UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2003
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Commission file number 1-8966
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SJW Corp.
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(Exact name of registrant as specified in its charter)
California 77-0066628
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(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
374 West Santa Clara Street, San Jose, CA 95196
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(Address of principal executive offices) (Zip Code)
408-279-7800
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No _
Indicate by check mark whether the registrant is an accelerated
filer (as defined by Rule 12b-2 of the Exchange Act). Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Common shares outstanding as of the date of this report are
3,045,147.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
SJW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
(UNAUDITED)
(In thousands, except share and per share data)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
2003 2002 2003 2002
--------------------------------------
OPERATING REVENUE $37,968 38,696 $65,759 66,414
OPERATING EXPENSE:
Operation:
Purchased water 8,873 10,619 14,920 16,306
Power 1,376 1,848 2,113 3,188
Pump taxes 4,201 5,097 6,269 8,714
Other 7,259 6,265 14,021 12,218
Maintenance 1,903 1,984 3,676 3,975
Property taxes and other
nonincome taxes 1,222 1,028 2,491 2,178
Depreciation and
amortization 3,825 3,496 7,565 7,002
Income taxes 3,053 2,639 4,472 3,741
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Total operating expense 31,712 32,976 55,527 57,322
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OPERATING INCOME 6,256 5,720 10,232 9,092
Gain on sale of nonutility
property, net of taxes - - 3,030 -
Interest on long-term
debt (2,106) (2,078) (4,192) 4,160)
Dividends 309 308 619 616
Other, net (33) 41 19 192
--------------------------------------
NET INCOME $ 4,426 3,991 $ 9,708 5,740
======================================
Other comprehensive
income (loss):
Unrealized income (loss)
on investment 2,606 (441) 4,916 (605)
Income taxes related
to other comprehensive
income (loss) (1,068) 181 (2,015) 248
--------------------------------------
Other comprehensive income
(loss), net 1,538 (260) 2,901 (357)
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COMPREHENSIVE INCOME $ 5,964 3,731 $12,609 5,383
=======================================
Basic and diluted
earnings per share $ 1.46 1.31 $ 3.19 1.88
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Basic and diluted
comprehensive income
per share $ 1.96 1.23 $ 4.14 1.77
======================================
Dividends per share $ 0.73 0.69 $ 1.46 1.38
======================================
Basic and diluted weighted
average shares
outstanding 3,045,147 3,045,147 3,045,147 3,045,147
See accompanying Notes to Condensed Consolidated Financial
Statements.
SJW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
JUNE 30 DECEMBER 31
ASSETS 2003 2002
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UTILITY PLANT $563,228 $541,919
Less accumulated depreciation and
amortization 168,798 161,576
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Net utility plant 394,430 380,343
NONUTILITY PROPERTY 27,458 12,083
Less accumulated depreciation 1,799 1,596
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Net nonutility property 25,659 10,487
CURRENT ASSETS:
Cash and equivalents - 324
Accounts receivable and accrued
utility revenue 21,029 16,721
Prepaid expenses and other 1,296 1,654
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Total current assets 22,325 18,699
OTHER ASSETS:
Investment in California Water
Service Group 30,931 26,014
Investment in joint venture 1,163 1,144
Unamortized debt issuance and
reacquisition costs 3,411 3,493
Goodwill 1,744 1,744
Regulatory assets 6,996 6,013
Other 5,898 5,286
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Total other assets 50,143 43,694
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$492,557 $453,223
=======================
CAPITALIZATION AND LIABILITIES
CAPITALIZATION:
Common stock $ 9,516 $ 9,516
Additional paid-in capital 12,375 12,357
Retained earnings 133,521 128,242
Accumulated other comprehensive income 6,285 3,384
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Shareholders' equity 161,697 153,499
Long-term debt 119,798 110,000
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Total capitalization 281,495 263,499
CURRENT LIABILITIES:
Bank overdraft 69 -
Line of credit 6,300 11,450
Accrued pump taxes and purchased water 6,233 3,144
Purchased power 1,543 1,219
Accounts payable 5,349 381
Accrued interest 3,240 3,244
Accrued taxes 3,124 634
Other current liabilities 3,862 3,528
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Total current liabilities 29,720 23,600
DEFERRED INCOME TAXES AND CREDITS 36,370 29,704
ADVANCES FOR AND CONSTRIBUTIONS
IN AID OF CONSTRUCTION 133,765 126,714
OTHER NONCURRENT LIABILITIES 11,207 9,706
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$492,557 $453,223
========================
See accompanying Notes to Condensed Consolidated Financial
Statements.
SJW CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
SIX MONTHS ENDED
JUNE 30
2003 2002
----------------------
OPERATING ACTIVITIES:
Net income $ 9,708 $ 5,740
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 7,565 7,002
Deferred income taxes and credits 4,561 (83)
Other noncurrent assets and
noncurrent liabilities (1,436) 1,013
Gain on sale of nonutility
property, net of taxes (3,030) -
Changes in operating assets and
liabilities:
Accounts receivable and accrued
utility revenue (4,308) (6,765)
Accounts payable, purchased power
and other current liabilities 5,538 3,721
Accrued pump taxes and
purchased water 3,089 4,859
Accrued taxes 2,490 2,201
Other changes, net 111 (584)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 24,288 17,104
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INVESTING ACTIVITIES:
Additions to utility plant (22,260) (20,478)
Additions to nonutility property (15,612) (256)
Cost to retire utility plant, net of
salvage (260) (268)
Proceeds from sale of nonutility
property 5,370 -
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NET CASH USED IN INVESTING ACTIVITIES (32,762) (21,002)
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FINANCING ACTIVITIES:
Repayments for line of credit,
net of borrowings (5,150) (2,850)
Long-term borrowings, net of repayments 9,886 -
Dividends paid (4,429) (4,202)
Advances for and contributions in aid
of construction 8,594 10,108
Refunds of advances for construction (751) (694)
---------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 8,150 2,362
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NET CHANGE IN CASH AND EQUIVALENTS (324) (1,536)
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CASH AND EQUIVALENTS, BEGINNING OF PERIOD 324 5,021
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CASH AND EQUIVALENTS, END OF PERIOD $ - $ 3,485
---------------------
Cash paid during period for:
Interest $ 4,244 $ 4,190
Income taxes 650 1,300
See accompanying Notes to Condensed Consolidated Financial
Statements.
SJW CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2003
Note 1. General
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In the opinion of SJW Corp. (the Company), the accompanying
unaudited condensed consolidated financial statements contain all
adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the results for the
interim periods.
The Notes to Consolidated Financial Statements in SJW Corp.'s
2002 Annual Report on Form 10-K should be read with the
accompanying condensed consolidated financial statements.
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 period. Diluted
earnings per share and comprehensive income per share are based
upon the weighted average number of common shares including both
outstanding and shares potentially issued in connection with
stock options and restricted common shares granted under SJW
Corp. Long Term Incentive Plan, and income available to common
shareholders and comprehensive income, respectively, adjusted for
recognized stock compensation expense. As of June 30, 2003, the
basic and diluted weighted average number of common shares is
3,045,147. In the three and six month periods ended June 30,
2003, 9,634 option share equivalents were excluded from the
diluted calculation because they were anti-dilutive. There were
no common stock equivalents during the three and six month
periods ended June 30, 2002.
SJW Corp. and its subsidiaries operate predominantly in one
reportable business segment of providing water utility service to
its customers.
Note 2. Long-Term Incentive Plan and Stock-Based Compensation
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On April 29, 2003, SJW Corp. amended its Long-Term Incentive Plan
(Incentive Plan) which was originally adopted on April 18, 2002.
Under the Incentive Plan, 300,000 common shares have been
reserved for issuance. The amendment will allow SJW Corp. to
provide key employees, including officers, and non-employee
directors, the opportunity to acquire a meaningful equity
interest in the Company. In no event may any one participant in
the Incentive Plan receive awards under the Incentive Plan in any
calendar year covering an aggregate of more than 100,000 common
shares. Additionally, awards granted under the Incentive Plan
may be conditioned upon the attainment of specified performance
goals. The types of awards included in the Incentive Plan are
stock options, dividend units, performance shares, rights to
acquire restricted stock and stock bonuses.
The form of stock options agreement under the Incentive Plan
allows executives to purchase common shares at a specified price.
Options are granted at an exercise price that is not less than
the per share market price on the date of grant. The options
vest at a 25% rate on their anniversary date over their first
four years and are exercisable over a ten-year period. At June
30, 2003, 9,643 options were granted and outstanding under the
Incentive Plan at a price of $84.00, with a remaining life of
9.67 years, and the average fair value of $16.00, at the date of
grant.
SJW Corp. has adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation",
utilizing the Black-Scholes option-pricing model to compute the
fair value of options at grant date as a basis for determining
stock-based compensation for financial reporting purposes. The
assumptions utilized include: expected dividend yield - 3.4%,
expected volatility - 27%, risk-free interest rate - 2.86%,
expected holding period - five years.
As of June 30, 2003, 13,890 shares of restricted stock have been
granted to a key employee of the Company and the shares vest over
a period of three years. Following SFAS No. 123, the restricted
stock was valued at the market price of $84.00 at the date of
grant. The Company will recognize compensation expenses in
connection with this award beginning in the third quarter of
2003.
SJW Corp. also has a Dividend Equivalent Rights Agreement which
allows holders of options to receive dividend rights each time a
dividend is paid on common shares after the option grant date,
for a maximum period of four years. Dividend Equivalent Rights
for restricted stock allow holders of restricted stock to receive
dividend rights, each time a dividend is paid on common shares
after the grant date, until the stock is issued to the holder.
Accumulated dividends will be used to purchase stock units on
behalf of the holders at the beginning of the following year
using the average fair market value of common shares on each of
the dividend dates in the immediately preceding year. The
dividend equivalent units shall be vested in the same manner as
the options and restricted stocks.
Note 3. Sale of Nonutility Property
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On March 11, 2003, SJW Land Company sold San Tomas station, a
nonutility property, to Santa Clara Valley Water District (SCVWD)
for a contract price of $5,400,000. SJW Corp. recognized a gain
on sale of nonutility property of $3,030,000, net of tax of
$2,105,000 in connection with the sale. In April 2003,
subsequent to the end of the first quarter, SJW Land Company
reinvested the property sale proceeds by acquiring two income
properties in the states of Connecticut and Florida, at a total
purchase price of $15,400,000. In connection with the purchases,
SJW Land Company executed mortgages in the amount of $9,900,000.
The mortgage loans are due in ten years with a fixed interest
rate of 5.96%.
Note 4. Impact of Recent Accounting Pronouncements
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In June 2001, the Financial Accounting Standards Board (FASB)
issued Statement of SFAS No. 143, "Accounting for Asset
Retirement Obligations", which applies to legal obligations that
are associated with the retirement of long-lived assets and the
associated asset retirement costs. The statement is effective
for financial statements issued for fiscal years beginning after
June 15, 2002. SJW Corp. adopted SFAS No. 143 in January 2003.
The adoption of SFAS No. 143 did not have a material impact on
SJW Corp.'s financial condition or results of operations.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13,
and Technical Corrections". Among other provisions, SFAS No. 145
rescinds SFAS No. 4, "Reporting Gains and Losses from
Extinguishment of Debt". Accordingly, gains or losses from
extinguishment of debt shall not be reported as extraordinary
items unless the extinguishment qualifies as an extraordinary
item under the criteria of APB No. 30. Gains or losses from
extinguishment of debt that do not meet the criteria of APB No.
30 should be reclassified to income from continuing operations in
all prior periods presented. SFAS No. 145 is effective for
fiscal years beginning after May 15, 2002. SJW Corp. adopted
SFAS No. 145 in January 2003. The adoption of SFAS No. 145 did
not have an impact on SJW Corp.'s financial condition or results
of operations.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". This statement
requires companies to recognize costs associated with exit or
disposal activities when they are incurred rather than at the
date of a commitment to an exit or disposal plan. Examples of
costs covered by the standard include lease termination costs and
certain employee severance costs that are associated with a
restructuring, discontinued operation, a plant closing, or other
exit or disposal activities. The provisions of this statement
are effective for exit and disposal activities that are initiated
by a company after December 31, 2002. SJW Corp. adopted SFAS No.
146 in January 2003. The adoption of SFAS No. 146 did not have
an impact on SJW Corp.'s financial condition or results of
operations.
In April 2003, the FASB issued SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities".
This statement amends SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", for certain decisions made
by FASB as part of the Derivatives Implementation Group process.
This statement also amends SFAS No. 133 to incorporate
clarifications of the definition of a derivative. SJW Corp. will
adopt SFAS No. 149 on July 1, 2003. The adoption of SFAS No. 149
will not impact SJW Corp.'s financial condition or results of
operations.
In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of Both
Liabilities and Equity". This statement establishes standards for
how an entity that issued a financial instrument, classifies and
measures in its statement of financial position certain financial
instruments with characteristics of both liabilities and equity.
SJW Corp. will adopt SFAS No. 150 on July 1, 2003. The adoption
of SFAS No. 150 will not impact SJW Corp.'s financial condition
or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
This report contains forward-looking statements within the
meaning of the federal securities laws relating to future events
and future results of SJW Corp. and its subsidiaries that are
based on current expectations, estimates, forecasts, and
projections about the industries in which SJW Corp. operates and
the beliefs and assumptions of the management of SJW Corp. Such
forward-looking statements are identified by words including
"expect", "estimate", "anticipate" and similar expressions.
These forward-looking statements are only predictions and are
subject to risks, uncertainties, and assumptions that are
difficult to predict. Therefore, actual results may differ
materially and adversely from those expressed in any forward-
looking statements. Important factors that could cause or
contribute to such differences include, but are not limited to,
those discussed in this report under the section entitled
"Factors that May Affect Future Results" and elsewhere, and in
other reports SJW Corp. files with the Securities and Exchange
Commission (SEC), specifically the most recent reports on Form
10-K, Form 10-Q and Form 8-K, each as it may be amended from time
to time. SJW Corp. undertakes no obligation to update the
information contained in this report, including the forward-
looking statements to reflect any event or circumstance that may
arise after the date of this report.
General:
- -------
SJW Corp. was incorporated in California on February 8, 1985.
SJW Corp. is a holding company with three subsidiaries.
San Jose Water Company, a wholly owned subsidiary, with
headquarters at 374 West Santa Clara Street in San Jose,
California 95196, was originally incorporated under the laws of
the State of California in 1866. San Jose Water Company was
later reorganized and reincorporated as the San Jose Water Works.
San Jose Water Works was reincorporated in 1985 as San Jose Water
Company, with SJW Corp. as the parent holding company. San Jose
Water Company is a public utility in the business of providing
water service to a population of approximately one million 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.
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. San Jose Water Company also
provides nonregulated water related services under agreements
with municipalities. These nonregulated services include full
water system operations, billings and cash remittances.
SJW Land Company, a wholly owned subsidiary, was incorporated in
1985. SJW Land Company owns and operates parking facilities,
which are located adjacent to San Jose Water Company's
headquarters and the HP Pavilion in San Jose, California. SJW
Land Company also owns commercial buildings and other undeveloped
land primarily in the San Jose Metropolitan area, and a 70%
limited partnership interest in 444 West Santa Clara Street, L.P.
Crystal Choice Water Service LLC, a 71% majority-owned limited
liability subsidiary formed in January 2001, engages in the sale
and rental of water conditioning and purification equipment.
SJW Corp. also owns 1,099,952 shares of California Water Service
Group.
Critical Accounting Policies:
- ----------------------------
SJW Corp. has identified accounting policies below as the
policies critical to the business operations and the
understanding of the results of operations. The preparation of
financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities, and revenues and expenses. SJW Corp. bases its
estimates on historical experience and on various other
assumptions that are believed to be reasonable under the
circumstances. The impact and any associated risks related to
these policies on the Company's business operations is discussed
throughout "Management's Discussion and Analysis of Financial
Condition and Results of Operations" where such policies affect
the Company's reported and expected financial results. The
Company's critical accounting policies are as follows:
Balancing Account
The California Public Utilities Commission (CPUC) establishes a
balancing account mechanism within its regulatory regime. A
separate balancing account must be maintained for each offset
expense item (e.g., purchased water, purchased power and pump
tax). 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. Since balances are being tracked and have to be
approved by the CPUC before they can be incorporated into rates,
San Jose Water Company has not recognized the balancing account
in its financial statements. Had the balancing account under-
collection been recognized in San Jose Water Company's financial
statements, San Jose Water Company's retained earnings would be
increased by the amount of balancing account under-collection,
less applicable taxes. As of June 30, 2003 and December 31,
2002, San Jose Water Company has a balance of $204,000 and
$262,000, respectively, to be collected from its customers.
Accrued Unbilled Revenue
San Jose Water Company reads the majority of its customer's
meters on a bi-monthly basis and records its revenue based on its
meter reading results. Revenues from the meter reading date to
the end of the accounting period is estimated based on historical
usage patterns, production records and the effective tariff
rates. The estimate of the unbilled revenue is a management
estimate utilizing certain sets of assumptions and conditions
which include the number of days between meter reads for each
billing cycle, the customers' consumption changes, and San Jose
Water Company's experiences in unaccounted-for water. Actual
results could differ from those estimates, which would result in
operating revenue being adjusted in the period that the revision
to the San Jose Water Company's estimates is determined. As of
June 30, 2003 and December 31, 2002, accrued utility revenue was
$12,445,000 and $6,605,000, respectively. The higher accrued
utility revenue at June 30, 2003 reflects the seasonality of the
water utility business such that customer consumption is at its
peak during the summer months.
Recognition of Regulatory Assets and Liabilities
Generally accepted accounting principles for water utilities
include the recognition of regulatory assets and liabilities as
permitted by SFAS No. 71, "Accounting for the Effects of Certain
Types of Regulation". In accordance with SFAS No. 71, San Jose
Water Company records deferred costs and credits on the balance
sheet as regulatory assets and liabilities when it is probable
that these costs and credits will be recovered in the ratemaking
process in a period different from when the costs and credits
were incurred. Accounting for such costs and credits is based on
management's judgments that it is probable that these costs are
recoverable in the future revenue of the San Jose Water Company
through the ratemaking process. The regulatory assets and
liabilities recorded by San Jose Water Company primarily relate
to the recognition of deferred income taxes for ratemaking versus
tax accounting purposes. The disallowance of any asset in future
ratemaking purposes, including the deferred regulatory assets,
would require San Jose Water Company to immediately recognize the
impact of the costs for financial reporting purposes.
Income Taxes
SJW Corp. estimates its federal and state income taxes as part of
the process of preparing the financial statements. The process
involves estimating the actual current tax exposure together with
assessing temporary differences resulting from different
treatment of items for tax and accounting purposes. These
differences result in deferred tax assets and liabilities, which
are included within the balance sheet. In the event that actual
results differ from these estimates, the provision for income
taxes could be materially impacted.
Pension Accounting
San Jose Water Company offers a defined benefit plan,
Supplemental Executive Retirement Plan and certain post-
retirement benefits other than pensions to employees retiring
with a minimum level of service. Accounting for pensions and
other post-retirement benefits requires an extensive use of
assumptions about the discount rate, expected return on plan
assets, the rate of future compensation increase received by the
employees, mortality, turnover, and medical costs.
San Jose Water Company, through its Retirement Plan
Administrative Committee managed by the representatives from the
unions and management establishes investment guidelines with
specification that at least 30% of the investments are in bonds
or cash. As of June 30, 2003, the plan assets consist of
approximately 30% bonds, 10% cash and 60% equities. Furthermore,
equities are to be diversified by industry groups to balance for
capital appreciation and income. In addition, all investments
are publicly traded. San Jose Water Company uses an expected
rate of return on plan assets of 8% in its actuarial computation
that is below the company's annualized actual rate of return of
10.5% measured from 1984 through 2002. The distributions of
assets are conservative and are less affected by market
volatility. Furthermore, foreign assets are not included in the
investment profile and thus a risk related to foreign exchange
fluctuation is minimized.
The market values of the plan assets are marked to market at the
measurement date. The investment trust assets suffered
significant unrealized market losses in the last two years.
Significant unrealized market losses on pension assets are
amortized over 14 years for actuarial expense calculation
purposes.
The Company utilizes Moody's 'A' and 'Aa' rated bonds in
industrial, utility and financial sectors with outstanding amount
of $1 million or more in determining the discount rate used in
calculating the liabilities at the measurement date. For the
year ending December 31, 2002, the composite discount rate used
was 6.75%.
Stock-Based Compensation Plans
SJW Corp. has a stockholder-approved long-term incentive plan
that allows granting of nonqualified stock options, performance
shares and dividend units. Under the plan, a total of 300,000
common shares are authorized for option awards and grants. The
Company has adopted Statement of Financial Accounting Standards
(SFAS) No. 123, "Accounting for Stock-Based Compensation",
utilizing the Black-Scholes option-pricing model to compute the
fair value of options at grant date as basis for the stock-based
compensation for financial reporting purposes. The weighted-
average assumptions utilized include: expected dividend yield -
3.4%, expected volatility - 27%, risk-free interest rate - 2.86%,
expected holding period - five years.
Liquidity and Capital Resources:
- -------------------------------
San Jose Water Company's budgeted capital expenditures for 2003,
exclusive of capital expenditures financed by customer
contributions and advances, are $28,667,000 with capital
expenditures concentrated in main replacements. Approximately
$13,000,000 will be spent to replace San Jose Water Company's
aging mains in 2003.
The four-phased Infrastructure Study, which was started by San
Jose Water Company in 1997 with the purpose of establishing a
systematic approach to replace its utility facilities, was
completed by July 2002. The Infrastructure Study analyzed the
San Jose Water Company's pipes and mains and examined all other
utility facilities and will be used as a guide for future capital
improvement programs, and serve as the master plan for the San
Jose Water Company's replacement program for the next 20 years.
San Jose Water Company's capital expenditures are incurred in
connection with normal upgrading and expansion of existing
facilities and to comply with environmental regulations. San
Jose Water Company expects to incur approximately $155,000,000,
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 projections due to
changes in the expected demand for services, weather patterns,
and 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.
A substantial portion of San Jose Water Company's distribution
system was constructed during the period from 1945 to 1980.
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. In most cases, replacement
cost will significantly exceed the original installation cost of
the retired assets due to increases in the costs of goods and
services.
As of June 30, 2003, SJW Corp.'s share of capital investment in
Crystal Choice Water Service LLC approximated 71%. SJW Corp. did
not make any additional investment in Crystal Choice Water
Service LLC during the first six months of 2003.
The water utility business is highly seasonal in nature. Customer
consumption demand during summer months could significantly
exceed that of winter months. Operating revenue, accounts
receivable and unbilled revenue increase as customer consumption
increases. Historically, San Jose Water Company's write-offs for
uncollectible accounts represent less than 1% of its total
revenue. Management believes it can continue to collect its
accounts receivable balances at its historical collection rate.
Accounts payable and current liabilities increase during the
summer months due to increased water production volume to meet
higher customer demand and the timing of the payment of certain
expenses. Please refer to "Sources of Capital" for further
discussion.
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.
San Jose Water Company has outstanding $110,000,000 of unsecured
senior notes as of June 30, 2003. The senior note agreements of
San Jose Water Company generally have terms and conditions that
restrict the company from issuing additional funded debt if (1)
the funded debt would exceed 66-2/3% of total capitalization, and
(2) net income available for interest charges for the trailing
twelve calendar month period would be less than 175% of interest
charges. As of June 30, 2003, San Jose Water Company's funded
debt was 46% of total capitalization and the net income for
preceding twelve months was 408% of interest charges.
In March 2003, SJW Land Company sold nonutility property and
recognized a gain of $3,030,000, net of tax. Subsequent to the
end of the first quarter, SJW Land Company reinvested the
proceeds from the sale of nonutility property by acquiring two
properties in the states of Connecticut and Florida. In
connection with the acquisition, SJW Land Company executed
mortgages in the amount of $9,900,000 in April 2003. The
mortgage loans are due in ten years and amortize over twenty-five
years with a fixed interest rate of 5.96%.
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.
San Jose Water Company intends to issue $20,000,000 of Senior
Notes Series G (Notes) in the third quarter of 2003. Proceeds
from the sale of the Notes will be used to repay short-term
borrowings and fund construction expenditures.
In 2002, the Department of Water Resources approved San Jose
Water Company's application for an approximately $2,500,000 Safe
Drinking Water State Revolving Fund twenty-year loan at an
interest rate of approximately 2.39%. Funds in the above amount
will be received for the retrofit of San Jose Water Company's
water treatment plant. San Jose Water Company will request the
funding in 2003 as soon as all the loan documentation and
contract requirements are met.
SJW Corp. and its subsidiaries have unsecured lines of credit
available allowing aggregate short-term borrowings of up to
$30,000,000 at rates that approximate the bank's prime or
reference rate. At June 30, 2003, SJW Corp. and its subsidiaries
had available unused short-term bank lines of credit of
$23,700,000. Cost of borrowing averaged 2.53% for the first six
months of 2003. The line of credit expires on July 1, 2005.
Results of Operations
- ---------------------
Overview
- --------
SJW Corp.'s consolidated net income for the second quarter ended
June 30, 2003 was $4,426,000, an increase of $435,000 or 11% from
$3,991,000 in the second quarter of 2002. Six months earnings was
$9,708,000, an increase of $3,968,000 or 69% from $5,740,000 for
the same period in 2002. The six months earnings included a gain
on sale of nonutility property of $3,030,000, net of tax of
$2,105,000, which contributed to 53% of the increase in net
income from the same period in 2002.
Operating Revenue
- -----------------
Consolidated Operating Revenue
Three months ended Six months ended
June 30 June 30
2003 2002 2003 2002
--------------------------------------
(in thousands)
San Jose Water Company $37,075 $38,042 $64,066 $65,060
SJW Land Company 542 476 1,088 1,020
Crystal Choice Water
Service 351 178 605 334
----------------- -----------------
$37,968 $38,696 $65,759 $66,414
Consolidated operating revenue for the three months ended June
30, 2003 decreased by $728,000 or 2% from the $38,696,000 for the
same period in 2002. The decrease was primarily attributable to
a decrease of $967,000 or 3% in revenue from San Jose Water
Company partially offset by a revenue increase from Crystal
Choice Water Service. The decrease in revenue from San Jose
Water Company was due to an 8% weather-related decrease in
customer consumption that was partially offset by a 4% rate
increase.
For the six months ended June 30, 2003, the decrease of $655,000
or 1% in consolidated operating revenue from the same period in
2002, was primarily due to the reasons as explained above.
The change in consolidated operating revenue was due to the
following factors:
Three months ended Six months ended
June 30 2003 vs. 2002 June 30 2003 vs. 2002
Increase/(decrease) Increase/(decrease)
------------------------------------------
Utility: (in thousands)
Consumption changes $(2,704) (7%) $(3,767) (5%)
New customers increase 87 - 170 -
Rate increases 1,650 4% 2,603 4%
Parking and rental 66 - 68 -
Crystal Choice Water
Service 173 1% 271 -
---------------- -------------------
$ (728) (2%) $ (655) (1%)
Operating Expenses
- ------------------
Three months ended Six months ended
June 30 2003 vs. 2002 June 30 2003 vs. 2002
Increase/(decrease) Increase/(decrease)
(in thousands)
-------------------------------------------
San Jose Water Company $27,878 29,787 $49,620 52,446
SJW Land Company 209 180 390 354
Crystal Choice Water
Service 371 262 685 544
SJW Corp. 201 108 360 237
----------------- -----------------
$28,659 30,337 $51,055 53,581
================ =================
The change in consolidated operating expenses, excluding income
taxes, from the same period in 2002 was due to the following
factors:
Three months ended Six months ended
June 30 2003 vs. 2002 June 30 2003 vs. 2002
Increase/(decrease) Increase/(decrease)
(in thousands)
------------------------------------------
Production costs:
Increased surface
water supply $(1,314) (4%) $(2,517) (5%)
Decrease in usage
and new customers (2,120) (7%) (2,907) (5%)
Pump tax and purchased
water price increase 352 1% 578 1%
Energy price and usage (32) - (60) -
Total production costs (3,114) (10%) (4,906) (9%)
Other operating expense 994 3% 1,803 3%
Maintenance (81) - (299) (1%)
Property taxes and other
nonincome taxes 194 1% 313 1%
Depreciation and
amortization 329 1% 563 1%
--------------- --------------
(1,678) (5%) (2,526) (5%)
=============== ==============
Total water production costs decreased $3,114,000 or 18% for the
second quarter of 2003. The decrease in water production costs
was primarily due to an approximately 8% decrease in customer
consumption and the availability of the less costly surface water
supply. The cost decreases were partially offset by an increase
in Santa Clara Valley Water District (SCVWD) water production
rates (pump tax and purchased water) in July 2002. Water
production in the second quarter of 2003 was lower than the same
period in 2002 due to a weather-related change in customer
consumption.
For the six months ended June 30, 2003, the decrease of
$4,906,000 or 17% in total water production costs from the same
period in 2002 was due to the reasons as explained above. The
decrease in water production costs was primarily attributable to
a decrease in weather-related customer consumption.
San Jose Water Company's water supply is obtained from wells,
groundwater, watershed run-off and diversion, surface water and
by import water purchases from the SCVWD. Surface water supply
is the least expensive source of water and the availability of a
higher surface water supply reduced water production costs in the
second quarter of 2003 by $1,314,000 and the first six months of
2003 by $2,517,000.
The change in San Jose Water Company's source of supply mix was
as follows:
Three months ended Six months ended
June 30 2003 vs. 2002 June 30 2003 vs. 2002
Increase/(decrease) Increase/(decrease)
(in million gallons)
-------------------------------------------
Purchased water (1,618) (11%) (1,458) (7%)
Ground water (1,006) (7%) (2,583) (11%)
Surface water 997 7% 1,953 8%
Reclaimed water (25) - (32) -
---------------- ---------------
(1,652) (11%) (2,120) (10%)
================ ===============
The changes in the source of supply mix were consistent with the
changes in the water production costs.
Consolidated operating expense in the second quarter of 2003,
excluding income taxes and production costs, increased $1,436,000
or 11% compared to the same period in 2002. The increases
included $116,000 in professional fees, $275,000 in pension costs
primarily as a result of the decline in the market value of
retirement trust assets, $330,000 in salaries and wages in
accordance with bargaining unit wage escalation and new hires,
and $356,000 in business and employee insurance costs.
Depreciation increased $329,000 due to higher investment in
utility plants.
Total income tax expense for the second quarter of 2003 was
$3,053,000 compared to $2,639,000 for the same period in 2002.
The increase of $414,000 was due to higher earnings in 2003. The
effective income tax rates for the second quarter of 2003 and
2002 approximated 41% and 40%, respectively.
Other income for the six month period ended June 30, 2003
includes an after-tax gain of $3,030,000 on the sale of a
nonutility property. In April 2003, SJW Corp. reinvested the
sale proceeds in two income properties in the states of
Connecticut and Florida. Please refer to Note 3. "Sale of
Nonutility Property" under "Notes to Unaudited Condensed
Consolidated Financial Statements" in Item 1. "Financial
Statements".
The decrease in other income and expense of $202,000 resulted
from higher interest expenses due to higher average borrowing.
Since the water business is highly seasonal in nature, a
comparison of the revenue and expense of the current quarter with
the immediately preceding quarter would not be meaningful. The
average usage per metered customer in the second quarter of 2003
decreased by approximately 8% from the second quarter of 2002 due
to cool summer in 2003.
Other comprehensive income was $1,538,000 for the three months
ended June 30, 2003 in comparison to the comprehensive loss of
$260,000 for the three months ended June 30, 2002 due to the
changes in market value of investment in California Water Service
Group.
Factors That May Affect Future Results
- --------------------------------------
Pension and Insurance
- ---------------------
In 2003, pension accruals increased $1,113,000 on an annual basis
primarily due to the decline in valuation of the retirement plan
portfolio in 2002. Market conditions, not changes in operating
risk or loss experience, were the sole reason for the Company's
average liability insurance cost increase of 39% in the second
quarter of 2003 after adjustments in self-insured retentions.
Pension and insurance expenses are expected to continue to
negatively impact the financial condition or results of
operations.
Nonregulated Operations
- -----------------------
In January 2002, SJW Land Company entered into an Agreement for
Possession and Use (Agreement) with Valley Transportation Agency
(VTA) whereby SJW Land Company has granted VTA an irrevocable
right to possession and use of 1.23 acres of the company's
parking lot property for the development of a light rail station.
VTA has adopted a resolution authorizing a condemnation
proceeding to acquire the land and has deposited $3.7 million in
an escrow account as fair market compensation. SJW Land Company
waived the right to challenge VTA's possession and use in any
subsequent eminent domain proceeding but reserved the right to
assert, and has disputed the fair market value placed on the
land. According to the terms of the Agreement, if a settlement
is not reached within three months of the execution of the
Agreement, VTA can file an eminent domain complaint to acquire
title to the parking lot property. On April 11, 2003, VTA filed
the eminent domain lawsuit. As a part of the proceedings, VTA
has transferred funds from the escrow account into court deposit
to secure its ongoing right of possession for construction of the
light rail station pending final litigation. Compensation for the
taking of property will be determined by the court or by way of
settlement between SJW Land Company and VTA. This transaction
will be booked and is expected to result in an increase to net
income, if and when the compensation issue is settled or a final
court order is rendered.
Water Supply and Energy Resources
- ---------------------------------
San Jose Water Company's water supply is obtained from wells,
groundwater, watershed run-off and diversion, surface water and
by import water purchases from the SCVWD under the terms of a
master contract with SCVWD expiring in 2051. Groundwater level in
2003 was well above the 30-year normal aquifer storage point.
On July 18, 2003, the SCVWD's ten reservoirs were 56% full with
94,647 acre-feet of water in storage. The rainfall in the winter
of 2003 was about average.
On July 7, 2003, local surface water in San Jose Water Company's
impoundments was at 85% of capacity. Local surface water is a
less costly source of water and its availability significantly
impacts the results of operations.
Based on information provided by SCVWD in its Water Utility
Enterprise Report, San Jose Water Company believes that its
various sources of water supply are sufficient to meet customer
demand for the remainder of the year.
To the extent that San Jose Water Company has to pump water
during peak periods to satisfy customer demand when imported
water is not available, higher energy costs will be incurred.
Currently, the CPUC has no established procedure for water
utilities to recover the additional costs incurred due to such
unanticipated changes in water supply mix. There can be no
assurance that such costs will be recovered in full or in part.
Security Issues
- ---------------
San Jose Water Company has taken steps to increase security at
its water utility facilities and continue to implement a
comprehensive security upgrade program for production and storage
facilities, booster pump stations and company buildings. San
Jose Water Company also coordinates security and planning
information with eight other large regional water utilities
within the San Francisco Bay area, as well as various
governmental and law enforcement agencies.
San Jose Water Company conducted a system-wide vulnerability
assessment in compliance with federal regulations Public Law 107-
188 imposed on all water utilities. The assessment report was
filed with the government on March 31, 2003. The vulnerability
assessment identified system security enhancements that impact
water quality, health, safety and continuity of service totaling
approximately $2,300,000, exclusive of the years 2001 to 2002
expenditures. These improvements shall be incorporated into the
capital budgets to be completed by 2005. For the six months
ended June 30, 2003 and the twelve months ended December 31,
2002, $234,000 and $479,000, respectively, were spent on capital
projects to improve and enhance security. Approximately $366,000
will be spent in the remaining six months in 2003. Once
completed, San Jose Water Company believes it will have
substantially reduced its vulnerability to terrorists' attack.
San Jose Water Company actively participated in the security
vulnerability assessment training offered by the American Water
Works Association Research Foundation and the Environmental
Protection Agency.
San Jose Water Company is currently revising its Emergency
Response Plans (ERP) and will issue the plans in advance of the
September 30, 2003 deadline set forth by the legislation. The
ERPs will include training and implementation of new procedures
and communications.
Regulatory Affairs
- ------------------
Rates and Regulations
Almost all the operating revenue of San Jose Water Company
results from the sale of water at rates authorized by the CPUC.
The CPUC sets rates that are intended to provide revenue
sufficient to recover operating expenses and produce a reasonable
return on common equity. San Jose Water Company's most recent
rate decision, approved in April 2001, authorized a return on
common equity in 2001, 2002 and 2003 of 9.95%. This is within
the range of recent rates of return authorized by the CPUC for
water utilities. San Jose Water Company received step rate
increases in January and March of 2003 totaling about 3% to
recover projected operating cost increase for 2003 as well as the
increased costs associated with the transfer of the maintenance
responsibility for approximately 12,000 fire hydrants from the
City of San Jose to San Jose Water Company.
On April 3, 2003, the CPUC issued an Opinion modifying Decision
D.00-07-018, which originally established the rules and
guidelines for the use of water utility assets in nonregulated
activities. Pursuant to the recently issued Opinion, investor
owned water utilities are now required to file for the CPUC's
authority to enter into any nonregulated activity that utilizes
assets or employees reflected in the utilities' regulated revenue
requirement. Previously certain activities that were
specifically identified in D.00-07-018 were exempt from this pre-
approval requirement. San Jose Water Company will therefore need
to obtain such an approval from the CPUC before executing any new
nonregulated utility service contracts. At this time it is
unclear whether this change to the rules will impact San Jose
Water Company's ability to participate in any future nonregulated
business activities.
On April 17, 2003, San Jose Water Company filed Advice Letter No.
342 with the CPUC requesting a revenue increase of $5,300,000 or
4% to recover the increased cost of purchased water and higher
pump tax charged to San Jose Water Company by SCVWD. The
proposed rates were approved as filed by the CPUC at its June 19,
2003 meeting, with the new rates effective on July 1, 2003.
On May 23, 2003, San Jose Water Company filed a General Rate Case
application with the CPUC to increase rates by $25,793,000 or
18.2% in 2004, $5,434,000 or 3.2% in 2005, and $5,210,000 or 3.0%
in 2006. San Jose Water Company is seeking these proposed
increases to cover higher costs of providing water service,
including higher costs of power, purchased water, pump tax,
labor, security, water quality testing and reporting, and to
allow for necessary improvements to the water system. San Jose
Water Company is also requesting rate recovery of the current
balance of $71,000 in its Water Contamination Memorandum Account,
as well as recovery of an under-collection of $382,000 accrued in
its pre-November 29, 2001 Balancing Account. Finally, San Jose
Water Company is requesting a rate of return on equity of 11.5%
for the years 2004 through 2006. A CPUC decision on the
application is expected in late 2003.
On September 30, 2002, Governor Davis signed the interim rate
bill (AB 2838), sponsored by the California water utility
industry, into law. The bill allows for the implementation of
interim water rates in general rate cases when the CPUC fails to
establish new rates in accordance with the established rate case
schedule. The interim rates would be based on a water company's
existing rates increased for the amount of inflation since the
last approved rate adjustment. The bill also allows for revenue
true-up from the time of the implementation of the interim rates
to the time of the CPUC's ultimate decision in the rate case. In
principal, this mechanism is designed to eliminate the adverse
financial impact on water utilities caused by regulatory delays
in general rate cases. The bill went into effect on January 1,
2003.
Balancing Account Recovery Procedures
On November 29, 2001, the CPUC issued Resolution W-4294
(Resolution) implementing significant changes in the long-
established offset rate increase and balancing account recovery
procedures applicable to water utilities. As required by the
Resolution, in December 2001 the CPUC opened an Order Instituting
Rulemaking (OIR) to evaluate existing balancing account and
offset rate practices and policies. On December 17, 2002, the
CPUC issued an interim OIR decision authorizing water utilities
to recover the balancing account balances accrued prior to
November 29, 2001 if the utility is not over-earning as measured
on a pro-forma basis. San Jose Water Company has accrued an
under-collection of $382,000 in its balancing account prior to
November 29, 2001. For the period from November 29, 2001 to June
30, 2003, San Jose Water Company has accumulated an over-
collection of $178,000. Therefore, the balancing account has a
net under-collected balance of $204,000.
On June 19, 2003 the CPUC issued its final OIR decision (D.03-06-
072) in which the CPUC revised the existing procedures for
recovery of under collections and over collections in balancing
accounts existing on or after November 29, 2001 as follows: (1)
If a utility is within its rate case cycle and is not over
earning, the utility shall recover its balancing account subject
to reasonableness review; and (2) If a utility is either within
or outside of its rate case cycle and is over earning, the
utility's recovery of expenses from the balancing accounts will
be reduced by the amount of the over earning, again subject to
reasonableness review. Utilities shall use the recorded rate of
return means test to evaluate earnings for all years. The CPUC
is currently in the process of scheduling workshops to determine
how these new requirements will ultimately be implemented.
As of June 30, 2003 San Jose Water Company has received all its
offset rate requests. Any future impact on San Jose Water
Company's ability to recover balancing account balances and
receive offset rate increases cannot be determined until San Jose
Water Company's next offset rate increase request scheduled for
July, 2004.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
-----------------------------------------------------
SJW Corp. is subject to market risks in the normal course of
business, including changes in interest rates and equity prices.
The exposure to changes in interest rates is a result of
financings through the issuance of fixed-rate, long-term debt and
short-term funds obtained through the variable rate line of
credit. SJW Corp. also owns 1,099,952 shares of California Water
Service Group and is exposed to the risk of changes in equity
prices.
The Company 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 change in market rates and prices.
ITEM 4. CONTROLS AND PROCEDURES
-----------------------
(a) Evaluation of disclosure controls and procedures.
The Company's management, with the participation of the Company's
Chief Executive Officer and Chief Financial Officer, evaluated
the effectiveness of the Company's disclosure controls and
procedures as of the end of the period covered by this report.
Based on that evaluation, the Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosures
controls and procedures as of the end of the period covered by
this report have been designed and are functioning effectively to
provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Securities
Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms. The Company believes that a control system, no matter how
well designed and operated, cannot provide absolute assurance
that the objectives of the control system are met, and no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within a company
have been detected.
(b) Changes in Internal Controls over Financial Reporting.
No change in the Company's internal control over financial
reporting occurred during the Company's most recent fiscal
quarter that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
In January 2002, SJW Land Company entered into an Agreement for
Possession and Use (Agreement) with Valley Transportation Agency
(VTA) whereby SJW Land Company has granted VTA an irrevocable
right to possession and use of 1.23 acres of the company's
parking lot property for the development of a light rail station.
VTA has adopted a resolution authorizing a condemnation
proceeding to acquire the land and has deposited $3.7 million in
an escrow account as fair market compensation. SJW Land Company
waived the right to challenge VTA's possession and use in any
subsequent eminent domain proceeding but reserved the right to
assert, and has disputed the fair market value placed on the
land. According to the terms of the Agreement, if a settlement
is not reached within three months of the execution of the
Agreement, VTA can file an eminent domain complaint to acquire
title to the parking lot property. On April 11, 2003, VTA filed
the eminent domain lawsuit. As a part of the proceedings, VTA
has transferred funds from the escrow account into court deposit
to secure its ongoing right of possession for construction of the
light rail station pending final litigation. Compensation for the
taking of property will be determined by the court or by way of
settlement between SJW Land Company and VTA. This transaction
will be booked and is expected to result in an increase to net
income, if and when the compensation issue is settled or a final
court order is rendered.
ITEM 5. OTHER INFORMATION
-----------------
On July 29, 2003, the Board of Directors of the SJW Corp.
declared the regular quarterly dividend of $.7275 per common
share. The dividend will be paid September 1, 2003, to
shareholders of record as of the close of business on August 11,
2003.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits required to be filed by Item 601 of
Regulation S-K.
See Exhibit Index located immediately following the
Certifications of this document which is incorporated herein by
reference as required to be filed by Item 601 of Regulation S-K
for the quarter ended June 30, 2003.
(b) Reports on Form 8-K
SJW Corp. filed a current report on Form 8-K with the Securities
and Exchange Commission on July 31, 2003 which announced the
financial results of SJW Corp. for the second quarter of 2003.
SIGNATURES
Pursuant to the requirements 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: August 8, 2003 By /s/ ANGELA YIP
------------------------
ANGELA YIP
Chief Financial Officer &
Treasurer
EXHIBIT INDEX
Exhibit No. Description of Document
- ----------------------------------------------------------------
10.18 San Jose Water Company Executive Supplemental
Retirement Plan adopted by San Jose Water Company Board
of Directors, as restated to reflect amendments made
through May 1, 2003. (1) (2)
10.19 SJW Corp. Executive Severance Plan adopted by SJW Corp.
Board of Directors, as restated to reflect amendments
made through May 1, 2003. (2)
10.20 SJW Corp. Long-Term Incentive Plan, adopted by SJW
Corp. Board of Directors, as amended on March 3, 2003.
(1) (2)
10.21 Chief Executive Officer Employment Agreement, as
restated on June 27, 2003. (1) (2)
10.22 Standard Form of Stock Option Agreement-subject to
changes per Employment Agreement, as adopted by the SJW
Corp. Board of Directors on April 29, 2003. (1) (2)
10.23 Chief Executive Officer SERP Deferred Restricted Stock
Award, as restated on June 27, 2003. (1) (2)
10.24 Form of Stock Option Agreement with Dividend Equivalent
Agreement as adopted by the Board of Directors on
April 29, 2003. (1) (2)
31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a) by
President and Chief Executive Officer. (1)
31.2 Certification Pursuant to Rule 13a-14(a)/15d-14(a) by
Chief Financial Officer and Treasurer. (1)
32.1 Certification Pursuant to 18 U.S.C. Section 1350 by
President and Chief Executive Officer, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (1)
32.2 Certification Pursuant to 18 U.S.C. Section 1350 by
Chief Financial Officer and Treasurer, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002. (1)
(1) Filed currently herewith.
(2) Management contract or compensatory plan or agreement.