Condensed Consolidating Financial Statements

3 Months Ended

Mar. 31, 2017

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Consolidating Financial Statements

Condensed Consolidating Financial Statements

On April 17, 2009, Cal Water issued $100.0 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 March 31, 2017 and December 31, 2016, the condensed consolidating statements of income (loss) for the three months ended March 31, 2017 and 2016, and the condensed consolidating statements of cash flows for the three months ended March 31, 2017 and 2016 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 statement of cash flows for the three months ended March 31, 2016 reflects the retrospective adoption of ASU 2016-09 (refer to Note 2 Summary of Significant Accounting Policies for more details).

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of March 31, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,567,142		$	204,969		$	(7,197	)	$	2,766,232
Less accumulated depreciation and amortization	(849		)	(824,791		)	(54,529		)	1,942			(878,227		)
Net utility plant	469			1,742,351			150,440			(5,255		)	1,888,005
Current assets:
Cash and cash equivalents	3,985			2,618			5,387			—			11,990
Receivables and unbilled revenue	—			93,155			3,888			—			97,043
Receivables from affiliates	19,317			2,653			186			(22,156		)	—
Other current assets	395			17,743			1,034			—			19,172
Total current assets	23,697			116,169			10,495			(22,156		)	128,205
Other assets:
Regulatory assets	—			363,672			3,804			—			367,476
Investments in affiliates	658,889			—			—			(658,889		)	—
Long-term affiliate notes receivable	25,393			—			—			(25,393		)	—
Other assets	274			52,636			3,744			(42		)	56,612
Total other assets	684,556			416,308			7,548			(684,324		)	424,088
TOTAL ASSETS	$	708,722		$	2,274,828		$	168,483		$	(711,735	)	$	2,440,298
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	651,333		$	587,853		$	76,333		$	(664,186	)	$	651,333
Affiliate long-term debt	—			—			25,393			(25,393		)	—
Long-term debt, less current maturities	—			520,815			900			—			521,715
Total capitalization	651,333			1,108,668			102,626			(689,579		)	1,173,048
Current liabilities:
Current maturities of long-term debt	—			35,636			503			—			36,139
Short-term borrowings	55,100			75,000			—			—			130,100
Payables to affiliates	715			64			21,377			(22,156		)	—
Accounts payable	—			66,254			3,022			—			69,276
Accrued expenses and other liabilities	141			55,368			2,349			—			57,858
Total current liabilities	55,956			232,322			27,251			(22,156		)	293,373
Unamortized investment tax credits	—			1,798			—			—			1,798
Deferred income taxes	1,433			297,254			777			—			299,464
Pension and postretirement benefits other than pensions	—			224,851			—			—			224,851
Regulatory liabilities and other	—			81,129			3,189			—			84,318
Advances for construction	—			182,268			547			—			182,815
Contributions in aid of construction	—			146,538			34,093			—			180,631
TOTAL CAPITALIZATION AND LIABILITIES	$	708,722		$	2,274,828		$	168,483		$	(711,735	)	$	2,440,298

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,519,785		$	203,433		$	(7,197	)	$	2,717,339
Less accumulated depreciation and amortization	(826		)	(805,992		)	(53,163		)	1,919			(858,062		)
Net utility plant	492			1,713,793			150,270			(5,278		)	1,859,277
Current assets:
Cash and cash equivalents	5,216			13,215			7,061			—			25,492
Receivables and unbilled revenue	—			98,850			4,173			—			103,023
Receivables from affiliates	19,566			3,608			8			(23,182		)	—
Other current assets	80			12,442			1,032			—			13,554
Total current assets	24,862			128,115			12,274			(23,182		)	142,069
Other assets:
Regulatory assets	—			352,139			3,791			—			355,930
Investments in affiliates	666,525			—			—			(666,525		)	—
Long-term affiliate notes receivable	25,744			—			—			(25,744		)	—
Other assets	376			50,361			3,765			(33		)	54,469
Total other assets	692,645			402,500			7,556			(692,302		)	410,399
TOTAL ASSETS	$	717,999		$	2,244,408		$	170,100		$	(720,762	)	$	2,411,745
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	659,471		$	595,003		76,833			$	(671,836	)	$	659,471
Affiliate long-term debt	—			—			25,744			(25,744		)	—
Long-term debt, less current maturities	—			530,850			895			—			531,745
Total capitalization	659,471			1,125,853			103,472			(697,580		)	1,191,216
Current liabilities:
Current maturities of long-term debt	—			25,657			551			—			26,208
Short-term borrowings	57,100			40,000			—			—			97,100
Payables to affiliates	—			539			22,643			(23,182		)	—
Accounts payable	—			74,998			2,815			—			77,813
Accrued expenses and other liabilities	88			47,232			1,789			—			49,109
Total current liabilities	57,188			188,426			27,798			(23,182		)	250,230
Unamortized investment tax credits	—			1,798			—			—			1,798
Deferred income taxes	1,340			296,781			803			—			298,924
Pension and postretirement benefits other than pensions	—			222,691			—			—			222,691
Regulatory and other liabilities	—			80,518			3,130			—			83,648
Advances for construction	—			181,907			541			—			182,448
Contributions in aid of construction	—			146,434			34,356			—			180,790
TOTAL CAPITALIZATION AND LIABILITIES	$	717,999		$	2,244,408		$	170,100		$	(720,762	)	$	2,411,745

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS)

For the three months ended March 31, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	113,342		$	8,694		$	—		$	122,036
Operating expenses:
Operations:
Water production costs	—			40,189			1,879			—			42,068
Administrative and general	—			22,476			2,773			—			25,249
Other operations	—			14,400			1,850			(126		)	16,124
Maintenance	—			5,906			206			—			6,112
Depreciation and amortization	23			18,111			1,090			(23		)	19,201
Income tax benefit	(103		)	(946		)	(92		)	257			(884		)
Property and other taxes	(4		)	5,412			708			—			6,116
Total operating (income) expenses	(84		)	105,548			8,414			108			113,986
Net operating income	84			7,794			280			(108		)	8,050
Other income and expenses:
Non-regulated revenue	481			3,135			454			(608		)	3,462
Non-regulated expenses	—			(1,747		)	(307		)	—			(2,054		)
Allowance for equity funds used during construction (Note 2)	—			779			—			—			779
Income tax expense on other income and expenses	(196		)	(883		)	(58		)	248			(889		)
Total other income	285			1,284			89			(360		)	1,298
Interest:
Interest expense	235			8,470			486			(481		)	8,710
Allowance for borrowed funds used during construction (Note 2)	—			(476		)	(18		)	—			(494		)
Net interest expense	235			7,994			468			(481		)	8,216
Equity earnings of subsidiaries	998			—			—			(998		)	—
Net income (loss)	$	1,132		$	1,084		$	(99	)	$	(985	)	$	1,132

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME (LOSS)

For the three months ended March 31, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	113,027		$	8,700		$	—		$	121,727
Operating expenses:
Operations:
Water production costs	—			39,245			1,824			—			41,069
Administrative and general	—			24,943			2,884			—			27,827
Other operations	—			17,726			1,702			(126		)	19,302
Maintenance	—			5,840			223			—			6,063
Depreciation and amortization	57			14,915			1,098			(24		)	16,046
Income tax (benefit) expense	(94		)	(1,037		)	(51		)	257			(925		)
Property and other taxes	—			5,390			685			—			6,075
Total operating (income) expenses	(37		)	107,022			8,365			107			115,457
Net operating income	37			6,005			335			(107		)	6,270
Other income and expenses:
Non-regulated revenue	464			3,196			374			(606		)	3,428
Non-regulated expenses	—			(2,705		)	(275		)	—			(2,980		)
Income tax (expense) benefit on other income and expenses	(189		)	(200		)	(39		)	247			(181		)
Total other income	275			291			60			(359		)	267
Interest:
Interest expense	173			7,899			473			(480		)	8,065
Less: capitalized interest	—			(714		)	(16		)	—			(730		)
Net interest expense	173			7,185			457			(480		)	7,335
Equity earnings of subsidiaries	(937		)	—			—			937			—
Net loss	$	(798	)	$	(889	)	$	(62	)	$	951		$	(798	)

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the three months endedMarch 31, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income (loss)	$	1,132		$	1,084		$	(99	)	$	(985	)	$	1,132
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity earnings of subsidiaries	(998		)	—			—			998			—
Dividends received from affiliates	8,634			—			—			(8,634		)	—
Depreciation and amortization	23			18,542			1,116			(23		)	19,658
Allowance for equity funds used during construction	—			(779		)	—			—			(779		)
Changes in value of life insurance contracts	—			(319		)	—			—			(319		)
Changes in operating assets and liabilities	(67		)	(11,003		)	696			—			(10,374		)
Other changes in noncurrent assets and liabilities	483			4,241			245			10			4,979
Net cash provided by operating activities	9,207			11,766			1,958			(8,634		)	14,297
Investing activities:
Utility plant expenditures	—			(50,509		)	(1,344		)	—			(51,853		)
Changes in affiliate advances	593			955			(175		)	(1,373		)	—
Issuance of affiliate short-term borrowings	(325		)				—			325			—
Reduction of affiliates long-term debt	332			—			—			(332		)	—
Life insurance proceeds	—			450			—			—			450
Purchase of life insurance contracts	—			(836		)	—			—			(836		)
Changes in restricted cash	—			(260		)	—			—			(260		)
Net cash provided by (used in) investing activities	600			(50,200		)	(1,519		)	(1,380		)	(52,499		)
Financing Activities:
Short-term borrowings	—			35,000			—			—			35,000
Repayment of short-term borrowings	(2,000		)	—			—			—			(2,000		)
Changes in affiliate advances	715			(475		)	(1,613		)	1,373			—
Proceeds from affiliate short-term borrowings	—			—			325			(325		)	—
Repayment of affiliate long-term borrowings	—			—			(332		)	332			—
Repayment of long-term debt	—			(170		)	(116		)	—			(286		)
Advances and contributions in aid of construction	—			3,952			23			—			3,975
Refunds of advances for construction	—			(2,236		)	—			—			(2,236		)
Repurchase of common stock	(1,119		)	—			—			—			(1,119		)
Dividends paid to non-affiliates	(8,634		)	—			—			—			(8,634		)
Dividends paid to affiliates	—			(8,234		)	(400		)	8,634			—
Net cash (used in) provided by financing activities	(11,038		)	27,837			(2,113		)	10,014			24,700
Change in cash and cash equivalents	(1,231		)	(10,597		)	(1,674		)	—			(13,502		)
Cash and cash equivalents at beginning of period	5,216			13,215			7,061			—			25,492
Cash and cash equivalents at end of period	$	3,985		$	2,618		$	5,387		$	—		$	11,990

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the three months ended March 31, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net loss	$	(798	)	$	(889	)	$	(62	)	$	951		$	(798	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity earnings of subsidiaries	937			—			—			(937		)	—
Dividends received from affiliates	8,258			—			—			(8,258		)	—
Depreciation and amortization	57			15,277			1,144			(24		)	16,454
Change in value of life insurance contracts	—			43			—			—			43
Changes in operating assets and liabilities	(280		)	9,414			1,589			—			10,723
Other changes in noncurrent assets and liabilities	621			4,432			7			10			5,070
Net cash provided by operating activities	8,795			28,277			2,678			(8,258		)	31,492
Investing activities:
Utility plant expenditures	—			(54,944		)	(1,519		)	—			(56,463		)
Changes in affiliate advances	40			1,468			(140		)	(1,368		)	—
Reduction of affiliate short-term borrowings	—			21,500			—			(21,500		)	—
Issuance of affiliate short-term borrowings	(250		)	(20,600		)	—			20,850			—
Reduction of affiliates long-term debt	279			—			—			(279		)	—
Life insurance proceeds	—			495			—			—			495
Purchase of life insurance contracts	—			(960		)	—			—			(960		)
Changes in restricted cash	—			(465		)	—			—			(465		)
Net cash provided by (used in) investing activities	69			(53,506		)	(1,659		)	(2,297		)	(57,393		)
Financing Activities:
Short-term borrowings	21,500			33,000			—			—			54,500
Repayment of short-term borrowings	(20,615		)	(33,000		)	—			—			(53,615		)
Changes in affiliate advances	—			(98		)	(1,270		)	1,368			—
Proceeds from affiliate short-term borrowings	20,600			—			250			(20,850		)
Repayment of affiliate short-term borrowings	(21,500		)	—			—			21,500
Repayment of affiliates long-term borrowings	—			—			(279		)	279			—
Proceeds from long-term debt, net of expenses	—			49,823			216			—			50,039
Repayment of long-term debt	—			(175		)	(79		)	—			(254		)
Advances and contributions in aid for construction	—			7,590			18			—			7,608
Refunds of advances for construction	—			(1,611		)	(1		)	—			(1,612		)
Repurchase of common stock	(466		)	—			—			—			(466		)
Dividends paid to non-affiliates	(8,258		)	—			—			—			(8,258		)
Dividends paid to affiliates	—			(8,058		)	(200		)	8,258			—
Net cash (used in) provided by financing activities	(8,739		)	47,471			(1,345		)	10,555			47,942
Change in cash and cash equivalents	125			22,242			(326		)	—			22,041
Cash and cash equivalents at beginning of period	582			4,270			3,985			—			8,837
Cash and cash equivalents at end of period	$	707		$	26,512		$	3,659		$	—		$	30,878