FORM 10-K405 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period ______________to_____________ Commission file number 1-8966 SJW CORP. (Exact name of registrant as specified in its charter) California 77-0066628 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 374 West Santa Clara Street, San Jose, California 95196 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 408-279-7810 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Name of each exchange on Title of each class which registered Common Stock, Par Value $3.125 American Stock Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the registrant - $80,636,135 on March 1, 1996. Shares of common stock outstanding on March 1, 1996 - 3,246,146 DOCUMENTS INCORPORATED BY REFERENCE None EXHIBIT INDEX The Exhibit Index to this Form 10-K is located in Part IV, Item 14 of this document. TABLE OF CONTENTS PART I Item 1. Business a. General Development of Business Regulation and Rates b. Financial Information about Industry Segments c. Narrative Description of Business General Water Supply Franchises Seasonal Factors Competition and Condemnation Environmental Matters Employees d. Financial Information about Foreign and Domestic Operations and Export Sales Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters a. Market Information b. Holders c. Dividends Item 6. Selected Financial Data Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure PART III Item 10. Directors and Executive Officers of the Registrant Compliance With Section 16(a) of the Exchange Act Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management Item 13. Certain Relationships and Related Transactions PART IV. Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K Signatures Exhibit Index PART I Item 1. Business. (a) General Development of Business. SJW Corp., incorporated in California on February 8, 1985, is a holding company with two wholly owned subsidiaries, San Jose Water Company and SJW Land Company. San Jose Water Company, with headquarters at 374 West Santa Clara Street, San Jose, California 95196, was incorporated under the laws of the State of California in 1931, succeeding a business founded in 1866. San Jose Water Company is a public utility in the business of providing water service to a population of approximately 928,000 in an area comprising about 134 square miles in the metropolitan San Jose area. SJW Land Company was incorporated in October, 1985. SJW Corp. also owns 549,976 shares of California Water Service Company, acquired through the liquidation of Western Precision, Inc., formerly a wholly owned subsidiary of SJW Corp. Regulation and Rates. San Jose Water Company's rates, service and other matters affecting its business are subject to regulation by the Public Utilities Commission of the State of California ( the "Commission"). Ordinarily, there are two types of rate increases, general and offset. The purpose of the latter is generally to compensate utilities for increases in specific expenses, such as those for purchased water or power. The most recent general rate case decision authorized an initial increase followed by two annual step increases designed to maintain the authorized return on equity over a three-year period. General rate applications are normally filed and processed during the last year covered by the most recent rate case in an attempt to avoid regulatory lag. Pursuant to Section 792.5 of the Public Utilities Code, a balancing account is to be kept for all expense items for which revenue offsets have been authorized. A separate balancing account must be maintained for each offset expense item. The purpose of a balancing account is to track the under-collection or over- collection associated with expense changes and the revenue authorized by the Commission to offset those expense changes. At December 31, 1995 the balancing account had a net under-collected balance to be offset of $712,000. This Annual Report contains forward looking statements relating to future events and financial performance of the company. The company's actual results could differ materially from those discussed herein. Important factors that could cause or contribute to such differences include the following: The Public Utilities Commission of California's policy and regulations can adversely affect San Jose Water Company's operating results through the availability, timeliness and amount of rate relief. The Commission's willingness to allow San Jose Water Company to recover all of its capital expenditure and to provide financial and operational flexibility to engage in non-regulated operations can also affect San Jose Water Company's operating results. San Jose Water Company's sales and therefore its operating results could be adversely affected by several events: Difficulties in obtaining a secured water supply from the Santa Clara Valley Water District which receives its allotment from the state and federal water projects could prevent the company from satisfying its customer demand within its service area; Fluctuation of customer sales due to lifestyle or weather; Availability of recycled water and its acceptance by customers as a substitute to potable water; and Economic development and growth in San Jose Water Company's service area. SJW Corp.'s expenses and therefore its operating results could be adversely affected by the following: Fluctuation of surface water availability from San Jose Water Company's Santa Cruz mountain watershed, which produces a less costly water supply, could result in the need to procure more costly water from other sources; Stringent environmental and water quality regulations could increase San Jose Water Company's water quality compliance costs; Consequences from pollution and contamination of San Jose Water Company's well and source of supply could result in the need to procure more costly water from other sources; 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 the corporation; Cost and other effects of lawsuits against SJW Corp. or its subsidiaries, whether civil, environmental, product-related or liability-related could increase the corporation's legal, liability and insurance costs. See also the heading "Factors That May Adversely Affect Future Operation Results" under Item 7. Management's Discussion and Analysis of Financial condition and Results of Operations. (b) Financial Information about Industry Segments. San Jose Water Company generated 98%, 94% and 95% of SJW Corp.'s consolidated revenue, and 91%, 86% and 92% of SJW Corp.'s consolidated income for the years ended December 31, 1995, 1994 and 1993, respectively. There were no significant changes in 1995 in the type of products produced or services rendered by San Jose Water Company, or in its markets or methods of distribution. Western Precision, Inc.'s mechanical parts manufacturing operation which was sold on February 28, 1995, generated 1%, 6% and 5% of SJW Corp.'s consolidated revenue for the years 1995, 1994 and 1993, respectively. Dividend income from California Water Service generated 8%, 9% and 8% of consolidated income for the years 1995, 1994 and 1993, respectively. (c) Narrative Description of Business. (1) (i) General. The principal business of San Jose Water Company consists of the production, purchase, storage, purification, distribution and retail sale of water. San Jose Water Company provides water service to customers in portions of the cities of Cupertino and San Jose and in the cities of Campbell, Monte Sereno, Saratoga and the Town of Los Gatos, and adjacent unincorporated territory, all in the County of Santa Clara in the State of California. It distributes water to customers in accordance with accepted water utility methods, which include pumping from storage and gravity feed from high elevation reservoirs. (1) (iii) Water Supply. San Jose Water Company's water supply is obtained from wells, surface run-off or diversion and by purchases from the Santa Clara Valley Water District ("SCVWD"). Surface supplies, which during a year of normal rainfall satisfy about 6% to 8% of San Jose Water Company's current annual needs, provide approximately 1% of its water supply in a dry year and approximately 14% in a wet year. In dry years the decrease in water from surface run-off and diversion, and the corresponding increase in purchased and pumped water increases production costs substantially. San Jose Water Company implemented various mandatory water rationing programs throughout the period of 1989-1993. Effective March 14, 1993 San Jose Water Company terminated its mandatory water rationing plan and instituted a voluntary conservation plan intended to reduce usage 15% from 1987 levels. Effective February 16, 1994, San Jose Water Company discontinued its voluntary conservation plan. Groundwater levels in 1995 climbed to their highest level in 8 years reflecting the impact of the last rainfall season. SCVWD's reservoir storage of approximately 140,000 acre feet (82% of capacity) was reported on February 14, 1996. Until 1989, San Jose Water Company had never found it necessary to impose mandatory water rationing. Except in a few isolated cases when service had been interrupted or curtailed because of power or equipment failures, construction shutdowns or other operating difficulties, San Jose Water Company had not at any prior time in its history interrupted or imposed mandatory curtailment of service to any type or class of customer. (1) (iv) Franchises. San Jose Water Company holds such franchises or permits in the communities it serves as it judges necessary to operate and maintain its facilities in the public streets. (1) (v) Seasonal Factors. Water sales are seasonal in nature. The demand for water, especially by residential customers, is generally influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by residential customers to vary significantly. (1) (x) Competition and Condemnation. San Jose Water Company is a public utility regulated by the Commission and operates within a service area approved by the Commission. The laws of the State of California provide that no other investor owned public utility may operate in San Jose Water Company's service area without first obtaining from the Commission a certificate of public convenience and necessity. Past experience shows such a certificate will be issued only after demonstrating San Jose Water Company's service in such area is inadequate. California law also provides that whenever a public agency constructs facilities to extend utility service to the service area of a privately owned public utility (like San Jose Water Company), such an act constitutes the taking of property and is conditioned upon payment of just compensation to the private utility. Under the constitution and statutes of the State of California, municipalities, water districts and other public agencies have been authorized to engage in the ownership and operation of water systems. Such agencies are empowered to condemn properties operated by privately owned public utilities upon payment of just compensation and are further authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems. To the Company's knowledge, no municipality, water district or other public agency has pending any action to condemn any part of San Jose Water Company's system. (1) (xii) Environmental Matters. San Jose Water Company maintains procedures to produce potable water in accordance with all applicable county, state and federal environmental rules and regulations. Additionally, San Jose Water Company is subject to environmental regulation by various other governmental authorities. (See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations.") (1) (xiii) Employees As of December 31, 1995, San Jose Water Company had 288 employees, of whom 59 were executive, administrative or supervisory personnel, and of whom 229 were members of unions. San Jose Water Company reached a two-year collective bargaining agreement with the Utility Workers of America, representing the majority of employees and the International Union of Operating Engineers, representing certain employees in the engineering department covering the years 1995 and 1996. Both groups are affiliated with the AFL-CIO. (d) Financial Information about Foreign and Domestic Operations and Export Sales. Substantially all of SJW Corp.'s revenue and expense are derived from operations located in the County of Santa Clara in the State of California. Item 2. Properties. The properties of San Jose Water Company consist of a unified system of water production, storage, purification and distribution located in the County of Santa Clara in the State of California. In general, the property is comprised of franchise rights, water rights, necessary rights-of-way, approximately 7,000 acres of land held in fee (which is primarily nondevelopable watershed), impounding reservoirs with a capacity of approximately 2.256 billion gallons, diversion facilities, wells, distribution storage of approximately 240 million gallons and all water facilities, equipment and other property necessary to supply its customers. San Jose Water Company maintains all of its properties in good operating condition in accordance with customary proper practice for a water utility. San Jose Water Company's well pumping stations have a production capacity of approximately 257 million gallons per day and the present capacity for taking purchased water is approximately 169 million gallons per day. The gravity water collection system has a physical delivery capacity of approximately 25 million gallons per day. During 1995, a maximum and average of 197 million gallons and 126 million gallons of water per day, respectively, were delivered to the system. San Jose Water Company holds all its principal properties in fee, subject to current tax and assessment liens, rights-of-way, easements, and certain minor clouds or defects in title which do not materially affect their use and to the lien of the indenture securing its first mortgage bonds, of which there were outstanding at December 31, 1995, $2,500,000 (including current maturities) in principal amount. SJW Land Company owns approximately 8 acres of property adjacent to San Jose Water Company's general office facilities and another approximately 36 undeveloped acres in the San Jose Metropolitan area. The 8 acres adjacent to San Jose Water Company are used as surface parking facilities and generate substantially all SJW Land Company's revenue. Item 3. Legal Proceedings. In October 1993, Valley Title Company and its insurer filed a lawsuit in Santa Clara County Superior Court naming San Jose Water Company as a defendant. Plaintiffs claimed a fire service pipeline ruptured in October 1992, causing water to flood the title company's basement. In April 1995, San Jose Water Company's insurance carrier settled with the plaintiff insurance company for $3.5 million. Whether or not San Jose Water Company will be compelled to contribute to the settlement is uncertain. However, management has consistently maintained that the pollution exclusion asserted by the insurance carrier does not apply to this type of incident, and therefore the company will aggressively resist any demand for contribution. The jury awarded the title company $3 million for its loss of files, and the insurance carrier for San Jose Water Company has appealed that decision. San Jose Water Company believes that any final award to the title company will be within the stated limits of the company's insurance coverage. San Jose Water Company does not believe, based upon all available information, that the outcome of the appeal will have a material adverse effect on its financial position. On June 27, 1995, the City of San Jose passed an ordinance imposing a franchise fee on the gross annual receipts arising from the use, operation, or possession of a "Potable Water Franchise". This ordinance became effective on July 28, 1995. San Jose Water Company maintains that it has a "constitutional franchise" dating from at least 1891, and that the City of San Jose cannot legally impose any new franchise or new franchise fees on San Jose Water Company's operations. San Jose Water Company has filed suit to challenge this new city ordinance. Although the company could have filed an advice letter requesting authorization to collect the new franchise fee by surcharge from its customers, San Jose Water Company decided not to impose such a surcharge at this time. Instead, with the concurrence of the Division of Ratepayer Advocates, San Jose Water Company filed an advice letter on July 13, 1995 with the Public Utilities Commission requesting permission to establish a memorandum account for the imposed franchise fee. A Commission decision issued on November 8, 1995 authorizes San Jose Water Company to establish such an account. San Jose Water Company will be able to collect the franchise fee from its customers by surcharge in the event that its efforts to invalidate the ordinance are unsuccessful. San Jose Water Company does not believe, based upon all available information, that the outcome of this event will have a material adverse effect on its financial position. Item 4. Submission of Matters to a Vote of Security Holders. None. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. (a) Market Information. (1) (i) Exchange SJW Corp.'s common stock is traded on the American Stock Exchange under the symbol SJW. (1) (ii) High and Low Sales Prices The information required by this item as to the high and low sales prices for SJW Corp.'s common stock for each quarter in the 1995 and 1994 fiscal years is contained in the section captioned "Market price range of stock" in the tables set forth in Note 10 of "Notes to Consolidated Financial Statements" in Part II, Item 8. (b) Holders. There were 1,537 record holders of SJW Corp.'s common stock on February 23, 1996 (record date for the 1996 annual meeting). (c) Dividends. Quarterly dividends have been paid on SJW Corp.'s and its predecessor's common stock for 209 consecutive quarters and the quarterly rate has been increased during each of the last 28 years. The information required by this item as to the cash dividends paid on common stock in 1995 and 1994 is contained in the section captioned "Dividends per share" in the tables set forth in Note 10 of "Notes to consolidated Financial Statements" in Part II, Item 8. Item 6. Selected Financial Data. FIVE YEAR STATISTICAL REVIEW 1995 1994 1993 1992 1991 CONSOLIDATED RESULTS ----- ----- ------ ------ ------ OF OPERATIONS (In thousands) Operating revenue $ 97,385 99,422 95,045 89,109 76,281 Operating expense: Operation 57,339 62,648 57,016 54,184 45,897 Maintenance 6,342 6,289 5,417 4,397 3,778 Taxes 10,764 9,426 10,829 10,252 8,681 Depreciation 7,626 7,292 6,823 6,153 5,773 ------ ------ ------ ------ ------ Total operating expense 82,071 85,655 80,085 74,986 64,129 ------ ------ ------ ------ ------ Operating income 15,314 13,767 14,960 14,123 12,152 Interest expense, other income and deductions 3,779 3,865 3,193 3,896 3,704 ------ ------ ------ ------ ------ Net income 11,535 9,902 11,767 10,227 8,448 Dividends paid 7,022 6,826 6,637 6,044 5,449 ------ ------ ------ ------ ----- Invested in the business 4,513 3,076 5,130 4,183 2,999 CONSOLIDATED PER COMMON SHARE DATA Net income $ 3.55 3.05 3.64 3.60 2.98 Dividends paid 2.16 2.10 2.04 2.13 1.92 Shareholders' equity at year-end 33.49 32.02 31.86 29.70 27.27 CONSOLIDATED BALANCE SHEET (In thousands) Utility plant $ 324,098 308,515 293,683 272,999 255,325 Less accumulated depreciation and amortization 100,000 95,083 90,030 84,158 78,675 ------- ------- ------- ------ ------- Net utility plant $ 224,098 213,432 203,653 188,841 176,650 ------- ------- ------- ------ ------- Nonutility property 6,624 7,178 6,775 5,465 4,974 Total assets $ 280,497 262,530 256,851 230,198 197,094 ======= ======= ======= ======= ======= Capitalization: Common shareholders' equity $ 108,854 104,098 103,130 96,155 77,373 Long-term debt(includes current maturities) 77,500 64,000 66,000 61,248 45,193 ------- ------- ------ ------- ------- Total capitalization $ 186,354 168,098 169,130 157,403 122,566 ======= ======= ======= ======= ======= Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Description of the Business SJW Corp. is a holding company with two wholly owned subsidiaries: San Jose Water Company and SJW Land Company. San Jose Water Company is a public utility in the business of providing water service to a population of approximately 928,000 in an area comprising about 134 square miles in the metropolitan San Jose area. SJW Land Company owns and operates a 900-space surface parking facility located adjacent to the San Jose Arena and also owns several undeveloped real estate parcels in San Jose Water Company's service area. SJW Corp. also owns 549,976 shares of California Water Service Company, acquired through the liquidation of Western Precision, Inc., formerly a wholly-owned subsidiary of SJW Corp. Results of Operations Consolidated results of operations for the years ended December 31, 1995, 1994 and 1993 include the results of Western Precision, Inc. which was acquired on December 31, 1992 and disposed of on February 28, 1995. CONSOLIDATED OPERATING REVENUE (in thousands) 1995 1994 1993 --------------------------- San Jose Water Company $95,634 92,963 90,496 Western Precision, Inc. 1,051 5,968 4,292 SJW Land Company 700 491 257 --------------------------- $97,385 99,422 95,045 =========================== Consolidated operating revenue for 1995 decreased $2,037,000 or 2% from 1994 due to the sale of Western Precision, Inc. San Jose Water Company's revenue increased 3% over 1994 mainly due to a similar growth in customer usage. Consolidated operating revenue for 1994 increased $4,377,000 or 5% over 1993 due to increased revenue from Western Precision, Inc. and a 5% increase in metered usage by San Jose Water Company customers. Western Precision, Inc.'s operating revenue increased due to an improving economy in the high technology sector and the resulting increased sales to its primary customer. CONSOLIDATED OPERATING EXPENSE (in thousands) 1995 1994 1993 ------------------------------ San Jose Water Company $80,069 79,466 75,353 Western Precision, Inc. 1,179 5,547 4,370 SJW Land Company 463 458 204 SJW Corp. 360 184 158 ------------------------------ $82,071 85,655 80,085 ============================== In 1995, consolidated operating expense decreased 4% due to cost savings from increased production of surface water and the sale of Western Precision, Inc. In 1994, consolidated operating expense increased 7%, or $5,570,000 over 1993. The majority of this increase is attributable to the increased cost of water supply to San Jose Water Company. A 3.5 billion gallon decrease in surface water in 1994 from 1993, due to reduced rainfall and run off in the Santa Cruz Mountain watershed, caused increased production needs to be satisfied by more costly ground water. Source of Supply (million gallons) 1995 1994 1993 ----------------------- Purchased water 20,380 19,161 20,313 Ground water 20,365 23,605 17,314 Surface water 5,275 1,663 5,198 ------------------------ 46,020 44,429 42,825 ======================== The effective consolidated income tax rates for 1995, 1994 and 1993 were 40%, 39% and 41%, respectively. Refer to Note 5 of Part II, Item 8 Notes To Consolidated Financial Statements for the reconciliation of income tax expense to the amount computed by applying the federal statutory rate to income before income taxes. OTHER INCOME AND EXPENSE Dividend income increased $33,000, or 3%, over 1994 due to a $.06 per share increase in the California Water Service Company annual dividend. The California Water Service Company shares were acquired on December 31, 1992. San Jose Water Company's interest expense on long-term debt in 1995, including capitalized interest, decreased $52,000 or 1%, from 1994 due to a lower average cost of long-term debt outstanding. San Jose Water Company's weighted average cost of long-term debt, including amortization of debt issuance costs, was 8.21%, 8.34% and 8.23% as of December 31, 1995, 1994 and 1993, respectively. Liquidity and Capital Resources CAPITAL REQUIREMENTS San Jose Water Company's budgeted capital expenditures for 1996 compared to 1995, exclusive of capital expenditures financed by customer contributions and advances, are as follows: 1996 1995 (in thousands) Amount % Amount % ----------------------------------- Source of supply $ 550 4% 251 2% Reservoirs and tanks 813 5% 1,436 9% Pump stations and equipment 1,721 11% 1,959 12% Distribution system 10,171 67% 9,242 58% Equipment and other 1,949 13% 3,019 19% ----------------------------------- $15,204 100% $15,907 100% ======================================== The 1996 capital budget is concentrated in two areas: $10,171,000 in main replacements and related services to systematically replace the company's aging infrastructure; and $1,250,000 to implement the second phase of a geographical information and mapping system. San Jose Water Company expects to incur approximately $80,000,000, exclusive of customer contributions and advances, in capital expenditures over the next five years. San Jose Water Company's actual capital expenditures may vary from its projection due to changes in the expected demand for services, weather patterns, actions by governmental agencies and general economic conditions. Total additions to utility plant normally exceed company-financed additions by several million dollars because certain new facilities are constructed using advances from developers and contributions in aid of construction. Most of San Jose Water Company's distribution system has been constructed over the last forty years. Expenditure levels for renewal and modernization of this part of the system will grow at an increasing rate as these components reach the end of their useful lives. Additionally, in most cases replacement cost will significantly exceed the cost of the retired asset due to increases in the cost of goods and services. SOURCES OF CAPITAL San Jose Water Company's ability to finance future construction programs and sustain dividend payments depends on its ability to attract external financing and maintain or increase internally generated funds. The level of future earnings and the related cash flow from operations is dependent, in large part, upon the timing and outcome of regulatory proceedings. Over the past five years SJW Corp. has paid its shareholders, in the form of dividends, an average of 61% of its net income. The remaining earnings have been reinvested. Capital requirements not funded by earnings are expected to be funded through external financing in the form of unsecured senior notes or a commercial bank line of credit. As of December 31, 1995, San Jose Water Company had $20,000,000 of unused line of credit and over $50,000,000 of borrowing capacity under the terms of the senior note agreements. San Jose Water Company's financing activity is designed to achieve a capital structure consistent with regulatory guidelines - approximately 50% debt and 50% equity. In 1995, San Jose Water Company issued $15,000,000 in Series D unsecured 30-year senior notes and redeemed its $1,500,000 Series N 4.85% first mortgage bonds at maturity. In 1994, San Jose Water Company redeemed its $2,000,000 Series M 4.65% first mortgage bonds at maturity. In 1993, San Jose Water Company redeemed, prior to maturity, various series of first mortgage bonds at principal plus redemption premium. To fund the redemption, $30,000,000 of Series B unsecured 30-year senior notes were issued. San Jose Water Company intends to retire all remaining first mortgage bonds by 1998 and satisfy all foreseeable future long-term financing needs with senior notes. Factors That May Affect Future Results The results of operations of San Jose Water Company generally depend on the following factors: (1) rate relief and regulation, (2) surface water supply, and (3) operation and maintenance expense. REGULATION Principally all the operating revenue of San Jose Water Company results from the sale of water at rates approved by the California Public Utilities Commission (The Commission). The Commission sets rates that are intended to provide revenue sufficient to recover operating expense and produce a reasonable return on common equity. In accordance with the Commission's Rate Case Plan and following months of intensive preparation, on August 14, 1995, San Jose Water Company filed its application for a general rate increase effective for the years 1996 through 1998. The company is requesting a return on equity of 12.25% for the years 1996 through 1998. Recent rates of return on common equity authorized by the Commission have been in the 10.3% to 11.0% range for water utilities. In December 1995, San Jose Water Company negotiated a stipulated settlement with the Commission staff over various revenue and expense estimates in the rate application. The return on equity, and two remaining issues, however, were not settled but were litigated before the Commission. Based upon the stipulated settlement, and the Commission's recently authorized return on common equity for water utilities, the company can expect approximately a 2.0% increase in rates in 1996, 1.2% in 1997 and 0.5% in 1998. The new rates are expected to be effective in the spring of 1996. Included in the rate application were requests for recovery of over $1,800,000 in various memorandum accounts the Commission authorized San Jose Water Company to open. These memorandum accounts include sales lost due to voluntary conservation for the period of March 1993 to February 1994, and the increase in income tax expense due to a change in the federal income tax rate. The recovery of these memorandum accounts will most likely be approved by the Commission concurrently with the above rate increase and will be collected ratably over one year. SURFACE WATER SUPPLY The level of surface water available in each year depends on the amount of rainfall and run-off collected in San Jose Water Company's Santa Cruz Mountain reservoirs. In a normal year, surface supply provides 6-8% of the total water supply of the system. Surface water is a less costly source of water and its availability may significantly impact the results of operations. OPERATION AND MAINTENANCE EXPENSE San Jose Water Company reached an agreement with its unionized personnel covering 1995 and 1996. The agreement includes a 3.5% wage increase each year and minor benefit modifications. ENVIRONMENTAL MATTERS San Jose Water Company's operations are subject to water quality and pollution control regulations issued by the United States Environmental Protection Agency (EPA), the California Department of Health Services and the California Regional Water Quality Control Board. The company is also subject to environmental laws and regulations administered by other state and local regulatory agencies. Under the federal Safe Drinking Water Act (SDWA), San Jose Water Company is subject to regulation by the EPA of the quality of water it sells and treatment techniques it uses to make the water potable. The EPA promulgates nationally applicable maximum contaminant levels (MCLs) for "contaminants" found in drinking water. San Jose Water Company is currently in compliance with all of the 84 MCLs promulgated to date. The EPA has continuing authority, however, to issue additional regulations under the SDWA, and to promulgate MCLs for over 180 contaminants by the year 2000. San Jose Water Company has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with existing MCLs and plan for compliance with future drinking water regulations. To comply with the State Total Coliform Regulation, disinfection of San Jose Water Company wells is being phased in over the next three to four years. To date, eight of the company's nineteen key groundwater production stations have been equipped with hypochlorinators, with five more installations to be completed in 1996. The EPA is expected to mandate disinfection of all groundwater supplies by 1999. In 1995, State Assembly Bill No. 733 was signed into law requiring public water systems in California serving at least 10,000 connections to fluoridate water. The law provides that water systems would not be required to comply unless funding for the needed capital and associated costs are available from any source other than ratepayers, shareholders, local taxpayers or bondholders of the public water system. In addition to SDWA, other environmental regulations are becoming increasingly important. The Santa Clara County Toxic Gas Ordinance became effective in 1993 requiring the elimination of chlorine gas disinfection systems or the installation of complete containment systems to control accidental chlorine gas discharges. During 1994, San Jose Water Company replaced the chlorine gas disinfection systems at its two water treatment plants with hypochlorinators which accomplish disinfection with liquid sodium hypochlorite. These facilities are currently operational and in compliance with all state and local hazardous materials storage regulations. Other state and local environmental regulations apply to San Jose Water Company's operations and facilities. These regulations relate primarily to the handling, storage and disposal of hazardous materials. San Jose Water Company is currently in compliance with state and local regulations governing underground storage tanks, disposal of hazardous wastes, non-point source discharges, and the warning provisions of the California Safe Drinking Water and Toxic Enforcement Act of 1986. Future drinking water regulations will most likely require increased monitoring, and may mandate disinfection or other treatment of underground water supplies, more stringent performance standards for treatment plants and procedures to reduce levels of disinfection by-products. San Jose Water Company continues to seek to establish mechanisms for recovery of government-mandated environmental compliance costs. However, there are limited regulatory mechanisms and procedures available to the company for the recovery of such costs and there can be no assurance that such costs will be fully recovered. Of all of the regulations being considered under the current SDWA, the proposed Disinfectants-Disinfection By-Products Rule is anticipated to have the most significant impact on water utilities. Due to be promulgated in December 1996, this rule would impose more stringent monitoring requirements and drinking water standards for by-products formed during the disinfection of water. The Santa Clara Valley Water District, whose imported surface water represents approximately 45% of San Jose Water Company's supply, projects that compliance with this regulation could, by the year 2000, cost over $100,000,000 in capital improvements and an additional $3,000,000 per year in operating expenses. If incurred, part of these costs would be passed along to San Jose Water Company and other water retailers in the form of higher rates for purchased water and pump taxes. San Jose Water Company would seek a rate increase, via an advice letter filing, to recover the additional costs. The company's surface and groundwater sources are generally of a higher quality than the imported water supplies and are not expected to require extensive modifications of existing treatment processes. NONREGULATED SUBSIDIARIES The investment in California Water Service Company is expected to produce 1996 pre-tax dividend income and cash flow of approximately $1,100,000. SJW Land Company's revenue is largely dependent upon the level of events and activities at the San Jose Arena which is located adjacent to its parking facility. Item 8. Financial Statements and Supplementary Data. Financial Statements: Independent Auditors' Report ---------------------------- The Shareholders and Board of Directors SJW Corp.: We have audited the consolidated financial statements of SJW Corp. and subsidiaries as listed in the accompanying index. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule as listed in the accompanying index. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of SJW Corp. and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP San Jose, California January 19, 1996 SJW CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (December 31, dollars in thousands, except share data) ASSETS 1995 1994 ------ ------ Utility plant $ 324,098 308,515 Less accumulated depreciation 100,000 95,083 ------- ------- 224,098 213,432 ------- ------- Nonutility property 6,624 7,178 Current assets: Cash and equivalents 7,414 1,277 Temporary investments 4,300 - Accounts receivable: Customers 5,315 5,513 Other 284 327 Accrued utility revenue 2,900 2,700 Materials and supplies, at average cost 643 1,711 Prepaid expenses 595 1,978 ------ ------- 21,451 13,506 ------ ------- Other assets: Investment in California Water Service Company 18,012 17,599 Unamortized debt issuance and reacquisition costs 4,283 4,262 Goodwill 2,256 2,341 Regulatory assets 3,551 3,672 Other 222 540 ------- ------- 28,324 28,414 ------- ------- $ 280,497 262,530 ======= ======= CAPITALIZATION AND LIABILITIES 1995 1994 ------ ------ Capitalization: Shareholders' equity: Common stock, $3.125 par value; authorized 6,000,000 shares; issued 3,250,746 shares in 1995 and 1994 $ 10,159 10,159 Additional paid-in capital 22,208 22,208 Retained earnings 76,569 72,056 Cumulative change in market value of investment (82) (325) ------- ------- 108,854 104,098 Long-term debt, less current maturities 76,500 62,500 ------- ------- 185,354 166,598 ------- ------- Current liabilities: Current maturities of long-term debt 1,000 1,500 Line of credit - 4,800 Accrued pump taxes and purchased water 3,742 3,203 Accounts payable 690 967 Accrued interest 2,179 2,173 Accrued taxes other than income taxes 311 285 Income taxes payable 447 - Other current liabilities 2,391 2,314 ------ ------- 10,760 15,242 ------ ------- Deferred income taxes 13,329 12,809 Unamortized investment tax credits 2,414 2,469 Advances for construction 35,805 33,555 Contributions in aid of construction 30,327 29,252 Deferred revenue 1,019 951 Other nonconcurrent liabilities 1,489 1,654 Commitments and contingency ------- ------- $ 280,497 262,530 ======= ======= See accompanying notes to consolidated financial statements. SJW CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Years ended December 31, dollars in thousands, except share data) 1995 1994 1993 ------ ------ ------ Operating revenue $ 97,385 99,422 95,045 Operating expense: Operation: Purchased water 19,389 18,229 20,001 Power 4,781 5,470 4,164 Pump taxes 14,969 17,356 13,095 Other 18,200 21,593 19,756 Maintenance 6,342 6,289 5,417 Property taxes and other nonincome taxes 2,996 3,039 2,758 Depreciation 7,626 7,292 6,823 Income taxes 7,768 6,387 8,071 ------ ------ ------ 82,071 85,655 80,085 ------ ------ ------ Operating income 15,314 13,767 14,960 Other (expense) income: Interest on long-term debt (4,888) (5,082) (4,489) Dividends 1,122 1,089 1,056 Other (13) 128 240 ------ ------ ------ Net income $ 11,535 9,902 11,767 ====== ====== ====== Earnings per share $ 3.55 3.05 3.64 ====== ====== ====== Weighted average shares outstanding 3,250,746 3,250,746 3,236,992 ========= ========= ========= See accompanying notes to consolidated financial statements. SJW CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (dollars in thousands) Cumulative Additional Change in Total Common Paid-in Retained Market Value Shareholders' Stock Capital Earnings of investment Equity ------- ------- ------- --------- ------ Balances, December 31 1992 $10,108 22,197 63,850 - 96,155 Purchase price adjustment 8 (434) - - (426) Net income - - 11,767 - 11,767 Dividends paid - - (6,637) - (6,637) Implementation of change in accounting for investment net of tax effect of $1,579 - - - 2,271 2,271 ------ ------- ------- ------ ------ Balances, December 31 1993 10,116 21,763 68,980 2,271 103,130 Purchase price adjustment 43 445 - - 488 Net income - - 9,902 - 9,902 Dividends paid - - (6,826) - (6,826) Change in market value of investment, net of tax effect of $1,804 - - - (2,596) (2,596) ------ ------ ------ ------ ------ Balances, December 31 1994 10,159 22,208 72,056 (325) 104,098 Net income - - 11,535 - 11,535 Dividends paid - - (7,022) - (7,022) Change in market value of investment, net of tax effect of $170 - - - 243 243 ------ ------ ------ ------ ------- Balances, December 31 1995 $10,159 22,208 76,569 (82) 108,854 ====== ====== ====== ====== ======= See accompanying notes to consolidated financial statements. SJW CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS Years ended December 31 (dollars in thousands) 1995 1994 1993 ------ ------ ------ Operating activities: Net income $ 11,535 9,902 11,767 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 7,626 7,292 6,823 Deferred income taxes and credits 274 144 1,813 Changes in operating assets and liabilities: Accounts receivable and accrued utility revenue 41 (515) 525 Accounts payable and other current liabilities (200) 828 (654) Accrued pump taxes and purchased water 539 (61) 1,074 Conservation fees - - (1,477) Income taxes payable 447 - - Prepaid expenses 1,383 95 (1,476) Other changes, net 532 769 915 ------- ------ ------ Net cash provided by operating activities 22,177 18,454 19,310 ------ ------ ------ Investing activities: Additions to utility plant (18,710) (17,350) (22,134) Cost to retire utility plant, net of salvage (491) (572) (251) Additions to nonutility property (328) (611) (1,497) (Purchase) sale of temporary investments (4,300) - 3,600 Net cash proceeds from sale of machine shop 1,954 - - ------- ------ ------- Net cash used in investing activities (21,875) (18,533) (20,282) ------- ------ ------ Financing activities: Dividends paid (7,022) (6,826) (6,637) Repayment of line of credit (7,000) (2,400) (1,675) Borrowings from line of credit 2,200 7,200 - Advances and contributions in aid of construction 5,585 4,393 6,501 Refunds of advances (1,428) (1,569) (1,610) Proceeds from issuance of long-term debt 15,000 - 30,000 Principal payments of long-term debt (1,500) (2,000) (28,665) ----- ----- ------ Net cash provided by (used in) financing activities 5,835 (1,202) (2,086) ----- ----- ----- Net change in cash and equivalents 6,137 (1,281) (3,058) Cash and equivalents, beginning of year 1,277 2,558 5,616 ----- ----- ----- Cash and equivalents, end of year $ 7,414 1,277 2,558 ===== ===== ===== See accompanying notes to consolidated financial statements. SJW CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 1995, 1994 and 1993 (Dollars in thousands, except share data) Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying consolidated financial statements include the accounts of SJW Corp. and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated. SJW Corp.'s principal subsidiary, San Jose Water Company, is a regulated California water utility providing water service to the greater metropolitan San Jose area. San Jose Water Company's accounting policies comply with the applicable uniform system of accounts prescribed by the California Public Utilities Commission (the Commission) and conform to generally accepted accounting principles for rate regulated public utilities. More than 90% of San Jose Water Company's revenue is derived from the sale of water to residential and business customers. SJW Land Company owns and operates a 900-space surface parking facility adjacent to the San Jose Arena and also owns several undeveloped real estate parcels in San Jose Water Company's service area. The consolidated financial results of 1995, 1994 and 1993 included the operation of Western Precision, Inc., which was sold in February 1995. Western Precision, Inc. contributed $1,051, $5,968 and $4,292 of SJW Corp.'s operating revenues in 1995, 1994 and 1993, respectively. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Utility Plant - The cost of additions, replacements and betterments to utility plant is capitalized. The amount of interest capitalized in 1995, 1994 and 1993 was $245, $103 and $769, respectively. Construction in progress was $1,813 in 1995, $2,658 in 1994 and $3,233 in 1993. Depreciation is computed using the straight-line method over the estimated service lives of the assets, ranging from 5 to 75 years. The cost of utility plant retired, including retirement costs (less salvage), is charged to accumulated depreciation, and no gain or loss is recognized. Nonutility Property - Nonutility property is recorded at cost and consists primarily of land and parking facilities. Depreciation is computed using accelerated depreciation method over the estimated useful lives of the assets, ranging from 5 to 15 years. Financial Instruments - Cash and equivalents include certain highly liquid investments with remaining maturity of three months or less when purchased. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Temporary investments consist principally of tax-exempt municipal obligations with maturities between three and twelve months, and are stated at cost plus accrued interest, which approximates fair value. Investment in California Water Service Company - SJW Corp.'s investment in California Water Service Company is reported at quoted market price, with the unrealized gain or loss excluded from earnings and reported as a separate component of shareholders' equity. The fair value of SJW Corp.'s investment in California Water Service Company approximated $18,012 and $17,599 as of December 31, 1995 and 1994, respectively. The increase in fair value of $413, after offsetting the deferred tax liabilities of $170, resulted in a net increase of $243 to shareholders' equity as of December 31, 1995. Other Assets - Debt reacquisition costs are amortized over the term of the new debt. Debt issuance costs are amortized over the life of each issue. The excess cost over fair market value of net assets acquired is recorded as goodwill and amortized over the periods estimated to be benefited, not exceeding 40 years. Management periodically evaluates goodwill to determine if an impairment has occurred. As of December 31, 1995 and 1994, goodwill has not been impaired. Income Taxes - Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the effect of temporary differences between financial and tax reporting. Deferred tax assets and liabilities are measured using enacted tax rates applicable to future years. To the extent that the tax benefits of the temporary differences have previously been passed through to customers through lower water rates, management anticipates that the payment of the future tax liabilities resulting from the reversal of the temporary differences will be recoverable through rates. Therefore, a regulatory asset has been recorded for the portion of net deferred tax liabilities which are expected to be recovered through future rates. Although realization is not assured, management believes it is more likely than not that all of the regulatory asset will be realized. To the extent permitted by the Commission, investment tax credits resulting from utility plant additions are deferred and amortized over the estimated useful lives of the related property. Advances for Construction and Contributions in Aid of Construction - Advances for construction received after 1981 are being refunded ratably over 40 years. Prior customer advances are refunded based on 22% of related revenues. Estimated refunds for 1996 are $1,300. Contributions in aid of construction represent funds received from developers that are not refundable under Commission regulations. Depreciation applicable to utility plant constructed with these contributions is charged to contributions in aid of construction. Customer advances and contributions in aid of construction received subsequent to 1986 generally must be included in federal taxable income. Beginning in 1992, advances and contributions are also included in state taxable income. Taxes paid relating to advances and contributions are recorded as deferred tax assets for financial reporting purposes and amortized over 40 years for advances, and over the tax depreciable life of the related asset for contributions. Revenue - Revenue of San Jose Water Company includes amounts billed to customers, and unbilled amounts based on estimated usage from the latest meter reading to the end of the year. Included in 1993 operating revenue is $1,200 relating to the recovery of prior years' conservation expenses and $327 of net revenue lost due to conservation programs. Earnings Per Share - Per share data are calculated using net income divided by the weighted average number of shares outstanding during the year, excluding in 1993, contingently returnable shares. Note 2 CAPITALIZATION At December 31, 1995, 1994, and 1993, 176,407 shares of preferred stock were authorized and unissued. Note 3 LINE OF CREDIT San Jose Water Company has available an unsecured bank line of credit, allowing aggregate short-term borrowings of up to $20,000. This line of credit bears interest at variable rates and expires May 31, 1997. The weighted average interest rate for the short-term borrowings at December 31, 1994 was 7.7%. Note 4 LONG-TERM DEBT Long-term debt as of December 31 was as follows: Description Due Date 1995 1994 ----------------------------------------------------------- First mortgage bonds: N 4.85% 1995 $ - 1,500 O 6.5% 1996 1,000 1,000 P 6.5% 1997 1,500 1,500 ----------------------------------------------------------- 2,500 4,000 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 - ----------------------------------------------------------- 75,000 60,000 ----------------------------------------------------------- Total long-term debt 77,500 64,000 Less current maturities 1,000 1,500 ----------------------------------------------------------- $76,500 62,500 =========================================================== First mortgage bonds and senior notes are obligations of San Jose Water Company. Maturities of long-term debt, including sinking fund requirements, amount to $1,000 in 1996 and $1,500 in 1997. Substantially all utility plant is pledged as collateral for first mortgage bonds. Senior notes are unsecured. To minimize issuance costs, all of San Jose Water Company's debt has historically been privately placed. The fair value of long-term debt, including current maturities, as of December 31, 1995 and 1994 was approximately $97,300 and $66,200, based on the amount of essentially risk- free assets that would have to be placed in trust to extinguish these obligations. Note 5 INCOME TAXES The following table reconciles income tax expense to the amount computed by applying the federal statutory rate to income before income taxes: 1995 1994 1993 ------------------------------------------------------------------------- Computed "expected" federal income tax at the statutory rate of 35% $6,756 5,701 6,943 Increase (decrease) in taxes attributable to: Utility plant basis 400 448 464 State taxes, net of federal income tax benefit 1,167 985 1,199 Dividend received deduction (275) (267) (259) Other items, net (280) (480) (276) -------------------------------------------------------------------------- $7,768 6,387 8,071 ========================================================================== The components of income tax expense were: 1995 1994 1993 ------------------------------------------------------------------------- Current: Federal $5,564 4,276 4,729 State 2,041 1,683 1,775 Deferred: Federal 549 782 1,662 State (386) (354) (95) ------------------------------------------------------------------------- $7,768 6,387 8,071 ========================================================================== The components of the net deferred tax liability as of December 31 were as follows: 1995 1994 ------------------------------------------------------------------------- Deferred tax assets: Advances and contributions $11,466 9,751 Unamortized investment tax credit 1,306 1,359 Pensions and postretirement benefits 438 693 California franchise tax 538 420 Other 183 104 ------------------------------------------------------------------------- Total deferred tax assets 13,931 12,327 ------------------------------------------------------------------------- Deferred tax liabilities: Utility plant 20,514 18,424 Investment 5,130 4,961 Debt reacquisition costs 1,406 1,456 Other 210 295 ------------------------------------------------------------------------- Total deferred tax liabilities 27,260 25,136 ------------------------------------------------------------------------- Net deferred tax liabilities $13,329 12,809 ========================================================================= Based upon the level of historical taxable income and projections for future taxable income over the periods which the deferred tax assets are deductible, management believes it is more likely than not the company will realize the benefits of these deductible differences. Note 6 EMPLOYEE BENEFIT PLANS Pension Plans - San Jose Water Company sponsors noncontributory defined benefit pension plans. Benefits under the plans are based on an employee's years of service and highest consecutive three years of compensation. San Jose Water Company's policy is to contribute the net periodic pension cost to the extent it is tax deductible. 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 amounts received under the retirement plan. The annual cost of this plan has been included in the determination of the net periodic pension cost shown below. The plan, which is unfunded, had a projected benefit obligation of $1,277 and $928 as of December 31, 1995 and 1994, respectively, and net periodic pension cost of $159, $152 and $139 for 1995, 1994 and 1993, respectively. Net periodic pension cost for defined benefit plans was as follows: 1995 1994 1993 ------------------------------------------------------------------------- Service cost-benefits earned during the period $536 637 572 Interest cost on projected benefit obligation 1,349 1,290 1,256 Actual return on plan assets (3,896) 347 (1,368) Net amortization and deferral 2,403 (1,802) (69) -------------------------------------------------------------------------- $392 472 391 ========================================================================== The actuarial present value of benefit obligations and the funded status of San Jose Water Company's defined benefit pension plans as of December 31 were as follows: 1995 1994 -------------------------------------------------------------------------- Actuarial present value of accumulated benefit obligation, including vested benefits of $16,254 and $11,821 $17,743 $12,717 ========================================================================== Projected benefit obligation (22,300) (16,095) Plan assets at fair value 22,486 18,159 -------------------------------------------------------------------------- Plan assets in excess of projected benefit obligation 186 2,064 Unrecognized net gain (1,997) (4,657) Prior service cost not recognized in net periodic pension cost 1,463 1,502 Unrecognized net obligation at January 1, 1987 and 1992 being recognized over 15 and 13.7 years 223 226 -------------------------------------------------------------------------- Accrued pension cost included in other current liabilities $(125) (865) ========================================================================== The plans invest primarily in listed stocks, bonds, government securities and cash and use the projected unit credit actuarial cost method. Average remaining service lives were 14.5 years for 1995 and 14.9 years for 1994. In determining net periodic pension cost for 1995, 1994 and 1993 the following assumptions were used: weighted average discount rate, 8.5%, 7.0% and 8.0%, respectively; compensation growth rate, 5.0%, 5.0% and 6.0%, respectively; and rate of return on plan assets, 8.0% for all years. In determining accrued pension cost as of December 31, 1995 and 1994, the following assumptions were used: weighted average discount rate, 6.5% and 8.5%, respectively; and compensation growth rate, 4.0% and 5.0%, respectively. Savings Plans - San Jose Water Company sponsors savings plans which allow employees to defer and contribute a portion of their earnings to the plans. Contributions, not to exceed set limits, are matched 50% by the company. Company contributions were $345, $266 and $241 in 1995, 1994 and 1993, respectively. Other Postretirement Benefits - In addition to providing pension and savings benefits, San Jose Water Company provides health care and life insurance benefits for retired employees. The Plan was amended in 1993 to reduce benefits and increase eligibility requirements. The changes reduced the 1993 net periodic postretirement benefit cost by approximately 50%. Net periodic postretirement benefit costs were as follows: 1995 1994 1993 ------------------------------------------------------------------------- Service cost - benefits earned during the period $28 40 43 Interest cost on benefit obligation 87 89 102 Actual return on plan assets (5) - - Amortization of transition obligation over 20 years 28 50 59 ------------------------------------------------------------------------ $138 179 204 ======================================================================== Benefits paid were $72, $72 and $70 in 1995, 1994 and 1993, respectively. The Plan's combined funded status and the related accrual as of December 31 were as follows: 1995 1994 ------------------------------------------------------------------------ Accumulated postretirement benefit obligation: Retirees $(630) (593) Active plan participants: Fully eligible (168) (112) Other (643) (390) ----------------------------------------------------------------------- (1,441) (1,095) Plan assets 218 139 ----------------------------------------------------------------------- Accumulated postretirement obligation in excess of plan assets (1,223) (956) Unrecognized net gain from past experience and changes in assumptions (151) (480) Unrecognized net transition obligation 945 1,004 ----------------------------------------------------------------------- Accrued postretirement benefit cost included in other current liabilities $(429) (432) ======================================================================== For measurement purposes, an 8.0% annual increase in the per capita cost of covered health care benefits was assumed for 1996; this increase was assumed to decrease gradually to 5.0% by 2002 and remain at that level thereafter. The weighted average discount rate used in determining the accumulated postretirement benefit obligation was 6.5% for 1995 and 8.5% for 1994. In determining the net periodic postretirement benefit cost, 8.5% and 7.0% discount rates were used respectively for 1995 and 1994. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates by 1% each year would increase the accumulated postretirement benefit obligation as of December 31, 1995 by $103 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1995 by $9. Note 7 COMMITMENT San Jose Water Company purchases water from the Santa Clara Valley Water District (SCVWD). Delivery schedules for purchased water are based on a contract year beginning July 1 and are negotiated every three years under terms of a master contract with SCVWD expiring in 2051. According to the contract terms, San Jose Water Company is obligated to purchase a minimum of 90% of the delivery schedule. The delivery schedule is established based on 95% of water delivered to San Jose Water Company within the prior three years. Based on current prices and estimated deliveries, San Jose Water Company expects to purchase $18,000 of water from SCVWD in the contract year ending June 30, 1996. Note 8 SUPPLEMENTAL CASH FLOW INFORMATION Supplemental information on cash flows and noncash transaction is as follows: 1995 1994 1993 ------------------------------------------------------------------- Cash paid during the year for Interest $5,284 4,482 4,998 Income taxes 5,810 5,760 8,028 Noncash investing and financing activities: Series C senior notes exchanged for Series AA first mortgage bonds - - 10,000 Adjustments to purchase price - 488 (426) Note 9 CONTINGENCY In October 1993, Valley Title Company and its insurer filed a lawsuit in Santa Clara County Superior Court naming San Jose Water Company as a defendant. Plaintiffs claimed a fire service pipeline ruptured in October 1992, causing water to flood the title company's basement. In April 1995, San Jose Water Company's insurance carrier settled with the plaintiff insurance company for $3,500. Whether or not San Jose Water Company will be compelled to contribute to the settlement is uncertain. However, management has consistently maintained that the pollution exclusion asserted by the insurance carrier does not apply to this type of incident, and therefore the company will aggressively resist any demand for contribution. The jury awarded the title company $3,000 for its loss of files, and the insurance carrier for San Jose Water Company has appealed that decision. San Jose Water Company believes that any final award to the title company will be within the stated limits of the company's insurance coverage. San Jose Water Company does not believe, based upon all available information, that the outcome of the appeal will have a material adverse effect on its financial position. NOTE 10 UNAUDITED QUARTERLY FINANCIAL DATA Summarized quarterly financial data is as follows: 1995 Quarter ended March June September December -------------------------------------------------- Operating revenue $ 18,239 23,780 32,004 23,362 Operating income 1,913 3,960 5,983 3,458 Net income 844 2,994 5,126 2,571 Earnings per share .26 .92 1.58 .79 Market price range of stock: High 37 1/2 37 3/8 37 7/8 37 3/4 Low 31 1/4 32 3/8 35 1/8 34 1/4 Dividends per share .54 .54 .54 .54 - ------------------------------------------------------------------------------ 1994 Quarter ended March June September December ----------------------------------------------- Operating revenue $ 18,991 26,715 31,888 21,828 Operating income 1,786 4,086 4,895 3,000 Net income 824 3,137 3,923 2,018 Earnings per share .25 .97 1.21 .62 Market price range of stock: High 42 1/2 39 1/8 36 1/8 36 Low 37 7/8 35 1/2 34 1/2 31 3/4 Dividends per share .525 .525 .525 .525 - ------------------------------------------------------------------------------ Schedule II ----------- SJW CORP. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 Description 1995 1994 1993 - ----------- --------------------------------- Allowance for doubtful accounts Balance, beginning of period 50,000 50,000 50,000 Charged to expense 222,163 188,171 203,854 Accounts written off (255,449) (226,962) (249,036) Recoveries of accounts written off 33,286 38,791 45,182 --------------------------------- Balance, end of period 50,000 50,000 50,000 ================================= Reserve for self insurance Balance, beginning of period 309,467 456,191 447,734 Charged to expense 278,100 200,000 110,000 Payments (87,523) (346,724) (101,543) --------------------------------- Balance, end of period 500,044 309,467 456,191 ================================= Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III Item 10. Directors and Executive Officers of the Registrant. DIRECTORS OF THE REGISTRANT A brief biography of each nominee (including the nominee's business experience during the past 5 years) is set forth below. All nominees are currently directors of SJW Corp. (the Corporation) and have served in such capacity since the Corporation was organized in 1985, except Mr. Gibson who has served since 1986, Mr. DiNapoli who has served since 1989, Mr. Toeniskoetter who has served since 1991, Mr. Cali who has served since 1992 and Mr. Roth who has served since 1994. All nominees are also directors of San Jose Water Company, a wholly owned public utility water corporation subsidiary of the Corporation and SJW Land Company, a wholly owned real estate development company subsidiary of the Corporation. It is the Corporation's intention to appoint all persons elected as directors of the Corporation at the annual meeting to be directors of San Jose Water Company and SJW Land Company for a concurrent term. MARK L. CALI, Attorney at Law, with the firm, Bledsoe, Cathcart, Diestel, Livingston and Pedersen. Formerly he was with the firm Jencks & Hunt from May 1994 through October 1994 and prior to that with Ropers, Majeski, Kohn, Bentley, Wagner and Kane from October 1990 through May 1994. Mr. Cali, age 30, has served as a director of San Jose Water Company since 1992. J. PHILIP DiNAPOLI, Attorney at Law, Chairman of Citation Insurance Company (Worker's Compensation specialty carrier) and Comerica California Inc. (California bank holding company); he serves as a director of Comerica, Inc. (bank holding company) and Comerica Bank-California (bank); he is also the owner of DiNapoli Development Company (real estate development company). Mr. DiNapoli, age 56, is a member of the Audit Committee and has served as a director of the San Jose Water Company since 1989. DREW GIBSON, Chairman of the Board and Chief Executive Officer of Gibson Speno Company (real estate development and investment company) and Chairman of the Board of Gibson Speno Management Company (real estate management company). He also serves as a director of Comerica (bank) and Celluphone, Inc. (Los Angeles based cellular agent). Mr. Gibson, age 53, is a member of the Audit and Compensation Committees and has served as a director of San Jose Water Company since 1986. RONALD R. JAMES, President Emeritus of the San Jose Chamber of Commerce (business promotion organization), formerly President and Chief Executive Officer of the Chamber. Mr. James, age 67, is a member of the Executive, Audit and Compensation Committees and has served as a director of San Jose Water Company since 1974. GEORGE E. MOSS, Vice Chairman of the Board of Roscoe Moss Manufacturing Company (manufacturer of steel water pipe and well casing). Mr. Moss was formerly President of the Roscoe Moss Company (holding company). Mr. Moss, age 64, is a member of the Compensation Committee and has served as a director of San Jose Water Company since 1984. ROSCOE MOSS, JR., Chairman of the Board of Roscoe Moss Manufacturing Company (manufacturer of steel water pipe and well casing). Mr. Moss was formerly Chairman of the Board of Roscoe Moss Company (holding company). Mr. Moss, age 66, is a member of the Corporation's Executive and Compensation Committees and has served as a director of San Jose Water Company since 1980. W.R. ROTH, Vice President since April 1992 and Chief Financial Officer and Treasurer of the Corporation since January 1990. He has been President and Chief Operating Officer of San Jose Water Company since October 1994. He was Vice President of San Jose Water Company from April 1992 until July 1994 and Senior Vice President from July 1994 until October 1994. He served as Chief Financial Officer and Treasurer from January 1990 until October 1994. Mr. Roth, age 43, has served as a director of San Jose Water Company since 1994. CHARLES J. TOENISKOETTER, President of Toeniskoetter & Breeding Inc. (construction and real estate development company). He also serves as a director of Redwood Trust, Inc. (real estate investment trust). Mr. Toeniskoetter, age 51, is a member of the Audit Committee and has served as a director of San Jose Water Company since 1991. J.W. WEINHARDT, President and Chief Executive Officer of the Corporation; Chairman of the Board and Chief Executive Officer of San Jose Water Company. Prior to his election to Chairman of the Board in October 1994, he was President of the San Jose Water Company. Mr. Weinhardt, age 65, is a member of the Corporation's Executive Committee and has served as a director of San Jose Water Company since 1975. Mr. Weinhardt also serves as a director of California Water Service Company, SJNB Financial Corp. and its subsidiary San Jose National Bank. Nominees Roscoe Moss, Jr. and George Moss are brothers. Other than the family relationship described in the preceding sentence, no nominee has any family relationship with any other nominee or with any executive officer. In the unanticipated event that a nominee is unable or declines to serve as a director at the time of the annual meeting or other organization that is a parent, subsidiary, or other affiliate of the corporation, proxies will be voted for any nominee named by the present Board of Directors to fill the vacancy. As of the date of this Proxy Statement, the Corporation is not aware of any nominee who is unable or will decline to serve as a director. No nominee is or has been employed in his principal occupation or employment during the past 5 years by a corporation or other organization that is a parent, subsidiary or other affiliate of the Corporation, other than Mr. Weinhardt and Mr. Roth whose employment relationship with San Jose Water Company is described above. The Corporation and San Jose Water Company pay their non-employee directors annual retainers of $3,000 and $13,200, respectively. In addition, all directors of the Corporation and San Jose Water Company are paid $700 for each Board or committee meeting attended. SJW Land Company directors are paid $250 for each Board meeting attended. Upon ceasing to serve as a director of the Corporation or San Jose Water Company, as the case may be, directors or their estate are currently entitled to receive from the respective corporation a benefit equal to the annual retainer paid to its directors. This benefit will be paid for the number of years the director served on the board up to a maximum of 10 years. The Board of Directors has an Executive Committee, an Executive Compensation Committee and an Audit Committee. The Audit Committee reviews the results of the annual audit, the financial statements, any supplemental management information submitted by the auditors, and internal accounting and control procedures. It also recommends the selection of auditors to the Corporation's shareholders. The Compensation Committee reviews and recommends to the Board of Directors appropriate compensation for executive officers of the corporation. There is no standing nominating committee. During 1995, there were 4 regular meetings and one special meeting of the Board of Directors and 3 regular meetings of the Audit Committee and 2 meetings of the Executive Compensation Committee. All directors attended at least 75% of all Board and applicable committee meetings, except for Mr. Gibson, who attended 68% of all Board and applicable committee meetings. Executive Officers of the Registrant. Name Age Offices and Experience J. W. Weinhardt 65 SJW Corp. - President, Chief Executive Officer, Director and Member of the Executive Committee of the Board of Directors since 1985. San Jose Water Company - Chairman of the Board since October 1994, President, Chief Executive Officer, Director and Member of the Executive Committee of the Board of Directors since 1974. Mr. Weinhardt has been with San Jose Water Company since 1963. W. R. Roth 43 SJW Corp. - Vice President, Chief Financial Officer and Treasurer since April 1992, Chief Financial Officer and Treasurer since January 1990. San Jose Water Company - President and Chief Operating Officer since October 1994. Senior Vice President since July 1994, Vice President, Finance since April 1992, Chief Financial Officer and Treasurer from January 1990 through October 1994. F. R. Meyer 56 San Jose Water Company - Vice President, Regulatory Affairs since January 1990. Vice President, Finance since 1984 and Chief Financial Officer and Treasurer from 1978 to January 1990. P. J. Schreiber 58 San Jose Water Company - Vice President, Operations since March 1984 and Directing Manager of Operations since 1978. Mr. Schreiber has been with San Jose Water Company since 1962. R. J. Balocco 46 San Jose Water Company - Vice President, Corporate Communications since October 1995, Vice President, Administration since April 1992, Manager of Customer Service since January 1985. Mr. Balocco has been with San Jose Water Company since December 1982. B. Y. Nilsen 54 SJW Corp., Secretary since 1985. San Jose Water Company - Secretary since 1983. Ms. Nilsen has been with San Jose Water Company since 1964. No executive officer has any family relationship to any other executive officer or director. No executive officer is appointed for any set term. There are no agreements or understandings between any executive officer and any other person pursuant to which he was selected as an officer, other than those with directors or officers of SJW Corp. acting solely in their capacities as such. Compliance With Section 16(a) of the Exchange Act. Section 16(a) of the Securities Exchange Act of 1934 requires the Corporation's executive officers and directors, and persons who own more than ten percent of a registered class of the Corporation's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and the American Stock Exchange. Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Corporation with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such reports received by it, or written representations from certain reporting persons that no other reports were required during 1995, SJW Corp. believes that during 1995 all officers, directors and greater than ten percent beneficial owners were in compliance with all Section 16(a) filing requirements. Item 11. Executive Compensation. The following table contains certain summary information regarding the cash compensation paid by the Corporation and its subsidiaries for each of the corporations last three completed fiscal years to the President and Chief Executive Officer and to the four other executive officers whose total annual salary and bonus exceeded $100,000. SUMMARY COMPENSATION TABLE Annual Compensation(1) Long Term Compensation(1) --------------------- ------------------------- Awards Payouts Other ------ ------- Name and Annual Restricted All Other Principal Compen- Stock Options/ LTIP Compen- Position Year Salary Bonus sation Award(s) SAR's Payouts sation - ------------- ---- ----- ----- ------ ------ ----- ------- ------ ($) ($) ($) ($) ($) ($) ($) J.W. Weinhardt 1995 270,000 13,820(2) President 1994 268,750 10,050(2) and Chief 1993 253,750 90,000 9,297(2) Executive Officer SJW Corp., Chairman and Chief Executive Officer San Jose Water Company W.R. Roth 1995 150,000 13,000(2) Vice President 1994 134,304 3,961(3) and Chief 1993 114,416 3,190(3) Financial Officer SJW Corp., President and Chief Operating Officer, San Jose Water Company F.R. Meyer 1995 136,500 4,095(3) Vice President 1994 130,500 3,915(3) San Jose Water 1993 124,500 3,735(3) Company P.J. Schreiber 1995 123,042 3,492(3) Vice President 1994 117,542 3,494(3) San Jose Water 1993 112,042 3,361(3) Company R.J. Balocco 1995 107,625 3,094(3) Vice President 1994 103,125 3,075(3) San Jose Water 1993 98,583 2,957(3) Company (1) Long Term Compensation Award or Payout Plans are not provided to employees of the Corporation or its subsidiaries. (2) For Mr. Weinhardt represents matching contributions paid by the San Jose Water Company under its Salary Deferral Plan of $4,620 for 1995, $4,500 for 1994 and $4,497 for 1993; for Mr. Roth represents matching contributions paid by the San Jose Water Company under its Salary Deferral Plan of $4,500 for 1995. The balance are amounts received for Director's fees. (3) Represents matching contributions paid by the San Jose Water Company under its Salary Deferral Plan. The foregoing table does not include benefits provided under San Jose Water Company's Retirement Plan (the "Retirement Plan") or Supplemental Executive Retirement Plan (SERP). All employees of San Jose Water Company participate in the Retirement Plan. Although subject to adjustment to comply with Internal Revenue Code requirements, the plan's regular benefit formula provides for a monthly retirement benefit equal to 1.6% of the employee's average monthly compensation for each year of credited service. Compensation means the employee's regular salary prior to reduction under the Deferral Plan. The plan also contains a minimum benefit formula which, although also subject to adjustment, provides for a monthly retirement benefit equal up to 55% of the employee's average compensation for the highest 36 consecutive months of compensation less 50% of primary social security benefits. This minimum monthly benefit is reduced by 1/30th for each year of credited service less than 30 years. Benefits vest after 5 years of service or at age 65; there are provisions for early retirement. In addition, in 1992, the Board of Directors of San Jose Water Company adopted a nonqualified, unfunded Supplemental Executive Retirement Plan (SERP) for certain executives and officers of San Jose Water Company. It is intended that the SERP in combination with the Retirement Plan will provide the covered executives and officers with a total retirement benefit commensurate with executives and officers of other comparable private water utilities. A minimum of twenty years of service is required for vesting in the SERP. The amounts contributed to the Retirement Plan by San Jose Water Company to fund retirement benefits with respect to any individual employee cannot be readily ascertained. The following table sets forth combined estimated retirement benefits, payable as a straight life annuity, assuming retirement at age 65 using the minimum benefit formula and the SERP: PENSION PLAN TABLE Years of service(1)(2)(3)(4) Average compensation 15 Years 20 Years 25 Years 30 Years 35 Years $100,000(5) $25,000 $ 44,000 $ 49,500 $ 55,000 $ 55,000 $125,000(5) $31,250 $ 55,000 $ 61,875 $ 68,750 $ 68,750 $150,000(5) $37,500 $ 66,000 $ 74,250 $ 82,500 $ 82,500 $175,000(6) $37,500(7) $ 77,000 $ 86,625 $ 96,250 $ 96,250 $200,000(6) $37,500(7) $123,500 $134,500 $145,500 $150,600 $225,000(6) $37,500(7) $139,000 $151,300 $163,700 $169,400 $250,000(6) $37,500(7) $154,400 $168,100 $181,900 $188,300 $275,000(6) $37,500(7) $169,800 $184,900 $200,000 $207,100 $300,000(6) $37,500(7) $185,200 $201,700 $218,200 $225,900 $325,000(6) $37,500(7) $200,700 $218,500 $236,400 $244,725 $350,000(6) $37,500(7) $216,000 $235,300 $254,500 $263,500 (1) The benefits listed in the table under the 15 years column are subject to deduction of 50% of the participant's social security benefits at age 65. (2) The number of years of credited service and covered compensation at December 31, 1995 is for Mr. Weinhardt, 32, $270,000; Mr. Meyer, 17, $136,500; Mr. Roth, 5, $150,000; Mr. Schreiber, 33, $123,042; Mr. Balocco, 13, $107,625. (3) Applicable laws and regulations limit the amounts which may be paid. (4) No additional benefits are accrued at the present time. (5) Range of benefits apply to Messrs. Meyer, Roth, Balocco and Schreiber only. (6) Range of benefits apply to Mr. Weinhardt only. (7) Compensation is limited to $150,000 in 1995 for the Retirement Plan. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION Mr. Drew Gibson, a director and member of the Corporation's Compensation Committee is a partner in the Gibson Speno Company which was compensated for consulting services as disclosed under Transactions with Management. No member of the Compensation Committee is a former or current officer or employee of the Corporation or any of its subsidiaries. Item 12. Security Ownership of Certain Beneficial Owners and Management. The following sets forth, as of January 1, 1996, the beneficial ownership of shares of the outstanding Common Stock of the Corporation by each director or nominee to the Board, each beneficial owner of more than 5% of the common stock, each officer listed in the summary compensation table and the executive officers of the Corporation as a group. Each nominee has sole voting and sole investment power with respect to the shares of the Corporation's stock listed below (or shares such powers with his spouse). Amount and Percent of Nature of class Class of beneficial beneficially Name stock ownership owned ____ ________ _________ ________ Directors: Mark L. Cali Common 2,195 * J. Philip DiNapoli Common 600 * Drew Gibson Common 500 * Ronald R. James Common 200 * George E. Moss Common 527,156(1) 16.2%(2) Roscoe Moss, Jr. Common 523,878 16.1%(2) W.R. Roth Common 2,500 * Charles J. Toeniskoetter Common 100 * J.W. Weinhardt Common 6,050 * Executive Officers: Fred R. Meyer Common 900 * P.J. Schreiber Common 1,162 * R.J. Balocco Common 186 * All directors and executive officers as a group (14 individuals) Common 1,066,791 32.8% *Denotes an amount less than 1%. (1) Includes 148,483 shares held by trust for which Mr. Moss is trustee or co- trustee. Mr. Moss disclaims any pecuniary interest in 29,344 shares. (2) The address for Mr. George E. Moss and Mr. Roscoe Moss, Jr. is 4360 Worth Street, Los Angeles, CA 90063. Item 13. Certain Relationships and Related Transactions. Transactions with Management SJW Land Company and San Jose Water Company, subsidiaries of the Corporation, retained Gibson Speno Company, of which Mr. Gibson, a director of the Corporation, is a partner, to perform certain consulting services during the year 1994. The Gibson Speno Company was paid $90,000 for consulting services for 1995. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) (1) Financial Statements Independent Auditors' Report, January 19, 1996 Consolidated Balance Sheet as of December 31, 1995 and 1994 Consolidated Statement of Income for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Changes in Shareholders' Equity for the years ended December 31, 1995, 1994 and 1993 Consolidated Statement of Cash Flows for the years ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements (2) Financial Statement Schedule: Schedule Number II Valuation and Qualifying Accounts and Reserves, Years ended December 31, 1995, 1994 and 1993 All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. (3) Exhibits required to be filed by Item 601 of Regulation S-K. See Exhibit Index located in Part IV, Item 7 of this document. The exhibits filed herewith are attached hereto (except as noted) and those indicated on the Exhibit Index which are not filed herewith were previously filed with the Securities and Exchange Commission as indicated. (b) Report on Form 8-K. There have been no reports filed on Form 8-K during the last quarter of the period covered by this report. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SJW CORP. Date: January 25, 1996 By /s/ J. W. Weinhardt J. W. WEINHARDT, President, Chief Executive Officer and Member, Board of Directors Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: January 25, 1996 By /s/ J. W. Weinhardt J. W. WEINHARDT, President, Chief Executive Officer and Member, Board of Directors Date: January 25, 1996 By /s/ W. R. Roth W. R. ROTH, Vice President, Finance and Chief Financial Officer (Chief Accounting Officer and Member, Board of Directors Date: January 25, 1996 By /s/ Mark L. Cali MARK L. CALI Member, Board of Directors Date: January 25, 1996 By /s/J. Philip DiNapoli J. PHILIP DINAPOLI Member, Board of Directors Date: January 25, 1996 By /s/Drew Gibson DREW GIBSON Member, Board of Directors Date: January 25, 1996 By /s/Ronald R. James RONALD R. JAMES Member, Board of Directors Date: January 25, 1996 By /s/George E. Moss GEORGE E. MOSS Member, Board of Directors Date: January 25, 1996 By /s/Roscoe Moss, Jr. ROSCOE MOSS, JR. Member, Board of Directors Date: January 26, 1995 By /s/Charles J. Toeniskoetter CHARLES J. TOENISKOETTER Member, Board of Directors In accordance with the Securities and Exchange Commission's requirements, the Company will furnish copies of any exhibit upon payment of a 30 cents per page fee. To order any exhibit(s), please advise the Secretary, SJW Corp., 374 West Santa Clara Street, San Jose, CA 95196, as to the exhibit(s) desired. On receipt of your request, the Secretary will provide to you the cost of the specific exhibit(s). The Secretary will forward the requested exhibits upon receipt of the required fee. EXHIBIT INDEX Location in Sequentially Exhibit Numbered No. Description Copy 2 Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession. 2.1 Stock Exchange Agreement dated as of August 20, 1992 (as amended October 21, 1992). Filed as Appendix A to Proxy Statement/Prospectus dated November 11, 1992. File No. 1-8966. NA 2.2 Registration Rights Agreement entered into as of December 31, 1992 among SJW Corp., Roscoe Moss, Jr. and George E. Moss. Filed as Exhibit 4.1 to Form 8-K January 11, 1993. File No. 1-8966. NA 2.3 Affiliates Agreement entered into as of December 31, 1992 among SJW Corp., Roscoe Moss, Jr. and George E. Moss. Filed as Exhibit 4.2 to Form 8-K January 11, 1993. File No. 1-8966. NA 2.4 Affiliates Agreement entered into as December 31,1992 among SJW Corp., Roscoe Moss Company and Roscoe Moss, Jr. Filed as Exhibit 4.3 to Form 8-K January 11, 1993. File No. 1-8966. NA 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. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. SEC File No. 1-8966. NA 4 Instruments Defining the Rights of Security Holders, including Indentures: No current issue of the registrant's long-term debt exceeds 10 percent of the total assets of the Company. The Company 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. NA 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 an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. File No.1-8966. NA Executive Compensation Plans and Arrangements: 10.2 Resolutions for Directors' Retirement Plan adopted by SJW Corp. Board of Directors, as amended. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. S.E.C. File No. 1-8966. NA
Location in Sequentially Exhibit Numbered No. Description Copy 10.3 Resolutions for Directors' Retirement Plan adopted by San Jose Water Company Board of Directors, as amended. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1991. S.E.C. File No. 1-8966. NA 10.4 Ninth amendment to San Jose Water Company Retirement Plan (As amended and Restated effective January 1. 1981). Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA 10.5 San Jose Water Company Executive Supplemental Retirement Plan adopted by San Jose Water Company Board of Directors. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA 10.6 First Amendment to San Jose Water Company Executive Supplemental Retirement Plan adopted by San Jose Water Company Board of Directors. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA 21 Subsidiaries of the Registrant. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1992. S.E.C. File No. 1-8966. NA 99 Additional Exhibits: None