-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TW7aeRQWS6Zd5ezzCLuTEG6visLn1scGIdhJS2rpFO5fifg2dvcXu9zuRX8X0VLz Sa+CiSHPt+WTdyS1ZwlG9Q== 0000016422-96-000011.txt : 19961113 0000016422-96-000011.hdr.sgml : 19961113 ACCESSION NUMBER: 0000016422-96-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA WATER SERVICE CO CENTRAL INDEX KEY: 0000016422 STANDARD INDUSTRIAL CLASSIFICATION: WATER SUPPLY [4941] IRS NUMBER: 940362795 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11309 FILM NUMBER: 96658863 BUSINESS ADDRESS: STREET 1: 1720 N FIRST ST CITY: SAN JOSE STATE: CA ZIP: 95112 BUSINESS PHONE: 4084518200 MAIL ADDRESS: STREET 1: 1720 NORTH FIRST STREET CITY: SAN JOSE STATE: CA ZIP: 95112 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ____ |_X_| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR ____ |___| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-464 California Water Service Company (Exact name of registrant as specified in its charter) California 94-0362795 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 1720 North First Street, San Jose, CA 95112 (Address of principal executive offices) (Zip Code) 1-408-451-8200 (Registrant's telephone number, including area code) Not Applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common shares outstanding as of November 1, 1996 - 6,299,789. This Form 10-Q contains a total of 21 pages. PART I - FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CALIFORNIA WATER SERVICE COMPANY BALANCE SHEET (In Thousands) Sept 30, 1996 Dec. 31, 1995 ASSETS Utility plant $611,056 $584,392 Less depreciation (172,341) (162,217) Net utility plant 438,715 422,175 Current assets: Cash and cash equivalents 6,016 6,273 Accounts receivable 16,699 13,663 Unbilled revenue 8,403 6,306 Materials and supplies 2,353 2,518 Taxes and other prepaid expenses 6,211 3,949 Total current assets 39,682 32,709 Regulatory assets 25,497 25,316 Other deferred assets 4,519 4,683 $508,413 $484,883 CAPITALIZATION AND LIABILITIES Capitalization Common shareholders' equity: Common stock $44,583 $43,507 Retained earnings 109,217 103,442 Total common shareholders' equity 153,800 146,949 Preferred stock 3,475 3,475 Long term debt 145,540 145,540 Total capitalization 302,815 295,964 Current liabilities: Accounts payable 18,843 14,807 Accrued expenses and other liabilities 20,180 11,023 Total current liabilities 39,023 25,830 Investment tax credit 3,179 3,352 Deferred income taxes 14,812 14,056 Advances for construction 95,325 94,100 Contributions in aid of construction 41,792 40,114 Regulatory liability 11,467 11,467 $508,413 $484,883 See accompanying notes on page 5 2 CALIFORNIA WATER SERVICE COMPANY STATEMENT OF INCOME SEPTEMBER 30, 1996 1995 In Thousands FOR THE THREE MONTHS ENDED: Operating revenue $59,230 $53,276 Operating expenses: Operation 34,319 33,008 Maintenance 2,186 2,000 Depreciation 3,263 2,859 Federal income taxes 4,634 3,447 State income taxes 1,365 1,018 Property and other taxes 1,975 1,848 Total Operating Expenses 47,742 44,180 Net operating income 11,488 9,096 Other income and expenses: Interest and amortization on long-term debt 2,953 2,791 Other income and expenses, net (138) (167) 2,815 2,624 Net income 8,673 6,472 Preferred dividends 38 38 Net income available for common stock $8,635 $6,434 Weighted average shares outstanding 6,295 6,253 Earnings per share of common stock $1.37 $1.03 Dividends per share of common stock $0.52 $0.51 FOR THE NINE MONTHS ENDED: Operating revenue $140,577 $124,063 Operating expenses: Operation 84,604 78,095 Maintenance 5,999 5,708 Depreciation 9,407 8,577 Federal income taxes 8,339 5,804 State income taxes 2,464 1,721 Property and other taxes 5,550 5,215 Total Operating Expenses 116,363 105,120 Net operating income 24,214 18,943 Other income and expenses: Interest and amortization on long-term debt 8,859 8,065 Other income and expenses, net (331) (101) 8,528 7,964 Net income 15,686 10,979 Preferred dividends 114 114 Net income available for common stock 15,572 10,865 Weighted average shares outstanding 6,285 6,249 Earnings per share of common stock $2.48 $1.74 Dividends per share of common stock $1.56 $1.53 See accompanying notes on page 5 3 CALIFORNIA WATER SERVICE COMPANY STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED In Thousands SEPTEMBER 30 1996 1995 Operating activities: Net Income $15,686 $10,979 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 9,407 8,577 Regulatory assets and liabilities, net (181) (142) Deferred income taxes and investment tax credits, net 582 103 Change in assets and liabilities: Accounts receivable (3,037) (2,827) Unbilled revenue (2,097) (2,375) Materials and supplies 165 288 Taxes and other prepaid expenses (2,262) (1,734) Accounts payable 4,036 5,126 Accrued expenses and other liabilities 9,158 8,323 Other changes, net 644 944 Net adjustments 16,415 16,283 Net cash provided by operating activities 32,101 27,262 Investing activities: Utility plant expenditures (27,298) (18,716) Financing activities: Net short-term borrowings -- (7,000) Proceeds from issuance of senior notes -- 20,000 Proceeds from issuance of common stock 1,076 -- Advances for construction 4,059 3,870 Contributions in aid of construction 2,440 1,370 Refunds of advances for construction (2,724) (2,671) Dividends (9,911) (9,673) Net cash used for financing activities (5,060) 5,896 Change in cash and cash equivalents (257) 14,442 Cash and cash equivalents at start of period 6,273 1,301 Cash and cash equivalents at end of period $6,016 $15,743 See accompanying notes on page 5 4 Notes: 1. Due to the seasonal nature of the water business, the results for interim periods are not indicative of the results for a twelve month period. 2. The interim financial information is unaudited. In the opinion of management, the accompanying financial statements reflect all adjustments which are necessary to provide a fair statement of the results for the periods covered. The adjustments consist only of normal recurring adjustments. 3. Earnings per share are calculated on the weighted average number of common shares outstanding during the period and net income available for common stock as shown on the Statement of Income. 4. Refer to 1995 Annual Report on Form 10-K for a summary of significant accounting policies and detailed information regarding the financial statements. 5 PART I FINANCIAL INFORMATION Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF THIRD QUARTER OPERATIONS Net income for the third quarter of 1996 was $8,673,000, equivalent to $1.37 per common share, a 34 cents increase from the $1.03 earned in last year's third quarter. Operating revenue increased $5,954,000 from 1995 to $59,230,000. The increase in operating revenue is accounted for in the following table: General and step rate increases $3,515,000 Offset rate increases 534,000 Total rate increases 4,049,000 Increased consumption 400,000 Usage by 9,300 new customers 1,505,000 Net revenue increase $5,954,000 In June, the California Public Utilities Commission (Commission) authorized a general rate increase for five operating districts representing about 47 percent of the Company's customer base. The benefit of the rate increases were in place for the full third quarter and is reflected in the revenue increases shown in the table above. The 9,300 new customers added this year includes 6,000 customers added under the Hawthorne lease agreement which became effective in the first quarter. Water production for the quarter was three percent above last year's level. Well production provided 56 percent of the supply with 44 percent purchased from wholesale suppliers. Water production cost, which includes purchased water, purchased power and pump taxes, increased $452,000 or two percent. Wholesale water suppliers' rates remained relatively unchanged from last year and savings were realized in purchased power costs in certain 6 districts due to less expensive supplier rate tariffs. The components of water production expense and the changes from last year are shown in the table below: Third Quarter Dollar Percent 1996 Cost Change Change Purchased water $16,200,000 $684,000 4 Purchased power 4,869,000 (465,000) (9) Pump taxes 1,732,000 233,000 15 Total $22,801,000 $452,000 Other operations expense increased $859,000, primarily due to a 3.5 percent general wage increase which was effective January 1 and increases in related employee benefits. Maintenance expense increased $186,000 during the quarter, primarily due to various scheduled projects and main repairs. Depreciation expense was $404,000 greater this year. In addition to increased depreciation expense resulting from utility plant additions, the Commission's June rate case decision provided for about $200,000 of added depreciation during the quarter, equivalent to $810,000 on an annualized basis. Recovery of the increase is reflected in the new customer rates which became effective June 11 for the five districts covered by the decision. Federal and state income taxes increased $1,534,000 because of higher taxable income. REGULATORY MATTERS In July, the Company filed its 1996 rate application with the Commission covering two districts, Livermore and Palos Verdes, which represents about 11 percent of the total customers. A 12.05 percent return on equity was requested in the application which would yield $2,780,000 of additional revenue over a four year period with $2,530,000 anticipated in the first full year the rates are effective. A decision from the Commission is expected during the latter part of next year's second quarter. During the quarter, federal legislation was enacted which repealed the income tax on deposits and facilities contributed by developers, known as 7 contributions in aid of construction (CIAC), to investor-owned water utilities for construction of new utility plant. Since the tax had primarily been collected from developers as a cost of each development, the federal tax law change will reduce each development's cost. The Company's cash flow will improve to the extent the Company was required to participate in the tax payments. The legislation requires new utility plant to be depreciated over a 25 year life using straight line depreciation. California state tax continues to apply to CIAC. LIQUIDITY At September 30, 1996, temporary investments totaled $4,000,000. The funds will be required on November 1 to fund semi-annual debt interest payments, first mortgage bond sinking fund requirements and the maturity of Series K first mortgage bonds. Interest on long-term debt increased $161,000 due to the sale of the $20,000,000 Series A senior notes in August 1995. The notes were outstanding for the full third quarter in 1996. Other interest expense decreased because of a reduced need for borrowings under the Company's bank line of credit. Bank borrowings were higher during the period prior to the senior note sale, resulting in higher 1995 interest expense. On August 15, 1996, the third quarter common dividend was paid at $0.52 per share. Under the Company's Dividend Reinvestment Plan (Plan), 9,893 new common shares at an average share price of $35.87 were issued to shareholders who elected to reinvest their dividend in additional shares. The dividend reinvestment program contributed $355,000 to shareholders' equity. About 11 percent of the outstanding shares participate in the Plan. The regular dividend was also paid on the Series C preferred stock. Issuance of the additional shares will have a dilutive effect in earnings per share calculations and upon existing equity of shareholders not participating in the Plan. 8 During the quarter, utility plant expenditures totaled $8,840,000. Of this amount, $6,136,000 was funded through the Company's construction budget with the balance consisting of developers' contributions in aid of construction and refundable advances for construction. On a year-to-date basis, plant expenditures have been $27,298,000 with $21,425,000 provided by Company funds. The Company funded expenditures include $14,925,000 for the ongoing construction budget and $6,500,000 for the City of Hawthorne lease payment. WATER SUPPLY The Company believes that its various sources of water supply are adequate to meet customer demand for the balance of this year. Storage in state reservoirs at September 30, 1996 is about 120% of average as reported by the California Department of Water Resources. This storage level should provide an adequate storage carryover into 1997. 9 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits required to be filed by Item 601 of Regulation S-K Sequential Exhibit Page Numbers Number Description in this report 10.18 Water Supply Agreement dated 11 September 25, 1996 between City of Bakersfield and California Water Service Company (b) No reports on Form 8-K have been filed during the quarter ended September 30, 1996. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CALIFORNIA WATER SERVICE COMPANY Registrant /s/ Gerald F. Feeney November 6, 1996 Gerald F. Feeney Vice President, Chief Financial Officer and Treasurer 10 EX-10 2 EXHIBIT 10.18 96-03 W.B. CITY AGREEMENT NO._96-272 WATER SUPPLY AGREEMENT THIS AGREEMENT (Agreement) made and entered into this _25_day of__September_, 1996, by and between the CITY OF BAKERSFIELD (CITY), a charter city and municipal corporation and CALIFORNIA WATER SERVICE COMPANY (COMPANY), a California public utility water corporation. RECITALS WHEREAS, COMPANY is engaged in the purveying of domestic water to, among others, citizens within the CITY; and WHEREAS, COMPANY has agreed, subject to approval by the CALIFORNIA PUBLIC UTILITIES COMMISSION (COMMISSION), of an appropriate extension of COMPANY's service area, to provide domestic water service to an area in the northeast section within the CITY, more specifically described as Section 17 (619.36 acres) and Section 20 (4.939 acres) of T29S/R29E MDBM, collectively referred to hereinafter as DEVELOPMENT; and WHEREAS, in order to provide water service to this DEVELOPMENT, COMPANY desires to acquire an additional water supply, which is intended to offset potential groundwater overdraft of the adjacent basin and aquifer; and WHEREAS, to promote and provide for the continued orderly growth within the CITY, CITY and COMPANY deem that it is desirable to arrange for a water supply to serve the DEVELOPMENT; and WHEREAS, CITY has previously acquired a permanent high quality source of Kern River water dedicated to serve the long-term needs of its residents; and WHEREAS, CITY is willing to make available a portion of its Kern River water supply to provide water service to future CITY residents that will be served in the DEVELOPMENT. NOW, THEREFORE, incorporating the foregoing recitals herein, it is mutually agreed as follows: 1. WATER SUPPLY. CITY will make available to COMPANY a surface water supply to serve the needs of residents that will reside in the DEVELOPMENT, consisting of approximately 625 acres. This DEVELOPMENT is shown on "Exhibit A" attached hereto and incorporated herein. The parties anticipate that at full build out the CITY will make available to COMPANY up to 2,500 acre feet per year to meet the needs of residents in the DEVELOPMENT. 2. POINT OF DELIVERY. The point of delivery of this water supply will be within the boundaries of the CITY. Surface deliveries may be made to the Kern County Water Agency Purification Plant located near Highway 99 and Golden State Highway. Deliveries for groundwater use by COMPANY may be made in the Kern River channel, through CITY recharge sites or at another mutually agreeable point of delivery to the groundwater aquifer within the CITY. 3. PLACE OF USE. COMPANY's plans and specifications for the design, construction and installation of the facilities required to serve a domestic water supply, that meets all federal, state and local water quality requirements, to the DEVELOPMENT are shown on "Exhibit B" attached hereto and incorporated herein. The plans may be changed from time to time by COMPANY as it deems reasonably necessary, provided that a current version of the plans shall be on file in CITY and COMPANY's business offices as specified herein. COMPANY acknowledges its intent to use the water made available hereunder only on the DEVELOPMENT lands. 4. WATER QUALITY. CITY does not represent or guarantee the quality of the raw water which is subject of this Agreement. COMPANY understands the water specified for delivery under this Agreement, as supplied from the Kern River, is untreated and not fit for human consumption as delivered. COMPANY shall be solely responsible for testing said water and for any and all treatment which may be necessary to bring the water into conformity with all federal, state and local domestic water quality requirements prior to its delivery for domestic use. CITY shall not be responsible for the quality of water delivered by COMPANY in any way or at any time and COMPANY's failure to test or properly treat the water is not the responsibility of CITY. By execution of this Agreement COMPANY expressly waives any and all legal remedies against CITY, from the CITY's delivery of nonpotable water to COMPANY. COMPANY shall indemnify, defend and hold CITY harmless from and against any and all claims from COMPANY failure to deliver water to domestic users in the DEVELOPMENT in conformance with federal, state and local domestic water quality requirements. 5. WATER BALANCE. COMPANY agrees to maintain a positive water account balance in providing service to the DEVELOPMENT, subject to Paragraphs 7 and 12. CITY and COMPANY, after consultation, shall annually on or before December 1 of each year determine COMPANY's projected water requirements to serve the DEVELOPMENT for the following three calendar years. To provide a continuous and uninterrupted supply, CITY shall make available and COMPANY shall purchase water from CITY such quantities so that at the start of any calendar year the Company's water account balance in the underground is not less than the determined three (3) year supply, subject to Paragraph 7; provided, however, that during the first three years of this Agreement the parties expect that COMPANY shall build up the requisite water account balance and accordingly agree that COMPANY shall not be in breach during such 3-year period from its failure to have the requisite water account balance during such period. COMPANY may purchase more water from CITY than is necessary to meet the determined three (3) year supply requirements of this Agreement, but such additional purchase shall be subject to the availability of such water from the CITY: CITY will provide COMPANY quarterly statements of water account balance and generate invoices and statements of water delivered for use by COMPANY. Water purchased from CITY by COMPANY shall be delivered to COMPANY at such times as COMPANY reasonably requests, subject to Paragraph 7. CITY's obligation to make deliveries, subject to Paragraph 7, shall continue so long as COMPANY has a positive water account balance and notwithstanding any termination of CITY's obligation to make future sales to COMPANY under this AGREEMENT. 6. WATER SERVICE AREA. COMPANY and CITY agree that any water delivered to COMPANY shall be used only within the incorporated boundary of the CITY and shall be limited to the DEVELOPMENT as described herein, provided, however, that both parties acknowledge that the water acquired by COMPANY hereunder may be commingled with other waters at any given time. Accordingly COMPANY agrees that except in cases in which the express written approval of CITY has been obtained, the aggregate amount of water acquired from CITY hereunder of which COMPANY takes delivery at the Kern County Water Agency Purification Plant, and pumped by COMPANY from the underground, for delivery to DEVELOPMENT will not exceed the aggregate amount of water delivered by the COMPANY to the customers in the DEVELOPMENT plus a reasonable amount attributable to lost water associated with COMPANY's service to customers in the DEVELOPMENT. 7. INTERRUPTIBLE SUPPLY. The obligation of CITY to supply water hereunder is subject to all prior existing commitments to service the needs of the CITY, its contractors, licensees or court decisions and existing agreements to supply water. The water to be delivered to COMPANY as contemplated by Paragraph 2 hereof shall be considered interruptible and the failure of CITY to supply water because of these limitations shall not constitute a breach of any duty, and imposes no liability upon City. In the event CITY reasonably determines to interrupt its deliveries hereunder to COMPANY, CITY shall attempt to catch up with its delivery obligations as soon as reasonably practicable thereafter. 8. INSTALLATION OF DELIVERY FACILITIES. CITY represents to COMPANY that CITY has and will continue to have required facilities to deliver water purchased hereunder by COMPANY to the Kern County Water Purification Plant and to other areas, including recharge sites in CITY. COMPANY shall be solely responsible for the construction and installation of any and all facilities required to be built for COMPANY to take delivery of the water supply at any other delivery locations agreed to by COMPANY and CITY. All costs for rights-of-way, permits, engineering, surveying, labor, materials, supplies and any other costs associates with the transportation and delivery of the water at such other locations shall be arranged by COMPANY. Notwithstanding the preceding two sentences, CITY shall use all means reasonably necessary to deliver CITY water to COMPANY using CITY facilities or rights to facilities at no cost or charge to COMPANY; provided, however Company shall be responsible for any and all costs that may be generated due to use of facilities of others. 9. OWNERSHIP AND ACCESS. CITY is owner of certain water rights and storage facilities on the Kern River. The water supply being made available to COMPANY from CITY shall not become the property of COMPANY, but will be available for COMPANY to use by groundwater withdrawal or direct delivery from existing purification plants for direct retail delivery to customers in areas of the CITY authorized under the terms and conditions of this agreement. The return flows from water supplied to COMPANY by CITY shall be the sole property of the CITY, as between CITY and COMPANY. 10. ENVIRONMENTAL STUDIES OR REVIEW. To the extent not funded by the developers of the DEVELOPMENT, which funding is expected by the parties, COMPANY shall be responsible to obtain any and all California Environmental Quality Act reviews that may be ordered or required to receive and use water as described in this Agreement. 11. WATER COSTS. To compensate CITY for water delivered hereunder and all other CITY costs hereunder (except as provided in Paragraph 8), COMPANY shall pay CITY $32.00 (thirty-two dollars) per acre foot of water made available to COMPANY by CITY for the first three (3) years of this Agreement. After the first three years the cost per acre foot shall be adjusted annually by the increase or decrease in the national Producer Price Index for All Commodities published by the U.S. Bureau of Labor Statistics over the same month in the prior year. Payment in full shall be made to CITY within thirty (30) days after mailing of an itemized invoice to COMPANY. Even though water may have been purchased by the COMPANY as contemplated by Paragraph 5, the CITY shall bill the COMPANY for quantities delivered only after the water is actually delivered by the CITY; provided that the applicable rate shall be the rate in effect on the date of purchase, not the date of delivery. COMPANY shall not assess or levy any charge of any kind or type to CITY for the delivery or use of said water. Failure to pay CITY in full shall constitute a breach of this Agreement. Reasonable late fee amounts may be assessed by CITY and shall be paid by COMPANY upon demand. In addition, at City's sole discretion, CITY may terminate this Agreement immediately after 30 day cure period and collect all past due sums and late fees. 12. NOTICE OF TERMINATION. The initial terms of this Agreement shall be for nine years commencing January 1,1997, or when the COMMISSION approves the extension of the COMPANY's service area to include the DEVELOPMENT, provided, however, that such term shall be renewed for successive three year periods, unless either party hereto shall provide written notification of termination to the other party at least one hundred eighty (180) days prior to the expiration of the then remaining term of this Agreement. In the event of termination, COMPANY shall be entitled to continue to receive from the CITY all of the water remaining in its water account in accordance with the terms of this Agreement and COMPANY acknowledges that thereafter it will have to acquire alternative water supplies to replace water furnished by CITY under this Agreement to serve DEVELOPMENT. 13. PUBLIC UTILITIES CODE. This Agreement is entered into in accordance with and subject to any requirements of the COMMISSION and any and all rules and regulations as may apply to COMPANY. CITY is immune from regulation by the COMMISSION and entering into this Agreement shall not construe CITY as recognizing authority or control by said COMMISSION over the CITY. 14. NONEXCLUSIVE AGREEMENT. CITY and COMPANY agree the rights under this contract to a water supply are nonexclusive and in no way dedicates the water supply to sole delivery to or use by COMPANY. CITY reserves the right to enter into other agreements or arrangements concerning water supply and delivery of water supplies, provided such agreements or arrangements do not interfere with CITY's obligations hereunder or necessitate termination by CITY of this Agreement. Nothing herein shall be deemed to constitute a dedication of the water supply to COMPANY or to COMPANY's customers. 15. DISRUPTION OF SERVICE. Whenever maintenance is required on CITY facilities or the system of delivery that requires suspension of deliveries of water at any point or points, such delivery shall be suspended without liability on the part of the CITY. Suspension of delivery may occur without reasonable notice only in cases of emergency by and without liability to the CITY whenever CITY is unable to obtain sufficient amounts of water to supply previously existing contract amounts and demands. CITY may also suspend deliveries upon reasonable prior notice for defaults under this agreement, and failure to pay any sums required to be paid shall result in immediate suspension of deliveries, subject to reapsonable notice. CITY will maintain accurate records and reporting of water balances and waters sold to COMPANY. 16. INDEMNITY. COMPANY shall indemnify, defend, and hold harmless CITY, its officers, agents and employees against any and all liability, claims, actions, causes of action or demands whatsoever against them, or any of them, before administrative or judicial tribunals of any kind whatsoever, arising out of, connected with, or caused by COMPANY, COMPANY's employees, agents or independent contractors in the performance of, or in any way arising from, the terms and provisions of this Agreement whether or not caused in part by a party indemnified hereunder, except as limited by California Civil Code section 2782. 17. DEFAULT. Should CITY and COMPANY default in the performance of any convenant, except payment for water, or condition of the Agreement contained herein, and the default is not cured within thirty (30) days after written notice of said default is served upon the offending party, then this Agreement may be terminated by the nondefaulting party; provided, however, if the nature of the breach reasonably required more than thirty (30) days to cure, this Agreement may not be terminated if CITY or COMPANY commences to cure the breach within thirty (30) days thereafter and diligently pursues the cure to completion. This clause shall not apply to any monetary payments due hereunder; other cure provisions apply to payment obligations. 18. WAIVER OF DEFAULT. The failure of any party to enforce against another, a provision of this Agreement shall not constitute a waiver of that party's right to enforce such a provision at a later time, and shall not serve to vary the terms of this Agreement. 19. FORUM. Any lawsuit pertaining to any matter arising under, or growing out of, this Agreement shall be instituted in Kern County, California. 20. TIME. Time is of the essence in this Agreement. 21. HEADINGS. All paragraph or section captions are for reference only and shall not be considered in construing this Agreement. 22. NOTICES. All notices relative to this Agreement shall be given in writing and shall be personally served, served by confirmed facsimile transmission or sent by certified or registered mail and be effective upon actual personal service or upon confirmed facsimile transmission or five (5) business days after depositing in the United States mail. The parties shall be addressed as follows or at any other address designated by notice: CITY: CITY OF BAKERSFIELD City Hall 1501 Truxtun Avenue Bakersfield, CA 93301 Attention: CITY CLERK FAX: 805.323.3780 COMPANY: CALIFORNIA WATER SERVICE COMPANY P. O. Box 1150 San Jose, CA 95108 Attention: PRESIDENT FAX: 408.437.9185 23. ASSIGNMENT. This Agreement shall not be assigned by any party, or any party substituted, without prior written consent of CITY and COMPANY, which shall not be unreasonably withheld; provided, however, the COMPANY may assign this Agreement, upon reasonable notice, without CITY's prior written consent, in connection with any merger or consolidation or in connection with any sale of all or substantially all of its assets. 24. BINDING EFFECT. The rights and obligations of this Agreement shall inure to the benefit of, and be binding upon, the parties to the Agreement and their heirs, administrators, executors, personal representatives, successors and permitted assigns. 25. MERGER AND MODIFICATION. All prior agreements between the parties with respect to the subject matter of this Agreement are incorporated in this Agreement which constitutes the entire agreement of the parties. Its terms are intended by the parties as a final expression of their agreement with respect to such terms as are included herein and may not be contradicted by evidence of any prior agreement or contemporaneous oral agreement. The parties further intend that this Agreement constitutes the complete and exclusive statement of its terms and no extrinsic evidence whatsoever may be introduced in any judicial or arbitration proceeding involving this Agreement. This Agreement may be modified only in a writing approved by the City Council and signed by all parties. 26. CORPORATE AUTHORITY. Each individual executing this Agreement represents and warrants that they are duly authorized to execute and deliver this Agreement on behalf of the corporation or organization named herein and that this Agreement is binding upon said corporation or organization in accordance with its terms, subject to applicable bankruptcy and insolvency laws. 27. COMPLIANCE WITH ALL LAWS. COMPANY shall, at COMPANY's sole cost, comply with all of the requirements of municipal, state and federal authorities now in force, or which may hereafter be in force, pertaining to its obligations under this Agreement, and shall faithfully observe in all activities relating to or growing out of this Agreement all municipal ordinances and state and federal statues, rules or regulations now in force or which may hereafter be in force. 28. INDEPENDENT CONTRACTOR. COMPANY shall not become or be deemed a partner or joint ventured with CITY or associate in any relationship with COMPANY by reason of the provisions of this Agreement other than specified herein. COMPANY shall not, for any purpose, be considered an agent, officer or employee of CITY in regard to this Agreement. 29. EXECUTION. This Agreement is effective upon execution. It is the product of negotiation and all parties are equally responsible for authorship of this Agreement. Section1654 of the California Civil Code shall not apply to the interpretation of this Agreement. 30. INTEREST. COMPANY shall pay CITY interest at an annual rate of ten percent (10%) compounded quarterly (or the maximum rate permitted by law, if less) on all expenses or costs reasonably incurred by CITY in the enforcement of the indemnity provisions of this Agreement, and of any sums COMPANY may pay as a result of claims, demands, cost or judgments with respect to the subject matter of this Agreement, from the date such sums are actually paid. 31. PREJUDGMENT INTEREST. In the event of a default by any party to this Agreement, to the extent that Paragraph 31 does not apply, the nondefaulting party shall be allowed to recover interest on all damages at the legal rate from the date of the breach. 32. SURVIVAL OF REPRESENTATIONS. All representations, warranties and covenants of CITY and COMPANY as set forth herein shall survive the termination of this Agreement. 33. POSSESSORY INTEREST TAXES. Without agreeing that COMPANY's interest hereunder is subject to property taxation, COMPANY acknowledges that, as a party in whom a possessory interest may be vested, COMPANY may be subject to the payment of property taxes levied on such interest, and, if such is determined to be the case, COMPANY shall pay all such possessory interest taxes lawfully levied on COMPANY. 34. RECORDS. COMPANY's records concerning maintenance, replacement and repair of its facilities used in the distribution of this water as described herein shall be available for CITY's review during normal business hours and shall be made available to CITY's representatives upon 24 hours written notice. CITY's records concerning maintenance, replacement and repair of its facilities used in the distribution of this water as described herein shall be available for COMPANY's review during normal business hours and shall be made available to COMPANY's representatives upon 24 hours written notice. 35. EXHIBITS. In the event of a conflict between the terms, conditions or specifications set forth in this Agreement and those in exhibits attached hereto, the terms, conditions, or specifications set forth in this Agreement shall prevail. All exhibits to which reference is made in this Agreement are deemed incorporated in this Agreement, whether or not actually attached. 36. TAX NUMBERS. COMPANY's Federal Tax Identification No. 94-0362795 COMPANY is a corporation Yes X No (Please check one.) IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed, the day and year first-above written. "CITY" CITY OF BAKERSFIELD BY: Bob Price, Mayor APPROVED AS TO CONTENT: WATER RESOURCES DEPARTMENT BY: GENE BOGART, WATER RESOURCES MANAGER APPROVED AS TO FORM: JUDY K. SKOUSEN, CITY ATTORNEY BY: ALAN D. DANIEL, ASSISTANT CITY ATTORNEY COUNTERSIGNED: BY: GREGORY J. KLIMKO, FINANCE DIRECTOR "COMPANY" CALIFORNIA WATER SERVICE CO. BY: PETER C. NELSON PRESIDENT AND CEO EX-27 3
UT 9-MOS DEC-31-1996 SEP-30-1996 PER-BOOK 438715000 0 39682000 4519000 25497000 508413000 44583000 0 109217000 153800000 0 3475000 145540000 0 0 0 0 0 0 0 205598000 508413000 140577000 10803000 105560000 116363000 24214000 331000 24545000 8859000 15686000 114000 15572000 9796000 8859000 32101000 2.48 0
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