Total Number of Pages - 70
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, 1994
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
Common Stock New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Cumulative Preferred Stock, Par Value, $25
(Title of Class)
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(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 .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by
nonaffiliates of the Registrant - $199,905,088 at February 28,
1995.
Common stock outstanding at February 28, 1995 - 6,247,034 shares.
1
EXHIBIT INDEX
The exhibit index to this Form 10-K is on page 25.
DOCUMENTS INCORPORATED BY REFERENCE
Designated portions of Registrant's Annual Report to
Shareholders for the calendar year ended December 31, 1994 ("1994
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 13, 1995, relating to the 1995 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... 8
Geographical Service Areas
and Number of Customers at
Year-End.......................... 9
Water Supply........................ 10
Utility Plant Construction Program
and Acquisitions.................. 13
Quality of Supplies................. 13
Competition and Condemnation........ 13
Environmental Matters .............. 14
Human Resources..................... 14
d. Financial Information about
Foreign and Domestic Operations
and Export Sales ................. 14
Item 2. Properties ......................... 14
Item 3. Legal Proceedings................... 15
Item 4. Submission of Matters to a Vote of
Security Holders.................. 15
Executive Officers of the Registrant......... 16
PART II
Item 5. Market for Registrant's
Common Equity and Related
Stockholder Matters............... 17
Item 6. Selected Financial Data............. 17
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations......... 17
3
Item 8. Financial Statements and
Supplementary Data................ 17
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure............. 18
PART III
Item 10. Directors and Executive Officers
of the Registrant................. 18
Item 11. Executive Compensation.............. 18
Item 12. Security Ownership of Certain
Beneficial Owners and Management.. 18
Item 13. Certain Relationships and Related
Transactions...................... 18
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on
Form 8-K.......................... 19
Signatures........................................ 21
Independent Auditors' Report...................... 23
Schedules......................................... 24
Exhibit Index..................................... 25
Exhibits.......................................... 30
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 1,500,000.
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).
Effective April 8, 1994 the Company's Common Stock
began trading on the New York Stock Exchange under
the symbol CWT. The Company was previously in the
over-the-counter market and quoted by the National
Association of Securities Dealers Automated
Quotation System (NASDAQ) under the symbol CWTR
During the fiscal year ended December 31, 1994 (the "1994
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 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 1994, general rate increase applications were
filed with the Commission requesting rate relief of
$3,023,000 in six Company districts representing 15
percent of the Company's customer base. The
applications requested a rate of return on common
equity of 12 percent. However, the Commission staff
has recommended a rate of return of 10.9 percent.
Public hearings for these cases were completed February
1995 and the Commission's decision is expected in mid-
May. In the meantime, step rate increases for 15
districts totaling approximately $2,102,000 became
effective in January 1995.
In July 1994 the Commission issued a decision of
general rate cases filed in July 1993, for three
districts representing 13 percent of customer base,
resulting in the authorization of $540,000 in additional
revenue and authorizing a return on common equity of 10.2
percent
In 1994 the Commission issued its long awaited decision
in its investigation of the financial and operational
risks for water utilities. While the Commission
concluded that no fundamental change in its ratemaking
procedures is necessary, it authorized water utilities
to accrue interest on balancing and memorandum accounts.
Additionally, the decision allows water utilities to
request prospective recovery for unanticipated Safe
Drinking Water Act compliance costs. The Company does
not expect the decision to have a material effect on
its operations.
Effective March 14, 1994, the Commission closed all
voluntary conservation memorandum accounts. The
Company has filed an advice letter seeking authority
to transfer $1,748,000 in conservation expenses from
the drought memorandum accounts to its expense balancing
accounts. These amounts would be recoverable on a
district by district basis through the Commission's
offset procedures which allow surcharges to amortize
account balances.
6
Offset rate increases of $1,944,000 and $2,327,000 were
authorized during the year for water production cost
increases and balancing account undercollections,
respectively. Additionally, the Commission approved
rate increases of $292,000 to recover increased costs
from the 1993 general office renovation, $87,000 for a
new water tank in the South San Francisco district, and
$215,000 for post-retirement benefits other than
pensions. This latter rate increase relates to an
expense which was incurred as a result of accounting
changes mandated by Statement of Financial Accounting
Standards No. 106.
In January 1995 a consultant retained by the
Commission's Division of Ratepayer Advocates delivered a
report on the reasonableness of the Second Amended
Contract between the Company, Stockton-East Water
District, the City of Stockton and certain other
governmental bodies, pertaining to the sale and delivery
of water to the Company's Stockton District by the
Stockton-East Water District. The report alleges that
the Company was required to receive prior Commission
approval before entering into the Second Amended
Contract and furthermore challenges the reasonableness
of the Second Amended Contract for ratemaking purposes.
However the report does not include specific ratemaking
recommendations. It is difficult and premature at this
time to assess the potential impact on the Company if
the report were to be adopted by the Commission.
However, the Company anticipates that if there is any
adverse financial impact as a result of the report, such
impact would be prospective, affecting only future
rates for the Stockton district. Hearings have not yet
been scheduled on the report by the assigned
administrative law judge. Following hearings at which
the Company intends to present evidence to rebut the
report, the assigned administrative law judge will
render a proposed decision for comment and then
Commission consideration. The management of the Company
intends to vigorously defend its position that the
Second Amended Contract did not require prior Commission
approval and is reasonable for ratemaking purposes.
b. Financial Information about Industry Segments.
The Company has only one business segment.
7
c. Narrative Description of Business.
The business of the Company consists of the production,
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.
The Company has various contracts under which it
operates three municipally owned water systems and two
reclaimed water distribution systems and provides
billing services for certain cities.
8
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, 1994, are as follows:
SAN FRANCISCO BAY AREA
Mid-Peninsula (San Mateo and San Carlos) 35,300
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) 17,800
Livermore 14,900
100,400
SACRAMENTO VALLEY
Chico (including Hamilton City) 20,700
Oroville 3,500
Marysville 3,800
Dixon 2,700
Willows 2,200
32,900
SALINAS VALLEY
Salinas 23,000
King City 1,900
24,900
SAN JOAQUIN VALLEY
Bakersfield 54,400
Stockton 40,800
Visalia 26,200
Selma 4,600
126,000
LOS ANGELES AREA
East Los Angeles (including portions
of City of Commerce and Montebello) 26,400
Hermosa Beach and Redondo Beach (including
a portion of Torrance) 24,800
Palos Verdes (including Palos Verdes
Estates, Rancho Palos Verdes, Rolling
Hills Estates and Rolling Hills) 23,400
Westlake (a portion of Thousand Oaks) 6,700
81,300
TOTAL 365,500
9
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) and 1994
winter rains 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. During drought periods, some districts experienced
water rationing.
The Company delivered approximately 100 billion gallons of
water during the 1994 fiscal year of which approximately 51%
was obtained from wells and 49% 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 83% San Francisco Water Department
Bear Gulch 95% San Francisco Water Department
Los Altos 82% Santa Clara Valley Water
District
Livermore 65% Alameda County Flood Control
and Water Conservation District
SACRAMENTO VALLEY
Oroville 70% Pacific Gas and Electric
Company
6% County of Butte
SAN JOAQUIN VALLEY
Bakersfield 20% Kern County Water Agency
Stockton 75% Stockton-East Water District
LOS ANGELES AREA
East Los Angeles 89% Central Basin Municipal
Water District
Hermosa Beach and
Redondo Beach 95% West Basin Municipal
Water District
10
% of
Supply
District Purchased Source of Purchased Supply
LOS ANGELES AREA (Continued)
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
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. A new 30
year contract for the Livermore District with Zone 7 of the
Alameda County Flood Control and Water Conservation District
was signed on November 16, 1994. 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.
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.
The 1993-1994 water season was California's fourth driest
year on record, leading the Department of Water resources to
declare a 'drought watch' in May of 1994. But these fears
began to be allayed as early as November 1994 when a
series of storms began pouring rain and snow throughout the
state's watersheds.
11
By late January 1995, cumulative average Sierra snowpack was
at 175 percent of normal, storage in the state's 155
reservoirs was at more than 90 percent of average and the
drought watch was cancelled. These promising figures
substantially improve the likelihood that 100 percent of
state water project deliveries will be made in 1995.
Substantial water reserves remain in the groundwater
aquifers that supply Company districts served by well water.
While recovery from drought-related depletion of these
reserves was interrupted by drier than normal conditions in
1994, the mean groundwater levels in these districts were
stable. In addition, districts located in regions with
existing groundwater management mechanisms showed noticeable
improvements in storage. Regional groundwater management
planning is receiving greater attention throughout the state
as its importance as a tool for addressing long-term water
supply concerns is realized. The passage of legislation
that enables management of this resource by existing local
government agencies further stimulated this attention.
Despite the promise of an abundant water year, California is
expected to have long-term water supply problems. To
compensate for this trend, the Company continues to promote
water conservation programs initiated during the drought on
a district-by-district basis outlined in our water
management plans and as permitted by the Commission.
Significant developments affecting future water supply
occurred in several of our districts. On August 16, 1994
the State Water Resources Control Board (SWRCB) informed the
Monterey County Board of Supervisors that it was initiating
an investigation into the groundwater supply issues in the
Salinas Valley. This is a prelude to a possible adjudication
of the groundwater basin by the SWRCB should Monterey County
fail to develop short and long-term solutions to the nitrate
contamination and saltwater intrusion threatening the
aquifers. In a related matter the SWRCB refused to consider
a separate investigation of groundwater use in our King City
district. This action will save the Company a considerable
amount of litigation expense.
In Solano County, the location of our Dixon district, the
Solano County Water Agency agreed to reimburse the Company
for costs it incurred as a party to the Putah Creek
adjudication. This action will determine the rights to
water from Putah Creek which recharges the groundwater from
which our Dixon district derives its water supply.
12
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 $28 million in 1994. Financing
was obtained from funds from operations, short-term bank
borrowings, sale of common stock, advances for construction,
and contributions in aid of construction as set forth in the
section entitled "Statement of Cash Flows" on page 26 of the
Company's 1994 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 1995 will amount to approximately
$20,700,000 (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 refinanced by funds from the anticipated issuance of
approximately $20,000,000 of long-term debt in 1995.
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.
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.
13
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 10-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, 1995 and 1996.
Human Resources.
As of December 31, 1994, the Company had 624 employees, of
whom 158 were executive and administrative officials and
supervisory employees, and 466 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. The Company plans to
enter negotiations to renew the collective bargaining
agreements prior to their expiration. The agreements have
been successfully renewed in the past without a labor
interruption.
d. Financial Information about Foreign and Domestic Operations
and Export Sales.
The Company makes no export sales.
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.
14
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, 1994, $128,944,000 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 1994.
15
Executive Officers of the Registrant.
Name Positions and Offices with the Company Age
C. H. Stump Chairman of the Board since 1991. 69
Director since 1976 and Member of
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
May 1992.
Donald L. Houck President and Chief Executive Officer 62
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.
Gerald F. Feeney Vice President, Chief Financial Officer and 50
Treasurer since November 1994.
Controller, Assistant Secretary and
Assistant Treasurer from 1976 to 1994.
From 1970 to 1976, Mr. Feeney was an
audit manager with Peat Marwick Mitchell
& Co.
Francis S. Ferraro Vice President since August 1989. Mr. 45
Ferraro previously had 15 years
experience in regulatory matters with the
California Public Utilities Commission,
from June 1985 through August 1989 in the
capacity of an administrative law judge.
James L. Good Vice President since December 1994. 31
Mr. Good was Director of Congressional
Relations for the National Association of
Water Companies from 1991 to 1994.
Raymond H. Taylor Vice President since April 1990. Mr. Taylor 49
had been director of water quality since
1986 and previously had been employed by
the Environmental Protection Agency
before joining the Company in 1982.
Helen Mary Kasley Secretary and Legal Counsel since 43
1993. From 1990 to 1992, Mrs. Kasley was
Secretary. From 1986 to 1990, she was an
associate attorney with McCutchen, Doyle,
Brown & Enersen.
16
Calvin L. Breed Controller, Assistant Secretary and Assistant 39
Treasurer since November 1994. Previously
Mr. Breed served as Treasurer of TCI
International, Inc.
John S. Simpson Assistant Secretary since 1992. Mr. 50
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 pages 34 and 35 of the Company's 1994 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 16 and 17 of the Company's 1994
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 18
through 21 of the Company's 1994 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 22 through 35 of the Company's 1994
Annual Report and is incorporated herein by reference.
17
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 6 of the Proxy Statement and
is incorporated herein by reference. (The Proxy Statement
was filed under EDGAR on March 10, 1995).
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 8 through 11 of the Proxy Statement and is
incorporated herein by reference. (The Proxy Statement was
filed under EDGAR on March 10, 1995).
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 6 and 13,
respectively, of the Proxy Statement and is incorporated
herein by reference. (The Proxy Statement was filed under
EDGAR on March 10, 1995).
Item 13.Certain Relationships and Related Transactions.
None.
18
PART IV
Item 14.Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.
(a) (1) Financial Statements:
Balance Sheet as of December 31, 1994 and 1993.
Statement of Income for the years ended
December 31, 1994, 1993, and 1992.
Statement of Common Shareholders' Equity for the
years ended December 31, 1994, 1993, and 1992.
Statement of Cash Flows for the years
ended December 31, 1994, 1993, and 1992.
Notes to Financial Statements, December 31,
1994, 1993, and 1992.
The above financial statements are contained in
sections bearing the same captions on pages 22
through 35 of the Company's 1994 Annual Report
and are incorporated herein by reference.
(2) Financial Statement Schedule:
Schedule
Number
Independent Auditors' Report
January 20, 1995.
II Valuation and Qualifying Accounts and
Reserves--years ending December 31,
1994, 1993, and 1992.
All other schedules are omitted as the required
information is inapplicable or the information is
presented in the financial statements or related notes.
19
(3) Exhibits required to be filed by Item 601 of Regulation
S-K.
See Exhibit Index on page 25 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 1994.
20
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 15, 1995 By /s/ Donald L. Houck
DONALD L. HOUCK, President and
Chief Executive Officer
21
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 15, 1995 /s/ William E. Ayer
WILLIAM E. AYER, Member,
Board of Directors
Date: March 15, 1995 /s/ Robert W. Foy
ROBERT W. FOY, Member,
Board of Directors
Date: March 15, 1995 /s/ Edward D. Harris, Jr.
EDWARD D. HARRIS, JR. M.D., Member,
Board of Directors
Date: March 15, 1995 /s/ Donald L. Houck
DONALD L. HOUCK
President, Chief Executive
Officer, Member,
Board of Directors
Date: March 15, 1995 /s/ Robert K. Jaedicke
ROBERT K. JAEDICKE, Member,
Board of Directors
Date: March 15, 1995 /s/ Linda R. Meier
LINDA R. MEIER, Member,
Board of Directors
Date: March 15, 1995 /s/ J. W. Weinhardt
J. W. WEINHARDT, Member,
Board of Directors
Date: March 15, 1995 /s/ C. H. Stump
C. H. STUMP, Chairman of the
Board, Member, Board of Directors
Date: March 15, 1995 /s/ Edwin E. van Bronkhorst
EDWIN E. VAN BRONKHORST, Member,
Board of Directors
Date: March 15, 1995 /s/ Gerald F. Feeney
GERALD F. FEENEY,
Vice President, Chief Financial
Officer and Treasurer
Date: March 15, 1995 /s/ Calvin L. Breed
CALVIN L. BREED, Controller,
Assistant Secretary and Assistant
Treasurer
22
Independent Auditors' Report
Shareholders and Board of Directors
California Water Service Company:
Under date of January 20, 1995, we reported on the balance sheet
of California Water Service Company as of December 31, 1994 and
1993, 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, 1994, as contained in the 1994 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 1994. In connection with our audits of
the aforementioned financial statements, we also audited the
related financial statement schedule as listed in accompanying
index. This financial statement schedule is the responsibility
of the Company's management. Our responsibility is to express an
opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly, in all material respects, the
information set forth therein.
San Jose, California /s/ KPMG Peat Marwick,LLP
January 20, 1995
23
CALIFORNIA WATER SERVICE COMPANY Schedule II
Valuation and Qualifying Accounts and Reserves
Years Ended December 31, 1994, 1993 and 1992
Additions
---------------------
Balance at Charged to Charged to Balance
beginning costs and other at end
Description of period expenses accounts Deductions of period
- ----------------------------------------------------------------------------------------------------------------------------------
1994
(A) Reserves deducted in the balance sheet from assets
to which they apply:
Allowance for doubtful accounts $72,696 $363,284 $71,235(3) $456,399(1) $50,816
Allowance for obsolete materials and supplies 61,395 11,000 69,002(2) 3,393
----------- -------- -------- ---------- -----------
(B) Reserves classified as liabilities in the balance sheet:
Miscellaneous reserves:
General Liability $1,064,300 $340,000 $0 $442,148(2) $962,152
Employees' group health plan 882,143 2,549,056 12,262 3,243,074(2) 200,387
Retirees' group health plan 237,000 480,998 189,000 481,000(2) 425,998
Workers compensation 150,523 648,374 0 691,321(2) 107,576
Deferred revenue - contributions in aid of construction 1,649,386 572,366 304,366(6) 1,917,386
Disability insurance 97,352 256,969 238,191(2) 116,130
----------- ---------- --------- ---------- ------------
Total $4,080,704 $4,018,428 $1,030,597 $5,400,100 $3,729,629
----------- ---------- ---------- ---------- -----------
Contributions in aid of construction $34,915,778 $3,858,961(4) $907,940(5) $37,866,799
----------- ---------- ---------- ---------- ------------
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
----------- ---------- ---------- ---------- -----------
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.
24
EXHIBIT INDEX
Sequential
Page Numbers
Exhibit Number in this Report
3. Articles of Incorporation and By-Laws:
3.1 Restated Articles of Incorporation dated 25
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)
3.2 Certificates of Determination of Preferences 25
for Series C Preferred Stock (Exhibit 3.2 to
Form 10-K for fiscal year 1987, File No. 0-464)
3.3 Certificate of Amendment of the Company's 25
Restated Articles of Incorporation dated
April 27, 1988. (Exhibit 3.3 to Form 10-K
for fiscal year 1989, File No. 0-464)
3.4 By-Laws dated September 21, 1977, as 25
amended 24 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).
3.5 Amendment to By-laws dated May 16, 1988. 25
(Exhibit 3.5 to Form 10-K for fiscal year
1991, File No. 0-464)
25
4. Instruments Defining the Rights of Security 26
Holders, including Indentures:
Mortgage of Chattels and Trust Indenture 26
dated April 1, 1928; Eighth Supplemental Indenture
dated November 1, 1945, covering First Mortgage
3.25% Bonds, Series C; Fifteenth Supplemental
Indenture dated November 1, 1965, covering First
Mortgage 4.85% Bonds, Series J; Sixteenth
Supplemental Indenture dated November 1, 1966,
covering First Mortgage 6.25% Bonds, Series K;
Seventeenth Supplemental Indenture dated
November 1, 1967, covering First Mortgage 6.75%
Bonds, Series L; Twenty-First Supplemental
Indenture dated October 1, 1972, cover First
Mortgage 7.875% Bonds, Series P; Twenty-Fourth
Supplemental Indenture dated November 1, 1973,
covering First Mortgage 8.50% Bonds, Series S
(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.)
Twenty-Sixth Supplemental Indenture dated May 1, 26
1976 (Exhibit 4 to Form 10-K for fiscal year
1986, File No. 0-464).
Twenty-Seventh Supplemental indenture dated 26
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).
Thirty-Fifth Supplemental Indenture dated as of 26
November 1, 1992, covering First Mortgage 8.63%
Bonds, Series DD. (Exhibit 4 to Form 10-Q
dated September 30, 1992, File No. 0-464)
Thirty-Sixth Supplemental Indenture dated as of 26
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)
Thirty-Seventh Supplemental Indenture dated as 26
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)
Thirty-Eighth Supplemental Indenture dated as 26
of October 15, 1993, covering First Mortgage 6.98%
Bonds, Series GG (Exhibit 4 to Form 10-K for fiscal
year 1994, File No. 0-464)
26
Sequential
Page Numbers
Exhibit Number in this Report
10. Material Contracts.
10.1 Water Supply Contract between the Company 27
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 27
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 l0-K for fiscal
year 1984, File No. 0-464).
10.3 Water Supply Contract dated January 27, 27
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 Amendments No. 3, 6 and 7 and Amendment 27
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)
27
Sequential
Page Numbers
Exhibit Number in this Report
10.5 Amendment dated May 31, 1977, to Water 28
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)
10.6 Second Amended Contract dated September 25, 28
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).
10.7 Dividend Reinvestment Plan. (Exhibit 10.8 to 28
Form 10-Q dated March 31, 1994, File No. 0-464)
10.8 Water Supply Contract dated April 19, 1927, 28
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)
10.9 California Water Service Company Pension Plan 28
(Exhibit 10.10 to Form 10-K for fiscal year
1992, File No. 0-464)
10.10 California Water Service Company Supplemental 28
Executive Retirement Plan. (Exhibit 10.11 to
Form 10-K for fiscal year 1992, File No.0-464)
10.11 California Water Service Company Salaried 28
Employees' Savings Plan. (Exhibit 10.12 to
Form 10-K for fiscal year 1992, File
No. 0-464)
10.12 California Water Service Company 28
Directors Deferred Compensation Plan
(Exhibit 10.13 to Form 10-K for fiscal
year 1992, File No. 0-464)
10.13 Board resolution setting forth 28
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)
28
Sequential
Page Numbers
Exhibit Number in this Report
10.14 Registration statement on Form S-3, 29
dated September 8, 1994 regarding the
sale of 550,000 shares of Registrant's
common stock (filed with the Commission
on September 8, 1994, Registration
No. 33-55233, File No. 0-464)
10.15 Water Supply Contract dated November 16, 1994, 30
between the Company and Alameda County Flood
Control and Water Conservation District
relating to the Company's Livermore District
13. Annual Report to Security Holders, Form 10-Q 46
or Quarterly Report to Security Holders:
1994 Annual Report. The sections of the
1994 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, Selected
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.
27. Financial Data Schedule as of December 31, 1994 70
29