<PAGE> 1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED SEPTEMBER 8, 1994
PROSPECTUS
550,000 SHARES
[COMPANY LOGO]
CALIFORNIA WATER SERVICE COMPANY
COMMON STOCK
------------------
The Company's Common Stock ("Common Shares") is listed on the New York
Stock Exchange under the symbol "CWT." On September 7, 1994, the last reported
sales price of the Common Shares on the New York Stock Exchange was $34.875 per
share.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------
Per Share $ $ $
- -------------------------------------------------------------------------------------------------
Total(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $175,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
50,000 additional Common Shares at the Price to Public, less the
Underwriting Discounts and Commissions, for the purpose of covering
over-allotments, if any. If all such additional shares are purchased by
the Underwriters, the total Price to Public, Underwriting Discounts and
Commissions and Proceeds to Company will be $ , $ , and
$ , respectively. See "Underwriting."
------------------
The Common Shares offered by this Prospectus are being offered by the
Underwriters named herein, subject to prior sale, when, as and if accepted by
them and subject to certain conditions. It is expected that certificates for the
Common Shares offered hereby will be made available for delivery on or about
, 1994, at the offices of Smith Barney Inc., 388 Greenwich Street, New
York, New York 10013.
------------------
SMITH BARNEY INC. A.G. EDWARDS & SONS, INC.
, 1994
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
California Water Service Company (the "Company") has filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-3 (hereinafter, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act of 1933 (the "1933
Act") with respect to the Common Shares offered hereby. Certain information
contained in this Prospectus summarizes, is based upon, or refers to,
information and financial statements contained in one or more documents
incorporated by reference in the Registration Statement. Accordingly, the
information contained herein is qualified in its entirety by reference to such
documents and should be read in conjunction therewith. Copies of the
Registration Statement may be inspected without charge at the offices of the
Commission, and copies of all or any portion thereof may be obtained from the
Commission upon payment of the prescribed fee.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the Public Reference Section of the Commission, Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at 7 World Trade Center, 13th Floor, New York, New York 10048-1102, and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Common Shares are listed on the New York Stock Exchange ("NYSE"). Reports, proxy
statements and other information concerning the Company can be inspected and
copied at the office of the NYSE at Room 401, 20 Broad Street, New York, New
York.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company filed with the Commission are
incorporated herein by reference (file 0-464): (1) Annual Report on Form 10-K
for the fiscal year ended December 31, 1993; (2) Quarterly Reports on Form 10-Q
for the quarters ended March 31 and June 30, 1994; and (3) all documents filed
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of this Prospectus and prior to the termination of
the offering of the Common Shares made by this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which is incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the foregoing documents incorporated by
reference herein, including exhibits specifically incorporated by reference in
such documents but excluding all other exhibits to such documents. Requests
should be made to Harold C. Ulrich, Vice President, Chief Financial Officer and
Treasurer, California Water Service Company, 1720 North First Street, San Jose,
California 95112 (Telephone: (408) 451-8200).
2
<PAGE> 3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus and in the documents incorporated herein by
reference. Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriters' over-allotment option will not be exercised.
THE COMPANY
<TABLE>
<S> <C>
Company.................................. California Water Service Company
Business................................. Public utility water company
Service area............................. Service is provided in 20 operating districts located
throughout California from Chico in Northern California to
the Palos Verdes Peninsula in Southern California
Estimated service area population........ 1,500,000
Active customers (June 30, 1994)......... Approximately 364,000
THE OFFERING
Securities offered....................... 550,000 shares of common stock, no par value
Common Shares to be outstanding after the
offering............................... 6,247,034(1)
New York Stock Exchange symbol........... CWT
Common Share price range: January 3,
1994-September 7, 1994................. $33.75 to $41.00
Closing price on September 7, 1994....... $34.875
Indicated annual dividend rate........... $1.98 per share
Use of proceeds.......................... To repay short-term bank borrowings incurred for the
purchase of property and utility plant construction, and for
additional purchases of property and utility plant
construction
</TABLE>
- ---------------
(1) Based upon the number of Common Shares outstanding on August 15, 1994.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED YEAR ENDED DECEMBER 31,
------------------- ----------------------------------
JUNE 30, 1994 1993 1992 1991
------------------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue................................. $ 154,106 $151,716 $139,805 $127,176
Operating expenses................................ 127,057 123,861 116,031 102,855
---------- -------- -------- --------
Net operating income.............................. 27,049 27,855 23,774 24,321
Other income and expenses, net.................... 327 273 169 384
---------- -------- -------- --------
Income before interest expense.................... 27,376 28,128 23,943 24,705
Interest expense.................................. 12,077 12,627 11,414 10,777
---------- -------- -------- --------
Net income...................................... $ 15,299 $ 15,501 $ 12,529 $ 13,928
================== ========= ========= =========
Net income available for common shareholders...... $ 15,146 $ 15,348 $ 12,376 $ 13,775
Earnings per Common Share......................... $ 2.66 $ 2.70 $ 2.18 $ 2.42
Average Common Shares outstanding................. 5,692 5,689 5,689 5,689
Dividends per Common Share........................ $ 1.95 $ 1.92 $ 1.86 $ 1.80
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1994 (UNAUDITED)
-----------------------------------------------
ACTUAL AS ADJUSTED(1)
-------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Common shareholders' equity.................................. $124,056 48.2% $142,223 51.7%
Preferred stock.............................................. 3,475 1.4 3,475 1.3
First mortgage bonds......................................... 129,608 50.4 129,608 47.0
-------- ------- -------- -------
Total capitalization................................ $257,139 100.0% $275,306 100.0%
========= ====== ========= ======
Short-term borrowings........................................ $ 18,800 --
</TABLE>
- ---------------
(1) Adjusted to reflect the sale of the 550,000 Common Shares offered hereby
and the application of net proceeds therefrom, assuming a public offering
price of $34.875 per share.
3
<PAGE> 4
CALIFORNIA WATER SERVICE COMPANY
LOCATION OF OPERATING DISTRICTS AND APPROXIMATE NUMBER OF ACTIVE CUSTOMERS PER
DISTRICT
(MAP)
<TABLE>
<CAPTION>
APPROXIMATE NO. OF
ACTIVE CUSTOMERS
OPERATING DISTRICTS (JUNE 30, 1994)
- --------------------------- -------------------
<S> <C>
APPROXIMATE NO. OF
OPERATING DISTRICTS ACTIVE CUSTOMERS
(CONTINUED) (CONTINUED)
- --------------------------- -------------------
SAN FRANCISCO BAY AREA
Mid-Peninsula 35,200
South San Francisco 15,300
Bear Gulch 17,100
Los Altos 17,700
Livermore 14,800
SACRAMENTO VALLEY
Chico 20,400
Oroville 3,500
Marysville 3,800
Dixon 2,700
Willows 2,200
SALINAS VALLEY
Salinas 22,800
King City 1,800
SAN JOAQUIN VALLEY
Bakersfield 54,400
Stockton 40,700
Visalia 25,900
Selma 4,600
LOS ANGELES AREA
East Los Angeles 26,400
Hermosa Beach/Redondo Beach 24,700
Palos Verdes 23,400
Westlake 6,600
-------
TOTAL CUSTOMERS 364,000
</TABLE>
4
<PAGE> 5
THE COMPANY
California Water Service Company (the "Company") is the largest
California-based investor-owned public utility water company. The Company owns
and operates 20 water systems serving customers in 38 cities and communities and
adjacent territories throughout California. With approximately 364,000 service
connections as of June 30, 1994, the Company provides water service to a
population estimated at approximately 1,500,000. The Company's rates and
operations are regulated by the California Public Utilities Commission (the
"CPUC") with the rates for each district determined separately. See "Recent
Developments -- Rates and Regulation."
Incorporated in California in 1926, the Company provides public utility
water service from Chico in Northern California to the Palos Verdes Peninsula in
Southern California. The Company's business consists of the production,
purchase, storage, purification, distribution and sale of water for domestic,
industrial, public, and irrigation uses, and for fire protection. The Company
also operates three municipal water systems on a contract basis.
The principal executive offices of the Company are located at 1720 North
First Street, San Jose, California. The Company's mailing address is Post Office
Box 1150, San Jose, California 95108, and its telephone number is (408)
451-8200.
USE OF PROCEEDS AND CONSTRUCTION PROGRAM
The net proceeds from the sale of the Common Shares offered hereby are
estimated to be $18.2 million ($19.8 million if the Underwriters' over-allotment
option is exercised in full), assuming a public offering price of $34.875 per
share and after deducting the estimated underwriting discounts and commissions
and offering expenses. Approximately $15.0 million of such proceeds will be used
to repay the Company's outstanding short-term debt incurred for the purchase of
property and the construction, completion, extension or improvement of the
Company's facilities. On September 7, 1994, the Company had outstanding
short-term borrowings of $15.0 million (out of a $30 million borrowing capacity)
with a weighted average interest cost of 6.41%. The amount of short-term debt
outstanding and the interest cost of that debt change from time to time. The
remaining proceeds will be used for the purchase of property and the
construction, completion, extension or improvement of the Company's facilities
during the remainder of 1994. Pending application of such proceeds, the Company
will invest the proceeds in short-term investments.
The Company's capital expenditures for construction and replacement of
utility plant (excluding developer advances and contributions) for 1991, 1992
and 1993 were $21.5 million, $24.1 million and $21.5 million, respectively.
Estimated capital expenditures for construction and replacement of utility plant
(excluding developer advances and contributions) for 1994 and 1995 are $21.6
million ($12.1 million of which had been incurred as of July 31, 1994) and $21.7
million, respectively. The Company's capital expenditures for 1994 and 1995 are
expected to be funded from the net proceeds from the sale of the Common Shares
offered hereby, internally generated funds and an offering of the Company's
first mortgage bonds. The Company has received CPUC authorization to issue an
additional $20 million in first mortgage bonds before December 31, 1994, and
intends to request that such authorization be extended by the CPUC through
December 31, 1995. The foregoing estimates of capital expenditures may be
revised to accommodate the results of the 1994 rate cases (see "Recent
Developments -- Rates and Regulation"), are reviewed periodically by the Company
and are subject to revision at any time.
5
<PAGE> 6
RECENT DEVELOPMENTS
RECENT FINANCIAL RESULTS
The Company's unaudited results of operations for the three months and the
six months ended June 30, 1994 and June 30, 1993 are summarized below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
1994 1993 1994 1993
------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Operating revenue................................. $40,147 $40,503 $70,726 $68,336
Net income........................................ 4,070 4,689 5,465 5,667
Net income available for common shareholders...... 4,032 4,651 5,389 5,591
Earnings per Common Share......................... $ 0.71 $ 0.82 $ 0.95 $ 0.98
</TABLE>
Operating revenue declined and certain operating expenses increased for the
three months ended June 30, 1994, as compared to the three months ended June 30,
1993, causing lower earnings. The second quarter of 1993 was a record second
quarter for the Company, in part because the CPUC authorized the Company to
transfer to revenue water conservation penalties previously collected and to
record revenue lost due to water conservation in 1993. Since this authority
expired in 1993, no similar revenues were recorded in the second quarter of
1994. The loss of this revenue was partially offset by rate relief from the CPUC
and the addition of new customers. Operating revenue for the first six months of
1994 was greater than the first six months of 1993 despite the second quarter
results, because the Company's first quarter 1994 operating revenues were
significantly ahead of last year's first quarter revenues. The increase was
primarily due to rate relief from the CPUC, the addition of new customers and
increased water consumption due to reduced rainfall during the 1993-1994 winter
season. Due to the seasonal nature of the water business, the results for
interim periods are not indicative of the results for a 12-month period.
WATER SUPPLY
The Company's water supply is obtained from wells, surface runoff or
diversion and by purchase from public agencies and other suppliers. During 1993,
the Company obtained approximately 50% of its delivered water from wells, and
50% from various suppliers. On January 1, 1994, water supplies in California's
major reservoirs were double the amount recorded one year earlier when the state
was in its sixth year of drought. The state's reservoir supply was replenished
during 1993 as a result of the abundant runoff which followed the above average
precipitation of the 1992-93 winter season. Although substantial reserves remain
in underground aquifers which serve 16 Company districts, many groundwater
tables have not fully recovered from the effects of the drought. Precipitation
in California for the 1993-1994 winter season averaged about 60% of normal. As a
result, the runoff into reservoirs and the recharge of the underground water
tables were significantly less than the prior winter's and were well below
normal. However, because of the carryover into 1994 of water stored in state
reservoirs and because water tables in the Company's well supply districts
remain at adequate levels, the Company expects to meet demand for the current
year. The Company does not anticipate that mandatory water rationing will be
required in any of its districts through the end of the 1994-1995 winter season,
although the Company will maintain its water conservation efforts through a
variety of customer programs.
RATES AND REGULATION
The CPUC regulates the service and operations of the Company as well as the
rates the Company charges for water service. Rates are set separately for each
of the Company's 20 districts based on the historical and projected expenses and
revenues in each district. As a general matter, each district is treated as a
separate entity for CPUC ratemaking purposes, with the exception that the
expenses of the Company's general office headquarters in San Jose are allocated
among all districts and the Company's cost of capital (i.e., authorized return
on debt and equity) is determined on a Company-wide basis.
6
<PAGE> 7
In 1993, the Company requested general rate increases in three of its
districts (Chico, Oroville and Salinas), which contain approximately 13% of the
Company's customers. In July 1994, the CPUC granted rate increases in these
districts and authorized a 10.2% return on common equity. As a result of these
rate case decisions, the Company's authorized rates for the three districts were
increased by an aggregate of approximately $850,000 or 5.5% on an annualized
basis. However, because of the timing of the decision, the Company expects that
its additional revenues during 1994 from these districts will be only $600,000.
In addition, the rate case decisions authorized additional annual step increases
for the three districts aggregating approximately $650,000 for each of 1995,
1996 and 1997. Finally, the CPUC decisions authorized offset rate increases
(rate increases related to increases in the Company's costs for purchased water,
power and pump tax costs) of approximately $300,000 to amortize the water
production balancing accounts for the Chico and Salinas districts.
In July 1994, the Company filed Notices of Intention to file general rate
cases with the CPUC, initiating the process by which the Company will seek
general rate increases in six districts (Dixon, Los Altos, Marysville, South San
Francisco, Westlake and Willows), which also contain approximately 13% of the
Company's customers. In these general rate cases the Company is requesting a
return on common equity of 12% and is seeking authority to increase rates in the
six districts by an aggregate of approximately $2,900,000 or 12.3% on an
annualized basis beginning in mid-1995, with additional annual step increases
for the six districts aggregating approximately $550,000 for each of 1996, 1997
and 1998. There can be no assurance that the CPUC will grant the requested
return on common equity or any portion of the requested rate increases.
The CPUC issued its final decision in the Order Instituting Investigation
proceeding regarding the risk of water utilities in June 1994. The CPUC
concluded that no fundamental change in ratemaking procedures was necessary at
this time. However, the CPUC authorized utilities to recover interest on water
utility expense balancing accounts and broadened the coverage of existing water
quality memorandum accounts (which track expenditures relating to water quality
for possible rate relief). In addition, the CPUC directed its staff to hold
workshops and formulate recommendations on conservation, water rate design,
performance-based ratemaking, water reclamation, assistance to low-income
families and related legislation.
7
<PAGE> 8
COMMON SHARE PRICE RANGE AND DIVIDENDS
The Common Shares have been listed on the New York Stock Exchange since
April 8, 1994 under the symbol "CWT." Prior to such date, the Common Shares were
traded in the Nasdaq National Market System under the symbol "CWTR."
The following table sets forth, for the periods indicated, the high and low
sale price and the quarterly cash dividend paid per Common Share. The following
prices are from the New York Stock Exchange Composite Tape for periods after
April 8, 1994 and supplied by Nasdaq for all earlier periods.
<TABLE>
<CAPTION>
DIVIDENDS
PRICE RANGE PAID PER
--------------------- COMMON
HIGH LOW SHARE
------ ------ ---------
<S> <C> <C> <C>
1992:
First Quarter......................... $31.00 $26.25 $.465
Second Quarter........................ 33.25 28.00 .465
Third Quarter......................... 34.25 29.50 .465
Fourth Quarter........................ 35.00 29.25 .465
1993:
First Quarter......................... $37.25 $32.50 $ .48
Second Quarter........................ 36.75 32.25 .48
Third Quarter......................... 40.50 33.50 .48
Fourth Quarter........................ 41.25 37.50 .48
1994:
First Quarter......................... $41.00 $34.25 $.495
Second Quarter........................ 36.75 33.75 .495
Third Quarter (through September 7,
1994).............................. 36.00 34.50 .495
</TABLE>
On August 15, 1994, the Company had approximately 4,300 common shareholders
of record. For a recent closing sale price of the Common Shares, as reported on
the New York Stock Exchange Composite Tape, see the cover page of this
Prospectus.
Cash dividends on the Common Shares of the Company have been paid each year
since 1944. The quarterly dividend rate has been increased each year since 1968.
On August 15, 1994, the Company paid a quarterly cash dividend of $.495 per
share to shareholders of record on August 1, 1994. The Board of Directors'
policy has been to pay cash dividends on the Common Shares on a quarterly basis.
Future cash dividends will necessarily be dependent upon the policies of the
Company's Board of Directors and upon the Company's earnings, financial
condition, capital demands and other factors. No assurance can be given that
cash dividends will continue to be paid in a manner consistent with historical
patterns.
The Company has a Dividend Reinvestment Plan pursuant to which shareholders
may automatically reinvest Common Share cash dividends in additional Common
Shares of the Company. No transaction fees are charged in connection with such
purchases. Such additional Common Shares may either be currently outstanding
shares purchased on the open market or be newly issued Common Shares.
DESCRIPTION OF CAPITAL STOCK
The Company is authorized to issue up to 8,000,000 shares of Common Stock,
no par value ("Common Shares"), of which 5,697,034 shares were outstanding on
August 15, 1994, and 380,000 shares, in one or more series, of Preferred Stock,
$25 par value ("Preferred Shares"), of which 139,000 shares of Preferred Stock,
4.4% Series C ("Series C Preferred Shares") were outstanding as of such date.
The following statements are brief summaries of certain provisions relating to
the Common Shares and Preferred Shares contained in the Company's Restated
Articles of Incorporation, as amended (the "Articles") and Bylaws. Such
summaries do
8
<PAGE> 9
not purport to be complete and for a full and complete statement of such
provisions reference is made to the Articles and Bylaws. Such summaries are
qualified in their entirety by such reference.
PREFERRED SHARES
The Board of Directors of the Company is authorized by the Articles to fix
the preferences, limitations, relative rights, qualifications and restrictions
of the Preferred Shares and may establish series of the Preferred Shares and
determine the variations between series. Dividends on Preferred Shares are
payable quarterly at a fixed rate before any dividends can be paid on Common
Shares. The Series C Preferred Share cumulative annual dividend rate is $1.10
per share. Preferred Shares are entitled to eight votes each with the right to
cumulative votes at any election of directors. Series C Preferred Shares are not
convertible to Common Shares. The Series C Preferred Shares are not subject to
any mandatory redemption right and there is no sinking fund for the Series C
Preferred Shares. A premium of $243,250 would be due to the holders of Series C
Preferred Shares upon the voluntary dissolution or liquidation of the Company.
No premium is payable in the event of an involuntary dissolution or liquidation
of the Company. If and when any additional Preferred Shares are issued, the
holders of Preferred Shares may have a preference over holders of the Common
Shares upon the payment of dividends, upon liquidation of the Company, in
respect of voting rights and in the redemption of the capital stock of the
Company.
COMMON SHARES
Holders of the Common Shares are entitled to one vote per share at all
meetings of shareholders. Shareholders are entitled to cumulate their votes for
the election of directors. Dividends that may be declared on the Common Shares
will be paid in an equal amount to the holder of each share. No pre-emptive
rights are conferred upon the holders of the Common Shares and there are no
liquidation or conversion rights. Common Shares have no redemption or sinking
fund provisions and are not subject to further calls or assessments by the
Company. In the event of a liquidation, holders of Common Shares are entitled to
share ratably in all assets remaining after payment of liabilities and the
liquidation preference on any Preferred Stock outstanding. The transfer agent
and registrar for the Common Shares is The First National Bank of Boston.
LIMITATIONS ON DIRECTORS' LIABILITIES AND INDEMNIFICATION
As authorized by California General Corporation Law ("GCL"), the Company's
Articles include provisions limiting the liability of directors of the Company
for monetary damages. The effect of these provisions is to eliminate the rights
of the Company and its shareholders (through shareholders' derivative suits on
behalf of the Company) to recover monetary damages against a director for breach
of the fiduciary duty of care as a director (including breaches resulting from
negligence) except in certain limited situations. This provision does not limit
or eliminate the rights of the Company or any shareholder to seek nonmonetary
relief such as an injunction or rescission in the event of a breach of a
director's duty of care. The Company's Articles require that the Company
indemnify its directors and officers to the fullest extent permitted under and
in accordance with the GCL. The Company's Board of Directors has adopted
resolutions specifying the procedures to be followed by an officer or director
who is seeking indemnification. Such procedures provide for, among other things,
the advancement of expenses by the Company to the officer or director upon
request and upon receipt by the Company of an undertaking to repay such advance
in certain circumstances. The Company believes that these provisions and
agreements will assist the Company in attracting and retaining qualified
individuals to serve as directors and officers.
9
<PAGE> 10
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell an aggregate of 550,000 Common Shares
to Smith Barney Inc. and A.G. Edwards & Sons, Inc. (the "Underwriters"), and
each Underwriter has severally agreed to purchase Common Shares from
the Company.
The Company has been advised by the Underwriters that they propose
initially to offer part of the shares to the public at the public offering price
set forth on the cover page hereof and part to certain dealers at a price which
represents a concession not in excess of $ per share below the public
offering price. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of $ per share to certain other brokers or dealers.
After the initial public offering, the public offering price and such
concessions may be changed. The nature of the Underwriters' obligations is such
that they are committed to purchase all of the Common Shares offered hereby
(other than the over-allotment option shares referred to below) if any such
shares are purchased.
The Company has granted an option to the Underwriters, exercisable within
30 days after the date of the Underwriting Agreement, to purchase up to a
maximum of 50,000 additional Common Shares at the same price per share that the
Company will receive for shares being purchased by the Underwriters as described
above. The Underwriters may purchase such shares only to cover over-allotments
made in connection with the sale of the 550,000 shares referred to above. If the
Underwriters purchase any of the additional Common Shares which are subject to
the over-allotment option, each of the Underwriters will be committed, subject
to certain conditions, to purchase shares.
The Company and the Underwriters have agreed to indemnify each other
against certain liabilities, including liabilities under the 1933 Act, or to
contribute to payments the other may be required to make in respect thereof.
The Company and certain of its officers and directors have agreed that, for
a period of 90 days after the date of this Prospectus, they will not, without
the prior written consent of Smith Barney Inc., sell, contract to sell or
otherwise dispose of any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares, or grant any options or warrants
to purchase Common Shares, other than, in the case of the Company, pursuant to
its dividend reinvestment plan.
LEGAL MATTERS
Certain legal matters with respect to the Company, including the validity
of the Common Shares to be issued in connection with this offering, will be
passed upon for the Company by McCutchen, Doyle, Brown & Enersen, Menlo Park,
California. Certain legal matters will be passed upon for the Underwriters by
Chapman and Cutler, Chicago, Illinois. Chapman and Cutler will rely upon the
opinion of McCutchen, Doyle, Brown & Enersen as to matters of California law.
EXPERTS
The financial statements and schedules of California Water Service Company
as of December 31, 1993 and 1992, and for each of the years in the three-year
period ended December 31, 1993, have been incorporated by reference herein and
in the Registration Statement in reliance upon the report of KPMG Peat Marwick,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG Peat Marwick covering the December 31, 1993 financial statements
refers to changes in accounting for income taxes and postretirement benefits
other than pensions.
10
<PAGE> 11
(THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 12
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NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION, OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER
CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Prospectus Summary.................... 3
The Company........................... 5
Use of Proceeds and Construction
Program............................. 5
Recent Developments................... 6
Common Share Price Range and Dividends... 8
Description of Capital Stock.......... 8
Underwriting.......................... 10
Legal Matters......................... 10
Experts............................... 10
</TABLE>
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550,000 SHARES
[INSERT LOGO]
CALIFORNIA WATER SERVICE COMPANY
COMMON STOCK
------------
PROSPECTUS
, 1994
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SMITH BARNEY INC.
A.G. EDWARDS & SONS, INC.
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