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Washington, D.C. 20549
FORM 10-K
SJW CORP.
(Exact name of registrant as specified in its charter)
California | 77-0066628 | |||||
---|---|---|---|---|---|---|
(State or
other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|||||
374 West
Santa Clara Street, San Jose, California, |
95196 |
|||||
(Address of
principal executive offices) |
(Zip Code) |
|||||
Registrants telephone number, including area code 408-279-7800 Securities Registered Pursuant to Section 12(b) of the Act: |
||||||
Title of
each class |
Name of each exchange on which registered |
|||||
Common
Stock, Par Value $1.042 |
American Stock Exchange |
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 registrants 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.
Indicate by check mark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
The aggregate market value of the common stock held by non-affiliates of the registrant on June 30, 2004 was $219,373,236.
Shares of common stock outstanding on March 7, 2005 9,135,573.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrants Proxy Statement relating to the Registrants 2005 Annual Meeting of Shareholders, to be held on April 28, 2005, are incorporated by reference into Part III of this Form 10-K where indicated.
TABLE OF CONTENTS
Page |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|
PART
I |
||||||||||
Forward-Looking Statements |
||||||||||
Item 1.
Business |
3 | |||||||||
Item 2.
Properties |
8 | |||||||||
Item 3. Legal
Proceedings |
8 | |||||||||
Item 4.
Submission of Matters to a Vote of Security Holders |
8 | |||||||||
PART
II |
||||||||||
Item 5.
Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
9 | |||||||||
Item 6.
Selected Financial Data |
10 | |||||||||
Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations |
11 | |||||||||
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk |
26 | |||||||||
Item 8.
Financial Statements and Supplementary Data |
27 | |||||||||
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
54 | |||||||||
Item 9A.
Controls and Procedure |
54 | |||||||||
Item 9B.
Other Information |
55 | |||||||||
PART
III |
||||||||||
Item 10.
Directors and Executive Officers of the Registrant |
55 | |||||||||
Item 11.
Executive Compensation |
55 | |||||||||
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
55 | |||||||||
Item 13.
Certain Relationships and Related Transactions |
55 | |||||||||
Item 14.
Principal Accountant Fees and Services |
56 | |||||||||
PART
IV |
||||||||||
Item 15.
Exhibits and Financial Statement Schedules |
56 | |||||||||
Exhibit
Index |
57 | |||||||||
Signatures |
59 |
2
PART I
Forward-Looking Statements
Item 1. Business
General Development of Business
Regulation and Rates
3
4
5
6
Officers of the Registrant
Name |
Age |
Offices and Experience |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
W.R.
Roth |
52 |
SJW
Corp. President and Chief Executive Officer of the Corporation. Prior to becoming Chief Executive Officer in 1999, he was President from October
1996, and Vice President from April 1992 until October 1996. Mr. Roth has served as a director of SJW Corp., San Jose Water Company and SJW Land
Company since 1994. |
||||||||
R.J.
Balocco |
55 |
San
Jose Water Company Vice President, Corporate Communications. Prior to becoming Vice President, Corporate Communications in 1995, he was Vice
President, Administration from April 1992. Mr. Balocco has been with San Jose Water Company since 1982. |
||||||||
G.J.
Belhumeur |
59 |
San
Jose Water Company Senior Vice President, Operations. Prior to becoming Sr. Vice President of Operations, he was Vice President of Operations
since 1996. Mr. Belhumeur has been with San Jose Water Company since 1970. |
||||||||
D.
Drysdale |
49 |
San
Jose Water Company Vice President, Information Services. Prior to becoming Vice President, Information Services in 1999, he was Director of
Information Services from 1998 and Data Processing Manager since 1994. Mr. Drysdale joined San Jose Water Company in 1992. |
||||||||
R.J.
Pardini |
59 |
San
Jose Water Company Vice President, Chief Engineer. Prior to becoming Vice President, Chief Engineer in 1996, he was Chief Engineer. Mr. Pardini
has been with San Jose Water Company since 1987. |
||||||||
A.
Yip |
51 |
SJW
Corp. Chief Financial Officer and Treasurer since October 1996, and Senior Vice President of Finance, Chief Financial Officer and Treasurer of
San Jose Water Company since April 2004. Prior to April 2004, Ms. Yip served as Vice President of Finance, Chief Financial Officer and Treasurer of San
Jose Water Company since January 1999. Ms. Yip has been with San Jose Water Company since 1986. |
||||||||
R.S.
Yoo |
54 |
San
Jose Water Company Senior Vice President, Administration from April 2003. Prior to April 2003, he was Vice President, Water Quality since April
1996. Mr. Yoo has been with San Jose Water Company since 1985. |
||||||||
S.
Papazian |
29 |
SJW
Corp. and San Jose Water Company Corporate Secretary and Attorney. Ms. Papazian has served as Corporate Secretary and Attorney since February
14, 2005. She was admitted to the California State Bar in January 2000 and thereafter was an Associate Attorney at The Corporate Law Group from March
2000 until February 2005. |
||||||||
V.K.
Wong |
35 |
San
Jose Water Company Controller. He has been with San Jose Water Company since December 2002. He served as Director of Finance for Golden State
Warriors from October 1998 until October 2002 and prior to October 1998, Mr. Wong was a Senior Auditor for KPMG LLP. |
7
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
8
PART II
Item 5. Market for Registrants Common Equity and Related Stockholder Matters
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plan |
Maximum Number of Shares that May Yet Be Purchased Under the Plan |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 1, 2004
to May 31, 2004 |
895 | $ | 32.50 | 895 | 99,105 | |||||||||||||
August 1,
2004 to August 31, 2004 |
3,400 | $ | 33.93 | 3,400 | 95,705 | |||||||||||||
Total |
4,295 | $ | 33.63 | 4,295 |
9
Item 6. Selected Financial Data
FIVE YEAR STATISTICAL REVIEW
SJW Corp. and Subsidiaries
2004 |
2003 Restated* |
2002 Restated* |
2001 Restated* |
2000 Restated* |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
CONSOLIDATED RESULTS OF OPERATIONS (in thousands) |
||||||||||||||||||||||
Operating
revenue |
$ | 166,911 | 150,454 | 146,373 | 136,804 | 123,578 | ||||||||||||||||
Operating
expense: |
||||||||||||||||||||||
Operation |
98,681 | 88,722 | 89,674 | 84,667 | 76,931 | |||||||||||||||||
Maintenance |
8,674 | 7,724 | 7,866 | 7,090 | 6,881 | |||||||||||||||||
Taxes |
16,958 | 15,588 | 14,078 | 11,770 | 11,496 | |||||||||||||||||
Depreciation
and amortization |
18,481 | 15,225 | 14,013 | 13,240 | 11,847 | |||||||||||||||||
Total
operating expense |
142,794 | 127,259 | 125,631 | 116,767 | 107,155 | |||||||||||||||||
Operating
income |
24,117 | 23,195 | 20,742 | 20,037 | 16,423 | |||||||||||||||||
Interest
expense, other income and deductions |
(4,331 | ) | (4,518 | ) | (6,510 | ) | (6,020 | ) | (5,758 | ) | ||||||||||||
Net
income |
19,786 | 18,677 | 14,232 | 14,017 | 10,665 | |||||||||||||||||
Dividends
paid |
9,319 | 8,861 | 8,405 | 7,834 | 7,491 | |||||||||||||||||
Invested in
the business |
$ | 10,467 | 9,816 | 5,827 | 6,183 | 3,174 | ||||||||||||||||
CONSOLIDATED PER SHARE DATA |
||||||||||||||||||||||
Net
income |
$ | 2.17 | 2.04 | 1.56 | 1.53 | 1.17 | ||||||||||||||||
Dividends
paid |
$ | 1.02 | 0.97 | 0.92 | 0.86 | 0.82 | ||||||||||||||||
Shareholders equity at year-end |
$ | 20.22 | 18.21 | 16.80 | 16.35 | 15.80 | ||||||||||||||||
CONSOLIDATED BALANCE SHEET (in thousands) |
||||||||||||||||||||||
Utility plant
and intangible assets |
$ | 619,590 | 583,709 | 541,919 | 507,227 | 462,892 | ||||||||||||||||
Less
accumulated depreciation and amortization |
189,221 | 174,985 | 161,576 | 149,721 | 139,396 | |||||||||||||||||
Net utility
plant |
430,369 | 408,724 | 380,343 | 357,506 | 323,496 | |||||||||||||||||
Nonutility
property |
31,987 | 32,569 | 15,521 | 15,464 | 15,267 | |||||||||||||||||
Total
assets |
552,152 | 516,244 | 457,770 | 435,552 | 396,356 | |||||||||||||||||
Capitalization: |
||||||||||||||||||||||
Shareholders equity |
184,691 | 166,368 | 153,499 | 149,354 | 144,325 | |||||||||||||||||
Long-term
debt |
143,604 | 143,879 | 114,407 | 114,460 | 94,330 | |||||||||||||||||
Total
capitalization |
$ | 328,295 | 310,247 | 267,906 | 263,814 | 238,655 | ||||||||||||||||
OTHER STATISTICS SAN JOSE WATER COMPANY |
||||||||||||||||||||||
Customers at
year-end |
220,800 | 220,100 | 219,400 | 219,000 | 218,500 | |||||||||||||||||
Average
revenue per customer |
$ | 733.76 | 664.99 | 652.79 | 612.78 | 556.99 | ||||||||||||||||
Investment in
utility plant per customer |
$ | 2,806 | 2,652 | 2,470 | 2,316 | 2,118 | ||||||||||||||||
Miles of main
at year-end |
2,434 | 2,430 | 2,422 | 2,419 | 2,419 | |||||||||||||||||
Water
production (million gallons) |
51,082 | 49,593 | 52,068 | 52,122 | 52,021 | |||||||||||||||||
Maximum daily
production (million gallons) |
192 | 211 | 216 | 199 | 217 | |||||||||||||||||
Population
served (estimate) |
995,000 | 992,000 | 989,000 | 988,000 | 985,000 |
* | SJW Corp. has restated its previously reported 2000, 2001, 2002 and 2003 Consolidated Statements of Income and Consolidated Balance Sheet as a result of adopting Interpretation No. 46(R), Consolidation of Variable Interest Entities (FIN46R). As a result of the adoption of FIN46R, SJW Corp. has consolidated its limited partnership interest in 444 West Santa Clara Street, L.P. |
See accompanying notes to consolidated financial statements
10
Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
Description of the Business:
Critical Accounting Policies:
11
Had the balancing account been recognized in San Jose Water Companys financial statements, San Jose Water Companys retained earnings would be increased by the amount of balancing account over-collection, as the case may be, or decreased by the amount of balancing account under-collection, less applicable taxes.
12
13
Results of Operations:
Consolidated Operating Revenue
2004 |
2003 |
2002 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Restated) |
(Restated) |
||||||||||||||
(in thousands) |
|||||||||||||||
San Jose
Water Company |
$ | 161,757 | 146,132 | 143,092 | |||||||||||
SJW Land
Company |
3,466 | 3,096 | 2,581 | ||||||||||||
Crystal
Choice Water Service LLC |
1,688 | 1,226 | 700 | ||||||||||||
$ | 166,911 | 150,454 | 146,373 |
The change in consolidated operating revenue was due to the following factors:
Utility:
2004 vs. 2003 Increase/(decrease) |
2003 vs. 2002 (Restated) Increase/(decrease) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
||||||||||||||||||||
Consumption
changes |
$ | 3,414 | 2 | % | $ | (5,117 | ) | (3 | %) | |||||||||||
New customers
increase |
458 | | 353 | | ||||||||||||||||
Rate
Increases |
11,753 | 8 | % | 7,804 | 5 | % | ||||||||||||||
Parking and
lease |
370 | | 515 | | ||||||||||||||||
Crystal
Choice Water Service LLC |
462 | 1 | % | 526 | | |||||||||||||||
$ | 16,457 | 11 | % | $ | 4,081 | 2 | % |
14
2004 vs. 2003
2003 vs. 2002
San Jose Water Company Operating Revenue and Customer Counts
Operating Revenue by Customer Group
2004 |
2003 |
2002 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
|||||||||||||||
Residential
and Business |
$ | 148,325 | 134,121 | 130,784 | |||||||||||
Industrial |
1,083 | 980 | 1,060 | ||||||||||||
Public
Authorities |
8,832 | 7,856 | 8,174 | ||||||||||||
Others |
3,517 | 3,175 | 3,074 | ||||||||||||
$ | 161,757 | 146,132 | 143,092 |
Number of Customers
2004 |
2003 |
2002 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
|||||||||||||||
Residential
and Business |
215,624 | 215,029 | 214,378 | ||||||||||||
Industrial |
89 | 91 | 92 | ||||||||||||
Public
Authorities |
1,715 | 1,689 | 1,664 | ||||||||||||
Others |
3,372 | 3,291 | 3,266 | ||||||||||||
220,800 | 220,100 | 219,400 |
15
Operating Expense
Operating expense by subsidiary was as follows:
2004 |
2003 |
2002 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Restated) |
(Restated) |
||||||||||||||
(in thousands) |
|||||||||||||||
San Jose
Water Company |
$ | 138,188 | 123,422 | 122,074 | |||||||||||
SJW Land
Company |
2,098 | 1,944 | 1,855 | ||||||||||||
Crystal
Choice Water Service LLC |
1,728 | 1,408 | 1,052 | ||||||||||||
SJW
Corp. |
780 | 485 | 650 | ||||||||||||
$ | 142,794 | 127,259 | 125,631 |
2004 vs. 2003 Increase/(decrease) |
2003 vs. 2002 (Restated) Increase/(decrease) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
||||||||||||||||||||
Water
Production costs: |
||||||||||||||||||||
Change in
surface water supply |
$ | 2,087 | 2 | % | $ | (3,879 | ) | (3 | %) | |||||||||||
Usage and new
customers |
2,003 | 2 | % | (3,742 | ) | (3 | %) | |||||||||||||
Purchased
water and pump tax price increase |
4,900 | 4 | % | 4,269 | 4 | % | ||||||||||||||
Energy
prices |
(421 | ) | (1 | %) | (696 | ) | (1 | %) | ||||||||||||
Total water
production costs |
8,569 | 7 | % | (4,048 | ) | (3 | %) | |||||||||||||
Administrative and general |
1,083 | 1 | % | 2,736 | 2 | % | ||||||||||||||
Other
operating expense |
307 | | 360 | | ||||||||||||||||
Maintenance |
950 | 1 | % | (142 | ) | | ||||||||||||||
Property
taxes and other non-income taxes |
249 | | 645 | | ||||||||||||||||
Depreciation
and amortization |
3,256 | 2 | % | 1,212 | 1 | % | ||||||||||||||
Income
taxes |
1,121 | 1 | % | 865 | 1 | % | ||||||||||||||
$ | 15,535 | 12 | % | $ | 1,628 | 1 | % |
2004 vs. 2003
2003 vs. 2002
16
Source of Water Supply |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
|||||||||||||
(million gallons) (MG) |
|||||||||||||||
Purchased
water |
28,243 | 27,376 | 30,566 | ||||||||||||
Ground
water |
18,109 | 16,168 | 18,430 | ||||||||||||
Surface
water |
4,258 | 5,670 | 2,661 | ||||||||||||
Reclaimed
water |
472 | 379 | 411 | ||||||||||||
51,082 | 49,593 | 52,068 | |||||||||||||
Average water
production cost per MG |
$ | 1,341 | 1,209 | 1,229 |
Other Operating Expense and Administrative and General
2004 |
2003 |
2002 |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Restated) |
(Restated) |
||||||||||||||
(in thousands) |
|||||||||||||||
Water
supply |
$ | 746 | 704 | 732 | |||||||||||
Water
treatment and quality |
1,487 | 1,541 | 1,539 | ||||||||||||
Pumping |
1,461 | 1,394 | 1,407 | ||||||||||||
Transmission
and distribution |
3,143 | 2,979 | 2,877 | ||||||||||||
Customer
accounts |
4,590 | 4,403 | 4,186 | ||||||||||||
Other |
1,465 | 1,564 | 1,484 | ||||||||||||
Subtotal
Other operating expenses |
12,892 | 12,585 | 12,225 | ||||||||||||
Administrative and general |
17,285 | 16,202 | 13,466 | ||||||||||||
Other
operating expenses and administrative and general |
$ | 30,177 | 28,787 | 25,691 |
2004 vs. 2003
2003 vs. 2002
17
18
Liquidity and Capital Resources:
Budgeted Capital Expenditures 2005 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
(in thousands) |
|||||||||||
Water
treatment |
$ | 408 | 1 | % | |||||||
Reservoirs and
tanks |
3,621 | 11 | % | ||||||||
Pump stations
and equipment |
2,803 | 8 | % | ||||||||
Distribution
system |
22,676 | 67 | % | ||||||||
Equipment and
other |
4,253 | 13 | % | ||||||||
$ | 33,761 | 100 | % |
Sources of Capital:
San Jose Water Company
19
SJW Land Company
SJW Corp.
Off-Balance Sheet Arrangement/Contractual Obligations
20
Contractual Obligations (dollars in thousands) Due in |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Total |
Less than 1 Year |
1-5 Years |
After 5 Years |
||||||||||||||||
Senior
notes |
$ | 130,000 | | | 130,000 | ||||||||||||||
SJW Land
Company mortgages |
9,614 | 195 | 1,168 | 8,251 | |||||||||||||||
Advance for
construction |
65,251 | 1,949 | 8,765 | 54,537 | |||||||||||||||
444 West
Santa Clara Street, L.P. long-term debt (non-recourse to SJW Land Company) |
4,265 | 80 | 507 | 3,678 | |||||||||||||||
Total
contractual cash obligation |
$ | 209,130 | 2,224 | 10,440 | 196,466 |
Related Party Transactions
Factors That May Affect Future Results:
The business of SJW Corp. and its subsidiaries may be adversely affected by new and changing legislation, policies and regulations. |
21
22
Changes in water supply, water supply costs or the mix of water supply could adversely affect the operating results and business of San Jose Water Company. |
Fluctuations in customer demand for water due to seasonality, restrictions of use, weather and lifestyle can adversely affect operating results. |
23
A contamination event or other decline in source water quality could affect the water supply of San Jose Water Company and therefore adversely affect the business and operating results. |
San Jose Water Company is subject to litigation risks concerning water quality and contamination. |
New or more stringent environmental regulations could increase San Jose Water Companys operating costs and affect its business. |
Costs associated with security precautions may have an adverse effect on the operating results of San Jose Water Company. |
24
Other factors that affect operating results. |
|
The level of labor and non-labor operating and maintenance expenses as affected by inflationary forces and collective bargaining power could adversely affect the operating and maintenance expenses of SJW Corp. |
|
The City of Cupertinos lease operation could be adversely affected by capital requirements, the ability of San Jose Water Company to raise rates through the Cupertino City Council, and the level of operating and maintenance expenses. |
|
If recycled water is widely accepted as a substitute to potable water and if rights are granted to others to serve San Jose Water Companys customers recycled water, San Jose Water Companys sales, revenue and operating results would be negatively impacted. |
|
SJW Land Companys expenses and operating results also could be adversely affected by the parking lot activities, the HP Pavilion at San Jose events, ongoing local, state and federal land use development activities and regulations, future economic conditions, and the development and fluctuations in the sale of the undeveloped properties. The San Jose Sharks, a professional hockey team, performs at the HP Pavilion. As a result of the cancellation of the 2004-2005 hockey season by the National Hockey League, SJW Land Companys parking lot revenue will be negatively impacted. |
Internal Controls
25
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
26
Item 8. Financial Statements and Supplementary Data
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Directors
SJW Corp.:
KPMG LLP
Mountain View, California
February 28, 2005
27
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
The Shareholders and Board of Directors
SJW Corp.:
KPMG LLP
Mountain View, California
February 28, 2005
28
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands,
except share and per share data)
December 31 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 (Restated, see Note 9) |
||||||||||
Assets |
|||||||||||
Utility
plant: |
|||||||||||
Land |
$ | 1,735 | 1,750 | ||||||||
Depreciable
plant and equipment |
605,420 | 570,119 | |||||||||
Construction
in progress |
4,595 | 4,000 | |||||||||
Intangible
assets |
7,840 | 7,840 | |||||||||
619,590 | 583,709 | ||||||||||
Less
accumulated depreciation and amortization |
189,221 | 174,985 | |||||||||
430,369 | 408,724 | ||||||||||
Nonutility
property |
35,154 | 34,918 | |||||||||
Less
accumulated depreciation and amortization |
3,167 | 2,349 | |||||||||
31,987 | 32,569 | ||||||||||
Current
assets: |
|||||||||||
Cash and
equivalents |
10,899 | 10,278 | |||||||||
Accounts
receivable: |
|||||||||||
Customers,
net of allowances for uncollectible accounts |
8,044 | 7,506 | |||||||||
Other |
611 | 1,332 | |||||||||
Accrued
unbilled utility revenue |
6,605 | 6,205 | |||||||||
Materials and
supplies |
559 | 485 | |||||||||
Prepaid
expenses |
1,652 | 1,534 | |||||||||
28,370 | 27,340 | ||||||||||
Other
assets: |
|||||||||||
Investment in
California Water Service Group |
41,413 | 30,139 | |||||||||
Unamortized
debt issuance and reacquisition costs |
3,300 | 3,447 | |||||||||
Regulatory
assets |
8,064 | 7,976 | |||||||||
Intangible
pension asset |
4,357 | 2,081 | |||||||||
Other |
4,292 | 3,968 | |||||||||
61,426 | 47,611 | ||||||||||
$ | 552,152 | 516,244 |
(continued)
See accompanying notes to consolidated financial statements
29
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands,
except share and per share data)
December 31 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 (Restated, see Note 9) |
||||||||||
Capitalization and Liabilities |
|||||||||||
Capitalization: |
|||||||||||
Shareholders equity: |
|||||||||||
Common stock,
$1.042 par value; authorized 18,000,000 shares; issued and outstanding 9,135,441 shares |
$ | 9,516 | 9,516 | ||||||||
Additional
paid-in capital |
14,306 | 13,375 | |||||||||
Retained
earnings |
148,525 | 138,058 | |||||||||
Accumulated
other comprehensive income |
12,344 | 5,419 | |||||||||
Total
shareholders equity |
184,691 | 166,368 | |||||||||
Long-term
debt, less current portion |
143,604 | 143,879 | |||||||||
328,295 | 310,247 | ||||||||||
Current
liabilities: |
|||||||||||
Current
portion of long-term debt |
275 | 252 | |||||||||
Accrued pump
taxes and purchased water |
3,856 | 3,224 | |||||||||
Purchased
power |
848 | 864 | |||||||||
Accounts
payable |
870 | 2,217 | |||||||||
Accrued
interest |
3,619 | 3,619 | |||||||||
Accrued
taxes |
890 | 467 | |||||||||
Accrued
payroll |
1,066 | 759 | |||||||||
Work order
deposit |
773 | 1,511 | |||||||||
Other current
liabilities |
3,154 | 2,231 | |||||||||
15,351 | 15,144 | ||||||||||
Deferred
income taxes |
49,507 | 36,714 | |||||||||
Unamortized
investment tax credits |
1,915 | 1,975 | |||||||||
Advances for
construction |
65,251 | 79,311 | |||||||||
Contributions
in aid of construction |
78,655 | 61,811 | |||||||||
Deferred
revenue |
1,282 | 1,328 | |||||||||
Postretirement benefit plans |
9,359 | 6,856 | |||||||||
Other
noncurrent liabilities |
2,537 | 2,858 | |||||||||
Commitments
and contingencies |
$ | 552,152 | 516,244 |
See accompanying notes to consolidated financial statements
30
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
Years ended December 31
(in thousands, except share and per share data)
2004 |
2003 (Restated, see Note 9) |
2002 (Restated, see Note 9) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating
revenue |
$ | 166,911 | 150,454 | 146,373 | ||||||||||
Operating
expense: |
||||||||||||||
Operation: |
||||||||||||||
Purchased
water |
41,220 | 36,708 | 38,228 | |||||||||||
Power |
5,511 | 5,296 | 6,805 | |||||||||||
Pump
taxes |
21,773 | 17,931 | 18,950 | |||||||||||
Administrative and general |
17,285 | 16,202 | 13,466 | |||||||||||
Other |
12,892 | 12,585 | 12,225 | |||||||||||
Maintenance |
8,674 | 7,724 | 7,866 | |||||||||||
Property
taxes and other nonincome taxes |
5,314 | 5,065 | 4,420 | |||||||||||
Depreciation
and amortization |
18,481 | 15,225 | 14,013 | |||||||||||
Income
taxes |
11,644 | 10,523 | 9,658 | |||||||||||
Total
operating expense |
142,794 | 127,259 | 125,631 | |||||||||||
Operating
income |
24,117 | 23,195 | 20,742 | |||||||||||
Other
(expense) income: |
||||||||||||||
Interest on
senior notes |
(9,247 | ) | (8,471 | ) | (7,803 | ) | ||||||||
Mortgage and
other interest expense |
(923 | ) | (530 | ) | (218 | ) | ||||||||
Condemnation
gain, net of taxes of $2,624 |
3,776 | | | |||||||||||
Gain on sale
of nonutility property, net of taxes of $2,106 |
| 3,030 | | |||||||||||
Dividends |
1,243 | 1,237 | 1,232 | |||||||||||
Other,
net |
820 | 216 | 279 | |||||||||||
Net
income |
$ | 19,786 | 18,677 | 14,232 | ||||||||||
Other
comprehensive income (loss): |
||||||||||||||
Unrealized
income (loss) on investment, net of taxes of $4,622 in 2004, $1,691 in 2003, and ($947) in 2002 |
6,652 | 2,434 | (1,363 | ) | ||||||||||
Minimum
pension liability adjustment, net of taxes of $188 in 2004, $276 in 2003, and $220 in 2002 |
273 | (399 | ) | (319 | ) | |||||||||
Other
comprehensive income (loss) |
6,925 | 2,035 | (1,682 | ) | ||||||||||
Comprehensive income |
$ | 26,711 | 20,712 | 12,550 | ||||||||||
Earnings
per share |
||||||||||||||
Basic |
$ | 2.17 | 2.04 | 1.56 | ||||||||||
Diluted |
$ | 2.15 | 2.04 | 1.56 | ||||||||||
Comprehensive income per share |
||||||||||||||
Basic |
$ | 2.92 | 2.27 | 1.37 | ||||||||||
Diluted |
$ | 2.90 | 2.26 | 1.37 | ||||||||||
Weighted
average shares outstanding |
||||||||||||||
Basic |
9,136,599 | 9,135,441 | 9,135,441 | |||||||||||
Diluted |
9,197,421 | 9,148,476 | 9,135,441 |
See accompanying notes to consolidated financial statements
31
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS EQUITY
(in thousands, except per share amounts)
Common Stock |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total Shareholders Equity |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balances,
December 31, 2001 |
$ | 9,516 | 12,357 | 122,415 | 5,066 | 149,354 | ||||||||||||||||
Net
income |
| | 14,232 | | 14,232 | |||||||||||||||||
Other
comprehensive income |
||||||||||||||||||||||
Unrealized
loss on investment, net of tax effect of $947 |
(1,363 | ) | (1,363 | ) | ||||||||||||||||||
Minimum
pension liability adjustment, net of tax effect of $220 |
(319 | ) | (319 | ) | ||||||||||||||||||
Comprehensive
income |
12,550 | |||||||||||||||||||||
Dividends
paid ($0.92 per share) |
| | (8,405 | ) | | (8,405 | ) | |||||||||||||||
Balances,
December 31, 2002 |
$ | 9,516 | 12,357 | 128,242 | 3,384 | 153,499 | ||||||||||||||||
Net
income |
| | 18,677 | | 18,677 | |||||||||||||||||
Other
comprehensive income |
||||||||||||||||||||||
Unrealized
gain on investment, net of tax effect of $1,691 |
2,434 | 2,434 | ||||||||||||||||||||
Minimum
pension liability adjustment, net of tax effect of $276 |
(399 | ) | (399 | ) | ||||||||||||||||||
Comprehensive
income |
20,712 | |||||||||||||||||||||
Stock-based
compensation |
1,018 | 1,018 | ||||||||||||||||||||
Dividends
paid ($0.97 per share) |
| | (8,861 | ) | | (8,861 | ) | |||||||||||||||
Balances,
December 31, 2003 |
$ | 9,516 | 13,375 | 138,058 | 5,419 | 166,368 | ||||||||||||||||
Net
income |
| | 19,786 | | 19,786 | |||||||||||||||||
Other
comprehensive income |
||||||||||||||||||||||
Unrealized
gain on investment, net of tax effect of $4,622 |
6,652 | 6,652 | ||||||||||||||||||||
Minimum
pension liability adjustment, net of tax effect of $188 |
273 | 273 | ||||||||||||||||||||
Comprehensive
income |
26,711 | |||||||||||||||||||||
Stock-based
compensation |
1,056 | 1,056 | ||||||||||||||||||||
Stock option
exercise |
19 | 19 | ||||||||||||||||||||
Common stock
buyback |
(144 | ) | (144 | ) | ||||||||||||||||||
Dividends
paid ($1.02 per share) |
| | (9,319 | ) | | (9,319 | ) | |||||||||||||||
Balances,
December 31, 2004 |
$ | 9,516 | 14,306 | 148,525 | 12,344 | 184,691 |
See accompanying notes to consolidated financial statements
32
SJW CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years
ended December 31 (in thousands)
2004 |
2003 (Restated, see Note 9) |
2002 (Restated, see Note 9) |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Operating
activities: |
||||||||||||||
Net
income |
$ | 19,786 | 18,677 | 14,232 | ||||||||||
Adjustments
to reconcile net income to net cash provided by operating activities: |
||||||||||||||
Depreciation
and amortization |
18,481 | 15,225 | 14,013 | |||||||||||
Deferred
income taxes |
10,110 | 6,398 | 2,998 | |||||||||||
Stock-based
compensation |
1,056 | 492 | | |||||||||||
Condemnation
gain, net of taxes |
(3,776 | ) | | | ||||||||||
Gain on sale
of nonutility property, net of taxes |
| (3,030 | ) | | ||||||||||
Changes in
operating assets and liabilities: |
||||||||||||||
Accounts
receivable and accrued utility revenue |
(217 | ) | 1,634 | (2,522 | ) | |||||||||
Accounts
payable, purchased power and other current liabilities |
(440 | ) | 1,579 | (134 | ) | |||||||||
Accrued pump
taxes and purchased water |
632 | 80 | 53 | |||||||||||
Accrued
taxes |
423 | (204 | ) | (548 | ) | |||||||||
Accrued
interest |
| 375 | 108 | |||||||||||
Accrued
payroll |
307 | 193 | 145 | |||||||||||
Work order
deposits |
(738 | ) | 677 | 398 | ||||||||||
Prepaid
Expenses and Materials and Supplies |
(192 | ) | (304 | ) | (406 | ) | ||||||||
Deferred
Revenue |
(46 | ) | (23 | ) | (37 | ) | ||||||||
Other
noncurrent assets and noncurrent liabilities |
(4,739 | ) | (1,922 | ) | 2,446 | |||||||||
Refund due to
customers |
| | (531 | ) | ||||||||||
Other
changes, net |
584 | 2,177 | (1,008 | ) | ||||||||||
Net cash
provided by operating activities |
41,231 | 42,024 | 29,207 | |||||||||||
Investing
activities: |
||||||||||||||
Additions to
utility plant |
(40,375 | ) | (44,467 | ) | (37,119 | ) | ||||||||
Additions to
nonutility property |
(1,888 | ) | (17,780 | ) | (1,352 | ) | ||||||||
Cost to
retire utility plant, net of salvage |
(1,398 | ) | (780 | ) | (356 | ) | ||||||||
Proceeds from
condemnation, net of legal fees |
8,177 | | | |||||||||||
Proceeds from
sale of nonutility property |
| 5,370 | | |||||||||||
Net cash
used in investing activities |
(35,484 | ) | (57,657 | ) | (38,827 | ) | ||||||||
Financing
activities: |
||||||||||||||
Borrowings
from line of credit |
| 14,000 | 50,763 | |||||||||||
Repayments of
line of credit |
| (25,450 | ) | (50,813 | ) | |||||||||
Long-term
borrowings |
| 29,900 | (53 | ) | ||||||||||
Repayments of
long-term borrowings |
(252 | ) | (176 | ) | | |||||||||
Dividends
paid |
(9,319 | ) | (8,861 | ) | (8,405 | ) | ||||||||
Common stock
buyback |
(144 | ) | | | ||||||||||
Exercise of
stock options |
19 | | | |||||||||||
Receipts of
advances and contributions in aid of construction |
6,680 | 17,694 | 15,242 | |||||||||||
Refunds of
advances for construction |
(2,110 | ) | (1,704 | ) | (1,627 | ) | ||||||||
Net cash
(used in) provided by financing activities |
(5,126 | ) | 25,403 | 5,107 | ||||||||||
Net change
in cash and equivalents |
621 | 9,770 | (4,513 | ) | ||||||||||
Cash and
equivalents, beginning of year |
10,278 | 508 | 5,021 | |||||||||||
Cash and
equivalents, end of year |
$ | 10,899 | 10,278 | 508 | ||||||||||
Cash paid
during the year for: |
||||||||||||||
Interest |
$ | 10,504 | 9,148 | 7,782 | ||||||||||
Income
taxes |
$ | 5,286 | 7,720 | 8,800 |
See accompanying notes to consolidated financial statements
33
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 1. Summary of Significant Accounting Policies
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Equipment |
$ | 101,337 | 96,553 | |||||||
Transmission and
distribution |
479,729 | 454,284 | ||||||||
Office buildings
and other structures |
24,354 | 19,282 | ||||||||
Total
depreciable plant and equipment |
$ | 605,420 | 570,119 |
Useful Lives |
||||||
---|---|---|---|---|---|---|
Equipment |
5
to 35 years |
|||||
Transmission
and distribution plant |
35
to 75 years |
|||||
Office
buildings and other structures |
7
to 50 years |
34
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 1. Summary of Significant Accounting Policies
(Continued)
For the years 2004, 2003, and 2002 the aggregate provisions for depreciation approximated 3.6%, 3.2%, and 3.3%, respectively, of the beginning of the year depreciable plant. The cost of utility plant retired, including retirement costs (less salvage), is charged to accumulated depreciation and no gain or loss is recognized. Depreciation expense for utility plant for the years ended December 31, 2004, 2003 and 2002 was $17,498, $14,435 and $13,480, respectively.
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Land |
$ | 8,139 | 9,485 | |||||||
Buildings and
improvements |
26,784 | 25,202 | ||||||||
Intangibles |
231 | 231 | ||||||||
Total
non-utility property |
$ | 35,154 | 34,918 |
35
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 1. Summary of Significant Accounting Policies
(Continued)
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Regulatory
assets: |
||||||||||
Income tax
temporary differences |
$ | 8,085 | 8,577 | |||||||
Asset
retirement obligation |
1,200 | 1,182 | ||||||||
Postretirement benefits other than pensions |
857 | 370 | ||||||||
Total regulatory
assets |
$ | 10,142 | 10,129 | |||||||
Regulatory
liabilities: |
||||||||||
Future tax
benefits to ratepayers |
$ | 2,078 | 2,153 | |||||||
Net Regulatory
Assets included in Balance Sheet |
$ | 8,064 | 7,976 |
36
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 1. Summary of Significant Accounting Policies
(Continued)
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Retirement
obligation |
$ | 4,613 | 4,682 | |||||||
Discount
rate |
6% | 6% | ||||||||
Present
value |
711 | 700 | ||||||||
Regulatory
asset |
1,200 | 1,182 |
37
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 1. Summary of Significant Accounting Policies
(Continued)
Note 2. Capitalization
38
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 3. Line Of Credit
2004
|
2003
|
2002
|
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Maximum
short-term borrowing: |
$ | | 13,950 | 11,500 | ||||||||||
Average
amount outstanding |
| 6,251 | 7,219 | |||||||||||
Weighted
average interest rate |
| 2.6% | 3.1% | |||||||||||
Interest
rate at December 31 |
4.25% | 3.0% | 3.3% | |||||||||||
Balance
as of December 31 |
$ | | | 11,450 |
Note 4. Long-Term Debt
Description |
Due Date |
2004 |
2003 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Senior
notes: |
||||||||||||||
A
8.58% |
2022 | $ | 20,000 | 20,000 | ||||||||||
B
7.37% |
2024 | 30,000 | 30,000 | |||||||||||
C
9.45% |
2020 | 10,000 | 10,000 | |||||||||||
D
7.15% |
2026 | 15,000 | 15,000 | |||||||||||
E
6.81% |
2028 | 15,000 | 15,000 | |||||||||||
F
7.20% |
2031 | 20,000 | 20,000 | |||||||||||
G
5.93% |
2033 | 20,000 | 20,000 | |||||||||||
Total senior
notes |
130,000 | 130,000 | ||||||||||||
Mortgage
loans 5.96% |
2013 | 9,614 | 9,798 | |||||||||||
444 West
Santa Clara Street, L.P. 7.80% (non-recourse to SJW Land Company) |
2011 | 4,265 | 4,333 | |||||||||||
Total
debt |
143,879 | 144,131 | ||||||||||||
Less: Current
portion |
275 | 252 | ||||||||||||
Total
long-term debt, less current portion |
143,604 | 143,879 |
39
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 4. Long-Term Debt (Continued)
Amortization Schedule |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year |
Total Payment |
Interest |
Principal |
||||||||||||
2005 |
$ | 763 | 568 | 195 | |||||||||||
2006 |
763 | 556 | 207 | ||||||||||||
2007 |
763 | 544 | 219 | ||||||||||||
2008 |
763 | 530 | 233 | ||||||||||||
2009 |
763 | 516 | 247 | ||||||||||||
Thereafter |
$ | 10,155 | 1,642 | 8,513 |
Amortization Schedule |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Year |
Total Payment |
Interest |
Principal |
||||||||||||
2005 |
$ | 410 | 330 | 80 | |||||||||||
2006 |
410 | 323 | 87 | ||||||||||||
2007 |
410 | 316 | 94 | ||||||||||||
2008 |
410 | 308 | 102 | ||||||||||||
2009 |
410 | 300 | 110 | ||||||||||||
Thereafter |
$ | 6,759 | 2,967 | 3,792 |
Note 5. Income Taxes
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected federal income tax |
$ | 11,918 | 10,957 | 8,361 | ||||||||||
Increase
(decrease) in taxes attributable to: |
||||||||||||||
State taxes,
net of federal income tax benefit |
1,957 | 1,799 | 1,373 | |||||||||||
Dividend
received deduction |
(305 | ) | (303 | ) | (302 | ) | ||||||||
Other items,
net |
698 | 176 | 226 | |||||||||||
$ | 14,268 | 12,629 | 9,658 |
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Current: |
||||||||||||||
Federal |
$ | 3,516 | 4,199 | 4,740 | ||||||||||
State |
2,681 | 2,374 | 1,986 | |||||||||||
Deferred: |
||||||||||||||
Federal |
7,627 | 6,129 | 2,838 | |||||||||||
State |
444 | (73 | ) | 94 | ||||||||||
$ | 14,268 | 12,629 | 9,658 |
40
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 5. Income Taxes (Continued)
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Income taxes
included in operating expenses |
$ | 11,644 | 10,523 | 9,658 | ||||||||||
Income taxes
included in gain on sale or condemnation of nonutility property |
2,624 | 2,106 | | |||||||||||
$ | 14,268 | 12,629 | 9,658 |
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Deferred tax
assets: |
||||||||||
Advances and
contributions |
$ | 14,262 | 14,291 | |||||||
Unamortized
investment tax credit |
1,031 | 1,063 | ||||||||
Pensions and
postretirement benefits |
3,020 | 2,784 | ||||||||
California
franchise tax |
749 | 628 | ||||||||
Other |
466 | 575 | ||||||||
Total deferred
tax assets |
19,528 | 19,341 | ||||||||
Deferred tax
liabilities: |
||||||||||
Utility
plant |
45,623 | 39,596 | ||||||||
Investment |
14,724 | 10,102 | ||||||||
Deferred
gain-property transfer |
6,161 | 3,537 | ||||||||
Debt
reacquisition costs |
942 | 991 | ||||||||
Other |
1,585 | 1,829 | ||||||||
Total deferred
tax liabilities |
69,035 | 56,055 | ||||||||
Net deferred tax
liabilities |
$ | 49,507 | 36,714 |
Note 6. Intangible Assets
2004 |
2003 |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Concession
fees |
$ | 6,800 | 6,800 | |||||||
Other
intangibles |
1,040 | 1,040 | ||||||||
Intangible
assets |
7,840 | 7,840 | ||||||||
Less: Accumulated amortization |
||||||||||
Concession
fees |
1,972 | 1,700 | ||||||||
Other
intangibles |
299 | 283 | ||||||||
Net intangible
assets |
$ | 5,569 | 5,857 |
41
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 7. Commitments
Note 8. Contingency
Note 9. Partnership Interest Restatement
42
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 9. Partnership Interest Restatement
(Continued)
December 31, 2003 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported |
As Restated |
||||||||||
Consolidated
Balance Sheets: |
|||||||||||
Assets |
|||||||||||
Non-utility
property |
$ | 29,665 | 34,918 | ||||||||
Less:
accumulated depreciation |
2,036 | 2,349 | |||||||||
Net
non-utility property |
$ | 27,629 | 32,569 | ||||||||
Cash and
equivalents |
10,036 | 10,278 | |||||||||
Total current
assets |
27,098 | 27,340 | |||||||||
Investment in
affiliate |
1,110 | | |||||||||
Other
assets |
5,594 | 6,049 | |||||||||
Total other
assets |
48,266 | 47,611 | |||||||||
Total
assets |
511,717 | 516,244 | |||||||||
Liabilities: |
|||||||||||
Long-term
debt, less current portion |
139,614 | 143,879 | |||||||||
Current
portion of partnership debt |
184 | 252 | |||||||||
Total
capitalization |
305,982 | 310,247 | |||||||||
Other
non-current liabilities |
9,520 | 9,714 | |||||||||
Total
capitalization and liabilities |
511,717 | 516,244 |
Twelve Months Ended December 31, 2003 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported |
As Restated |
||||||||||
Consolidated
Statements of Income and Comprehensive Income: |
|||||||||||
Operating
revenue |
$ | 149,732 | 150,454 | ||||||||
Total
operating expense |
126,778 | 127,259 | |||||||||
Operating
income |
22,954 | 23,195 | |||||||||
Other,
net |
(73 | ) | 216 | ||||||||
Net
income |
18,677 | 18,677 | |||||||||
Comprehensive
income |
20,712 | 20,712 |
43
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 9. Partnership Interest Restatement
(Continued)
Twelve Months Ended December 31, 2003 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As Previously Reported |
As Restated |
||||||||||
Consolidated
Statements of Income and Comprehensive Income: |
|||||||||||
Operating
revenue |
$ | 145,652 | $ | 146,373 | |||||||
Total
operating expense |
125,094 | 125,631 | |||||||||
Operating
income |
20,558 | 20,742 | |||||||||
Other,
net |
245 | 279 | |||||||||
Net
income |
14,232 | 14,232 | |||||||||
Comprehensive
income |
12,550 | 12,550 |
Note 10. Crystal Choice Water Service LLC
Note 11. Employee Benefit Plans
44
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 11. Employee Benefit Plans
(Continued)
period and/or full market cycle. These standards include a specific rate of return, a return of 4% in excess of inflation and performance better than a similarly balanced fund using Standard and Poors 500 and Lehman Brothers Government/Corporate Index. Satisfactory performance will also be achieved if the total return over a full market cycle is in the first quartile of a blended universe (60/40) of equity and fixed income funds.
General restrictions have been placed on the Investment Manager. He may not acquire any security subject to any restriction: write, or sell any put, naked call or call option; acquire any security on margin; utilize borrowed funds for the acquisition of any security; sell any security not owned by the Fund; acquire more than 10% of any class of securities of any single issuer; generally, acquire a security of any single issuer whose costs exceed 6% of the fund value; acquire any securities of the San Jose Water Company; trade in commodities; or acquire foreign stocks except those traded as American depository receipts on a U.S. Stock Exchange; or participate in any joint trading account.
San Jose Water Company has a Supplemental Executive Retirement Plan, which is a defined benefit plan under which the company will pay supplemental pension benefits to key executives in addition to the amounts received under the retirement plan. The annual cost of this plan has been included in the determination of the net periodic benefit cost shown below. The plan, which is unfunded, had a projected benefit obligation of $4,378, $5,008 and $4,583 as of December 31, 2004, 2003, and 2002, respectively, and net periodic pension cost of $426, $583 and $606 for 2004, 2003, and 2002, respectively.
Flexible Spending Plan
Medicare
Deferral Plan
Other Postretirement Benefits
45
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 11. Employee Benefit Plans
(Continued)
Pension Benefits |
Other Benefits |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
2004 |
2003 |
2002 |
|||||||||||||||||||||||
Weighted-Average |
||||||||||||||||||||||||||||
Assumptions
as of Dec. 31 |
% | % | % | % | % | % | ||||||||||||||||||||||
Discount
rate |
6.00 | 6.25 | 6.75 | 6.00 | 6.25 | 6.75 | ||||||||||||||||||||||
Expected
return on plan assets |
8.00 | 8.00 | 8.00 | 8.00 | 8.00 | 8.00 | ||||||||||||||||||||||
Rate of
compensation increase |
4.00 | 4.00 | 4.00 | n.a. | n.a. | n.a. |
Pension Benefits |
Other Benefits |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
2004 |
2003 |
2002 |
|||||||||||||||||||||||
Components of Net Periodic Benefit Cost |
||||||||||||||||||||||||||||
Service
cost |
$ | 1,753 | 1,413 | 1,148 | 123 | 46 | 41 | |||||||||||||||||||||
Interest
cost |
3,048 | 2,741 | 2,640 | 235 | 122 | 118 | ||||||||||||||||||||||
Expected
return on assets |
(2,557 | ) | (2,191 | ) | (2,659 | ) | (50 | ) | (41 | ) | (40 | ) | ||||||||||||||||
Amortization
of transition obligation |
56 | 56 | 54 | 56 | 56 | 56 | ||||||||||||||||||||||
Amortization
of prior service cost |
493 | 286 | 354 | 122 | 16 | 16 | ||||||||||||||||||||||
Recognized
actuarial loss |
402 | 412 | 57 | | | | ||||||||||||||||||||||
Net periodic
benefit cost |
$ | 3,195 | 2,717 | 1,594 | 486 | 199 | 191 |
Pension Benefits |
Other Benefits |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
2004 |
2003 |
2002 |
|||||||||||||||||||||||
Change in Benefit Obligation |
||||||||||||||||||||||||||||
Benefit
obligation at beginning of year |
$ | 47,279 | 41,466 | 37,021 | 3,739 | 1,821 | 1,709 | |||||||||||||||||||||
Service
cost |
1,753 | 1,413 | 1,148 | 123 | 46 | 41 | ||||||||||||||||||||||
Interest
cost |
3,048 | 2,741 | 2,640 | 235 | 122 | 118 | ||||||||||||||||||||||
Amendments |
2,794 | | 424 | | 1,711 | | ||||||||||||||||||||||
Actuarial
loss |
1,863 | 3,516 | 1,931 | 215 | 152 | 66 | ||||||||||||||||||||||
Benefits
paid |
(2,041 | ) | (1,857 | ) | (1,698 | ) | (125 | ) | (113 | ) | (113 | ) | ||||||||||||||||
Benefit
obligation at end of year |
$ | 54,696 | 47,279 | 41,466 | 4,187 | 3,739 | 1,821 |
46
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 11. Employee Benefit Plans
(Continued)
Pension Benefits |
Other Benefits |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
2004 |
2003 |
2002 | |||||||||||||||||||||||
Change in Plan Assets |
||||||||||||||||||||||||||||
Fair value of assets at beginning of year; |
||||||||||||||||||||||||||||
Debt
securities |
$ | 7,116 | 8,653 | 9,488 | | | | |||||||||||||||||||||
22.0% | 31.1% | 27.9% | | | | |||||||||||||||||||||||
Equity
securities |
$ | 21,677 | 16,461 | 23,682 | | | | |||||||||||||||||||||
67.0% | 59.1% | 69.6% | | | | |||||||||||||||||||||||
Cash &
equivalents |
$ | 3,540 | 2,718 | 840 | 521 | 507 | 394 | |||||||||||||||||||||
11.0% | 9.8% | 2.5% | 100% | % | 100% | 100% | ||||||||||||||||||||||
$ | 32,333 | 27,832 | 34,010 | 521 | 507 | 394 | ||||||||||||||||||||||
Actual return
on plan assets |
1,746 | 4,344 | (4,713 | ) | 1 | | 7 | |||||||||||||||||||||
Employer
contributions |
2,568 | 2,000 | 233 | 297 | 114 | 206 | ||||||||||||||||||||||
Benefits
paid |
(2,041 | ) | (1,843 | ) | (1,698 | ) | (107 | ) | (100 | ) | (100 | ) | ||||||||||||||||
$ | 34,606 | 32,333 | 27,832 | 712 | 521 | 507 | ||||||||||||||||||||||
Fair value of assets at end of year; |
||||||||||||||||||||||||||||
Debt
securities |
$ | 10,428 | 7,116 | 8,653 | | | | |||||||||||||||||||||
30.1% | 22.0% | 31.1% | | | | |||||||||||||||||||||||
Equity
securities |
$ | 23,487 | 21,677 | 16,461 | | | | |||||||||||||||||||||
67.9% | 67.0% | 59.1% | | | | |||||||||||||||||||||||
Cash &
equivalents |
$ | 691 | 3,540 | 2,718 | 712 | 521 | 507 | |||||||||||||||||||||
2.0% | 11.0% | 9.8% | 100% | 100% | 100% | |||||||||||||||||||||||
Total |
$ | 34,606 | 32,333 | 27,832 | 712 | 521 | 507 | |||||||||||||||||||||
Funded
Status |
||||||||||||||||||||||||||||
Plan assets
less benefit obligation |
$ | (20,089 | ) | (15,047 | ) | (13,633 | ) | (3,474 | ) | (3,218 | ) | (1,313 | ) | |||||||||||||||
Unrecognized
transition obligation |
40 | 96 | 152 | 396 | 453 | 509 | ||||||||||||||||||||||
Unamortized
prior service cost |
4,286 | 1,985 | 2,270 | 1,613 | 1,735 | 39 | ||||||||||||||||||||||
Unamortized
actuarial loss |
12,835 | 10,665 | 9,388 | 509 | 229 | 20 | ||||||||||||||||||||||
Accrued
benefit cost |
$ | (2,928 | ) | (2,301 | ) | (1,823 | ) | (956 | ) | (801 | ) | (745 | ) |
Pension Plan |
Other Postretirement Benefit Plan |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
2005 |
$ | 2,062 | $ | 133 | ||||||
2006 |
2,129 | 140 | ||||||||
2007 |
2,136 | 151 | ||||||||
2008 |
2,258 | 155 | ||||||||
2009 |
2,465 | 165 |
47
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 11. Employee Benefit Plans
(Continued)
Pension Benefits |
Other Benefits |
|||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 |
2003 |
2002 |
2004 |
2003 |
2002 |
|||||||||||||||||||||||
Accrued
benefit cost |
$ | (2,928 | ) | (2,301 | ) | (1,823 | ) | (956 | ) | (801 | ) | (745 | ) | |||||||||||||||
Additional
minimum liability |
(6,689 | ) | (4,874 | ) | (4,541 | ) | | | | |||||||||||||||||||
Intangible
asset |
4,357 | 2,080 | 2,423 | | | | ||||||||||||||||||||||
Accumulated
other comprehensive loss |
2,332 | 2,794 | 2,118 | | | | ||||||||||||||||||||||
Net amount
recognized |
$ | (2,928 | ) | (2,301 | ) | (1,823 | ) | (956 | ) | (801 | ) | (745 | ) |
Note 12. Long-Term Incentive Plan and Stock-Based Compensation
Stock Options
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Options
granted |
26,076 | 28,929 | N/A | |||||||||||
Exercise
price |
$ | 29.70 | $ | 28.00 | N/A | |||||||||
Weighted
average remaining life in years |
8.6 | 9.3 | N/A | |||||||||||
Weighted
average fair value at date of grant |
$ | 5.33 | $ | 5.33 | N/A |
48
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 12. Long-Term Incentive Plan and Stock-Based
Compensation (Continued)
grant date as a basis for determining stock-based compensation costs for financial reporting purposes. The assumptions utilized include:
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Expected
dividend yield |
3.3 | % | 3.4 | % | N/A | |||||||||
Expected
volatility |
23.6 | % | 27 | % | N/A | |||||||||
Risk-free
interest rate |
3.22 | % | 2.86 | % | N/A | |||||||||
Expected
holding period in years |
5.0 | 5.0 | N/A |
SJW Corp. has recognized stock compensation expense of $74 and $26 for options granted to its executives for the years ended December 31, 2004, and 2003, respectively. No options were granted prior to 2003.
Stock Options
2004 |
2003 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Weighted-Average Exercise Price |
Shares |
Weighted-Average Exercise Price |
|||||||||||||||||
Outstanding
at beginning of year |
28,929 | $ | 28.00 | | | |||||||||||||||
Granted |
26,076 | $ | 29.70 | 28,929 | $ | 28.00 | ||||||||||||||
Exercised |
(266 | ) | $ | 28.00 | | | ||||||||||||||
Forfeited |
| | | | ||||||||||||||||
Outstanding
at end of year |
54,739 | $ | 28.81 | 28,929 | $ | 28.00 | ||||||||||||||
Options
exercisable at end of year |
6,961 | $ | 28.00 | | | |||||||||||||||
Weighted-average fair value of options granted during the year |
$ | 5.33 | $ | 5.33 |
Options Exercisable
2004 |
2003 |
2002 |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Options
Outstanding |
||||||||||||||
Range of
exercise prices |
$28.0029.70 |
$28.00 |
N/A |
|||||||||||
Outstanding
at end of year |
54,739 |
28,929 |
N/A |
|||||||||||
Weighted
average remaining life in years |
8.6 |
9.3 |
N/A |
|||||||||||
Weighted
average exercise price |
$28.81 |
$28.00 |
N/A |
Deferred Restricted Stock Plans
49
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 12. Long-Term Incentive Plan and Stock-Based
Compensation (Continued)
grant. Directors can receive a maximum number of 10 awards for 10 full years of service. On September 1, 2003, 55,524 shares were granted to the directors under the program at a market price of $28.40 per share. With respect to the conversion of existing pension benefits, which were accrued before the grant date, 20,487 shares were fully vested at the time of grant and the remaining 35,037 shares vest over a period of three years when services are rendered. As of December 31, 2004, 3,994 shares were issued pursuant to deferred restricted stock awards to a retired non-employee board member and total vested shares are 28,172. There were no shares issued or vested as of December 31, 2003. In accordance with SFAS No. 123, the Corporation has recognized stock compensation expense of $350 and $141 for the years ended December 31, 2004 and 2003, respectively. %Directors who elect to convert the annual retainer fee receive deferred restricted stock in an amount equal to the annual retainer fee divided by the fair market value of the Companys common stock on the last business day before the date of grant, which will vest on a monthly basis as the retainer would have otherwise been earned. For the year ended December 31, 2004, the Company has granted 3,636 deferred restricted shares in lieu of cash retainer fees at $29.75 per share and recognized stock compensation expense of $108. The Company granted 1,284 deferred restricted shares in 2003 at $28.07 per share and recognized stock compensation expense of $36. No deferred restricted stock was granted in 2002.
Deferred Restricted Stock Outstanding
2004 |
2003 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Weighted-Average Issue Price |
Shares |
Weighted-Average Issue Price |
|||||||||||||||||
Outstanding
at beginning of year |
98,478 | $ | 28.27 | | | |||||||||||||||
Issued |
3,636 | $ | 29.75 | 98,478 | $ | 28.27 | ||||||||||||||
Exercised |
(3,994 | ) | $ | 28.40 | | | ||||||||||||||
Forfeited |
| | | | ||||||||||||||||
Outstanding
at end of year |
98,120 | $ | 28.32 | 98,478 | $ | 28.27 | ||||||||||||||
Shares
vested |
46,982 | | 35,661 | |
Dividend Equivalent Rights
Note 13. Sale of Non-utility Property
50
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 14. Condemnation Gain
Note 15. Non-regulated Businesses
December 31, 2004 |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Regulated |
Non Regulated |
Total |
|||||||||||||
Revenue |
$ | 157,951 | 8,960 | 166,911 | |||||||||||
Expenses |
135,103 | 7,691 | 142,794 | ||||||||||||
Operating
Income |
$ | 22,848 | 1,269 | 24,117 |
December 31, 2003 |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Regulated |
Non Regulated |
Total |
|||||||||||||
Revenue |
$ | 142,793 | 7,661 | 150,454 | |||||||||||
Expenses |
120,836 | 6,423 | 127,259 | ||||||||||||
Operating
Income |
$ | 21,957 | 1,238 | 23,195 |
December 31, 2002 |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Regulated |
Non Regulated |
Total |
|||||||||||||
Revenue |
$ | 139,835 | 6,538 | 146,373 | |||||||||||
Expenses |
119,606 | 6,025 | 125,631 | ||||||||||||
Operating
Income |
$ | 20,229 | 513 | 20,742 |
Note 16. Segment Reporting
51
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 16. Segment Reporting (Continued)
For twelve months ended December 31, 2004 |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SJWC |
SJW Land Company |
All Other* |
SJW Corp. |
||||||||||||||||
Operating
revenue |
$ | 161,757 | 3,466 | 1,688 | 166,911 | ||||||||||||||
Operating
expense |
138,188 | 2,098 | 2,507 | 142,793 | |||||||||||||||
Net
income |
14,733 | 4,461 | 592 | 19,786 | |||||||||||||||
Depreciation
and amortization |
17,787 | 615 | 79 | 18,481 | |||||||||||||||
Interest
expense |
9,249 | 915 | 6 | 10,170 | |||||||||||||||
Income tax
expense |
10,863 | 787 | (6 | ) | 11,644 | ||||||||||||||
Assets |
$ | 468,388 | 39,715 | 44,049 | 552,152 |
For twelve months ended December 31, 2003 (Restated) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SJWC |
SJW Land Company |
All Other* |
SJW Corp. |
||||||||||||||||
Operating
revenue |
$ | 146,132 | 3,096 | 1,226 | 150,454 | ||||||||||||||
Operating
expense |
123,422 | 1,944 | 1,893 | 127,259 | |||||||||||||||
Net
income |
17,065 | 1,010 | 602 | 18,677 | |||||||||||||||
Depreciation
and amortization |
14,723 | 431 | 71 | 15,225 | |||||||||||||||
Interest
expense |
8,594 | 407 | | 9,001 | |||||||||||||||
Income tax
expense |
10,208 | 487 | (172 | ) | 10,523 | ||||||||||||||
Assets |
$ | 450,796 | 32,635 | 32,813 | 516,244 |
For twelve months ended December 31, 2002 (Restated) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
SJWC |
SJW Land Company |
All Other* |
SJW Corp. |
||||||||||||||||
Operating
revenue |
$ | 143,092 | 2,581 | 700 | 146,373 | ||||||||||||||
Operating
expense |
122,111 | 1,818 | 1,702 | 125,631 | |||||||||||||||
Net
income |
13,344 | 625 | 263 | 14,232 | |||||||||||||||
Depreciation
and amortization |
13,769 | 182 | 62 | 14,013 | |||||||||||||||
Interest
expense |
7,879 | 68 | 74 | 8,021 | |||||||||||||||
Income tax
expense |
9,145 | 521 | (8 | ) | 9,658 | ||||||||||||||
Assets |
$ | 411,787 | 17,187 | 28,796 | 457,770 |
* | The All Other category includes CCWS and without regard to its subsidiaries, SJW Corp. |
52
SJW CORP. AND SUBSIDIARIES
Notes to Consolidated Financial
Statements
Years ended December 31, 2004, 2003 and 2002
(Dollars in thousands, except share data)
Note 17. Subsequent Event
Note 18. Unaudited Quarterly Financial Data
2004 Quarter Ended |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March |
June |
September |
December |
||||||||||||||||
Operating
revenue |
$ | 31,063 | 45,609 | 52,297 | 37,942 | ||||||||||||||
Operating
income |
3,985 | 7,110 | 7,740 | 5,282 | |||||||||||||||
Net
income |
1,774 | 4,807 | 5,530 | 7,675 | |||||||||||||||
Comprehensive
income |
2,352 | 4,326 | 6,711 | 13,322 | |||||||||||||||
Earnings per share |
|||||||||||||||||||
Basic |
0.19 | 0.53 | 0.61 | 0.84 | |||||||||||||||
Diluted |
0.19 | 0.53 | 0.60 | 0.83 | |||||||||||||||
Comprehensive income per share |
|||||||||||||||||||
Basic |
0.26 | 0.47 | 0.74 | 1.46 | |||||||||||||||
Diluted |
0.26 | 0.47 | 0.73 | 1.45 | |||||||||||||||
Market price range of stock |
|||||||||||||||||||
High |
38.00 | 37.10 | 35.60 | 38.90 | |||||||||||||||
Low |
29.29 | 30.35 | 30.84 | 32.90 | |||||||||||||||
Dividend per
share |
0.25 | 0.26 | 0.25 | 0.26 |
2003 Quarter Ended (Restated) |
|||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
March |
June |
September |
December |
||||||||||||||||
Operating
revenue |
$ | 27,971 | 38,149 | 49,514 | 34,820 | ||||||||||||||
Operating
income |
4,062 | 6,308 | 7,938 | 4,887 | |||||||||||||||
Net
income |
5,282 | 4,426 | 5,967 | 3,002 | |||||||||||||||
Comprehensive
income |
6,645 | 5,964 | 4,468 | 3,635 | |||||||||||||||
Earnings per share |
|||||||||||||||||||
Basic |
0.58 | 0.48 | 0.66 | 0.33 | |||||||||||||||
Diluted |
0.58 | 0.48 | 0.65 | 0.33 | |||||||||||||||
Comprehensive income per share |
|||||||||||||||||||
Basic |
0.73 | 0.65 | 0.49 | 0.40 | |||||||||||||||
Diluted |
0.73 | 0.65 | 0.49 | 0.40 | |||||||||||||||
Market price range of stock |
|||||||||||||||||||
High |
28.08 | 29.15 | 29.42 | 29.90 | |||||||||||||||
Low |
25.13 | 25.65 | 27.25 | 28.47 | |||||||||||||||
Dividend per
share |
0.24 | 0.25 | 0.24 | 0.24 |
53
SJW CORP.
FINANCIAL STATEMENT SCHEDULE
VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
Years ended December 31, 2004 and 2003
Schedule II
Description |
2004 |
2003 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Allowance for doubtful accounts |
||||||||||
Balance,
beginning of period |
$ | 130,000 | 120,000 | |||||||
Charged to
expense |
227,442 | 312,740 | ||||||||
Accounts
written off |
(279,719 | ) | (349,343 | ) | ||||||
Recoveries of
accounts written off |
52,277 | 46,603 | ||||||||
Balance, end
of period |
$ | 130,000 | 130,000 | |||||||
Reserve for
litigation and claims |
||||||||||
Balance,
beginning of period |
$ | 648,225 | 609,292 | |||||||
Charged to
expense |
| 105,000 | ||||||||
Revision to
accrual |
(123,500 | ) | | |||||||
Payments |
(82,404 | ) | (66,067 | ) | ||||||
Balance, end
of period |
$ | 442,321 | 648,225 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Evaluation of Disclosure Control and Procedures
Managements Report on Internal Control Over Financial Reporting
54
Changes in Internal Controls
Item 9B. Other Information
PART III
Item 10. Directors and Executive Officers of the Registrant
Code of Ethics
Corporate Governance Guidelines and Board Committee Charters
SJW Corp.
374 West Santa Clara Street
San Jose CA 95196
Attn: Corporate
Secretary
Phone: 800-250-5147
Item 11. Executive Compensation
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. Certain Relationships and Related Transactions
55
Item 14. Principal Accountant Fees and Services
PART IV
Item 15. Exhibits and Financial Statement Schedules
(1) |
Financial Statements |
Page |
||||||
---|---|---|---|---|---|---|
Report of
Independent Accounting Firm |
27 | |||||
Report of
Internal Controller over Financial Reporting |
28 | |||||
Consolidated
Balance Sheets as of December 31, 2004 and 2003 |
29 | |||||
Consolidated
Statements of Income and Comprehensive Income for the years ended December 31, 2004, 2003 and 2002 |
31 | |||||
Consolidated
Statements of Changes in Shareholders Equity for the years ended December 31, 2004, 2003 and 2002 |
32 | |||||
Consolidated
Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 |
33 | |||||
Notes to
Consolidated Financial Statements |
34 |
(2) |
Financial Statement Schedule |
Valuation
and Qualifying Accounts and Reserves, Years ended December 31, 2004 and 2003 |
54 |
(3) |
Exhibits required to be filed by Item 601 of Regulation S-K |
56
EXHIBIT INDEX
Exhibit
No.
|
Description
|
|||||
---|---|---|---|---|---|---|
2 |
Plan
of Acquisition, Reorganization, Arrangement, Liquidation or Succession: |
|||||
2.1 |
Registration Rights Agreement entered into as of December 31, 1992 among
SJW Corp., Roscoe Moss, Jr. and George E. Moss. Filed as Exhibit 2.1 to
Form 10-K March 12, 2004. S.E.C. File No. 1-8966. |
|||||
3 |
Articles of Incorporation and By-Laws: |
|||||
3.1 |
Restated Articles of Incorporation and By-Laws of SJW Corp., defining
the rights of holders of the equity securities of SJW Corp. |
|||||
3.2 | Certificate of Amendment of SJW Corp. amending the restated Articles of Incorporation. (1) | |||||
3.3 | By-Laws of SJW Corp. as amended. (1) | |||||
4 |
Instruments Defining the Rights of Security Holders, including Indentures: |
|||||
No
current issue of the registrants long-term debt exceeds 10 percent
of its total assets. SJW Corp. hereby agrees to furnish upon request to
the Commission a copy of each instrument defining the rights of holders
of unregistered senior and subordinated debt of the company. |
||||||
10 |
Material Contracts: |
|||||
10.1 |
Water Supply Contract dated January 27, 1981 between San Jose Water Works
and the Santa Clara Valley Water District, as amended. Filed as Exhibit
10.1 to Form 10-K for the year ended December 31, 2001. |
|||||
10.2 |
Resolution for Directors Retirement Plan adopted by SJW Corp. Board
of Directors as amended on September 22, 1999. Filed as an Exhibit to
10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966.
(2) |
|||||
10.3 |
Resolution for Directors Retirement Plan adopted by San Jose Water
Companys Board of Directors as amended on September 22, 1999. Filed
as an Exhibit to 10-Q for the period ending September 30, 1999. S.E.C.
File No. 1-8966. (2) |
|||||
10.4 |
Resolution for Directors Retirement Plan adopted by SJW Land Company
Board of Directors on September 22, 1999. Filed as an Exhibit to 10-Q
for the period ending September 30, 1999. S.E.C. File No. 1-8966. (2) |
|||||
10.5 |
SJW
Corp. Long-Term Incentive Plan, adopted by SJW Corp. Board of Directors
March 6, 2002. Filed as an Exhibit to Form 10-Q for the period ended June
30, 2002. (2) |
|||||
10.6 |
Limited Partnership Agreement of 444 West Santa Clara Street, L. P. executed
between SJW Land Company and Toeniskoetter & Breeding, Inc. Development.
Filed as an Exhibit to 10-Q for the period ending September 30, 1999.
S.E.C. File No. 1-8966. |
|||||
10.7 |
San
Jose Water Company Executive Supplemental Retirement Plan adopted by San
Jose Water Company Board of Directors, as restated to reflect amendments
made through May 1, 2003. Filed as an Exhibit to Form 10-Q for the period
ended June 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.8 |
SJW
Corp. Executive Severance Plan adopted by SJW Corp. Board of Directors,
as restated to reflect amendments made through May 1, 2003. Filed as an
Exhibit to Form 10-Q for the period ended June 30, 2003. S.E.C. File No.
1-8966. (2) |
|||||
10.9 |
SJW
Corp. Long-Term Incentive Plan, adopted by SJW Corp. Board of Directors,
as amended on March 3, 2003. Filed as an Exhibit to Form 10-Q for the
period ended June 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.10 |
Chief Executive Officer Employment Agreement, as restated on June 27,
2003. Filed as an Exhibit to Form 10-Q for the period ended June 30, 2003.
S.E.C. File No. 1-8966. (2) |
57
Exhibit No. |
Description | |||||
---|---|---|---|---|---|---|
10.11 |
Standard Form of Stock Option Agreement-subject to changes per Employment
Agreement, as adopted by the SJW Corp. Board of Directors on April 29,
2003. Filed as an Exhibit to Form 10-Q for the period ended June 30, 2003.
S.E.C. File No. 1-8966. (2) |
|||||
10.12 |
Chief Executive Officer SERP Deferred Restricted Stock Award, as restated on June 27, 2003. Filed as an Exhibit to Form 10-Q for the period
ended June 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.13 |
Form
of Stock Option Agreement with Dividend Equivalent Agreement as adopted by the Board of Directors on April 29, 2003. Filed as an Exhibit to Form 10-Q
for the period ended June 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.14 |
Form
of Directors Deferred Restricted Stock Program as adopted by SJW Corp. Board of Directors on July 29, 2003. Filed as an Exhibit to 10-Q for the period
ending September 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.15 |
Form
of Directors Annual Retainer Fee Deferred Election Agreement, as adopted by SJW Corp. Board of Directors on July 29, 2003. Filed as an Exhibit to 10-Q
for the period ending September 30, 2003. S.E.C. File No. 1-8966. (2) |
|||||
10.16 |
First Amendment dated March 1, 2004 to San Jose Water Companys Executive Supplemental Retirement Plan adopted by the San Jose Water
Company Board of Directors. Filed as an Exhibit to Form 10-Q for the period ending March 31, 2004. SEC File No. 1-8966. (2) |
|||||
10.17 |
San
Jose Water Company Special Deferral Election Plan adopted by San Jose Water Company Board of Directors on December 9, 2004. Filed as Exhibit 99.1 of
Form 8-K on December 13, 2004. SEC File No. 1-8966. (2) |
|||||
10.18 |
First Amendment to the San Jose Water Company Special Deferral Election Plan adopted by the Board of Directors January 27, 2005. (1)
(2) |
|||||
21.1 |
Subsidiaries of SJW Corp. filed as an Exhibit to the Annual Report on Form 10-K for the year ended December 31, 2002. SEC File No.
1-8966. |
|||||
23 |
Consent of Independent Registered Public Accounting Firm. (1) |
|||||
31.1 |
Certification Pursuant to Rule 13a-14(a)/15d-14(a) by President and Chief Executive Officer. (1) |
|||||
31.2 |
Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer and Treasurer. (1) |
|||||
32.1 |
Certification Pursuant to 18 U.S.C. Section 1350 by President and Chief Executive Officer, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. (1) |
|||||
32.2 |
Certification Pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer and Treasurer, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. (1) |
|||||
(1) |
Filed currently herewith. |
|||||
(2) |
Management contract or compensatory plan or agreement. |
|||||
58
SIGNATURES
SJW
CORP. |
||||||||||||||||||||||
Date: |
By |
|||||||||||||||||||||
DREW
GIBSON, Chairman, Board of Directors |
Date: January 27,
2005 |
By |
|||||||||||||||||||||
W.
RICHARD ROTH, President, Chief Executive Officer and Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
ANGELA YIP, Chief Financial Officer |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
VICTOR K. WONG, Controller (Chief Accounting Officer) |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
MARK
L. CALI, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
J.
PHILIP DINAPOLI, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
DREW
GIBSON, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
DOUGLAS R. KING, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
GEORGE E. MOSS, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
CHARLES J. TOENISKOETTER, Member, Board of Directors |
||||||||||||||||||||||
Date: January 27,
2005 |
By |
|||||||||||||||||||||
FREDERICK ULRICH, Member, Board of Directors |
59
Exhibit 3.2
CERTIFICATE OF AMENDMENT
OF THE RESTATED ARTICLES OF INCORPORATION OF
SJW CORP.
A California
Corporation
The undersigned, W. Richard Roth and Robert A. Loehr, hereby certify that:
ONE: They are the duly elected and acting President and Secretary, respectively, of SJW Corp., a California corporation.
TWO: The Restated Articles of Incorporation of said corporation, filed on August 29, 1991, shall be amended as set forth in this Certificate of Amendment.
THREE: Section 3.1 of ARTICLE III of the Amended and Restated Articles of Incorporation is amended to read in its entirety as follows:
Section 3.1. The corporation is authorized to issue more than one class of shares, namely, two classes consisting of one class of preferred shares and one class of common shares. As of the close of business on February 10, 2004 each common share outstanding is split into three (3) common shares. The total number of shares which the corporation is authorized to issue is 18,176,407, and the aggregate, par value of all of said shares that are to have a par value, namely, all 18,176,407 of said shares is $23,160,175. Of said 18,176,407 shares 176,407 shall be and are preferred shares of the par value of $25 per share and 18,000,000 shall be and are common shares of the par value of $1.042 per share. Of said 176,407 preferred shares, 2,645 shall be and are Cumulative Preferred Stock, Series A (hereinafter called Series A preferred shares), 196 shall be and are Cumulative Preferred Stock, Series B (hereinafter called Series B preferred shares), 200 shall be and are Cumulative Preferred Stock, Series C (hereinafter called Series C preferred shares), 200 shall be and are Cumulative Preferred Stock, Series D (hereinafter called Series D preferred shares), 166 shall be and are Cumulative Preferred Stock, Series E (hereinafter called Series E preferred shares), 4,000 shall be and are Cumulative Preferred Stock, Series G (hereinafter called Series G preferred shares), 9,000 shall be and are Cumulative Preferred Stock, Series H (hereinafter called Series H preferred shares), and 160,000 shall be and are preferred shares of Series I, Series J, Series K, Series L, Series M and Series N, the number of shares constituting each of such series to be determined by the Board of Directors of the corporation pursuant to the authorization contained in these Articles. Series F has been intentionally omitted. All of said 18,000,000 common shares shall be of one and the same series, namely, |
common shares of the par value of $1.042 per share. No shares of any class are to be without par value. |
FOUR: The Board of Directors of the corporation has duly approved the foregoing Certificate of Amendment.
FIVE: In accordance with Section 902(c) of the General Corporation Law of the State of California, the foregoing Certificate of Amendment of the Restated Articles of Incorporation does not require shareholder approval. No preferred shares are outstanding.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of Amendment on February 10, 2004.
/s/ W. RICHARD ROTH |
/s/ ROBERT A. LOEHR |
The undersigned certify under penalty of perjury that they have read the foregoing Certificate of Amendment and know the contents thereof, and that the statements therein are true.
Executed at San Jose, California, on February 10, 2004.
/s/
W. RICHARD ROTH |
/s/ ROBERT A. LOEHR |
Exhibit 3.3
By-Laws Of
SJW Corp.
(A California Corporation)
Adopted April
16, 1985
As amended January 24, 1989,
October 20, 1994, September 22, 1999,
July 19,
2001 and April 29, 2004
1
ARTICLE I
OFFICES
Section 1.1 Principal Office. The principal office for the transaction of the business of the corporation shall be located at 374 West Santa Clara Street, San Jose, California 95113. The Board of Directors is hereby granted full power and authority to change said principal office to another location within or without the State of California.
Section 1.2 Other Offices. One or more branch or other subordinate offices may at any time be fixed and located by the Board of Directors at such place or places within or without the State of California, as it deems appropriate.
ARTICLE II
DIRECTORS
Section 2.1 Exercise of Corporate Powers. Except as otherwise provided by the Articles of Incorporation, as amended, of the corporation (the Articles) or by the laws of the State of California now or hereafter in force, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors. The Board may delegate the management of the day-to-day operation of the business of the corporation as permitted by law provided that the business and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the Board.
Section 2.2 Number. (a) The number of the corporations directors shall not be less than seven nor more than eleven, the exact number of which shall be fixed by a By-Law duly adopted by the shareholders or by the Board of Directors. [As amended July 19, 2001; April 29, 2004]
(b) The number of directors set forth in clause (a) of this Section 2.2 shall constitute the authorized number of the corporations directors until changed by an amendment of the Articles or of the By-Laws duly adopted by the shareholders.
(c) The exact number of directors of the corporation is fixed, within the limits set forth in clause (a) of this Section 2.2, at eight. [As amended October 20, 1994; July 19, 2001; April 29, 2004]
Section 2.3 Need Not Be Shareholders. The directors of the corporation need not be shareholders of the corporation.
Section 2.4 Compensation. Directors shall receive such compensation for their services as directors and such reimbursement for their expenses of attendance at meetings as may be determined from time to time by resolution of the Board. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefore.
Section 2.5 Election and Term of Office. Except as otherwise provided in paragraph
2
(1) of Section 5.1 of Article V of the Articles, directors shall be elected at each annual meeting of shareholders to hold office until the next annual meeting, provided, that if for any reason, said annual meeting or an adjournment thereof is not held or the directors are not: elected thereat, then the directors may be elected at any special meeting of the shareholders called and held for that purpose. Except as otherwise provided in paragraph (1) of Section 5.1 of Article V of the Articles, the term of office of the directors shall begin immediately after their election and shall continue until the expiration of the term for which elected and until their respective successors have been elected and qualified.
Section 2.6 Vacancies. A vacancy or vacancies in the Board of Directors shall exist when any authorized position of director is not then filled by a duly elected director, whether caused by death, resignation, removal, change in the authorized number of directors (by the Board or the shareholders) or otherwise. The Board of Directors may declare vacant the office of a director who has been declared of unsound mind by an order of court or convicted of a felony. Except for a vacancy created by the removal of a director, vacancies on the Board may be filled by a majority of the directors then in office, whether or not less than a quorum, or by a sole remaining director. A vacancy created by the removal of a director may be filled only by the approval of the shareholders. The shareholders may elect a director at any time to fill any vacancy not filled by the directors, but any such election by written consent requires the consent of the holders of shares entitled to cast a majority of the votes entitled to be cast by the outstanding voting shares. Any director may resign effective upon giving written notice to the Chairman of the Board, the President, the Secretary or the Board of Directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.
Section 2.7 Removal. (a) Any and all of the directors may be removed without cause if such removal is approved by the affirmative vote of a majority of the votes entitled to be cast by the outstanding voting shares at an election of directors, subject to the following:
(1) No director may be removed (unless the entire Board is removed) when the votes cast against removal, or not consenting in writing to such removal, would be sufficient to elect such director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote were voted) and the entire number of directors authorized at the time of the directors most recent election were then being elected; and |
(2) When by the provisions of the Articles, the holders of the shares of any class or series, voting as a class or series, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the holders of the shares of that class or series. |
(b) Any reduction of the authorized number of directors does not remove any director prior to the expiration of such directors term of office. |
Section 2.8 Emeritus Directors. The Board of Directors may designate any former director or directors of the corporation as an Emeritus Director for such term as the Board of Directors shall deem appropriate. Persons so designated shall not thereby become officers, directors or employees and shall have only such responsibilities and privileges as the Board of
3
Directors may from time to time specifically determine.
ARTICLE III
OFFICERS
Section 3.1 Election and Qualifications. The officers of this corporation shall consist of a President, one or more Vice Presidents, a Secretary, and a Chief Financial Officer and Treasurer who shall be chosen by the Board of Directors and such other officers, including a Chairman of the Board, as the Board of Directors shall deem expedient, who shall be chosen in such manner and hold their offices for such terms as the Board of Directors may prescribe. Any two or more of such offices may be held by the same person. Any Vice President may exercise any of the powers of the President as directed by the Board of Directors and shall perform such other duties as are imposed upon such officer by the By-Laws or the Board of Directors. The Chairman of the Board of Directors, if there be one, shall be chosen from the directors, but the other officers of the corporation mayor may not be directors.
Section 3.2 Term of Office and Compensation. The term of office and salary of each of said officers and the manner and time of the payment of such salaries shall be fixed and determined by the Board of Directors and may be altered by said Board from time to time at its pleasure, subject to the rights, if any, of said officers under any contract of employment.
Section 3.3 Removal and Vacancies. Any officer of the corporation may be removed at the pleasure of the Board of Directors at any meeting or by vote of shareholders entitled to exercise a majority of the voting power of the corporation at any meeting or at the pleasure of any officer who may be granted such power by a resolution of the Board of Directors. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party. If any vacancy occurs in any office of the corporation, the Board of Directors may elect a successor to fill such vacancy for the remainder of the un-expired term and until a successor is duly chosen and qualified.
ARTICLE IV
CHAIRMAN OF THE BOARD
Section 4.1 Powers and Duties. If there be one, the Chairman of the Board of Directors shall preside at meetings of the shareholders and of the Board of Directors, and shall do and perform such other things as may from time to time be assigned to him by the Board of Directors. He shall have the power and authority to affix the signature of the corporation to all deeds, conveyances, mortgages, leases, obligations, bonds, contracts, certificates and other papers and instruments in writing which have been authorized or directed by the Board of Directors or which, in his judgment, should be executed on behalf of the corporation. [As amended September 22, 1999]
4
ARTICLE V
PRESIDENT
Section 5.1 Powers and Duties. The President shall, subject to the Board of Directors, be the chief executive officer of the corporation. The President shall do and perform such duties as may from time to time be assigned to him by the Board of Directors. He shall have the power and authority to affix the signature of the corporation to all deeds, conveyances, mortgages, leases, obligations, bonds, contracts, certificates and other papers and instruments in writing which have been authorized or directed by the Board of Directors or which, in his judgment, should be executed on behalf of the corporation, and to sign certificates for shares of stock of the corporation. In the event of the absence or disability of the Chairman of the Board of Directors, the President shall exercise the powers and perform the duties of the Chairman of the Board of Directors. If there be no Chairman of the Board of Directors, the powers and duties of the President shall include those assigned to the Chairman of the Board of Directors by Article IV, as well as those assigned to the President by this Article. [As amended September 22, 1999]
Section 5.2 President Pro Tem. If neither the Chairman of the Board, the President, nor any Vice President is present at any meeting of the Board of Directors, a President pro tem may be chosen to preside and act at such meeting. If neither the President nor any Vice President is present at any meeting of the shareholders, a President pro tem may be chosen to preside at such meeting.
ARTICLE VI
VICE PRESIDENT
Section 6.1 Powers and Duties. In case of the absence, disability or death of the President, the Vice President, or one of the Vice Presidents, shall exercise all the powers and perform all the duties of the President. If there is more than one Vice President, the order in which the Vice Presidents shall succeed to the powers and duties of the President shall be as fixed by the Board of Directors. The Vice President or Vice Presidents shall have such other powers and perform such other duties as may be granted or prescribed by the Board of Directors.
ARTICLE VII
SECRETARY
Section 7.1 Powers and Duties. The powers and duties of the Secretary are:
(a)
To keep a book of minutes at the principal office of the corporation. or such
other place as the Board of Directors may order, of all meetings of its
directors and shareholders with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the names
of those present at directors meetings, the number of shares present or
represented at shareholders meetings and the proceedings thereof;
5
(b) To keep the seal of the corporation and to affix the same to all instruments which may require it;
(c) To keep or cause to be kept at the principal office of the corporation, or at the office of the transfer agent or agents, a share register, or duplicate share registers, showing the names of the shareholders and their addresses, the number and classes; of shares held by each, the number and date of certificates issued for shares, and the number and date of cancellation of every certificate surrendered for cancellation;
(d) To keep a supply of certificates for shares of the corporation, to fill in all certificates issued and to make a proper record of each such issuance; provided, that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents;
(e) To transfer upon the share books of the corporation any and all shares of the corporation; provided, that so long as the corporation shall have one or more duly appointed and acting transfer agents of the shares, or any class or series of shares, of the corporation, such duties with respect to such shares shall be performed by such transfer agent or transfer agents and the method of transfer of each certificate shall be subject to the reasonable regulations of the transfer agent to which the certificate is presented for transfer and also, if the corporation then has one or more duly appointed and acting registrars, to the reasonable regulations of the registrar to which the new certificate is presented for registration; and provided further that no certificate for shares of stock shall be issued or delivered or, if issued or delivered, shall have any validity whatsoever until and unless it has been signed or authenticated in the manner provided in Section 12.4 hereof;
(f) To make service and publication of all notices that may be necessary or proper, and without command or direction from anyone. In case of the absence, disability, refusal or neglect of the Secretary to make service or publication of any notices, then such notices may be served and/or published by the President or a Vice President, or by any person thereunto authorized by either of them or by the Board of Directors or by the holders of a majority of the outstanding shares of the corporation; and
(g) Generally to do and perform all such duties as pertain to the office of Secretary and as may be required by the Board of Directors.
ARTICLE VIII
CHIEF FINANCIAL OFFICER AND TREASURER
Section 8.1 Powers and Duties. The powers and duties of the Chief Financial
Officer and Treasurer are:
(a)
To supervise and control the keeping and maintaining of adequate and correct
accounts of the corporations properties and business transactions,
including accounts of its assets, liabilities, receipts, disbursements, gains,
losses, capital, retained earnings and shares. The books of account shall at all
reasonable times be open to inspection by any director;
(b) To have the custody of all funds, securities, evidence of indebtedness and other valuable documents of the corporation and, at the discretion of the Chief Financial Officer and Treasurer, to cause any or all thereof to be deposited for the account of the corporation with such depositary as may be designated from time to time by the Board of Directors;
6
(c) To receive or cause to be received, and to give or cause to be given, receipts and acquittances for moneys paid in for the account of the corporation;
(d) To pay out of the corporation funds on hand all just debts of the corporation of whatever nature upon maturity of the same and to disburse, or cause to be disbursed, all funds of the corporation as may be directed by the Board of Directors, taking proper vouchers for such disbursements;
(e) To render to the Chairman of the Board, to the President and to the Board of Directors, whenever they may require, accounts of all transactions and of the financial condition of the corporation; and
(f) Generally to do and perform all such duties as pertain to the office of Chief Financial Officer and Treasurer and as may be required by the Board of Directors.
ARTICLE IX
COMMITTEES OF THE BOARD
Section 9.1 Appointment and Procedure. The Board of Directors may, by resolution adopted by a majority of the authorized number of directors, designate one or more committees, including an Audit Committee, each consisting of two or more directors, to serve at the pleasure of the Board. The Board may designate one or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee.
Section 9.2 Powers. Any committee appointed by the Board of Directors, to the extent provided in the resolution of the Board or in these By-Laws, shall have all the authority of the Board except with respect to:
(a) The approval of any action, which requires the approval or vote of the shareholders;
(b) The filling of vacancies on the Board or on any committee;
(c) The fixing of compensation of the directors for serving on the Board or on any committee;
(d) The amendment or repeal of By-Laws or the adoption of new By-Laws;
(e) The amendment or repeal of any resolution of the Board, which by its express terms is not so amendable or repealable;
(f) A distribution to the shareholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the Board; and
(g) The appointment of other committees of the Board or the members thereof.
Section 9.3 Executive Committee. In the event that the Board of Directors appoints an Executive Committee, such Executive Committee shall include the Chairman of the Board, if any, as one of its members. In all cases in which specific directions to the contrary shall not have been given by the Board of Directors, such Executive Committee shall have and may exercise, during the intervals between the meetings of the Board of Directors, all the power and authority of the Board of Directors in the management of the business and affairs of the corporation (except as provided in Section 9.2 hereof) in such manner as the Executive Committee may deem in the best interests of the corporation.
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ARTICLE X
MEETINGS OF SHAREHOLDERS
Section 10.1 Place of Meetings. Meetings (whether regular, special or adjourned) of the shareholders of the corporation shall be held at the principal office for the transaction of business as specified in accordance with Section 1.1 hereof, or any place within or without the State which may be designated by written consent of all the shareholders entitled to vote thereat, or which may be designated by the Board of Directors.
Section 10.2 Time of Annual Meetings. The annual meeting of the shareholders shall be held at the hour of 10:00 oclock in the forenoon on the third Tuesday in April in each year, if not a legal holiday, and if a legal holiday, then on the next succeeding business day not a legal holiday, or such other time or date as may be set by the Board of Directors.
Section 10.3 Special Meetings. Special meetings of the shareholders may be called by the Board of Directors, the Chairman of the Board, the President or the holders of shares entitled to cast not less than 10 percent of the vote at the meeting.
Section 10.4 Notice of Meetings. (a) Whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 nor more than 60 days before the day of the meeting to each shareholder entitled to vote thereat. Such notice shall state the place, date and hour of the meeting and (1) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the annual meeting, those matters which the Board, at the time of the mailing of the notice, intends to present for action by the shareholders, but subject to the provisions of subdivision (b) any proper matter may be presented at the meeting for such action. The notice of any meeting at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented by management for election.
(b) Any shareholder approval at a meeting, other than unanimous approval by those entitled to vote, on any of the matters listed below shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice:
(1) A proposal to approve a contract or other transaction between the corporation and one or more of its directors, or between the corporation and any corporation, firm or association in which one or more directors has a material financial interest; |
(2) A proposal to amend the Articles; |
(3) A proposal regarding a reorganization, merger or consolidation involving the corporation; |
(4) A proposal to wind up and dissolve the corporation; |
(5) A proposal to adopt a plan of distribution of the share, obligations or securities of any other corporation, domestic or foreign, or assets other than money which is not in accordance with the liquidation rights of any preferred shares as specified in the Articles. |
Section 10.5 Delivery of Notice. Notice of a shareholders meeting or any report shall be given either personally or by mail or other means of written communication, addressed to the shareholder at the address of such shareholder appearing on the books of the corporation or given by the shareholder to the corporation for the purpose of notice; or if no such address appears or is given, at the place where the principal executive office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the
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principal executive office is located. The notice or report shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by other means of written communication. An affidavit of mailing of any notice or report in accordance with the provisions of this section, executed by the secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.
If any notice or report addressed to the shareholders at the address of such shareholder appearing on the books of the corporation is returned to the corporation by United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the shareholder at such address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the shareholder upon written demand of the shareholder at the principal executive office of the corporation for a period of one year from the date of the giving of the notice to all other shareholders.
Section 10.6 Adjourned Meetings. When a shareholders meeting is adjourned to another time or place, unless the By-Laws otherwise require and except as provided in this section, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 45 days or if after the adjournment a new record date if fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.
Section 10.7 Attendance at Shareholders Meeting. Attendance of a person at a meeting of shareholders shall constitute a waiver of notice of such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by the California General Corporation Law to be included in the notice but not so included in the notice if such objection is expressly made at the meeting.
Section 10.8 Quorum. (a) The presence in person or by proxy at any meeting of persons entitled to cast a majority of the votes entitled to be cast by the outstanding voting shares shall constitute a quorum for the transaction of business. If a quorum is present, the affirmative vote of a majority of the votes entitled to be cast by the shares represented at the meeting and entitled to vote on any matter shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by law or the Articles or these By-Laws and except as provided in subdivision (b).
(b) The shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by an affirmative vote equal to at least a majority of the votes required to constitute a quorum.
(c) In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the votes entitled to be cast by the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (b).
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Section 10.9 Actions Without Meeting. (a) Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted; provided that, subject to the provisions of Section 2.6, directors may not be elected by written consent except by unanimous written consent of all shares entitled to vote for the election of directors;
(b) Unless the consents of all shareholders entitled to vote have been solicited in writing:
(1) Notice of any shareholder approval on matters described in subparagraphs (1), (3) or (5) of subdivision (b) of Section 10.4 or respecting indemnification of agents of the corporation without a meeting by less than unanimous written consent shall be given at least ten (10) days before the consummation of the action authorized by such approval; and |
(2) Prompt notice shall be given of the taking of any other corporate action approved by shareholders without a meeting by less than unanimous written consent, to those shareholders entitled to vote who have not consented in writing; the provisions of Section 10.5 shall apply to such notice. |
Section 10.10 Revocation of Consent. Any shareholder giving a written consent, or the shareholders proxy holders, or a transferee of the shares or a personal representative of the shareholder or their respective proxy holders, may revoke the consent by a writing received by the corporation prior to the time that written consents of the number of shares required to authorize the proposed action have been filed with the secretary of the corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the secretary of the corporation.
Section 10.11 Voting Rights. Except as provided in Section 10.13 or in the Articles or in the Certificate of Determination of Preferences of any series of preferred shares or in any statute relating to the election of directors or to other particular matters, each holder of preferred shares entitled to be voted shall be entitled to eight votes for each preferred share and each holder of common shares entitled to be voted shall be entitled to one vote for each common share with respect to each matter submitted to a vote of shareholders. A fraction of a share shall not be entitled to any voting rights whatsoever. Any holder of shares entitled to vote on any matter may vote part of the shares in favor of the proposal and refrain from voting the remaining share; or vote them against the proposal, other than elections to office, but, if the shareholder fails to specify the number of shares such shareholder is voting affirmatively, it will be conclusively presumed that the shareholders approving vote is with respect to all shares such shareholder is entitled to vote.
Section 10.12 Determination of Holders of Record. (a) In order that the corporation may determine the shareholders entitled to notice of any meeting or to vote or entitled to receive payment of any dividend or other distribution or allotment of any rights or entitled to exercise any rights in respect of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days prior to the date of such meeting nor more than 60 days prior to any other action.
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(b) In the absence of any record date set by the Board of Directors pursuant to subdivision (a) above, then:
(1) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; |
(2) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting, when no prior action by the Board has been taken, shall be the day on which the first written consent is given; |
(3) The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later. |
(c) A determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders shall apply to any adjournment of the meeting unless the Board fixes a new record date for the adjourned meeting, but the Board shall fix a new record date if the meeting is adjourned for more than 45 days from the date set for the original meeting.
(d) Shareholders on the record date are entitled to notice and to vote or to receive the dividend distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the Articles or these By-Laws or by agreement or applicable law.
Section 10.13 Elections for Directors. (a) Every shareholder complying with subdivision (b) and entitled to vote at any election of directors may cumulate such shareholders votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the shareholders shares are entitled, or distribute the shareholders votes on the same principle among as many candidates as the shareholder thinks fit.
(b) No shareholder shall be entitled to cumulate votes (i.e., cast for anyone or more candidates a number of votes greater than the number of votes to which the shareholders shares are entitled pursuant to Section 10.11) unless such candidate or candidates names have been placed in nomination prior to the voting and the shareholder has given written notice to the chairman of the meeting at the meeting prior to the voting of the shareholders intention to cumulate the shareholders votes. If anyone shareholder has given such notice, all shareholders may cumulate their votes for candidates in nomination.
(c) In any election of directors, the candidates receiving the highest number of votes of the shares entitled, to be voted for them up to the number of directors, to be elected by such shares are elected.
(d) Elections for directors need not be by ballot unless a shareholder demands election by ballot at the meeting and before the voting begins or unless the By-Laws so require.
Section 10.14 Proxies. (a) Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to such shares. Any proxy purporting to be executed in accordance with the provisions of the General Corporation Law of the State of California shall be presumptively valid.
(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this
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section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or by attendance at the meeting and voting in person by, the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.
(c) A proxy is not revoked by the death or incapacity of the maker unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.
Section 10.15 Inspectors of Election. (a) In advance of any meeting of shareholders the Board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of shareholders may and on the request of any shareholder or a shareholders proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more shareholders or proxies, the holders of shares entitled to cast a majority of the votes entitled to be cast by the shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed.
(b) The inspectors of election shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all shareholders.
(c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
Section 10.16 Voting Powers on Default in Dividends. Reference is hereby made to paragraph (1) of Section 5.1 of Article V of the Articles for provisions concerning changes in voting powers of preferred shares and common shares of the corporation and procedure for election of directors in case of certain defaults in payment of dividends on preferred shares.
ARTICLE XI
MEETINGS OF DIRECTORS
Section 11.1 Place of Meetings. Unless otherwise specified in the notice thereof, meetings (whether regular, special or adjourned) of the Board of Directors of this corporation shall be held at the principal office of the corporation for the transaction of business, as specified in accordance with Section 1.1 hereof, which is hereby designated as an office for such purpose in accordance with the laws of the State of California, or at any other place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board.
Section 11.2 Regular Meetings. Regular meetings of the Board of Directors, of which
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no notice need be given except as required by the laws of the State of California, shall be held after the adjournment of each annual meeting of the shareholders (which meeting shall be designated the Regular Annual Meeting) and at the hour of 11:00 oclock in the forenoon on the fourth Tuesday in January and on the third Tuesday in April, July and October, if not a legal holiday, and if a legal holiday, then on the next succeeding business day not a legal holiday.
Section 11.3 Special Meetings. Special meetings of the Board of Directors may be called at any time by the Chairman of the Board or the President or by any Vice President or the Secretary or by any two or more of the directors.
Section 11.4 Notice of Meetings. Except in the case of regular meetings, notice of which has been dispensed with, the meetings of the Board of Directors shall be held upon four (4) days notice by mail or forty-eight (48) hours notice delivered personally or by telephone, telegraph or other electronic or wireless means. If the address of a director is not shown on the records and is not readily ascertainable, notice shall be addressed to him at the city or place in which the meetings of the directors are regularly held. Except as set forth in Section 11.6, notice of the time and place of holding an adjourned meeting need not be given to absent directors if the time and place be fixed at the meeting adjourned.
Section 11.5 Quorum. A majority of the authorized number of directors constitutes a quorum of the Board for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors except as otherwise provided by law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting.
Section 11.6 Adjourned Meetings. A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.
Section 11.7 Waiver of Notice and Consent. (a) Notice of a meeting need not be given to any director who signs a waiver of notice, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director.
(b) The transactions of any meeting of the Board, however called and noticed or wherever held, are as valid as though had at a meeting duly held after regular call and notice if a quorum is present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes thereof. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
Section 11.8 Action Without a Meeting. Any action required or permitted, to be taken by the Board may be taken without a meeting, if all members of the Board shall individually or
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collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board. Such action by written consent shall have the same force and effect as a unanimous vote of such directors.
Section 11.9 Conference Telephone Meetings. Members of the Board may participate in a meeting through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting pursuant to this section constitutes presence in person at such meeting.
Section 11.10 Meetings of Committees. The provisions of this Article apply also to committees of the Board and action by such committees.
ARTICLE XII
SUNDRY PROVISIONS
Section 12.1 Instruments in Writing. All checks, drafts, demands for money and notes of the corporation, and all written contracts of the corporation, shall be signed by such officer or officers, agent or agents, as the Board of Directors may from time to time by resolution designate. No officer, agent, or employee of the corporation shall have power to bind the corporation by contract or otherwise unless authorized to do so by these By-Laws or by the Board of Directors.
Section 12.2 Fiscal Year. The fiscal year of this corporation shall be the calendar year.
Section 12.3 Shares Held by the Corporation. Shares in other corporations standing in the name of this corporation may be voted or represented and all rights incident thereto may be exercised on behalf of this corporation by the President or by any other officer of this corporation authorized so to do by resolution of the Board of Directors.
Section 12.4 Certificates of Stock. There shall be issued to each holder of fully paid shares of the capital stock of the corporation a certificate or certificates for such shares. Every holder of shares in the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman or Vice Chairman of the Board or the President or a Vice President and by the Chief Financial Officer and Treasurer or the Secretary, certifying the number of shares and the class or series of shares owned by the shareholder. Any or all of the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.
Section 12.5 Lost Certificate. The Board of Directors may by resolution provide that in the event any certificates for shares of the capital stock of the corporation shall be alleged to have been lost or destroyed, no new certificate or certificates shall be issued in lieu thereof until an indemnity bond in such form and in such amount as shall be approved by the President or a
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Vice President of the corporation shall have been furnished. The Board of Directors may adopt such other provisions and restrictions with reference to lost certificates as it shall in its discretion deem appropriate.
Section 12.6 Certification and Inspection of By-Laws. The corporation shall keep at its principal executive office in this state, or if its principal executive office is not in this state at its principal business office in this state, the original or a copy of these By-Laws as amended to date, which shall be open to inspection by the shareholders at all reasonable times during office hours. If the principal executive office of the corporation is outside this state and the corporation has no principal business office in this state, it shall upon the written request of any shareholder furnish to such shareholder a copy of the By-Laws as amended to date.
Section 12.7 Notices. Any reference in these By-Laws to the time a notice is given or sent means, unless otherwise expressly provided, the time a written notice by mail is deposited in the United States mails, postage prepaid; or the time any other written notice is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or the time any oral notices communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.
Section 12.8 Reports to Shareholders. The Board of Directors shall cause an annual report to be sent to the shareholders not later than 120 days after the close of the fiscal year or within such shorter time period as may be required by applicable law, and such annual report shall contain such information and be accompanied by such other documents as may be required by applicable law.
Section 12.9 No Closing of Stock Transfer Books. The Board of Directors shall set a record date to determine shareholders eligible to receive dividends, rights, distributions and the like, and to vote at meetings of shareholders, and the transfer books shall not be closed in connection therewith.
Section 12.10 Indemnification of Directors, Officers and Employees. (a) For the purpose of this section, agent means any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; proceeding means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and expenses includes without limitation attorneys fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e).
(b) Subject to the specific determination required by subdivision (e), the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person
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acted in good faith and in a manner such person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo-contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the persons conduct was unlawful.
(c) Subject to the specific determination required by subdivision (e), the corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was an agent of the corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if such person acted in good faith, in a manner such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in alike position would use under similar circumstances. No indemnification shall be made under this subdivision (c):
(1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of such persons duty to the corporation, unless and only to the extent that the court in which such action was brought shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; or |
(2) Of amounts paid in settling or otherwise disposing of a threatened or pending action with or without court approval; or |
(3) Of expenses incurred in defending a threatened or pending action, which is settled or otherwise disposed of without court approval. |
(d) To the extent that an agent of the corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim issue or matter therein the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.
(e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subdivision (b) or (c), by:
(1) A majority vote of a quorum consisting of directors who are not parties to such proceeding; or |
(2) Approval of the shareholders, with the shares owned by the person to be indemnified not being entitled to vote thereon; or |
(3) The court in which such proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is opposed by the corporation. |
(f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section.
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(g) No provision made by the corporation to indemnify its or its subsidiaries directors or officers for the defense of any proceeding, whether contained in a resolution of shareholders or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than such directors and officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstance where it appears:
(1) That it would be inconsistent with a provision of the Articles, By-Laws, a resolution of the shareholders or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or |
(2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement. |
(i) The corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agents status as such whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of this section.
(j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such persons capacity as such, even though such person may also be an agent of the corporation as defined in subdivision (a). Nothing contained in this section shall limit any right to indemnification to which such a trustee, investment manager or other fiduciary may be entitled by contract or otherwise, which shall be enforceable to the extent permitted by applicable law other than this section.
(k) Nothing in this section shall restrict the power of the corporation to indemnify its agents under any provision of the California General Corporation Law, as amended from time to time, or under any other provision of law from time to time applicable to the corporation, nor shall anything in this section authorize the corporation to indemnify its agents in situations prohibited by the California General Corporation Law or other applicable law. [The foregoing Section 12.10 was deleted in its entirety by amendment dated January 24, 1989]
ARTICLE XIII
CONSTRUCTION OF BY-LAWS WITH REFERENCE TO PROVISIONS OF LAW
Section 13.1 Definitions. Unless defined otherwise in these By-Laws or unless the context otherwise requires, terms used herein shall have the same meaning, if any, ascribed thereto in the California General Corporation Law, as amended from time to time.
Section 13.2 By-Law Provisions Additional and Supplemental to Provisions of Law. All restrictions, limitations, requirements and other provisions of these By-Laws shall be construed, insofar as possible, as supplemental and additional to all provisions of law applicable to the subject matter thereof and shall be fully complied with in addition to the said provisions of law unless such compliance shall be illegal.
Section 13.3 By-Law Provisions Contrary to or Inconsistent with Provisions of Law. Any article, section, subsection, subdivision, sentence, clause or phrase of these By-Laws which
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upon being construed in the manner provided in Section 13.2 hereof, shall be contrary to or inconsistent with any applicable provision of law, shall not apply so long as said provisions of law shall remain in effect, but such result shall not affect the validity or applicability of any other portions of these By-Laws, it being hereby declared that these By-Laws would have been adopted and each article, section, subsection, subdivision, sentence, clause or phrase thereof, irrespective of the fact that anyone or more articles, sections, subsections, subdivisions, sentences, clauses or phrases is or are illegal.
ARTICLE XIV
ADOPTION, AMENDMENT OR REPEAL OF BY-LAWS
Section 14.1 By Shareholders. By-Laws may be adopted, amended or repealed by the affirmative vote of a majority of the votes entitled to be cast by the outstanding voting shares of the corporation.
Section 14.2 By the Board of Directors. Subject to the right of shareholders to adopt, amend or repeal By-Laws, By-Laws other than a By-Law or amendment thereof changing the authorized number of directors may be adopted, amended or repealed by the Board of Directors. A By-Law adopted by the shareholders may restrict or eliminate the power of the Board of Directors to adopt, amend or repeal any or all By-Laws.
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Exhibit 10.18
SAN
JOSE WATER COMPANY
SPECIAL DEFERRAL ELECTION PLAN
PLAN
AMENDMENT
The San Jose Water Company Special Deferral Election Plan (the "Plan"), as previously adopted and approved by the Executive Compensation Committee of the Board of Directors of SJW. Corp., is hereby amended as follows:
1. Section 3.08 of the Plan is hereby amended in its entirety to read as follows: |
3.08 Eligible Earnings shall mean any direct and current cash compensation, including salary, bonuses and other incentive-type compensation, earned by the Participant for service as an Employee during the Plan Year. In no event, however, shall a Participants Eligible Earnings include, for purposes of the Plan, any item of compensation paid or distributed to the Participant after a period of deferral, whether under this Plan or any other program of deferred compensation maintained by the Corporation or any Affiliated Company. Eligible Earnings shall also include any bonus earned by the Participant for service as an Employee during the period commencing January 1, 2004 and continuing through March 31, 2005 and otherwise payable to such Participant on March 31, 2005 in the absence of a Deferral Election under this Plan (the March 2005 Bonus Payment). |
2. Section 4.01 of the Plan is hereby amended in its entirety to read as follows: |
4.01 Eligibility Rules. The Plan Administrator shall have absolute discretion in selecting the Eligible Employees who are to participate in the Plan for each Plan Year. An Eligible Employee selected for participation for the 2005 Plan Year must, in order to participate in the Plan for that year, file his or her Deferral Election on or before the last day of the 2004 calendar year; provided, however, that any Deferral Election with respect to the March 31, 2005 Bonus Payment must be filed on or before January 31, 2005. For each subsequent Plan Year of participation, the Participant must file his or her Deferral Election on or before the last day of the immediately preceding Plan Year. However, an Eligible Employee who is first selected for participation in the Plan after the start of a Plan Year must, in order to participate in the Plan for that Plan Year, file his or her Deferral Election within the thirty (30)-day period following the date he or she is so selected, with such Deferral Election to be effective only for Eligible Earnings attributable to Employee service for the period commencing with the first day of the first calendar month coincident with or next following the filing of such election and ending with the close of such Plan Year. |
3. Section 5.02.A of the Plan is hereby amended in its entirety to read as follows: |
A. The Deferral Election must be exercised by means of a written notice filed with the Plan Administrator or its designate. The notice shall be substantially in the form of the Deferral Election attached as Exhibit A and must be filed on or before the last day of the calendar year immediately preceding the start of the Plan Year for which the Eligible Earnings subject to that election are to be earned; provided, however, that any Deferral Election with respect to the March 31, 2005 Bonus Payment must be filed on or before January 31, 2005. An Eligible Employee who is first selected for participation in the Plan after the start of a Plan Year must file his or her Deferral Election within the thirty (30)-day period following the date he or she is so selected, and the Deferral Election shall be effective only for Eligible Earnings attributable to Employee service for the period commencing with the first day of the first calendar month coincident with or next following the filing of such election and ending with the close of such Plan Year. |
4. Section 5.03 of the Plan is hereby amended in its entirety to read as follows: |
5.03 Deferral Election Subaccounts. A separate Deferral Election Subaccount shall be established for each Plan Year for which the Participant defers a portion of his or her Eligible Earnings under the Plan. Such subaccount shall be credited with the Eligible Earnings subject to the Deferral Election in effect for that Plan Year, as and when those Eligible Earnings would have otherwise become due and payable to the Participant in the absence of such Deferral Election. In addition, a separate Deferral Election Subaccount shall be established on March 31, 2005 with respect to the portion of the March 31, 2005 Bonus Payment which the Participant has elected to defer under the Plan. The Participant shall at all times be fully vested in the balance credited to each of his or her Deferral Election Subaccounts. |
5. Except as modified by the foregoing amendments, the terms and provisions of the Plan shall continue in full force and effect. |
IN WITNESS WHEREOF, SAN JOSE WATER COMPANY has caused this Plan Amendment to be executed by its duly-authorized officer on this 30th day of December 2004. |
SAN JOSE WATER COMPANY |
By: _________________________________________ |
Title: _________________________________________ |
Exhibit 23
CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Shareholders and Board of Directors
SJW Corp.:
We consent to the incorporation by reference in the registration statement (No. 333-105010) on Form S-8 of SJW Corp. of our report dated February 28, 2005, with respect to the consolidated balance sheets of SJW Corp. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2004, and the related financial statement schedule, management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2004, and the effectiveness of internal control over financial reporting as of December 31, 2004, which reports appear in the December 31, 2004, annual report on Form 10-K of SJW Corp.
Exhibit 31.1
CERTIFICATIONS
I, W. Richard Roth, President and Chief Executive Officer, certify that:
1. | I have reviewed this Annual Report on Form 10-K of SJW Corp. (the registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and have: |
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: |
||||||||||||||||||||||
W.
Richard Roth President and Chief Executive Officer (Principal executive officer) |
60
Exhibit 31.2
CERTIFICATIONS
I, Angela Yip, Chief Financial Officer and Treasurer, certify that:
1. | I have reviewed this Annual Report on Form 10-K of SJW Corp. (the registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a15(e) and 15d15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a15(f) and 15d15(f)) for the registrant and have: |
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of registrants board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: |
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Angela Yip Chief Financial Officer and Treasurer (Principal financial officer) |
61
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of SJW Corp. (the Company) on Form 10-K for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, W. Richard Roth, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ W. Richard Roth
W. RICHARD ROTH
President and Chief Executive
Officer
(Principal executive officer)
March 7, 2005
62
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT
TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of SJW Corp. (the Company) on Form 10-K for the year ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Angela Yip, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Angela Yip
ANGELA YIP
Chief Financial Officer and Treasurer
(Principal financial officer)
March 7, 2005
63