Item 1 Business.
a. General Development of Business.
California Water Service Company (the "Company") is a public utility water company which owns and operates 20 water systems serving 38 cities and communities and adjacent territories in California with an estimated population of more than 1,500,000.
The Company, one of the largest investor-owned water companies in the United States, was incorporated under the laws of the State of California on December 21, 1926. Its principal executive offices are located at 1720 North First Street, San Jose, California, and its mailing address is Post Office Box 1150, San Jose, California 95108 (telephone number:1-408-451-8200).
Effective April 8, 1994 the Company's Common Stock began trading on the New York Stock Exchange under the symbol CWT. The Company was previously in the over-the-counter market and quoted by the National Association of Securities Dealers Automated Quotation System (NASDAQ) under the symbol CWTR
During the fiscal year ended December 31, 1994 (the "1994 fiscal year"), there were no significant changes in the kind of products produced or services rendered by the Company, or in the Company's markets or methods of distribution.
Regulation and Rates.
The Company is subject to regulation of its rates, service and other matters affecting its business by the Public Utilities Commission of the State of California ("Commission" or "PUC").
The Company's systems, which are operated as 20 separate districts in the State of California, are not integrated with one another, and except for allocation of general office expenses and the determination of cost of capital, the expenses and revenues of individual districts are not affected by operations in other districts. Cost of capital (i.e. return on debt and equity) is determined on a Company-wide basis. Otherwise, the PUC requires that each district be considered a separate and distinct entity for rate-making purposes.
The Commission requires that water rates for each Company operating district be determined independently. Each year the Company attempts to file general rate increase applications for approximately one-third of its operating districts. According to its rate case processing procedures for water utilities, the Commission attempts to issue decisions within eight months of acceptance of the Application. Rates are set prospectively for a three-year period, with a provision for step increases to maintain the authorized rate of return. Offset rate adjustments are also allowed as required for changes in purchased water, power and pump tax costs.
During 1994, general rate increase applications were filed with the Commission requesting rate relief of $3,023,000 in six Company districts representing 15 percent of the Company's customer base. The applications requested a rate of return on common equity of 12 percent. However, the Commission staff has recommended a rate of return of 10.9 percent. Public hearings for these cases were completed February 1995 and the Commission's decision is expected in mid- May. In the meantime, step rate increases for 15 districts totaling approximately $2,102,000 became effective in January 1995.
In July 1994 the Commission issued a decision of general rate cases filed in July 1993, for three districts representing 13 percent of customer base, resulting in the authorization of $540,000 in additional revenue and authorizing a return on common equity of 10.2 percent
In 1994 the Commission issued its long awaited decision in its investigation of the financial and operational risks for water utilities. While the Commission concluded that no fundamental change in its ratemaking procedures is necessary, it authorized water utilities to accrue interest on balancing and memorandum accounts. Additionally, the decision allows water utilities to request prospective recovery for unanticipated Safe Drinking Water Act compliance costs. The Company does not expect the decision to have a material effect on its operations.
Effective March 14, 1994, the Commission closed all voluntary conservation memorandum accounts. The Company has filed an advice letter seeking authority to transfer $1,748,000 in conservation expenses from the drought memorandum accounts to its expense balancing accounts. These amounts would be recoverable on a district by district basis through the Commission's offset procedures which allow surcharges to amortize account balances.
Offset rate increases of $1,944,000 and $2,327,000 were authorized during the year for water production cost increases and balancing account undercollections, respectively. Additionally, the Commission approved rate increases of $292,000 to recover increased costs from the 1993 general office renovation, $87,000 for a new water tank in the South San Francisco district, and $215,000 for post-retirement benefits other than pensions. This latter rate increase relates to an expense which was incurred as a result of accounting changes mandated by Statement of Financial Accounting Standards No. 106.
In January 1995 a consultant retained by the Commission's Division of Ratepayer Advocates delivered a report on the reasonableness of the Second Amended Contract between the Company, Stockton-East Water District, the City of Stockton and certain other governmental bodies, pertaining to the sale and delivery of water to the Company's Stockton District by the Stockton-East Water District. The report alleges that the Company was required to receive prior Commission approval before entering into the Second Amended Contract and furthermore challenges the reasonableness of the Second Amended Contract for ratemaking purposes. However the report does not include specific ratemaking recommendations. It is difficult and premature at this time to assess the potential impact on the Company if the report were to be adopted by the Commission. However, the Company anticipates that if there is any adverse financial impact as a result of the report, such impact would be prospective, affecting only future rates for the Stockton district. Hearings have not yet been scheduled on the report by the assigned administrative law judge. Following hearings at which the Company intends to present evidence to rebut the report, the assigned administrative law judge will render a proposed decision for comment and then Commission consideration. The management of the Company intends to vigorously defend its position that the Second Amended Contract did not require prior Commission approval and is reasonable for ratemaking purposes.
b. Financial Information about Industry Segments.
The Company has only one business segment.
c. Narrative Description of Business.
The business of the Company consists of the production, purchase, storage, purification, distribution and sale of water for domestic, industrial, public, and irrigation uses, and for fire protection. The Company's business fluctuates according to the demand for water, which is partially dictated by seasonal conditions, such as summer temperatures or the amount and timing of rain during the year. The Company holds such franchises or permits in the communities it serves as it judges necessary to operate and maintain its facilities in the public streets. The Company distributes its water to customers in accordance with accepted water utility methods, which include pumping from storage and gravity feed from high elevation reservoirs.
The Company has various contracts under which it operates three municipally owned water systems and two reclaimed water distribution systems and provides billing services for certain cities.
Geographical Service Areas and Number of Customers at Year-End.
The principal markets for the Company's products are users of water within the Company's service areas. The Company's geographical service areas and the approximate number of customers served in each at December 31, 1994, are as follows:
SAN FRANCISCO BAY AREA Mid-Peninsula (San Mateo and San Carlos) 35,300 South San Francisco (including Colma and Broadmoor) 15,300 Bear Gulch (including Menlo Park, Atherton, Woodside and Portola Valley) 17,100 Los Altos (including Los Altos and portions of Cupertino, Los Altos Hills, Mountain View and Sunnyvale) 17,800 Livermore 14,900 100,400
SACRAMENTO VALLEY Chico (including Hamilton City) 20,700 Oroville 3,500 Marysville 3,800 Dixon 2,700 Willows 2,200 32,900
SALINAS VALLEY Salinas 23,000 King City 1,900 24,900
SAN JOAQUIN VALLEY Bakersfield 54,400 Stockton 40,800 Visalia 26,200 Selma 4,600 126,000
LOS ANGELES AREA East Los Angeles (including portions of City of Commerce and Montebello) 26,400 Hermosa Beach and Redondo Beach (including a portion of Torrance) 24,800 Palos Verdes (including Palos Verdes Estates, Rancho Palos Verdes, Rolling Hills Estates and Rolling Hills) 23,400 Westlake (a portion of Thousand Oaks) 6,700 81,300
TOTAL 365,500
Water Supply
The Company's water supply is obtained from wells, surface runoff or diversion and by purchase from public agencies and other suppliers. The effects of the recent California drought (which ended after the 1992-93 winter) and 1994 winter rains are discussed below. Except for periods of drought, the Company in the past has had adequate water supplies to meet the existing requirements of its service areas. During drought periods, some districts experienced water rationing.
The Company delivered approximately 100 billion gallons of water during the 1994 fiscal year of which approximately 51% was obtained from wells and 49% was purchased from the following suppliers:
% of Supply District Purchased Source of Purchased Supply
SAN FRANCISCO BAY AREA
Mid-Peninsula 100% San Francisco Water Department
South San Francisco 83% San Francisco Water Department
Bear Gulch 95% San Francisco Water Department
Los Altos 82% Santa Clara Valley Water District
Livermore 65% Alameda County Flood Control and Water Conservation District
SACRAMENTO VALLEY Oroville 70% Pacific Gas and Electric Company 6% County of Butte
SAN JOAQUIN VALLEY
Bakersfield 20% Kern County Water Agency Stockton 75% Stockton-East Water District
LOS ANGELES AREA
East Los Angeles 89% Central Basin Municipal Water District Hermosa Beach and Redondo Beach 95% West Basin Municipal Water District
% of Supply District Purchased Source of Purchased Supply
LOS ANGELES AREA (Continued)
Palos Verdes 100% West Basin Municipal Water District
Westlake 100% Russell Valley Municipal Water District
The balance of the required supply for the above districts is obtained from wells, except for Bear Gulch where the balance is obtained from surface runoff from a local watershed.
The Chico, Marysville, Dixon and Willows districts in the Sacramento Valley, the Salinas and King City districts in the Salinas Valley, and the Selma and Visalia districts in the San Joaquin Valley obtain their entire supply from wells. In these districts, although groundwater levels declined during the six consecutive years of below normal precipitation (1986-1992), they remain, in the opinion of the Company, adequate for anticipated future needs. However, in the Salinas Valley, declining water tables have resulted in salt water intrusion in some areas adjacent to Monterey Bay. Operational changes have been made in the Salinas district in an attempt to retard the movement of salt water toward the Company's production wells. Pumping of vulnerable wells has been curtailed and supply supplemented by boosting water from other zones. The Company continues to cooperate with the Monterey County Water Resources Agency and other groups on long-term mitigation plans.
Purchases for the Los Altos, Livermore, Oroville, Stockton and Bakersfield districts are pursuant to long-term contracts expiring on various dates after 2011. A new 30 year contract for the Livermore District with Zone 7 of the Alameda County Flood Control and Water Conservation District was signed on November 16, 1994. The supplies for the East Los Angeles, Hermosa-Redondo, Palos Verdes and Westlake districts are provided to the Company by public agencies pursuant to an obligation of continued nonpreferential service to persons within their boundaries.
Purchases for the South San Francisco, Mid-Peninsula and Bear Gulch districts are pursuant to long-term contracts with the San Francisco Water Department expiring June 30, 2009.
The 1993-1994 water season was California's fourth driest year on record, leading the Department of Water resources to declare a 'drought watch' in May of 1994. But these fears began to be allayed as early as November 1994 when a series of storms began pouring rain and snow throughout the state's watersheds.
By late January 1995, cumulative average Sierra snowpack was at 175 percent of normal, storage in the state's 155 reservoirs was at more than 90 percent of average and the drought watch was cancelled. These promising figures substantially improve the likelihood that 100 percent of state water project deliveries will be made in 1995.
Substantial water reserves remain in the groundwater aquifers that supply Company districts served by well water. While recovery from drought-related depletion of these reserves was interrupted by drier than normal conditions in 1994, the mean groundwater levels in these districts were stable. In addition, districts located in regions with existing groundwater management mechanisms showed noticeable improvements in storage. Regional groundwater management planning is receiving greater attention throughout the state as its importance as a tool for addressing long-term water supply concerns is realized. The passage of legislation that enables management of this resource by existing local government agencies further stimulated this attention.
Despite the promise of an abundant water year, California is expected to have long-term water supply problems. To compensate for this trend, the Company continues to promote water conservation programs initiated during the drought on a district-by-district basis outlined in our water management plans and as permitted by the Commission.
Significant developments affecting future water supply occurred in several of our districts. On August 16, 1994 the State Water Resources Control Board (SWRCB) informed the Monterey County Board of Supervisors that it was initiating an investigation into the groundwater supply issues in the Salinas Valley. This is a prelude to a possible adjudication of the groundwater basin by the SWRCB should Monterey County fail to develop short and long-term solutions to the nitrate contamination and saltwater intrusion threatening the aquifers. In a related matter the SWRCB refused to consider a separate investigation of groundwater use in our King City district. This action will save the Company a considerable amount of litigation expense.
In Solano County, the location of our Dixon district, the Solano County Water Agency agreed to reimburse the Company for costs it incurred as a party to the Putah Creek adjudication. This action will determine the rights to water from Putah Creek which recharges the groundwater from which our Dixon district derives its water supply.
Utility Plant Construction Program and Acquisitions.
The Company is continually extending and enlarging its facilities as required to meet increasing demands and to maintain its service. Capital expenditures for these purposes and for the replacement of existing facilities amounted to approximately $28 million in 1994. Financing was obtained from funds from operations, short-term bank borrowings, sale of common stock, advances for construction, and contributions in aid of construction as set forth in the section entitled "Statement of Cash Flows" on page 26 of the Company's 1994 Annual Report and is incorporated herein by reference. Advances for construction of main extensions are received by the Company from subdivision developers under the rules of the PUC. These advances are refundable without interest over a period of years. Contributions in aid of construction consist of nonrefundable cash deposits or facilities received from developers.
The Company now estimates that additions and improvements to its facilities during 1995 will amount to approximately $20,700,000 (exclusive of additions and improvements financed through advances for construction and contributions in aid of construction), which is expected to be financed with internally generated funds and short-term borrowings to be refinanced by funds from the anticipated issuance of approximately $20,000,000 of long-term debt in 1995.
Quality of Supplies.
The Company maintains procedures to produce potable water in accordance with accepted water utility practice. All water entering the distribution systems from surface sources is chlorinated and in most cases filtered. Samples of water from each district are analyzed regularly by Company bacteriologists.
Competition and Condemnation.
The Company is a public utility regulated by the PUC. The Company provides service within filed service areas approved by the PUC. Under the laws of the State of California, no privately owned public utility may compete with the Company in any territory already served by the Company without first obtaining a certificate of public convenience and necessity from the PUC. Under PUC practice, such certificate will be issued only on a showing that the Company's service in such territory is inadequate.
California law also provides that whenever a public agency constructs facilities to extend a utility service into the service area of a privately owned public utility, such an act constitutes the taking of property and for such taking the public utility is to be paid just compensation.
Under the constitution and statutes of the State of California, municipalities, water districts and other public agencies have been authorized to engage in the ownership and operation of water systems. Such agencies are empowered to condemn properties already operated by privately owned public utilities upon payment of just compensation and are further authorized to issue bonds (including revenue bonds) for the purpose of acquiring or constructing water systems. To the Company's knowledge, no municipality, water district or other public agency has pending any action to condemn any of the Company's systems.
Environmental Matters.
The Company is subject to environmental regulation by various governmental authorities. Compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had, as of the date of filing of this Form 10-K, any material effect on the Company's capital expenditures, earnings or competitive position. No such material effect is anticipated for the fiscal years ending December 31, 1995 and 1996.
Human Resources.
As of December 31, 1994, the Company had 624 employees, of whom 158 were executive and administrative officials and supervisory employees, and 466 were members of unions. The Company presently has two-year collective bargaining agreements expiring December 31, 1995, with the Utility Workers of America, AFL-CIO, representing the majority of employees, and the International Federation of Professional and Technical Engineers, AFL-CIO, representing certain engineering department employees. The Company plans to enter negotiations to renew the collective bargaining agreements prior to their expiration. The agreements have been successfully renewed in the past without a labor interruption.
d. Financial Information about Foreign and Domestic Operations and Export Sales.
The Company makes no export sales.
Item 2.

Item 2.Properties.
The Company's physical properties consist of offices and water systems for the production, storage, purification, and distribution of water. These properties are located in or near the service areas listed above in the section entitled "Water Supply." The Company maintains all of its properties in good operating condition.
The Company holds all its principal properties in fee, subject to the lien of the indenture securing the Company's first mortgage bonds, of which there were outstanding at December 31, 1994, $128,944,000 in principal amount.
Item 3.

Item 3.Legal Proceedings.
The Company is involved in only routine litigation which is incidental to the business.
Item 4.

Item 4.Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders in the fourth quarter of fiscal year 1994.
Executive Officers of the Registrant.
Name Positions and Offices with the Company Age
C. H. Stump Chairman of the Board since 1991. 69 Director since 1976 and Member of Executive Committee since 1977. Mr. Stump was Secretary of the Company from 1959 to 1966, Secretary and Treasurer from 1966 to 1975, Executive Vice President from 1975 to 1981, President and Chief Operating Officer from 1981 to 1986, and President and Chief Executive Officer from 1986 to May 1992.
Donald L. Houck President and Chief Executive Officer 62 since May 1992. Director since 1988. Mr. Houck was Executive Vice President and Chief Operating Officer from 1986 to 1992 and a Vice President since 1977. Prior to that, Mr. Houck was a supervising engineer with the California Public Utilities Commission with eighteen years experience in the rate-making process.
Gerald F. Feeney Vice President, Chief Financial Officer and 50 Treasurer since November 1994. Controller, Assistant Secretary and Assistant Treasurer from 1976 to 1994. From 1970 to 1976, Mr. Feeney was an audit manager with Peat Marwick Mitchell & Co.
Francis S. Ferraro Vice President since August 1989. Mr. 45 Ferraro previously had 15 years experience in regulatory matters with the California Public Utilities Commission, from June 1985 through August 1989 in the capacity of an administrative law judge.
James L. Good Vice President since December 1994. 31 Mr. Good was Director of Congressional Relations for the National Association of Water Companies from 1991 to 1994.
Raymond H. Taylor Vice President since April 1990. Mr. Taylor 49 had been director of water quality since 1986 and previously had been employed by the Environmental Protection Agency before joining the Company in 1982.
Helen Mary Kasley Secretary and Legal Counsel since 43 1993. From 1990 to 1992, Mrs. Kasley was Secretary. From 1986 to 1990, she was an associate attorney with McCutchen, Doyle, Brown & Enersen.
Calvin L. Breed Controller, Assistant Secretary and Assistant 39 Treasurer since November 1994. Previously Mr. Breed served as Treasurer of TCI International, Inc.
John S. Simpson Assistant Secretary since 1992. Mr. 50 Simpson has been Manager of New Business Development for the past nine years and has held various management positions with the Company since 1967.
No officer or director has any family relationship to any other executive officer or director. No executive officer is appointed for any set term. There are no agreements or understandings between any executive officer and any other person pursuant to which he was selected as an executive officer, other than those with directors or officers of the Company acting solely in their capacities as such.
PART II
Item 5.

Item 5.Market for Registrant's Common Equity and Related Stockholder Matters
The information required by this item is contained in the Section captioned "Quarterly Financial and Common Stock Market Data" on pages 34 and 35 of the Company's 1994 Annual Report and is incorporated herein by reference. The number of holders listed in such section includes the Company's record holders and also individual participants in security position listings.
Item 6.

Item 6.Selected Financial Data.
The information required by this item is contained in the section captioned "California Water Service Company Ten Year Financial Review" on pages 16 and 17 of the Company's 1994 Annual Report and is incorporated herein by reference.
Item 7.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations.
The information required by this item is contained in the sections captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations," on pages 18 through 21 of the Company's 1994 Annual Report and is incorporated herein by reference.
Item 8.

Item 8.Financial Statements and Supplementary Data.
The information required by this item is contained in the sections captioned "Balance Sheet," "Statement of Income," "Statement of Common Shareholders' Equity," "Statement of Cash Flows," "Notes to Financial Statements" and "Independent Auditors' Report" on pages 22 through 35 of the Company's 1994 Annual Report and is incorporated herein by reference.
Item 9.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10.

Item 10.Directors and Executive Officers of the Registrant.
Information regarding executive officers of the Company is included in a separate item captioned "Executive Officers of the Registrant" contained in Part I of this report. The information required by this item as to directors of the Company is contained in the section captioned "Election of Directors" on pages 2 through 6 of the Proxy Statement and is incorporated herein by reference. (The Proxy Statement was filed under EDGAR on March 10, 1995).
Item 11.

Item 11.Executive Compensation.
The information required by this item as to directors and executive officers of the Company is contained in the section captioned "Compensation of Executive Officers" on pages 8 through 11 of the Proxy Statement and is incorporated herein by reference. (The Proxy Statement was filed under EDGAR on March 10, 1995).
Item 12.

Item 12.Security Ownership of Certain Beneficial Owners and Management.
The information required by this item is contained in the sections captioned "Election of Directors," "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" pages 2 through 6 and 13, respectively, of the Proxy Statement and is incorporated herein by reference. (The Proxy Statement was filed under EDGAR on March 10, 1995).
Item 13.

Item 13.Certain Relationships and Related Transactions.
None.
PART IV
Item 14.

Item 14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) (1) Financial Statements:
Balance Sheet as of December 31, 1994 and 1993.
Statement of Income for the years ended December 31, 1994, 1993, and 1992.
Statement of Common Shareholders' Equity for the years ended December 31, 1994, 1993, and 1992.
Statement of Cash Flows for the years ended December 31, 1994, 1993, and 1992.
Notes to Financial Statements, December 31, 1994, 1993, and 1992.
The above financial statements are contained in sections bearing the same captions on pages 22 through 35 of the Company's 1994 Annual Report and are incorporated herein by reference.
(2) Financial Statement Schedule:
Schedule Number
Independent Auditors' Report January 20, 1995.
II Valuation and Qualifying Accounts and Reserves--years ending December 31, 1994, 1993, and 1992.
All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
(3) Exhibits required to be filed by Item 601 of Regulation S-K.
See Exhibit Index on page 25 of this document which is incorporated herein by reference.
The exhibits filed herewith are attached hereto (except as noted) and those indicated on the Exhibit Index which are not filed herewith were previously filed with the Securities and Exchange Commission as indicated. Except where stated otherwise, such exhibits are hereby incorporated by reference.
Exhibits filed herewith and attached hereto under separate cover will be furnished to security holders of the Company upon written request and payment of a fee of $.30 per page which fee covers only the Company's reasonable expenses in furnishing such exhibits.
(b) Report on Form 8-K.
None required to be filed during the last quarter of 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CALIFORNIA WATER SERVICE COMPANY
Date: March 15, 1995 By /s/ Donald L. Houck DONALD L. HOUCK, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Date: March 15, 1995 /s/ William E. Ayer WILLIAM E. AYER, Member, Board of Directors
Date: March 15, 1995 /s/ Robert W. Foy ROBERT W. FOY, Member, Board of Directors
Date: March 15, 1995 /s/ Edward D. Harris, Jr. EDWARD D. HARRIS, JR. M.D., Member, Board of Directors
Date: March 15, 1995 /s/ Donald L. Houck DONALD L. HOUCK President, Chief Executive Officer, Member, Board of Directors
Date: March 15, 1995 /s/ Robert K. Jaedicke ROBERT K. JAEDICKE, Member, Board of Directors
Date: March 15, 1995 /s/ Linda R. Meier LINDA R. MEIER, Member, Board of Directors
Date: March 15, 1995 /s/ J. W. Weinhardt J. W. WEINHARDT, Member, Board of Directors
Date: March 15, 1995 /s/ C. H. Stump C. H. STUMP, Chairman of the Board, Member, Board of Directors
Date: March 15, 1995 /s/ Edwin E. van Bronkhorst EDWIN E. VAN BRONKHORST, Member, Board of Directors
Date: March 15, 1995 /s/ Gerald F. Feeney GERALD F. FEENEY, Vice President, Chief Financial Officer and Treasurer
Date: March 15, 1995 /s/ Calvin L. Breed CALVIN L. BREED, Controller, Assistant Secretary and Assistant Treasurer
Independent Auditors' Report
Shareholders and Board of Directors California Water Service Company:
Under date of January 20, 1995, we reported on the balance sheet of California Water Service Company as of December 31, 1994 and 1993, and the related statements of income, common shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1994, as contained in the 1994 annual report to shareholders. These financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1994. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule as listed in accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
San Jose, California /s/ KPMG Peat Marwick,LLP January 20, 1995
EXHIBIT INDEX Sequential Page Numbers Exhibit Number in this Report
3. Articles of Incorporation and By-Laws:
3.1 Restated Articles of Incorporation dated 25 March 20, 1968 Certificate of Ownership Merging Palos Verdes Water Company into California Water Service Company dated December 22, 1972; Certificate of Amendment of Restated Articles of Incorporation dated April 7, 1975; Certificate of Amendment of Restated Articles of Incorporation dated April 16, 1984; Certificate of Amendment of Restated Articles of Incorporation dated July 31, 1987; Certificate of Amendment of Restated Articles of Incorporation dated October 19, 1987 (Exhibit 3.1 to Form 10-K for fiscal year 1987, File No. 0-464)
3.2 Certificates of Determination of Preferences 25 for Series C Preferred Stock (Exhibit 3.2 to Form 10-K for fiscal year 1987, File No. 0-464)
3.3 Certificate of Amendment of the Company's 25 Restated Articles of Incorporation dated April 27, 1988. (Exhibit 3.3 to Form 10-K for fiscal year 1989, File No. 0-464)
3.4 By-Laws dated September 21, 1977, as 25 amended 24 November 19, 1980, April 21, 1982, June 15, 1983, September 17, 1984, and November 16, 1987 (Exhibit 3.3 to Form 10-K for fiscal year 1987, File No. 0-464).
3.5 Amendment to By-laws dated May 16, 1988. 25 (Exhibit 3.5 to Form 10-K for fiscal year 1991, File No. 0-464)
4. Instruments Defining the Rights of Security 26 Holders, including Indentures:
Mortgage of Chattels and Trust Indenture 26 dated April 1, 1928; Eighth Supplemental Indenture dated November 1, 1945, covering First Mortgage 3.25% Bonds, Series C; Fifteenth Supplemental Indenture dated November 1, 1965, covering First Mortgage 4.85% Bonds, Series J; Sixteenth Supplemental Indenture dated November 1, 1966, covering First Mortgage 6.25% Bonds, Series K; Seventeenth Supplemental Indenture dated November 1, 1967, covering First Mortgage 6.75% Bonds, Series L; Twenty-First Supplemental Indenture dated October 1, 1972, cover First Mortgage 7.875% Bonds, Series P; Twenty-Fourth Supplemental Indenture dated November 1, 1973, covering First Mortgage 8.50% Bonds, Series S (Exhibits 2(b), 2(c), 2(d), Registration Statement No. 2-53678, of which certain exhibits are incorporated by reference to Registration Statement Nos. 2-2187, 2-5923, 2-9681, 2-10517 and 2-11093.)
Twenty-Sixth Supplemental Indenture dated May 1, 26 1976 (Exhibit 4 to Form 10-K for fiscal year 1986, File No. 0-464).
Twenty-Seventh Supplemental indenture dated 26 November 1, 1977; Twenty-Eighth Supplemental Indenture dated May 1, 1978; Twenty-Ninth Supplemental Indenture dated November 1, 1979 (Exhibit 4 to Form 10-K for fiscal year 1989, File No. 0-464).
Thirty-Fifth Supplemental Indenture dated as of 26 November 1, 1992, covering First Mortgage 8.63% Bonds, Series DD. (Exhibit 4 to Form 10-Q dated September 30, 1992, File No. 0-464)
Thirty-Sixth Supplemental Indenture dated as of 26 May 1, 1993, covering First Mortgage 7.90% Bonds Series EE (Exhibit 4 to Form 10-Q dated June 30, 1993, File No. 0-464)
Thirty-Seventh Supplemental Indenture dated as 26 of September 1, 1993, covering First Mortgage 6.95% Bonds, Series FF (Exhibit 4 to Form 10-Q dated September 30, 1993, File No. 0-464)
Thirty-Eighth Supplemental Indenture dated as 26 of October 15, 1993, covering First Mortgage 6.98% Bonds, Series GG (Exhibit 4 to Form 10-K for fiscal year 1994, File No. 0-464)
Sequential Page Numbers Exhibit Number in this Report
10. Material Contracts.
10.1 Water Supply Contract between the Company 27 and the County of Butte relating to the Company's Oroville District; Water Supply Contract between the Company and the Kern County Water Agency relating to the Company's Bakersfield District; Water Supply Contract between the Company and Stockton East Water District relating to the Company's Stockton District. (Exhibits 5(g), 5(h), 5(i), 5(j), Registration Statement No. 2-53678, which incorporates said exhibits by reference to Form 1O-K for fiscal year 1974, File No. 0-464).
10.2 Settlement Agreement and Master Water Sales 27 Contract between the City and County of San Francisco and Certain Suburban Purchasers dated August 8, 1984; Supplement to Settlement Agreement and Master Water Sales Contract, dated August 8, 1984; Water Supply Contract between the Company and the City and County of San Francisco relating to the Company's Bear Gulch District dated August 8, 1984; Water Supply Contract between the Company and the City and County of San Francisco relating to the Company's San Carlos District dated August 8, 1984; Water Supply Contract between the Company and the City and County of San Francisco relating to the Company's San Mateo District dated August 8, 1984; Water Supply Contract between the Company and the City and County of San Francisco relating to the Company's South San Francisco District dated August 8, 1984. (Exhibit 10.2 to Form l0-K for fiscal year 1984, File No. 0-464).
10.3 Water Supply Contract dated January 27, 27 1981, between the Company and the Santa Clara Valley Water District relating to the Company's Los Altos District (Exhibit 10.3 to Form 10-K for fiscal year 1992, File No. 0-464)
10.4 Amendments No. 3, 6 and 7 and Amendment 27 dated June 17, 1980, to Water Supply Contract between the Company and the County of Butte relating to the Company's Oroville District. (Exhibit 10.5 to Form 10-K for fiscal year 1992, File No. 0-464)
Sequential Page Numbers Exhibit Number in this Report
10.5 Amendment dated May 31, 1977, to Water 28 Supply Contract between the Company and Stockton-East Water District relating to the Company's Stockton District. (Exhibit 10.6 to Form 10-K for fiscal year 1992, File No. 0-464)
10.6 Second Amended Contract dated September 25, 28 1987 among the Stockton East Water District, the California Water Service Company, the City of Stockton, the Lincoln Village Maintenance District, and the Colonial Heights Maintenance District Providing for the Sale of Treated Water. (Exhibit 10.7 to Form 10-K for fiscal year 1987, File No. 0-464).
10.7 Dividend Reinvestment Plan. (Exhibit 10.8 to 28 Form 10-Q dated March 31, 1994, File No. 0-464)
10.8 Water Supply Contract dated April 19, 1927, 28 and Supplemental Agreement dated June 5, 1953, between the Company and Pacific Gas and Electric Company relating to the Company's Oroville District. (Exhibit 10.9 to Form 10-K for fiscal year 1992, File No. 0-464)
10.9 California Water Service Company Pension Plan 28 (Exhibit 10.10 to Form 10-K for fiscal year 1992, File No. 0-464)
10.10 California Water Service Company Supplemental 28 Executive Retirement Plan. (Exhibit 10.11 to Form 10-K for fiscal year 1992, File No.0-464)
10.11 California Water Service Company Salaried 28 Employees' Savings Plan. (Exhibit 10.12 to Form 10-K for fiscal year 1992, File No. 0-464)
10.12 California Water Service Company 28 Directors Deferred Compensation Plan (Exhibit 10.13 to Form 10-K for fiscal year 1992, File No. 0-464)
10.13 Board resolution setting forth 28 the terms of the retirement plan, as amended, for Directors of California Water Service Company (Exhibit 10.14 to Form 10-K for fiscal year 1992, File No. 0-464)
Sequential Page Numbers Exhibit Number in this Report
10.14 Registration statement on Form S-3, 29 dated September 8, 1994 regarding the sale of 550,000 shares of Registrant's common stock (filed with the Commission on September 8, 1994, Registration No. 33-55233, File No. 0-464)
10.15 Water Supply Contract dated November 16, 1994, 30 between the Company and Alameda County Flood Control and Water Conservation District relating to the Company's Livermore District
13. Annual Report to Security Holders, Form 10-Q 46 or Quarterly Report to Security Holders:
1994 Annual Report. The sections of the 1994 Annual Report which are incorporated by reference in this 10-K filing. This includes those sections referred to in Part II, Item 5, Market for Registrant's Common Equity and Related Shareholder Matters; Part II, Item 6, Selected Financial Data; Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations; and Part II, Item 8, Financial Statement and Supplementary Data.
27. Financial Data Schedule as of December 31, 1994 70


Item 1. Business
(a) General Development of the Business.
The Registrant was incorporated in 1966 under the laws of Minnesota. In the past year, the Registrant has not changed its form of organization or mode of conducting business. The Registrant grows through internal development and acquisitions. As in the past, periodic dispositions of assets or business units are possible when they no longer fit with the long-term strategies of the Registrant.
Effective January 1, 1994, the Registrant acquired the net assets and the subsidiaries of Schroff GmbH (Schroff) from Fried. Krupp AG Hoesch-Krupp for a cash purchase price of approximately $140 million net of cash acquired. Schroff manufactures and sells enclosures, cases, subracks and accessories for commercial electronic and instrumentation applications, with world-wide 1993 sales of approximately $160 million. While Schroff faces significant competition in each of its markets, it is the largest manufacturer of electronic enclosures and 19 inch subracks in the European market, in which the majority of Schroff sales are made. The Registrant views Schroff as complementary to the electrical enclosure business of Hoffman Engineering and intends to develop these businesses using their respective strengths in technology, manufacturing, marketing and market position.
In September 1994, Pentair announced that it was exploring strategic alternatives for its paper businesses, including their possible sale. That course of action was chosen to achieve several objectives. First, to permit Pentair to focus its commitment and resources in the industrial products sector, continuing the strong growth and leading market positions these businesses have achieved. Second, to permit the paper businesses to seek their own opportunities and long-term goals. Third, to make Pentair a more understandable company to the investment community and its shareholders.
That process is ongoing. In February 1995, Pentair announced the sale of its uncoated paper business, Cross Pointe Paper, to Noranda Forest for approximately $200 million. The sale is expected to close at the beginning of April 1995. Efforts continue toward completing the strategic alternatives for Niagara of Wisconsin and for the joint venture interest in Lake Superior Paper Industries, the company's other paper businesses.
Pentair expects that its strategic refocusing will be completed in the course of 1995. Whatever the eventual outcome, Pentair is poised to aggressively expand into its chosen industrial markets.
(b) Financial Information about Industry Segments.
The Registrant's business is conducted in three industry segments. The Specialty Products segment manufactures woodworking machinery; portable power tools; and pumps and pumping systems. The General Industrial Equipment segment manufactures electrical and electronic enclosures and wireways; industrial lubricating systems and material dispensing equipment; automotive service equipment; and sporting ammunition. The Paper Products segment manufactures printing papers in a variety of types and grades. Business segment financial information is found on page 29 and pages 52-53 (Note 18) of the 1994 Annual Report to Shareholders.
Narrative Description of Business.
Description of the Specialty Products Segment:
Products and marketing.
The following table sets forth, for each of the last three years, the Specialty Products segment product class net sales in excess of 10 percent of the Registrant's consolidated net sales .
Woodworking Machinery. The Registrant, through its subsidiary Delta International Machinery Corp. (Delta), manufactures, markets, and services a line of general-purpose woodworking machinery, such as saws, planers, joiners, grinders, drill presses, shapers, lathes, and other quality machines. Delta sells its products in the United States, Canada, and other foreign countries under its "Delta" brand name through a network of independent and mail order distributors, hardware stores and home centers.
Portable Electric Tools. The Registrant, through its subsidiary Porter-Cable Corporation (Porter-Cable), manufactures and markets a variety of portable electric tools, such as saws, sanders, drills and routers, used in woodworking, industrial maintenance, and construction trades. Porter-Cable markets its products under the brand name "Porter-Cable" through a network of independent, specialty tool, and mail order distributors, hardware stores and home centers.
Pumps and Pumping Systems. The Registrant, through its F.E. Myers Co. Division of McNeil (Ohio) Corporation (Myers), manufactures and markets a wide variety of pumps for residential, environmental engineering, and industrial use. Products are distributed through a network of distributors, wholesalers, dealers, and installers. In addition, Myers distributes products to the do-it-yourself market for retail sale through home centers and hardware stores under the names "Water Ace" and "Shur Dri".
Competitive conditions.
Delta participates in the middle range of the overall market for general purpose woodworking machinery. The addressed market is focused on high quality, feature oriented products and value added services for the home shop, contractor, and small shop markets. Delta markets the industry's broadest line of products for its addressed market. Delta's numerous competitors do have individual products which compete with certain of Delta's products. Competition in this market focuses on quality, features, service and price.
Porter-Cable competes in the professional portable electric tool market which is highly competitive. Porter-Cable faces several major competitors across its addressed market. Product innovation, features, performance, quality, service, delivery and price are all competitive factors.
Myers addresses the water pump and system market. Myers faces many competitors across its product lines. Price, delivery, and quality are competitive factors.
Description of the General Industrial Equipment Segment:
Products and marketing.
The following table sets forth, for each of the last three years, the General Industrial Equipment segment product class net sales in excess of 10 percent of consolidated net sales.
Electrical Enclosures. Through the Hoffman Engineering Company division of Federal-Hoffman, Inc. (Hoffman Engineering), the Registrant manufactures enclosures and wireways for electrical and industrial instrumentation applications and markets these products primarily through independent manufacturer's representatives and electrical and electronic equipment distributors throughout North America and the United Kingdom.
Electronic Enclosures. Through Schroff GmbH and its international subsidiaries (Schroff), the Registrant manufactures enclosures and wireways for electronic instrumentation applications. Schroff is a large European manufacturer of cabinets, cases, subracks, microcomputer packaging systems and accessories. Schroff serves the worldwide industrial electronics industry including key segments such as computers, test & measurement, private LANs/data communication, industrial control and factory automation, medical and telecommunications.
Sporting Ammunition. Through the Federal Cartridge Company division of Federal-Hoffman, Inc. (Federal Cartridge), the Registrant manufactures and markets sporting and law enforcement ammunition, and components. These products are distributed throughout the United States through a network of distributors; directly to large retail chains; and directly to law enforcement agencies (governmental).
Industrial Lubricating Systems and Material Dispensing Equipment. The Registrant, through its Lincoln Industrial division of McNeil (Ohio) Corporation (Lincoln Industrial), manufactures components and designs systems for manual and automatic delivery of measured quantities of lubricants for industrial applications. Lincoln Industrial also manufactures components and designs, fabricates, and installs high-volume liquid and semi-solid dispensing systems. Both segments serve original equipment and retrofit markets. Lubricating and materials dispensing systems are marketed in the United States by approximately 100 specially qualified systems distributors with design, installation, and service capability. Basic lubricating equipment and accessories are marketed through industrial supply and specialty distributors. A special direct sales group markets a wide variety of Lincoln Industrial products to original equipment manufacturers in a variety of industries. Lincoln Industrial also manufactures lubricating components and systems at its facility in Walldorf, Germany for distribution to European, Middle East, Far East and African markets, and to a lesser extent to the United States. The remainder of the world market, including the Pacific Rim, is served from Lincoln Industrial's St. Louis, Missouri manufacturing facility.
Automotive Service Equipment. The Registrant, through its Lincoln Automotive division of McNeil (Ohio) Corporation (Lincoln Automotive), manufactures and markets lubrication, repair, and service equipment for a broad range of vehicles. Products are sold through a key group of approximately 600 aftermarket wholesalers. Certain products are sold to large auto parts chain stores. Certain lubricating equipment, tools, and jacks and lifting equipment are sold under private label programs. Garage, service station, car dealership service department, and fast oil change lubricating systems are marketed through petroleum equipment and service distributors with design and installation capability.
Competitive conditions.
Hoffman Engineering is the largest North American manufacturer of electrical enclosures and wireways, having a market share estimated to be about 25%. It is currently the only manufacturer with national distribution and its competitors are generally smaller, regional manufacturers. Hoffman Engineering also participates in the North American electronic enclosures market, facing competition from a large number of firms, with three or four established firms leading the market. In both markets, the most significant competitive factors are price, product innovation, service, quality, breadth of product line, and delivery.
Schroff is a large manufacturer in Europe's electronic enclosure market and a technical leader. Schroff, like Hoffman, has a comprehensive product range. Schroff faces competition from a large number of firms, some very large and some smaller. Significant competitive factors are product innovation and quality.
Federal Cartridge and its two primary competitors, Winchester and Remington, have a combined market share of approximately 90% in the U.S. sporting ammunition market, with the balance coming from smaller domestic competitors and foreign ammunition manufacturers. Quality, delivery, price and terms are significant competitive factors.
Lincoln Industrial and Lincoln Automotive face three to five major competitors and several smaller competitors across their product lines. Competition involving industrial lubricating systems and material dispensing equipment tends to center around quality, systems capability, and application knowledge. Price becomes a more significant competitive factor for vehicle servicing equipment.
Description of the Paper Products and Joint Venture Segments:
Products and marketing.
The following table sets forth, for each of the last three years, the Registrant's net sales ($ millions), percent of consolidated net sales and tons shipped (thousands) for each paper product class.
fn1 Lake Superior Paper Industries is a joint venture in Duluth, Minnesota; only 50% of the joint venture's sales and tonnage are included. Since this joint venture is accounted for on the equity method, its sales are not included in consolidated sales.
Coated Paper. The Registrant, through its subsidiary Niagara of Wisconsin Paper Corporation (Niagara), manufactures coated groundwood publication-grade paper (nos. 4 and 5) used for applications requiring high-resolution printing and reproduction of color pictures, such as magazines, periodicals, catalogs, and general commercial printing.
Uncoated Papers. Cross Pointe Paper Corporation (Cross Pointe), a subsidiary of the Registrant, through its subsidiaries, Miami Paper Corporation, Dayton Paper Corp. and Flambeau Paper Corp., manufactures a variety of uncoated papers, primarily for commercial printing, text and cover, and book publishing markets, and operates a centralized converting and distribution operation (IDC) in West Chicago, Illinois.
Supercalendered (SCA) Printing and Publication Grade Papers. The Registrant has a 50% interest in a joint venture, Lake Superior Paper Industries (Lake Superior), which produces supercalendered paper known as SCA. End use markets include magazine publication, catalogues and advertising inserts. SCA is sold directly to printers and end users through Lake Superior's own sales and marketing personnel. Adjacent to Lake Superior, is a recycled pulp mill facility, of which 24% is owned by LSPI Fiber Co. Registrant owns 50% of LSPI Fiber Co. and accounts for it on the equity method. LSPI Fiber Co. sells recycled pulp to LSPI and other paper mills.
Competitive conditions.
The Paper Products segment output of Niagara and Cross Pointe is sold in highly competitive markets with between 10 to 15 competitors in each. Many competitors have greater production capacity and, in many cases, captive sources of raw materials. Lake Superior is the largest North American producer of SCA, but is subject to substantial competition from European manufacturers, and makers of other grades of printing and publication paper. Price, quality, innovation and service are significant competitive factors in the markets served by the Paper Products segment.
Raw materials.
The raw materials used in the manufacture of paper are bleached kraft pulps, pulp substitutes, pulpwood, groundwood pulp, waste paper, certain chemicals, clays, starches, and additives. The Registrant does not own its own timberlands or manufacture its own kraft pulp.
Purchases of kraft pulp and waste paper are significant components of the Registrant's fiber needs. The raw materials are supplied by several manufacturers, some under long-term contracts. The balance of fiber needs, comprised primarily of groundwood pulp, sulphite pulp and secondary fiber (pulp recovered by recycling waste paper), is produced at the various mills. The Registrant has recently installed or expanded its recycled fiber capacity at its Cross Pointe mills and has invested in a joint venture recycled pulp facility in Duluth, Minnesota.
The Registrant also purchases chemicals, clays, logs for pulp, waste paper, and other paper-making components from various sources. Adequate supplies of these materials are expected to be available to meet the Registrant's needs.
Backlog.
The following table shows backlog (in days) and approximate sales value (at average selling price) at December 31:
A substantial portion of paper sales are produced to meet specific customer orders. Although the level of backlogs provides some indication of the strength of the paper markets, other factors such as the trend of retail sales and customer and printer inventory levels must be considered. The current backlog is considered adequate. All backlogs are expected to be filled within the current year.
Information Regarding All Segments:
Working capital items.
Federal Cartridge's working capital builds from January through September as inventories are increased to meet third quarter shipping schedules and receivables increase due to fall dating for early order programs used in the sporting ammunition business. Management continues to focus on reducing working capital requirements through management of receivable and inventory levels.
Status of new products.
The industries in which the segments participate are essentially mature and do not experience the introduction of many products that materially change the nature of the industry. Individual manufacturers generally make improvements or apply new technologies to existing products.
Raw materials.
The raw materials used in the manufacturing process include steel(bar and sheet) various metals including brass and lead, gunpowder and plastic. Selected motors, castings, plastic parts and components are also purchased. The supply of all raw materials and components is currently adequate.
Delta and Porter-Cable import select tools in their product offerings. Design and engineering of these products is performed primarily by Delta. The manufacturing process is controlled and monitored for most of these products in factories dedicated to Delta production. Supply of these products is currently adequate and timely.
Patents, trademarks, licenses, franchises and concessions.
The businesses own a number of U.S. and foreign patents and trademarks. They were acquired over many years and relate to many products and improvements. No one patent or trademark is of material importance to the company as a whole.
Seasonal aspects.
For the Registrant as a whole there is no strongly seasonal aspect.
Backlog.
The Specialty Products and General Industrial Equipment segments normally do not experience backlogs for substantial periods of time. The nature of the businesses emphasizes maintaining inventories sufficient to satisfy customer needs on a timely basis, and production and sourcing is geared towards providing adequate inventories in order to minimize customer back orders. Accordingly, backlogs are not material to understanding the sales trends or manufacturing fluctuations of the segment.
Dependence on limited number of customers.
The Registrant as a whole is not dependent on a single customer or on a few customers. The loss of a limited number of customers would not have a material adverse impact on the Registrant.
Government contracts.
The Registrant has no material portion of sales under government contracts that may be subject to renegotiation of profits or termination of contracts at the election of the government.
Employees.
As of December 31, 1994, the Registrant and its subsidiaries employed approximately 10,300 persons, of which 2,475 were represented by unions having collective bargaining agreements.
Labor contracts negotiated in 1994 were: Molders and Allied Workers Local 45 - Ashland, Ohio (extended to May 1, 1997), 49 employees; Clerical Workers Local 47 - Niagara, Wisconsin (extended to May 14, 1997), 25 employees; and Molders and Allied Workers Local 19 - Guelph, Ontario, Canada (extended to July 1, 1997) 7 employees.
Contracts expiring in 1995: International Association of Machinists Local 59 - Ashland, Ohio (expires April 6, 1995); United Paperworkers International Union Local 1166 - Niagara, Wisconsin (was extended from January 31, 1995 and now expires April 30, 1995); International Association of Machinists Local 9 - St. Louis, Missouri (expires April 30, 1995); United Steel Workers of America Local 8630 - Tupelo, Mississippi (expires May 1, 1995); Patternworkers League - Ashland, Ohio (expires September 1, 1995); and Teamsters Local 984 - Memphis, Tennessee (expires December 15, 1995).
The Registrant considers its employee relations to be good and feels future contracts can be negotiated for the benefit of the business and the employees.
(d) Financial Information about Foreign Operations.
The Registrant operates primarily in North America and Europe. See discussion of foreign operations incorporated by reference.
Item 2.

Item 2. Properties
The Registrant's corporate offices, located at 1500 County Road B2 West, St. Paul, Minnesota 55113-3105, are leased and consist of approximately 22,000 square feet; the lease expires in December 1999. The Registrant also has an option to terminate the lease during the period December 1994 to June 1995. Information about the Registrant's principal manufacturing facilities and other properties is presented below by industry segment. These facilities are adequate and suitable for the purposes they serve. Unless noted all facilities are owned.
Specialty Products Segment
NOTES:
(1) Certain pulp and paper production equipment is leased. One lease expires in 1996 with options to renew for two terms of three years each. Another lease expires in 1999 with options to renew for three terms of two years each. The third lease expires in 2006 with an option to purchase after seven years and options to renew for up to eight years . Under each lease, Niagara has the option to purchase the equipment at the then-current market value at the end of the initial term or at the end of each renewal term. (2) Consists of 10,700 square feet of space under a lease expiring in 1997. (3) Consists of 202,000 square feet under a lease expiring in 1998 and 253,000 square feet under a lease expiring in 2001. (4) The Flambeau mill power plant is leased until 2007 with options to renew for three terms of five years each. (5) The production equipment is leased under 25-year leases through 2012 with options to renew for periods of five to seven years and options to purchase the equipment in 1997, and at the expiration of the lease term and of any renewal term.
Item 3.

Item 3. Legal Proceedings.
The Registrant or its subsidiaries have been made parties to actions filed, or have been given notice of potential claims, relating to the conduct of its business, including those pertaining to product liability, environmental and employment matters. Major matters which may have an impact on the Registrant are discussed below. The Registrant believes that it is remote that the outcome of such matters will have a material adverse effect on the Registrant's financial position or future results of operations, based on current circumstances known to the Registrant.
Federal-Hoffman, Inc. Federal Cartridge, a division of Federal-Hoffman, has been named by the EPA as a Potentially Responsible Party (PRP) in connection with a waste disposal site in Greer, South Carolina. The EPA issued an administrative order effective April 29, 1992 to Federal-Hoffman and 96 other entities to compel the cleanup of the Aqua-Tech Environmental, Inc. site. Federal-Hoffman is working with a group of other PRPs to negotiate with the EPA regarding the cleanup of the site. A surface cleanup of the site is complete. Under interim allocations by the PRP group, Federal Cartridge paid $442,000 toward the cost of the surface cleanup. Under current final allocation proposals, Federal-Hoffman anticipates no additional payout for the surface cleanup.
On March 16, 1995, the EPA notified Federal Cartridge that it is a PRP related to the subsurface of the site. The PRP group anticipates beginning a study of the soil and groundwater to determine the extent of subsurface contamination. The cost of such study, any necessary remediation and the size of allocation, if any, to Federal-Hoffman is unknown to the Registrant at this time. Federal-Hoffman however, anticipates its allocation in the subsurface action to be positively impacted by the nature of its waste and the fact that virtually all of its waste was accounted for and removed during the surface remediation.
In October 1992, Hoffman Engineering, a division of Federal-Hoffman was also named as a PRP in connection with the Aqua-Tech site. Hoffman settled out of the surface removal as a de minimis party, and anticipates doing the same for the subsurface remediation. Based on current information available to it, the Registrant believes that this matter is unlikely to result in material future liability.
Porter-Cable Corporation. In November 1993, the Tennessee Department of Environment and Conservation (TDEC) issued to Porter-Cable Corporation (Porter-Cable) and Rockwell International Corporation (Rockwell) an administrative order requiring them to investigate, and if necessary, clean up alleged groundwater contamination at a manufacturing facility located in Madison County, Tennessee. The facility was acquired by Porter Cable from Rockwell in 1981. Porter Cable is currently engaged in discussions with Rockwell to reach an agreement regarding indemnification from or cost sharing with Rockwell, based upon Tennessee and Federal law, for costs and expenses related to investigation of the site. The Registrant believes that this matter is unlikely to result in material liability or material changes in operations. No estimate of the projected response cost liability can be made based on information currently known to the Company.
Cross Pointe Paper Corporation. In February 1994, the Miami mill (Miami) of Cross Pointe Paper Corporation was named a PRP in connection with the IWD/Cardington landfill in Moraine, Ohio. Waste haulers with whom Miami contracted to transport its flyash and paper and wood waste allegedly took it to this landfill for some time prior to its closure in 1980. The EPA has identified 22 other PRPs at this time. The cost of remediation of the site is estimated to be approximately $12 to $15 million. Miami is investigating its alleged involvement at this site.
Niagara of Wisconsin Paper Corporation. In March 1994, Niagara of Wisconsin Paper Corporation (Niagara) was notified by the Michigan Department of Natural Resources (MDNR) that Niagara's sludge lagoons violate MDNR regulations. Niagara is discussing with the MDNR the closure schedule of the lagoons and the need for expanded groundwater monitoring at the site. Monitoring done to date indicates some groundwater contamination, but at this time the extent is unknown. It is likely that some remediation will be required; but the Registrant does not anticipate that the cost of any such remediation will have a material impact on Registrant's financial condition or operations.
California Proposition 65 Notice. Two divisions of Registrant's subsidiaries have received notices pursuant to California Health and Safety Code Section 25249 (Proposition 65). In February 1994, F.E. Myers (Myers), a division of McNeil (Ohio) Corporation, received a notice regarding alleged violations arising from discharge of lead from submersible water pumps into drinking water since February 27, 1988. Two private environmental groups sent the notice to and subsequently filed suit against Myers and three other pump manufacturers and one pump distributor. Under Proposition 65, the penalty for each violation is $2,500 per day. Myers is responding to the claims raised in the lawsuit. In light of a recent settlement proposal by plaintiffs, Registrant believes that it is unlikely that this matter will result in material liability.
In October 1994, Federal Cartridge (Federal), a division of Federal-Hoffman, Inc. received a notice regarding alleged violations of Proposition 65 arising from exposure of firearm users to lead from ammunition. A private environmental group sent the notice to Federal and 75 other ammunition and firearms manufacturers and sellers. Federal is currently investigating the claims set forth in this notice.
Product Liability Claims. As of March 4, 1995, the Registrant or its subsidiaries are defendants in approximately 177 product liability lawsuits and have been notified of approximately 100 additional claims. The Registrant has had and currently has in place insurance coverage it deems adequate for its needs. A substantial number of these lawsuits and claims are insured by Penwald, a regulated insurance company wholly owned by Registrant. See discussion in Item 7 (MD&A - Insurance Subsidiary) and Item 8 (Note 1 to the Financial Statements). Accounting reserves covering the deductible portion of liability claims not covered by Penwald have been established and are reviewed on a regular basis. The Registrant has not experienced unfavorable trends in either the severity or frequency of product liability claims.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders.
During the fourth quarter, no matter was submitted to a vote of security holders.
PART II
Item 5.

Item 5. Market for Registrant's Common Equity and Related Shareholder Matters.
Item 6.

Item 6. Selected Financial Data.
Item 7.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operation.
Item 8.

Item 8. Financial Statements and Supplementary Data.
For information required under Items 5 through 8, see the Registrant's Annual Report to Shareholders for the year ended December 31, 1994, as referenced on page 2 of this report.
Item 9.

Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
No changes in accountants or disagreements between the Registrant and its accountants regarding accounting principles or financial statement disclosures have occurred within the 24 months prior to the date of the Registrant's most recent financial statements.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following are the executive officers of the Registrant. Their term of office extends until the next annual meeting of the Board of Directors, scheduled for April 19, 1995, or until their successors are elected and have qualified.
Winslow H. Buxton 55 Chairman since January 15, 1993; President and Chief Executive Officer since August 1992; Chief Operating Officer, August 1990 - August 1992; Vice President - Paper Group, January 1989 - August 1990.
Wilson Blackburn 42 Vice President, Paper Operations since September 1994; President, Cross Pointe Paper Corporation (subsidiary of Registrant) since September 1994; President, Lake Superior Paper (joint venture of Registrant), April 1993 - September 1994; President and CEO of PWA Rolland Decor Inc., 1990-1993; Vice President, Operations, Rolland Inc., 1989-1990. (In connection with the sale of Cross Pointe Paper Corporation to Noranda Forest, Mr. Blackburn has resigned effective April 1, 1995.)
Richard J. Cathcart 50 Executive Vice President, Corporate Development since March 6, 1995; Vice President, Business Development of Honeywell, Inc. 1994 - March 1995; Vice President and General Manager of Honeywell's Worldwide Building Control Division 1992 - 1994; Vice President and General Manager, Honeywell's U.S. Operations of Building Control Division, 1988-1991.
Joseph R. Collins 53 Senior Vice President - Specialty Products since August 1991; Acting Chief Financial Officer, June 1993 - March 1994; President, Delta International Machinery Corporation (subsidiary of the Registrant), October 1984 - August 1991.
David D. Harrison 47 Senior Vice President and Chief Financial Officer since March 1994; Vice-President, Finance and Information Technology of the GE Canada Appliance Component subsidiary of General Electric, August 1992 - March 1994; and Vice President, Finance and Deputy Executive Officer of the GE Europe Lighting Component subsidiary of General Electric, January 1990 - July 1992.
Ronald V. Kelly 58 Senior Vice President - Long Range Planning since September 1994; Senior Vice President - Paper Products, August 1991 - September 1994; Vice President - Specialty Products, March 1989 - August 1991.
Gerald C. Kitch 57 Senior Vice President - General Industrial Equipment since August 1991; Vice President - General Industrial Equipment, March 1989 - August 1991.
Debby S. Knutson 40 Vice President, Human Resources since September 1994; Assistant Vice President, Human Resources , August 1993 - September 1994; Vice President, Human Resources of Hoffman Engineering (division of Registrant) July 1990 - August 1993; Director of Human Resources at Hoffman, December 1988 - July 1990.
Allan J. Kolles 63 Senior Vice President and Assistant to the Chief Executive Officer since August 1994; Vice President, Human Resources, March 1985 - August 1994.
Roy T. Rueb 54 Vice President, Treasurer since October 1986 and Secretary since June 1994.
Mark T. Schroepfer 48 Vice President Finance and MIS since June 1994; Vice President, Controller, January 1990 - June 1994.
There is no family relationship between any of the executive officers or directors.
Item 11.

Item 11. Executive Compensation.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
For information required under Items 11 and 12, see the Registrant's Proxy Statement for the 1995 Annual Meeting of Shareholders referenced on page 2 of this report.
Item 13.

Item 13. Certain Relationships and Related Transactions.
No relationships or transactions existed that require disclosure under Item 13.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Financial Statements and Exhibits.
1. The following consolidated financial statements of Pentair, Inc. and subsidiaries, together with the Report of Independent Certified Public Accountants, found on pages 34 to 53 of the Registrant's Annual Report to Shareholders for the year ended December 31, 1994, are hereby incorporated by reference in this Form 10-K.
Page of Annual Report Report of Independent Certified Public Accountants34
Consolidated Statements of Income for Years Ended December 31, 1994, 1993 and 1992
Consolidated Balance Sheets as of December 31, 1994 and 1993 36 - 37
Consolidated Statements of Cash Flows for Years Ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements 40 - 53
2. The additional financial data listed below is included as exhibits to this Form 10-K Report and should be read in conjunction with the consolidated financial statements presented in the 1994 Annual Report to Shareholders.
Report of Independent Certified Public Accountants
Schedule for the years ended December 31, 1994, 1993 and 1992:
VIII- Valuation and Qualifying Accounts
3. The following exhibits are included with this Report on Form 10-K (or incorporated by reference) as required by Item 601 of Regulation S-K.
Exhibit Number Description
(3.1) Restated Articles of Incorporation as amended through April 25, 1989.
(3.2) Resolution Establishing and Designating $7.50 Callable Cumulative Convertible Preferred Stock, Series 1988, as a series of Preferred Stock of Pentair, Inc.
(3.3) Resolution Establishing and Designating 8% Callable Cumulative Voting Convertible Preferred Stock, Series 1990, as a series of Preferred Stock of Pentair, Inc.
(3.4) Second Amended and Superseding By-Laws as amended through January 19, 1993.
(4.1) Restated Articles of Incorporation, as amended, and Second Amended and Superseding By-Laws, as amended (see Exhibits 3.1 - 3.4 above).
(4.2) Rights Agreement dated December 26, 1986 between the Company and First Trust Company, Inc.
(4.3) Amendment to Rights Agreement dated July 22, 1988 between the Company and Norwest Bank Minnesota, National Association, as successor Rights Agent (Amending Exhibit 4.2).
(4.4) Second Amendment to Rights Agreement dated December 15, 1989 between the Company and Norwest Bank Minnesota, National Association, as successor Rights Agent (Amending Exhibit 4.2).
(4.5) Bid Loan Agreement dated December 14, 1988 between the Company, Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, Morgan Bank (Delaware), First Bank National Association, Norwest Bank Minnesota, N.A., and Mellon Bank, N.A.
(4.6) First Amendment to Bid Loan Agreement dated January 1, 1991 between the Company, Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, Morgan Bank (Delaware), First Bank National Association, Norwest Bank Minnesota, N.A., and NBD Bank, N.A. (Amending Exhibit 4.5).
(4.7) Second Amendment to Bid Loan Agreement dated as of February 11, 1994 between Pentair, Inc., Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, J.P. Morgan Delaware, First Bank National Assocation, Norwest Bank Minnesota, N.A., and NBD Bank, N.A. (Amending Exhibit 4.5).
(4.8) $125,000,000 Facility Agreement dated as of February 11, 1994 between Pentair, Inc., Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York for itself and as Agent, NBD Bank, N.A., and J. P. Morgan Delaware.
(4.9) Amendment Number One to Facility Agreement dated as of November 1, 1994 between Pentair, Inc., Bank of America Illinois (formerly known as Continental Bank N.A.) for itself and as Agent, Morgan Guaranty Trust Company of New York for itself and as Agent, NBD Bank, N.A., and J. P. Morgan Delaware. (Amending Exhibit 4.8)
(4.10) $45,000,000 Facility Agreement dated as of February 11, 1994 between Pentair, Inc., First Bank National Association, for itself and as Agent, and Norwest Bank Minnesota N.A.
(4.11) Amendment Number One to Facility Agreement dated as of November 1, 1994 between Pentair, Inc., First Bank National Association, for itself and as Agent, and Norwest Bank Minnesota N.A.(Amending Exhibit 4.10)
(4.12) DM 115,000,000 Facility Agreement dated as of February 11, 1994 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Continental Bank N.A., for itself and as Agent, NBD Bank, N.A. and Dresdner Bank.
(4.13) Amendment Number One to Facility Agreement dated as of November 1, 1994 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Bank of America Illinois(formerly known as Continental Bank N.A.), for itself and as Agent, NBD Bank, N.A. and Dresdner Bank. (Amending Exhibit 4.12)
(4.14) Amendment Number Two to Facility Agreement dated as of February 15, 1995 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Bank of America Illinois(formerly known as Continental Bank N.A.), for itself and as Agent, NBD Bank, N.A. and Dresdner Bank . (Amending Exhibit 4.12)
(4.15) Restatement of Credit Agreement dated July 11, 1989 between Federal-Hoffman, Inc. and First Bank National Association.
(4.16) Second Amendment to Restatement of Credit Agreement dated as of January 19, 1993 between Federal-Hoffman, Inc., Pentair, Inc., and First Bank National Association (Amending Exhibit 4.15) .
(4.17) Third Amendment to Restatement of Credit Agreement dated as of December 31, 1994 between Federal-Hoffman, Inc., Pentair, Inc., and First Bank National Association (Amending Exhibit 4.15)
(4.18) $35,000,000 Note Purchase Agreement dated March 25, 1991 between Pentair, Inc. and Nationwide Life Insurance Company.
(4.19) $25,000,000 Note Purchase Agreement dated December 13, 1991 between Pentair, Inc. and Principal Mutual Life Insurance Company.
(4.20) $15,000,000 Note Purchase Agreement dated November 1, 1992 between Pentair, Inc. and Nationwide Life Insurance Company.
(4.21) $15,000,000 Note Purchase Agreement dated January 15, 1993 between Pentair, Inc. and Principal Mutual Life Insurance Company.
(4.22) $70,000,000 Senior Notes Purchase Agreement dated as of April 30, 1993 between Pentair, Inc. and United of Omaha Life Insurance Company, Companion Life Insurance Company, Principal Mutual Life Insurance Company, Nippon Life Insurance Company of America, Lutheran Brotherhood, American United Life Insurance Company, Modern Woodmen of America, The Franklin Life Insurance Company and Ameritas Life Insurance Corp.
(10.1) Agreements dated February 8, 1978 and February 9, 1982 between the Company and D. Eugene Nugent.
(10.2) Agreement dated February 8, 1984 (Amending Exhibit 10.1).
(10.3) Agreement dated December 17, 1985 (Amending Exhibit 10.1).
(10.4) Agreement dated May 7, 1990 (Amending Exhibit 10.1).
(10.5) Company's Supplemental Employee Retirement Plan effective June 16, 1988.
(10.6) Company's 1986 Nonqualified Stock Option Plan.
(10.7) Company's 1990 Omnibus Stock Incentive Plan.
(10.8) Company's Management Incentive Plan as amended to January 12, 1990.
(10.9) Employee Stock Purchase and Bonus Plan as amended and restated effective January 1, 1992.
(10.10) Company's Flexible Perquisite Program as amended to January 1, 1989.
(10.11) Form of 1986 Management Assurance Agreement (Revised 1990) between the Company and certain executive officers.
(10.12) Company's Third Amended and Restated Compensation Plan for Non-Employee Directors as amended to January 1, 1992.
(10.13) Company's Outside Directors Nonqualified Stock Option Plan dated January 22, 1988.
(10.14) First Amendment to Outside Directors Nonqualified Stock Option Plan (Amending Exhibit 10.13).
(10.15) Second Amendment to Outside Directors Nonqualified Stock Option Plan (Amending Exhibit 10.13).
(10.16) Pentair, Inc. Deferred Compensation Plan effective January 1, 1993.
(10.17) Lake Superior Paper Industries Venture Council By-Laws and Management Protocol.
(10.18) Second Amended and Restated Joint Venture Agreement dated December 31, 1987 between Pentair Duluth Corp. and Minnesota Paper, Incorporated.
(10.19) First Amendment to Second Restated Joint Venture Agreement, First Amendment to Venture Council By-Laws, and First Amendment to Management Protocol, all dated May 30, 1989, between Pentair Duluth Corp. and Minnesota Paper, Incorporated (Amending Exhibits 10.17 and 10.18).
(10.20) Cash Deficiency Agreement dated December 31, 1987 among Pentair Duluth Corp., as Joint Venturer, Associated Southern Investment Company, as Owner Participant, The Connecticut Bank and Trust Company, National Association, as Indenture Trustee, and First National Bank of Minneapolis, as Owner Trustee. Cash Deficiency Agreements also were entered into with respect to each of the other four Owner Participants: Dana Lease Finance Corporation, NYNEX Credit Company, Public Service Resources Corporation, and Southern Indiana Properties, Inc.
(10.21) Keepwell Agreement and Assignment dated December 31, 1987 among Pentair, Inc., as Sponsor, Pentair Duluth Corp., as Joint Venturer, and First National Bank of Minneapolis, as Owner Trustee; although First Minneapolis executed this filed document as Owner Trustee for Associated Southern Investment Company, additional Keepwell Agreements and Assignments were entered into by First Minneapolis as Owner Trustee for the other four Owner Participants listed in the description of Exhibit 10.20 above.
(10.22) Definition of Terms for Financing Agreement dated December 31, 1987 and the Transaction Documents Referred to Therein: Sale and Leaseback of Undivided Interest in Lake Superior Paper Industries' Supercalendered Paper Mill; although this filed document supplies the definitions applicable to the agreements filed as Exhibits 10.20 and 10.2 above, there were four additional sets of definitions that supply the definitions for the other sets of agreements referred to in the descriptions of those Exhibits with respect to the various Owner Participants.
(10.23) Loan and Stock Purchase Agreement dated March 7, 1990 between the Company and the Pentair, Inc. Employee Stock Ownership Plan Trust, acting through State Street Bank and Trust Company, as Trustee.
(10.24) $56,499,982 Promissory Note dated March 7, 1990 of the Pentair, Inc. Employee Stock Ownership Plan Trust, acting through State Street Bank and Trust Company, as Trustee, to the Company.
(11) Statement regarding computation of earnings per share.
(13) Annual Report to Shareholders for period ended December 31, 1994.
(21) Subsidiaries of Registrant.
(24) Consent of Deloitte & Touche.
(b) Reports on Form 8-K.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PENTAIR, INC.
By /s/ David D. Harrison David D. Harrison Senior Vice President and Chief Financial Officer
Dated: March 29, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has also been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ Winslow H. Buxton Dated: March 29, 1995 Winslow H. Buxton, Chairman, President and Chief Executive Officer, Director
By /s/ George N. Butzow Dated: March 29, 1995 George N. Butzow, Director
By /s/ Charles A. Haggerty Dated: March 29, 1995 Charles A. Haggerty, Director
By /s/ Harold V. Haverty Dated: March 29, 1995 Harold V. Haverty, Director
By /s/ Quentin J. Hietpas Dated: March 29, 1995 Quentin J. Hietpas, Director
By /s/ B. Kristine Johnson Dated: March 29, 1995 B. Kristine Johnson, Director
By /s/ Walter Kissling Dated: March 29, 1995 Walter Kissling, Director
By /s/ D. Eugene Nugent Dated: March 29, 1995 D. Eugene Nugent, Director
By /s/ Richard M. Schulze Dated: March 29, 1995 Richard M. Schulze, Director
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Pentair, Inc.:
We have audited the consolidated financial statements of Pentair, Inc. and subsidiaries as of December 31, 1994 and 1993, and for each of the three years in the period ended December 31, 1994, and have issued our report thereon dated February 10, 1995, except for Note 4, as to which the date is February 21, 1995; such financial statements and report are included in your 1994 Annual Report to Shareholders and are incorporated herein by reference. Our audits also included the financial statement schedule of Pentair, Inc. and subsidiaries listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE
Minneapolis, Minnesota February 10, 1995, except for Note 4, as to which the date is February 21, 1995
SCHEDULE VIII
PENTAIR, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS FOR THE THREE YEARS ENDED DECEMBER 31
EXHIBIT INDEX
Exhibit Number Description
(3.1) Restated Articles of Incorporation as amended through April 25, 1989 (Incorporated by reference to Exhibit 3.1 to the Company's Form 10-Q for the quarter ended March 31, 1989).
(3.2) Resolution Establishing and Designating $7.50 Callable Cumulative Convertible Preferred Stock, Series 1988, as a series of Preferred Stock of Pentair, Inc. (Incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company's Current Report on Form 8-K filed December 30, 1988).
(3.3) Resolution Establishing and Designating 8% Callable Cumulative Voting Convertible Preferred Stock, Series 1990, as a series of Preferred Stock of Pentair, Inc. (Incorporated by reference to Exhibit 4 to the Company's Current Report on Form 8-K filed March 21, 1990).
(3.4) Second Amended and Superseding By-Laws as amended through January 19, 1993 (Incorporated by reference to Exhibit 3.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992).
(4.1) Restated Articles of Incorporation, as amended, and Second Amended and Superseding By-Laws, as amended (see Exhibits 3.1 - 3.4 above).
(4.2) Rights Agreement dated December 26, 1986 between the Company and First Trust Company, Inc. (Incorporated by reference to Exhibit 1 to the Company's Registration Statement on Form 8-A filed December 26, 1986).
(4.3) Amendment to Rights Agreement dated July 22, 1988 between the Company and Norwest Bank Minnesota, National Association, as successor Rights Agent (Amending Exhibit 4.2) (Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed August 2, 1988).
(4.4) Second Amendment to Rights Agreement dated December 15, 1989 between the Company and Norwest Bank Minnesota, National Association, as successor Rights Agent (Amending Exhibit 4.2) (Incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed December 28, 1989).
(4.5) Bid Loan Agreement dated December 14, 1988 between the Company, Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, Morgan Bank (Delaware), First Bank National Association, Norwest Bank Minnesota, N.A., and Mellon Bank, N.A. (Incorporated by reference to Exhibit 4.2 to Amendment No. 1 to the Company's Current Report on Form 8-K filed December 30, 1988).
(4.6) First Amendment to Bid Loan Agreement dated January 1, 1991 between the Company, Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, Morgan Bank (Delaware), First Bank National Association, Norwest Bank Minnesota, N.A., and NBD Bank, N.A. (Amending Exhibit 4.5) (Incorporated by reference to Exhibit 4.9 to the Company's Annual Report on Form 10K for the year ended December 31, 1990).
(4.7) Second Amendment to Bid Loan Agreement dated as of February 11, 1994 between Pentair, Inc., Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York, J.P. Morgan Delaware, First Bank National Assocation, Norwest Bank Minnesota, N.A., and NBD Bank, N.A. (Amending Exhibit 4.5) (Incorporated by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed March 14, 1994).
(4.8) $125,000,000 Facility Agreement dated as of February 11, 1994 between Pentair, Inc., Continental Bank N.A. for itself and as Agent, Morgan Guaranty Trust Company of New York for itself and as Agent, NBD Bank, N.A., and J. P. Morgan Delaware (Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed March 14, 1994).
(4.9) Amendment Number One to Facility Agreement dated as of November 1, 1994 between Pentair, Inc., Bank of America Illinois (formerly known as Continental Bank N.A.) for itself and as Agent, Morgan Guaranty Trust Company of New York for itself and as Agent, NBD Bank, N.A., and J. P. Morgan Delaware. (Amending Exhibit 4.8)
(4.10) $45,000,000 Facility Agreement dated as of February 11, 1994 between Pentair, Inc., First Bank National Association, for itself and as Agent, and Norwest Bank Minnesota N.A. (Incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed March 14, 1994).
(4.11) Amendment Number One to Facility Agreement dated as of November 1, 1994 between Pentair, Inc., First Bank National Association, for itself and as Agent, and Norwest Bank Minnesota N.A.(Amending Exhibit 4.10)
(4.12) DM 115,000,000 Facility Agreement dated as of February 11, 1994 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Continental Bank N.A., for itself and as Agent, NBD Bank, N.A. and Dresdner Bank (Incorporated by reference to Exhibit 4.4 to the Company's Current Report on Form 8-K filed March 14, 1994).
(4.13) Amendment Number One to Facility Agreement dated as of November 1, 1994 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Bank of America Illinois(formerly known as Continental Bank N.A.), for itself and as Agent, NBD Bank, N.A. and Dresdner Bank. (Amending Exhibit 4.12)
(4.14) Amendment Number Two to Facility Agreement dated as of February 15, 1995 between EuroPentair, GmbH as Borrower, Pentair, Inc., as Guarantor, Morgan Guaranty Trust Company of New York for itself and as Agent, Bank of America Illinois(formerly known as Continental Bank N.A.), for itself and as Agent, NBD Bank, N.A. and Dresdner Bank . (Amending Exhibit 4.12)
(4.15) Restatement of Credit Agreement dated July 11, 1989 between Federal-Hoffman, Inc. and First Bank National Association (Incorporated by reference to Exhibit 4.10 to the Company's Form 10-K for the year ended December 31, 1989).
(4.16) Second Amendment to Restatement of Credit Agreement dated as of January 19, 1993 between Federal-Hoffman, Inc., Pentair, Inc., and First Bank National Association (Amending Exhibit 4.15) (Incorporated by reference to Exhibit 4.13 to the Company's Form 10-K for the year ended December 31, 1992).
(4.17) Third Amendment to Restatement of Credit Agreement dated as of December 31, 1994 between Federal-Hoffman, Inc., Pentair, Inc., and First Bank National Association (Amending Exhibit 4.15).
(4.18) $35,000,000 Note Purchase Agreement dated March 25, 1991 between Pentair, Inc. and Nationwide Life Insurance Company. (Incorporated by reference to Exhibit 4.14 to the Company's Registration Statement on Form S-8 filed August 6, 1991).
(4.19) $25,000,000 Note Purchase Agreement dated December 13, 1991 between Pentair, Inc. and Principal Mutual Life Insurance Company. (Incorporated by reference to Exhibit 4.15 to the Company's Registration Statement on Form S-8 filed January 13, 1992).
(4.20) $15,000,000 Note Purchase Agreement dated November 1, 1992 between Pentair, Inc. and Nationwide Life Insurance Company (Incorporated by reference to Exhibit 4.16 to the Company's Form 10-K for the year ended December 31, 1992).
(4.21) $15,000,000 Note Purchase Agreement dated January 15, 1993 between Pentair, Inc. and Principal Mutual Life Insurance Company (Incorporated by reference to Exhibit 4.17 to the Company's Form 10-K for the year ended December 31, 1992).
(4.22) $70,000,000 Senior Notes Purchase Agreement dated as of April 30, 1993 between Pentair, Inc. and United of Omaha Life Insurance Company, Companion Life Insurance Company, Principal Mutual Life Insurance Company, Nippon Life Insurance Company of America, Lutheran Brotherhood, American United Life Insurance Company, Modern Woodmen of America, The Franklin Life Insurance Company and Ameritas Life Insurance Corp (Incorporated by reference to Exhibit 4.17 to the Company's Form 10-K for the year ended December 31, 1993).
(10.1) Agreements dated February 8, 1978 and February 9, 1982 between the Company and D. Eugene Nugent (Incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-2 filed June 24, 1983).
(10.2) Agreement dated February 8, 1984 (Amending Exhibit 10.1) (Incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1983).
(10.3) Agreement dated December 17, 1985 (Amending Exhibit 10.1) (Incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1985).
(10.4) Agreement dated May 7, 1990 (Amending Exhibit 10.1). (Incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10K for the year ended December 31, 1990).
(10.5) Company's Supplemental Employee Retirement Plan effective June 16, 1988 (Incorporated by reference to Exhibit 10.10 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.6) Company's 1986 Nonqualified Stock Option Plan (Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 1986).
(10.7) Company's 1990 Omnibus Stock Incentive Plan (Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.8) Company's Management Incentive Plan as amended to January 12, 1990 (Incorporated by reference to Exhibit 10.17 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.9) Employee Stock Purchase and Bonus Plan as amended and restated effective January 1, 1992 (Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991).
(10.10) Company's Flexible Perquisite Program as amended to January 1, 1989 (Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.11) Form of 1986 Management Assurance Agreement (Revised 1990) between the Company and certain executive officers (Incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.12) Company's Third Amended and Restated Compensation Plan for Non-Employee Directors as amended to January 1, 1992. (Incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-8 filed January 13, 1992).
(10.13) Company's Outside Directors Nonqualified Stock Option Plan dated January 22, 1988 (Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 1987).
(10.14) First Amendment to Outside Directors Nonqualified Stock Option Plan (Amending Exhibit 10.13) (Incorporated by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991).
(10.15) Second Amendment to Outside Directors Nonqualified Stock Option Plan (Amending Exhibit 10.13) (Incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991).
(10.16) Pentair, Inc. Deferred Compensation Plan effective January 1, 1993 (Incorporated by reference to Exhibit 10.21 to the Company's Form 10-K for the year ended December 31, 1992).
(10.17) Lake Superior Paper Industries Venture Council By-Laws and Management Protocol (Incorporated by reference to Exhibit 10.16 to the Company's Annual Report on Form 10-K for the year ended December 31, 1985).
(10.18) Second Amended and Restated Joint Venture Agreement dated December 31, 1987 between Pentair Duluth Corp. and Minnesota Paper, Incorporated (Incorporated by reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 1987).
(10.19) First Amendment to Second Restated Joint Venture Agreement, First Amendment to Venture Council By-Laws, and First Amendment to Management Protocol, all dated May 30, 1989, between Pentair Duluth Corp. and Minnesota Paper, Incorporated (Amending Exhibits 10.17 and 10.18) (Incorporated by reference to Exhibit 10.28 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989).
(10.20) Cash Deficiency Agreement dated December 31, 1987 among Pentair Duluth Corp., as Joint Venturer, Associated Southern Investment Company, as Owner Participant, The Connecticut Bank and Trust Company, National Association, as Indenture Trustee, and First National Bank of Minneapolis, as Owner Trustee. Cash Deficiency Agreements also were entered into with respect to each of the other four Owner Participants: Dana Lease Finance Corporation, NYNEX Credit Company, Public Service Resources Corporation, and Southern Indiana Properties, Inc. (Incorporated by reference to Exhibit 10.1 to Amendment No. 1 to the Company's Current Report on Form 8-K filed April 26, 1988).
(10.21) Keepwell Agreement and Assignment dated December 31, 1987 among Pentair, Inc., as Sponsor, Pentair Duluth Corp., as Joint Venturer, and First National Bank of Minneapolis, as Owner Trustee; although First Minneapolis executed this filed document as Owner Trustee for Associated Southern Investment Company, additional Keepwell Agreements and Assignments were entered into by First Minneapolis as Owner Trustee for the other four Owner Participants listed in the description of Exhibit 10.20 above (Incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Company's Current Report on Form 8-K filed April 26, 1988).
(10.22) Definition of Terms for Financing Agreement dated December 31, 1987 and the Transaction Documents Referred to Therein: Sale and Leaseback of Undivided Interest in Lake Superior Paper Industries' Supercalendered Paper Mill; although this filed document supplies the definitions applicable to the agreements filed as Exhibits 10.20 and 10.21 above, there were four additional sets of definitions that supply the definitions for the other sets of agreements referred to in the descriptions of those Exhibits with respect to the various Owner Participants (Incorporated by reference to Exhibit 10.3 to Amendment No. 1 to the Company's Current Report on Form 8-K filed April 26, 1988).
(10.23) Loan and Stock Purchase Agreement dated March 7, 1990 between the Company and the Pentair, Inc. Employee Stock Ownership Plan Trust, acting through State Street Bank and Trust Company, as Trustee (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed March 21, 1990).
(10.24) $56,499,982 Promissory Note dated March 7, 1990 of the Pentair, Inc. Employee Stock Ownership Plan Trust, acting through State Street Bank and Trust Company, as Trustee, to the Company (Incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed March 21, 1990).
(11) Statement regarding computation of earnings per share.
(13) Annual Report to Shareholders for period ended December 31, 1994.
(21) Subsidiaries of Registrant.
(24) Consent of Deloitte & Touche.