|
Delaware
|
|
77-0066628
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
110 West Taylor Street, San Jose, CA
|
|
95110
|
(Address of principal executive offices)
|
|
(Zip Code)
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Large accelerated filer
☐
|
|
Accelerated filer
☒
|
|
Non-accelerated filer
☐
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|
Smaller reporting company
☐
|
|
|
|
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(Do not check if a smaller reporting company)
|
||
|
|
|
|
Emerging growth company ☐
|
||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
OPERATING REVENUE
|
$
|
102,073
|
|
|
86,944
|
|
|
$
|
171,118
|
|
|
148,056
|
|
OPERATING EXPENSE:
|
|
|
|
|
|
|
|
||||||
Production Expenses:
|
|
|
|
|
|
|
|
||||||
Purchased water
|
22,181
|
|
|
14,485
|
|
|
36,105
|
|
|
24,182
|
|
||
Power
|
1,704
|
|
|
1,614
|
|
|
2,991
|
|
|
2,851
|
|
||
Groundwater extraction charges
|
10,932
|
|
|
8,312
|
|
|
18,342
|
|
|
14,760
|
|
||
Other production expenses
|
3,655
|
|
|
3,272
|
|
|
7,166
|
|
|
6,504
|
|
||
Total production expenses
|
38,472
|
|
|
27,683
|
|
|
64,604
|
|
|
48,297
|
|
||
Administrative and general
|
13,412
|
|
|
11,536
|
|
|
26,017
|
|
|
23,241
|
|
||
Maintenance
|
4,258
|
|
|
4,054
|
|
|
7,919
|
|
|
7,865
|
|
||
Property taxes and other non-income taxes
|
3,111
|
|
|
2,684
|
|
|
6,806
|
|
|
5,902
|
|
||
Depreciation and amortization
|
12,033
|
|
|
11,187
|
|
|
24,152
|
|
|
22,370
|
|
||
Total operating expense
|
71,286
|
|
|
57,144
|
|
|
129,498
|
|
|
107,675
|
|
||
OPERATING INCOME
|
30,787
|
|
|
29,800
|
|
|
41,620
|
|
|
40,381
|
|
||
OTHER (EXPENSE) INCOME:
|
|
|
|
|
|
|
|
||||||
Interest on long-term debt
|
(5,696
|
)
|
|
(5,007
|
)
|
|
(11,659
|
)
|
|
(10,046
|
)
|
||
Mortgage and other interest expense
|
(60
|
)
|
|
(462
|
)
|
|
(154
|
)
|
|
(858
|
)
|
||
Gain on sale of California Water Service Group stock
|
—
|
|
|
3,197
|
|
|
—
|
|
|
3,197
|
|
||
Gain on sale of real estate investments
|
6,903
|
|
|
—
|
|
|
6,903
|
|
|
—
|
|
||
Dividend income
|
18
|
|
|
8
|
|
|
36
|
|
|
53
|
|
||
Other, net
|
596
|
|
|
150
|
|
|
1,041
|
|
|
459
|
|
||
Income before income taxes
|
32,548
|
|
|
27,686
|
|
|
37,787
|
|
|
33,186
|
|
||
Provision for income taxes
|
11,964
|
|
|
10,911
|
|
|
13,532
|
|
|
13,033
|
|
||
NET INCOME BEFORE NONCONTROLLING INTEREST
|
20,584
|
|
|
16,775
|
|
|
24,255
|
|
|
20,153
|
|
||
Less net income attributable to the noncontrolling interest
|
1,896
|
|
|
—
|
|
|
1,896
|
|
|
—
|
|
||
SJW GROUP NET INCOME
|
18,688
|
|
|
16,775
|
|
|
22,359
|
|
|
20,153
|
|
||
Other comprehensive income, net of tax:
|
|
|
|
|
|
|
|
||||||
Unrealized gain on investment
|
56
|
|
|
487
|
|
|
172
|
|
|
1,017
|
|
||
Reclassification adjustment for gain realized on sale of investments
|
—
|
|
|
(1,742
|
)
|
|
—
|
|
|
(1,742
|
)
|
||
SJW GROUP COMPREHENSIVE INCOME
|
$
|
18,744
|
|
|
15,520
|
|
|
$
|
22,531
|
|
|
19,428
|
|
SJW GROUP EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.91
|
|
|
0.82
|
|
|
$
|
1.09
|
|
|
0.99
|
|
Diluted
|
$
|
0.90
|
|
|
0.82
|
|
|
$
|
1.08
|
|
|
0.98
|
|
DIVIDENDS PER SHARE
|
$
|
0.22
|
|
|
0.20
|
|
|
$
|
0.44
|
|
|
0.41
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
||||||
Basic
|
20,504,357
|
|
|
20,437,612
|
|
|
20,495,211
|
|
|
20,425,678
|
|
||
Diluted
|
20,673,775
|
|
|
20,578,585
|
|
|
20,664,556
|
|
|
20,569,790
|
|
|
June 30,
2017 |
|
December 31,
2016 |
|||
ASSETS
|
|
|
|
|||
Utility plant:
|
|
|
|
|||
Land
|
$
|
18,073
|
|
|
17,923
|
|
Depreciable plant and equipment
|
1,575,892
|
|
|
1,554,016
|
|
|
Construction in progress
|
110,396
|
|
|
70,453
|
|
|
Intangible assets
|
25,165
|
|
|
23,989
|
|
|
|
1,729,526
|
|
|
1,666,381
|
|
|
Less accumulated depreciation and amortization
|
535,346
|
|
|
520,018
|
|
|
|
1,194,180
|
|
|
1,146,363
|
|
|
Real estate investments
|
56,226
|
|
|
62,193
|
|
|
Less accumulated depreciation and amortization
|
10,545
|
|
|
11,734
|
|
|
|
45,681
|
|
|
50,459
|
|
|
CURRENT ASSETS:
|
|
|
|
|||
Cash and cash equivalents
|
9,220
|
|
|
6,349
|
|
|
Restricted cash
|
8
|
|
|
19,001
|
|
|
Accounts receivable:
|
|
|
|
|||
Customers, net of allowances for uncollectible accounts
|
19,643
|
|
|
16,361
|
|
|
Income tax
|
—
|
|
|
9,796
|
|
|
Other
|
1,038
|
|
|
3,383
|
|
|
Accrued unbilled utility revenue
|
31,132
|
|
|
24,255
|
|
|
Current regulatory assets, net
|
7,672
|
|
|
16,064
|
|
|
Other current assets
|
4,179
|
|
|
4,402
|
|
|
|
72,892
|
|
|
99,611
|
|
|
OTHER ASSETS:
|
|
|
|
|||
Investment in California Water Service Group
|
3,680
|
|
|
3,390
|
|
|
Net regulatory assets, less current portion
|
147,132
|
|
|
135,709
|
|
|
Other
|
7,621
|
|
|
7,844
|
|
|
|
158,433
|
|
|
146,943
|
|
|
|
$
|
1,471,186
|
|
|
1,443,376
|
|
|
June 30,
2017 |
|
December 31,
2016 |
|||
CAPITALIZATION AND LIABILITIES
|
|
|
|
|||
CAPITALIZATION:
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
|||
Common stock, $0.001 par value; authorized 36,000,000 shares; issued and outstanding shares 20,506,494 on June 30, 2017 and 20,456,225 on December 31, 2016
|
$
|
21
|
|
|
21
|
|
Additional paid-in capital
|
82,622
|
|
|
81,715
|
|
|
Retained earnings
|
351,771
|
|
|
338,386
|
|
|
Accumulated other comprehensive income
|
1,696
|
|
|
1,524
|
|
|
Total stockholders’ equity
|
436,110
|
|
|
421,646
|
|
|
Long-term debt, less current portion
|
430,926
|
|
|
433,335
|
|
|
|
867,036
|
|
|
854,981
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|||
Line of credit
|
—
|
|
|
14,200
|
|
|
Current portion of long-term debt
|
—
|
|
|
125
|
|
|
Accrued groundwater extraction charges, purchased water and power
|
18,222
|
|
|
10,846
|
|
|
Accounts payable
|
27,060
|
|
|
18,739
|
|
|
Accrued interest
|
6,823
|
|
|
6,309
|
|
|
Accrued property taxes and other non-income taxes
|
947
|
|
|
1,681
|
|
|
Accrued payroll
|
4,540
|
|
|
4,696
|
|
|
Non-refundable deposit
|
3,000
|
|
|
—
|
|
|
Income tax payable
|
2,407
|
|
|
—
|
|
|
Other current liabilities
|
7,397
|
|
|
6,977
|
|
|
|
70,396
|
|
|
63,573
|
|
|
DEFERRED INCOME TAXES
|
206,503
|
|
|
205,203
|
|
|
ADVANCES FOR CONSTRUCTION
|
87,223
|
|
|
84,815
|
|
|
CONTRIBUTIONS IN AID OF CONSTRUCTION
|
154,441
|
|
|
151,576
|
|
|
POSTRETIREMENT BENEFIT PLANS
|
72,828
|
|
|
70,177
|
|
|
OTHER NONCURRENT LIABILITIES
|
12,759
|
|
|
13,051
|
|
|
COMMITMENTS AND CONTINGENCIES
|
—
|
|
|
—
|
|
|
|
$
|
1,471,186
|
|
|
1,443,376
|
|
|
Six months ended June 30,
|
|||||
|
2017
|
|
2016
|
|||
OPERATING ACTIVITIES:
|
|
|
|
|||
Net income before noncontrolling interest
|
$
|
24,255
|
|
|
20,153
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|||
Depreciation and amortization
|
25,258
|
|
|
23,204
|
|
|
Deferred income taxes
|
1,286
|
|
|
10,049
|
|
|
Share-based compensation
|
1,044
|
|
|
852
|
|
|
Gain on sale of real estate investments
|
(6,903
|
)
|
|
—
|
|
|
Gain on sale of California Water Service Group stock
|
—
|
|
|
(3,197
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|||
Accounts receivable and accrued unbilled utility revenue
|
(7,814
|
)
|
|
(7,489
|
)
|
|
Accounts payable and other current liabilities
|
725
|
|
|
(1,012
|
)
|
|
Accrued groundwater extraction charges, purchased water and power
|
7,376
|
|
|
3,553
|
|
|
Tax payable and receivable, and other accrued taxes
|
12,030
|
|
|
6,141
|
|
|
Postretirement benefits
|
2,651
|
|
|
2,848
|
|
|
Regulatory assets and liability related to balancing and memorandum accounts
|
(3,031
|
)
|
|
(780
|
)
|
|
Other changes, net
|
114
|
|
|
1,049
|
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
56,991
|
|
|
55,371
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|||
Additions to utility plant:
|
|
|
|
|||
Company-funded
|
(62,037
|
)
|
|
(62,859
|
)
|
|
Contributions in aid of construction
|
(3,142
|
)
|
|
(3,286
|
)
|
|
Additions to real estate investments
|
(119
|
)
|
|
(248
|
)
|
|
Payments for business/asset acquisition and water rights
|
(1,150
|
)
|
|
(1,060
|
)
|
|
Payments to retire utility plant, net of salvage
|
(718
|
)
|
|
(808
|
)
|
|
Proceeds from sale of real estate investments
|
11,180
|
|
|
—
|
|
|
Proceeds from non-refundable deposit
|
3,000
|
|
|
—
|
|
|
Proceeds from sale of California Water Service Group stock
|
—
|
|
|
4,510
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
(52,986
|
)
|
|
(63,751
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|||
Borrowings on line of credit
|
2,500
|
|
|
33,875
|
|
|
Repayments of line of credit
|
(16,700
|
)
|
|
(12,550
|
)
|
|
Repayments of long-term borrowings
|
(2,717
|
)
|
|
(4,885
|
)
|
|
Payment to noncontrolling interest
|
(1,896
|
)
|
|
—
|
|
|
Dividends paid
|
(8,916
|
)
|
|
(8,274
|
)
|
|
Receipts of advances and contributions in aid of construction
|
9,052
|
|
|
8,750
|
|
|
Refunds of advances for construction
|
(1,202
|
)
|
|
(1,164
|
)
|
|
Other changes, net
|
(248
|
)
|
|
(93
|
)
|
|
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
|
(20,127
|
)
|
|
15,659
|
|
|
NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
(16,122
|
)
|
|
7,279
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD
|
25,350
|
|
|
5,239
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$
|
9,228
|
|
|
12,518
|
|
Cash paid (received) during the period for:
|
|
|
|
|||
Interest
|
$
|
12,382
|
|
|
11,943
|
|
Income taxes
|
237
|
|
|
(3,783
|
)
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|||
Increase in accrued payables for construction costs capitalized
|
7,985
|
|
|
9,061
|
|
|
Utility property installed by developers
|
381
|
|
|
3,907
|
|
|
RECONCILIATION TO CONSOLIDATED BALANCE SHEETS:
|
|
|
|
|||
Cash and cash equivalents
|
9,220
|
|
|
12,518
|
|
|
Restricted cash
|
8
|
|
|
—
|
|
|
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD
|
$
|
9,228
|
|
|
12,518
|
|
Note 1.
|
General
|
Note 2.
|
Equity Plans
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Adjustments to additional paid-in capital and common stock for:
|
|
|
|
|
|
|
|
||||||
Compensation costs charged to income:
|
|
|
|
|
|
|
|
||||||
ESPP
|
$
|
—
|
|
|
—
|
|
|
$
|
100
|
|
|
79
|
|
Restricted stock and deferred restricted stock
|
458
|
|
|
379
|
|
|
944
|
|
|
773
|
|
||
Total compensation costs charged to income
|
$
|
458
|
|
|
379
|
|
|
$
|
1,044
|
|
|
852
|
|
Excess tax benefits realized from stock issuance:
|
|
|
|
|
|
|
|
||||||
Restricted stock and deferred restricted stock
|
$
|
—
|
|
|
94
|
|
|
$
|
—
|
|
|
202
|
|
Total excess tax benefits realized from stock issuance
|
$
|
—
|
|
|
94
|
|
|
$
|
—
|
|
|
202
|
|
Proceeds from ESPP and similar instruments:
|
|
|
|
|
|
|
|
||||||
ESPP
|
$
|
—
|
|
|
—
|
|
|
$
|
570
|
|
|
451
|
|
Total proceeds from the ESPP and similar instruments
|
$
|
—
|
|
|
—
|
|
|
$
|
570
|
|
|
451
|
|
Note 3.
|
Real Estate Investments
|
|
June 30,
2017 |
|
December 31,
2016 |
|||
Land
|
$
|
13,262
|
|
|
15,218
|
|
Buildings and improvements
|
42,964
|
|
|
46,826
|
|
|
Intangibles
|
—
|
|
|
149
|
|
|
Subtotal
|
56,226
|
|
|
62,193
|
|
|
Less: accumulated depreciation and amortization
|
10,545
|
|
|
11,734
|
|
|
Total
|
$
|
45,681
|
|
|
50,459
|
|
Note 4.
|
Defined Benefit Plan
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Service cost
|
$
|
1,288
|
|
|
1,249
|
|
|
$
|
2,614
|
|
|
2,490
|
|
Interest cost
|
1,920
|
|
|
1,858
|
|
|
3,823
|
|
|
3,736
|
|
||
Other cost
|
1,165
|
|
|
1,091
|
|
|
2,203
|
|
|
2,201
|
|
||
Expected return on assets
|
(2,053
|
)
|
|
(1,893
|
)
|
|
(4,119
|
)
|
|
(3,788
|
)
|
||
|
$
|
2,320
|
|
|
2,305
|
|
|
$
|
4,521
|
|
|
4,639
|
|
|
|
|
Fair Value Measurements at June 30, 2017
|
||||||||||||||
|
|
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
|
|
Significant
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Cash and cash equivalents
|
|
|
$
|
5,812
|
|
|
$
|
5,812
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
All Cap Equity
|
Russell 3000 Value
|
|
6,001
|
|
|
5,965
|
|
|
36
|
|
|
—
|
|
||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
45,599
|
|
|
45,599
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
|
|
8,748
|
|
|
8,748
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value
|
|
7,697
|
|
|
7,697
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
5,503
|
|
|
5,503
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT - Equity REIT’S
|
|
5,859
|
|
|
—
|
|
|
5,859
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
41,692
|
|
|
—
|
|
|
41,692
|
|
|
—
|
|
||||
Total
|
|
|
$
|
126,911
|
|
|
$
|
79,324
|
|
|
$
|
47,587
|
|
|
$
|
—
|
|
(a)
|
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
|
(b)
|
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.
|
|
|
|
Fair Value Measurements at December 31, 2016
|
||||||||||||||
|
|
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
|
|
Significant
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Cash and cash equivalents
|
|
|
$
|
10,050
|
|
|
$
|
10,050
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
All Cap Equity
|
Russell 3000 Value
|
|
5,290
|
|
|
5,266
|
|
|
24
|
|
|
—
|
|
||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
39,534
|
|
|
39,534
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
|
|
7,021
|
|
|
7,021
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value
|
|
6,357
|
|
|
6,357
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
4,832
|
|
|
4,832
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT - Equity REIT’S
|
|
5,663
|
|
|
—
|
|
|
5,663
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
40,514
|
|
|
—
|
|
|
40,514
|
|
|
—
|
|
||||
Total
|
|
|
$
|
119,261
|
|
|
$
|
73,060
|
|
|
$
|
46,201
|
|
|
$
|
—
|
|
(a)
|
Actively managed portfolio of securities with the goal to exceed the stated benchmark performance.
|
(b)
|
Actively managed portfolio of fixed income securities with the goal to exceed the Barclays 1-5 Year Government/Credit, Barclays Intermediate Government/Credit, and Merrill Lynch Preferred Stock Fixed Rate.
|
Note 5.
|
Segment and Non-Tariffed Business Reporting
|
|
For Three Months Ended June 30, 2017
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
98,836
|
|
|
1,910
|
|
|
1,327
|
|
|
—
|
|
|
98,836
|
|
|
3,237
|
|
|
102,073
|
|
Operating expense
|
68,317
|
|
|
1,223
|
|
|
942
|
|
|
804
|
|
|
68,317
|
|
|
2,969
|
|
|
71,286
|
|
|
Operating income (loss)
|
30,519
|
|
|
687
|
|
|
385
|
|
|
(804
|
)
|
|
30,519
|
|
|
268
|
|
|
30,787
|
|
|
Net income (loss) before noncontrolling interest
|
16,080
|
|
|
320
|
|
|
5,321
|
|
|
(1,137
|
)
|
|
16,080
|
|
|
4,504
|
|
|
20,584
|
|
|
Depreciation and amortization
|
11,592
|
|
|
142
|
|
|
299
|
|
|
—
|
|
|
11,592
|
|
|
441
|
|
|
12,033
|
|
|
Senior note, mortgage and other interest expense
|
5,215
|
|
|
—
|
|
|
(3
|
)
|
|
544
|
|
|
5,215
|
|
|
541
|
|
|
5,756
|
|
|
Income tax expense (benefit) in net income
|
9,908
|
|
|
236
|
|
|
1,988
|
|
|
(168
|
)
|
|
9,908
|
|
|
2,056
|
|
|
11,964
|
|
|
Assets
|
$
|
1,398,567
|
|
|
19,358
|
|
|
49,337
|
|
|
3,924
|
|
|
1,398,567
|
|
|
72,619
|
|
|
1,471,186
|
|
|
For Three Months Ended June 30, 2016
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
83,746
|
|
|
1,542
|
|
|
1,656
|
|
|
—
|
|
|
83,746
|
|
|
3,198
|
|
|
86,944
|
|
Operating expense
|
54,667
|
|
|
1,038
|
|
|
1,021
|
|
|
418
|
|
|
54,667
|
|
|
2,477
|
|
|
57,144
|
|
|
Operating income (loss)
|
29,079
|
|
|
504
|
|
|
635
|
|
|
(418
|
)
|
|
29,079
|
|
|
721
|
|
|
29,800
|
|
|
Net income (loss) before noncontrolling interest
|
15,023
|
|
|
214
|
|
|
178
|
|
|
1,360
|
|
|
15,023
|
|
|
1,752
|
|
|
16,775
|
|
|
Depreciation and amortization
|
10,676
|
|
|
118
|
|
|
393
|
|
|
—
|
|
|
10,676
|
|
|
511
|
|
|
11,187
|
|
|
Senior note, mortgage and other interest expense
|
4,655
|
|
|
—
|
|
|
240
|
|
|
574
|
|
|
4,655
|
|
|
814
|
|
|
5,469
|
|
|
Income tax expense (benefit) in net income
|
9,705
|
|
|
168
|
|
|
107
|
|
|
931
|
|
|
9,705
|
|
|
1,206
|
|
|
10,911
|
|
|
Assets
|
$
|
1,314,565
|
|
|
18,976
|
|
|
64,867
|
|
|
929
|
|
|
1,314,565
|
|
|
84,772
|
|
|
1,399,337
|
|
|
For Six Months Ended June 30, 2017
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
165,054
|
|
|
3,174
|
|
|
2,890
|
|
|
—
|
|
|
165,054
|
|
|
6,064
|
|
|
171,118
|
|
Operating expense
|
123,938
|
|
|
2,054
|
|
|
1,890
|
|
|
1,616
|
|
|
123,938
|
|
|
5,560
|
|
|
129,498
|
|
|
Operating income (loss)
|
41,116
|
|
|
1,120
|
|
|
1,000
|
|
|
(1,616
|
)
|
|
41,116
|
|
|
504
|
|
|
41,620
|
|
|
Net income (loss) before noncontrolling interest
|
20,029
|
|
|
492
|
|
|
5,681
|
|
|
(1,947
|
)
|
|
20,029
|
|
|
4,226
|
|
|
24,255
|
|
|
Depreciation and amortization
|
23,252
|
|
|
278
|
|
|
622
|
|
|
—
|
|
|
23,252
|
|
|
900
|
|
|
24,152
|
|
|
Senior note, mortgage and other interest expense
|
10,640
|
|
|
—
|
|
|
62
|
|
|
1,111
|
|
|
10,640
|
|
|
1,173
|
|
|
11,813
|
|
|
Income tax expense (benefit) in net income
|
11,701
|
|
|
373
|
|
|
2,116
|
|
|
(658
|
)
|
|
11,701
|
|
|
1,831
|
|
|
13,532
|
|
|
Assets
|
$
|
1,398,567
|
|
|
19,358
|
|
|
49,337
|
|
|
3,924
|
|
|
1,398,567
|
|
|
72,619
|
|
|
1,471,186
|
|
|
For Six Months Ended June 30, 2016
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
141,887
|
|
|
2,746
|
|
|
3,423
|
|
|
—
|
|
|
141,887
|
|
|
6,169
|
|
|
148,056
|
|
Operating expense
|
102,788
|
|
|
1,920
|
|
|
2,053
|
|
|
914
|
|
|
102,788
|
|
|
4,887
|
|
|
107,675
|
|
|
Operating income (loss)
|
39,099
|
|
|
826
|
|
|
1,370
|
|
|
(914
|
)
|
|
39,099
|
|
|
1,282
|
|
|
40,381
|
|
|
Net income (loss) before noncontrolling interest
|
18,594
|
|
|
319
|
|
|
431
|
|
|
809
|
|
|
18,594
|
|
|
1,559
|
|
|
20,153
|
|
|
Depreciation and amortization
|
21,349
|
|
|
234
|
|
|
787
|
|
|
—
|
|
|
21,349
|
|
|
1,021
|
|
|
22,370
|
|
|
Senior note, mortgage and other interest expense
|
9,281
|
|
|
—
|
|
|
490
|
|
|
1,133
|
|
|
9,281
|
|
|
1,623
|
|
|
10,904
|
|
|
Income tax expense (benefit) in net income
|
11,977
|
|
|
274
|
|
|
248
|
|
|
534
|
|
|
11,977
|
|
|
1,056
|
|
|
13,033
|
|
|
Assets
|
$
|
1,314,565
|
|
|
18,976
|
|
|
64,867
|
|
|
929
|
|
|
1,314,565
|
|
|
84,772
|
|
|
1,399,337
|
|
Note 6.
|
Long-Term Liabilities and Bank Borrowings
|
Note 7.
|
Fair Value Measurement
|
Note 8.
|
Regulatory Rate Filings
|
Note 9.
|
Balancing and Memorandum Account Recovery Procedures
|
|
Three months ended June 30, 2017
|
|
Three months ended June 30, 2016
|
||||||||||||||||||||||||||||
Beginning Balance
|
|
Revenue Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending Balance
|
|
Beginning Balance
|
|
Revenue Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending Balance
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Memorandum accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2014 WCMA*
|
$
|
—
|
|
|
978
|
|
|
(70
|
)
|
|
—
|
|
|
908
|
|
|
$
|
2,427
|
|
|
(152
|
)
|
|
(712
|
)
|
|
—
|
|
|
1,563
|
|
2015 WCMA*
|
398
|
|
|
2,183
|
|
|
(486
|
)
|
|
—
|
|
|
2,095
|
|
|
5,352
|
|
|
(77
|
)
|
|
(528
|
)
|
|
—
|
|
|
4,747
|
|
||
2016 WCMA
|
—
|
|
|
45
|
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|
—
|
|
|
3,747
|
|
|
—
|
|
|
(3,747
|
)
|
|
—
|
|
||
2017 WCMA*
|
—
|
|
|
4,989
|
|
|
—
|
|
|
(3,988
|
)
|
|
1,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
All others
|
3,680
|
|
|
658
|
|
|
212
|
|
|
—
|
|
|
4,550
|
|
|
1,110
|
|
|
551
|
|
|
—
|
|
|
—
|
|
|
1,661
|
|
||
Total memorandum accounts
|
4,078
|
|
|
8,853
|
|
|
(344
|
)
|
|
(4,033
|
)
|
|
8,554
|
|
|
8,889
|
|
|
4,069
|
|
|
(1,240
|
)
|
|
(3,747
|
)
|
|
7,971
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balancing accounts, net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Water supply costs
|
5,684
|
|
|
1,358
|
|
|
272
|
|
|
—
|
|
|
7,314
|
|
|
2,436
|
|
|
257
|
|
|
(52
|
)
|
|
—
|
|
|
2,641
|
|
||
Drought surcharges
|
(5,054
|
)
|
|
—
|
|
|
60
|
|
|
4,033
|
|
|
(961
|
)
|
|
(512
|
)
|
|
—
|
|
|
(4,951
|
)
|
|
3,747
|
|
|
(1,716
|
)
|
||
Pension
|
(2,539
|
)
|
|
273
|
|
|
(641
|
)
|
|
—
|
|
|
(2,907
|
)
|
|
(427
|
)
|
|
280
|
|
|
(373
|
)
|
|
—
|
|
|
(520
|
)
|
||
2012 General Rate Case true-up
|
18,424
|
|
|
—
|
|
|
(2,659
|
)
|
|
—
|
|
|
15,765
|
|
|
30,572
|
|
|
—
|
|
|
(2,832
|
)
|
|
—
|
|
|
27,740
|
|
||
2015 General Rate Case true-up
|
4,097
|
|
|
—
|
|
|
(1,686
|
)
|
|
—
|
|
|
2,411
|
|
|
—
|
|
|
8,767
|
|
|
—
|
|
|
—
|
|
|
8,767
|
|
||
All others
|
(623
|
)
|
|
(232
|
)
|
|
(305
|
)
|
|
—
|
|
|
(1,160
|
)
|
|
1,225
|
|
|
(97
|
)
|
|
(27
|
)
|
|
—
|
|
|
1,101
|
|
||
Total balancing accounts
|
$
|
19,989
|
|
|
1,399
|
|
|
(4,959
|
)
|
|
4,033
|
|
|
20,462
|
|
|
$
|
33,294
|
|
|
9,207
|
|
|
(8,235
|
)
|
|
3,747
|
|
|
38,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
24,067
|
|
|
10,252
|
|
|
(5,303
|
)
|
|
—
|
|
|
29,016
|
|
|
$
|
42,183
|
|
|
13,276
|
|
|
(9,475
|
)
|
|
—
|
|
|
45,984
|
|
|
Six months ended June 30, 2017
|
|
Six months ended June 30, 2016
|
||||||||||||||||||||||||||||
Beginning Balance
|
|
Revenue Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending Balance
|
|
Beginning Balance
|
|
Revenue Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending Balance
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Memorandum accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2014 WCMA*
|
$
|
—
|
|
|
1,089
|
|
|
(181
|
)
|
|
—
|
|
|
908
|
|
|
$
|
2,944
|
|
|
(152
|
)
|
|
(1,229
|
)
|
|
—
|
|
|
1,563
|
|
2015 WCMA*
|
1,589
|
|
|
2,113
|
|
|
(1,607
|
)
|
|
—
|
|
|
2,095
|
|
|
5,372
|
|
|
(97
|
)
|
|
(528
|
)
|
|
—
|
|
|
4,747
|
|
||
2016 WCMA
|
—
|
|
|
1,452
|
|
|
—
|
|
|
(1,452
|
)
|
|
—
|
|
|
—
|
|
|
6,761
|
|
|
—
|
|
|
(6,761
|
)
|
|
—
|
|
||
2017 WCMA*
|
—
|
|
|
7,049
|
|
|
—
|
|
|
(6,048
|
)
|
|
1,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
All others
|
2,768
|
|
|
1,329
|
|
|
453
|
|
|
—
|
|
|
4,550
|
|
|
594
|
|
|
1,068
|
|
|
(1
|
)
|
|
—
|
|
|
1,661
|
|
||
Total memorandum accounts
|
4,357
|
|
|
13,032
|
|
|
(1,335
|
)
|
|
(7,500
|
)
|
|
8,554
|
|
|
8,910
|
|
|
7,580
|
|
|
(1,758
|
)
|
|
(6,761
|
)
|
|
7,971
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balancing accounts, net assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Water supply costs
|
5,190
|
|
|
1,555
|
|
|
569
|
|
|
—
|
|
|
7,314
|
|
|
2,771
|
|
|
(56
|
)
|
|
(74
|
)
|
|
—
|
|
|
2,641
|
|
||
Drought surcharges
|
(7,688
|
)
|
|
—
|
|
|
(773
|
)
|
|
7,500
|
|
|
(961
|
)
|
|
(359
|
)
|
|
—
|
|
|
(8,118
|
)
|
|
6,761
|
|
|
(1,716
|
)
|
||
Pension
|
(2,009
|
)
|
|
446
|
|
|
(1,344
|
)
|
|
—
|
|
|
(2,907
|
)
|
|
(552
|
)
|
|
560
|
|
|
(528
|
)
|
|
—
|
|
|
(520
|
)
|
||
2012 General Rate Case true-up
|
20,682
|
|
|
—
|
|
|
(4,917
|
)
|
|
—
|
|
|
15,765
|
|
|
33,070
|
|
|
—
|
|
|
(5,330
|
)
|
|
—
|
|
|
27,740
|
|
||
2015 General Rate Case true-up
|
5,528
|
|
|
—
|
|
|
(3,117
|
)
|
|
—
|
|
|
2,411
|
|
|
—
|
|
|
8,767
|
|
|
—
|
|
|
—
|
|
|
8,767
|
|
||
All others
|
(151
|
)
|
|
(446
|
)
|
|
(639
|
)
|
|
76
|
|
|
(1,160
|
)
|
|
1,366
|
|
|
(227
|
)
|
|
(38
|
)
|
|
—
|
|
|
1,101
|
|
||
Total balancing accounts
|
$
|
21,552
|
|
|
1,555
|
|
|
(10,221
|
)
|
|
7,576
|
|
|
20,462
|
|
|
$
|
36,296
|
|
|
9,044
|
|
|
(14,088
|
)
|
|
6,761
|
|
|
38,013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
25,909
|
|
|
14,587
|
|
|
(11,556
|
)
|
|
76
|
|
|
29,016
|
|
|
$
|
45,206
|
|
|
16,624
|
|
|
(15,846
|
)
|
|
—
|
|
|
45,984
|
|
Note 10.
|
Regulatory Assets and Liabilities
|
Description
|
|
June 30, 2017
|
|
December 31, 2016
|
|||
Regulatory assets:
|
|
|
|
|
|||
Income tax temporary differences, net
|
|
$
|
10,139
|
|
|
10,139
|
|
Postretirement pensions and other medical benefits
|
|
109,795
|
|
|
109,795
|
|
|
Balancing and memorandum accounts, net
|
|
29,016
|
|
|
25,909
|
|
|
Other, net
|
|
5,854
|
|
|
5,930
|
|
|
Total regulatory assets, net in Consolidated Balance Sheets
|
|
$
|
154,804
|
|
|
151,773
|
|
Less: current regulatory asset, net
|
|
7,672
|
|
|
16,064
|
|
|
Total regulatory assets, net, less current portion
|
|
$
|
147,132
|
|
|
135,709
|
|
Note 11.
|
Texas Water Alliance Limited
|
Note 12.
|
Legal Proceedings
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
% for Six months ended
June 30, 2017
of SJW Land Company
|
||||
Description
|
|
Location
|
|
Acreage
|
|
Square Footage
|
|
Revenue
|
|
Expense
|
||
Commercial building
|
|
San Jose, California
|
|
2
|
|
28,000
|
|
6
|
%
|
|
9
|
%
|
Warehouse building
|
|
Knoxville, Tennessee
|
|
30
|
|
361,500
|
|
40
|
%
|
|
36
|
%
|
Commercial building
|
|
Knoxville, Tennessee
|
|
15
|
|
135,000
|
|
54
|
%
|
|
55
|
%
|
Undeveloped land and parking lot
|
|
Knoxville, Tennessee
|
|
10
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
Undeveloped land
|
|
San Jose, California
|
|
5
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
(1)
|
Regional regulated water utility operations;
|
(2)
|
Regional non-tariffed water utility related services provided in accordance with the guidelines established by the CPUC in California and the PUCT in Texas; and
|
(3)
|
Out-of-region water and utility related services.
|
|
Operating Revenue by Segment
|
||||||||||||
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Water Utility Services
|
$
|
100,746
|
|
|
85,288
|
|
|
$
|
168,228
|
|
|
144,633
|
|
Real Estate Services
|
1,327
|
|
|
1,656
|
|
|
2,890
|
|
|
3,423
|
|
||
|
$
|
102,073
|
|
|
86,944
|
|
|
$
|
171,118
|
|
|
148,056
|
|
|
Three months ended
June 30,
2017 vs. 2016
|
|
Six months ended
June 30,
2017 vs. 2016
|
||||||||||
Increase/(decrease)
|
|
Increase/(decrease)
|
|||||||||||
Water Utility Services:
|
|
|
|
|
|
|
|
||||||
Consumption changes
|
$
|
3,182
|
|
|
4
|
%
|
|
$
|
1,593
|
|
|
1
|
%
|
Increase in customers
|
344
|
|
|
—
|
%
|
|
463
|
|
|
—
|
%
|
||
Rate increases
|
14,955
|
|
|
17
|
%
|
|
23,574
|
|
|
16
|
%
|
||
Balancing and memorandum accounts:
|
|
|
|
|
|
|
|
|
|
||||
WCMA
|
4,677
|
|
|
5
|
%
|
|
5,191
|
|
|
4
|
%
|
||
2015 General Rate Case true-up
|
(8,767
|
)
|
|
(10
|
)%
|
|
(8,767
|
)
|
|
(6
|
)%
|
||
All other
|
1,066
|
|
|
1
|
%
|
|
1,541
|
|
|
1
|
%
|
||
Real Estate Services
|
(328
|
)
|
|
—
|
%
|
|
(533
|
)
|
|
—
|
%
|
||
|
$
|
15,129
|
|
|
17
|
%
|
|
$
|
23,062
|
|
|
16
|
%
|
|
Operating Expense by Segment
|
||||||||||||
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Water Utility Services
|
$
|
69,540
|
|
|
55,705
|
|
|
$
|
125,992
|
|
|
104,708
|
|
Real Estate Services
|
942
|
|
|
1,021
|
|
|
1,890
|
|
|
2,053
|
|
||
All Other
|
804
|
|
|
418
|
|
|
1,616
|
|
|
914
|
|
||
|
$
|
71,286
|
|
|
57,144
|
|
|
$
|
129,498
|
|
|
107,675
|
|
|
Three months ended
June 30,
2017 vs. 2016
|
|
Six months ended
June 30,
2017 vs. 2016
|
||||||||||
Increase/(decrease)
|
|
Increase/(decrease)
|
|||||||||||
Water production expenses:
|
|
|
|
|
|
|
|
||||||
Change in surface water use
|
$
|
4,087
|
|
|
7
|
%
|
|
$
|
6,362
|
|
|
6
|
%
|
Change in usage and new customers
|
1,163
|
|
|
2
|
%
|
|
802
|
|
|
1
|
%
|
||
Purchased water and groundwater extraction charge and energy price increase
|
5,539
|
|
|
10
|
%
|
|
9,143
|
|
|
8
|
%
|
||
Total water production expenses
|
10,789
|
|
|
19
|
%
|
|
16,307
|
|
|
15
|
%
|
||
Administrative and general
|
1,876
|
|
|
3
|
%
|
|
2,776
|
|
|
2
|
%
|
||
Maintenance
|
204
|
|
|
—
|
%
|
|
54
|
|
|
—
|
%
|
||
Property taxes and other non-income taxes
|
427
|
|
|
1
|
%
|
|
904
|
|
|
1
|
%
|
||
Depreciation and amortization
|
846
|
|
|
2
|
%
|
|
1,782
|
|
|
2
|
%
|
||
|
$
|
14,142
|
|
|
25
|
%
|
|
$
|
21,823
|
|
|
20
|
%
|
|
Three months ended June 30,
|
|
Increase/
(decrease)
|
|
% of Total Change
|
|
Six months ended June 30,
|
|
Increase/
(decrease)
|
|
% of Total Change
|
||||||||||||
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|||||||||||||||
Purchased water
|
6,121
|
|
|
4,687
|
|
|
1,434
|
|
|
15
|
%
|
|
10,030
|
|
|
7,866
|
|
|
2,164
|
|
|
13
|
%
|
Groundwater
|
3,499
|
|
|
3,179
|
|
|
320
|
|
|
3
|
%
|
|
5,897
|
|
|
5,677
|
|
|
220
|
|
|
1
|
%
|
Surface water
|
295
|
|
|
1,557
|
|
|
(1,262
|
)
|
|
(13
|
)%
|
|
476
|
|
|
2,444
|
|
|
(1,968
|
)
|
|
(12
|
)%
|
Reclaimed water
|
174
|
|
|
176
|
|
|
(2
|
)
|
|
—
|
%
|
|
221
|
|
|
222
|
|
|
(1
|
)
|
|
—
|
%
|
|
10,089
|
|
|
9,599
|
|
|
490
|
|
|
5
|
%
|
|
16,624
|
|
|
16,209
|
|
|
415
|
|
|
2
|
%
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
|
|
|
|
SJW GROUP
|
|
|
|
|
|
DATE:
|
July 31, 2017
|
By:
|
|
/s/ JAMES P. LYNCH
|
|
|
|
|
James P. Lynch
|
|
|
|
|
Chief Financial Officer and Treasurer
(Principal financial officer)
|
(1)
|
Filed currently herewith.
|
|
A.
|
The Plan allows the Corporation to issue awards to non-employee Board members in order to provide such individuals with a meaningful incentive to continue to serve as Board members and acquire an ownership interest in shares of Common Stock.
|
|
B.
|
Participant is an eligible non-employee Board member, and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the award of restricted stock units under the Plan to such Board member.
|
|
C.
|
All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.
|
|
1.
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Grant of Restricted Stock Units
. The Corporation hereby awards to Participant, as of the Award Date, an award (the “Award”) of restricted stock units under the Plan. Each restricted stock unit represents the right to receive one share of Common Stock on the vesting date of that unit. The number of shares of Common Stock subject to the awarded restricted stock units, the applicable vesting schedule for the restricted stock units and the underlying shares of Common Stock, the date on which those vested shares shall be issued to Participant and the remaining terms and conditions governing the Award shall be as set forth in this Agreement.
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Participant
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[Name]
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Award Date:
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[Date]
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Number of Shares
Subject to Award:
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[#] shares of Common Stock (the “Shares”)
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Vesting Schedule:
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The Shares shall vest in full upon Participant’s continuation in Board service through the day immediately preceding the date of the first annual meeting of the Corporation’s shareholders following the Award Date specified above. However, the Shares may vest in full on an accelerated basis in accordance with the provisions of Paragraphs 3 and 5 of this Agreement. In no event shall any Shares vest after the date of Participant’s termination of Board service.
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Issuance Schedule
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Each Share in which the Participant vests in accordance with the foregoing Vesting Schedule or pursuant to the vesting acceleration provisions of Paragraph 3 or 5 of this Agreement shall be issued on the date that Share vests or as soon thereafter as administratively practicable, but in no event later than the
later
of (i) the close of the calendar year in which that Share vests or (ii) the fifteenth day of the third calendar month following such vesting date (the “Issuance Date”).
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2.
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Limited Transferability
. Prior to actual receipt of the Shares which vest and become issuable hereunder, Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of Participant’s death may be transferred pursuant to the provisions of Participant’s will or the laws of inheritance or to Participant’s designated beneficiary or beneficiaries of this Award. Participant may also direct the Corporation to re-issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his lifetime to one or more designated family members or a trust established for Participant and/or his family members. Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.
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3.
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Cessation of Service
. The restricted stock units subject to this Award shall immediately vest in full upon Participant’s cessation of Board service by reason of death or Permanent Disability. Should Participant cease Board service for any other reason prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of restricted stock units will be reduced accordingly. Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.
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4.
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Stockholder Rights
. Participant shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the Shares subject to the Award until Participant becomes the record holder of those Shares following their actual issuance. In addition, Participant shall not be entitled to any dividend equivalent rights with respect to the Shares subject to this Award.
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5.
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Special Vesting Acceleration
. The restricted stock units subject to this Award shall immediately vest in full upon Participant’s continuation in Board service until the effective date of any Change in Control transaction. The vested Shares will be issued immediately upon such effective date or as soon as administratively practicable thereafter, but in no event more than fifteen (15) business days after such effective date. Alternatively, the Participant’s right to the Shares may, pursuant to the terms of the Change in Control transaction, be converted into the right to receive the same consideration per share of Common Stock payable to the other shareholders of the Corporation in consummation of the Change in Control and distributed at the same time as such shareholder payments, but such distribution to Participant shall in all events be completed no later than the
later
of (i) the close of the calendar year in which such Change in Control is effected or (ii) the fifteenth (15th) of the third (3rd) calendar month following the effective date of that Change in Control.
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6.
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Adjustment in Shares
. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Plan Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change, and the determination of the Plan Administrator shall be final, binding and conclusive.
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7.
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Issuance of Shares of Common Stock
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(a) Except as otherwise provided in Paragraph 5, on the applicable Issuance Date for the Shares which vest in accordance with the terms of this Agreement, the Corporation shall issue to or on behalf of Participant a certificate (which may be in electronic form) for the vested shares of Common Stock to be issued on such date.
(b) Except as otherwise provided in Paragraph 5, the settlement of all restricted stock units which vest under this Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued at the time the Award vests shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.
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8.
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Compliance with Laws and Regulations
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(a) The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Common Stock may be listed for trading at the time of such issuance.
(b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance of any Common Stock hereby shall relieve the Corporation of any liability with respect to the non-issuance of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals.
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9.
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Successors and Assigns
. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant’s assigns, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.
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10.
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Notices
. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated below Participant’s signature line on this Agreement. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.
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11.
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Construction
. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.
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12.
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Governing Law
. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.
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13.
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No Impairment of Rights
. This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. In addition, this Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the right of the Corporation or its shareholders to remove Participant from the Board at any time in accordance with the provisions of applicable law.
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14.
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Section 409A Compliance
. Should there occur any ambiguity as to whether any provision of this Agreement would otherwise contravene one or more applicable requirements or limitations of Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder, that that provision shall be interpreted and applied in a manner that complies with the applicable requirements of Section 409A of the Internal Revenue Code and the Treasury Regulations thereunder.
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15.
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Share Retention
. Participant shall retain beneficial ownership of at least fifty percent (50%) of the Shares issued in connection with the vesting of this Award until such time as Participant is in compliance with the equity ownership guidelines that the Corporation from time to time establishes for its non-employee Board members. In no event may Participant sell or otherwise transfer beneficial ownership of more than fifty percent (50%) of the Shares issued to him or her under this Agreement, unless he or she is at the time of such sale or transfer in full compliance with the equity ownership guidelines in effect at that time for the non-employee Board members.
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SJW GROUP
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By:
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[Name]
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PARTICIPANT
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Signature:
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[Name]
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Address:
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A.
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Agreement
shall mean this Restricted Stock Unit Award Agreement.
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B.
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Award
shall mean the award of restricted stock units made to Participant pursuant to the terms of this Agreement.
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C.
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Award Date
shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.
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D.
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Board
shall mean the Corporation’s Board of Directors.
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E.
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Change in Control
shall mean any change in control or ownership of the Corporation which occurs by reason of one or more of the following events:
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(i) the acquisition, directly or indirectly by any person or related group of persons (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under control with, the Corporation or an employee benefit plan maintained by any such entity, of beneficial ownership (as defined in Rule 13d-3 of the Exchange Act) of securities of the Corporation that results in such person or related group owning thirty percent (30%) or more of the total combined voting power of the Corporation’s then-outstanding securities;
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(ii) a merger, recapitalization, consolidation, or other similar transaction to which the Corporation is a party, unless securities representing at least 50% of the combined voting power of the then-outstanding securities of the surviving entity or a parent thereof are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately before the transaction;
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(iii) a sale, transfer or disposition of all or substantially all of the Corporation’s assets, unless securities representing at least 50% of the combined voting power of the then-outstanding securities of the entity acquiring the Corporation’s assets or parent thereof are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately before the transaction;
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(iv) a merger, recapitalization, consolidation, or other transaction to which the Corporation is a party or the sale, transfer, or other disposition of all or substantially all of the Corporation’s assets if, in either case, the members of the Board immediately prior to consummation of the transaction do not, upon consummation of the transaction, constitute at least a majority of the board of directors of the surviving entity or the entity acquiring the Corporation’s assets, as the case may be, or a parent thereof (for this purpose, any change in the composition of the board of directors that is anticipated or pursuant to an understanding or agreement in connection with a transaction will be deemed to have occurred at the time of the transaction); or
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(v) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases by reason of one or more contested elections for Board membership, to be comprised of individuals who either (a) have been Board members since the beginning of such period or (b) have been elected or nominated for election as Board members during such period by at least a majority of the Board members who were described in clause (a) or who were previously so elected or approved and who were still in office at the time the Board approved such election or nomination;
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provided however, that no Change in Control shall occur if the result of the transaction is to give more ownership or control of the Corporation to any person or related group of persons who held securities representing more than thirty percent (30%) of the combined voting power of the Corporation's outstanding securities as of March 3, 2003.
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F.
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Code
shall mean the Internal Revenue Code of 1986, as amended.
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G.
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Common Stock
shall mean shares of the Corporation’s common stock.
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H.
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Corporation
shall mean SJW Group, a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of SJW Group.
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I.
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1934 Act
shall mean the Securities Exchange Act of 1934, as amended.
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J.
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Participant
shall mean the non-employee Board member to whom the Award is made pursuant to the provisions of the Plan.
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K.
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Permanent Disability
shall mean the inability of Participant to perform his or her usual duties as a Board member by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.
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L.
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Plan
shall mean the Corporation’s Long-Term Incentive Plan.
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M.
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Plan Administrator
shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.
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1.
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I have reviewed this Quarterly Report on Form 10-Q of SJW Group (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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July 31, 2017
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/s/ W. RICHARD ROTH
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W. Richard Roth
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Chairman, President and Chief Executive Officer
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(Principal executive officer)
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1.
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I have reviewed this Quarterly Report on Form 10-Q of SJW Group (the “registrant”);
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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July 31, 2017
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/s/ JAMES P. LYNCH
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James P. Lynch
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Chief Financial Officer and Treasurer
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(Principal financial officer)
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(1)
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the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ W. RICHARD ROTH
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W. Richard Roth
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Chairman, President and Chief Executive Officer
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(Principal executive officer)
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July 31, 2017
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(1)
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the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ JAMES P. LYNCH
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James P. Lynch
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Chief Financial Officer and Treasurer
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(Principal financial officer)
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July 31, 2017
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