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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
F O R M 8 - K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT ................................ NOVEMBER 18, 1998
DOMINGUEZ SERVICES CORPORATION
................................................................................
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 0-18677 33-0391161
................................................................................
(STATE OF OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
21718 SOUTH ALAMEDA STREET, LONG BEACH, CALIFORNIA 90810
................................................................................
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE.............(310) 834-2625
................................................................................
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
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ITEM 5. OTHER EVENTS
On November 15, 1998, Registrant issued a press release announcing that on
November 13, 1998, it had entered into an agreement to merge with California
Water Service Group ("CWSG") and its wholly-owned subsidiary, California
Water Service Company ("Subsidiary"). As set forth in the press release,
Registrant will be merged (the "Merger") with and into Subsidiary, upon the
agreed terms and conditions, and each then issued and outstanding share of
Registrant's common stock will be converted into 1.18 shares of CWSG common
stock. The consummation of the Merger is conditioned upon the satisfaction
of certain conditions precedent, including approval by the California Public
Utilities Commission and other regulatory approvals, receipt of certain
assurances that the Merger will be accounted for as a polling-of-interests
and will qualify as a tax free reorganization, and approval by Registrant's
shareholders.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(C) Exhibits
Exhibit Number Description
-------------- ------------
99 Press Release issued by the Registrant on
November 15, 1998 announcing the proposed
merger with California Water Service Group
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
DOMINGUEZ SERVICES CORPORATION
------------------------------
(Registrant)
Date: November 18, 1998 By: /s/ John S. Tootle
---------------------------
John S. Tootle
CFO, Vice-President Finance
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Exhibit Number Exhibit
--------------- -------
99 Press Release dated November 15, 1998
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November 15, 1998
California Water Service Group and Dominguez Services Corporation Announce
Merger
SAN JOSE, Calif.-- Nov. 15, 1998 -- At special meetings held on
Friday, November 13, the Boards of Directors of California Water Service
Group (NYSE:CWT) and Dominguez Services Corporation (NASDAQ:DOMZ) announced
an agreement to merge. California Water Service Group (Group) is the parent
of the California Water Service Company and CWS Utility Services, providing
water utility services to over 1.5 million people in 58 California
communities. Dominguez Services Corporation (Dominguez) is a water utility
holding company whose subsidiaries provide water service to 140,000 people in
20 communities throughout the state. The transaction is believed to be the
largest merger of investor-owned water utilities in the history of
California.
"We are pleased to announce this merger with one of the finest
companies in the investor-owned water industry," said Robert W. Foy, Chairman
of the Board of California Water Service Group. "This transaction, expected
to be accretive to Group shareholders within the first calendar year, will add
value in a number of ways, including: providing growth opportunities in new
areas of California; allowing the consolidation of the two companies'
neighboring systems in the Los Angeles region and thereby better positioning
us to compete in this key area; and permitting us to reap the administrative
benefits of a combined company. Shareholders will benefit further from the
added liquidity resulting from the larger share float of the combined
companies."
The transaction will be accounted for as a pooling of interests.
It will be structured as a tax-free exchange of 1,778,000 Group shares for
all outstanding shares of Dominguez, valued at approximately $47.6 million as
of November 13, 1998, an exchange ratio of 1:1.18 of Dominguez to Group
shares. Group will also assume Dominguez' outstanding net debt of
approximately $10.5 million, for a combined value of approximately $58
million.
The merger is subject to review by various state and federal
agencies, including the U.S. Securities and Exchange Commission and the
California Public Utilities Commission. Final regulatory approval is
expected in late 1999. Dominguez shareholders must also approve the
transaction, which is expected to occur at a special meeting in the first
quarter of 1999.
"Merging our two firms, one -- California Water Service Group --
the largest investor-owned water utility in California and west of the
Mississippi, and the other -- Dominguez Services Corporation -- one of the
oldest water companies in the Golden State, with an active presence in the
state's burgeoning water rights market, makes good business sense," said
Peter C. Nelson, President and CEO of California Water Service Group. "The
post-merger firm will be well-positioned to play an active role in the growth
and consolidation taking place in the water industry. In combining our
adjacent operations,
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we will pool our human resources and achieve economies of scale that will not
only benefit our shareholders and customers, but also make us a more
attractive and viable partner to public and private water providers," he said.
Brian J. Brady, President and CEO of Dominguez said: "I am
confident that this merger will benefit shareholders, customers, and
employees alike. California Water Service Group is committed to welcoming
Dominguez employees and the expertise and experience they will bring to the
company. Working together, we will focus on producing superior results for
our shareholders while providing excellent water service to our customers."
The post-merger firm will solidify its position as the largest
investor-owned water utility in California and west of the Mississippi. It
will serve almost 80 California communities through 450,000 service
connections, consistently post annual revenues well in excess of $200
million, and, based on current share prices, have a market capitalization of
$350 million.
Dominguez Service Corporation owns and operates Dominguez Water
Company, formed in 1911 to irrigate the farmlands of one of the first Spanish
land grants in California, as well as the Antelope Valley Water Company in
northern Los Angeles County and Kern River Valley Water Company near Lake
Isabella in Kern County. By year-end, Dominguez will complete acquisition of
the Redwood Valley Water Company, located in northern California. Dominguez
also has a water rights trading operation and a 20 percent equity investment
in Chemical Services Company of San Jose, a supplier of on-site chlorine
generation equipment.
Formed in 1926, California Water Service Group is the largest
investor-owned water utility in California and fourth largest in the nation.
Additional information about the two companies may be found on
the attached fact sheet or on their Web sites, located at
www.dominguezh2o.com and www.calwater.com.
This press release contains a number of forward looking
statements, all of which are based upon current expectations. Actual results
may differ materially.
Attachment (Fact Sheet)
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CALIFORNIA WATER SERVICE GROUP
DOMINGUEZ SERVICES CORPORATION
MERGER
FACTS-AT-A-GLANCE
(DATA AS OF 11/13/98 UNLESS OTHERWISE INDICATED)
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CALIFORNIA WATER DOMINGUEZ SERVICES
ITEM SERVICE GROUP CORPORATION
<S> <C> <C>
Principal Subsidiary California Water Services Dominguez Water Company
Company
Year Formed 1926 1911
Total Customers Served 410,000 38,000
Number of Employees 650 73
Communities Served 58 20
Gross Revenue (12 months $185 million $26 million
as of 9/30/98)
EPS(12 months as of $1.41 $1.04
9/30/98)
Dividends Per Share, 1998 $1.07 $0.92
Dividend Yield 4.0% 3.5%
Net Utility $471 million $39 million
Plant(9/30/98)
Average ROE, since 1987 12.2% 13.3%
Market-to-Book Ratio 2.0x 2.4x
Price-to-Earnings Ratio 19.0x 25.5x
Stock Trading Range Since $14-$33.75 $10- $24
1994
Average Daily Trading 13,550 1,591
Volume YTD 1998
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Number of Shareholders 11,000 960
Exchange and Trading NYSE:CWT NASDAQ:DOMZ
Symbol
Type of Transaction Tax free
reorganization/merger;
pooling of Interests
Purchase Price $47.6 million equity
purchase, $10.5 million
in assumed debt.
Total $58.0 million
Purchase Method Tax-free exchange of
common equity
Estimated Exchange Ratio 1.18:1, CWT:DOMZ
Benefit to DOMZ Market Value: $30,000 Market Value: $17,750
Shareholder with 1,000 Annual Dividend: $1,338 Annual Dividend: $920
shares @ 6/30/98
CONTACT: California Water Service Group
Gerry Feeney, 408/367-8216 (Analysts)
or Jim Good, 408/367-8219 (Media)
or
Dominguez Services Corporation
John Tootle, 310/834-2625 x322 (Analysts)
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