FORM 10-K405
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period ______________to_____________
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, California 95196
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 408-279-7810
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT:
Name of each
exchange on
Title of each class which registered
Common Stock, Par Value $3.125 American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g)
OF THE ACT:
None
(Title of Class)
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the registrant - $80,636,135 on March 1, 1996.
Shares of common stock outstanding on March 1, 1996 - 3,246,146
DOCUMENTS INCORPORATED BY REFERENCE
None
EXHIBIT INDEX
The Exhibit Index to this Form 10-K is located in Part IV, Item 14 of this
document.
TABLE OF CONTENTS
PART I
Item 1. Business
a. General Development of Business
Regulation and Rates
b. Financial Information about
Industry Segments
c. Narrative Description of Business
General
Water Supply
Franchises
Seasonal Factors
Competition and Condemnation
Environmental Matters
Employees
d. Financial Information about
Foreign and Domestic Operations
and Export Sales
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a
Vote of Security Holders
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
a. Market Information
b. Holders
c. Dividends
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Item 8. Financial Statements and
Supplementary Data
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure
PART III
Item 10. Directors and Executive Officers
of the Registrant
Compliance With Section 16(a) of the
Exchange Act
Item 11. Executive Compensation
Item 12. Security Ownership of Certain
Beneficial Owners and
Management
Item 13. Certain Relationships and Related
Transactions
PART IV.
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
Signatures
Exhibit Index
PART I
Item 1. Business.
(a) General Development of Business.
SJW Corp., incorporated in California on February 8, 1985, is a holding company
with two wholly owned subsidiaries, San Jose Water Company and SJW Land Company.
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 928,000 in an area comprising about 134 square miles
in the metropolitan San Jose area.
SJW Land Company was incorporated in October, 1985.
SJW Corp. also owns 549,976 shares of California Water Service Company, acquired
through the liquidation of Western Precision, Inc., formerly a wholly owned
subsidiary of SJW Corp.
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 ( the "Commission").
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
Commission to offset those expense changes. At December 31, 1995 the balancing
account had a net under-collected balance to be offset of $712,000.
This Annual Report contains forward looking statements relating to future events
and financial performance of the company. The company's actual results could
differ materially from those discussed herein. Important factors that could
cause or contribute to such differences include the following:
The Public Utilities Commission of California's policy and regulations can
adversely affect San Jose Water Company's operating results through the
availability, timeliness and amount of rate relief. The Commission's
willingness to allow San Jose Water Company to recover all of its capital
expenditure and to provide financial and operational flexibility to engage in
non-regulated operations can also affect San Jose Water Company's operating
results.
San Jose Water Company's sales and therefore its operating results could be
adversely affected by several events:
Difficulties in obtaining a secured water supply from the Santa Clara
Valley Water District which receives its allotment from the state and federal
water projects could prevent the company from satisfying its customer demand
within its service area;
Fluctuation of customer sales due to lifestyle or weather;
Availability of recycled water and its acceptance by customers as a
substitute to potable water; and
Economic development and growth in San Jose Water Company's service area.
SJW Corp.'s expenses and therefore its operating results could be adversely
affected by the following:
Fluctuation of surface water availability from San Jose Water Company's
Santa Cruz mountain watershed, which produces a less costly water supply, could
result in the need to procure more costly water from other sources;
Stringent environmental and water quality regulations could increase San
Jose Water Company's water quality compliance costs;
Consequences from pollution and contamination of San Jose Water Company's
well and source of supply could result in the need to procure more costly water
from other sources;
The level of labor and non-labor operating and maintenance expenses as
affected by inflationary forces and collective bargaining power could adversely
affect the operating and maintenance expenses of the corporation;
Cost and other effects of lawsuits against SJW Corp. or its subsidiaries,
whether civil, environmental, product-related or liability-related could
increase the corporation's legal, liability and insurance costs.
See also the heading "Factors That May Adversely Affect Future Operation
Results" under Item 7.
Management's Discussion and Analysis of Financial condition and Results of
Operations.
(b) Financial Information about Industry Segments.
San Jose Water Company generated 98%, 94% and 95% of SJW Corp.'s consolidated
revenue, and 91%, 86% and 92% of SJW Corp.'s consolidated income for the years
ended December 31, 1995, 1994 and 1993, respectively. There were no significant
changes in 1995 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 which was sold on
February 28, 1995, generated 1%, 6% and 5% of SJW Corp.'s consolidated revenue
for the years 1995, 1994 and 1993, respectively. Dividend income from
California Water Service generated 8%, 9% and 8% of consolidated income for the
years 1995, 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 approximately 1% of
its water supply in a dry year and 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 1995 climbed to their highest level in 8 years reflecting
the impact of the last rainfall season. SCVWD's reservoir storage of
approximately 140,000 acre feet (82% of capacity) was reported on February 14,
1996.
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 Commission and
operates within a service area approved by the Commission. 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 Commission 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.
(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, 1995, San Jose Water Company had 288 employees, of whom 59
were executive, administrative or supervisory personnel, and of whom 229 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. 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 1995, a maximum and average of 197 million gallons and
126 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, 1995, $2,500,000 (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.
Item 3. Legal Proceedings.
In October 1993, Valley Title Company and its insurer filed a lawsuit in Santa
Clara County Superior Court naming San Jose Water Company as a defendant.
Plaintiffs claimed a fire service pipeline ruptured in October 1992, causing
water to flood the title company's basement.
In April 1995, San Jose Water Company's insurance carrier settled with the
plaintiff insurance company for $3.5 million. Whether or not San Jose Water
Company will be compelled to contribute to the settlement is uncertain.
However, management has consistently maintained that the pollution exclusion
asserted by the insurance carrier does not apply to this type of incident, and
therefore the company will aggressively resist any demand for contribution.
The jury awarded the title company $3 million for its loss of files, and the
insurance carrier for San Jose Water Company has appealed that decision. San
Jose Water Company believes that any final award to the title company will be
within the stated limits of the company's insurance coverage. San Jose Water
Company does not believe, based upon all available information, that the outcome
of the appeal will have a material adverse effect on its financial position.
On June 27, 1995, the City of San Jose passed an ordinance imposing a franchise
fee on the gross annual receipts arising from the use, operation, or possession
of a "Potable Water Franchise". This ordinance became effective on July 28,
1995. San Jose Water Company maintains that it has a "constitutional franchise"
dating from at least 1891, and that the City of San Jose cannot legally impose
any new franchise or new franchise fees on San Jose Water Company's operations.
San Jose Water Company has filed suit to challenge this new city ordinance.
Although the company could have filed an advice letter requesting authorization
to collect the new franchise fee by surcharge from its customers, San Jose Water
Company decided not to impose such a surcharge at this time. Instead, with the
concurrence of the Division of Ratepayer Advocates, San Jose Water Company filed
an advice letter on July 13, 1995 with the Public Utilities Commission
requesting permission to establish a memorandum account for the imposed
franchise fee. A Commission decision issued on November 8, 1995 authorizes San
Jose Water Company to establish such an account. San Jose Water Company will be
able to collect the franchise fee from its customers by surcharge in the event
that its efforts to invalidate the ordinance are unsuccessful. San Jose Water
Company does not believe, based upon all available information, that the outcome
of this event will have a material adverse effect on its financial position.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
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
SJW Corp.'s common stock for each quarter in the 1995 and 1994 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 23, 1996
(record date for the 1996 annual meeting).
(c) Dividends.
Quarterly dividends have been paid on SJW Corp.'s and its predecessor's common
stock for 209 consecutive quarters and the quarterly rate has been increased
during each of the last 28 years. The information required by this item as to
the cash dividends paid on common stock in 1995 and 1994 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. Selected Financial Data.
FIVE YEAR STATISTICAL REVIEW
1995 1994 1993 1992 1991
CONSOLIDATED RESULTS ----- ----- ------ ------ ------
OF OPERATIONS (In thousands)
Operating revenue $ 97,385 99,422 95,045 89,109 76,281
Operating expense:
Operation 57,339 62,648 57,016 54,184 45,897
Maintenance 6,342 6,289 5,417 4,397 3,778
Taxes 10,764 9,426 10,829 10,252 8,681
Depreciation 7,626 7,292 6,823 6,153 5,773
------ ------ ------ ------ ------
Total operating expense 82,071 85,655 80,085 74,986 64,129
------ ------ ------ ------ ------
Operating income 15,314 13,767 14,960 14,123 12,152
Interest expense,
other income and
deductions 3,779 3,865 3,193 3,896 3,704
------ ------ ------ ------ ------
Net income 11,535 9,902 11,767 10,227 8,448
Dividends paid 7,022 6,826 6,637 6,044 5,449
------ ------ ------ ------ -----
Invested in the
business 4,513 3,076 5,130 4,183 2,999
CONSOLIDATED PER COMMON SHARE DATA
Net income $ 3.55 3.05 3.64 3.60 2.98
Dividends paid 2.16 2.10 2.04 2.13 1.92
Shareholders' equity
at year-end 33.49 32.02 31.86 29.70 27.27
CONSOLIDATED BALANCE SHEET (In thousands)
Utility plant $ 324,098 308,515 293,683 272,999 255,325
Less accumulated
depreciation and
amortization 100,000 95,083 90,030 84,158 78,675
------- ------- ------- ------ -------
Net utility plant $ 224,098 213,432 203,653 188,841 176,650
------- ------- ------- ------ -------
Nonutility property 6,624 7,178 6,775 5,465 4,974
Total assets $ 280,497 262,530 256,851 230,198 197,094
======= ======= ======= ======= =======
Capitalization:
Common shareholders'
equity $ 108,854 104,098 103,130 96,155 77,373
Long-term
debt(includes current
maturities) 77,500 64,000 66,000 61,248 45,193
------- ------- ------ ------- -------
Total capitalization $ 186,354 168,098 169,130 157,403 122,566
======= ======= ======= ======= =======
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 two wholly owned subsidiaries: San Jose
Water Company and SJW Land Company. San Jose Water Company is a public utility
in the business of providing water service to a population of approximately
928,000 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 located adjacent to the San Jose Arena and also owns several
undeveloped real estate parcels in San Jose Water Company's service area. SJW
Corp. also owns 549,976 shares of California Water Service Company, acquired
through the liquidation of Western Precision, Inc., formerly a wholly-owned
subsidiary of SJW Corp.
Results of Operations
Consolidated results of operations for the years ended December 31, 1995, 1994
and 1993 include the results of Western Precision, Inc. which was acquired on
December 31, 1992 and disposed of on February 28, 1995.
CONSOLIDATED OPERATING REVENUE
(in thousands)
1995 1994 1993
---------------------------
San Jose Water Company $95,634 92,963 90,496
Western Precision, Inc. 1,051 5,968 4,292
SJW Land Company 700 491 257
---------------------------
$97,385 99,422 95,045
===========================
Consolidated operating revenue for 1995 decreased $2,037,000 or 2% from 1994 due
to the sale of Western Precision, Inc. San Jose Water Company's revenue
increased 3% over 1994 mainly due to a similar growth in customer usage.
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 EXPENSE
(in thousands)
1995 1994 1993
------------------------------
San Jose Water Company $80,069 79,466 75,353
Western Precision, Inc. 1,179 5,547 4,370
SJW Land Company 463 458 204
SJW Corp. 360 184 158
------------------------------
$82,071 85,655 80,085
==============================
In 1995, consolidated operating expense decreased 4% due to cost savings from
increased production of surface water and the sale of Western Precision, Inc. In
1994, consolidated operating expense increased 7%, or $5,570,000 over 1993. The
majority of this increase is attributable to the increased cost of water supply
to 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.
Source of Supply (million gallons)
1995 1994 1993
-----------------------
Purchased water 20,380 19,161 20,313
Ground water 20,365 23,605 17,314
Surface water 5,275 1,663 5,198
------------------------
46,020 44,429 42,825
========================
The effective consolidated income tax rates for 1995, 1994 and 1993 were 40%,
39% and 41%, respectively. Refer to Note 5 of Part II, Item 8 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 1994 due to a $.06 per share
increase in the California Water Service Company annual dividend. The
California Water Service Company shares were acquired on December 31, 1992.
San Jose Water Company's interest expense on long-term debt in 1995, including
capitalized interest, decreased $52,000 or 1%, from 1994 due to a lower average
cost of long-term debt outstanding. San Jose Water Company's weighted average
cost of long-term debt, including amortization of debt issuance costs, was
8.21%, 8.34% and 8.23% as of December 31, 1995, 1994 and 1993, respectively.
Liquidity and Capital Resources
CAPITAL REQUIREMENTS
San Jose Water Company's budgeted capital expenditures for 1996 compared to
1995, exclusive of capital expenditures financed by customer contributions and
advances, are as follows:
1996 1995
(in thousands) Amount % Amount %
-----------------------------------
Source of supply $ 550 4% 251 2%
Reservoirs and tanks 813 5% 1,436 9%
Pump stations and equipment 1,721 11% 1,959 12%
Distribution system 10,171 67% 9,242 58%
Equipment and other 1,949 13% 3,019 19%
-----------------------------------
$15,204 100% $15,907 100%
========================================
The 1996 capital budget is concentrated in two areas: $10,171,000 in main
replacements and related services to systematically replace the company's aging
infrastructure; and $1,250,000 to implement the second phase of a geographical
information and mapping system.
San Jose Water Company expects to incur approximately $80,000,000, exclusive of
customer contributions and advances, in capital expenditures over the next five
years. San Jose Water Company's actual capital expenditures may vary from its
projection due to changes in the expected demand for services, weather patterns,
actions by governmental agencies and general economic conditions. Total
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 its shareholders, in the form of
dividends, an average of 61% 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, 1995, San Jose Water Company
had $20,000,000 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 1995, San Jose Water Company issued $15,000,000 in Series D unsecured 30-year
senior notes and redeemed its $1,500,000 Series N 4.85% first mortgage bonds at
maturity. 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 foreseeable
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) rate relief and regulation, (2) surface water supply, and
(3) 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
(The Commission). The Commission sets rates that are intended to provide
revenue sufficient to recover operating expense and produce a reasonable return
on common equity.
In accordance with the Commission's Rate Case Plan and following months of
intensive preparation, on August 14, 1995, San Jose Water Company filed its
application for a general rate increase effective for the years 1996 through
1998. The company is requesting a return on equity of 12.25% for the years 1996
through 1998. Recent rates of return on common equity authorized by the
Commission have been in the 10.3% to 11.0% range for water utilities.
In December 1995, San Jose Water Company negotiated a stipulated settlement with
the Commission staff over various revenue and expense estimates in the rate
application. The return on equity, and two remaining issues, however, were not
settled but were litigated before the Commission. Based upon the stipulated
settlement, and the Commission's recently authorized return on common equity for
water utilities, the company can expect approximately a 2.0% increase in rates
in 1996, 1.2% in 1997 and 0.5% in 1998. The new rates are expected to be
effective in the spring of 1996.
Included in the rate application were requests for recovery of over $1,800,000
in various memorandum accounts the Commission authorized San Jose Water Company
to open. These memorandum accounts include sales lost due to voluntary
conservation for the period of March 1993 to February 1994, and the increase in
income tax expense due to a change in the federal income tax rate. The recovery
of these memorandum accounts will most likely be approved by the Commission
concurrently with the above rate increase and will be collected ratably over one
year.
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 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.
To comply with the State Total Coliform Regulation, disinfection of San Jose
Water Company wells is being phased in over the next three to four years. To
date, eight of the company's nineteen key groundwater production stations have
been equipped with hypochlorinators, with five more installations to be
completed in 1996. The EPA is expected to mandate disinfection of all
groundwater supplies by 1999.
In 1995, State Assembly Bill No. 733 was signed into law requiring public water
systems in California serving at least 10,000 connections to fluoridate water.
The law provides that water systems would not be required to comply unless
funding for the needed capital and associated costs are available from any
source other than ratepayers, shareholders, local taxpayers or bondholders of
the public water system.
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 state and local hazardous
materials storage regulations.
Other state and local environmental regulations apply to San Jose Water
Company's 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.
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, part of these 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.
NONREGULATED SUBSIDIARIES
The investment in California Water Service Company is expected to produce 1996
pre-tax dividend income and cash flow of approximately $1,100,000. SJW Land
Company's revenue is largely dependent upon the level of events and activities
at the San Jose Arena which is located adjacent to its parking facility.
Item 8. Financial Statements and Supplementary Data.
Financial Statements:
Independent Auditors' Report
----------------------------
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, 1995 and 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1995, 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.
KPMG Peat Marwick LLP
San Jose, California
January 19, 1996
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(December 31, dollars in thousands, except share data)
ASSETS
1995 1994
------ ------
Utility plant $ 324,098 308,515
Less accumulated depreciation 100,000 95,083
------- -------
224,098 213,432
------- -------
Nonutility property 6,624 7,178
Current assets:
Cash and equivalents 7,414 1,277
Temporary investments 4,300 -
Accounts receivable:
Customers 5,315 5,513
Other 284 327
Accrued utility revenue 2,900 2,700
Materials and supplies, at
average cost 643 1,711
Prepaid expenses 595 1,978
------ -------
21,451 13,506
------ -------
Other assets:
Investment in California
Water Service Company 18,012 17,599
Unamortized debt issuance and
reacquisition costs 4,283 4,262
Goodwill 2,256 2,341
Regulatory assets 3,551 3,672
Other 222 540
------- -------
28,324 28,414
------- -------
$ 280,497 262,530
======= =======
CAPITALIZATION AND LIABILITIES
1995 1994
------ ------
Capitalization:
Shareholders' equity:
Common stock, $3.125 par value;
authorized 6,000,000 shares; issued
3,250,746 shares in 1995 and 1994 $ 10,159 10,159
Additional paid-in capital 22,208 22,208
Retained earnings 76,569 72,056
Cumulative change in market value of investment (82) (325)
------- -------
108,854 104,098
Long-term debt, less current maturities 76,500 62,500
------- -------
185,354 166,598
------- -------
Current liabilities:
Current maturities of long-term debt 1,000 1,500
Line of credit - 4,800
Accrued pump taxes and purchased water 3,742 3,203
Accounts payable 690 967
Accrued interest 2,179 2,173
Accrued taxes other than income taxes 311 285
Income taxes payable 447 -
Other current liabilities 2,391 2,314
------ -------
10,760 15,242
------ -------
Deferred income taxes 13,329 12,809
Unamortized investment tax credits 2,414 2,469
Advances for construction 35,805 33,555
Contributions in aid of construction 30,327 29,252
Deferred revenue 1,019 951
Other nonconcurrent liabilities 1,489 1,654
Commitments and contingency ------- -------
$ 280,497 262,530
======= =======
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Years ended December 31, dollars in thousands, except share data)
1995 1994 1993
------ ------ ------
Operating revenue $ 97,385 99,422 95,045
Operating expense:
Operation:
Purchased water 19,389 18,229 20,001
Power 4,781 5,470 4,164
Pump taxes 14,969 17,356 13,095
Other 18,200 21,593 19,756
Maintenance 6,342 6,289 5,417
Property taxes and other nonincome taxes 2,996 3,039 2,758
Depreciation 7,626 7,292 6,823
Income taxes 7,768 6,387 8,071
------ ------ ------
82,071 85,655 80,085
------ ------ ------
Operating income 15,314 13,767 14,960
Other (expense) income:
Interest on long-term debt (4,888) (5,082) (4,489)
Dividends 1,122 1,089 1,056
Other (13) 128 240
------ ------ ------
Net income $ 11,535 9,902 11,767
====== ====== ======
Earnings per share $ 3.55 3.05 3.64
====== ====== ======
Weighted average shares outstanding 3,250,746 3,250,746 3,236,992
========= ========= =========
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
(dollars in thousands) Cumulative
Additional Change in Total
Common Paid-in Retained Market Value Shareholders'
Stock Capital Earnings of investment Equity
------- ------- ------- --------- ------
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
Net income - - 11,535 - 11,535
Dividends paid - - (7,022) - (7,022)
Change in market
value of investment,
net of tax effect
of $170 - - - 243 243
------ ------ ------ ------ -------
Balances,
December 31 1995 $10,159 22,208 76,569 (82) 108,854
====== ====== ====== ====== =======
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Years ended December 31
(dollars in thousands) 1995 1994 1993
------ ------ ------
Operating activities:
Net income $ 11,535 9,902 11,767
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 7,626 7,292 6,823
Deferred income taxes and credits 274 144 1,813
Changes in operating assets and liabilities:
Accounts receivable and accrued utility revenue 41 (515) 525
Accounts payable and other current liabilities (200) 828 (654)
Accrued pump taxes and purchased water 539 (61) 1,074
Conservation fees - - (1,477)
Income taxes payable 447 - -
Prepaid expenses 1,383 95 (1,476)
Other changes, net 532 769 915
------- ------ ------
Net cash provided by operating activities 22,177 18,454 19,310
------ ------ ------
Investing activities:
Additions to utility plant (18,710) (17,350) (22,134)
Cost to retire utility plant, net of salvage (491) (572) (251)
Additions to nonutility property (328) (611) (1,497)
(Purchase) sale of temporary investments (4,300) - 3,600
Net cash proceeds from sale of machine shop 1,954 - -
------- ------ -------
Net cash used in investing activities (21,875) (18,533) (20,282)
------- ------ ------
Financing activities:
Dividends paid (7,022) (6,826) (6,637)
Repayment of line of credit (7,000) (2,400) (1,675)
Borrowings from line of credit 2,200 7,200 -
Advances and contributions in aid of
construction 5,585 4,393 6,501
Refunds of advances (1,428) (1,569) (1,610)
Proceeds from issuance of long-term debt 15,000 - 30,000
Principal payments of long-term debt (1,500) (2,000) (28,665)
----- ----- ------
Net cash provided by (used in)
financing activities 5,835 (1,202) (2,086)
----- ----- -----
Net change in cash and equivalents 6,137 (1,281) (3,058)
Cash and equivalents, beginning of year 1,277 2,558 5,616
----- ----- -----
Cash and equivalents, end of year $ 7,414 1,277 2,558
===== ===== =====
See accompanying notes to consolidated financial statements.
SJW CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1995, 1994 and 1993
(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 providing water service to the greater metropolitan San
Jose area. San Jose Water Company's accounting policies comply with the
applicable uniform system of accounts prescribed by the California Public
Utilities Commission (the Commission) and conform to generally accepted
accounting principles for rate regulated public utilities. More than 90% of San
Jose Water Company's revenue is derived from the sale of water to residential
and business customers.
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.
The consolidated financial results of 1995, 1994 and 1993 included the
operation of Western Precision, Inc., which was sold in February 1995. Western
Precision, Inc. contributed $1,051, $5,968 and $4,292 of SJW Corp.'s operating
revenues in 1995, 1994 and 1993, respectively.
The preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Utility Plant - The cost of additions, replacements and betterments to utility
plant is capitalized. The amount of interest capitalized in 1995, 1994 and 1993
was $245, $103 and $769, respectively. Construction in progress was $1,813 in
1995, $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, ranging from 5 to 75 years. 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 and parking facilities. Depreciation is computed using
accelerated depreciation method over the estimated useful lives of the assets,
ranging from 5 to 15 years.
Financial Instruments - Cash and equivalents include certain highly liquid
investments with remaining maturity of three months or less when purchased.
Cash equivalents are stated at cost plus accrued interest, which approximates
fair value. Temporary investments consist principally of tax-exempt municipal
obligations with maturities between three and twelve months, and are stated at
cost plus accrued interest, which approximates fair value.
Investment in California Water Service Company - 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 shareholders' equity.
The fair value of SJW Corp.'s investment in California Water Service Company
approximated $18,012 and $17,599 as of December 31, 1995 and 1994, respectively.
The increase in fair value of $413, after offsetting the deferred tax
liabilities of $170, resulted in a net increase of $243 to shareholders' equity
as of December 31, 1995.
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. Management periodically evaluates goodwill to determine if an
impairment has occurred. As of December 31, 1995 and 1994, goodwill has not
been impaired.
Income Taxes - Income taxes are accounted for using the asset and liability
method. 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.
To the extent that the tax benefits of the temporary differences have
previously been passed through to customers through lower water rates,
management anticipates that the payment of the future tax liabilities resulting
from the reversal of the temporary differences will be recoverable through
rates. Therefore, a regulatory asset has been recorded for the portion of net
deferred tax liabilities which are expected to be recovered through future
rates. Although realization is not assured, management believes it is more
likely than not that all of the regulatory asset will be realized.
To the extent permitted by the Commission, 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 1996 are $1,300.
Contributions in aid of construction represent funds received from developers
that are not refundable under Commission 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, and unbilled amounts based on estimated usage from the latest meter
reading to the end of the year.
Included in 1993 operating revenue is $1,200 relating to the recovery of prior
years' conservation expenses and $327 of 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, contingently returnable shares.
Note 2
CAPITALIZATION
At December 31, 1995, 1994, and 1993, 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 $20,000. This line of credit
bears interest at variable rates and expires May 31, 1997. The weighted average
interest rate for the short-term borrowings at December 31, 1994 was 7.7%.
Note 4
LONG-TERM DEBT
Long-term debt as of December 31 was as follows:
Description Due Date 1995 1994
-----------------------------------------------------------
First mortgage bonds:
N 4.85% 1995 $ - 1,500
O 6.5% 1996 1,000 1,000
P 6.5% 1997 1,500 1,500
-----------------------------------------------------------
2,500 4,000
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
D 7.15% 2026 15,000 -
-----------------------------------------------------------
75,000 60,000
-----------------------------------------------------------
Total long-term debt 77,500 64,000
Less current maturities 1,000 1,500
-----------------------------------------------------------
$76,500 62,500
===========================================================
First mortgage bonds and senior notes are obligations of San Jose Water
Company. Maturities of long-term debt, including sinking fund requirements,
amount to $1,000 in 1996 and $1,500 in 1997.
Substantially all utility plant is pledged as collateral for first mortgage
bonds. Senior notes are unsecured. To minimize issuance costs, all of San Jose
Water Company's debt has historically been privately placed. The fair value of
long-term debt, including current maturities, as of December 31, 1995 and 1994
was approximately $97,300 and $66,200, based on the amount of essentially risk-
free assets that would have to be placed 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:
1995 1994 1993
-------------------------------------------------------------------------
Computed "expected" federal
income tax at the
statutory rate of 35% $6,756 5,701 6,943
Increase (decrease) in taxes
attributable to:
Utility plant basis 400 448 464
State taxes, net of federal
income tax benefit 1,167 985 1,199
Dividend received deduction (275) (267) (259)
Other items, net (280) (480) (276)
--------------------------------------------------------------------------
$7,768 6,387 8,071
==========================================================================
The components of income tax expense were:
1995 1994 1993
-------------------------------------------------------------------------
Current:
Federal $5,564 4,276 4,729
State 2,041 1,683 1,775
Deferred:
Federal 549 782 1,662
State (386) (354) (95)
-------------------------------------------------------------------------
$7,768 6,387 8,071
==========================================================================
The components of the net deferred tax liability as of December 31 were as
follows:
1995 1994
-------------------------------------------------------------------------
Deferred tax assets:
Advances and contributions $11,466 9,751
Unamortized investment tax credit 1,306 1,359
Pensions and postretirement
benefits 438 693
California franchise tax 538 420
Other 183 104
-------------------------------------------------------------------------
Total deferred tax assets 13,931 12,327
-------------------------------------------------------------------------
Deferred tax liabilities:
Utility plant 20,514 18,424
Investment 5,130 4,961
Debt reacquisition costs 1,406 1,456
Other 210 295
-------------------------------------------------------------------------
Total deferred tax liabilities 27,260 25,136
-------------------------------------------------------------------------
Net deferred tax liabilities $13,329 12,809
=========================================================================
Based upon the level of historical taxable income and projections for future
taxable income over the periods which the deferred tax assets are deductible,
management believes it is more likely than not the company will realize the
benefits of these deductible differences.
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 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 retirement
plan. 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 $1,277 and $928 as of December 31, 1995 and
1994, respectively, and net periodic pension cost of $159, $152 and $139 for
1995, 1994 and 1993, respectively.
Net periodic pension cost for defined benefit plans was as follows:
1995 1994 1993
-------------------------------------------------------------------------
Service cost-benefits earned
during the period $536 637 572
Interest cost on projected
benefit obligation 1,349 1,290 1,256
Actual return on plan assets (3,896) 347 (1,368)
Net amortization and deferral 2,403 (1,802) (69)
--------------------------------------------------------------------------
$392 472 391
==========================================================================
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:
1995 1994
--------------------------------------------------------------------------
Actuarial present value of
accumulated benefit obligation,
including vested benefits of
$16,254 and $11,821 $17,743 $12,717
==========================================================================
Projected benefit obligation (22,300) (16,095)
Plan assets at fair value 22,486 18,159
--------------------------------------------------------------------------
Plan assets in excess
of projected benefit obligation 186 2,064
Unrecognized net gain (1,997) (4,657)
Prior service cost not recognized
in net periodic pension cost 1,463 1,502
Unrecognized net obligation at
January 1, 1987 and 1992 being
recognized over 15 and 13.7 years 223 226
--------------------------------------------------------------------------
Accrued pension cost included
in other current liabilities $(125) (865)
==========================================================================
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 14.5 years for 1995 and 14.9 years for 1994.
In determining net periodic pension cost for 1995, 1994 and 1993 the following
assumptions were used: weighted average discount rate, 8.5%, 7.0% and 8.0%,
respectively; compensation growth rate, 5.0%, 5.0% 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, 1995 and 1994, the following assumptions were
used: weighted average discount rate, 6.5% and 8.5%, respectively; and
compensation growth rate, 4.0% and 5.0%, respectively.
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 $345, $266 and $241 in 1995, 1994 and 1993,
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 costs were as follows:
1995 1994 1993
-------------------------------------------------------------------------
Service cost - benefits earned
during the period $28 40 43
Interest cost on benefit obligation 87 89 102
Actual return on plan assets (5) - -
Amortization of transition
obligation over 20 years 28 50 59
------------------------------------------------------------------------
$138 179 204
========================================================================
Benefits paid were $72, $72 and $70 in 1995, 1994 and 1993, respectively.
The Plan's combined funded status and the related accrual as of December 31
were as follows:
1995 1994
------------------------------------------------------------------------
Accumulated postretirement
benefit obligation:
Retirees $(630) (593)
Active plan participants:
Fully eligible (168) (112)
Other (643) (390)
-----------------------------------------------------------------------
(1,441) (1,095)
Plan assets 218 139
-----------------------------------------------------------------------
Accumulated postretirement
obligation in excess of plan assets (1,223) (956)
Unrecognized net gain from
past experience and changes in
assumptions (151) (480)
Unrecognized net transition
obligation 945 1,004
-----------------------------------------------------------------------
Accrued postretirement benefit cost
included in other current liabilities $(429) (432)
========================================================================
For measurement purposes, an 8.0% annual increase in the per capita cost of
covered health care benefits was assumed for 1996; this increase was assumed to
decrease gradually to 5.0% by 2002 and remain at that level thereafter. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 6.5% for 1995 and 8.5% for 1994. In
determining the net periodic postretirement benefit cost, 8.5% and 7.0% discount
rates were used respectively for 1995 and 1994.
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, 1995 by $103 and the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1995 by $9.
Note 7
COMMITMENT
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.
According to the contract terms, San Jose Water Company is obligated to
purchase a minimum of 90% of the delivery schedule. The delivery schedule is
established based on 95% of water delivered to San Jose Water Company within the
prior three years.
Based on current prices and estimated deliveries, San Jose Water Company
expects to purchase $18,000 of water from SCVWD in the contract year ending June
30, 1996.
Note 8
SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental information on cash flows and noncash transaction is as follows:
1995 1994 1993
-------------------------------------------------------------------
Cash paid during the year for
Interest $5,284 4,482 4,998
Income taxes 5,810 5,760 8,028
Noncash investing and financing activities:
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, Valley Title Company and its insurer filed a lawsuit in
Santa Clara County Superior Court naming San Jose Water Company as a defendant.
Plaintiffs claimed a fire service pipeline ruptured in October 1992, causing
water to flood the title company's basement.
In April 1995, San Jose Water Company's insurance carrier settled with the
plaintiff insurance company for $3,500. Whether or not San Jose Water Company
will be compelled to contribute to the settlement is uncertain. However,
management has consistently maintained that the pollution exclusion asserted by
the insurance carrier does not apply to this type of incident, and therefore the
company will aggressively resist any demand for contribution.
The jury awarded the title company $3,000 for its loss of files, and the
insurance carrier for San Jose Water Company has appealed that decision. San
Jose Water Company believes that any final award to the title company will be
within the stated limits of the company's insurance coverage. San Jose Water
Company does not believe, based upon all available information, that the outcome
of the appeal will have a material adverse effect on its financial position.
NOTE 10
UNAUDITED QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows:
1995 Quarter ended
March June September December
--------------------------------------------------
Operating revenue $ 18,239 23,780 32,004 23,362
Operating income 1,913 3,960 5,983 3,458
Net income 844 2,994 5,126 2,571
Earnings per share .26 .92 1.58 .79
Market price range of
stock:
High 37 1/2 37 3/8 37 7/8 37 3/4
Low 31 1/4 32 3/8 35 1/8 34 1/4
Dividends per share .54 .54 .54 .54
- ------------------------------------------------------------------------------
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
- ------------------------------------------------------------------------------
Schedule II
-----------
SJW CORP.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Description 1995 1994 1993
- ----------- ---------------------------------
Allowance for doubtful accounts
Balance, beginning of period 50,000 50,000 50,000
Charged to expense 222,163 188,171 203,854
Accounts written off (255,449) (226,962) (249,036)
Recoveries of accounts written off 33,286 38,791 45,182
---------------------------------
Balance, end of period 50,000 50,000 50,000
=================================
Reserve for self insurance
Balance, beginning of period 309,467 456,191 447,734
Charged to expense 278,100 200,000 110,000
Payments (87,523) (346,724) (101,543)
---------------------------------
Balance, end of period 500,044 309,467 456,191
=================================
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
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 has served since
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. Mr. Cali, age 30, 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 56, is a member of the Audit Committee and has served as a
director of the San Jose Water Company since 1989.
DREW GIBSON, Chairman of the Board and Chief Executive Officer of Gibson Speno
Company (real estate development and investment company) and Chairman of the
Board of Gibson Speno Management Company (real estate management company). He
also serves as a director of Comerica (bank) and Celluphone, Inc. (Los Angeles
based cellular agent). Mr. Gibson, age 53, 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 67, 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 64, is a
member of the Compensation Committee and has served as a director of San Jose
Water Company since 1984.
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
66, is a member of the Corporation's Executive and Compensation Committees and
has served as a director of San Jose Water Company since 1980.
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. Mr. Roth,
age 43, has served as a director of San Jose Water Company since 1994.
CHARLES J. TOENISKOETTER, President of Toeniskoetter & Breeding Inc.
(construction and real estate development company). He also serves as a
director of Redwood Trust, Inc. (real estate investment trust). Mr.
Toeniskoetter, age 51, 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 65, is a member of the
Corporation's Executive Committee and has served as a director of San Jose Water
Company since 1975. 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.
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 1995, there were 4 regular
meetings and one special meeting 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, except for Mr. Gibson, who attended 68% of all Board and
applicable committee meetings.
Executive Officers of the Registrant.
Name Age Offices and Experience
J. W. Weinhardt 65 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 43 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 from January 1990 through October 1994.
F. R. Meyer 56 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 58 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 46 San Jose Water Company - Vice President,
Corporate Communications since October 1995, Vice
President, Administration since April 1992, Manager of
Customer Service since January 1985. Mr. Balocco
has been with San Jose Water Company since December
1982.
B. Y. Nilsen 54 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 1995, SJW Corp. believes that during 1995 all officers,
directors and greater than ten percent beneficial owners were in compliance with
all Section 16(a) filing requirements.
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 the 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 1995 270,000 13,820(2)
President 1994 268,750 10,050(2)
and Chief 1993 253,750 90,000 9,297(2)
Executive Officer
SJW Corp., Chairman and
Chief Executive
Officer San Jose
Water Company
W.R. Roth 1995 150,000 13,000(2)
Vice President 1994 134,304 3,961(3)
and Chief 1993 114,416 3,190(3)
Financial Officer
SJW Corp., President
and Chief Operating
Officer, San Jose
Water Company
F.R. Meyer 1995 136,500 4,095(3)
Vice President 1994 130,500 3,915(3)
San Jose Water 1993 124,500 3,735(3)
Company
P.J. Schreiber 1995 123,042 3,492(3)
Vice President 1994 117,542 3,494(3)
San Jose Water 1993 112,042 3,361(3)
Company
R.J. Balocco 1995 107,625 3,094(3)
Vice President 1994 103,125 3,075(3)
San Jose Water 1993 98,583 2,957(3)
Company
(1) Long Term Compensation Award or Payout Plans are not provided to employees
of the Corporation or its subsidiaries.
(2) For Mr. Weinhardt represents matching contributions paid by the San Jose
Water Company under its Salary Deferral Plan of $4,620 for 1995, $4,500 for 1994
and $4,497 for 1993; for Mr. Roth represents matching contributions paid by the
San Jose Water Company under its Salary Deferral Plan of $4,500 for 1995. The
balance are amounts received for Director's 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(6) $37,500(7) $ 77,000 $ 86,625 $ 96,250 $ 96,250
$200,000(6) $37,500(7) $123,500 $134,500 $145,500 $150,600
$225,000(6) $37,500(7) $139,000 $151,300 $163,700 $169,400
$250,000(6) $37,500(7) $154,400 $168,100 $181,900 $188,300
$275,000(6) $37,500(7) $169,800 $184,900 $200,000 $207,100
$300,000(6) $37,500(7) $185,200 $201,700 $218,200 $225,900
$325,000(6) $37,500(7) $200,700 $218,500 $236,400 $244,725
$350,000(6) $37,500(7) $216,000 $235,300 $254,500 $263,500
(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, 1995 is for Mr. Weinhardt, 32, $270,000; Mr. Meyer, 17, $136,500; Mr. Roth,
5, $150,000; Mr. Schreiber, 33, $123,042; Mr. Balocco, 13, $107,625.
(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 Messrs. Meyer, Roth, Balocco and Schreiber only.
(6) Range of benefits apply to Mr. Weinhardt only.
(7) Compensation is limited to $150,000 in 1995 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. Security Ownership of Certain Beneficial Owners and Management.
The following sets forth, as of January 1, 1996, 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 2,195 *
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 523,878 16.1%(2)
W.R. Roth Common 2,500 *
Charles J. Toeniskoetter Common 100 *
J.W. Weinhardt Common 6,050 *
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 1,066,791 32.8%
*Denotes an amount less than 1%.
(1) Includes 148,483 shares held by trust for which Mr. Moss is trustee or co-
trustee. Mr. Moss disclaims any pecuniary interest in 29,344 shares.
(2) The address for Mr. George E. Moss and Mr. Roscoe Moss, Jr. is 4360 Worth
Street, Los Angeles, CA 90063.
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 $90,000 for consulting services
for 1995.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
Independent Auditors' Report, January 19, 1996
Consolidated Balance Sheet as of December 31, 1995 and 1994
Consolidated Statement of Income for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statement of Changes in Shareholders' Equity
for the years ended December 31, 1995, 1994 and 1993
Consolidated Statement of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(2) Financial Statement Schedule:
Schedule
Number
II Valuation and Qualifying Accounts and
Reserves, Years ended December 31,
1995, 1994 and 1993
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 located in Part IV, Item 7 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 25, 1996 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 25, 1996 By /s/ J. W. Weinhardt
J. W. WEINHARDT, President,
Chief Executive Officer and
Member, Board of Directors
Date: January 25, 1996 By /s/ W. R. Roth
W. R. ROTH, Vice President,
Finance and Chief Financial
Officer (Chief Accounting
Officer and Member, Board
of Directors
Date: January 25, 1996 By /s/ Mark L. Cali
MARK L. CALI
Member, Board of Directors
Date: January 25, 1996 By /s/J. Philip DiNapoli
J. PHILIP DINAPOLI
Member, Board of Directors
Date: January 25, 1996 By /s/Drew Gibson
DREW GIBSON
Member, Board of Directors
Date: January 25, 1996 By /s/Ronald R. James
RONALD R. JAMES
Member, Board of Directors
Date: January 25, 1996 By /s/George E. Moss
GEORGE E. MOSS
Member, Board of Directors
Date: January 25, 1996 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
<PAGE>
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
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