Condensed Consolidating Financial Statements

6 Months Ended

Jun. 30, 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 June 30, 2017 and December 31, 2016, the condensed consolidating statements of income for the three and six months ended June 30, 2017 and 2016, and the condensed consolidating statements of cash flows for the six months ended June 30, 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 six months ended June 30, 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 June 30, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
ASSETS
Utility plant:
Utility plant	$	1,321		$	2,625,435		$	206,628		$	(7,197	)	$	2,826,187
Less accumulated depreciation and amortization	(872		)	(842,974		)	(55,694		)	1,965			(897,575		)
Net utility plant	449			1,782,461			150,934			(5,232		)	1,928,612
Current assets:
Cash and cash equivalents	2,112			20,417			6,574			—			29,103
Receivables and unbilled revenue	—			115,606			4,671			—			120,277
Receivables from affiliates	21,786			1,117			143			(23,046		)	—
Other current assets	290			19,810			1,100			—			21,200
Total current assets	24,188			156,950			12,488			(23,046		)	170,580
Other assets:
Regulatory assets	—			372,048			3,820			—			375,868
Investments in affiliates	668,660			—			—			(668,660		)	—
Long-term affiliate notes receivable	25,037			—			—			(25,037		)	—
Other assets	238			53,928			4,005			(205		)	57,966
Total other assets	693,935			425,976			7,825			(693,902		)	433,834
TOTAL ASSETS	$	718,572		$	2,365,387		$	171,247		$	(722,180	)	$	2,533,026
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders’ equity	$	661,834		$	597,262		$	76,682		$	(673,944	)	$	661,834
Affiliate long-term debt	—			—			25,037			(25,037		)	—
Long-term debt, less current maturities	—			518,839			1,036			—			519,875
Total capitalization	661,834			1,116,101			102,755			(698,981		)	1,181,709
Current liabilities:
Current maturities of long-term debt	—			35,624			486			—			36,110
Short-term borrowings	55,100			135,000			—			—			190,100
Payables to affiliates	—			302			22,744			(23,046		)	—
Accounts payable	—			81,399			2,823			—			84,222
Accrued expenses and other liabilities	126			47,124			3,345			—			50,595
Total current liabilities	55,226			299,449			29,398			(23,046		)	361,027
Unamortized investment tax credits	—			1,798			—			—			1,798
Deferred income taxes	1,512			308,164			1,413			(153		)	310,936
Pension and postretirement benefits other than pensions	—			227,186			—			—			227,186
Regulatory liabilities and other	—			83,579			3,242			—			86,821
Advances for construction	—			181,832			562			—			182,394
Contributions in aid of construction	—			147,278			33,877			—			181,155
TOTAL CAPITALIZATION AND LIABILITIES	$	718,572		$	2,365,387		$	171,247		$	(722,180	)	$	2,533,026

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

For the three months ended June 30, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	161,174		$	9,958		$	—		$	171,132
Operating expenses:
Operations:
Water production costs	—			62,089			2,042			—			64,131
Administrative and general	—			21,147			2,649			—			23,796
Other operations	—			16,729			1,725			(126		)	18,328
Maintenance	—			4,509			199			—			4,708
Depreciation and amortization	26			18,102			1,113			(23		)	19,218
Income tax (benefit) expense	(123		)	9,100			395			263			9,635
Property and other taxes	—			5,315			742			—			6,057
Total operating (income) expenses	(97		)	136,991			8,865			114			145,873
Net operating income	97			24,183			1,093			(114		)	25,259
Other income and expenses:
Non-regulated revenue	496			3,469			396			(622		)	3,739
Non-regulated expenses	—			(1,428		)	(186		)	—			(1,614		)
Allowance for equity funds used during construction	—			879			—			—			879
Income tax expense on other income and expenses	(202		)	(1,190		)	(78		)	253			(1,217		)
Total other income	294			1,730			132			(369		)	1,787
Interest:
Interest expense	275			8,795			505			(496		)	9,079
Allowance for borrowed funds used during construction	—			(542		)	(22		)	—			(564		)
Net interest expense	275			8,253			483			(496		)	8,515
Equity earnings of subsidiaries	18,415			—			—			(18,415		)	—
Net income	$	18,531		$	17,660		$	742		$	(18,402	)	$	18,531

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the three months ended June 30, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	142,342		$	10,103		$	—		$	152,445
Operating expenses:
Operations:
Water production costs	—			55,643			1,946			—			57,589
Administrative and general	—			20,667			2,699			—			23,366
Other operations	—			17,365			1,622			(84		)	18,903
Maintenance	—			5,692			242			—			5,934
Depreciation and amortization	57			14,735			1,074			(24		)	15,842
Income tax (benefit) expense	(93		)	6,228			497			238			6,870
Property and other taxes	—			4,669			738			—			5,407
Total operating (income) expenses	(36		)	124,999			8,818			130			133,911
Net operating income	36			17,343			1,285			(130		)	18,534
Other income and expenses:
Non-regulated revenue	462			3,439			423			(560		)	3,764
Non-regulated expenses	—			(2,547		)	(262		)	—			(2,809		)
Income tax expense on other income and expenses	(188		)	(364		)	(60		)	228			(384		)
Total other income	274			528			101			(332		)	571
Interest:
Interest expense	173			8,263			474			(476		)	8,434
Less: capitalized interest	—			(820		)	(17		)	—			(837		)
Net interest expense	173			7,443			457			(476		)	7,597
Equity earnings of subsidiaries	11,371			—			—			(11,371		)	—
Net income	$	11,508		$	10,428		$	929		$	(11,357	)	$	11,508

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the six months endedJune 30, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	274,516		$	18,652		$	—		$	293,168
Operating expenses:
Operations:
Water production costs	—			102,278			3,921			—			106,199
Administrative and general	—			43,623			5,422			—			49,045
Other operations	—			31,129			3,575			(252		)	34,452
Maintenance	—			10,415			405			—			10,820
Depreciation and amortization	49			36,213			2,203			(46		)	38,419
Income tax (benefit) expense	(226		)	8,154			303			520			8,751
Property and other taxes	(4		)	10,727			1,450			—			12,173
Total operating (income) expenses	(181		)	242,539			17,279			222			259,859
Net operating income	181			31,977			1,373			(222		)	33,309
Other income and expenses:
Non-regulated revenue	977			6,604			850			(1,230		)	7,201
Non-regulated expenses	—			(3,175		)	(493		)	—			(3,668		)
Allowance for equity funds used during construction	—			1,658			—			—			1,658
Income tax expense on other income and expenses	(398		)	(2,073		)	(136		)	501			(2,106		)
Net other income	579			3,014			221			(729		)	3,085
Interest:
Interest expense	510			17,265			991			(977		)	17,789
Allowance for borrowed funds used during construction	—			(1,018		)	(40		)	—			(1,058		)
Net interest expense	510			16,247			951			(977		)	16,731
Equity earnings of subsidiaries	19,413			—			—			(19,413		)	—
Net income	$	19,663		$	18,744		$	643		$	(19,387	)	$	19,663

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the six months ended June 30, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating revenue	$	—		$	255,369		$	18,803		$	—		$	274,172
Operating expenses:
Operations:
Water production costs	—			94,888			3,770			—			98,658
Administrative and general	—			45,610			5,583			—			51,193
Other operations	—			35,091			3,324			(210		)	38,205
Maintenance	—			11,532			465			—			11,997
Depreciation and amortization	114			29,650			2,172			(48		)	31,888
Income tax (benefit) expense	(187		)	5,191			446			495			5,945
Property and other taxes	—			10,059			1,423			—			11,482
Total operating (income) expenses	(73		)	232,021			17,183			237			249,368
Net operating income	73			23,348			1,620			(237		)	24,804
Other income and expenses:
Non-regulated revenue	926			6,635			797			(1,166		)	7,192
Non-regulated expenses	—			(5,252		)	(537		)	—			(5,789		)
Income tax expense on other income and expenses	(377		)	(564		)	(99		)	475			(565		)
Total other income	549			819			161			(691		)	838
Interest:
Interest expense	346			16,162			947			(956		)	16,499
Less: capitalized interest	—			(1,534		)	(33		)	—			(1,567		)
Net interest expense	346			14,628			914			(956		)	14,932
Equity earnings of subsidiaries	10,434			—			—			(10,434		)	—
Net income	$	10,710		$	9,539		$	867		$	(10,406	)	$	10,710

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months endedJune 30, 2017

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income	$	19,663		$	18,744		$	643		$	(19,387	)	$	19,663
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(19,413		)	—			—			19,413			—
Dividends received from affiliates	17,278			—			—			(17,278		)	—
Depreciation and amortization	47			37,074			2,253			(46		)	39,328
Changes in value of life insurance contracts	—			(1,208		)	—			—			(1,208		)
Allowance for equity funds used during construction	—			(1,658		)	—			—			(1,658		)
Changes in operating assets and liabilities	(172		)	(40,755		)	841			—			(40,086		)
Other changes in noncurrent assets and liabilities	1,520			17,650			497			20			19,687
Net cash provided by operating activities	18,923			29,847			4,234			(17,278		)	35,726
Investing activities:
Utility plant expenditures	—			(105,684		)	(3,028		)	—			(108,712		)
Changes in affiliate advances	429			2,491			(138		)	(2,782		)	—
Issuance of affiliate short-term borrowings	(2,610		)	—			—			2,610			—
Reduction of affiliates long-term debt	668			—			—			(668		)	—
Life insurance proceeds	—			450			—			—			450
Purchase of life insurance contracts	—			(1,216		)	—			—			(1,216		)
Changes in restricted cash	—			(598		)	—			—			(598		)
Net cash used in investing activities	(1,513		)	(104,557		)	(3,166		)	(840		)	(110,076		)
Financing Activities:
Short-term borrowings	—			140,000			—			—			140,000
Repayment of short-term borrowings	(2,000		)	(45,000		)	—			—			(47,000		)
Changes in affiliate advances	—			(238		)	(2,544		)	2,782			—
Proceeds from affiliate short-term borrowings	—			—			2,610			(2,610		)	—
Repayment of affiliates long-term borrowings	—			—			(668		)	668			—
Repayment of long-term debt	—			(2,161		)	(246		)	—			(2,407		)
Advances and contributions in aid of construction	—			10,225			87			—			10,312
Refunds of advances for construction	—			(4,430		)	—			—			(4,430		)
Repurchase of common stock	(1,236		)	—			—			—			(1,236		)
Dividends paid to non-affiliates	(17,278		)	—			—			—			(17,278		)
Dividends paid to affiliates	—			(16,484		)	(794		)	17,278			—
Net cash (used in) provided by financing activities	(20,514		)	81,912			(1,555		)	18,118			77,961
Change in cash and cash equivalents	(3,104		)	7,202			(487		)	—			3,611
Cash and cash equivalents at beginning of period	5,216			13,215			7,061			—			25,492
Cash and cash equivalents at end of period	$	2,112		$	20,417		$	6,574		$	—		$	29,103

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the six months ended June 30, 2016

(In thousands)

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
Operating activities:
Net income	$	10,710		$	9,539		$	867		$	(10,406	)	$	10,710
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(10,434		)	—			—			10,434			—
Dividends received from affiliates	16,532			—			—			(16,532		)	—
Depreciation and amortization	114			30,372			2,263			(48		)	32,701
Changes in value of life insurance contracts	—			(336		)	—			—			(336		)
Changes in operating assets and liabilities	(218		)	(987		)	984			—			(221		)
Other changes in noncurrent assets and liabilities	1,440			14,567			730			20			16,757
Net cash provided by operating activities	18,144			53,155			4,844			(16,532		)	59,611
Investing activities:
Utility plant expenditures	—			(113,894		)	(2,261		)	—			(116,155		)
Changes in affiliate advances	(561		)	787			(199		)	(27		)	—
Reduction of affiliate short-term borrowings	2,000			42,100			—			(44,100		)	—
Issuance of affiliate short-term borrowings	(2,615		)	(20,600		)	—			23,215			—
Reduction of affiliates long-term debt	544			—			—			(544		)	—
Life insurance proceeds	—			495			—			—			495
Purchase of life insurance contracts	—			(1,065		)	—			—			(1,065		)
Changes in restricted cash	—			(653		)	—			—			(653		)
Net cash used in investing activities	(632		)	(92,830		)	(2,460		)	(21,456		)	(117,378		)
Financing Activities:
Short-term borrowings	42,100			61,000			—			—			103,100
Repayment of short-term borrowings	(20,615		)	(41,000		)	—			—			(61,615		)
Changes in affiliate advances	—			651			(678		)	27			—
Proceeds from affiliate short-term borrowings	20,600			—			2,615			(23,215		)	—
Repayment of affiliate short-term borrowings	(42,100		)	—			(2,000		)	44,100			—
Repayment of affiliates long-term borrowings	—			—			(544		)	544			—
Proceeds from long-term debt, net of issuance costs	—			49,823			—			—			49,823
Repayment of long-term debt	—			(2,287		)	(176		)	—			(2,463		)
Advances and contributions in aid for construction	—			11,413			50			—			11,463
Refunds of advances for construction	—			(3,454		)	(18		)	—			(3,472		)
Repurchase of common stock	(548		)	—			—			—			(548		)
Dividends paid to non-affiliates	—			(16,135		)	(397		)	—			(16,532		)
Dividends paid to affiliates	(16,532		)	—			—			16,532			—
Net cash (used in) provided by financing activities	(17,095		)	60,011			(1,148		)	37,988			79,756
Change in cash and cash equivalents	417			20,336			1,236			—			21,989
Cash and cash equivalents at beginning of period	582			4,270			3,985			—			8,837
Cash and cash equivalents at end of period	$	999		$	24,606		$	5,221		$	—		$	30,826