.

Right. Well those audits have not started at this point. The PUC will need to do an RFP to select outside auditing group to come in. So we did not incur any costs related to those audits in the fourth quarter. And it may be at least the second quarter, before we start to see any expenses. The entire cost of the audits will be borne by the shareholders.

Right. So do you have an expectation of how much on an annual basis that might run?

Probably, I would think around $500,000. $250,000 to $500,000. That's just based on our experience with auditors. But with the CPUC, it's a little bit hard to predict at this point, which is based on our prior experience with our other audits that we had, and that's the range. But no...

Sure. Okay, so it's not overly material? Now, will this lie in the other operating expenses or the administrative in general?

It will be in the administrative and general, I think.

[Operator Instructions] And our next question comes from Heike Doerr of Robert W. Baird.

I wonder if you could remind us, as we look for 2012, what revenue increases for each of the regions we would expect? Can you refresh our memory what that year 2 and year 3 -- that increases?

You want -- I mean, I gave you that in total, but you want it broken down further, I guess?

Yes, if it's not too much trouble. I mean I know that the 23 GO is going to be larger than the Region I.

Right.

Because one's in year 2, right, and the other one is in year 3?

Yes. 2 and 3 are in year 3 and Region I is in the final year, but it's the second year.

Yes, they only have 2-year rate cases.

Oh, right. As we get into one schedule.

Right. You want to break it down I think we have $2 million for Region II, $3 million for Region III and the rate increases for Region I are not material. So in total, it's like $5 million for water regions for 2012.

Okay. And that doesn't that include any advice letters from -- I know the commission is leaning more towards carving out some of these larger capital expenditure programs into advice letters. Is there any additional revenue that's going to come from advice letters that we should be taking into account?

I think it probably be -- as you may recall that we in our last case with the Region I, we have about $18 million advice letter project. So some of them will be completed in 2012, and we'll file a rate increase right after. So, the $5 million I give you, Heike, does not include the advice letter revenue increases there.

Okay. And in the GRC, can you tell me what the capital forecast that you've assumed? You said it was going to $70 million to $80 million in 2012. What did you put in the rate case for your CapEx program?

I think we're putting a little bit over $80 million for our water regions.

Okay. And that's approximately the same -- it's consistent throughout those 3 years?

Yes.

Okay. And what's the next step that we would see in the GRC? Are we at the point where now we would get a proposed decision? What's the next data point we're looking for?

Okay. So we'll file our rebuttal to DRA's report by the first part of April. Then what you'll see is a negotiation session between sessions between us and the DRA. And then to the degree things are not settled, which hard to say how that's going to go, there would be evidentiary hearings beginning in May.

And in the best case you're able to settle and instead of evidentiary hearings, we would see a settlement filed? Is that how to think about that in the best case?

Yes, I think that's probably correct.

Yes. But usually, we have some items that we -- are going to be litigated.

Right. So if we have evidentiary hearings in -- did you say April, Bob?

Those would be in May.

Oh, in May. And then after the evidentiary hearings, then we would see a proposed decision some time this summer?

No. It's likely the proposed decision will be closer to -- it's going to be maybe 30 to 60 days prior to year end, I would guess.

Okay. So we wouldn't see a proposed decision until late third quarter, early fourth quarter?

I think that's probably a fair estimation.

And we have a follow-up question from Michael Roomberg of Ladenburg.

Just a quick follow-up on the -- on Bear Valley. As I'm sure you're aware, the electric utilities will be filing for their cost of capital in 2013. I'm just wondering, will Bear Valley be a part of that filing or...

No, they will not. Theirs will be the sort of the more traditional where it's still part of the general rate case.

[Operator Instructions] Having no further questions, I'd like to turn it over to Mr. Sprowls for any closing remarks.

Sure, thank you, Emily. Again, I just wanted to thank you all for your participation today and for your continued interest and investment in American States Water Company. Everyone have a good day.

This concludes today's American States Water Company Conference Call. As a reminder, the call will be archived on our website and can be replayed beginning Monday, March 12, 2012 at 2 p.m. Pacific time and will run through Monday, March 19, 2012. After logging on to the website, click the Investors button at the top of the page. The archive is located just above the Stock Quote section. Thank you for your participation. You may now disconnect.