<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For Fiscal Year Ended DECEMBER 31, 1997 Commission file number 0-1121
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
- --------------------------------------------------------------------------------
(Full title of the plan and the address of the plan,
if different from that of the issuer named below)
OF
SOUTHERN CALIFORNIA WATER COMPANY
630 EAST FOOTHILL BOULEVARD
SAN DIMAS, CALIFORNIA 91773
- --------------------------------------------------------------------------------
(Name of issuer of the Securities held pursuant to the
plan and the address of its principal executive office)
<PAGE> 2
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
INDEX
<TABLE>
<CAPTION>
<S> <C>
Page
----
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS.................................................. 2
FINANCIAL STATEMENTS
Statements of Net Assets Available for Plan Benefits as of December 31,
1997 and 1996........................................................................ 3
Statement of Changes in Net Assets Available for Plan Benefits for the Year
Ended December 31, 1997.............................................................. 5
NOTES TO FINANCIAL STATEMENTS............................................................. 6
SUPPLEMENTAL SCHEDULES
I: Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1997................................................................. 12
II: Item 27b - Schedule of Loans or Fixed Income Obligations as of December
31, 1997.......................................................................... 13
III: Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1997................................................................. 14
</TABLE>
NOTE: All other schedules have been omitted since the information is either
disclosed elsewhere in the financial statements or not required by 29
CFR 2520.103-10 of the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security
Act of 1974.
<PAGE> 3
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the
Southern California Water Company
Investment Incentive Program:
We have audited the accompanying statements of net assets available for plan
benefits of the SOUTHERN CALIFORNIA WATER COMPANY INVESTMENT INCENTIVE PROGRAM
(the "Plan") as of December 31, 1997 and 1996, and the related statement of
changes in net assets available for plan benefits for the year ended December
31, 1997. These financial statements and the schedules referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and schedules 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 financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules I, II and III listed in the
accompanying index are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The fund information in the statements of net assets available for plan
benefits and the statement of changes in net assets available for plan benefits
is presented for purposes of additional analysis rather than to present the net
assets available for plan benefits and changes in net assets available for plan
benefits of each fund. The supplemental schedules and fund information have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
June 25, 1998
Los Angeles, California
2
<PAGE> 4
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
------------ --------------------------------------------------------
Southern Southern Wells Fargo INVESCO
California California Stable Wells Fargo Select
Water Company Water Company Asset S&P 500 Income
Stock Fund Stock Fund Fund Stock Fund Fund
------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Southern California Water Company
Common Stock $ 5,380,213 $ 3,104,681 $ -- $ -- $ --
Value of Interest in
Common/Collective Trusts -- -- 1,085,351 1,107,389 --
Value of Interest in
Registered Investment Companies -- -- -- -- 441,526
Participant Loans -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total investments 5,380,213 3,104,681 1,085,351 1,107,389 441,526
----------- ----------- ----------- ----------- -----------
Receivables:
Employer Contributions 60,382 -- -- -- --
Employee Contributions -- 25,248 12,985 18,439 7,779
Accrued Investment Income -- -- 5,430 -- 2,445
----------- ----------- ----------- ----------- -----------
Total receivables 60,382 25,248 18,415 18,439 10,224
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS: $ 5,440,595 $ 3,129,929 $ 1,103,766 $ 1,125,828 $ 451,750
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------
Westcore
Strong Strong Intermediate
Opportunity Total Return Term Bond Participant
Fund Fund Fund Loans Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Southern California Water Company
Common Stock $ -- $ -- $ -- $ -- $ 8,484,894
Value of Interest in
Common/Collective Trusts -- -- -- -- 2,192,740
Value of Interest in
Registered Investment Companies 1,704,679 539,024 383,924 -- 3,069,153
Participant Loans -- -- -- 901,682 901,682
----------- ----------- ----------- ----------- -----------
Total investments 1,704,679 539,024 383,924 901,682 14,648,469
----------- ----------- ----------- ----------- -----------
Receivables:
Employer Contributions -- -- -- -- 60,382
Employee Contributions 25,484 8,382 6,567 -- 104,884
Accrued Investment Income -- 1 -- -- 7,876
----------- ----------- ----------- ----------- -----------
Total receivables 25,484 8,383 6,567 -- 173,142
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS: $ 1,730,163 $ 547,407 $ 390,491 $ 901,682 $14,821,611
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE> 5
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1996
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
----------- --------------------------------------------------------
Southern Southern Wells Fargo INVESCO
California California Stable Wells Fargo Select
Water Company Water Company Asset S&P 500 Income
Stock Fund Stock Fund Fund Stock Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Southern California Water Company
Common Stock $ 3,911,179 $ 2,577,116 $ -- $ -- $ --
Value of Interest in
Common/Collective Trusts -- -- 889,771 574,290 --
Value of Interest in
Registered Investment Companies -- -- -- -- 353,047
Participant Loans -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total investments 3,911,179 2,577,116 889,771 574,290 353,047
----------- ----------- ----------- ----------- -----------
Receivables:
Employer Contributions 83,165 -- -- -- --
Employee Contributions -- 4,952 13,135 6,736 4,674
Accrued Investment Income -- 410 4,272 -- 2,045
----------- ----------- ----------- ----------- -----------
Total receivables 83,165 5,362 17,407 6,736 6,719
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS: $ 3,994,344 $ 2,582,478 $ 907,178 $ 581,026 $ 359,766
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------
Westcore
Strong Strong Intermediate
Opportunity Total Return Term Bond Participant
Fund Fund Fund Loans Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at fair value:
Southern California Water Company
Common Stock $ -- $ -- $ -- $ -- $ 6,488,295
Value of Interest in
Common/Collective Trusts -- -- -- -- 1,464,061
Value of Interest in
Registered Investment Companies 1,171,858 325,314 321,399 -- 2,171,618
Participant Loans -- -- -- 483,182 483,182
----------- ----------- ----------- ----------- -----------
Total investments 1,171,858 325,314 321,399 483,182 10,607,156
----------- ----------- ----------- ----------- -----------
Receivables:
Employer Contributions -- -- -- -- 83,165
Employee Contributions 15,281 3,868 4,353 -- 52,999
Accrued Investment Income -- -- -- -- 6,727
----------- ----------- ----------- ----------- -----------
Total receivables 15,281 3,868 4,353 -- 142,891
----------- ----------- ----------- ----------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS: $ 1,187,139 $ 329,182 $ 325,752 $ 483,182 $10,750,047
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE> 6
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
Non-Participant
Directed Participant Directed
----------- ---------------------------------------------------------
Southern Southern Wells Fargo INVESCO
California California Stable Wells Fargo Select
Water Company Water Company Asset S&P 500 Income
Stock Fund Stock Fund Fund Stock Fund Fund
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ -- $ 366,581 $ 182,675 $ 215,891 $ 106,562
Employer 786,386 -- -- -- --
----------- ----------- ----------- ----------- -----------
Total contributions 786,386 366,581 182,675 215,891 106,562
----------- ----------- ----------- ----------- -----------
Investment income:
Interest and dividends 215,805 178,844 58,295 42 37,924
Net appreciation (depreciation) in
fair value of investments 606,140 478,220 -- 221,177 6,960
----------- ----------- ----------- ----------- -----------
Total investment income 821,945 657,064 58,295 221,219 44,884
----------- ----------- ----------- ----------- -----------
Total additions 1,608,331 1,023,645 240,970 437,110 151,446
----------- ----------- ----------- ----------- -----------
DEDUCTIONS:
Benefits paid to participants 144,129 88,337 94,575 6,703 16,812
----------- ----------- ----------- ----------- -----------
Total deductions 144,129 88,337 94,575 6,703 16,812
----------- ----------- ----------- ----------- -----------
TRANSFERS BETWEEN FUNDS (17,951) (387,857) 50,193 114,395 (42,650)
----------- ----------- ----------- ----------- -----------
NET INCREASE 1,446,251 547,451 196,588 544,802 91,984
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 3,994,344 2,582,478 907,178 581,026 359,766
----------- ----------- ----------- ----------- -----------
End of year $ 5,440,595 $ 3,129,929 $ 1,103,766 $ 1,125,828 $ 451,750
=========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Participant Directed
-----------------------------------------------------------
Westcore
Strong Strong Intermediate
Opportunity Total Return Term Bond Participant
Fund Fund Fund Loans Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ADDITIONS:
Contributions:
Employee $ 352,614 $ 99,237 $ 90,258 $ -- $ 1,413,818
Employer -- -- -- -- 786,386
----------- ----------- ----------- ----------- -----------
Total contributions 352,614 99,237 90,258 -- 2,200,204
----------- ----------- ----------- ----------- -----------
Investment income:
Interest and dividends 231,713 114,740 19,263 61,544 918,170
Net appreciation (depreciation) in
fair value of investments 72,244 (26,788) 6,647 -- 1,364,600
----------- ----------- ----------- ----------- -----------
Total investment income 303,957 87,952 25,910 61,544 2,282,770
----------- ----------- ----------- ----------- -----------
Total additions 656,571 187,189 116,168 61,544 4,482,974
----------- ----------- ----------- ----------- -----------
DEDUCTIONS:
Benefits paid to participants 20,036 17,457 23,361 -- 411,410
----------- ----------- ----------- ----------- -----------
Total deductions 20,036 17,457 23,361 -- 411,410
----------- ----------- ----------- ----------- -----------
TRANSFERS BETWEEN FUNDS (93,511) 48,493 (28,068) 356,956 --
----------- ----------- ----------- ----------- -----------
NET INCREASE 543,024 218,225 64,739 418,500 4,071,564
NET ASSETS AVAILABLE FOR PLAN BENEFITS:
Beginning of year 1,187,139 329,182 325,752 483,182 10,750,047
----------- ----------- ----------- ----------- -----------
End of year $ 1,730,163 $ 547,407 $ 390,491 $ 901,682 $14,821,611
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE> 7
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1. Plan Description
The following description of the Southern California Water Company
Investment Incentive Program (the "Plan") provides only general
information. Participants should refer to the Plan document for a more
complete description of the Plan's provisions.
General
The Plan is a defined contribution plan established by the Southern
California Water Company (the "Company") under the provisions of Section
401(a) of the Internal Revenue Code (the "IRC"), which includes a
qualified cash or deferred arrangement as described in Section 401(k) of
the IRC, for the benefit of eligible employees of the Company. The Plan
is subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA"), as amended.
Prior to inception of the Plan, the Company maintained the Payroll-Based
Tax Credit Employee Stock Ownership Plan (the "PAYSOP") for the benefit
of participating employees and their beneficiaries. Under the PAYSOP,
the Company contributed amounts equal to a tax credit claimed by the
Company on its federal income tax return. This credit was calculated as
a percentage of qualifying payroll. The Tax Reform Act of 1986
eliminated this credit for tax years after 1986. As a result, the
Company terminated the PAYSOP and transferred the net assets into the
Plan effective January 1, 1988. The trustee maintains a separate account
for the net assets which were transferred from the PAYSOP.
Plan Administration
Under a trust agreement dated May 4, 1988, Wells Fargo Bank, N.A.
(formerly First Interstate Bank) was appointed trustee for the Plan (the
"Trustee"). The Plan is administered by the Investment Incentive Program
Committee (the "Plan Administrator"), which is appointed by the
Company's Board of Directors.
Eligibility
Effective January 1, 1996 any employee who has completed a period of
service of 30 consecutive days is eligible to participate in the Plan.
6
<PAGE> 8
Contributions
Effective January, 1, 1996, eligible employees can contribute an amount
between one percent and fifteen percent of compensation, as defined in
the Plan document. In addition, the Company provides matching
contributions of 100 percent of the first three percent and 50 percent
of the next three percent contributed by a participant. Under the terms
of the Plan, employer matching contributions are invested in the
Southern California Water Company Stock Fund.
Vesting
Participants are fully vested in all employer matching contributions
made to their account and the earnings thereon. Accordingly, there are
no forfeited non-vesting accounts as of December 31, 1997 and 1996.
Distribution of Benefits
Participants' benefits under the Plan become distributable upon
severance from service, as defined in the Plan document. Participants
electing to have their distribution deferred will receive benefits equal
to the amounts credited to their accounts as of the end of the next
calendar quarter. The value of benefits distributable to participants
not electing deferral is based upon amounts credited to the
participants' accounts under the Plan as of the end of the next
preceding calendar quarter, except as described below.
A participant shall be entitled to request an in-service withdrawal of
the lesser of the balance of his/her deferral account or total
unwithdrawn deferral contributions after the participant has attained
age 59-1/2. Such a distribution shall be permitted only once every two
years while the participant remains as an employee. In addition, subject
to the approval of the Plan's administrator, withdrawals from the
participant's deferral account may be permitted before age 59-1/2 to
meet a financial hardship.
Participant Accounts
Individual accounts are maintained for each of the Plan's participants
to reflect the participants' contributions and related employer matching
contributions, as well as the participants' share of the Plan's income
and any related administrative expenses. Allocations are based on the
proportion that each participant's account balance has to the total of
all participants' account balances.
2. Investment Options
Participants may direct their contributions and any related earnings
into various investment options. Participants may change their
investment elections on a daily basis, in full percent increments.
Participants may not direct the investment of employer matching
contributions. Employer contributions and the net assets of the former
PAYSOP, and the respective earnings thereon are both in the form of
Company stock and have been combined for financial statement purposes
under the heading "Non-Participant Directed".
7
<PAGE> 9
A description of each investment option is provided below:
Southern California Water Company Stock Fund
The objective of this fund is to invest in Southern California
Water Company common stock. From time to time, the Plan may
maintain a portion of the fund's assets in cash or forms of
short-term investments, provided that such accounts remain
primarily invested in Company common stock.
Wells Fargo Stable Asset Fund
The objective of this fund is to provide a stable level of income
without significant principal volatility. The fund primarily
invests in a variety of high quality fixed-income securities.
Wells Fargo S&P 500 Stock Fund
The objective of this fund is to provide returns comparable to
the returns of the S&P 500 Stock Index by investing in the same
stocks and in substantially the same percentages as the S&P 500
Stock Index.
INVESCO Select Income Fund
The objective of this fund is to provide a high level of current
income by investing in government and corporate debt securities.
Strong Opportunity Fund
The objective of this fund is to provide long-term capital
appreciation. The fund primarily invests in common stocks.
Strong Total Return Fund
The objective of this fund is to provide a mix of income and
capital appreciation. The fund primarily invests in common
stocks, corporate bonds and debentures, and money market
instruments.
Westcore Intermediate Term Bond Fund
The objective of this fund is to provide current income with
little volatility of principal by investing in high quality
corporate and government bonds with maturities between three and
six years.
8
<PAGE> 10
Participant Loans
Effective June 5, 1996, a participant may borrow, subject to certain
restrictions and tax law requirements, the lesser of $50,000 or 50
percent of his or her account balance, with a minimum loan amount of
$1,000. Loan transactions are treated as a transfer to (from) the
investment fund from (to) Participant Loans. Principal and interest are
repayable ratably through payroll deductions over 36 months for loans
less than $5,000 and within 59 months for all other loans. The loans
bear interest at the Prime Rate plus one percent. The interest rates for
the 1997 Plan year range from 9.25 to 9.50 percent. A loan is considered
to be in default if any scheduled payment is more than 30 days late.
Defaulted loans are treated as a taxable distribution from the Plan.
Prior to June 5, 1996, participants were not allowed to borrow from the
plan.
3. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements are prepared on the accrual basis
of accounting. The preparation of the financial statements in conformity
with generally accepted accounting principles requires the Plan's
management to use estimates and assumptions that affect the reported
amounts of assets, liabilities and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates.
Reclassification
Certain prior year fund amounts have been reclassified to conform with
current year presentation.
Income Recognition
Purchases and sales of securities are recorded on a settlement-date
basis. Interest income is recorded as earned on the accrual basis.
Dividend income is recorded on the ex-dividend date.
Investment Valuation
Investments are stated at fair value. Investments in collective funds
and Company stock are valued at quoted market prices, which represent
the net asset value of shares held by the Plan at year end. Participant
loans are valued at cost, which approximate fair value.
Net Appreciation in Fair Value of Investments
Net realized and unrealized appreciation (depreciation) is recorded in
the accompanying statement of changes in net assets available for plan
benefits, as net appreciation (depreciation) in fair value of
investments.
9
<PAGE> 11
Distributions to Participants
Distributions to participants are recorded when paid.
Administrative Expenses
Administrative fees for accountants, legal counsel and other specialists
and any other costs of administering the Plan, unless paid directly by
the Company, will be paid by the Plan and will be charged against
participants' accounts. Certain administrative expenses directly
relating to participant accounts are specifically allocated and deducted
from the participants' accounts.
Administrative expenses incurred related to the net assets of the former
PAYSOP account, that are paid out of the Plan, are limited to the lesser
of (i) the sum of 10 percent of the first $100,000 and 5 percent of any
amount in excess of $100,000 of the income from dividends paid to the
Plan with respect to Company stock allocated to the PAYSOP account
during the plan year, or (ii) $100,000.
4. Related Party Transactions
The Wells Fargo Stable Asset Fund and the Wells Fargo S&P 500 Stock Fund
(collectively the "Wells Funds") are managed by Wells Fargo Bank, N.A.
As such, transactions in the Wells Funds qualify as an exempt
party-in-interest transactions.
5. Tax Status
The Internal Revenue Service issued a determination letter dated
November 6, 1996 stating that the Plan and related trust are designed in
accordance with applicable IRC requirements as of that date. The Plan
Administrator and the Plan's tax counsel believe that the Plan was
qualified and was tax-exempt for the years ended December 31, 1997 and
1996.
6. Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
amend or terminate the Plan subject to the provisions of ERISA.
10
<PAGE> 12
7. Reconciliation of Financial Statements to Form 5500
The Plan financial statements are prepared on the accrual basis of
accounting, however, the Form 5500 is prepared on the cash basis. The
following is a reconciliation of net assets available for plan benefits
per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net assets available for plan benefits
per the financial statements $ 14,821,611 $ 10,750,047
Less: Contributions and income receivable (173,142) (142,891)
------------ ------------
Net assets available for plan benefits
per the Form 5500 $ 14,648,469 $ 10,607,156
============ ============
</TABLE>
The following is a reconciliation of total additions per the financial
statements to total income per the Form 5500:
<TABLE>
<CAPTION>
Year ended
December 31,1997
----------------
<S> <C>
Total additions per the
financial statements $ 4,482,974
Add: Amounts accrued for contributions
and income at December 31, 1996 142,891
Less: Amounts accrued for contributions
and income at December 31, 1997 (173,142)
-----------
Total income per the Form 5500 $ 4,452,723
===========
</TABLE>
11
<PAGE> 13
SCHEDULE I
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
EIN: 95-1243678 Plan No. 005
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Description of Investment
Identity of Issuer, Borrower, Including Maturity Date, Rate of Fair
Lessor, or Similar Party Interest, Par or Maturity Value Cost Value
----------------------------- -------------------------------- ----------- -----------
<S> <C> <C> <C>
* Southern California Water
Company Common Stock - $2.50 Par Value $ 6,860,843 $ 8,484,894
* Wells Fargo Institutional
Trust Group Wells Fargo Stable Asset Fund 1,085,351 1,085,351
* Wells Fargo Institutional
Trust Group Wells Fargo S&P 500 Stock Fund 1,188,769 1,107,389
* Wells Fargo Institutional
Trust Group INVESCO Select Income Fund 438,131 441,526
* Wells Fargo Institutional
Trust Group Strong Opportunity Fund 1,607,479 1,704,679
* Wells Fargo Institutional
Trust Group Strong Total Return Fund 580,860 539,024
* Wells Fargo Institutional
Trust Group Westcore Intermediate Term Bond
Fund 380,389 383,924
Participant Loans Loan with maturities varying from
three to five years and interest
rates ranging from 9.25 percent
to 9.50 percent - 901,682
----------- -----------
Total $12,141,822 $14,648,469
=========== ===========
</TABLE>
* Party-in-interest
12
<PAGE> 14
SCHEDULE II
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
EIN 95-1243678 Plan No. 005
ITEM 27b - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Detailed description of loan including
dates of making and maturity, interest
Amount received rate, the type & value of collateral,
Original during reporting year Unpaid any renegotiation of the loan and the Amount overdue
Identity and address amount --------------------- balance at terms of the renegotiation and other -------------------
of obligor of loan Principal Interest end of year material items Principal Interest
- -- -------------------- ------- --------- -------- ----------- -------------------------------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Karen Pascal 2,310 0 0 2,138 Participant Loan 2,138 120
45334 Esmeado Ct 12/20/96; 12/16/99, 9.25 percent
Temec, CA 92592 Collateral - Vested Balance
</TABLE>
13
<PAGE> 15
SCHEDULE III
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
EIN 95-1243678 Plan No. 005
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Expense Current Value
Incurred of Asset on
Identity of Party Purchase Selling Lease with Cost of Transaction Net Gain
Involved Description of Assets Price Price Rental Transaction Asset Date or (Loss)
- --------------------- ------------------------- ---------- ---------- --- ----------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Southern California Southern California Water
Water Company Company Common Stock
116 purchases $3,191,450 $ - N/A $ - $3,191,450 $3,191,450 -
112 sales - 2,279,211 N/A - 2,266,479 2,279,211 12,732
Wells Fargo Strong Opportunity Fund
Institutional 85 purchases 676,884 - N/A - 676,884 676,884 -
Trust Group 35 sales - 216,307 N/A - 198,757 216,307 17,550
</TABLE>
14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
members of the Investment Incentive Program Committee have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
By : /s/ McCLELLAN HARRIS III
--------------------------------------------
McClellan Harris III
Member - Investment Incentive Program
Committee
By : /s/ JAMES B. GALLAGHER
--------------------------------------------
James B. Gallagher
Member - Investment Incentive Program
Committee
By : /s/ RANDELL J. VOGEL
--------------------------------------------
Randell J. Vogel
Member - Investment Incentive Program
Committee
Dated: June 29, 1998
15
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 25, 1998 included in this Form 11-K, into the
previously filed S-8 Registration Statement (File No. 33-71226) of Southern
California Water Company.
/s/ ARTHUR ANDERSEN LLP
--------------------------------
Arthur Andersen LLP
Los Angeles, California
June 29, 1998
16
