Item 1. Business. (a) General Development of Business.
SJW Corp., incorporated in California on February 8, 1985, is a holding company with three wholly-owned subsidiaries, San Jose Water Company, SJW Land Company and Western Precision, Inc.
San Jose Water Company, with headquarters at 374 West Santa Clara Street, San Jose, California 95196, was incorporated under the laws of the State of California in 1931, succeeding a business founded in 1866. San Jose Water Company is a public utility in the business of providing water service to a population of approximately 921,000 in an area comprising about 134 square miles in the metropolitan San Jose area.
SJW Land Company was incorporated in October, 1985.
Western Precision, Inc. was acquired on December 31, 1992 through an exchange of stock between SJW Corp. and the shareholders of Western Precision, Inc., formerly Roscoe Moss Company. Roscoe Moss Company was incorporated on March 22, 1927. At December 31, 1994, Western Precision, Inc. held 549,976 shares, or approximately 8.8%, of the outstanding common stock of California Water Service Company. Western Precision, Inc. also operates a precision mechanical parts manufacturing facility located in Sunnyvale, California, and Austin, Texas.
The precision mechanical parts manufacturing facility of Western Precision, Inc. was sold as of February 28, 1995 to a group of employees from the manufacturing facility. The sale price was $2,000,000. Pursuant to the terms of the transaction, all employees related to the business sold were transferred to the purchaser. The sale will have no material impact on the consolidated operating results of SJW Corp. The only remaining asset of Western Precision, Inc. is 549,976 shares of California Water Service Company.
Regulation and Rates.
San Jose Water Company's rates, service and other matters affecting its business are subject to regulation by the Public Utilities Commission of the State of California ("CPUC").
Ordinarily, there are two types of rate increases, general and offset. The purpose of the latter is generally to compensate utilities for increases in specific expenses, such as those for purchased water or power.
The most recent general rate case decision authorized an initial increase followed by two annual step increases designed to maintain the authorized return on equity over a three-year period. General rate applications are normally filed and processed during the last year covered by the most recent rate case in an attempt to avoid regulatory lag.
Pursuant to Section 792.5 of the Public Utilities Code, a balancing account is to be kept for all expense items for which revenue offsets have been authorized. A separate balancing account must be maintained for each offset expense item. The purpose of a balancing account is to track the under-collection or over- collection associated with expense changes and the revenue authorized by the CPUC to offset those expense changes. At December 31, 1994 the balancing account had a net under-collected balance to be offset of $577,000.
(b) Financial Information about Industry Segments.
San Jose Water Company generated 94%, 95% and 100% of SJW Corp.'s consolidated revenue, and 86%, 92% and 99% of SJW Corp.'s consolidated income for the years ended December 31, 1994, 1993 and 1992, respectively. There were no significant changes in 1994 in the type of products produced or services rendered by San Jose Water Company, or in its markets or methods of distribution. Western Precision, Inc.'s mechanical parts manufacturing operation generated 6% and 5% of SJW Corp.'s consolidated revenue for the years 1994 and 1993, respectively. Including the dividend income from California Water Service, Western Precision, Inc. generated 14% and 7% of consolidated income for the years 1994 and 1993, respectively.
(c) Narrative Description of Business.
(1) (i) General.
The principal business of San Jose Water Company consists of the production, purchase, storage, purification, distribution and retail sale of water. San Jose Water Company provides water service to customers in portions of the cities of Cupertino and San Jose and in the cities of Campbell, Monte Sereno, Saratoga and the Town of Los Gatos, and adjacent unincorporated territory, all in the County of Santa Clara in the State of California. It distributes water to customers in accordance with accepted water utility methods, which include pumping from storage and gravity feed from high elevation reservoirs.
(1) (iii) Water Supply.
San Jose Water Company's water supply is obtained from wells, surface run-off or diversion and by purchases from the Santa Clara Valley Water District ("SCVWD"). Surface supplies, which during a year of normal rainfall satisfy about 6% to 8% of San Jose Water Company's current annual needs, provide from approximately 1% of its water supply in a dry year to approximately 14% in a wet year. In dry years the decrease in water from surface run-off and diversion, and the corresponding increase in purchased and pumped water increases production costs substantially.
San Jose Water Company implemented various mandatory water rationing programs throughout the period of 1989-1993. Effective March 14, 1993 San Jose Water Company terminated its mandatory water rationing plan and instituted a voluntary conservation plan intended to reduce usage 15% from 1987 levels. Effective February 16, 1994, San Jose Water Company discontinued its voluntary conservation plan.
Groundwater levels in 1994 climbed to their highest level in 7 years reflecting the impact of the last rainfall season. SCVWD's reservoir storage of 131,000 acre feet (77% of capacity) was reported on February 8, 1995.
Until 1989, San Jose Water Company had never found it necessary to impose mandatory water rationing. Except in a few isolated cases when service had been interrupted or curtailed because of power or equipment failures, construction shutdowns or other operating difficulties, San Jose Water Company had not at any prior time in its history interrupted or imposed mandatory curtailment of service to any type or class of customer.
(1) (iv) Franchises.
San Jose Water Company holds such franchises or permits in the communities it serves as it judges necessary to operate and maintain its facilities in the public streets.
(1) (v) Seasonal Factors.
Water sales are seasonal in nature. The demand for water, especially by residential customers, is generally influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by residential customers to vary significantly.
(1) (x) Competition and Condemnation.
San Jose Water Company is a public utility regulated by the CPUC and operates within a service area approved by the CPUC. The laws of the State of California provide that no other investor owned public utility may operate in San Jose Water Company's service area without first obtaining from the CPUC a certificate of public convenience and necessity. Past experience shows such a certificate will be issued only after demonstrating San Jose Water Company's service in such area is inadequate.
California law also provides that whenever a public agency constructs facilities to extend utility service to the service area of a privately owned public utility (like San Jose Water Company), such an act constitutes the taking of property and is conditioned upon payment of just compensation to the private utility.
Under the constitution and statutes of the State of California, municipalities, water districts and other public agencies have been authorized to engage in the ownership and operation of water systems. Such agencies are empowered to condemn properties operated by privately owned public utilities upon payment of just compensation and are further authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems. To the Company's knowledge, no municipality, water district or other public agency has pending any action to condemn any part of San Jose Water Company's system.
Western Precision, Inc., which manufactures high-precision mechanical parts, is not protected by any rate regulation for customer and market share.
(1) (xii) Environmental Matters.
San Jose Water Company maintains procedures to produce potable water in accordance with all applicable county, state and federal environmental rules and regulations. Additionally, San Jose Water Company is subject to environmental regulation by various other governmental authorities. (See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations.")
(1) (xiii) Employees
As of December 31, 1994, San Jose Water Company had 281 employees, of whom 56 were executive, administrative or supervisory personnel, and of whom 225 were members of unions. San Jose Water Company reached a two-year collective bargaining agreement with the Utility Workers of America, representing the majority of employees and the International Union of Operating Engineers, representing certain employees in the engineering department covering the years 1995 and 1996. Both groups are affiliated with the AFL-CIO.
(d) Financial Information about Foreign and Domestic Operations and Export Sales.
Substantially all of SJW Corp.'s revenue and expense are derived from operations located in the County of Santa Clara in the State of California.
Item 2.
Item 2. Properties.
The properties of San Jose Water Company consist of a unified system of water production, storage, purification and distribution located in the County of Santa Clara in the State of California. In general, the property is comprised of franchise rights, water rights, necessary rights-of-way, approximately 7,000 acres of land held in fee (which is primarily nondevelopable watershed), impounding reservoirs with a capacity of approximately 2.256 billion gallons, diversion facilities, wells, distribution storage of approximately 240 million gallons and all water facilities, equipment and other property necessary to supply its customers.
San Jose Water Company maintains all of its properties in good operating condition in accordance with customary proper practice for a water utility. San Jose Water Company's well pumping stations have a production capacity of approximately 257 million gallons per day and the present capacity for taking purchased water is approximately 169 million gallons per day. The gravity water collection system has a physical delivery capacity of approximately 25 million gallons per day. During 1994, a maximum and average of 197 million gallons and 121 million gallons of water per day, respectively, were delivered to the system.
San Jose Water Company holds all its principal properties in fee, subject to current tax and assessment liens, rights-of-way, easements, and certain minor clouds or defects in title which do not materially affect their use and to the lien of the indenture securing its first mortgage bonds, of which there were outstanding at December 31, 1994, $4,000,000 (including current maturities) in principal amount.
SJW Land Company owns approximately 8 acres of property adjacent to San Jose Water Company's general office facilities and another approximately 36 undeveloped acres in the San Jose Metropolitan area. The 8 acres adjacent to San Jose Water Company are used as surface parking facilities and generate substantially all SJW Land Company's revenue.
Western Precision, Inc. leases the facilities in which it operates and does not own any real estate.
Item 3.
Item 3. Legal Proceedings.
In October, 1993, the San Jose Water Company was named as a defendant by Valley Title Company and its insurer in a lawsuit filed in Santa Clara County Superior Court in San Jose, California. Plaintiffs claim a fire service pipeline ruptured in October, 1992, causing water to flood the title company's basement. The suit seeks reimbursement for cleanup costs, damages for lost title records, business related damages and lost rents. San Jose Water Company has denied liability, claiming it did not own the portion of the water line that failed. The title company had an unsealed heating oil tank in its basement which flooded and contributed to much of the loss. San Jose Water Company has taken the position that to the extent the damage to the building and its contents was caused or increased by oil mixed with the water, that increase in damage is solely the responsibility of the title company.
Trial began in January, 1995 and is scheduled to end by March 31, 1995. Plaintiff's insurance carrier claims expenditures in excess of $5.4 million. The title company has reduced its demand for lost title files from $21 million to $14 million.
San Jose Water Company's insurance carrier is defending the case under a reservation of rights. The insurance carrier has stated that to the extent the damage was caused or enhanced by the presence of oil, it has no duty to indemnify the San Jose Water Company due to exclusions in the insurance policy. Because of the uncertainties of liability and insurance coverage issues, the company has no certain measure on the size of loss, if any, to the company. If a judgment is found against the company, it is believed that the award would be within the limits of the company's insurance coverages, but that some or all of the company's insurers may deny the resulting duty to indemnify, leading to insurance coverage litigation.
No governmental entity is known to have an unresolved claim against the San Jose Water Company arising from the release of oil in this incident.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
At the Annual Meeting of Shareholders of SJW Corp. held on April 21, 1994, SJW Corp.'s shareholders voted in favor of: (i) the election of eight directors to the company's Board of Directors and (ii) the approval of KPMG Peat Marwick LLP as independent auditors of the company for 1994.
The number of votes for, against, as well as the number of abstentions and broker nonvotes as to each matter approved at the Annual Meeting of the Shareholders were as follows:
APRIL 21, 1994 ANNUAL MEETING
FOR WITHHELD ABSTAIN BROKER NON- VOTES
M. L. CALI 2,883,436 12,108 0 0 J. D. DINAPOLI 2,886,307 9,237 0 0 D. GIBSON 2,886,781 8,763 0 0 R. R. JAMES 2,886,997 8,547 0 0 G. E. MOSS 2,888,554 6,990 0 0 R. MOSS 2,888,554 6,990 0 0 C. J. TOENISKOETTER 2,886,219 9,325 0 0 J. W. WEINHARDT 2,887,339 8,205 0 0 BROKER NON- FOR AGAINST ABSTAIN VOTES
AUDITORS 2,870,442 4,890 20,212 0
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
(a) Market Information. (1) (i) Exchange
SJW Corp.'s common stock is traded on the American Stock Exchange under the symbol SJW.
(1) (ii) High and Low Sales Prices
The information required by this item as to the high and low sales prices for the Company's common stock for each quarter in the 1994 and 1993 fiscal years is contained in the section captioned "Market price range of stock" in the tables set forth in Note 10 of "Notes to Consolidated Financial Statements" in Part II, Item 8.
(b) Holders. There were 1,537 record holders of SJW Corp.'s common stock on February 21, 1995 (record date for the 1995 annual meeting).
(c) Dividends.
Quarterly dividends have been paid on SJW Corp.'s and its predecessor's common stock for 205 consecutive quarters and the quarterly rate has been increased during each of the last 27 years. The information required by this item as to the cash dividends paid on common stock in 1994 and 1993 is contained in the section captioned "Dividends per share" in the tables set forth in Note 10 of "Notes to consolidated Financial Statements" in Part II, Item 8.
Item 6.
Item 6. Selected Financial Data.
FIVE YEAR STATISTICAL REVIEW 1994 1993 1992 1991 1990 CONSOLIDATED RESULTS ----- ------ ------ ------ ------ OF OPERATIONS (In thousands) Operating revenue $ 99,422 95,045 89,109 76,281 70,458 Operating expense: Operation 62,648 57,016 54,184 45,897 41,626 Maintenance 6,289 5,417 4,397 3,778 3,963 Taxes 9,426 10,829 10,252 8,681 8,033 Depreciation 7,292 6,823 6,153 5,773 5,249 ------ ------ ------ ------ ------ Total operating expense 85,655 80,085 74,986 64,129 58,871 ------ ------ ------ ------ ------ Operating income 13,767 14,960 14,123 12,152 11,587 Interest expense, other income and deductions 3,865 3,193 3,896 3,704 3,048 ------ ------ ------ ------ ------ Net income 9,902 11,767 10,227 8,448 8,539 Dividends paid 6,826 6,637 6,044 5,449 5,304 ------ ------ ------ ----- ----- Invested in the business 3,076 5,130 4,183 2,999 3,235
CONSOLIDATED PER COMMON SHARE DATA
Net income $ 3.05 3.64 3.60 2.98 3.00 Dividends paid 2.10 2.04 2.13 1.92 1.86 Shareholders' equity at year-end 32.02 31.86 29.70 27.27 26.21
CONSOLIDATED BALANCE SHEET (In thousands)
Utility plant $ 308,515 293,683 272,999 255,325 244,068 Less accumulated depreciation and amortization 95,083 90,030 84,158 78,675 73,405 ------- ------- ------ ------- ------- Net utility plant 213,432 203,653 188,841 176,650 170,663 ------- ------- ------ ------- ------- Nonutility property 7,178 6,775 5,465 4,974 4,990 Total assets 262,530 256,851 230,198 197,094 188,313 Capitalization: Common shareholders' equity 104,098 103,130 96,155 77,373 74,373 Long-term debt(includes current maturities) 64,000 66,000 61,248 45,193 38,138 ------- ------ ------- ------ ------ Total capitalization $ 168,098 169,130 157,403 122,566 112,511 ======= ======= ======= ======= =======
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Description of the Business
SJW Corp. is a holding company with three wholly owned subsidiaries: San Jose Water Company, SJW Land Company and Western Precision, Inc. San Jose Water Company is a public utility in the business of providing water service to a population of approximately 921,000 in an area comprising about 134 square miles in the metropolitan San Jose area. SJW Land Company owns and operates a 900- space surface parking facility adjacent to the San Jose Arena and also owns several undeveloped real estate parcels in San Jose Water Company's service area. Western Precision, Inc. owns 549,976 shares of California Water Service Company, and owns and operates a precision mechanical parts manufacturing facility, which was sold on February 28, 1995.
Results of Operations
Consolidated results of operations for the years ended December 31, 1994 and 1993 include the results of Western Precision, Inc. (formerly Roscoe Moss Company) which was acquired on December 31, 1992.
CONSOLIDATED OPERATING REVENUE (in thousands) 1994 1993 1992
San Jose Water Company $ 92,963 90,496 89,051 Western Precision, Inc. 5,968 4,292 - SJW Land Company 491 257 58 ------ ------ ------ $ 99,422 95,045 89,109
Consolidated operating revenue for 1994 increased $4,377,000 or 5% over 1993 due to increased revenue from Western Precision, Inc. and a 5% increase in metered usage by San Jose Water Company customers. Western Precision, Inc.'s operating revenue increased due to an improving economy in the high technology sector and the resulting increased sales to its primary customer. Consolidated operating revenue for 1993 increased $5,936,000 or 7% over 1992 due to the inclusion of Western Precision, Inc. operating revenue of $4,292,000, and to a lesser extent due to an increase in usage by San Jose Water Company customers.
CONSOLIDATED OPERATING EXPENSE (in thousands) 1994 1993 1992
San Jose Water Company $ 79,529 75,398 74,731 Western Precision, Inc. 5,547 4,370 - SJW Land Company 395 113 61 SJW Corp. 184 204 194 ------ ------ ------ $ 85,655 80,085 74,986
In 1994, consolidated operating expense increased 7%, or $5,570,000. The majority of this increase is attributable to the increased cost of water supply in San Jose Water Company. A 3.5 billion gallon decrease in surface water in 1994 from 1993, due to reduced rainfall and run off in the Santa Cruz Mountain watershed, caused increased production needs to be satisfied by more costly ground water.
SOURCES OF SUPPLY (million gallons) 1994 1993 1992 Purchased water 19,161 20,313 18,826 Ground water 23,605 17,314 18,225 Surface water 1,663 5,198 3,234 ------ ------ ------ 44,429 42,825 40,285
Consolidated operating expense for 1993 increased $5,099,000 or 7% over 1992 due to the inclusion of Western Precision, Inc. operating expense of $4,370,000 and, to a lesser extent, increased water production in San Jose Water Company.
The effective income tax rates for 1994, 1993 and 1992 were 39%, 41% and 43%, respectively. See Note No. 5 of the Notes To Consolidated Financial Statements for the reconciliation of income tax expense to the amount computed by applying the federal statutory rate to income before income taxes.
OTHER INCOME AND EXPENSE Dividend income increased $33,000, or 3%, over 1993 due to a $.06 per share increase in the California Water Service Company annual dividend rate. The California Water Service Company shares were acquired on December 31, 1992.
San Jose Water Company's interest expense on long-term debt in 1994, including capitalized interest, decreased $73,000 or 1%, from 1993 due to a lower average amount of long-term debt outstanding. Interest expense on long-term debt in 1993, including capitalized interest, increased $848,000 or 19%, over 1992 due to the issuance of Series A and B senior notes. San Jose Water Company's weighted average cost of long-term debt, including amortization of debt issuance costs, was 8.34%, 8.23% and 8.88% as of December 31, 1994, 1993 and 1992, respectively.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL REQUIREMENTS
San Jose Water Company's 1995 and 1994 budgeted capital expenditures, exclusive of capital expenditures financed by customer contributions and advances, are as follows:
1995 1994 (in thousands) Amount % Amount % Source of supply $ 251 2% - - Reservoirs and tanks 1,436 9% 1,111 11% Pump stations and equipment 1,959 12% 1,717 17% Distribution system 9,242 58% 5,859 58% Equipment and other 3,019 19% 1,414 14% ------ --- ------ --- $ 15,907 100% 10,101 100%
The $5,806,000, or 57%, increase in 1995 budgeted capital expenditures over 1994 is primarily due to two large programs: $3,402,000 increase in main replacements and related services; and $1,503,000 to implement the first phase of a geographical information and mapping system.
San Jose Water Company expects to spend approximately $80,000,000 on capital expenditures over the next five years. San Jose Water Company's actual capital expenditures may vary from projected due to changes in the expected demand for services, weather patterns, actions by governmental agencies and general economic conditions. Annual additions to utility plant normally exceed company- financed additions by several million dollars because certain new facilities are constructed using advances from developers and contributions in aid of construction.
Most of San Jose Water Company's distribution system has been constructed over the last forty years. Expenditure levels for renewal and modernization of this part of the system will grow at an increasing rate as these components reach the end of their useful lives. Additionally, in most cases replacement cost will significantly exceed the cost of the retired asset due to increases in the cost of goods and services.
SOURCES OF CAPITAL
San Jose Water Company's ability to finance future construction programs and sustain dividend payments depends on its ability to attract external financing and maintain or increase internally generated funds. The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings.
Over the past five years SJW Corp. has paid to its shareholders, in the form of dividends, an average of 62% of its net income. The remaining earnings have been reinvested. Capital requirements not funded by earnings are expected to be funded through external financing in the form of unsecured senior notes or a commercial bank line of credit. As of December 31, 1994, San Jose Water Company had $10,200,000 of unused line of credit and over $50,000,000 of borrowing capacity under the terms of the senior note agreements.
San Jose Water Company's financing activity is designed to achieve a capital structure consistent with regulatory guidelines - approximately 50% debt and 50% equity.
In 1994, San Jose Water Company redeemed its $2,000,000 Series M 4.65% first mortgage bonds at maturity. In 1993, San Jose Water Company redeemed, prior to maturity, various series of first mortgage bonds at principal plus redemption premium. To fund the redemption, $30,000,000 of Series B unsecured 30-year senior notes were issued. San Jose Water Company intends to retire all remaining first mortgage bonds by 1998 and satisfy all future long-term financing needs with senior notes.
Factors That May Affect Future Results
The results of operations of San Jose Water Company generally depend on the following factors: (1) the availability of rate relief due to regulation, (2) the level of surface water supply, and (3) the level of operation and maintenance expense.
REGULATION
Principally all the operating revenue of San Jose Water Company results from the sale of water at rates approved by the California Public Utilities Commission (CPUC). The CPUC sets rates that are intended to provide revenue sufficient to recover operating expense and produce a reasonable return on common equity.
San Jose Water Company's most recent general rate case decision authorized it to earn a return on common equity of 11.75% in 1992, 1993 and 1994. San Jose Water Company deferred the filing of a general rate application from January 1994, to July 1995, and expects to receive new rates in the second quarter of 1996. Because the company elected to defer filing of its general rate case application, it will not receive additional step rate increases until the next general rate case decision is rendered.
San Jose Water Company implemented step rate increases on January 1, 1994, and 1993, which were designed to produce revenue increases of $293,000 and $213,000, respectively. Both step rate increases were authorized in San Jose Water Company's general rate case granted in December 1991 and were designed to maintain a rate of return on common equity at authorized levels.
On March 14, 1994, San Jose Water Company implemented a special rate increase in the amount of $892,000 offsetting construction costs of the Austrian Dam Spillway in excess of those previously approved in rates.
SURFACE WATER SUPPLY
The level of surface water available in each year depends on the amount of rainfall and run-off collected in San Jose Water Company's Santa Cruz Mountain reservoirs. In a normal year, surface supply provides 6-8% of the total water supply of the system. Surface water is a less costly source of water and its availability may significantly impact the results of operations.
OPERATION AND MAINTENANCE EXPENSE
San Jose Water Company reached an agreement with its unionized personnel covering 1995 and 1996. The agreement includes a 3.5% wage increase each year and minor benefit modifications.
ENVIRONMENTAL MATTERS
San Jose Water Company's operations are subject to water quality and pollution control regulations issued by the United States Environmental Protection Agency (EPA), the California Department of Health Services and the California Regional Water Quality Control Board. The company is also subject to environmental laws and regulations administered by other state and local regulatory agencies.
Under the federal Safe Drinking Water Act (SDWA), San Jose Water Company is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates nationally applicable maximum contaminant levels (MCLs) for "contaminants" found in drinking water. San Jose Water Company is currently in compliance with all of the 84 MCLs promulgated to date. The EPA has continuing authority, however, to issue additional regulations under the SDWA, and Congress amended the SDWA in July 1986 to require the EPA to promulgate MCLs for over 180 contaminants by the year 2000. San Jose Water Company has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing MCLs and plan for compliance with future drinking water regulations.
Of all of the regulations being considered under the current SDWA, the proposed Disinfectants-Disinfection By-Products Rule is anticipated to have the most significant impact on water utilities. Due to be promulgated in December 1996, this rule would impose more stringent monitoring requirements and drinking water standards for by-products formed during the disinfection of water. The Santa Clara Valley Water District, whose imported surface water represents approximately 45% of San Jose Water Company's supply, projects that compliance with this regulation could, by the year 2000, cost over $100,000,000 in capital improvements and an additional $3,000,000 per year in operating expenses. If incurred, most costs would be passed along to San Jose Water Company and other water retailers in the form of higher rates for purchased water and pump taxes. San Jose Water Company would seek a rate increase, via an advice letter filing, to recover the additional costs. The company's surface and groundwater sources are generally of a higher quality than the imported water supplies and are not expected to require extensive modifications of existing treatment processes.
To comply with the State Total Coliform Regulation, disinfection of company wells is being phased in over the next four to five years. To date, five of the company's nineteen key groundwater production stations have been equipped with hypochlorinators, with five more installations planned in 1995. The EPA is expected to mandate disinfection of all groundwater supplies by 1999.
In addition to SDWA, other environmental regulations are becoming increasingly important. The Santa Clara County Toxic Gas Ordinance became effective in 1993 requiring the elimination of chlorine gas disinfection systems or the installation of complete containment systems to control accidental chlorine gas discharges. During 1994, San Jose Water Company replaced the chlorine gas disinfection systems at its two water treatment plants with hypochlorinators which accomplish disinfection with liquid sodium hypochlorite. These facilities are currently operational and in compliance with all local hazardous materials storage regulations.
Other state and local environmental regulations apply to company operations and facilities. These regulations relate primarily to the handling, storage and disposal of hazardous materials. San Jose Water Company is currently in compliance with state and local regulations governing underground storage tanks, disposal of hazardous wastes, non-point source discharges, and the warning provisions of the California Safe Drinking Water and Toxic Enforcement Act of 1986.
Future drinking water regulations will most likely require increased monitoring, and may mandate disinfection or other treatment of underground water supplies, more stringent performance standards for treatment plants and procedures to reduce levels of disinfection by-products. San Jose Water Company continues to seek to establish mechanisms for recovery of government-mandated environmental compliance costs. However, there are limited regulatory mechanisms and procedures available to the company for the recovery of such costs and there can be no assurance that such costs will be fully recovered.
NONREGULATED SUBSIDIARIES
As described above in Part I, Item 1(a), the high precision mechanical parts manufacturing business of Western Precision, Inc. was sold on February 28, 1995. The sale is anticipated to result in a reduction of consolidated operating revenue and expense in 1995. However, its impact on consolidated net income is not anticipated to be material. Western Precision, Inc.'s investment in California Water Service Company is expected to produce 1995 pre-tax dividend income and cash flow of approximately $1,100,000. SJW Land Company's surface parking facilities are largely dependent upon the level of events and activities at the San Jose Arena which is located adjacent to its parking facility.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Financial Statements: Independent Auditors' Report ----------------------------
To the Shareholders and Board of Directors SJW Corp.:
We have audited the consolidated financial statements of SJW Corp. and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SJW Corp. and subsidiaries as of December 31, 1994 and 1993, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1994, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for income taxes in 1993 to adopt the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes", and changed its method of accounting for investments to adopt the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities" at December 31, 1993.
KPMG Peat Marwick LLP San Jose, California January 20, 1995
SJW CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (December 31,dollars in thousands, except share data)
ASSETS
1994 1993 ------ ------
Utility plant $ 308,515 293,683 Less accumulated depreciation 95,083 90,030 ------- ------- 213,432 203,653 ------- ------- Nonutility property 7,178 6,775
Current assets: Cash and equivalents 1,277 2,558 Accounts receivable: Customers 5,513 5,211 Other 327 214 Accrued utility revenue 2,700 2,600 Materials and supplies, at average cost 1,711 1,026 Prepaid expenses 1,978 2,073 ------- ------- 13,506 13,682 ------- ------- Other assets: Investment in California Water Service Company 17,599 21,999 Unamortized debt issuance and reacquisition costs 4,262 4,389 Goodwill 2,341 1,906 Regulatory asset 3,672 4,060 Other 540 387 ------- ------- 28,414 32,741 ------- ------- $ 262,530 256,851 ======= =======
See accompanying notes to consolidated financial statements.
CONSOLIDATED BALANCE SHEET (Continued) CAPITALIZATION AND LIABILITIES 1994 1993 ------- ------- Capitalization: Common shareholders' equity: Common stock, $3.125 par value; authorized 6,000,000 shares; issued 3,250,746 shares in 1994 and 1993 $ 10,159 10,116 Additional paid-in capital 22,208 21,763 Retained earnings 72,056 68,980 Cumulative change in market value of investment (325) 2,271 ------- ------- 104,098 103,130 Long-term debt, less current maturities 62,500 64,000 ------- ------- 166,598 167,130 ------- ------- Current liabilities: Current maturities of long-term debt 1,500 2,000 Line of credit 4,800 - Accrued pump taxes and purchased water 3,203 3,264 Accounts payable 967 421 Accrued interest 2,173 1,431 Accrued taxes other than income taxes 285 262 Other current liabilities 2,314 2,032 ------- ------- 15,242 9,410 ------- ------- Deferred income taxes 12,809 14,414 Unamortized investment tax credits 2,469 2,523 Advances for construction 33,555 32,616 Contributions in aid of construction 29,252 28,164 Deferred revenue 951 954 Other nonconcurrent liabilities 1,654 1,640 Commitments and contingency ------- ------- $ 262,530 256,851 ======= =======
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (Years ended December 31, dollars in thousands, except share data) 1994 1993 1992 ------ ------ ------
Operating revenue $ 99,422 95,045 89,109 Operating expense: Operation: Purchased water 18,229 20,001 19,181 Power 5,470 4,164 4,123 Pump taxes 17,356 13,095 14,628 Other 21,593 19,756 16,252 Maintenance 6,289 5,417 4,397 Property taxes and other nonincome taxes 3,039 2,758 2,633 Depreciation 7,292 6,823 6,153 Income taxes 6,387 8,071 7,619 -------- -------- -------- 85,655 80,085 74,986 --------- --------- -------- Operating income 13,767 14,960 14,123
Other (expense) income: Interest on long-term debt (5,082) (4,489) (4,002) Dividends 1,089 1,056 - Other 128 240 106 --------- --------- --------- Net income $ 9,902 11,767 10,227 ========= ========= ========= Earnings per share $ 3.05 3.64 3.60 ========= ========= ========= Weighted average shares outstanding 3,250,746 3,236,992 2,837,788 ========= ========= =========
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN COMMON SHAREHOLDERS' EQUITY (dollars in thousands) Cumulative Additional Change in Total Common Common Paid-in Retained Market Value Shareholders' Stock Capital Earnings of investment Equity ------- ------- ------- ----------- ----------- Balances, December 31 1991 $ 8,868 8,839 59,667 - 77,374 Net income - - 10,227 - 10,227 Dividends paid - - (6,044) - (6,044) Common stock issued 1,240 13,358 - - 14,598 ------- ------ ------- ----- ------ Balances, December 31 1992 10,108 22,197 63,850 - 96,155 Purchase price adjustment 8 (434) - - (426) Net income - - 11,767 - 11,767 Dividends paid - - (6,637) - (6,637) Implementation of change in accounting for investment net of tax effect of $1,579 - - - 2,271 2,271 ------- ------- ------- ------ ------ Balances, December 31 1993 10,116 21,763 68,980 2,271 103,130 Purchase price adjustment 43 445 - - 488 Net income - - 9,902 - 9,902 Dividends paid - - (6,826) - (6,826) Change in market value of investment, net of tax effect of $1,804 - - - (2,596) (2,596) ------ ------ ------ ------ ------ Balances, December 31 1994 $ 10,159 22,208 72,056 (325) 104,098 ====== ====== ====== ====== =======
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS Years ended December 31 (dollars in thousands) 1994 1993 1992 ------ ------ ------
Operating activities: Net income $ 9,902 11,767 10,227 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,292 6,823 6,153 Deferred income taxes and credits 144 1,813 621 Changes in operating assets and liabilities: Accounts receivable and accrued utility revenue (515) 525 3,482 Accounts payable and other current liabilities 828 (654) 707 Accrued pump taxes and purchased water (61) 1,074 (148) Conservation fees - (1,477) 1,477 Income taxes payable - - (4,275) Other changes, net 864 (561) 740 ------- ------ ----- Net cash provided by operating activities 18,454 19,310 18,984 ------ ------ ------ Investing activities: Additions to utility plant (17,350) (22,134)(19,083) Cost to retire utility plant, net of salvage (572) (251) (174) Acquisition costs, net of cash acquired - - (291) Additions to nonutility property (611) (1,497) - Temporary investments - 3,600 (3,600) ------ ------- ------- Net cash used in investing activities (18,533) (20,282)(23,148) ------- ------ ------ Financing activities: Dividends paid (6,826) (6,637) (6,044) Repayment of line of credit (2,400) (1,675)(12,800) Borrowings from line of credit 7,200 - 10,100 Advances and contributions in aid of construction 4,393 6,501 3,269 Refunds of advances (1,569) (1,610) (1,722) Proceeds from issuance of long-term debt - 30,000 20,000 Principal payments of long-term debt (2,000) (28,665) (3,945) ------ ------ ------ Net cash provided by (used in) financing activities (1,202) (2,086) 8,858 ------ ----- ----- Net change in cash and equivalents (1,281) (3,058) 4,694 Cash and equivalents, beginning of year 2,558 5,616 922 ------ ------ ----- Cash and equivalents, end of year $ 1,277 2,558 5,616 ====== ====== =====
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1994, 1993 and 1992 (Dollars in thousands, except share data)
Note 1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts of SJW Corp. and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated.
SJW Corp.'s principal subsidiary, San Jose Water Company, is a regulated California water utility. San Jose Water Company's accounting policies comply with the applicable uniform system of accounts prescribed by the California Public Utilities Commission (CPUC) and conform to generally accepted accounting principles for rate regulated public utilities.
Utility Plant - The cost of additions, replacements and betterments to utility plant is capitalized. The amount of interest capitalized in 1994, 1993 and 1992 was $103, $769 and $407, respectively. Construction in progress was $2,658 in 1994 and $3,233 in 1993.
Depreciation is computed using the straight-line method over the estimated service lives of the assets. The cost of utility plant retired, including retirement costs (less salvage), is charged to accumulated depreciation, and no gain or loss is recognized.
Nonutility Property - Nonutility property is recorded at cost and consists primarily of land, parking facilities and machine shop equipment.
Cash and Equivalents - Cash equivalents include certain highly liquid investments with a maturity of three months or less when purchased. Cash equivalents are stated at cost plus accrued interest, which approximates fair value.
Investment in California Water Service Company- Effective December 31, 1993, SJW Corp. adopted Statement of Financial Accounting Standards (SFAS) No. 115 -- "Accounting for Certain Investments in Debt and Equity Securities". Under this Statement SJW Corp.'s investment in California Water Service Company is reported at quoted market price, with the unrealized gain or loss excluded from earnings and reported as a separate component of common shareholders' equity. The adoption of SFAS No. 115 resulted in increases in: investment in California Water Service Company, $3,850; deferred income taxes, $1,579; and common shareholders' equity, $2,271, at December 31, 1993.
The fair value of SJW Corp.'s investment in California Water Service Company approximated $17,599 and $21,999 as of December 31, 1994 and 1993, respectively. The reduction in fair value, $4,400, net of the related tax effect, $1,804, is partially offset by the unrealized gain of $2,271 at December 31, 1993, and resulted in a net unrealized loss on investment of $325 as of December 31, 1994.
Other Assets - Debt reacquisition costs are amortized over the term of the new debt. Debt issuance costs are amortized over the life of each issue. The excess cost over fair market value of net assets acquired is recorded as goodwill and amortized over the periods estimated to be benefited, not exceeding 40 years.
Income Taxes - Effective January 1, 1993 SJW Corp. adopted SFAS No. 109, "Accounting for Income Taxes". Prior year financial statements have not been restated to apply the provisions of SFAS No. 109 which require a change from the deferred method to the asset and liability method. Under SFAS No. 109, deferred tax assets and liabilities are recognized for the effect of temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using enacted tax rates applicable to future years.
The adoption of SFAS No. 109 had the effect of increasing net deferred tax liabilities by $8,500 and of effecting corresponding $5,000 and $3,500 increases in investment in California Water Service Company and regulatory asset at January 1, 1993. Management believes the increase in net deferred tax liabilities recorded as a result of adopting SFAS No. 109 will be recovered through future rates and has recorded a regulatory asset for this probable future revenue. As a result of recording a net regulatory asset, there was no material effect on the consolidated results of operations.
To the extent permitted by the CPUC, investment tax credits resulting from utility plant additions are deferred and amortized over the estimated useful lives of the related property.
Advances for Construction and Contributions in Aid of Construction - Advances for construction received after 1981 are being refunded ratably over 40 years. Prior customer advances are refunded based on 22% of related revenues. Estimated refunds for 1995 are $1,400.
Contributions in aid of construction represent funds received from developers that are not refundable under CPUC regulations. Depreciation applicable to utility plant constructed with these contributions is charged to contributions in aid of construction.
Customer advances and contributions in aid of construction received subsequent to 1986 generally must be included in federal taxable income. Beginning in 1992, advances and contributions are also included in state taxable income. Taxes paid relating to advances and contributions are recorded as deferred tax assets for financial reporting purposes and amortized over 40 years for advances, and over the tax depreciable life of the related asset for contributions.
Revenue - Revenue of San Jose Water Company includes amounts billed to customers, unbilled amounts based on estimated usage from the latest meter reading to the end of the year, and recoverable net revenue losses resulting from water conservation programs. Western Precision, Inc. records revenue as orders are shipped.
Included in 1993 operating revenue is $1,200 relating to the recovery of prior years' conservation expenses. Operating revenue also includes $327 in 1993 and $1,900 in 1992 related to recoverable net revenue lost due to conservation programs.
Earnings Per Share - Per share data are calculated using net income divided by the weighted average number of shares outstanding during the year, excluding in 1993 and 1992, contingently returnable shares.
Note 2
CAPITALIZATION
In connection with the acquisition of Roscoe Moss Company (subsequently renamed Western Precision, Inc.), the sellers agreed to return a portion of the common shares received in the transaction in the event the acquired enterprise does not achieve a three-year earnings target. Shares of common stock issued and outstanding include 13,754 and 21,181 shares contingently returnable to the company as of December 31, 1993 and 1992, respectively. As of December 31, 1994, there were no contingently returnable shares outstanding. Additionally, 5,020 shares of common stock were returned to SJW Corp. in 1993 as the result of a purchased price adjustment of the acquired entity.
At December 31, 1994, 1993 and 1992, 176,407 shares of preferred stock were authorized and unissued.
Note 3
LINE OF CREDIT
San Jose Water Company has available an unsecured bank line of credit, allowing aggregate short-term borrowings of up to $15,000. This line of credit bears interest at variable rates and expires April 30, 1995.
Note 4
LONG-TERM DEBT
Long-term debt as of December 31 was as follows:
Description Due 1994 1993
First mortgage bonds: M 4.65% 1994 $ - 2,000 N 4.85% 1995 1,500 1,500 O 6.5% 1996 1,000 1,000 P 6.5% 1997 1,500 1,500 ----------------------------------------- 4,000 6,000 Senior Notes: A 8.58% 2022 20,000 20,000 B 7.37% 2024 30,000 30,000 C 9.45% 2020 10,000 10,000 ---------------------------------------- 64,000 66,000 Less current maturities 1,500 2,000 ---------------------------------------- $62,500 64,000
In 1993, San Jose Water Company issued $30,000 in Series B senior notes and retired, ahead of scheduled maturity dates, various series of first mortgage bonds totaling $22,503. Additionally, the company exchanged Series C senior notes for $10,000 of Series AA first mortgage bonds.
First mortgage bonds and senior notes are obligations of San Jose Water Company. Maturities of long-term debt, including sinking fund requirements, amount to $1,500 in 1995, $1,000 in 1996, and $1,500 in 1997.
Substantially all utility plant is pledged as collateral for first mortgage bonds. Senior notes are unsecured. All of San Jose Water Company's debt is privately placed. The fair value of long-term debt, including current maturities, as of December 31, 1994 was approximately $66,200 based on the amount of essentially risk-free assets the company would have to place in trust to extinguish these obligations.
Note 5
INCOME TAXES
The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes: 1994 1993 1992 Computed "expected" federal income tax at the statutory rate $ 5,701 6,943 6,068 Increase (decrease) in taxes attributable to: Utility plant basis 448 464 414 State taxes, net of federal income tax benefit 985 1,199 1,092 Dividend received deduction (267) (259) - Other items, net (480) (276) 45 ----- ----- ----- $6,387 8,071 7,619 ===== ===== ===== The components of income tax expense were: 1994 1993 1992 Current: Federal $4,276 4,729 5,003 State 1,683 1,775 1,940 Deferred: Advances and contributions (1,361) (1,641) (837) Depreciation 1,655 1,535 1,802 Other 134 1,673 (289) ----- ----- ----- $6,387 8,071 7,619 ===== ===== =====
The components of the net deferred tax liability as of December 31 were as follows: 1994 1993 Deferred tax assets: Advances and contributions $ 9,751 8,599 Unamortized investment tax credit 1,359 1,366 Pensions and postretirement benefits 693 619 California franchise tax 420 462 Other 104 164 ------ ------ Total deferred tax assets 12,327 11,210 ------ ------ Deferred tax liabilities: Utility plant 18,424 17,111 Investment 4,961 6,765 Debt reacquisition costs 1,456 1,506 Other 295 242 ------ ------ Total deferred tax liabilities 25,136 25,624 ------ ------ Net deferred tax liabilities $ 12,809 14,414 ====== ======
Note 6
EMPLOYEE BENEFIT PLANS
Pension Plans - San Jose Water Company sponsors noncontributory defined benefit pension plans. Benefits under the plans are based on an employee's years of service and highest consecutive three years of compensation. San Jose Water Company's policy is to contribute the net periodic pension cost calculated under generally accepted accounting principles to the extent it is tax deductible.
San Jose Water Company has a Supplemental Executive Retirement Plan which is a defined benefit plan under which the company will pay supplemental pension benefits to key executives in addition to amounts received under the company's retirement plans. The annual cost of this plan has been included in the determination of the net periodic pension cost shown below. The plan, which is unfunded, had a projected benefit obligation of $928 and $887 as of December 31, 1994 and 1993, respectively, and net periodic pension cost of $152, $139 and $7 for 1994, 1993 and 1992, respectively.
Net periodic pension cost for defined benefit plans was as follows: 1994 1993 1992 Service cost-benefits earned during the period $ 637 572 666 Interest cost on projected benefit obligation 1,290 1,256 1,047 Actual return on plan assets 347 (1,368) (1,000) Net amortization and deferral (1,802) (69) (556) ----- ----- ----- $ 472 391 157 ===== ===== ===== The actuarial present value of benefit obligations and the funded status of San Jose Water Company's defined benefit pension plans as of December 31 were as follows:
1994 1993 Actuarial present value of accumulated benefit obligation, including vested benefits of $11,821 and $13,518 $12,717 13,842 ====== ====== Projected benefit obligation (16,095) (17,883) Plan assets at fair value 18,159 18,786 ------ ------ Plan assets in excess of projected benefit obligation 2,064 903 Unrecognized net gain (4,657) (3,533) Prior service cost not recognized in net periodic pension cost 1,502 1,633 Unrecognized net obligation at January 1, 1987 and 1992 being recognized over 15 and 13.7 years 226 230 ----- ----- Accrued pension cost included in other current liabilities $(865) (767) ===== =====
The plans invest primarily in listed stocks, bonds, government securities and cash and use the projected unit credit actuarial cost method. Average remaining service lives were 14.9 years for 1994 and 15.1 years for 1993.
In determining net periodic pension cost for 1994, 1993 and 1992 the following assumptions were used: weighted average discount rate, 7.0%, 8.0% and 8.0%, respectively; compensation growth rate, 5.0%, 6.0% and 6.0%, respectively; and rate of return on plan assets, 8.0% for all years. In determining accrued pension cost as of December 31, 1994 and 1993, the following assumptions were used: weighted average discount rate, 8.5% and 7.0%, respectively; and compensation growth rate, 5.0% for both years.
Savings Plans - San Jose Water Company sponsors savings plans which allow employees to defer and contribute a portion of their earnings to the plans. Contributions, not to exceed set limits, are matched 50% by the company. Company contributions were $266, $241 and $232 in 1994, 1993 and 1992, respectively.
Other Postretirement Benefits - In addition to providing pension and savings benefits, San Jose Water Company provides health care and life insurance benefits for retired employees. The Plan was amended in 1993 to reduce benefits and increase eligibility requirements. The changes reduced the 1993 net periodic postretirement benefit cost by approximately 50%.
Net periodic postretirement benefit cost was as follows:
1994 1993 1992 Service cost - benefits earned during the period $ 40 43 89 Interest cost on benefit obligation 89 102 182 Amortization of transition obligation over 20 years 50 59 116 --- --- --- $ 179 204 387
Expense recognized in 1994, 1993 and 1992 amounted to $200. The difference between the net periodic postretirement benefit cost shown above and the amount recognized in the accompanying consolidated financial statements is recoverable in future rates and has been recorded as a regulatory asset. Benefits paid were $72, $70, and $71 in 1994, 1993 and 1992, respectively.
The Plan's combined funded status and the related accrual as of December 31 were as follows:
1994 1993 Accumulated postretirement benefit obligation: Retirees $ (593) (690) Active plan participants: Fully eligible (112) (176) Other (390) (753) ----- ----- (1,095) (1,619) Plan assets 139 62 ----- ----- Accumulated postretirement obligation in excess of plan assets (956) (1,557) Unrecognized net gain from past experience and changes in assumptions (480) 92 Unrecognized net transition obligation 1,004 1,064 ----- ----- Accrued postretirement benefit cost included in other current liabilities $ (432) (401)
For measurement purposes, an 8.5% annual increase in the per capita cost of covered health care benefits was assumed for 1995; this increase was assumed to decrease gradually to 5% by 2002 and remain at that level thereafter. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 8.5% for 1994 and 7% for 1993. In determining the net periodic postretirement benefit cost, 7% and 8% discount rates were used respectively for 1994 and 1993.
The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates by 1% each year would increase the accumulated postretirement benefit obligation as of December 31, 1994 by $61 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1994 by $15.
Note 7
COMMITMENTS
San Jose Water Company purchases water from the Santa Clara Valley Water District (SCVWD). Delivery schedules for purchased water are based on a contract year beginning July 1 and are negotiated every three years under terms of a master contract with SCVWD expiring in 2051.
San Jose Water Company is obligated to purchase a minimum of 90% of the delivery schedule. The amount of water purchased in any year may not be less than 95% of the highest amount agreed to be purchased in any year of the current three-year schedule.
Based on current prices and estimated deliveries, San Jose Water Company expects to purchase at least $18,000 of water from SCVWD in each contract year ending June 30, 1995 through 1996.
San Jose Water Company and Western Precision, Inc. have combined operating lease commitments amounting to approximately $268 for 1995, $156 for 1996, and $85 for 1997 through 1999.
Note 8
SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental information on cash flows and noncash transaction is as follows: 1994 1993 1992 Cash paid during the year for: Interest $4,482 4,998 4,041 Income taxes 5,760 8,028 11,485
Noncash Investing and Financing Activities: Fair value of assets acquired - - 16,450 Liabilities assumed - - 1,752 Stock issued (net) - - 14,698 Series C senior notes exchanged for Series AA first mortgage bonds - 10,000 - Adjustments to purchase price 488 (426) -
Note 9
CONTINGENCY
In October, 1993 San Jose Water Company was named as a defendant in a lawsuit filed in San Jose, California, seeking damages resulting from the flooding of a local title company's basement. In 1992, a large diameter water line providing standby fire protection service to the title company ruptured, filling the basement and an abandoned oil cistern in that basement with water, damaging the real property and the title company's records. The company maintains that the failed pipeline was the property of the building owner and that the company is not liable for any damage.
Due to the impact of the oil, San Jose Water Company's insurer has reserved its rights to deny coverage, but is providing the defense. Trial began in January 1995, and certain legal issues may generate appeals. Because of the uncertainties of liability and insurance coverage issues, the company at this time has no certain measure on the size of loss, if any, to the company. If a judgment is found against the company, it is believed that the award would be within the limits of the company's insurance coverages, but that some or all of the company's insurers may deny the resulting duty to indemnify, leading to further insurance coverage litigation.
NOTE 10
UNAUDITED QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows:
1994 Quarter Ended March June September December
Operating revenue $ 18,991 26,715 31,888 21,828 Operating income 1,786 4,086 4,895 3,000 Net income 824 3,137 3,923 2,018 Earnings per share .25 .97 1.21 .62 Market price range of stock: High 42 1/2 39 1/8 36 1/8 36 Low 37 7/8 35 1/2 34 1/2 31 3/4 Dividends per share .525 .525 .525 .525
1993 Quarter Ended March June September December
Operating revenue $ 17,176 23,847 31,469 22,553 Operating income 2,308 3,372 5,673 3,607 Net income 1,391 2,397 4,695 3,284 Earnings per share . 43 .74 1.45 1.02 Market price range of stock: High 41 39 5/8 39 40 1/4 Low 34 3/4 35 7/8 36 1/4 35 3/4 Dividends per share .51 .51 .51 .51
Schedule II SJW CORP. ------------- Valuation and Qualifying Accounts and Reserves Years ended December 31, 1994, 1993 and 1992
Description 1994 1993 1992 ----------- ------ ------ ------ Allowance for doubtful accounts Balance, beginning of period $ 50,000 50,000 50,000 Charged to expense 188,171 203,854 223,345 Accounts written off (226,962) (249,036) (264,105) Recoveries of accounts written off 38,791 45,182 40,760 ------- ------- ------- Balance, ending of period 50,000 50,000 50,000 ======= ======= ======= Reserve for self insurance Balance, beginning of period 456,191 447,734 150,000 Charged to expense 200,000 110,000 365,000 Payments (346,724) (101,543) (67,266) ------- ------- ------- Balance, ending of period $ 309,467 456,191 447,734 ======= ======= =======
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
DIRECTORS OF THE REGISTRANT
A brief biography of each nominee (including the nominee's business experience during the past 5 years) is set forth below. All nominees are currently directors of SJW Corp. (the Corporation) and have served in such capacity since the Corporation was organized in 1985, except Mr. Gibson who has served since 1986, Mr. DiNapoli who has served since 1989, Mr. Toeniskoetter who has served since 1991, Mr. Cali who has served since 1992 and Mr. Roth who was elected to the Board on October 20, 1994. All nominees are also directors of San Jose Water Company, a wholly-owned public utility water corporation subsidiary of the Corporation and SJW Land Company, a wholly owned real estate development company subsidiary of the Corporation. It is the Corporation's intention to appoint all persons elected as directors of the Corporation at the annual meeting to be directors of San Jose Water Company and SJW Land Company for a concurrent term.
MARK L. CALI, Attorney at Law, with the firm, Bledsoe, Cathcart, Diestel, Livingston and Pedersen. Formerly he was with the firm Jencks & Hunt from May 1994 through October 1994 and prior to that with Ropers, Majeski, Kohn, Bentley, Wagner and Kane from October 1990 through May 1994. Before his employment as an attorney, Mr. Cali attended Santa Clara University Law School. Mr. Cali, age 29, has served as a director of San Jose Water Company since 1992.
J. PHILIP DiNAPOLI, Attorney at Law, Chairman of Citation Insurance Company (Worker's Compensation specialty carrier) and Comerica California Inc. (California bank holding company); he serves as a director of Comerica, Inc. (bank holding company) and Comerica Bank-California (bank); he is also the owner of DiNapoli Development Company (real estate development company). Mr. DiNapoli, age 55, is a member of the Audit Committee and has served as a director of the San Jose Water Company since 1989. Mr. DiNapoli is a general partner of a partnership which owned, through another general partnership, certain real estate in San Jose, California. In 1993, a nonrecourse loan to the partnership secured by the real estate was declared in default and the lender put the property in receivership and foreclosed on the property. This property was only one of many real estate investments of Mr. DiNapoli and was not material in relation to his total net worth.
DREW GIBSON, President of the Gibson Speno Company (real estate development and investment company) and President of the Gibson Speno Management Company (management company). He also serves as a director of Comerica California Inc. (California bank holding company) and its subsidiary Comerica Bank-California (bank). Mr. Gibson, age 52, is a member of the Audit and Compensation Committees and has served as a director of San Jose Water Company since 1986.
RONALD R. JAMES, President Emeritus of the San Jose Chamber of Commerce (business promotion organization), formerly President and Chief Executive Officer of the Chamber. Mr. James, age 66, is a member of the Executive, Audit and Compensation Committees and has served as a director of San Jose Water Company since 1974.
GEORGE E. MOSS, Vice Chairman of the Board of Roscoe Moss Manufacturing Company (manufacturer of steel water pipe and well casing). Mr. Moss was formerly President of the Roscoe Moss Company (holding company). Mr. Moss, age 63, is a member of the Compensation Committee and has served as a director of San Jose Water Company since 1984. Mr. Moss also serves as a director of Western Precision, Inc.
ROSCOE MOSS, JR., Chairman of the Board of Roscoe Moss Manufacturing Company (manufacturer of steel water pipe and well casing). Mr. Moss was formerly Chairman of the Board of Roscoe Moss Company (holding company). Mr. Moss, age 65, is a member of the Corporation's Executive and Compensation Committees. Mr. Moss has served as a director of San Jose Water Company since 1980. Mr. Moss also serves as a director of Western Precision, Inc.
W.R. ROTH, Vice President since April 1992 and Chief Financial Officer and Treasurer of the Corporation since January 1990. He has been President and Chief Operating Officer of San Jose Water Company since October 1994. He was Vice President of San Jose Water Company from April 1992 until July 1994 and Senior Vice President from July 1994 until October 1994. He served as Chief Financial Officer and Treasurer from January 1990 until October 1994. Prior to January 1990, Mr. Roth was employed as a Senior Manager with KPMG Peat Marwick. Mr. Roth, age 42, was elected as a director of San Jose Water Company and SJW Land Company on October 20, 1994.
CHARLES J. TOENISKOETTER, President of Toeniskoetter & Breeding Inc. (construction and real estate development company). Mr. Toeniskoetter, age 50, is a member of the Audit Committee and has served as a director of San Jose Water Company since 1991.
J.W. WEINHARDT, President and Chief Executive Officer of the Corporation; Chairman of the Board and Chief Executive Officer of San Jose Water Company. Prior to his election to Chairman of the Board in October 1994, he was President of the San Jose Water Company. Mr. Weinhardt, age 64, is a member of the Corporation's Executive Committee and has served as a director of San Jose Water Company since 1975 and Western Precision Inc., since 1992. Mr. Weinhardt also serves as a director of California Water Service Company, SJNB Financial Corp. and its subsidiary San Jose National Bank.
Nominees Roscoe Moss, Jr. and George Moss are brothers. Other than the family relationship described in the preceding sentence, no nominee has any family relationship with any other nominee or with any executive officer.
In the unanticipated event that a nominee is unable or declines to serve as a director at the time of the annual meeting or other organization that is a parent, subsidiary, or other affiliate of the corporation, proxies will be voted for any nominee named by the present Board of Directors to fill the vacancy. As of the date of this Proxy Statement, the Corporation is not aware of any nominee who is unable or will decline to serve as a director.
No nominee is or has been employed in his principal occupation or employment during the past 5 years by a corporation or other organization that is a parent, subsidiary, or other affiliate of the Corporation, other than Mr. Weinhardt and Mr. Roth whose employment relationship with San Jose Water Company is described above and Mr. George Moss and Mr. Roscoe Moss, Jr. whose former employment relationship with the Roscoe Moss Company (now Western Precision, Inc.), a subsidiary of the corporation is described above.
The Corporation and San Jose Water Company pay their non-employee directors annual retainers of $3,000 and $13,200, respectively. In addition, all directors of the Corporation and San Jose Water Company are paid $700 for each Board or committee meeting attended. SJW Land Company directors are paid $250 for each Board meeting attended.
Upon ceasing to serve as a director of the Corporation or San Jose Water Company, as the case may be, directors or their estate are currently entitled to receive from the respective corporation a benefit equal to the annual retainer paid to its directors. This benefit will be paid for the number of years the director served on the board up to a maximum of 10 years.
The Board of Directors has an Executive Committee, an Executive Compensation Committee and an Audit Committee. The Audit Committee reviews the results of the annual audit, the financial statements, any supplemental management information submitted by the auditors, and internal accounting and control procedures. It also recommends the selection of auditors to the Corporation's shareholders. The Compensation Committee reviews and recommends to the Board of Directors appropriate compensation for executive officers of the corporation. There is no standing nominating committee. During 1994, there were 4 regular meetings of the Board of Directors and 3 regular meetings of the Audit Committee and 2 meetings of the Executive Compensation Committee. All directors attended at least 75% of all Board and applicable committee meetings.
Executive Officers of the Registrant.
Name Age Offices and Experience
J. W. Weinhardt 64 SJW Corp. - President, Chief Executive Officer, Director and Member of the Executive Committee of the Board of Directors since 1985.
San Jose Water Company - Chairman of the Board since October 1994, President, Chief Executive Officer, Director and Member of the Executive Committee of the Board of Directors since 1974. Mr. Weinhardt has been with San Jose Water Company since 1963.
W. R. Roth 42 SJW Corp. - Vice President, Chief Financial Officer and Treasurer since April 1992, Chief Financial Officer and Treasurer since January 1990.
San Jose Water Company - President and Chief Operating Officer since October 1994. Senior Vice President since July 1994, Vice President, Finance since April 1992, Chief Financial Officer and Treasurer since January 1990. For the nine consecutive years preceding January 1990 Mr. Roth was employed by KPMG Peat Marwick, the last three years as a Senior Manager.
F. R. Meyer 55 San Jose Water Company - Vice President, Regulatory Affairs since January 1990. Vice President, Finance since 1984 and Chief Financial Officer and Treasurer from 1978 to January 1990.
P. J. Schreiber 57 San Jose Water Company - Vice President, Operations since March 1984 and Directing Manager of Operations since 1978. Mr. Schreiber has been with San Jose Water Company since 1962.
R. J. Balocco 45 San Jose Water Company - Vice President, Administration since March 1992, Manager of Customer Service since January 1985. Mr. Balocco has been with San Jose Water Company since December 1982.
B. Y. Nilsen 53 SJW Corp., Secretary since 1985. San Jose Water Company - Secretary since 1983. Ms. Nilsen has been with San Jose Water Company since 1964.
No executive officer has any family relationship to any other executive officer or director. No executive officer is appointed for any set term. There are no agreements or understandings between any executive officer and any other person pursuant to which he was selected as an officer, other than those with directors or officers of SJW Corp. acting solely in their capacities as such.
Compliance With Section 16(a) of the Exchange Act.
Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's executive officers and directors, and persons who own more than ten percent of a registered class of the Corporation's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the American Stock Exchange. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Corporation with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such reports received by it, or written representations from certain reporting persons that no other reports were required during 1994, SJW Corp. believes that during 1994 all officers, directors and greater than ten percent beneficial owners were in compliance with all Section 16(a) filing requirements.
Item 11.
Item 11. Executive Compensation.
The following table contains certain summary information regarding the cash compensation paid by the Corporation and its subsidiaries for each of the corporations last three completed fiscal years to the President and Chief Executive Officer and to four other executive officers whose total annual salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE Annual Compensation(1) Long Term Compensation(1) --------------------- ------------------------- Awards Payouts Other ------ -------- Name and Annual Restricted All Other Principal Compen- Stock Options/ LTIP Compen- Position Year Salary Bonus sation Award(s) SAR's Payouts sation ------------- ---- ----- ----- ------ ------ ----- ------ ------ ($) ($) ($) ($) ($) ($) ($) J.W. Weinhardt 1994 268,750 8,858(2) President 1993 253,750 90,000 9,297(2) and Chief 1992 238,750 11,564(2) Executive Officer SJW Corp., Chairman and Chief Executive Officer San Jose Water Company
W.R. Roth 1994 134,304 3,961(3) Vice President 1993 114,416 3,190(3) SJW Corp., 1992 98,300 2,950(3) President San Jose Water Company and Vice President Western Precision, Inc.
F.R. Meyer 1994 130,500 3,915(3) Vice President 1993 124,500 3,735(3) San Jose Water 1992 118,417 3,553(3) Company
P.J. Schreiber 1994 117,542 3,494(3) Vice President 1993 112,042 3,361(3) San Jose Water 1992 106,542 3,196(3) Company
R.J. Balocco 1994 103,125 3,075(3) Vice President 1993 98,583 2,957(3) San Jose Water 1992 92,833 2,785(3) Company
(1) Long Term Compensation Award or Payout Plans are not provided to employees of the Corporation or its subsidiaries. (2) Represents matching contributions paid by the San Jose Water Company under its Salary Deferral Plan of $4,500 for 1994, $4,497 for 1993 and $4,364 for 1992, the balance are amounts received for Directors fees. (3) Represents matching contributions paid by the San Jose Water Company under its Salary Deferral Plan.
The foregoing table does not include benefits provided under San Jose Water Company's Retirement Plan (the "Retirement Plan") or Supplemental Executive Retirement Plan (SERP).
All employees of San Jose Water Company participate in the Retirement Plan. Although subject to adjustment to comply with Internal Revenue Code requirements, the plan's regular benefit formula provides for a monthly retirement benefit equal to 1.6% of the employee's average monthly compensation for each year of credited service. Compensation means the employee's regular salary prior to reduction under the Deferral Plan. The plan also contains a minimum benefit formula which, although also subject to adjustment, provides for a monthly retirement benefit equal up to 55% of the employee's average compensation for the highest 36 consecutive months of compensation less 50% of primary social security benefits. This minimum monthly benefit is reduced by 1/30th for each year of credited service less than 30 years. Benefits vest after 5 years of service or at age 65; there are provisions for early retirement. In addition, in 1992, the Board of Directors of San Jose Water Company adopted a nonqualified, unfunded Supplemental Executive Retirement Plan (SERP) for certain executives and officers of San Jose Water Company. It is intended that the SERP in combination with the Retirement Plan will provide the covered executives and officers with a total retirement benefit commensurate with executives and officers of other comparable private water utilities. A minimum of twenty years of service is required for vesting in the SERP. The amounts contributed to the Retirement Plan by San Jose Water Company to fund retirement benefits with respect to any individual employee cannot be readily ascertained. The following table sets forth combined estimated retirement benefits, payable as a straight life annuity, assuming retirement at age 65 using the minimum benefit formula and the SERP:
PENSION PLAN TABLE
Years of service(1)(2)(3)(4) Average compensation 15 Years 20 Years 25 Years 30 Years 35 Years
$100,000(5) $25,000 $ 44,000 $ 49,500 $ 55,000 $ 55,000 $125,000(5) $31,250 $ 55,000 $ 61,875 $ 68,750 $ 68,750 $150,000(5) $37,500 $ 66,000 $ 74,250 $ 82,500 $ 82,500 $175,000(5) $37,500(7) $ 77,000 $ 86,625 $ 96,250 $ 96,250 $200,000(6) $37,500(7) $121,700 $132,700 $143,700 $149,000 $225,000(6) $37,500(7) $136,900 $149,200 $161,600 $167,600 $250,000(6) $37,500(7) $152,100 $165,800 $179,600 $186,200 $275,000(6) $37,500(7) $167,300 $182,400 $197,500 $204,800 $300,000(6) $37,500(7) $182,500 $199,000 $215,500 $223,400 $325,000(6) $37,500(7) $197,700 $215,600 $233,400 $242,100 $350,000(6) $37,500(7) $212,900 $232,200 $251,400 $260,700
(1) The benefits listed in the table under the 15 years column are subject to deduction of 50% of the participant's social security benefits at age 65. (2) The number of years of credited service and covered compensation at December 31, 1994 is for Mr. Weinhardt, 31, $268,750; Mr. Meyer, 16, $130,500; Mr. Roth, 4, $134,304; Mr. Schreiber, 32, $117,542; Mr. Balocco, 12, $103,125. (3) Applicable laws and regulations limit the amounts which may be paid. (4) No additional benefits are accrued at the present time. (5) Range of benefits apply to Messers. Meyer, Roth and Schreiber only. (6) Range of benefits apply to Mr. Weinhardt only. (7) Compensation is limited to $150,000 in 1994 for the Retirement Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Drew Gibson, a director and member of the Corporation's Compensation Committee is a partner in the Gibson Speno Company which was compensated for consulting services as disclosed under Transactions with Management. No member of the Compensation Committee is a former or current officer or employee of the Corporation or any of its subsidiaries.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following sets forth, as of January 1, 1995, the beneficial ownership of shares of the outstanding Common Stock of the Corporation by each director or nominee to the Board, each beneficial owner of more than 5% of the common stock, each officer listed in the summary compensation table and the executive officers of the Corporation as a group. Each nominee has sole voting and sole investment power with respect to the shares of the Corporation's stock listed below (or shares such powers with his spouse).
Amount and Percent of Nature of class Class of beneficial beneficially Name stock ownership owned ____ ________ _________ ________ Directors:
Mark L. Cali Common 2,159 * J. Philip DiNapoli Common 600 * Drew Gibson Common 500 * Ronald R. James Common 200 * George E. Moss Common 527,156(1) 16.2%(2) Roscoe Moss, Jr. Common 521,878 16.1%(2) W.R. Roth Common 100 * Charles J. Toeniskoetter Common 100 * J.W. Weinhardt Common 5,150 * Executive Officers: Fred R. Meyer Common 900 * P.J. Schreiber Common 1,162 * R.J. Balocco Common 186 * All directors and executive officers as a group (14 individuals) Common 1,061,455 32.6%
*Denotes an amount less than 1%. (1) Mr. Moss disclaims beneficial ownership as to 148,483 shares. (2) The address for Mr. George E. Moss and Mr. Roscoe Moss, Jr. is 4360 Worth Street, Los Angeles, CA 90063.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Transactions with Management
SJW Land Company and San Jose Water Company, subsidiaries of the Corporation, retained Gibson Speno Company, of which Mr. Gibson, a director of the Corporation, is a partner, to perform certain consulting services during the year 1994. The Gibson Speno Company was paid $125,000 for consulting services and reimbursed $75,606 for reimbursement of subcontractor costs.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) (1) Financial Statements
Page
Independent Auditors' Report, January 20, 1995 15
Consolidated Balance Sheet as of December 31, 1994 and 1993 16
Consolidated Statement of Income for the years ended December 31, 1994, 1993 and 1992 18
Consolidated Statement of Changes in Common Shareholders' Equity for the years ended December 31, 1994, 1993 and 1992 19
Consolidated Statement of Cash Flow for the years ended December 31, 1994, 1993 and 1992 20
Notes to Consolidated Financial Statements 21
(2) Financial Statement Schedule:
Schedule Number II Valuation and Qualifying Accounts and Reserves, Years ended December 31, 1994, 1993 and 1992 29
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
(3) Exhibits required to be filed by Item 601 of Regulation S-K.
See Exhibit Index on pages 38 through 39 of this document.
The exhibits filed herewith are attached hereto (except as noted) and those indicated on the Exhibit Index which are not filed herewith were previously filed with the Securities and Exchange Commission as indicated.
(b) Report on Form 8-K. There have been no reports filed on Form 8-K during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SJW CORP. Date: January 26, 1995 By /s/ J. W. Weinhardt J. W. WEINHARDT, President, Chief Executive Officer and Member, Board of Directors
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: January 26, 1995 By /s/ J. W. Weinhardt J. W. WEINHARDT, President, Chief Executive Officer and Member, Board of Directors
Date: January 26, 1995 By /s/ W. R. Roth W. R. ROTH, Vice President, Finance and Chief Financial Officer and Member, Board of Directors
Date: January 26, 1995 By /s/ G. W. Clements G. W. CLEMENTS, Controller
Date: January 26, 1995 By /s/ Mark L. Cali MARK L. CALI Member, Board of Directors
Date: January 26, 1995 By /s/J. Philip DiNapoli J. PHILIP DINAPOLI Member, Board of Directors
Date: January 26, 1995 By /s/Drew Gibson DREW GIBSON Member, Board of Directors
Date: January 26, 1995 By /s/Ronald R. James RONALD R. JAMES Member, Board of Directors
Date: January 26, 1995 By /s/George E. Moss GEORGE E. MOSS Member, Board of Directors
Date: January 26, 1995 By /s/Roscoe Moss, Jr. ROSCOE MOSS, JR. Member, Board of Directors
Date: January 26, 1995 By /s/Charles J. Toeniskoetter CHARLES J. TOENISKOETTER Member, Board of Directors
In accordance with the Securities and Exchange Commission's requirements, the Company will furnish copies of any exhibit upon payment of a 30 cents per page fee. To order any exhibit(s), please advise the Secretary, SJW Corp., 374 West Santa Clara Street, San Jose, CA 95196, as to the exhibit(s) desired. On receipt of your request, the Secretary will provide to you the cost of the specific exhibit(s). The Secretary will forward the requested exhibits upon receipt of the required fee.
EXHIBIT INDEX Location in Sequentially Exhibit Numbered No. Description Copy
2 Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession.
2.1 Stock Exchange Agreement dated as of August 20, 1992 (as amended October 21, 1992). Filed as Appendix A to Proxy Statement/Prospectus dated November 11, 1992. File No. 1-8966. NA
2.2 Registration Rights Agreement entered into as of December 31, 1992 among SJW Corp., Roscoe Moss, Jr. and George E. Moss. Filed as Exhibit 4.1 to Form 8-K January 11, 1993. File No. 1-8966. NA
2.3 Affiliates Agreement entered into as of December 31, 1992 among SJW Corp., Roscoe Moss, Jr. and George E. Moss. Filed as Exhibit 4.2 to Form 8-K January 11, 1993. File No. 1-8966. NA
2.4 Affiliates Agreement entered into as December 31,1992 among SJW Corp., Roscoe Moss Company and Roscoe Moss, Jr. Filed as Exhibit 4.3 to Form 8-K January 11, 1993. File No. 1-8966. NA
3 Articles of Incorporation and By-Laws:
3.1 Restated Articles of Incorporation and By-Laws of SJW Corp., defining the rights of holders of the equity securities of SJW Corp. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. SEC File No. 1-8966. NA
4 Instruments Defining the Rights of Security Holders, including Indentures:
No current issue of the registrant's long-term debt exceeds 10 percent of the total assets of the Company. The Company hereby agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of unregistered senior and subordinated debt of the Company. NA
10 Material Contracts:
10.1 Water Supply Contract dated January 27, 1981 between San Jose Water Works and the Santa Clara Valley Water District, as amended. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. File No.1-8966. NA
Executive Compensation Plans and Arrangements:
10.2 Resolutions for Directors' Retirement Plan adopted by SJW Corp. Board of Directors, as amended. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. S.E.C. File No. 1-8966. NA
Location in Sequentially Exhibit Numbered No. Description Copy
10.3 Resolutions for Directors' Retirement Plan adopted by San Jose Water Company Board of Directors, as amended. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. S.E.C. File No. 1-8966. NA
10.4 Ninth amendment to San Jose Water Company Retirement Plan (As amended and Restated effective January 1. 1981). Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA
10.5 San Jose Water Company Executive Supplemental Retirement Plan adopted by San Jose Water Company Board of Directors. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA
10.6 First Amendment to San Jose Water Company Executive Supplemental Retirement Plan adopted by San Jose Water Company Board of Directors. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA
21 Subsidiaries of the Registrant. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA
99 Additional Exhibits: None