ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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77-0066628
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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110 West Taylor Street, San Jose, California
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95110
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock, $0.001 par value per share
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New York Stock Exchange
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Class
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Outstanding at February 12, 2018
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Common Stock, $0.001 par value per share
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20,557,554
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 1.
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Business
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•
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San Jose Water Company, a wholly owned subsidiary of SJW Group, with its headquarters located at 110 West Taylor Street in San Jose, California 95110, was originally incorporated under the laws of the State of California in 1866. As part of a reorganization on February 8, 1985, San Jose Water Company became a wholly owned subsidiary of SJW Corp. and subsequently SJW Group on November 15, 2016. San Jose Water Company is a public utility in the business of providing water service to approximately
230,000
connections that serve a population of approximately
one million
people in an area comprising approximately
139
square miles in the metropolitan San Jose, California area.
|
•
|
SJWTX, Inc., a wholly owned subsidiary of SJW Group, was incorporated in the State of Texas in 2005. SJWTX, Inc. is doing business as Canyon Lake Water Service Company (“CLWSC”). CLWSC is a public utility in the business of providing water service to approximately
14,000
connections that serve approximately
42,000
people. CLWSC’s service area comprises more than
244
square miles in western Comal County and southern Blanco County in the growing region between San Antonio and Austin, Texas. SJWTX, Inc. has a 25% interest in Acequia Water Supply Corporation (“Acequia”). The water supply corporation has been determined to be a variable interest entity within the scope of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 810, “Consolidation” with SJWTX, Inc. as the primary beneficiary. As a result, Acequia has been consolidated with SJWTX, Inc.
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•
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SJW Land Company, a wholly owned subsidiary of SJW Group, was incorporated in 1985. SJW Land Company owns undeveloped land and operates commercial buildings in Tennessee. SJW Land also has a 70% limited partnership interest in 444 West Santa Clara Street, L.P. The partnership owned a commercial building in California which was sold by the partnership on April 6, 2017. See Note 1 of “Notes to Consolidated Financial Statements” for discussion of the sales transaction.
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Name
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Age
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Offices and Experience
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D.R. Drysdale
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62
|
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San Jose Water Company—Vice President, Information Systems. Mr. Drysdale has served as Vice President of Information Systems since 2000. From 1998 to 1999, Mr. Drysdale was Director of Information Systems. From 1994 to 1998, Mr. Drysdale was Data Processing Manager. Mr. Drysdale joined San Jose Water Company in 1992.
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A.R. Gere
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51
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San Jose Water Company—President and Chief Operating Officer. Mr. Gere has served as President since April 2016 and as Chief Operating Officer since April 2015. From 2013 to April 2015, Mr. Gere was Vice President of Operations. From 2008 to 2013, Mr. Gere was Chief of Operations. From 2006 to 2008, Mr. Gere was Director of Maintenance. From 2005 to 2006, Mr. Gere was Director of Operations and Water Quality. From 2003 to 2005, Mr. Gere was Manager of Operations and Water Quality.
Mr. Gere has been with San Jose Water Company since 1995.
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C.S. Giordano
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61
|
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San Jose Water Company—Vice President, Engineering. Mr. Giordano has served as Vice President of Engineering since April 2013. From June 2007 to April 2013, Mr. Giordano was Chief Engineer. From August 2000 to June 2007, Mr. Giordano was Director of Engineering and Construction. From January 1994 to August 2000, Mr. Giordano was Assistant Chief Engineer. Mr. Giordano has been with San Jose Water Company since 1994.
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P. L. Jensen
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58
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San Jose Water Company—Executive Vice President. Mr. Jensen has served as Executive Vice President for San Jose Water Company since April 2017 and as Senior Vice President of Regulatory Affairs for SJWTX, Inc. since September 2015. Mr. Jensen served as Senior Vice President of Regulatory Affairs of San Jose Water Company from October 2011 to April 2017. From July 2007 to October 2011, Mr. Jensen was Vice President of Regulatory Affairs. From 1995 to July 2007, Mr. Jensen was Director of Regulatory Affairs. Mr. Jensen has been with San Jose Water Company since 1995.
|
J.P. Lynch
|
58
|
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SJW Group—Chief Financial Officer and Treasurer. Mr. Lynch has served as Chief Financial Officer and Treasurer since October 2010. He is also Chief Financial Officer and Treasurer of San Jose Water Company, SJW Land Company, and SJWTX, Inc. Mr. Lynch served as Chief Financial Officer and Treasurer of Texas Water Alliance Limited from October 2010 until November 16, 2017. Prior to joining the Corporation, Mr. Lynch was an Audit Partner with KPMG LLP. Mr. Lynch was with KPMG LLP for 26 years. Mr. Lynch is a certified public accountant.
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S. Papazian
|
42
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SJW Group—General Counsel and Corporate Secretary. Ms. Papazian has served as General Counsel and Corporate Secretary for SJW Group and San Jose Water Company since April 2014. From February 2005 to April 2014, Ms. Papazian was Corporate Secretary and Attorney. She is also Corporate Secretary of SJW Land Company and SJWTX, Inc. From 2009 until 2017, Ms. Papazian served as Secretary of Texas Water Alliance Limited. She was admitted to the California State Bar in January 2000 and thereafter was an Associate Attorney at The Corporate Law Group from March 2000 until February 2005.
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C.A. Rayer
|
48
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San Jose Water Company—Vice President, Operations. Mr. Rayer has served as Vice President of Operations since March 2016 and as Director of Operations from 2014 until March 2016. From 2006 to 2014, Mr. Rayer was the Manager of Operations and from 2001 to 2006, he served as the Operations Superintendent. From 1993 to 2001, Mr. Rayer worked in various capacities for San Jose Water Company.
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J.B. Tang
|
47
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San Jose Water Company—Vice President, Government Relations and Regulatory Affairs. Mr. Tang has served as Vice President, Government Relations and Regulatory Affairs since April 2017. Prior to that, Mr. Tang served as Vice President of Corporate Communications from October 2014 to April 2017. From 2012 to October 2014, Mr. Tang was Director of Government Relations and Corporate Communications. From 2009 to 2011, Mr. Tang was Manager of Government Relations and Corporate Communications.
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E.W. Thornburg
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57
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SJW Group—President and Chief Executive Officer. Mr. Thornburg has served as President and Chief Executive Officer of SJW Group and SJW Land Company and Chief Executive Officer of San Jose Water Company and SJWTX, Inc. since November 6, 2017. He has served on the Board of Directors of SJW Group, San Jose Water Company, SJW Land Company and SJWTX, Inc. since November 6, 2017. Prior to joining the Corporation, Mr. Thornburg served as President and Chief Executive Officer of Connecticut Water Service, Inc. (“CTWS”) since 2006, and Chairman of the Board of CTWS since 2007. Mr. Thornburg served as President of Missouri-American Water, a subsidiary of American Water Works Corporation from 2000 to 2004. From July 2004 to January 2006, he served as Central Region Vice President-External Affairs for American Water Works Corporation.
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W.L. Avila-Walker
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54
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SJW Group—Controller. Ms. Avila-Walker has served as Controller of San Jose Water Company since September 2009. Ms. Avila-Walker is also Controller of SJW Group since October 2014. From August 2008 to September 2009, Ms. Avila-Walker served as Director of Compliance of San Jose Water Company. From May 2005 to May 2008, Ms. Avila-Walker served as Director of Reporting and Finance of San Jose Water Company.
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A.F. Walters
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47
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San Jose Water Company—Chief Administrative Officer. Mr. Walters has served as Chief Administrative Officer since January 31, 2014. Prior to joining San Jose Water Company, Mr. Walters was a managing director and a senior acquisitions officer in the Infrastructure Investments Group of JP Morgan Asset Management from January 2009 to June 2013.
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Item 1A.
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Risk Factors
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•
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Liquidity risk—real estate investments are illiquid. The lag time to build or reduce the real estate portfolio is long.
|
•
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Obsolescence risk—real estate property is location specific. Location obsolescence can occur due to a decline of a particular sub-market or neighborhood. Functional obsolescence can also occur from physical depreciation, wear and tear, and other architectural and physical features which could be curable or incurable.
|
•
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Market and general economic risks—real estate investment is tied to overall domestic economic growth and, therefore, carries market risk which cannot be eliminated by diversification. Generally, all property types benefit from national economic growth, though the benefits range according to local factors, such as local supply and demand and job creation. Because real estate leases are typically staggered and last for multiple years, there is generally a delayed effect in the performance of real estate in relation to the overall economy. This delayed effect can insulate or deteriorate the financial impact to SJW Land Company in a downturn or an improved economic environment.
|
•
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Concentration/Credit risk—the risk of a tenant declaring bankruptcy and seeking relief from its contractual rental obligation could affect the income and the financial results of SJW Land Company. This risk is most prevalent in a recessionary environment.
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(2)
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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
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•
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Authorizing Board of Directors to issue “blank check” preferred stock;
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•
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Prohibiting cumulative voting in the election of directors;
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•
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Limiting the ability of stockholders to call a special meeting of stockholders to only stockholders holding not less than 20% of outstanding voting power; and
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•
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Requiring advance notification of stockholder nominations and proposals.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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% for Year Ended
December 31, 2017
of SJW Land Company
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||||||
Description
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Location
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Acreage
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Square Footage
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Revenue
|
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Expense
|
||||
Commercial building*
|
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San Jose, California
|
|
2
|
|
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28,000
|
|
|
3
|
%
|
|
4
|
%
|
Warehouse building
|
|
Knoxville, Tennessee
|
|
30
|
|
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361,500
|
|
|
40
|
%
|
|
40
|
%
|
Commercial building
|
|
Knoxville, Tennessee
|
|
15
|
|
|
135,000
|
|
|
57
|
%
|
|
56
|
%
|
Undeveloped land and parking lot
|
|
Knoxville, Tennessee
|
|
10
|
|
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N/A
|
|
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N/A
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N/A
|
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Undeveloped land*
|
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San Jose, California
|
|
5
|
|
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N/A
|
|
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N/A
|
|
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N/A
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
2012
|
|
2013
|
|
2014
|
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2015
|
|
2016
|
|
2017
|
||||||
SJW Group
|
100
|
|
|
115
|
|
|
127
|
|
|
121
|
|
|
233
|
|
|
270
|
|
Water Utility Index
|
100
|
|
|
120
|
|
|
148
|
|
|
167
|
|
|
204
|
|
|
262
|
|
S&P 500 Index
|
100
|
|
|
132
|
|
|
151
|
|
|
153
|
|
|
171
|
|
|
208
|
|
Item 6.
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Selected Financial Data
|
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2017
|
|
2016
|
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2015
|
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2014
|
|
2013
|
||||||
CONSOLIDATED RESULTS OF OPERATIONS
(in thousands)
|
|
|
|
|
|
|
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|
||||||
Operating revenue
|
$
|
389,225
|
|
|
339,706
|
|
|
305,082
|
|
|
319,668
|
|
|
276,869
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
||||||
Purchased water
|
86,456
|
|
|
72,971
|
|
|
61,089
|
|
|
47,280
|
|
|
63,225
|
|
|
Power
|
7,295
|
|
|
6,102
|
|
|
6,121
|
|
|
9,865
|
|
|
7,619
|
|
|
Groundwater extraction charges
|
47,817
|
|
|
32,088
|
|
|
31,240
|
|
|
53,678
|
|
|
37,927
|
|
|
Other production expenses
|
15,203
|
|
|
13,167
|
|
|
12,178
|
|
|
11,929
|
|
|
12,073
|
|
|
Administrative and general
|
55,011
|
|
|
48,038
|
|
|
47,131
|
|
|
40,573
|
|
|
43,714
|
|
|
Maintenance
|
17,430
|
|
|
17,476
|
|
|
14,956
|
|
|
14,474
|
|
|
13,548
|
|
|
Property taxes and other non-income taxes
|
13,642
|
|
|
12,123
|
|
|
11,667
|
|
|
11,086
|
|
|
10,317
|
|
|
Depreciation and amortization
|
48,292
|
|
|
44,625
|
|
|
40,740
|
|
|
37,905
|
|
|
35,039
|
|
|
Total operating expense
|
291,146
|
|
|
246,590
|
|
|
225,122
|
|
|
226,790
|
|
|
223,462
|
|
|
Operating income
|
98,079
|
|
|
93,116
|
|
|
79,960
|
|
|
92,878
|
|
|
53,407
|
|
|
Interest expense, other income and expense
|
(1,586
|
)
|
|
(6,735
|
)
|
|
(18,806
|
)
|
|
(16,101
|
)
|
|
(16,888
|
)
|
|
Income before income taxes
|
96,493
|
|
|
86,381
|
|
|
61,154
|
|
|
76,777
|
|
|
36,519
|
|
|
Provision for income taxes
|
35,393
|
|
|
33,542
|
|
|
23,272
|
|
|
24,971
|
|
|
14,135
|
|
|
Net income before noncontrolling interest
|
61,100
|
|
|
52,839
|
|
|
37,882
|
|
|
51,806
|
|
|
22,384
|
|
|
Less net income attributable to the noncontrolling interest
|
1,896
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
SJW Group net income
|
$
|
59,204
|
|
|
52,839
|
|
|
37,882
|
|
|
51,806
|
|
|
22,384
|
|
Dividends paid
|
$
|
21,332
|
|
|
16,559
|
|
|
15,885
|
|
|
15,177
|
|
|
14,443
|
|
CONSOLIDATED PER SHARE DATA
|
|
|
|
|
|
|
|
|
|
||||||
Earnings per share - diluted
|
2.86
|
|
|
2.57
|
|
|
1.85
|
|
|
2.54
|
|
|
1.12
|
|
|
Dividends paid
|
1.04
|
|
|
0.81
|
|
|
0.78
|
|
|
0.75
|
|
|
0.73
|
|
|
Book value per common share
|
22.57
|
|
|
20.61
|
|
|
18.83
|
|
|
17.75
|
|
|
14.71
|
|
|
CONSOLIDATED BALANCE SHEET
(in thousands)
|
|
|
|
|
|
|
|
|
|
||||||
Utility plant and intangible assets
|
$
|
1,792,323
|
|
|
1,666,381
|
|
|
1,524,422
|
|
|
1,413,151
|
|
|
1,314,191
|
|
Less accumulated depreciation and amortization
|
553,059
|
|
|
520,018
|
|
|
487,659
|
|
|
450,137
|
|
|
415,453
|
|
|
Net utility plant
|
1,239,264
|
|
|
1,146,363
|
|
|
1,036,763
|
|
|
963,014
|
|
|
898,738
|
|
|
Net real estate investment
|
45,081
|
|
|
50,459
|
|
|
61,434
|
|
|
62,201
|
|
|
67,819
|
|
|
Total assets
|
1,458,001
|
|
|
1,443,376
|
|
|
1,337,325
|
|
|
1,269,304
|
|
|
1,109,986
|
|
|
Capitalization:
|
|
|
|
|
|
|
|
|
|
||||||
Stockholders’ equity
|
463,209
|
|
|
421,646
|
|
|
383,783
|
|
|
360,155
|
|
|
321,175
|
|
|
Long-term debt, less current portion
|
431,092
|
|
|
433,335
|
|
|
377,187
|
|
|
384,365
|
|
|
334,997
|
|
|
Total capitalization
|
$
|
894,301
|
|
|
854,981
|
|
|
760,970
|
|
|
744,520
|
|
|
656,172
|
|
OTHER STATISTICS—WATER UTILITY SERVICES
|
|
|
|
|
|
|
|
|
|
||||||
Average revenue per connection
|
$
|
1,594
|
|
|
1,402
|
|
|
1,263
|
|
|
1,328
|
|
|
1,159
|
|
Investment in gross utility plant per connection
|
$
|
7,340
|
|
|
6,874
|
|
|
6,311
|
|
|
5,869
|
|
|
5,499
|
|
Connections at year-end
|
244,133
|
|
|
242,421
|
|
|
241,555
|
|
|
240,773
|
|
|
238,977
|
|
|
Miles of main at year-end
|
3,082
|
|
|
3,069
|
|
|
3,031
|
|
|
2,939
|
|
|
2,920
|
|
|
Water production (million gallons)
|
38,584
|
|
|
35,847
|
|
|
36,535
|
|
|
44,649
|
|
|
49,638
|
|
|
Maximum daily production (million gallons)
|
148
|
|
|
136
|
|
|
130
|
|
|
173
|
|
|
187
|
|
|
Population served (estimate)
|
1,100,200
|
|
|
1,092,600
|
|
|
1,089,000
|
|
|
1,085,000
|
|
|
1,077,000
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
(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.
|
•
|
Potential profitability;
|
•
|
Regulatory environment;
|
•
|
Additional growth opportunities within the region;
|
•
|
Water supply, water quality and environmental issues;
|
•
|
Capital requirements;
|
•
|
General economic conditions; and
|
•
|
Synergy potential.
|
•
|
Economic utility regulation;
|
•
|
Infrastructure investment;
|
•
|
Compliance with environmental, health and safety standards;
|
•
|
Production expenses;
|
•
|
Customer growth;
|
•
|
Water usage per customer; and
|
•
|
Weather conditions, seasonality and sources of water supply.
|
|
2017
|
|
2016
|
|
2015
|
||||
Water Utility Services
|
$
|
383,523
|
|
|
332,989
|
|
|
298,094
|
|
Real Estate Services
|
5,702
|
|
|
6,717
|
|
|
6,988
|
|
|
|
$
|
389,225
|
|
|
339,706
|
|
|
305,082
|
|
|
2017 vs. 2016
Increase/(decrease)
|
|
2016 vs. 2015
Increase/(decrease) |
||||||||||
Water Utility Services:
|
|
|
|
|
|
|
|
||||||
Consumption changes
|
$
|
15,416
|
|
|
5
|
%
|
|
$
|
(184
|
)
|
|
—
|
%
|
Increase in customers
|
1,169
|
|
|
—
|
%
|
|
628
|
|
|
—
|
%
|
||
Rate increases
|
41,137
|
|
|
13
|
%
|
|
28,561
|
|
|
10
|
%
|
||
Recycled
|
515
|
|
|
—
|
%
|
|
731
|
|
|
—
|
%
|
||
Balancing and memorandum accounts:
|
|
|
|
|
|
|
|
||||||
2015 General Rate Case true-up
|
(8,767
|
)
|
|
(3
|
)%
|
|
6,830
|
|
|
2
|
%
|
||
Water Conservation Memorandum Account
|
179
|
|
|
—
|
%
|
|
(3,384
|
)
|
|
(1
|
)%
|
||
All other
|
885
|
|
|
—
|
%
|
|
1,713
|
|
|
1
|
%
|
||
Real Estate Services
|
(1,015
|
)
|
|
—
|
%
|
|
(271
|
)
|
|
—
|
%
|
||
|
$
|
49,519
|
|
|
15
|
%
|
|
$
|
34,624
|
|
|
12
|
%
|
|
2017
|
|
2016
|
|
2015
|
||||
Residential and business
|
$
|
331,837
|
|
|
278,941
|
|
|
251,617
|
|
Industrial
|
1,987
|
|
|
1,519
|
|
|
1,446
|
|
|
Public authorities
|
16,448
|
|
|
13,422
|
|
|
11,764
|
|
|
Others
|
11,066
|
|
|
9,218
|
|
|
8,536
|
|
|
Balancing and memorandum accounts
|
22,185
|
|
|
29,889
|
|
|
24,731
|
|
|
|
$
|
383,523
|
|
|
332,989
|
|
|
298,094
|
|
|
2017
|
|
2016
|
|
2015
|
|||
Residential and business
|
238,231
|
|
|
236,689
|
|
|
235,883
|
|
Industrial
|
75
|
|
|
76
|
|
|
76
|
|
Public authorities
|
1,349
|
|
|
1,360
|
|
|
1,368
|
|
Others
|
4,478
|
|
|
4,296
|
|
|
4,228
|
|
|
244,133
|
|
|
242,421
|
|
|
241,555
|
|
|
2017
|
|
2016
|
|
2015
|
||||
Water Utility Services
|
$
|
284,688
|
|
|
240,716
|
|
|
218,687
|
|
Real Estate Services
|
3,688
|
|
|
4,074
|
|
|
4,079
|
|
|
All Other
|
2,770
|
|
|
1,800
|
|
|
2,356
|
|
|
|
$
|
291,146
|
|
|
246,590
|
|
|
225,122
|
|
|
2017 vs. 2016
Increase/(decrease)
|
|
2016 vs. 2015
Increase/(decrease) |
||||||||||
Water production expenses:
|
|
|
|
|
|
|
|
||||||
Change in surface water supply
|
$
|
5,880
|
|
|
2
|
%
|
|
$
|
(2,512
|
)
|
|
(1
|
)%
|
Change in usage and new customers
|
9,618
|
|
|
4
|
%
|
|
(830
|
)
|
|
—
|
%
|
||
Purchased water and groundwater extraction charge and energy price increase
|
16,945
|
|
|
7
|
%
|
|
17,042
|
|
|
7
|
%
|
||
Total water production expenses
|
32,443
|
|
|
13
|
%
|
|
13,700
|
|
|
6
|
%
|
||
Administrative and general
|
6,973
|
|
|
3
|
%
|
|
907
|
|
|
—
|
%
|
||
Maintenance
|
(46
|
)
|
|
—
|
%
|
|
2,520
|
|
|
1
|
%
|
||
Property taxes and other non-income taxes
|
1,519
|
|
|
1
|
%
|
|
456
|
|
|
—
|
%
|
||
Depreciation and amortization
|
3,667
|
|
|
1
|
%
|
|
3,885
|
|
|
3
|
%
|
||
|
$
|
44,556
|
|
|
18
|
%
|
|
$
|
21,468
|
|
|
10
|
%
|
|
Source of Water Supply
|
||||||||
|
2017
|
|
2016
|
|
2015
|
||||
|
(million gallons) (MG)
|
||||||||
Purchased water
|
22,913
|
|
|
21,474
|
|
|
21,338
|
|
|
Groundwater
|
14,444
|
|
|
11,271
|
|
|
13,005
|
|
|
Surface water
|
620
|
|
|
2,465
|
|
|
1,553
|
|
|
Reclaimed water
|
607
|
|
|
637
|
|
|
639
|
|
|
|
38,584
|
|
|
35,847
|
|
|
36,535
|
|
|
Average water production expense per MG
|
$
|
4,063
|
|
|
3,468
|
|
|
3,028
|
|
|
Budgeted Capital
Expenditures
2018
|
|||||
Water treatment
|
$
|
1,268
|
|
|
1
|
%
|
Source of supply
|
7,652
|
|
|
6
|
%
|
|
Reservoirs and tanks
|
11,985
|
|
|
10
|
%
|
|
Pump stations and equipment
|
5,278
|
|
|
4
|
%
|
|
Equipment and other
|
15,037
|
|
|
13
|
%
|
|
Recycled water, green and alternative energy projects
|
9,626
|
|
|
8
|
%
|
|
Distribution system
|
68,844
|
|
|
58
|
%
|
|
|
$
|
119,690
|
|
|
100
|
%
|
|
Total
|
|
Contractual Obligations Due in
|
||||||||||||
|
Less than
1 Year
|
|
1-3
Years
|
|
3-5
Years
|
|
After
5 Years
|
||||||||
Senior notes, Water Utility Services
|
$
|
265,000
|
|
|
—
|
|
|
10,000
|
|
|
20,000
|
|
|
235,000
|
|
Advances for construction, San Jose Water Company*
|
66,168
|
|
|
2,766
|
|
|
5,532
|
|
|
5,532
|
|
|
52,338
|
|
|
California Pollution Control Financing Authority Revenue Bonds, San Jose Water Company
|
120,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
120,000
|
|
|
Senior note, SJW Group
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
Total contractual cash obligation
|
$
|
501,168
|
|
|
2,766
|
|
|
15,532
|
|
|
25,532
|
|
|
457,338
|
|
Total interest on contractual obligations
|
$
|
408,031
|
|
|
25,485
|
|
|
50,812
|
|
|
44,958
|
|
|
286,776
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
December 31,
|
|||||
|
2017
|
|
2016
|
|||
Assets
|
|
|
|
|||
Utility plant:
|
|
|
|
|||
Land
|
$
|
17,831
|
|
|
17,923
|
|
Depreciable plant and equipment
|
1,714,228
|
|
|
1,554,016
|
|
|
Construction in progress
|
45,851
|
|
|
70,453
|
|
|
Intangible assets
|
14,413
|
|
|
23,989
|
|
|
|
1,792,323
|
|
|
1,666,381
|
|
|
Less accumulated depreciation and amortization
|
553,059
|
|
|
520,018
|
|
|
|
1,239,264
|
|
|
1,146,363
|
|
|
Real estate investments
|
56,213
|
|
|
62,193
|
|
|
Less accumulated depreciation and amortization
|
11,132
|
|
|
11,734
|
|
|
|
45,081
|
|
|
50,459
|
|
|
Current assets:
|
|
|
|
|||
Cash and cash equivalents
|
7,799
|
|
|
6,349
|
|
|
Restricted cash
|
—
|
|
|
19,001
|
|
|
Accounts receivable:
|
|
|
|
|||
Customers, net of allowances for uncollectible accounts of $190 and $200 in 2017 and 2016, respectively
|
17,305
|
|
|
16,361
|
|
|
Income tax
|
7,981
|
|
|
9,796
|
|
|
Other
|
1,118
|
|
|
3,383
|
|
|
Accrued unbilled utility revenue
|
27,905
|
|
|
24,255
|
|
|
Current regulatory assets, net
|
—
|
|
|
16,064
|
|
|
Other current assets
|
4,750
|
|
|
4,402
|
|
|
|
66,858
|
|
|
99,611
|
|
|
Other assets:
|
|
|
|
|||
Investment in California Water Service Group
|
4,535
|
|
|
3,390
|
|
|
Net regulatory assets, less current portion
|
99,554
|
|
|
135,709
|
|
|
Other
|
2,709
|
|
|
7,844
|
|
|
|
106,798
|
|
|
146,943
|
|
|
|
$
|
1,458,001
|
|
|
1,443,376
|
|
|
December 31,
|
|||||
|
2017
|
|
2016
|
|||
Capitalization and Liabilities
|
|
|
|
|||
Capitalization:
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
|||
Common stock, $0.001 par value; authorized 36,000,000 shares; issued and outstanding 20,520,856 shares in 2017 and 20,456,225 shares in 2016
|
$
|
21
|
|
|
21
|
|
Additional paid-in capital
|
84,866
|
|
|
81,715
|
|
|
Retained earnings
|
376,119
|
|
|
338,386
|
|
|
Accumulated other comprehensive income
|
2,203
|
|
|
1,524
|
|
|
Total stockholders’ equity
|
463,209
|
|
|
421,646
|
|
|
Long-term debt, less current portion
|
431,092
|
|
|
433,335
|
|
|
|
894,301
|
|
|
854,981
|
|
|
Current liabilities:
|
|
|
|
|||
Lines of credit
|
25,000
|
|
|
14,200
|
|
|
Current portion of long-term debt
|
—
|
|
|
125
|
|
|
Accrued groundwater extraction charges, purchased water and power
|
14,382
|
|
|
10,846
|
|
|
Accounts payable
|
22,960
|
|
|
18,739
|
|
|
Accrued interest
|
6,869
|
|
|
6,309
|
|
|
Accrued property taxes and other non-income taxes
|
1,904
|
|
|
1,681
|
|
|
Accrued payroll
|
6,011
|
|
|
4,696
|
|
|
Other current liabilities
|
7,926
|
|
|
6,977
|
|
|
|
85,052
|
|
|
63,573
|
|
|
Deferred income taxes
|
85,795
|
|
|
205,203
|
|
|
Advances for construction
|
83,695
|
|
|
84,815
|
|
|
Contributions in aid of construction
|
160,830
|
|
|
151,576
|
|
|
Postretirement benefit plans
|
72,841
|
|
|
70,177
|
|
|
Regulatory liability
|
62,476
|
|
|
—
|
|
|
Other noncurrent liabilities
|
13,011
|
|
|
13,051
|
|
|
Commitments and contingencies
|
—
|
|
|
—
|
|
|
|
$
|
1,458,001
|
|
|
1,443,376
|
|
|
2017
|
|
2016
|
|
2015
|
||||
Operating revenue
|
$
|
389,225
|
|
|
339,706
|
|
|
305,082
|
|
Operating expense:
|
|
|
|
|
|
||||
Production Expenses:
|
|
|
|
|
|
||||
Purchased water
|
86,456
|
|
|
72,971
|
|
|
61,089
|
|
|
Power
|
7,295
|
|
|
6,102
|
|
|
6,121
|
|
|
Groundwater extraction charges
|
47,817
|
|
|
32,088
|
|
|
31,240
|
|
|
Other production expenses
|
15,203
|
|
|
13,167
|
|
|
12,178
|
|
|
Total production expenses
|
156,771
|
|
|
124,328
|
|
|
110,628
|
|
|
Administrative and general
|
55,011
|
|
|
48,038
|
|
|
47,131
|
|
|
Maintenance
|
17,430
|
|
|
17,476
|
|
|
14,956
|
|
|
Property taxes and other non-income taxes
|
13,642
|
|
|
12,123
|
|
|
11,667
|
|
|
Depreciation and amortization
|
48,292
|
|
|
44,625
|
|
|
40,740
|
|
|
Total operating expense
|
291,146
|
|
|
246,590
|
|
|
225,122
|
|
|
Operating income
|
98,079
|
|
|
93,116
|
|
|
79,960
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||
Interest on long-term debt
|
(22,610
|
)
|
|
(20,205
|
)
|
|
(20,925
|
)
|
|
Mortgage and other interest expense
|
(319
|
)
|
|
(1,633
|
)
|
|
(1,261
|
)
|
|
Gain on sale of equity interests in Texas Water Alliance Limited and utility property
|
12,499
|
|
|
—
|
|
|
—
|
|
|
Gain on sale of real estate investments
|
6,903
|
|
|
10,419
|
|
|
1,886
|
|
|
Gain on sale of California Water Service Group stock
|
—
|
|
|
3,197
|
|
|
—
|
|
|
Dividend income
|
75
|
|
|
87
|
|
|
174
|
|
|
Other, net
|
1,866
|
|
|
1,400
|
|
|
1,320
|
|
|
Income before income taxes
|
96,493
|
|
|
86,381
|
|
|
61,154
|
|
|
Provision for income taxes
|
35,393
|
|
|
33,542
|
|
|
23,272
|
|
|
Net income before noncontrolling interest
|
61,100
|
|
|
52,839
|
|
|
37,882
|
|
|
Less net income attributable to the noncontrolling interest
|
1,896
|
|
|
—
|
|
|
—
|
|
|
SJW Group net income
|
$
|
59,204
|
|
|
52,839
|
|
|
37,882
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
||||
Unrealized income (loss) on investment, net of taxes of $466 in 2017, $657 in 2016, and ($141) in 2015
|
679
|
|
|
955
|
|
|
(206
|
)
|
|
Reclassification adjustment for gain realized on investment, net of taxes of $1,198 in 2016
|
—
|
|
|
(1,742
|
)
|
|
—
|
|
|
SJW Group comprehensive income
|
$
|
59,883
|
|
|
52,052
|
|
|
37,676
|
|
SJW Group earnings per share
|
|
|
|
|
|
||||
—Basic
|
$
|
2.89
|
|
|
2.59
|
|
|
1.86
|
|
—Diluted
|
$
|
2.86
|
|
|
2.57
|
|
|
1.85
|
|
Weighted average shares outstanding
|
|
|
|
|
|
||||
—Basic
|
20,506,960
|
|
|
20,439,957
|
|
|
20,360,663
|
|
|
—Diluted
|
20,685,118
|
|
|
20,588,973
|
|
|
20,515,643
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling Interest
|
|
Total
Stockholders’ Equity |
|||||||||
Number of
Shares
|
|
Amount
|
|
|||||||||||||||||
Balances, December 31, 2014
|
20,286,840
|
|
|
21
|
|
|
76,844
|
|
|
280,773
|
|
|
2,517
|
|
|
—
|
|
|
360,155
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
37,882
|
|
|
—
|
|
|
—
|
|
|
37,882
|
|
Cumulative effect of change in accounting principle, net of tax effect of $300
|
—
|
|
|
—
|
|
|
—
|
|
|
(436
|
)
|
|
—
|
|
|
—
|
|
|
(436
|
)
|
Unrealized loss on investment, net of tax effect of ($141)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(206
|
)
|
|
—
|
|
|
(206
|
)
|
Share-based compensation
|
—
|
|
|
—
|
|
|
1,603
|
|
|
(114
|
)
|
|
—
|
|
|
—
|
|
|
1,489
|
|
Issuance of restricted and deferred stock units
|
61,791
|
|
|
—
|
|
|
(111
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(111
|
)
|
Employee stock purchase plan
|
33,318
|
|
|
—
|
|
|
895
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
895
|
|
Dividends paid ($0.78 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,885
|
)
|
|
—
|
|
|
—
|
|
|
(15,885
|
)
|
Balances, December 31, 2015
|
20,381,949
|
|
|
21
|
|
|
79,231
|
|
|
302,220
|
|
|
2,311
|
|
|
—
|
|
|
383,783
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
52,839
|
|
|
—
|
|
|
—
|
|
|
52,839
|
|
Unrealized income on investment, net of tax effect of $657
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
955
|
|
|
—
|
|
|
955
|
|
Reclassification adjustment for gain realized on investment, net of tax effect of $1,198
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,742
|
)
|
|
—
|
|
|
(1,742
|
)
|
Share-based compensation
|
—
|
|
|
—
|
|
|
1,691
|
|
|
(114
|
)
|
|
—
|
|
|
—
|
|
|
1,577
|
|
Issuance of restricted and deferred stock units
|
44,062
|
|
|
—
|
|
|
(161
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
Employee stock purchase plan
|
30,214
|
|
|
—
|
|
|
954
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
954
|
|
Dividends paid ($0.81 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,559
|
)
|
|
—
|
|
|
—
|
|
|
(16,559
|
)
|
Balances, December 31, 2016
|
20,456,225
|
|
|
21
|
|
|
81,715
|
|
|
338,386
|
|
|
1,524
|
|
|
—
|
|
|
421,646
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
59,204
|
|
|
—
|
|
|
1,896
|
|
|
61,100
|
|
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,896
|
)
|
|
(1,896
|
)
|
Unrealized income on investment, net of tax effect of $466
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
679
|
|
|
—
|
|
|
679
|
|
Share-based compensation
|
—
|
|
|
—
|
|
|
2,643
|
|
|
(139
|
)
|
|
—
|
|
|
—
|
|
|
2,504
|
|
Issuance of restricted and deferred stock units
|
36,888
|
|
|
—
|
|
|
(707
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(707
|
)
|
Employee stock purchase plan
|
27,743
|
|
|
—
|
|
|
1,215
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,215
|
|
Dividends paid ($1.04 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,332
|
)
|
|
—
|
|
|
—
|
|
|
(21,332
|
)
|
Balances, December 31, 2017
|
20,520,856
|
|
|
21
|
|
|
84,866
|
|
|
376,119
|
|
|
2,203
|
|
|
—
|
|
|
463,209
|
|
|
2017
|
|
2016
|
|
2015
|
||||
Operating activities:
|
|
|
|
|
|
||||
Net income before noncontrolling interest
|
$
|
61,100
|
|
|
52,839
|
|
|
37,882
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||
Depreciation and amortization
|
50,501
|
|
|
46,295
|
|
|
42,330
|
|
|
Deferred income taxes
|
(436
|
)
|
|
4,803
|
|
|
15,625
|
|
|
Share-based compensation
|
2,643
|
|
|
1,691
|
|
|
1,603
|
|
|
Gain on sale of Texas Water Alliance Limited and utility property
|
(12,499
|
)
|
|
—
|
|
|
—
|
|
|
Gain on sale of real estate investments
|
(6,903
|
)
|
|
(10,419
|
)
|
|
(1,886
|
)
|
|
Gain on sale of California Water Service Group stock
|
—
|
|
|
(3,197
|
)
|
|
—
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||
Accounts receivable and accrued unbilled utility revenue
|
(1,702
|
)
|
|
(5,377
|
)
|
|
735
|
|
|
Accounts payable and other current liabilities
|
2,888
|
|
|
(337
|
)
|
|
1,550
|
|
|
Accrued groundwater extraction charges, purchased water and power
|
3,536
|
|
|
3,683
|
|
|
1,133
|
|
|
Tax receivable and accrued taxes
|
2,164
|
|
|
(680
|
)
|
|
(3,297
|
)
|
|
Postretirement benefits
|
(769
|
)
|
|
(349
|
)
|
|
(117
|
)
|
|
Regulatory asset related to balancing and memorandum accounts
|
(979
|
)
|
|
19,297
|
|
|
1,429
|
|
|
Other noncurrent assets and noncurrent liabilities
|
741
|
|
|
5,468
|
|
|
1,950
|
|
|
Other changes, net
|
827
|
|
|
854
|
|
|
(783
|
)
|
|
Net cash provided by operating activities
|
101,112
|
|
|
114,571
|
|
|
98,154
|
|
|
Investing activities:
|
|
|
|
|
|
||||
Additions to utility plant:
|
|
|
|
|
|
||||
Company-funded
|
(141,213
|
)
|
|
(129,134
|
)
|
|
(96,012
|
)
|
|
Contributions in aid of construction
|
(7,842
|
)
|
|
(13,086
|
)
|
|
(10,762
|
)
|
|
Additions to real estate investment
|
(116
|
)
|
|
(328
|
)
|
|
(1,097
|
)
|
|
Payments for business/asset acquisition and water rights
|
(1,149
|
)
|
|
(1,070
|
)
|
|
(991
|
)
|
|
Cost to retire utility plant, net of salvage
|
(3,356
|
)
|
|
(3,361
|
)
|
|
(3,673
|
)
|
|
Proceeds from sale of Texas Water Alliance Limited and utility property
|
28,623
|
|
|
—
|
|
|
—
|
|
|
Proceeds from sale of real estate investments
|
11,179
|
|
|
20,341
|
|
|
1,925
|
|
|
Proceeds from sale of California Water Service Group stock
|
—
|
|
|
4,509
|
|
|
—
|
|
|
Net cash used in investing activities
|
(113,874
|
)
|
|
(122,129
|
)
|
|
(110,610
|
)
|
|
Financing activities:
|
|
|
|
|
|
||||
Borrowings from lines of credit
|
56,500
|
|
|
62,075
|
|
|
97,000
|
|
|
Repayments of lines of credit
|
(45,700
|
)
|
|
(82,475
|
)
|
|
(75,600
|
)
|
|
Long-term borrowings
|
—
|
|
|
50,999
|
|
|
—
|
|
|
Long-term borrowings held as restricted cash
|
—
|
|
|
19,001
|
|
|
—
|
|
|
Repayments of long-term borrowings
|
(2,717
|
)
|
|
(16,599
|
)
|
|
(633
|
)
|
|
Payment to noncontrolling interest
|
(1,896
|
)
|
|
—
|
|
|
—
|
|
|
Debt issuance costs
|
—
|
|
|
(1,275
|
)
|
|
—
|
|
|
Dividends paid
|
(21,332
|
)
|
|
(16,559
|
)
|
|
(15,885
|
)
|
|
Receipts of advances and contributions in aid of construction
|
12,581
|
|
|
14,366
|
|
|
12,266
|
|
|
Refunds of advances for construction
|
(2,622
|
)
|
|
(2,522
|
)
|
|
(2,484
|
)
|
|
Other changes, net
|
397
|
|
|
658
|
|
|
632
|
|
|
Net cash (used) provided by financing activities
|
(4,789
|
)
|
|
27,669
|
|
|
15,296
|
|
|
Net change in cash, cash equivalents and restricted cash
|
(17,551
|
)
|
|
20,111
|
|
|
2,840
|
|
|
Cash and cash equivalents, beginning of year
|
25,350
|
|
|
5,239
|
|
|
2,399
|
|
|
Cash, cash equivalents and restricted cash, end of year
|
$
|
7,799
|
|
|
25,350
|
|
|
5,239
|
|
Cash paid during the year for:
|
|
|
|
|
|
||||
Interest
|
$
|
25,254
|
|
|
23,962
|
|
|
23,634
|
|
Income taxes
|
$
|
34,052
|
|
|
27,517
|
|
|
9,723
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
||||
Increase in accrued payables for construction costs capitalized
|
$
|
2,273
|
|
|
3,696
|
|
|
7,540
|
|
Utility property installed by developers
|
$
|
3,723
|
|
|
9,614
|
|
|
1,011
|
|
|
|
|
|
|
|
||||
Reconciliation to Consolidated Balance Sheets:
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,799
|
|
|
6,349
|
|
|
5,239
|
|
Restricted cash
|
$
|
—
|
|
|
19,001
|
|
|
—
|
|
Cash, cash equivalents and restricted cash, end of year
|
$
|
7,799
|
|
|
25,350
|
|
|
5,239
|
|
Note 1.
|
Summary of Significant Accounting Policies
|
|
2017
|
|
2016
|
|||
Equipment
|
$
|
307,938
|
|
|
269,734
|
|
Transmission and distribution
|
1,295,690
|
|
|
1,204,520
|
|
|
Office buildings and other structures
|
110,600
|
|
|
79,762
|
|
|
Total depreciable plant and equipment
|
$
|
1,714,228
|
|
|
1,554,016
|
|
|
Useful Lives
|
Equipment
|
5 to 35 years
|
Transmission and distribution plant
|
35 to 75 years
|
Office buildings and other structures
|
7 to 50 years
|
|
2017
|
|
2016
|
|||
Land
|
$
|
13,262
|
|
|
15,218
|
|
Buildings and improvements
|
42,951
|
|
|
46,826
|
|
|
Intangibles
|
—
|
|
|
149
|
|
|
Total real estate investment
|
$
|
56,213
|
|
|
62,193
|
|
|
Useful Lives
|
Buildings and improvements
|
7 to 39 years
|
Intangibles
|
7 to 12 years
|
|
For the year ended December 31, 2017
|
||||||||||||||
Beginning Balance
|
|
Revenue
Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset and Other
|
|
Ending
Balance
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||
Memorandum accounts:
|
|
|
|
|
|
|
|
|
|
||||||
2014 WCMA
|
$
|
—
|
|
|
1,090
|
|
|
(1,047
|
)
|
|
—
|
|
|
43
|
|
2015 WCMA
|
1,589
|
|
|
2,101
|
|
|
(3,657
|
)
|
|
—
|
|
|
33
|
|
|
2016 WCMA
|
—
|
|
|
1,567
|
|
|
—
|
|
|
(1,452
|
)
|
|
115
|
|
|
2017 WCMA
|
—
|
|
|
12,530
|
|
|
—
|
|
|
(6,041
|
)
|
|
6,489
|
|
|
All others
|
2,768
|
|
|
1,762
|
|
|
453
|
|
|
—
|
|
|
4,983
|
|
|
Total memorandum accounts
|
$
|
4,357
|
|
|
19,050
|
|
|
(4,251
|
)
|
|
(7,493
|
)
|
|
11,663
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balancing accounts:
|
|
|
|
|
|
|
|
|
|
||||||
Water supply costs
|
5,190
|
|
|
2,921
|
|
|
568
|
|
|
—
|
|
|
8,679
|
|
|
Drought surcharges
|
(7,688
|
)
|
|
—
|
|
|
(765
|
)
|
|
8,453
|
|
|
—
|
|
|
Pension
|
(2,009
|
)
|
|
894
|
|
|
(1,344
|
)
|
|
—
|
|
|
(2,459
|
)
|
|
2012 General Rate Case true-up
|
20,682
|
|
|
—
|
|
|
(9,363
|
)
|
|
—
|
|
|
11,319
|
|
|
2015 General Rate Case true-up
|
5,528
|
|
|
—
|
|
|
(5,413
|
)
|
|
—
|
|
|
115
|
|
|
All others
|
(151
|
)
|
|
(678
|
)
|
|
(638
|
)
|
|
75
|
|
|
(1,392
|
)
|
|
Total balancing accounts
|
$
|
21,552
|
|
|
3,137
|
|
|
(16,955
|
)
|
|
8,528
|
|
|
16,262
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
25,909
|
|
|
22,187
|
|
|
(21,206
|
)
|
|
1,035
|
|
|
27,925
|
|
|
For the year ended December 31, 2016
|
||||||||||||||
Beginning Balance
|
|
Revenue
Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending
Balance
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||
Memorandum accounts:
|
|
|
|
|
|
|
|
|
|
||||||
2014 WCMA
|
$
|
2,944
|
|
|
188
|
|
|
(3,132
|
)
|
|
—
|
|
|
—
|
|
2015 WCMA
|
5,372
|
|
|
211
|
|
|
(3,994
|
)
|
|
—
|
|
|
1,589
|
|
|
2016 WCMA
|
—
|
|
|
16,708
|
|
|
—
|
|
|
(16,708
|
)
|
|
—
|
|
|
All others
|
594
|
|
|
1,756
|
|
|
418
|
|
|
—
|
|
|
2,768
|
|
|
Total memorandum accounts
|
$
|
8,910
|
|
|
18,863
|
|
|
(6,708
|
)
|
|
(16,708
|
)
|
|
4,357
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balancing accounts:
|
|
|
|
|
|
|
|
|
|
||||||
Water supply costs
|
2,771
|
|
|
1,620
|
|
|
799
|
|
|
—
|
|
|
5,190
|
|
|
Drought surcharges
|
(359
|
)
|
|
—
|
|
|
(24,037
|
)
|
|
16,708
|
|
|
(7,688
|
)
|
|
Pension
|
(552
|
)
|
|
1,120
|
|
|
(2,577
|
)
|
|
—
|
|
|
(2,009
|
)
|
|
2012 General Rate Case true-up
|
33,070
|
|
|
—
|
|
|
(12,388
|
)
|
|
—
|
|
|
20,682
|
|
|
2015 General Rate Case true-up
|
—
|
|
|
8,767
|
|
|
(3,239
|
)
|
|
—
|
|
|
5,528
|
|
|
All others
|
1,366
|
|
|
(483
|
)
|
|
(1,034
|
)
|
|
—
|
|
|
(151
|
)
|
|
Total balancing accounts
|
$
|
36,296
|
|
|
11,024
|
|
|
(42,476
|
)
|
|
16,708
|
|
|
21,552
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
45,206
|
|
|
29,887
|
|
|
(49,184
|
)
|
|
—
|
|
|
25,909
|
|
|
For the year ended December 31, 2015
|
||||||||||||||
Beginning Balance
|
|
Revenue
Increase (Reduction)
|
|
Refunds (Collections)
|
|
Surcharge Offset
|
|
Ending
Balance
|
|||||||
|
|
|
|
|
|
|
|
|
|
||||||
Memorandum accounts:
|
|
|
|
|
|
|
|
|
|
||||||
2014 WCMA
|
$
|
—
|
|
|
2,981
|
|
|
(37
|
)
|
|
—
|
|
|
2,944
|
|
2015 WCMA
|
—
|
|
|
17,511
|
|
|
—
|
|
|
(12,139
|
)
|
|
5,372
|
|
|
All others
|
$
|
(1,377
|
)
|
|
1,494
|
|
|
477
|
|
|
—
|
|
|
594
|
|
Total memorandum accounts
|
$
|
(1,377
|
)
|
|
21,986
|
|
|
440
|
|
|
(12,139
|
)
|
|
8,910
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balancing accounts:
|
|
|
|
|
|
|
|
|
|
||||||
Water supply costs
|
890
|
|
|
2,025
|
|
|
(144
|
)
|
|
—
|
|
|
2,771
|
|
|
Drought surcharges
|
—
|
|
|
—
|
|
|
(12,498
|
)
|
|
12,139
|
|
|
(359
|
)
|
|
Pension
|
1,412
|
|
|
(924
|
)
|
|
(1,040
|
)
|
|
—
|
|
|
(552
|
)
|
|
2012 General Rate Case true-up
|
44,400
|
|
|
1,937
|
|
|
(13,267
|
)
|
|
—
|
|
|
33,070
|
|
|
All others
|
1,736
|
|
|
(293
|
)
|
|
(77
|
)
|
|
—
|
|
|
1,366
|
|
|
Total balancing accounts
|
$
|
48,438
|
|
|
2,745
|
|
|
(27,026
|
)
|
|
12,139
|
|
|
36,296
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total
|
$
|
47,061
|
|
|
24,731
|
|
|
(26,586
|
)
|
|
—
|
|
|
45,206
|
|
|
2017
|
|
2016
|
|||
Regulatory assets:
|
|
|
|
|||
Income tax temporary differences, net
|
$
|
—
|
|
|
10,139
|
|
Postretirement pensions and other medical benefits
|
68,556
|
|
|
109,795
|
|
|
Balancing and memorandum accounts, net
|
27,925
|
|
|
25,909
|
|
|
Other, net
|
3,073
|
|
|
5,930
|
|
|
Total regulatory assets, net in Consolidated Balance Sheets
|
$
|
99,554
|
|
|
151,773
|
|
Less: current regulatory asset, net
|
—
|
|
|
16,064
|
|
|
Total regulatory assets, net, less current portion
|
$
|
99,554
|
|
|
135,709
|
|
|
|
|
|
|||
Regulatory liability:
|
|
|
|
|||
Income tax temporary differences, net
|
$
|
62,476
|
|
|
—
|
|
Total regulatory liability in Consolidated Balance Sheets
|
$
|
62,476
|
|
|
—
|
|
|
Estimated Refunds
|
||
2018
|
$
|
2,766
|
|
2019
|
2,766
|
|
|
2020
|
2,766
|
|
|
2021
|
2,766
|
|
|
2022
|
2,766
|
|
|
Thereafter
|
52,338
|
|
|
2017
|
|
2016
|
|||
Retirement obligation
|
$
|
5,231
|
|
|
4,835
|
|
Discount rate
|
6
|
%
|
|
6
|
%
|
|
Present value, recorded as a liability
|
1,184
|
|
|
1,966
|
|
|
Deferred tax
|
—
|
|
|
1,352
|
|
|
Regulatory asset
|
$
|
1,184
|
|
|
3,318
|
|
Note 2.
|
Capitalization
|
Note 3.
|
Lines of Credit
|
Note 4.
|
Long-Term Debt
|
Description
|
Due Date
|
|
2017
|
|
2016
|
|||
Senior notes, San Jose Water Company:
|
|
|
|
|
|
|||
Series A 8.58%
|
2022
|
|
$
|
20,000
|
|
|
20,000
|
|
Series B 7.37%
|
2024
|
|
30,000
|
|
|
30,000
|
|
|
Series C 9.45%
|
2020
|
|
10,000
|
|
|
10,000
|
|
|
Series D 7.15%
|
2026
|
|
15,000
|
|
|
15,000
|
|
|
Series E 6.81%
|
2028
|
|
15,000
|
|
|
15,000
|
|
|
Series F 7.20%
|
2031
|
|
20,000
|
|
|
20,000
|
|
|
Series G 5.93%
|
2033
|
|
20,000
|
|
|
20,000
|
|
|
Series H 5.71%
|
2037
|
|
20,000
|
|
|
20,000
|
|
|
Series I 5.93%
|
2037
|
|
20,000
|
|
|
20,000
|
|
|
Series J 6.54%
|
2024
|
|
10,000
|
|
|
10,000
|
|
|
Series K 6.75%
|
2039
|
|
20,000
|
|
|
20,000
|
|
|
Series L 5.14%
|
2044
|
|
50,000
|
|
|
50,000
|
|
|
SJWTX, Inc. Series A 6.27%
|
2036
|
|
15,000
|
|
|
15,000
|
|
|
SJW Group Series A 4.35%
|
2021
|
|
50,000
|
|
|
50,000
|
|
|
Total senior notes
|
|
|
$
|
315,000
|
|
|
315,000
|
|
444 West Santa Clara Street, L.P. 5.68% (non-recourse to SJW Land Company)
|
2021
|
|
—
|
|
|
2,717
|
|
|
California Pollution Control Financing Authority Revenue Bonds 5.10%, San Jose Water Company
|
2040
|
|
50,000
|
|
|
50,000
|
|
|
California Pollution Control Financing Authority Revenue Bonds 4.75%, San Jose Water Company
|
2046
|
|
70,000
|
|
|
70,000
|
|
|
Total debt
|
|
|
$
|
435,000
|
|
|
437,717
|
|
Less:
|
|
|
|
|
|
|||
Unamortized debt issuance costs related to debt above
|
|
|
3,908
|
|
|
4,257
|
|
|
Current portion
|
|
|
—
|
|
|
125
|
|
|
Total long-term debt, less current portion
|
|
|
$
|
431,092
|
|
|
433,335
|
|
Note 5.
|
Income Taxes
|
|
2017
|
|
2016
|
|
2015
|
||||
Current:
|
|
|
|
|
|
||||
Federal
|
$
|
29,377
|
|
|
21,651
|
|
|
3,723
|
|
State
|
6,452
|
|
|
7,088
|
|
|
3,924
|
|
|
Deferred:
|
|
|
|
|
|
||||
Federal
|
(1,174
|
)
|
|
6,119
|
|
|
16,109
|
|
|
State
|
738
|
|
|
(1,316
|
)
|
|
(484
|
)
|
|
|
$
|
35,393
|
|
|
33,542
|
|
|
23,272
|
|
|
2017
|
|
2016
|
|||
Deferred tax assets:
|
|
|
|
|||
Advances and contributions
|
$
|
9,929
|
|
|
17,196
|
|
Unamortized investment tax credit
|
441
|
|
|
644
|
|
|
Pensions and postretirement benefits
|
21,349
|
|
|
3,927
|
|
|
California franchise tax
|
1,058
|
|
|
2,331
|
|
|
Other
|
3,110
|
|
|
4,802
|
|
|
Total deferred tax assets
|
$
|
35,887
|
|
|
28,900
|
|
Deferred tax liabilities:
|
|
|
|
|||
Utility plant
|
$
|
94,414
|
|
|
177,338
|
|
Pension and postretirement benefits
|
19,184
|
|
|
44,737
|
|
|
Investment in stock
|
1,199
|
|
|
1,280
|
|
|
Deferred gain and other-property related
|
5,640
|
|
|
9,769
|
|
|
Debt reacquisition costs
|
204
|
|
|
347
|
|
|
Other
|
1,041
|
|
|
632
|
|
|
Total deferred tax liabilities
|
$
|
121,682
|
|
|
234,103
|
|
Net deferred tax liabilities
|
$
|
85,795
|
|
|
205,203
|
|
Balance at December 31, 2016
|
$
|
1,132
|
|
Increase related to tax positions taken during a prior year, including interest
|
185
|
|
|
Reductions related to tax positions taken in a prior year, including interest
|
(10
|
)
|
|
Balance at December 31, 2017
|
$
|
1,307
|
|
Note 6.
|
Intangible Assets
|
|
2017
|
|
2016
|
|||
Concession fees
|
$
|
6,800
|
|
|
6,800
|
|
Other intangibles
|
7,613
|
|
|
17,189
|
|
|
Intangible assets
|
14,413
|
|
|
23,989
|
|
|
Less: Accumulated amortization
|
|
|
|
|||
Concession fees
|
5,508
|
|
|
5,236
|
|
|
Other intangibles
|
2,585
|
|
|
2,412
|
|
|
Net intangible assets
|
$
|
6,320
|
|
|
16,341
|
|
Note 7.
|
Commitments
|
Note 8.
|
Contingencies
|
Note 9.
|
Partnership Interest
|
Note 10.
|
Benefit Plans
|
|
Pension Benefits
|
|
Other Benefits
|
||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
%
|
|
%
|
|
%
|
|
%
|
Discount rate
|
3.52
|
|
4.04
|
|
3.45
|
|
3.93
|
Rate of compensation increase
|
4.00
|
|
4.00
|
|
N/A
|
|
N/A
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2017
|
|
2016
|
|
2015
|
||||||||
Components of net periodic benefit cost
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
$
|
4,699
|
|
|
4,447
|
|
|
5,072
|
|
|
$
|
529
|
|
|
527
|
|
|
379
|
|
Interest cost
|
6,993
|
|
|
6,830
|
|
|
6,342
|
|
|
634
|
|
|
655
|
|
|
504
|
|
||
Expected return on assets
|
(7,888
|
)
|
|
(7,288
|
)
|
|
(6,984
|
)
|
|
(376
|
)
|
|
(292
|
)
|
|
(283
|
)
|
||
Amortization of prior service cost
|
94
|
|
|
376
|
|
|
376
|
|
|
198
|
|
|
197
|
|
|
197
|
|
||
Recognized actuarial loss
|
3,844
|
|
|
3,527
|
|
|
4,005
|
|
|
273
|
|
|
316
|
|
|
188
|
|
||
Net periodic benefit cost
|
$
|
7,742
|
|
|
7,892
|
|
|
8,811
|
|
|
$
|
1,258
|
|
|
1,403
|
|
|
985
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Change in benefit obligation
|
|
|
|
|
|
|
|
||||||
Benefit obligation at beginning of year
|
$
|
174,097
|
|
|
164,268
|
|
|
$
|
16,461
|
|
|
16,420
|
|
Service cost
|
4,699
|
|
|
4,447
|
|
|
529
|
|
|
527
|
|
||
Interest cost
|
6,993
|
|
|
6,830
|
|
|
634
|
|
|
655
|
|
||
Actuarial (gain)/loss
|
16,552
|
|
|
3,967
|
|
|
1,124
|
|
|
(528
|
)
|
||
Implicit rate subsidy
|
—
|
|
|
—
|
|
|
(196
|
)
|
|
(179
|
)
|
||
Benefits paid
|
(6,134
|
)
|
|
(5,415
|
)
|
|
(549
|
)
|
|
(434
|
)
|
||
Benefit obligation at end of year
|
$
|
196,207
|
|
|
174,097
|
|
|
$
|
18,003
|
|
|
16,461
|
|
Change in plan assets
|
|
|
|
|
|
|
|
||||||
Fair value of assets at beginning of year
|
$
|
113,895
|
|
|
104,953
|
|
|
$
|
5,366
|
|
|
4,462
|
|
Actual return on plan assets
|
17,298
|
|
|
5,936
|
|
|
736
|
|
|
295
|
|
||
Employer contributions
|
8,301
|
|
|
8,421
|
|
|
702
|
|
|
793
|
|
||
Benefits paid
|
(6,134
|
)
|
|
(5,415
|
)
|
|
—
|
|
|
(184
|
)
|
||
Fair value of plan assets at end of year
|
133,360
|
|
|
113,895
|
|
|
6,804
|
|
|
5,366
|
|
||
Funded status at end of year
|
$
|
(62,847
|
)
|
|
(60,202
|
)
|
|
$
|
(11,199
|
)
|
|
(11,095
|
)
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Current liabilities
|
$
|
1,099
|
|
|
1,032
|
|
|
$
|
86
|
|
|
87
|
|
Noncurrent liabilities
|
61,748
|
|
|
59,170
|
|
|
11,113
|
|
|
11,008
|
|
||
|
$
|
62,847
|
|
|
60,202
|
|
|
$
|
11,199
|
|
|
11,095
|
|
|
2017
|
|
2016
|
|||
Funded status of obligation
|
$
|
74,046
|
|
|
71,297
|
|
Accrued benefit cost
|
(5,490
|
)
|
|
(6,239
|
)
|
|
Amount to be recovered in future rates
|
68,556
|
|
|
65,058
|
|
|
Tax gross-up
|
—
|
|
|
44,737
|
|
|
Regulatory asset
|
$
|
68,556
|
|
|
109,795
|
|
|
Pension Benefits
|
|
Other Benefits
|
|||
Amortization of prior service cost
|
$
|
51
|
|
|
197
|
|
Amortization of loss
|
3,794
|
|
|
296
|
|
|
Total
|
$
|
3,845
|
|
|
493
|
|
|
Pension Benefits
|
|
Other Benefits
|
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Fair value of assets at end of year:
|
|
|
|
|
|
|
|
||||||
Debt securities
|
$
|
42,784
|
|
|
38,887
|
|
|
$
|
1,710
|
|
|
1,627
|
|
|
32
|
%
|
|
34
|
%
|
|
25
|
%
|
|
30
|
%
|
||
Equity securities
|
83,352
|
|
|
66,022
|
|
|
4,111
|
|
|
2,675
|
|
||
|
63
|
%
|
|
58
|
%
|
|
60
|
%
|
|
50
|
%
|
||
Cash and equivalents
|
7,224
|
|
|
8,986
|
|
|
983
|
|
|
1,064
|
|
||
|
5
|
%
|
|
8
|
%
|
|
14
|
%
|
|
20
|
%
|
||
Total
|
$
|
133,360
|
|
|
113,895
|
|
|
$
|
6,804
|
|
|
5,366
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2017
|
||||||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Cash and cash equivalents
|
|
|
$
|
8,207
|
|
|
$
|
8,207
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
All Cap Equity
|
Russell 3000 Value
|
|
6,413
|
|
|
6,376
|
|
|
37
|
|
|
—
|
|
||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
50,351
|
|
|
50,351
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap,
Russell Mid Cap Growth, Russell Mid Cap Value
|
|
9,358
|
|
|
9,358
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value, Russell 2500
|
|
8,725
|
|
|
8,725
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
5,973
|
|
|
5,973
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT—Equity REIT’s
|
|
6,143
|
|
|
—
|
|
|
6,143
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
44,994
|
|
|
—
|
|
|
44,994
|
|
|
—
|
|
||||
Total
|
|
|
$
|
140,164
|
|
|
$
|
88,990
|
|
|
$
|
51,174
|
|
|
$
|
—
|
|
(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
|
||||||||||||
Asset Category
|
Benchmark
|
|
Total
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets
(Level 1)
|
|
Significant
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(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.
|
|
Pension Plan
|
|
Other Postretirement
Benefit Plan
|
||||
2018
|
$
|
6,941
|
|
|
$
|
795
|
|
2019
|
7,032
|
|
|
817
|
|
||
2020
|
7,392
|
|
|
823
|
|
||
2021
|
7,741
|
|
|
868
|
|
||
2022
|
8,013
|
|
|
916
|
|
||
2023 - 2027
|
43,828
|
|
|
5,032
|
|
Note 11.
|
Equity Plans
|
|
2017
|
|
2016
|
|
2015
|
||||
Compensation costs charged to income:
|
|
|
|
|
|
||||
ESPP
|
$
|
214
|
|
|
168
|
|
|
158
|
|
Restricted stock and deferred restricted stock
|
2,429
|
|
|
1,523
|
|
|
1,445
|
|
|
Total compensation costs charged to income
|
$
|
2,643
|
|
|
1,691
|
|
|
1,603
|
|
Proceeds from the exercise of stock options and similar instruments:
|
|
|
|
|
|
||||
ESPP
|
1,215
|
|
|
954
|
|
|
895
|
|
|
Total proceeds from the exercise of stock options and similar instruments
|
$
|
1,215
|
|
|
954
|
|
|
895
|
|
Excess tax benefits realized from share options exercised and stock issuance:
|
|
|
|
|
|
||||
Restricted stock and deferred restricted stock
|
—
|
|
|
203
|
|
|
634
|
|
|
Total excess tax benefits realized from share options exercised and stock issuance
|
$
|
—
|
|
|
203
|
|
|
634
|
|
|
Units
|
|
Weighted- Average Grant-
Date Fair Value
|
|||
Nonvested as of January 1, 2017
|
85,903
|
|
|
$
|
28.00
|
|
Granted
|
48,754
|
|
|
$
|
52.19
|
|
Vested
|
(47,174
|
)
|
|
$
|
29.10
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Nonvested as of December 31, 2017
|
87,483
|
|
|
$
|
40.89
|
|
Note 12.
|
Segment and Non-Tariffed Businesses Reporting
|
|
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
|
|
Note 13.
|
Texas Water Alliance Limited
|
Note 14.
|
California Water Service Group Stock
|
Note 15.
|
Unaudited Quarterly Financial Data
|
|
2017 Quarter Ended
|
|||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
|||||
Operating revenue
|
$
|
69,045
|
|
|
102,073
|
|
|
124,578
|
|
|
93,529
|
|
Operating income
|
10,833
|
|
|
30,787
|
|
|
38,245
|
|
|
18,214
|
|
|
SJW Group net income
|
3,671
|
|
|
18,688
|
|
|
19,540
|
|
|
17,305
|
|
|
Comprehensive income
|
3,787
|
|
|
18,744
|
|
|
19,620
|
|
|
17,732
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|||||
—Basic
|
0.18
|
|
|
0.91
|
|
|
0.95
|
|
|
0.84
|
|
|
—Diluted
|
0.18
|
|
|
0.90
|
|
|
0.94
|
|
|
0.84
|
|
|
Market price range of stock:
|
|
|
|
|
|
|
|
|||||
—High
|
55.30
|
|
|
53.00
|
|
|
57.43
|
|
|
68.13
|
|
|
—Low
|
46.13
|
|
|
45.74
|
|
|
48.46
|
|
|
57.60
|
|
|
Dividend per share
|
0.22
|
|
|
0.22
|
|
|
0.22
|
|
|
0.38
|
|
|
2016 Quarter Ended
|
|||||||||||
|
March
|
|
June
|
|
September
|
|
December
|
|||||
Operating revenue
|
$
|
61,112
|
|
|
86,944
|
|
|
112,344
|
|
|
79,306
|
|
Operating income
|
10,581
|
|
|
29,800
|
|
|
36,346
|
|
|
16,389
|
|
|
SJW Group net income
|
3,378
|
|
|
16,775
|
|
|
18,959
|
|
|
13,727
|
|
|
Comprehensive income
|
3,908
|
|
|
15,520
|
|
|
18,790
|
|
|
13,834
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|||||
—Basic
|
0.17
|
|
|
0.82
|
|
|
0.93
|
|
|
0.67
|
|
|
—Diluted
|
0.16
|
|
|
0.82
|
|
|
0.92
|
|
|
0.67
|
|
|
Market price range of stock:
|
|
|
|
|
|
|
|
|||||
—High
|
37.50
|
|
|
39.38
|
|
|
46.66
|
|
|
56.69
|
|
|
—Low
|
29.35
|
|
|
32.66
|
|
|
38.13
|
|
|
42.19
|
|
|
Dividend per share
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
|
0.20
|
|
Description
|
2017
|
|
2016
|
|
2015
|
||||
Allowance for doubtful accounts:
|
|
|
|
|
|
||||
Balance, beginning of period
|
$
|
200
|
|
|
200
|
|
|
150
|
|
Charged to expense
|
399
|
|
|
504
|
|
|
392
|
|
|
Accounts written off
|
(675
|
)
|
|
(681
|
)
|
|
(528
|
)
|
|
Recoveries of accounts written off
|
266
|
|
|
177
|
|
|
186
|
|
|
Balance, end of period
|
$
|
190
|
|
|
200
|
|
|
200
|
|
Reserve for litigation and claims:
|
|
|
|
|
|
||||
Balance, beginning of period
|
$
|
2,105
|
|
|
263
|
|
|
133
|
|
Charged to expense
|
528
|
|
|
2,186
|
|
|
213
|
|
|
Revision to accrual, due to settlements
|
(245
|
)
|
|
(19
|
)
|
|
(16
|
)
|
|
Payments
|
(496
|
)
|
|
(325
|
)
|
|
(67
|
)
|
|
Balance, end of period
|
$
|
1,892
|
|
|
2,105
|
|
|
263
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
Page
|
(a)(1) Financial Statements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)(2) Financial Statement Schedule
|
|
|
|
|
|
|
Exhibit No.
|
|
Description
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2.1
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3.1
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3.2
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3.3
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3.4
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4.1
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Instruments Defining the Rights of Security Holders, including Indentures: No current issue of the registrant’s long-term debt exceeds 10 percent of its total assets. SJW Group hereby agrees to furnish upon request to the Commission a copy of each instrument defining the rights of holders of unregistered senior and subordinated debt of the Company.
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4.2
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4.3
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4.4
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Indenture dated as of December 1, 2016, by and between California Pollution Control Financing Authority and The Bank of New York Mellon Trust Company, N.A. relating to the Bond. SJW Group agrees to furnish to the Commission upon request a copy of such agreement which it has elected not to file under the provisions of Regulation S-K 601(b)(4)(iii).
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4.5
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4.35% Senior Notes due June 30, 2021. SJW Group agrees to furnish a copy of such Senior Notes to the Commission upon request.
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10.1
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10.2
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10.3
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10.4
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10.5
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10.6
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10.7
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10.8
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10.9
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10.10
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10.11
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10.12
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10.13
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10.14
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10.15
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10.16
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10.17
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10.18
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10.19
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10.20
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10.21
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10.22
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10.23
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10.24
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10.25
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10.26
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10.27
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10.28
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10.29
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10.30
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10.31
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10.32
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10.33
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10.34
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10.35
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10.36
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10.37
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10.38
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10.39
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10.40
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10.41
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10.42
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10.43
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10.44
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10.45
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10.46
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10.47
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10.48
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10.49
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10.50
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10.51
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10.52
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10.53
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10.54
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10.55
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Form of Chief Executive Officer SJW Group Restricted Stock Unit Issuance Agreement (TSR Goals)
. (1)(2)
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10.56
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10.57
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10.58
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10.59
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10.60
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10.61
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10.62
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10.63
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10.64
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10.65
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21.1
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23.1
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31.1
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31.2
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32.1
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32.2
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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(1) Filed currently herewith.
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(2) Management contract or compensatory plan or agreement.
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SJW Group
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Date:
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February 27, 2018
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By
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/s/ Eric W. Thornburg
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ERIC W. THORNBURG,
President, Chief Executive Officer
and Board Member
(Principal executive officer)
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Date:
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February 27, 2018
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By
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/s/ Eric W. Thornburg
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ERIC W. THORNBURG,
President, Chief Executive Officer and Board Member (Principal executive officer) |
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Date:
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February 27, 2018
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By
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/s/ James P. Lynch
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JAMES P. LYNCH,
Chief Financial Officer and Treasurer
(Principal financial officer)
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Date:
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February 27, 2018
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By
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/s/ Wendy Avila-Walker
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WENDY AVILA-WALKER,
Controller
(Principal accounting officer)
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Date:
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February 27, 2018
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By
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/s/ Katharine Armstrong
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KATHARINE ARMSTRONG,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ Walter J. Bishop
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WALTER J. BISHOP,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ Douglas R. King
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DOUGLAS R. KING,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ Gregory P. Landis
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GREGORY P. LANDIS,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ Debra C. Man
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DEBRA C. MAN,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ Daniel B. More
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DANIEL B. MORE,
Member, Board of Directors
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Date:
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February 27, 2018
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By
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/s/ George E. Moss
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GEORGE E. MOSS,
Member, Board of Directors |
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Date:
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February 27, 2018
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By
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/s/ W. Richard Roth
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W. RICHARD ROTH,
Member, Board of Directors, Chairman |
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Date:
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February 27, 2018
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By
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/s/ Robert A. Van Valer
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ROBERT A. VAN VALER,
Member, Board of Directors
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Participant:
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_________________
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Award Date:
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________________
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Target Number of Shares:
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_____ shares of Common Stock (the “Target Shares”). The actual number of shares of Common Stock that may become issuable pursuant to the Award shall be determined in accordance with the Vesting Schedule below.
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Vesting Schedule:
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The number of shares of Common Stock which may actually vest and become issuable pursuant to the Award shall be determined pursuant to a two-step process: (i) first the maximum number of shares of Common Stock in which Participant can vest under the Performance Vesting section below shall be calculated on the basis of the level at which the Performance Objective specified on attached Schedule I is actually attained and (ii) then the number of shares calculated under clause (i) in which Participant may actually vest shall be determined on the basis of his or her completion of the applicable Service vesting requirements set forth in Paragraph 3 of this Agreement.
Performance Vesting
: Attached Schedule I specifies the Performance Objective to be attained for the specified Measurement Period. No later than the last business day of February in the calendar year immediately following the end of the Measurement Period, the Plan Administrator shall determine and certify the actual level of attainment for the Performance Objective (the “Performance Certification Date”). On the basis of that certified level of attainment, the number of Target Shares will be multiplied by the applicable percentage (which may range from 0% to 200%) determined in accordance with the table set forth in Schedule I. The number of shares resulting from such calculation shall constitute the maximum number of shares of Common Stock in which Participant may vest under this Award and shall be designated the “Performance-Qualified Shares.” In no event may the number of such Performance-Qualified Shares exceed 200% of the number of Target Shares.
Should the Performance Objective be attained at a level below the threshold level specified in attached Schedule I, the Award shall be forfeited and shall be immediately cancelled. Participant shall thereupon cease to have any further right, title or interest in the shares of Common Stock underlying the cancelled Award.
Service Vesting.
The number of Performance-Qualified Shares in which Participant actually vests shall be determined on the basis of Participant’s satisfaction of the Service vesting requirements set forth in Paragraph 3.
Change in Control Vesting.
The shares of Common Stock underlying the Award may also vest on an alternative basis in accordance with Paragraph 5 should a Change in Control occur prior to the completion of the Measurement Period.
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Issuance Schedule:
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The shares of Common Stock which actually vest and become issuable pursuant to the terms of this Agreement shall be issued in accordance with the provisions of this Agreement applicable to the particular circumstances under which such vesting occurs. The actual issuance of the shares shall be subject to the Corporation’s collection of all applicable Withholding Taxes as set forth in Paragraph 7 of this Agreement.
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SJW GROUP
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By:
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____________________________
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Dated:
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____________________, _____
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[Participant Name]
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Signature:
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____________________________
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Dated:
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____________________, _____
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TSR =
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(Ending Stock Price – Beginning Stock Price ) + Reinvested Dividends
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Beginning Stock Price
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Performance Criteria
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Goals and Minimum and Maximum Thresholds
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Allocation of Target Amount ($) (1)
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San Jose Water Company Capital Additions (2)
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Target Goal:
($103.4M)
Minimum Threshold:
($91.9M)
Maximum Goal:
($114.9M) or more
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$140,000
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San Jose Water Company Water Quality Compliance (3)
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Target Goal
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No citations from the California Division of Drinking Water (DDW) for failure to meet Primary Drinking Water Standards or Secondary Maximum Contaminant criteria
Minimum Threshold
No citations from DDW for failure to meet Primary Drinking Water Standards
Maximum Goal
No citations from DDW for failure to meet Primary Drinking Water Standards, Secondary Maximum Contaminant criteria, or water quality monitoring or repotting requirements.
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$70,000
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San Jose Water Company Key Operational Goals (4)
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No
Material Environmental Violations
(a)
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Abandoned Call Rate (Based on % of calls received)
(b)
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Level One Emergency Response Time (%Responses
<
30 Min.)
(b)
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Distribution System Integrity (Main Surface Leaks /100 Mi.)
(b)
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Code 3 Emergency Repair Response Time (% response
<
60 min.)
(b)
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Reportable Incidence Rate
(c)
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Target Goal
No violations w/fines
>
$25,000/$100,000
<
4.5%
> 90%
<
2.5
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95%
<
8.3
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Minimum Goal
No violations w/fines
>
$50,000/$200,000
<
5%
> 85%
<3
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90%
<
9.3
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Maximum Goal
No violations w/fines
>
$10,000/$40,000
<
4%
> 95%
<
2.0
100%
<
7.3
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$8,750
$8,750
$8,750
$8,750
$8,750
$8,750
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Total Key Operating Goals
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$52,500
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Total Company Performance
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$262,500
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Individual Performance (5)
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$87,500
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Total 2018 STI Amount
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$350,000
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(1)
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The 2018 annual cash STI target amount is equal to $350,000, which is 50 percent of Mr. Thornburg's base salary per his employment agreement. The actual STI may range from 0% to 150% of the portion of the target amount allocated to that goal. Based on the Executive Compensation Committee's determination of the level of achievement of each performance goal, the amount payable with respect to that goal will be as follows:
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If the goal is only attained at the minimum level, then 50 percent of the allocated amount will be paid.
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If the goal is attained at or above maximum level, then 150 percent of the allocated amount will be paid.
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For a goal that does not have a minimum threshold, no amount will be paid if the goal attained is below the target
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(2)
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"San Jose Water Capital Additions" means San Jose Water Company's capital expenditures made in 2018, including the cost to retire facilities and excluding expenditures made in connection with IRS STI depreciation infrastructure re- investments.
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(3)
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Target is achieved if the Company does not receive a citation during the performance period from the California Division of Drinking Water (DDW) for (bonus) violating health-related drinking water standards and treatment techniques specified in the U.S. National Primary Drinking Water Regulations and California Code of Regulations Title 22, Chapter 15 or (ii) for violating secondary maximum contaminant criteria. Secondary maximum contaminant criteria are associated with the aesthetic quality of drinking water and do not pose a threat to public health at regulated levels. Minimum performance is achieved if the Company does not receive a DDW citation during the performance period for violating health-related drinking water standards and treatment techniques as described in the target. Maximum performance is achieved if the target is achieved and the Company does not receive a DDW citation during the performance period for failure to meet water quality monitoring or reporting requirements. A monitoring or reporting requirement violation occurs when mandated water sampling plans are not followed, when water samples are not collected within the required time frames, or when monitoring results are not reported to DDW within the required time frames.
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(4)
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All results of San Jose Water Company's key operational goals are rounded to the nearest whole number, or to the decimal point, as appropriate. Compliance with each goal is based on year-end results. Footnotes related to key operational goals follow:
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(5)
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CEO individual performance will be measured against 2018 Strategic Objectives as follows:
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Achieve 2018 SJW Group planned operating budget/results
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Develop and Conduct Customer Satisfaction Survey/ prepare response plan.
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Develop and conduct Employee Satisfaction Survey/ prepare response plan.
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Develop and implement Community Engagement and Corporate Citizenship Initiative
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Implement Information Governance Initiative
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Prepare an Environmental Sustainability Report for SJW Group
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Date:
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February 27, 2018
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/s/ Eric W. Thornburg
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ERIC W. THORNBURG
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President, Chief Executive Officer
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and Board Member
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(Principal executive officer)
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Date:
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February 27, 2018
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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/ Eric W. Thornburg
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ERIC W. THORNBURG
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President, Chief Executive Officer
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and Board Member
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(Principal executive officer)
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February 27, 2018
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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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February 27, 2018
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