Total Number of Pages - 109
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..............to....................
Commission file No. 0-464
CALIFORNIA WATER SERVICE COMPANY
(Exact name of registrant as specified in its charter)
California 94-0362795
(State or other jurisdiction (I.R.S. Employer Identification No.)
of Incorporation)
1720 North First Street, San Jose California 95112
(Address of Principal Executive Offices) (Zip Code)
1-408-451-8200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock, Par Value, $25
(Title of Class)
Common Stock, No Par Value
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
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 (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
The aggregate market value of the voting stock held by nonaffiliates
of the Registrant - $20,651,748 at March 8, 1994.
Common stock outstanding at March 8, 1994 - 5,697,034 shares.
EXHIBIT INDEX
The exhibit index to this Form 10-K is on page 28.
1
DOCUMENTS INCORPORATED BY REFERENCE
Designated portions of Registrant's Annual Report to
Shareholders for the calendar year ended December 31, 1993 ("1993
Annual Report") are incorporated by reference in Part I (Item 1),
Part II (Items 5, 6, 7 and 8) and in Part IV (Item 14(a)(1))
Designated portions of the Registrant's Proxy Statement
dated March 16, 1994, relating to the 1994 annual meeting of
shareholders ("Proxy Statement") are incorporated by reference in
Part III (Items 10, 11 and 12) as of the date the Proxy Statement
was filed with the Securities and Exchange Commission.
2
TABLE OF CONTENTS
Page
PART I
Item 1. Business............................... 5
a. General Development of Business ....... 5
Regulation and Rates .................. 5
b. Financial Information about
Industry Segments ..................... 7
c. Narrative Description of
Business .............................. 7
Geographical Service Areas
and Number of Customers at
Year-End .............................. 8
Water Supply .......................... 9
Utility Plant Construction Program
and Acquisitions ...................... 12
Quality of Supplies ................... 12
Competition and Condemnation .......... 12
Environmental Matters ................. 13
Human Resources........................ 13
d. Financial Information about
Foreign and Domestic Operations
and Export Sales ...................... 13
Item 2. Properties ............................ 14
Item 3. Legal Proceedings ..................... 14
Item 4. Submission of Matters to a Vote of
Security Holders....................... 14
Executive Officers of the Registrant ........... 15
PART II
Item 5. Market for Registrant's
Common Equity and Related
Stockholder Matters .................... 16
Item 6. Selected Financial Data ............... 16
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations ............. 16
3
Item 8. Financial Statements and
Supplementary Data .................... 16
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure............................. 17
PART III
Item 10. Directors and Executive Officers
of the Registrant ..................... 17
Item 11. Executive Compensation ................ 17
Item 12. Security Ownership of Certain
Beneficial Owners and
Management ............................ 17
Item 13. Certain Relationships and Related
Transactions .......................... 17
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on
Form 8-K .............................. 18
Signatures .......................................... 20
Schedules ........................................... 22
Exhibit Index ....................................... 28
Exhibits ............................................ 33
4
PART I
Item 1. Business.
a. General Development of Business.
California Water Service Company (the "Company") is a
public utility water company which owns and operates 20
water systems serving 38 cities and communities and
adjacent territories in California with an estimated
population of more than 1,400,000. Prior to 1993, the
Company had 21 operating districts; however, during 1993,
the San Carlos and San Mateo districts were consolidated
to become the Mid-Peninsula district.
The Company, one of the largest investor-owned water
companies in the United States, was incorporated under
the laws of the State of California on December 21, 1926.
Its principal executive offices are located at 1720 North
First Street, San Jose, California, and its mailing
address is Post Office Box 1150, San Jose, California
95108 (telephone number: 1-408-451-8200). The Company's
Common Stock is traded in the over-the-counter market and
is quoted by the National Association of Securities
Dealers Automated Quotation System (NASDAQ) under the
symbol CWTR. The Company is currently in the process of
seeking to list its common shares on the New York Stock
Exchange.
During the fiscal year ended December 31, 1993 (the "1993
fiscal year"), there were no significant changes in the
kind of products produced or services rendered by the
Company, or in the Company's markets or methods of
distribution.
Regulation and Rates.
The Company is subject to regulation of its rates,
service and other matters affecting its business by the
Public Utilities Commission of the State of California
("Commission" or "PUC").
The Company's systems, which are operated as 20 separate
districts in the State of California, are not integrated
with one another, and except for allocation of general
office expenses and the determination of cost of capital,
the expenses and revenues of individual districts are not
affected by operations in other districts. Cost of
capital (i.e. return on debt and equity) is determined on
a Company-wide basis. Otherwise, the PUC requires that
each district be considered a separate and distinct
entity for rate-making purposes.
5
The California Public Utilities Commission requires
that water rates for each Company operating district be
determined independently. Each year the Company
attempts to file general rate increase applications for
approximately one-third of its operating districts.
According to its rate case processing procedures for
water utilities, the Commission attempts to issue
decisions within eight months of acceptance of the
Application. Rates are set prospectively for a
three-year period, with a provision for step increases
to maintain the authorized rate of return. Offset rate
adjustments are also allowed as required for changes in
purchased water, power and pump tax costs.
During 1993, general rate increase applications were
filed with the Commission requesting rate relief of
$2,100,000 in three Company districts based upon a rate
of return on common equity of 12%. However, in recent
proceedings, the Commission has authorized a rate of
return on common equity of about 10.50%. Public
hearings for these cases have been scheduled for late
March 1994. In the meantime, step increases for 15
districts totaling approximately $2,233,000 were
authorized in January 1994.
The Company received two general rate case decisions in
1993. In April, the Commission issued a decision on
general rate cases filed in July 1991 for six
districts, authorizing $390,000 in additional revenue
based on a return on common equity of 11.50%. Then in
August 1993, the Commission issued a decision on
general rate cases filed in July 1992 for seven
districts, providing a revenue increase of $3,408,000
based on a return on common equity of 11%.
In November 1992, hearings began in the Commission's
investigation of the current financial and operational
risks which confront water utilities. This
investigation addresses two of the most significant
challenges to the California water industry--water
supply and water quality and their effect on
appropriate rates of return to be authorized by the
Commission. The California Water Association retained
expert witnesses to put forth the industry's position.
The hearings concluded in 1993 and the Commission is
expected to issue its decision sometime in 1994.
Interim rate relief in the Stockton district totaling
$1,900,000 was granted by the Commission in July 1993
for changes in purchased water expense, purchased power
costs and pump taxes. The Commission staff's
continuing review of these costs had delayed recovery
since 1989 when the amended Stockton supplemental water
purchase contract was first implemented. As part of
the staff's continuing review of the amended contract,
an independent consultant was hired by the Commission
staff to review the amended contract and a report is
expected in early 1994.
6
Two additional offset changes relating to the cost of
surface water supplies were issued by the Commission
during the past year. The first decision authorized
rate relief totaling $3,500,000 effective July 1, 1993,
to cover the increased cost of purchased water from the
Metropolitan Water District of Southern California to
serve the Company's four Los Angeles area districts,
and the second decision authorized a rate reduction
beginning in July and August totaling $4,300,000 for
customers in the Company's three San Francisco
Peninsula districts to reflect a 33% decrease in the
cost of purchased water from the wholesale supplier,
the San Francisco Water Department. Additional offset
rate relief of $637,000 was granted for the Bakersfield
district in November 1993 to allow for adjustments in
the district's water production expense balancing
account as permitted under the rate-making process.
The Company's headquarters in San Jose was recently
renovated and expanded with the addition of a new
engineering-water quality building to accommodate
increased staffing levels. This was the first
remodeling and expansion since expansion of facilities
to accommodate the Company's Information System
Department in 1972. As permitted by a prior Commission
order, an advice letter to recover the increased costs
due to the renovation and expansion was filed with the
CPUC in late 1993 requesting approximately $360,000 in
additional revenue.
b. Financial Information about Industry Segments.
The Company has only one business segment.
c. Narrative Description of Business.
The sole business of the Company consists of the pro-
duction, purchase, storage, purification, distribution
and sale of water for domestic, industrial, public, and
irrigation uses, and for fire protection. The
Company's business fluctuates according to the demand
for water, which is partially dictated by seasonal
conditions, such as summer temperatures or the amount
and timing of rain during the year. The 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. The Company
distributes its water to customers in accordance with
accepted water utility methods, which include pumping
from storage and gravity feed from high elevation
reservoirs.
7
Geographical Service Areas and Number of Customers at Year-End.
The principal markets for the Company's products are users of
water within the Company's service areas. The Company's
geographical service areas and the approximate number of
customers served in each at December 31, 1993, are as follows:
SAN FRANCISCO BAY AREA
Mid-Peninsula (San Mateo and San Carlos) 35,200
South San Francisco (including Colma
and Broadmoor) 15,300
Bear Gulch (including Menlo Park, Atherton,
Woodside and Portola Valley) 17,100
Los Altos (including Los Altos
and portions of Cupertino, Los Altos
Hills, Mountain View and Sunnyvale) 17,700
Livermore 14,700
100,000
SACRAMENTO VALLEY
Chico (including Hamilton City) 20,100
Oroville 3,500
Marysville 3,800
Dixon 2,700
Willows 2,200
32,300
SALINAS VALLEY
Salinas 22,600
King City 1,800
24,400
SAN JOAQUIN VALLEY
Bakersfield 54,300
Stockton 40,700
Visalia 25,500
Selma 4,600
125,100
LOS ANGELES AREA
East Los Angeles (including portions
of City of Commerce and Montebello) 26,400
Hermosa Beach and Redondo Beach (including
portions of Torrance) 24,700
Palos Verdes (including Palos Verdes
Estates, Rancho Palos Verdes, Rolling
Hills Estates and Rolling Hills) 23,400
Westlake (portion of Thousand Oaks) 6,600
81,100
TOTAL 362,900
8
Water Supply
The Company's water supply is obtained from wells, surface
runoff or diversion and by purchase from public agencies and
other suppliers. The effects of the recent California
drought (which ended after the 1992-93 winter) are discussed
below. Except for periods of drought, the Company in the
past has had adequate water supplies to meet the existing
requirements of its service areas.
The Company delivered approximately 95 billion gallons of
water during the 1993 fiscal year, of which approximately
50% was obtained from wells, and 50% was purchased from the
following suppliers:
% of
Supply
District Purchased Source of Purchased Supply
SAN FRANCISCO BAY AREA
Mid-Peninsula 100% San Francisco Water Department
South San Francisco 74% San Francisco Water Department
Bear Gulch 86% San Francisco Water Department
Los Altos 67% Santa Clara Valley Water District
Livermore 73% Alameda County Flood Control
and Water Conservation District
SACRAMENTO VALLEY
Oroville 81% Pacific Gas and Electric Company
1% County of Butte
SAN JOAQUIN VALLEY
Bakersfield 21% Kern County Water Agency
Stockton 72% Stockton-East Water District
LOS ANGELES AREA
East Los Angeles 99% Central Basin Municipal
Water District
9
% of
Supply
District Purchased Source of Purchased Supply
LOS ANGELES AREA (Continued)
Hermosa Beach and Redondo
Beach 100% West Basin Municipal
Water District
Palos Verdes 100% West Basin Municipal
Water District
Westlake 100% Russell Valley Municipal
Water District
The balance of the required supply for the above districts
is obtained from wells, except for Bear Gulch where the
balance is obtained from surface runoff from a local
watershed.
The Chico, Marysville, Dixon and Willows districts in the
Sacramento Valley, the Salinas and King City districts in
the Salinas Valley, and the Selma and Visalia districts in
the San Joaquin Valley obtain their entire supply from
wells. In these districts, although groundwater levels
have declined during the six consecutive years of below
normal precipitation (1986-1992), they remain, in the
opinion of the Company, adequate for anticipated future
needs. However, in the Salinas Valley, declining water
tables have resulted in salt water intrusion in some areas
adjacent to Monterey Bay. Operational changes have been
made in the Salinas district in an attempt to retard the
movement of salt water toward the Company's production
wells. Pumping of vulnerable wells has been curtailed and
supply supplemented by boosting water from other zones.
The Company continues to cooperate with the Monterey County
Water Resources Agency and other groups on long-term
mitigation plans.
Purchases for the Los Altos, Livermore, Oroville, Stockton
and Bakersfield districts are pursuant to long-term
contracts expiring on various dates after 2011, except for
the Livermore contract which expired in July 1992.
Discussions with Zone 7 of the Alameda County Flood Control
and Water Conservation District regarding the renewal of
the contract are currently in progress and a new contract
is expected to be completed within a few months. The
contract, which expired in July 1992, requires water
deliveries to continue for two years after the expiration
of the contract. The supplies for the East Los Angeles,
Hermosa-Redondo, Palos Verdes and Westlake districts are
provided to the Company by public agencies pursuant to an
obligation of continued nonpreferential service to persons
within their boundaries.
10
Purchases for the South San Francisco, Mid-Peninsula and
Bear Gulch districts are pursuant to long-term contracts with
the San Francisco Water Department expiring June 30, 2009.
Water supplies in California's major reservoirs were at
22.4 million acre feet on January 1, 1994, almost doubled
that recorded one year earlier when the state was in its
sixth year of drought. The state's current reservoir
supply, which is at average for this time of year, was
replenished during 1993 as a result of the abundant runoff
which followed the above average precipitation of the
1992-93 winter season. Twelve Company districts receive
all or a portion of their supply from surface water runoff
captured by state and local reservoirs. While overall
reservoir storage remained normal at the start of 1994, the
snowpack in the Sierra on January 3, 1994, was
approximately 45% of average for this date, indicating that
the 1993-94 water year has started significantly drier than
last year's above average season. Subsequent storms in
mid-February 1994 have greatly increased the Sierra
snowpack.
Although substantial reserves remain in underground
aquifers which serve 16 Company districts, many groundwater
tables have not fully recovered from the effects of the
drought. Taking this into consideration, together with the
fact that California will continue to have long-term water
supply problems with future growth, the Company will
maintain its water conservation efforts through a variety
of customer programs initiated during the drought. The
state's improved supply conditions have eliminated the need
for water rationing.
While not under a mandatory rationing program during 1994,
customers in the Company's Salinas district will be asked
to voluntarily cut water use by 15% to conform to a new
local ordinance. The new law, which places water use
restrictions on both urban and agricultural users in
Monterey County, is part of an overall program to curtail
ocean salt water intrusion. Possible program options
include: The use of additional supplies from southern
Monterey County reservoirs for imported surface water and
groundwater recharge; the use of 20,000 acre feet of
reclaimed water from the Regional Water Treatment plant in
Marina, recycled for irrigation use and groundwater
recharge; restrictions placed upon the Salinas Valley's
urban and agricultural communities on water use; and the
possible development of a new dam and reservoir in the
County's Arroyo Seco area for reserve storage and recharge
of the underground through the Salinas and Arroyo Seco
Rivers.
11
Utility Plant Construction Program and Acquisitions.
The Company is continually extending and enlarging its
facilities as required to meet increasing demands and to
maintain its service. Capital expenditures for these
purposes and for the replacement of existing facilities
amounted to approximately $29 million in 1993. Financing
was obtained from funds from operations, temporary cash
investments, first mortgage bonds, advances for
construction, and contributions in aid of construction as
set forth in the section entitled "Statement of Cash Flows"
on page 20 of the Company's 1993 Annual Report and is
incorporated herein by reference. Advances for
construction of main extensions are received by the Company
from subdivision developers under the rules of the PUC.
These advances are refundable without interest over a
period of years. Contributions in aid of construction
consist of nonrefundable cash deposits or facilities
received from developers.
The Company now estimates that additions and improvements
to its facilities during 1994 will amount to approximately
$21,600,000 (exclusive of additions and improvements
financed through advances for construction and
contributions in aid of construction), which is expected to
be financed with internally generated funds and short-term
borrowings to be replaced by funds from issuance of
approximately 600,000 shares of common stock during the
year or from the issuance of first mortgage bonds.
In November 1992, the Company executed a Stock Purchase
Agreement to acquire Del Este Water Company located in
Modesto, California, through an exchange of common stock.
However, in August 1993, the Company elected not to pursue
the purchase after the City of Modesto initiated
condemnation proceedings to acquire the system from the
present owner.
Quality of Supplies.
The Company maintains procedures to produce potable water
in accordance with accepted water utility practice. All
water entering the distribution systems from surface
sources is chlorinated and in most cases filtered. Samples
of water from each district are analyzed regularly by
Company bacteriologists.
Competition and Condemnation.
The Company is a public utility regulated by the PUC. The
Company provides service within filed service areas
approved by the PUC. Under the laws of the State of
California, no privately owned public utility may compete
with the Company in any territory already served by the
Company without first obtaining a certificate of public
convenience and necessity from the PUC. Under PUC
practice, such certificate will be issued only on a showing
that the Company's service in such territory is inadequate.
12
California law also provides that whenever a public
agency constructs facilities to extend a utility service
into the service area of a privately owned public
utility, such an act constitutes the taking of property
and for such taking the public utility is to be paid just
compensation.
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 already 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 of the Company's
systems.
Environmental Matters.
The Company is subject to environmental regulation by
various governmental authorities. Compliance with
federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials
into the environment, or otherwise relating to the
protection of the environment, has not had, as of the
date of filing of this Form lO-K, any material effect on
the Company's capital expenditures, earnings or
competitive position. No such material effect is
anticipated for the fiscal years ending December 31, 1994
and 1995.
Human Resources.
As of December 31, 1993, the Company had 614 employees,
of whom 150 were executive and administrative officials
and supervisory employees, and 464 were members of
unions. The Company presently has two-year collective
bargaining agreements expiring December 31, 1995, with
the Utility Workers of America, AFL-CIO, representing the
majority of employees, and the International Federation
of Professional and Technical Engineers, AFL-CIO,
representing certain engineering department employees.
d. Financial Information about Foreign and Domestic
Operations and Export Sales.
The Company makes no export sales.
13
Item 2. Properties.
The Company's physical properties consist of offices and
water systems for the production, storage, purification,
and distribution of water. These properties are located
in or near the service areas listed above in the section
entitled "Water Supply." The Company maintains all of its
properties in good operating condition.
The Company holds all its principal properties in fee,
subject to the lien of the indenture securing the
Company's first mortgage bonds, of which there were
outstanding at December 31, 1993, $129,608,000 in
principal amount.
Item 3. Legal Proceedings.
The Company is involved in only routine litigation which
is incidental to the business.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders in
the fourth quarter of fiscal year 1993.
14
Executive Officers of the Registrant.
Name Positions and Offices with the Company Age
C. H. Stump Chairman of the Board since 1991, Chief
Executive Officer 1991 to May 1992.
Director since 1976, and Member of 68
Executive Committee since 1977.
Mr. Stump was Secretary of the
Company from 1959 to 1966, Secretary and
Treasurer from 1966 to 1975, Executive
Vice President from 1975 to 1981,
President and Chief Operating Officer
from 1981 to 1986, and President and Chief
Executive Officer from 1986 to 1992.
Donald L. Houck President, Chief Executive Officer 61
since May 1992. Director since 1988.
Mr. Houck was Executive Vice President
and Chief Operating Officer from 1986
to 1992 and a Vice President since 1977.
Prior to that, Mr. Houck was a supervising
engineer with the California Public
Utilities Commission with eighteen years
experience in the rate-making process.
Harold C. Ulrich Vice President and Chief Financial 64
Officer since 1976 and Treasurer since
1975. Mr. Ulrich was Controller of the
Company from 1966 to 1975.
Kenneth J. Roed Vice President, Corporate Communications, 64
since 1988. Mr. Roed was previously
employed by the Company for 12 years as
Assistant to the President and Director of
Corporate Communications.
Francis S. Ferraro Vice President since August 1989. Mr. 44
Ferraro previously had 15 years experience in
regulatory matters with the California Public
Utilities Commission, from June 1985 in the
capacity of an administrative law judge.
Raymond H. Taylor Vice President since April 1990. Mr. Taylor 48
had been director of water quality since
1986 and previously had been employed by
the Environmental Protection Agency
before joining the Company in 1982.
Gerald F. Feeney Controller, Assistant Secretary and 49
Assistant Treasurer since 1976.
From 1970 to 1976, Mr. Feeney was
a manager with Peat Marwick Mitchell & Co.
15
Helen Mary Kasley Secretary and Legal Counsel since 42
1993. From 1990 to 1992, Mrs. Kasley
was Secretary. From 1986 to 1990, she was
an associate attorney with McCutchen,
Doyle, Brown & Enersen.
John S. Simpson Assistant Secretary since 1992. Mr. 49
Simpson has been Manager of New Business
Development for the past nine years
and has held various management positions
with the Company since 1967.
No officer or director 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 executive officer, other than those with directors or
officers of the Company acting solely in their capacities as such.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters.
The information required by this item is contained in the
section captioned "Quarterly Financial and Common Stock
Market Data" on page 26 of the Company's 1993 Annual Report
and is incorporated herein by reference. The number of
holders listed in such section includes the Company's record
holders and also individual participants in security position
listings.
Item 6. Selected Financial Data.
The information required by this item is contained in the
section captioned "California Water Service Company Ten Year
Financial Review" on pages 12 and 13 of the Company's 1993
Annual Report and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information required by this item is contained in the
sections captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations," on pages 14
and 15 of the Company's 1993 Annual Report and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is contained in the
sections captioned "Balance Sheet," "Statement of Income,"
"Statement of Common Shareholders' Equity," "Statement of
Cash Flows," "Notes to Financial Statements" and "Independent
Auditors' Report" on pages 16 through 27 of the Company's
1993 Annual Report and is incorporated herein by reference.
16
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Information regarding executive officers of the Company is
included in a separate item captioned "Executive Officers of
the Registrant" contained in Part I of this report. The
information required by this item as to directors of the
Company is contained in the section captioned "Election of
Directors" on pages 2 through 5 of the Proxy Statement and
is incorporated herein by reference. (The proxy statement
was filed under EDGAR on March 14, 1994).
Item 11. Executive Compensation.
The information required by this item as to directors and
executive officers of the Company is contained in the
section captioned "Compensation of Executive Officers" on
pages 7 and 8 of the Proxy Statement and is incorporated
herein by reference. (The proxy statement was filed under
EDGAR on March 14, 1994).
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information required by this item is contained in the
sections captioned "Election of Directors," "Security
Ownership of Certain Beneficial Owners" and "Security
Ownership of Management" pages 2 through 4 and 12 and 13,
respectively, of the Proxy Statement and is incorporated
herein by reference. (The proxy statement was filed under
EDGAR on March 14, 1994).
Item 13. Certain Relationships and Related Transactions.
None.
17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) (1) Financial Statements:
Balance Sheet as of December 31, 1993 and 1992.
Statement of Income for the years ended
December 31, 1993, 1992, and 1991.
Statement of Common Shareholders' Equity for the
years ended December 31, 1993, 1992, and 1991.
Statement of Cash Flows for the years
ended December 31, 1993, 1992, and 1991.
Notes to Financial Statements, December 31,
1993, 1992, and 1991.
The above financial statements are contained in
sections bearing the same captions on pages 16
through 26 of the Company's 1993 Annual Report
and are incorporated herein by reference.
(2) Financial Statement Schedules:
Schedule
Number
- Independent Auditors' Report
on Schedules, January 21, 1994.
V Property, Plant, and Equipment --
years ending December 31, 1993,
1992, and 1991.
VI Accumulated Depreciation of Property,
Plant, and Equipment--years ending
December 31, 1993, 1992, and 1991.
VIII Valuation and Qualifying Accounts and
Reserves--years ending December 31, 1993, 1992,
and 1991.
X Supplementary Income Statement
Information--years ending December 31,
1993, 1992, and 1991.
18
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 on page 27 of this document which is
incorporated herein by reference.
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. Except where stated
otherwise, such exhibits are hereby incorporated by
reference.
Exhibits filed herewith and attached hereto under separate
cover will be furnished to security holders of the Company
upon written request and payment of a fee of $.30 per page
which fee covers only the Company's reasonable expenses in
furnishing such exhibits.
(b) Report on Form 8-K.
None required to be filed during the last quarter of 1993.
19
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.
CALIFORNIA WATER SERVICE COMPANY
Date: March 16, 1994 By /s/ Donald L. Houck
DONALD L. HOUCK, President and
Chief Executive Officer
20
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the dates indicated:
Date: March 16, 1994 /s/ William E. Ayer
WILLIAM E. AYER, Member,
Board of Directors
Date: March 16, 1994 /s/ Robert W. Foy
ROBERT W. FOY, Member,
Board of Directors
Date: March 16, 1994 /s/ Edward D. Harris, Jr.
EDWARD D. HARRIS, JR. M.D., Member,
Board of Directors
Date: March 16, 1994 /s/ Donald L. Houck
DONALD L. HOUCK
President, Chief Executive
Officer, Member,
Board of Directors
Date: March 16, 1994 /s/ Robert K. Jaedicke
ROBERT K. JAEDICKE, Member,
Board of Directors
Date: March 16, 1994 /s/ Roscoe Moss, Jr.
ROSCOE MOSS, JR., Member,
Board of Directors
/s/
L. W. LANE, JR., Member,
Board of Directors
Date: March 16, 1994 /s/ C. H. Stump
C. H. STUMP, Chairman of the
Board, Member, Board of Directors
Date: March 16, 1994 /s/ Edwin E. Van Bronkhorst
EDWIN E. VAN BRONKHORST, Member,
Board of Directors
Date: March 16, 1994 /s/ Harold C. Ulrich
HAROLD C. ULRICH,
Vice President, Chief Financial
and Treasurer
Date: March 16, 1994 /s/ Gerald F. Feeney
GERALD F. FEENEY, Controller
21
Independent Auditors' Report on Schedules
Shareholders and Board
of Directors
California Water Service Company :
Under date of January 21, 1994, we reported on the balance sheets of
California Water Service Company as of December 31, 1993 and 1992, and
the related statements of income, common shareholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1993,
as contained in the 1993 annual report to shareholders. These financial
statements and our report thereon are incorporated by reference in
the annual report on Form 10-K for the year 1993. In connection with
our audits of the aforementioned financial statements, we also
audited the related financial statement Schedules V, VI, VIII and X.
These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered
in relation to the basic financial statements taken as a whole,
present fairly, in all material respects, the information set forth
therein.
San Jose, California /s/ KPMG Peat Marwick
January 21, 1994
22
CALIFORNIA WATER SERVICE COMPANY SCHEDULE V
Property, Plant and Equipment
Years Ending December 31, 1993, 1992 and 1991
Classification 1993 1992 1991
Utility Plant:
Source of supply plant $14,230,230 $13,595,710 $13,423,454
Pumping plant 38,336,601 35,877,503 32,889,989
Water treatment plant 6,169,057 5,841,979 4,284,069
Transmission and distribution plant 436,321,598 414,495,854 388,870,701
General plant 27,540,124 25,361,766 18,526,371
Undistributed items 16,501 39,409 15,277
------------- ------------- -------------
Total depreciable utility plant $522,614,111 $495,212,221 $458,009,861
Land 6,741,764 6,507,818 6,589,236
Construction work in progress 3,465,777 4,122,877 8,635,943
Utility plant held for future use (land) (5) - 330,639 158,052
------------- ------------- -------------
$532,821,652 $506,173,555 $473,393,092
------------- ------------- -------------
Non-utility Property (5) $592,050 $261,610 $241,508
------------- ------------- -------------
Neither total additions nor total retirements exceeded 10% of the ending balance of utility plant.
A summary of activity follows:
Utility Plant Non-utility Plant
--------------------------------------------- ---------------------------------
1993 1992 1991 1993 1992 1991
Additions (notes 2, 4) $28,902,065 $35,186,813 $35,305,807 - - -
Retirements (note 4) (2,765,757) (2,406,351) (2,106,609) (199) (1,726) (18,025)
Other changes (notes 3, 5) 511,789 - - 330,639 21,828 -
------------- ------------- ------------- --------- --------- ---------
$26,648,097 $32,780,462 $33,199,198 $330,440 $20,102 ($18,025)
------------- ------------- ------------- --------- --------- ---------
Notes:
(1) See note 1 to financial statements as to basis upon which the plant equipment is stated.
(2) Represents additions of new or replacement facilities added to provide service to customers; funded principally by
advances for construction, contributions in aid of construction, sale of first mortgage bonds and operations.
(3) Transfers between accounts.
(4) 1993 additions include $973,477 of assets added with the purchase of 1 water system; 1991 additions include
$1,576,515 of assets added with the purchase of 2 water systems.
(5) Non-utility property is included on the balance sheet with other assets. During 1993 Utility plant held for
future use was combined with non-utility plant.
23
CALIFORNIA WATER SERVICE COMPANY Schedule VI
Accumulated Depreciation of Property, Plant and Equipment
Years Ending December 31, 1993, 1992 and 1991
Additions
Balance at charged to Balance
beginning cost and at end
Classification of period expense Retirements of period
1993
Utility Plant:
Source of supply plant $8,189,801 $529,535 ($59,771) $8,659,565
Pumping plant 11,553,194 1,194,550 (549,779) 12,197,965
Water treatment plant 1,304,309 149,932 (83,589) 1,370,652
Transmission and distribution main 104,642,216 8,368,856 (1,470,928) 111,540,144
General plant 6,932,133 1,912,174 (947,751) 7,896,556
Undistributed items 14,950 - - 14,950
------------ ----------- ------------ ------------
Total depreciable utility plant $132,636,603 $12,155,047 ($3,111,818) $141,679,832 (2)
------------ ----------- ------------ ------------
Non-utility Plant $19,148 $1,538 - $20,686
------------ ----------- ------------ ------------
1992
Utility Plant:
Source of supply plant $7,766,168 $512,609 ($88,976) $8,189,801
Pumping plant 10,877,391 1,007,234 (331,431) 11,553,194
Water treatment plant 1,227,001 102,164 (24,856) 1,304,309
Transmission and distribution main 98,137,614 7,591,561 (1,086,959) 104,642,216
General plant 6,431,137 1,567,342 (1,066,346) 6,932,133
Undistributed items 14,950 - - 14,950
----------- ----------- ------------ ------------
Total depreciable utility plant $124,454,261 $10,780,910 ($2,598,568) $132,636,603 (2)
----------- ----------- ------------ ------------
Non-utility Plant $19,148 - - $19,148
----------- ----------- ------------ ------------
1991
Utility Plant:
Source of supply plant $7,402,140 $552,152 ($188,124) $7,766,168
Pumping plant 10,266,517 1,029,776 (418,902) 10,877,391
Water treatment plant 1,196,270 87,925 (57,194) 1,227,001
Transmission and distribution main 91,790,856 7,552,170 (1,205,412) 98,137,614
General plant 5,635,467 1,404,844 (609,174) 6,431,137
Undistributed items 14,950 - - 14,950
----------- ----------- ------------ ------------
Total depreciable utility plant $116,306,200 $10,626,867 ($2,478,806) $124,454,261 (2)
----------- ----------- ------------ ------------
Non-utility Plant $19,148 - - $19,148
----------- ----------- ------------ ------------
Notes:
(1) See note 1 to financial statements for statement with respect to depreciation policy of the Company. Included
in these amounts, but not identified by asset category, are additions charged to the transportation clearing
account, construction overhead and contributions in aid of construction totalling $1,529,087 in 1993, $1,358,474
in 1992 and $1,273,854 in 1991.
(2) Accumulated depreciation and amortization in the balance sheet includes accumulated amortization of intangible
assets of $170,446, $99,096 and $(21,687) at December 31, 1993, 1992 and 1991 respectively.
24
CALIFORNIA WATER SERVICE COMPANY Schedule VIII
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1993, 1992 and 1991
Additions
----------------------------
Balance at Charged to Charged to Balance
beginning costs and other at end
Description of period expenses accounts Deductions of period
- ----------------------------------------------------------------------------------------------------------------------------------
1993
(A) Reserves deducted in the balance sheet from assets to which they apply:
Allowance for doubtful accounts $75,155 $316,748 $65,280 (3) $384,487 (1) $72,696
Allowance for obsolete materials and supplies 5,000 72,000 15,605 (2) 61,395
----------- ---------- ----------- ----------- ---------
(B) Reserves classified as liabilities in the balance sheet:
Miscellaneous reserves:
General Liability $1,200,000 $330,000 44,401 $510,101 (2) $1,064,300
Employees' group health plan 511,985 2,240,000 9,578 1,879,420 (2) 882,143
Retirees' group health plan 0 480,000 267,360 510,360 (2) 237,000
Workers compensation 226,386 497,043 0 572,906 (2) 150,523
Deferred revenue - contributions
in aid of construction 1,247,256 758,380 356,250 (6) 1,649,386
Disability insurance 47,113 255,017 204,778 (2) 97,352
----------- ---------- ------------ ----------- ---------
Total $3,232,740 $3,547,043 $1,334,736 $4,033,815 $4,080,704
----------- ---------- ------------ ----------- ---------
Contributions in aid of construction $32,119,906 $3,637,420 (4) $841,548 (5) $34,915,778
==========================================================================
1992
(A) Reserves deducted in the balance sheet from assets to which they apply:
Allowance for doubtful accounts $79,767 $319,280 $66,374 (3) $390,266 (1) $75,155
Allowance for obsolete materials and supplies 5,000 190,527 190,527 (2) 5,000
---------- ---------- ---------- --------- ----------
(B) Reserves classified as liabilities in the balance sheet:
Miscellaneous reserves:
General Liability $1,081,494 $315,443 $196,937 (2) $1,200,000
Employees' group health plan 322,404 2,842,000 248,696 2,901,115 (2) 511,985
Workers compensation 188,120 487,153 32,112 480,999 (2) 226,386
Deferred revenue - contributions
in aid of construction 1,058,112 466,429 277,285 (6) 1,247,256
Disability insurance 63,929 239,296 256,112 (2) 47,113
---------- ----------- ---------- --------- ---------
Total $2,714,059 $3,644,596 $986,533 $4,112,448 $3,232,740
---------- ----------- ---------- --------- ---------
Contributions in aid of construction $29,349,230 $3,515,621 (4) $744,945 (5) $32,119,906
==========================================================================
25
Schedule VIII (Contd.)
1991
(A) Reserves deducted in the balance sheet from assets to which they apply:
Allowance for doubtful accounts $136,424 $215,232 $62,523 (3) $334,412 (1) $79,767
Allowance for obsolete materials and supplies 5,000 99,710 99,710 (2) 5,000
---------- ---------- ---------- --------- ---------
(B) Reserves classified as liabilities in the balance sheet:
Miscellaneous reserves:
General Liability $1,128,392 $460,000 $506,898 (2) $1,081,494
Employees' group health plan 570,703 2,448,000 212,751 2,909,050 (2) 322,404
Workers compensation 308,515 259,581 11,873 391,849 (2) 188,120
Deferred revenue - contributions
in aid of construction 857,393 438,875 238,156 (6) 1,058,112
Disability insurance 42,598 186,060 164,729 (2) 63,929
--------- ---------- ---------- --------- ---------
Total $2,907,601 $3,167,581 $849,559 $4,210,682 $2,714,059
--------- ---------- ---------- --------- ---------
Contributions in aid of construction $26,895,401 $3,161,855 (4) $708,026 (5) $29,349,230
==========================================================================
Notes:
(1) Accounts written off during the year.
(2) Expenditures and other charges made during the year.
(3) Recovery of amounts previously charged to reserve.
(4) Properties acquired at no cost, cash contributions and net transfer on non-refundable balances from advances to construction.
(5) Depreciation of utility plant acquired by contributions charged to a balance sheet account.
(6) Amortized to revenue.
26
Schedule X
CALIFORNIA WATER SERVICE COMPANY
Supplementary Income Statement Information
Years Ended December 31, 1993, 1992 and 1991
1993 1992 1991
Taxes, other than payroll and income taxes:
City and county real and personal
property taxes $2,939,000 $2,755,000 $2,650,000
Other taxes $1,452,000 $1,399,000 $1,167,000
__________ __________ __________
$4,391,000 $4,154,000 $3,817,000
========== ========== ==========
All charges for maintenance and repairs, depreciation and amortization are
stated separately in the statement of income. Amounts for royalties and
advertising costs are inapplicable.
27
EXHIBIT INDEX
Sequential
Page Numbers
Exhibit Number in this Report
3. Articles of Incorporation and By Laws:
3.1 Restated Articles of Incorporation dated
March 20, 1968, Certificate of Ownership
Merging Palos Verdes Water Company into
California Water Service Company dated
December 22, 1972; Certificate of Amendment
of Restated Articles of Incorporation dated
April 7, 1975; Certificate of Amendment of
Restated Articles of Incorporation dated
April 16, 1984; Certificate of Amendment of
Restated Articles of Incorporation dated
July 31, 1987; Certificate of Amendment of
Restated Articles of Incorporation dated
October 19, 1987 (Exhibit 3.1 to Form 10-K
for fiscal year 1987, File No. 0-464). 28
3.2 Certificates of Determination of Preferences
for Series C Preferred Stock (Exhibit 3.2 to
Form 10-K for fiscal year 1987, File No.
0-464). 28
3.3 Certificate of Amendment of the Company's
Restated Articles of Incorporation dated
April 27, 1988. (Exhibit 3.3 to Form 10-K
for fiscal year 1989, File No. 0-464). 28
3.4 By-Laws dated September 21, 1977, as amended
November 19, 1980, April 21, 1982, June 15,
1983, September 17, 1984, and November 16,
1987 (Exhibit 3.3 to Form 10-K for fiscal
year 1987, File No. 0-464). 28
3.5 Amendment to By-laws dated May 16, 1988.
(Exhibit 3.5 to Form 10-K for fiscal year
1991, File No. 0-464) 28
4. Instruments Defining the Rights of Security
Holders, including Indentures:
Mortgage of Chattels and Trust Indenture dated
April 1, 1928; Fifteenth Supplemental Indenture
dated November 1, 1965; Sixteenth Supplemental
Indenture dated November 1, 1966; Seventeenth
Supplemental Indenture dated November 1, 1967;
28
Twenty-First Supplemental Indenture dated
October 1, 1972; Twenty-Fourth Supplemental
Indenture dated November 1, 1973; (Exhibits
2(b), 2(c), 2(d), Registration Statement No.
2-53678, of which certain exhibits are
incorporated by reference to Registration
Statement Nos. 2-2187, 2-5923, 2-9681, 2-10517
and 2-11093.) 29
Twenty-Sixth Supplemental Indenture dated May 1,
1976 (Exhibit 4 to Form 10-K for fiscal year 1986,
File No. 0-464). 29
Twenty-Seventh Supplemental Indenture dated
November 1, 1977; Twenty-Eighth Supplemental
Indenture dated May 1, 1978; Twenty-Ninth
Supplemental Indenture dated November 1, 1979
(Exhibit 4 to Form 10-K for fiscal year 1989, File
No. 0-464). 29
Thirty-Third Supplemental Indenture dated as
of May 1, 1988, covering First Mortgage 9.48%
Bonds, Series BB (Exhibit 4 to Form 10-Q
September 30, 1988, File No. 0-464) 29
Thirty-Fourth Supplemental Indenture dated as
of November 1, 1990, covering First Mortgage
9.896% Bonds, Series CC (Exhibit 4 to Form 10-K
for fiscal year 1990, File No. 0-464). 29
Thirty-Fifth Supplemental Indenture dated as of
November 1, 1992, covering First Mortgage 8.63%
Bonds, Series DD. (Exhibit 4 to Form 10-Q for
dated September 30, 1992, File No. 0-464) 29
Thirty-Sixth Supplemental Indenture dated as of
May 1, 1993, covering First Mortgage 7.90% Bonds
Series EE (Exhibit 4 to Form 10-Q dated June 30,
1993, File No. 0-464) 29
Thirty-Seventh Supplemental Indenture dated as
of September 1, 1993, covering First Mortgage
6.95% Bonds, Series FF (Exhibit 4 to Form 10-Q
dated September 30, 1993, File No. 0-464) 29
Thirty-Eighth Supplemental Indenture dated as
of October 15, 1993, covering First Mortgage 6.98%
Bonds, Series GG. 33
29
Sequential
Page Numbers
Exhibit No. in this Report
10. Material Contracts.
10.1 Water Supply Contracts: Supply Contract 30
between the Company and Alameda County
Flood Control and Water Conservation
District relating to the Company's
Livermore District; Water Supply Contract
between the Company and the County of
Butte relating to the Company's Oroville
District; Water Supply Contract between
the Company and the Kern County Water
Agency relating to the Company's Bakersfield
District; Water Supply Contract between
the Company and Stockton East Water
District relating to the Company's Stockton
District. (Exhibits 5(g), 5(h), 5(i), 5(j),
Registration Statement No. 2-53678, which
incorporates said exhibits by reference to
Form 1O-K for fiscal year 1974, File No. 0-464).
10.2 Settlement Agreement and Master Water Sales 30
Contract between the City and County of San
Francisco and Certain Suburban Purchasers
dated August 8, 1984; Supplement to
Settlement Agreement and Master Water
Sales Contract, dated August 8, 1984; Water
Supply Contract between the Company and the
City and County of San Francisco relating to
the Company's Bear Gulch District dated
August 8, 1984; Water Supply Contract
between the Company and the City and County
of San Francisco relating to the Company's
San Carlos District dated August 8, 1984;
Water Supply Contract between the Company
and the City and County of San Francisco
relating to the Company's San Mateo District
dated August 8, 1984; Water Supply Contract
between the Company and the City and County
of San Francisco relating to the Company's
South San Francisco District dated August 8,
1984. (Exhibit 10.2 to Form lO-K for fiscal
year 1984, File No. 0-464).
30
Sequential
Page Numbers
Exhibit Number in this Report
10.3 Water Supply Contract dated January 27, 31
1981, between the Company and the Santa
Clara Valley Water District relating to
the Company's Los Altos District
(Exhibit 10.3 to Form 10-K for fiscal
year 1992, File No. 0-464)
10.4 Amendment dated November 28, 1979, to 31
Water Supply Contract between the Company
and Alameda County Flood Control and
Water Conservation District relating to
the Company's Livermore District.
(Exhibit 10.4 to Form 10-K for fiscal
year 1992, File No. 0-464)
10.5 Amendments No. 3, 6 and 7 and Amendment 31
dated June 17, 1980, to Water Supply
Contract between the Company and the
County of Butte relating to the Company's
Oroville District. (Exhibit 10.5 to Form
10-K for fiscal year 1992, File No.
0-464)
10.6 Amendment dated May 31, 1977, to Water 31
Supply Contract between the Company and
Stockton-East Water District relating to
the Company's Stockton District.
(Exhibit 10.6 to Form 10-K for fiscal
year 1992, File No. 0-464)
10.7 Second Amended Contract dated September 25, 31
1987 among the Stockton East Water District,
the California Water Service Company, the
City of Stockton, the Lincoln Village
Maintenance District, and the Colonial Heights
Maintenance District Providing for the Sale of
Treated Water. (Exhibit 10.7 to Form 10-K for
fiscal year 1987, File No. 0-464).
10.8 Dividend Reinvestment Plan. (Exhibit 10.8 to 31
Form 10-K for fiscal year 1991, File No. 0-464)
10.9 Water Supply Contract dated April 19, 1927, 31
and Supplemental Agreement dated June 5,
1953, between the Company and Pacific Gas
and Electric Company relating to the
Company's Oroville District. (Exhibit 10.9
to Form 10-K for fiscal year 1992, File No.
0-464)
10.10 California Water Service Company Pension Plan 31
(Exhibit 10.10 to Form 10-K for fiscal year
1992, File No. 0-464)
31
Sequential
Page Numbers
Exhibit Number in this Report
10.11 California Water Service Company Supplemental
Executive Retirement Plan. (Exhibit 10.11 to
Form 10-K for fiscal year 1992, File No. 0-464) 32
10.12 California Water Service Company Salaried
Employees' Savings Plan. (Exhibit 10.12
to Form 10-K for fiscal year 1992, File
No. 0-464) 32
10.13 California Water Service Company
Directors Deferred Compensation Plan
(Exhibit 10.13 to Form 10-K for fiscal
year 1992, File No. 0-464) 32
10.14 Board resolution setting forth
the terms of the retirement plan,
as amended, for Directors of
California Water Service Company
(Exhibit 10.14 to Form 10-K for
fiscal year 1992, File No. 0-464) 32
13. Annual Report to Security Holders, Form 1O-Q
or Quarterly Report to Security Holders:
1993 Annual Report. The sections of the
1993 Annual Report which are incorporated
by reference in this 10-K filing. This
includes those sections referred to in
Part II, Item 5, Market for Registrant's
Common Equity and Related Shareholder
Matters; Part II, Item 6, Management's
Financial Data; Part II, Item 7,
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; and Part II, Item 8,
Financial Statement and Supplementary
Data. 86
32
RECORDING REQUESTED BY
AND MAIL TO:
California Water Service Company
P.O. Box 1150
San Jose, California 95108-1150
Attention: Helen M. Kasley, Secretary
SUPPLEMENTAL MORTGAGE OF CHATTELS
AND
TRUST INDENTURE
(Thirty-Eighth Supplemental Indenture)
------------
CALIFORNIA WATER SERVICE COMPANY
to
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
Trustee
------------
Dated as of October 15, 1993
33
TABLE OF CONTENTS
Section Page
PARTIES................................................................ 1
RECITALS............................................................... 1
Execution and recordation of Original Indenture, dated April 1, 1928. 1
Change of name of Los Angeles-First National Trust & Savings
Bank............................................................... 2
Change of name of American Trust Company............................. 2
Resignations of Wells Fargo Bank, National Association and Security
Pacific National Bank, as trustees, and appointment of Bank of
America National Trust and Savings Association, as successor
trustee............................................................ 2
Execution of thirty-seven supplemental indentures.................... 3
Recordation of thirty-seven supplemental indentures.................. 4
Amount of bonds heretofore issued and now outstanding................ 5
Authorization of Original Indenture, as amended, of issuance of bonds
in series and requirements for creation of new series.............. 6
Proposal of Company to issue additional bonds of new series, prescribe
terms thereof and confirm lien of Original Indenture and thirty-seven
prior supplemental indentures...................................... 6
Desire of Company to describe specifically additional properties acquired
since date of Thirty-Seventh Supplemental Indenture................ 7
Authorization of Thirty-Eighth Supplemental Indenture by Company..... 7
Compliance with all conditions and requirements for validity of Thirty-
Eighth Supplemental Indenture...................................... 7
Execution of Bond Purchase Agreements................................ 7
GRANTING CLAUSE...................................................... 7
Schedule I--Properties under prior indentures...................... 8
Properties described in prior indentures but subsequently released 8
Schedule II--Properties now owned or acquired...................... 8
1. Real estate................................................... 8
2. Franchises, rights-of-way, rights and privileges.............. 8
Schedule III--Other property now owned............................. 9
Right to retain possession and dispose of certain intangible and other
property.........................................................
Schedule IV--After-acquired property............................... 9
Franchises, permits, licenses, rights, etc......................... 10
Tenements, hereditaments, appurtenances, etc....................... 10
Express condition that subjection of properties to lien shall not render
them unavailable for use under Indenture......................... 10
HABENDUM CLAUSE...................................................... 11
USES AND TRUSTS...................................................... 11
AGREEMENT OF COMPANY AND TRUSTEE..................................... 11
i 34
TABLE OF CONTENTS
--------
PART I
SERIES GG BONDS
ARTICLE I--CREATION OF AND PARTICULARS OF SERIES GG BONDS
Section Page
1. Creation and Designation....................................... 12
2. Terms of Series GG Bonds....................................... 12
3. Form of Series GG Bonds........................................ 16
Form of registered bond without coupons of Series GG........ 17
Form of trustee's certificate of authentication............. 21
ARTICLE II--ISSUE OF BONDS
1. Conditions Applicable to Issuance of Series GG Bonds........... 22
ARTICLE III--REDEMPTION
1. Right to Redeem; Redemption Prices............................. 22
2. Notice and Manner of Redemption................................ 22
ARTICLE IV--SINKING FUND
1. Amount and Time of Payment..................................... 23
2. Application of Sinking Fund Cash to Redemption of Bonds........ 23
3. Limitations on Use of Sinking Fund Cash in Case of Default..... 24
4. Sinking Funds for Bonds of Other Series........................ 24
ii 35
Table of Contents
--------
PART II
MISCELLANEOUS PROVISIONS WITH RESPECT TO
SUPPLEMENTAL INDENTURE
Section Page
1. The Trustee....................................................... 24
2. Destruction of Bonds.............................................. 24
3. Separability of Invalid Provisions................................ 25
4. Effect on Successors and Assigns of Parties....................... 25
5. Immunity of Incorporators, Stockholders, Officers and Directors... 25
6. Titles Not Part of Supplemental Indenture......................... 25
7. Counterparts...................................................... 25
8. Title to Property; Authority to Mortgage; Prior Liens............. 26
ATTESTATION........................................................... 26
EXECUTION............................................................. 26
ACKNOWLEDGMENT OF COMPANY............................................. 27
ACKNOWLEDGMENT OF BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION............................................. 28
SCHEDULE A--Recording Data as to Resignations of Wells Fargo
Bank, National Association and Security Pacific National Bank, as
Trustees, and Appointment of Bank of America National Trust and
Savings Association as Successor Trustee............................ 29
SCHEDULE B--Recording Data as to Supplemental Indentures.............. 30
SCHEDULE C--Properties Released Since September 1, 1993............... 48
SCHEDULE D--Real Estate Acquired by the Company Since
September 1, 1993 or Otherwise Not Included in the
Original Indenture or any Supplemental Indenture.................... 49
iii 36
SUPPLEMENTAL MORTGAGE OF CHATTELS
AND TRUST INDENTURE
Thirty-Eighth Supplemental Indenture
--------
THIS SUPPLEMENTAL INDENTURE, made and entered into as of the 15th day of
October, 1993, by and between California Water Service Company, a corporation
organized and existing under and by virtue of the laws of the State of
California, and having its principal place of business in the City of San Jose,
County of Santa Clara, State of California, by occupation a public utility water
company (hereinafter called the "Company"), party of the first part, and Bank of
America National Trust and Savings Association, a national banking association
created, organized and existing under and by virtue of the laws of the United
States of America, and having corporate trust offices in the cities of Los
Angeles and San Francisco, State of California (hereinafter sometimes called
the "Trustee").
Whereas, the Company heretofore made, executed and delivered that certain
indenture, California Water Service Company to American Trust Company and Los
Angeles-First National Trust & Savings Bank, as trustees, dated as of the 1st
day of April, 1928 (hereinafter sometimes called the "Original Indenture"),
which indenture has been recorded in the offices of the Recorders of the
following counties and city and county of the State of California on the
respective dates and in the respective books of record hereinafter set forth as
follows:
1 37
Vol. of Page at
Official Records Which
County or Date of (except as Record
City and County Recordation noted) Commences
Contra Costa............. May 2, 1928 141 7
City and County of
San Francisco.......... May 3, 1928 1637 346
(Book of
Glenn.................... May 2, 1928 62 Mortgages) 190
Kings.................... Jan. 7, 1929 40 348
San Joaquin.............. May 2, 1928 243 295
Solano................... May 2, 1928 14 7
Tulare................... May 3, 1928 260 11
Alameda.................. May 2, 1928 1877 35
Sonoma................... May 2, 1928 196 136
Los Angeles.............. May 4, 1928 7105 102
(Book of
Butte.................... May 2, 1928 116 Mortgages) 106
Kern..................... May 3, 1928 249 1
Shasta................... May 2, 1928 38 80
Fresno................... May 2, 1928 894 32
San Mateo................ Jan. 20, 1939 837 16
Yuba..................... Sept. 12, 1942 69 291
Santa Clara.............. Nov. 2, 1945 1305 286
Monterey................. Feb. 21, 1962 23 (Reel) 1;
and
Whereas, Los Angeles-First National Trust & Savings Bank changed its name to
Security-First National Bank of Los Angeles and later to Security First
National Bank and later to Security Pacific National Bank; and
Whereas, American Trust Company changed its name to Wells Fargo
Bank-American Trust Company and later to Wells Fargo Bank and Wells Fargo Bank
subsequently merged into Wells Fargo Bank, National Association; and
Whereas, by instrument entitled "Resignations of Wells Fargo Bank, National
Association as Authenticating Trustee and Security Pacific National Bank as
Trustee and Appointment and Acceptance of Bank of America National Trust and
Savings Association as Authenticating Trustee under Mortgage of Chattels and
Trust Indenture Dated as of April 1, 1928 As Supplemented, Amended and Modified
from California Water Service Company" dated as of August 1, 1983, recorded in
the offices of the Recorders of those counties and city and county of the State
of California on the respective dates and in the respective books of record
and/or as the respective document numbers set forth in SCHEDULE A, which is
annexed hereto and hereby made a part hereof, Wells Fargo Bank, National
Association resigned as authenticating trustee under the Original Indenture, as
theretofore supplemented, amended and modified by thirty-one supplemental
indentures, effective August 1, 1983, the Company
2 38
appointed Bank of America National Trust and Savings Association as successor
authenticating trustee to Wells Fargo Bank, National Association, effective
August 1, 1983, Bank of America National Trust and Savings Association accepted
such appointment as authenticating trustee under the Original Indenture, as
theretofore supplemented, amended and modified by thirty-one supplemental
indentures, effective August 1, 1983, Security Pacific National Bank resigned as
trustee under the Original Indenture, as theretofore supplemented, amended and
modified by thirty-one supplemental indentures, effective August 1, 1983, the
Company appointed no successor trustee to said Security Pacific National Bank,
Bank of America National Trust and Savings Association as of August 1, 1983
became fully vested with all the estates, properties, rights, powers, trusts,
duties and obligations of Wells Fargo Bank, National Association and Security
Pacific National Bank, as trustees under the Original Indenture, as theretofore
supplemented, amended and modified by thirty-one supplemental indentures, with
like effect as if originally named as trustee therein, and Bank of America
National Trust and Savings Association is now the authenticating trustee under
the Original Indenture, as supplemented, amended and modified by the First
through Thirty-Seventh Supplemental Indentures referred to below and by this
supplemental indenture (hereinafter sometimes called the "Thirty-Eighth
Supplemental Indenture"), said Original Indenture as so supplemented, amended
and modified being hereinafter called the "Indenture"; and
Whereas, the Company has heretofore made, executed and delivered
thirty-seven certain supplemental indentures supplemental to said Original
Indenture, to-wit, one such supplemental indenture from said California Water
Service Company to said American Trust Company and said Los Angeles-First
National Trust & Savings Bank, as trustees, dated January 3, 1929, hereinafter
sometimes called the "First Supplemental Indenture;" twelve such supplemental
indentures from said California Water Service Company to said American Trust
Company and said Security-First National Bank of Los Angeles, as trustees, dated
and hereinafter sometimes called, respectively, as follows:
Date Name
August 19, 1929 Second Supplemental Indenture
February 25, 1930 Third Supplemental Indenture
February 1, 1931 Fourth Supplemental Indenture
March 23, 1932 Fifth Supplemental Indenture
May 1, 1936 Sixth Supplemental Indenture
April 1, 1939 Seventh Supplemental Indenture
November 1, 1945 Eighth Supplemental Indenture
May 1, 1951 Ninth Supplemental Indenture
May 1, 1953 Tenth Supplemental Indenture
May 1, 1954 Eleventh Supplemental Indenture
May 1, 1955 Twelfth Supplemental Indenture
November 1, 1956 Thirteenth Supplemental Indenture;
four such supplemental indentures from said California Water Service Company to
said Wells Fargo Bank and said Security First National Bank, as trustees, dated
and hereinafter sometimes called, respectively, as follows:
3 39
Date Name
November 1, 1963 Fourteenth Supplemental Indenture
November 1, 1965 Fifteenth Supplemental Indenture
November 1, 1966 Sixteenth Supplemental Indenture
November 1, 1967 Seventeenth Supplemental Indenture;
fourteen such supplemental indentures from said California Water Service
Company to said Wells Fargo Bank, National Association and said Security
Pacific National Bank, as trustees, dated and hereinafter sometimes called,
respectively, as follows:
Date Name
November 1, 1969 Eighteenth Supplemental Indenture
May 1, 1970 Nineteenth Supplemental Indenture
November 1, 1970 Twentieth Supplemental Indenture
October 1, 1972 Twenty-First Supplemental Indenture
November 1, 1972 Twenty-Second Supplemental Indenture
November 15, 1972 Twenty-Third Supplemental Indenture
November 1, 1973 Twenty-Fourth Supplemental Indenture
May 1, 1975 Twenty-Fifth Supplemental Indenture
May 1, 1976 Twenty-Sixth Supplemental Indenture
November 1, 1977 Twenty-Seventh Supplemental Indenture
May 1, 1978 Twenty-Eighth Supplemental Indenture
November 1, 1979 Twenty-Ninth Supplemental Indenture
November 1, 1980 Thirtieth Supplemental Indenture
May 1, 1982 Thirty-First Supplemental Indenture;
and six such supplemental indentures from said California Water Service Company
to said Bank of America National Trust and Savings Association, as trustee,
dated and hereinafter sometimes called, respectively, as follows:
Date Name
September 1, 1983 Thirty-Second Supplemental Indenture
May 1, 1988 Thirty-Third Supplemental Indenture
November 1, 1990 Thirty-Fourth Supplemental Indenture
November 1, 1992 Thirty-Fifth Supplemental Indenture
May 1, 1993 Thirty-Sixth Supplemental Indenture
September 1, 1993 Thirty-Seventh Supplemental Indenture;
and
Whereas, said First through Thirty-Seventh Supplemental Indentures above
mentioned have been recorded in the offices of the Recorders of those counties
and city and county of the State of California on the respective dates and in
the respective books of record and/or as the respective document numbers set
forth in SCHEDULE B, which is annexed hereto and hereby made a part hereof; and
4 40
Whereas, under and pursuant to said Original Indenture and said
supplemental indentures hereinabove mentioned, the Company has heretofore
issued its bonds as follows:
Principal
Total Amount
Aggregate Outstanding
Principal as of
Designation Amount October 14, 1993
First Mortgage 5% Gold Bonds, Series A
(Heretofore redeemed and cancelled)..... $8,738,000
First Mortgage 4% Bonds, Series B
(Heretofore redeemed and cancelled)..... 11,882,000
First Mortgage 3-1/4% Bonds, Series C
(Heretofore redeemed and cancelled)..... 17,822,000
First Mortgage 3-5/8% Bonds, Series D
(Heretofore redeemed and cancelled)..... 3,540,000
First Mortgage 4-1/8% Bonds, Series E
(Heretofore redeemed and cancelled)..... 2,000,000
First Mortgage 3.35% Bonds, Series F
(Heretofore redeemed and cancelled)..... 1,500,000
First Mortgage 3-3/4% Bonds, Series G
(Heretofore redeemed and cancelled)..... 4,500,000
First Mortgage 4.60% Bonds, Series H
(Heretofore redeemed and cancelled)..... 3,000,000
First Mortgage 4.65% Bonds, Series I...... 3,000,000 $2,565,000
First Mortgage 4.85% Bonds, Series J...... 3,000,000 2,596,000
First Mortgage 6-1/4% Bonds, Series K..... 3,000,000 2,610,000
First Mortgage 6-3/4% Bonds, Series L..... 2,500,000 2,189,000
First Mortgage 9-1/2% Bonds, Series M
(Heretofore redeemed and cancelled)..... 2,500,000
First Mortgage 9-1/4% Bonds, Series N
(Heretofore redeemed and cancelled)..... 3,000,000
First Mortgage 9-1/4% Bonds, Series O
(Heretofore redeemed and cancelled)..... 3,000,000
First Mortgage 7-7/8% Bonds, Series P..... 3,000,000 2,700,000
First Mortgage 4-1/2% Bonds, Series Q
(Heretofore redeemed and cancelled)..... 1,171,000
First Mortgage 6.6% Bonds, Series R....... 4,653,000
(Heretofore redeemed and cancelled).....
First Mortgage 8-1/2% Bonds, Series S..... 3,000,000 2,715,000
First Mortgage 8-3/4% Bonds, Series T
(Heretofore redeemed and cancelled)..... 26,000,000
First Mortgage 9-1/4% Bonds, Series U
(Heretofore redeemed and cancelled)..... 4,000,000
First Mortgage 8.60% Bonds, Series V...... 3,000,000 1,785,000
First Mortgage 9-3/8% Bonds, Series W
(Heretofore redeemed and cancelled)..... 4,000,000
[continued on next page]
5 41
[continued from previous page]
Principal
Total Amount
Aggregate Outstanding
Principal as of
Designation Amount October 14, 1993
First Mortgage 10% Bonds, Series X
(Heretofore redeemed and cancelled)..... 5,000,000
First Mortgage 13% Bonds, Series Y
(Heretofore redeemed and cancelled)..... 6,000,000
First Mortgage 16-1/4% Bonds, Series Z
(Heretofore redeemed and cancelled)..... 5,000,000
First Mortgage 12-7/8% Bonds, Series AA... 35,000,000 33,425,000
First Mortgage 9.48% Bonds, Series BB..... 18,000,000 17,460,000
First Mortgage 9.86% Bonds, Series CC..... 20,000,000 19,700,000
First Mortgage 8.63% Bonds, Series DD..... 20,000,000 20,000,000
First Mortgage 7.90% Bonds, Series EE..... 20,000,000 20,000,000
First Mortgage 6.95% Bonds, Series FF..... 20,000,000 20,000,000;
and
Whereas, the Original Indenture, as amended by the Eighth Supplemental
Indenture, authorizes the bonds issuable thereunder to be issued in one or more
series and provides that before the authentication and delivery of any bonds of
a series not theretofore created, the Company shall furnish the Authenticating
Trustee (as defined therein) either a copy of a resolution certified by the
Secretary or an Assistant Secretary under the corporate seal of the Company to
have been duly adopted by the Board of Directors or a supplemental indenture
authorized by a resolution in like manner certified to have been duly adopted by
the Board of Directors, designating the new series to be created and prescribing
the amount thereof, if limited, the authorized denominations, the currency or
currencies in which and the rate or rates of exchange, if any, at which
principal and interest are to be paid, the date and the date or dates of
maturity thereof, the place or places where principal and interest are to be
paid, rate of interest and dates on which payable, provisions, if any, as to
deduction and/or reimbursement of taxes, terms and rates of redemption, if
redeemable, terms and rates of conversion, if convertible, terms and rates of
exchange, if exchangeable, any other particulars necessary to describe and
define such series, any other provisions and agreements in respect thereof and
the text of the bonds and coupons, if any; and
Whereas, the Company now proposes to issue additional bonds of a new series
under and pursuant to and secured by the Original Indenture, as supplemented,
amended and modified by the thirty-seven supplemental indentures hereinabove
mentioned and particularly by the Eighth Supplemental Indenture, as more
particularly provided in Article II thereof, and proposes to prescribe and
provide herein the series designation, date, denominations, date of
6 42
maturity, rate of interest, interest payment dates, terms of redemption, sinking
fund, place at which payable and other particulars, provisions and agreements in
respect to said additional bonds and the form thereof and to confirm the lien
and security of the Original Indenture and thirty-seven prior supplemental
indentures with respect to such additional bonds; and
Whereas, the Company also desires specifically to describe herein additional
properties which have been acquired by the Company since the date of the
Thirty-Seventh Supplemental Indenture and are subject to the lien and charge of
the Original Indenture and the thirty-seven prior supplemental indentures; and
Whereas, the Company, under and by virtue of the provisions of the Original
Indenture, as amended by the Eighth Supplemental Indenture, and under and by
virtue of appropriate resolutions of its Board of Directors, has duly resolved
to make, execute and deliver to the Trustee this Thirty-Eighth Supplemental
Indenture, in the form hereof for the purposes herein provided; and
Whereas, all conditions and requirements necessary to make this supplemental
indenture a valid, binding and legal instrument in accordance with its terms
have been done, performed and fulfilled and the execution and delivery hereof
have been in all respects duly authorized; and
Whereas, the Company expects to enter into agreements dated November 1, 1993
(the "Bond Purchase Agreements") with various prospective purchasers relating to
the purchase of the Series GG bonds (as hereinafter defined);
Now, Therefore, This Supplemental Indenture Witnesseth: That California
Water Service Company, in consideration of the premises and of the acceptance by
the Trustee of the trusts hereinafter mentioned, and of the purchase and
acceptance of the bonds hereinafter mentioned by the holders thereof, by way of
further assurance to the Trustee and the holders of the bonds hereinafter
mentioned and to confirm the lien and security of the Original Indenture and the
thirty-seven prior supplemental indentures above described with respect to said
bonds and to confirm the lien and security of the Original Indenture and the
thirty-seven prior supplemental indentures on the properties acquired since the
date of the Thirty-Seventh Supplemental Indenture hereinafter more specifically
described and referred to for the benefit of all bonds issued and to be issued
under the Original Indenture and/or any indenture supplemental thereto, and in
order to secure the payment both of the principal and interest of the bonds
hereinafter mentioned according to their tenor and effect and to secure the
performance and observance by the Company of all the covenants and conditions in
said bonds and in the Original Indenture, the thirty-seven prior supplemental
indentures and in this Thirty-Eighth Supplemental Indenture contained, has
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over and confirmed, and by these presents does grant, bargain,
sell, release, convey, assign, transfer, mortgage, pledge, set over and confirm
unto Bank of America National Trust and Savings Association, as trustee, and to
its successors in the trust and to its assigns
7 43
forever, all those certain water systems, properties, premises, rights,
franchises and interests (hereinafter sometimes referred to as the "mortgaged
property" or the "trust estate"), more particularly described as follows:
SCHEDULE I.
Properties Under Prior Indentures
All properties, premises, rights, franchises and interests more particularly
described in the Original Indenture and the First through Thirty-Seventh
Supplemental Indentures, inclusive, referred to above, excepting therefrom,
however, the following:
First: All properties shown in the First through Thirty-Seventh
Supplemental Indentures, inclusive, to have been released.
Second: The properties, if any, described in SCHEDULE C, which is
annexed hereto and hereby made a part hereof, which since September 1, 1993,
have been sold, conveyed or otherwise disposed of by the Company and
released and reconveyed by the Trustee under and pursuant to the terms and
provisions of the Original Indenture, as amended by the Eighth Supplemental
Indenture, or which have been condemned or taken by the power of eminent
domain and are no longer subject to the lien of the Original Indenture or
any supplement thereto.
SCHEDULE II.
Properties Now Owned or Acquired
All other properties, premises, rights, franchises and interests now or at
the date of delivery of these presents owned or acquired by the Company of
whatever character and wherever situated. Said properties include, among other
things, the following, but reference to or enumeration of any particular kinds,
classes or items of property shall not be deemed to exclude from the operation
and effect of this indenture any kind, class or item not so referred to or
enumerated:
1. Real Estate. All those certain lots, pieces or parcels of land, if
any, more particularly described in SCHEDULE D, which is annexed hereto and
hereby made a part hereof.
2. Franchises, Rights-of-Way, Rights and Privileges. All franchises,
permits, licenses, rights, easements, grants, privileges and immunities
pertaining to or used or usable in connection with the water systems of the
Company; all rights-of-way, water rights or privileges appurtenant to the
lands, if any, described in SCHEDULE D or used or useable in connection
therewith and all renewals, extensions or modifications of the foregoing.
8 44
Together with all and singular the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the aforesaid property,
real estate, franchises, rights, privileges and other property or any part
thereof; with the reversion and reversions, remainder and remainders, tolls,
rents, revenues, issues, income, product and profits thereof, and all the
estate, right, title, interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and to the same
and every part and parcel thereof.
SCHEDULE III.
Other Property Now Owned
And together with all buildings, plants, systems, works, improvements,
structures, fixtures, supplies, appliances, machinery, equipment, materials,
transporting and distributing systems, filter systems, ditches, dams, water
works, wells, pumps, reservoirs, conduits, pipes, mains, purifiers, washers,
holders, boilers, engines, motors (but not motor vehicles), pipe lines, sewers,
meters, services, fuel, office furniture, books, records, office supplies,
tools, accounts receivable, bills receivable, cash on hand and in bank, and all
personal property of every kind and nature whatsoever, appertaining to or useful
in the conduct of the Company's present or future business, which the Company
now owns, or in which it now has any interest; provided, however, that so long
as the Company shall not be in default under the Original Indenture or any
indenture supplemental thereto, it shall be entitled to retain in its possession
all cash on hand or in bank, accounts receivable, bills receivable, materials
and supplies and all shares of stock, bonds and other securities not
specifically transferred or assigned to or pledged with the Trustee under the
Original Indenture or any indenture supplemental thereto or required so to be
and all proceeds of the sale, condemnation or other disposition of the same, and
it shall have the power from time to time in its discretion, without reference
to the Trustee to dispose of, free from the lien of the Original Indenture and
any indenture supplemental thereto, any and all of said cash on hand or in bank,
accounts receivable, bills receivable, materials and supplies and said shares of
stock, bonds and other securities and proceeds of the same covered by the lien
of the Original Indenture or any indenture supplemental thereto.
SCHEDULE IV.
After-Acquired Property
All properties, premises, rights, franchises and interests, of whatever
character and wherever situated, hereafter acquired by the Company, including,
without limiting the generality of the foregoing description, all "new or
additional property" and all "permanent improvements, extensions or additions"
(as those terms are used in subdivision (A) of Section 2.03 of Part II of the
Eighth Supplemental Indenture) hereafter acquired or constructed by the
9 45
Company, whether fully constructed or erected or in the process of construction
or erection, so far as actually constructed or erected, together with all
buildings, plants, systems, works, improvements, structures, fixtures, supplies,
appliances, machinery, equipment, materials, transporting and distributing
systems, filter systems, ditches, dams, water works, wells, pumps, reservoirs,
conduits, pipes, mains, purifiers, washers, holders, boilers, engines, motors
(but not motor vehicles), pipe lines, sewers, meters, services, fuel, office
furniture, books, records, office supplies, tools, accounts receivable, bills
receivable, cash on hand and in bank, and all personal property of every kind
and nature whatsoever appertaining to or useful in the conduct of the Company's
present or future business, which the Company may hereafter acquire or in which
it may have any interest; provided, however, that so long as the Company shall
not be in default under the Original Indenture or any indenture supplemental
thereto, it shall be entitled to retain in its possession all cash on hand or in
bank, accounts receivable, bills receivable, materials and supplies and all
shares of stock, bonds and other securities not specifically transferred or
assigned to or pledged with the Trustee under the Original Indenture or any
indenture supplemental thereto or required so to be and all proceeds of the
sale, condemnation or other disposition of the same and it shall have the power
from time to time in its discretion, without reference to the Trustee to dispose
of, free from the lien of the Original Indenture and any indenture supplemental
thereto, any and all of said cash on hand or in bank, accounts receivable, bills
receivable, materials and supplies and said shares of stock, bonds and other
securities and proceeds of the same covered by the lien of the Original
Indenture or any indenture supplemental thereto.
Together with all franchises, permits, licenses, rights, easements, grants,
privileges and immunities, pertaining to or used or usable in connection with
said "new or additional property" and said "permanent improvements, extensions
or additions"; all rights-of-way, water rights or privileges appurtenant to said
"new or additional property" and said "permanent improvements, extensions or
additions" or used or usable in connection therewith, and all renewals,
extensions or modifications of any of the foregoing.
Together with all and singular the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the aforesaid "new or
additional property" and "permanent improvements, extensions or additions,"
franchises, rights, privileges and other property, or any part thereof; with the
reversion and reversions, remainder and remainders, tolls, rents, revenues,
issues, income, product and profits thereof, and all the estate, right, title,
interest and claim whatsoever, at law as well as in equity, which the Company
now has or may hereafter acquire in and to the same and every part and parcel
thereof.
Provided, however, that nothing herein contained is intended or shall be
deemed to, and the conveyance and mortgage hereby made is upon the express
condition that it shall not, render any such "new or additional property" or
"permanent improvements, extensions or additions" unavailable under the
10 46
Original Indenture, or any indenture supplemental thereto, or any provision of
any thereof, (a) as a basis for the issue, authentication and delivery of
additional bonds, or for the withdrawal of any money held by the Trustee under
the Original Indenture, or any indenture supplemental thereto or by any trustee
under an instrument of lien prior to the lien of the Original Indenture, or
(b) as substituted property with reference to the release of property from the
lien of the Original Indenture or any indenture supplemental thereto, or (c) as
used or usable to provide any increase required by the provisions of
subparagraphs (2) and/or (3) of Section 2.04 of Part II of the Eighth
Supplemental Indenture, or (d) as used or usable as a credit against any sinking
fund provided for in any instrument of lien prior to the lien of the Original
Indenture, or provided for in any indenture supplemental to the Original
Indenture, or (e) for any other purpose for which it is provided in the Original
Indenture, as amended by the Eighth Supplemental Indenture, that the Company may
use said "new or additional property" or "permanent improvements, extensions or
additions."
To have and to hold all the hereinbefore described properties, real,
personal and mixed, mortgaged, conveyed, assigned or pledged by the Company, or
intended so to be, unto the Trustee and its successors in the trusts hereby and
by the Original Indenture and by the prior supplemental indentures created, and
to its assigns forever;
In trust nevertheless upon the terms and trusts set forth in the Original
Indenture, as supplemented, amended and modified by the thirty-seven prior
supplemental indentures hereinabove mentioned and particularly by the Eighth
Supplemental Indenture, and set forth in this Thirty-Eighth Supplemental
Indenture, and for the benefit and security of the holders of the bonds and
coupons issued and to be issued under the Original Indenture and/or any
indenture supplemental thereto, without preference of any said bonds and coupons
over any others thereof by reason of priority in the time of issue or
negotiation thereof or by reason of the date of maturity thereof, or for any
reason whatsoever (subject, however, to the provisions of Section 3.02 of
Part II of the Eighth Supplemental Indenture), and upon and subject to the
covenants, conditions, uses and trusts set forth in the Original Indenture, as
supplemented, amended and modified by the thirty-seven prior supplemental
indentures hereinabove mentioned and particularly by the Eighth Supplemental
Indenture, and in this Thirty-Eighth Supplemental Indenture, all with the same
force and effect as though the hereinabove described properties, real estate,
franchises, rights, privileges and other property were included in the granting
clauses of the Original Indenture.
And it is hereby covenanted, declared and agreed, by and between the parties
hereto, that all bonds of Series GG hereinafter described are to be issued,
authenticated and delivered and that all property subject or to become subject
hereto is to be held and applied subject to the further covenants, conditions,
uses and trusts hereinafter set forth; and the Company, for itself, its
successors and assigns, does hereby covenant and agree to and with the Trustee,
for the benefit of those who shall hold said bonds, or any of them, or any bonds
or interest coupons issued or to be issued under the Original Indenture and/or
any indenture supplemental thereto as follows:
11 47
PART I.
SERIES GG BONDS
ARTICLE I.
Creation of and Particulars of Series GG Bonds
Section 1. Creation and Designation. There shall be and hereby is created
a new series of bonds of the Company to be designated as hereinafter set forth
in the title of the form of bond contained in Section 3 of Article I hereof,
and to be issued under this Thirty-Eighth Supplemental Indenture and under and
subject to and in accordance with the terms and conditions of the Original
Indenture, as supplemented by this Thirty-Eighth Supplemental Indenture, and as
supplemented, amended and modified by the thirty-seven prior supplemental
indentures and particularly by the Eighth and Ninth Supplemental Indentures.
For convenience in designation said bonds are hereinafter sometimes referred to
as "Series GG bonds" or "bonds of Series GG."
Section 2. Terms of Series GG Bonds. The following matters are hereby
prescribed with reference to Series GG bonds:
(a) The aggregate principal amount of Series GG bonds shall be limited
to Twenty Million Dollars ($20,000,000), except for bonds authenticated and
delivered upon transfer of, or in exchange for, or in lieu of, other bonds
pursuant to Sections 3 and 6 of Part II of the Ninth Supplemental Indenture
and subdivisions (o), (p), and (q) of this Section 2.
(b) Notwithstanding the provisions of Section 1 of Part II of the Ninth
Supplemental Indenture, the definitive Series GG bonds shall be only in the
form of registered bonds without coupons in the denomination of $1,000 and
any denominations that are multiples of $1,000, to be substantially of the
tenor and purport as recited in Section 3 of this Article I, and may have
such letters, numbers or other marks of identification or designation and
such legends or endorsements typed, printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of the Indenture. The Series GG bonds shall be exchangeable
and transferable for registered bonds without coupons of the several
denominations at the corporate trust office of Bank of America National
Trust and Savings Association, in the City of Los Angeles, State of
California, in the manner and subject to the conditions in Section 3 of
Part II of the Ninth Supplemental Indenture provided, except as otherwise
provided in subdivisions (o), (p), (q), (r) and (s) of this Section 2.
12 48
(c) Principal, interest and premium, if any, of each of the Series GG
bonds and all amounts payable in respect of the same under the Original
Indenture or any indenture supplemental thereto shall be payable solely in
such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public or private debts.
(d) Notwithstanding any provisions whatsoever in the Original
Indenture or any prior supplemental indenture, neither principal nor
interest nor premium (if any) nor any other amount payable in respect of any
of the Series GG bonds shall be payable in gold coin.
(e) Notwithstanding the provisions of Sections 2 and 3 of Part II of
the Ninth Supplemental Indenture, each Series GG bond shall be dated the
date of its authentication and, except as otherwise provided herein, shall
bear interest (computed on the basis of a 360 day year of twelve 30 day
months), payable semi-annually on May 1 and November 1 of each year, from
the May 1 or November 1, as the case may be, next preceding the date of such
bond to which interest has been paid, or if the date of such bond is the
date to which interest has been paid, from the date of such bond, or, if no
interest has been paid on the Series GG bonds, then from the date of
authentication of the initial issue of Series GG bonds, until payment of the
principal sum of such bond has been made or duly provided for.
Notwithstanding the foregoing, when there is no existing default in the
payment of interest on the Series GG bonds, all Series GG bonds
authenticated by the Trustee after the close of business on the record date
(as hereinafter defined) for any interest payment date (May 1 or November 1,
as the case may be) and prior to such interest payment date, shall be dated
the date of authentication and shall bear interest from such interest
payment date; provided, however, that if and to the extent that the Company
shall default in the interest due on such interest payment date, then such
Series GG bond shall bear interest from the May 1 or November 1, as the case
may be, next preceding the date of such Series GG bond to which interest has
been paid or if no interest has been paid on the Series GG bonds, from the
date of authentication of the initial issue of Series GG bonds. The term
"record date" as used with respect to a semi-annual interest payment date
shall mean the April 15 prior to such May 1 or the October 15 prior to such
November 1, unless such April 15 or October 15 shall not be a business day,
in which event the business day next preceding. The term "business day" as
used herein shall mean a day which in said City of Los Angeles is neither a
legal holiday nor a day on which banking institutions are authorized by law
to close.
(f) The person in whose name any Series GG bond is registered at the
close of business on the record date with respect to a semi-annual interest
payment date shall be entitled to receive the interest payable on such
interest payment date notwithstanding the cancellation of such bond upon any
transfer or exchange thereof subsequent to such record date and prior to
such interest payment date; provided, however, that if and to the
13 49
extent the Company shall default in the payment of the interest due on such
interest payment date, such defaulted interest shall be paid to the persons
in whose names the Series GG bonds are registered at the close of business
on a record date established for such payment (which must be a date
subsequent to the record date for the earliest interest payment date for
which there is an outstanding default in payment) by notice by or on behalf
of the Company to the holders of the Series GG bonds mailed by first-class
mail not less than fifteen days prior to such record date to their last
addresses as the same appear on the books maintained for such purpose by or
on behalf of the Company.
(g) Notwithstanding the provisions of Section 3 of Part II of the
Ninth Supplemental Indenture, the Company shall not be required to issue,
register, transfer, or make exchanges of any Series GG bonds, which are to
be redeemed pursuant to the provisions set forth in Article III of this
Part I of this Thirty-Eighth Supplemental Indenture, within thirty (30) days
prior to the date of redemption of such Series GG bonds.
(h) All of the Series GG bonds shall mature on November 1, 2023.
Notwithstanding any provision in the Original Indenture, as amended by the
Eighth and Ninth Supplemental Indentures, notice of maturity of the
Series GG bonds stating that final payment will be made to the holders of
the Series GG bonds only after surrender of the bonds to the Trustee for
cancellation shall be delivered by the Company at least thirty days prior to
the date of maturity of the Series GG bonds to the respective holders of the
bonds at the addresses set forth on the books maintained for such purpose by
or on behalf of the Company, or, if there then be in effect any home office
payment agreement between the Company and any institutional holder of
Series GG bonds designating a different address for such notice, to such
institutional holder at such different address.
(i) All principal, interest and premiums, if any, of each and all of
the Series GG bonds shall be payable at the corporate trust office of Bank
of America National Trust and Savings Association, in the City of Los
Angeles, State of California and may be paid by check to the order of the
person entitled thereto mailed on the applicable payment date to such
person's address as the same appears on the books maintained for such
purpose by or on behalf of the Company, or, if there then be in effect any
home office payment agreement between the Company and any particular
institutional holder of Series GG bonds specifying a different address for
or manner of payment, shall be paid to such institutional holder at such
different address and in such different manner.
(j) Each of the Series GG bonds shall bear interest at the rate per
annum set forth in the title of the form of bond contained in Section 3 of
Article I hereof.
(k) Unless required by the laws of the United States of America or the
State of California, the Series GG bonds shall not require the deduction or
withholding by the Company of any taxes or any reimbursement of taxes to the
bondholders.
14 50
(l) The Series GG bonds shall be redeemable as hereinafter in
Article III of this Part I of this Thirty-Eighth Supplemental Indenture
provided.
(m) The Series GG bonds shall not be convertible into any class of
stock or other type of security of the Company.
(n) The Series GG bonds shall have the benefit of the sinking fund
hereinafter provided in Article IV of this Part I of this Thirty-Eighth
Supplemental Indenture.
(o) A mutilated bond may be surrendered and, after the delivery to the
Company and the Trustee of such security or indemnity as may be required by
them to save them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new bond of like tenor and
principal amount and bearing a number not contemporaneously outstanding. If
there be delivered to the Company and to the Trustee:
(i) evidence to their satisfaction of the destruction, loss or
theft of any bond, and
(ii) such security or indemnity as may be required by them to save
each of them harmless,
then, the Company shall execute and upon its request the Trustee shall
authenticate and deliver in lieu of any such destroyed, lost or stolen bond,
a new bond of like tenor and principal amount, bearing interest from the
date to which interest has been paid on such destroyed, lost or stolen bond
or from the date of such destroyed, lost or stolen bond if no interest has
been paid thereon, and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen bond has become or is
about to become due and payable, the Company in its discretion may, instead
of issuing a new bond, pay such bond. Upon the issuance of any new bond
under this subdivision, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including fees and expenses of
the Trustee) connected therewith; provided, however, that the Company shall
pay all such taxes or other governmental charges and all such other expenses
(including the fees and expenses of the Trustee) connected with the issuance
under this subdivision of any new bond to any institutional holder. Every
new bond issued pursuant to this subdivision in lieu of any destroyed, lost
or stolen bond shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen bond
shall be at any time enforceable by anyone, and shall be entitled to all the
benefits of the Indenture equally and proportionately with any and all other
bonds duly issued hereunder. The provisions of this subdivision are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen bonds.
15 51
(p) Notwithstanding any other provision of the Mortgage, including
without limitation Section 3 of Part II of the Ninth Supplemental Indenture,
or hereof, upon presentation and surrender to the Trustee of any Series GG
bond or bonds accompanied by the written request of any institutional holder
thereof, the Company will execute, and upon its request the Trustee will
authenticate and deliver to the institutional holder or to the office of its
custodian, if any, as soon as reasonably practicable after such request, in
exchange for said Series GG bond or bonds, an equivalent unpaid principal
amount of Series GG bonds in any denomination provided for herein,
registered in the name of such institutional holder or in such other name as
such institutional holder may specify or as such institutional holder may
elect.
(q) Notwithstanding any other provision of the Mortgage, including
without limitation Section 3 of Part II of the Ninth Supplemental Indenture,
or hereof, upon the presentation and surrender to the Trustee of any
Series GG bond or bonds accompanied by a written instrument of transfer in a
form reasonably satisfactory to the Company and the Trustee, the Company
will execute, and upon its request the Trustee shall authenticate and
deliver to the transferee or to the office of its custodian, as soon as
reasonably practicable after surrender of such Series GG bond or bonds, an
equivalent unpaid principal amount of Series GG bonds in any denomination
provided for herein, registered in the name of the transferee or in such
other name as may be specified in the instrument of transfer.
(r) Notwithstanding any other provision of the Mortgage, including
without limitation Section 3 of Part II of the Ninth Supplemental Indenture,
or hereof, the Company will bear all expenses in connection with the
preparation, issue, delivery and the above-mentioned exchanges and transfers
of Series GG bonds, including, with respect any institutional holder of the
Series GG bonds, the cost of transmitting Series GG bonds for the purpose of
such exchanges to and from such institutional holder's home office or the
office of its custodian, as well as the cost of transmitting Series GG bonds
for the purpose of such transfers from any such institutional holder's home
office or the office of its custodian and to the transferee.
(s) Notwithstanding any other provision of the Mortgage, including
without limitation Section 3 of Part II of the Ninth Supplemental Indenture,
or hereof, if any holder of Series GG bonds is an insurance company, its own
agreement of indemnity shall be deemed to be satisfactory indemnity and
security where required under the Mortgage or any Supplemental Indenture.
(t) The Series GG bonds shall be issued upon and subject to the other
provisions and agreements in respect thereof hereinafter in this
Thirty-Eighth Supplemental Indenture contained.
Section 3. Form of Series GG Bonds. The registered bonds without coupons
of Series GG shall be substantially in the following form:
16 52
[FORM OF REGISTERED BOND WITHOUT COUPONS OF SERIES GG]
California Water Service Company
First Mortgage 6.98% Bond, Series GG
Due November 1, 2023
No..................
California Water Service Company, a California corporation (hereinafter
called the "Company"), for value received hereby promises to pay to
...................................................... or registered assigns,
the principal sum of ......................... Dollars on November 1, 2023 in
such coin or currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts, and to pay
interest (computed on the basis of a 360 day year of twelve 30 day months),
semi-annually on May 1 and November 1 of each year, on said principal sum, in
like coin or currency, at the rate per annum specified in the title of this
bond, from the May 1 or November 1, as the case may be, next preceding the date
hereof to which interest has been paid, or, if the date hereof is a date to
which interest has been paid, from the date hereof, or if no interest has been
paid on the Series GG bonds, then from ............. [date of authentication of
the initial issue of Series GG bonds], until payment of said principal sum has
been made or duly provided for. Notwithstanding the foregoing, if the date
hereof is after April 15 and before the next following May 1 or is after
October 15 and before the next following November 1, this bond shall bear
interest from such May 1 or November 1; provided, however, that if the Company
shall default in the payment of interest due on such May 1 or November 1, then
this bond shall bear interest from the next preceding May 1 or November 1 to
which interest has been paid, or, if no interest has been paid on the Series GG
bonds, from ............. [date of authentication of the initial issue of
Series GG bonds]. Such principal and interest shall be payable at the corporate
trust office of Bank of America National Trust and Savings Association, in the
City of Los Angeles, State of California. The interest so payable on any May 1
or November 1 will, except as provided in the Indenture as hereinafter defined,
be paid to the person in whose name this bond is registered at the close of
business on the April 15 prior to such May 1 or the October 15 prior to such
November 1 unless such April 15 or October 15 shall not be a business day (as
defined in said Indenture), in which event the business day next preceding; and
may be paid by check to the order of such person mailed on the payment date to
such person's address as the same appears on the books maintained for such
purpose by or on behalf of the Company, or, if there then be in effect any home
office payment agreement between the Company and any particular institutional
holder of this bond specifying a different address for or manner of payment,
shall be paid to such institutional holder at such different address and in such
different manner.
This bond is one of an authorized issue of bonds of the Company, known
generally as its First Mortgage Bonds, all issued and to be issued in one or
17 53
more series under and equally secured by an indenture executed by the Company to
American Trust Company and Los Angeles-First National Trust & Savings Bank, as
trustees, dated April 1, 1928 (hereinafter called the "Original Indenture"), as
supplemented, amended and modified by the first eight indentures supplemental
thereto and particularly by that certain Supplemental Mortgage of Chattels and
Trust Indenture (hereinafter called the "Eighth Supplemental Indenture"),
executed by the Company to American Trust Company and Security-First National
Bank of Los Angeles (formerly known as Los Angeles-First National Trust &
Savings Bank), as trustees, dated November 1, 1945, which Eighth Supplemental
Indenture particularly describes the seven preceding supplemental indentures,
and as further supplemented by other indentures supplemental thereto creating
particular series of bonds, which Original Indenture as so supplemented, amended
and modified is herein called the "Indenture." As provided in the Indenture,
said bonds may be for various principal sums and are issuable in series which
may mature at different times, may bear interest at different rates and may
otherwise vary as in the Indenture provided or permitted. This bond is one of
the bonds limited to an aggregate principal amount of Twenty Million Dollars
($20,000,000) created by the Indenture and particularly by that certain
Supplemental Mortgage of Chattels and Trust Indenture (hereinafter called the
"Thirty-Eighth Supplemental Indenture"), executed by the Company to Bank of
America National Trust and Savings Association, as trustee, dated as of
October 15, 1993, and designated therein as set forth in the title of this bond
(herein sometimes referred to as the "Series GG bonds"). Reference is hereby
made to the Indenture for a description of the property mortgaged and pledged,
the nature and extent of the security, and the rights of the Company, of the
trustee under the Indenture (hereinafter referred to as the "Trustee") and of
the holders of the bonds in respect thereto.
This bond may not be redeemed prior to November 1, 2003, except as provided
in clauses (i), (ii) and (iii) below. On or after November 1, 2003, this bond
is subject to redemption at any time, in whole or in part, at the option of the
Company, initially at a redemption price equal to 103.490% of the outstanding
principal amount thereof and thereafter at a redemption price equal to the
principal amount thereof plus a premium equal to the following percentages,
respectively, of said principal amount:
During the Twelve
Months Beginning
November 1 Premium
2004 3.141%
2005 2.792%
2006 2.443%
2007 2.094%
2008 1.745%
2009 1.396%
2010 1.047%
2011 0.698%
2012 0.349%
2013 (and each year thereafter) 0.0000%
18 54
together with interest accrued thereon to the date fixed for redemption (such
redemption price being hereinafter called the "Regular Redemption Price");
provided, however, that Series GG bonds may be redeemed (i) out of cash held in
the sinking fund hereinafter mentioned, (ii) through the application of the
proceeds of the sale of any complete water system or any substantial part of a
water system owned by the Company, including without limiting the generality of
the foregoing a sale to a municipality or other public body or agency having the
power of eminent domain or the right to purchase or order the sale of such
property, or (iii) in connection with a sale pursuant to involuntary liquidation
of the Company, and, in case of redemption upon any such event, the applicable
redemption price shall be the principal amount of such Series GG bonds so
redeemed, together with interest accrued thereon to the redemption date (such
redemption price being hereinafter called the "Special Redemption Price").
In each case such redemption shall only be made upon at least thirty days'
notice sent by the Company (except where such redemption is made out of cash
deposited in the sinking fund hereinafter mentioned) and upon the further
conditions and in the manner provided in the Indenture. If this bond is called
for redemption and payment therefor is duly provided, as specified in the
Indenture, interest shall cease to accrue hereon from and after the date fixed
for redemption; provided, however, that if only a part of the principal amount
of this bond is called for redemption, interest shall cease to accrue from and
after the date fixed for redemption only upon that portion of the principal
amount hereof called for redemption, and in case of any such partial redemption
of this bond, payment of the redemption price will be made only (a) upon
surrender of this bond in exchange for a new bond or bonds of authorized
denominations of this series of an aggregate principal amount equal to the
unredeemed portion of this bond, (b) upon presentation of this bond for notation
hereon of the payment of such portion of the principal amount hereof so called
for redemption, or (c) in accordance with the applicable terms of any home
office payment agreement between the Company and any institutional holder of
this bond.
Said Thirty-Eighth Supplemental Indenture provides a sinking fund applicable
to the Series GG bonds, which requires the Company to deposit with the Trustee
in cash on or before the end of each year ending October 31, commencing with the
year ending October 31, 1994 through the year ending October 31, 2022, the sum
of $100,000. Such annual sinking fund payments shall be made, held and applied
to the retirement or for the greater security of the outstanding Series GG bonds
in the manner more particularly provided in said Thirty-Eighth Supplemental
Indenture, including the redemption of outstanding Series GG bonds as therein
provided.
To the extent and in the manner permitted by the Indenture, the provisions
of the Indenture or any supplemental indenture may be modified by the Company
with the consent of the Trustee and the written consent of the holders of 75% in
principal amount of all bonds then outstanding under the Indenture; provided,
however, (1) that the obligation of the Company to pay the principal of the
bonds and the interest thereon, as the same shall from time to time
19 55
become due, shall continue unimpaired; (2) that no such modification shall give
to any bond or bonds any preference over any other bond or bonds; (3) that no
such modification shall authorize the creation of any lien prior or equal to the
lien of the Indenture on any of the fixed property of the Company now owned or
hereafter acquired and on which the same shall constitute a lien; (4) that no
such modification shall reduce the percentage of the principal amount of bonds
the consent of which is required to effect a modification of the Indenture or
any supplemental indenture; and (5) that if any such modification shall affect
one or more series of bonds and shall not affect equally the bonds of all
series, then such modification shall also be consented to by the holders of 75%
in principal amount of the bonds of each series which will be so affected.
In case an event of default as defined in the Indenture or if certain other
contingencies specified therein shall occur, the principal of this bond may
become or be declared due and payable in the manner, with the effect and subject
to the conditions provided in the Indenture.
This bond is transferable by the registered owner hereof, in person or by
attorney duly authorized in writing, at the corporate trust office of Bank of
America National Trust and Savings Association, in the City of Los Angeles,
State of California, upon surrender and cancellation of this bond. Upon any
such transfer, a new registered bond or bonds without coupons, of the same
series and for the same aggregate unpaid principal amount, will be issued to the
transferee in exchange therefor. The Company and the Trustee may deem and treat
the person in whose name this bond is registered as the absolute owner hereof
for the purpose of receiving payment hereof or on account hereof (including
principal, interest and premium, if any) and for all other purposes and shall
not be affected by any notice to the contrary.
The Series GG bonds are issuable in the form of registered bonds without
coupons in the denomination of $1,000 and any denominations that are multiples
of $1,000.
No recourse shall be had for the payment of the principal of, premium, if
any, or the interest on, this bond, or for any claim based hereon or on the
Indenture or any indenture supplemental thereto, against any incorporator, or
against any stockholder, director or officer, as such, past, present or future,
of the Company, or of any predecessor or successor corporation, either directly
or through the Company or any such predecessor or successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability, whether at common
law, in equity, by any constitution, statute or otherwise, of incorporators,
stockholders, directors or officers being released by every holder hereof by the
acceptance of this bond and as part of the consideration for the issue hereof,
and being likewise released by the terms of the Indenture; provided, however,
that nothing herein or in the Indenture contained shall be taken to prevent
recourse to and the enforcement of the liability, if any, of any stockholder or
subscriber to capital stock of the Company upon or in respect of shares of
capital stock not fully paid.
20 56
This bond, with or without others of like form and series, may be exchanged
for one or more new bonds of the same series of other authorized denominations,
but of the same aggregate unpaid principal amount.
This bond shall not become valid or obligatory until Bank of America
National Trust and Savings Association, the current Trustee under the Indenture,
or a successor Trustee thereunder, shall have signed the form of certificate
endorsed hereon.
In Witness Whereof, California Water Service Company has caused this bond to
be signed, manually or in facsimile, by its President or a Vice President and
its corporate seal (or a facsimile thereof) to be hereto affixed, imprinted,
engraved or otherwise reproduced and attested, manually or in facsimile, by its
Secretary or an Assistant Secretary.
Dated: ..........................
CALIFORNIA WATER SERVICE COMPANY
By......................................
President
Attest: ............................
Secretary
[seal]
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series designated therein, described
in the within mentioned Indenture and registered on the registration books of
the Trustee.
Dated: ..........................
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
Trustee
By.......................................
Authorized Officer
21 57
ARTICLE II.
Issue of Bonds
Section 1. Conditions Applicable to Issuance of Series GG Bonds. Bonds of
Series GG shall be authenticated, issued and delivered only upon and subject to
the terms and conditions specified in Article II of the Original Indenture, as
amended by the Eighth Supplemental Indenture, as applicable to bonds after the
initial issue of bonds under the Original Indenture.
ARTICLE III.
Redemption
Section 1. Right to Redeem; Redemption Prices. Series GG bonds may not be
redeemed prior to November 1, 2003, except as provided in clauses (i), (ii) and
(iii) below. On or after November 1, 2003, the Company may, at its election,
evidenced by a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company under its corporate seal to have been duly adopted by
the Board of Directors, and delivered to the Trustee, redeem at any time or from
time to time (and whether or not on an interest payment date or interest payment
dates) all or any part of the bonds of Series GG at the Regular Redemption Price
set forth in the form of registered bond without coupons of Series GG
hereinabove recited; provided, however, that Series GG bonds may be redeemed
(i) out of cash held in the sinking fund hereinafter provided for, or
(ii) through the application of the proceeds of the sale of any complete water
system or any substantial part of a water system owned by the Company, including
without limitation of the generality of the foregoing a sale to a municipality
or other public body or agency having the power of eminent domain or the right
to purchase or order the sale of such property, or (iii) in connection with a
sale pursuant to involuntary liquidation of the Company, and, in case of
redemption upon any such event, the applicable redemption price shall be the
Special Redemption Price set forth in the form of registered bond without
coupons of Series GG hereinabove recited.
Section 2. Notice and Manner of Redemption. Such redemption of Series GG
bonds or any of the same shall only be made upon the notice and in the manner
and with the effect as provided in Article IV of the Original Indenture, as
amended by the Eighth and Ninth Supplemental Indentures, excepting only that
notwithstanding anything in said Article IV provided, (1) no notice by
publication shall be required and notice of redemption shall be sent by the
Company, delivery charges prepaid, by first class mail or by same-day or
overnight messenger at least thirty days prior to the redemption date to the
respective registered holders of the bonds called for redemption at their last
addresses appearing on the books maintained for such purpose by or on behalf of
the Company, except no such notice is required to be sent by the Company where
such redemption is made out of cash deposited in the sinking fund referred to in
Article IV of this Thirty-Eighth Supplemental Indenture; (2) in case the Company
shall redeem less than all of the bonds of Series GG, whether
22 58
through the sinking fund or otherwise, the Trustee shall redeem the bonds held
by each registered holder pro rata in an amount proportional to the amount of
then outstanding Series GG bonds held by such registered holder, and the notice
of redemption shall specify the respective portions of the principal amount of
each such bond to be redeemed in part and shall also state that payment of the
redemption price will be made only (a) upon presentation of said bond for
notation thereon of the payment of such portion of the principal amount thereof
(b) upon surrender of said bond in exchange for a new bond or bonds of
authorized denominations of the same series and of an aggregate principal amount
equal to the unredeemed portion of said bond, or (c) in accordance with the
applicable terms of any respective home office payment agreement(s) between the
Company and any institutional holder(s) of Series GG bonds; and (3) the
redemption moneys for any Series GG bonds shall be paid and deposited in lawful
money of the United States of America.
ARTICLE IV.
Sinking Fund
Section 1. Amount and Time of Payment. The Company covenants and agrees
that it will establish and maintain by annual cash deposits with the Trustee a
sinking fund for the benefit of holders of Series GG bonds and for the purpose
of retiring and/or further securing such bonds, all as hereinafter in this
Article IV provided. The amount to be deposited annually in such sinking fund
(the "mandatory sinking fund payment") shall be, for the period commencing with
the year ending October 31, 1994 through the year ending October 31, 2022, the
sum of $100,000. The Company shall deposit said respective amounts in cash with
the Trustee on or before the end of each year ending October 31, commencing on
October 31, 1994.
Section 2. Application of Sinking Fund Cash to Redemption of Bonds. All
cash deposited with the Trustee for the sinking fund for Series GG bonds shall
be held in a fund known as "Series GG Sinking Fund Cash". Notwithstanding any
provisions to the contrary in Article IV of the Original Indenture, as amended
by the Eighth Supplemental Indenture and Section 6 of the Ninth Supplemental
Indenture, the Company shall instruct the Trustee in each year, after the
deposit with the Trustee of the sinking fund payment for such year, to redeem
Series GG bonds from the Series GG Sinking Fund Cash in accordance with the
provisions of Article III of this Thirty-Eighth Supplemental Indenture. The
Company shall fix the date for the redemption of such Series GG bonds to be the
November 1 first following the deposit with the Trustee of any such sinking fund
payment. However, the Trustee will redeem Series GG bonds only in denominations
of $1,000 or multiples thereof. If any registered holder's share of the sinking
fund payment is not an even multiple of $1,000, the Trustee shall hold for the
account of such registered holder the difference between the amount of such
registered holder's share and the highest multiple of $1,000 which is less than
such amount. The Trustee shall apply such sum on the next possible sinking fund
redemption date to redeem Series GG bonds from such registered holders in
authorized multiples of $1,000.
23 59
The Company covenants and agrees to take any and all steps necessary to
effect the redemption of such Series GG bonds from the Series GG Sinking Fund
Cash as provided in this Thirty-Eighth Supplemental Indenture, but if the
Company shall fail to do so, the Trustee is hereby authorized and empowered, to
take all such steps for and in the name of the Company, including the giving of
any notice of redemption. No resolution of the Board of Directors of the
Company shall be necessary for such redemption and if the Trustee holds such
amount of money in the sinking fund that shall, in and of itself, constitute the
election of the Company to redeem the largest amount of bonds which may be
thereby redeemed.
Section 3. Limitations on Use of Sinking Fund Cash in Case of Default.
Notwithstanding anything hereinbefore provided, the Trustee shall not use cash
in said sinking fund to redeem any bonds if the Company shall be in default
under the Indenture to the knowledge of the Trustee and, in the event of
default, the cash in the sinking fund shall form a part of the trust estate for
the equal protection of all bonds as above provided for any part of the trust
estate.
Section 4. Sinking Funds for Bonds of Other Series. The Company further
covenants and agrees that any bonds of any other series which may be hereafter
issued under the Original Indenture or any indenture supplemental thereto while
any Series GG bonds are outstanding shall have a sinking fund, commencing not
later than eighteen months after the date of authentication and delivery of such
bonds of other series, in an annual amount not less than 1/2 of 1% of the
maximum aggregate principal amount of all bonds of such other series at any time
authenticated and delivered by the Trustee after deducting therefrom the
aggregate principal amount of all bonds of such other series theretofore retired
otherwise than through the operation of such sinking fund.
PART II.
Miscellaneous Provisions
with Respect to Supplemental Indenture
Section 1. The Trustee. The Trustee hereby accepts the trusts under this
Thirty-Eighth Supplemental Indenture and agrees to perform the same on the terms
and conditions set forth in the Original Indenture and supplemental indentures,
including this Thirty-Eighth Supplemental Indenture. The Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Thirty-Eighth Supplemental Indenture or the due execution
hereof by the Company nor for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely.
Section 2. Destruction of Bonds. The Trustee shall forthwith cancel and
destroy all bonds transferred, exchanged or redeemed and delivered to the
Trustee and the Trustee shall deliver a certificate of such destruction to the
Company.
24 60
Section 3. Separability of Invalid Provisions. If any one or more of the
covenants or agreements provided in this Thirty-Eighth Supplemental Indenture on
the part of the Company or the Trustee to be performed should be contrary to any
express provision of law, or contrary to the policy of express law, to such an
extent as to be unenforceable in any court of competent jurisdiction, then such
covenant or covenants, agreement or agreements, shall be null and void, and
shall be deemed separable from the remaining covenants and agreements and shall
in no wise affect or impair the validity of this Thirty-Eighth Supplemental
Indenture.
Section 4. Effect on Successors and Assigns of Parties. Whenever in this
Thirty-Eighth Supplemental Indenture either of the parties hereto is named or
referred to, the successors and assigns of such party (subject, however, to the
provisions of Article IX of the Original Indenture, as amended by the Eighth
Supplemental Indenture, as to the successors and assigns of the Company) shall
be deemed to be included, and, subject as aforesaid, all the covenants, promises
and agreements in this Thirty-Eighth Supplemental Indenture contained, by or on
behalf of the Company or by or on behalf of the Trustee, shall bind and inure to
the benefit of their respective successors and assigns, whether so expressed or
not.
Section 5. Immunity of Incorporators, Stockholders, Officers and Directors.
No recourse shall be had for the payment of the principal of, premium, if any,
or the interest on, any Series GG bonds, or for any claim based on any of the
Series GG bonds or on the Original Indenture or any indenture supplemental
thereto, against any incorporator, or against any stockholder, director or
officer, as such, past, present or future, of the Company, or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise, all such liability, whether at common law, in equity, by any
constitution, statute or otherwise, of incorporators, stockholders, or officers
being released by every holder of Series GG bonds by the acceptance thereof and
as part of the consideration for the issue thereof; provided, however, that
nothing in the Original Indenture or any indenture supplemental thereto or in
the Series GG bonds contained shall be taken to prevent recourse to and the
enforcement of liability, if any, of any stockholder or subscriber to capital
stock of the Company upon or in respect of shares of capital stock not fully
paid.
Section 6. Titles Not Part of Supplemental Indenture. The titles of Parts
and Articles and headings of Sections are inserted for convenience only and are
not a part of this Thirty-Eighth Supplemental Indenture.
Section 7. Counterparts. This Thirty-Eighth Supplemental Indenture may be
simultaneously executed in any number of counterparts and all such counterparts
executed and delivered, each as an original, shall constitute but one and the
same instrument.
25 61
Section 8. Title to Property; Authority to Mortgage; Prior Liens. The
Company covenants and agrees that the statements contained in Section 3.01 of
Part II of the Eighth Supplemental Indenture shall also apply to all properties
acquired subsequent to the Eighth Supplemental Indenture and not heretofore
released from the lien of the Indenture pursuant to the provisions of Article V
of Part II of the Eighth Supplemental Indenture.
In Witness Whereof, said California Water Service Company and said Bank of
America National Trust and Savings Association have caused these presents to be
signed in their respective corporate names by their respective officers
thereunto duly authorized and impressed with their respective corporate seals,
all as of the day and year first above written.
CALIFORNIA WATER SERVICE COMPANY
By /s/ DONALD L. HOUCK
President and Chief Executive
Officer
[Seal]
By /s/ HELEN MARY KASLEY
Secretary
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
[Seal]
By /s/ JENNIFER HOLDER
Senior Trust Officer
26 62
State of California )
) ss.
County of Santa Clara )
On 10/13/93 before me, CHRISTINA M. FREEMAN , a Notary Public
in and for the State of California, personally appeared Donald L. Houck and
Helen M. Kasley, known to me (or proved to me on the basis of satisfactory
evidence) to be the persons whose names are subscribed to the within instrument
and acknowledged to me that they executed the same in their authorized
capacities, and that by their signatures on the instrument the entity upon
behalf of which the persons acted executed the instrument.
WITNESS my hand and official seal.
[Notarial Seal]
/s/ CHRISTINA M. FREEMAN
27 63
State of California )
) ss.
City and County of San Francisco )
On 10/26/93 before me, NORMA L. CANTORA , a Notary
Public in and for the State of California, personally appeared Jennifer Holder,
known to me (or proved to me on the basis of satisfactory evidence) to be the
person whose name is subscribed to the within instrument and acknowledged to me
that she executed the same in her authorized capacity, and that by her signature
on the instrument the entity upon behalf of which the person acted executed the
instrument.
WITNESS my hand and official seal.
[Notarial Seal]
/s/ NORMA L. CANTORA
28 64
SCHEDULE A
The resignations of Wells Fargo Bank, National Association and Security
Pacific National Bank as trustees and the appointment of Bank of America
National Trust and Savings Association as successor trustee have been recorded
in the offices of the Recorders of the following counties and city and county of
the State of California on the respective dates and in the respective books of
record and/or as the respective document numbers hereinafter set forth as
follows:
County or Book and
City and Recording Document Page
County Date Number (Reel-Image)
Alameda........... August 1, 1983 83-137410 None
Butte............. August 1, 1983 83-25375 2851-200
Fresno............ August 2, 1983 83069489 Not Available
Glenn............. August 1, 1983 3329 729-170
Kern.............. August 2, 1983 12487 5576-522
Los Angeles....... August 2, 1983 83-887733 None
Monterey.......... August 1, 1983 GG 34173 1655-830
City and County of San
Francisco....... August 1, 1983 D 376552 D559-205
San Joaquin....... August 10, 1983 83058347 None
San Mateo......... August 1, 1983 83080322 None
Santa Clara....... August 1, 1983 7766085 H770-413
Solano............ August 1, 1983 32353 Page 61300
Sonoma............ August 1, 1983 83-50597 83-50597
Tulare............ August 1, 1983 35981 4093-763
Yuba.............. August 1, 1983 1056 805-423
29 65
SCHEDULE B
The First through Thirty-Seventh Supplemental Indentures have been recorded
in the offices of the Recorders of the following counties and city and county of
the State of California on the respective dates and in the respective books of
record and/or as the respective document numbers hereinafter set forth, as
follows:
FIRST SUPPLEMENTAL INDENTURE
Page
Vol. of at which
Date of Official Record
County Recordation Records Commences
Kings.................. Jan. 7, 1929 40 432
Contra Costa........... Jan. 7, 1929 157 256
SECOND SUPPLEMENTAL INDENTURE
Page
Vol. of at which
Date of Official Record
County Recordation Records Commences
Kings.................. August 20, 1929 48 442
Butte.................. August 20, 1929 116 389
Glenn.................. August 20, 1929 17 179
Alameda................ August 20, 1929 2173 334
Tulare................. August 20, 1929 337 88
Kern................... August 21, 1929 320 95
Contra Costa........... August 20, 1929 208 198
THIRD SUPPLEMENTAL INDENTURE
Page
Vol. of at which
Date of Official Record
County Recordation Records Commences
Yuba................... February 28, 1930 9 238
City and County of San
Francisco............ February 28, 1930 1985 257
FOURTH SUPPLEMENTAL INDENTURE
Page
Vol. of at which
Date of Official Record
County Recordation Records Commences
San Mateo.............. July 17, 1931 537 1
City and County of San
Francisco............ July 20, 1931 2232 284
Santa Clara............ July 17, 1931 576 175
30 66
FIFTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
City and County of San
Francisco.......... March 31, 1932 2359 17
Yuba................. April 6, 1932 12 469
Sonoma............... April 6, 1932 320 39
Alameda.............. April 6, 1932 2808 77
Tulare............... April 6, 1932 466 381
Los Angeles.......... April 6, 1932 11543 85
San Joaquin.......... April 6, 1932 397 375
Santa Clara.......... April 6, 1932 606 464
San Mateo............ April 6, 1932 553 492
Butte................ April 6, 1932 83 489
Kings................ April 6, 1932 87 292
Glenn................ April 6, 1932 43 123
Shasta............... April 6, 1932 74 10
Contra Costa......... April 6, 1932 299 449
Kern................. April 6, 1932 428 473
Solano............... April 6, 1932 89 66
SIXTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. June 15, 1936 3314 406
Butte................ June 15, 1936 167 1
Contra Costa......... June 15, 1936 418 12
Glenn................ June 15, 1936 82 73
Kern................. June 15, 1936 643 64
Kings................ June 15, 1936 151 241
Los Angeles.......... June 15, 1936 14153 291
City and County of San
Francisco.......... June 15, 1936 2972 1
San Joaquin.......... June 15, 1936 542 53
San Mateo............ June 15, 1936 703 1
Santa Clara.......... June 15, 1936 777 137
Shasta............... June 15, 1936 108 134
Solano............... June 15, 1936 161 1
Sonoma............... June 15, 1936 412 160
Tulare............... June 15, 1936 682 1
Yuba................. June 15, 1936 35 25
31 67
SEVENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Los Angeles.......... May 1, 1939 16572 206
City and County of San
Francisco.......... May 2, 1939 3450 93
San Mateo............ May 2, 1939 840 94
Sonoma............... May 2, 1939 477 108
Kern................. May 2, 1939 869 12
EIGHTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. November 3, 1945 4780 134
Butte................ November 2, 1945 380 1
Contra Costa......... November 3, 1945 874 1
Fresno............... February 21, 1962 4681 226
Glenn................ November 2, 1945 191 1
Kern................. November 2, 1945 1292 21
Kings................ November 1, 1945 342 1
Los Angeles.......... November 2, 1945 22396 251
Monterey............. February 21, 1962 23 (Reel) 1
City and County of San
Francisco.......... November 2, 1945 4346 103
San Joaquin.......... November 3, 1945 960 21
San Mateo............ November 3, 1945 1231 1
Santa Clara.......... November 1, 1945 1267 583
Solano............... November 3, 1945 344 6
Sonoma............... November 3, 1945 665 21
Tulare............... November 3, 1945 1141 382
Yuba................. November 3, 1945 94 23
32 68
NINTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. August 31, 1951 6525 237
Butte................ August 30, 1951 603 1
Contra Costa......... August 30, 1951 1814 508
Fresno............... February 21, 1962 4681 437
Glenn................ August 30, 1951 266 63
Kern................. August 29, 1951 1840 373
Kings................ August 30, 1951 502 228
Los Angeles.......... August 29, 1951 37102 345
Monterey............. February 21, 1962 23 (Reel) 207
City and County of San
Francisco.......... August 30, 1951 5773 355
San Joaquin.......... August 30, 1951 1372 123
San Mateo............ August 30, 1951 2150 298
Santa Clara.......... August 30, 1951 2275 295
Solano............... August 31, 1951 592 136
Sonoma............... August 31, 1951 1072 420
Tulare............... August 30, 1951 1539 528
Yuba................. August 31, 1951 155 177
TENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. July 10, 1953 7078 451
Butte................ July 9, 1953 679 45
Contra Costa......... July 9, 1953 2157 453
Fresno............... February 21, 1962 4681 540
Glenn................ July 9, 1953 297 139
Kern................. July 8, 1953 2102 215
Kings................ July 9, 1953 561 249
Los Angeles.......... July 8, 1953 42134 371
Monterey............. February 21, 1962 23 (Reel) 314
City and County of San
Francisco.......... July 9, 1953 6190 21
San Joaquin.......... July 9, 1953 1540 523
San Mateo............ July 10, 1953 2443 248
Santa Clara.......... July 9, 1953 2680 50
Solano............... July 9, 1953 677 4
Sonoma............... July 10, 1953 1218 348
Tulare............... July 9, 1953 1686 314
Yuba................. July 10, 1953 181 1
33 69
ELEVENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. August 20, 1954 7404 181
Butte................ August 20, 1954 732 496
Contra Costa......... August 20, 1954 2368 164
Fresno............... February 21, 1962 4681 604
Glenn................ August 20, 1954 314 369
Kern................. August 20, 1954 2278 74
Kings................ August 20, 1954 594 449
Los Angeles.......... August 19, 1954 45365 64
Monterey............. February 21, 1962 23 (Reel) 377
City and County of San
Francisco.......... August 20, 1954 6435 421
San Joaquin.......... August 20, 1954 1662 316
San Mateo............ August 19, 1954 2636 330
Santa Clara.......... August 20, 1954 2942 331
Solano............... August 19, 1954 728 10
Sonoma............... August 20, 1954 1290 234
Tulare............... August 20, 1954 1772 388
Yuba................. August 20, 1954 195 490
TWELFTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. October 7, 1955 7806 501
Butte................ October 7, 1955 794 9
Contra Costa......... October 7, 1955 2625 417
Fresno............... February 21, 1962 4681 665
Glenn................ October 7, 1955 331 350
Kern................. October 6, 1955 2498 171
Kings................ October 7, 1955 628 1
Los Angeles.......... October 6, 1955 49158 316
Monterey............. February 21, 1962 23 (Reel) 439
City and County of San
Francisco.......... October 7, 1955 6711 525
San Joaquin.......... October 7, 1955 1797 300
San Mateo............ October 7, 1955 2890 480
Santa Clara.......... October 7, 1955 3299 406
Solano............... October 7, 1955 792 422
Sonoma............... October 7, 1955 1384 2
Tulare............... October 7, 1955 1864 548
Yuba................. October 7, 1955 213 593
34 70
THIRTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. December 7, 1956 8226 15
Butte................ December 7, 1956 859 117
Contra Costa......... December 7, 1956 2894 20
Fresno............... February 21, 1962 4681 729
Glenn................ December 7, 1956 348 217
Kern................. December 6, 1956 2699 390
Kings................ December 7, 1956 666 316
Los Angeles.......... December 6, 1956 53054 61
Monterey............. February 21, 1962 23 (Reel) 503
City and County of San
Francisco.......... December 10, 1956 6970 41
San Joaquin.......... December 7, 1956 1925 1
San Mateo............ December 7, 1956 3140 258
Santa Clara.......... December 7, 1956 3680 1
Solano............... December 7, 1956 860 189
Sonoma............... December 7, 1956 1489 28
Tulare............... December 7, 1956 1961 551
Yuba................. December 7, 1956 233 65
FOURTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. March 20, 1964 1155 (Reel) (Image) 2
Butte................ March 20, 1964 1303 8
Contra Costa......... March 20, 1964 4578 360
Fresno............... March 20, 1964 4980 337
Glenn................ March 20, 1964 463 1
Kern................. March 19, 1964 3706 1
Los Angeles.......... March 19, 1964 D2401 6
Monterey............. March 20, 1964 299 (Reel) 230
City and County of San
Francisco............ March 20, 1964 A734 966
San Joaquin.......... March 20, 1964 2801 126
San Mateo............ March 19, 1964 4670 563
Santa Clara.......... March 20, 1964 6432 567
Solano............... March 20, 1964 1259 331
Sonoma............... March 19, 1964 2030 757
Tulare............... March 20, 1964 2491 437
Yuba................. March 20, 1964 389 535
35 71
FIFTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. November 4, 1965 1635 610
Butte................ November 4, 1965 1398 67
Contra Costa......... November 4, 1965 4987 469
Fresno............... November 4. 1965 5236 699
Glenn................ November 4, 1965 483 194
Kern................. November 3, 1965 3889 476
Los Angeles.......... November 3, 1965 D3104 7
Monterey............. November 4, 1965 432 526
City and County of San
Francisco.......... November 4, 1965 A983 431
San Joaquin.......... November 4, 1965 2996 13
San Mateo............ November 4, 1965 5056 588
Santa Clara.......... November 4, 1965 7166 234
Solano............... November 3, 1965 1366 547
Sonoma............... November 3, 1965 2167 261
Tulare............... November 4, 1965 2619 12
Yuba................. November 4, 1965 422 562
SIXTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. December 2, 1966 1881 788
Butte................ December 2, 1966 1452 13
Contra Costa......... December 2, 1966 5256 298
Fresno............... December 2, 1966 5383 432
Glenn................ December 2, 1966 495 555
Kern................. December 1, 1966 3999 845
Los Angeles.......... December 1, 1966 D3496 236
Monterey............. December 2, 1966 485 472
City and County of San
Francisco.......... December 2, 1966 B101 10
San Joaquin.......... December 2, 1966 3090 511
San Mateo............ December 2, 1966 5244 411
Santa Clara.......... December 2, 1966 7579 440
Solano............... December 1, 1966 1429 482
Sonoma............... December 1, 1966 2243 434
Tulare............... December 2, 1966 2686 249
Yuba................. December 2, 1966 443 434
36 72
SEVENTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. April 2, 1968 2154 273
Butte................ April 2, 1968 1511 632
Contra Costa......... April 2, 1968 5593 177
Fresno............... April 3, 1968 5554 654
Glenn................ April 2, 1968 507 326
Kern................. April 3, 1968 4147 264
Los Angeles.......... April 2, 1968 D3959 10
Monterey............. April 2, 1968 551 580
City and County of San
Francisco.......... April 2, 1968 B230 362
San Joaquin.......... April 2, 1968 3199 132
San Mateo............ April 2, 1968 5453 1
Santa Clara.......... April 2, 1968 8076 99
Solano............... April 1, 1968 1501 35
Sonoma............... April 3, 1968 2323 446
Tulare............... April 3, 1968 2773 415
Yuba................. April 2, 1968 465 122
EIGHTEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. April 3, 1970 2592 708
Butte................ April 6, 1970 1608 505
Contra Costa......... April 3, 1970 6099 58
Fresno............... April 3, 1970 5775 371
Glenn................ April 6, 1970 524 168
Kern................. April 3, 1970 4384 72
Los Angeles.......... April 6, 1970 D4677 518
Monterey............. April 6, 1970 645 921
City and County of San
Francisco.......... April 6, 1970 B414 258
San Joaquin.......... April 3, 1970 3381 569
San Mateo............ April 3, 1970 5766 1
Santa Clara.......... April 3, 1970 8878 585
Solano............... April 3, 1970 1618 477
Sonoma............... April 3, 1970 2453 531
Tulare............... April 3, 1970 2889 894
Yuba................. April 6, 1970 497 84
37 73
NINETEENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. June 10, 1970 2632 835
Butte................ June 11, 1970 1618 2
Contra Costa......... June 10, 1970 6146 1
Fresno............... June 10, 1970 5793 233
Glenn................ June 11, 1970 526 170
Kern................. June 9, 1970 4405 724
Los Angeles.......... June 10, 1970 D4736 731
Monterey............. June 10, 1970 653 890
City and County of
San Francisco...... June 11, 1970 B430 928
San Joaquin.......... June 10, 1970 3402 124
San Mateo............ June 10, 1970 5792 57
Santa Clara.......... June 11, 1970 8949 586
Solano............... June 10, 1970 1629 158
Sonoma............... June 10, 1970 2465 923
Tulare............... June 10, 1970 2898 231
Yuba................. June 11, 1970 500 77
TWENTIETH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. April 2, 1971 2820 92
Butte................ April 2, 1971 1667 102
Contra Costa......... April 2, 1971 6351 138
Fresno............... April 2, 1971 5880 820
Glenn................ April 2, 1971 533 530
Kern................. April 1, 1971 4509 30
Los Angeles.......... April 1, 1971 D5014 368
Monterey............. April 2, 1971 695 719
City and County of
San Francisco...... April 5, 1971 B507 812
San Joaquin.......... April 5, 1971 3509 305
San Mateo............ April 2, 1971 5919 363
Santa Clara.......... April 2, 1971 9278 182
Solano............... April 5, 1971 1677 384
Sonoma............... April 2, 1971 2524 671
Tulare............... April 2, 1971 2959 373
Yuba................. April 2, 1971 513 81
38 74
TWENTY-FIRST SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. December 14, 1972 3298 449
Butte................ December 14, 1972 1805 96
Contra Costa......... December 14, 1972 6821 129
Fresno............... December 14, 1972 6104 2
Glenn................ December 14, 1972 554 371
Kern................. December 15, 1972 4757 356
Los Angeles.......... December 14, 1972 D5698 815
Monterey............. December 14, 1972 815 838
City and County of
San Francisco...... December 14, 1972 B708 675
San Joaquin.......... December 14, 1972 3718 161
San Mateo............ December 14, 1972 6289 367
Santa Clara.......... December 14, 1972 O154 435
Solano............... December 15, 1972 1795 147
Sonoma............... December 14, 1972 2719 547
Tulare............... December 14, 1972 3075 674
Yuba................. December 14, 1972 546 360
TWENTY-SECOND SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. December 27, 1972 3306 930
Butte................ December 27, 1972 1807 385
Contra Costa......... December 27, 1972 6829 150
Fresno............... December 27, 1972 6108 355
Glenn................ December 27, 1972 555 69
Kern................. December 29, 1972 4762 140
Los Angeles.......... December 27, 1972 D5710 690
Monterey............. December 27, 1972 818 40
City and County of
San Francisco...... December 27, 1972 B712 707
San Joaquin.......... December 27, 1972 3721 317
San Mateo............ December 27, 1972 6296 114
Santa Clara.......... December 27, 1972 O171 29
Solano............... December 29, 1972 1797 530
Sonoma............... December 27, 1972 2722 782
Tulare............... December 27, 1972 3078 118
Yuba................. December 27, 1972 547 158
39 75
TWENTY-THIRD SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. December 27, 1972 3307 1
Butte................ December 27, 1972 1807 433
Contra Costa......... December 27, 1972 6829 197
Fresno............... December 27, 1972 6108 307
Glenn................ December 27, 1972 555 116
Kern................. December 29, 1972 4762 187
Los Angeles.......... December 27, 1972 D5710 737
Monterey............. December 27, 1972 818 87
City and County of San
Francisco.......... December 27, 1972 B712 733
San Joaquin.......... December 27, 1972 3721 269
San Mateo............ December 27, 1972 6296 161
Santa Clara.......... December 27, 1972 O171 76
Solano............... December 29, 1972 1797 577
Sonoma............... December 27, 1972 2722 830
Tulare............... December 27, 1972 3078 165
Yuba................. December 27, 1972 547 205
TWENTY-FOURTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. March 22, 1974 3635 156
Butte................ March 22, 1974 1896 665
Contra Costa......... March 22, 1974 7183 54
Fresno............... March 22, 1974 6279 513
Glenn................ March 22, 1974 570 163
Kern................. March 22, 1974 4832 519
Los Angeles.......... March 22, 1974 D6209 133
Monterey............. March 22, 1974 902 1
City and County of San
Francisco.......... March 22, 1974 B866 907
San Joaquin.......... March 22, 1974 3856 1
San Mateo............ March 22, 1974 6574 611
Santa Clara.......... March 22, 1974 815 125
Solano............... March 22, 1974 1974 11482
Sonoma............... March 22, 1974 2847 542
Tulare............... March 22, 1974 3166 315
Yuba................. March 22, 1974 571 423
40 76
TWENTY-FIFTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. June 20, 1975 4007 676
Butte................ June 20, 1975 1995 455
Contra Costa......... June 20, 1975 7543 54
Fresno............... June 20, 1975 6447 21
Glenn................ June 20, 1975 587 128
Kern................. June 20, 1975 4901 154
Los Angeles.......... June 20, 1975 D6698 184
Monterey............. June 20, 1975 985 335
City and County of San
Francisco.......... June 20, 1975 C30 18
San Joaquin.......... June 20, 1975 3996 258
San Mateo............ June 20, 1975 6872 1
Santa Clara.......... June 20, 1975 B474 219
Solano............... June 20, 1975 1975 25377
Sonoma............... June 20, 1975 2970 761
Tulare............... June 20, 1975 3249 11
Yuba................. June 20, 1975 595 695
TWENTY-SIXTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. June 10, 1976 4397 342
Butte................ June 10, 1976 2077 441
Contra Costa......... June 10, 1976 7896 746
Fresno............... June 11, 1976 6608 364
Glenn................ June 10, 1976 600 137
Kern................. June 11, 1976 4960 1166
Los Angeles.......... June 10, 1976 10257 734
Monterey............. June 10, 1976 1060 798
City and County of San
Francisco.......... June 10, 1976 C184 1
San Joaquin.......... June 10, 1976 4136 42
San Mateo............ June 10, 1976 7151 667
Santa Clara.......... June 10, 1976 C073 688
Solano............... June 10, 1976 1976 31463
Sonoma............... June 10, 1976 3089 913
Tulare............... June 10, 1976 3326 626
Yuba................. June 10, 1976 616 512
41 77
TWENTY-SEVENTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. March 24, 1978 5312 57
Butte................ March 24, 1978 2268 279
Fresno............... March 27, 1978 6997 25
Glenn................ March 24, 1978 626 594
Kern................. March 24, 1978 5098 1124
Los Angeles.......... March 24, 1978 78-310554
Monterey............. March 24, 1978 1227 1030
City and County of
San Francisco...... March 24, 1978 C538 664
San Joaquin.......... March 27, 1978 4377 286
San Mateo............ March 24, 1978 7728 715
Santa Clara.......... March 24, 1978 D549 102
Solano............... March 24, 1978 21803 73
Sonoma............... March 24, 1978 3371 634
Tulare............... March 27, 1978 3315 618
Yuba................. March 24, 1978 662 589
TWENTY-EIGHTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. August 28, 1978 5551 62
Butte................ August 28, 1978 2318 170
Fresno............... August 28, 1978 7107 2
Glenn................ August 28, 1978 633 666
Kern................. August 28, 1978 5135 674
Los Angeles.......... August 28, 1978 78-951209
Monterey............. August 28, 1978 1270 1030
City and County of
San Francisco...... August 28, 1978 C631 740
San Joaquin.......... August 28, 1978 4442 141
San Mateo............ August 28, 1978 7774 1709
Santa Clara.......... August 28, 1978 D914 715
Solano............... August 28, 1978 -- 71420
Sonoma............... August 28, 1978 3445 337
Tulare............... August 28, 1978 3566 14
Yuba................. August 28, 1978 675 331
42 78
TWENTY-NINTH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. March 28, 1980 80-055698
Butte................ March 28, 1980 2500 503
Fresno............... March 31, 1980 7494 230
Glenn................ March 31, 1980 663 509
Kern................. March 28, 1980 5275 818
Los Angeles.......... March 31, 1980 80-318971
Monterey............. March 31, 1980 1399 636
City and County of
San Francisco...... March 28, 1980 C970 327
San Joaquin.......... March 31, 1980 80020795
San Mateo............ March 28, 1980 7948 1952
Santa Clara.......... March 28, 1980 F233 366
Solano............... March 28, 1980 23159
Sonoma............... March 28, 1980 80-18782
Tulare............... March 31, 1980 3753 500
Yuba................. March 28, 1980 722 625
THIRTIETH SUPPLEMENTAL INDENTURE
Page
County or Vol. of at which
City and Date of Official Record
County Recordation Records Commences
Alameda.............. January 2, 1981 81-000002 None
Butte................ January 2, 1981 81-113 2583-250
Fresno............... January 2, 1981 401 7651-362
Glenn................ January 2, 1981 0023 678-226
Kern................. January 5, 1981 000286 5342-1512
Los Angeles.......... January 2, 1981 81-2293 None
Monterey............. January 2, 1981 G00066 1456-551
City and County of
San Francisco...... December 31, 1980 D044298 D127-551
San Joaquin.......... January 2, 1981 81000191 None
San Mateo............ January 2, 1981 0507AS None
Santa Clara.......... January 2, 1981 6941984 F825-269
Solano............... January 2, 1981 60 Pg 90-156
Sonoma............... January 2, 1981 81-000131 None
Tulare............... January 2, 1981 189 3828-412
Yuba................. January 2, 1981 7644 743-99
43 79
THIRTY-FIRST SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ May 4, 1982 82-064230 None
Butte.................. May 4, 1982 82-12318 2715-529
Fresno................. May 3, 1982 37212 7901-572
Glenn.................. May 4, 1982 1908 704-299
Kern................... May 3, 1982 40614 5456-1478
Los Angeles............ May 3, 1982 82-445736 None
Monterey............... May 3, 1982 G17137 1549-234
City and County of
San Francisco........ May 3, 1982 D198127 D392-276
San Joaquin............ May 4, 1982 82022803 None
San Mateo.............. May 3, 1982 82035410 None
Santa Clara............ May 3, 1982 7353398 None
Solano................. May 3, 1982 15522 Page 26792
Sonoma................. May 3, 1982 82-23083 None
Tulare................. May 3, 1982 19242 3961-163
Yuba................... May 3, 1982 10984 775-263
THIRTY-SECOND SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ October 13, 1983 83-191597 None
Butte.................. October 13, 1983 83-34081 None
Fresno................. October 13, 1983 83095135 None
Glenn.................. October 13, 1983 4435 None
Kern................... October 13, 1983 041161 5597-658
Los Angeles............ October 13, 1983 83-1208172 None
Monterey............... October 13, 1983 G46236 1674-1194
City and County of
San Francisco........ October 13, 1983 D408975 None
San Joaquin............ October 13, 1983 83074718 None
San Mateo.............. October 13, 1983 83112077 None
Santa Clara............ October 13, 1983 7850561 H980-717
Solano................. October 13, 1983 45171 1983-85369
Sonoma................. October 13, 1983 83-69362 None
Tulare................. October 13, 1983 51515 4120-726
Ventura................ October 13, 1983 117059 1983-117059
Ventura (re-recorded).. November 15,1983 130202 1983-130202
Yuba................... October 13, 1983 3764 810-614
44 80
THIRTY-THIRD SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ September 13, 1988 88-232083 None
Butte.................. September 13, 1988 88-031123 None
Fresno................. September 13, 1988 88101543 None
Glenn.................. September 13, 1988 88-4023 None
Kern................... September 13, 1988 31355 6162-1754
Los Angeles............ September 13, 1988 88-1464893 None
Monterey............... September 13, 1988 47561 2273-660
City and County of
San Francisco........ September 13, 1988 E243818 None
San Joaquin............ September 13, 1988 88077190 None
San Mateo.............. September 13, 1988 88120443 None
Santa Clara............ September 13, 1988 9833944 None
Solano................. September 13, 1988 54422 1988-117737
Sonoma................. September 13, 1988 88-77182 88-77182
Tulare................. September 13, 1988 58120 4745-662
Ventura................ September 13, 1988 88-133327 None
Yuba................... September 13, 1988 2818 947-287
THIRTY-FOURTH SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ December 20, 1990 90-332019 None
Butte.................. December 20, 1990 90-054231 None
Fresno................. December 20, 1990 90155101 None
Glenn.................. December 20, 1990 90-6395 None
Kern................... December 20, 1990 85807 6468-709
Los Angeles............ December 20, 1990 90-2094360 None
Monterey............... December 20, 1990 73725 2589-678
City and County of
San Francisco........ December 20, 1990 E836831 F276-480
San Joaquin............ December 20, 1990 90122496 None
San Mateo.............. December 20, 1990 90165083 None
Santa Clara............ December 21, 1990 10758142 None
Solano................. December 20, 1990 99015 None
Sonoma................. December 20, 1990 90-122784 None
Tulare................. December 23, 1990 83069 None
Ventura................ December 20, 1990 90-187399 None
Yuba................... December 20, 1990 90-14553 None
45 81
THIRTY-FIFTH SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ November 3, 1992 92-358477 None
Butte.................. November 3, 1992 92-050443 None
Fresno................. November 3, 1992 92167544 None
Glenn.................. November 3, 1992 92-5920 None
Kern................... November 3, 1992 167635 6757-1488
Los Angeles............ November 3, 1992 92-2022769 None
Monterey............... November 3, 1992 78604 2867-956
City and County of
San Francisco........ November 3, 1992 F237077 F747-0581
San Joaquin............ November 2, 1992 92127961 None
San Mateo.............. November 3, 1992 92180648 None
Santa Clara............ November 3, 1992 11617179 None
Solano................. November 3, 1992 101527 None
Sonoma................. November 3, 1992 1992-137370 None
Tulare................. November 3, 1992 92-081425 None
Ventura................ November 3, 1992 92-198950 None
Yuba................... November 3, 1992 92-13796 None
THIRTY-SIXTH SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ June 9, 1993 93-203153 None
Butte.................. June 9, 1993 93-023408 None
Fresno................. June 9, 1993 93086809 None
Glenn.................. June 10, 1993 93-2925 None
Kern................... June 9, 1993 82236 6859-1043
Los Angeles............ June 9, 1993 93-1098735 None
Monterey............... June 9, 1993 38484 None
City and County of
San Francisco........ June 9, 1993 F371252 F896-0727
San Joaquin............ June 9, 1993 93067318 None
San Mateo.............. June 9, 1993 93094357 None
Santa Clara............ June 9, 1993 11944269 None
Solano................. June 9, 1993 93-51895 None
Sonoma................. June 9, 1993 93-71358 None
Tulare................. June 9, 1993 93-040396 None
Ventura................ June 9, 1993 93-104242 None
Yuba................... June 9, 1993 93-06640 None
46 82
THIRTY-SEVENTH SUPPLEMENTAL INDENTURE
County or
City and Recording Document Book and Page
County Date Number (Reel-Image)
Alameda................ September 28, 1993 93342967 None
Butte.................. September 28, 1993 93-041800 None
Fresno................. September 28, 1993 93148269 None
Glenn.................. September 28, 1993 93-5140 None
Kern................... September 28, 1993 140436 6915-188
Los Angeles............ September 28, 1993 93-1891500 None
Monterey............... September 28, 1993 66464 None
City and County of
San Francisco........ September 28, 1993 F456929 F973-511
San Joaquin............ September 28, 1993 93111959 None
San Mateo.............. September 28, 1993 93164391 None
Santa Clara............ September 28, 1993 12128051 None
Solano................. September 28, 1993 93-88880 1993
Sonoma................. September 28, 1993 93-121864 None
Tulare................. September 28, 1993 93-069108A None
Ventura................ September 28, 1993 93-181168 None
Yuba................... September 28, 1993 93-11284 None
47 83
SCHEDULE C
None
48 84
SCHEDULE D
None
49 85
CALIFORNIA WATER SERVICE COMPANY TEN YEAR FINANCIAL REVIEW
1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
(dollars in thousands except common share and other data)
SUMMARY OF OPERATIONS
Operating revenue
Residential $111,526 $101,842 $87,560 $90,178 $84,295 $81,404 $82,254 $79,131 $75,508 $73,204
Business 25,247 23,670 20,759 20,910 19,870 19,480 19,986 19,095 17,847 16,639
Industrial 5,123 4,925 4,490 5,146 5,166 4,754 4,361 4,539 4,636 4,689
Public authorities 7,396 6,892 5,734 6,412 6,225 6,232 6,491 6,285 6,118 6,117
Other 2,424 2,476 8,633 1,741 1,932 1,885 693 1,385 1,382 1,256
-------- -------- -------- -------- -------- -------- -------- ------- -------- --------
Total operating revenue 151,716 139,805 127,176 124,387 117,488 113,755 113,785 110,435 105,491 101,905
Operating expenses 123,861 116,031 102,855 101,017 95,150 91,265 90,587 87,788 83,722 80,729
Interest expense, other
income and expenses, net 12,354 11,245 10,393 9,004 8,566 8,416 8,026 8,808 9,115 9,396
-------- -------- -------- -------- -------- -------- -------- ------- -------- --------
Net income $15,501 $12,529 $13,928 $14,366 $13,772 $14,074 $15,172* $13,839 $12,654 $11,780
======== ======== ======== ======== ======== ======== ======== ======= ======== ========
COMMON SHARE DATA
Earnings per share $2.70 $2.18 $2.42 $2.50 $2.40 $2.45 $2.63* $2.40 $2.21 $2.06
Dividend paid 1.92 1.86 1.80 1.74 1.68 1.60 1.48 1.40 1.30 1.20
Dividend payout ratio 71% 85% 74% 70% 70% 65% 49% 58% 59% 58%
Book value $21.80 $21.02 $20.70 $20.08 $19.32 $18.59 $17.72 $16.11 $15.03 $14.07
Market price at year-end 40.00 33.00 28.00 26.75 28.00 25.50 30.00 26.625 22.625 15.25
Common shares outstanding
at year-end (in thousands) 5,689 5,689 5,689 5,689 5,689 5,672 5,636 5,607 5,576 5,528
Return on common
shareholders' equity 12.4% 10.4% 11.7% 12.4% 12.4% 13.2% 14.8% 14.9% 14.7% 14.6%
Bond interest coverage 3.2 2.9 3.2 3.6 3.4 3.8 4.3 3.9 3.5 3.3
BALANCE SHEET DATA
Net utility plant $391,703 $374,613 $349,937 $325,409 $307,802 $289,363 $273,619 $262,216 $246,467 $236,881
Utility plant expenditures 28,829 35,188 34,459 26,861 27,277 23,994 19,511 22,710 16,469 17,177
Advances for construction 90,812 89,127 84,424 77,202 69,016 59,145 54,887 50,907 45,790 43,869
12 86
TEN YEAR FINANCIAL REVIEW (CONTD.)
Capitalization:
First mortgage bonds 129,608 122,069 103,505 104,905 86,012 86,959 73,930 77,056 84,009 86,478
Preferred stock 3,475 3,475 3,475 3,475 3,475 3,475 5,783 5,909 6,031 6,178
Common shareholders' equity 123,999 119,574 117,779 114,244 109,929 105,435 99,897 90,336 83,818 77,770
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total capitalization 257,082 245,118 224,759 222,624 199,416 195,869 179,610 173,301 173,858 170,426
Capitalization ratios:
First mortgage bonds 50.4% 49.8% 46.1% 47.1% 43.1% 44.4% 41.2% 44.5% 48.3% 50.8%
Preferred stock 1.4% 1.4% 1.5% 1.6% 1.8% 1.8% 3.2% 3.4% 3.5% 3.6%
Common shareholders' equity 48.2% 48.8% 52.4% 51.3% 55.1% 53.8% 55.6% 52.1% 48.2% 45.6%
OTHER DATA
Water production (million gallons)
Wells 47,205 52,000 48,930 51,329 51,350 48,828 48,097 45,222 43,589 44,602
Purchased 48,089 40,426 36,686 45,595 45,978 48,254 50,744 50,782 50,328 49,983
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total water production 95,294 92,426 85,616 96,924 97,328 97,082 98,841 96,004 93,917 94,585
Customers at year-end 362,900 360,700 357,600 353,300 348,600 344,800 337,800 334,200 330,300 326,100
New customers added 2,200 3,100 4,300 4,700 3,800 7,000 3,600 3,900 4,200 4,000
Revenue per customer $418 $388 $356 $352 $337 $330 $337 $330 $319 $313
Utility plant per customer $1,469 $1,406 $1,327 $1,251 $1,198 $1,140 $1,098 $1,058 $1,007 $973
Employees at year-end 614 610 593 581 565 550 534 528 525 522
*Net income excludes $2,196 for a change in accounting for unbilled revenue; $.39 is excluded from earnings per share.
Common share data is adjusted to reflect the 2-for-1 stock splits effective October 1987 and May 1984.
12 87
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS BUSINESS
BUSINESS
California Water Service Company is a public utility supplying water
service through 20 separate water systems to 362,900 customers living in
38 communities in California. These systems, or districts, are located
throughout the state as shown in the tabulation of page 11. [Note to
EDGAR 10K user: the tabulation "Service Areas and Customers" is on page
91 of this filing.]
The Company's rates and operations are regulated by the California
Public Utilities Commission (Commission) with the rates for each district
determined separately. A detailed discussion of Regulation and Rates begins
on page 6 of this report. [Note to EDGAR 10K user: the discussion of
"Regulation and Rates" is on page 92 of this filing.]
The six-year drought in California which required water rationing in a
number of the Company's districts was declared officially ended after near-
record precipitation in the first three months of 1993. A detailed discussion
of Water Supply is on page 4 of this report. [Note to EDGAR 10K user: the
discussion of "Water Supply" is on page 93 of this filing.]
RESULTS OF OPERATIONS
Earnings and Dividends
The Company's earnings per share for 1993 were $2.70, compared
with $2.18 in 1992 and $2.42 in 1991. Net income was $15,501,000 in
1993 compared with $12,529,000 in 1992 and $13,928,000 in 1991.
Earnings and revenue in 1991 and 1992 were impacted by mandatory water
rationing in some Company districts and water conservation in all districts.
In January 1993, the Board of Directors increased the dividend rate
for the twenty-sixth consecutive year. The annual rate paid in 1993 was
$1.92 per share, an increase of 3.2% compared with the 1992 dividend of
$1.86 per share, which represented an increase of 3.3% over the 1991
dividend of $1.80 per share. The dividend payout ratio was 71% in 1993
compared with 85% in 1992 and 74% in 1991. These increases were
based on projections that the higher dividend could be sustained while still
providing the Company with adequate financial flexibility.
Operating Revenue
Operating revenue was a record $151.7 million in 1993, compared
with $139.8 million in 1992 and $127.2 million in 1991. The increase was
$11.9 million, or 9%, in 1993. Step and general rate increases accounted
for $2.7 million of added revenue. Offset rate adjustments, primarily for
purchased water and pump tax cost increases, added $7.3 million. Average
water consumption per customer increased 3%, adding $2.3 million to
revenue. However, rationing loss recoveries declined $1.2 million from
1992 due to the ending of rationing. Sales to 2,200 new customers
accounted for $0.8 million in additional revenue.
In 1992, operating revenue increased $12.6 million from 1991. Step
and general rate increases accounted for $3.4 million of added revenue.
Offset rate adjustments, primarily for purchased water and pump tax cost
14 88
increases, added $7.0 million. Average water consumption per customer
increased 6%, adding $3.9 million to revenue. The discontinuance of
mandatory rationing in four districts in April 1992 helped account for higher
water consumption. However, this also resulted in lower rationing loss
recoveries of $4.0 million compared with $6.9 million in 1991. Sales to
3,100 new customers accounted for $1.2 million in additional revenue.
In 1991, an October decision of the Commission authorized the
Company to recover a portion of revenue lost through water rationing and
conservation. In December, after the Commission approved district water
management plans, $6,951,000 of revenue lost since August 8, 1990, was
recorded as revenue. This included the transfer of $3,195,000 in penalty
charges collected from customers who had exceeded their monthly
allotments, while the remaining $3,756,000 was accrued as unbilled
revenue. Surcharges on customer water bills were authorized by the
Commission beginning in 1992, to allow recovery of this accrued unbilled
revenue in addition to future revenue losses. Water rationing and
conservation in the fifth drought year lowered average water consumption
per customer by 14% causing an $11.9 million reduction in revenue.
Additional revenue from drought rate relief in 1991 was $5.6 million.
General and step rate increases added $4.1 million to 1991 revenue. Sales
to 4,300 new customers accounted for $1.3 million in additional revenue.
[Appearing within the text of Management's Discussion and Anaylsis
of Financial Condition and Results of Operations is a bar chart titled
"OPERATING REVENUE (Millions of Dollars)". The chart shows total
revenue for the five year period 1989 through 1993. The revenue for those
years were: $117.5, $124.4, $127.2, $139.8 and $151.7, respectively.]
Operating and Interest Expenses
Operating expenses in 1993 increased $7.8 million compared with
increases of $13.2 million in 1992 and $1.8 million in 1991.
Purchased water expense continued to be the largest component of
operating expense at $38.5 million, an increase of $5.4 million. This was
attributable to a 19% increase in water purchases to 48 billion gallons and
to wholesale water suppliers' rate increases. Total water production,
including well production and surface supplies was up 3% from 1992 to 95
billion gallons. Total cost of water production, including purchased water,
purchased power and pump taxes, was $52.9 million in 1993, $50.2 million
in 1992, and $38.8 million in 1991. Commission regulatory procedures
allow offset rate adjustments for changes in these costs through use of
balancing accounts. However, there was a delay in recovery of some cost
increases as discussed under the caption Regulation and Rates on page 6.
Employee payroll and benefits charged to operations and maintenance
expense was $26.2 million in 1993 compared with $24.8 million in 1992
and $23.5 million in 1991.
Bond interest expense in 1993 increased $1.5 million due to the sale
of $20 million new bonds in November 1992 and the sale of additional new
bonds in 1993 as discussed under the caption Liquidity and Capital
Resources. However, this was partially offset by a $336,000 reduction in
interest on short-term debt due to reduced borrowings. Bond interest
coverage before income taxes was 3.2 in 1993, 2.9 in 1992 and 3.2 in
1991.
15 89
New Accounting Standards
The Financial Accounting Standards Board has issued three new
statements which affect the financial statements in 1992 or 1993. These
are Statement No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions", Statement No. 107 "Disclosures About Fair Value of
Financial Instruments", and Statement No. 109 "Accounting for Income
Taxes". The effect of these Statements is discussed in Notes to Financial
Statements: Note 5--Income Taxes; Note 6--Employee Benefit Plans and
Note 7--Fair Value of Financial Instruments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is primarily provided by cash generated from
operations and the utilization of a short-term line of credit of $30 million as
described in Note 3 to the financial statements. The credit line was
temporarily increased to $40 million during the bond refinancing periods in
May and November to cover short-term requirements between the calling of
bonds and the issuance of new bonds.
A major refinancing program was completed in 1993. Eight series of
bonds in the principal amount of $49,593,000 and bearing coupons ranging
from 8.6% to 12-7/8% were called prior to maturity with a portion of the
proceeds from the sale of three $20 million dollar bond issues. The Series
EE 7.9% first mortgage bonds were issued in June 1993, the Series FF
6.95% bonds were issued in October 1993 and the Series GG 6.98% bonds
were issued in November 1993. Interest savings from the refunding will be
approximately $1.9 million annually. Standard & Poor's and Moody's
maintained their bond ratings of AA- and Aa3 respectively on the new
Series GG bond issue. Capital requirements consist primarily of new
construction expenditures for replacing and expanding the Company's utility
plant facilities. They also include refunds of advances for construction and
retirement of bonds.
During 1993, utility plant expenditures totaled $28.8 million including
$21.5 million covered by Company funding and $7.3 million being recovered
from developers through refundable advances and contributions in aid of
construction. Company funding was through cash generated from
operations, the use of short-term line of credit and a portion of the proceeds
from the sale of new bonds.
The 1994 Company construction program has been authorized for
$21.6 million. The funds for this program are expected to be provided by
cash from operations and a new issue of common stock. Additionally, new
subdivision construction will be financed by developers' refundable
advances and contributions.
[Appearing within the text of Management's Discussion and Anaylsis
of Financial Condition and Results of Operations is a bar chart titled "GROSS
ADDITIONS TO UTILITY PLANT (Millions of Dollars). The chart shows gross
additions to utility plant for the years 1989 through 1993. The additions
were $27.3, $26.9, $34.5, $35.2 and $28.8, respectively.]
Capital Structure
The Company's total capitalization at December 31, 1993, was
$257.1 million. Capital ratios were: common equity 48.2% preferred
stock, 1.4%; and long-term debt, 50.4%. The rate of return on year-end
common equity was 12.4% compared with 10.4% in 1992 and 11.7% in
1991.
15 90
SERVICE AREAS AND CUSTOMERS
SAN FRANCISCO BAY AREA
Mid-Peninsula
(San Mateo and San Carlos) 35,200
South San Francisco
(including Colma and Broadmoor) 15,300
Bear Gulch (including Menlo Park, Atherton,
Woodside and Portola Valley) 17,100
Los Altos (including Los Altos and portions Cupertino,
Los Altos Hills, Mountain View and Sunnyvale) 17,700
Livermore 14,700
-------
100,000
SACRAMENTO VALLEY
Chico (including Hamilton City) 20,100
Oroville 3,500
Marysville 3,800
Dixon 2,700
Willows 2,200
------
32,300
SALINAS VALLEY
Salinas 22,600
King City 1,800
------
24,400
SAN JOAQUIN VALLEY
Bakersfield 54,300
Stockton 40,700
Visalia 25,500
Selma 4,600
-------
125,100
LOS ANGELES AREA
East Los Angeles (including portions of
City of Commerce and Montebello) 26,400
Hermosa Beach and Redondo Beach
(including portion of Torrance) 24,700
Palos Verdes (including Palos Verdes Estates,Rancho Palos
Verdes, Rolling Hills Estates and Rolling Hills) 23,400
Westlake (portion of Thousand Oaks) 6,600
-------
81,100
-------
362,900
=======
11 91
REGULATION AND RATES
The California Public Utilities Commission requires that water rates for
each Company operating district be determined independently. Each year
the Company files general rate increase applications for approximately one-
third of its operating districts. According to its rate case processing
procedures for water utilities, the Commission attempts to issue decisions
within eight month of acceptance. Offset rate adjustments are also allowed
as required for changes in purchased water, power costs and pump taxes.
During 1993, general rate increase applications were filed with the
Commission requesting rate relief of $2,184,800 in three Company districts
based upon a rate of return on common equity of 12%. However, in recent
proceedings, the Commission staff has been recommending a rate of return
in the 10.50% range. Public hearings for these cases have been scheduled
for early February 1994. In the meantime, step increases for 15 districts
totaling approximately $2,233,000 were authorized in January 1994.
The Company received two general rate case decisions in 1993. In
April, the Commission issued a decision on general rate cases filed in July
1991 for six districts, resulting in $390,000 in additional revenue and
yielding a return on common equity of 11.50%. Then in August 1993, the
Commission issued a decision on general rate cases filed in July 1992 for
seven districts, providing a revenue increase of $3,408,000 and yielding a
return on common equity of 11%.
In November 1992, hearings began in the Commission's investigation
of the financial and operational risks which confront water utilities today.
This investigation addresses two of the most significant challenges to the
California water industry--water supply and water quality and their affect on
appropriate rates of return to be authorized by the Commission. The
California Water Association retained expert witnesses to put forth the
industry's position. Following the hearings, which concluded in 1993, the
Commission will present its position on these matters through a formal
decision anticipated sometime in 1994.
Interim rate relief in the Stockton district totaling $1,900,000 was
granted by the Commission for changes in purchased water expense,
purchased power costs and pump taxes. The Commission staff's continuing
review of these costs has delayed recovery since 1989 when the contract
was first implemented. As part of the staff's review, an independent
consultant was hired and a report is expected in early 1994.
Two additional offset changes relating to the cost of surface water
supplies were issued by the Commission during the past year. They
included rate relief totaling $3,500,000 effective July 1, 1993, authorized
to cover the increased cost of purchased water from the Metropolitan Water
District of Southern California to serve the Company's four Los Angeles area
districts; and a rate reduction in July and August totaling $4,300,000 for
customers on the San Francisco Peninsula to reflect a 33% decrease in the
cost of purchased water from the wholesale supplier, the San Francisco
Water Department. Additional offset relief of $637,000 was granted for the
Bakersfield district in November 1993 to allow for adjustments in the
district's water production expense balancing account as permitted by the
rate-making process.
The Company's headquarters in San Jose was recently renovated to
accommodate increased staffing levels at the General Office. This was the
first remodeling since expansion of facilities to accommodate the Company's
Information Systems Department in 1972. An advice letter to recover the
6 92
increased costs due to the renovation was filed with the CPUC in late 1993
requesting approximately $360,000 in additional revenue.
WATER SUPPLY
Water supplies in California's 155 major reservoirs were at 22.4
million acre feet on January 1, 1994, almost doubled that recorded one year
earlier when the state was undergoing its sixth year of drought. The state's
current reservoir supply, which is at average for this time of year, was
replenished during 1993 as a result of the abundant runoff which followed
the near record precipitation of the 1992-93 winter season. Twelve
Company districts receive all or a portion of their supplies from surface
water runoff captured by state and local reservoirs. While overall reservoir
storage remained normal at the start of 1994, the snowpack in the Sierra on
January 3, 1994, was approximately 45% of average for that date,
indicating that the 1993-94 water year had started significantly dryer than
last year's above average season. Subsequent storms in mid-February
1994, however, have greatly increased the Sierra snowpack.
Although substantial reserves remain in underground aquifers which
serve 16 Company districts, many groundwater tables have not fully
recovered from the effects of the drought. Taking this into consideration,
together with the fact that California will continue to have long-term water
supply problems with future growth, the Company will maintain its water
conservation efforts through a variety of customer programs initiated during
the drought. Fortunately, the state's improved supply conditions have
eliminated the need for water rationing.
While not under a mandatory rationing program during 1994,
customers in the Company's Salinas district will be asked to voluntarily cut
water use by 15% to conform to a new local ordinance. The new law,
which placed water use restrictions on both urban and agricultural users in
Monterey County, is part of an overall program designed to curtail ocean
salt water intrusion. The program is described in more detail on page 7 of
this report. [Note to EDGAR 10K user: the detail of the Salinas progam is
on page 94 of this report.]
Photo Captions
[The photograph referred in the following paragraph, depicts two men
looking at a set of blueprints with a panoramic view of the Salinas Valley in
the background.]
Jim Smith, left, Company District Manager in Salinas, and William
Hurst, General Manager of the Monterey County Resources Agency, review
options under consideration by the Agency to protect the Salinas Valley
underground aquifer against salt water intrusion from Monterey Bay.
Possible programs include the use of additional supplies from both the
Nacimiento and San Antonio Reservoirs in the Southern Monterey County
for imported surface water and groundwater recharge; the use of 20,000
acre feet of reclaimed water from the Regional Water Treatment plant in
Marina, recycled for irrigation use and groundwater recharge; restrictions
placed upon the Valley's urban and agricultural communities on water use;
and the possible development of a new dam and reservoir in the County's
Arroyo Seco area for reserve storage and recharge of the underground
through the Salinas and Arroyo Seco Rivers.
4 93
[The picture referred to the in following parapraph shows a computer
designed schematic diagram of the Salinas district water distribution system
with contour lines that indicate elevation.]
To assist in this overall effort, the Company has developed a
computer model which creates a three dimensional hydraulic network
analyses of the Salinas district distribution system. The model provides an
overall view of system water pressure at all locations; system mains color
coded as to size and type; sources of supply (wells); water connections;
booster pumps; storage tanks and reservoirs. Through use of the computer
model, the Company can simulate a variety of scenarios to determine the
effectiveness of different operational modes when pumping conditions are
changed.
7 94
CALIFORNIA WATER SERVICE COMPANY
BALANCE SHEET
December 31, 1993 and 1992
ASSETS
1993 1992
(In thousands)
Utility plant:
Land $6,742 $6,838
Depreciable plant and equipment 522,614 495,212
Construction work in progress 3,466 4,123
Intangible assets 391 978
-------- --------
Total utility plant 533,213 507,151
Less depreciation 141,510 132,538
-------- --------
Net utility plant 391,703 374,613
Current assets:
Cash and cash equivalents 1,461 899
Accounts receivable:
Customers 8,984 8,407
Other 1,851 3,336
Unbilled revenue 7,548 6,744
Materials and supplies at average cost 2,853 2,784
Taxes and other prepaid expenses 3,716 3,763
-------- --------
Total current assets 26,413 25,933
Other assets:
Regulatory assets 23,404 ---
Unamortized debt premium and expense 4,467 1,187
Other 632 1,715
-------- --------
Total other charges 28,503 2,902
-------- --------
$446,619 $403,448
======== ========
See accompanying notes to financial statements.
16 95
CAPITALIZATION AND LIABILITIES
1993 1992
(In thousands)
Capitalization:
Common stock $25,059 $25,059
Retained earnings 98,940 94,515
-------- --------
Total common shareholders' equity 123,999 119,574
Preferred stock without mandatory
redemption provision 3,475 3,475
First mortgage bonds 129,608 122,069
-------- --------
Total capitalization 257,082 245,118
Current liabilities:
Short-term borrowings 15,000 11,500
Accounts payable 11,234 9,110
Accrued taxes 2,810 2,520
Accrued interest 1,788 2,088
Other accrued liabilities 7,124 8,452
-------- --------
Total current liabilities 37,956 33,670
Unamortized investment tax credits 3,341 3,413
Deferred income taxes 11,045 ---
Regulatory liabilities 11,467 ---
Advances for construction 90,812 89,127
Contributions in aid of construction 34,916 32,120
-------- --------
$446,619 $403,448
======== ========
See accompanying notes to financial statements.
17 96
CALIFORNIA WATER SERVICE COMPANY
STATEMENT OF INCOME
For the years ended December 31, 1993, 1992 and 1991
1993 1992 1991
(In thousands, except share per data)
Operating revenue $151,716 $139,805 $127,176
Operating expenses:
Operations:
Purchased water 38,454 33,065 23,947
Purchased power 11,852 12,766 11,683
Pump taxes 2,601 4,370 3,206
Administrative and general 16,910 16,349 15,023
Other 19,718 19,051 18,107
Maintenance 7,250 6,965 7,175
Depreciation 10,304 9,412 8,795
Income taxes 10,600 8,250 9,550
Property and other taxes 6,172 5,803 5,369
-------- -------- --------
Total operating expenses 123,861 116,031 102,855
-------- -------- --------
Net operating income 27,855 23,774 24,321
Other income and expenses, net 273 169 384
-------- -------- --------
Income before interest expense 28,128 23,943 24,705
-------- -------- --------
Interest expense:
Bond interest 11,992 10,443 10,564
Other interest 635 971 213
-------- -------- --------
Total interest expense 12,627 11,414 10,777
-------- -------- --------
Net income $15,501 $12,529 $13,928
======== ======== ========
Earnings per share of common stock $2.70 $2.18 $2.42
======== ======== ========
Average number of common shares
outstanding 5,689 5,689 5,689
======== ======== ========
See accompanying notes to financial statements.
18 97
STATEMENT OF COMMON SHAREHOLDERS' EQUITY
For the years ended December 31, 1993, 1992 and 1991
(In thousands, except shares)
Common
Shares Common Retained
Outstanding Stock Earnings Total
Balance at December 31, 1990 5,688,754 $25,059 $89,185 $114,244
Net income 13,928 13,928
------- --------
Dividends paid: preferred stock 153 153
common stock 10,240 10,240
------- --------
Total dividends paid 10,393 10,393
------- --------
Income reinvested in business 3,535 3,535
--------- ------- ------- --------
Balance at December 31, 1991 5,688,754 25,059 92,720 117,779
Net income 12,529 12,529
------- --------
Dividends paid: preferred stock 153 153
common stock 10,581 10,581
------- --------
Total dividends paid 10,734 10,734
------- --------
Income reinvested in business 1,795 1,795
--------- ------- ------- --------
Balance at December 31, 1992 5,688,754 25,059 94,515 119,574
Net income 15,501 15,501
------- --------
Dividends paid: preferred stock 153 153
common stock 10,923 10,923
------- --------
Total dividends paid 11,076 11,076
------- --------
Income reinvested in business 4,425 4,425
--------- ------- ------- --------
Balance at December 31, 1993 5,688,754 $25,059 $98,940 $123,999
========= ======= ======= ========
See accompanying notes to financial statements.
19 98
CALIFORNIA WATER SERVICE COMPANY
STATEMENT OF CASH FLOWS
For the years ended December 31, 1993, 1992 and 1991
1993 1992 1991
(In thousands)
Operating activities:
Net income $15,501 $12,529 $13,928
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 10,304 9,412 8,795
Deferred income taxes and investment
tax credits, net 12,355 (821) (4,135)
Regulatory assets and liabilities, net (11,937) --- ---
Changes in operating assets and liabilities:
Accounts receivable 908 (2,633) (126)
Unbilled revenue (804) 842 (3,708)
Accounts payable 2,124 1,218 (444)
Other current liabilities (1,338) 1,084 (346)
Other changes, net 247 645 143
-------- -------- --------
Net adjustments 11,859 9,747 179
-------- -------- --------
Net cash provided by operating
activities 27,360 22,276 14,107
-------- -------- --------
Investing activities:
Utility plant expenditures (28,829) (35,188) (34,459)
-------- -------- --------
Financing activities:
Net short-term borrowings 3,500 (2,500) 14,000
Proceeds from sale of first mortgage
bonds 60,000 20,000 --
Advances for construction 5,024 8,187 10,425
Refunds of advances for construction (3,428) (3,443) (3,234)
Contributions in aid of construction 3,402 3,446 3,075
Retirements of first mortgage bonds
including premiums (55,391) (1,458) (1,421)
Dividends paid (11,076) (10,734) (10,393)
-------- -------- --------
Net cash provided by financing
activities 2,031 13,498 12,452
-------- -------- --------
Change in cash and cash equivalents 562 586 (7,900)
Cash and cash equivalents at beginning
of year 899 313 8,213
-------- -------- --------
Cash and cash equivalents at end of year $1,461 $899 $313
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest (net of amounts capitalized) $12,763 $11,042 $10,292
Income taxes $9,188 11,384 13,316
======== ======== ========
See accompanying notes to financial statemtents.
20 99
NOTES TO FINANCIAL STATEMENTS December 31, 1993, 1992 and 1991
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting records of the Company are maintained in accordance
with the uniform system of accounts prescribed by the California Public
Utilities Commission (Commission). Certain prior years' amounts have been
reclassified, where necessary, to conform to the current presentation.
Revenue
Revenue consists of monthly cycle customer billings for water service
at rates authorized by the Commission. Revenue from metered accounts
includes unbilled amounts based on the estimated usage from the latest
meter reading to the end of the accounting period. Flat rate accounts which
are billed at the beginning of the service period are included in revenue on a
prorata basis for the portion applicable to the current accounting period.
In October 1991 the Commission issued a decision on its investigation
into the effects of the drought on water utilities which permitted the
Company to recover revenue lost through water conservation as recorded in
memorandum accounts. As a result, $6,951,000 of revenue lost since
August 8, 1990 was recorded as revenue in December 1991 after the Commission
approved district water management plans. Penalty charges totaling
$3,195,000 collected from customers who had exceeded their monthly
allotments were transferred to revenue while the remaining $3,756,000 was
accrued as unbilled revenue in current assets. Of this amount $3,337,000
was recovered in 1992 by surcharges on customer water bills and transfers of
penalty charges.
During 1992, $4,087,000 of revenue lost due to water conservation was
recorded as revenue and accrued in unbilled revenue. Of $2,355,000 was
recovered through customer surcharges and penalty charge transfers. As of
December 31, 1992 a total of $2,151,000 of revenue lost due to water
conservation was included in unbilled revenue.
In 1993, $2,904,000 was recorded as lost water conservation revenue and
accrued in unbilled revenue, while $2,631,000 was recovered through customer
surcharges and penalty charge transfers. As of December 31, 1993,
$2,424,000 of lost water conservation revenue remains in unbilled revenue.
Utility Plant
Utility plant is carried at original cost when first constructed or
purchased, except for certain minor units of property recorded at estimated
fair values at dates of acquisition. Costs of depreciable plant retired are
eliminated from utility plant accounts and such costs are charged against
accumulated depreciation. Maintenance of utility plant, other than
transportation equipment, is charged to operating expenses. Maintenance
and depreciation of transportation equipment are charged to a clearing
account and subsequently distributed primarily to operations. Interest is
capitalized on plant expenditures during the construction period and
amounted to $141,000 in 1993, $523,000 in 1992 and $293,000 in 1991.
21 100
Intangible assets arising during the period of initial development of the
Company and those acquired as parts of water systems purchased are
stated at amounts prescribed by the Commission. All other intangibles have
been recorded at cost.
Bond Premium, Discount and Expense
The discount and expense on first mortgage bonds is being amortized
over the original lives of the related bond issues. Premiums paid on the
early redemption of bonds and unamortized original issue discount and
expense of those bonds are amortized over the life of new bonds issued in
conjunction with the early redemption.
Cash Equivalents
Cash equivalents include highly liquid investments, primarily a money
market mutual fund, stated at cost with original maturities of three months
or less.
Depreciation
Depreciation of utility plant for financial statement purposes is
computed on the straight-line remaining life method at rates based on the
estimated useful lives of the assets. The provision for depreciation
expressed as a percentage of the aggregate depreciable asset balances was
2.4% in 1993 and 2.3% in 1992 and 1991. For income tax purposes, the
Company computes depreciation using the accelerated methods allowed by
the respective taxing authorities.
Advances for Construction
Advances for construction of water main extensions are primarily
refundable to depositors over a 20-year or 40-year period. Refund amounts
under the 20-year contracts are based on annual revenues from the
extensions. Unrefunded balances at the end of the contract period are
credited to Contributions in Aid of Construction and are no longer
refundable. Contracts entered into since 1982 provide for full refunds at a
2 1/2% rate per year for 40 years. Estimated refunds for 1994 for all water
main extension contracts are $3,600,000.
Income Taxes
Effective January 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes". Statement 109 requires a change from the deferred
method of accounting for income taxes under APB Opinion 11 to the asset
and liability method. Under SFAS 109 deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Measurement of the deferred tax
assets and liabilities is at enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to
be recovered or settled. Under Statement 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the period
that includes the enactment date.
22 101
Due to the implementation of SFAS 109 as of January 1, 1993, the
Company recorded an increase in both net regulatory assets and net
deferred income taxes of $9,905,000. There was no impact on the results
of operations. It is anticipated that future rate action by the Commission
will reflect revenue requirements for the tax effects of temporary differences
recognized under SFAS 109 which have previously been flowed through to
customers.
Prior to 1993, the provision for income taxes was based on income
and expenses included in the Statement of Income as prescribed by APB
Opinion 11. In accordance with Commission requirements, deferred taxes
were not provided for items flowed through for rate-making and accounting
purposes. Flow through items included excess state tax depreciation and
excess federal depreciation on assets placed in service prior to 1981. Prior
year amounts have not been restated to apply the provisions of SFAS 109.
The Commission has granted the Company customer rate increases to
reflect the normalization of the tax benefits of the federal accelerated
methods and available investment tax credits (ITC) for all assets placed in
service since 1980. ITC are deferred and amortized over the lives of the
related properties.
Advances for Construction and Contributions in Aid of Construction
received from developers subsequent to 1986 are taxable for federal income
tax purposes and subsequent to 1991 subject to state income tax.
Earnings per Share
Earnings per share is calculated using the weighted average number
of common shares outstanding during the year after deducting dividend
requirements on preferred stock.
NOTE 2. PREFERRED AND COMMON STOCK
As of December 31, 1993, 399,200 shares of preferred stock were
authorized. Dividends on outstanding shares are payable quarterly at a fixed
rate before any dividends can be paid on common stock. Preferred shares
are entitled to eight votes each with the right to cumulative votes at any
elections of directors.
The outstanding 139,000 shares of $25 par value cumulative, 4.4%
Series C preferred shares are not convertible to common stock. A premium
of $243,250 would be due upon voluntary liquidation of Series C. There is
no premium in the event of an involuntary liquidation.
The Company is authorized 8,000,000 shares of no par value
common stock. As of December 31, 1993 and 1992, 5,688,754 shares of
common stock were issued and outstanding.
NOTE 3. SHORT-TERM BORROWINGS
As of December 31, 1993 the Company maintained a bank line of
credit which provided for unsecured borrowings of up to $30,000,000 at
the prime lending rate or lower rates as quoted by the bank. The agreement
23 102
does not require minimum or specific compensating balances.
The maximum short-term borrowings outstanding during 1993, 1992
and 1991 were $33,500,000, $24,500,000, and $14,000,000, respectively.
The average amount outstanding during each of the three years was
$11,746,000, $17,431,000 and $1,269,000, respectively, with weighted
average interest rates on the daily balances of 4.31%, 4.85% and 5.90%,
respectively.
NOTE 4. FIRST MORTGAGE BONDS
As of December 31, 1993 and 1992 first mortgage bonds outstanding were:
In Thousands
1993 1992
Series I, 4.65% due 1993 $ -- $2,565
Series J, 4.85% due 1995 2,581 2,596
Series K, 6 1/4% due 1996 2,595 2,610
Series L, 6 3/4% due 1997 2,177 2,189
Series M, 9 1/2% due 1999 -- 2,213
Series N, 9 1/4% due 2000 -- 2,670
Series O, 9 1/4% due 2000 -- 2,670
Series P, 7 7/8% due 2002 2,685 2,700
Series S, 8 1/2% due 2003 2,700 2,715
Series U, 9 1/4% due 2003 -- 2,080
Series V, 8.60% due 2006 -- 1,785
Series W, 9 3/8% due 2007 -- 2,380
Series X, 10% due 2005 -- 2,755
Series AA, 12 7/8% due 2013 -- 33,425
Series BB, 9.48% due 2008 17,370 17,460
Series CC, 9.86% due 2020 19,600 19,700
Series DD, 8.63% due 2022 19,900 20,000
Series EE, 7.90% due 2023 20,000 --
Series FF, 6.95% due 2023 20,000 --
Series GG, 6.98% due 2023 20,000 --
-------- --------
129,608 122,513
Less: Series AA discount --- 444
-------- --------
Total first mortgage bonds $129,608 $122,069
======== ========
Aggregate maturities and sinking fund requirements for each of the
succeeding five years 1994 through 1998 are $663,000, $3,215,000,
$3,197,000, $2,759,000 and $620,000, respectively. The first mortgage
bonds are secured by substantially all of the Company's utility plant.
23 103
NOTE 5. INCOME TAXES
Income tax expense consists of the following:
In Thousands
1993 Federal State Total
Current $6,800 $2,408 $9,208
Deferred 1,400 (8) 1,392
------- ------ -------
Total $8,200 $2,400 $10,600
======= ====== =======
1992
Current $3,371 $1,650 $5,021
Deferred 3,229 -- 3,229
------- ------ ------
Total $6,600 $1,650 $8,250
======= ====== ======
1991
Current $4,939 $1,750 $6,689
Deferred 2,861 -- 2,861
------- ------ ------
Total $7,800 $1,750 $9,550
======= ====== ======
Income tax expense differs from the amount computed by applying
the current federal tax rate to pretax book income. The difference is listed
in the table below:
In Thousands
1993 1992 1991
Computed "expected" tax expense $9,135 $8,332 $9,415
Increase (reduction) in taxes due to:
State income taxes net of federal
tax benefit 1,565 1,089 1,155
Investment tax credits (100) (85) (85)
Other --- (1,086) (935)
------- ------- ------
Total income tax $10,600 $8,250 $9,550
======= ======= ======
The components of deferred income tax expense in 1993, 1992 and 1991 were:
In Thousands
1993 1992 1991
Depreciation $3,858 $3,314 $2,946
Developer advances and contributions (3,951) -- --
Bond redemption premiums 1,333 -- --
Other 224 -- --
Investment tax credits (72) (85) (85)
------- ------ ------
Total deferred income tax expense $1,392 $3,229 $2,861
======= ====== ======
24 104
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1993 are presented in the following table:
In Thousands
Deferred tax assets:
Developer deposits for extension
agreements and contributions in aid
of construction $25,532
Federal benefit of state tax deductions 3,798
Book plant cost reduction for future
deferred ITC amortization 1,811
Insurance loss provisions 668
Miscellaneous 1,686
-------
Total deferred tax assets 33,495
-------
Deferred tax liabilities:
Utility plant, principally due to
depreciation differences 42,796
Premium on early retirement of bonds 1,487
Miscellaneous 257
-------
Total deferred tax liabilities 44,540
-------
Net deferred tax liability $11,045
=======
A valuation allowance was not required during 1993. Based on
historical taxable income and future taxable income projections over the
periods in which the deferred assets are deductible, management believes it
is more likely than not the Company will realize the benefits of the
deductible differences.
NOTE 6. EMPLOYEE BENEFIT PLANS
Pension Plan
The Company provides a uniform pension plan for substantially all
employees. The cost of the plan was charged to expense and utility plant.
The Company makes annual contributions to fund the amounts accrued for
pension cost. Plan assets are invested in pooled equity, bond and short-
term investment accounts. The data below includes the supplemental
executive retirement plan.
25 105
Net pension cost for the years ending December 31, 1993, 1992 and
1991 included the following components:
In Thousands
1993 1992 1991
Service cost-benefits earned
during the period $1,167 $1,076 $1,044
Interest cost on projected obligation 2,153 1,970 1,855
Actual return on plan assets (3,672) (1,410) (4,629)
Net amortization and deferral 2,132 (262) 3,385
------- ------- -------
Net pension cost $1,780 $1,374 $1,655
======= ======= =======
The following table sets forth the plan's funded status as of
December 31, 1993 and 1992:
In Thousands
1993 1992
Accumulated benefit obligation, including
vested benefits of $20,719 in 1993 and
$15,849 in 1992 $(21,386) $(16,281)
========= =========
Projected benefit obligation $(31,179) $(26,652)
Plan assets at fair value 29,319 25,349
--------- ---------
Projected benefit obligation in excess
of plan assets (1,860) (1,303)
Unrecognized net gain (4,556) (5,665)
Prior service cost not yet recognized in
net periodic pension cost 3,925 4,307
Remaining net transition obligation at
adoption date January 1, 1987 2,288 2,574
--------- ---------
Accrued pension liability recognized in the
balance sheet $(203) $(87)
========= =========
The projected long term rate of return on plan assets used in
determining pension cost was 8.0% for the years 1993 to 1992. A
discount rate of 7% in 1993 and 8.0% in 1992 and future compensation
increases of 4.75% in 1993 and 6.0% in 1992 were used to calculate the
projected benefit obligations for 1993 and 1992.
Savings Plan
The Company maintains employee savings plans which allow
participants to contribute from 1% to 14% of pre-tax compensation. The
Company matches fifty cents for each dollar contributed by the employee
up to 6% of the employees' compensation. Company contributions were
25 106
$606,000, $561,000 and $522,000 for the years 1993, 1992 and 1991, respectively.
Other Postretirement Plans
The Company provides substantially all active employees medical, dental
and vision benefits through a self-insured plan. Employees retiring at or
after age 60 with 10 or more years of service are offered, along with their
spouses and dependents, continued participation in the plan. Prior to 1993,
the Company's share of the costs of this plan were recorded as expense as
they were paid. Retired employees are also provided with $5,000 life
insurance benefit.
In 1993 the Company adopted SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" which requires that the costs
of postretirement benefits be accrued during the employees years of active
service. The Commission has issued a decision which authorizes rate
recovery of tax deductible funding for postretirment benefits and permits
recording of a regulatory asset for the portion of costs that will be
recoverable in future rates.
Net postretirement benefit cost for 1993 included the following components:
In Thousands
Service cost - benefits earned during the year $85
Interest cost on accumulated postretirement benefit obligation 384
Net amortization of transition obligation 248
----
Net periodic postretirement benefit cost $717
====
Postretirement benefit expense recorded in 1993 was $480,000. The
remaining $237,000, which is recoverable through future customer rates,
was recorded as a regulatory asset. The Company intends to make annual
contributions to the plan up to the amount deductible for tax purposes. Plan
assets are invested in high grade, short-term money market instruments and
commercial paper.
The following table sets forth the plan's funded status and the plan's
accrued liability as of year end:
In Thousands
Accumulated postretirement benefit obligation:
Retirees $(2,850)
Other fully eligible participants (657)
Other active participants (1,542)
--------
Total (5,049)
Plan assets at fair value 215
--------
Accumulated postretirement benefit obligation
in excess of plan assets (4,834)
Unrecognized net gain (119)
Remaining unrecognized transition obligation 4,716
--------
Net postretirement benefit liability included in
current liabilities $(237)
========
26 107
For 1994 measurement purposes, an 8% annual rate of increase in the
per capita cost of covered benefits was assumed; the rate was assumed to
decrease gradually to 5% in the year 2020 and remain at that level
thereafter. The health care cost trend rate assumption has a significant
effect on the amounts reported. Increasing the assumed health care cost
trend rates by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1993 by
$423,000 and the aggregate of the service and interest cost components of
the net periodic postretirement benefit cost for the year ended December
31, 1993 by $59,000.
The weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 7% at December 31, 1993 and the
long term rate of return on plan assets was 8%.
NOTE 7. FAIR VALUE OF FINANCIAL INSTRUMENTS
For those financial instruments for which it is practicable to estimate
a fair value the following methods and assumptions were used to estimate
the fair value.
Cash and Temporary Cash Investments. The carrying amount of cash
and temporary cash investments approximates fair value because of the
short term maturity of the instruments.
First Mortgage Bonds. The fair value of the Company's first mortgage
bonds is estimated a $133,415,000 using a discounted cash flow analysis,
based on the current rates available to the Company for debt of similar
maturities.
Advances for Construction. The fair value of advances for
construction contracts are estimated at $22,000,000 based on data
provided by brokers.
NOTE 8. QUARTERLY FINANCIAL AND COMMON STOCK MARKET DATA (Unaudited)
(In thousands, except per share amounts)
The Company's common stock is traded in the over-the-counter
market and is quoted in the National NASDAQ list with the symbol CWTR.
There were approximately 5,500 holders of common stock at December 31,
1993. Quarterly dividends have been paid on common stock for 196
consecutive quarters and the quarterly rate has been increased during each
year since 1968. The 1993 and 1992 quarterly range of common stock
market prices was supplied by NASDAQ.
26 108
1993
First Second Third Fourth
Operating revenue $27,833 $40,504 $47,431 $35,948
Net operating income 4,116 7,747 9,377 6,615
Net income 979 4,689 6,221 3,612
Earnings per share $.17 $.82 $1.09 $.62
Common stock market price range:
High 37-1/4 36-3/4 40-1/2 41-1/4
Low 32-1/2 32-1/4 33-1/2 37-1/2
Dividends paid $.48 $.48 $.48 $.48
1992
First Second Third Fourth
Operating revenue $26,867 $36,972 $42,772 $33,194
Net operating income 4,620 6,437 7,076 5,641
Net income 1,811 3,617 4,225 2,876
Earnings per share $.31 $.63 $.74 $.50
Common stock market price range:
High 31 33-1/4 34-1/4 35
Low 26-1/4 28 29-1/2 29-1/4
Dividends paid $.46-1/2 $.46-1/2 $.46-1/2 $.46-1/2
26 109