Condensed Consolidating Financial Statements

9 Months Ended

Sep. 30, 2015

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

Condensed Consolidating Financial Statements

On April 17, 2009, Cal Water issued $100 million aggregate principal amount of 5.875% First Mortgage Bonds due 2019, and on November 17, 2010, Cal Water issued $100 million aggregate principal amount of 5.500% First Mortgage Bonds due 2040, all of which are fully and unconditionally guaranteed by the Company.  As a result of these guarantee arrangements, the Company is required to present the following condensed consolidating financial information.  The investments in affiliates are accounted for and presented using the “equity method” of accounting.

The following tables present the condensed consolidating balance sheets as of September 30, 2015 and December 31, 2014, the condensed consolidating statements of income for the three months ended September 30, 2015 and 2014, condensed consolidating statements of income for the nine months ended September 30, 2015 and 2014, and the condensed consolidating statements of cash flows for the nine months ended September 30, 2015 and 2014 of (i) California Water Service Group, the guarantor of the first mortgage bonds and the parent company; (ii) California Water Service Company, the issuer of the first mortgage bonds and a 100% owned consolidated subsidiary of California Water Service Group; and (iii) the other 100% owned non-guarantor consolidated subsidiaries of California Water Service Group.

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of September 30, 2015

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,268,876		$	197,832		$	(7,197	)	$	2,460,829
Less accumulated depreciation and amortization	(548		)	(751,913		)	(46,601		)	1,798			(797,264		)
Net utility plant	770			1,516,963			151,231			(5,399		)	1,663,565
Current assets:
Cash and cash equivalents	5,523			43,359			1,943			—			50,825
Receivables and unbilled revenue, net	13			120,790			4,528			—			125,331
Receivables from affiliates	23,161			690			195			(24,046		)	—
Other current assets	182			13,517			1,211			—			14,910
Total current assets	28,879			178,356			7,877			(24,046		)	191,066
Other assets:
Regulatory assets	—			395,079			3,456			—			398,535
Investments in affiliates	651,120			—			—			(651,120		)	—
Long-term affiliate notes receivable	24,452			—			—			(24,452		)	—
Other assets	806			48,803			4,628			(883		)	53,354
Total other assets	676,378			443,882			8,084			(676,455		)	451,889
	$	706,027		$	2,139,201		$	167,192		$	(705,900	)	$	2,306,520
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	640,852		$	581,135		$	75,367		$	(656,502	)	$	640,852
Affiliate long-term debt	—			—			24,452			(24,452		)	—
Long-term debt, less current maturities	—			415,375			1,072			—			416,447
Total capitalization	640,852			996,510			100,891			(680,954		)	1,057,299
Current liabilities:
Current maturities of long-term debt	—			6,201			364			—			6,565
Short-term borrowings	64,215			72,400			—			—			136,615
Payables to affiliates	—			3,235			20,811			(24,046		)	—
Accounts payable	—			74,277			2,984			—			77,261
Accrued expenses and other liabilities	64			75,231			5,034			—			80,329
Total current liabilities	64,279			231,344			29,193			(24,046		)	300,770
Unamortized investment tax credits	—			1,947			—			—			1,947
Deferred income taxes, net	896			236,447			—			(900		)	236,443
Pension and postretirement benefits other than pensions	—			276,525			—			—			276,525
Regulatory liabilities and other	—			73,911			2,888			—			76,799
Advances for construction	—			180,297			508			—			180,805
Contributions in aid of construction	—			142,220			33,712			—			175,932
	$	706,027		$	2,139,201		$	167,192		$	(705,900	)	$	2,306,520

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2014

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,154,146		$	194,204		$	(7,197	)	$	2,342,471
Less accumulated depreciation and amortization	(377		)	(710,840		)	(42,545		)	1,722			(752,040		)
Net utility plant	941			1,443,306			151,659			(5,475		)	1,590,431
Current assets:
Cash and cash equivalents	4,108			13,929			1,550			—			19,587
Receivables	—			108,815			9,114			(1,051		)	116,878
Receivables from affiliates	20,001			3,608			—			(23,609		)	—
Other current assets	—			16,443			1,216			—			17,659
Total current assets	24,109			142,795			11,880			(24,660		)	154,124
Other assets:
Regulatory assets	—			387,387			2,944			—			390,331
Investments in affiliates	637,998			—			—			(637,998		)	—
Long-term affiliate notes receivable	25,263			—			—			(25,263		)	—
Other assets	891			47,617			4,278			(321		)	52,465
Total other assets	664,152			435,004			7,222			(663,582		)	442,796
	$	689,202		$	2,021,105		$	170,761		$	(693,717	)	$	2,187,351
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	626,626		$	569,319		74,107			$	(643,426	)	$	626,626
Affiliate long-term debt	—			—			25,263			(25,263		)	—
Long-term debt, less current maturities	—			417,884			1,349			—			419,233
Total capitalization	626,626			987,203			100,719			(668,689		)	1,045,859
Current liabilities:
Current maturities of long-term debt	—			6,173			434			—			6,607
Short-term borrowings	61,715			17,400			—			—			79,115
Payables to affiliates	—			270			23,339			(23,609		)	—
Accounts payable	—			56,666			2,930			(201		)	59,395
Accrued expenses and other liabilities	861			71,203			1,281			(756		)	72,589
Total current liabilities	62,576			151,712			27,984			(24,566		)	217,706
Unamortized investment tax credits	—			2,032			—			—			2,032
Deferred income taxes, net	—			210,789			4,515			(462		)	214,842
Pension and postretirement benefits other than pensions	—			270,865			—			—			270,865
Regulatory and other liabilities	—			74,282			8,997			—			83,279
Advances for construction	—			181,763			521			—			182,284
Contributions in aid of construction	—			142,459			28,025			—			170,484
	$	689,202		$	2,021,105		$	170,761		$	(693,717	)	$	2,187,351

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended September 30, 2015

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	172,425		$	11,118		$	—		$	183,543
Operating expenses:
Operations:
Water production costs	—			58,173			2,264			—			60,437
Administrative and general	—			27,620			3,117			—			30,737
Other operations	—			16,329			1,668			(125		)	17,872
Maintenance	—			5,722			230			—			5,952
Depreciation and amortization	57			14,231			1,079			(25		)	15,342
Income tax (benefit) expense	(107		)	14,638			508			254			15,293
Property and other taxes	—			4,910			799			—			5,709
Total operating (income) expenses	(50		)	141,623			9,665			104			151,342
Net operating income	50			30,802			1,453			(104		)	32,201
Other Income and Expenses:
Non-regulated revenue	444			3,489			451			(570		)	3,814
Non-regulated expenses, net	—			(4,058		)	(396		)	—			(4,454		)
Income tax (expense) benefit on other income and expense	(181		)	232			(33		)	244			262
Total other income (loss)	263			(337		)	22			(326		)	(378		)
Interest:
Interest expense	205			6,969			472			(445		)	7,201
Less: capitalized interest	—			(488		)	(10		)	—			(498		)
Net interest expense	205			6,481			462			(445		)	6,703
Equity earnings of subsidiaries	25,012			—			—			(25,012		)	—
Net income	$	25,120		$	23,984		$	1,013		$	(24,997	)	$	25,120

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended September 30, 2014

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	180,768		$	10,416		$	—		$	191,184
Operating expenses:
Operations:
Water production costs	—			64,332			2,648			—			66,980
Administrative and general	34			21,282			2,449			—			23,765
Other	—			14,161			1,657			(126		)	15,692
Maintenance	—			4,620			180			—			4,800
Depreciation and amortization	57			13,692			926			(27		)	14,648
Income tax (benefit) expense	(79		)	18,632			393			287			19,233
Taxes other than income taxes	—			4,409			823			—			5,232
Total operating expenses	12			141,128			9,076			134			150,350
Net operating (loss) income	(12		)	39,640			1,340			(134		)	40,834
Other Income and Expenses:
Non-regulated revenue	448			4,027			446			(512		)	4,409
Non-regulated expenses, net	—			(4,538		)	(274		)	—			(4,812		)
Income tax (expense) benefit on other income and expense	(182		)	207			(132		)	276			169
Net other income (loss)	266			(304		)	40			(236		)	(234		)
Interest:
Interest expense	103			7,030			473			(385		)	7,221
Less: capitalized interest	—			(252		)	(19		)	—			(271		)
Net interest expense	103			6,778			454			(385		)	6,950
Equity earnings of subsidiaries	33,499			—			—			(33,499		)	—
Net income	$	33,650		$	32,558		$	926		$	(33,484	)	$	33,650

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the nine months endedSeptember 30, 2015

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	422,372		$	27,570		$	—		$	449,942
Operating expenses:
Operations:
Water production costs	—			152,593			6,068			—			158,661
Administrative and general	—			76,271			8,798			—			85,069
Other operations	—			46,632			4,973			(378		)	51,227
Maintenance	—			15,148			587			—			15,735
Depreciation and amortization	171			42,659			3,261			(76		)	46,015
Income tax (benefit) expense	(294		)	20,454			92			756			21,008
Property and other taxes	—			13,964			2,072			—			16,036
Total operating (income) expenses	(123		)	367,721			25,851			302			393,751
Net operating income	123			54,651			1,719			(302		)	56,191
Other Income and Expenses:
Non-regulated revenue	1,353			9,674			1,241			(1,728		)	10,540
Non-regulated expenses, net	—			(9,283		)	(918		)	—			(10,201		)
Income tax expense on other income and expense	(549		)	(159		)	(148		)	725			(131		)
Total other income	804			232			175			(1,003		)	208
Interest:
Interest expense	555			20,751			1,375			(1,350		)	21,331
Less: capitalized interest	—			(1,438		)	(34		)	—			(1,472		)
Net interest expense	555			19,313			1,341			(1,350		)	19,859
Equity earnings of subsidiaries	36,168			—			—			(36,168		)	—
Net income	$	36,540		$	35,570		$	553		$	(36,123	)	$	36,540

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the nine months ended September 30, 2014

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	434,857		$	25,258		$	—		$	460,115
Operating expenses:
Operations:
Water production costs	—			167,214			7,083			—			174,297
Administrative and general	67			65,144			7,491			—			72,702
Other	—			43,186			5,264			(378		)	48,072
Maintenance	—			14,276			517			—			14,793
Depreciation and amortization	157			43,607			3,104			(80		)	46,788
Income tax (benefit) expense	(184		)	22,713			(686		)	741			22,584
Taxes other than income taxes	—			13,552			2,049			—			15,601
Total operating expenses	40			369,692			24,822			283			394,837
Net operating (loss) income	(40		)	65,165			436			(283		)	65,278
Other Income and Expenses:
Non-regulated revenue	1,365			11,264			1,193			(1,659		)	12,163
Non-regulated expenses, net	—			(10,286		)	(898		)	—			(11,184		)
Income tax (expense) on other income and expense	(556		)	(399		)	(144		)	708			(391		)
Net other income	809			579			151			(951		)	588
Interest:
Interest expense	228			20,974			1,452			(1,281		)	21,373
Less: capitalized interest	—			(790		)	(61		)	—			(851		)
Net interest expense	228			20,184			1,391			(1,281		)	20,522
Equity earnings of subsidiaries	44,803			—			—			(44,803		)	—
Net income (loss)	$	45,344		$	45,560		$	(804	)	$	(44,756	)	$	45,344

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the nine months endedSeptember 30, 2015

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income	$	36,540		$	35,570		$	553		$	(36,123	)	$	36,540
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(36,168		)	—			—			36,168			—
Dividends received from affiliates	24,047			—			—			(24,047		)	—
Depreciation and amortization	171			43,768			3,543			(76		)	47,406
Changes in value of life insurance contracts	—			758			—			—			758
Changes in operating assets and liabilities	(910		)	(9,088		)	8,436			(94		)	(1,656		)
Other changes in noncurrent assets and liabilities	3,030			35,324			(5,003		)	125			33,476
Net cash provided by operating activities	26,710			106,332			7,529			(24,047		)	116,524
Investing activities:
Utility plant expenditures	—			(114,325		)	(3,984		)	—			(118,309		)
Investment in affiliates	(1,000		)	—			—			1,000			—
Changes in affiliate advances	(3,116		)	2,918			(82		)	280			—
Proceeds from affiliates long-term debt	767			—			—			(767		)	—
Purchase of life insurance contracts	—			(1,855		)	—			—			(1,855		)
Changes in restricted cash	—			(241		)	—			—			(241		)
Net cash (used in) investing activities	(3,349		)	(113,503		)	(4,066		)	513			(120,405		)
Financing Activities:
Short-term borrowings	2,500			80,000			—			—			82,500
Repayment of short-term borrowings	—			(25,000		)	—			—			(25,000		)
Debt issuance costs	(399		)	(798		)	—						(1,197		)
Investment from affiliates	—			—			1,000			(1,000		)	—
Changes in affiliate advances	—			2,965			(2,685		)	(280		)	—
Repayment of affiliates long-term borrowings	—			—			(767		)	767			—
Proceeds from long-term debt	—			—			50			—			50
Repayment of long-term debt	—			(2,480		)	(398		)	—			(2,878		)
Advances and contributions in aid for construction	—			10,682			59			—			10,741
Refunds of advances for construction	—			(5,014		)	(36		)	—			(5,050		)
Dividends paid to non-affiliates	(24,047		)	—			—			—			(24,047		)
Dividends paid to affiliates	—			(23,754		)	(293		)	24,047			—
Net cash (used in) provided by financing activities	(21,946		)	36,601			(3,070		)	23,534			35,119
Change in cash and cash equivalents	1,415			29,430			393			—			31,238
Cash and cash equivalents at beginning of period	4,108			13,929			1,550			—			19,587
Cash and cash equivalents at end of period	$	5,523		$	43,359		$	1,943		$	—		$	50,825

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the nine months ended September 30, 2014

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income (loss)	$	45,344		$	45,560		$	(804	)	$	(44,756	)	$	45,344
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of subsidiaries	(44,803		)	—			—			44,803			—
Dividends received from affiliates	23,295			—			—			(23,295		)	—
Depreciation and amortization	157			45,059			3,345			(80		)	48,481
Change in value of life insurance contracts	—			(501		)	—			—			(501		)
Changes in operating assets and liabilities	(68		)	(7,969		)	1,540						(6,497		)
Other changes in noncurrent assets and liabilities	2,160			11,539			(392		)	33			13,340
Net cash provided by operating activities	26,085			93,688			3,689			(23,295		)	100,167
Investing activities:
Utility plant expenditures	—			(81,505		)	(4,753		)	—			(86,258		)
Investment in affiliates	(46,850		)	—			—			46,850			—
Changes in affiliate advances	(5,455		)	4,778			(200		)	877			—
Proceeds from affiliates long-term debt	699			—			—			(699		)	—
Purchase of life insurance contracts	—			(3,207		)	—			—			(3,207		)
Changes in restricted cash	—			354			—			—			354
Net cash (used in) investing activities	(51,606		)	(79,580		)	(4,953		)	47,028			(89,111		)
Financing Activities:
Short-term borrowings	64,900			35,000			—			—			99,900
Repayment of short-term borrowings	(20,000		)	(65,000		)	—			—			(85,000		)
Investment from affiliates	—			42,000			4,850			(46,850		)	—
Changes in affiliate advances	(48		)	1,814			(889		)	(877		)	—
Repayment of affiliates long-term borrowings	—						(699		)	699			—
Repayment of long-term debt	—			(2,919		)	(1,685		)	—			(4,604		)
Advances and contributions in aid for construction	—			8,239			541			—			8,780
Refunds of advances for construction	—			(4,809		)	(49		)	—			(4,858		)
Dividends paid to non-affiliates	(23,295		)	—			—			—			(23,295		)
Dividends paid to affiliates				(23,005		)	(290		)	23,295			—
Net cash (used in) provided by financing activities	21,557			(8,680		)	1,779			(23,733		)	(9,077		)
Change in cash and cash equivalents	(3,964		)	5,428			515			—			1,979
Cash and cash equivalents at beginning of period	5,280			20,790			1,436			—			27,506
Cash and cash equivalents at end of period	$	1,316		$	26,218		$	1,951		$	—		$	29,485