Condensed Consolidating Financial Statements

9 Months Ended

Sep. 30, 2016

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

On April 17, 2009, Cal Water issued $100.0 million aggregate principal amount of 5.875% First Mortgage Bonds due 2019, and on November 17, 2010, Cal Water issued $100.0 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, 2016 and December 31, 2015, the condensed consolidating statements of income for the three months ended September 30, 2016 and 2015, condensed consolidating statements of income for the nine months ended September 30, 2016 and 2015, and the condensed consolidating statements of cash flows for the nine months ended September 30, 2016 and 2015 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. No other subsidiary of the Company guarantees the securities. The condensed consolidating balance sheet as of December 31, 2015 reflects the retrospective adoption of ASU 2015-03 (refer to Note 2. Summary of Significant Accounting Policies for more details).

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of September 30, 2016

(In thousands)



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,317		$	2,471,314		$	202,200		$	(7,196	)	$	2,667,635
Less accumulated depreciation and amortization	(776		)	(799,057		)	(51,946		)	1,895			(849,884		)
Net utility plant	541			1,672,257			150,254			(5,301		)	1,817,751
Current assets:
Cash and cash equivalents	1,987			13,928			5,436			—			21,351
Receivables and unbilled revenue	—			107,535			5,578			—			113,113
Receivables from affiliates	23,313			300			246			(23,859		)	—
Other current assets	179			15,449			1,035			—			16,663
Total current assets	25,479			137,212			12,295			(23,859		)	151,127
Other assets:
Regulatory assets	—			359,926			3,671			—			363,597
Investments in affiliates	659,828			—			—			(659,828		)	—
Long-term affiliate notes receivable	24,206			—			—			(24,206		)	—
Other assets	1,103			49,482			3,188			(205		)	53,568
Total other assets	685,137			409,408			6,859			(684,239		)	417,165
TOTAL ASSETS	$	711,157		$	2,218,877		$	169,408		$	(713,399	)	$	2,386,043
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	652,012		$	588,183		$	76,970		$	(665,153	)	$	652,012
Affiliate long-term debt	—			—			24,206			(24,206		)	—
Long-term debt, less current maturities	—			554,748			788			—			555,536
Total capitalization	652,012			1,142,931			101,964			(689,359		)	1,207,548
Current liabilities:
Current maturities of long-term debt	—			5,661			469			—			6,130
Short-term borrowings	57,100			—			—			—			57,100
Payables to affiliates	—			2,034			21,825			(23,859		)	—
Accounts payable	—			81,161			2,891			—			84,052
Accrued expenses and other liabilities	2,045			58,141			(3,540		)	53			56,699
Total current liabilities	59,145			146,997			21,645			(23,806		)	203,981
Unamortized investment tax credits	—			1,872			—			—			1,872
Deferred income taxes	—			275,596			7,613			(236		)	282,973
Pension and postretirement benefits other than pensions	—			237,341			—			—			237,341
Regulatory liabilities and other	—			87,633			3,081			—			90,714
Advances for construction	—			181,454			547			—			182,001
Contributions in aid of construction	—			145,053			34,560			—			179,613
TOTAL CAPITALIZATION AND LIABILITIES	$	711,157		$	2,218,877		$	169,410		$	(713,401	)	$	2,386,043

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2015

(In thousands)



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,313,704		$	199,121		$	(7,197	)	$	2,506,946
Less accumulated depreciation and amortization	(605		)	(758,362		)	(48,034		)	1,823			(805,178		)
Net utility plant	713			1,555,342			151,087			(5,374		)	1,701,768
Current assets:
Cash and cash equivalents	582			4,270			3,985			—			8,837
Receivables and unbilled revenue	—			100,777			3,728			—			104,505
Receivables from affiliates	19,677			26,219			—			(45,896		)	—
Other current assets	79			13,077			1,080			—			14,236
Total current assets	20,338			144,343			8,793			(45,896		)	127,578
Other assets:
Regulatory assets	—			358,254			3,639			—			361,893
Investments in affiliates	651,449			—			—			(651,449		)	—
Long-term affiliate notes receivable	25,099			—			—			(25,099		)	—
Other assets	758			45,544			4,616			(904		)	50,014
Total other assets	677,306			403,798			8,255			(677,452		)	411,907
TOTAL ASSETS	$	698,357		$	2,103,483		$	168,135		$	(728,722	)	$	2,241,253
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	642,155		$	581,792		75,024			$	(656,816	)	$	642,155
Affiliate long-term debt	—			—			25,099			(25,099		)	—
Long-term debt, less current maturities	—			507,034			968			—			508,002
Total capitalization	642,155			1,088,826			101,091			(681,915		)	1,150,157
Current liabilities:
Current maturities of long-term debt	—			5,654			389			—			6,043
Short-term borrowings	33,615			—			—			—			33,615
Payables to affiliates	21,500			667			23,729			(45,896		)	—
Accounts payable	—			63,814			2,566			—			66,380
Accrued expenses and other liabilities	102			40,173			1,585			—			41,860
Total current liabilities	55,217			110,308			28,269			(45,896		)	147,898
Unamortized investment tax credits	—			1,872			—			—			1,872
Deferred income taxes	985			264,823			—			(911		)	264,897
Pension and postretirement benefits other than pensions	—			236,266			—			—			236,266
Regulatory and other liabilities	—			79,477			2,937			—			82,414
Advances for construction	—			179,630			542			—			180,172
Contributions in aid of construction	—			142,281			35,296			—			177,577
TOTAL CAPITALIZATION AND LIABILITIES	$	698,357		$	2,103,483		$	168,135		$	(728,722	)	$	2,241,253

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended September 30, 2016

(In thousands)



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	173,223		$	11,045		$	—		$	184,268
Operating expenses:
Operations:
Water production costs	—			68,045			2,130			—			70,175
Administrative and general	—			21,679			2,165			—			23,844
Other operations	—			18,037			1,692			(168		)	19,561
Maintenance	—			5,322			223			—			5,545
Depreciation and amortization	57			14,777			1,074			(24		)	15,884
Income tax (benefit) expense	(105		)	12,165			920			267			13,247
Property and other taxes	—			5,182			775			—			5,957
Total operating (income) expenses	(48		)	145,207			8,979			75			154,213
Net operating income	48			28,016			2,066			(75		)	30,055
Other income and expenses:
Non-regulated revenue	464			3,024			541			(632		)	3,397
Non-regulated expenses	—			(2,170		)	(347		)	—			(2,517		)
Income tax expense on other income and expenses	(189		)	(345		)	(73		)	258			(349		)
Total other income	275			509			121			(374		)	531
Interest:
Interest expense	201			8,259			488			(463		)	8,485
Less: capitalized interest	—			(759		)	(15		)	—			(774		)
Net interest expense	201			7,500			473			(463		)	7,711
Equity earnings of subsidiaries	22,753			—			—			(22,753		)	—
Net income	$	22,875		$	21,025		$	1,714		$	(22,739	)	$	22,875

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 expenses	(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 nine months ended September 30, 2016

(In thousands)



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	428,592		$	29,848		$	—		$	458,440
Operating expenses:
Operations:
Water production costs	—			162,933			5,900			—			168,833
Administrative and general	—			67,289			7,748			—			75,037
Other operations	—			53,128			5,016			(378		)	57,766
Maintenance	—			16,854			688			—			17,542
Depreciation and amortization	171			44,427			3,246			(72		)	47,772
Income tax (benefit) expense	(292		)	17,356			1,366			762			19,192
Property and other taxes	—			15,241			2,198			—			17,439
Total operating (income) expenses	(121		)	377,228			26,162			312			403,581
Net operating income	121			51,364			3,686			(312		)	54,859
Other income and expenses:
Non-regulated revenue	1,390			9,659			1,338			(1,798		)	10,589
Non-regulated expenses	—			(7,422		)	(884		)	—			(8,306		)
Income tax expense on other income and expenses	(566		)	(909		)	(172		)	733			(914		)
Net other income	824			1,328			282			(1,065		)	1,369
Interest:
Interest expense	547			24,421			1,435			(1,419		)	24,984
Less: capitalized interest	—			(2,293		)	(48		)	—			(2,341		)
Net interest expense	547			22,128			1,387			(1,419		)	22,643
Equity earnings of subsidiaries	33,187			—			—			(33,187		)	—
Net income	$	33,585		$	30,564		$	2,581		$	(33,145	)	$	33,585

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the nine months ended September 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 expenses	(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 CASH FLOWS

For the nine months ended September 30, 2016

(In thousands)



	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income	$	33,585		$	30,564		$	2,581		$	(33,145	)	$	33,585
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(33,187		)	—			—			33,187			—
Dividends received from affiliates	24,807			—			—			(24,807		)	—
Depreciation and amortization	171			45,466			3,381			(72		)	48,946
Changes in value of life insurance contracts	—			(915		)	—			—			(915		)
Changes in operating assets and liabilities	1,844			12,552			(6,623		)	54			7,827
Other changes in noncurrent assets and liabilities	(250		)	24,726			9,297			(24		)	33,749
Net cash provided by operating activities	26,970			112,393			8,636			(24,807		)	123,192
Investing activities:
Utility plant expenditures	—			(163,179		)	(3,227		)	—			(166,406		)
Changes in affiliate advances	(957		)	4,419			(319		)	(3,143		)	—
Reduction of affiliate short-term borrowings	2,000			42,100			—			(44,100		)	—
Issuance of affiliate short-term borrowings	(4,615		)	(20,600		)	—			25,215			—
Reduction of affiliates long-term debt	829			—			—			(829		)	—
Life insurance proceeds	—			495			—			—			495
Purchase of life insurance contracts	—			(2,710		)	—			—			(2,710		)
Changes in restricted cash	—			(685		)	—			—			(685		)
Net cash used in investing activities	(2,743		)	(140,160		)	(3,546		)	(22,857		)	(169,306		)
Financing Activities:
Short-term borrowings	44,100			61,000			—			—			105,100
Repayment of short-term borrowings	(20,615		)	(61,000		)	—			—			(81,615		)
Changes in affiliate advances	—			1,367			(4,510		)	3,143			—
Proceeds from affiliate short-term borrowings	20,600			—			4,615			(25,215		)	—
Repayment of affiliate short-term borrowings	(42,100		)	—			(2,000		)	44,100			—
Repayment of affiliates long-term borrowings	—			—			(829		)	829			—
Proceeds from long-term debt, net of issuance costs	—			49,823			—			—			49,823
Repayment of long-term debt	—			(2,516		)	(349		)	—			(2,865		)
Advances and contributions in aid of construction	—			18,096			90			—			18,186
Refunds of advances for construction	—			(5,172		)	(22		)	—			(5,194		)
Dividends paid to non-affiliates	—			(24,173		)	(634		)	—			(24,807		)
Dividends paid to affiliates	(24,807		)	—			—			24,807			—
Net cash (used in) provided by financing activities	(22,822		)	37,425			(3,639		)	47,664			58,628
Change in cash and cash equivalents	1,405			9,658			1,451			—			12,514
Cash and cash equivalents at beginning of period	582			4,270			3,985			—			8,837
Cash and cash equivalents at end of period	$	1,987		$	13,928		$	5,436		$	—		$	21,351

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the nine months ended September 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
Change 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 of 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

- Definition

The entire disclosure for condensed financial information, including the financial position, cash flows, and the results of operations of the registrant (parent company) as of the same dates or for the same periods for which audited consolidated financial statements are being presented. Alternatively, the details of this disclosure can be reported by the specific parent company taxonomy elements, indicating the appropriate date and period contexts in an instance document.

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