UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
November
10, 2008
Date
of Report
(Date of earliest event reported)
SOUTHWEST WATER COMPANY
(Exact
name of registrant as specified in its charter)
Delaware
|
0-8176
|
95-1840947
|
(State or other jurisdiction
of Incorporation)
|
(Commission File Number)
|
(I.R.S. Employer
Identification No.)
|
One Wilshire Building
624 South Grand Avenue, Suite 2900
Los
Angeles, CA 90017-3782
(Address, including zip code, of principal
executive offices)
(213) 929-1800
(Registrant’s
telephone number, including area code)
None
(Former name or former address, if changed since last
report)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 4.02
|
Non-Reliance on Previously Issued Financial Statements or a
|
|
Related Audit Report or Completed Interim Review.
|
a) On November 10, 2008, SouthWest Water Company (the “Company”)
announced that on November 6, 2008 the Audit Committee of its Board of
Directors, acting upon management’s recommendations, concluded that the
Company’s consolidated financial statements as of and for the years
ended December 31, 2007, 2006 and 2005, and for each of the quarterly
periods ended therein, and as of and for the quarterly periods ended
March 31, 2008 and June 30, 2008, should no longer be relied upon. As a
result, the Company’s consolidated financial statements for those
periods will be restated.
As a result of the decision to restate previously issued financial
statements, the Company will be unable to file its Quarterly Report on
Form 10-Q for the period ended September 30, 2008 with the Securities
and Exchange Commission by the required deadline.
The restatement relates to errors discovered by management in its
consolidated financial statements while developing a ten year
company-wide rate strategy for its regulated utilities. The Company
intends to correct the errors in its consolidated financial statements
to bring them into alignment with its rate filings. The differences
primarily relate to: 1) errors in establishing the rate of depreciation
of assets acquired through acquisitions since 2000; and 2) accounting
for revenues and related costs associated with the installation of water
and sewer taps.
At the time of the acquisition of its Texas assets in 2000, the Company
applied a rate of depreciation for financial reporting purposes that did
not consider the length of time the assets were in service prior to
being acquired. As a result, depreciation expense related to assets
acquired through acquisition has been understated in the Company’s
consolidated financial statements.
The Company has been capitalizing and depreciating costs associated with
installing water and sewer taps in Texas and Mississippi but recognizing
the related tap fee revenue when received, instead of expensing the
costs as incurred and recognizing the related revenue in the period the
tap was actually installed. As a result, previously capitalized tap
costs for financial reporting purposes will be charged to expense when
incurred and the related depreciation charge will be reversed.
The restatement will also adjust for the impact of other errors that
were identified in prior periods but were determined to be immaterial to
that period’s financial statements and therefore corrected in the
subsequent period. As part of the restatement of the consolidated
financial statements, the Company will reverse the entry recorded and
instead reflect the correction of the error in the appropriate period.
These errors primarily relate to period end revenue and expense
accruals, billing adjustments, the calculation of asset impairment
charges and income taxes.
The review process is ongoing and may result in additional adjustments.
The Audit Committee intends to engage PricewaterhouseCoopers LLP (“PwC”)
to re-audit the Company’s financial statements for the two years ended
December 31, 2007. As announced in a Form 8-K filed on November 8, 2007,
the Audit Committee engaged PwC as the Company’s independent accountants
commencing January 1, 2008. Management currently estimates the
cumulative effect of these non-cash adjustments will be to reduce net
income by $4 million to $8 million from 2000 to 2008, with most of the
income statement impact occurring from 2005 to 2008. The Company is in
close contact with its banking syndicate and management’s assessment at
this time is that this restatement will not impact its available cash or
liquidity.
As soon as practical, following completion of PwC’s audits of 2006, 2007
and 2008, the Company will file with the Securities and Exchange
Commission: 1) a Form 10-K for the year ended December 31, 2008; 2) Form
10-Q/As for the quarterly periods ended March 31, 2008 and June 30,
2008; and 3) the Form 10-Q for the quarterly period ended September 30,
2008.
The late filing of the Form 10-Q for the period ended September 30, 2008
has adversely affected our eligibility to use Registration Statements on
Form S-3 for registration of our securities with the SEC. Use of Form
S-3 requires, among other things, that the issuer be current and timely
in its reports under the Exchange Act for at least twelve months.
Because of our inability to use Form S-3, we will have to meet more
demanding requirements to register additional securities, which will
make it more difficult for us to effect public offering transactions,
and our range of available financing alternatives could also be
narrowed. We will regain Form S-3 eligibility twelve months after the
filing of the 2008 Form 10-K.
The Company is assessing the effect of the restatement on internal
control over financial reporting as well as disclosure controls and
procedures. The Company does not expect to reach a final conclusion on
the restatement’s effect on these controls until completion of the
restatement process. Since management has not completed its assessment
of its disclosure controls and procedures, including internal control
over financial reporting, there can be no assurance that control
deficiencies that could be material weaknesses will not be identified. A
material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company’s
annual or interim financial statements will not be prevented or detected
on a timely basis. The existence of one or more material weaknesses
would preclude a conclusion by management, that the Company’s internal
control over financial reporting was effective.
Management and the Audit Committee have discussed the matters described
herein with PwC, the Company's current independent registered public
accounting firm. In addition, management has discussed these matters
with KPMG LLP, the Company’s independent registered public accounting
firm for the years ended December 31, 2007, 2006 and 2005.
This document contains “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements, including expectations relating to future revenues and
income, the Company’s ability to gain new business and control costs,
involve risks and uncertainties, as well as assumptions that, if they
prove incorrect or never materialize, could cause the results of the
company to differ materially from those expressed or implied by such
forward-looking statements. Actual results may differ materially from
these expectations due to changes in regulatory, political, weather,
economic, business, competitive, market, environmental and other
factors. More detailed information about these factors is contained in
the Company’s filings with the Securities and Exchange Commission,
including under the caption “Risk Factors” in the Company’s 2007 Annual
Report on Form 10-K. The company assumes no obligation to update these
forward-looking statements to reflect any change in future events.
Item 9.01
|
Financial Statements and Exhibits.
|
(d) Exhibits.
Exhibit
Number
|
|
Exhibit Description
|
99.1
|
|
Press Release date November 10, 2008
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
|
|
SOUTHWEST WATER COMPANY
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date:
|
November 10, 2008
|
By:
|
/S/ CHERYL L. CLARY
|
|
|
|
|
Name:
|
Cheryl L. Clary
|
|
|
|
|
Title:
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
Southwest Water (NASDAQ:SWWC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Southwest Water (NASDAQ:SWWC)
Historical Stock Chart
From Jul 2023 to Jul 2024