Yes OPERATING REVENUE OPERATING EXPENSE: Operation: Purchased water Power Groundwater extraction charges Total production costs Administrative and general Other Maintenance Property taxes and other non-income taxes Depreciation and amortization Income taxes Total operating expense OPERATING INCOME OTHER (EXPENSE) INCOME: Interest on senior notes Mortgage and other interest expense Gain on sale of California Water Service Group investment, net of taxes of $1,831 Dividends Other, net NET INCOME Other comprehensive (loss) income: Unrealized (loss) income on investment Less: income taxes related to other comprehensive (loss) income Other comprehensive (loss) income, net COMPREHENSIVE INCOME EARNINGS PER SHARE Basic Diluted DIVIDENDS PER SHARE WEIGHTED AVERAGE SHARES OUTSTANDING Basic Diluted ASSETS Utility plant: Land Depreciable plant and equipment Construction in progress Intangible assets Less accumulated depreciation and amortization Real estate investment Less accumulated depreciation and amortization CURRENT ASSETS: Cash and cash equivalents Restricted cash Accounts receivable: Customers, net of allowances for uncollectible accounts Other Accrued unbilled utility revenue Materials and supplies Prepaid expenses OTHER ASSETS: Investment in California Water Service Group Debt issuance costs and broker fees, net of accumulated amortization Regulatory assets Other CAPITALIZATION AND LIABILITIES CAPITALIZATION: Shareholders’ equity: Common stock, $0.521 par value; authorized 36,000,000 shares; issued and outstanding 18,540,845 shares on September 30, 2010 and 18,499,602 on December 31, 2009 Additional paid-in capital Retained earnings Accumulated other comprehensive income Total shareholders’ equity Long-term debt, less current portion CURRENT LIABILITIES: Line of credit Current portion of long-term debt Accrued groundwater extraction charges and purchased water Purchased power Accounts payable Accrued interest Accrued property taxes and other non-income taxes Accrued payroll Income tax payable Other current liabilities DEFERRED INCOME TAXES UNAMORTIZED INVESTMENT TAX CREDITS ADVANCES FOR CONSTRUCTION CONTRIBUTIONS IN AID OF CONSTRUCTION DEFERRED REVENUE POSTRETIREMENT BENEFIT PLANS OTHER NONCURRENT LIABILITIES COMMITMENTS AND CONTINGENCIES OPERATING ACTIVITIES: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Share-based compensation Gain on sale of California Water Service Group investment, net of tax Changes in operating assets and liabilities: Accounts receivable and accrued unbilled utility revenue Accounts payable, purchased power and other current liabilities Accrued groundwater extraction charges and purchased water Accrued taxes Accrued interest Accrued payroll Postretirement benefits Other charges, net NET CASH PROVIDED BY OPERATING ACTIVITIES INVESTING ACTIVITIES: Additions to utility plant: Company funded Contributions in aid of construction Additions to real estate investment Payments for business acquisition and water rights Cost to retire utility plant, net of salvage Proceeds from sale of California Water Service Group investment NET CASH USED IN INVESTING ACTIVITIES FINANCING ACTIVITIES: Borrowings from line of credit Repayments of line of credit Long-term borrowings Repayments of long-term borrowings Debt issuance costs Dividends paid Exercise of stock options and similar instruments Tax benefits realized from share options exercised Receipts of advances and contributions in aid of construction Refund of advances for construction NET CASH PROVIDED BY FINANCING ACTIVITIES NET CHANGE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS, END OF PERIOD Cash paid during the period for: Interest Income taxes Supplemental disclosure of non-cash activities: Change in accrued payables Utility property installed by developers Loan proceeds held as restricted cash Compensation costs charged to income: Stock options ESPP Restricted stock and deferred restricted stock Total compensation costs charged to income Excess tax benefits realized from share options exercised and stock issuance: Stock options Restricted stock and deferred restricted stock Total excess tax benefits realized from share options exercised and stock issuance Proceeds from the exercise of stock options and similar instruments: Stock options ESPP Restricted stock and deferred restricted stock Total proceeds from the exercise of stock options and similar instruments 2011. As of per share data) Land Buildings and improvements Intangibles Subtotal Less: accumulated depreciation and amortization Total Service cost Interest cost Other cost Expected return on assets Benchmark Cash and cash equivalents Actively Managed (a): U.S. Large Cap Equity U.S. Small Cap Equity U.S. Small Mid Cap Equity Emerging Market Equity Non-U.S. Large Cap Equity Passive Index Fund ETFs (b): U.S. Large Cap Equity U.S. Mid Cap Equity U.S. Small Cap Equity U.S. Small Mid Cap Equity Emerging Market Equity Non-U.S. Large Cap Equity REIT Fixed Income (c) Total Operating revenue Operating expense Operating income (loss) Net income (loss) Depreciation and amortization Senior note, mortgage and other interest expense Income tax expense (benefit) in operating income Assets Operating revenue Operating expense Operating income (loss) Net income (loss) Depreciation and amortization Senior note, mortgage and other interest expense Income tax expense (benefit) in operating income Assets Operating revenue Operating expense Operating income (loss) Net income (loss) Depreciation and amortization Senior note, mortgage and other interest expense Income tax expense (benefit) in operating income Assets Operating revenue Operating expense Operating income (loss) Net income (loss) Depreciation and amortization Senior note, mortgage and other interest expense Income tax expense (benefit) in operating income Assets Assets: Investment in California Water Service Group Assets: Investment in California Water Service Group case or if an individual account reaches a threshold of 2% of authorized revenue. San Jose Water cash flows. 2010 Description 2 Commercial buildings Warehouse building Warehouse building Retail building Warehouse building Warehouse building Commercial building Undeveloped land Undeveloped land In addition, San Jose Water Company maintains balancing accounts for pensions and other approved activities. the rates became effective on January 26, 2011. balances at its historical collection rate. year. As of SJW Corp.’s Water Utility Services Real Estate Services Water Utility Services: Consumption changes New customers increase Rate increases Real Estate Services Water Utility Services Real Estate Services All Other Water production costs: Change in surface water supply Change in usage and new customers Purchased water and groundwater extraction charge and energy price increase Total water production costs Administrative and general Other operating expense Maintenance Property taxes and other non-income taxes Depreciation and amortization Income taxes Purchased water Groundwater Surface water Reclaimed water DescriptionSeptember 30, 2010March 31, 2011California 77-0066628 110 West Taylor Street, San Jose, CA 95110 (Address of principal executive offices) (Zip Code) ¨o¨o No ¨o¨o ¨o ¨o (Do not check if a smaller reporting company) Yes ¨No xOctoberApril 21, 2010,2011, there were 18,540,84518,577,012 shares of the registrant’s Common Stock outstanding.ITEM 1. FINANCIAL STATEMENTS THREE MONTHS
ENDED SEPTEMBER 30, NINE MONTHS
ENDED SEPTEMBER 30, 2010 2009 2010 2009 $ 70,347 69,326 $ 164,886 167,541 16,574 15,174 33,728 35,564 2,122 2,666 4,850 5,243 8,736 10,743 19,969 25,275 27,432 28,583 58,547 66,082 8,168 6,807 21,909 20,834 4,792 4,697 13,784 13,221 2,895 3,550 8,960 9,682 2,056 1,882 5,819 6,564 7,082 6,403 21,263 19,192 5,502 5,735 9,285 8,811 57,927 57,657 139,567 144,386 12,420 11,669 25,319 23,155 (4,166 ) (3,638 ) (11,424 ) (10,384 ) (486 ) (476 ) (1,555 ) (1,506 ) 2,635 - 2,635 - 239 324 893 973 145 138 420 313 10,787 8,017 16,288 12,551 (3,188 ) 2,310 (4,420 ) (8,239 ) 1,307 (947 ) 1,812 3,378 (1,881 ) 1,363 (2,608 ) (4,861 ) $ 8,906 9,380 $ 13,680 7,690 $ 0.58 0.43 $ 0.87 0.68 $ 0.58 0.43 $ 0.87 0.67 $ 0.17 0.16 $ 0.51 0.49 18,536,802 18,494,274 18,528,176 18,482,362 18,751,921 18,689,769 18,738,089 18,672,855 THREE MONTHS ENDED
MARCH 31, 2011 2010 OPERATING REVENUE $ 43,696 40,411 OPERATING EXPENSE: Operations: Purchased water 7,416 5,819 Power 1,014 1,144 Groundwater extraction charges 4,508 4,995 Other production costs 2,592 2,538 Total production costs 15,530 14,496 Administrative and general 9,636 8,988 Maintenance 3,048 2,776 Property taxes and other non-income taxes 2,087 1,703 Depreciation and amortization 7,794 7,111 Total operating expense 38,095 35,074 OPERATING INCOME 5,601 5,337 OTHER (EXPENSE) INCOME: Interest on long-term debt (4,256 ) (3,622 ) Mortgage and other interest expense (475 ) (500 ) Loss on sale of utility property (23 ) — Dividend income 60 327 Other, net 136 125 Income before income taxes 1,043 1,667 Provision for income taxes 433 682 NET INCOME 610 985 Other comprehensive (loss) income: Unrealized (loss) income on investment (19 ) 869 Less: income taxes related to other comprehensive (loss) income 8 (356 ) Other comprehensive (loss) income, net (11 ) 513 COMPREHENSIVE INCOME $ 599 1,498 EARNINGS PER SHARE Basic $ 0.03 0.05 Diluted $ 0.03 0.05 DIVIDENDS PER SHARE $ 0.17 0.17 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 18,570,140 18,519,036 Diluted 18,775,385 18,721,491 SEPTEMBER 30,
2010 DECEMBER 31,
2009 $ 8,580 8,558 985,853 913,071 20,243 11,119 13,258 11,278 1,027,934 944,026 315,815 298,921 712,119 645,105 91,286 88,000 8,446 7,188 82,840 80,812 3,335 1,416 148 - 16,447 10,892 560 677 19,197 12,435 974 994 1,983 1,596 42,644 28,010 32,399 40,500 4,112 3,098 78,274 78,525 3,004 2,424 117,789 124,547 $ 955,392 878,474 MARCH 31,
2011 DECEMBER 31,
2010ASSETS Utility plant: Land $ 8,579 8,579 Depreciable plant and equipment 1,018,311 1,004,689 Construction in progress 14,501 10,103 Intangible assets 14,313 13,538 1,055,704 1,036,909 Less accumulated depreciation and amortization 329,597 322,102 726,107 714,807 Real estate investment 88,962 88,943 Less accumulated depreciation and amortization 9,273 8,854 79,689 80,089 CURRENT ASSETS: Cash and cash equivalents 2,354 1,730 Accounts receivable: Customers, net of allowances for uncollectible accounts 9,154 12,491 Income tax 11,579 7,634 Other 731 993 Accrued unbilled utility revenue 13,108 12,717 Materials and supplies 1,015 989 Prepaid expenses 1,120 1,473 39,061 38,027 OTHER ASSETS: Investment in California Water Service Group 7,158 7,177 Debt issuance costs and broker fees, net of accumulated amortization 4,479 4,308 Regulatory assets, net 87,721 87,721 Other 3,463 3,233 102,821 102,439 $ 947,678 935,362 SEPTEMBER 30,
2010 DECEMBER 31,
2009 $ 9,657 9,635 23,099 22,046 214,632 207,888 10,579 13,187 257,967 252,756 295,990 246,879 553,957 499,635 3,500 5,800 1,144 1,081 8,223 4,496 718 486 21,273 6,562 4,788 4,979 2,225 1,481 3,083 2,412 3,437 728 4,772 3,933 53,163 31,958 99,271 100,766 1,570 1,615 69,353 69,086 121,547 121,420 1,106 1,179 49,937 47,484 5,488 5,331 - - $ 955,392 878,474 MARCH 31,
2011 DECEMBER 31,
2010CAPITALIZATION AND LIABILITIES CAPITALIZATION: Shareholders’ equity: Common stock, $0.521 par value; authorized 36,000,000 shares; issued and outstanding 18,577,012 shares on March 31, 2011 and 18,551,540 on December 31, 2010 $ 9,675 9,662 Additional paid-in capital 23,808 23,443 Retained earnings 216,942 219,568 Accumulated other comprehensive income 2,348 2,359 Total shareholders’ equity 252,773 255,032 Long-term debt, less current portion 295,059 295,704 547,832 550,736 CURRENT LIABILITIES: Line of credit 11,500 4,000 Current portion of long-term debt 1,149 1,133 Accrued groundwater extraction charges and purchased water 3,721 4,359 Purchased power 454 495 Accounts payable 10,609 5,487 Accrued interest 4,897 5,244 Accrued property taxes and other non-income taxes 1,876 1,288 Accrued payroll 2,825 2,720 Other current liabilities 4,040 4,429 41,071 29,155 DEFERRED INCOME TAXES 109,753 106,406 UNAMORTIZED INVESTMENT TAX CREDITS 1,540 1,555 ADVANCES FOR CONSTRUCTION 67,489 68,352 CONTRIBUTIONS IN AID OF CONSTRUCTION 121,603 121,803 DEFERRED REVENUE 1,066 1,100 POSTRETIREMENT BENEFIT PLANS 51,248 50,213 OTHER NONCURRENT LIABILITIES 6,076 6,042 COMMITMENTS AND CONTINGENCIES — — $ 947,678 935,362 NINE MONTHS ENDED
SEPTEMBER 30, 2010 2009 $ 16,288 12,551 21,263 19,192 931 7,114 632 695 (2,635 ) - (12,200 ) (9,390 ) 415 976 3,727 3,033 794 1,691 (191 ) (616 ) 671 (436 ) 2,734 1,321 743 561 33,172 36,692 (70,448 ) (38,584 ) (2,884 ) (5,138 ) (3,286 ) - (2,892 ) (3,720 ) (327 ) (310 ) 8,147 - (71,690 ) (47,752 ) 49,300 9,600 (51,600 ) (23,700 ) 49,852 30,000 (577 ) (524 ) (852 ) - (9,451 ) (9,149 ) 544 561 4 80 4,830 4,358 (1,613 ) (1,712 ) 40,437 9,514 1,919 (1,546 ) 1,416 3,406 $ 3,335 1,860 $ 13,686 12,437 8,093 1,156 15,424 3,636 117 1,153 148 - THREE MONTHS ENDED
MARCH 31, 2011 2010 OPERATING ACTIVITIES: Net income $ 610 985 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,794 7,111 Deferred income taxes 3,273 158 Share-based compensation 202 241 Loss on sale of utility property 23 — Changes in operating assets and liabilities: Accounts receivable and accrued unbilled utility revenue 3,208 2,205 Accounts payable, purchased power and other current liabilities (927 ) (37 ) Accrued groundwater extraction charges and purchased water (638 ) (688 ) Accrued taxes (3,551 ) (211 ) Accrued interest (347 ) (972 ) Accrued payroll 105 192 Postretirement benefits 1,035 1,404 Other changes, net 749 656 NET CASH PROVIDED BY OPERATING ACTIVITIES 11,536 11,044 INVESTING ACTIVITIES: Additions to utility plant: Company funded (12,122 ) (15,658 ) Contributions in aid of construction (723 ) (890 ) Additions to real estate investment (19 ) — Payments for business acquisition and water rights (1,078 ) (663 ) Cost to retire utility plant, net of salvage (883 ) (101 ) Proceeds from sale of utility property 43 — NET CASH USED IN INVESTING ACTIVITIES (14,782 ) (17,312 ) FINANCING ACTIVITIES: Borrowings from line of credit 7,500 10,850 Repayments of line of credit — (2,300 ) Repayments of long-term borrowings (543 ) (186 ) Debt issuance costs (87 ) — Dividends paid (3,205 ) (3,149 ) Exercise of stock options and similar instruments 254 290 Tax benefits realized from share options exercised 8 4 Receipts of advances and contributions in aid of construction 370 1,565 Refund of advances for construction (427 ) (422 ) NET CASH PROVIDED BY FINANCING ACTIVITIES 3,870 6,652 NET CHANGE IN CASH AND CASH EQUIVALENTS 624 384 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,730 1,416 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,354 1,800 Cash paid during the period for: Interest $ 5,186 5,204 Income taxes 850 339 Supplemental disclosure of non-cash activities: Change in accrued payables 5,625 4,297 Utility property installed by developers — 117 SEPTEMBER 30, 2010Note 1. General 20092010 Annual Report on Form 10-K should be read with the accompanying unaudited condensed consolidated financial statements.September 30, 2010March 31, 2011 and 2009, 5712010, 239 and 7412,433 anti-dilutive restricted common stock units were excluded from the dilutive earnings per share calculation, respectively. Fornine months ended September 30, 2010delivery of water from other operating expense to production costs and 2009, 3,004$1,930 from other operating expense to administrative and 4,521 anti-dilutive restricted common stock units were excluded fromgeneral related to customer service costs. In addition, the dilutive earnings per share calculation, respectively.Company reclassified income taxes out of operating expense to conform to the current year presentation. These reclassifications impacted total production costs, total operating expense and operating income. The Company believes these reclassifications provide investors with better operating information and are in line with current practices of other water companies and California Public Utilities Commission (“CPUC”) guidance.Note 2. Long-Term Incentive Plan and Share-Based Compensation Board Members,non-employee board members or the board of directors of any parent or subsidiary, consultants, and other independent advisors who provide services to the company or any parent or subsidiary the opportunity to acquire an equity interest in SJW Corp. The types of awards included in the Incentive Plan are restricted stock awards, restricted stock units, performance shares, or other share-based awards. In addition, shares are issued under thean ESPP. As of September 30, 2010,March 31, 2011, the remaining shares available for issuance under the Incentive Plan were 1,210,926,1,196,102, and 386,964369,333 shares are issuable upon the exercise of outstanding options, restricted stock units, and deferred restricted stock units under the Incentive Plan.The total compensation cost charged to income under the Incentive Plan for the threenine months ended September 30, 2010 was $209 and $632, respectively, and for the three and nine months ended September 30, 2009 was $249 and $695, respectively. per share data) vesting period. A summary of compensation costs charged to income, proceeds from the exercise of stock options and similar instruments, and the tax benefit realized from stock options and similar instruments exercised, that are recorded to additional paid-in capital and common stock, by award type, are presented below for the ninethree months ended September 30, 2010March 31, 2011 and 2009.6SJW CORP. AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)SEPTEMBER 30, 2010(in thousands, except share and per share data). Nine months ended
September 30, 2010 2009 $ - 11 90 90 542 594 $ 632 695 $ 4 3 - 77 $ 4 80 $ 32 29 512 512 - 20 $ 544 561 THREE MONTHS ENDED
MARCH 31, 2011 2010 Compensation costs charged to income: ESPP $ 45 46 Restricted stock and deferred restricted stock 157 195 Total compensation costs charged to income $ 202 241 Excess tax benefits realized from share options exercised and stock issuance: Stock options $ — 4 Restricted stock and deferred restricted stock 8 — Total excess tax benefits realized from share options exercised and stock issuance $ 8 4 Proceeds from the exercise of stock options and similar instruments: Stock options $ — 32 ESPP 254 258 Total proceeds from the exercise of stock options and similar instruments $ 254 290 and nine months ended September 30, 2010March 31, 2011 and 2009.2010.September 30, 2010,March 31, 2011, there arewere no unrecognized compensation costs related to stock options. Plans4, 2010,3, 2011, restricted stock units covering an aggregate of 14,38913,631 shares of common stock of SJW Corp. were granted to several executives of SJW Corp. and its subsidiaries. The units vest in four equal successive installments upon completion of each year of service with no dividend equivalent rights. Share-based compensation expense is being recognized at grant date fair value of $20.64$23.70 per unit over the vesting period beginning in 2010.26, 2010,25, 2011, market performance-vesting restricted stock units granted to a key executive of SJW Corp. on January 25, 2007 andApril 30, 2008 covering 7,000 shares of common stock of SJW Corp. were cancelledcanceled because the market performance objective was not attained. However, since the requisite service over the three-year service period of the award was rendered, even though the market condition was not achieved, compensation cost over the three-year requisite service period was not reversed.On January 26, 2010, restricted stock units covering an aggregate of 49,850 shares of common stock of SJW Corp. were awarded to a key executive of SJW Corp. These units do not include dividend equivalent rights. Such units include market performance-vesting restricted units covering 37,850 shares of common stock of SJW Corp. which will be issued if the market performance objective is attained and the executive continues in the Company’s service through the completion of the five-year performance period. Share-based compensation expense is being recognized ratably over five years at $8.77 per unit. The remaining 12,000 restricted stock units are recognized over three years at $20.02 per unit. The fair value of the market performance-vesting restricted stock units was estimated with the Monte Carlo valuation model using the fair value of SJW Corp.’s common stock with the effect of market conditions and no dividend yield on the date of grant, and assumes the market performance goals will be attained.On April 26, 2010, a total of 207 shares of common stock were distributed to a retired member of SJW Corp.’s Board of Directors. There was no excess tax benefit realized from this stock issuance.7SJW CORP. AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)SEPTEMBER 30, 2010(in thousands, except share and per share data)On August 11, 2010, a total of 463 shares of common stock were distributed to a key employee of SJW Corp. There was no excess tax benefit realized from this stock issuance.On September 30, 2010, the employer/employee relationship was terminated between an executive and SJW Corp., and as a result a total of 4,349 shares were forfeited. Compensation costs of $18 previously recognized relating to these unvested shares was reversed during the third quarter of 2010.September 30, 2010,March 31, 2011, the total unrecognized compensation costs related to restricted and deferred restricted stock plans amounted to $1,178.$1,233. This cost is expected to be recognized over a weighted-average period of 1.702.07 years. and nine months ended September 30, 2010, $31March 31, 2011 and $93,2010, $32 and $31, respectively, related to DERs were recorded against retained earnings and were accrued as a liability. For the threenine months ended September 30, 2009, $30 and $92, respectively, related to DERs were recorded against retained earnings and were accrued as a liability.$14$15 in each of the three-month periods ended March 31, 2011 and $53 for the three and nine months ended September 30, 2010 respectively, and $24 and $66 for the three and nine months ended September 30, 2009, respectively,, related to the ESPP.JanuaryJuly 31, 2011 for the ESPP is approximately $27.$29. This cost is expected to be recognized during the fourth quartersecond and third quarters of 2010 and the first quarter of 2011.Note 3. Real Estate Investments September 30, 2010March 31, 2011 and December 31, 20092010 are as follows: September 30,
2010 December 31,
2009 $ 22,393 22,381 68,662 65,388 231 231 91,286 88,000 8,446 7,188 $ 82,840 80,812 March 31,
2011 December 31,
2010Land $ 21,312 21,312 Buildings and improvements 67,350 67,281 Intangibles 300 350 Subtotal 88,962 88,943 Less: accumulated depreciation and amortization 9,273 8,854 Total $ 79,689 80,089 The increase in gross real estate investments was primarily due to leasehold improvements for the office building located in Knoxville, Tennessee, as a result of lease agreements entered into with a single tenant earlier in the year.8SJW CORP. AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)SEPTEMBER 30, 2010(in thousands, except share and per share data)Note 4. Employee Benefit Plans and nine months ended September 30, 2010March 31, 2011 and 20092010 are as follows: Three months ended
September 30, Nine months ended
September 30, 2010 2009 2010 2009 $ 1,048 678 $ 2,692 2,035 1,483 1,238 4,290 3,713 808 642 2,231 1,925 (597 ) (765 ) (2,468 ) (2,295 ) $ 2,742 1,793 $ 6,745 5,378 THREE MONTHS ENDED
MARCH 31, 2011 2010 Service cost $ 947 822 Interest cost 1,445 1,403 Other cost 738 712 Expected return on assets (1,105 ) (935 ) $ 2,025 2,002 table summarizestables summarize the fair values of plan assets by major categories as of September 30, 2010: Fair Value Measurements at September 30, 2010 Quoted
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Markets for
Identical
Assets Significant
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Inputs Asset Category Total (Level 1) (Level 2) (Level 3) $ 3,494 3,494 - - Russell 1000 Growth 3,596 3,596 - - Russell 2000 1,382 1,382 - - Russell 2500 3,420 3,420 - - MSCI Emerging Markets Net 50 50 - - MSCI EAFE Net 2,715 2,715 - - S&P 500/Russell 1000 Growth 8,394 8,394 - - Russell Mid Cap 47 47 - - Russell 2000 97 97 - - Russell 2500 1,996 1,996 - - MSCI Emerging Markets Net 2,455 2,455 - - MSCI EAFE Net 2,805 2,805 - - Nareit - Equity REITS 1,019 1,019 - - (c) 19,765 19,765 - - $ 51,235 51,235 - - Fair Value Measurements at March 31, 2011 Asset Category Benchmark Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 2,086 $ 2,086 $ — $ — Actively Managed (a): U.S. Small Cap Equity Russell 2000 6,428 6,428 — — U.S. Large Cap Equity Russell 1000 Growth 3,981 3,981 — — Emerging Market Equity MSCI Emerging Markets Net 3,659 3,659 — — U.S. Small Mid Cap Equity Russell 2500 2,025 2,025 — — Non-U.S. Large Cap Equity MSCI EAFE Net 4,517 4,517 — — Passive Index Fund ETFs (b): U.S. Large Cap Equity S&P 500/Russell 1000 Growth 5,898 5,898 — — U.S. Small Mid Cap Equity Russell 2500 665 665 — — U.S. Small Cap Equity Russell 2000 139 139 — — U.S. Mid Cap Equity Russell Mid Cap 67 67 — — Non-U.S. Large Cap Equity MSCI EAFE Net 4,765 4,765 — — REIT Nareit - Equity REITS 3,187 — 3,187 — Fixed Income (c) (c) 25,262 — 25,262 — Total $ 62,679 $ 34,230 $ 28,449 $ — 60%55% invested in a diversified array of equity securities to provide long-term capital appreciation and 40%45% invested in a diversified array of fixed income securities to provide preservation of capital plus generation of income.(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, Citigroup World Government Bond Index, and Merrill Lynch High Yield Master II performance. Fair Value Measurements at December 31, 2010 Asset Category Benchmark Total (Level 1) (Level 2) (Level 3) Cash and cash equivalents $ 12,823 $ 12,823 $ — $ — Actively Managed (a): U.S. Small Cap Equity Russell 2000 5,961 5,961 — — U.S. Large Cap Equity Russell 1000 Growth 3,822 3,822 — — Emerging Market Equity MSCI Emerging Markets Net 62 62 — — U.S. Small Mid Cap Equity Russell 2500 1,850 1,850 — — Non-U.S. Large Cap Equity MSCI EAFE Net 101 101 — — Passive Index Fund ETFs (b): U.S. Large Cap Equity S&P 500/Russell 1000 Growth 5,597 5,597 — — U.S. Small Mid Cap Equity Russell 2500 625 625 — — U.S. Small Cap Equity Russell 2000 128 128 — — U.S. Mid Cap Equity Russell Mid Cap 63 63 — — Non-U.S. Large Cap Equity MSCI EAFE Net 4,617 4,617 — — REIT Nareit - Equity REITS 2,987 — 2,987 — Fixed Income (c) (c) 22,118 — 22,118 — Total $ 60,754 $ 35,649 $ 25,105 $ — (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. 2010,2011, San Jose Water Company has madeis required by the Internal Revenue Service to make minimum contributions of $3,765up to the pension plan. Contributions of $7,500$6,800 and $499 are expected to be paid in the fourth quarter of 2010$569 to the pension plan and other postretirement benefit plan, respectively.9SJW CORP. AND SUBSIDIARIESNOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)SEPTEMBER 30, 2010(in thousands, except share and per share data)Note 5. Segment and Nonregulated Business Reporting which operatesoperate commercial building rentals, (“Real Estate Services”), (iii) SJWTX, Inc. which is doing business as Canyon Lake Water Service Company, a regulated water utility located in Canyon Lake, Texas and (iv) Texas Water Alliance Limited, a nonregulated water utility operation which is undertaking activities that are necessary to develop a water supply project in Texas. In accordance with FASB ASC Topic 280 – “Segment Reporting,” SJW Corp. has determined that it has two reportable business segments. The first segment is that of providing water utility and utility-related services to its customers through SJW Corp.’s subsidiaries, San Jose Water Company, Canyon Lake Water Service Company, and Texas Water Alliance Limited, together referred to as “Water Utility Services.” The second segment is property management and investment activity conducted by SJW Land Company, referred to as “Real Estate Services.” For Three Months Ended September 30, 2010 Water Utility Services Real
Estate
Services All
Other* SJW Corp. Regulated Non
regulated Non
regulated Non
regulated Regulated Non
regulated Total $ 67,928 1,575 844 - 67,928 2,419 70,347 55,693 1,235 658 341 55,693 2,234 57,927 12,235 340 186 (341 ) 12,235 185 12,420 8,501 317 (342 ) 2,311 8,501 2,286 10,787 6,576 87 419 - 6,576 506 7,082 4,206 - 440 6 4,206 446 4,652 5,737 225 (234 ) (226 ) 5,737 (235 ) 5,502 $ 827,850 9,462 83,545 34,535 827,850 127,542 955,392 For Three Months Ended September 30, 2009 Water Utility Services Real
Estate
Services All
Other* SJW Corp. Regulated Non
regulated Non
regulated Non
regulated Regulated Non
regulated Total $ 66,998 1,514 814 - 66,998 2,328 69,326 55,642 1,220 576 219 55,642 2,015 57,657 11,356 294 238 (219 ) 11,356 313 11,669 8,050 295 (228 ) (100 ) 8,050 (33 ) 8,017 5,898 86 419 - 5,898 505 6,403 3,665 - 449 - 3,665 449 4,114 6,055 202 (347 ) (175 ) 6,055 (320 ) 5,735 $ 749,366 5,000 82,466 44,432 749,366 131,898 881,264 10 For Three Months Ended March 31, 2011 Water Utility Services Real Estate Services All Other* SJW Corp. Regulated Regulated Total Operating revenue $ 41,682 907 1,107 — 41,682 2,014 43,696 Operating expense 36,070 698 790 537 36,070 2,025 38,095 Operating income (loss) 5,612 209 317 (537 ) 5,612 (11 ) 5,601 Net income (loss) 860 99 (120 ) (229 ) 860 (250 ) 610 Depreciation and amortization 7,288 87 419 — 7,288 506 7,794 Senior note, mortgage and other interest expense 4,266 — 465 — 4,266 465 4,731 Income tax expense (benefit) in net income 618 82 (84 ) (183 ) 618 (185 ) 433 Assets $ 855,877 10,564 81,462 (225 ) 855,877 91,801 947,678 For Three Months Ended March 31, 2010 Water Utility Services Real Estate Services All Other* SJW Corp. Regulated Regulated Total Operating revenue $ 38,760 844 807 — 38,760 1,651 40,411 Operating expense 33,543 571 610 350 33,543 1,531 35,074 Operating income (loss) 5,217 273 197 (350 ) 5,217 120 5,337 Net income (loss) 973 161 (174 ) 25 973 12 985 Depreciation and amortization 6,606 86 419 — 6,606 505 7,111 Senior note, mortgage and other interest expense 3,681 — 441 — 3,681 441 4,122 Income tax expense (benefit) in net income 809 111 (119 ) (119 ) 809 (127 ) 682 Assets $ 760,644 7,307 81,243 41,468 760,644 130,018 890,662 CORP. AND SUBSIDIARIESCorp. on a stand-alone basis.NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(Continued)SEPTEMBER 30, 2010(in thousands, except share and per share data) For Nine Months Ended September 30, 2010 Water Utility Services Real
Estate
Services All
Other* SJW Corp. Regulated Non
regulated Non
regulated Non
regulated Regulated Non
regulated Total $ 158,860 3,553 2,473 - 158,860 6,026 164,886 134,003 2,866 1,773 925 134,003 5,564 139,567 24,857 687 700 (925 ) 24,857 462 25,319 14,699 650 (827 ) 1,766 14,699 1,589 16,288 19,745 260 1,258 - 19,745 1,518 21,263 11,649 - 1,324 6 11,649 1,330 12,979 9,948 457 (568 ) (552 ) 9,948 (663 ) 9,285 $ 827,850 9,462 83,545 34,535 827,850 127,542 955,392 For Nine Months Ended September 30, 2009 Water Utility Services Real
Estate
Services All
Other* SJW Corp. Regulated Non
regulated Non
regulated Non
regulated Regulated Non
regulated Total $ 160,972 3,557 3,012 - 160,972 6,569 167,541 137,962 2,900 2,563 961 137,962 6,424 144,386 23,010 657 449 (961 ) 23,010 145 23,155 13,233 657 (974 ) (365 ) 13,233 (682 ) 12,551 17,677 257 1,258 - 17,677 1,515 19,192 10,482 - 1,382 26 10,482 1,408 11,890 9,665 448 (890 ) (412 ) 9,665 (854 ) 8,811 $ 749,366 5,000 82,466 44,432 749,366 131,898 881,264 *The “All Other” category includes SJW Corp. on a stand-alone basis.Note 6. Long-Term Liabilities May 27, 2010, SJW Corp. andMarch 10, 2011, 444 West Santa Clara Street, L.P. refinanced its mortgage loan. The new loan of $3,300 required a cash call from the partnership of approximately $500, of which SJW Land Company entered into a credit agreementcontributed 70% or approximately $350. The new mortgage loan is due in March 2021 and will be amortized over 20 years with Wells Fargo Bank, National Association (“Wells Fargo”), which provided an unsecured revolving credit facility in an aggregate amount of $10,000. This credit agreement replaced the then existing credit facility between SJW Corp., SJW Land Company and Wells Fargo. In addition, San Jose Water Company and Wells Fargo entered into a credit agreement which provided an unsecured revolving credit facility in an aggregate amount of $75,000. This credit agreement expanded and replaced the then existing credit facility between San Jose Water Company and Wells Fargo. The outstanding principal balance on both credit agreements bear interest either: (a) at a fluctuating rate per annum 1.00% below the prime rate, or (b) at a fixed interest rate per annum determined by Wells Fargo to be 1.375% above LIBOR. The two credit agreements will expire on June 1, 2012. San Jose Water Company’s unsecured bank line of credit has the following affirmative covenants: (1) the funded debt cannot exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar-month period cannot be less than 225% of interest charges. As of September 30, 2010, San Jose Water Company’s funded debt was 55% of total capitalization and the net income available for interest charges was 322% of interest charges. As of September 30, 2010, San Jose Water Company is in compliance with all covenants.On June 9, 2010, San Jose Water Company entered into a Bond Purchase Contract with Goldman, Sachs & Co., the Treasurer of the State of California and the California Pollution Control Financing Authority (the “Authority”) for the placement of $50,000 aggregate principal amount of 5.10% fixed rate California Pollution Control Financing Authority Revenue Bonds (San Jose Water Company Project) Series 2010A with interest only payments until maturity, which is June 1, 2040 (the “Bonds”)5.68%.SEPTEMBER 30, 2010The Bonds were issued by the Authority on June 16, 2010 pursuant to the provisions of the California Pollution Control Financing Authority Act and an Indenture, dated as of June 1, 2010 (the “Indenture”), between the Authority and Wells Fargo, as trustee. The proceeds from the issuance of the Bonds have been loaned by the Authority to San Jose Water Company pursuant to a Loan Agreement, dated as of June 1, 2010 (the “Loan Agreement”), between the Authority and San Jose Water Company. The loan proceeds have been used by San Jose Water Company to: (1) finance certain costs of (i) improvements to the structures and facilities that are integral to the supply of water throughout the water supply system owned by San Jose Water Company (the “Water System”), (ii) improvements to the water distribution system, and (iii) the acquisition of equipment for the Water System, all in the current service areas of San Jose Water Company and to the extent they will prevent the pollution of drinking water or improve the quality of water or ensure the safe handling, recycling or disposal of materials that might otherwise be improperly disposed of; and (2) pay certain costs of issuance of the Bonds.The Loan Agreement contains affirmative and negative covenants customary for a loan agreement relating to revenue bonds, including, among other things, complying with certain disclosure obligations and covenants relating to the tax exempt status of the interest on the Bonds and limitations and prohibitions relating to the transfer of the project funded by the loan proceeds and the assignment of the Loan Agreement. The Loan Agreement and the Indenture contain provisions that provide for the acceleration of the indebtedness upon the occurrence of a loan default event (as defined in the Loan Agreement) and an event of default (as defined in the Indenture).Note 7. Fair Value Measurement assets and liabilities measured at fair value on a recurring basisof our investment in California Water Service Group as required by FASB ASC Topic 820 – “Fair Value Measurements and Disclosures,” as of September 30, 2010March 31, 2011 and December 31, 2009: Balance as of
September 30, 2010 Level 1 Level 2 Level 3 $ 32,399 32,399 - - Balance as of
December 31, 2009 Level 1 Level 2 Level 3 $ 40,500 40,500 - - Fair Value Measurements at March 31, 2011 Total (Level 1) (Level 2) (Level 3) Assets: Investment in California Water Service Group $ 7,158 7,158 — — Fair Value Measurements at December 31, 2010 Total (Level 1) (Level 2) (Level 3) Assets: Investment in California Water Service Group $ 7,177 7,177 — — Note 8. Balancing and Memorandum Account Recovery Procedures The California Public Utilities Commission (“CPUC”) issued San Jose Water Company’s most recent general rate case decision in November 2009. part of that decision, the over-collected balance in the Company’s balancing account for expense offsets for the period January 1, 2005 to March 31, 2011 and December 31, 2007 of approximately $1,696 has been reviewed and authorized for inclusion in customer rates as a 12-month customer surcredit.As of September 30, 2010 and December 31, 2009,remaining balancing accounts, for expense offsetsincluding interest, was an over-collectionunder-collection of $176$2,628 and $1,062, respectively,$2,596, respectively. As of March 31, 2011 and December 31, 2010, the total balance in San Jose Water Company’s memorandum-type accounts, including interest. Theseinterest, was an under-collection of $5,455 and $5,217, respectively. As of March 31, 2011 and December 31, 2010, an under-collection of $5,740 is included in these amounts relating to the Company’s Mandatory Conservation Revenue Adjustment Memorandum Account (“MCRAM”). All balancing accounts are expected toand memorandum-type accounts will generally be reviewed for inclusion in customer rates by the CPUC as part ofin San Jose Water Company’s next general rate case.Mandatory Conservation Revenue Adjustment Memorandum Account (“MCRAM”),MCRAM, which covered the periodwas in effect from August 3, 2009 to May 1, 2010. The CPUC authorized San Jose Water Company to establish a MCRAM to track the revenue impact of mandatory conservation upon San Jose Water Company’s quantity revenue resulting from mandatory conservation instituted by Santa Clara Valley Water District.District (“SCVWD”). As directed by the CPUC’s Division of Water Division, any revenue increaseand Audits, the MCRAM would be recovered via a surcharge on the existing quantity rate for a period of 12 months following final approval by the CPUC. All revenue would be recognized immediately after final approval by the CPUC. A CPUC decision which was previously expected inOn November 29, 2010, the third quarterCPUC’s Division of Water and Audits rejected the requested revenue increase without prejudice, claiming that the request should be submitted on a Petition for Modification of an earlier decision. On December 7, 2010, is now expected sometime in the fourth quarter of 2010.SEPTEMBER 30, 2010Note 9. Sale of California Water Service Group StockLegal ProceedingsDuringquarter ended September 30, 2010,Superior Court of the Company sold 223,112 sharesState of California, County of Santa Clara (55 Partners LLC v San Jose Water Service Group for $8,147, before feesCompany, Case No. 109 CV 157824). The lawsuit alleged that a water main operated by San Jose Water Company has encroached upon the Plaintiff’s commercial property located in Los Gatos, California, and that the Plaintiff suffered damages following a rupture of $60.the water main caused by the Plaintiff’s construction work in a development project. The lawsuit seeks to recover damages in lost rental revenue to the Plaintiff’s development project, lost revenue to the Plaintiff’s motel operation on the property, and other opportunity costs and expenses. The trial commenced on April 27, 2011. San Jose Water Company intends to defend the lawsuit vigorously. SJW Corp. recognizeddoes not believe that the outcome of this lawsuit will have a gross gainmaterial adverse effect on the salefinancial condition of SJW Corp. and its subsidiaries.stocksubject, that are expected to have a material effect on SJW Corp.’s business, financial position, results of approximately $4,466, tax expense of approximately $1,831, for a net gain of $2,635. The unrealized holding gain associated with the shares sold, that was reclassified out of accumulated other comprehensive income was $2,527 and was based on the fair value of the stock as of June, 30, 2010. As of September 30, 2010, the Company held 876,840 shares of California Water Service Group. The Company classifies its investment in California Water Service Group as available for sale. The stock is carried at the quoted market price with the changes in unrealized gainoperations or loss reported, net of tax, as a component of other comprehensive income.ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (in thousands, except share and per share data)2009.Securities and Exchange Commission (the “SEC”)SEC under the item entitled “Risk Factors,” and in other reports SJW Corp. files with the SEC, specifically the most recent reports on Form 10-Q and Form 8-K, each as it may be amended from time to time. SJW Corp. undertakes no obligation to update or revise the information contained in this report, including the forward-looking statements, to reflect any event or circumstance that may arise after the date of this report.territory,territories, all in the County of Santa Clara in the State of California. San Jose Water Company distributes water to customers in accordance with accepted water utility methods which include pumping from storage and gravity feed from high elevation reservoirs. San Jose Water Company also provides nonregulated water related services under agreements with municipalities. These nonregulated services include full water system operations and billing and cash remittance services.September 30, 2010: % for Nine Months Ended
September 30, 2010
of SJW Land Company Location Acreage Square Footage Revenue Expense San Jose, California 2 28,000 29 % 15 % Windsor, Connecticut 17 170,000 23 % 12 % Orlando, Florida 8 147,000 13 % 7 % El Paso, Texas 2 14,000 9 % 2 % Phoenix, Arizona 11 176,000 26 % 12 % Knoxville, Tennessee 29 346,000 N/ A 12 % Knoxville, Tennessee 15 135,000 N/ A 40 % Knoxville, Tennessee 10 N/A N/ A N/ A San Jose, California 5 N/A N/ A N/ A The California properties include Description Location Acreage Square Footage Revenue Expense 2 Commercial buildings San Jose, California 2 28,000 16 % 16 % Warehouse building Windsor, Connecticut 17 170,000 17 % 12 % Warehouse building Orlando, Florida 8 147,000 10 % 7 % Retail building El Paso, Texas 2 14,000 7 % 2 % Warehouse building Phoenix, Arizona 11 176,000 19 % 11 % Warehouse building Knoxville, Tennessee 30 361,500 N/A 13 % Commercial building Knoxville, Tennessee 15 135,000 31 % 39 % Undeveloped land Knoxville, Tennessee 10 N/A N/A N/A Undeveloped land San Jose, California 5 N/A N/A N/A 9,2009,300 connections that serve approximately 36,000 people. CLWSC’s service area comprises more than 237 square miles in western Comal County and southern Blanco County in the growing region between San Antonio and Austin, Texas.876,840192,560 shares of common stock of California Water Service Group, which represents approximately 4%1% of that company’s outstanding shares of common stock as of September 30, 2010.March 31, 2011.fourthree strategic areas:(1) Regional regulated water utility operations. (2) Regional nonregulated water utility related services provided in accordance with the guidelines established by the CPUC.CPUC in California and the Texas Commission on Environmental Quality (“TCEQ”) in Texas.(3) Out-of-region water and utility related services, primarily in the Western United States. (4)Real estate investment activities in SJW Land Company.fourthree strategic areas, the Company considers from time to time opportunities to acquire businesses and assets. However, SJW Corp. cannot be certain it will be successful in identifying and consummating any strategic business acquisitions relating to such opportunities. In addition, any transaction will involve numerous risks, including the possibility of incurring more costs than benefits derived from the acquisition, the assumption of certain known and unknown liabilities related to the acquired assets, the diversion of management’s attention from day-to-day operations of the business, the potential for a negative impact on SJW Corp.’s financial position and operating results, entering markets in which SJW Corp. has no or limited direct prior experience and the potential loss of key employees of any acquired company. SJW Corp. cannot be certain that any transaction will be successful and will not materially harm its operating results or financial condition. the Water Utility Services includes billing to customers based on meter readings plus an estimate of water used between the customers’ last meter reading and the end of the accounting period. The Water Utility Services readsread the majority of its customers’ meters on a bi-monthly basis and records its revenue based on its meter reading results. Unbilled revenue from the last meter reading date to the end of the accounting period is estimated based on the most recent usage patterns, production records and the effective tariff rates. Actual results could differ from those estimates, which may result in an adjustment to the operating revenue in the period which the revision to the Water Utility Services’ estimates areis determined. As of September 30, 2010March 31, 2011 and December 31, 2009,2010, accrued unbilled revenue was $19,197$13,108 and $12,435$12,717, respectively.Unaccounted-for water on a 12 month-to-date basis for September 30, 2010 and 2009 approximated 7.36% and 8.03%, respectively, as a percentage of production. The estimate is based on the results of past experience, the trend and efforts in reducing the Water Utility Services’ unaccounted-for water through main replacements and lost water reduction programs.ninethree months ended September 30, 2010March 31, 2011 and 2009,2010, the surcharge was $2,229$581 and $2,489,$601, respectively.termsterm of the leases.the Water Utility Services, to the extent applicable, recordrecords deferred costs and credits on the balance sheet as regulatory assets and liabilities when it is probable that these costs and credits will be recognized in the ratemaking process in a period different from when the costs and credits are incurred. Accounting for such costs and credits is based on management’s judgment and prior historical ratemaking practices, and it occurs when management determines that it is probable that these costs and credits will be recognized in the future revenue of the Water Utility Services through the ratemaking process. The regulatory assets and liabilities recorded by the Water Utility Services, in particular, San Jose Water Company, primarily relate to the recognition of deferred income taxes for ratemaking versus tax accounting purposes and the postretirement pension benefits, medical costs, accrued benefits for vacation and asset retirement obligations that have not been passed through in rates. The disallowance of any asset in future ratemaking, including deferred regulatory assets, would require San Jose Water Company to immediately recognize the impact of the costs for financial reporting purposes. No disallowance was recognized as of September 30, 2010March 31, 2011 and December 31, 2009.2010. Net regulatory assets recorded by San Jose Water Company as of September 30, 2010March 31, 2011 and December 31, 20092010 were $78,274$87,721 and $78,525,$87,721, respectively.defined benefit plan,Pension Plan, an Executive Supplemental Retirement Plan, and certain postretirement benefits other than pensions to employees retiring with a minimum level of service. Accounting for pensions and other postretirement benefits requires an extensive use of assumptions about the discount rate applied to expected benefit obligations, expected return on plan assets, the rate of future compensation increases expected to be received by the employees, mortality, turnover, and medical costs.16The pension plan is administered by a committee that is composed of an equal number of company and union representatives (the “Committee”). The Committee has retained an investment consultant, presently Wells Fargo Advisors, LLC, to assist it with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and manager due diligence. Investment decisions have been delegated by the Committee to investment managers. Investment guidelines provided in the Investment Policy Statement require that at least 25% of the plan assets be invested in fixed income securities. As of December 31, 2009, the plan assets consist of approximately 37% bonds, 4% cash equivalents, and 59% equities. Furthermore, equities are to be diversified by industry groups and selected to achieve a balance of long-term growth and income combined with a goal of long-term preservation of capital. Except as provided for in the prospectus of any co-mingled investments, investment managers may not invest in commodities and futures contracts, private placements, options, letter stock, speculative securities, nor may they hold more than 5% of assets of any one private corporation. Except as provided for in the prospectus of any co-mingled investments, fixed income assets may only be invested in bonds, commercial paper, and money market funds with acceptable ratings by Moody’s or Standard & Poor’s as defined by the Investment Policy Statement. The investment manager performance is reviewed regularly by the investment consultant who provides quarterly reports to the Committee for review.12.9312.78 years for actuarial expense calculation purposes.Federalfederal and state income taxes as part of the process of preparing financial statements. The process involves estimating the actual current tax exposure together with assessing temporary differences resulting from different treatment of items for tax and accounting purposes, including the evaluation of the treatment acceptable in the water utility industry and regulatory environment. These differences result in deferred tax assets and liabilities, which are included on the balance sheet. If actual results, due to changes in the regulatory treatment, or significant changes in tax-related estimates or assumptions or changes in law, differ materially from these estimates, the provision for income taxes will be materially impacted.A balancing account isauthorizes a change in customers’ rates related to any balancing account.approval occurs. It is typical for the CPUC to incorporate any over-collected and/or under-collected balances in balancing accounts into customer rates at the time rate decisions are made as part of the Company’s general rate case proceedings by assessing temporary surcredits and/or surcharges. In such circumstances, the Company recognizes an impact to revenue, either positive or negative, as the surcredits and/or surcharges are billed to customer accounts.FASB ASC Topic 605 and Sub-Topic 980-605 – “Revenue Recognition.”RecognitionGain/Loss on Utility, Nonutility PropertyOperations:Real Estate InvestmentsIn conformity withinfluenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. Due to the seasonal nature of the water business, the operating results for interim periods are not indicative of the operating results for a 12-month period. Revenue is generally accepted accounting principles for rate-regulated public utilities, the cost of retired utility plant, including retirement costs (less salvage), is charged to accumulated depreciation and no gain or loss is recognized for utility plant used and useful in providing water utility services to customers.Utility propertyhigher in the warm, dry summer months when water usage and sales are greater and lower in the winter months when cooler temperatures and increased rainfall curtail water usage and sales. Operating Revenue by Segment THREE MONTHS ENDED
MARCH 31, 2011 2010 Water Utility Services $ 42,589 39,604 Real Estate Services 1,107 807 $ 43,696 40,411 Increase/(decrease) Water Utility Services: Consumption changes $ 458 1 % New customers increase 170 — % Rate increases 2,357 6 % Real Estate Services 300 1 % $ 3,285 8 % Operating Expense by Segment THREE MONTHS ENDED
MARCH 31, 2011 2010 Water Utility Services $ 36,768 34,114 Real Estate Services 790 610 All Other 537 350 $ 38,095 35,074 Increase/(decrease) Water production costs: Change in surface water supply $ 1,040 3 % Change in usage and new customers 19 — % Purchased water and groundwater extraction charge and energy price increase (25 ) — % Total water production costs 1,034 3 % Administrative and general 648 2 % Maintenance 272 1 % Property taxes and other non-income taxes 384 1 % Depreciation and amortization 683 2 % $ 3,021 9 % ServicesServices: THREE MONTHS ENDED
MARCH 31, % Change 2011 2010 Purchased water 3,911 3,037 874 11 % Groundwater 2,914 3,216 (302 ) (4 )% Surface water 872 1,411 (539 ) (7 )% Reclaimed water 18 25 (7 ) — % 7,715 7,689 26 — % is used and useful in providingits various sources of water utility services to customers and is included in rate base for rate-setting purposes. In California, real estate type utility property is subject to California Public Utilities Code Section 851, which states any gain recognizedsupply will be dividedsufficient to meet customer demand through the remainder of 2011.two-thirds goingthe California Fish & Game Commission’s restrictions to protect longfin smelt, the customers (inlongfin pumping restrictions, if triggered, could cause significant supply impacts beyond those estimated to comply with Delta smelt requirements.formSCVWD board of rate reduction)directors passed a resolution calling for a mandatory 15% reduction in water use for the remainder of the calendar year 2009. On December 8, 2009, this call for conservation was further extended through June 2010. To effect water restrictions, SCVWD worked with other political subdivisions that possess the authority to enact and one-thirdenforce drought ordinances in order to effect such restrictions. San Jose Water Company worked with the shareholders. Net gains or lossesCPUC to develop its water conservation plan to comply with the call for a 15% reduction in water use. The CPUC approved the plan, which became effective on August 12, 2009 and remained in effect through June 2010.utility propertywater at rates authorized by the CPUC. The CPUC sets rates that are recorded asintended to provide revenue sufficient to recover operating expenses and produce a componentspecified return on common equity. The timing of other (expense) income inrate decisions could have an impact on the consolidated statementresults of income and comprehensive income.Nonutility property in the Water Utility Services is property that is neither used nor useful in providing water utility services to customers and is excluded from the rate base for rate-setting purposes.operations.recognizes gain/lossfiled an advice letter with the CPUC requesting authorization to increase revenues by $5,740 or approximately 2.61%. This increase is intended to recover the accumulated balance in the MCRAM, which was in effect from August 3, 2009 to May 1, 2010. The CPUC authorized MCRAM is intended to track the revenue impact of mandatory conservation upon San Jose Water Company’s quantity revenue resulting from mandatory conservation instituted by the SCVWD. As directed by the CPUC’s Division of Water and Audits, the MCRAM would be recovered via a surcharge on dispositionthe existing quantity rate for a period of nonutility property12 months following final approval by the CPUC. All revenue would be recognized immediately after final approval by the CPUC. On November 29, 2010, the CPUC’s Division of Water and Audits rejected the requested revenue increase without prejudice, claiming that the request should be submitted on a Petition for Modification of an earlier decision. On December 7, 2010, San Jose Water Company filed a Request for Review of the Rejection. On April 29, 2011, the CPUC’s Division of Water and Audits issued draft Resolution W-4875 that would have the CPUC affirm the rejection of the requested revenue increase. The draft Resolution sets a deadline for submitting comments on or before June 15, 2011. San Jose Water Company anticipates filing comments on the draft Resolution prior to the scheduled deadline. The draft Resolution is preliminarily set to be on the June 23, 2011 Commission meeting agenda, where the Commission will vote to adopt or deny the draft Resolution.accordancecompliance with California Public Utilities Code Section 790.SJW Land Company owns real estate investment property, which consists primarilyCommission Decision 09-11-032, requested the CPUC’s approval of land and buildings. Net gains and lossesupgrades to San Jose Water Company’s 40-year old Montevina Water Treatment Plant (“MWTP”). Thesalelocal watershed by direct media filtration and chlorine disinfection. Over the past 40 years, state and federal drinking water regulations have changed significantly in areas that the MWTP was not designed to address. The MWTP has aging infrastructure and many of real estate investmentsits components are recorded as a componentout-dated and at the end of other (expense) incometheir useful lives. In addition, the concrete structures do not meet current structural and seismic requirements. The total planned project cost is $73,700 over five years, with the project commencing in late 2011. San Jose Water Company’s application is requesting revenue increases of $490 or 0.22% in 2011, $1,861 or 0.85% in 2012, $7,700 or 3.50% in 2013, $3,547 or 1.61% in 2014 and $843 or 0.38% in 2015 (all at the current authorized rate of return). A decision on the application is expected sometime in the consolidated statementsecond half of income2011.comprehensive income.ninethree months ended September 30, 2010,March 31, 2011, SJW Corp. generated cash flow from operations of approximately $33,200,$11,500, compared to $36,700$11,000 in 2009.2010. Cash flow from operations is primarily generated by net income from its revenue producing activities, adjusted for non-cash expenses for depreciation and amortization, deferred income taxes and gains on the sale of assets. The decreasechanges in cashworking capital items. Cash flow from operations increased by approximately $500. This increase was caused by a combination of approximately $3,500 was due to a decrease inthe following factors: (1) net income adjusted for non-cash items and loss from asset activity increased $3,400, (2) improved collection of $3,100 and $400 inaccounts receivable drove an increase of $1,000, (3) general working capital changes caused a $600 decrease, and employee benefits. The decrease(4) changes in working capital and employee benefits was primarily dueaccrued taxes were $3,300 greater than the prior period.a decrease incollect its accounts receivable and accrued unbilled utility revenue, offset by an increase in postretirement benefits and accrued payroll.ninethree months ended September 30, 2010,March 31, 2011, SJW Corp. used approximately $70,400$12,100 of cash for company funded capital expenditures, $2,900$700 for developer funded capital expenditures, $3,300and $1,100 for real estate investments which relate to the leasehold improvement additions for the office building located in Knoxville, Tennessee, and $2,900 for acquisitions. These uses were offset by proceeds of $8,100 related to the sale of California Water Service Group stock. This represented an increase in additions to utility plant of $29,600 over the same period in 2009.2010,2011, exclusive of capital expenditures financed by customer contributions and advances, are $70,016.$69,958. Historically, amounts have been carried over from previous years’ budgets. Approximately $21,500$10,600 has been carried over from prior years for total forecasted 2010 capital expenditures of $91,500.years’ budget and is included in the amount above. As of September 30, 2010, $73,332March 31, 2011, $12,122 or 80%17% of the $91,500$69,958 has been spent.The the Water Utility Services expects to incur approximately $439,000$469,000 in capital expenditures, which includes replacement of pipes and mains, and maintaining water systems. Capital expenditures have the effect of increasing utility plant on which the Water Utility Services earns a return. The Water Utility Services actual capital expenditures may vary from their projections due to changes in the expected demand for services, weather patterns, actions by governmental agencies, and general economic conditions. Total additions to utility plant normally exceed company-financed additions as a result of new facilities construction funded with advances from developers and contributions in aid of construction.18As of September 30, 2010, the Water Utility Services’ write-offs for uncollectible accounts represent less than 1% of its total revenue, unchanged from September 30, 2009. Management believes it can continue to collect its accounts receivable balances at its historical collection rate.ninethree months ended September 30, 2010 increasedMarch 31, 2011 decreased by approximately $30,900$2,800 from the same period in the prior year. As the company has increased its needs for capital expenditures, funding for these has been made possible from additional long-termThe decrease was primarily due to a $3,400 decrease in new borrowings where in the prior year we made a net repayment on the line of credit and issued long-term debt. Long-term borrowings duringa decrease in repayments of $1,900. In addition, the nine months ended September 30, 2010 consistsCompany received $1,200 less in cash from advances and contributions in aid of $50,000 in California Pollution Control Financing Authority Revenue Bonds. Duringconstruction compared to the same period in the prior year, San Jose Water Company issued a total of $30,000 in unsecured Senior Notes, consisting of $10,000 in Series J and $20,000 in Series K.50%48% debt and 50%52% equity (book value). As of September 30, 2010,March 31, 2011, San Jose Water Company’s funded debt and equity were approximately 55%54% and 45%46%, respectively.itsour investment in California Water Service Group, all of which will be consistent with the regulator’s guidelines.September 30, 2010,55%54% of total capitalization and the net income available for interest charges was 322%288% of interest charges. As of September 30, 2010,March 31, 2011, San Jose Water Company didis not have any restrictions inrestricted from issuing future indebtedness as a result of these terms and conditions.the Water Utility Services cumulative net income, since December 31, 2005. As of September 30, 2010,March 31, 2011, SJW Corp. didis not have any restrictions inrestricted from issuing any future indebtedness as a result of these terms and conditions.$85,000,$95,000, of which $45,000 is available to SJW Corp. and SJW Land Company under a single line of credit and $50,000 is available to San Jose Water Company under another line of credit. $3,000 under the San Jose Water Company line of credit is set aside as security for San Jose Water Company’sits Safe Drinking Water State Revolving Fund loans. At September 30, 2010, theMarch 31, 2011, SJW Corp. and its subsidiaries had available unused short-term bank lines of credit was $78,500.of $80,500. These lines of credit bear interest at variable rates. They will expire on June 1, 2012. The cost of borrowing on unsecured bank lines ofSJW Corp.’s short-term credit facilities averaged 2%1.75% for the first ninethree months of 2010.2011. SJW Corp., on a consolidated basis, has the following affirmative covenants on its unsecured bank line of credit: (1) the funded debt cannot exceed 60% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar-month period cannot be less than 200% of interest charges. As of March 31, 2011, SJW Corp.’s funded debt was 54% of total capitalization and the net income available for interest charges was 322% of interest charges. As such, as of March 31, 2011, SJW Corp. was in compliance with all covenants. San Jose Water Company’s unsecured bank line of credit has the following affirmative covenants: (1) the funded debt cannot exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar-month period cannot be less than 225% of interest charges. As of September 30, 2010,March 31, 2011, San Jose Water Company iswas in compliance with all covenants.June 9, 2010, San Jose Water Company entered into a loan agreementFebruary 3, 2011, SJW Corp. filed with the California Pollution Control Financing Authority (the “Authority”), under whichSEC a Form S-3 to provide stockholders the proceeds from the issuance by the Authority of its 5.10% fixed rate revenue bondsopportunity to participate in an aggregate principal amount of $50,000 have been loaned to San Jose Water Company. The loan proceeds have been used by San Jose Water Company to finance, among other things, (i) improvements to the structures and facilities integral to the supply of water throughout the water supply system owned by San Jose Water Company (the “Water System”), (ii) improvements to the distribution system, and19(iii) the acquisition of equipment for the Water System, subject to certain conditions. The loan agreement contains affirmative and negative covenants customary for a loan agreement relating to revenue bonds, including, among other things, complying with certain disclosure obligations and covenants relating to the tax exempt status of the interest on the bonds and limitations and prohibitions relating to the transfer of the project funded by the loan proceeds.Results of Operations:Water sales are seasonal in nature and influenced by weather conditions. The timing of precipitation and climatic conditions can cause seasonal water consumption by customers to vary significantly. Due to the seasonal nature of the water business, the operating results for interim periods are not indicative of the operating results for a 12-month period. Revenue is generally higher in the warm, dry summer months when water usage and sales are greater and lower in the winter months when cooler temperatures and increased rainfall curtail water usage and sales.Overviewconsolidated net income for the three months ended September 30, 2010 was $10,787, an increase of $2,770, or approximately 35%, from $8,017 in the third quarter of 2009. For the nine months ended September 30, 2010, consolidated net income was $16,288, an increase of $3,737, or approximately 30%, from $12,551 for the same period in 2009. The increase for the threeDividend Reinvestment and nine months ended September 30, 2010 was primarily due to the gain on sale of California Water Service Group investment and lower production costs as a result of increased surface water availability.Operating Revenue Operating Revenue by Segment Three months ended
September 30, Nine months ended
September 30, 2010 2009 2010 2009 $ 69,503 68,512 $ 162,413 164,529 844 814 2,473 3,012 $ 70,347 69,326 $ 164,886 167,541 The change in consolidated operating revenues was due to the following factors: Three months ended
September 30,
2010 vs. 2009 Nine months ended
September 30,
2010 vs. 2009 Increase/(decrease) Increase/(decrease) $ (33 ) 0 % $ (6,148 ) -4 % 109 0 % 257 0 % 915 1 % 3,775 2 % 30 0 % (539 ) 0 % $ 1,021 1 % $ (2,655 ) -2 % Operating Expense Operating Expense by Segment Three months ended
September 30, Nine months ended
September 30, 2010 2009 2010 2009 $ 56,928 56,862 $ 136,869 140,862 658 576 1,773 2,563 341 219 925 961 $ 57,927 57,657 $ 139,567 144,386 20The change in consolidated operating expenses was due to the following factors: Three months ended
September 30,
2010 vs. 2009 Nine months ended
September 30,
2010 vs. 2009 Increase/(decrease) Increase/(decrease) $ (541 ) -1 % $ (3,547 ) -2 % (483 ) -1 % (4,658 ) -3 % (127 ) 0 % 670 0 % (1,151 ) -2 % (7,535 ) -5 % 1,361 2 % 1,075 1 % 95 0 % 563 0 % (655 ) -1 % (722 ) 0 % 174 0 % (745 ) -1 % 679 1 % 2,071 2 % (233 ) 0 % 474 0 % $ 270 0 % $ (4,819 ) -3 % Water production costsFor the three months ended September 30, the decrease in water production costs was primarily attributable to an increase in the availability of surface water supply in addition to a decrease in usage due to conservation efforts called for by the Santa Clara Valley Water District and lower per unit costs paid for purchased water and energy. For the nine months ended September 30, the decrease in water production costs was also due to an increase in the availability of surface water supply in addition to a decrease in usage due to conservation efforts. These decreases were partially offset by an increase in net higher per unit costs paid for energy and purchased water.Sources of Water SupplyThe Water Utility Services water supply consists of groundwater from wells, surface water from watershed run-off and diversion, reclaimed water and water purchased from regional wholesalers. Surface water is the least expensive source of water. The following table presents the change in sources of water supply, in million gallons, for the Water Utility Services: Three months ended
September 30, Increase/
(decrease) % Change Nine months ended
September 30, Increase/
(decrease) % Change 2010 2009 2010 2009 8,636 7,883 753 5 % 17,607 18,555 (948 ) -3 % 5,615 6,872 (1,257 ) -8 % 12,854 16,206 (3,352 ) -8 % 1,400 1,125 275 2 % 4,655 2,759 1,896 5 % 196 188 8 0 % 329 356 (27 ) 0 % 15,847 16,068 (221 ) -1 % 35,445 37,876 (2,431 ) -6 % The changes in the source of supply mix were consistent with the changes in the water production costs.Operating expenses, excluding water production costs and income taxes, increased $1,654 for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. The increase was primarily attributable to an increase of $1,361 in administrative and general expenses primarily due to an increase in retirement benefits, $679 in depreciation expense due to increased depreciable assets and $269 in other operating expenses. These increases were offset by a $655 decrease in maintenance expenses primarily due to a decrease in contracting and paving costs as a result of a decrease in main leak repairs. Income tax expense decreased for the three months ended September 30, 2010 due primarily to lower pre-tax income. The tax rate was 41% and 42%, respectively, for the three months ended September 30, 2010 and 2009.21Operating expenses, excluding water production costs and income taxes, increased $2,242 for the nine months ended September 30, 2010 compared to the nine months ended September 30, 2009. The increase was primarily attributable to an increase of $2,071 in depreciation expense due to increased depreciable assets, $1,075 in administrative and general expenses primarily due to an increase in retirement benefits and $563 in other operating expenses. These increases were offset by a $745 decrease in taxes other than income taxes and $722 in maintenance expenses. In 2009, we assumed the payment of property tax expense on one of our real estate properties resulting from a tenant bankruptcy. Income tax expense increased for the nine months ending September 30, 2010 as a result of higher pre-tax income. The tax rate was 41% for the nine months ended September 30, 2010 and 2009.The change in other comprehensive income/(loss) for the three and nine months ended September 30, 2010 and 2009 was due to the changes in market value and the sale of the investment in California Water Service Group.Water SupplySan Jose Water Company’s water supply consists of groundwater from wells, surface water from watershed run-off and diversion, and imported water purchased from the Santa Clara Valley Water District (“SCVWD”) under the terms of a master contract with SCVWD expiring in 2051.On September 20, 2010, SCVWD’s 10 reservoirs were approximately 58% full with 98,375 acre-feet of water in storage. For the first quarter of the rainfall season that commenced on July 1, 2010 and ends on June 30, 2011, there was no measurable rainfall. As of September 30, 2010, San Jose Water Company’s Lake Elsman contained 527 million gallons of which approximately 330 million gallons can be utilized. In addition, there was no rainfall at San Jose Water Company’s Lake Elsman for the season commencing from July 1, 2010 through June 30, 2011, which is close to the five-year average of 0.09 inches for the same period. Local surface water is a less costly source of water than groundwater or purchased water and its availability significantly impacts San Jose Water Company’s results of operations. San Jose Water Company believes that its various sources of water supply will be sufficient to meet customer demand through the remainder of 2010.On December 15, 2008, the U.S. Fish and Wildlife Service issued a new Biological Opinion (BiOp) and Incidental Take Statement for the Central Valley Project (CVP) and the State Water Project (SWP) on the Delta smelt. The operating requirements of BiOp replaced the interim remedy ordered by Federal Judge Oliver Wanger in December 2007. The BiOp prescribes a range of operational criteria that are determined based on hydrology, fish distribution, abundance and other factors. Under a “most likely” scenario, the California Department of Water Resources (DWR) and United States Bureau of Reclamation (USBR) estimate that SWP and CVP supplies to SCVWD could be reduced by approximately 17% to 18% of the supply amount they currently receive. Under a “worst case” BiOp scenario, SWP and CVP supplies to SCVWD could be reduced by approximately 32% to 33% of the current supply amount they receive. In addition, while there is some overlap with the California Fish & Game Commission’s restrictions to protect longfin smelt, the longfin pumping restrictions, if triggered, could cause significant supply impacts beyond those estimated to comply with Delta smelt requirements.On March 24, 2009, the SCVWD board of directors passed a resolution calling for a mandatory 15% reduction in water use, which had been extended through June 2010. To effect water restrictions, SCVWD must work with other political subdivisions that possess the authority to enact and enforce drought ordinances in order to effect such restrictions. San Jose Water Company worked with the CPUC to develop its water conservation plan to comply with the call for a 15% reduction in water use. The CPUC approved the plan, whichStock Purchase Plan. Such filing became effective on August 12, 2009 and remained in effect through June 2010.On July 13, 2010, the SCVWD board of directors passed a resolution calling for a three-month, 10% mandatory water conservation through September 30, 2010; and implemented a special Board work study session, which included retailers and municipalities, to discuss tiered rates and the effect on water conservation.On September 28, 2010, the SCVWD board of directors voted to end mandatory conservation, but continued to request a voluntary 10% conservation.CLWSC’s water supply consists of groundwater from wells and purchased raw water from the Guadalupe-Blanco River Authority (“GBRA”). CLWSC has long-term agreements with GBRA, which expire in 2040, 2044 and 2050. The agreements provide CLWSC with 6,700 acre-feet of water per year from Canyon Lake at prices to be adjusted periodically by GBRA.22Regulatory AffairsAlmost all of the operating revenue of San Jose Water Company results from the sale of water at rates authorized by the CPUC. The CPUC sets rates that are intended to provide revenue sufficient to recover operating expenses and produce a specified return on common equity. The timing of rate decisions could have an impact on the results of operations.On May 1, 2009, San Jose Water Company filed an application with the CPUC requesting authority to increase its authorized Cost of Capital (COC) for the period from January 1, 2010 through December 31, 2012. In the application, San Jose Water Company is requesting a rate of return on rate base of 9.70% for Test Year 2010, a debt-equity capital structure of 47.66%/52.34%, a cost of debt of 7.03%, and an authorized return on equity of 12.125%. A CPUC decision is expected sometime in the fourth quarter of 2010.On November 20, 2009, the CPUC approved the most recent general rate increase for San Jose Water Company. In summary, the decision authorizes a rate increase designed to increase revenue by $18,597 or 9.24% in 2010. In accordance with CPUC rules, the subsequent increases for the years 2011 and 2012 will be based upon the consumer price indices published in October of the preceding year. Best estimates of these increases at that time were $7,558 or 3.43% in 2011, and $11,088 or 4.87% in 2012. These rate increases are designed to produce a return on common equity of 10.13%, which is comparable with recent authorized returns for water utilities in California. The stated revenue increases for 2010 through 2012 do not include additional authorized increases associated with scheduled expense and rate base offset filings, rate recovery of planned upgrades to the Montevina Treatment Plant, and the potential supplemental filings for rate recovery of investments in alternative energy projects. The new rates for 2010 became effective January 1, 2010.On April 2, 2010, San Jose Water Company filed an application with the CPUC requesting authorization to increase the annual revenue requirement by $80 or about 0.03% and to increase rates proportionately. This increase is necessary in order to support an annual increase of about $410 in the capital budget for meter replacement, in order to comply with the requirements of the Commission’s General Order No. 103. If approved, the rate change should become effective sometime in the fourth quarter of 2010.On June 2, 2010, San Jose Water Company filed an advice letter with the CPUC requesting authorization to increase revenues by $5,740 or approximately 2.61%. This increase is intended to recover the accumulated balance in the Mandatory Conservation Revenue Adjustment Memorandum Account (“MCRAM”), which covered the period from August 3, 2009 to May 1, 2010. The CPUC authorized San Jose Water Company to establish a MCRAM to track the revenue impact of mandatory conservation upon San Jose Water Company’s quantity revenue resulting from mandatory conservation instituted by Santa Clara Valley Water District. As directed by the CPUC’s Water Division, any revenue increase would be recovered via a surcharge on the existing quantity rate for a period of 12 months following final approval by the CPUC. All revenue would be recognized immediately after final approval by the CPUC. A CPUC decision which was previously expected in the third quarter of 2010 is now expected sometime in the fourth quarter of 2010.On August 27, 2010, Canyon Lake Water Service Company filed a rate case with the Texas Commission on Environmental Quality (“TCEQ”). The filing contains a request for an increase in revenue of 38.4%. The rates will become effective, subject to refund, on or about October 27, with the first bills mailed to customers 30 days later. The Company is also requesting from the TCEQ for a rate base determination. A resolution of the case is not expected for at least 12 months.On September 30, 2010, San Jose Water Company, in compliance with Commission Decision 09-11-032, is requesting the CPUC’s approval of upgrades to San Jose Water Company’s 40-year old Montevina Water Treatment Plant (“MWTP”). The MWTP treats surface water from the local watershed by direct media filtration and chlorine disinfection. Over the past 40 years, State and Federal drinking water regulations have changed significantly in areas that the MWTP was not designed to address. The MWTP has aging infrastructure and many of its components are out-dated and at the end of their useful lives. In addition, the concrete structures do not meet current structural and seismic requirements. The total project cost is $73,700 over five years, with the project commencing in19, 2011. To fund the MWTP upgrades, San Jose Water Company’s application is requesting revenue increases of $490 or 0.22% in 2011, $1,861 or 0.85% in 2012, $7,700 or 3.50% in 2013, $3,547 or 1.61% in 2014 and $843 or 0.38% in 2015 (all at current authorized rate of return).23ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK linelines of credit. SJW Corp. also owns 876,840192,560 shares of common stock of California Water Service Group as of September 30, 2010,March 31, 2011, which is listed on the New York Stock Exchange, and is therefore exposed to the risk of fluctuations and changes in equity prices.ITEM 4. SJW Corp.’sits Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of SJW Corp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, the “Exchange Act”), as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that SJW Corp.’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or “the Act”) as of the end of the period covered by this report have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by SJW Corp. in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. SJW Corp. believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.thirdfirst fiscal quarter of 20102011 that has materially affected, or is reasonably likely to materially affect, the internal controls over financial reporting of SJW Corp.ITEM 1. LEGAL PROCEEDINGS ITEM 5. OTHER INFORMATION OctoberApril 27, 2010,2011, the Board of Directors of SJW Corp. declared the regular quarterly dividend of $0.17$0.1725 per share of common stock. The dividend will be paid DecemberJune 1, 20102011 to shareholders of record as of the close of business on November 8, 2010.May 9, 2011.ITEM 6. EXHIBITS CertificationSignatures of this document, which is incorporated herein by reference as required to be filed by Item 601 of Regulation S-K for the quarter ended September 30, 2010.24 SJW CORP. DATE: November 5, 2010 By DATE: May 6, 2011 By /s/ JAMES P. LYNCH James P. Lynch James P. Lynch 25EXHIBIT INDEX 3.1By-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, 2010.10.1 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)10.2 Amendment to the San Jose Water Company Cash Balance Executive Supplemental Retirement Plan, effective as of January 1, 2011. Incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 1, 2010. (2) 10.2 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) 10.3 Amended and restated Exhibit A to SJW Corp. Executive Supplemental Retirement Plan effective January 26, 2011. (1) (2) 31.1 Certification Pursuant to Rule 13a-14(a)/15d-14(a) by President and Chief Executive Officer. (1) 31.2 Certification Pursuant to Rule 13a-14(a)/15d-14(a) by Chief Financial Officer and Treasurer. (1) 32.1 Certification Pursuant to 18 U.S.C. Section 1350 by President and Chief Executive Officer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1) 32.2 Certification Pursuant to 18 U.S.C. Section 1350 by Chief Financial Officer and Treasurer, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (1) (1) Filed currently herewith. (2) Management contract or compensatory plan or agreement. 26