SECURITIES AND EXCHANGE COMMISSION Washington, D. C FORM 10-K

Transcription

1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ~XCHANGE ACT OF For Fiscal Year Ended December 31, 1983 Commission file number SOUTHERN CALIFORNIA WATER COMPANY (Exact name of registrant as specified in its charter) California (State or other jurisdiction of incorporation or organization) (I.R.s. Employer identification No.) 3625 West Sixth Street, Los Angeles, California (Address of principal executive offices) (Zip Code) Regis_trant 's telephone number, including area code (213) ~--~ ~ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered Securities registered pursuant to Section 12(g) of the Act:., Common Stock, $5 Par Value (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13-or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No State the aggregate market value of the voting stock held by non-affiliates of the registrant: Common Stock average bid 16-1/8 - average asking price 16-1/2 on February 29, Voting Preferred for which there is no established market was valued on February 29, 1984, based on a yield basis of 12%. Aggregate market value $33,237,203 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: February 29, 1984, 2,041,388 shares Documents incorporated by reference: (1) Annual report to shareholders for year ended December 31, 1983, as to Part I, Item 1 (part) and Part II, Items 5, 6, 7 & 8. (2) Proxy statement dated March 26, 1984 as to Item 10 (part), Item 11 and Item 12 and Item 13.

2 Form 10-K -1- PART I Item 1. Business. Southern California Water Company (the "Company'') is a public utility com~any engaged principally in the production and distribution of water. The Company distributes electricity in one community where it also supplies water, The Company was incorporated in 1929 under the laws of California as American States Water Service Company of California, as the result of the consolidation of 20 water utility companies, From time to time additional small water companies have been acquired and properties in limited service areas have been sold. The Company's present name was adopted in At.December 31, 1983, the Company provided service in 19 separate operating districts, of which 18 are water districts and one is an electric district, located in eleven counties in the State of California. Total population of the service areas is approximately 950,000. About 67% of the Company's water customers are located in the greater metropolitan areas of Los Angeles and Orange Counties, Electric service is supplied in the Big Bear Lake area in San Bernardino County; all energy sold is purchased from Southern California Edison Company on a resale rate schedule, At December 31, 1983, the Company served 223,019 water customers and 16,667 electric customers, or a total of 239,686 customers compared with 236,748 at December 31, For the year ended December 31, 1983, approximately 88% of total operating revenues were derived from water sales and approximately 12% from the sale of electricity, which ratios are generally consistent with recent prior years. Operating income before taxes on income of the electric district is 3% of total Company operating income before taxe~. Reference is made to Note 10 of the Notes to Financial Statements included iq. the Annual Report to the Shareholders for additional information on business segments and to the inside back.cover of said annual report for the geograph~ ical distribution of customers. During 1983, the Company prod~ced, from all sources, a total of 162,640 acre feet of water compared with 162,969 acre feet for the previous year. Of the total water supplied in 1983, approximately 54% was obtained from the Company's own wells located in various service areas. 44% wa~ purchased from others, principally from member units of the Metropolitan Water District of Southern California, and 2% was furnished by the Bureau of Reclamation under contract, at no cost, for the Company's Arden-Cordova area and by prescriptive right to water extracted from Clear Lake for the Company's Clearlake District, It is expected that an increasing proportion of the Company's water requirements in the future will be purchased from the Metropolitan Water District, The Company is continuing to encourage conservation and reduction in waste of water with the result that the average customer water use during 1983 decreased approximately 1-1/2% from the prior year.

3 Form 10-K -2- Item 1 - Continued The Company is subject to the jurisdiction of the California Public Utilities Commission C'CPUC") as to its water and electric business and properties. The CPUC has broad powers of supervision and regulation over public utilities with respect to service and facilities, rates, classification of accounts, valuation of properties, purchase, disposition and mortgaging of properties necessary or useful in rendering public utility service, and various other matters, including the issuance of securities and the granting of certificates-of convenience and necessity as to the extension of services and facilities. Water rates of the Company vary from district to district due to differences in operating conditions and costs. Each district is considered a separate entity for rate-making purposes, The Company continuously monitors its operations in all of its districts so that applications for rate increases may be filed, when warranted, on a district-by-district basis ~n accordance with CPUC procedure. During 1982 and 1983, the Company's rates for all districts were increased, among other reasons, to reflect in rates the effect of certain provisions of the Economic Recovery Tax Act of Specifically, rates were increased to reflect the normalization of the timing difference arising from the adoption of the Accelerated Cost Recovery System for tax depreciation and for investment tax credits. Prior to this time, these items had been accounted for and provided rate-making treatment under the flow-through method, The Company's executive offices are located in Los Angeles, California, Service facilities and collection offices are located in each of the districts. The Company had 372 employees as of December 31, Item 2, Properties Water Properties As of December 31, 1983, the Company's principal physical properties consisted of a water transmission and distribution system which included over 2,500 miles of pipeline together with services, meters and fire hydrants and approximately 352 parcels of land (generally less than 1 acre each) on which are located wells, pumping plants, reservoirs and other utility facilities, The Company's operating properties have been maintained and improved in the ordinary course of business and the Company believes they are in satisfactory operating condition. As of December 31, 1983, the Company owned and operated 321 water wells equipped with pumps with an aggregate capacity of 236 million gallons per day ("MGD"). Other production facilities include filter plants with an aggregate capacity of 19 MGD and 42 connections to the Metropolitan Water District facilities. There are additional connections to adjacent utilities for emergency supply. The Company's storage reservoirs and tanks have an aggregate capacity of 87.5 million gallons, There are no dams in the Company's systems.

4 Forin 10-K -3- Item 2 - Continued Electric Properties. The Company's electric properties are all located in the Big Bear area of San Bernardino County. As of December 31, 1983, the Company operated 24.6 miles of overhead 34.5 KV transmission lines,.9 miles of underground 34.5 KV transmission lines, miles of 4.16 KV or 2.4 KV distribution lines, 30.9 miles of underground cable and 14 substations, There are no generating plants. in the. Company's system as all power is purchased from Southern California Edison Company. Other Information. The Company's executive offices are located in a two-story cmnmercial building, of which the Company occupies approximately 80% of the space with the balance leased to others or available for leasing. The Company owns its operating properties, subject to the lien of an indenture se-curing the.company's outstanding first mortgage bonds. As of December 31, 1983, the aggregate principal amount of first mortgage bonds outstanding was $35,340,000, The Company's general office building is subject to a deed of trust securing payment of the purchase price, the balance of which was $374,000 as of December 31, In 1983 the Company issued a $6,000,000, 11-3/4% Note due 1993, in a private.placement, The proceeds were used to reduce outstanding short-term bank loans. On February 15, 1984, 30,000 shares of the Company's $100 Preferred Shares, % Series, were sold at par to a single institution. During 1983, cash proceeds from the sale of Common Shares to the Dividend Reinvestment Plan and to the Tax Reduction Act Employee Stock O~nership Plan totaled $376,000 and required the issuance of 24,451 additional Common Shares. Franchises, Competition, Acquisitions and Condemnation of Properties. The Company believes it holds all required franchises from the incorporated communities or the counties.in which the Company serves, except in one instance in which an application is pending. The Company holds certificates of pub1ic convenience and necessity granted by the CPUC in each of the districts the Company serves~ The business of the Company is substantially free from direct competition with other public utilities, municipalities and other public agencies. The Company's certificates, franchises and similar rights are subject to alteration, suspension or repeal by the respective governmental authorities having jurisdiction.

5 Form 10-K -4- Item 2 - Continued The. laws of the State of California provide for the acquisition of public.utility property by public agencies through their power of eminent domain, also known as condemnationo In the event of a taking of property by public agencies.through such action, the Company would be entitled to just compensation. The cities of Vernon and San Bernardino plus the East Valley Water District indicated. that they wish to acquire the Company's facilities within their respective boundaries, and negotiations about a possible acquisition are in progress. The total number of customers within these boundaries is approximately 4,050o Irt 1983, the voters in the City of Big Bear Lake voted not to incur indebtedness to acquire the Company's facilities within the City. The Company's management believes it likely that certain of its properties will be acquired by municipalities during the next five years although no prediction of the number of customers which might be lost through such action is possible. During each of the past ten years more customers have been added through growth than were lost by condemnation. On February 20, 1984, the Company acquired the assets of Lake Marie Water Company, Santa Maria, California. The acquisition added another 196 customers to the Santa Maria District's service area together with its own source of supply and storage. Item 3. Legal Proceedings. There are no material pending legal proceedings, other than ordinary litigation incidental to the busines~ to which the Company is a party or of which any of. its properties is the subject (other than possible condemnation proceedings discussed above). Item 4, Submission of Matters to a Vote of Security Holders. Inapplicable

6 Form 10-K PART II Item 5. Market.for Registrant's Conunon Equity and Related St-ockholder Matters, (a) Market Price for Common Stock - Reference is made to Page 9 of the Annual Report to the Shareholders. (b) Approximate Number of Holders of Common Stock - As of December 31, 19 83,. there were 4, 568 holders of record_of Common Shares and 5 holders of 5-3/4% Convertible Subordinated Debentures, (c) Frequency and Amount of Any Dividends Declared - Reference is made to Pages 9 and 12 of the Annual Report to the Shareholders, (d) Dividend Restriction - Refere nce is made to Note 4 of Notes to Financial Statements of the:cartnual. Repo-rt to th.e ~Sha-r eholders. Item 6, Selected Financial Data, Reference is made to Page 1 of the Annual Report to the Shareholders. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation, Reference is made to Page 13 of the Annual Report to the Shareholders.

7 Form.;1.0-K PART II (Continued) Item 8. Financial Statements and"supplementary Data 1 Financi&l statements incorporated by reference to the Annual Report to the Shareholders: Balance Sheets - December 31, 1983 and 1982 Statements of Capitalization... December 31, 1983 and 1982 Statements of Income for the years ended December 31, 1983, 1982 and 1981 Statements of Additional Paid-In Capital for the years ended December 31, 1983, 1982 and 1981 Statements of Earnings Reinvested in the Business for the years ended December 31, 1983, 1982 and 1981 Statements of Sources of Funds Used for Construction Expenditures-for the years ended December 31, 1983, 1982 and 1981 Notes to Financial Statements Report of Independent Public Accountants Unaudited supplemental statement incorporated by reference to the Annual Report to the Shareholders: Financial Reporting and Changing Prices (unaudited) Item 9. Pisagreements on Accounting and Financial Disclosure... ' - -,.._ t - Inapplicable.

8 Form 10-K PART III Item 10. Directors and Executive Officers of the Registrant. The following table sets forth the names and ages of all executive officers, indicating all positions and offices presently held by each. Name Age Position and Office D, R, w. w. w. R. R, c. c. E. B, M, w. v. L, F. w. L. Brown 57 Director Clark 59 Director Kizer 59 Director Franklin 68 Chairman of the Board and Director Caveney 57 President, Chief Executive Officer and Director Anthony 58 Senior Vice President Gruszka 58 Vice President Plemons 63 Vice President and Secretary and Treasurer Stuart 69 Vice President, Assistant Secretary-Treasurer There is no "family relationship" between any of the exec1,1tive officers. Other information responding to Item 10 was included in a proxy statement filed by the Company with the Commission on March 20, 1984, pursuant to Regulation 14A and is incorporated by reference he-rein pursuant to General Instruction G(3), Item 11. Executive Compensation. Information responding to Item 11 was included in a proxy statement filed by the Company with the Commission on March 20, 1984, pursuant to Regulation 14A and is incorporated by reference herein pursuant to General Instruction G(3). Item 12.- Security Ownership of Certain Beneficial Owners and Management, Information responding to Item 12 was included in a proxy statement filed by the Company with the Commission on March 20, 1984, pursuant to Regulation 14A and is incorporated by reference herein pursuant to General Instruction G(3), Item 13, Certain Relationships and Related Transactions. Information responding to Item 13 was included in a proxy statement filed by the Company with the Commission on March 20, 1984, pursuant to Regulation 14A and is incorporated by reference herein pursuant to General Instruction G(3).

9 Form 10-K PART IV Item 14, Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) (b) (c) Exhibits - None Schedules V, VI, VIII and IX, not included in the Annual Report to the Shareholders, and related report of independent public accountants are included after Item 14 in Part IV. Schedules Omitted: Information required for Schedule X has been included in the financial statements or the notes to financial statements of the Annual Report to the Shareholders. Expenses for advertising and royalties represented less than 1% of total revenues, Schedules I, II, III, IV, VII, XI, XII and XIII are omitted as they are not applicable. (d) (e) Reference is made to the Financial Statements incorporated herein in Item 8. No events have been reported on Form 8-K during the past quarter of the period covered by this report.

10 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON THE SUPPLEMENTAL SCHEDULES To the Shareholders and the Board of Directors of.southern Californi a Water Company: In connection with our examinations of the financial statements included.in the 1983 Annual Report to the Shareholders of Southern California Water Company and incorporated by reference in this Form 10-K, we have also examined the supplemental schedules listed in Item 14 (b) herein. Our examinations were made for the purpose of forming an.opinion on the basic financial statements taken as a whole. The supplemental schedules are presented for purposes of complying with the Securities and Exchange Commission's rules and regulations under the Securities Exchange Act of 1934 and are not~therwise a required part of the basic f±nanc-ial statements, The supplemental schedules have been subjected to the auditing procedures applied in the examinations of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole, ARTHUR ANDERSEN & CO. Los Angeles, California, February 17, 1984,

11 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As ;independent.public accountants, we hereby consent to the incorporation by reference of.~ur.. reports appear~ng in or in corpora ted by reference. in this annual. report on Form 10-K tor the year ended. Decemher 31, 1983of Southern California Water Company in the. Reg.ist.ration. Statement on Form S-16 which became effective on January 18, 1982 (File No, ) Los Angeles, California, March 26, 1984, ARTHUR ANDERSEN & CO,

12 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE V---TANGIBLE AND INTANGIBLE PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 1983 Description Balance at Beginning of Year Additions at Cost Deductions for Retirements Sales and Transfers Balance at Close of Year Utility plant Water department- Land and land rights Buildings, structures I! II ' ' and grounds.,...,..,,.,,.. Source of supply, pumping and purification Transmission and distribution,, General, work in progress and undistributed assets..... Plant purchased - not classified,.,,.,, $ 2,620 3,132 16, ,151 3, $ ,952 9, $ (10) (197) (718) (96) (1) $ (2) 2 $ 2,655 3,597 18, ,166 3, Total water department... $158,254 $12,658 $(1,022) $ $169,890 Electric department,..,.,..,,,,, 8,843 1,065 (6) 9,902 Intangible plant..,.,.,,.,,,,,,,, Construction Work in Progress,,,. 6,974 (739) 6,235 Total utility plant e I I ' I I I $174,513 $12,984 $(1,028) $ $186,469 Investment in other physical property.,..,,,.,,,,,, $ 495 $ =$ =:::::;=(=3) =$ =T== $ 492

13 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE V---TANGIBLE AND INTANGIBLE PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED DECEMBER 31, 1982 Description Balance at Beginning of Year Additions at Cost Deductions for Retirements Sales and Transfers Balance at Close of Year Utility plant Water department- Land and land rights Buildings, structures t ' I f f ' p f'! p and grounds,..., Source of supply, pumping and purification Transmission and distribution., General, work in progress and undistributed assets.,... Plant purchased - not classified,...,.. $ 2,301 2,973 14, ,344 2, $ ,301 7, $ (31) (729) (252) (125) (6) $ (4) (24) (87) (694) $ 2,620 3,132 16, ' 151 3, Total water department,.., $148,746 $11,460 $(1,143) $ (809) $158,254 Electric department ,227 1,639 (23) 8, Intangible plant..,.,,.,, 443 (1) 442 Construction Work in Progress,... 7,311 (337) 6,974 Total utility plant $163,727 $12,762 $(1,166) $ (810) $174,513 Investment in 'other physical property,...,,.. ~...,...,,.., $ 495 $ 1 $ $ (1) $ 495

14 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE V---TANGIBLE AND INTANGIBLE. PROPERTY, PLANT AND EQUIPMENT FOR THE YEAR ENDED- DECEMBER 31, 1981 (in thousands) Description Balance at Beginning Additions of Year at Cost Deductions for Retirements Sales and Transfers Balance at Close of Year Utility plant Water department- Land and land rights...,,,,,,. Buildings, structures and grounds ooo o o Source of supply, pumping and purification,o too o,,o Transmission and distribution,, General, work in progress and undistributed.assets,., 0 Plant purchased-- not classified. o o o o, o, o o, $ 2,296 2,921 13, ,815 2, $ 56 1,058 7, $ - (4) (52) (179) (64) $ 5 (81) $ 2,301 2,973 14, ,344 2, Total water department o $139,992 '$ 9,129 $ (299) $ (76) $148,746 Electric department o, ooooe oo o 7, (1) (1) 7,227 Intangible plant,oo,oo,o o Construction Work in Progress o.,o 5,406 1,905 7,311 Total utility plant... ' '. ' '$152,873 $11,231 $ (300) $ (77) $163,727 Investment _in_ other physical property o o, o o o o o,, o o o $ 502 $ $ - $ (7) $ 495

15 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE VI--ACCUMULATED DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 1983 (in thousands) Description Utility Plant Water Electric Total Other Physical Property aalance at beginning of year Add-* Ch~rged to expense Charged to clearing and other accounts... Ch~rged to contributions in aid of construction.....,...., $39,097 2, $3,172 $42, , $ 15 42,408 3,454 45~ Lesq - Retir~ments, sales and cost of removal, less salvage Balance at close of year $4ls497 $3s446 $44,943 $ 15 * A rema1n1ng life method of calculating depreciation is used by the Company with rates varying from a minimum of 1.3% to a maximum of 17,8% per annum. The.annual calculation is based on depreciable plant at the beginning of each year.

16 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE VI-RESERVES FOR DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 1982 (in thousandsf- Utility Plant Description Water Electric Balance at beginning of year I tt t t t t I t t 4J t t $37,414 $2,965 Add-* Charged to expense t t Charged to clearing and 2, other accounts, &, Charged to contributions in aid of construction..,...,..,..,.,..,,.,,.., ,480 3,196 Less - Retirements, sales and cost of removal, less salvage...,..,...,.. 1, Balance at close of year.,... $39~097 $3,172 Total $40,379 2, ,676 1,407 $42,269 Other Physical Property $ $ 15 *A rema1n1ng life method of calculating depreciation is used by the Company with rates.varying-:from-minimum -of 1,3% tb a maximum of 16-.6% per annum, The annual calculation is based on depreciable plant at the beginning of each year.

17 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE VI-RESERVES FOR DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 1981 (in thousands) Description - #.. I. J ":z Utility Plant ~ Water Electric - :S :S X J ; ;:.. Total Other Physical Property Balance at beginning of year~..,.,..., Add-* Charged to expense... ~,...,. Charged to clearing and other accounts.,. 1 1 Char;ged to contributions in aid of construction.....,,..., $34,786 2, $2,742 $37, , $ 15 37,665 2,966 40, Less - Retirements, sales and cost of removal, less salvage,..,.,,... ~ Balance at close of year....,,.,,., $37,414 $2,965 $40,379 $ 15 * A rema1n1ng life method of calculating depreciation is used by the Company with rates.varying from a minimum of 1.3% to a maximum of 16,6% per annum, The annual calculation is based on depreciable plant at the beginning of each year.

18 c SOUTHERN CALIFORNIA WATER-COMPANY Form 10-K SCHEDULE VIII... RESERVE-FOR,UNCOLLECTIBLE.AeCOUNTS FOR THK YEARS ENDED DECEMBER 31, , ''AND 1981 (in: thousands) - Description Balance at beginning of year,.,,.,,,,, $176 Add (deduct) Provisions charged to expense,,,,,,, 299 Accounts written off, net of recoveries.,,..,,,,..,..,,,,,., (254) Balance at close of year,,,,,,... $221 = $ $ (158) $174 ~

19 SOUTHERN CALIFORNIA WATER COMPANY SCHEDULE IX - SHORT~TERM BORROWINGS Maximum Average; Weighted Weighted Amount Amount Average Balance Average Outstanding Outstanding Interest at end Interest During During Rate During of Period Rate the Period the Period the Period (000) (000)- (000) (a) (b) December 31, 1983: Notes payable to banks... '... ' $ 5,000 10,99% $10,300 $6, % December 31, 1982: Nbtes payable to banks! 5,100 10,85% 11,600 '6 '649 15,25% December 31, 1981: Notes payable to banks t I t t t ' '.. 10,000 15,75% 10,000 7,817 18,8% (a) (b) Average arnount:.. outstanding during the year is computed by dividing the total of daily out~tanding principal balances by 365 for 1983, 1982 and 1981, Weightedaverage interest rate during the year is computed by dividing the total interest expense by the average amount outstanding.

20 Page 10-K SIGNATURE Pursuant to the requirements of. Section 13 or 15(d) of the Securities Exchange.Act of 1934~ Registrant_has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: March 26, 1984 SOUTHERN CALIFORNIA WATER COMPANY Directors Executive Officers DONALD E. BROWN Donald E. Brown W, V, CAVENEY Principal Executive Officer W, V, Caveney, President W. V. CAVENEY W. V, Caveney R. BRADBURY CLARK R, Bradbury Clark W. W, FRANKLIN W, W, Franklin C, W. PLEMONS Principal Financial Officer c. W. Plemons, Vice President HERMAN W, HOLT Controller or Principal Accounting Officer Herman W. Holt WILLIAM M. KIZER William M i Kizer