for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” This Statement requires that a liability for costs associated with an exit or dis- posal activity be recognized and measured initially at fair value only when the liability is incurred.The provisions of this Statement are effective for exit or disposal activities that are initiated after December 31, 2002.The Company does not expect the impact of adopting SFAS No. 146 to be significant to the Company’s financial position, results of operations, or cash flows. In December 2002, the FASB issued Statement No. 148, “Accounting for Stock-Based Compensation,Transition and Disclosure.” This statement provides alternative methods of transition for a  voluntary change to the fair value based method of accounting for stock-based employee compensation. It  also requires that disclosures of the pro forma effect of using the fair value method of accounting for stock- based employee compensation be displayed more prominently and in a table. Additionally, the statement requires disclosure of the pro forma effect in interim financial statements.The transition and annual disclo- sure requirements of Statement No. 148 are effective for the Company in 2002.The interim disclosure requirements are effective for the Company’s first quarter of 2003.The Company does not expect  Statement No. 148 to have a material effect on its results of operations or financial condition. The Merger between the Company and Dominguez was completed on May 25, 2000. On the merger date, each outstanding Dominguez common share was exchanged for 1.38 shares of Company com- mon stock.The Company issued 2,210,254 new common shares in exchange for the 1,601,679 outstanding Dominguez shares. Dominguez provided water service in 21 California communities.The former Dominguez operations became districts within Cal Water.The Merger was accounted for as a pooling of interests.There were no intercompany transactions as a result of the Merger. Certain reclassifications were made to the his- torical financial statements of the companies to conform presentation. No adjustments were made to the Dominguez net assets in applying the accounting practices of the Company. Dominguez previously reported common stock of $1,542,000 that was reclassified by the Company to “Paid-in-Capital” in accordance with the Company’s financial statement presentation.The Company and Dominguez each had December 31 year-ends; therefore no adjustment was required to retained earnings due to a change in fiscal year-ends. During 2002, after receiving regulatory approval, the Company acquired the assets of Rio Grande Utility Corporation (Rio Grande) through its wholly-owned subsidiary, New Mexico Water.The  purchase includes the water and wastewater assets of Rio Grande, which serves water and wastewater cus- tomers in unincorporated areas of Valencia County, New Mexico.The purchase price was $2,300,000 in cash, plus assumption of $3,100,000 in outstanding debt. Rate base for the system is $5,400,000, including intan- gible water rights valued at $732,000. In 2001, the Company acquired four companies operating in Cal Water’s Visalia district.The acquisitions were completed in February 2001, in exchange for 36,180 shares of Company common stock worth $899,000 and assumed debt of $218,000.The acquisitions were accounted for under the pooling of interests method of accounting; however, due to the results from operations not being material to the Company’s consolidated results from operations, prior periods were not restated.The net equity acquired  was recorded as an increase to retained earnings at the beginning of the year. In addition,Washington Water purchased the assets of eight water companies for cash of $701,000. During 2000,Washington Water purchased the assets of Mirrormount Water Services and Lacamas Farmsteads Water Company for $639,000 in cash and assumed debt.To provide in-house engineering, Washington Water also purchased the assets of Robischon Engineers, Inc. in April 2000 for $70,000 in cash. CALIFORNIA WATER SERVICE GROUP 3  MERGER WITH DOMINGUEZ SERVICES CORPORATION 4  OTHER ACQUISITIONS 44