ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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California
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77-0066628
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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110 West Taylor Street, San Jose, California
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95110
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.521 par value per share
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New York Stock Exchange
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Class
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Outstanding at February 8, 2013
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Common Stock, $0.521 par value per share
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18,694,785
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 1.
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Business
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•
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San Jose Water Company, a wholly owned subsidiary of SJW Corp., with its headquarters located at 110 West Taylor Street in San Jose, California 95110, was originally incorporated under the laws of the State of California in 1866. As part of a reorganization on February 8, 1985, San Jose Water Company became a wholly owned subsidiary of SJW Corp. San Jose Water Company is a public utility in the business of providing water service to approximately
227,000
connections that serve a population of approximately
one million
people in an area comprising approximately
138
square miles in the metropolitan San Jose, California area.
|
•
|
SJWTX, Inc., a wholly owned subsidiary of SJW Corp., was incorporated in the State of Texas in 2005. SJWTX, Inc. is doing business as Canyon Lake Water Service Company (“CLWSC”). CLWSC is a public utility in the business of providing water service to approximately
10,600
connections that serve approximately
36,000
people. CLWSC’s service area comprises more than
240
square miles in western Comal County and southern Blanco County in the growing region between San Antonio and Austin, Texas. SJWTX, Inc. has a 25% interest in Acequia Water Supply Corporation (“Acequia”). Acequia has been determined to be a variable interest entity within the scope of Financial Accounting Standards Board (FASB) Accounting Standard Codification (ASC) Topic 810—“Consolidation” with SJWTX, Inc. as the primary beneficiary. As a result, Acequia has been consolidated with SJWTX, Inc.
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•
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SJW Land Company, a wholly owned subsidiary of SJW Corp., was incorporated in 1985. SJW Land Company owns undeveloped land in the states of California and Tennessee, owns and operates commercial buildings in the states of California, Connecticut, Texas, Arizona and Tennessee, and has a 70% limited partnership interest in 444 West Santa Clara Street, L.P. As of December 31, 2012, our Connecticut property was classified as held-for-sale.
|
•
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Texas Water Alliance Limited (“TWA”), a wholly owned subsidiary of SJW Corp., is undertaking activities that are necessary to develop a water supply project in Texas.
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Name
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Age
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Offices and Experience
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D.R. Drysdale
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57
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San Jose Water Company—Vice President, Information Systems. Mr. Drysdale has served as Vice President of Information Systems since 2000. From 1998 to 1999, Mr. Drysdale was Director of Information Systems. From 1994 to 1998, Mr. Drysdale was Data Processing Manager. Mr. Drysdale joined San Jose Water Company in 1992.
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C.S. Giordano
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56
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San Jose Water Company—Officer, Chief Engineer. Mr. Giordano has served as Chief Engineer since June 2007. From August 2000 to June 2007, Mr. Giordano was Director of Engineering and Construction. From January 1994 to August 2000, Mr. Giordano was Assistant Chief Engineer. Mr. Giordano has been with San Jose Water Company since 1994.
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P. L. Jensen
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53
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San Jose Water Company—Senior Vice President, Regulatory Affairs. Mr. Jensen has served as Senior Vice President of Regulatory Affairs since October 2011. From July 2007 to October 2011, Mr. Jensen was Vice President of Regulatory Affairs. From 1995 to July 2007, Mr. Jensen was Director of Regulatory Affairs. Mr. Jensen has been with San Jose Water Company since 1995.
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J.P. Lynch
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53
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SJW Corp.—Chief Financial Officer and Treasurer. Mr. Lynch has served as Chief Financial Officer and Treasurer since October 2010. He is also Chief Financial Officer and Treasurer of San Jose Water Company, SJW Land Company, SJWTX, Inc. and Texas Water Alliance Limited. Prior to joining the Corporation, Mr. Lynch was an Audit Partner with KPMG LLP. Mr. Lynch was with KPMG LLP for 26 years. Mr. Lynch is a certified public accountant.
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S. Papazian
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37
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SJW Corp.—Corporate Secretary and Attorney. Ms. Papazian has served as Corporate Secretary and Attorney for SJW Corp. and San Jose Water Company since February 2005. She is also Corporate Secretary of SJW Land Company, SJWTX, Inc. and Texas Water Alliance Limited. She was admitted to the California State Bar in January 2000 and thereafter was an Associate Attorney at The Corporate Law Group from March 2000 until February 2005.
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W.R. Roth
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60
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SJW Corp.—President, Chief Executive Officer and Chairman of the Board of Directors of SJW Corp., San Jose Water Company, SJW Land Company, SJWTX, Inc. and Texas Water Alliance Limited. Mr. Roth was appointed Chief Executive Officer of SJW Corp. in 1999 and President in 1996. Mr. Roth has been with San Jose Water Company since 1990.
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W.L. Avila-Walker
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49
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San Jose Water Company—Controller. Ms. Avila-Walker has served as Controller since September 2009. From August 2008 to September 2009, Ms. Avila-Walker served as Director of Compliance. From May 2005 to May 2008, Ms. Avila-Walker served as Director of Reporting and Finance.
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R.S. Yoo
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62
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San Jose Water Company—Chief Operating Officer. Mr. Yoo has served as Chief Operating Officer since July 2005. From April 2003 to July 2005, Mr. Yoo was Senior Vice President of Administration. From April 1996 to April 2003, Mr. Yoo was Vice President of Water Quality. Mr. Yoo has served as President of Crystal Choice Water Service LLC from January 2001 to August 2005 and Manager from January 2001 to January 2007. Mr. Yoo was appointed Vice President of SJWTX, Inc. from September 2005 to April 2008. Mr. Yoo has been with San Jose Water Company since 1985.
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Item 1A.
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Risk Factors
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•
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Liquidity risk—real estate investment is illiquid. The lag time to build or reduce the real estate portfolio is long.
|
•
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Obsolescence risk—real estate property is location specific. Location obsolescence can occur due to a decline of a particular sub-market or neighborhood. Functional obsolescence can also occur from physical depreciation, wear and tear, and other architectural and physical features which could be curable or incurable.
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•
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Market and general economic risks—real estate investment is tied to overall domestic economic growth and, therefore, carries market risk which cannot be eliminated by diversification. Generally, all property types benefit from national economic growth, though the benefits range according to local factors, such as local supply and demand and job creation. Because real estate leases are typically staggered and last for multiple years, there is generally a delayed effect in the performance of real estate in relation to the overall economy. This delayed effect can insulate or deteriorate the financial impact to SJW Land Company in a downturn or an improved economic environment.
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•
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Concentration/Credit risk—the risk of a tenant declaring bankruptcy and seeking relief from its contractual rental obligation could affect the income and the financial results of SJW Land Company. Diversification of many tenants across many properties may mitigate the risk, but can never eliminate it. This risk is most prevalent in a recessionary environment.
|
•
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The level of labor and non-labor operating and maintenance expenses as affected by inflationary forces and collective bargaining power could adversely affect our operating and maintenance expenses.
|
•
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The City of Cupertino lease operation could be adversely affected by:
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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% for Year Ended
December 31, 2012
of SJW Land Company
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||||||
Description
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Location
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Acreage
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Square Footage
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Revenue
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Expense
|
||||
2 Commercial buildings
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San Jose, California
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2
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28,000
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14
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%
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13
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%
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Warehouse building *
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Windsor, Connecticut
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17
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170,000
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16
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%
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12
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%
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Warehouse building **
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Orlando, Florida
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8
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147,000
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5
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%
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(16
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)%
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Retail building
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El Paso, Texas
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2
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14,000
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6
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%
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2
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%
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Warehouse building
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Phoenix, Arizona
|
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11
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176,000
|
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17
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%
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13
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%
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Warehouse building ***
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Knoxville, Tennessee
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30
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361,500
|
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3
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%
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21
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%
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Commercial building ***
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Knoxville, Tennessee
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15
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135,000
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39
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%
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55
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%
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Undeveloped land
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Knoxville, Tennessee
|
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10
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N/A
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N/A
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N/A
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Undeveloped land
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San Jose, California
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5
|
|
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N/A
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N/A
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N/A
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*
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On February 1, 2013, SJW Land Company closed the sale of its Connecticut warehouse building.
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**
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On August 8, 2012, SJW Land Company closed the sale of its Florida warehouse building. Revenue and expense amounts are through the sale closing date. Expense amount is net of the gain on sale of property.
|
***
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The Company's warehouse and commercial buildings in Knoxville, Tennessee have been fully leased out. On August 14, 2012, SJW Land Company entered into a lease with a single tenant for approximately 50,000 square feet of office space and approximately 25,000 square feet of space in the warehouse building. The lease commences on or about July 1, 2013 and is a modified full service lease with an initial fifteen-year term and four five-year term options. On October 16, 2012, SJW Land Company entered into a lease agreement for approximately 326,000 square feet of the warehouse building. The lease commenced on November 1, 2012 and is a modified net lease with an initial five-year and four-month term and two three-year options.
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
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2007
|
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2008
|
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2009
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2010
|
|
2011
|
|
2012
|
||||||
SJW Corp.
|
100
|
|
|
88
|
|
|
69
|
|
|
83
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|
|
76
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|
|
88
|
|
Water Utility Index
|
100
|
|
|
98
|
|
|
98
|
|
|
116
|
|
|
132
|
|
|
157
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|
S&P 500 Index
|
100
|
|
|
63
|
|
|
80
|
|
|
92
|
|
|
94
|
|
|
109
|
|
Item 6.
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Selected Financial Data
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2012
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|
2011
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|
2010
|
|
2009
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|
2008
|
||||||
CONSOLIDATED RESULTS OF OPERATIONS
(in thousands)
|
|
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|
||||||
Operating revenue
|
$
|
261,547
|
|
|
238,955
|
|
|
215,638
|
|
|
216,097
|
|
|
220,347
|
|
Operating expense:
|
|
|
|
|
|
|
|
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|
||||||
Purchased water
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66,106
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|
54,317
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|
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43,557
|
|
|
45,317
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|
|
48,291
|
|
|
Power
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5,796
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|
|
5,394
|
|
|
6,429
|
|
|
6,582
|
|
|
7,559
|
|
|
Groundwater extraction charges
|
23,940
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|
|
20,997
|
|
|
26,614
|
|
|
31,635
|
|
|
34,368
|
|
|
Other production costs
|
11,445
|
|
|
11,345
|
|
|
10,702
|
|
|
10,074
|
|
|
9,871
|
|
|
Administrative and general
|
42,812
|
|
|
39,136
|
|
|
38,184
|
|
|
35,445
|
|
|
30,207
|
|
|
Maintenance
|
13,350
|
|
|
13,261
|
|
|
12,242
|
|
|
13,172
|
|
|
13,123
|
|
|
Property taxes and other non-income taxes
|
9,703
|
|
|
8,921
|
|
|
7,907
|
|
|
8,549
|
|
|
6,793
|
|
|
Depreciation and amortization
|
33,098
|
|
|
31,193
|
|
|
28,331
|
|
|
25,643
|
|
|
24,043
|
|
|
Impairment on real estate investment
|
—
|
|
|
—
|
|
|
3,597
|
|
|
—
|
|
|
—
|
|
|
Total operating expense
|
206,250
|
|
|
184,564
|
|
|
177,563
|
|
|
176,417
|
|
|
174,255
|
|
|
Operating income
|
55,297
|
|
|
54,391
|
|
|
38,075
|
|
|
39,680
|
|
|
46,092
|
|
|
Interest expense, other income and deductions
|
(17,437
|
)
|
|
(18,947
|
)
|
|
3,071
|
|
|
(14,229
|
)
|
|
(10,597
|
)
|
|
Income before income taxes
|
37,860
|
|
|
35,444
|
|
|
41,146
|
|
|
25,451
|
|
|
35,495
|
|
|
Provision for income taxes
|
15,542
|
|
|
14,566
|
|
|
16,740
|
|
|
10,280
|
|
|
14,034
|
|
|
Net income
|
22,318
|
|
|
20,878
|
|
|
24,406
|
|
|
15,171
|
|
|
21,461
|
|
|
Dividends paid
|
13,231
|
|
|
12,823
|
|
|
12,603
|
|
|
12,202
|
|
|
11,875
|
|
|
CONSOLIDATED PER SHARE DATA (BASIC)
|
|
|
|
|
|
|
|
|
|
||||||
Net income
|
1.20
|
|
|
1.12
|
|
|
1.32
|
|
|
0.82
|
|
|
1.17
|
|
|
Dividends paid
|
0.71
|
|
|
0.69
|
|
|
0.68
|
|
|
0.66
|
|
|
0.65
|
|
|
Shareholders’ equity at year-end
|
14.74
|
|
|
14.21
|
|
|
13.76
|
|
|
13.67
|
|
|
13.81
|
|
|
CONSOLIDATED BALANCE SHEET
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||||
Utility plant and intangible assets
|
$
|
1,216,235
|
|
|
1,112,127
|
|
|
1,036,909
|
|
|
944,026
|
|
|
878,743
|
|
Less accumulated depreciation and amortization
|
384,675
|
|
|
355,914
|
|
|
322,102
|
|
|
298,921
|
|
|
272,562
|
|
|
Net utility plant
|
831,560
|
|
|
756,213
|
|
|
714,807
|
|
|
645,105
|
|
|
606,181
|
|
|
Net real estate investment
|
65,187
|
|
|
78,542
|
|
|
80,089
|
|
|
80,812
|
|
|
82,489
|
|
|
Total assets
|
1,087,499
|
|
|
1,038,810
|
|
|
935,362
|
|
|
878,474
|
|
|
850,877
|
|
|
Capitalization:
|
|
|
|
|
|
|
|
|
|
||||||
Shareholders’ equity
|
274,604
|
|
|
264,004
|
|
|
255,032
|
|
|
252,756
|
|
|
254,326
|
|
|
Long-term debt, less current portion
|
335,598
|
|
|
343,848
|
|
|
295,704
|
|
|
246,879
|
|
|
216,613
|
|
|
Total capitalization
|
$
|
610,202
|
|
|
607,852
|
|
|
550,736
|
|
|
499,635
|
|
|
470,939
|
|
OTHER STATISTICS—WATER UTILITY SERVICES
|
|
|
|
|
|
|
|
|
|
||||||
Average revenue per connection
|
$
|
1,101
|
|
|
1,010
|
|
|
916
|
|
|
920
|
|
|
914
|
|
Investment in utility plant per connection
|
$
|
5,119
|
|
|
4,702
|
|
|
4,407
|
|
|
4,019
|
|
|
3,751
|
|
Connections at year-end
|
237,600
|
|
|
236,500
|
|
|
235,300
|
|
|
234,900
|
|
|
234,300
|
|
|
Miles of main at year-end
|
2,893
|
|
|
2,915
|
|
|
2,883
|
|
|
2,881
|
|
|
2,814
|
|
|
Water production (million gallons)
|
47,655
|
|
|
46,033
|
|
|
45,493
|
|
|
47,900
|
|
|
51,961
|
|
|
Maximum daily production (million gallons)
|
190
|
|
|
181
|
|
|
196
|
|
|
192
|
|
|
204
|
|
|
Population served (estimate)
|
1,071,000
|
|
|
1,066,000
|
|
|
1,060,600
|
|
|
1,058,800
|
|
|
1,056,100
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(1)
|
Regional regulated water utility operations;
|
(2)
|
Regional nonregulated water utility related services provided in accordance with the guidelines established by the CPUC in California and the TCEQ in Texas; and
|
(3)
|
Out-of-region water and utility related services, primarily in the Western United States.
|
•
|
potential profitability;
|
•
|
regulatory environment;
|
•
|
additional growth opportunities within the region;
|
•
|
water supply, water quality and environmental issues;
|
•
|
capital requirements;
|
•
|
general economic conditions; and
|
•
|
synergy potential.
|
•
|
economic utility regulation;
|
•
|
infrastructure investment;
|
•
|
compliance with environmental, health and safety standards;
|
•
|
production costs;
|
•
|
customer growth;
|
•
|
water usage per customer; and
|
•
|
weather.
|
|
2012
|
|
2011
|
|
2010
|
||||
Water Utility Services
|
$
|
256,555
|
|
|
234,346
|
|
|
212,078
|
|
Real Estate Services
|
4,992
|
|
|
4,609
|
|
|
3,560
|
|
|
|
$
|
261,547
|
|
|
238,955
|
|
|
215,638
|
|
|
2012 vs. 2011
Increase/(decrease)
|
|
2011 vs. 2010
Increase/(decrease)
|
||||||||||
Water Utility Services:
|
|
|
|
|
|
|
|
||||||
Consumption changes
|
$
|
5,546
|
|
|
2
|
%
|
|
$
|
3,429
|
|
|
2
|
%
|
Increase in customers
|
1,265
|
|
|
1
|
%
|
|
706
|
|
|
—
|
%
|
||
Rate increases
|
17,588
|
|
|
7
|
%
|
|
12,393
|
|
|
6
|
%
|
||
MCRAM
|
(5,740
|
)
|
|
(2
|
)%
|
|
5,740
|
|
|
3
|
%
|
||
Balancing and memorandum accounts
|
3,550
|
|
|
1
|
%
|
|
—
|
|
|
—
|
%
|
||
Real Estate Services
|
383
|
|
|
—
|
%
|
|
1,049
|
|
|
—
|
%
|
||
|
$
|
22,592
|
|
|
9
|
%
|
|
$
|
23,317
|
|
|
11
|
%
|
|
2012
|
|
2011
|
|
2010
|
||||
Residential and business
|
$
|
234,278
|
|
|
216,747
|
|
|
195,431
|
|
Industrial
|
1,106
|
|
|
1,086
|
|
|
1,031
|
|
|
Public authorities
|
10,706
|
|
|
10,008
|
|
|
9,306
|
|
|
Others
|
6,915
|
|
|
6,505
|
|
|
6,310
|
|
|
Balancing and memorandum accounts
|
3,550
|
|
|
—
|
|
|
—
|
|
|
|
$
|
256,555
|
|
|
234,346
|
|
|
212,078
|
|
|
2012
|
|
2011
|
|
2010
|
|||
Residential and business
|
232,169
|
|
|
231,122
|
|
|
229,933
|
|
Industrial
|
78
|
|
|
79
|
|
|
75
|
|
Public authorities
|
1,408
|
|
|
1,419
|
|
|
1,447
|
|
Others
|
3,945
|
|
|
3,880
|
|
|
3,845
|
|
|
237,600
|
|
|
236,500
|
|
|
235,300
|
|
|
2012
|
|
2011
|
|
2010
|
||||
Water Utility Services
|
$
|
201,936
|
|
|
179,293
|
|
|
168,115
|
|
Real Estate Services
|
3,379
|
|
|
3,240
|
|
|
6,858
|
|
|
All Other
|
935
|
|
|
2,031
|
|
|
2,590
|
|
|
|
$
|
206,250
|
|
|
184,564
|
|
|
177,563
|
|
|
2012 vs. 2011
Increase/(decrease)
|
|
2011 vs. 2010
Increase/(decrease)
|
||||||||||
Water production costs:
|
|
|
|
|
|
|
|
||||||
Change in surface water supply
|
$
|
5,338
|
|
|
3
|
%
|
|
$
|
265
|
|
|
—
|
%
|
Change in usage and new customers
|
3,172
|
|
|
2
|
%
|
|
743
|
|
|
1
|
%
|
||
Purchased water and groundwater extraction charge and energy price increase
|
6,724
|
|
|
4
|
%
|
|
3,743
|
|
|
2
|
%
|
||
Total water production costs
|
15,234
|
|
|
9
|
%
|
|
4,751
|
|
|
3
|
%
|
||
Administrative and general
|
3,676
|
|
|
2
|
%
|
|
952
|
|
|
—
|
%
|
||
Maintenance
|
89
|
|
|
—
|
%
|
|
1,019
|
|
|
1
|
%
|
||
Property taxes and other non-income taxes
|
782
|
|
|
—
|
%
|
|
1,014
|
|
|
1
|
%
|
||
Depreciation and amortization
|
1,905
|
|
|
1
|
%
|
|
2,862
|
|
|
1
|
%
|
||
Impairment on real estate investment
|
—
|
|
|
—
|
%
|
|
(3,597
|
)
|
|
(2
|
)%
|
||
|
$
|
21,686
|
|
|
12
|
%
|
|
$
|
7,001
|
|
|
4
|
%
|
|
Source of Water Supply
|
||||||||
|
2012
|
|
2011
|
|
2010
|
||||
|
(million gallons) (MG)
|
||||||||
Purchased water
|
31,230
|
|
|
27,549
|
|
|
22,767
|
|
|
Groundwater
|
13,465
|
|
|
13,029
|
|
|
17,125
|
|
|
Surface water
|
2,409
|
|
|
5,059
|
|
|
5,203
|
|
|
Reclaimed water
|
551
|
|
|
396
|
|
|
398
|
|
|
|
47,655
|
|
|
46,033
|
|
|
45,493
|
|
|
Average water production cost per MG
|
$
|
2,251
|
|
|
2,000
|
|
|
1,919
|
|
|
Budgeted Capital
Expenditures
2013
|
|||||
Water treatment
|
$
|
803
|
|
|
1
|
%
|
Source of supply
|
8,962
|
|
|
9
|
%
|
|
Reservoirs and tanks
|
15,459
|
|
|
15
|
%
|
|
Pump stations and equipment
|
11,068
|
|
|
11
|
%
|
|
Equipment and other
|
7,660
|
|
|
7
|
%
|
|
Recycled water
|
7,379
|
|
|
7
|
%
|
|
Distribution system
|
53,234
|
|
|
50
|
%
|
|
|
$
|
104,565
|
|
|
100
|
%
|
|
Total
|
|
Contractual Obligations Due in
|
||||||||||||
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After
5 Years
|
||||||||
Senior notes, Water Utility Services
|
$
|
215,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
215,000
|
|
SJW Land Company mortgages
|
20,556
|
|
|
5,199
|
|
|
725
|
|
|
14,632
|
|
|
—
|
|
|
Advances for construction, San Jose Water Company
|
68,277
|
|
|
2,326
|
|
|
4,651
|
|
|
4,651
|
|
|
56,649
|
|
|
SDWSRF loan, San Jose Water Company
|
2,281
|
|
|
97
|
|
|
290
|
|
|
304
|
|
|
1,590
|
|
|
444 West Santa Clara Street, L.P. long-term debt (non-recourse to SJW Land Company)
|
3,153
|
|
|
100
|
|
|
218
|
|
|
245
|
|
|
2,590
|
|
|
California Pollution Control Financing Authority Revenue Bonds, San Jose Water Company
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
Senior note, SJW Corp.
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
Total contractual cash obligation
|
$
|
409,267
|
|
|
7,722
|
|
|
5,884
|
|
|
19,832
|
|
|
375,829
|
|
Total interest on contractual obligations
|
$
|
346,257
|
|
|
20,839
|
|
|
41,348
|
|
|
40,446
|
|
|
243,624
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
December 31,
|
|||||
|
2012
|
|
2011
|
|||
Assets
|
|
|
|
|||
Utility plant:
|
|
|
|
|||
Land
|
$
|
10,156
|
|
|
8,852
|
|
Depreciable plant and equipment
|
1,166,220
|
|
|
1,070,016
|
|
|
Construction in progress
|
24,298
|
|
|
18,527
|
|
|
Intangible assets
|
15,561
|
|
|
14,732
|
|
|
|
1,216,235
|
|
|
1,112,127
|
|
|
Less accumulated depreciation and amortization
|
384,675
|
|
|
355,914
|
|
|
|
831,560
|
|
|
756,213
|
|
|
Real estate investment
|
74,232
|
|
|
89,099
|
|
|
Less accumulated depreciation and amortization
|
9,045
|
|
|
10,557
|
|
|
|
65,187
|
|
|
78,542
|
|
|
Current assets:
|
|
|
|
|||
Cash and cash equivalents
|
2,522
|
|
|
26,734
|
|
|
Accounts receivable:
|
|
|
|
|||
Customers, net of allowances for uncollectible accounts of $225 in 2012 and 2011
|
12,317
|
|
|
12,541
|
|
|
Income tax
|
489
|
|
|
5,248
|
|
|
Other
|
854
|
|
|
746
|
|
|
Accrued unbilled utility revenue
|
16,284
|
|
|
15,318
|
|
|
Long-lived assets held-for-sale
|
7,768
|
|
|
—
|
|
|
Materials and supplies
|
1,088
|
|
|
991
|
|
|
Prepaid expenses
|
1,589
|
|
|
1,598
|
|
|
Other current asset
|
—
|
|
|
5,739
|
|
|
|
42,911
|
|
|
68,915
|
|
|
Other assets:
|
|
|
|
|||
Investment in California Water Service Group
|
7,067
|
|
|
7,032
|
|
|
Unamortized debt issuance, broker and reacquisition costs
|
5,226
|
|
|
4,865
|
|
|
Regulatory assets, net
|
130,488
|
|
|
119,248
|
|
|
Other
|
5,060
|
|
|
3,995
|
|
|
|
147,841
|
|
|
135,140
|
|
|
|
$
|
1,087,499
|
|
|
1,038,810
|
|
|
December 31,
|
|||||
|
2012
|
|
2011
|
|||
Capitalization and Liabilities
|
|
|
|
|||
Capitalization:
|
|
|
|
|||
Shareholders’ equity:
|
|
|
|
|||
Common stock, $0.521 par value; authorized 36,000,000 shares; issued and outstanding 18,670,566 shares in 2012 and 18,592,827 shares in 2011
|
$
|
9,724
|
|
|
9,684
|
|
Additional paid-in capital
|
26,117
|
|
|
24,552
|
|
|
Retained earnings
|
236,453
|
|
|
227,494
|
|
|
Accumulated other comprehensive income
|
2,310
|
|
|
2,274
|
|
|
Total shareholders’ equity
|
274,604
|
|
|
264,004
|
|
|
Long-term debt, less current portion
|
335,598
|
|
|
343,848
|
|
|
|
610,202
|
|
|
607,852
|
|
|
Current liabilities:
|
|
|
|
|||
Line of credit
|
15,300
|
|
|
—
|
|
|
Current portion of long-term debt
|
5,392
|
|
|
838
|
|
|
Accrued groundwater extraction charges and purchased water
|
4,755
|
|
|
5,789
|
|
|
Purchased power
|
317
|
|
|
423
|
|
|
Accounts payable
|
8,481
|
|
|
7,417
|
|
|
Accrued interest
|
5,355
|
|
|
5,376
|
|
|
Accrued property taxes and other non-income taxes
|
1,465
|
|
|
1,298
|
|
|
Accrued payroll
|
3,069
|
|
|
2,744
|
|
|
Other current liabilities
|
4,973
|
|
|
4,403
|
|
|
|
49,107
|
|
|
28,288
|
|
|
Deferred income taxes
|
147,579
|
|
|
133,541
|
|
|
Unamortized investment tax credits
|
1,434
|
|
|
1,495
|
|
|
Advances for construction
|
68,277
|
|
|
67,333
|
|
|
Contributions in aid of construction
|
128,466
|
|
|
123,335
|
|
|
Deferred revenue
|
1,137
|
|
|
1,070
|
|
|
Postretirement benefit plans
|
73,425
|
|
|
68,855
|
|
|
Other noncurrent liabilities
|
7,872
|
|
|
7,041
|
|
|
Commitments and contingencies
|
—
|
|
|
—
|
|
|
|
$
|
1,087,499
|
|
|
1,038,810
|
|
|
2012
|
|
2011
|
|
2010
|
||||
Operating revenue
|
$
|
261,547
|
|
|
238,955
|
|
|
215,638
|
|
Operating expense:
|
|
|
|
|
|
||||
Production Costs:
|
|
|
|
|
|
||||
Purchased water
|
66,106
|
|
|
54,317
|
|
|
43,557
|
|
|
Power
|
5,796
|
|
|
5,394
|
|
|
6,429
|
|
|
Groundwater extraction charges
|
23,940
|
|
|
20,997
|
|
|
26,614
|
|
|
Other production costs
|
11,445
|
|
|
11,345
|
|
|
10,702
|
|
|
Total production costs
|
107,287
|
|
|
92,053
|
|
|
87,302
|
|
|
Administrative and general
|
42,812
|
|
|
39,136
|
|
|
38,184
|
|
|
Maintenance
|
13,350
|
|
|
13,261
|
|
|
12,242
|
|
|
Property taxes and other non-income taxes
|
9,703
|
|
|
8,921
|
|
|
7,907
|
|
|
Depreciation and amortization
|
33,098
|
|
|
31,193
|
|
|
28,331
|
|
|
Impairment on real estate investment
|
—
|
|
|
—
|
|
|
3,597
|
|
|
Total operating expense
|
206,250
|
|
|
184,564
|
|
|
177,563
|
|
|
Operating income
|
55,297
|
|
|
54,391
|
|
|
38,075
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||
Interest on long-term debt
|
(18,662
|
)
|
|
(17,799
|
)
|
|
(15,676
|
)
|
|
Mortgage and other interest expense
|
(1,523
|
)
|
|
(1,876
|
)
|
|
(2,007
|
)
|
|
Gain on sale of California Water Service Group stock
|
—
|
|
|
—
|
|
|
18,966
|
|
|
Gain on sale of real estate investment
|
910
|
|
|
—
|
|
|
—
|
|
|
Dividend income
|
243
|
|
|
238
|
|
|
1,185
|
|
|
Other, net
|
1,595
|
|
|
490
|
|
|
603
|
|
|
Income before income taxes
|
37,860
|
|
|
35,444
|
|
|
41,146
|
|
|
Provision for income taxes
|
15,542
|
|
|
14,566
|
|
|
16,740
|
|
|
Net income
|
$
|
22,318
|
|
|
20,878
|
|
|
24,406
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||
Unrealized income (loss) on investment, net of taxes of $0 in 2012, $59 in 2011 and $30 in 2010
|
36
|
|
|
(85
|
)
|
|
(44
|
)
|
|
Reclassification adjustment for gain realized on investment, net of tax of $7,494 in 2010
|
—
|
|
|
—
|
|
|
(10,784
|
)
|
|
Comprehensive income
|
$
|
22,354
|
|
|
20,793
|
|
|
13,578
|
|
Earnings per share
|
|
|
|
|
|
||||
—Basic
|
$
|
1.20
|
|
|
1.12
|
|
|
1.32
|
|
—Diluted
|
$
|
1.18
|
|
|
1.11
|
|
|
1.30
|
|
Weighted average shares outstanding
|
|
|
|
|
|
||||
—Basic
|
18,635,206
|
|
|
18,581,762
|
|
|
18,531,458
|
|
|
—Diluted
|
18,839,231
|
|
|
18,794,066
|
|
|
18,742,315
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders’
Equity
|
||||||||
Number of
Shares
|
|
Amount
|
|
||||||||||||||
Balances, December 31, 2009
|
18,499,602
|
|
|
9,635
|
|
|
22,046
|
|
|
207,888
|
|
|
13,187
|
|
|
252,756
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
24,406
|
|
|
—
|
|
|
24,406
|
|
Unrealized loss on investment, net of tax effect of $30
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44
|
)
|
|
(44
|
)
|
Reclassification adjustment for gain realized on investment, net of tax effect of $7,494
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,784
|
)
|
|
(10,784
|
)
|
Share-based compensation
|
—
|
|
|
—
|
|
|
812
|
|
|
(123
|
)
|
|
—
|
|
|
689
|
|
Exercise of stock options and similar instruments
|
26,078
|
|
|
14
|
|
|
86
|
|
|
—
|
|
|
—
|
|
|
100
|
|
Employee stock purchase plan
|
25,860
|
|
|
13
|
|
|
499
|
|
|
—
|
|
|
—
|
|
|
512
|
|
Dividends paid ($0.68 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,603
|
)
|
|
—
|
|
|
(12,603
|
)
|
Balances, December 31, 2010
|
18,551,540
|
|
|
9,662
|
|
|
23,443
|
|
|
219,568
|
|
|
2,359
|
|
|
255,032
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
20,878
|
|
|
—
|
|
|
20,878
|
|
Unrealized loss on investment, net of tax effect of $59
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
(85
|
)
|
Share-based compensation
|
—
|
|
|
—
|
|
|
651
|
|
|
(129
|
)
|
|
—
|
|
|
522
|
|
Exercise of stock options and similar instruments
|
13,896
|
|
|
7
|
|
|
(91
|
)
|
|
—
|
|
|
—
|
|
|
(84
|
)
|
Employee stock purchase plan
|
25,712
|
|
|
14
|
|
|
511
|
|
|
—
|
|
|
—
|
|
|
525
|
|
Dividend reinvestment and stock purchase plan
|
1,679
|
|
|
1
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
39
|
|
Dividends paid ($0.69 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,823
|
)
|
|
—
|
|
|
(12,823
|
)
|
Balances, December 31, 2011
|
18,592,827
|
|
|
9,684
|
|
|
24,552
|
|
|
227,494
|
|
|
2,274
|
|
|
264,004
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
22,318
|
|
|
—
|
|
|
22,318
|
|
Unrealized income on investment, net of tax effect of $0
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|
36
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
564
|
|
|
(128
|
)
|
|
—
|
|
|
436
|
|
Exercise of stock options and similar instruments
|
29,468
|
|
|
23
|
|
|
347
|
|
|
—
|
|
|
—
|
|
|
370
|
|
Employee stock purchase plan
|
44,784
|
|
|
15
|
|
|
573
|
|
|
—
|
|
|
—
|
|
|
588
|
|
Dividend reinvestment and stock purchase plan
|
3,487
|
|
|
2
|
|
|
81
|
|
|
—
|
|
|
—
|
|
|
83
|
|
Dividends paid ($0.71 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(13,231
|
)
|
|
—
|
|
|
(13,231
|
)
|
Balances, December 31, 2012
|
18,670,566
|
|
|
9,724
|
|
|
26,117
|
|
|
236,453
|
|
|
2,310
|
|
|
274,604
|
|
|
2012
|
|
2011
|
|
2010
|
||||
Operating activities:
|
|
|
|
|
|
||||
Net income
|
$
|
22,318
|
|
|
20,878
|
|
|
24,406
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||
Depreciation and amortization
|
34,629
|
|
|
32,709
|
|
|
29,756
|
|
|
Deferred income taxes
|
12,235
|
|
|
16,458
|
|
|
8,077
|
|
|
Share-based compensation
|
564
|
|
|
651
|
|
|
812
|
|
|
Gain on sale of California Water Service Group stock
|
—
|
|
|
—
|
|
|
(18,966
|
)
|
|
Impairment of real estate investment
|
—
|
|
|
—
|
|
|
3,597
|
|
|
Gain on sale of real estate investment
|
(910
|
)
|
|
—
|
|
|
—
|
|
|
Loss on sale of utility property
|
—
|
|
|
23
|
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||
Accounts receivable and accrued unbilled utility revenue
|
(800
|
)
|
|
(2,470
|
)
|
|
(2,197
|
)
|
|
Accounts payable, purchased power and other current liabilities
|
933
|
|
|
(133
|
)
|
|
887
|
|
|
Accrued groundwater extraction charges and purchased water
|
(1,034
|
)
|
|
1,430
|
|
|
(137
|
)
|
|
Tax receivable and accrued taxes
|
5,093
|
|
|
(1,102
|
)
|
|
(8,528
|
)
|
|
Other current asset
|
5,740
|
|
|
(5,740
|
)
|
|
—
|
|
|
Postretirement benefits
|
77
|
|
|
(37
|
)
|
|
(2,566
|
)
|
|
Regulatory asset related to balancing and memorandum accounts
|
(3,550
|
)
|
|
—
|
|
|
—
|
|
|
Other noncurrent assets and noncurrent liabilities
|
(1,503
|
)
|
|
1,855
|
|
|
1,166
|
|
|
Other changes, net
|
575
|
|
|
(318
|
)
|
|
860
|
|
|
Net cash provided by operating activities
|
74,367
|
|
|
64,204
|
|
|
37,167
|
|
|
Investing activities:
|
|
|
|
|
|
||||
Additions to utility plant:
|
|
|
|
|
|
||||
Company-funded
|
(99,635
|
)
|
|
(62,439
|
)
|
|
(95,536
|
)
|
|
Contributions in aid of construction
|
(6,199
|
)
|
|
(7,311
|
)
|
|
(4,364
|
)
|
|
Additions to real estate investment
|
(678
|
)
|
|
(156
|
)
|
|
(4,540
|
)
|
|
Payments for business/asset acquisition and water rights
|
(2,280
|
)
|
|
(4,040
|
)
|
|
(3,504
|
)
|
|
Cost to retire utility plant, net of salvage
|
(922
|
)
|
|
(1,816
|
)
|
|
(757
|
)
|
|
Proceeds from sale of California Water Service Group stock
|
—
|
|
|
—
|
|
|
33,938
|
|
|
Proceeds from sale of real estate investment
|
5,517
|
|
|
—
|
|
|
—
|
|
|
Proceeds from sale of utility property
|
—
|
|
|
43
|
|
|
—
|
|
|
Net cash used in investing activities
|
(104,197
|
)
|
|
(75,719
|
)
|
|
(74,763
|
)
|
|
Financing activities:
|
|
|
|
|
|
||||
Borrowings from line of credit
|
16,300
|
|
|
17,600
|
|
|
62,300
|
|
|
Repayments of line of credit
|
(1,000
|
)
|
|
(21,600
|
)
|
|
(64,100
|
)
|
|
Long-term borrowings
|
—
|
|
|
50,000
|
|
|
50,000
|
|
|
Repayments of long-term borrowings
|
(3,696
|
)
|
|
(1,094
|
)
|
|
(790
|
)
|
|
Debt issuance costs
|
(33
|
)
|
|
(87
|
)
|
|
(856
|
)
|
|
Dividends paid
|
(13,231
|
)
|
|
(12,823
|
)
|
|
(12,603
|
)
|
|
Exercise of stock options and similar instruments
|
989
|
|
|
564
|
|
|
692
|
|
|
Tax benefits realized from share options exercised
|
97
|
|
|
7
|
|
|
41
|
|
|
Receipts of advances and contributions in aid of construction
|
8,407
|
|
|
6,149
|
|
|
5,428
|
|
|
Refunds of advances for construction
|
(2,215
|
)
|
|
(2,197
|
)
|
|
(2,202
|
)
|
|
Net cash provided by financing activities
|
5,618
|
|
|
36,519
|
|
|
37,910
|
|
|
Net change in cash and cash equivalents
|
(24,212
|
)
|
|
25,004
|
|
|
314
|
|
|
Cash and cash equivalents, beginning of year
|
26,734
|
|
|
1,730
|
|
|
1,416
|
|
|
Cash and cash equivalents, end of year
|
$
|
2,522
|
|
|
26,734
|
|
|
1,730
|
|
Cash paid (received) during the year for:
|
|
|
|
|
|
||||
Interest
|
$
|
21,206
|
|
|
20,307
|
|
|
18,070
|
|
Income taxes
|
$
|
(1,445
|
)
|
|
(2,930
|
)
|
|
15,326
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
||||
Increase (decrease) in accrued payables for construction costs capitalized
|
$
|
355
|
|
|
1,971
|
|
|
(1,389
|
)
|
Utility property installed by developers
|
$
|
4,073
|
|
|
567
|
|
|
341
|
|
Obligations relieved related to acquisition of certain water service assets
|
$
|
—
|
|
|
(726
|
)
|
|
—
|
|
Note 1.
|
Summary of Significant Accounting Policies
|
|
2012
|
|
2011
|
|||
Equipment
|
$
|
214,670
|
|
|
202,181
|
|
Transmission and distribution
|
892,957
|
|
|
811,332
|
|
|
Office buildings and other structures
|
58,593
|
|
|
56,503
|
|
|
Total depreciable plant and equipment
|
$
|
1,166,220
|
|
|
1,070,016
|
|
|
Useful Lives
|
Equipment
|
5 to 35 years
|
Transmission and distribution plant
|
35 to 75 years
|
Office buildings and other structures
|
7 to 50 years
|
|
2012
|
|
2011
|
|||
Land
|
$
|
18,892
|
|
|
21,312
|
|
Buildings and improvements
|
55,011
|
|
|
67,487
|
|
|
Intangibles
|
329
|
|
|
300
|
|
|
Total real estate investment
|
$
|
74,232
|
|
|
89,099
|
|
|
December 31, 2012
|
||
Land
|
$
|
1,200
|
|
Buildings and improvements
|
8,684
|
|
|
Subtotal
|
9,884
|
|
|
Less: accumulated depreciation and amortization
|
2,116
|
|
|
Total
|
$
|
7,768
|
|
|
2012
|
|
2011
|
|||
Regulatory assets:
|
|
|
|
|||
Income tax temporary differences
|
$
|
8,712
|
|
|
9,295
|
|
Postretirement pensions and other medical benefits
|
113,633
|
|
|
105,988
|
|
|
Pension balancing account
|
6,671
|
|
|
—
|
|
|
Other
|
5,927
|
|
|
4,676
|
|
|
Total regulatory assets
|
$
|
134,943
|
|
|
119,959
|
|
Regulatory liabilities:
|
|
|
|
|||
Cost of capital memorandum account
|
$
|
2,295
|
|
|
—
|
|
Water supply balancing accounts
|
1,594
|
|
|
—
|
|
|
Future tax benefits to ratepayers
|
566
|
|
|
711
|
|
|
Total regulatory liabilities
|
$
|
4,455
|
|
|
711
|
|
Net regulatory assets included in Consolidated Balance Sheets
|
$
|
130,488
|
|
|
119,248
|
|
|
Estimated Refunds
|
||
2013
|
$
|
2,326
|
|
2014
|
2,325
|
|
|
2015
|
2,326
|
|
|
2016
|
2,325
|
|
|
2017
|
2,326
|
|
|
Thereafter
|
56,649
|
|
|
2012
|
|
2011
|
|||
Retirement obligation
|
$
|
4,650
|
|
|
4,296
|
|
Discount rate
|
6
|
%
|
|
6
|
%
|
|
Present value, recorded as a liability
|
1,807
|
|
|
1,481
|
|
|
Deferred tax
|
1,242
|
|
|
1,019
|
|
|
Regulatory asset
|
$
|
3,049
|
|
|
2,500
|
|
Note 2.
|
Capitalization
|
Note 3.
|
Lines of Credit
|
Note 4.
|
Long-Term Debt
|
Description
|
Due Date
|
|
2012
|
|
2011
|
|||
Senior notes, San Jose Water Company:
|
|
|
|
|
|
|||
Series A 8.58%
|
2022
|
|
$
|
20,000
|
|
|
20,000
|
|
Series B 7.37%
|
2024
|
|
30,000
|
|
|
30,000
|
|
|
Series C 9.45%
|
2020
|
|
10,000
|
|
|
10,000
|
|
|
Series D 7.15%
|
2026
|
|
15,000
|
|
|
15,000
|
|
|
Series E 6.81%
|
2028
|
|
15,000
|
|
|
15,000
|
|
|
Series F 7.20%
|
2031
|
|
20,000
|
|
|
20,000
|
|
|
Series G 5.93%
|
2033
|
|
20,000
|
|
|
20,000
|
|
|
Series H 5.71%
|
2037
|
|
20,000
|
|
|
20,000
|
|
|
Series I 5.93%
|
2037
|
|
20,000
|
|
|
20,000
|
|
|
Series J 6.54%
|
2024
|
|
10,000
|
|
|
10,000
|
|
|
Series K 6.75%
|
2039
|
|
20,000
|
|
|
20,000
|
|
|
SJWTX, Inc. Series A 6.27%
|
2036
|
|
15,000
|
|
|
15,000
|
|
|
SJW Corp. Series A 4.35%
|
2021
|
|
50,000
|
|
|
50,000
|
|
|
Total senior notes
|
|
|
$
|
265,000
|
|
|
265,000
|
|
Mortgage loans 5.61% - 6.09%
|
2013
|
|
4,867
|
|
|
7,973
|
|
|
|
2016
|
|
3,314
|
|
|
3,407
|
|
|
|
2017
|
|
12,375
|
|
|
12,594
|
|
|
444 West Santa Clara Street, L.P. 5.68% (non-recourse to SJW Land Company)
|
2021
|
|
3,153
|
|
|
3,248
|
|
|
California Pollution Control Financing Authority Revenue Bonds 5.10%, San Jose Water Company
|
2040
|
|
50,000
|
|
|
50,000
|
|
|
SDWSRF loans 2.39% and 2.60%, San Jose Water Company
|
2027
|
|
2,281
|
|
|
2,464
|
|
|
Total debt
|
|
|
$
|
340,990
|
|
|
344,686
|
|
Less: Current portion
|
|
|
5,392
|
|
|
838
|
|
|
Total long-term debt, less current portion
|
|
|
$
|
335,598
|
|
|
343,848
|
|
|
Amortization Schedule
|
|||||||
Year
|
Total Payment
|
|
Interest
|
|
Principal
|
|||
2013
|
6,216
|
|
|
1,017
|
|
|
5,199
|
|
2014
|
1,229
|
|
|
877
|
|
|
352
|
|
2015
|
1,229
|
|
|
856
|
|
|
373
|
|
2016
|
4,034
|
|
|
762
|
|
|
3,272
|
|
2017
|
11,470
|
|
|
110
|
|
|
11,360
|
|
Note 5.
|
Income Taxes
|
|
2012
|
|
2011
|
|
2010
|
||||
Current:
|
|
|
|
|
|
||||
Federal
|
$
|
—
|
|
|
(4,894
|
)
|
|
3,738
|
|
State
|
3,305
|
|
|
3,002
|
|
|
4,925
|
|
|
Deferred:
|
|
|
|
|
|
||||
Federal
|
12,114
|
|
|
16,560
|
|
|
10,694
|
|
|
State
|
123
|
|
|
(102
|
)
|
|
(2,617
|
)
|
|
|
$
|
15,542
|
|
|
14,566
|
|
|
16,740
|
|
|
2012
|
|
2011
|
|||
Deferred tax assets:
|
|
|
|
|||
Advances and contributions
|
$
|
15,214
|
|
|
14,954
|
|
Unamortized investment tax credit
|
773
|
|
|
805
|
|
|
Pensions and postretirement benefits
|
4,757
|
|
|
4,644
|
|
|
California franchise tax
|
1,193
|
|
|
1,429
|
|
|
Net operating loss
|
6,439
|
|
|
2,495
|
|
|
Other
|
1,272
|
|
|
1,181
|
|
|
Total deferred tax assets
|
$
|
29,648
|
|
|
25,508
|
|
Deferred tax liabilities:
|
|
|
|
|||
Utility plant
|
$
|
110,983
|
|
|
96,349
|
|
Pension and postretirement benefits
|
46,315
|
|
|
43,199
|
|
|
Investment in stock
|
2,487
|
|
|
2,488
|
|
|
Deferred gain and other-property related
|
14,440
|
|
|
15,287
|
|
|
Debt reacquisition costs
|
545
|
|
|
595
|
|
|
Other
|
2,457
|
|
|
1,131
|
|
|
Total deferred tax liabilities
|
$
|
177,227
|
|
|
159,049
|
|
Net deferred tax liabilities
|
$
|
147,579
|
|
|
133,541
|
|
Balance at December 31, 2011
|
$
|
1,978
|
|
Additions based on tax position related to the current year, including interest
|
546
|
|
|
Reductions related to tax positions taken in a prior year, including interest
|
(208
|
)
|
|
Balance at December 31, 2012
|
$
|
2,316
|
|
Note 6.
|
Intangible Assets
|
|
2012
|
|
2011
|
|||
Concession fees
|
$
|
6,800
|
|
|
6,800
|
|
Other intangibles
|
8,761
|
|
|
7,932
|
|
|
Intangible assets
|
15,561
|
|
|
14,732
|
|
|
Less: Accumulated amortization
|
|
|
|
|||
Concession fees
|
4,148
|
|
|
3,876
|
|
|
Other intangibles
|
712
|
|
|
643
|
|
|
Net intangible assets
|
$
|
10,701
|
|
|
10,213
|
|
Note 7.
|
Commitments
|
Note 8.
|
Contingencies
|
Note 9.
|
Partnership Interest
|
Note 10.
|
Benefit Plans
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
|
%
|
Discount rate
|
4.34
|
|
5.48
|
|
5.92/5.51
|
*
|
4.25
|
|
5.40
|
|
5.83
|
Expected return on plan assets
|
7.00
|
|
7.00
|
|
8.00/7.00
|
*
|
7.00
|
|
7.00
|
|
8.00
|
Rate of compensation increase
|
4.00
|
|
4.00
|
|
4.00
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Pension Benefits
|
|
Other Benefits
|
||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
%
|
|
%
|
|
%
|
|
%
|
Discount rate
|
3.92
|
|
4.34
|
|
3.80
|
|
4.25
|
Rate of compensation increase
|
4.00
|
|
4.00
|
|
N/A
|
|
N/A
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
|
2012
|
|
2011
|
|
2010
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
4,288
|
|
|
3,516
|
|
|
3,171
|
|
|
$
|
339
|
|
|
273
|
|
|
229
|
|
Interest cost
|
5,349
|
|
|
5,313
|
|
|
5,231
|
|
|
452
|
|
|
467
|
|
|
433
|
|
||
Expected return on assets
|
(4,442
|
)
|
|
(4,289
|
)
|
|
(3,599
|
)
|
|
(151
|
)
|
|
(129
|
)
|
|
(130
|
)
|
||
Amortization of transition obligation
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
57
|
|
|
57
|
|
||
Amortization of prior service cost
|
414
|
|
|
450
|
|
|
470
|
|
|
197
|
|
|
197
|
|
|
197
|
|
||
Recognized actuarial loss
|
3,857
|
|
|
2,147
|
|
|
2,129
|
|
|
195
|
|
|
96
|
|
|
48
|
|
||
Net periodic benefit cost
|
$
|
9,466
|
|
|
7,137
|
|
|
7,402
|
|
|
$
|
1,033
|
|
|
961
|
|
|
834
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||
Benefit obligation at beginning of year
|
$
|
123,904
|
|
|
102,783
|
|
|
$
|
10,796
|
|
|
8,731
|
|
Service cost
|
4,288
|
|
|
3,516
|
|
|
339
|
|
|
273
|
|
||
Interest cost
|
5,349
|
|
|
5,313
|
|
|
452
|
|
|
467
|
|
||
Actuarial loss
|
11,090
|
|
|
15,732
|
|
|
994
|
|
|
1,641
|
|
||
Benefits paid
|
(3,632
|
)
|
|
(3,440
|
)
|
|
(338
|
)
|
|
(316
|
)
|
||
Benefit obligation at end of year
|
$
|
140,999
|
|
|
123,904
|
|
|
$
|
12,243
|
|
|
10,796
|
|
Change in plan assets
|
|
|
|
|
|
|
|
||||||
Fair value of assets at beginning of year
|
$
|
62,763
|
|
|
58,761
|
|
|
$
|
2,321
|
|
|
1,993
|
|
Actual return on plan assets
|
6,645
|
|
|
(27
|
)
|
|
838
|
|
|
(20
|
)
|
||
Employer contributions
|
9,766
|
|
|
7,469
|
|
|
596
|
|
|
567
|
|
||
Benefits paid
|
(3,632
|
)
|
|
(3,440
|
)
|
|
(277
|
)
|
|
(219
|
)
|
||
Fair value of plan assets at end of year
|
75,542
|
|
|
62,763
|
|
|
3,478
|
|
|
2,321
|
|
||
Funded status at end of year
|
$
|
(65,457
|
)
|
|
(61,141
|
)
|
|
$
|
(8,765
|
)
|
|
(8,475
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Current liabilities
|
$
|
737
|
|
|
705
|
|
|
$
|
60
|
|
|
56
|
|
Noncurrent liabilities
|
64,720
|
|
|
60,436
|
|
|
8,705
|
|
|
8,419
|
|
||
|
$
|
65,457
|
|
|
61,141
|
|
|
$
|
8,765
|
|
|
8,475
|
|
|
2012
|
|
2011
|
|||
Funded status of obligation
|
$
|
74,222
|
|
|
69,616
|
|
Accrued benefit cost
|
(6,904
|
)
|
|
(6,827
|
)
|
|
Amount to be recovered in future rates
|
67,318
|
|
|
62,789
|
|
|
Tax gross-up
|
46,315
|
|
|
43,199
|
|
|
Regulatory asset
|
$
|
113,633
|
|
|
105,988
|
|
|
Pension Benefits
|
|
Other Benefits
|
|||
Amortization of prior service cost
|
$
|
376
|
|
|
197
|
|
Amortization of loss
|
3,920
|
|
|
219
|
|
|
Total
|
$
|
4,296
|
|
|
416
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||
Fair value of assets at end of year:
|
|
|
|
|
|
|
|
||||||
Debt securities
|
$
|
33,922
|
|
|
26,271
|
|
|
$
|
1,168
|
|
|
938
|
|
|
45
|
%
|
|
42
|
%
|
|
33
|
%
|
|
40
|
%
|
||
Equity securities
|
35,352
|
|
|
32,653
|
|
|
1,522
|
|
|
921
|
|
||
|
47
|
%
|
|
52
|
%
|
|
44
|
%
|
|
40
|
%
|
||
Cash and equivalents
|
6,268
|
|
|
3,839
|
|
|
788
|
|
|
462
|
|
||
|
8
|
%
|
|
6
|
%
|
|
23
|
%
|
|
20
|
%
|
||
Total
|
$
|
75,542
|
|
|
62,763
|
|
|
$
|
3,478
|
|
|
2,321
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2012
|
||||||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash and cash equivalents
|
|
|
$
|
7,056
|
|
|
$
|
7,056
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
22,749
|
|
|
22,749
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap,
Russell Mid Cap Growth, Russell Mid Cap Value
|
|
3,989
|
|
|
3,989
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value
|
|
2,174
|
|
|
2,174
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
4,169
|
|
|
4,169
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT—Equity REIT’s
|
|
3,792
|
|
|
—
|
|
|
3,792
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
35,091
|
|
|
—
|
|
|
35,091
|
|
|
—
|
|
||||
Total
|
|
|
$
|
79,020
|
|
|
$
|
40,137
|
|
|
$
|
38,883
|
|
|
$
|
—
|
|
(a)
|
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
|
(b)
|
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.
|
|
|
|
|
|
Fair Value Measurements at December 31, 2011
|
||||||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash and cash equivalents
|
|
|
$
|
4,301
|
|
|
$
|
4,301
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap Equity
|
Russell 1000 Growth
|
|
3,716
|
|
|
3,716
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Mid Cap Equity
|
Russell 2500
|
|
1,814
|
|
|
1,814
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000
|
|
6,303
|
|
|
6,303
|
|
|
—
|
|
|
—
|
|
||||
Emerging Market Equity
|
MSCI Emerging
Markets Net
|
|
3,547
|
|
|
3,547
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE Net
|
|
4,271
|
|
|
4,271
|
|
|
—
|
|
|
—
|
|
||||
Passive Index Fund ETFs (b):
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. Large Cap Equity
|
S&P 500/Russell 1000 Growth
|
|
5,525
|
|
|
5,525
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap
|
|
69
|
|
|
69
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Mid Cap Equity
|
Russell 2500
|
|
617
|
|
|
617
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000
|
|
143
|
|
|
143
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE Net
|
|
4,356
|
|
|
4,356
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
Nareit—Equity REITS
|
|
3,213
|
|
|
—
|
|
|
3,213
|
|
|
—
|
|
||||
Fixed Income (c)
|
(c)
|
|
27,209
|
|
|
—
|
|
|
27,209
|
|
|
—
|
|
||||
Total
|
|
|
$
|
65,084
|
|
|
$
|
34,662
|
|
|
$
|
30,422
|
|
|
$
|
—
|
|
(a)
|
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
|
(b)
|
Open-ended fund of securities with the goal to track the stated benchmark performance.
|
(c)
|
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays Capital Aggregate Bond, Barclays Capital 1-3 Year Government/Credit, and Merrill Lynch High Yield Master II performance.
|
|
Pension Plan
|
|
Other Postretirement
Benefit Plan
|
||||
2013
|
$
|
4,523
|
|
|
$
|
416
|
|
2014
|
4,697
|
|
|
441
|
|
||
2015
|
4,914
|
|
|
475
|
|
||
2016
|
5,185
|
|
|
511
|
|
||
2017
|
5,458
|
|
|
544
|
|
||
2018 - 2022
|
31,438
|
|
|
3,193
|
|
Note 11.
|
Equity Plans
|
|
2012
|
|
2011
|
|
2010
|
||||
Compensation costs charged to income:
|
|
|
|
|
|
||||
ESPP
|
$
|
104
|
|
|
92
|
|
|
90
|
|
Restricted stock and deferred restricted stock
|
460
|
|
|
559
|
|
|
722
|
|
|
Total compensation costs charged to income
|
$
|
564
|
|
|
651
|
|
|
812
|
|
Proceeds from the exercise of stock options and similar instruments:
|
|
|
|
|
|
||||
Stock options
|
$
|
318
|
|
|
—
|
|
|
180
|
|
ESPP
|
588
|
|
|
525
|
|
|
512
|
|
|
DRSPP
|
83
|
|
|
39
|
|
|
—
|
|
|
Total proceeds from the exercise of stock options and similar instruments
|
$
|
989
|
|
|
564
|
|
|
692
|
|
Excess tax benefits realized from share options exercised and stock issuance:
|
|
|
|
|
|
||||
Stock options
|
$
|
61
|
|
|
—
|
|
|
41
|
|
Restricted stock and deferred restricted stock
|
36
|
|
|
7
|
|
|
—
|
|
|
Total excess tax benefits realized from share options exercised and stock issuance
|
$
|
97
|
|
|
7
|
|
|
41
|
|
|
Shares
|
|
Weighted-
Average Exercise
Price
|
|
Weighted
Average
Remaining
Life in Years
|
|
Aggregate
Intrinsic
Value
|
||||||
Outstanding as of January 1, 2012
|
85,526
|
|
|
$
|
18.24
|
|
|
2.73
|
|
|
$
|
518
|
|
Granted
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Exercised
|
(20,982
|
)
|
|
15.18
|
|
|
—
|
|
|
210
|
|
||
Forfeited or expired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Outstanding as of December 31, 2012
|
64,544
|
|
|
$
|
19.24
|
|
|
1.92
|
|
|
$
|
490
|
|
Options exercisable at December 31, 2012
|
64,544
|
|
|
$
|
19.24
|
|
|
1.92
|
|
|
$
|
490
|
|
|
Units
|
|
Weighted Grant-
Date Fair Value
|
|||
Nonvested as of January 1, 2012
|
85,268
|
|
|
$
|
15.95
|
|
Granted
|
21,991
|
|
|
$
|
21.74
|
|
Vested
|
(19,048
|
)
|
|
$
|
23.76
|
|
Forfeited
|
(11,998
|
)
|
|
$
|
17.32
|
|
Nonvested as of December 31, 2012
|
76,213
|
|
|
$
|
15.45
|
|
Note 12.
|
Segment and Nonregulated Businesses Reporting
|
|
For year ended December 31, 2012
|
|||||||||||||||||||
|
Water Utility Services
|
|
Real
Estate
Services
|
|
All Other (1)
|
|
SJW Corp.
|
|||||||||||||
|
Regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Regulated
|
|
Non
regulated
|
|
Total
|
|||||||
Operating revenue
|
251,032
|
|
|
5,523
|
|
|
4,992
|
|
|
—
|
|
|
251,032
|
|
|
10,515
|
|
|
261,547
|
|
Operating expense
|
197,893
|
|
|
4,043
|
|
|
3,379
|
|
|
935
|
|
|
197,893
|
|
|
8,357
|
|
|
206,250
|
|
Operating income (loss)
|
53,139
|
|
|
1,480
|
|
|
1,613
|
|
|
(935
|
)
|
|
53,139
|
|
|
2,158
|
|
|
55,297
|
|
Net income (loss)
|
22,811
|
|
|
707
|
|
|
244
|
|
|
(1,444
|
)
|
|
22,811
|
|
|
(493
|
)
|
|
22,318
|
|
Depreciation and amortization
|
31,085
|
|
|
360
|
|
|
1,653
|
|
|
—
|
|
|
31,085
|
|
|
2,013
|
|
|
33,098
|
|
Senior note, mortgage and other interest expense
|
16,499
|
|
|
—
|
|
|
1,511
|
|
|
2,175
|
|
|
16,499
|
|
|
3,686
|
|
|
20,185
|
|
Income tax expense (benefit) in net income
|
15,678
|
|
|
581
|
|
|
374
|
|
|
(1,091
|
)
|
|
15,678
|
|
|
(136
|
)
|
|
15,542
|
|
Assets
|
991,866
|
|
|
13,245
|
|
|
74,903
|
|
|
7,485
|
|
|
991,866
|
|
|
95,633
|
|
|
1,087,499
|
|
|
For year ended December 31, 2011
|
|||||||||||||||||||
|
Water Utility Services
|
|
Real
Estate
Services
|
|
All Other (1)
|
|
SJW Corp.
|
|||||||||||||
|
Regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Regulated
|
|
Non
regulated
|
|
Total
|
|||||||
Operating revenue
|
229,411
|
|
|
4,935
|
|
|
4,609
|
|
|
—
|
|
|
229,411
|
|
|
9,544
|
|
|
238,955
|
|
Operating expense
|
175,812
|
|
|
3,481
|
|
|
3,240
|
|
|
2,031
|
|
|
175,812
|
|
|
8,752
|
|
|
184,564
|
|
Operating income (loss)
|
53,599
|
|
|
1,454
|
|
|
1,369
|
|
|
(2,031
|
)
|
|
53,599
|
|
|
792
|
|
|
54,391
|
|
Net income (loss)
|
21,970
|
|
|
765
|
|
|
(407
|
)
|
|
(1,450
|
)
|
|
21,970
|
|
|
(1,092
|
)
|
|
20,878
|
|
Depreciation and amortization
|
29,136
|
|
|
360
|
|
|
1,697
|
|
|
—
|
|
|
29,136
|
|
|
2,057
|
|
|
31,193
|
|
Senior note, mortgage and other interest expense
|
16,741
|
|
|
—
|
|
|
1,833
|
|
|
1,101
|
|
|
16,741
|
|
|
2,934
|
|
|
19,675
|
|
Income tax expense (benefit) in net income
|
15,387
|
|
|
571
|
|
|
(296
|
)
|
|
(1,096
|
)
|
|
15,387
|
|
|
(821
|
)
|
|
14,566
|
|
Assets
|
917,580
|
|
|
11,668
|
|
|
80,097
|
|
|
29,465
|
|
|
917,580
|
|
|
121,230
|
|
|
1,038,810
|
|
|
For year ended December 31, 2010
|
|||||||||||||||||||
|
Water Utility Services
|
|
Real
Estate
Services
|
|
All Other (1)
|
|
SJW Corp.
|
|||||||||||||
|
Regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Non
regulated
|
|
Regulated
|
|
Non
regulated
|
|
Total
|
|||||||
Operating revenue
|
207,432
|
|
|
4,646
|
|
|
3,560
|
|
|
—
|
|
|
207,432
|
|
|
8,206
|
|
|
215,638
|
|
Operating expense
|
164,976
|
|
|
3,139
|
|
|
6,858
|
|
|
2,590
|
|
|
164,976
|
|
|
12,587
|
|
|
177,563
|
|
Operating income (loss)
|
42,456
|
|
|
1,507
|
|
|
(3,298
|
)
|
|
(2,590
|
)
|
|
42,456
|
|
|
(4,381
|
)
|
|
38,075
|
|
Net income (loss)
|
16,818
|
|
|
846
|
|
|
(3,166
|
)
|
|
9,908
|
|
|
16,818
|
|
|
7,588
|
|
|
24,406
|
|
Depreciation and amortization
|
26,319
|
|
|
347
|
|
|
1,665
|
|
|
—
|
|
|
26,319
|
|
|
2,012
|
|
|
28,331
|
|
Senior note, mortgage and other interest expense
|
15,917
|
|
|
—
|
|
|
1,760
|
|
|
6
|
|
|
15,917
|
|
|
1,766
|
|
|
17,683
|
|
Income tax expense (benefit) in net income
|
11,496
|
|
|
600
|
|
|
(2,176
|
)
|
|
6,820
|
|
|
11,496
|
|
|
5,244
|
|
|
16,740
|
|
Assets
|
844,364
|
|
|
9,849
|
|
|
81,361
|
|
|
(212
|
)
|
|
844,364
|
|
|
90,998
|
|
|
935,362
|
|
Note 13.
|
California Water Service Group Stock
|
|
Balance as of
December 31, 2012
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||
Assets:
|
|
|
|
|
|
|
|
||||||
Investment in California Water Service Group
|
$
|
7,067
|
|
|
$
|
7,067
|
|
|
—
|
|
|
—
|
|
|
Balance as of
December 31, 2011
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||
Assets:
|
|
|
|
|
|
|
|
||||||
Investment in California Water Service Group
|
$
|
7,032
|
|
|
$
|
7,032
|
|
|
—
|
|
|
—
|
|
Note 14.
|
Unaudited Quarterly Financial Data
|
|
2012 Quarter Ended
|
|||||||||||
|
March
|
|
June
|
|
September
|
|
December (1)
|
|||||
Operating revenue
|
$
|
51,149
|
|
|
65,575
|
|
|
82,374
|
|
|
62,449
|
|
Operating income
|
6,725
|
|
|
13,585
|
|
|
20,877
|
|
|
14,110
|
|
|
Net income
|
1,109
|
|
|
5,201
|
|
|
10,084
|
|
|
5,924
|
|
|
Comprehensive income
|
1,098
|
|
|
5,260
|
|
|
10,125
|
|
|
5,871
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|||||
—Basic
|
0.06
|
|
|
0.28
|
|
|
0.54
|
|
|
0.32
|
|
|
—Diluted
|
0.06
|
|
|
0.28
|
|
|
0.53
|
|
|
0.31
|
|
|
Market price range of stock:
|
|
|
|
|
|
|
|
|||||
—High
|
24.91
|
|
|
24.34
|
|
|
25.64
|
|
|
26.62
|
|
|
—Low
|
22.96
|
|
|
22.81
|
|
|
22.95
|
|
|
22.69
|
|
|
Dividend per share
|
0.18
|
|
|
0.18
|
|
|
0.18
|
|
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|||||
|
2011 Quarter Ended
|
|||||||||||
|
March
|
|
June
|
|
September
|
|
December (1)
|
|||||
Operating revenue
|
$
|
43,696
|
|
|
59,007
|
|
|
73,914
|
|
|
62,338
|
|
Operating income
|
5,601
|
|
|
13,784
|
|
|
18,486
|
|
|
16,520
|
|
|
Net income
|
610
|
|
|
5,451
|
|
|
8,215
|
|
|
6,602
|
|
|
Comprehensive income
|
599
|
|
|
5,479
|
|
|
7,988
|
|
|
6,727
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|||||
—Basic
|
0.03
|
|
|
0.29
|
|
|
0.44
|
|
|
0.36
|
|
|
—Diluted
|
0.03
|
|
|
0.29
|
|
|
0.44
|
|
|
0.35
|
|
|
Market price range of stock:
|
|
|
|
|
|
|
|
|||||
—High
|
26.40
|
|
|
24.24
|
|
|
24.80
|
|
|
24.93
|
|
|
—Low
|
22.48
|
|
|
21.99
|
|
|
21.16
|
|
|
21.10
|
|
|
Dividend per share
|
0.17
|
|
|
0.17
|
|
|
0.17
|
|
|
0.17
|
|
(1)
|
During the quarter ended
December 31, 2012
, the Company recorded revenues of
$3,550
related to the recognition of certain San Jose Water Company balancing and memorandum accounts as the Company concluded that it was probable that these amounts would be collected. Of this amount,
$240
represents a net over-collection of revenues generated during the quarter ended
December 31, 2012
and
$3,790
represents a net-under-collection of revenues which should have been recognized as revenue during the quarter ended September 30, 2012. See Note 1 of the Notes to the Consolidated Financial Statements for further discussion on balancing and memorandum accounts. During the quarter ended
December 31, 2011
, the Company recorded revenues of
$5,740
related to the recognition of San Jose Water Company's MCRAM which was authorized for recovery by the CPUC on December 27, 2011.
|
Description
|
2012
|
|
2011
|
|
2010
|
||||
Allowance for doubtful accounts:
|
|
|
|
|
|
||||
Balance, beginning of period
|
$
|
225
|
|
|
235
|
|
|
285
|
|
Charged to expense
|
449
|
|
|
327
|
|
|
301
|
|
|
Accounts written off
|
(526
|
)
|
|
(422
|
)
|
|
(472
|
)
|
|
Recoveries of accounts written off
|
77
|
|
|
85
|
|
|
121
|
|
|
Balance, end of period
|
$
|
225
|
|
|
225
|
|
|
235
|
|
Reserve for litigation and claims:
|
|
|
|
|
|
||||
Balance, beginning of period
|
$
|
240
|
|
|
449
|
|
|
417
|
|
Charged to expense
|
118
|
|
|
121
|
|
|
538
|
|
|
Revision to accrual, due to settlements
|
(38
|
)
|
|
(182
|
)
|
|
(245
|
)
|
|
Payments
|
(39
|
)
|
|
(148
|
)
|
|
(261
|
)
|
|
Balance, end of period
|
$
|
281
|
|
|
240
|
|
|
449
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transaction, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
|
(a)(1) Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)(2) Financial Statement Schedule
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
|
3.1
|
|
Restated Articles of Incorporation of SJW Corp. Incorporated by reference to Exhibit 3.1 to Form 10-K for year ended December 31, 2001.
|
|
|
|
3.2
|
|
Certificate of Amendment of the Restated Articles of Incorporation of SJW Corp., as filed with the Secretary of State of the State of California on February 22, 2006. Incorporated by reference to Exhibit 3.1 to Form 8-K filed on February 27, 2006.
|
|
|
|
3.3
|
|
By-Laws of SJW Corp., as amended on July 28, 2010. Incorporated by reference to Exhibit 3.1 to Form 8-K filed on July 29, 2010.
|
|
|
|
4
|
|
Instruments Defining the Rights of Security Holders, including Indentures: No current issue of the registrant’s long-term debt exceeds 10 percent of its total assets. SJW Corp. hereby agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of unregistered senior and subordinated debt of the Company.
|
|
|
|
4.1
|
|
Indenture dated as of June 1, 2010 between San Jose Water Company and Wells Fargo Bank, National Association. Incorporated by reference to Exhibit 4.1 to Form 10-Q for the quarter ended June 30, 2010.
|
|
|
|
4.2
|
|
4.35% Senior Notes due June 30, 2021. SJW Corp. agrees to furnish a copy of such Senior Notes to the Commission upon request.
|
|
|
|
10.1
|
|
Water Supply Contract dated January 27, 1981, between San Jose Water Works and the Santa Clara Valley Water District, as amended. Incorporated by reference to Exhibit 10.1 to Form 10-K for the year ended December 31, 2001.
|
|
|
|
10.2
|
|
Limited Partnership Agreement of 444 West Santa Clara Street, L.P., entered into as of September 2, 1999, between SJW Land Company and Toeniskoetter & Breeding, Inc. Development. Incorporated by reference to Exhibit 10.18 to Form 10-Q for the quarter ended September 30, 1999.
|
|
|
|
10.3
|
|
Asset Purchase Agreement by and between SJWTX, Inc. to purchase the assets of Canyon Lake Water Supply Corporation, a Texas nonprofit water supply corporation, dated October 4, 2005. Incorporated by reference to Exhibit 10.1 to Form 10-Q for quarter ending September 30, 2005.
|
|
|
|
10.4
|
|
Grantor Trust Agreement by and between San Jose Water Company and Wells Fargo Bank, National Association dated November 2, 2012. (1)
|
|
|
|
10.5
|
|
Credit Agreement dated as of May 27, 2010 by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 28, 2010.
|
|
|
|
10.6
|
|
First Amendment to Credit Agreement by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association dated December 16, 2010 and First Modification to Promissory Note dated December 16, 2010. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 17, 2010.
|
|
|
|
10.7
|
|
Second Amendment to Credit Agreement by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association dated July 1, 2011 and Second Modification to Promissory Note dated July 1, 2011. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on July 7, 2011.
|
|
|
|
10.8
|
|
Third Modification to Promissory Note dated August 1, 2011 by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association. Incorporated by reference as Exhibit 10.3 to Form 10-Q for the quarter ended September 30, 2011.
|
|
|
|
10.9
|
|
Credit Agreement dated March 1, 2012 by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association and Promissory Note dated March 1, 2012. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on March 7, 2012.
|
|
|
|
10.10
|
|
First Amendment to Credit Agreement by and between SJW Corp., SJW Land Company and Wells Fargo Bank, National Association dated January 11, 2013. (1)
|
|
|
|
|
|
|
10.11
|
|
Credit Agreement dated as of May 27, 2010 by and between San Jose Water Company and Wells Fargo Bank, National Association. Incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 28, 2010.
|
|
|
|
10.12
|
|
First Amendment to Credit Agreement by and between San Jose Water Company and Wells Fargo Bank, National Association dated December 16, 2010 and First Modification to Promissory Note dated December 16, 2010. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 17, 2010.
|
|
|
|
10.13
|
|
Second Amendment to Credit Agreement by and between San Jose Water Company and Wells Fargo Bank, National Association dated July 1, 2011 and Second Modification to Promissory Note dated July 1, 2011. Incorporated by reference as Exhibit 10.2 to Form 8-K filed on July 7, 2011.
|
|
|
|
10.14
|
|
Third Modification to Promissory Note dated July 27, 2011 by and between San Jose Water Company and Wells Fargo Bank, National Association. Incorporated by reference as Exhibit 10.4 to Form 10-Q for the quarter ended September 30, 2011.
|
|
|
|
10.15
|
|
Credit Agreement dated March 1, 2012 by and between San Jose Water Company and Wells Fargo Bank, National Association and Promissory Note dated March 1, 2012. Incorporated by reference as Exhibit 10.2 to Form 8-K filed on March 7, 2012.
|
|
|
|
10.16
|
|
First Amendment to Credit Agreement by and between San Jose Water Company and Wells Fargo Bank, National Association dated January 11, 2013. (1)
|
|
|
|
10.17
|
|
Loan Agreement dated as of June 1, 2010 between the California Pollution Control Financing Authority and San Jose Water Company. Incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended June 30, 2010.
|
|
|
|
10.18
|
|
Bond Purchase agreement dated June 9, 2010 among Goldman, Sachs & Co., the Treasurer of the State of California and the California Pollution Control Financing Authority and approved by San Jose Water Company. Incorporated by reference to Exhibit 10.4 to Form 10-Q for the quarter ended June 30, 2010.
|
|
|
|
10.19
|
|
Note Agreement between SJW Corp. and the Prudential Insurance Company of America, dated June 30, 2011. Incorporated by reference as Exhibit 10.3 to Form 8-K filed on July 7, 2011.
|
|
|
|
10.20
|
|
Form of Letter Amendment to SJW Corp. Director Pension Plan. Incorporated by reference as Exhibit 10.25 to Form 10-K for the year ended December 31, 2007. (2)
|
|
|
|
10.21
|
|
San Jose Water Company Executive Supplemental Retirement Plan, as amended and restated effective October 28, 2009. Incorporated by reference to Exhibit 10.5 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.22
|
|
Plan Amendment No. 1 to San Jose Water Company Executive Supplemental Retirement Plan as amended and restated effective October 28, 2009. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on January 29, 2010. (2)
|
|
|
|
10.23
|
|
Amended and Restated Exhibit A to SJW Corp. Executive Supplemental Retirement Plan effective January 26, 2011. Incorporated by reference as Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2011. (2)
|
|
|
|
10.24
|
|
Plan Amendment to San Jose Water Company Executive Supplemental Retirement Plan effective January 1, 2011. Incorporated by reference as Exhibit 10.5 to Form 10-Q for the quarter ended September 30, 2011. (2)
|
|
|
|
10.25
|
|
San Jose Water Company Executive Supplemental Retirement Plan, as amended and restated effective January 1, 2012. Incorporated by reference as Exhibit 10.20 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.26
|
|
San Jose Water Company Cash Balance Executive Supplemental Retirement Plan as amended and restated effective January 1, 2012. Incorporated by reference as Exhibit 10.23 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.27
|
|
SJW Corp. Long-Term Incentive Plan, as amended and restated January 30, 2008. Incorporated by reference as Exhibit 10.1 to Form 8-K filed on May 1, 2008. (2)
|
|
|
|
|
|
|
10.28
|
|
Chief Executive Officer Employment Agreement amended and restated, effective January 1, 2008. Incorporated by reference to Exhibit 10.9 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.29
|
|
First Amendment, effective as of January 1, 2010, to the Chief Executive Officer Employment Agreement amended and restated effective January 1, 2008. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 18, 2009. (2)
|
|
|
|
10.30
|
|
Second Amendment dated January 26, 2010 to the Chief Executive Officer Employment Agreement amended and restated effective January 1, 2008. Incorporated by reference to Exhibit 10.11 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.31
|
|
Offer Letter to Mr. James P. Lynch dated September 22, 2010 and accepted September 27, 2010. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 1, 2010. (2)
|
|
|
|
10.32
|
|
Standard Form of Stock Option Agreement, as adopted by SJW Corp. Board of Directors on April 29, 2003. Incorporated by reference to Exhibit 10.22 to Form 10-Q for the quarter ended June 30, 2003. (2)
|
|
|
|
10.33
|
|
SJW Corp. Executive Officer Short-Term Incentive Plan, effective as of April 30, 2008. Incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 1, 2008. (2)
|
|
|
|
10.34
|
|
SJW Corp. Executive Severance Plan, as amended and restated, effective January 1, 2010 and amended effective October 26, 2010. Incorporated by reference as Exhibit 10.23 to Form 10-K for the year ended December 31, 2010. (2)
|
|
|
|
10.35
|
|
San Jose Water Company Special Deferral Election Plan, as amended and restated, effective January 1, 2012. Incorporated by reference as Exhibit 10.33 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.36
|
|
San Jose Water Company Special Deferral Election Plan, as amended and restated, effective January 1, 2013. (1) (2)
|
|
|
|
10.37
|
|
SJW Corp. Amended and Restated Deferred Restricted Stock Program, effective January 1, 2008. Incorporated by reference as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2008. (2)
|
|
|
|
10.38
|
|
SJW Corp. Deferral Election Program for Non-Employee Board Members, as amended and restated, effective January 1, 2008. Incorporated by reference as Exhibit 10.22 to Form 10-K for the year ended December 31, 2007. (2)
|
|
|
|
10.39
|
|
SJW Corp. Director Compensation and Expense Reimbursement Policies, amended and restated, effective as of July 29, 2009. Incorporated by reference as Exhibit 10.1 to Form 10-Q for the quarter ended September 30, 2009. (2)
|
|
|
|
10.40
|
|
Form of Stock Option Dividend Equivalent Rights Agreement, effective as of January 1, 2008. Incorporated by reference as Exhibit 10.18 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.41
|
|
Chief Operating Officer Stock Option Dividend Equivalent Rights Agreement, as amended and restated effective as of January 1, 2008. Incorporated by reference as Exhibit 10.19 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.42
|
|
Restricted Stock Unit Issuance Agreement, amended and restated, effective as of July 1, 2008. Incorporated by reference as Exhibit 10.2 to Form 10-Q for the quarter ended September 30, 2008. (2)
|
|
|
|
10.43
|
|
Deferred Restricted Stock Award Agreement, amended and restated, as of October 22, 2008. Incorporated by reference as Exhibit 10.21 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.44
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. Incorporated by reference as Exhibit 10.22 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
|
|
|
10.45
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. Incorporated by reference as Exhibit 10.23 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.46
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. Incorporated by reference as Exhibit 10.24 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.47
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated effective October 22, 2008. Incorporated by reference as Exhibit 10.25 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.48
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. Incorporated by reference as Exhibit 10.26 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.49
|
|
Chief Executive Officer Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. Incorporated by reference as Exhibit 10.27 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.50
|
|
Form of Chief Executive Officer Restricted Stock Unit Issuance Agreement. Incorporated by reference as Exhibit 10.30 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.51
|
|
Form of Chief Executive Officer Restricted Stock Unit Issuance Agreement. Incorporated by reference as Exhibit 10.31 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.52
|
|
Form of Chief Executive Officer Restricted Stock Unit Issuance Agreement. Incorporated by reference as Exhibit 10.49 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.53
|
|
Form of Restricted Stock Unit Issuance Agreement Award, amended and restated, effective October 22, 2008. Incorporated by reference as Exhibit 10.28 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.54
|
|
Form of Restricted Stock Unit Issuance Agreement, amended and restated, effective October 22, 2008. Incorporated by reference as Exhibit 10.29 to Form 10-K for the year ended December 31, 2008. (2)
|
|
|
|
10.55
|
|
Form of Restricted Stock Unit Issuance Agreement. Incorporated by reference as Exhibit 10.34 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.56
|
|
Form of Restricted Stock Unit Issuance Agreement. Incorporated by reference as Exhibit 10.53 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.57
|
|
Performance Goals for the Chief Executive Officer 2009 Fiscal Year Bonus. Incorporated by reference as Exhibit 10.1 to Form 10-Q for the quarter ended March 31, 2009. (2)
|
|
|
|
10.58
|
|
Performance Goals for the Chief Executive Officer 2010 Fiscal Year Bonus. Incorporated by reference as Exhibit 10.36 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.59
|
|
Performance Goals for the Chief Executive Officer 2011 Fiscal Year Bonus. Incorporated by reference as Exhibit 10.45 to Form 10-K for the year ended December 31, 2010. (2)
|
|
|
|
10.60
|
|
Performance Goals for the Chief Executive Officer 2012 Fiscal Year Bonus. Incorporated by reference as Exhibit 10.57 to Form 10-K for the year ended December 31, 2011. (2)
|
|
|
|
10.61
|
|
Performance Goals for the Chief Executive Officer 2013 Fiscal Year Bonus. (1) (2)
|
|
|
|
10.62
|
|
Form of Indemnification Agreement between SJW Corp. and officers. Incorporated by reference as Exhibit 10.37 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.63
|
|
Form of Indemnification Agreement between SJW Corp. and Board members. Incorporated by reference as Exhibit 10.38 to Form 10-K for the year ended December 31, 2009. (2)
|
|
|
|
10.64
|
|
Form of Separation Agreement and Release by and between Angela Yip and San Jose Water Company. Incorporated by reference to Exhibit 10.1 to Form 8-K filed on December 10, 2010. (2)
|
|
|
|
|
|
|
10.65
|
|
Form of Separation Agreement and Release dated September 30, 2010 by and between David A. Green and San Jose Water Company. Incorporated by reference as Exhibit 10.49 to Form 10-K for the year ended December 31, 2010. (2)
|
|
|
|
10.66
|
|
Separation Agreement and Release by and between George J. Belhumeur and San Jose Water Company, dated as of May 25, 2012. Incorporated by reference as Exhibit 10.1 to Form 10-Q for period ended June 30, 2012. (2)
|
|
|
|
21.1
|
|
Subsidiaries of SJW Corp. filed as Exhibit 21.1 to Form 10-K for the year ended December 31, 2009.
|
|
|
|
23
|
|
Consent of Independent Registered Public Accounting Firm. (1)
|
|
|
|
31.1
|
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) by President and Chief Executive Officer. (1)
|
|
|
|
31.2
|
|
Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer and Treasurer. (1)
|
|
|
|
32.1
|
|
Certification Pursuant to 18 U.S.C. Section 1350 by President and Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)
|
|
|
|
32.2
|
|
Certification Pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer and Treasurer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1)
|
|
|
|
|
|
(1) Filed currently herewith.
(2) Management contract or compensatory plan or agreement.
|
|
|
SJW CORP.
|
|
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ W. Richard Roth
|
|
|
|
W. RICHARD ROTH,
President, Chief Executive Officer
and Chairman of the Board of Directors
(Principal executive officer)
|
|
|||
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ W. Richard Roth
|
|
|
|
W. RICHARD ROTH,
President, Chief Executive Officer and Chairman of the Board of Directors (Principal executive officer) |
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ James P. Lynch
|
|
|
|
JAMES P. LYNCH,
Chief Financial Officer and Treasurer
(Principal financial officer)
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Wendy Avila-Walker
|
|
|
|
WENDY AVILA-WALKER,
Controller
(Principal accounting officer)
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Katharine Armstrong
|
|
|
|
KATHARINE ARMSTRONG,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Walter J. Bishop
|
|
|
|
WALTER J. BISHOP,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Mark L. Cali
|
|
|
|
MARK L. CALI,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Douglas R. King
|
|
|
|
DOUGLAS R. KING,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Ronald B. Moskovitz
|
|
|
|
RONALD B. MOSKOVITZ,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ George E. Moss
|
|
|
|
GEORGE E. MOSS,
Member, Board of Directors
|
|
|||
|
|
|
|
Date:
|
February 28, 2013
|
By
|
/s/ Robert A. Van Valer
|
|
|
|
ROBERT A. VAN VALER,
Member, Board of Directors
|
|
(a)
|
WHEREAS
, the Company has adopted the following nonqualified deferred compensation Plans (collectively, the “
Plans
”):
|
(b)
|
WHEREAS
, the Company has incurred or expects to incur liability under the terms of such Plans with respect to the individuals participating in such Plans (the “
Participants
”) or their beneficiaries (the “
Beneficiaries
”);
|
(c)
|
WHEREAS
, the Company wishes to establish a Trust (the “
Trust
”) so that the Company may contribute assets to the Trust that shall be held therein, subject to the claims of the Company’s creditors in the event of the Company’s Insolvency (as herein defined), until paid to Participants and their Beneficiaries in such manner and at such times as specified in the Plans and in this Trust Agreement;
|
(d)
|
WHEREAS
, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not affect the status of the SERP, the Cash Balance SERP or the Deferral Election Plan as unfunded plans maintained for the purpose of providing deferred compensation for a select group of management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974; and
|
(e)
|
WHEREAS
, it is the intention of the Company to make contributions to the Trust to provide itself with a source of funds (the “
Trust Fund
”) to assist it in satisfying its liabilities under the Plans.
|
(a)
|
The Trust is intended to be a Grantor Trust, of which the Company is the Grantor, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended, and shall be construed accordingly.
|
(b)
|
The Company shall be considered the Grantor for the purposes of the Trust.
|
(c)
|
The Trust hereby established is irrevocable.
|
(d)
|
The Company hereby deposits with the Trustee in the Trust one-thousand dollars and zero cents ($1,000.00) which shall become the principal of the Trust Fund to be held, administered and disposed of by the Trustee as provided in this Trust Agreement.
|
(e)
|
The principal of the Trust Fund, together with any earnings thereon, shall be held separate and apart from other funds of the Company and shall be used exclusively for the uses and purposes of Participants, their Beneficiaries and the general creditors of the Company as herein set forth. Participants and their Beneficiaries shall have no preferred claim on, or any beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust Agreement shall be unsecured contractual rights of Participants and their Beneficiaries against the Company. Any assets held by the Trust will be subject to the claims of the general creditors of the Company under federal and state law in the event the Company is Insolvent, as defined in Section 3(a) herein.
|
(f)
|
The Company, in its sole discretion, may at any time, or from time to time, make additional deposits of cash or other property acceptable to the Trustee in the Trust to augment the principal of the Trust Fund and to be held, administered and disposed of by the Trustee as provided in this Trust Agreement. Prior to a Change in Control, neither the Trustee nor any Participant or Beneficiary shall have any right to compel additional deposits.
|
(g)
|
In addition to the Initial Contribution, the Company may make such other contributions as may from time to time be authorized by due corporate action. Any such payments made by the Company may be in cash, by letter of credit or, prior to the date as of which a Change in Control occurs, in such property (including, without limitation, securities issued by the Company) as the Company may determine. The Company shall keep accurate books and records with respect to the interest of each Participant in the particular Plan (the SERP, the Cash Balance SERP or the Deferral Election Plan) in which he or she participates and shall provide copies of such books and records to the Trustee at any time as the Trustee may reasonably request. Immediately prior to the effective date of a Change in Control (as defined herein), the Company shall make a contribution to the Trust in an amount that is sufficient (taking into account the assets of the Trust Fund resulting from prior contributions and the investment earnings thereon) to fund the Trust in an amount equal to no less than one hundred percent (100%) but no more than one hundred twenty percent (120%) of the Required Funding and Expense Reserve. For such purpose, the
Required Funding
shall be equal to the aggregate of the following three amounts:
|
Section 2.
|
Payments to Participants and Their Beneficiaries
|
(a)
|
Prior to a Change in Control, distributions from the Trust shall be made by the Trustee to Participants and Beneficiaries at the direction of the Company. Prior to a Change in Control, the entitlement of a Participant or his or her Beneficiaries to benefits under the Plans shall be determined by the Plan Administrative Committee (the “
Plan Committee
”) appointed by the Company under the Plans, and any claim for such benefits shall be considered and reviewed by the Plan Committee pursuant to the procedures set out in the Plans.
|
(b)
|
The Company may make payment of benefits directly to Participants or their Beneficiaries as they become due under the terms of the Plans. The Company shall notify the Trustee of its decision to make such direct payment of benefits prior to the time amounts are paid to Participants or their Beneficiaries, and any such notification shall continue in effect until the Company provides the Trustee with written notice to the contrary. Before a Change in Control, the Company may direct the Trustee in writing to reimburse the Company from the Trust Fund, and debit the account of each Participant or his or her Beneficiary, for amounts paid directly to the Participant or their Beneficiaries by the Company. The Trustee shall reimburse the Company for such payments promptly after receipt by the Trustee of satisfactory evidence that the Company has made the direct payments. No such reimbursement to the Company shall be allowed after a Change in Control to the extent that such reimbursement would reduce the assets of the Trust Fund to less than one hundred percent (100%) of the Required Funding and Expense Reserve, as most recently calculated in accordance with Section 1 of this Trust Agreement.
|
(c)
|
The Company shall deliver on an annual basis to the Trustee a schedule (the “
Payment Schedule
”) for each of the Plans as follows:
|
(d)
|
The following provisions shall be applicable in the event of a Change in Control:
|
(e)
|
Unless the Company otherwise makes the payment directly as permitted pursuant to Section 2(c) above, the Trustee shall, with respect to the payments Trustee makes under the Plans to Participants or their Beneficiaries, report and withhold the applicable federal, state and local taxes required to be withheld with respect to those payments and shall pay the withheld amounts to the appropriate taxing authorities, unless the Trustee determines that such amounts have been reported, withheld and paid by the Company.
|
(f)
|
The Trustee agrees that it will not itself institute any action at law or at equity, whether in the nature of an accounting, interpleading action, request for a declaratory judgment or otherwise, requesting a court or administrative or quasi-judicial body to make the determination required to be made by the Trustee under this Section 2 in the place and stead of the Trustee. The Trustee shall have the right to institute an action to collect a contribution due the Trust following a Change in Control.
|
Section 3.
|
Trustee Responsibility Regarding Payments To The Trust Beneficiary When The Company Is Insolvent
|
(a)
|
The Trustee shall cease payment of benefits to Participants and their Beneficiaries if the Company is Insolvent. The Company shall be considered "
Insolvent
" for purposes of this Trust Agreement if: (i) the Company is unable to pay its debts as they become due or (ii) the Company is subject to a pending proceeding as a debtor under the United States Bankruptcy Code.
|
(b)
|
At all times during the continuance of this Trust, the principal and income of the Trust Fund shall be subject to claims of general creditors of the Company under federal and state law as set forth below.
|
(c)
|
Provided that there are sufficient assets, if the Trustee discontinues the payment of benefits from the Trust Fund pursuant to Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Participants or their Beneficiaries under the terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Participants or their Beneficiaries by the Company in lieu of the payments provided for hereunder during any such period of discontinuance.
|
Section 4.
|
Payments When a Short-Fall of The Trust Assets Occurs
|
(a)
|
If there are not sufficient assets in the Trust Fund for the payment of current and expected future benefits pursuant to Section 2 or Section 3(c) hereof and the Company does not otherwise make such payments within a reasonable time after demand from the Trustee, the Trustee shall allocate the assets of the Trust Fund among the Participants or their Beneficiaries in the following order of priority:
|
(1)
|
first to the vested Participants (regardless of whether they are actively employed) and their Beneficiaries; and
|
(2)
|
then any remaining assets to the non-vested Participants (regardless of whether they are actively employed) and their Beneficiaries
|
(b)
|
Within each category, assets shall be allocated pro-rata with respect to the total present value of benefits expected for each Participant or Beneficiary within the category, and payments to each Participant or Beneficiary shall be made to the extent of the assets allocated to each Participant or Beneficiary.
|
(c)
|
Upon receipt of a contribution from the Company necessary to make up for a short-fall in the payments due, the Trustee shall resume full payments to all the Participants and Beneficiaries under the Plans. Following a Change in Control, the Trustee shall have the right and duty to compel a contribution to the Trust from the Company to make-up for any short-fall.
|
(a)
|
Except as provided in Section 2(b), Section 3, Section 5(b), and Section 8(a) hereof, the Company shall have no right or power to direct the Trustee to return to the Company or to divert to others any of the assets of the Trust Fund before all payment of benefits have been made to Participants and their Beneficiaries pursuant to the terms of the Plans.
|
(b)
|
In the event that the Company, prior to a Change in Control, or the Trustee in its sole and absolute discretion, after a Change in Control, determines that the assets of the Trust exceed one-hundred twenty percent (120%) of the anticipated benefit obligations and administrative expenses that are to be paid under the Plans, the Trustee, at the written direction of the Company, prior to a Change in Control, or the Trustee in its sole and absolute discretion, after a Change in Control, shall distribute to the Company such excess portion of Trust assets.
|
(a)
|
Prior to a Change in Control, the Company shall have the right, subject to this Section, to direct the Trustee with respect to investments in accordance with the following parameters:
|
(1)
|
The Company may direct the Trustee to segregate all or a portion of the Trust Fund in one or more separate investment accounts and may appoint one or more investment managers and/or an investment committee established by the Company to direct the investment and reinvestment of each such investment account. In such event, the Company shall notify the Trustee of the appointment of each such investment manager and/or investment committee. No such investment manager shall be related, directly or indirectly, to the Company, but members of the investment committee may be employees of the Company.
|
(2)
|
Until a Change in Control, the Trustee shall make every sale or investment with respect to such investment account or accounts as directed in writing by the investment manager or investment committee. It shall be the duty of the Trustee to act strictly in accordance with each direction. The Trustee shall be under no duty to question any such direction of the investment manager or investment committee, to review any securities or other property held in such investment account or accounts acquired by it pursuant to such directions or to make any recommendations to the investment managers or investment committee with respect to such securities or other property. Accordingly, until a Change in Control, the Trustee shall have no discretion with respect to the investment or reinvestment of the Trust Fund.
|
(3)
|
Notwithstanding the foregoing, the Trustee, upon direction from from the investment manager or investment committee, shall, to the extent necessary to assure sufficient liquidity to meet current benefit payments under the Plans, retain a portion of the Trust Fund in cash. Any cash balances held by the Trustee from time to time, whether to cover currently anticipated benefit payments under the Plans or pending investment in longer-term securities or otherwise, shall be invested by the Trustee in short term cash equivalents including, but not limited to, through the medium of any short term common, collective or commingled trust fund established and maintained by the Trustee subject to the instrument establishing such trust fund, U.S. Treasury Bills, commercial paper (including such forms of commercial paper as may be available through the Trustee’s Trust Department), certificates of deposit (including certificates issued by the Trustee in its separate corporate capacity), and similar type securities, with a maturity not to exceed one year; and, furthermore, sell such short term investments as may be necessary to carry out the instructions of an investment manager or investment committee regarding more permanent type investment and directed distributions.
|
(4)
|
The Trustee shall neither be liable nor responsible for any loss resulting to the Trust Fund by reason of any sale or purchase of an investment directed by an investment manager or investment committee nor by reason of the failure to take any action with respect to any investment which was acquired pursuant to any such direction in the absence of further directions of such investment manager or investment committee.
|
a.
|
Notwithstanding anything in this Trust Agreement to the contrary, the Trustee shall be indemnified and saved harmless by the Company from and against any and all personal liability to which the Trustee may be subjected by carrying out any directions of an investment manager or investment committee issued pursuant hereto or for failure to act in the absence of directions of the investment manager or investment committee, including all expenses reasonably incurred in its defense, in the event the Company fails to provide such defense; provided, however, the Trustee shall not be so indemnified if it participates knowingly in, or knowingly undertakes to conceal, an act or omission of an investment manager or investment committee, having actual knowledge that such act or omission is a breach of a fiduciary duty; provided further, however, that the Trustee shall not be deemed to have knowingly participated in or knowingly undertaken to conceal an act or omission of an investment manager or investment committee with knowledge that such act or omission was a breach of fiduciary duty by merely complying with directions of an investment manager or investment committee or for failure to act in the absence of directions of an investment manager or investment committee. The Trustee may rely upon any order, certificate, notice, direction or other documentary confirmation purporting to have been issued by the investment manager or investment committee which the Trustee believes to be genuine and to have been issued by the investment manager or investment committee. The Trustee shall not be charged with knowledge of the termination of the appointment of any investment manager or investment committee until it receives written notice thereof from the Company.
|
b.
|
The Company, prior to a Change in Control, may direct the Trustee to invest in securities (including stock and the rights to acquire stock) or obligations issued by the Company.
|
c.
|
All rights associated with respect to any investment held by the Trust, including but not limited to, exercising or voting of proxies, in person or by general or limited proxy, shall be in accordance with and as directed in writing by the Company or its authorized representative.
|
(b)
|
From and after the effective date of a Change in Control, the Trustee shall have the power to invest and reinvest the Trust Fund in its sole discretion in accordance with the following parameters:
|
(1)
|
To invest and reinvest in any readily marketable common and preferred stocks (including any stock or security of the Company), bonds, notes, debentures (including convertible stocks and securities but not including any stock or security of the Trustee other than a de minimis amount held in a collective or mutual fund), certificates of deposit or demand or time deposits (including any such deposits with the Trustee), limited partnerships or limited liability companies, private placements and shares of investment companies, and mutual funds. Without limitation, the Trustee may invest assets of the Trust Fund in any investment company (including any investment company or companies for which Wells Fargo Bank, N.A. or an affiliated company acts as the investment advisor (“
Special Investment Companies
”) or, any insurance contract or contracts issued by an insurance company or companies in each case as the Trustee may determine provided that the Trustee may in its sole discretion keep such portion of the Trust Fund in cash or cash balances for such reasonable periods as may from time to time be deemed advisable pending investment or in order to meet contemplated payments of benefits;
|
(2)
|
To invest and reinvest all or any portion of the Trust Fund collectively through the medium of any proprietary mutual fund that may be established and maintained by the Trustee;
|
(3)
|
To commingle for investment purposes all or any portion of the Trust Fund with assets of any other similar trust or trusts established by the Company with the Trustee for the purpose of safeguarding deferred compensation or retirement income benefits of its employees and/or directors;
|
(4)
|
To retain any property at any time received by the Trustee;
|
(5)
|
To sell or exchange any property held by it at public or private sale, for cash or on credit, to grant and exercise options for the purchase or exchange thereof, to exercise all conversion or subscription rights pertaining to any such property and to enter into any covenant or agreement to purchase any property in the future;
|
(6)
|
To participate in any plan of reorganization, consolidation, merger, combination, liquidation or other similar plan relating to property held by it and to consent to or oppose any such plan or any action thereunder or any contract, lease, mortgage, purchase, sale or other action by any person;
|
(7)
|
To deposit any property held by it with any protective, reorganization or similar committee, to delegate discretionary power thereto, and to pay part of the expenses and compensation thereof for any assessments levied with respect to any such property to be deposited;
|
(8)
|
To extend the time of payment of any obligation held by it;
|
(9)
|
To hold uninvested any moneys received by it, without liability for interest thereon, but only in anticipation of payments due for investments, reinvestments, expenses or disbursements;
|
(10)
|
To exercise all voting or other rights with respect to any property held by it and to grant proxies, discretionary or otherwise;
|
(11)
|
For the purposes of the Trust, to borrow money from others, to issue its promissory note or notes therefor, and to secure the repayment thereof by pledging any property held by it;
|
(12)
|
To employ suitable contractors and counsel, who may be counsel to the Company or to the Trustee, and, subject to section 10 d., to pay their reasonable expenses and compensation from the Trust Fund to the extent not paid by the Company.
|
(13)
|
To register investments in its own name or in the name of a nominee; and to combine certificates representing securities with certificates of the same issue held by it in other fiduciary capacities or to deposit or to arrange for the deposit of such securities with any depository, even though, when so deposited, such securities may be held in the name of the nominee of such depository with other securities deposited therewith by other persons, or to deposit or to arrange for the deposit of any securities issued or guaranteed by the United States government, or any agency or instrumentality thereof, including securities evidenced by book entries rather than by certificates, with the United States Department of the Treasury or a Federal Reserve Bank, even though, when so deposited, such securities may not be held separate from securities deposited therein by other persons; provided, however, that no securities held in the Trust Fund shall be deposited with the United States Department of the Treasury or a Federal Reserve Bank or other depository in the same account as any individual property of the Trustee, and provided, further, that the books and records of the Trustee shall at all times show that all such securities are part of the Trust Fund;
|
(14)
|
To settle, compromise or submit to arbitration any claims, debts or damages due or owing to or from the Trust, respectively, to commence or defend suits or legal proceedings to protect any interest of the Trust, and to represent the Trust in all suits or legal proceedings in any court or before any other body or tribunal; provided, however, that the Trustee shall not be required to take any such action unless it shall have been indemnified by the Company to its reasonable satisfaction against liability or reasonable expenses it might incur therefrom;
|
(15)
|
Subject to Section 7, to hold and retain policies of life insurance, annuity contracts, and other property of any kind which policies are contributed to the Trust by the Company or any subsidiary of the Company or are purchased by the Trustee;
|
(16)
|
To hold any other class of assets which may be contributed by the Company and that is deemed reasonable by the Trustee, unless expressly prohibited herein;
|
(17)
|
To loan any securities at any time held by it to brokers or dealers upon such security as may be deemed advisable, and during the term of any such loan to permit the loaned securities to be transferred into the name of and voted by the borrower or others; and
|
(18)
|
Generally, to do all acts, whether or not expressly authorized, that the Trustee may deem necessary or desirable for the protection of the Fund.
|
(c)
|
Following a Change in Control, the Trustee shall have the sole and absolute discretion in the management of the Trust assets and shall have all the powers set forth under Section 6(b). In investing the Trust assets, the Trustee shall consider:
|
(1)
|
the needs of the Plans;
|
(2)
|
the need for matching of the assets of the Trust Fund with the liabilities of the Plans; and
|
(3)
|
the duty of the Trustee to act solely in the best interests of the Participants and their Beneficiaries.
|
(d)
|
The Trustee shall have the right, in its sole discretion, to delegate its investment responsibility to an investment manager who may be an affiliate of the Trustee; provided, however, that prior to a Change in Control any such investment manager arrangement and the compensation payable to the investment manager must be pre-authorized by the Company. In the event the Trustee shall exercise this right, the Trustee shall remain, at all times responsible for the acts of an investment manager. The Trustee shall have the right to purchase an insurance policy or an annuity to fund the benefits of the Plans.
|
(e)
|
The Company shall have the right at any time, and from time to time in its sole discretion, to substitute assets (other than securities issued by the Trustee or the Company) of equal fair market value for any asset held by the Trust. This right is exercisable by the Company in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity; provided, however, that, following a Change in Control, no such substitution shall be permitted unless the Trustee determines that the fair market values of the substituted assets are equal.
|
(a)
|
To the extent that the Trustee is directed by the Company prior to a Change in Control to invest part or all of the Trust Fund in insurance contracts, the type and amount thereof shall be specified by the Company. The Trustee shall be under no duty to make inquiry as to the propriety of the type or amount so specified.
|
(b)
|
Each insurance contract issued shall provide that the Trustee shall be the owner thereof with the power to exercise all rights, privileges, options and elections granted by or permitted under such contract or under the rules of the insurer. The exercise by the Trustee of any incidents of ownership under any contract shall, prior to a Change in Control, be subject to the direction of the Company. After a Change in Control, the Trustee shall have all such rights.
|
(c)
|
The Trustee shall have no power to name a beneficiary of the policy other than the Trust, to assign the policy (as distinct from conversion of the policy to a different form) other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against an insurance policy held in the Trust Fund.
|
(d)
|
No insurer shall be deemed to be a party to the Trust, and an insurer’s obligations shall be measured and determined solely by the terms of contracts and other agreements executed by the insurer.
|
(a)
|
Prior to a Change in Control, all income received by the Trust, net of expenses and taxes, may be returned to the Company or accumulated and reinvested as part of the Trust Fund at the direction of the Company.
|
(b)
|
Following a Change in Control, all income received by the Trust, net of expenses and taxes payable by the Trust, shall be accumulated and reinvested as part of the Trust Fund.
|
(a)
|
The Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and all other transactions required to be made, including such specific records as shall be agreed upon in writing between the Company and the Trustee. Within forty-five (45) days following the close of each calendar year and within forty-five (45) days after the removal or resignation of the Trustee, the Trustee shall deliver to the Company a written account of its administration of the Trust during such year or during the period from the close of the last preceding year to the date of such removal or resignation setting forth all investments, receipts, disbursements and other transactions effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be. The Company may approve such account by an instrument in writing delivered to the Trustee. In the absence of the Company’s filing with the Trustee objections to any such account within one hundred eighty (180) days after its receipt, the Company shall be deemed to have so approved such account. In the absence of such timely objections or upon the written approval by the Company of any such account, the Trustee shall, to the extent permitted by law, be discharged from all liability to the Company for its acts or failures to act described by such account. The foregoing, however, shall not preclude the Trustee from having its accounting settled by a court of competent jurisdiction. The Trustee shall be entitled to hold and to commingle the assets of the Trust in one Trust Fund for investment purposes but at the direction of the Company prior to a Change in Control; the Trustee shall create one or more sub-accounts.
|
(b)
|
The Trustee shall, under the terms specified by the on-line service agreement, provide the Company with access to Trust account activity through its internet site and provide monthly trust statements within 15 days following the close of each month.
|
(a)
|
The Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims, provided, however, that the Trustee shall incur no liability to any person for any action taken pursuant to a direction, request or approval given by the Company which is contemplated by, and in conformity with, the terms of the Plans or this Trust and is given in writing by the Company. In the event of a dispute between the Company and a party, the Trustee may apply to a court of competent jurisdiction to resolve the dispute, subject, however to Section 2(d) hereof.
|
(b)
|
The Company hereby indemnifies the Trustee against losses, liabilities, claims, costs and expenses in connection with the administration of the Trust, unless resulting from the negligence or willful misconduct of Trustee. To the extent the Company fails to make any payment on account of an indemnity provided in this paragraph 10(b), in a reasonably timely manner, the Trustee may obtain payment from the assets of the Trust Fund. If the Trustee undertakes or defends any litigation arising in connection with this Trust or to protect a Participant’s or Beneficiary’s rights under the Plans, the Company agrees to indemnify the Trustee against the Trustee's costs, reasonable expenses and liabilities (including, without limitation, reasonable attorneys' fees and expenses) relating thereto and to be primarily liable for such payments, except to the extent such costs, liabilities and expenses are directly attributable to acts or omissions due to the negligence or willful misconduct of the Trustee. If the Company does not in a reasonably timely manner pay any such costs, expenses and liabilities that the Trustee believes to be subject to indemnification hereunder, the Trustee may obtain such payment from the Trust; provided, however, that prior to a Change in Control the Company may delay payment of any amount in dispute, and the Trustee in that event shall not charge that amount against the Trust Fund, until such dispute is resolved in accordance with the terms of this Trust Agreement. Following a Change in Control, the Company shall have no right to delay payment of any amount due to the Trust.
|
(c)
|
Prior to a Change in Control, the Trustee may consult with legal counsel (who may also be counsel for the Company generally) with respect to any of its duties or obligations hereunder. Following a Change in Control the Trustee shall select independent legal counsel and may consult with counsel or other persons with respect to its duties and with respect to the rights of Participants or their Beneficiaries under the Plans.
|
(d)
|
The Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to assist it in performing any of its duties or obligations hereunder and may rely on any determinations made by such agents and information provided to it by the Company. Prior to a Change in Control, as a condition to the hiring of any such persons, the Trustee must first obtain the Company’s prior written approval of such arrangement and the compensation payable for the services to be rendered thereunder. Following a Change in Control, the Trustee shall have no duty to obtain the Company’s prior written approval of such arrangement, except that the Trustee's fees and administrative expenses payable for the services to be rendered under this agreement, in the aggregate, may not exceed fifty thousand dollars ($50,000) per year without prior Company approval. Notwithstanding the foregoing, if there is a dispute between the Company and Trustee following a Change in Control regarding Trustee’s duties and obligations under this agreement, the Trustee’s fees and expenses incurred per the terms of this agreement in connection with such dispute may reach up to two hundred fifty thousand dollars ($250,000) per year without prior Company approval.
|
(e)
|
The Trustee shall have, without exclusion, all powers conferred on the Trustee by applicable law, except to the extent expressly provided otherwise herein.
|
(f)
|
Notwithstanding any powers granted to the Trustee pursuant to this Trust Agreement or applicable law, the Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations promulgated pursuant to the Internal Revenue Code.
|
(a)
|
Prior to a Change in Control, the Trustee may resign at any time by written notice to the Company, which shall be effective sixty (60) days after the Company’s receipt of such notice, unless the Company and the Trustee agree in writing on a shorter notice period. Following a Change in Control, the Trustee may resign only after the appointment of a successor Trustee.
|
(b)
|
The Trustee may be removed by the Company on sixty days (60) days notice, unless the Company and the Trustee agree in writing on a shorter notice period. Subsequent to a Change in Control, the Trustee may only be removed by the Company with the consent of a Majority of the Participants.
|
(c)
|
If the Trustee resigns within two years after a Change in Control (as defined herein), the Company, or if the Company fails to act within a reasonable period of time following such resignation, the Trustee, shall apply to a court of competent jurisdiction for the appointment of a successor Trustee which satisfies the requirements of Section 13 or for instructions.
|
(d)
|
Upon resignation or removal of the Trustee and appointment of a successor Trustee, all assets of the Trust Fund shall subsequently be transferred to the successor Trustee. The transfer shall be completed within sixty (60) days after receipt of notice of resignation, removal or transfer, unless the Company extends the time limit. Upon the transfer of the assets of the Trust Fund, the successor Trustee shall succeed to all the rights, powers and duties of the Trustee under this Trust Agreement. The resigning or removed Trustee shall render to the Company an accounting in the form and manner and at the time prescribed in Section 9(a). The approval of such accounting and the discharge of the Trustee shall be effected in accordance with the same terms and conditions as in effect under Section 9(a).
|
(e)
|
If the Trustee resigns or is removed, a successor shall be appointed by the Company, in accordance with Section 13 hereof, by the effective date of resignation or removal under paragraph(s) (a) or (b) of this section. If no such appointment has been made, the Trustee may apply to a court of competent jurisdiction for appointment of a successor or for instructions. All reasonable expenses of the Trustee in connection with the proceeding shall be allowed as administrative expenses of the Trust.
|
(a)
|
If the Trustee resigns or is removed in accordance with Section 12 hereof, the Company may appoint, subject to Section 12, any third party national banking association or other third party with corporate trustee powers under state law to replace the Trustee upon resignation or removal. The successor Trustee shall have all of the rights and powers of the former Trustee, including ownership rights in the Trust. The former Trustee shall execute any instrument necessary or reasonably requested by the Company or the successor Trustee to evidence the transfer.
|
(b)
|
The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of existing assets of the Trust Fund, subject to Section 9 and 10 hereof. The successor Trustee shall not be responsible for and the Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor Trustee.
|
(a)
|
This Trust Agreement may be amended by a written instrument executed by the Trustee and the Company, except as otherwise provided in this Section 14. Notwithstanding the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable.
|
(b)
|
Following a Change in Control, the Trust shall not terminate until the date on which Participants and their Beneficiaries have received all of the benefits due to them under the terms and conditions of the Plans.
|
(c)
|
Upon written approval of all Participants or Beneficiaries entitled to payment of benefits pursuant to the terms of the Plans, the Company may terminate this Trust prior to the time all benefit payments under the Plans have been made. All assets in the Trust Fund at termination shall be returned to the Company.
|
(d)
|
This Trust Agreement may not be amended by the Company following a Change in Control without the written consent of a Majority of the Participants.
|
(a)
|
For purposes of this Trust, the following terms shall be defined as set forth below:
|
(3)
|
“
Exchange Act
” shall mean the Securities Exchange Act of 1934, as amended.
|
(4)
|
“
Majority of Participants
” shall mean more than fifty percent (50%) of participants with vested benefits under the Plans, determined on a present value basis in accordance with the actuarial assumptions, mortality rates and discount rates in effect under each Plan at the time of such determination.
|
(b)
|
The Chief Executive Officer of the Company shall have the specific authority to determine whether a Change in Control has transpired and shall be required to give the Trustee notice of the Change in Control. The Trustee shall be entitled to rely upon such notice, but if the Trustee receives notice of a Change in Control from another source, the Trustee shall make its own independent determination.
|
(a)
|
This Trust Agreement and certain information relating to the Trust is "Confidential Information" pursuant to applicable federal and state law, and as such it shall be maintained in confidence and not disclosed, used or duplicated, except as described in this section. If it is necessary for the Trustee to disclose Confidential Information to a third party in order to perform the Trustee's duties hereunder and the Company has authorized the Trustee to do so, the Trustee shall disclose only such Confidential Information as is necessary for such third party to perform its obligations to the Trustee and shall, before such disclosure is made, ensure that said third party understands and agrees to the confidentiality obligations set forth herein. The Trustee and the Company shall maintain an appropriate information security program and adequate administrative and physical safeguards to prevent the unauthorized disclosure, misuse, alteration or destruction of Confidential Information, and shall inform the other party as soon as possible of any security breach or other incident involving possible unauthorized disclosure of or access to Confidential Information. Confidential Information shall be returned to the disclosing party upon request. Confidential Information does not include information that is generally known or available to the public or that is not treated as confidential by the disclosing party or that is required to be disclosed by the disclosing party pursuant to applicable laws or regulations, provided, however, that this exception shall not apply to any publicly available information to the extent that the disclosure or sharing of the information by one or both parties is subject to any limitation, restriction, consent, or notification requirement under any applicable federal or state information privacy law or regulation. If the receiving party is required by law, according to the advice of competent counsel, to disclose Confidential Information, the receiving party may do so without breaching this section, but shall first, if feasible and legally permissible, provide the disclosing party with prompt notice of such pending disclosure so that the disclosing party may seek a protective order or other appropriate remedy or waive compliance with the provisions of this section.
|
(a)
|
Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition, without invalidating the remaining provisions hereof.
|
(b)
|
The Company hereby represents and warrants that each of the Plans has been established, maintained and administered in accordance with all applicable laws, including without limitation, ERISA. The Company hereby indemnifies and agrees to hold the Trustee harmless from all liabilities, including reasonable attorney’s fees, relating to or arising out of the establishment, maintenance and administration of the Plans. To the extent the Company does not pay any of such liabilities in a reasonably timely manner, the Trustee may obtain payment from the assets of the Trust Fund.
|
(c)
|
Benefits payable to Participants and their Beneficiaries under this Trust Agreement may not be anticipated, assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy, execution or other legal or equitable process.
|
(d)
|
This Trust Agreement shall be governed by and construed in accordance with the laws of California.
|
SAN JOSE WATER COMPANY
|
WELLS FARGO BANK, NATIONAL
ASSOCIATION as TRUSTEE
|
By:
/s/ James P. Lynch
Its:
Chief Financial Officer
|
By:
/s/ Alan C. Frazier
Its:
Senior Vice President
|
|
|
ATTEST:
|
ATTEST:
|
|
|
By:
/s/ Suzy Papazian
Its:
Corporate Secretary/Attorney
|
By:
/s/ Tonya M. Inscore
Its:
Sr. Vice President
|
|
|
|
|
1.
|
Section 4.9. (a) is hereby deleted in its entirety, and the following substituted therefor:
|
2.
|
Section 4.9. (b) is hereby deleted in its entirety, and the following substituted therefor:
|
SJW CORP.
|
WELLS FARGO BANK,
|
|
NATIONAL ASSOCIATION
|
|
|
By: /
s/ W. Richard Roth
|
By:
/s/ Anthony White
|
W. Richard Roth, President
|
Anthony White, Senior Vice President
|
|
|
By:
/s/ James P. Lynch
|
|
James P. Lynch, Chief Financial Officer
|
|
|
|
|
|
SJW LAND COMPANY
|
|
|
|
By: /
s/ W. Richard Roth
|
|
W. Richard Roth, President
|
|
|
|
By:
/s/ James P. Lynch
|
|
James P. Lynch, Chief Financial Officer
|
|
1.
|
Section 4.9. (a) is hereby deleted in its entirety, and the following substituted therefor:
|
2.
|
Section 4.9. (b) is hereby deleted in its entirety, and the following substituted therefor:
|
SAN JOSE WATER COMPANY
|
WELLS FARGO BANK,
|
|
NATIONAL ASSOCIATION
|
|
|
By: /
s/ W. Richard Roth
|
By:
/s/ Anthony White
|
W. Richard Roth, President
|
Anthony White, Senior Vice President
|
|
|
By:
/s/ James P. Lynch
|
|
James P. Lynch, Chief Financial Officer
|
|
[ ] A.
|
I hereby elect to participate in the Special Deferral Election Plan (the “Plan”) for the 20___ plan year.
|
[ ] B.
|
I hereby elect the following commencement date for the distribution of my deferral election subaccount for the 20___ plan year:
|
[ ] C.
|
I hereby elect the following method of distribution for my deferral election subaccount for the 20__ plan year:
|
[ ] D.
|
I hereby elect not to defer any portion of my base salary for the 20__ Plan Year under the Plan.
|
[ ] E.
|
I hereby elect not to defer any portion of my bonus or other incentive compensation for the 20___ Plan Year under the Plan.
|
[ ] F.
|
I hereby elect to have the deferral elections specified in Sections A through C above continue for each subsequent plan year, until I change my deferral elections in accordance with the provisions of the Plan. Any such change shall become effective for a particular plan year only if the new deferral election is filed not later than the December 31 immediately prior to the start of that plan year.
|
Printed Name:
|
|
|
|
|
|
|
|
Signature:
|
|
|
|
|
|
|
|
Date:
|
|
, 20
|
|
|
|
|
|
|
Name
|
|
Relationship
|
|
Percent of Total
|
|
|
|
|
|
|
(1)
|
|
|
|
|
|
(2)
|
|
|
|
|
|
(3)
|
|
|
|
|
|
(4)
|
|
|
|
|
|
Signature:
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
Date:
|
|
, 20
|
|
|
|
|
|
Performance Criteria
|
Goals and Minimum and Maximum Thresholds
|
Allocation of Target Amount ($) (1)
|
San Jose Water
Company Return on
Equity for the 2013
Fiscal Year
|
Target Goal:
9.45%
Minimum Threshold:
7.00%
Maximum Goal:
At least 11.00%
|
$54,167
|
Compliance (Environmental) (2)
|
Maximum Goal:
No material water quality or environmental violations (Goal and Minimum Threshold are not applicable).
|
$54,167
|
San Jose Water
Company
Operational Goals
|
Target Goal:
Achieve 80% of identified key water industry objectives measured primarily in terms of service, reliability and efficiency.
Minimum Threshold:
Achieve 70% of identified water industry objectives.
Maximum Goal:
Achieve 90% of identified key water industry objectives.
|
$54,166
|
1)
|
The target 2013 annual cash bonus amount is equal to $162,500, which is 25 percent of Mr. Roth’s 2013 base salary per his employment agreement. The actual bonus attributable to each performance goal may range from 0 to 150 percent of the portion of the target bonus amount allocated to that goal. Based on the Committee determination of the level of achievement of each performance goal, the amount payable with respect to that goal will be as follows:
|
•
|
If the goal is attained at target level, 100 percent of the allocated amount will be paid.
|
•
|
If the goal is only attained at the minimum level, then 50 percent of the allocated amount will be paid.
|
•
|
If the goal is attained at or above maximum level, then 150 percent of the allocated amount will be paid.
|
•
|
Should the actual level of attainment of any such performance goal be between two of the designated levels, then the bonus potential with respect to that goal will be interpolated on a straight-line basis.
|
2)
|
“No material water quality or environmental violations” means the absence of citations with material fines issued by state or federal environmental regulators in the performance year in connection with violations which occurred in the performance year. A material fine will be deemed to occur if the amount of the fine exceeds $25,000 in any one instance or $100,000 in the aggregate for the year.
|
Date:
|
February 28, 2013
|
/s/ W. Richard Roth
|
|
|
W. RICHARD ROTH
|
|
|
President, Chief Executive Officer and
|
|
|
Chairman of the Board
|
|
|
(Principal executive officer)
|
Date:
|
February 28, 2013
|
/s/ James P. Lynch
|
|
|
JAMES P. LYNCH
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal financial officer)
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ W. Richard Roth
|
W. RICHARD ROTH
|
President, Chief Executive Officer and
|
Chairman of the Board
|
(Principal executive officer)
|
February 28, 2013
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James P. Lynch
|
JAMES P. LYNCH
|
Chief Financial Officer and Treasurer
|
(Principal financial officer)
|
February 28, 2013
|