CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

12 Months Ended

Dec. 31, 2019

Condensed Financial Information Disclosure [Abstract]

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

On November 17, 2010, Cal Water issued $100.0 million aggregate principal amount of 5.500% First Mortgage Bonds due 2040, all of which is fully and unconditionally guaranteed by the Company. As a result of this guarantee arrangement, 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 December 31, 2019 and 2018, the Condensed Consolidating Statements of Income for the years ended December 31, 2019, 2018, and 2017, and the Condensed Consolidating Statements of Cash Flows for the years ended December 31, 2019, 2018, and 2017, 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 year ended December 31, 2017 reflects the retrospective adoption of ASU 2016-09, which affected California Water Service Company and the other subsidiaries. The Condensed Consolidating Statement of Income for the year ended December 31, 2017 reflects the retrospective adoption of ASU 2017-07, which affected California Water Service Company and the other subsidiaries.

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2019

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
	ASSETS
Utility plant:
Utility plant	$	1,318		$	3,332,331		$	224,033		$	(7,197	)	$	3,550,485
Less accumulated depreciation and amortization	(1,107		)	(1,079,627		)	(65,561		)	2,180			(1,144,115		)
Net utility plant	211			2,252,704			158,472			(5,017		)	2,406,370
Current assets:
Cash and cash equivalents	3,096			29,098			10,459			—			42,653
Receivables and unbilled revenue	—			114,999			4,350			—			119,349
Receivables from affiliates	25,803			3,621			209			(29,633		)	—
Other current assets	90			20,615			2,005			—			22,710
Total current assets	28,989			168,333			17,023			(29,633		)	184,712
Other assets:
Regulatory assets	—			428,639			4,683			—			433,322
Investments in affiliates	777,170			—			—			(777,170		)	—
Long-term affiliate notes receivable	30,060			—			—			(30,060		)	—
Other assets	409			81,591			5,125			(221		)	86,904
Total other assets	807,639			510,230			9,808			(807,451		)	520,226
TOTAL ASSETS	$	836,839		$	2,931,267		$	185,303		$	(842,101	)	$	3,111,308
	CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	779,906		$	700,784		$	81,604		$	(782,388	)	$	779,906
Affiliate long-term debt	—			—			30,060			(30,060		)	—
Long-term debt, net	—			786,310			444			—			786,754
Total capitalization	779,906			1,487,094			112,108			(812,448		)	1,566,660
Current liabilities:
Current maturities of long-term debt, net	—			21,732			136			—			21,868
Short-term borrowings	55,100			120,000			—			—			175,100
Payables to affiliates	—			6,115			23,518			(29,633		)	—
Accounts payable	—			104,419			4,044			—			108,463
Accrued expenses and other liabilities	313			50,569			2,408			—			53,290
Total current liabilities	55,413			302,835			30,106			(29,633		)	358,721
Unamortized investment tax credits	—			1,575			—			—			1,575
Deferred income taxes	1,520			217,847			3,243			(20		)	222,590
Pension and postretirement benefits other than pensions	—			258,907			—			—			258,907
Regulatory and other long-term liabilities	—			262,859			7,397			—			270,256
Advances for construction	—			190,568			494			—			191,062
Contributions in aid of construction	—			209,582			31,955			—			241,537
TOTAL CAPITALIZATION AND LIABILITIES	$	836,839		$	2,931,267		$	185,303		$	(842,101	)	$	3,111,308

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING BALANCE SHEET

As of December 31, 2018

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
	ASSETS
Utility plant:
Utility plant	$	1,318		$	3,021,437		$	213,888		$	(7,197	)	$	3,229,446
Less accumulated depreciation and amortization	(1,013		)	(938,072		)	(59,735		)	2,097			(996,723		)
Net utility plant	305			2,083,365			154,153			(5,100		)	2,232,723
Current assets:
Cash and cash equivalents	3,779			33,763			9,634			—			47,176
Receivables and unbilled revenue	126			118,632			4,201			—			122,959
Receivables from affiliates	21,318			4,074			61			(25,453		)	—
Other current assets	80			16,907			1,580			—			18,567
Total current assets	25,303			173,376			15,476			(25,453		)	188,702
Other assets:
Regulatory assets	—			349,414			4,155			—			353,569
Investments in affiliates	733,156			—			—			(733,156		)	—
Long-term affiliate notes receivable	27,829			—			—			(27,829		)	—
Other assets	133			58,959			3,821			(203		)	62,710
Total other assets	761,118			408,373			7,976			(761,188		)	416,279
TOTAL ASSETS	$	786,726		$	2,665,114		$	177,605		$	(791,741	)	$	2,837,704
	CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	730,157		$	659,340		$	79,093		$	(738,433	)	$	730,157
Affiliate long-term debt	—			—			27,828			(27,828		)	—
Long-term debt, net	—			709,444			583			—			710,027
Total capitalization	730,157			1,368,784			107,504			(766,261		)	1,440,184
Current liabilities:
Current maturities of long-term debt, net	—			104,664			247			—			104,911
Short-term borrowings	55,100			10,000			—			—			65,100
Payables to affiliates	17			488			24,948			(25,453		)	—
Accounts payable	—			92,310			3,270			—			95,580
Accrued expenses and other liabilities	107			53,655			1,813			—			55,575
Total current liabilities	55,224			261,117			30,278			(25,453		)	321,166
Unamortized investment tax credits	—			1,649			—			—			1,649
Deferred income taxes	1,376			210,052			1,648			(43		)	213,033
Pension and postretirement benefits other than pensions	—			193,538			—			—			193,538
Regulatory and other long-term liabilities	(31		)	250,720			5,817			16			256,522
Advances for construction	—			185,843			499			—			186,342
Contributions in aid of construction	—			193,411			31,859			—			225,270
TOTAL CAPITALIZATION AND LIABILITIES	$	786,726		$	2,665,114		$	177,605		$	(791,741	)	$	2,837,704

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2019

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	669,769		$	44,788		$	—		$	714,557
Operating expenses:
Operations:
Purchased water	—			211,998			463			—			212,461
Purchased power	—			22,338			9,024			—			31,362
Pump taxes	—			11,518			—			—			11,518
Administrative and general	23			98,675			9,919			—			108,617
Other operations	—			83,148			7,496			(583		)	90,061
Maintenance	—			25,720			1,114			—			26,834
Depreciation and amortization	94			83,183			6,025			(82		)	89,220
Income tax (benefit) expense	(528		)	14,677			1,273			858			16,280
Property and other taxes	—			25,601			3,191			—			28,792
Total operating (income) expenses	(411		)	576,858			38,505			193			615,145
Net operating income	411			92,911			6,283			(193		)	99,412
Other income and expenses:
Non-regulated revenue	2,401			18,080			1,707			(2,983		)	19,205
Non-regulated expenses	—			(12,526		)	(1,343		)	—			(13,869		)
Other components of net periodic benefit cost	—			(5,559		)	(174		)	—			(5,733		)
Allowance for equity funds used during construction	—			6,685			—			—			6,685
Gain on non-utility properties	—			28			—			—			28
Income tax expense on other income and expenses	(672		)	(1,476		)	(78		)	835			(1,391		)
Net other income	1,729			5,232			112			(2,148		)	4,925
Interest:
Interest expense	1,769			43,104			2,419			(2,401		)	44,891
Allowance for borrowed funds used during construction	—			(3,408		)	(262		)	—			(3,670		)
Net interest expense	1,769			39,696			2,157			(2,401		)	41,221
Equity earnings of subsidiaries	62,745			—			—			(62,745		)	—
Net income	$	63,116		$	58,447		$	4,238		$	(62,685	)	$	63,116

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2018

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	656,939		$	41,257		$	—		$	698,196
Operating expenses:
Operations:
Purchased water	—			206,675			428			—			207,103
Purchased power	—			22,460			8,620			—			31,080
Pump taxes	—			14,664			—			—			14,664
Administrative and general	—			90,563			10,218			—			100,781
Other operations	—			73,521			6,930			(583		)	79,868
Maintenance	—			23,573			921			—			24,494
Depreciation and amortization	94			78,601			5,173			(87		)	83,781
Income tax (benefit) expense	(960		)	17,678			948			923			18,589
Property and other taxes	—			24,190			3,106			—			27,296
Total operating (income) expenses	(866		)	551,925			36,344			253			587,656
Net operating income	866			105,014			4,913			(253		)	110,540
Other Income and Expenses:
Non-regulated revenue	2,333			17,658			1,197			(2,916		)	18,272
Non-regulated expenses	—			(22,122		)	(665		)	—			(22,787		)
Other components of net periodic benefit cost	—			(8,886		)	(422		)	—			(9,308		)
Allowance for equity funds used during construction	—			3,954			—			—			3,954
Gain on sale of non-utility properties	—			50			—			—			50
Income tax (expense) benefit on other income and expenses	(652		)	2,616			(63		)	816			2,717
Net other income (loss)	1,681			(6,730		)	47			(2,100		)	(7,102		)
Interest:
Interest expense	1,711			38,288			2,251			(2,333		)	39,917
Allowance for borrowed funds used during construction	—			(1,909		)	(154		)	—			(2,063		)
Net interest expense	1,711			36,379			2,097			(2,333		)	37,854
Equity earnings of subsidiaries	64,748			—			—			(64,748		)	—
Net income	$	65,584		$	61,905		$	2,863		$	(64,768	)	$	65,584

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF INCOME

For the Year Ended December 31, 2017

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	635,604		$	40,509		$	—		$	676,113
Operating expenses:
Operations:
Purchased water	—			198,682			399			—			199,081
Purchased power	—			21,021			7,841			—			28,862
Pump taxes	—			13,924			—			—			13,924
Administrative and general	—			83,163			10,163			—			93,326
Other operations	—			67,069			7,903			(524		)	74,448
Maintenance	—			21,595			935			—			22,530
Depreciation and amortization	94			72,327			4,453			(91		)	76,783
Income tax (benefit) expense	(498		)	33,313			1,405			1,059			35,279
Property and other taxes	(4		)	21,778			3,023			—			24,797
Total operating (income) expenses	(408		)	532,872			36,122			444			569,030
Net operating income	408			102,732			4,387			(444		)	107,083
Other Income and Expenses:
Non-regulated revenue	1,985			14,608			1,814			(2,509		)	15,898
Non-regulated expenses	—			(8,139		)	(1,251		)	—			(9,390		)
Other components of net periodic benefit cost	—			(9,032		)	(556		)	—			(9,588		)
Allowance for equity funds used during construction	—			3,750			—			—			3,750
Gain on sale of non-utility properties	—			663			—			—			663
Income tax expense on other income and expenses	(809		)	(1,714		)	(47		)	1,022			(1,548		)
Net other income (loss)	1,176			136			(40		)	(1,487		)	(215		)
Interest:
Interest expense	1,131			35,116			2,026			(1,985		)	36,288
Allowance for borrowed funds used during construction	—			(2,319		)	(41		)	—			(2,360		)
Net interest expense	1,131			32,797			1,985			(1,985		)	33,928
Equity earnings of subsidiaries	72,487			—			—			(72,487		)	—
Net income	$	72,940		$	70,071		$	2,362		$	(72,433	)	$	72,940

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2019

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	63,116		$	58,447		$	4,238		$	(62,685	)	$	63,116
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(62,745		)	—			—			62,745			—
Dividends received from Affiliates	38,023			—			—			(38,023		)	—
Depreciation and amortization	94			85,175			6,101			(82		)	91,288
Change in value of life insurance contract	—			(5,104		)	—			—			(5,104		)
Stock-based compensation	—			—			6,731			—			6,731
Gain on sale of non-utility properties	—			(28		)	—			—			(28		)
Changes in normalized deferred income taxes	—			15,346			—			—			15,346
Allowance for equity funds used during construction	—			(6,685		)	—			—			(6,685		)
Changes in operating assets and liabilities	321			1,883			220			—			2,424
Other changes in noncurrent assets and liabilities	6,632			(308		)	(4,640		)	22			1,706
Net cash provided by operating activities	45,441			148,726			12,650			(38,023		)	168,794
Investing activities:
Utility plant expenditures	—			(262,500		)	(11,270		)	—			(273,770		)
Proceeds from sale of non-utility assets	—			28			—			—			28
Investment in affiliates	(19,294		)	—			—			19,294			—
Change in affiliate advances	(4,379		)	453			(174		)	4,100			—
Issuance of affiliate short-term borrowings	(4,300		)	—			—			4,300			—
Collection of affiliate long-term debt	1,963			—			—			(1,963		)	—
Purchase of life insurance	—			(2,216		)	—			—			(2,216		)
Net cash used in investing activities	(26,010		)	(264,235		)	(11,444		)	25,731			(275,958		)
Financing Activities:
Short-term borrowings	—			260,000			—			—			260,000
Repayment of short-term borrowings	—			(150,000		)	—			—			(150,000		)
Investment from affiliates	—			19,294			—			(19,294		)	—
Change in affiliate advances	(17		)	5,627			(1,510		)	(4,100		)	—
Proceeds from affiliate short-term borrowings	—			—			4,300			(4,300		)
Repayment of affiliates long-term debt	—			—			(1,963		)	1,963			—
Issuance of long-term debt, net of debt issuance costs	—			398,204			—			—			398,204
Retirement of long-term debt	—			(405,317		)	(251		)	—			(405,568		)
Advances and contribution in aid of construction	—			27,005			769			—			27,774
Refunds of advances for construction	—			(7,565		)	(1		)	—			(7,566		)
Issuance of common stock	20,423			—			—			—			20,423
Repurchase of common stock	(2,497		)	—			—			—			(2,497		)
Dividends paid to non-affiliates	(38,023		)	—			—			—			(38,023		)
Dividends paid to affiliates	—			(36,297		)	(1,726		)	38,023			—
Net cash (used in) provided by financing activities	(20,114		)	110,951			(382		)	12,292			102,747
Change in cash, cash equivalents, and restricted cash	(683		)	(4,558		)	824			—			(4,417		)
Cash, cash equivalents, and restricted cash at beginning of period	3,779			34,239			9,697			—			47,715
Cash, cash equivalents, and restricted cash at end of year	$	3,096		$	29,681		$	10,521		$	—		$	43,298

CALIFORNIA WATER SERVICE GROUP

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2018

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	65,584		$	61,905		$	2,863		$	(64,768	)	$	65,584
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(64,748		)	—			—			64,748			—
Dividends received from Affiliates	36,043			—			—			(36,043		)	—
Depreciation and amortization	94			80,442			5,258			(87		)	85,707
Change in value of life insurance contract	—			2,334			—			—			2,334
Stock-based compensation	3,141			—			—			—			3,141
Gain on sale of non-utility properties	—			(50		)	—			—			(50		)
Changes in normalized deferred income taxes	—			20,909			—			—			20,909
Allowance for equity funds used during construction	—			(3,954		)	—			—			(3,954		)
Changes in operating assets and liabilities	(290		)	16,943			(170		)	—			16,483
Other changes in noncurrent assets and liabilities	(348		)	(12,284		)	1,390			107			(11,135		)
Net cash provided by operating activities	39,476			166,245			9,341			(36,043		)	179,019
Investing activities:
Utility plant expenditures	—			(261,456		)	(10,251		)	—			(271,707		)
Proceeds from sale of non-utility assets	—			59			—			—			59
Change in affiliate advances	(689		)	19			53			617			—
Issuance of affiliate short-term borrowings	(23,700		)	—			—			23,700			—
Collection of affiliate short-term debt	20,000			—			—			(20,000		)	—
Collection of affiliate long-term debt	1,635			—			—			(1,635		)	—
Life insurance benefits	—			3,491			—			—			3,491
Purchase of life insurance	—			(4,925		)	—			—			(4,925		)
Net cash used in investing activities	(2,754		)	(262,812		)	(10,198		)	2,682			(273,082		)
Financing Activities:
Short-term borrowings	20,000			131,000			—			—			151,000
Repayment of short-term borrowings	(20,000		)	(341,000		)	—			—			(361,000		)
Change in affiliate advances	17			(93		)	693			(617		)	—
Proceeds from affiliate short-term borrowings	20,000			—			3,700			(23,700		)	—
Repayment of affiliates short-term debt	(20,000		)	—			—			20,000			—
Repayment of affiliates long-term debt	—			—			(1,635		)	1,635			—
Issuance of long-term debt, net of debt issuance costs	—			299,383			—			—			299,383
Retirement of long-term debt	—			(16,200		)	(332		)	—			(16,532		)
Advances and contribution in aid of construction	—			18,218			394			—			18,612
Refunds of advances for construction	—			(7,279		)	(18		)	—			(7,297		)
Repurchase of common stock	(1,645		)	—			—			—			(1,645		)
Dividends paid to non-affiliates	(36,043		)	—			—			—			(36,043		)
Dividends paid to affiliates	—			(34,624		)	(1,419		)	36,043			—
Net cash (used in) provided by financing activities	(37,671		)	49,405			1,383			33,361			46,478
Change in cash, cash equivalents, and restricted cash	(949		)	(47,162		)	526			—			(47,585		)
Cash, cash equivalents, and restricted cash at beginning of period	4,728			81,401			9,171			—			95,300
Cash, cash equivalents, and restricted cash at end of year	$	3,779		$	34,239		$	9,697		$	—		$	47,715

California Water Service Group

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2017

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income	$	72,940		$	70,071		$	2,362		$	(72,433	)	$	72,940
Adjustments to reconcile net income to net cash provided by operating activities:
Equity earnings of subsidiaries	(72,487		)	—			—			72,487			—
Dividends received from Affiliates	34,563			—			—			(34,563		)	—
Depreciation and amortization	94			74,041			4,548			(91		)	78,592
Change in value of life insurance contract	—			(3,058		)	—			—			(3,058		)
Stock-based compensation	3,118			—			—			—			3,118
Gain on sale of non-utility properties	—			(663		)	—			—			(663		)
Changes in normalized deferred income taxes	—			21,087			—			—			21,087
Allowance for equity funds used during construction	—			(3,750		)	—			—			(3,750		)
Changes in operating assets and liabilities	184			(36,611		)	38			—			(36,389		)
Other changes in noncurrent assets and liabilities	254			13,101			2,573			37			15,965
Net cash provided by operating activities	38,666			134,218			9,521			(34,563		)	147,842
Investing activities:
Utility plant expenditures	(4		)	(252,055		)	(7,135		)	—			(259,194		)
TCP settlement proceeds	—			56,004			—			—			56,004
Proceeds from sale of non-utility assets	—			666			—			—			666
Change in affiliate advances	172			(485		)	(50		)	363			—
Issuance of affiliate short-term borrowings	(2,610		)	—			—			2,610			—
Collection of affiliate long-term debt	1,356			—			—			(1,356		)	—
Life insurance benefits	—			1,558			—			—			1,558
Purchase of life insurance	—			(5,605		)	—			—			(5,605		)
Net cash used in investing activities	(1,086		)	(199,917		)	(7,185		)	1,617			(206,571		)
Financing Activities:
Short-term borrowings	—			265,000			—			—			265,000
Repayment of short-term borrowings	(2,000		)	(85,000		)	—			—			(87,000		)
Change in affiliate advances	—			41			322			(363		)	—
Proceeds from affiliate short-term borrowings	—			—			2,610			(2,610		)	—
Repayment of affiliates long-term debt	—			—			(1,356		)	1,356			—
Retirement of long-term debt	—			(26,223		)	(606		)	—			(26,829		)
Advances and contribution in aid of construction	—			21,075			294			—			21,369
Refunds of advances for construction	—			(8,373		)	(5		)	—			(8,378		)
Repurchase of common stock	(1,505		)	—			—			—			(1,505		)
Dividends paid to non-affiliates	(34,563		)	—			—			—			(34,563		)
Dividends paid to affiliates	—			(33,015		)	(1,548		)	34,563			—
Net cash (used in) provided by financing activities	(38,068		)	133,505			(289		)	32,946			128,094
Change in cash, cash equivalents, and restricted cash	(488		)	67,806			2,047			—			69,365
Cash, cash equivalents, and restricted cash at beginning of period	5,216			13,595			7,124			—			25,935
Cash, cash equivalents, and restricted cash at end of year	$	4,728		$	81,401		$	9,171		$	—		$	95,300