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FORM 10-K
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, 1999
[ ] 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.
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(Exact name of registrant as specified in its charter)
California 77-0066628
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(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 408-279-7800
SECURITIES REGISTERED PURSUANT TO SECTION 12(b)
OF THE ACT:
Title of each class Name of each exchange on 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant - $337,440,352 on March 15, 2000.
Shares of common stock outstanding on March 15, 2000 - 3,045,147.
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DOCUMENTS INCORPORATED BY REFERENCE
Definitive Proxy Statement relating to the Registrant's 2000 Annual
Meeting (filed on March 16, 2000), incorporated into Part III hereof.
EXHIBIT INDEX
The Exhibit Index to this Form 10-K is located in Part IV, Item 14 of
this document.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I Page
<S> <C>
Item 1. Business
a. General Development of Business Regulation and Rates 3
b. Financial Information about Industry Segments 5
c. Narrative Description of Business 6
General 6
Water Supply 7
Franchises 7
Seasonal Factors 7
Competition and Condemnation 7
Environmental Matters 8
Employees 8
Executive Officers of the Registrant 8
d. Financial Information about Foreign and Domestic
Operations and Export Sales 10
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 11
a. Market Information 11
b. Holders 12
c. Dividends 12
Item 6. Selected Financial Data 13
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Item 7a. Quantitative and Qualitative Disclosures About Market Risk 20
</TABLE>
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<TABLE>
<S> <C>
Item 8. Financial Statements and Supplementary Data 20
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 36
PART III
Item 10. Directors and Executive Officers of the Registrant 36
Item 11. Executive Compensation 36
Item 12. Security Ownership of Certain Beneficial Owners
and Management 36
Item 13. Certain Relationship on Related Transactions 36
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 36
Exhibit Index 38
Signatures 41
</TABLE>
PART I
Item 1. Business.
(a) General Development of Business.
SJW Corp. was incorporated in California on February 8, 1985. SJW Corp. 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 reorganized 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 979,000 people in an area comprising about 138
square miles in the metropolitan San Jose area. San Jose Water Company's web
site can be accessed via the Internet at http://www.sjwater.com.
SJW Land Company was incorporated in October, 1985. SJW Land Company owns and
operates parking facilities adjacent to the company's headquarters and the San
Jose Arena. SJW Land Company also owns a commercial building in San Jose and 70%
limited partnership interest in 444 West Santa Clara Street, L.P.
SJW Corp. also owns 1,099,952 shares of California Water Service Group.
Regulation and Rates.
San Jose Water Company's rates, service and other matters affecting its business
are subject to regulation by the California Public Utilities Commission (CPUC).
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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 California Public Utilities Code, a balancing
account is to be kept for all expense items for which revenue offsets have been
authorized. A separate balancing account must be maintained for each offset
expense item. The purpose of a balancing account is to track the
under-collection or over-collection associated with expense changes and the
revenue authorized by the CPUC to offset those expense changes. At December 31,
1999 the balancing account had a net over-collected balance to be refunded of
$51,000.
FORWARD LOOKING STATEMENTS
This report contains forward looking statements relating to future events and
financial performance of the company. Such forward looking statements are
identified by words including "expect", "estimate", "anticipate" and similar
expressions. The company's actual results could differ materially from those
discussed in such forward looking statements. Important factors that could
cause or contribute to such differences include the following:
The CPUC's policy and regulations can adversely affect San Jose Water
Company's operating results through the availability, timeliness and amount of
rate relief. The CPUC's willingness to allow San Jose Water Company to recover
all of its capital expenditures 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 (SCVWD) 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:
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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 wells 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.
The City of Cupertino's lease operation could be adversely affected by
the capital requirements, the ability of San Jose Water Company to raise rates
through the City Council and the level of operating and maintenance expenses.
SJW Land Company's expenses and operating results could be adversely
affected by the fluctuations in the parking lot activities, the San Jose Arena
events and the development and sale of the undeveloped parcels of land.
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."
The company undertakes no obligation to update the information including
the forward-looking statements, contained in this report.
(b) Financial Information about Industry Segments.
San Jose Water Company generated 99% of SJW Corp.'s consolidated revenue for the
years ended December 31, 1999, 1998 and 1997. There were no significant changes
in 1999 in the type of products produced or services rendered by San Jose Water
Company, or in its markets or methods of distribution.
SJW Land Company contributed 1% to SJW Corp.'s consolidated revenue in 1999,
1998 and 1997. In 1999 and 1998, SJW Land Company sold non-utility properties
and contributed a higher net income percentage to SJW Corp.'s consolidated
income for those respective years.
Dividend income from California Water Service Group generated 7% of consolidated
income for the years 1999, 1998 and 1997.
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(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.
In October 1997, San Jose Water Company commenced operation of the City of
Cupertino Municipal water system under terms of a 25-year lease. The system is
adjacent to the existing San Jose Water Company Service area and has 4,200
service connections. Under terms of the lease, San Jose Water Company made an
up-front $6.8 million lease payment to the City which will be amortized over the
lease term. The Company is responsible for all aspects of system operation
including capital improvements.
The Merger
On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American
Water) entered into an Agreement and Plan of Merger (the Merger Agreement).
Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water
will merge with and into SJW Corp. American Water is the largest investor-owned
and most geographically diverse water utility business in the United States.
American Water provides water utility services to over 900 communities with a
total population of approximately 10 million in 23 states.
Under the terms of the Merger Agreement, each share of the company's common
stock issued and outstanding on the closing date would be converted into the
right to receive $128 per share in cash. SJW Corp. expects that the transaction
will be completed in 8-12 months, following all required regulatory approvals,
termination of the waiting period under federal antitrust laws and the approval
of the Merger Agreement by SJW Corp.'s shareholders. Shareholders of SJW Corp.
will be asked to approve the Merger Agreement at the Annual Meeting of the
Shareholders to be held on April 20, 2000.
The receipt of the proposed merger consideration will be treated as a taxable
transaction under the applicable provision of the Internal Revenue Code and may
also be taxable under applicable state, local, foreign and other tax laws. The
transaction will be accounted for under the purchase accounting method.
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(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.
Groundwater levels in 1999 remained at a high level reflecting the impact of the
last rainfall season. SCVWD's reservoir storage of approximately 125,399 acre
feet (74% of capacity) was reported on February 22, 2000.
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. During the summer of 1989 through
March 1993, rationing was imposed intermittently, to all customers based on
request from SCVWD.
(1) (iv) Franchises.
San Jose Water Company holds such franchises or permits in the communities it
serves as it judges necessary to operate and maintain its facilities in the
public streets.
(1) (v) Seasonal Factors.
Water sales are seasonal in nature. The demand for water, especially by
residential customers, is generally influenced by weather conditions. The timing
of precipitation and climatic conditions can cause seasonal water consumption by
residential customers to vary significantly.
(1) (x) Competition and Condemnation.
San Jose Water Company is a public utility regulated by the CPUC and operates
within a service area approved by the CPUC. The laws of the State of California
provide that no other investor owned public utility may operate in San Jose
Water Company's service area without first obtaining from the CPUC a certificate
of public convenience and necessity. Past experience shows such a certificate
will be issued only after demonstrating San Jose Water Company's service in such
area is inadequate.
California law also provides that whenever a public agency constructs facilities
to extend utility service to the service area of a privately owned public
utility (like San Jose Water Company), such an act constitutes the taking of
property and is conditioned upon payment of just compensation to the private
utility.
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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, 1999, San Jose Water Company had 285 employees, of whom 59
were executive, administrative or supervisory personnel, and of whom 226 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
1999 and 2000. Both groups are affiliated with the AFL-CIO.
Executive Officers of the Registrant.
<TABLE>
<CAPTION>
Name Age Offices and Experience
<S> <C> <C>
J.W. Weinhardt 69 SJW Corp. - Chairman of the Board.
Prior to becoming Chairman in October 1996
he was President; Director and Member of
the Executive Committee of the Board of
Directors since 1985. He also served as
Chief Executive Officer until October
1999.
San Jose Water Company - Chairman of the
Board.
Prior to his election to Chairman of the
Board in October 1994, he was President.
He also served as Chief Executive Officer
until October 1996; Director and Member of
the Executive Committee of the Board of
Directors since 1974.
</TABLE>
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<TABLE>
<S> <C> <C>
Mr. Weinhardt has been with San Jose Water
Company since 1963.
W.R. Roth 47 SJW Corp. - President and Chief Executive
Officer of the Corporation since October
1999. Prior to that he was President from
October 1996 to October 1999, Vice
President from April 1992 until October
1996 and Chief Financial Officer and
Treasurer from January 1990 until October
1996.
San Jose Water Company - President since
October 1994. He has been Chief Executive
Officer since October 1996. Prior to that
he was Chief Operating Officer from
October 1994 until October 1996. He was
Vice President from April 1992 until July
1994 and Senior Vice President from July
1994 until October 1994.
R.J. Balocco 50 San Jose Water Company - Vice President -
Corporate Communications since October
1995. He was Vice President,
Administration from April 1992 until
October 1995. Mr. Balocco has been with
San Jose Water Company since 1982.
G.J. Belhumeur 54 San Jose Water Company - Vice President -
Operations since April 1996. Prior to
April 1996 he was Operations & Maintenance
Manager. Mr. Belhumeur has been with San
Jose Water Company since 1970.
D. Drysdale 44 San Jose Water Company - Vice President -
Information System since January 1999.
Prior to that, he was Director of
Information System from March 1998 to
January 1999. Prior to March 1998, he was
Data Processing Manager since 1994. Mr.
Drysdale joined San Jose Water Company in
1992.
J. Johansson 54 San Jose Water Company - Vice President -
Human Resources since January 1999. Prior
to that, he was Director of Human
Resources from March 1998 to January 1999.
Prior to March 1998, he was Personnel
Manager. Mr. Johansson has been with San
Jose Water Company since 1976.
R.J. Pardini 54 San Jose Water Company - Vice President -
Chief Engineer since April 1996. Prior to
April 1996 he was Chief Engineer. Mr.
Pardini has been with San Jose Water
Company since 1987.
A. Yip 46 SJW Corp., Chief Financial Officer and
Treasurer since October 1996.
</TABLE>
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<TABLE>
<S> <C> <C>
San Jose Water Company - Vice President -
Finance since January 1999, Chief
Financial Officer and Treasurer since
October 1994. She was Regulatory Affairs
Manager from July 1993 until October 1994.
Ms. Yip has been with the San Jose Water
Company since 1986.
R.S. Yoo 49 San Jose Water Company - Vice President -
Water Quality since April 1996. Prior to
April 1996 he was Water Quality Manager.
He has been with San Jose Water Company
since 1985.
R.A. Loehr 53 SJW Corp. and San Jose Water Company,
Secretary since March 1, 1998. Mr. Loehr
also serves as an attorney and has been
with San Jose Water Company since 1987.
A.J. Elliott 36 San Jose Water Company, Controller since
January 1995. Ms. Elliott has been with
San Jose Water Company since 1990.
</TABLE>
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.
(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 non-developable 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 264 million gallons per day and the present capacity for taking
purchased water is approximately 172 million gallons per day. The gravity water
collection system has a physical delivery capacity of approximately 25 million
gallons per day. During 1999, a maximum and average of 207 million gallons and
136 million gallons of water per day, respectively, were delivered to the
system.
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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.
SJW Land Company owns approximately nine acres of property adjacent to San Jose
Water Company's general office facilities, approximately another five
undeveloped acres and a commercial building in the San Jose Metropolitan area.
Eight of the nine acres of land adjacent to San Jose Water Company are used as
surface parking facilities and generate the majority of SJW Land Company's
revenue.
Item 3. Legal Proceedings.
Valley Title Company
In 1993, Valley Title Company and its insurer claimed in a lawsuit that a fire
service pipeline ruptured, causing water and heating oil to flood the title
company's basement. In April 1995, San Jose Water Company's insurance carrier
settled the property damage claim of plaintiff insurance company for $3.5
million.
The jury separately awarded plaintiff title company $3 million for its loss of
business documents. A unanimous appellate court reversed this decision, and in
January 1998, the California Supreme Court denied review of that reversal.
In July 1998, Maxxum Management Company, successor to Valley Title Company,
filed a new lawsuit against San Jose Water Company. The litigation was based
upon the same facts as the first lawsuit but alleges a cause of action in
inverse condemnation. San Jose Water Company has recently succeeded in having
the case dismissed by the Court of Appeal and the case is concluded. San Jose
Water Company believes the matter has come to a successful closure.
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
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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 1999 and 1998 fiscal years is
contained in the section captioned "Market price range of stock" in the tables
set forth in Note 11 of "Notes to Consolidated Financial Statements" in Part II,
Item 8.
(b) Holders.
There were 993 record holders of SJW Corp.'s common stock on December 31, 1999.
(c) Dividends.
Quarterly dividends have been paid on SJW Corp.'s and its predecessor's common
stock for 225 consecutive quarters and the quarterly rate has been increased
during each of the last 32 years. The information required by this item as to
the cash dividends paid on common stock in 1999 and 1998 is contained in the
section captioned "Dividends per share" in the tables set forth in Note 11 of
"Notes to consolidated Financial Statements" in Part II, Item 8.
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Item 6. Selected Financial Data.
FIVE YEAR STATISTICAL REVIEW
SJW CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED RESULTS
OF OPERATIONS (in thousands)
Operating revenue $117,001 106,010 110,084 102,593 97,385
Operating expense:
Operation 67,676 57,454 61,382 57,231 57,339
Maintenance 6,638 6,909 7,087 6,851 6,342
Taxes 12,713 13,206 13,454 12,234 10,764
Depreciation and
amortization 10,235 9,594 8,847 8,671 7,626
- ---------------------------------------------------------------------------------------------------------------
Total operating expense 97,262 87,163 90,770 84,987 82,071
- ---------------------------------------------------------------------------------------------------------------
Operating income 19,739 18,847 19,314 17,606 15,314
Interest expense, other
income and deductions 3,855 2,829 4,098 (954) 3,779
- ---------------------------------------------------------------------------------------------------------------
Net income 15,884 16,018 15,216 18,560 11,535
Dividends paid 7,379 7,419 7,228 7,163 7,022
- ---------------------------------------------------------------------------------------------------------------
Invested in the business $ 8,505 8,599 7,988 11,397 4,513
- ---------------------------------------------------------------------------------------------------------------
CONSOLIDATED PER SHARE DATA
Net income $ 5.20 5.05 4.80 5.75 3.55
Dividends paid $ 2.40 2.34 2.28 2.22 2.16
Shareholders' equity
at year-end $ 47.25 45.19 42.13 37.86 33.49
CONSOLIDATED BALANCE SHEET(in thousands)
Utility plant $432,262 403,227 371,200 342,368 324,098
Less accumulated
depreciation and
amortization 129,828 122,809 114,851 107,584 100,000
- ---------------------------------------------------------------------------------------------------------------
Net utility plant 302,434 280,418 256,349 234,784 224,098
- ---------------------------------------------------------------------------------------------------------------
Nonutility property 10,133 11,360 7,301 7,287 6,624
Total assets 372,427 359,380 323,223 296,536 280,497
Capitalization:
Shareholders' equity 143,894 143,149 133,553 120,028 108,854
Long-term debt(includes
current maturities) 90,000 90,000 75,000 76,500 77,500
- ---------------------------------------------------------------------------------------------------------------
Total capitalization $233,894 233,149 208,553 196,528 186,354
===============================================================================================================
</TABLE>
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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
979,000 in an area comprising about 138 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. SJW Corp. owns 1,099,952 shares of
California Water Service Group.
The Merger
On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American
Water) entered into an Agreement and Plan of Merger (the Merger Agreement).
Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water
will merge with and into SJW Corp. American Water is the largest investor-owned
and most geographically diverse water utility business in the United States.
American Water provides water utility services to over 900 communities with a
total population of approximately 10 million in 23 states.
Under the terms of the Merger Agreement, each share of the company's common
stock issued and outstanding on the closing date would be converted into the
right to receive $128 per share in cash. SJW Corp. expects that the transaction
will be completed in 8-12 months, following all required regulatory approvals,
termination of the waiting period under federal antitrust laws and the approval
of the Merger Agreement by SJW Corp.'s shareholders. Shareholders of SJW Corp.
will be asked to approve the Merger Agreement at the Annual Meeting of the
Shareholders to be held on April 20, 2000.
The receipt of the proposed merger consideration will be treated as a taxable
transaction under the applicable provision of the Internal Revenue Code and may
also be taxable under applicable state, local, foreign and other tax laws. The
transaction will be accounted for under the purchase accounting method.
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<TABLE>
<CAPTION>
Results of Operations
CONSOLIDATED OPERATING REVENUE (in thousands)
1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
San Jose Water Company $115,689 105,025 108,991
SJW Land Company 1,312 985 1,093
- --------------------------------------------------------------------------
$117,001 106,010 110,084
==========================================================================
</TABLE>
Consolidated operating revenue for 1999 increased $10,991,000, or 10%,
from 1998 mainly due to a 4% increase in water consumption and increased office
rental activities. Rate increases and new customers contributed $6,048,000 and
$752,000, respectively, to 1999's revenue.
Consolidated operating revenue for 1998 decreased $4,074,000, or 4%,
from 1997 mainly due to an 8% decrease in water consumption and reduced parking
activities. The decline was partially offset by rate increases of $1,175,000,
and usage by new customers of $1,652,000.
<TABLE>
<CAPTION>
CONSOLIDATED OPERATING EXPENSE (in thousands)
1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
San Jose Water Company $86,276 76,559 79,841
SJW Land Company 944 566 486
SJW Corp. 1,168 353 333
- ------------------------------------------------------------------------------------
$88,388 77,478 80,660
====================================================================================
</TABLE>
Consolidated operating expense in 1999, excluding income taxes,
increased 14% in comparison with 1998 due to increased water production.
Consolidated operating expense in 1998 decreased 4% in comparison with 1997 due
to reduced water production.
<TABLE>
<CAPTION>
SOURCES OF SUPPLY (million gallons)
1999 1998 1997
- -----------------------------------------------------------------------
<S> <C> <C> <C>
Purchased water 27,195 25,436 26,157
Ground water 18,438 16,379 20,846
Surface water 5,232 6,246 4,881
Reclaimed water 301 79 -
- -----------------------------------------------------------------------
51,166 48,140 51,884
=======================================================================
</TABLE>
Water production in 1999 increased 3,105 million gallons, or 6%, over
1998. Water production in 1998 decreased 3,823 million gallons, or 7%, from
1997. The changes are consistent with the related operating expenses.
The effective consolidated income tax rates for 1999, 1998 and 1997 were
41%, 40% and 40%, respectively. Refer to the Notes To Consolidated Financial
Statements for the reconciliation of income tax expense to the amount computed
by applying the federal statutory rate to income before income taxes.
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OTHER INCOME AND EXPENSE
The 1999 dividend income increased $16,000, or 1%, over 1998 due to a $.015 per
share increase in the California Water Service Group annual dividend.
San Jose Water Company's interest cost on long-term debt in 1999,
including capitalized interest, increased $959,000 from 1998 due to the issuance
of the Series E Senior Note. San Jose Water Company's weighted average cost of
long-term debt, including amortization of debt issuance costs, was 8.04%, 8.04%
and 8.27% as of December 31, 1999, 1998 and 1997, respectively.
In association with SJW Corp.'s merger with American Water Works
Company, Inc., certain merger-related expenses in the amount of $1,588,000 were
incurred in 1999.
Other income in 1999 and 1998 included gains on sale of nonutility
properties to affiliated and non-affiliated parties.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL REQUIREMENTS
San Jose Water Company's budgeted capital expenditures for 2000 compared to
1999, exclusive of capital expenditures financed by customer contributions and
advances, are as follows:
<TABLE>
<CAPTION>
BUDGETED CAPITAL EXPENDITURES (in thousands)
2000 1999
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Source of supply $ 72 -% $ 692 3%
Reservoirs and tanks 3,470 14% 1,737 8%
Pump stations and equipment 1,391 6% 1,902 9%
Distribution system 15,286 62% 14,386 65%
Equipment and other 4,332 18% 3,433 15%
- ----------------------------------------------------------------------------------------------------
$24,551 100% $22,150 100%
====================================================================================================
</TABLE>
The 2000 capital budget is concentrated in main replacements and
facility relocation. Approximately $15 million will be spent to systematically
renew the company's aging infrastructure and $1.6 million will be spent in the
relocation and expansion of operations and engineering facilities.
San Jose Water Company expects to incur approximately $120 million,
exclusive of customer contributions and advances, in capital expenditures over
the next five years. The 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.
16
<PAGE> 17
Most of San Jose Water Company's distribution system has been
constructed over the last 40 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 original installation 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 50% 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, 1999, SJW Corp. and its
subsidiaries had $24.7 million of unused line of credit and over $50 million 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 of approximately 50%
debt and 50% equity.
In 1998, San Jose Water Company issued $15 million in Series E unsecured
30-year senior note. In 1997, the company redeemed its $1.5 million Series P
6.5% first mortgage bonds at maturity. The company intends to 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) 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 authorized by the California Public Utilities Commission
(CPUC). The CPUC sets rates that are intended to provide revenue sufficient to
recover operating expenses and produce a reasonable return on common equity. The
company's most recent rate case decision authorized it to earn a return on
common equity in 1996, 1997, 1998 and 1999 of 10.2% which is within the range of
recent rates of return authorized by the CPUC for water utilities. The same
decision also granted the company memorandum account protection for the largely
indeterminate costs associated with the new or more stringent federal water
quality regulations. With the establishment of the water quality memorandum
17
<PAGE> 18
account, any potential financial exposure resulting from these regulations has
been substantially reduced.
San Jose Water Company deferred the filing of a general rate case
application from January, 1999 to January, 2000. Consequently, apart from any
offset increases, the company is not authorized any additional step rate
increases until the next general rate case decision becomes effective in
January, 2001.
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 Mountains
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 1999 and 2000. The agreement includes a 3% wage increase for 2000, and
minor benefit modifications.
YEAR 2000 ISSUES
San Jose Water Company executives, as part of their operating duties, evaluated
the company's information technology (IT) and non-IT systems to ensure all
systems are prepared for the Year 2000 (Y2K). The company generally uses
software packages and hardware that are Y2K assured by vendors or independent
testers.
San Jose Water Company has an IT master plan that identifies systems
that need to be replaced due to age, or need to be modified to generate
operating and customer service benefits. The systems that were identified as
non-assured were upgraded as of October, 1999.
Management also contacted critical third party suppliers regarding their
Y2K readiness. Suppliers of water, power and other goods are critical to San
Jose Water Company's operations. The suppliers described their state of
readiness and contingency plans, if available. San Jose Water Company prepared
comprehensive Y2K contingency plans covering accounting, operations and
information systems.
To date, San Jose Water Company has not experienced any Y2K related
issues nor has incurred any significant costs associated solely with Y2K issues.
No major IT projects have been deferred due to Y2K issues. The costs of
identifying the issues, evaluating the systems, inquiring about third party
suppliers' Y2K preparedness and any testing have been expensed.
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 (DHS) and the California
Regional Water Quality Control Board. The company is
18
<PAGE> 19
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 drinking water. San
Jose Water Company is currently in compliance with all of the 87 primary MCLs
promulgated to date. However, the EPA and DHS have continuing authority to issue
additional regulations under the SDWA. San Jose Water Company has implemented
monitoring activities and installed specific water treatment improvements
enabling it to comply with all existing MCLs and plan for compliance with future
drinking water 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 hazardous
materials, point and non-point source discharges and the warning provisions of
the California Safe Drinking Water and Toxic Enforcement Act of 1986.
Future drinking water regulations may require increased monitoring,
disinfection or other treatment of underground water supplies, fluoridation of
all 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, currently, there are limited regulatory
mechanisms and procedures available to the company for the recovery of such
costs and there can be no assurance that such costs will be fully recovered.
NONREGULATED OPERATIONS
The investment in California Water Service Group is expected to produce 2000
pre-tax dividend income and cash flow of approximately $1.2 million. SJW Land
Company's parking revenue is largely dependent upon the level of events and
activities at the San Jose Arena which is located adjacent to its parking
facility. In the spring of 2000, SJW Land Company's parking lots will host the
hugely popular Cirque du Soleil, enhancing parking and rental cash flow during
that period. SJW Land Company's commercial property is fully leased.
The operating results of the City of Cupertino lease are largely
dependent on the level of operation, maintenance and capital costs incurred. In
January, 2000, San Jose Water Company completed its phase-in of its regular
water service rates within the City of Cupertino. Further changes in water
service rates will be subject to the approval of the Cupertino City Council.
19
<PAGE> 20
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Corporation has no derivative financial instruments, financial instruments
with significant off-balance sheet risks, or financial instruments with
concentrations of credit risk. There is no material sensitivity to changes in
market rates and prices.
Item 8. Financial Statements and Supplementary Data.
Financial Statements:
Independent Auditors' Report
The Shareholders and Board of Directors
SJW Corp.
We have audited the accompanying consolidated balance sheets of SJW Corp. (the
Company) and subsidiaries as of December 31, 1999 and 1998, and the related
consolidated statements of income and comprehensive income, changes in
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1999. In connection with our audits of the
consolidated financial statements, we also have audited the accompanying
financial statement schedule. 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, 1999 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1999, 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 LLP
Mountain View, California
January 21, 2000
20
<PAGE> 21
CONSOLIDATED BALANCE SHEETS
SJW CORP. AND SUBSIDIARIES
December 31, (in thousands, except share data)
<TABLE>
<CAPTION>
ASSETS
1999 1998
---- ----
<S> <C> <C>
Utility plant $424,421 395,386
Intangible assets 7,841 7,841
- ------------------------------------------------------------
432,262 403,227
Less accumulated depreciation
and amortization 129,828 122,809
- ------------------------------------------------------------
302,434 280,418
- ------------------------------------------------------------
Nonutility property 10,133 11,360
Current assets:
Cash and equivalents 124 8,066
Accounts receivable:
Customers 5,858 5,267
Other 215 140
Accrued utility revenue 6,507 6,503
Materials and supplies, at
average cost 382 437
Prepaid expenses 714 812
- ------------------------------------------------------------
13,800 21,225
- ------------------------------------------------------------
Other assets:
Investment in California Water
Service Group 33,342 34,442
Investment in joint venture 1,210 -
Unamortized debt issuance and
reacquisition costs 3,880 4,032
Goodwill 1,914 2,000
Regulatory assets 5,177 5,137
Other 537 766
- ------------------------------------------------------------
46,060 46,377
- ------------------------------------------------------------
$372,427 359,380
============================================================
</TABLE>
21
<PAGE> 22
CONSOLIDATED BALANCE SHEETS (Continued)
SJW CORP. AND SUBSIDIARIES
December 31, (in thousands, except share data)
<TABLE>
<CAPTION>
CAPITALIZATION AND LIABILITIES
1999 1998
---- ----
<S> <C> <C>
CAPITALIZATION:
Shareholders' equity:
Common stock, $3.125 par value;
authorized 6,000,000 shares; issued
3,045,147 shares in 1999 and
3,167,547 in 1998 $ 9,516 9,899
Additional paid-in capital 12,357 19,085
Retained earnings 113,058 104,553
Accumulated other comprehensive income 8,963 9,612
- ----------------------------------------------------------------------
143,894 143,149
Long-term debt 90,000 90,000
- ----------------------------------------------------------------------
233,894 233,149
- ----------------------------------------------------------------------
CURRENT LIABILITIES:
Line of credit 3,300 -
Accrued pump taxes and purchased water 3,072 2,423
Accounts payable 476 2,163
Accrued interest 2,751 2,720
Accrued taxes 3,849 1,353
Other current liabilities 3,394 3,095
- ----------------------------------------------------------------------
16,842 11,754
- ----------------------------------------------------------------------
DEFERRED INCOME TAXES 25,947 25,541
UNAMORTIZED INVESTMENT TAX CREDITS 2,205 2,249
ADVANCES FOR CONSTRUCTION 50,076 47,513
CONTRIBUTIONS IN AID OF CONSTRUCTION 40,669 36,258
DEFERRED REVENUE 1,397 1,244
OTHER NONCURRENT LIABILITIES 1,397 1,672
COMMITMENTS - -
- ----------------------------------------------------------------------
$372,427 359,380
======================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
22
<PAGE> 23
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
SJW CORP. AND SUBSIDIARIES
Years ended December 31, (in thousands, except share and per share data)
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING REVENUE $ 117,001 106,010 110,084
OPERATING EXPENSE:
Operation:
Purchased water 27,987 24,124 24,341
Power 3,756 3,259 4,004
Pump taxes 15,502 12,661 15,293
Other 20,431 17,410 17,744
Maintenance 6,638 6,909 7,087
Property taxes and other
nonincome taxes 3,839 3,521 3,344
Depreciation and amortization 10,235 9,594 8,847
Income taxes 8,874 9,685 10,110
- ------------------------------------------------------------------------------------
97,262 87,163 90,770
- ------------------------------------------------------------------------------------
Operating income 19,739 18,847 19,314
OTHER (EXPENSE) INCOME:
Interest on long-term debt (6,552) (5,629) (5,695)
Merger related costs (1,588) - -
Gain on sale of nonutility
property, net 3,064 1,629 -
Dividends 1,193 1,177 1,160
Other 28 (6) 437
- ------------------------------------------------------------------------------------
NET INCOME $ 15,884 16,018 15,216
====================================================================================
OTHER COMPREHENSIVE INCOME:
Unrealized gain (loss)
on investment (1,100) 1,959 9,384
Income taxes related to other
comprehensive income 451 (804) (3,847)
- ------------------------------------------------------------------------------------
Other comprehensive income
(loss), net (649) 1,155 5,537
- ------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $ 15,235 17,173 20,753
====================================================================================
BASIC EARNINGS PER SHARE $ 5.20 5.05 4.80
====================================================================================
COMPREHENSIVE INCOME PER SHARE $ 4.99 5.42 6.55
====================================================================================
WEIGHTED AVERAGE SHARES
OUTSTANDING 3,054,980 3,169,839 3,170,347
====================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
23
<PAGE> 24
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
SJW CORP. AND SUBSIDIARIES
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Com- Total
Common Paid-in Retained prehensive Shareholders'
Stock Capital Earnings Income Equity
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCES,
DECEMBER 31, 1996 9,907 19,235 87,966 2,920 120,028
Net income - - 15,216 - 15,216
Other comprehensive
income - unrealized
gain on investment,
net of tax effect
of $3,847 - - - 5,537 5,537
- - -------
Comprehensive Income 20,753
Dividends paid - - (7,228) - (7,228)
- ----------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1997 9,907 19,235 95,954 8,457 133,553
Net income - - 16,018 - 16,018
Other comprehensive
income - unrealized
gain on investment,
net of tax effect
of $804 - - - 1,155 1,155
-------
Comprehensive Income 17,173
Purchase and retirement
of common stock (8) (150) - - (158)
Dividends paid - - (7,419) - (7,419)
- ----------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1998 9,899 19,085 104,553 9,612 143,149
Net income - - 15,884 - 15,884
Other comprehensive
income - unrealized
loss on investment,
net of tax effect
of $451 - - - (649) (649)
-------
Comprehensive Income 15,235
Purchase and retirement
of common stock (383) (6,728) - - (7,111)
Dividends paid - - (7,379) - (7,379)
- ----------------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1999 $ 9,516 12,357 113,058 8,963 143,894
====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
24
<PAGE> 25
CONSOLIDATED STATEMENTS OF CASH FLOWS
SJW CORP. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Years ended December 31, (in thousands) 1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 15,884 16,018 15,216
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,235 9,594 8,847
Deferred income taxes and credits 813 1,648 1,943
Gain on sale of nonutility property, net (3,064) (1,629) -
Changes in operating assets and liabilities:
Accounts receivable and accrued
utility revenue (670) (1,115) (3,048)
Accounts payable and other current
liabilities (1,388) 1,628 1,028
Accrued pump taxes and purchased water 649 351 80
Accrued taxes 389 772 386
Other changes, net 732 (333) (554)
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 23,580 26,934 23,898
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Additions to utility plant (32,294) (34,356) (24,109)
Cost to retire utility plant, net
of salvage (1,233) (485) (720)
Additions to nonutility property (68) (4,360) (82)
Proceeds from sale of nonutility property 5,230 3,073 -
Water system leasehold acquisition cost - - (6,800)
- --------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (28,365) (36,128) (31,711)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Dividends paid (7,379) (7,419) (7,228)
Repayment of line of credit (4,500) (12,900) -
Borrowings from line of credit 7,800 12,900 -
Advances and contributions in aid of
construction 9,655 7,477 9,944
Refunds of advances (1,622) (1,472) (1,475)
Proceeds from issuance of long-term debt - 15,000 -
Principal payments of long-term debt - - (1,500)
Purchase and retirement of common stock (7,111) (158) -
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (3,157) 13,428 (259)
- --------------------------------------------------------------------------------------------
NET CHANGE IN CASH AND EQUIVALENTS (7,942) 4,234 (8,072)
CASH AND EQUIVALENTS, BEGINNING OF YEAR 8,066 3,832 11,904
- --------------------------------------------------------------------------------------------
CASH AND EQUIVALENTS, END OF YEAR $ 124 8,066 3,832
Cash paid during the year for:
Interest $ 7,099 6,005 5,993
Income taxes $ 8,027 8,238 8,846
- --------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
25
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1999, 1998, and 1997
(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 (CPUC) 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, a commercial property in San Jose and also owns
several undeveloped real estate parcels in San Jose.
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 1999, 1998 and 1997 was $414,
$378 and $290, respectively. Construction in progress was $3,602, $4,631 and
$2,693 at December 31, 1999, 1998 and 1997, respectively.
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.
Rate-regulated enterprises are required to charge a regulatory asset to
earnings if and when that asset no longer meets the criteria for being recorded
as a regulatory asset.
INTANGIBLE ASSETS
Intangible assets consist of leasehold acquisition cost for the City of
Cupertino municipal water system and other intangibles associated with the
operation of San Jose Water Company. All intangible assets are recorded at cost
and are amortized using the straight-line method over the legal or estimated
economic life of the asset, whichever is shorter, not to exceed 40 years.
26
<PAGE> 27
NONUTILITY PROPERTY
Nonutility property is recorded at cost and consists primarily of land,
buildings and parking facilities. Depreciation is computed using accelerated
depreciation methods over the estimated useful lives of the assets, ranging from
5 to 39 years.
FINANCIAL INSTRUMENTS
Cash and equivalents include certain highly liquid investments with original
maturities of three months or less when purchased. Cash equivalents are stated
at cost plus accrued interest, which approximates fair value.
INVESTMENT IN CALIFORNIA WATER SERVICE GROUP AND COMPREHENSIVE INCOME
SJW Corp.'s investment in California Water Service Group is reported at quoted
market price, with the unrealized gain or loss reported as other comprehensive
income. The accumulated balance of other comprehensive income is reported in the
equity section of the financial statements.
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 the recoverability of goodwill by assessing whether the
amortization of the balance over the remaining life can be recovered through
expected and undiscounted future results to determine if an impairment has
occurred.
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.
27
<PAGE> 28
To the extent permitted by the CPUC, investment tax credits resulting
from utility plant additions are deferred and amortized over the estimated
useful lives of the related property.
ADVANCES FOR CONSTRUCTION AND CONTRIBUTIONS IN AID OF CONSTRUCTION
Advances for construction received after 1981 are being refunded ratably over 40
years. Prior customer advances are refunded based on 22% of related revenues.
Estimated refunds for 2000 are $1,635.
Contributions in aid of construction represent funds received from
developers that are not refundable under CPUC regulations. Depreciation
applicable to utility plant constructed with these contributions is charged to
contributions in aid of construction.
Customer advances and contributions in aid of construction received
subsequent to 1986 and prior to June 12, 1996 generally must be included in
federal taxable income. Taxes paid relating to advances and contributions are
recorded as deferred tax assets for financial reporting purposes and are
amortized over 40 years for advances, and over the tax depreciable life of the
related asset for contributions. Receipts subsequent to June 12, 1996 are
generally exempt from federal taxable income.
Advances and contributions received subsequent to 1991 and prior to 1997
are included in state taxable income.
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 1997's operating revenue is $890 relating to recovery of
prior years' net revenue lost due to voluntary conservation programs. 1999, 1998
and 1997 operating revenue includes $2,392, $2,078 and $463, respectively, from
the lease operation of the City of Cupertino.
EARNINGS PER SHARE
Basic earnings per share and comprehensive income per share are calculated using
income available to common shareholders and comprehensive income, respectively,
divided by the weighted average number of shares outstanding during the year.
SJW Corp. has no dilutive securities, and accordingly, diluted earnings per
share is not shown.
BUSINESS SEGMENT INFORMATION
SJW Corp. and its subsidiaries operate predominantly in one reportable business
segment of providing water utility service to its customers. Nonutility revenue,
assets and net income do not have a material effect on SJW Corp.'s financial
condition and results of operations.
28
<PAGE> 29
NOTE 2
CAPITALIZATION
At December 31, 1999 and 1998, 176,407 shares of $25 par value preferred stock
were authorized and unissued.
In 1999 and 1998, SJW Corp. repurchased 122,400 and 2,800 shares,
respectively, of its outstanding common stock at the prevailing market price in
the open market at an aggregate cost of $7,111 and $158, respectively. All
repurchased shares have been canceled and are considered authorized and
unissued.
NOTE 3
LINE OF CREDIT
SJW Corp. and its subsidiaries have unsecured bank lines of credit available,
allowing aggregate short-term borrowings of up to $28,000. These lines of credit
bear interest at variable rates and expire on May 31, 2001. The weighted average
interest rate for the short-term borrowings at December 31, 1999 was 6.2%.
NOTE 4
GAIN ON SALE OF NONUTILITY PROPERTY
In December 1999, SJW Corp. sold nonutility property to a company partially
owned by a director, receiving consideration of $5,230 in cash. The transaction
resulted in a gain of $3,064, net of income tax expense of $2,107. The
transaction was negotiated at arms length supported by independent appraisals.
In June 1998, SJW Corp. recognized a gain of $1,629, net of income taxes
of $1,132, from the sale of nonutility property, receiving as consideration a
nonutility investment property with a fair value of $3,595.
NOTE 5
LONG-TERM DEBT
Long-term debt as of December 31 was as follows:
<TABLE>
<CAPTION>
Description Due Date 1999 1998
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
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 15,000
E 6.81% 2028 15,000 15,000
- ---------------------------------------------------------------------------------
Total long-term debt $90,000 90,000
=================================================================================
</TABLE>
29
<PAGE> 30
Senior notes held by institutional investors, are unsecured obligations
of San Jose Water Company and require interest only payments until maturity. To
minimize issuance costs, all of the company's debt has historically been
privately placed. The fair value of long-term debt as of December 31, 1999 and
1998 was approximately $100,707 and $118,600, respectively, based on the amount
of essentially risk-free assets that would have to be placed in trust to
extinguish these obligations.
30
<PAGE> 31
NOTE 6
INCOME TAXES
The following table reconciles income tax expense to the amount computed by
applying the federal statutory rate of 35% to income before income taxes:
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
"Expected" federal income tax $ 9,402 9,392 8,864
Increase (decrease) in taxes
attributable to:
Utility plant basis (6) 224 180
State taxes, net of federal
income tax benefit 1,544 1,542 1,531
Dividend received deduction (292) (288) (284)
Other items, net 333 (53) (181)
- ---------------------------------------------------------------------------
$ 10,981 10,817 10,110
===========================================================================
</TABLE>
The components of income tax expense as of December 31 were:
<TABLE>
<CAPTION>
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 7,931 6,611 6,657
State 2,417 2,124 2,225
Deferred:
Federal 686 1,885 1,230
State (53) 197 (2)
- ---------------------------------------------------------------------------
$ 10,981 10,817 10,110
- ---------------------------------------------------------------------------
Income taxes included in
operating expense $ 8,874 9,685 10,110
Income taxes included in gain
on sale of nonutility property 2,107 1,132 -
- ---------------------------------------------------------------------------
$ 10,981 10,817 10,110
- ---------------------------------------------------------------------------
</TABLE>
The components of the net deferred tax liability as of December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Advances and contributions $13,994 13,437
Unamortized investment tax credit 1,187 1,211
Pensions and postretirement benefits 264 389
California franchise tax 766 649
Other 1,332 585
- ----------------------------------------------------------------
Total deferred tax assets 17,543 16,271
- ----------------------------------------------------------------
Deferred tax liabilities:
Utility plant 28,564 26,624
Investment 11,415 11,866
Debt reacquisition costs 1,190 1,239
Other 2,321 2,083
- ----------------------------------------------------------------
Total deferred tax liabilities 43,490 41,812
- ----------------------------------------------------------------
Net deferred tax liabilities $25,947 25,541
- ----------------------------------------------------------------
</TABLE>
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.
31
<PAGE> 32
NOTE 7
COMMITMENTS
San Jose Water Company purchases water from 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. Based on current prices and estimated
deliveries, San Jose Water Company expects to purchase a minimum of 90% of the
delivery schedule, or $21,800 of water, from SCVWD in the contract year ending
June 30, 2000.
In 1997, San Jose Water Company entered into a 25-year lease agreement
with the City of Cupertino to operate the City's municipal water system. Under
the terms of the lease agreement, San Jose Water Company assumed responsibility
for all maintenance, operating and capital costs, while receiving all payments
for water service. Water service rates will be subject to approval by the
Cupertino City Council.
NOTE 8
JOINT VENTURE
In September, 1999, SJW Land Company formed 444 West Santa Clara Street, L.P., a
limited partnership, with a real estate development firm whereby SJW Land
contributed real property in exchange for a 70% limited partnership interest. An
office building is being developed on the property. The real estate development
firm is partially owned by an individual who also serves as a director of SJW
Corp. The partnership is being accounted for under the equity method of
accounting.
NOTE 9
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. Company 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 the amounts received under the
retirement plan. The annual cost of this plan has been included in the
determination of the net periodic benefit cost shown below. The plan, which is
unfunded, had a projected benefit obligation of $2,120, $1,721, $1,713 and as of
December 31, 1999, 1998 and 1997, respectively, and net periodic pension cost of
$290, $196 and $222, for 1999, 1998 and 1997, respectively.
32
<PAGE> 33
DEFERRAL PLAN
San Jose Water Company sponsors a salary deferral plan which allows employees to
defer and contribute a portion of their earnings to the plan. Contributions, not
to exceed set limits, are matched by the company. Company contributions were
$596, $433 and $421, in 1999, 1998 and 1997, 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. In 1997,
the plan was changed to a flat dollar plan which is unaffected by variations in
health care costs.
Net periodic cost for the defined benefit plans and other postretirement
benefits was:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- ---------------------------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Weighted-Average
Assumptions as of Dec. 31: % % % % % %
Discount rate 8.00 6.75 6.75 8.00 6.75 6.75
Expected return on plan
assets 8.00 8.00 8.00 8.00 8.00 8.00
Rate of compensation
increase 4.00 4.00 4.00 n.a. n.a. n.a.
===============================================================================================================
Components of Net Periodic
Benefit Cost:
Service cost $ 1,105 875 886 $ 46 36 39
Interest cost 1,966 1,731 1,590 103 91 91
Expected return on
assets (2,584) (2,386) (2,029) (27) (25) (20)
Amortization of transition
obligation 3 3 3 56 56 56
Amortization of prior
service cost 219 190 151 16 - -
Recognized actuarial
gain (188) (274) (118) (3) (9) (6)
- ---------------------------------------------------------------------------------------------------------------
Net periodic benefit
cost $ 521 139 483 $ 191 149 160
===============================================================================================================
</TABLE>
33
<PAGE> 34
The actuarial present value of benefit obligations and the funded status
of San Jose Water Company's defined benefit pension and other postretirement
plans as of December 31 were as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- ----------------------------------------------------------------------------------------------------------------
1999 1998 1997 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Change in Benefit
Obligation:
Benefit obligation at
beginning of year $ 27,912 25,625 23,314 $ 1,536 1,437 1,419
Service cost 1,105 875 886 46 36 39
Interest cost 1,966 1,731 1,590 103 91 91
Amendments 629 863 365 - 101 (38)
Actuarial (gain) loss (3,553) 56 476 (335) (50) 4
Benefits paid (1,310) (1,238) (1,006) (92) (79) (78)
- ----------------------------------------------------------------------------------------------------------------
Benefit obligation at
end of year $ 26,749 27,912 25,625 $ 1,258 1,536 1,437
================================================================================================================
Change in Plan Assets:
Fair value of assets at
beginning of year $ 32,880 30,336 25,813 $ 391 350 291
Actual return on
plan assets 3,378 3,618 4,626 18 16 13
Employer contributions 1,140 - 777 108 92 103
Benefits paid (1,310) (1,074) (880) (78) (67) (57)
- ----------------------------------------------------------------------------------------------------------------
Fair value of assets at
end of year $ 36,088 32,880 30,336 $ 439 391 350
================================================================================================================
Funded Status:
Plan assets less
benefit obligation $ 9,339 4,968 4,711 $ (819) (1,145) (1,087)
Unrecognized tran-
sition obligation 212 215 218 679 735 792
Unamortized prior
service cost 2,628 2,219 1,545 86 101 -
Unrecognized actuarial
gain (11,595) (7,436) (6,533) (583) (246) (214)
- ----------------------------------------------------------------------------------------------------------------
Prepaid (accrued)
benefit cost $ 584 (34) (59) $ (637) (555) (509)
================================================================================================================
</TABLE>
NOTE 10
THE MERGER
On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American
Water) entered into an Agreement and Plan of Merger (the Merger Agreement).
Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water
will merge with and into SJW Corp.
Under the terms of the Merger Agreement, each share of the company's common
stock outstanding on the closing date would be converted into the right to
receive $128 per share. SJW Corp. expects that the transaction will be completed
in 8-12 months, following all required regulatory
34
<PAGE> 35
approvals, termination of the waiting period under federal antitrust laws and
the approval of the Merger Agreement by SJW Corp.'s shareholders.
NOTE 11
UNAUDITED QUARTERLY FINANCIAL DATA
Summarized quarterly financial data is as follows:
<TABLE>
<CAPTION>
1999 Quarter ended
March June September December
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue $ 21,067 30,188 37,661 28,085
Operating income 3,158 5,548 6,790 4,243
Net income 1,781 4,075 5,409 4,619
Comprehensive income
(loss) (2,640) 5,130 6,220 6,525
Basic earnings per share .58 1.34 1.78 1.52
Comprehensive income
(loss) per share (0.86) 1.68 2.04 2.14
Market price range of stock:
High 65 81 1/2 93 1/2 121
Low 57 1/4 60 3/8 75 1/2 87 3/4
Dividends per share .60 .60 .60 .60
======================================================================================
</TABLE>
<TABLE>
<CAPTION>
1998 Quarter ended
March June September December
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating revenue $ 19,336 25,508 35,821 25,345
Operating income 2,687 4,692 6,968 4,500
Net income 1,526 5,190 5,807 3,495
Comprehensive income
(loss) (76) 3,933 4,185 9,131
Basic earnings per share .48 1.64 1.83 1.10
Comprehensive income
(loss) per share (0.02) 1.24 1.32 2.88
Market price range of stock:
High 71 70 3/8 59 3/8 62 3/4
Low 56 7/8 58 3/8 50 1/2 48 1/2
Dividends per share .585 .585 .585 .585
======================================================================================
</TABLE>
35
<PAGE> 36
FINANCIAL STATEMENT SCHEDULE
SJW CORP. Schedule II
-----------
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
Description 1999 1998 1997
-----------------------------------------
<S> <C> <C> <C>
Allowance for doubtful accounts
Balance, beginning of period $ 100,000 100,000 50,000
Charged to expense 120,145 131,464 170,812
Accounts written off (155,022) (169,646) (150,991)
Recoveries of accounts written off 34,877 38,182 30,179
-----------------------------------------
Balance, end of period 100,000 100,000 100,000
=========================================
Reserve for self insurance
Balance, beginning of period 707,100 589,702 512,641
Charged to expense 320,000 240,000 180,000
Payments (320,075) (122,602) (102,939)
-----------------------------------------
Balance, end of period $ 707,025 707,100 589,702
=========================================
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
The Company's Proxy Statement for its 2000 Annual Meeting of Shareholders, which
was filed on March 16, 2000 pursuant to Regulation 14A under the Securities
Exchange Act of 1934 and is incorporated by reference in this Form 10-K pursuant
to General Instruction G(3) of Form 10-K, provides the information required
under Part III (Items 10, 11, 12 and 13), except for the information with
respect to the Company's executive officers which is included in "Item 1.
Business - Executive Officers of the Registrant."
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report 20
Consolidated Balance Sheets as of December 31, 1999 and 1998 21
Consolidated Statements of Income and Comprehensive Income
for the years ended December 31, 1999, 1998, and 1997 23
</TABLE>
36
<PAGE> 37
<TABLE>
<S> <C>
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1999, 1998 and 1997 24
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 25
Notes to Consolidated Financial Statements 26
(2) Financial Statement Schedule:
Schedule
Number
II Valuation and Qualifying Accounts and 36
Reserves, Years ended December 31,
1999, 1998 and 1997
</TABLE>
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 immediately following paragraph (b) of this Item 14.
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. SJW Corp filed its 8K report with the Commission on
November 5, 1999. S.E.C. File No. 1-8966.
37
<PAGE> 38
EXHIBIT INDEX
<TABLE>
<CAPTION>
Location in
Sequentially
Exhibit Numbered
No. Description Copy
<S> <C>
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. S.E.C. 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. S.E.C. 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. S.E.C. 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. S.E.C. File No. 1-8966. NA
2.5 Agreement and Plan of Merger dated as of October 28, 1999 among American
Water Works Company, Inc., SJW Acquisition Corporation and SJW Corp. Filed as an
Exhibit to 10Q for the period ending September 30, 1999. S.E.C. 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. S.E.C. 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
</TABLE>
38
<PAGE> 39
<TABLE>
<S> <C>
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. S.E.C. 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
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. Filed
as an Exhibit to Annual Report on Form 10-K for the year ended December 31,
1996. 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
10.7 Second 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, 1998.
S.E.C. File No. 1-8966. NA
10.8 Third 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, 1998. S.E.C. File
No. 1-8966. NA
10.9 Fourth 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, 1998.
S.E.C. File No. 1-8966. NA
</TABLE>
39
<PAGE> 40
<TABLE>
<S> <C>
10.10 Fifth 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, 1998.
S.E.C. File No. 1-8966. NA
10.11 SJW Corp. Executive Severance Plan adopted by SJW Board of Directors.
Filed as an Exhibit to Annual Report on Form 10-K for the year ended December
31, 1998. S.E.C. File No. 1-8966. NA
10.12 Sixth Amendment to San Jose Water Company's Executive Supplemental
Retirement Plan. Filed as an Exhibit to 10Q for the period ending September 30,
1999. S.E.C. File No. 1-8966. NA
10.13 Amendment to SJW Corp.'s Executive Severance Plan. Filed as an Exhibit to
10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA
10.14 SJW Corp.'s Transaction Incentive and Retention Program for Key Employees.
Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File
No. 1-8966. NA
10. 15 Resolution for Directors' Retirement Plan adopted by SJW Corp. Board of
Directors as amended on September 22, 1999. Filed as an Exhibit to 10Q for the
period ending September 30, 1999. S.E.C. File No. 1-8966. NA
10.16 Resolution for Directors' Retirement Plan adopted by San Jose Water
Company's Board of Directors as amended on September 22, 1999. Filed as an
Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA
10.17 Resolution for Directors' Retirement Plan adopted by SJW Land Company
Board of Directors on September 22, 1999. Filed as an Exhibit to 10Q for the
period ending September 30, 1999. S.E.C. File No. 1-8966. NA
10.18 Limited Partnership Agreement of 444 West Santa Clara Street, L. P.
executed between SJW Land Company and Toeniskoetter & Breeding, Inc.
Development. Filed as an Exhibit to 10Q for the period ending September 30,
1999. 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
27 Financial Data Schedule as of December 31, 1999 43
99 Additional Exhibits: None
</TABLE>
40
<PAGE> 41
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 27, 2000 By /s/ J.W. WEINHARDT
----------------------------------------------
J.W. WEINHARDT, Chairman, 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.
<TABLE>
<S> <C>
Date: January 27, 2000 By /s/ J.W. WEINHARDT
----------------------------------------------
J.W. WEINHARDT, Chairman, Board of
Directors
Date: January 27, 2000 By /s/ RICHARD ROTH
----------------------------------------------
W. RICHARD ROTH, President, Chief
Executive Officer and Member,
Board of Directors
Date: January 27, 2000 By /s/ ANGELA YIP
----------------------------------------------
ANGELA YIP, Chief Financial Officer
Date: January 27, 2000 By /s/ ANDREA ELLIOTT
----------------------------------------------
ANDREA ELLIOTT, Chief Accounting Officer
Date: January 27, 2000 By /s/ MARK L. CALI
----------------------------------------------
MARK L. CALI, Member, Board of Directors
Date: January 27, 2000 By /s/ PHILIP DINAPOLI
----------------------------------------------
J. PHILIP DINAPOLI, Member, Board of Directors
Date: January 27, 2000 By /s/ DREW GIBSON
----------------------------------------------
DREW GIBSON, Member, Board of Directors
Date: January 27, 2000 By /s/ RONALD R. JAMES
----------------------------------------------
RONALD R. JAMES, Member, Board of Directors
Date: January 27, 2000 By /s/ GEORGE E. MOSS
----------------------------------------------
GEORGE E. MOSS, Member, Board of Directors
Date: January 27, 2000 By /s/ ROSCOE MOSS, JR.
----------------------------------------------
ROSCOE MOSS, JR., Member, Board of Directors
Date: January 27, 2000 By /s/ CHARLES J. TOENISKOETTER
----------------------------------------------
CHARLES J. TOENISKOETTER, Member,
Board of Directors
</TABLE>
41
<PAGE> 42
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.
42
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 302,434
<OTHER-PROPERTY-AND-INVEST> 10,133
<TOTAL-CURRENT-ASSETS> 13,800
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 46,060
<TOTAL-ASSETS> 372,427
<COMMON> 9,516
<CAPITAL-SURPLUS-PAID-IN> 12,357
<RETAINED-EARNINGS> 122,021
<TOTAL-COMMON-STOCKHOLDERS-EQ> 143,894
0
0
<LONG-TERM-DEBT-NET> 90,000
<SHORT-TERM-NOTES> 3,300
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 135,233
<TOT-CAPITALIZATION-AND-LIAB> 372,427
<GROSS-OPERATING-REVENUE> 117,001
<INCOME-TAX-EXPENSE> 8,874
<OTHER-OPERATING-EXPENSES> 88,388
<TOTAL-OPERATING-EXPENSES> 97,262
<OPERATING-INCOME-LOSS> 19,739
<OTHER-INCOME-NET> 2,697
<INCOME-BEFORE-INTEREST-EXPEN> 22,436
<TOTAL-INTEREST-EXPENSE> 6,552
<NET-INCOME> 15,884
0
<EARNINGS-AVAILABLE-FOR-COMM> 15,884
<COMMON-STOCK-DIVIDENDS> 7,379
<TOTAL-INTEREST-ON-BONDS> 6,552
<CASH-FLOW-OPERATIONS> 23,580
<EPS-BASIC> 5.2
<EPS-DILUTED> 5.2
</TABLE>
