<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, 1999 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
OF
SOUTHERN CALIFORNIA WATER COMPANY
630 EAST FOOTHILL BOULEVARD
SAN DIMAS, CALIFORNIA 91773
<PAGE> 2
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
INDEX
-----
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Public Accountants 1
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1999 3
Notes to Financial Statements 4-9
Supplemental Schedules:
Schedule I: Schedule of Assets Held for Investment Purposes
as of December 31, 1999 10
Schedule II: Schedule of Reportable Transactions
for the Year Ended December 31, 1999 11
</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, 1999 and 1998, and the related statement of
changes in net assets available for plan benefits for the year ended December
31, 1999. These financial statements and the supplemental schedules referred to
below are the responsibility of the Plan's administrator. Our responsibility is
to express an opinion on these financial statements and supplemental schedules
based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the changes in net assets available for plan
benefits for the year ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedules I and II, listed in the
accompanying index to the financial statements, 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 supplemental schedules 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
Los Angeles, California
June 23, 2000
<PAGE> 4
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
Statements of Net Assets Available for Plan Benefits
As of December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
Assets
<S> <C> <C>
Investments, at Fair Value (see Note 4) $26,121,503 $19,081,487
Receivables:
Employer contributions -- 30,227
Employee contributions -- 53,273
Accrued investment income -- 9,452
----------- -----------
Total Receivables -- 92,952
----------- -----------
Net Assets Available for Plan Benefits $26,121,503 $19,174,439
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 1999
<TABLE>
<S> <C>
Additions:
Additions to net assets attributed to:
Contributions:
Employee $ 1,678,812
Employer 920,445
-----------
Total Contributions 2,599,257
-----------
Investment Income:
Interest and dividends 830,616
Net appreciation in fair value of investments 4,649,301
-----------
Total Investment Income 5,479,917
-----------
Total Additions 8,079,174
-----------
Deductions:
Deductions to net assets attributed to:
Benefits paid to participants 1,132,110
-----------
Total Deductions 1,132,110
-----------
Net Increase 6,947,064
Net Assets Available for Plan Benefits,
Beginning of year 19,174,439
-----------
End of year $26,121,503
===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE> 6
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
Notes to Financial Statements
December 31, 1999 and 1998
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.
a. 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, as amended ("ERISA").
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 of the Plan maintains
a separate account for the net assets which were transferred from
the PAYSOP.
In 1998, the Company formed a holding company, American
States Water Company ("ASWC"). ASWC has no material assets other
than the common stock of the Company. At the time of the
formation, the Plan's investments in the Company's common stock
changed to an investment in the ASWC common stock. Such change
did not have a significant impact on the financial statements.
b. 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"). During 1999, Wells Fargo Bank merged with
Norwest; as a result of the merger the recordkeeping services
which Wells Fargo Bank provided changed from Trust Mark to Omni
Plus. The Plan is administered by the Investment Incentive
Program Committee (the "Plan Administrator"), which is appointed
by the Company's Board of Directors.
c. Eligibility
Effective January 1, 1996, any employee who has completed a
period of service of thirty consecutive days is eligible to
participate in the Plan.
4
<PAGE> 7
d. Contributions
Effective January 1, 1996, eligible employees can contribute an
amount between one 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 American States Water Company
Common Stock Fund, formerly the Southern California Water Company
Common Stock Fund.
e. Vesting
Participants are fully vested in their contributions and the
employer contributions made to their account, plus actual
earnings thereon.
f. 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 account
as of the end of the next calendar quarter. The value of benefits
distributable to a participant not electing deferral is based
upon amounts credited to the participant's account 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 account or the
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 an
employee of the Company. In addition, subject to the approval of
the Plan Administrator, withdrawals from a participant's account
may be permitted before age 59-1/2 to meet a financial hardship,
as defined in the Plan document.
g. Participant Accounts
Each participant's account is credited with the participant's
contributions and related employer matching contributions, as
well as the participant's share of the Plan's earnings and
charged with an allocation of administrative expenses.
Allocations are based on the proportion that each participant's
account balance has to the total of all participants' account
balances. The benefit to which participant is entitled is the
benefit that can be provided from the participant's vested
account.
f. Participant Loans
Effective June 5, 1996, participants may borrow from their
account a minimum of $1,000 up to a maximum equal to the lesser
of $50,000 or 50 percent of his or her account balance. Loan
transactions are treated as a transfer to (from) the investment
fund from (to) Participant Loan Fund. 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 1999 Plan year range from 8.75 to 9.50
percent. A loan is considered to be in default if any scheduled
payment is more than thirty days late. At December 31, 1999,
there were no loans in default.
5
<PAGE> 8
2. Summary of Significant Accounting Policies
a. Basis of Accounting
The accompanying financial statements are prepared on the accrual
basis of accounting.
b. Use of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires the Plan's management to make 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.
c. New Accounting Pronouncements
In September 1999, the Accounting Standards Executive Committee
issued Statement of Position ("SOP") 99-3 Accounting For and
Reporting of Certain Defined Contribution Benefit Plan Investments
and Other Disclosure Matters. This SOP establishes standards for
the reporting and disclosure of participant directed investment
programs. This SOP is effective for financial statements for plan
years ending after December 15, 1999. Certain reclassifications
have been made to the 1998 financial statement captions to conform
to the 1999 disclosure requirements pursuant to this SOP.
d. Investment Valuation and Income Recognition
Investments are stated at fair value. Investments in collective
funds, registered investment companies and American States Water
Company common 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.
Purchases and sales of securities are recorded on a trade-date
basis. Interest income is recorded on the accrual basis. Dividends
are recorded on the ex-dividend date.
e. Net Appreciation (Depreciation) in Fair Value of Investments
Net appreciation (depreciation) in fair value of investments is
based on the market value of the assets at the beginning of the
Plan year or at the time of purchase for assets purchased during
the year and the related fair values on the day investments are
sold with respect to realized gains and losses, and on the last
day of the year with respect to unrealized gains and losses. Net
realized and unrealized appreciation (depreciation) is recorded in
the accompanying Statement of Changes in Net Assets Available for
Plan Benefits as net appreciation in fair value of investments.
f. Distributions to Participants
Distributions to participants are recorded when paid.
6
<PAGE> 9
g. 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 a participant's account are
specifically allocated and deducted from the specific
participant's account.
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 the American States
Water Company stock allocated to the PAYSOP account during the
plan year, or (ii) $100,000. During 1999 and 1998, administrative
expenses borne by the Plan and by the Company were insignificant.
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 percentage increments. Participants may not direct the
investment of employer matching contributions. Participants should refer to the
Plan document for a complete description of the investment options as well as
for the detailed composition of each investment fund.
4. Investments
The following table presents investments that represent 5 percent or more of the
Plan's Net Assets:
<TABLE>
<CAPTION>
December 31,
1999 1998
-------------- -------------
<S> <C> <C>
American States Water Company Common Stock,
415,433 and 317,754 shares, respectively $ 14,942,702 * $10,304,263 *
Common and Collective Trusts
Wells Fargo Stable Asset Fund,
1,750,716 and 1,253,864 shares, respectively 1,570,413 1,253,864
Wells Fargo S&P 500 Stock Fund,
52,119 and 45,549 shares, respectively 2,883,598 2,149,931
Registered Investment Companies
Strong Opportunity Fund,
60,586 and 57,098 shares, respectively 2,711,912 2,205,107
Strong Total Return Fund,
29,971 and 22,720 shares, respectively 1,404,236 783,395
Participant Loans 1,520,741 1,256,997
</TABLE>
* Participant and Non Participant-Directed
7
<PAGE> 10
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated in value by
$4,649,301 as follows:
<TABLE>
<S> <C>
American States Water Company Common Stock $3,542,745
Common and Collective Trusts 508,817
Registered Investment Companies 597,739
----------
Total $4,649,301
==========
</TABLE>
5. Non Participant-Directed Investments
Information about the net assets and the significant components of the changes
in the net assets relating to the non participant-directed portion of the ASWC
Stock Fund is as follows:
<TABLE>
<CAPTION>
December 31,
1999 1999
------------ -------------
<S> <C> <C>
Net Assets:
American States Water Company Stock Fund $ 9,928,017 $ 6,842,380
</TABLE>
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
<S> <C>
Changes in Net Assets:
Contributions $ 920,445
Dividends 85,732
Net appreciation 2,578,727
Benefits paid to participants (410,475)
Transfers to participant directed investments (88,792)
-----------
Total $ 3,085,637
===========
</TABLE>
6. Related Party Transactions
The Trustee and the Company are parties-in-interest as defined by ERISA. Certain
Plan investments are shares of mutual funds managed by the Trustee and shares of
ASWC common stock. Such transactions qualify as party-in-interest transactions
permitted by the Department of Labor regulations.
7. 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 has been amended since
receiving the determination letter. However, the Plan Administrator and the
Plan's tax counsel believe that the Plan is designed and is currently operated
in compliance with the applicable provisions of the IRC. As such, no taxes have
been accrued for in the accompanying financial statements.
8
<PAGE> 11
8. Plan Termination
Although it has not expressed any intent to do so, the Company has the right
under the Plan document to discontinue its contributions at any time and to
amend or terminate the Plan subject to the provisions of ERISA.
9. Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500 which is due to the financial
statements being prepared on an accrual basis and the Form 5500 being prepared
on a cash basis:
<TABLE>
<CAPTION>
December 31,
1999 1998
------------ ------------
<S> <C> <C>
Net assets available for plan benefits
per the financial statements $ 26,121,503 $ 19,174,439
Less: Receivables -- (92,952)
------------ ------------
Net assets available for plan benefits
per the Form 5500 $ 26,121,503 $ 19,081,487
============ ============
</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, 1999
-----------------
<S> <C>
Total additions per the
financial statements $8,079,174
Add: amounts accrued for receivables
at December 31, 1998 92,952
----------
Total Income per the Form 5500 $8,172,126
==========
</TABLE>
9
<PAGE> 12
SCHEDULE I
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
EIN: 95-1243678 Plan No. 005
Schedule of Assets Held for Investment Purposes
As of December 31, 1999
<TABLE>
<CAPTION>
Description of investment
Party-In Identity of issuer, borrower, lessor, including maturity date, rate Current
interest or similar party interest, par or maturity value Cost value
-------- ------------------------------------- -------------------------------------- ------------ -------------
<S> <C> <C> <C> <C>
* American States Water
Company Common Stock, $2.50 Par Value $ 8,012,944 $ 14,942,702
Common and Collective Trusts
* Wells Fargo Institutional
Trust Group Stable Asset Fund 1,570,413
* Wells Fargo Institutional
Trust Group S&P 500 Stock Fund 2,883,598
Registered Investment Companies
Invesco Select Income Fund 572,371
Strong Opportunity Fund 2,711,912
Strong Total Return Fund 1,404,236
Westcore Intermediate Term Bond Fund 515,530
Participant Loans Loan with maturities through 2004,
interest rates ranging from
8.75 to 9.50 percent 1,520,741
------------
Total $ 26,121,503
============
</TABLE>
10
<PAGE> 13
SCHEDULE II
SOUTHERN CALIFORNIA WATER COMPANY
INVESTMENT INCENTIVE PROGRAM
EIN: 95-1243678 Plan No. 005
Schedule of Reportable Transactions
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
Expense Current value
Identity of party Purchase Selling Lease incurred with Cost of of asset on Net gain
involved Description of asset price price rental transaction asset transaction date or (loss)
----------------- -------------------- ---------- ---------- -------- ------------- ---------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
American States
Water Company Common Stock
141 purchases $4,313,231 $ -- $ -- $ -- $4,313,231 $4,313,231 $ --
127 sales -- 3,451,837 -- -- 3,356,164 3,451,837 95,673
</TABLE>
11
<PAGE> 14
Signatures
Pursuant to the requirements of the 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
Dated: June 23, 2000
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<S> <C>
23 Consent of Independent Public Accountants
</TABLE>
