Total Number of Pages 9
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1994
Commission file number 1-8966
SJW Corp.
(Exact name of registrant as specified in its charter)
California 77-0066628
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
374 West Santa Clara Street, San Jose, CA 95196
(Address of principal executive offices)
(Zip Code)
408-279-7810
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year changed
since last report)
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Common stock outstanding as of July 1, 1994 and as of the
date of this report is 3,250,746 shares.
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<P>
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
--------------------
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1994 1993 1994 1993
Operating revenue $ 26,715 23,847 45,706 41,024
Operating expense:
Operation:
Purchased water 5,251 6,274 8,740 10,204
Power 1,395 934 2,152 1,307
Pump taxes 4,518 3,005 7,312 4,362
Other 5,238 4,925 10,879 9,670
Maintenance 1,539 1,402 2,893 2,587
Property and other
nonincome taxes 703 656 1,419 1,333
Depreciation 1,755 1,655 3,580 3,310
Income taxes 2,230 1,624 2,859 2,570
------ ------ ------ -----
22,629 20,475 39,834 35,343
------ ------ ------ ------
Operating income 4,086 3,372 5,872 5,681
Other income 147 111 294 284
Dividend income 272 264 544 528
Interest and other charges (1,368) (1,350) (2,749) (2,705)
------- ------- ------- ------
Net income $ 3,137 2,397 3,961 3,788
======= ======= ======= =======
Earnings per share of
common stock $ 0.97 0.74 1.22 1.17
======= ======= ======= =======
Dividends per share
of common stock $ 0.525 0.51 1.05 1.02
======= ======= ======= =======
Weighted average outstanding
outstanding common shares 3,236,992 3,232,377 3,236,992 3,232,377
========= ========= ========= =========
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<P>
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(In thousands)
JUNE 30 DECEMBER 31
1994 1993
ASSETS
Utility plant $ 300,546 293,683
Less accumulated depreciation 92,528 90,030
------- -------
Net utility plant 208,018 203,653
Nonutility property 7,242 6,775
Current assets:
Cash and equivalents 1,288 2,363
Temporary investments - 195
Accounts receivable and accrued revenue 11,514 8,025
Prepaid expenses and other 2,247 3,099
------ ------
Total current assets 15,049 13,682
Other assets:
Investment in California Water
Service Company 19,730 21,999
Debt issuance and reacquisition costs 4,338 4,389
Regulatory asset 4,053 4,060
Goodwill 1,877 1,906
Other 360 387
------- -------
Total other assets 30,358 32,741
------- -------
$ 260,667 256,851
======= =======
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 10,116 10,116
Additional paid-in capital 21,763 21,763
Retained earnings 69,528 68,980
Unrealized gain on investment 932 2,271
------ ------
Total common shareholders' equity 102,339 103,130
Long-term debt,
less current maturities 64,000 64,000
------- -------
Total capitalization 166,339 167,130
Current liabilities:
Current maturities of long-term debt 2,000 2,000
Line of credit - -
Accounts payable 790 421
Accrued interest 2,169 1,431
Accrued pump taxes and purchased water 3,868 3,264
Income taxes payable 1,208 -
Postretirement benefits 1,395 1,168
Other current liabilities 2,413 1,787
------- -------
Total current liabilities 13,843 10,071
Deferred income taxes and tax credits 16,039 16,937
Other noncurrent liabilities 1,836 1,933
Advances for and contributions in aid
of construction 62,610 60,780
------- -------
$ 260,667 256,851
======= =======
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<P>
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
SIX MONTHS ENDED
JUNE 30
1994 1993
---- ----
Operating activities:
Net income $ 3,961 3,788
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 3,723 3,310
Deferred income taxes and credits 31 (510)
Changes in operating assets and
liabilities:
Accounts receivable and accrued revenue (3,489) (1,536)
Accounts payable and other
current liabilities 995 294
Accrued pump taxes and purchased water 604 1,451
Conservation fees 0 (244)
Income taxes payable 2,908 1,774
Accrued interest 738 272
Other changes, net (614) 1,020
----- -----
Net cash provided by operating activities 8,857 9,619
----- -----
Investing activities:
Additions to utility plant (8,231) (9,462)
Additions to nonutility property (488) (368)
Cost to retire utility plant (222) (124)
Temporary investments 195 3,405
------ ------
Net cash used in investing activities (8,746) (6,549)
------ ------
Financing activities:
Dividends paid (3,413) (3,321)
Line of credit - (1,594)
Advances and contributions
in aid of construction 2,858 2,867
Refunds of advances (631) (681)
Retirement of long-term debt - (2,500)
------ ------
Net cash used in financing activities (1,186) (5,229)
------ ------
Net change in cash and equivalents (1,075) (2,159)
Cash and equivalents, beginning of period 2,363 5,616
----- -----
Cash and equivalents, end of period $ 1,288 3,457
===== =====
Supplemental disclosures of cash flow information:
Cash paid during period for:
Interest $ 1,878 2,390
Income taxes $ - 1,239
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<P>
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1994
NOTE I - General
In the opinion of SJW Corp., the accompanying
unaudited consolidated financial statements
contain all adjustments, consisting only
of normal recurring adjustments, necessary for the
fair presentation of the results for the interim
periods.
The Notes to Consolidated Financial Statements
incorporated by reference in the Company's 1993 Annual
Report on Form 10-K should be read with the accompanying
consolidated financial statements.
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<P>
PART II. OTHER INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
San Jose Water Company's ("SJWC") liquidity and capital
are provided through cash flow from operations and
through long-term debt and a line of credit. Results of
operations are described in a following section.
SJWC will redeem at maturity, on November 1, 1994, its
4.65% Series M first mortgage bonds in the amount of
$2,000,000. No other redemption or sinking fund payments
for other first mortgage bonds or long-term debt will be
made in 1994.
SJWC's weighted average cost of long-term debt at June
30, 1994, including the amortization of debt issuance
costs, was 8.23% compared to 8.78% at June 30, 1993.
SJWC has a commercial bank line of credit that provides
for unsecured borrowings of up to $15,000,000 at rates
which approximate the bank's prime or reference rate. At
June 30, 1994, SJWC had no outstanding borrowings on its
line of credit.
SJWC's 1994 company-financed (excluding capital
expenditures financed by advances and contributions)
construction budget of $10,500,000 will be funded by cash
flow from operations and, if necessary, line of credit borrowings.
Results of Operations:
Since the water business is highly seasonal in nature,
comparisons of the current quarter with the immediately
preceding quarter are not meaningful. One quarter's
results of operations are not indicative of results for
the entire year.
Quarter ended June 30, 1994
Consolidated earnings per common share for the second
quarter of 1994 were $0.97, compared to earnings of $.74
per common share in the second quarter of 1993.
Second quarter 1994 operating revenue increased
$2,868,000 or 12%, from the second quarter of 1993 due
primarily to a 14% increase in usage by SJWC customers.
Total operating expense increased $2,145,000, or 11%, due
to a lack of surface water which resulted in higher
production costs.
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<P>
Six Months Ended June 30, 1994
Earnings per share for the six months ended June 30, 1994
were $1.22, compared to earnings of $1.17 per common
share for the same period in 1993.
Operating revenue increased $4,682,000 or less than 11%
from 1993, while operating expense increased
approximately $4,491,000 or 13%. The primary reason for the
increase is the change in supply mix from less costly surface
supplies to more costly purchased and pumped supplies. The
substantially lower surface supplies can be expected to
adversely impact the results of operations for the second half
of 1994, resulting in 1994 earnings below those of 1993.
Water Supply:
June brought little or no precipitation to Santa Clara
County, thus rainfall totals finished the season (July 1,
1993 to June 30, 1994) at about 70% of average. The
Company's reservoirs, which store surface supplies, are
at base levels and will not be available to meet water
needs. Ground water levels for basins in Santa Clara County
remain considerably above pre-drought levels.
The California Department of Water Resources reported the
Sacramento River Index for 1993-1994 as "critical".
Statewide runoff is now expected to be only 45% of
average, which is comparable to the 1991 and 1992 drought
years.
As a result of relatively low statewide precipitation and
runoff, imported supplies will be below contract
entitlements during 1994.
Average metered usage for both the second quarter and
year to date increased 14% over similar periods in 1993.
Regulatory Affairs:
On June 22, 1994 the California Public Utilities Commission
rendered its decision on its investigation into the financial
and operational risks of regulated water utilities. They
concluded that no fundamental changes are required in their
ratemaking procedures at this time based on the risks of an
endemic water shortage and increased costs of water quality.
They authorized interest on expense balancing accounts
and will permit water companies to apply to broaden the
coverage of existing water quality memorandum accounts.
The Company and other investor owned water utilities in
California sought to demonstrate that water shortages and
increased water quality costs increased operating and
financial risks and that water utilities should be accorded
a higher rate of return on equity.
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<P>
Item 5. OTHER INFORMATION
On July 21, 1994, the SJW Corp. Board of Directors
declared the regular quarterly dividend of $.525 per
common share. The dividend will be paid September 1,
1994 to shareholders of record as of the close of
business on August 1, 1994.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a.) Exhibits required to be filed by Item 601 of Regulation S-K.
There were no exhibits required to be filed by Item 601
of Regulation S-K for the quarter ended June 30, 1994.
(b.) Reports on Form 8-K
There were no reports filed on Form 8-K during the
quarter ended June 30, 1994.
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<P>
SIGNATURES
Pursuant to the requirements 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: August 12, 1994 By /s/ W. R. Roth
W. R. ROTH
Senior Vice President
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