CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Tables)

12 Months Ended

Dec. 31, 2014

CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

Schedule of Condensed Consolidating Balance Sheet

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2014

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
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 BALANCE SHEET
As of December 31, 2013

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
ASSETS
Utility plant:
Utility plant	$	1,318		$	2,034,935		$	184,272		$	(7,197	)	$	2,213,328
Less accumulated depreciation and amortization		(164	)		(661,780	)		(37,168	)		1,615			(697,497	)
Net utility plant		1,154			1,373,155			147,104			(5,582	)		1,515,831
Current assets:
Cash and cash equivalents		5,280			20,790			1,436			—			27,506
Receivables		(756	)		90,008			8,931			(94	)		98,089
Receivables from affiliates		16,747			5,755			—			(22,502	)		—
Other current assets		—			13,011			884			—			13,895
Total current assets		21,271			129,564			11,251			(22,596	)		139,490
Other assets:
Regulatory assets		—			248,938			2,743			—			251,681
Investments in affiliates		565,347			—			—			(565,347	)		—
Long-term affiliate notes receivable		26,255			—			—			(26,255	)		—
Other assets		1,120			44,827			7,111			(205	)		52,853
Total other assets		592,722			293,765			9,854			(591,807	)		304,534
	$	615,147		$	1,796,484		$	168,209		$	(619,985	)	$	1,959,855
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stockholders' equity	$	598,756		$	500,290		$	70,548		$	(570,838	)	$	598,756
Affiliate long-term debt		—			—			26,255			(26,255	)		—
Long-term debt, less current maturities		—			424,854			1,288			—			426,142
Total capitalization		598,756			925,144			98,091			(597,093	)		1,024,898
Current liabilities:
Current maturities of long-term debt		—			6,137			1,771			—			7,908
Short-term borrowings		16,815			30,000			—			—			46,815
Payables to affiliates		48			—			22,454			(22,502	)		—
Accounts payable		—			51,764			3,323			—			55,087
Accrued expenses and other liabilities		107			55,346			1,321			—			56,774
Total current liabilities		16,970			143,247			28,869			(22,502	)		166,584
Unamortized investment tax credits		—			2,106			—			—			2,106
Deferred income taxes, net		(579	)		179,870			4,344			(390	)		183,245
Pension and postretirement benefits other than pensions		—			145,451			—			—			145,451
Regulatory and other liabilities		—			77,627			8,828			—			86,455
Advances for construction		—			182,776			617			—			183,393
Contributions in aid of construction		—			140,263			27,460			—			167,723
	$	615,147		$	1,796,484		$	168,209		$	(619,985	)	$	1,959,855

Schedule of Condensed Consolidating Statement of Operations

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2014

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	564,508		$	32,991		$	—		$	597,499
Operating expenses:
Operations:
Purchased water		—			177,561			323			—			177,884
Purchased power		—			24,089			9,070			—			33,159
Pump taxes		—			12,898			—			—			12,898
Administrative and general		66			87,130			10,177			—			97,373
Other		—			59,291			7,021			(505	)		65,807
Maintenance		—			19,141			713			—			19,854
Depreciation and amortization		214			56,836			4,274			(107	)		61,217
Income tax (benefit) expense		(275	)		27,286			(1,248	)		964			26,727
Taxes other than income taxes		—			18,086			2,647			—			20,733
Total operating (income) expenses		5			482,318			32,977			352			515,652
Net operating income (loss)		(5	)		82,190			14			(352	)		81,847
Other Income and Expenses:
Non-regulated revenue		1,811			16,085			1,592			(2,170	)		17,318
Non-regulated expense		—			(13,086	)		(1,199	)		—			(14,285	)
Gain on non-utility properties		—			51									51
Income tax (expense) on other income and expense		(738	)		(1,243	)		(184	)		920			(1,245	)
Net other income		1,073			1,807			209			(1,250	)		1,839
Interest:
Interest expense		394			27,777			1,978			(1,666	)		28,483
Less: capitalized interest		—			(1,460	)		(75	)		—			(1,535	)
Net interest expense		394			26,317			1,903			(1,666	)		26,948
Equity earnings of subsidiaries		56,064			—			—			(56,064	)		—
Net income (loss)	$	56,738		$	57,680		$	(1,680	)	$	(56,000	)	$	56,738

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2013

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	552,327		$	31,776		$	—		$	584,103
Operating expenses:
Operations:
Purchased water		—			182,503			543			—			183,046
Purchased power		—			22,932			9,288			—			32,220
Pump taxes		—			10,795			—			—			10,795
Administrative and general		69			87,620			10,366			—			98,055
Other		—			63,237			7,005			(504	)		69,738
Maintenance		—			16,654			714			—			17,368
Depreciation and amortization		56			54,886			3,490			(112	)		58,320
Income tax (benefit) expense		(304	)		19,890			(1,880	)		1,341			19,047
Taxes other than income taxes		—			18,679			2,830			—			21,509
Total operating (income) expenses		(179	)		477,196			32,356			725			510,098
Net operating income (loss)		179			75,131			(580	)		(725	)		74,005
Other Income and Expenses:
Non-regulated revenue		2,323			13,606			1,918			(3,052	)		14,795
Non-regulated expense		(337	)		(9,465	)		(1,463	)		—			(11,265	)
Income tax (expense) on other income and expense		(809	)		(1,687	)		(222	)		1,296			(1,422	)
Net other income		1,177			2,454			233			(1,756	)		2,108
Interest:
Interest expense		621			30,238			2,585			(2,547	)		30,897
Less: capitalized interest		—			(1,662	)		(376	)		—			(2,038	)
Net interest expense		621			28,576			2,209			(2,547	)		28,859
Equity earnings of subsidiaries		46,519			—			—			(46,519	)		—
Net income (loss)	$	47,254		$	49,009		$	(2,556	)	$	(46,453	)	$	47,254

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the Year Ended December 31, 2012

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating revenue	$	—		$	527,449		$	32,517		$	—		$	559,966
Operating expenses:
Operations:
Purchased water		—			160,913			423			—			161,336
Purchased power		—			21,435			9,592			—			31,027
Pump taxes		—			10,336			—			—			10,336
Administrative and general		—			84,399			9,528			—			93,927
Other		—			70,864			6,744			(504	)		77,104
Maintenance		—			18,478			664			—			19,142
Depreciation and amortization		—			52,012			2,774			(118	)		54,668
Income tax (benefit) expense		(583	)		18,992			(375	)		1,322			19,356
Taxes other than income taxes		—			16,630			2,597			—			19,227
Total operating (income) expenses		(583	)		454,059			31,947			700			486,123
Net operating income		583			73,390			570			(700	)		73,843
Other Income and Expenses:
Non-regulated revenue		1,919			15,204			2,420			(2,857	)		16,686
Non-regulated expense		—			(9,588	)		(1,965	)		—			(11,553	)
Gain on sale on non-utility property		—			81			—			3			84
Income tax (expense) on other income and expense		(782	)		(2,321	)		(266	)		1,273			(2,096	)
Net other income		1,137			3,376			189			(1,581	)		3,121
Interest:
Interest expense		1,430			30,328			2,132			(2,353	)		31,537
Less: capitalized interest		—			(2,334	)		(1,067	)		—			(3,401	)
Net interest expense		1,430			27,994			1,065			(2,353	)		28,136
Equity earnings of subsidiaries		48,538			—			—			(48,538	)		—
Net income (loss)	$	48,828		$	48,772		$	(306	)	$	(48,466	)	$	48,828

Schedule of Condensed Consolidating Statement of Cash Flows

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2014

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income (loss)	$	56,738		$	57,680		$	(1,680	)	$	(56,000	)	$	56,738
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity earnings of subsidiaries		(56,064	)		—			—			56,064			—
Dividends received from affiliates		31,063			—			—			(31,063	)		—
Depreciation and amortization		214			58,657			4,558			(107	)		63,322
Change in value of life insurance contracts		—			(994	)		—			—			(994	)
Stock-based compensation		2,195			—			—			—			2,195
Gain on sale of non-utility properties		—			(51	)		—			—			(51	)
Changes in deferred income taxes		—			34,125			—			—			34,125
Other changes in noncurrent assets and liabilities		789			(15,596	)		243			43			(14,521	)
Changes in operating assets and liabilities		16			(11,803	)		(894	)		—			(12,681	)
Net cash provided by operating activities		34,951			122,018			2,227			(31,063	)		128,133
Investing activities:
Utility plant expenditures		—			(125,048	)		(6,967	)		—			(132,015	)
Proceeds from sale of non-utility assets		—			57			—			—			57
Investment in affiliates		(47,650	)		—			—			47,650			—
Change in affiliate advances		(3,200	)		2,147			(80	)		1,133			—
Proceeds from affiliates long term debt		938			—			—			(938	)		—
Purchase of life insurance contracts		—			(3,207	)		—			—			(3,207	)
Changes in Restricted cash		—			396			—			—			396
Net cash (used in) investing activities		(49,912	)		(125,655	)		(7,047	)		47,845			(134,769	)
Financing Activities:
Short-term borrowings		64,900			52,400			—			—			117,300
Repayment of short-term borrowings		(20,000	)		(65,000	)		—			—			(85,000	)
Investment from affiliates		—			42,000			5,650			(47,650	)		—
Change in affiliate advances		(48	)		270			911			(1,133	)		—
Repayment of affiliate long-term borrowings		—			—			(938	)		938			—
Proceeds from long-term debt		—			—			497			—			497
Repayment of long-term debt		—			(6,934	)		(1,771	)		—			(8,705	)
Advances and contributions in aid for construction		—			11,219			1,110			—			12,329
Refunds of advances for construction		—			(6,529	)		(112	)		—			(6,641	)
Dividends paid to non-affiliates		(31,063	)		—			—			—			(31,063	)
Dividends paid to affiliates		—			(30,650	)		(413	)		31,063			—
Net cash provided by (used in) financing activities		13,789			(3,224	)		4,934			(16,782	)		(1,283	)
Change in cash and cash equivalents		(1,172	)		(6,861	)		114			—			(7,919	)
Cash and cash equivalents at beginning of period		5,280			20,790			1,436			—			27,506
Cash and cash equivalents at end of year	$	4,108		$	13,929		$	1,550		$	—		$	19,587

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2013

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income (loss)	$	47,254		$	49,009		$	(2,556	)	$	(46,453	)	$	47,254
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity earnings of subsidiaries		(46,519	)		—			—			46,519			—
Dividends received from affiliates		29,619			—			—			(29,619	)		—
Depreciation and amortization		56			56,670			3,636			(112	)		60,250
Change in value of life insurance contracts		—			(1,878	)		—			—			(1,878	)
Stock-based compensation		1,832			—			—			—			1,832
Changes in deferred income taxes		—			9,800			—			—			9,800
Other changes in noncurrent assets and liabilities		(76	)		11,899			(449	)		(49	)		11,325
Changes in operating assets and liabilities		544			226			(5,275	)		95			(4,410	)
Net cash provided by (used in) operating activities		32,710			125,726			(4,644	)		(29,619	)		124,173
Investing activities:
Utility plant expenditures		(712	)		(111,819	)		(10,457	)		—			(122,988	)
Investment in affiliates		(35,000	)		—			—			35,000			—
Affiliate advances		(14,903	)		(2,575	)		1,210			16,268			—
Proceeds from affiliate loans		1,227			7,796			—			(9,023	)		—
Purchase of life insurance		—			(3,281	)		—			—			(3,281	)
Restricted cash decrease		—			1,073			—			—			1,073
Net cash (used in) investing activities		(49,388	)		(108,806	)		(9,247	)		42,245			(125,196	)
Financing Activities:
Short-term borrowings		20,615			50,000			—			—			70,615
Repayment of short-term borrowings		(68,275	)		(45,000	)		—			—			(113,275	)
Affiliate advances		(14	)		(1,152	)		17,434			(16,268	)		—
Reduction of affiliate long-term borrowings		(7,796	)		—			(1,227	)		9,023			—
Proceeds from long-term debt		—			—			48			—			48
Repayment of long-term debt		—			(46,547	)		(701	)		—			(47,248	)
Advances and contributions in aid for construction		—			10,465			98			—			10,563
Refunds of advances for construction		—			(6,814	)		(108	)		—			(6,922	)
Dividends paid to non-affiliates		(29,619	)		—			—			—			(29,619	)
Dividends paid to affiliates		—			(26,691	)		(2,928	)		29,619			—
Issuance of common stock		105,577			—			—			—			105,577
Investment from affiliates		—			35,000			—			(35,000	)		—
Net cash provided by (used in) financing activities		20,488			(30,739	)		12,616			(12,626	)		(10,261	)
Change in cash and cash equivalents		3,810			(13,819	)		(1,275	)		—			(11,284	)
Cash and cash equivalents at beginning of year		1,470			34,609			2,711			—			38,790
Cash and cash equivalents at end of year	$	5,280		$	20,790		$	1,436		$	—		$	27,506

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2012

	Parent Company			Cal Water			All Other Subsidiaries			Consolidating Adjustments			Consolidated
	(In thousands)
Operating activities:
Net income (loss)	$	48,828		$	48,772		$	(306	)	$	(48,466	)	$	48,828
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity earnings of subsidiaries		(48,538	)		—			—			48,538			—
Dividends received from affiliates		26,387			—			—			(26,387	)		—
Depreciation and amortization		56			54,040			2,888			(118	)		56,866
Change in value of life insurance contracts		—			(2,504	)		—			—			(2,504	)
Stock-based compensation		1,442			—			—			—			1,442
Gain on sale of non-utility property		—			(81	)		—			(3	)		(84	)
Changes in deferred income taxes		—			34,133			—			—			34,133
Other changes in noncurrent assets and liabilities		102			(10,367	)		1,307			133			(8,825	)
Changes in operating assets and liabilities		(170	)		9,035			(6,723	)		(84	)		2,058
Net cash provided by (used in) operating activities		28,107			133,028			(2,834	)		(26,387	)		131,914
Investing activities:
Utility plant expenditures		(281	)		(111,636	)		(15,761	)		(3	)		(127,681	)
Proceeds from sale of non-utility assets		—			82			—			3			85
Affiliate advances		(12,245	)		254			(853	)		12,844			—
Proceeds from affiliate loans		552			48			—			(600	)		—
Reduction of loans to affiliates		(5,675	)		—			—			5,675			—
Purchase of life insurance		—			(3,294	)		—			—			(3,294	)
Restricted cash decrease		—			1,959			—			—			1,959
Net cash (used in) investing activities		(17,649	)		(112,587	)		(16,614	)		17,919			(128,931	)
Financing Activities:
Short-term borrowings		18,335			76,000			—			—			94,335
Repayment of short-term borrowings		(1,000	)		(51,000	)		—			—			(52,000	)
Affiliate advances		23			962			11,859			(12,844	)		—
Proceeds from affiliates long-term borrowings		—			—			5,675			(5,675	)		—
Reduction of affiliate long-term borrowings		(48	)		—			(552	)		600			—
Proceeds from long-term debt		—			—			124			—			124
Retirement of long-term debt		—			(6,310	)		(727	)		—			(7,037	)
Advances and contributions in aid for construction		—			6,883			83			—			6,966
Refunds of advances for construction		—			(7,275	)		(122	)		—			(7,397	)
Dividends paid to non-affiliates		(26,387	)		—			—			—			(26,387	)
Dividends paid to affiliates		—			(23,567	)		(2,820	)		26,387			—
Net cash (used in) provided by financing activities		(9,077	)		(4,307	)		13,520			8,468			8,604
Change in cash and cash equivalents		1,381			16,134			(5,928	)		—			11,587
Cash and cash equivalents at beginning of year		89			18,475			8,639			—			27,203
Cash and cash equivalents at end of year	$	1,470		$	34,609		$	2,711		$	—		$	38,790