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 March 31, 1995
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 shares outstanding as of April 1, 1995 and as of the
date of this report are 3,250,746.
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
--------------------
SJW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
THREE MONTHS ENDED
MARCH 31
1995 1994
---------------------
Operating revenue $ 18,239 18,991
Operating expense:
Operation:
Purchased water 3,304 3,489
Power 596 757
Pump taxes 2,062 2,794
Other 5,309 5,641
Maintenance 1,702 1,825
Property and other
nonincome taxes 827 716
Depreciation 1,923 1,354
Income taxes 603 629
---------------------
16,326 17,205
---------------------
Operating income 1,913 1,786
Other income 129 147
Dividend income 280 272
Interest and other charges (1,478) (1,381)
---------------------
Net income $ 844 824
=====================
Earnings per share of
common stock $ 0.26 0.25
=====================
Dividends per share
of common stock $ 0.54 0.525
=====================
Weighted average outstanding
common shares 3,250,746 3,236,992
========================
SJW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(In thousands)
MARCH 31 DECEMBER 31
1995 1994
ASSETS -----------------------
Utility plant $ 310,733 308,515
Less accumulated depreciation 96,369 95,083
----------------------
Net utility plant 214,364 213,432
Nonutility property 6,475 7,178
Current assets:
Cash and equivalents 2,287 1,277
Accounts receivable and accrued revenue 6,798 8,540
Prepaid expenses and other 917 3,689
----------------------
10,002 13,506
Other assets:
Investment in California Water Service Co. 16,431 17,599
Debt issuance and reacquisition costs 4,225 4,262
Regulatory asset 3,665 3,672
Goodwill 2,320 2,341
Other 528 540
----------------------
Total other assets 27,169 28,414
----------------------
$ 258,010 262,530
======================
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock $ 10,159 10,159
Additional paid-in capital 22,208 22,208
Retained earnings 71,145 72,056
Unrealized loss on investment (1,015) (325)
----------------------
Total common shareholders' equity 102,497 104,098
Long-term debt, less current maturities 62,500 62,500
----------------------
Total capitalization 164,997 166,598
Current liabilities:
Current maturities of long-term debt 1,500 1,500
Line of credit 3,800 4,800
Accounts payable 568 967
Accrued interest 1,487 2,173
Accrued pump taxes and purchased water 1,946 3,203
Income taxes payable 237 0
Postretirement benefits 992 507
Other current liabilities 2,177 2,092
----------------------
Total current liabilities 12,707 15,242
Deferred income taxes and tax credits 15,073 15,278
Other noncurrent liabilities 2,345 2,605
Advances for and contributions in aid
of construction 62,888 62,807
----------------------
$ 258,010 262,530
======================
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
THREE MONTHS ENDED
MARCH 31
1995 1994
Operating activities: ----------------
Net income 844 824
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,923 1,825
Deferred income taxes and credits 252 283
Changes in operating assets and liabilities:
Accounts receivable and accrued revenue 1,742 166
Prepaid expenses and other 2,772 297
Accounts payable and other
current liabilities (314) 872
Accrued pump taxes and purchased water (1,257) (873)
Income taxes payable 237 384
Accrued interest (686) 78
Other changes, net (845) (207)
----------------
Net cash provided by operating activities 4,668 3,649
----------------
Investing activities:
Additions to utility plant (2,937) (4,859)
Additions to nonutility property (79) (224)
Cost to retire utility plant (129) (52)
Temporary investments 0 195
Net cash proceeds from sale of machine shop 1,954 0
----------------
Net cash used in investing activities (1,191) (4,940)
----------------
Financing activities:
Dividends paid (1,755) (1,707)
Line of credit (1,000) 1,100
Advances and contributions in aid of
construction 507 799
Refunds of advances (219) (239)
----------------
Net cash used in financing activities (2,467) (47)
----------------
Net change in cash and equivalents 1,010 (1,338)
----------------
Cash and equivalents, beginning of period 1,277 2,363
----------------
Cash and equivalents, end of period $ 2,287 1,025
================
Supplemental disclosures of cash flow information:
Cash paid (credited) during period for:
Interest $ 2,069 1,229
Income taxes $ (1,294) 0
SJW CORP. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
March 31, 1995
NOTE I - General
In the opinion of SJW Corp., the accompanying
unaudited condensed 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 SJW Corp.'s 1994 Annual
Report on Form 10-K should be read with the accompanying
condensed consolidated financial statements.
PART I. OTHER INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources:
On November 1, 1995 San Jose Water Company will redeem at
maturity Series N 4.85% first mortgage bonds in the
amount of $1,500,000 plus accrued interest.
At March 31, 1995 San Jose Water Company's weighted
average cost of long-term debt was 8.34% (including
amortization of debt issuance costs) with an average
maturity of approximately 26 years. Under the terms and
conditions of the senior note agreements, San Jose Water
Company currently has additional long-term financing
capacity in excess of $60,000,000.
On April 28, 1995, San Jose Water Company renewed its
unsecured commercial bank line of credit which provides
for unsecured borrowings of up to $20,000,000 at rates
which approximate the bank's prime or reference rate. At
April 28, 1995, San Jose Water Company had $1,800,000
outstanding borrowings on its line of credit.
San Jose Water Company's capital expenditures are
incurred in connection with normal upgrading and
expansion of existing facilities and to comply with
environmental regulations. Capital expenditures for the
next five years are likely to increase from historical
levels due to the addition of new, or expansion of
existing, water treatment and source of supply facilities
and to comply with environmental regulations. Net
capital expenditures for 1995 are estimated at
$15,907,000. For the five year period from 1995 to 1999,
San Jose Water Company's net capital expenditures are
estimated to aggregate $80,000,000. Net capital
expenditures represent gross capital expenditures less
advances and contributions in aid of construction.
San Jose Water Company expects cash flow from operations
and its bank line of credit will provide the funds
necessary to pay for projected capital expenditures
through the end of 1995.
General:
SJW Corp. is a holding company created in 1985 through an
agreement of merger with San Jose Water Company. SJW
Corp. has operational and financial flexibility and can
engage in nonutility activities. San Jose Water Company
is a public utility in the business of providing water
service to approximately 921,000 people in the
metropolitan San Jose area. SJW Land Company, a wholly-
owned subsidiary, was formed in 1985 for the purpose of
real estate development. It operates parking facilities
located adjacent to the Company's headquarters and the
San Jose Arena. Western Precision, Inc., a wholly-owned
subsidiary acquired in 1992, sold its precision
mechanical parts manufacturing facility in March 1995.
Western Precision, Inc. was subsequently renamed W P
Shell Corporation. The only remaining asset of W P Shell
Corporation is 549,976 shares of California Water Service
Company.
Results of Operations:
Overview
SJW Corp.'s consolidated net income for the first quarter
of 1995 was $844,000, an increase of 2% from $824,000 in
the first quarter of 1994. The increase in consolidated
net income is due primarily to the decreased variable
costs of production resulting from the availability of
the lower cost surface water supplies in 1995.
Operating Revenue
The change in consolidated operating revenue from the
same period in 1994 is due to the following factors:
Three months ended March 31,
Operating revenue 1995 vs. 1994
Increase/decrease
_____________________________________________________
Utility:
Rate impact $ 243,000 1.3%
Consumption (715,000) (3.8)%
New customers 95,000 .5%
Real estate (22,000) (0.1)%
Other operations (353,000) (1.9)%
_____________________________________________________
$(752,000) (4.0)%
======= ===
Other operations revenue decreased primarily due to W P
Shell Corporation's sale of the machine shop operation.
Operating expense
The change in consolidated operating expense, excluding
income taxes, from the same period in 1994 is due to the
following:
Three months ended March 31,
Operating Expense 1995 vs. 1994
Operation and maintenance $(1,062,000) (6.4)%
Depreciation 98,000 0.6%
General Taxes 111,000 0.7%
$ (853,000) (5.1)%
The decrease in operation and maintenance expense is
primarily due to reduced water production cost resulting
from the availability of greater surface water supplies,
and from lower customer usage.
Income tax expense decreased $26,000 which is 4% in
comparison to the first quarter of 1994.
Since the water business is highly seasonal in nature, a
comparison of the revenue and expense of the current
quarter with the immediately preceding quarter would not
be meaningful. The first quarter is normally the quarter
with the lowest average usage per metered customer and is
not indicative of the results for the calendar year.
Average usage per metered customer in the first quarter
of 1995 decreased 5% from the first quarter of 1994.
Water Supply
On May 1, 1995, Santa Clara Valley Water District's 10
reservoirs were 98.6% full with 167,796 acre feet of
water in storage -- which is above average for the past
20 years. As of May 1, 1995 the water level in the Santa
Clara ground water basin exceeded the 30-year average.
The heavy rainfall in January and March of 1995 increased
the surface water supplies to the Company. Surface water
is a less costly source of water and its availability
significantly impacts the results of operation.
Regulatory Affairs
San Jose Water Company intends to file a general rate
case application in the second quarter of 1995, for rates
to be effective in the second quarter of 1996. Because
San Jose Water Company's most recent general rate case
decision covered only the three years from 1992 through
1994, it is not authorized to increase rates in 1995.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In October, 1993, 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 claimed a fire service
pipeline ruptured in October, 1992, causing water to
flood the title company's basement. The suit asked
reimbursement for cleanup costs, damages for lost title
records, business related damages and lost rents. San
Jose Water Company 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 took 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 was solely the responsibility of the title
company.
Plaintiff's insurance carrier claimed expenditures in
excess of $5.4 million. During the three month trail
which ended in April, 1995, San Jose Water Company's
insurance carrier agreed to settle that claim for $3.5
million. At trial, the title company reduced its demand
for damages caused by destroyed title files from $21
million to $14 million. The jury awarded the title
company $3.0 million, and San Jose Water Company has
appealed.
San Jose Water Company's insurance carrier previously
advised that it was defending the lawsuit under a
reservation of rights. The insurance carrier stated that
to the extent the damage was caused or enhanced by the
presence of oil, it had no duty to indemnify the San Jose
Water Company due to exclusions in the insurance policy.
It appears from the nature of the jury verdict, however,
that the jurors found that water, not oil, was the
primary cause of the damage to the title company files.
Because of the ongoing uncertainties of the appeal
process and the
insurance company's reservation of rights on
indemnification, San Jose Water Company has no certain
measure on the size of loss, if any, to the company. San
Jose Water Company believes that any final award to
plaintiffs will be within the stated limits of the
company's insurance coverages.
No governmental entity is known to have an unresolved
claim against San Jose Water Company arising from the
release of oil in this incident.
Item 5. OTHER INFORMATION
On April 20, 1995, the Board of Directors declared the
regular quarterly dividend of $.54 per common share. The
dividend will be paid June 1, 1995 to shareholders of
record as of the close of business on May 1, 1995.
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 March 31, 1995.
(b.) Reports on Form 8-K
No reports on Form 8-K have been filed during the
quarter ended March 31, 1995.
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: May 5, 1995 By /s/ W. R. Roth
W. R. ROTH
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SJW Corp.'s
consolidated balance sheet and statements of income and cash flows -- as of and
for the three months ended March 31, 1995, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<CIK> 0000766829
<NAME> SJW CORP.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 214,364
<OTHER-PROPERTY-AND-INVEST> 22,906
<TOTAL-CURRENT-ASSETS> 10,002
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 10,738
<TOTAL-ASSETS> 258,010
<COMMON> 10,158
<CAPITAL-SURPLUS-PAID-IN> 22,208
<RETAINED-EARNINGS> 70,131
<TOTAL-COMMON-STOCKHOLDERS-EQ> 102,497
0
0
<LONG-TERM-DEBT-NET> 62,500
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,500
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 91,513
<TOT-CAPITALIZATION-AND-LIAB> 258,010
<GROSS-OPERATING-REVENUE> 18,239
<INCOME-TAX-EXPENSE> 603
<OTHER-OPERATING-EXPENSES> 15,723
<TOTAL-OPERATING-EXPENSES> 16,326
<OPERATING-INCOME-LOSS> 1,913
<OTHER-INCOME-NET> 271
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 1,340
<NET-INCOME> 844
0
<EARNINGS-AVAILABLE-FOR-COMM> 844
<COMMON-STOCK-DIVIDENDS> 1,755
<TOTAL-INTEREST-ON-BONDS> 1,234
<CASH-FLOW-OPERATIONS> 4,668
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
