1 FORM 10-K 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, 1999 [ ] 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 408-279-7800 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: Title of each class Name of each exchange on which registered Common Stock, Par Value $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. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant - $337,440,352 on March 15, 2000. Shares of common stock outstanding on March 15, 2000 - 3,045,147. 1
2 DOCUMENTS INCORPORATED BY REFERENCE Definitive Proxy Statement relating to the Registrant's 2000 Annual Meeting (filed on March 16, 2000), incorporated into Part III hereof. EXHIBIT INDEX The Exhibit Index to this Form 10-K is located in Part IV, Item 14 of this document. TABLE OF CONTENTS <TABLE> <CAPTION> PART I Page <S> <C> Item 1. Business a. General Development of Business Regulation and Rates 3 b. Financial Information about Industry Segments 5 c. Narrative Description of Business 6 General 6 Water Supply 7 Franchises 7 Seasonal Factors 7 Competition and Condemnation 7 Environmental Matters 8 Employees 8 Executive Officers of the Registrant 8 d. Financial Information about Foreign and Domestic Operations and Export Sales 10 Item 2. Properties 10 Item 3. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Security Holders 11 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters 11 a. Market Information 11 b. Holders 12 c. Dividends 12 Item 6. Selected Financial Data 13 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Item 7a. Quantitative and Qualitative Disclosures About Market Risk 20 </TABLE> 2
3 <TABLE> <S> <C> Item 8. Financial Statements and Supplementary Data 20 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 36 PART III Item 10. Directors and Executive Officers of the Registrant 36 Item 11. Executive Compensation 36 Item 12. Security Ownership of Certain Beneficial Owners and Management 36 Item 13. Certain Relationship on Related Transactions 36 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 36 Exhibit Index 38 Signatures 41 </TABLE> PART I Item 1. Business. (a) General Development of Business. SJW Corp. was incorporated in California on February 8, 1985. SJW Corp. 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 reorganized 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 979,000 people in an area comprising about 138 square miles in the metropolitan San Jose area. San Jose Water Company's web site can be accessed via the Internet at http://www.sjwater.com. SJW Land Company was incorporated in October, 1985. SJW Land Company owns and operates parking facilities adjacent to the company's headquarters and the San Jose Arena. SJW Land Company also owns a commercial building in San Jose and 70% limited partnership interest in 444 West Santa Clara Street, L.P. SJW Corp. also owns 1,099,952 shares of California Water Service Group. Regulation and Rates. San Jose Water Company's rates, service and other matters affecting its business are subject to regulation by the California Public Utilities Commission (CPUC). 3
4 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 California 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 CPUC to offset those expense changes. At December 31, 1999 the balancing account had a net over-collected balance to be refunded of $51,000. FORWARD LOOKING STATEMENTS This report contains forward looking statements relating to future events and financial performance of the company. Such forward looking statements are identified by words including "expect", "estimate", "anticipate" and similar expressions. The company's actual results could differ materially from those discussed in such forward looking statements. Important factors that could cause or contribute to such differences include the following: The CPUC's policy and regulations can adversely affect San Jose Water Company's operating results through the availability, timeliness and amount of rate relief. The CPUC's willingness to allow San Jose Water Company to recover all of its capital expenditures 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 (SCVWD) 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: 4
5 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 wells 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. The City of Cupertino's lease operation could be adversely affected by the capital requirements, the ability of San Jose Water Company to raise rates through the City Council and the level of operating and maintenance expenses. SJW Land Company's expenses and operating results could be adversely affected by the fluctuations in the parking lot activities, the San Jose Arena events and the development and sale of the undeveloped parcels of land. 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." The company undertakes no obligation to update the information including the forward-looking statements, contained in this report. (b) Financial Information about Industry Segments. San Jose Water Company generated 99% of SJW Corp.'s consolidated revenue for the years ended December 31, 1999, 1998 and 1997. There were no significant changes in 1999 in the type of products produced or services rendered by San Jose Water Company, or in its markets or methods of distribution. SJW Land Company contributed 1% to SJW Corp.'s consolidated revenue in 1999, 1998 and 1997. In 1999 and 1998, SJW Land Company sold non-utility properties and contributed a higher net income percentage to SJW Corp.'s consolidated income for those respective years. Dividend income from California Water Service Group generated 7% of consolidated income for the years 1999, 1998 and 1997. 5
6 (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. In October 1997, San Jose Water Company commenced operation of the City of Cupertino Municipal water system under terms of a 25-year lease. The system is adjacent to the existing San Jose Water Company Service area and has 4,200 service connections. Under terms of the lease, San Jose Water Company made an up-front $6.8 million lease payment to the City which will be amortized over the lease term. The Company is responsible for all aspects of system operation including capital improvements. The Merger On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American Water) entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water will merge with and into SJW Corp. American Water is the largest investor-owned and most geographically diverse water utility business in the United States. American Water provides water utility services to over 900 communities with a total population of approximately 10 million in 23 states. Under the terms of the Merger Agreement, each share of the company's common stock issued and outstanding on the closing date would be converted into the right to receive $128 per share in cash. SJW Corp. expects that the transaction will be completed in 8-12 months, following all required regulatory approvals, termination of the waiting period under federal antitrust laws and the approval of the Merger Agreement by SJW Corp.'s shareholders. Shareholders of SJW Corp. will be asked to approve the Merger Agreement at the Annual Meeting of the Shareholders to be held on April 20, 2000. The receipt of the proposed merger consideration will be treated as a taxable transaction under the applicable provision of the Internal Revenue Code and may also be taxable under applicable state, local, foreign and other tax laws. The transaction will be accounted for under the purchase accounting method. 6
7 (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. Groundwater levels in 1999 remained at a high level reflecting the impact of the last rainfall season. SCVWD's reservoir storage of approximately 125,399 acre feet (74% of capacity) was reported on February 22, 2000. 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. During the summer of 1989 through March 1993, rationing was imposed intermittently, to all customers based on request from SCVWD. (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 CPUC and operates within a service area approved by the CPUC. 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 CPUC 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. 7
8 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, 1999, San Jose Water Company had 285 employees, of whom 59 were executive, administrative or supervisory personnel, and of whom 226 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 1999 and 2000. Both groups are affiliated with the AFL-CIO. Executive Officers of the Registrant. <TABLE> <CAPTION> Name Age Offices and Experience <S> <C> <C> J.W. Weinhardt 69 SJW Corp. - Chairman of the Board. Prior to becoming Chairman in October 1996 he was President; Director and Member of the Executive Committee of the Board of Directors since 1985. He also served as Chief Executive Officer until October 1999. San Jose Water Company - Chairman of the Board. Prior to his election to Chairman of the Board in October 1994, he was President. He also served as Chief Executive Officer until October 1996; Director and Member of the Executive Committee of the Board of Directors since 1974. </TABLE> 8
9 <TABLE> <S> <C> <C> Mr. Weinhardt has been with San Jose Water Company since 1963. W.R. Roth 47 SJW Corp. - President and Chief Executive Officer of the Corporation since October 1999. Prior to that he was President from October 1996 to October 1999, Vice President from April 1992 until October 1996 and Chief Financial Officer and Treasurer from January 1990 until October 1996. San Jose Water Company - President since October 1994. He has been Chief Executive Officer since October 1996. Prior to that he was Chief Operating Officer from October 1994 until October 1996. He was Vice President from April 1992 until July 1994 and Senior Vice President from July 1994 until October 1994. R.J. Balocco 50 San Jose Water Company - Vice President - Corporate Communications since October 1995. He was Vice President, Administration from April 1992 until October 1995. Mr. Balocco has been with San Jose Water Company since 1982. G.J. Belhumeur 54 San Jose Water Company - Vice President - Operations since April 1996. Prior to April 1996 he was Operations & Maintenance Manager. Mr. Belhumeur has been with San Jose Water Company since 1970. D. Drysdale 44 San Jose Water Company - Vice President - Information System since January 1999. Prior to that, he was Director of Information System from March 1998 to January 1999. Prior to March 1998, he was Data Processing Manager since 1994. Mr. Drysdale joined San Jose Water Company in 1992. J. Johansson 54 San Jose Water Company - Vice President - Human Resources since January 1999. Prior to that, he was Director of Human Resources from March 1998 to January 1999. Prior to March 1998, he was Personnel Manager. Mr. Johansson has been with San Jose Water Company since 1976. R.J. Pardini 54 San Jose Water Company - Vice President - Chief Engineer since April 1996. Prior to April 1996 he was Chief Engineer. Mr. Pardini has been with San Jose Water Company since 1987. A. Yip 46 SJW Corp., Chief Financial Officer and Treasurer since October 1996. </TABLE> 9
10 <TABLE> <S> <C> <C> San Jose Water Company - Vice President - Finance since January 1999, Chief Financial Officer and Treasurer since October 1994. She was Regulatory Affairs Manager from July 1993 until October 1994. Ms. Yip has been with the San Jose Water Company since 1986. R.S. Yoo 49 San Jose Water Company - Vice President - Water Quality since April 1996. Prior to April 1996 he was Water Quality Manager. He has been with San Jose Water Company since 1985. R.A. Loehr 53 SJW Corp. and San Jose Water Company, Secretary since March 1, 1998. Mr. Loehr also serves as an attorney and has been with San Jose Water Company since 1987. A.J. Elliott 36 San Jose Water Company, Controller since January 1995. Ms. Elliott has been with San Jose Water Company since 1990. </TABLE> 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. (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 non-developable 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 264 million gallons per day and the present capacity for taking purchased water is approximately 172 million gallons per day. The gravity water collection system has a physical delivery capacity of approximately 25 million gallons per day. During 1999, a maximum and average of 207 million gallons and 136 million gallons of water per day, respectively, were delivered to the system. 10
11 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. SJW Land Company owns approximately nine acres of property adjacent to San Jose Water Company's general office facilities, approximately another five undeveloped acres and a commercial building in the San Jose Metropolitan area. Eight of the nine acres of land adjacent to San Jose Water Company are used as surface parking facilities and generate the majority of SJW Land Company's revenue. Item 3. Legal Proceedings. Valley Title Company In 1993, Valley Title Company and its insurer claimed in a lawsuit that a fire service pipeline ruptured, causing water and heating oil to flood the title company's basement. In April 1995, San Jose Water Company's insurance carrier settled the property damage claim of plaintiff insurance company for $3.5 million. The jury separately awarded plaintiff title company $3 million for its loss of business documents. A unanimous appellate court reversed this decision, and in January 1998, the California Supreme Court denied review of that reversal. In July 1998, Maxxum Management Company, successor to Valley Title Company, filed a new lawsuit against San Jose Water Company. The litigation was based upon the same facts as the first lawsuit but alleges a cause of action in inverse condemnation. San Jose Water Company has recently succeeded in having the case dismissed by the Court of Appeal and the case is concluded. San Jose Water Company believes the matter has come to a successful closure. 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 11
12 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 1999 and 1998 fiscal years is contained in the section captioned "Market price range of stock" in the tables set forth in Note 11 of "Notes to Consolidated Financial Statements" in Part II, Item 8. (b) Holders. There were 993 record holders of SJW Corp.'s common stock on December 31, 1999. (c) Dividends. Quarterly dividends have been paid on SJW Corp.'s and its predecessor's common stock for 225 consecutive quarters and the quarterly rate has been increased during each of the last 32 years. The information required by this item as to the cash dividends paid on common stock in 1999 and 1998 is contained in the section captioned "Dividends per share" in the tables set forth in Note 11 of "Notes to consolidated Financial Statements" in Part II, Item 8. 12
13 Item 6. Selected Financial Data. FIVE YEAR STATISTICAL REVIEW SJW CORP. AND SUBSIDIARIES <TABLE> <CAPTION> 1999 1998 1997 1996 1995 -------- -------- -------- -------- -------- <S> <C> <C> <C> <C> <C> CONSOLIDATED RESULTS OF OPERATIONS (in thousands) Operating revenue $117,001 106,010 110,084 102,593 97,385 Operating expense: Operation 67,676 57,454 61,382 57,231 57,339 Maintenance 6,638 6,909 7,087 6,851 6,342 Taxes 12,713 13,206 13,454 12,234 10,764 Depreciation and amortization 10,235 9,594 8,847 8,671 7,626 - --------------------------------------------------------------------------------------------------------------- Total operating expense 97,262 87,163 90,770 84,987 82,071 - --------------------------------------------------------------------------------------------------------------- Operating income 19,739 18,847 19,314 17,606 15,314 Interest expense, other income and deductions 3,855 2,829 4,098 (954) 3,779 - --------------------------------------------------------------------------------------------------------------- Net income 15,884 16,018 15,216 18,560 11,535 Dividends paid 7,379 7,419 7,228 7,163 7,022 - --------------------------------------------------------------------------------------------------------------- Invested in the business $ 8,505 8,599 7,988 11,397 4,513 - --------------------------------------------------------------------------------------------------------------- CONSOLIDATED PER SHARE DATA Net income $ 5.20 5.05 4.80 5.75 3.55 Dividends paid $ 2.40 2.34 2.28 2.22 2.16 Shareholders' equity at year-end $ 47.25 45.19 42.13 37.86 33.49 CONSOLIDATED BALANCE SHEET(in thousands) Utility plant $432,262 403,227 371,200 342,368 324,098 Less accumulated depreciation and amortization 129,828 122,809 114,851 107,584 100,000 - --------------------------------------------------------------------------------------------------------------- Net utility plant 302,434 280,418 256,349 234,784 224,098 - --------------------------------------------------------------------------------------------------------------- Nonutility property 10,133 11,360 7,301 7,287 6,624 Total assets 372,427 359,380 323,223 296,536 280,497 Capitalization: Shareholders' equity 143,894 143,149 133,553 120,028 108,854 Long-term debt(includes current maturities) 90,000 90,000 75,000 76,500 77,500 - --------------------------------------------------------------------------------------------------------------- Total capitalization $233,894 233,149 208,553 196,528 186,354 =============================================================================================================== </TABLE> 13
14 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 979,000 in an area comprising about 138 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. SJW Corp. owns 1,099,952 shares of California Water Service Group. The Merger On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American Water) entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water will merge with and into SJW Corp. American Water is the largest investor-owned and most geographically diverse water utility business in the United States. American Water provides water utility services to over 900 communities with a total population of approximately 10 million in 23 states. Under the terms of the Merger Agreement, each share of the company's common stock issued and outstanding on the closing date would be converted into the right to receive $128 per share in cash. SJW Corp. expects that the transaction will be completed in 8-12 months, following all required regulatory approvals, termination of the waiting period under federal antitrust laws and the approval of the Merger Agreement by SJW Corp.'s shareholders. Shareholders of SJW Corp. will be asked to approve the Merger Agreement at the Annual Meeting of the Shareholders to be held on April 20, 2000. The receipt of the proposed merger consideration will be treated as a taxable transaction under the applicable provision of the Internal Revenue Code and may also be taxable under applicable state, local, foreign and other tax laws. The transaction will be accounted for under the purchase accounting method. 14
15 <TABLE> <CAPTION> Results of Operations CONSOLIDATED OPERATING REVENUE (in thousands) 1999 1998 1997 - -------------------------------------------------------------------------- <S> <C> <C> <C> San Jose Water Company $115,689 105,025 108,991 SJW Land Company 1,312 985 1,093 - -------------------------------------------------------------------------- $117,001 106,010 110,084 ========================================================================== </TABLE> Consolidated operating revenue for 1999 increased $10,991,000, or 10%, from 1998 mainly due to a 4% increase in water consumption and increased office rental activities. Rate increases and new customers contributed $6,048,000 and $752,000, respectively, to 1999's revenue. Consolidated operating revenue for 1998 decreased $4,074,000, or 4%, from 1997 mainly due to an 8% decrease in water consumption and reduced parking activities. The decline was partially offset by rate increases of $1,175,000, and usage by new customers of $1,652,000. <TABLE> <CAPTION> CONSOLIDATED OPERATING EXPENSE (in thousands) 1999 1998 1997 - ------------------------------------------------------------------------------------ <S> <C> <C> <C> San Jose Water Company $86,276 76,559 79,841 SJW Land Company 944 566 486 SJW Corp. 1,168 353 333 - ------------------------------------------------------------------------------------ $88,388 77,478 80,660 ==================================================================================== </TABLE> Consolidated operating expense in 1999, excluding income taxes, increased 14% in comparison with 1998 due to increased water production. Consolidated operating expense in 1998 decreased 4% in comparison with 1997 due to reduced water production. <TABLE> <CAPTION> SOURCES OF SUPPLY (million gallons) 1999 1998 1997 - ----------------------------------------------------------------------- <S> <C> <C> <C> Purchased water 27,195 25,436 26,157 Ground water 18,438 16,379 20,846 Surface water 5,232 6,246 4,881 Reclaimed water 301 79 - - ----------------------------------------------------------------------- 51,166 48,140 51,884 ======================================================================= </TABLE> Water production in 1999 increased 3,105 million gallons, or 6%, over 1998. Water production in 1998 decreased 3,823 million gallons, or 7%, from 1997. The changes are consistent with the related operating expenses. The effective consolidated income tax rates for 1999, 1998 and 1997 were 41%, 40% and 40%, respectively. Refer to the 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. 15
16 OTHER INCOME AND EXPENSE The 1999 dividend income increased $16,000, or 1%, over 1998 due to a $.015 per share increase in the California Water Service Group annual dividend. San Jose Water Company's interest cost on long-term debt in 1999, including capitalized interest, increased $959,000 from 1998 due to the issuance of the Series E Senior Note. San Jose Water Company's weighted average cost of long-term debt, including amortization of debt issuance costs, was 8.04%, 8.04% and 8.27% as of December 31, 1999, 1998 and 1997, respectively. In association with SJW Corp.'s merger with American Water Works Company, Inc., certain merger-related expenses in the amount of $1,588,000 were incurred in 1999. Other income in 1999 and 1998 included gains on sale of nonutility properties to affiliated and non-affiliated parties. LIQUIDITY AND CAPITAL RESOURCES CAPITAL REQUIREMENTS San Jose Water Company's budgeted capital expenditures for 2000 compared to 1999, exclusive of capital expenditures financed by customer contributions and advances, are as follows: <TABLE> <CAPTION> BUDGETED CAPITAL EXPENDITURES (in thousands) 2000 1999 - ---------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Source of supply $ 72 -% $ 692 3% Reservoirs and tanks 3,470 14% 1,737 8% Pump stations and equipment 1,391 6% 1,902 9% Distribution system 15,286 62% 14,386 65% Equipment and other 4,332 18% 3,433 15% - ---------------------------------------------------------------------------------------------------- $24,551 100% $22,150 100% ==================================================================================================== </TABLE> The 2000 capital budget is concentrated in main replacements and facility relocation. Approximately $15 million will be spent to systematically renew the company's aging infrastructure and $1.6 million will be spent in the relocation and expansion of operations and engineering facilities. San Jose Water Company expects to incur approximately $120 million, exclusive of customer contributions and advances, in capital expenditures over the next five years. The 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. 16
17 Most of San Jose Water Company's distribution system has been constructed over the last 40 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 original installation 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 50% 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, 1999, SJW Corp. and its subsidiaries had $24.7 million of unused line of credit and over $50 million 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 of approximately 50% debt and 50% equity. In 1998, San Jose Water Company issued $15 million in Series E unsecured 30-year senior note. In 1997, the company redeemed its $1.5 million Series P 6.5% first mortgage bonds at maturity. The company intends to 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) 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 authorized by the California Public Utilities Commission (CPUC). The CPUC sets rates that are intended to provide revenue sufficient to recover operating expenses and produce a reasonable return on common equity. The company's most recent rate case decision authorized it to earn a return on common equity in 1996, 1997, 1998 and 1999 of 10.2% which is within the range of recent rates of return authorized by the CPUC for water utilities. The same decision also granted the company memorandum account protection for the largely indeterminate costs associated with the new or more stringent federal water quality regulations. With the establishment of the water quality memorandum 17
18 account, any potential financial exposure resulting from these regulations has been substantially reduced. San Jose Water Company deferred the filing of a general rate case application from January, 1999 to January, 2000. Consequently, apart from any offset increases, the company is not authorized any additional step rate increases until the next general rate case decision becomes effective in January, 2001. 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 Mountains 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 1999 and 2000. The agreement includes a 3% wage increase for 2000, and minor benefit modifications. YEAR 2000 ISSUES San Jose Water Company executives, as part of their operating duties, evaluated the company's information technology (IT) and non-IT systems to ensure all systems are prepared for the Year 2000 (Y2K). The company generally uses software packages and hardware that are Y2K assured by vendors or independent testers. San Jose Water Company has an IT master plan that identifies systems that need to be replaced due to age, or need to be modified to generate operating and customer service benefits. The systems that were identified as non-assured were upgraded as of October, 1999. Management also contacted critical third party suppliers regarding their Y2K readiness. Suppliers of water, power and other goods are critical to San Jose Water Company's operations. The suppliers described their state of readiness and contingency plans, if available. San Jose Water Company prepared comprehensive Y2K contingency plans covering accounting, operations and information systems. To date, San Jose Water Company has not experienced any Y2K related issues nor has incurred any significant costs associated solely with Y2K issues. No major IT projects have been deferred due to Y2K issues. The costs of identifying the issues, evaluating the systems, inquiring about third party suppliers' Y2K preparedness and any testing have been expensed. 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 (DHS) and the California Regional Water Quality Control Board. The company is 18
19 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 drinking water. San Jose Water Company is currently in compliance with all of the 87 primary MCLs promulgated to date. However, the EPA and DHS have continuing authority to issue additional regulations under the SDWA. San Jose Water Company has implemented monitoring activities and installed specific water treatment improvements enabling it to comply with all existing MCLs and plan for compliance with future drinking water 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 hazardous materials, point and non-point source discharges and the warning provisions of the California Safe Drinking Water and Toxic Enforcement Act of 1986. Future drinking water regulations may require increased monitoring, disinfection or other treatment of underground water supplies, fluoridation of all 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, currently, 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. NONREGULATED OPERATIONS The investment in California Water Service Group is expected to produce 2000 pre-tax dividend income and cash flow of approximately $1.2 million. SJW Land Company's parking revenue is largely dependent upon the level of events and activities at the San Jose Arena which is located adjacent to its parking facility. In the spring of 2000, SJW Land Company's parking lots will host the hugely popular Cirque du Soleil, enhancing parking and rental cash flow during that period. SJW Land Company's commercial property is fully leased. The operating results of the City of Cupertino lease are largely dependent on the level of operation, maintenance and capital costs incurred. In January, 2000, San Jose Water Company completed its phase-in of its regular water service rates within the City of Cupertino. Further changes in water service rates will be subject to the approval of the Cupertino City Council. 19
20 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Corporation has no derivative financial instruments, financial instruments with significant off-balance sheet risks, or financial instruments with concentrations of credit risk. There is no material sensitivity to changes in market rates and prices. Item 8. Financial Statements and Supplementary Data. Financial Statements: Independent Auditors' Report The Shareholders and Board of Directors SJW Corp. We have audited the accompanying consolidated balance sheets of SJW Corp. (the Company) and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1999. In connection with our audits of the consolidated financial statements, we also have audited the accompanying financial statement schedule. 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, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, 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 LLP Mountain View, California January 21, 2000 20
21 CONSOLIDATED BALANCE SHEETS SJW CORP. AND SUBSIDIARIES December 31, (in thousands, except share data) <TABLE> <CAPTION> ASSETS 1999 1998 ---- ---- <S> <C> <C> Utility plant $424,421 395,386 Intangible assets 7,841 7,841 - ------------------------------------------------------------ 432,262 403,227 Less accumulated depreciation and amortization 129,828 122,809 - ------------------------------------------------------------ 302,434 280,418 - ------------------------------------------------------------ Nonutility property 10,133 11,360 Current assets: Cash and equivalents 124 8,066 Accounts receivable: Customers 5,858 5,267 Other 215 140 Accrued utility revenue 6,507 6,503 Materials and supplies, at average cost 382 437 Prepaid expenses 714 812 - ------------------------------------------------------------ 13,800 21,225 - ------------------------------------------------------------ Other assets: Investment in California Water Service Group 33,342 34,442 Investment in joint venture 1,210 - Unamortized debt issuance and reacquisition costs 3,880 4,032 Goodwill 1,914 2,000 Regulatory assets 5,177 5,137 Other 537 766 - ------------------------------------------------------------ 46,060 46,377 - ------------------------------------------------------------ $372,427 359,380 ============================================================ </TABLE> 21
22 CONSOLIDATED BALANCE SHEETS (Continued) SJW CORP. AND SUBSIDIARIES December 31, (in thousands, except share data) <TABLE> <CAPTION> CAPITALIZATION AND LIABILITIES 1999 1998 ---- ---- <S> <C> <C> CAPITALIZATION: Shareholders' equity: Common stock, $3.125 par value; authorized 6,000,000 shares; issued 3,045,147 shares in 1999 and 3,167,547 in 1998 $ 9,516 9,899 Additional paid-in capital 12,357 19,085 Retained earnings 113,058 104,553 Accumulated other comprehensive income 8,963 9,612 - ---------------------------------------------------------------------- 143,894 143,149 Long-term debt 90,000 90,000 - ---------------------------------------------------------------------- 233,894 233,149 - ---------------------------------------------------------------------- CURRENT LIABILITIES: Line of credit 3,300 - Accrued pump taxes and purchased water 3,072 2,423 Accounts payable 476 2,163 Accrued interest 2,751 2,720 Accrued taxes 3,849 1,353 Other current liabilities 3,394 3,095 - ---------------------------------------------------------------------- 16,842 11,754 - ---------------------------------------------------------------------- DEFERRED INCOME TAXES 25,947 25,541 UNAMORTIZED INVESTMENT TAX CREDITS 2,205 2,249 ADVANCES FOR CONSTRUCTION 50,076 47,513 CONTRIBUTIONS IN AID OF CONSTRUCTION 40,669 36,258 DEFERRED REVENUE 1,397 1,244 OTHER NONCURRENT LIABILITIES 1,397 1,672 COMMITMENTS - - - ---------------------------------------------------------------------- $372,427 359,380 ====================================================================== </TABLE> See accompanying notes to consolidated financial statements. 22
23 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME SJW CORP. AND SUBSIDIARIES Years ended December 31, (in thousands, except share and per share data) <TABLE> <CAPTION> 1999 1998 1997 - ------------------------------------------------------------------------------------ <S> <C> <C> <C> OPERATING REVENUE $ 117,001 106,010 110,084 OPERATING EXPENSE: Operation: Purchased water 27,987 24,124 24,341 Power 3,756 3,259 4,004 Pump taxes 15,502 12,661 15,293 Other 20,431 17,410 17,744 Maintenance 6,638 6,909 7,087 Property taxes and other nonincome taxes 3,839 3,521 3,344 Depreciation and amortization 10,235 9,594 8,847 Income taxes 8,874 9,685 10,110 - ------------------------------------------------------------------------------------ 97,262 87,163 90,770 - ------------------------------------------------------------------------------------ Operating income 19,739 18,847 19,314 OTHER (EXPENSE) INCOME: Interest on long-term debt (6,552) (5,629) (5,695) Merger related costs (1,588) - - Gain on sale of nonutility property, net 3,064 1,629 - Dividends 1,193 1,177 1,160 Other 28 (6) 437 - ------------------------------------------------------------------------------------ NET INCOME $ 15,884 16,018 15,216 ==================================================================================== OTHER COMPREHENSIVE INCOME: Unrealized gain (loss) on investment (1,100) 1,959 9,384 Income taxes related to other comprehensive income 451 (804) (3,847) - ------------------------------------------------------------------------------------ Other comprehensive income (loss), net (649) 1,155 5,537 - ------------------------------------------------------------------------------------ COMPREHENSIVE INCOME $ 15,235 17,173 20,753 ==================================================================================== BASIC EARNINGS PER SHARE $ 5.20 5.05 4.80 ==================================================================================== COMPREHENSIVE INCOME PER SHARE $ 4.99 5.42 6.55 ==================================================================================== WEIGHTED AVERAGE SHARES OUTSTANDING 3,054,980 3,169,839 3,170,347 ==================================================================================== </TABLE> See accompanying notes to consolidated financial statements. 23
24 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY SJW CORP. AND SUBSIDIARIES (in thousands) <TABLE> <CAPTION> Accumulated Additional Other Com- Total Common Paid-in Retained prehensive Shareholders' Stock Capital Earnings Income Equity - ---------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> BALANCES, DECEMBER 31, 1996 9,907 19,235 87,966 2,920 120,028 Net income - - 15,216 - 15,216 Other comprehensive income - unrealized gain on investment, net of tax effect of $3,847 - - - 5,537 5,537 - - ------- Comprehensive Income 20,753 Dividends paid - - (7,228) - (7,228) - ---------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 1997 9,907 19,235 95,954 8,457 133,553 Net income - - 16,018 - 16,018 Other comprehensive income - unrealized gain on investment, net of tax effect of $804 - - - 1,155 1,155 ------- Comprehensive Income 17,173 Purchase and retirement of common stock (8) (150) - - (158) Dividends paid - - (7,419) - (7,419) - ---------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 1998 9,899 19,085 104,553 9,612 143,149 Net income - - 15,884 - 15,884 Other comprehensive income - unrealized loss on investment, net of tax effect of $451 - - - (649) (649) ------- Comprehensive Income 15,235 Purchase and retirement of common stock (383) (6,728) - - (7,111) Dividends paid - - (7,379) - (7,379) - ---------------------------------------------------------------------------------------------------- BALANCES, DECEMBER 31, 1999 $ 9,516 12,357 113,058 8,963 143,894 ==================================================================================================== </TABLE> See accompanying notes to consolidated financial statements. 24
25 CONSOLIDATED STATEMENTS OF CASH FLOWS SJW CORP. AND SUBSIDIARIES <TABLE> <CAPTION> Years ended December 31, (in thousands) 1999 1998 1997 - -------------------------------------------------------------------------------------------- <S> <C> <C> <C> OPERATING ACTIVITIES: Net income $ 15,884 16,018 15,216 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,235 9,594 8,847 Deferred income taxes and credits 813 1,648 1,943 Gain on sale of nonutility property, net (3,064) (1,629) - Changes in operating assets and liabilities: Accounts receivable and accrued utility revenue (670) (1,115) (3,048) Accounts payable and other current liabilities (1,388) 1,628 1,028 Accrued pump taxes and purchased water 649 351 80 Accrued taxes 389 772 386 Other changes, net 732 (333) (554) - -------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 23,580 26,934 23,898 - -------------------------------------------------------------------------------------------- INVESTING ACTIVITIES: Additions to utility plant (32,294) (34,356) (24,109) Cost to retire utility plant, net of salvage (1,233) (485) (720) Additions to nonutility property (68) (4,360) (82) Proceeds from sale of nonutility property 5,230 3,073 - Water system leasehold acquisition cost - - (6,800) - -------------------------------------------------------------------------------------------- NET CASH USED IN INVESTING ACTIVITIES (28,365) (36,128) (31,711) - -------------------------------------------------------------------------------------------- FINANCING ACTIVITIES: Dividends paid (7,379) (7,419) (7,228) Repayment of line of credit (4,500) (12,900) - Borrowings from line of credit 7,800 12,900 - Advances and contributions in aid of construction 9,655 7,477 9,944 Refunds of advances (1,622) (1,472) (1,475) Proceeds from issuance of long-term debt - 15,000 - Principal payments of long-term debt - - (1,500) Purchase and retirement of common stock (7,111) (158) - - -------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (3,157) 13,428 (259) - -------------------------------------------------------------------------------------------- NET CHANGE IN CASH AND EQUIVALENTS (7,942) 4,234 (8,072) CASH AND EQUIVALENTS, BEGINNING OF YEAR 8,066 3,832 11,904 - -------------------------------------------------------------------------------------------- CASH AND EQUIVALENTS, END OF YEAR $ 124 8,066 3,832 Cash paid during the year for: Interest $ 7,099 6,005 5,993 Income taxes $ 8,027 8,238 8,846 - -------------------------------------------------------------------------------------------- </TABLE> See accompanying notes to consolidated financial statements. 25
26 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Years ended December 31, 1999, 1998, and 1997 (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 (CPUC) 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, a commercial property in San Jose and also owns several undeveloped real estate parcels in San Jose. 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 1999, 1998 and 1997 was $414, $378 and $290, respectively. Construction in progress was $3,602, $4,631 and $2,693 at December 31, 1999, 1998 and 1997, respectively. 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. Rate-regulated enterprises are required to charge a regulatory asset to earnings if and when that asset no longer meets the criteria for being recorded as a regulatory asset. INTANGIBLE ASSETS Intangible assets consist of leasehold acquisition cost for the City of Cupertino municipal water system and other intangibles associated with the operation of San Jose Water Company. All intangible assets are recorded at cost and are amortized using the straight-line method over the legal or estimated economic life of the asset, whichever is shorter, not to exceed 40 years. 26
27 NONUTILITY PROPERTY Nonutility property is recorded at cost and consists primarily of land, buildings and parking facilities. Depreciation is computed using accelerated depreciation methods over the estimated useful lives of the assets, ranging from 5 to 39 years. FINANCIAL INSTRUMENTS Cash and equivalents include certain highly liquid investments with original maturities of three months or less when purchased. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. INVESTMENT IN CALIFORNIA WATER SERVICE GROUP AND COMPREHENSIVE INCOME SJW Corp.'s investment in California Water Service Group is reported at quoted market price, with the unrealized gain or loss reported as other comprehensive income. The accumulated balance of other comprehensive income is reported in the equity section of the financial statements. 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 the recoverability of goodwill by assessing whether the amortization of the balance over the remaining life can be recovered through expected and undiscounted future results to determine if an impairment has occurred. 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. 27
28 To the extent permitted by the CPUC, 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 2000 are $1,635. Contributions in aid of construction represent funds received from developers that are not refundable under CPUC 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 and prior to June 12, 1996 generally must be included in federal taxable income. Taxes paid relating to advances and contributions are recorded as deferred tax assets for financial reporting purposes and are amortized over 40 years for advances, and over the tax depreciable life of the related asset for contributions. Receipts subsequent to June 12, 1996 are generally exempt from federal taxable income. Advances and contributions received subsequent to 1991 and prior to 1997 are included in state taxable income. 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 1997's operating revenue is $890 relating to recovery of prior years' net revenue lost due to voluntary conservation programs. 1999, 1998 and 1997 operating revenue includes $2,392, $2,078 and $463, respectively, from the lease operation of the City of Cupertino. EARNINGS PER SHARE Basic earnings per share and comprehensive income per share are calculated using income available to common shareholders and comprehensive income, respectively, divided by the weighted average number of shares outstanding during the year. SJW Corp. has no dilutive securities, and accordingly, diluted earnings per share is not shown. BUSINESS SEGMENT INFORMATION SJW Corp. and its subsidiaries operate predominantly in one reportable business segment of providing water utility service to its customers. Nonutility revenue, assets and net income do not have a material effect on SJW Corp.'s financial condition and results of operations. 28
29 NOTE 2 CAPITALIZATION At December 31, 1999 and 1998, 176,407 shares of $25 par value preferred stock were authorized and unissued. In 1999 and 1998, SJW Corp. repurchased 122,400 and 2,800 shares, respectively, of its outstanding common stock at the prevailing market price in the open market at an aggregate cost of $7,111 and $158, respectively. All repurchased shares have been canceled and are considered authorized and unissued. NOTE 3 LINE OF CREDIT SJW Corp. and its subsidiaries have unsecured bank lines of credit available, allowing aggregate short-term borrowings of up to $28,000. These lines of credit bear interest at variable rates and expire on May 31, 2001. The weighted average interest rate for the short-term borrowings at December 31, 1999 was 6.2%. NOTE 4 GAIN ON SALE OF NONUTILITY PROPERTY In December 1999, SJW Corp. sold nonutility property to a company partially owned by a director, receiving consideration of $5,230 in cash. The transaction resulted in a gain of $3,064, net of income tax expense of $2,107. The transaction was negotiated at arms length supported by independent appraisals. In June 1998, SJW Corp. recognized a gain of $1,629, net of income taxes of $1,132, from the sale of nonutility property, receiving as consideration a nonutility investment property with a fair value of $3,595. NOTE 5 LONG-TERM DEBT Long-term debt as of December 31 was as follows: <TABLE> <CAPTION> Description Due Date 1999 1998 - --------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> Senior notes: A 8.58% 2022 $20,000 20,000 B 7.37% 2024 30,000 30,000 C 9.45% 2020 10,000 10,000 D 7.15% 2026 15,000 15,000 E 6.81% 2028 15,000 15,000 - --------------------------------------------------------------------------------- Total long-term debt $90,000 90,000 ================================================================================= </TABLE> 29
30 Senior notes held by institutional investors, are unsecured obligations of San Jose Water Company and require interest only payments until maturity. To minimize issuance costs, all of the company's debt has historically been privately placed. The fair value of long-term debt as of December 31, 1999 and 1998 was approximately $100,707 and $118,600, respectively, based on the amount of essentially risk-free assets that would have to be placed in trust to extinguish these obligations. 30
31 NOTE 6 INCOME TAXES The following table reconciles income tax expense to the amount computed by applying the federal statutory rate of 35% to income before income taxes: <TABLE> <CAPTION> 1999 1998 1997 - --------------------------------------------------------------------------- <S> <C> <C> <C> "Expected" federal income tax $ 9,402 9,392 8,864 Increase (decrease) in taxes attributable to: Utility plant basis (6) 224 180 State taxes, net of federal income tax benefit 1,544 1,542 1,531 Dividend received deduction (292) (288) (284) Other items, net 333 (53) (181) - --------------------------------------------------------------------------- $ 10,981 10,817 10,110 =========================================================================== </TABLE> The components of income tax expense as of December 31 were: <TABLE> <CAPTION> 1999 1998 1997 - --------------------------------------------------------------------------- <S> <C> <C> <C> Current: Federal $ 7,931 6,611 6,657 State 2,417 2,124 2,225 Deferred: Federal 686 1,885 1,230 State (53) 197 (2) - --------------------------------------------------------------------------- $ 10,981 10,817 10,110 - --------------------------------------------------------------------------- Income taxes included in operating expense $ 8,874 9,685 10,110 Income taxes included in gain on sale of nonutility property 2,107 1,132 - - --------------------------------------------------------------------------- $ 10,981 10,817 10,110 - --------------------------------------------------------------------------- </TABLE> The components of the net deferred tax liability as of December 31 were as follows: <TABLE> <CAPTION> 1999 1998 - ---------------------------------------------------------------- <S> <C> <C> Deferred tax assets: Advances and contributions $13,994 13,437 Unamortized investment tax credit 1,187 1,211 Pensions and postretirement benefits 264 389 California franchise tax 766 649 Other 1,332 585 - ---------------------------------------------------------------- Total deferred tax assets 17,543 16,271 - ---------------------------------------------------------------- Deferred tax liabilities: Utility plant 28,564 26,624 Investment 11,415 11,866 Debt reacquisition costs 1,190 1,239 Other 2,321 2,083 - ---------------------------------------------------------------- Total deferred tax liabilities 43,490 41,812 - ---------------------------------------------------------------- Net deferred tax liabilities $25,947 25,541 - ---------------------------------------------------------------- </TABLE> 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. 31
32 NOTE 7 COMMITMENTS San Jose Water Company purchases water from 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. Based on current prices and estimated deliveries, San Jose Water Company expects to purchase a minimum of 90% of the delivery schedule, or $21,800 of water, from SCVWD in the contract year ending June 30, 2000. In 1997, San Jose Water Company entered into a 25-year lease agreement with the City of Cupertino to operate the City's municipal water system. Under the terms of the lease agreement, San Jose Water Company assumed responsibility for all maintenance, operating and capital costs, while receiving all payments for water service. Water service rates will be subject to approval by the Cupertino City Council. NOTE 8 JOINT VENTURE In September, 1999, SJW Land Company formed 444 West Santa Clara Street, L.P., a limited partnership, with a real estate development firm whereby SJW Land contributed real property in exchange for a 70% limited partnership interest. An office building is being developed on the property. The real estate development firm is partially owned by an individual who also serves as a director of SJW Corp. The partnership is being accounted for under the equity method of accounting. NOTE 9 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. Company 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 the amounts received under the retirement plan. The annual cost of this plan has been included in the determination of the net periodic benefit cost shown below. The plan, which is unfunded, had a projected benefit obligation of $2,120, $1,721, $1,713 and as of December 31, 1999, 1998 and 1997, respectively, and net periodic pension cost of $290, $196 and $222, for 1999, 1998 and 1997, respectively. 32
33 DEFERRAL PLAN San Jose Water Company sponsors a salary deferral plan which allows employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. Company contributions were $596, $433 and $421, in 1999, 1998 and 1997, 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. In 1997, the plan was changed to a flat dollar plan which is unaffected by variations in health care costs. Net periodic cost for the defined benefit plans and other postretirement benefits was: <TABLE> <CAPTION> PENSION BENEFITS OTHER BENEFITS - --------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1999 1998 1997 - --------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Weighted-Average Assumptions as of Dec. 31: % % % % % % Discount rate 8.00 6.75 6.75 8.00 6.75 6.75 Expected return on plan assets 8.00 8.00 8.00 8.00 8.00 8.00 Rate of compensation increase 4.00 4.00 4.00 n.a. n.a. n.a. =============================================================================================================== Components of Net Periodic Benefit Cost: Service cost $ 1,105 875 886 $ 46 36 39 Interest cost 1,966 1,731 1,590 103 91 91 Expected return on assets (2,584) (2,386) (2,029) (27) (25) (20) Amortization of transition obligation 3 3 3 56 56 56 Amortization of prior service cost 219 190 151 16 - - Recognized actuarial gain (188) (274) (118) (3) (9) (6) - --------------------------------------------------------------------------------------------------------------- Net periodic benefit cost $ 521 139 483 $ 191 149 160 =============================================================================================================== </TABLE> 33
34 The actuarial present value of benefit obligations and the funded status of San Jose Water Company's defined benefit pension and other postretirement plans as of December 31 were as follows: <TABLE> <CAPTION> PENSION BENEFITS OTHER BENEFITS - ---------------------------------------------------------------------------------------------------------------- 1999 1998 1997 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> <C> <C> Change in Benefit Obligation: Benefit obligation at beginning of year $ 27,912 25,625 23,314 $ 1,536 1,437 1,419 Service cost 1,105 875 886 46 36 39 Interest cost 1,966 1,731 1,590 103 91 91 Amendments 629 863 365 - 101 (38) Actuarial (gain) loss (3,553) 56 476 (335) (50) 4 Benefits paid (1,310) (1,238) (1,006) (92) (79) (78) - ---------------------------------------------------------------------------------------------------------------- Benefit obligation at end of year $ 26,749 27,912 25,625 $ 1,258 1,536 1,437 ================================================================================================================ Change in Plan Assets: Fair value of assets at beginning of year $ 32,880 30,336 25,813 $ 391 350 291 Actual return on plan assets 3,378 3,618 4,626 18 16 13 Employer contributions 1,140 - 777 108 92 103 Benefits paid (1,310) (1,074) (880) (78) (67) (57) - ---------------------------------------------------------------------------------------------------------------- Fair value of assets at end of year $ 36,088 32,880 30,336 $ 439 391 350 ================================================================================================================ Funded Status: Plan assets less benefit obligation $ 9,339 4,968 4,711 $ (819) (1,145) (1,087) Unrecognized tran- sition obligation 212 215 218 679 735 792 Unamortized prior service cost 2,628 2,219 1,545 86 101 - Unrecognized actuarial gain (11,595) (7,436) (6,533) (583) (246) (214) - ---------------------------------------------------------------------------------------------------------------- Prepaid (accrued) benefit cost $ 584 (34) (59) $ (637) (555) (509) ================================================================================================================ </TABLE> NOTE 10 THE MERGER On October 28, 1999, SJW Corp. and American Water Works Company, Inc. (American Water) entered into an Agreement and Plan of Merger (the Merger Agreement). Pursuant to the Merger Agreement, a wholly owned subsidiary of American Water will merge with and into SJW Corp. Under the terms of the Merger Agreement, each share of the company's common stock outstanding on the closing date would be converted into the right to receive $128 per share. SJW Corp. expects that the transaction will be completed in 8-12 months, following all required regulatory 34
35 approvals, termination of the waiting period under federal antitrust laws and the approval of the Merger Agreement by SJW Corp.'s shareholders. NOTE 11 UNAUDITED QUARTERLY FINANCIAL DATA Summarized quarterly financial data is as follows: <TABLE> <CAPTION> 1999 Quarter ended March June September December - -------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Operating revenue $ 21,067 30,188 37,661 28,085 Operating income 3,158 5,548 6,790 4,243 Net income 1,781 4,075 5,409 4,619 Comprehensive income (loss) (2,640) 5,130 6,220 6,525 Basic earnings per share .58 1.34 1.78 1.52 Comprehensive income (loss) per share (0.86) 1.68 2.04 2.14 Market price range of stock: High 65 81 1/2 93 1/2 121 Low 57 1/4 60 3/8 75 1/2 87 3/4 Dividends per share .60 .60 .60 .60 ====================================================================================== </TABLE> <TABLE> <CAPTION> 1998 Quarter ended March June September December - -------------------------------------------------------------------------------------- <S> <C> <C> <C> <C> Operating revenue $ 19,336 25,508 35,821 25,345 Operating income 2,687 4,692 6,968 4,500 Net income 1,526 5,190 5,807 3,495 Comprehensive income (loss) (76) 3,933 4,185 9,131 Basic earnings per share .48 1.64 1.83 1.10 Comprehensive income (loss) per share (0.02) 1.24 1.32 2.88 Market price range of stock: High 71 70 3/8 59 3/8 62 3/4 Low 56 7/8 58 3/8 50 1/2 48 1/2 Dividends per share .585 .585 .585 .585 ====================================================================================== </TABLE> 35
36 FINANCIAL STATEMENT SCHEDULE SJW CORP. Schedule II ----------- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 <TABLE> <CAPTION> Description 1999 1998 1997 ----------------------------------------- <S> <C> <C> <C> Allowance for doubtful accounts Balance, beginning of period $ 100,000 100,000 50,000 Charged to expense 120,145 131,464 170,812 Accounts written off (155,022) (169,646) (150,991) Recoveries of accounts written off 34,877 38,182 30,179 ----------------------------------------- Balance, end of period 100,000 100,000 100,000 ========================================= Reserve for self insurance Balance, beginning of period 707,100 589,702 512,641 Charged to expense 320,000 240,000 180,000 Payments (320,075) (122,602) (102,939) ----------------------------------------- Balance, end of period $ 707,025 707,100 589,702 ========================================= </TABLE> Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. PART III The Company's Proxy Statement for its 2000 Annual Meeting of Shareholders, which was filed on March 16, 2000 pursuant to Regulation 14A under the Securities Exchange Act of 1934 and is incorporated by reference in this Form 10-K pursuant to General Instruction G(3) of Form 10-K, provides the information required under Part III (Items 10, 11, 12 and 13), except for the information with respect to the Company's executive officers which is included in "Item 1. Business - Executive Officers of the Registrant." PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) (1) Financial Statements <TABLE> <CAPTION> Page <S> <C> Independent Auditors' Report 20 Consolidated Balance Sheets as of December 31, 1999 and 1998 21 Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 1999, 1998, and 1997 23 </TABLE> 36
37 <TABLE> <S> <C> Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997 24 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 25 Notes to Consolidated Financial Statements 26 (2) Financial Statement Schedule: Schedule Number II Valuation and Qualifying Accounts and 36 Reserves, Years ended December 31, 1999, 1998 and 1997 </TABLE> 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 immediately following paragraph (b) of this Item 14. 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. SJW Corp filed its 8K report with the Commission on November 5, 1999. S.E.C. File No. 1-8966. 37
38 EXHIBIT INDEX <TABLE> <CAPTION> Location in Sequentially Exhibit Numbered No. Description Copy <S> <C> 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. S.E.C. 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. S.E.C. 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. S.E.C. 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. S.E.C. File No. 1-8966. NA 2.5 Agreement and Plan of Merger dated as of October 28, 1999 among American Water Works Company, Inc., SJW Acquisition Corporation and SJW Corp. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. 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. S.E.C. 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 </TABLE> 38
39 <TABLE> <S> <C> 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. S.E.C. 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 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. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1996. 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 10.7 Second 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, 1998. S.E.C. File No. 1-8966. NA 10.8 Third 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, 1998. S.E.C. File No. 1-8966. NA 10.9 Fourth 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, 1998. S.E.C. File No. 1-8966. NA </TABLE> 39
40 <TABLE> <S> <C> 10.10 Fifth 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, 1998. S.E.C. File No. 1-8966. NA 10.11 SJW Corp. Executive Severance Plan adopted by SJW Board of Directors. Filed as an Exhibit to Annual Report on Form 10-K for the year ended December 31, 1998. S.E.C. File No. 1-8966. NA 10.12 Sixth Amendment to San Jose Water Company's Executive Supplemental Retirement Plan. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10.13 Amendment to SJW Corp.'s Executive Severance Plan. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10.14 SJW Corp.'s Transaction Incentive and Retention Program for Key Employees. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10. 15 Resolution for Directors' Retirement Plan adopted by SJW Corp. Board of Directors as amended on September 22, 1999. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10.16 Resolution for Directors' Retirement Plan adopted by San Jose Water Company's Board of Directors as amended on September 22, 1999. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10.17 Resolution for Directors' Retirement Plan adopted by SJW Land Company Board of Directors on September 22, 1999. Filed as an Exhibit to 10Q for the period ending September 30, 1999. S.E.C. File No. 1-8966. NA 10.18 Limited Partnership Agreement of 444 West Santa Clara Street, L. P. executed between SJW Land Company and Toeniskoetter & Breeding, Inc. Development. Filed as an Exhibit to 10Q for the period ending September 30, 1999. 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 27 Financial Data Schedule as of December 31, 1999 43 99 Additional Exhibits: None </TABLE> 40
41 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 27, 2000 By /s/ J.W. WEINHARDT ---------------------------------------------- J.W. WEINHARDT, Chairman, 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. <TABLE> <S> <C> Date: January 27, 2000 By /s/ J.W. WEINHARDT ---------------------------------------------- J.W. WEINHARDT, Chairman, Board of Directors Date: January 27, 2000 By /s/ RICHARD ROTH ---------------------------------------------- W. RICHARD ROTH, President, Chief Executive Officer and Member, Board of Directors Date: January 27, 2000 By /s/ ANGELA YIP ---------------------------------------------- ANGELA YIP, Chief Financial Officer Date: January 27, 2000 By /s/ ANDREA ELLIOTT ---------------------------------------------- ANDREA ELLIOTT, Chief Accounting Officer Date: January 27, 2000 By /s/ MARK L. CALI ---------------------------------------------- MARK L. CALI, Member, Board of Directors Date: January 27, 2000 By /s/ PHILIP DINAPOLI ---------------------------------------------- J. PHILIP DINAPOLI, Member, Board of Directors Date: January 27, 2000 By /s/ DREW GIBSON ---------------------------------------------- DREW GIBSON, Member, Board of Directors Date: January 27, 2000 By /s/ RONALD R. JAMES ---------------------------------------------- RONALD R. JAMES, Member, Board of Directors Date: January 27, 2000 By /s/ GEORGE E. MOSS ---------------------------------------------- GEORGE E. MOSS, Member, Board of Directors Date: January 27, 2000 By /s/ ROSCOE MOSS, JR. ---------------------------------------------- ROSCOE MOSS, JR., Member, Board of Directors Date: January 27, 2000 By /s/ CHARLES J. TOENISKOETTER ---------------------------------------------- CHARLES J. TOENISKOETTER, Member, Board of Directors </TABLE> 41
42 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. 42