##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934for
the quarterly period ended June 30, 2005 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934for
the transition period from _________ to ___________
 Commission
file number 001-14431
 American States Water Company
  California
    
    95-4676679(State or Other Jurisdiction of
Incorporation or Organization)
    
    (IRS Employer Identification No.)
 630 East Foothill Boulevard, San Dimas
    
    91773(Address of Principal Executive Offices)
    
    (Zip Code)
 (909) 394-3600(Registrants Telephone Number, Including Area Code)Not Applicable(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 Commission file number 001-12008
 Southern California Water Company
  California
    
    95-1243678(State or Other Jurisdiction of Incorporation or Organization)
    
    (IRS Employer Identification No.)
 630 East Foothill Boulevard, San Dimas
    
    91773(Address of Principal Executive Offices)
    
    (Zip Code)
 (909) 394-3600(Registrants Telephone Number, Including Area Code)Not Applicable(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
  American States Water Company
    
    Yes þ
    
    No oSouthern California Water Company
    
    Yes þ
    
    No o
  American States Water Company
    
    Yes þ
    
    No oSouthern California Water Company
    
    Yes o
    
    No þ




---



AMERICAN STATES WATER COMPANY
and
 SOUTHERN CALIFORNIA WATER COMPANY
FORM 10-Q
 INDEX
  PagePart I Financial InformationItem 1: Financial Statements
    
    
    2Consolidated Balance Sheets of American States Water Company as of June 30, 2005 and December 31, 2004
    
    
    3-4Consolidated Statements of Income of American States Water Company for the Three Months Ended June 30, 2005 and 2004
    
    
    5Consolidated Statements of Income of American States Water Company for the Six Months Ended June 30, 2005 and 2004
    
    
    6Consolidated Statements of Cash Flow of American States Water Company for the Six Months Ended June 30, 2005 and 2004
    
    
    7Consolidated Balance Sheets of Southern California Water Company as of June 30, 2005 and December 31, 2004
    
    
    8-9Consolidated Statements of Income of Southern California Water Company for the Three Months Ended June 30, 2005 and 2004
    
    
    10Consolidated Statements of Income of Southern California Water Company for the Six Months Ended June 30, 2005 and June 30, 2004
    
    
    11Consolidated Statements of Cash Flow of Southern California Water Company for the Six Months Ended June 30, 2005 and June 30, 2004
    
    
    12Notes to Consolidated Financial Statements
    
    
    13-26Item 2: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27-46Item 3: Quantitative and Qualitative Disclosures About Market Risks
    
    
    46Item 4: Controls and Procedures
    
    
    46Part II Other InformationItem 1: Legal Proceedings
    
    
    47Item 2: Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    47Item 3: Defaults Upon Senior Securities
    
    
    47Item 4: Submission of Matters to a Vote of Security Holders
    
    
    48Item 5: Other Information
    
    
    48Item 6: Exhibits
    
    
    49Signature
    
    
    49Exhibit 31.1Exhibit 31.1.1Exhibit 31.2Exhibit 31.2.1Exhibit 32.1Exhibit 32.2
  1




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##### Table of Contents



PART I
 
 Item 1. Financial Statements
 General
    Filing Format
 Notes to Consolidated
Financial Statements General Item 2  Managements Discussion and
Analysis of Financial Condition and Results of Operation.
 2




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AMERICAN STATES WATER COMPANY
 
 CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)
 June 30,
    
    December 31,(in thousands)
    
    2005
    
    2004Utility Plant, at costWater
    
    $
    791,595
    
    
    $
    778,238Electric
    
    
    58,549
    
    
    
    58,667850,144
    
    
    
    836,905Less  Accumulated depreciation
    
    
    (253,106
    )
    
    
    (241,717
    )597,038
    
    
    
    595,188Construction work in progress
    
    
    90,386
    
    
    
    68,977Net utility plant
    
    
    687,424
    
    
    
    664,165Other Property and InvestmentsGoodwill
    
    
    11,883
    
    
    
    11,925Other property and investments
    
    
    9,814
    
    
    
    9,792Total other property and investments
    
    
    21,697
    
    
    
    21,717Current AssetsCash and cash equivalents
    
    
    5,104
    
    
    
    4,303Accounts
receivable-customers (less allowance for doubtful accounts of $757 in 2005 and $782 in 2004)
    
    
    11,950
    
    
    
    10,970Unbilled revenue
    
    
    17,633
    
    
    
    13,743Other accounts receivable (less allowance for
doubtful
accounts of $234 in 2005 and $201 in 2004)
    
    
    3,092
    
    
    
    3,384Income taxes receivable
    
    
    
    
    
    
    5,833Materials and supplies, at average cost
    
    
    1,436
    
    
    
    1,496Regulatory assets  current
    
    
    5,428
    
    
    
    7,104Prepayments and other current assets
    
    
    3,364
    
    
    
    3,466Deferred income taxes  current
    
    
    1,736
    
    
    
    2,725Total current assets
    
    
    49,743
    
    
    
    53,024Regulatory and Other AssetsRegulatory assets
    
    
    53,621
    
    
    
    54,404Other accounts receivable
    
    
    8,607
    
    
    
    8,400Other
    
    
    8,708
    
    
    
    8,567Total regulatory and other assets
    
    
    70,936
    
    
    
    71,371Total Assets
    
    $
    829,800
    
    
    $
    810,277
 The accompanying notes are an integral part of these consolidated financial statements
 3




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##### Table of Contents



AMERICAN STATES WATER COMPANY
 
 CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)
 June 30,
    
    December 31,(in thousands)
    
    2005
    
    2004CapitalizationCommon shares, no par value, no stated value
    
    $
    165,922
    
    
    $
    165,270Earnings reinvested in the business
    
    
    91,408
    
    
    
    89,454Accumulated other comprehensive loss
    
    
    (3,259
    )
    
    
    (3,259
    )Total common shareholders equity
    
    
    254,071
    
    
    
    251,465Long-term debt
    
    
    228,892
    
    
    
    228,902Total capitalization
    
    
    482,963
    
    
    
    480,367Current LiabilitiesNotes payable to banks
    
    
    49,000
    
    
    
    45,000Long-term debt  current
    
    
    658
    
    
    
    880Accounts payable
    
    
    18,782
    
    
    
    18,206Income taxes payable
    
    
    3,356
    
    
    
    Accrued employee expenses
    
    
    4,744
    
    
    
    4,260Accrued interest
    
    
    1,877
    
    
    
    1,670Regulatory liabilities  current
    
    
    3,697
    
    
    
    3,441Other
    
    
    10,263
    
    
    
    12,879Total current liabilities
    
    
    92,377
    
    
    
    86,336Other CreditsAdvances for construction
    
    
    83,300
    
    
    
    81,351Contributions in aid of construction  net
    
    
    76,223
    
    
    
    73,100Deferred income taxes
    
    
    60,993
    
    
    
    59,839Unamortized investment tax credits
    
    
    2,564
    
    
    
    2,609Accrued pension and other postretirement benefits
    
    
    12,518
    
    
    
    8,793Regulatory liabilities
    
    
    10,545
    
    
    
    9,731Other
    
    
    8,317
    
    
    
    8,151Total other credits
    
    
    254,460
    
    
    
    243,574Commitments and Contingencies (Note 10)
    
    
    
    
    
    
    Total Capitalization and Liabilities
    
    $
    829,800
    
    
    $
    810,277
 The accompanying notes are an integral part of these consolidated financial statements
 4




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AMERICAN STATES WATER COMPANY
 
 CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED JUNE 30, 2005 AND 2004
(Unaudited)
 Three Months EndedJune 30,(in thousands, except per share amounts)
    
    2005
    
    2004Operating RevenuesWater
    
    $
    53,551
    
    
    $
    53,576Electric
    
    
    6,091
    
    
    
    5,449Other
    
    
    854
    
    
    
    31960,496
    
    
    
    59,344Operating ExpensesWater purchased
    
    
    12,277
    
    
    
    12,802Power purchased for pumping
    
    
    2,184
    
    
    
    2,415Power purchased for resale
    
    
    2,710
    
    
    
    2,538Unrealized (gain) loss on purchased power contracts
    
    
    (459
    )
    
    
    76Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )Groundwater production assessment
    
    
    1,843
    
    
    
    1,338Supply cost balancing accounts
    
    
    (550
    )
    
    
    3,598Other operating expenses
    
    
    5,218
    
    
    
    5,283Administrative and general expenses
    
    
    11,495
    
    
    
    11,497Depreciation and amortization
    
    
    5,696
    
    
    
    5,073Maintenance
    
    
    2,522
    
    
    
    2,609Taxes on income
    
    
    4,808
    
    
    
    5,086Other taxes
    
    
    2,221
    
    
    
    2,105Total operating expenses
    
    
    49,965
    
    
    
    48,745Operating Income
    
    
    10,531
    
    
    
    10,599Other Income (Loss)Other income (loss), net
    
    
    (121
    )
    
    
    851Taxes on other income (loss)
    
    
    69
    
    
    
    (313
    )Total other income (loss), net
    
    
    (52
    )
    
    
    538Interest ChargesInterest on long-term debt
    
    
    4,054
    
    
    
    4,052Other interest and amortization of debt expense
    
    
    690
    
    
    
    375Total interest charges
    
    
    4,744
    
    
    
    4,427Net Income
    
    $
    5,735
    
    
    $
    6,710Weighted Average Number of Shares Outstanding
    
    
    16,773
    
    
    
    15,248Basic Earnings Per Common Share
    
    $
    0.34
    
    
    $
    0.44Weighted Average Number of Diluted Shares
    
    
    16,834
    
    
    
    15,269Fully Diluted Earnings Per Share
    
    $
    0.34
    
    
    $
    0.44Dividends Declared Per Common Share
    
    $
    0.225
    
    
    $
    0.221
 The accompanying notes are an integral part of these consolidated financial statements
 5




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AMERICAN STATES WATER COMPANY
 CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004
(Unaudited)
 Six Months EndedJune 30,(in thousands, except per share amounts)
    
    2005
    
    2004Operating RevenuesWater
    
    $
    95,048
    
    
    $
    92,318Electric
    
    
    13,561
    
    
    
    13,076Other
    
    
    1,681
    
    
    
    601110,290
    
    
    
    105,995Operating ExpensesWater purchased
    
    
    19,963
    
    
    
    21,683Power purchased for pumping
    
    
    3,671
    
    
    
    4,132Power purchased for resale
    
    
    6,847
    
    
    
    7,367Unrealized gain on purchased power contracts
    
    
    (3,474
    )
    
    
    (481
    )Gain on settlement for removal of wells
    
    
    (760
    )
    
    
    Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )Groundwater production assessment
    
    
    3,764
    
    
    
    3,160Supply cost balancing accounts
    
    
    528
    
    
    
    3,819Other operating expenses
    
    
    10,287
    
    
    
    9,720Administrative and general expenses
    
    
    21,624
    
    
    
    20,576Depreciation and amortization
    
    
    11,331
    
    
    
    10,250Maintenance
    
    
    4,988
    
    
    
    4,936Taxes on income
    
    
    8,024
    
    
    
    6,028Other taxes
    
    
    4,493
    
    
    
    4,331Total operating expenses
    
    
    91,286
    
    
    
    89,846Operating Income
    
    
    19,004
    
    
    
    16,149Other Income (Loss)Other income (loss)
    
    
    (242
    )
    
    
    669Taxes on other income (loss)
    
    
    141
    
    
    
    (214
    )Total other income (loss)
    
    
    (101
    )
    
    
    455Interest ChargesInterest on long-term debt
    
    
    8,106
    
    
    
    8,102Other interest and amortization of debt expense
    
    
    1,298
    
    
    
    646Total interest charges
    
    
    9,404
    
    
    
    8,748Net Income
    
    $
    9,499
    
    
    $
    7,856Weighted Average Number of Shares Outstanding
    
    
    16,769
    
    
    
    15,236Basic Earnings Per Common Share
    
    $
    0.57
    
    
    $
    0.52Weighted Average Number of Diluted Shares
    
    
    16,821
    
    
    
    15,265Fully Diluted Earnings Per Share
    
    $
    0.56
    
    
    $
    0.51Dividends Declared Per Common Share
    
    $
    0.450
    
    
    $
    0.442
 The accompanying notes are an integral part of these consolidated financial statements
 6




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AMERICAN STATES WATER COMPANY
 
 CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2005
    
    2004Cash Flows From Operating Activities:Net income
    
    $
    9,499
    
    
    $
    7,856Adjustments for non-cash items:Depreciation and amortization
    
    
    11,331
    
    
    
    10,250Provision for doubtful accounts
    
    
    235
    
    
    
    257Deferred income taxes and investment tax credits
    
    
    3,219
    
    
    
    651Unrealized gain on purchased power contracts
    
    
    (3,474
    )
    
    
    (481
    )Impairment loss on assets removed from rate-base
    
    
    
    
    
    
    482Non-cash compensation expense on stock units issued
    
    
    97
    
    
    
    778Other  net
    
    
    (107
    )
    
    
    970Changes in assets and liabilities:Accounts receivable  customers
    
    
    (1,182
    )
    
    
    (479
    )Unbilled revenue
    
    
    (3,890
    )
    
    
    (2,059
    )Other accounts receivable
    
    
    52
    
    
    
    8,282Materials and supplies
    
    
    60
    
    
    
    (107
    )Prepayments and other current assets
    
    
    1,549
    
    
    
    1,820Regulatory assets  supply cost balancing accounts
    
    
    528
    
    
    
    3,819Other assets
    
    
    336
    
    
    
    (46
    )Accounts payable
    
    
    576
    
    
    
    (3,247
    )Income taxes receivable/payable
    
    
    9,189
    
    
    
    5,135Other liabilities
    
    
    4,871
    
    
    
    (4,802
    )Net cash provided
    
    
    32,889
    
    
    
    29,079Cash Flows From Investing Activities:Construction expenditures
    
    
    (35,834
    )
    
    
    (30,592
    )Net cash used
    
    
    (35,834
    )
    
    
    (30,592
    )Cash Flows From Financing Activities:Proceeds from issuance of common shares
    
    
    555
    
    
    
    1,204Receipt of advances for and contributions in aid
of construction
    
    
    8,128
    
    
    
    5,175Refunds on advances for construction
    
    
    (2,372
    )
    
    
    (2,287
    )Repayments of long-term debt
    
    
    (353
    )
    
    
    (331
    )Net change in notes payable to banks
    
    
    4,000
    
    
    
    (2,000
    )Cash received on financing portion of purchased
power contracts
    
    
    1,333
    
    
    
    658Dividends paid
    
    
    (7,545
    )
    
    
    (6,732
    )Net cash provided (used)
    
    
    3,746
    
    
    
    (4,313
    )Net increase (decrease) in cash and cash equivalents
    
    
    801
    
    
    
    (5,826
    )Cash and cash equivalents, beginning of period
    
    
    4,303
    
    
    
    12,775Cash and cash equivalents, end of period
    
    $
    5,104
    
    
    $
    6,949
 The accompanying notes are an integral part of these consolidated financial statements
 7




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##### Table of Contents



SOUTHERN CALIFORNIA WATER COMPANY
 
 BALANCE SHEETS
ASSETS
(Unaudited)
 June 30,
    
    December 31,(in thousands)
    
    2005
    
    2004Utility Plant, at costWater
    
    $
    747,710
    
    
    $
    734,662Electric
    
    
    58,549
    
    
    
    58,667806,259
    
    
    
    793,329Less  Accumulated depreciation
    
    
    (240,502
    )
    
    
    (229,664
    )565,757
    
    
    
    563,665Construction work in progress
    
    
    84,487
    
    
    
    65,136Net utility plant
    
    
    650,244
    
    
    
    628,801Other Property and Investments
    
    
    7,438
    
    
    
    7,419Current AssetsCash and cash equivalents
    
    
    3,323
    
    
    
    2,702Accounts receivable-customers (less allowance for doubtful
accounts of $720 in 2005 and $758 in 2004)
    
    
    11,814
    
    
    
    10,818Unbilled revenue
    
    
    17,255
    
    
    
    13,466Inter-company receivable
    
    
    707
    
    
    
    1,126Other accounts receivable (less allowance for
doubtful
accounts of $234 in 2005 and $201 in 2004)
    
    
    2,053
    
    
    
    2,465Income taxes receivable from Parent
    
    
    
    
    
    
    4,187Materials and supplies, at average cost
    
    
    1,410
    
    
    
    1,473Regulatory assets  current
    
    
    5,428
    
    
    
    7,104Prepayments and other current assets
    
    
    3,192
    
    
    
    3,248Deferred income taxes  current
    
    
    1,791
    
    
    
    2,795Total current assets
    
    
    46,973
    
    
    
    49,384Regulatory and Other AssetsRegulatory assets
    
    
    53,292
    
    
    
    54,219Other accounts receivable
    
    
    8,607
    
    
    
    8,400Other
    
    
    7,884
    
    
    
    8,053Total regulatory and other assets
    
    
    69,783
    
    
    
    70,672Total Assets
    
    $
    774,438
    
    
    $
    756,276
 The accompanying notes are an integral part of these financial statements
 8




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##### Table of Contents



SOUTHERN CALIFORNIA WATER COMPANY
 BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
(Unaudited)
 June 30,
    
    December 31,(in thousands)
    
    2005
    
    2004CapitalizationCommon shares, no par value
    
    $
    159,387
    
    
    $
    159,290Earnings reinvested in the business
    
    
    89,793
    
    
    
    87,817Accumulated other comprehensive loss
    
    
    (3,259
    )
    
    
    (3,259
    )Total common shareholders equity
    
    
    245,921
    
    
    
    243,848Long-term debt
    
    
    221,687
    
    
    
    221,697Total capitalization
    
    
    467,608
    
    
    
    465,545Current LiabilitiesLong-term debt  current
    
    
    229
    
    
    
    282Accounts payable
    
    
    17,430
    
    
    
    17,196Inter-company payable
    
    
    29,383
    
    
    
    23,925Income taxes payable to Parent
    
    
    3,792
    
    
    
    Accrued employee expenses
    
    
    4,400
    
    
    
    3,951Accrued interest
    
    
    1,796
    
    
    
    1,636Regulatory liabilities  current
    
    
    3,697
    
    
    
    3,441Other
    
    
    9,945
    
    
    
    12,601Total current liabilities
    
    
    70,672
    
    
    
    63,032Other CreditsAdvances for construction
    
    
    71,271
    
    
    
    70,206Contributions in aid of construction-net
    
    
    75,393
    
    
    
    72,574Deferred income taxes
    
    
    57,431
    
    
    
    56,684Unamortized investment tax credits
    
    
    2,564
    
    
    
    2,609Accrued pension and other postretirement benefits
    
    
    12,518
    
    
    
    8,793Regulatory liabilities
    
    
    9,785
    
    
    
    9,731Other
    
    
    7,196
    
    
    
    7,102Total other credits
    
    
    236,158
    
    
    
    227,699Commitments and Contingencies (Note 10)
    
    
    
    
    
    
    Total Capitalization and Liabilities
    
    $
    774,438
    
    
    $
    756,276
 The accompanying notes are an integral part of these financial statements
 9




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##### Table of Contents



SOUTHERN CALIFORNIA WATER COMPANY
 
 STATEMENTS OF INCOME
FOR THE THREE MONTHS
ENDED JUNE 30, 2005 AND 2004
(Unaudited)
 Three Months EndedJune 30,(in thousands)
    
    2005
    
    2004Operating RevenuesWater
    
    $
    51,797
    
    
    $
    51,897Electric
    
    
    6,091
    
    
    
    5,44957,888
    
    
    
    57,346Operating ExpensesWater purchased
    
    
    12,100
    
    
    
    12,609Power purchased for pumping
    
    
    2,045
    
    
    
    2,294Power purchased for resale
    
    
    2,710
    
    
    
    2,538Unrealized (gain) loss on purchased power contracts
    
    
    (459
    )
    
    
    76Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )Groundwater production assessment
    
    
    1,878
    
    
    
    1,338Supply cost balancing accounts
    
    
    (550
    )
    
    
    3,598Other operating expenses
    
    
    4,697
    
    
    
    4,914Administrative and general expenses
    
    
    9,653
    
    
    
    9,418Depreciation and amortization
    
    
    5,415
    
    
    
    4,835Maintenance
    
    
    2,304
    
    
    
    2,375Taxes on income
    
    
    5,207
    
    
    
    6,024Other taxes
    
    
    2,112
    
    
    
    2,015Total operating expenses
    
    
    47,112
    
    
    
    46,359Operating Income
    
    
    10,776
    
    
    
    10,987Other Income (Loss)Other income (loss), net
    
    
    (140
    )
    
    
    851Taxes on other income (loss)
    
    
    77
    
    
    
    (322
    )Total other income (loss), net
    
    
    (63
    )
    
    
    529Interest ChargesInterest on long-term debt
    
    
    3,956
    
    
    
    3,939Other interest and amortization of debt expense
    
    
    460
    
    
    
    258Total interest charges
    
    
    4,416
    
    
    
    4,197Net Income
    
    $
    6,297
    
    
    $
    7,319
 The accompanying notes are an integral part of these financial statements
 10




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##### Table of Contents



SOUTHERN CALIFORNIA WATER COMPANY
 
 STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED
JUNE 30, 2005 AND 2004
(Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2005
    
    2004Operating RevenuesWater
    
    $
    91,951
    
    
    $
    89,358Electric
    
    
    13,561
    
    
    
    13,076105,512
    
    
    
    102,434Operating ExpensesWater purchased
    
    
    19,670
    
    
    
    21,329Power purchased for pumping
    
    
    3,457
    
    
    
    3,935Power purchased for resale
    
    
    6,847
    
    
    
    7,367Unrealized gain on purchased power contracts
    
    
    (3,474
    )
    
    
    (481
    )Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )Groundwater production assessment
    
    
    3,799
    
    
    
    3,160Supply cost balancing accounts
    
    
    528
    
    
    
    3,819Other operating expenses
    
    
    9,310
    
    
    
    9,007Administrative and general expenses
    
    
    18,472
    
    
    
    17,154Depreciation and amortization
    
    
    10,772
    
    
    
    9,772Maintenance
    
    
    4,613
    
    
    
    4,628Taxes on income
    
    
    8,386
    
    
    
    7,360Other taxes
    
    
    4,272
    
    
    
    4,140Total operating expenses
    
    
    86,652
    
    
    
    85,515Operating Income
    
    
    18,860
    
    
    
    16,919Other Income (Loss)Other income (loss), net
    
    
    (264
    )
    
    
    664Taxes on other income (loss)
    
    
    150
    
    
    
    (221
    )Total other income (loss), net
    
    
    (114
    )
    
    
    443Interest ChargesInterest on long-term debt
    
    
    7,903
    
    
    
    7,874Other interest and amortization of debt expense
    
    
    867
    
    
    
    450Total interest charges
    
    
    8,770
    
    
    
    8,324Net Income
    
    $
    9,976
    
    
    $
    9,038
 The accompanying notes are an integral part of these financial statements
 11




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##### Table of Contents



SOUTHERN CALIFORNIA WATER COMPANY
 
 CASH FLOW STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
 Six Months EndedJune 30,(in thousands)
    
    2005
    
    2004Cash Flows From Operating Activities:Net income
    
    $
    9,976
    
    
    $
    9,038Adjustments for non-cash items:Depreciation and amortization
    
    
    10,772
    
    
    
    9,772Provision for doubtful accounts
    
    
    218
    
    
    
    240Deferred income taxes and investment tax credits
    
    
    2,782
    
    
    
    354Unrealized gain on purchased power contracts
    
    
    (3,474
    )
    
    
    (481
    )Impairment loss on assets removed from rate-base
    
    
    
    
    
    
    482Non-cash compensation expense on stock units issued
    
    
    97
    
    
    
    778Other  net
    
    
    95
    
    
    
    1,028Changes in assets and liabilities:Accounts receivable  customers
    
    
    (1,181
    )
    
    
    (553
    )Unbilled revenue
    
    
    (3,789
    )
    
    
    (2,030
    )Other accounts receivable
    
    
    172
    
    
    
    8,348Materials and supplies
    
    
    63
    
    
    
    (108
    )Prepayments and other current assets
    
    
    1,503
    
    
    
    1,864Regulatory assets  supply cost balancing accounts
    
    
    528
    
    
    
    3,819Other assets
    
    
    501
    
    
    
    (118
    )Accounts payable
    
    
    234
    
    
    
    (2,579
    )Inter-company receivable/payable
    
    
    (2,423
    )
    
    
    (1,533
    )Income taxes receivable/payable from/to Parent
    
    
    7,979
    
    
    
    6,788Other liabilities
    
    
    3,920
    
    
    
    (5,074
    )Net cash provided
    
    
    27,973
    
    
    
    30,035Cash Flows From Investing Activities:Construction expenditures
    
    
    (33,437
    )
    
    
    (29,266
    )Net cash used
    
    
    (33,437
    )
    
    
    (29,266
    )Cash Flows From Financing Activities:Receipt of advances for and contributions in aid
of construction
    
    
    7,013
    
    
    
    5,170Refunds on advances for construction
    
    
    (2,377
    )
    
    
    (2,274
    )Repayments of long-term debt
    
    
    (184
    )
    
    
    (174
    )Net change in intercompany borrowings
    
    
    8,300
    
    
    
    Cash received on financing portion of purchased
power contracts
    
    
    1,333
    
    
    
    658Dividends paid
    
    
    (8,000
    )
    
    
    (7,700
    )Net cash provided (used)
    
    
    6,085
    
    
    
    (4,320
    )Net increase (decrease) in cash and cash equivalents
    
    
    621
    
    
    
    (3,551
    )Cash and cash equivalents, beginning of period
    
    
    2,702
    
    
    
    8,306Cash and cash equivalents, end of period
    
    $
    3,323
    
    
    $
    4,755
 The accompanying notes are an integral part of these financial statements
 12




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##### Table of Contents



AMERICAN STATES WATER COMPANY
 AND
 SOUTHERN
CALIFORNIA WATER COMPANY
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note
1  Summary of Significant Accounting Policies
 General:
 Basis of Presentation:
 SCWs Related Party Transactions
 13




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##### Table of Contents



Note
2  Regulatory Matters:
  June 30,
    
    December 31,(In thousands)
    
    2005
    
    2004SCWSupply cost balancing accounts
    
    $
    21,923
    
    
    $
    23,537Costs deferred for future recovery on Aerojet case
    
    
    15,122
    
    
    
    15,347Flow-through taxes, net
    
    
    6,658
    
    
    
    7,733Electric transmission line abandonment costs
    
    
    3,488
    
    
    
    3,546Asset retirement obligations
    
    
    3,230
    
    
    
    3,038Low income balancing accounts
    
    
    2,436
    
    
    
    2,134General rate case memorandum accounts
    
    
    1,424
    
    
    
    2,168Refund of water right lease revenues
    
    
    (6,199
    )
    
    
    (5,889
    )Revenues subject to refund
    
    
    (3,518
    )
    
    
    (3,487
    )Supply cost memorandum accounts net over-collections
    
    
    (643
    )
    
    
    (1,818
    )Other regulatory assets
    
    
    1,317
    
    
    
    1,842Total SCW
    
    $
    45,238
    
    
    $
    48,151CCWCAsset retirement obligations
    
    $
    43
    
    
    $
    41Other regulatory assets/liabilities, net
    
    
    (474
    )
    
    
    144Total AWR
    
    $
    44,807
    
    
    $
    48,336
 Supply Cost Balancing Accounts:
 Electric
Supply Cost Balancing Account
 14




---



##### Table of Contents



Note 2  Regulatory Matters (Continued):
 Water Memorandum Supply Cost Accounts:
 .
  Costs Deferred for Future Recovery:
   15




---



##### Table of Contents



Note 2  Regulatory Matters (Continued):
 Refund of Water Right Lease Revenues:
   CCWC Other Regulatory Assets/Liabilities:
   16
    Table of Contents  Note 3  Earnings Per Share / Capital Stock:
 Earnings Per Share
 For The Three Months
    
    For The Six MonthsEnded June 30,
    
    Ended June 30,(in thousands, except per share data)
    
    2005
    
    
    2004
    
    2005
    
    
    2004Weighted average shares outstanding
    
    
    16,773
    
    
    
    
    15,248
    
    
    
    16,769
    
    
    
    
    15,236Assumed exercise of stock options
    
    
    44
    
    
    
    
    3
    
    
    
    36
    
     
   
    
    11Assumed stock units are converted to
Common Shares
    
    
    17
    
    
    
    
    18
    
    
    
    16
    
    
    
    
    18Weighted average diluted shares
    
    
    16,834
    
    
    
    
    15,269
    
    
    
    16,821
    
    
    
    
    15,265Earnings available for common shareholders
    
    $
    5,735
    
    
    
    $
    6,710
    
    
    $
    9,499
    
    
    
    $
    7,856Basic earnings per share
    
    $
    0.34
    
    
    
    $
    0.44
    
    
    $
    0.57
    
    
    
    $
    0.52Diluted earnings per share
    
    $
    0.34
    
    
    
    $
    0.44
    
    
    $
    0.56
    
    
    
    $
    0.51
   17
    Table of Contents  Note
4  Credit Facility:
 Note
5  Derivative Instruments: Accounting for Derivative
Instruments and Hedging Activities
 Note
6  Income Taxes
   18
    Table of Contents  Note 7  Stock Incentive Plans: Accounting for Stock Issued to Employees Accounting for Stock-Based Compensation.
   For The Three Months
    
    
    For The Six MonthsEnded June 30,
    
    
    Ended June 30,(dollars in thousands, except EPS)
    
    2005
    
    2004
    
    
    2005
    
    2004Earnings available to common
shareholders:As reported
    
    $
    5,735
    
    
    $
    6,710
    
    
    
    $
    9,499
    
    
    $
    7,856Add: Stock-based compensation
expense included in reported net
income, net of tax
    
    
    52
    
    
    
    461
    
    
    
    
    57
    
    
    
    461Less: Stock-based compensation
expense determined under the
fair-value accounting method, net
of tax
    
    
    (106
    )
    
    
    (497
    )
    
    
    
    (672
    )
    
    
    (909
    )Pro forma
    
    $
    5,681
    
    
    $
    6,674
    
    
    
    $
    8,884
    
    
    $
    7,408Basic earnings per share:As reported
    
    $
    0.34
    
    
    $
    0.44
    
    
    
    $
    0.57
    
    
    $
    0.52Pro forma
    
    $
    0.34
    
    
    $
    0.44
    
    
    
    $
    0.53
    
    
    $
    0.49Diluted earnings per share:As reported
    
    $
    0.34
    
    
    $
    0.44
    
    
    
    $
    0.56
    
    
    $
    0.51Pro forma
    
    $
    0.34
    
    
    $
    0.44
    
    
    
    $
    0.53
    
    
    $
    0.49
 19
    Table of Contents  Note 8  Employee Benefit Plans:
 For The Three Months Ended June 30, 2005 and 2004OtherPostretirementPension Benefits
    
    
    Benefits
    
    
    SERP(dollars in thousands)
    
    2005
    
    2004
    
    
    2005
    
    2004
    
    
    2005
    
    2004Components of Net Periodic Benefits
Cost:Service Cost
    
    $
    933
    
    
    $
    701
    
    
    
    $
    109
    
    
    $
    101
    
    
    
    $
    32
    
    
    $
    32Interest Cost
    
    
    1,088
    
    
    
    906
    
    
    
    
    151
    
    
    
    148
    
    
    
    
    28
    
    
    
    31Expected Return on Plan Assets
    
    
    (922
    )
    
    
    (830
    )
    
    
    
    (74
    )
    
    
    (64
    )
    
    
    
    
    
    
    
    Amortization of Transition
    
    
    
    
    
    
    
    
    
    
    
    105
    
    
    
    105
    
    
    
    
    
    
    
    
    Amortization of Prior Service Cost
    
    
    41
    
    
    
    40
    
    
    
    
    (50
    )
    
    
    (50
    )
    
    
    
    38
    
    
    
    37Amortization of Actuarial (Gain) Loss
    
    
    313
    
    
    
    90
    
    
    
    
    41
    
    
    
    30
    
    
    
    
    (10
    )
    
    
    Net Periodic Pension Cost
    
    $
    1,453
    
    
    $
    907
    
    
    
    $
    282
    
    
    $
    270
    
    
    
    $
    88
    
    
    $
    100
 For The Six Months Ended June 30, 2005 and 2004OtherPostretirementPension Benefits
    
    
    Benefits
    
    
    SERP(dollars in thousands)
    
    2005
    
    2004
    
    
    2005
    
    2004
    
    
    2005
    
    2004Components of Net Periodic Benefits
Cost:Service Cost
    
    $
    1,866
    
    
    $
    1,402
    
    
    
    $
    218
    
    
    $
    202
    
    
    
    $
    64
    
    
    $
    64Interest Cost
    
    
    2,176
    
    
    
    1,812
    
    
    
    
    302
    
    
    
    296
    
    
    
    
    56
    
    
    
    62Expected Return on Plan Assets
    
    
    (1,844
    )
    
    
    (1,660
    )
    
    
    
    (148
    )
    
    
    (128
    )
    
    
    
    
    
    
    
    Amortization of Transition
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    210
    
    
    
    
    
    
    
    
    Amortization of Prior Service Cost
    
    
    82
    
    
    
    80
    
    
    
    
    (100
    )
    
    
    (100
    )
    
    
    
    76
    
    
    
    74Amortization of Actuarial (Gain) Loss
    
    
    626
    
    
    
    180
    
    
    
    
    82
    
    
    
    60
    
    
    
    
    (20
    )
    
    
    Net Periodic Pension Cost
    
    $
    2,906
    
    
    $
    1,814
    
    
    
    $
    564
    
    
    $
    540
    
    
    
    $
    176
    
    
    $
    200
  Note 9  New Accounting Pronouncements:
 Accounting Changes and Error Corrections  A Replacement of APB Opinion No. 20 and FASB Statement
No. 3
 20
    Table of Contents  Note 9  New Accounting Pronouncements (Continued):
 Accounting for Conditional Asset
Retirement Obligations,
 Share-Based Payment, Accounting for Stock-Based Compensation,
  Note 10  Contingencies:
 Water Quality-Related Litigation:
   21
    Table of Contents  Note 10  Contingencies (Continued):
  Aerojet:
     22
    Table of Contents  Note 10  Contingencies (Continued):
  Other Water Quality Litigation:
    23
    Table of Contents  Note 10  Contingencies (Continued):
 Condemnation of Properties
    Santa Maria Groundwater Basin Adjudication:
  24
    Table of Contents  Note 10  Contingencies (Continued):
  Other Litigation:
  Note 11  Business Segments:
 As of and for the Three Months Ended June 30, 2005SCW
    
    CCWC
    
    
    
    
    
    
    
    
    
    Consolidated(dollars in thousands)
    
    Water
    
    Electric
    
    Water
    
    Other*
    
    Eliminations
    
    AWROperating revenues
    
    $
    51,797
    
    
    $
    6,091
    
    
    $
    1,753
    
    
    $
    890
    
    
    
    ($35
    )
    
    $
    60,496Operating income (loss)
before income taxes
    
    
    15,093
    
    
    
    890
    
    
    
    286
    
    
    
    (930
    )
    
    
    
    
    
    
    15,339Interest expense, net
    
    
    4,006
    
    
    
    410
    
    
    
    104
    
    
    
    224
    
    
    
    
    
    
    
    4,744Identifiable assets
    
    
    610,249
    
    
    
    39,995
    
    
    
    36,488
    
    
    
    692
    
    
    
    
    
    
    
    687,424Depreciation and
amortization expense
    
    
    4,903
    
    
    
    512
    
    
    
    264
    
    
    
    17
    
    
    
    
    
    
    
    5,696Capital additions
    
    
    14,628
    
    
    
    682
    
    
    
    1,450
    
    
    
    248
    
    
    
    
    
    
    
    17,008
 As of and for the Three Months Ended June 30, 2005SCW
    
    CCWC
    
    
    
    
    
    
    
    
    
    Consolidated(dollars in thousands)
    
    Water
    
    Electric
    
    Water
    
    Other*
    
    Eliminations
    
    AWROperating revenues
    
    $
    51,897
    
    
    $
    5,449
    
    
    $
    1,704
    
    
    $
    319
    
    
    
    ($25
    )
    
    $
    59,344Operating income
(loss) before income
taxes
    
    
    17,922
    
    
    
    (911
    )
    
    
    123
    
    
    
    (1,449
    )
    
    
    
    
    
    
    15,685Interest expense, net
    
    
    3,763
    
    
    
    434
    
    
    
    121
    
    
    
    109
    
    
    
    
    
    
    
    4,427Identifiable assets
    
    
    551,764
    
    
    
    37,681
    
    
    
    32,245
    
    
    
    172
    
    
    
    
    
    
    
    621,862Depreciation and
amortization expense
    
    
    4,526
    
    
    
    309
    
    
    
    234
    
    
    
    4
    
    
    
    
    
    
    
    5,073Capital additions
    
    
    15,783
    
    
    
    552
    
    
    
    715
    
    
    
    57
    
    
    
    
    
    
    
    17,107
 25
    Table of Contents  Note 11  Business Segments (Continued):
 As of and for the Three Months Ended June 30, 2005SCW
    
    CCWC
    
    
    
    
    
    
    
    
    
    Consolidated(dollars in thousands)
    
    Water
    
    Electric
    
    Water
    
    Other*
    
    Eliminations
    
    AWROperating revenues
    
    $
    91,951
    
    
    $
    13,561
    
    
    $
    3,096
    
    
    $
    1,717
    
    
    
    ($35
    )
    
    $
    110,290Operating income (loss)
before income taxes
    
    
    22,904
    
    
    
    4,342
    
    
    
    1,266
    
    
    
    (1,484
    )
    
    
    
    
    
    
    27,028Interest expense, net
    
    
    7,956
    
    
    
    814
    
    
    
    224
    
    
    
    410
    
    
    
    
    
    
    
    9,404Identifiable assets
    
    
    610,249
    
    
    
    39,995
    
    
    
    36,488
    
    
    
    692
    
    
    
    
    
    
    
    687,424Depreciation and
amortization expense
    
    
    9,765
    
    
    
    1,007
    
    
    
    525
    
    
    
    34
    
    
    
    
    
    
    
    11,331Capital additions
    
    
    32,077
    
    
    
    1,360
    
    
    
    2,038
    
    
    
    359
    
    
    
    
    
    
    
    35,834
 As of and for the Three Months Ended June 30, 2005SCW
    
    CCWC
    
    
    
    
    
    Consolidated(dollars in thousands)
    
    Water
    
    Electric
    
    Water
    
    Other*
    
    Eliminations
    
    AWROperating revenues
    
    $
    89,358
    
    
    $
    13,076
    
    
    $
    3,008
    
    
    $
    601
    
    
    
    ($48
    )
    
    $
    105,995Operating income
(loss) before income
taxes
    
    
    24,272
    
    
    
    7
    
    
    
    234
    
    
    
    (2,336
    )
    
    
    
    
    
    
    22,177Interest expense, net
    
    
    7,552
    
    
    
    772
    
    
    
    243
    
    
    
    181
    
    
    
    
    
    
    
    8,748Identifiable assets
    
    
    551,764
    
    
    
    37,681
    
    
    
    32,245
    
    
    
    172
    
    
    
    
    
    
    
    621,862Depreciation and
amortization expense
    
    
    9,054
    
    
    
    718
    
    
    
    470
    
    
    
    8
    
    
    
    
    
    
    
    10,250Capital additions
    
    
    26,928
    
    
    
    2,338
    
    
    
    1,243
    
    
    
    83
    
    
    
    
    
    
    
    30,592
 
 *
    
    Includes amounts from AWR and ASUSs contracted services. Beginning on October 1, 2004, it
also includes ASUSs wholly-owned subsidiary FBWS. Note 12  Subsequent Event:
 26
    Table of Contents  Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operation
 ForwardLooking Information
   General
     27
    Table of Contents  Consolidated
Results of Operations  Three Months Ended June 30, 2005 and 2004 (dollars in
thousands)
 3 MOS
    
    
    3 MOSENDED
    
    
    ENDED
    
    
    $
    
    
    %6/30/2005
    
    
    6/30/2004
    
    
    CHANGE
    
    
    CHANGEOPERATING REVENUESWater
    
    $
    53,551
    
    
    $
    53,576
    
    
    $
    (25
    )
    
    
    0.0
    %Electric
    
    
    6,091
    
    
    
    5,449
    
    
    
    642
    
    
    
    11.8
    %Other
    
    
    854
    
    
    
    319
    
    
    
    535
    
    
    
    167.7
    %Total operating revenues
    
    
    60,496
    
    
    
    59,344
    
    
    
    1,152
    
    
    
    1.9
    %OPERATING EXPENSESWater purchased
    
    
    12,277
    
    
    
    12,802
    
    
    
    (525
    )
    
    
    -4.1
    %Power purchased for pumping
    
    
    2,184
    
    
    
    2,415
    
    
    
    (231
    )
    
    
    -9.6
    %Groundwater production assessment
    
    
    1,843
    
    
    
    1,338
    
    
    
    505
    
    
    
    37.7
    %Power purchased for resale
    
    
    2,710
    
    
    
    2,538
    
    
    
    172
    
    
    
    6.8
    %Unrealized gain on purchased power contracts
    
    
    (459
    )
    
    
    76
    
    
    
    (535
    )
    
    
    -703.9
    %Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )
    
    
    5,675
    
    
    
    -100.0
    %Supply cost balancing accounts
    
    
    (550
    )
    
    
    3,598
    
    
    
    (4,148
    )
    
    
    -115.3
    %Other operating expenses
    
    
    5,218
    
    
    
    5,283
    
    
    
    (65
    )
    
    
    -1.2
    %Administrative and general expenses
    
    
    11,495
    
    
    
    11,497
    
    
    
    (2
    )
    
    
    0.0
    %Depreciation and amortization
    
    
    5,696
    
    
    
    5,073
    
    
    
    623
    
    
    
    12.3
    %Maintenance
    
    
    2,522
    
    
    
    2,609
    
    
    
    (87
    )
    
    
    -3.3
    %Taxes on income
    
    
    4,808
    
    
    
    5,086
    
    
    
    (278
    )
    
    
    -5.5
    %Other taxes
    
    
    2,221
    
    
    
    2,105
    
    
    
    116
    
    
    
    5.5
    %Total operating expenses
    
    
    49,965
    
    
    
    48,745
    
    
    
    1,220
    
    
    
    2.5
    %Operating income
    
    
    10,531
    
    
    
    10,599
    
    
    
    (68
    )
    
    
    -0.6
    %OTHER INCOME (LOSS)  NET
    
    
    (52
    )
    
    
    538
    
    
    
    (590
    )
    
    
    -109.7
    %INTEREST CHARGES
    
    
    4,744
    
    
    
    4,427
    
    
    
    317
    
    
    
    7.2
    %NET INCOME
    
    $
    5,735
    
    
    $
    6,710
    
    
    $
    (975
    )
    
    
    -14.5
    %
   28
    Table of Contents  Operating Revenues
     Operating Expenses
     29
    Table of Contents  30
    Table of Contents  Other Income (Loss) Other Income (Loss)
  31
    Table of Contents  Interest Charges
  Consolidated
Results of Operations  Six Months Ended June 30, 2005 and
2004 (dollars in
thousands)
 6 MOS
    
    
    6 MOSENDED
    
    
    ENDED
    
    
    $
    
    
    %6/30/2005
    
    
    6/30/2004
    
    
    CHANGE
    
    
    CHANGEOPERATING REVENUESWater
    
    $
    95,048
    
    
    $
    92,318
    
    
    $
    2,730
    
    
    
    3.0
    %Electric
    
    
    13,561
    
    
    
    13,076
    
    
    
    485
    
    
    
    3.7
    %Other
    
    
    1,681
    
    
    
    601
    
    
    
    1,080
    
    
    
    179.7
    %Total operating revenues
    
    
    110,290
    
    
    
    105,995
    
    
    
    4,295
    
    
    
    4.1
    %OPERATING EXPENSESWater purchased
    
    
    19,963
    
    
    
    21,683
    
    
    
    (1,720
    )
    
    
    -7.9
    %Power purchased for pumping
    
    
    3,671
    
    
    
    4,132
    
    
    
    (461
    )
    
    
    -11.2
    %Groundwater production assessment
    
    
    3,764
    
    
    
    3,160
    
    
    
    604
    
    
    
    19.1
    %Power purchased for resale
    
    
    6,847
    
    
    
    7,367
    
    
    
    (520
    )
    
    
    -7.1
    %Unrealized gain on purchased power contracts
    
    
    (3,474
    )
    
    
    (481
    )
    
    
    (2,993
    )
    
    
    622.2
    %Gain on setlement for removal of wells
    
    
    (760
    )
    
    
    
    
    
    
    (760
    )
    
    
    -100.0
    %Gain on sale of water rights
    
    
    
    
    
    
    (5,675
    )
    
    
    5,675
    
    
    
    -100.0
    %Supply cost balancing accounts
    
    
    528
    
    
    
    3,819
    
    
    
    (3,291
    )
    
    
    -86.2
    %Other operating expenses
    
    
    10,287
    
    
    
    9,720
    
    
    
    567
    
    
    
    5.8
    %Administrative and general expenses
    
    
    21,624
    
    
    
    20,576
    
    
    
    1,048
    
    
    
    5.1
    %Depreciation and amortization
    
    
    11,331
    
    
    
    10,250
    
    
    
    1,081
    
    
    
    10.5
    %Maintenance
    
    
    4,988
    
    
    
    4,936
    
    
    
    52
    
    
    
    1.1
    %Taxes on income
    
    
    8,024
    
    
    
    6,028
    
    
    
    1,996
    
    
    
    33.1
    %Other taxes
    
    
    4,493
    
    
    
    4,331
    
    
    
    162
    
    
    
    3.7
    %Total operating expenses
    
    
    91,286
    
    
    
    89,846
    
    
    
    1,440
    
    
    
    1.6
    %Operating income
    
    
    19,004
    
    
    
    16,149
    
    
    
    2,855
    
    
    
    17.7
    %OTHER INCOME (LOSS)  NET
    
    
    (101
    )
    
    
    455
    
    
    
    (556
    )
    
    
    -122.2
    %INTEREST CHARGES
    
    
    9,404
    
    
    
    8,748
    
    
    
    656
    
    
    
    7.5
    %NET INCOME
    
    $
    9,499
    
    
    $
    7,856
    
    
    $
    1,643
    
    
    
    20.9
    %
  32
    Table of Contents  Operating
Revenues
    Operating
Expenses
    33
    Table of Contents  34
    Table of Contents  Other
Income (Loss)
  35
    Table of Contents  Interest
Charges
  Critical
Accounting Policies
   36
    Table of Contents  Liquidity and Capital Resources
 AWR
       37
    Table of Contents  SCW
       CCWC
  38
    Table of Contents  ASUS
  Contractual Obligations and Other Commitments
   ($ in thousands)
    
    Payments/Commitments Due by Period (1)Total
    
    Less than 1 Year
    
    1-3 Years
    
    4-5 Years
    
    After 5 YearsNotes/Debentures(2)
    
    $
    173,100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    173,100Private Placement Notes(3)
    
    
    28,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,000Tax-Exempt Obligations(4)
    
    
    18,861
    
    
    
    72
    
    
    
    160
    
    
    
    181
    
    
    
    18,448Other Debt Instruments(5)
    
    
    1,955
    
    
    
    157
    
    
    
    445
    
    
    
    460
    
    
    
    893Interest on Long-Term Debt(6)
    
    
    386,678
    
    
    
    16,403
    
    
    
    32,802
    
    
    
    32,715
    
    
    
    304,758Advances for Construction(7)
    
    
    83,300
    
    
    
    2,917
    
    
    
    5,184
    
    
    
    5,184
    
    
    
    70,015Purchased Power Contracts(8)
    
    
    41,766
    
    
    
    11,973
    
    
    
    23,947
    
    
    
    5,846
    
    
    
    Purchase Obligations(9)
    
    
    42,215
    
    
    
    42,215
    
    
    
    
    
    
    
    
    
    
    
    Water Purchase Agreements
(10)
    
    
    58,044
    
    
    
    16,054
    
    
    
    25,397
    
    
    
    5,649
    
    
    
    10,944Operating Leases(11)
    
    
    4,214
    
    
    
    1,766
    
    
    
    2,036
    
    
    
    412
    
    
    
    Employer Contributions(12)
    
    
    19,260
    
    
    
    5,363
    
    
    
    9,954
    
    
    
    3,943
    
    
    
    Chaparral City Water Co. (13)
    
    
    14,295
    
    
    
    1,718
    
    
    
    1,011
    
    
    
    1,001
    
    
    
    10,565SUB-TOTAL
    
    $
    871,688
    
    
    $
    98,638
    
    
    $
    100,936
    
    
    $
    55,391
    
    
    $
    616,723Other Commitments(14)
    
    
    54,191TOTAL
    
    $
    925,879
 
 (1)
    
    Excludes dividends and facility fees.(2)
    
    The Notes and Debentures are issued under an Indenture dated as of
September 1, 1993. The Notes and Debentures do not contain any financial covenants that
Registrant believes to be material, or cross default provisions.(3)
    
    The private placement notes were issued pursuant to the terms of Note
Agreements with substantially similar terms. The Note Agreements contain restrictions on the
payment of dividends, minimum interest coverage requirements, a maximum debt to capitalization
ratio and a negative pledge. Pursuant to the Note Agreements, SCW must maintain a minimum
interest coverage ratio of two times interest 39
    Table of Contents  expense. SCW does not currently have any outstanding mortgages or other encumbrances on its
properties.(4)
    
    Consists of obligations under a loan agreement supporting $7.9 million in
outstanding debt issued by the California Pollution Control Financing Authority, $6 million in
obligations supporting $6 million in certificates of participation issued by the Three Valleys
Municipal Water District and $4.9 million of obligations incurred by SCW with respect to its
500 acre foot entitlement to water from the State Water Project (SWP). These obligations do
not contain any financial covenants believed to be material to Registrant or any cross default
provisions. SCWs obligations with respect to the certificates of participation issued by the
Three Valleys Municipal Water District are supported by a letter of credit issued by Wells
Fargo Bank. In regards to its SWP entitlement, SCW has entered into agreements with various
developers for 422 acre-feet, in aggregate, of its 500 acre-foot entitlement to water from the
SWP.(5)
    
    Consists of $1.2 million outstanding under a fixed rate obligation
incurred to fund construction of water storage and delivery facilities with the Three Valleys
Municipal Water District, $0.5 million outstanding under a variable rate obligation incurred
to fund construction of water delivery facilities with the Three Valleys Municipal Water
District and an aggregate of $0.3 million outstanding under capital lease obligations. These
obligations do not contain any financial covenants believed to be material to Registrant or
any cross default provisions.(6)
    
    Consists of expected interest expense payments assuming Registrants
long-term debt remains outstanding until maturity. Current interest rates were used to
estimate expected interest expense payments on variable long-term debt.(7)
    
    Advances for construction represent annual contract refunds to developers
for the cost of water systems paid for by the developers. The advances are generally
refundable at rates ranging from 10% to 22% of the revenue received from the installation for
which funds were advanced or in equal annual installments over periods of time ranging from 10
to 40-year periods.(8)
    
    Consists of the remaining balance of purchased power contracts through
December 2008.(9)
    
    Consists of non-cancelable commitments primarily for capital projects
under signed contracts.(10)
    
    Water purchase agreements consist of (i) contracts with various
governmental entities to purchase imported water for an aggregate remaining commitment of
$50.9 million which expire on an agreement-by-agreement basis between 2008 and 2012; (ii) a
remaining amount of $3 million under an agreement with the City of Claremont to lease water
rights that were ascribed to the City as part of the Six Basins adjudication (the initial term
expires in 2028 with an option to renew this agreement for 10 more years); and (iii) an
aggregate amount of $4.1 million of other water purchase commitments with other third parties.
In some cases, the amount of the commitment is estimated based on current rates per acre-foot
of water purchased. These rates may be changed annually.(11)
    
    Reflects Registrants future minimum payments under non-cancelable
operating leases.(12)
    
    Consists of Registrants expected contributions (all by employer) for its
pension and postretirement plans. These amounts are subject to change based on, among other
things, the limits established for federal tax deductibility (pension plan). The estimated
minimum required contributions to the pension plan were computed by our actuary and are
subject to change based on the significant impact that return on plan assets and changes in
discount rates might have on such amounts.(13)
    
    Consists of $7.4 million of outstanding obligations under a loan
agreement supporting Industrial Development Revenue Bonds due in 2006 and a $0.2 million
outstanding repayment obligation to the United States Bureau of Reclamation (Bureau). The loan
agreement contains provisions that establish a maximum of 65% debt in the capital structure,
limits cash distributions when the percentage of debt in the capital structure exceeds 55% and
requires a debt service coverage ratio of two times. The Bureau obligation does not contain
any financial covenants believed to be material to Registrant or any cross default provisions.
In addition, CCWC has a long-term water supply contract with the Central Arizona Conservation
District (the District) through September 2033, and is entitled to take 6,978 acre feet of
water per year from the Central Arizona Project. The maintenance rate for such water delivered
is set by the District and is subject to annual increases. The estimated remaining commitment
under this contract is $5.6 million as of June 30, 2005. Furthermore, CCWC has entered into a
commitment with the District to purchase 1,931 acre feet per year of additional water rights
for an 40
    Table of Contents  estimated amount of $1.1 million as of June 30, 2005. The price is subject to further adjustment
and is expected to increase annually until final written agreement is executed which is expected
later this year.(14)
    
    Other commitments consist of (i) $85 million syndicated revolving credit
facility, expiring in June 2010 of which $49.0 million is outstanding as of June 30, 2005,
(ii) an amount of $296,000 with respect to a $6,296,000 irrevocable letter of credit issued by
Wells Fargo Bank to support the certificates of participation of Three Valleys Municipal Water
District (the other $6,000,000 is reflected under tax-exempt obligations), (iii) an
irrevocable letter of credit in the amount of $700,000 that expires in October 2005 for the
deductible in Registrants business automobile insurance policy, (iv) an irrevocable letter of
credit that expires October 5, 2005 for its energy scheduling agreement with Automated Power
Exchange as security for the purchase of power; the amount of the credit is $585,000, (v)
outstanding performance bonds of $10,075 to secure performance under franchise agreements with
governmental agencies, and (vi) an irrevocable letter of credit in the amount of $3,600,000
pursuant to a settlement agreement with Southern California Edison Company (Edison) to cover
Registrants commitment to pay the settlement amount. All of the letters of credit are issued
pursuant to the syndicated revolving credit facility. The syndicated revolving credit facility
contains restrictions on prepayments, disposition of property, mergers, liens indebtedness
and guaranty obligations and, transactions with affiliates and contains a negative pledge,
minimum interest coverage requirements, a maximum debt to capitalization ratio, and a minimum
debt rating covenant. Pursuant to the Credit Agreement, AWR must maintain a minimum interest
coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to
1.00 and a minimum debt rating of Baa3 or BBB-.    41
    Table of Contents  Bear Valley Electric Service of SCW
  Power Supply Arrangements at SCWs Bear Valley Electric Service Area
  Construction Program
   42
    Table of Contents  Regulatory Matters
 Regulation
  Changes in Rates
    Pending Rate Changes
  Other Regulatory Matters
   43
    Table of Contents  Environmental Matters
   Water Supply
  
    
    Rainfall
    
    Availability of Colorado River water and imported water from northern California
    
    The amount of water stored in reservoirs and groundwater basins
    
    The amount of water used by our customers and others
    
    Water quality
    
    Legal limitations on use
 
 44
    Table of Contents  
    
    They adversely affect supply mix by causing us to rely on more expensive purchased
water.
    
    They adversely affect operating costs.
    
    They may result in an increase in capital expenditures for building pipelines to
connect to alternative sources of supply, new wells to replace those that are no longer
in service or are otherwise inadequate to meet the needs of customers and reservoirs
and other facilities to conserve or reclaim water.
  Risk Factor Summary
  
    
    Our business is heavily regulated and, as a result, decisions by regulatory agencies and
changes in laws and regulations can significantly affect our business;
    
    Our liquidity and earnings could be adversely affected by changes in water supply costs;
    
    Our business entails a significant risk of litigation, brought on a variety of legal
theories, alleging that we have caused personal injury and property damage as a result of
the delivery of contaminated water;
    
    Our operating costs have increased and are expected to continue to increase as a result
of groundwater contamination;
    
    Environmental regulation has increased, and is expected to continue to increase our
operating costs;
    
    The adequacy of our water supplies depends upon a variety of factors beyond our control
described more fully in the Water Supply section;
    
    Our earnings are greatly affected by weather during different seasons;
    
    Our liquidity, and in certain circumstances, earnings, could be adversely affected by
increases in electricity and natural gas prices in California;
    
    Our business requires significant capital expenditures; and
    
    The expansion of our contract operations will expose us to different risks than those
associated with our utility operations.
 
 45
    Table of Contents  New Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
  (b) Changes in Internal Controls over Financial Reporting
  46
    Table of Contents  PART II
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
   Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares That May YetPart of Publicly
    
    
    Be Purchased underTotal Number of
    
    
    Average Price Paid
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Shares Purchased
    
    
    per Share
    
    

Programs(1)
    
    
    ProgramsApril 1  30, 2005
    
    
    997
    (3)
    
    $
    25.28
    
    
    
    
    
    
    NA(2)May 1  31, 2005
    
    
    11,720
    (4)
    
    $
    26.76
    
    
    
    
    
    
    NA(2)June 1  30, 2005
    
    
    180
    (3)
    
    $
    28.83
    
    
    
    
    
    
    NA(2)Total
    
    
    12,897
    
    
    $
    26.68
    
    
    
    
    
    
    NA(2)
 
 (1)
    
    None of the common shares were purchased pursuant to any publicly announced stock repurchase
program.(2)
    
    None of these plans contain a maximum number of common shares that may be purchased in the open
market under the plans.(3)
    
    All of these Common Shares were acquired on the open market for new participants in the
Companys Common Share Purchase and Dividend Reinvestment Plan.(4)
    
    Of this amount, 10,000 Common Shares were acquired on the open market for employees pursuant
to the Companys 401(k) plan. All of the Common Shares needed to meet the requirements of this plan
were purchased in the open market. The remainder of the Common Shares was acquired on the open
market for new participants in the Companys Common Share Purchase and Dividend Reinvestment Plan. 
 Item 3. Defaults Upon Senior Securities
  47
    Table of Contents  Item 4. Submission of Matters to a Vote of Security Holders
  Name
    
    Votes For
    
    
    Votes WithheldJames L. Anderson
    
    
    14,686,719
    
    
    
    346,391Anne M. Holloway
    
    
    14,722,847
    
    
    
    310,262Floyd E. Wicks
    
    
    14,809,604
    
    
    
    223,505
   Name of Plan
    
    Votes For
    
    
    Votes Against
    
    
    Abstentions2003 Non-Employee Directors Stock Plan
    
    
    13,314,674
    
    
    
    1,481,229
    
    
    
    237,2062000 Stock Incentive Plan
    
    
    8,448,106
    
    
    
    1,382,250
    
    
    
    247,781
   
 Item 5. Other Information
   48
    Table of Contents  Item 6. Exhibits
  31.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 for AWR (1)31.1.1
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 for SCW (1)31.2
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 for AWR (1)31.2.1
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 for SCW (1)32.1
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (2)32.2
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (2)
 
 (1)
    
    Filed concurrently herewith.(2)
    
    Furnished concurrently herewith. 
 SIGNATURE
  AMERICAN STATES WATER COMPANYand its subsidiarySOUTHERN CALIFORNIA WATER COMPANYBy:
    
    /s/ Robert J. SprowlsRobert J. SprowlsSenior Vice President-Finance, Chief Financial Officer,Treasurer and Corporate Secretary
  49