Segment and Non-Tariffed Businesses Reporting

SJW Group is a holding company with three subsidiaries: (i) San Jose Water Company, a water utility operation with both regulated and non-tariffed businesses, (ii) SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., operate commercial building rentals, and (iii) SJWTX, Inc. which is doing business as Canyon Lake Water Service Company, a regulated water utility located in Canyon Lake, Texas, and its consolidated non-tariffed variable interest entity, Acequia Water Supply Corporation. Texas Water Alliance Limited was a non-tariffed water utility operation undertaking activities that are necessary to develop a water supply project in Texas. On November 16, 2017, all equity interest in TWA was sold to GBRA. See Note 13 below. In accordance with FASB ASC Topic 280—“Segment Reporting,” SJW Group has determined that it has two reportable business segments. The first segment is that of providing water utility and utility-related services to its customers through SJW Group’s subsidiaries, San Jose Water Company, Canyon Lake Water Service Company and, up to the date of the sale, including Texas Water Alliance, together referred to as “Water Utility Services.” The second segment is property management and investment activity conducted by SJW Land Company, referred to as “Real Estate Services.”

SJW Group’s reportable segments have been determined based on information used by the chief operating decision maker. SJW Group’s chief operating decision maker includes the President and Chief Executive Officer, and his senior staff. The senior staff reviews financial information presented on a consolidated basis that is accompanied by disaggregated information about operating revenue, net income and total assets, by subsidiaries.

The following tables set forth information relating to SJW Group’s reportable segments and distribution of regulated and non-tariffed business activities within the reportable segments. Certain allocated assets, revenue and expenses have been included in the reportable segment amounts. Other business activity of SJW Group not included in the reportable segments is included in the “All Other” category.



	For year ended December 31, 2017
	Water Utility Services		Real Estate Services	All Other (1)		SJW Group
	Regulated	Non- tariffed	Non- tariffed	Non- tariffed		Regulated	Non- tariffed	Total
Operating revenue	376,104	7,419	5,702	—		376,104	13,121	389,225
Operating expense	279,833	4,855	3,688	2,770		279,833	11,313	291,146
Operating income (loss)	96,271	2,564	2,014	(2,770	)	96,271	1,808	98,079
Net income before noncontrolling interest	47,736	1,137	8,089	4,138		47,736	13,364	61,100
Depreciation and amortization	46,500	572	1,220	—		46,500	1,792	48,292
Senior note, mortgage and other interest expense	20,670	—	60	2,199		20,670	2,259	22,929
Income tax expense in net income	30,127	993	644	3,629		30,127	5,266	35,393
Assets	1,406,221	4,471	47,668	(359	)	1,406,221	51,780	1,458,001



	For year ended December 31, 2016
	Water Utility Services		Real Estate Services	All Other (1)		SJW Group
	Regulated	Non- tariffed	Non- tariffed	Non- tariffed		Regulated	Non- tariffed	Total
Operating revenue	326,547	6,442	6,717	—		326,547	13,159	339,706
Operating expense	236,459	4,257	4,074	1,800		236,459	10,131	246,590
Operating income (loss)	90,088	2,185	2,643	(1,800	)	90,088	3,028	93,116
Net income (loss) before noncontrolling interest	45,594	954	7,406	(1,115	)	45,594	7,245	52,839
Depreciation and amortization	42,709	480	1,436	—		42,709	1,916	44,625
Senior note, mortgage and other interest expense	18,667	—	912	2,259		18,667	3,171	21,838
Income tax expense in net income	27,902	750	4,235	655		27,902	5,640	33,542
Assets	1,368,886	17,794	54,818	1,878		1,368,886	74,490	1,443,376



	For year ended December 31, 2015
	Water Utility Services		Real Estate Services	All Other (1)		SJW Group
	Regulated	Non- tariffed	Non- tariffed	Non- tariffed		Regulated	Non- tariffed		Total
Operating revenue	291,949	6,145	6,988	—		291,949	13,133		305,082
Operating expense	214,538	4,149	4,079	2,356		214,538	10,584		225,122
Operating income (loss)	77,411	1,996	2,909	(2,356	)	77,411	2,549		79,960
Net income (loss) before noncontrolling interest	38,402	882	953	(2,355	)	38,402	(520	)	37,882
Depreciation and amortization	38,742	434	1,564	—		38,742	1,998		40,740
Senior note, mortgage and other interest expense	18,935	—	1,019	2,232		18,935	3,251		22,186
Income tax expense (benefit) in net income	23,802	730	513	(1,773	)	23,802	(530	)	23,272
Assets	1,250,552	18,106	65,571	3,096		1,250,552	86,773		1,337,325

____________________

(1) The “All Other” category includes the accounts of SJW Group on a stand-alone basis.