|
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)
|
Title of each class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common stock, par value $0.001 per share
|
|
SJW
|
|
New York Stock Exchange LLC
|
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
REVENUE
|
$
|
102,965
|
|
|
99,086
|
|
|
$
|
180,647
|
|
|
174,128
|
|
OPERATING EXPENSE:
|
|
|
|
|
|
|
|
||||||
Production Expenses:
|
|
|
|
|
|
|
|
||||||
Purchased water
|
26,381
|
|
|
23,712
|
|
|
40,043
|
|
|
39,128
|
|
||
Power
|
1,493
|
|
|
1,624
|
|
|
2,653
|
|
|
2,892
|
|
||
Groundwater extraction charges
|
9,100
|
|
|
9,919
|
|
|
15,963
|
|
|
19,451
|
|
||
Other production expenses
|
5,159
|
|
|
4,626
|
|
|
10,258
|
|
|
8,838
|
|
||
Total production expenses
|
42,133
|
|
|
39,881
|
|
|
68,917
|
|
|
70,309
|
|
||
Administrative and general
|
13,408
|
|
|
11,958
|
|
|
25,699
|
|
|
23,526
|
|
||
Maintenance
|
4,729
|
|
|
4,596
|
|
|
9,054
|
|
|
9,056
|
|
||
Property taxes and other non-income taxes
|
3,848
|
|
|
3,450
|
|
|
7,976
|
|
|
7,316
|
|
||
Depreciation and amortization
|
15,101
|
|
|
13,656
|
|
|
30,246
|
|
|
27,239
|
|
||
Merger related expenses
|
1,775
|
|
|
2,746
|
|
|
4,376
|
|
|
6,552
|
|
||
Total operating expense
|
80,994
|
|
|
76,287
|
|
|
146,268
|
|
|
143,998
|
|
||
OPERATING INCOME
|
21,971
|
|
|
22,799
|
|
|
34,379
|
|
|
30,130
|
|
||
OTHER (EXPENSE) INCOME:
|
|
|
|
|
|
|
|
||||||
Interest on long-term debt and other interest expense
|
(6,714
|
)
|
|
(6,084
|
)
|
|
(12,505
|
)
|
|
(12,136
|
)
|
||
Pension non-service cost
|
(907
|
)
|
|
(595
|
)
|
|
(1,828
|
)
|
|
(1,178
|
)
|
||
Unrealized gain (loss) on California Water Service Group stock
|
—
|
|
|
140
|
|
|
—
|
|
|
(527
|
)
|
||
Interest income on money market fund
|
2,342
|
|
|
—
|
|
|
4,174
|
|
|
—
|
|
||
Gain on sale of real estate investments
|
745
|
|
|
—
|
|
|
745
|
|
|
—
|
|
||
Other, net
|
517
|
|
|
679
|
|
|
907
|
|
|
1,355
|
|
||
Income before income taxes
|
17,954
|
|
|
16,939
|
|
|
25,872
|
|
|
17,644
|
|
||
Provision for income taxes
|
4,192
|
|
|
4,068
|
|
|
6,237
|
|
|
3,488
|
|
||
NET INCOME BEFORE NONCONTROLLING INTEREST
|
13,762
|
|
|
12,871
|
|
|
19,635
|
|
|
14,156
|
|
||
Less net income attributable to the noncontrolling interest
|
224
|
|
|
—
|
|
|
224
|
|
|
—
|
|
||
SJW GROUP NET INCOME
|
13,538
|
|
|
12,871
|
|
|
19,411
|
|
|
14,156
|
|
||
SJW GROUP COMPREHENSIVE INCOME
|
$
|
13,538
|
|
|
12,871
|
|
|
$
|
19,411
|
|
|
14,156
|
|
SJW GROUP EARNINGS PER SHARE
|
|
|
|
|
|
|
|
||||||
Basic
|
$
|
0.48
|
|
|
0.63
|
|
|
$
|
0.68
|
|
|
0.69
|
|
Diluted
|
$
|
0.47
|
|
|
0.62
|
|
|
$
|
0.68
|
|
|
0.68
|
|
DIVIDENDS PER SHARE
|
$
|
0.30
|
|
|
0.28
|
|
|
$
|
0.60
|
|
|
0.56
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
|
|
|
|
|
|
|
||||||
Basic
|
28,440,221
|
|
|
20,592,014
|
|
|
28,431,764
|
|
|
20,576,757
|
|
||
Diluted
|
28,526,022
|
|
|
20,732,127
|
|
|
28,516,927
|
|
|
20,716,665
|
|
|
June 30,
2019 |
|
December 31,
2018 |
|||
ASSETS
|
|
|
|
|||
Utility plant:
|
|
|
|
|||
Land
|
$
|
18,303
|
|
|
18,296
|
|
Depreciable plant and equipment
|
1,870,156
|
|
|
1,833,051
|
|
|
Construction in progress
|
100,350
|
|
|
68,765
|
|
|
Intangible assets
|
15,799
|
|
|
15,799
|
|
|
|
2,004,608
|
|
|
1,935,911
|
|
|
Less accumulated depreciation and amortization
|
635,005
|
|
|
607,090
|
|
|
|
1,369,603
|
|
|
1,328,821
|
|
|
Real estate investments
|
56,473
|
|
|
56,336
|
|
|
Less accumulated depreciation and amortization
|
12,925
|
|
|
12,327
|
|
|
|
43,548
|
|
|
44,009
|
|
|
CURRENT ASSETS:
|
|
|
|
|||
Cash and cash equivalents:
|
|
|
|
|||
Cash
|
9,849
|
|
|
8,722
|
|
|
Money market fund
|
412,000
|
|
|
412,000
|
|
|
Accounts receivable:
|
|
|
|
|||
Customers, net of allowances for uncollectible accounts
|
24,350
|
|
|
19,154
|
|
|
Income tax
|
1,397
|
|
|
1,888
|
|
|
Other
|
2,456
|
|
|
1,203
|
|
|
Accrued unbilled utility revenue
|
32,800
|
|
|
27,974
|
|
|
Current regulatory assets, net
|
15,904
|
|
|
26,910
|
|
|
Other current assets
|
5,163
|
|
|
4,871
|
|
|
|
503,919
|
|
|
502,722
|
|
|
OTHER ASSETS:
|
|
|
|
|||
Net regulatory assets, less current portion
|
81,746
|
|
|
76,715
|
|
|
Other
|
4,834
|
|
|
4,122
|
|
|
|
86,580
|
|
|
80,837
|
|
|
|
$
|
2,003,650
|
|
|
1,956,389
|
|
|
June 30,
2019 |
|
December 31,
2018 |
|||
CAPITALIZATION AND LIABILITIES
|
|
|
|
|||
CAPITALIZATION:
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
|||
Common stock, $0.001 par value; authorized 36,000,000 shares; issued and outstanding shares 28,442,139 on June 30, 2019 and 28,404,316 on December 31, 2018
|
$
|
28
|
|
|
28
|
|
Additional paid-in capital
|
497,633
|
|
|
495,366
|
|
|
Retained earnings
|
396,334
|
|
|
393,918
|
|
|
Total stockholders’ equity
|
893,995
|
|
|
889,312
|
|
|
Long-term debt, less current portion
|
510,859
|
|
|
431,424
|
|
|
|
1,404,854
|
|
|
1,320,736
|
|
|
CURRENT LIABILITIES:
|
|
|
|
|||
Line of credit
|
55,000
|
|
|
100,000
|
|
|
Accrued groundwater extraction charges, purchased water and power
|
17,625
|
|
|
13,694
|
|
|
Accounts payable
|
28,253
|
|
|
24,937
|
|
|
Accrued interest
|
7,972
|
|
|
7,132
|
|
|
Accrued property taxes and other non-income taxes
|
1,042
|
|
|
1,926
|
|
|
Accrued payroll
|
5,573
|
|
|
7,181
|
|
|
Other current liabilities
|
11,593
|
|
|
9,115
|
|
|
|
127,058
|
|
|
163,985
|
|
|
DEFERRED INCOME TAXES
|
76,983
|
|
|
79,651
|
|
|
ADVANCES FOR CONSTRUCTION
|
83,454
|
|
|
80,610
|
|
|
CONTRIBUTIONS IN AID OF CONSTRUCTION
|
168,515
|
|
|
168,243
|
|
|
POSTRETIREMENT BENEFIT PLANS
|
72,432
|
|
|
70,490
|
|
|
REGULATORY LIABILITY
|
57,901
|
|
|
59,149
|
|
|
OTHER NONCURRENT LIABILITIES
|
12,453
|
|
|
13,525
|
|
|
COMMITMENTS AND CONTINGENCIES
|
—
|
|
|
—
|
|
|
|
$
|
2,003,650
|
|
|
1,956,389
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling Interest
|
|
Total
Stockholders’ Equity |
|||||||||||||||
Number of
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
BALANCES, December 31, 2018
|
28,404,316
|
|
|
$
|
28
|
|
|
$
|
495,366
|
|
|
$
|
393,918
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
889,312
|
|
Net income before noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
5,873
|
|
|
—
|
|
|
—
|
|
|
5,873
|
|
||||||
Cumulative effect of change in accounting principle, net of tax effect of $33
|
—
|
|
|
—
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
—
|
|
|
97
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
886
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
870
|
|
||||||
Issuance of restricted and deferred stock units
|
14,312
|
|
|
—
|
|
|
(132
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(132
|
)
|
||||||
Employee stock purchase plan
|
15,932
|
|
|
—
|
|
|
811
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
811
|
|
||||||
Common stock issuance cost
|
—
|
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10
|
)
|
||||||
Dividends paid ($0.30 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,528
|
)
|
|
—
|
|
|
—
|
|
|
(8,528
|
)
|
||||||
BALANCES, March 31, 2019
|
28,434,560
|
|
|
$
|
28
|
|
|
$
|
496,921
|
|
|
$
|
391,344
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
888,293
|
|
Net income before noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
13,538
|
|
|
—
|
|
|
224
|
|
|
13,762
|
|
||||||
Distribution to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(224
|
)
|
|
(224
|
)
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
718
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
702
|
|
||||||
Issuance of restricted and deferred stock units
|
7,579
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
Dividends paid ($0.30 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,532
|
)
|
|
—
|
|
|
—
|
|
|
(8,532
|
)
|
||||||
BALANCES, June 30, 2019
|
28,442,139
|
|
|
$
|
28
|
|
|
$
|
497,633
|
|
|
$
|
396,334
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
893,995
|
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Noncontrolling Interest
|
|
Total
Stockholders’ Equity |
|||||||||||||||
Number of
Shares
|
|
Amount
|
|
|||||||||||||||||||||||
BALANCES, December 31, 2017
|
20,520,856
|
|
|
$
|
21
|
|
|
$
|
84,866
|
|
|
$
|
376,119
|
|
|
$
|
2,203
|
|
|
$
|
—
|
|
|
$
|
463,209
|
|
Net income before noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
1,285
|
|
|
—
|
|
|
—
|
|
|
1,285
|
|
||||||
Cumulative effect of change in accounting principle, net of tax effect of $1,507
|
—
|
|
|
—
|
|
|
—
|
|
|
2,203
|
|
|
(2,203
|
)
|
|
—
|
|
|
—
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
487
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
457
|
|
||||||
Issuance of restricted and deferred stock units
|
51,442
|
|
|
—
|
|
|
(2,020
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,020
|
)
|
||||||
Employee stock purchase plan
|
12,838
|
|
|
—
|
|
|
653
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
653
|
|
||||||
Dividends paid ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,754
|
)
|
|
—
|
|
|
—
|
|
|
(5,754
|
)
|
||||||
BALANCES, March 31, 2018
|
20,585,136
|
|
|
$
|
21
|
|
|
$
|
83,986
|
|
|
$
|
373,823
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
457,830
|
|
Net income before noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
12,871
|
|
|
—
|
|
|
—
|
|
|
12,871
|
|
||||||
Share-based compensation
|
—
|
|
|
—
|
|
|
392
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
362
|
|
||||||
Issuance of restricted and deferred stock units
|
9,350
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
||||||
Dividends paid ($0.28 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,766
|
)
|
|
—
|
|
|
—
|
|
|
(5,766
|
)
|
||||||
BALANCES, June 30, 2018
|
20,594,486
|
|
|
$
|
21
|
|
|
$
|
84,375
|
|
|
$
|
380,898
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
465,294
|
|
|
Six months ended June 30,
|
|||||
|
2019
|
|
2018
|
|||
OPERATING ACTIVITIES:
|
|
|
|
|||
Net income before noncontrolling interest
|
$
|
19,635
|
|
|
14,156
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|||
Depreciation and amortization
|
31,576
|
|
|
28,389
|
|
|
Deferred income taxes
|
(2,939
|
)
|
|
(2,129
|
)
|
|
Stock-based compensation
|
1,604
|
|
|
879
|
|
|
Unrealized loss on California Water Service Group stock
|
—
|
|
|
527
|
|
|
Gain on sale of real estate investments
|
(745
|
)
|
|
—
|
|
|
Loss on sale of California Water Service Group stock
|
—
|
|
|
87
|
|
|
Changes in operating assets and liabilities:
|
|
|
|
|||
Accounts receivable and accrued unbilled utility revenue
|
(11,275
|
)
|
|
(9,359
|
)
|
|
Accounts payable and other current liabilities
|
830
|
|
|
1,414
|
|
|
Accrued groundwater extraction charges, purchased water and power
|
3,931
|
|
|
4,173
|
|
|
Tax payable and receivable, and other accrued taxes
|
(41
|
)
|
|
5,607
|
|
|
Postretirement benefits
|
1,942
|
|
|
2,388
|
|
|
Regulatory assets and liability related to balancing and memorandum accounts
|
6,237
|
|
|
1,399
|
|
|
Other changes, net
|
(998
|
)
|
|
(2,105
|
)
|
|
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
49,757
|
|
|
45,426
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
|||
Additions to utility plant:
|
|
|
|
|||
Company-funded
|
(62,330
|
)
|
|
(62,091
|
)
|
|
Contributions in aid of construction
|
(7,800
|
)
|
|
(3,091
|
)
|
|
Additions to real estate investments
|
(137
|
)
|
|
(123
|
)
|
|
Payments to retire utility plant, net of salvage
|
(3,009
|
)
|
|
(2,787
|
)
|
|
Proceeds from sale of real estate investments
|
745
|
|
|
—
|
|
|
Proceeds from sale of California Water Service Group stock
|
—
|
|
|
714
|
|
|
NET CASH USED IN INVESTING ACTIVITIES
|
(72,531
|
)
|
|
(67,378
|
)
|
|
FINANCING ACTIVITIES:
|
|
|
|
|||
Borrowings on line of credit
|
66,000
|
|
|
34,000
|
|
|
Repayments of line of credit
|
(111,000
|
)
|
|
—
|
|
|
Long-term borrowings
|
80,000
|
|
|
—
|
|
|
Payment to noncontrolling interest
|
(224
|
)
|
|
—
|
|
|
Debt issuance and broker fee costs
|
(847
|
)
|
|
—
|
|
|
Dividends paid
|
(17,060
|
)
|
|
(11,520
|
)
|
|
Receipts of advances and contributions in aid of construction
|
7,836
|
|
|
4,560
|
|
|
Refunds of advances for construction
|
(1,390
|
)
|
|
(1,251
|
)
|
|
Other changes, net
|
586
|
|
|
(2,710
|
)
|
|
NET CASH PROVIDED BY FINANCING ACTIVITIES
|
23,901
|
|
|
23,079
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
1,127
|
|
|
1,127
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
420,722
|
|
|
7,799
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
421,849
|
|
|
8,926
|
|
Cash paid during the period for:
|
|
|
|
|||
Interest
|
$
|
13,332
|
|
|
13,240
|
|
Income taxes
|
9,581
|
|
|
420
|
|
|
Supplemental disclosure of non-cash activities:
|
|
|
|
|||
Change in accrued payables for construction costs capitalized
|
2,348
|
|
|
1,657
|
|
|
Utility property installed by developers
|
(109
|
)
|
|
565
|
|
Note 1.
|
General
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Revenue from contracts with customers
|
$
|
104,299
|
|
|
98,443
|
|
|
$
|
183,227
|
|
|
174,312
|
|
Alternative revenue programs, net - WCMA
|
(327
|
)
|
|
3,933
|
|
|
(2,306
|
)
|
|
3,601
|
|
||
Other balancing and memorandum accounts revenue, net
|
(2,376
|
)
|
|
(4,611
|
)
|
|
(3,009
|
)
|
|
(6,447
|
)
|
||
Rental income
|
1,369
|
|
|
1,321
|
|
|
2,735
|
|
|
2,662
|
|
||
|
$
|
102,965
|
|
|
99,086
|
|
|
$
|
180,647
|
|
|
174,128
|
|
Note 2.
|
Equity Plans
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Adjustments to additional paid-in capital and common stock for:
|
|
|
|
|
|
|
|
||||||
Compensation costs charged to income:
|
|
|
|
|
|
|
|
||||||
ESPP
|
$
|
—
|
|
|
—
|
|
|
$
|
143
|
|
|
115
|
|
Restricted stock and deferred restricted stock
|
718
|
|
|
392
|
|
|
1,461
|
|
|
764
|
|
||
Total compensation costs charged to income
|
$
|
718
|
|
|
392
|
|
|
$
|
1,604
|
|
|
879
|
|
ESPP proceeds
|
$
|
—
|
|
|
—
|
|
|
$
|
811
|
|
|
653
|
|
Note 3.
|
Real Estate Investments
|
|
June 30,
2019 |
|
December 31,
2018 |
|||
Land
|
$
|
13,262
|
|
|
13,262
|
|
Buildings and improvements
|
43,211
|
|
|
43,074
|
|
|
Subtotal
|
56,473
|
|
|
56,336
|
|
|
Less: accumulated depreciation and amortization
|
12,925
|
|
|
12,327
|
|
|
Total
|
$
|
43,548
|
|
|
44,009
|
|
Note 4.
|
Defined Benefit Plan
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Service cost
|
$
|
1,479
|
|
|
1,607
|
|
|
$
|
2,958
|
|
|
3,203
|
|
Interest cost
|
2,113
|
|
|
1,876
|
|
|
4,225
|
|
|
3,753
|
|
||
Other cost
|
1,117
|
|
|
1,145
|
|
|
2,235
|
|
|
2,278
|
|
||
Expected return on assets
|
(2,310
|
)
|
|
(2,426
|
)
|
|
(4,619
|
)
|
|
(4,853
|
)
|
||
|
$
|
2,399
|
|
|
2,202
|
|
|
$
|
4,799
|
|
|
4,381
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Other production expenses
|
$
|
370
|
|
|
426
|
|
|
$
|
740
|
|
|
849
|
|
Administrative and general expense
|
851
|
|
|
902
|
|
|
1,689
|
|
|
1,797
|
|
||
Maintenance expense
|
271
|
|
|
279
|
|
|
542
|
|
|
557
|
|
||
Pension non-service costs
|
907
|
|
|
595
|
|
|
1,828
|
|
|
1,178
|
|
||
|
$
|
2,399
|
|
|
2,202
|
|
|
$
|
4,799
|
|
|
4,381
|
|
|
|
|
Fair Value Measurements at June 30, 2019
|
||||||||||||||
|
|
|
|
|
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
|
—
|
|
$
|
7,723
|
|
|
$
|
7,723
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
All Cap Equity
|
Russell 3000 Value
|
|
6,461
|
|
|
6,426
|
|
|
35
|
|
|
—
|
|
||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
57,375
|
|
|
57,375
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
|
|
10,202
|
|
|
10,202
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value
|
|
10,385
|
|
|
10,385
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
5,767
|
|
|
5,767
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT - Equity REIT’S
|
|
7,137
|
|
|
—
|
|
|
7,137
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
47,489
|
|
|
—
|
|
|
47,489
|
|
|
—
|
|
||||
Total
|
|
|
$
|
152,539
|
|
|
$
|
97,878
|
|
|
$
|
54,661
|
|
|
$
|
—
|
|
(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, 2018
|
||||||||||||||
|
|
|
|
|
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
|
—
|
|
$
|
8,136
|
|
|
$
|
8,136
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Actively Managed (a):
|
|
|
|
|
|
|
|
|
|
||||||||
All Cap Equity
|
Russell 3000 Value
|
|
5,670
|
|
|
5,632
|
|
|
38
|
|
|
—
|
|
||||
U.S. Large Cap Equity
|
Russell 1000, Russell 1000 Growth, Russell 1000 Value
|
|
47,040
|
|
|
47,040
|
|
|
—
|
|
|
—
|
|
||||
U.S. Mid Cap Equity
|
Russell Mid Cap, Russell Mid Cap Growth, Russell Mid Cap Value
|
|
8,372
|
|
|
8,372
|
|
|
—
|
|
|
—
|
|
||||
U.S. Small Cap Equity
|
Russell 2000, Russell 2000 Growth, Russell 2000 Value
|
|
8,528
|
|
|
8,528
|
|
|
—
|
|
|
—
|
|
||||
Non-U.S. Large Cap Equity
|
MSCI EAFE
|
|
4,969
|
|
|
4,969
|
|
|
—
|
|
|
—
|
|
||||
REIT
|
NAREIT - Equity REIT’S
|
|
5,889
|
|
|
—
|
|
|
5,889
|
|
|
—
|
|
||||
Fixed Income (b)
|
(b)
|
|
44,855
|
|
|
—
|
|
|
44,855
|
|
|
—
|
|
||||
Total
|
|
|
$
|
133,459
|
|
|
$
|
82,677
|
|
|
$
|
50,782
|
|
|
$
|
—
|
|
(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, 2019
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
99,773
|
|
|
1,823
|
|
|
1,369
|
|
|
—
|
|
|
99,773
|
|
|
3,192
|
|
|
102,965
|
|
Operating expense
|
75,564
|
|
|
1,356
|
|
|
1,008
|
|
|
3,066
|
|
|
75,564
|
|
|
5,430
|
|
|
80,994
|
|
|
Operating income (loss)
|
24,209
|
|
|
467
|
|
|
361
|
|
|
(3,066
|
)
|
|
24,209
|
|
|
(2,238
|
)
|
|
21,971
|
|
|
Net income (loss)
|
13,662
|
|
|
336
|
|
|
662
|
|
|
(1,122
|
)
|
|
13,662
|
|
|
(124
|
)
|
|
13,538
|
|
|
Depreciation and amortization
|
14,698
|
|
|
105
|
|
|
298
|
|
|
—
|
|
|
14,698
|
|
|
403
|
|
|
15,101
|
|
|
Senior note and other interest expense
|
6,170
|
|
|
—
|
|
|
—
|
|
|
544
|
|
|
6,170
|
|
|
544
|
|
|
6,714
|
|
|
Income tax expense (benefit) in net income
|
4,154
|
|
|
130
|
|
|
220
|
|
|
(312
|
)
|
|
4,154
|
|
|
38
|
|
|
4,192
|
|
|
Assets
|
$
|
1,537,404
|
|
|
6,149
|
|
|
46,510
|
|
|
413,587
|
|
|
1,537,404
|
|
|
466,246
|
|
|
2,003,650
|
|
|
For Three Months Ended June 30, 2018
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
95,798
|
|
|
1,967
|
|
|
1,321
|
|
|
—
|
|
|
95,798
|
|
|
3,288
|
|
|
99,086
|
|
Operating expense
|
70,642
|
|
|
1,278
|
|
|
891
|
|
|
3,476
|
|
|
70,642
|
|
|
5,645
|
|
|
76,287
|
|
|
Operating income (loss)
|
25,156
|
|
|
689
|
|
|
430
|
|
|
(3,476
|
)
|
|
25,156
|
|
|
(2,357
|
)
|
|
22,799
|
|
|
Net income (loss)
|
15,022
|
|
|
497
|
|
|
296
|
|
|
(2,944
|
)
|
|
15,022
|
|
|
(2,151
|
)
|
|
12,871
|
|
|
Depreciation and amortization
|
13,272
|
|
|
85
|
|
|
299
|
|
|
—
|
|
|
13,272
|
|
|
384
|
|
|
13,656
|
|
|
Senior note, mortgage and other interest expense
|
5,540
|
|
|
—
|
|
|
—
|
|
|
544
|
|
|
5,540
|
|
|
544
|
|
|
6,084
|
|
|
Income tax expense (benefit) in net income
|
4,650
|
|
|
193
|
|
|
92
|
|
|
(867
|
)
|
|
4,650
|
|
|
(582
|
)
|
|
4,068
|
|
|
Assets
|
$
|
1,449,714
|
|
|
3,768
|
|
|
46,756
|
|
|
(117
|
)
|
|
1,449,714
|
|
|
50,407
|
|
|
1,500,121
|
|
|
For Six Months Ended June 30, 2019
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
174,920
|
|
|
2,992
|
|
|
2,735
|
|
|
—
|
|
|
174,920
|
|
|
5,727
|
|
|
180,647
|
|
Operating expense
|
136,149
|
|
|
2,197
|
|
|
1,899
|
|
|
6,023
|
|
|
136,149
|
|
|
10,119
|
|
|
146,268
|
|
|
Operating income (loss)
|
38,771
|
|
|
795
|
|
|
836
|
|
|
(6,023
|
)
|
|
38,771
|
|
|
(4,392
|
)
|
|
34,379
|
|
|
Net income (loss)
|
19,762
|
|
|
572
|
|
|
980
|
|
|
(1,903
|
)
|
|
19,762
|
|
|
(351
|
)
|
|
19,411
|
|
|
Depreciation and amortization
|
29,447
|
|
|
202
|
|
|
597
|
|
|
—
|
|
|
29,447
|
|
|
799
|
|
|
30,246
|
|
|
Senior note and other interest expense
|
11,390
|
|
|
—
|
|
|
—
|
|
|
1,115
|
|
|
11,390
|
|
|
1,115
|
|
|
12,505
|
|
|
Income tax expense (benefit) in net income
|
6,230
|
|
|
222
|
|
|
350
|
|
|
(565
|
)
|
|
6,230
|
|
|
7
|
|
|
6,237
|
|
|
Assets
|
$
|
1,537,404
|
|
|
6,149
|
|
|
46,510
|
|
|
413,587
|
|
|
1,537,404
|
|
|
466,246
|
|
|
2,003,650
|
|
|
For Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Water Utility Services
|
|
Real Estate Services
|
|
All Other*
|
|
SJW Group
|
||||||||||||||
|
Regulated
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Non-tariffed
|
|
Regulated
|
|
Non-tariffed
|
|
Total
|
||||||||
Operating revenue
|
$
|
168,151
|
|
|
3,315
|
|
|
2,662
|
|
|
—
|
|
|
168,151
|
|
|
5,977
|
|
|
174,128
|
|
Operating expense
|
132,343
|
|
|
2,166
|
|
|
1,740
|
|
|
7,749
|
|
|
132,343
|
|
|
11,655
|
|
|
143,998
|
|
|
Operating income (loss)
|
35,808
|
|
|
1,149
|
|
|
922
|
|
|
(7,749
|
)
|
|
35,808
|
|
|
(5,678
|
)
|
|
30,130
|
|
|
Net income (loss)
|
19,817
|
|
|
828
|
|
|
652
|
|
|
(7,141
|
)
|
|
19,817
|
|
|
(5,661
|
)
|
|
14,156
|
|
|
Depreciation and amortization
|
26,473
|
|
|
168
|
|
|
598
|
|
|
—
|
|
|
26,473
|
|
|
766
|
|
|
27,239
|
|
|
Senior note and other interest expense
|
11,048
|
|
|
—
|
|
|
—
|
|
|
1,088
|
|
|
11,048
|
|
|
1,088
|
|
|
12,136
|
|
|
Income tax expense (benefit) in net income
|
5,142
|
|
|
322
|
|
|
186
|
|
|
(2,162
|
)
|
|
5,142
|
|
|
(1,654
|
)
|
|
3,488
|
|
|
Assets
|
$
|
1,449,714
|
|
|
3,768
|
|
|
46,756
|
|
|
(117
|
)
|
|
1,449,714
|
|
|
50,407
|
|
|
1,500,121
|
|
Note 6.
|
Long-Term Liabilities and Bank Borrowings
|
Note 7.
|
Fair Value Measurement
|
Note 8.
|
Regulatory Rate Filings
|
Note 9.
|
Balancing and Memorandum Accounts
|
|
Three months ended June 30, 2019
|
|
Three months ended June 30, 2018
|
||||||||||||||||||||||
Beginning Balance
|
|
Regulatory Asset Increase (Decrease)
|
|
Refunds (Collections) Adjustments
|
|
Ending Balance
|
|
Beginning Balance
|
|
Regulatory Asset Increase (Decrease)
|
|
Refunds (Collections) Adjustments
|
|
Ending Balance
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014-2017 WCMA*
|
$
|
6,912
|
|
|
—
|
|
|
(1,597
|
)
|
|
5,315
|
|
|
$
|
7,055
|
|
|
220
|
|
|
2
|
|
|
7,277
|
|
2018 WCMA*
|
8,997
|
|
|
(39
|
)
|
|
—
|
|
|
8,958
|
|
|
(708
|
)
|
|
3,711
|
|
|
—
|
|
|
3,003
|
|
||
2019 WCMA*
|
(752
|
)
|
|
1,309
|
|
|
—
|
|
|
557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
2012 General Rate Case true-up
|
10,152
|
|
|
—
|
|
|
(2,421
|
)
|
|
7,731
|
|
|
11,320
|
|
|
—
|
|
|
4
|
|
|
11,324
|
|
||
Cost of capital memorandum account
|
(1,532
|
)
|
|
(8
|
)
|
|
—
|
|
|
(1,540
|
)
|
|
(1,309
|
)
|
|
(198
|
)
|
|
—
|
|
|
(1,507
|
)
|
||
Tax memorandum account
|
(6,545
|
)
|
|
(40
|
)
|
|
—
|
|
|
(6,585
|
)
|
|
(933
|
)
|
|
(4,563
|
)
|
|
—
|
|
|
(5,496
|
)
|
||
All others
|
6,249
|
|
|
2,031
|
|
|
(1,088
|
)
|
|
7,192
|
|
|
4,251
|
|
|
422
|
|
|
2
|
|
|
4,675
|
|
||
Total revenue accounts
|
$
|
23,481
|
|
|
3,253
|
|
|
(5,106
|
)
|
|
21,628
|
|
|
$
|
19,676
|
|
|
(408
|
)
|
|
8
|
|
|
19,276
|
|
Cost-recovery accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Water supply costs
|
8,217
|
|
|
(1,058
|
)
|
|
(1,247
|
)
|
|
5,912
|
|
|
8,197
|
|
|
1,190
|
|
|
—
|
|
|
9,387
|
|
||
Pension
|
(1,237
|
)
|
|
199
|
|
|
805
|
|
|
(233
|
)
|
|
(2,298
|
)
|
|
161
|
|
|
—
|
|
|
(2,137
|
)
|
||
All others
|
1,015
|
|
|
3
|
|
|
(148
|
)
|
|
870
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total cost-recovery accounts
|
$
|
7,995
|
|
|
(856
|
)
|
|
(590
|
)
|
|
6,549
|
|
|
$
|
5,899
|
|
|
1,351
|
|
|
—
|
|
|
7,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total
|
$
|
31,476
|
|
|
2,397
|
|
|
(5,696
|
)
|
|
28,177
|
|
|
$
|
25,575
|
|
|
943
|
|
|
8
|
|
|
26,526
|
|
|
Six months ended June 30, 2019
|
|
Six months ended June 30, 2018
|
||||||||||||||||||||||
Beginning Balance
|
|
Regulatory Asset Increase (Decrease)
|
|
Refunds (Collections) Adjustments
|
|
Ending Balance
|
|
Beginning Balance
|
|
Regulatory Asset Increase (Decrease)
|
|
Refunds (Collections) Adjustments
|
|
Ending Balance
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2014-2017 WCMA*
|
$
|
7,750
|
|
|
—
|
|
|
(2,435
|
)
|
|
5,315
|
|
|
$
|
6,679
|
|
|
596
|
|
|
2
|
|
|
7,277
|
|
2018 WCMA*
|
9,386
|
|
|
(428
|
)
|
|
—
|
|
|
8,958
|
|
|
—
|
|
|
3,003
|
|
|
—
|
|
|
3,003
|
|
||
2019 WCMA*
|
—
|
|
|
557
|
|
|
—
|
|
|
557
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
2012 General Rate Case true-up
|
11,328
|
|
|
96
|
|
|
(3,693
|
)
|
|
7,731
|
|
|
11,320
|
|
|
—
|
|
|
4
|
|
|
11,324
|
|
||
Cost of capital memorandum account
|
(1,523
|
)
|
|
(17
|
)
|
|
—
|
|
|
(1,540
|
)
|
|
(144
|
)
|
|
(1,363
|
)
|
|
—
|
|
|
(1,507
|
)
|
||
Tax memorandum account
|
(6,504
|
)
|
|
(81
|
)
|
|
—
|
|
|
(6,585
|
)
|
|
—
|
|
|
(5,496
|
)
|
|
—
|
|
|
(5,496
|
)
|
||
All others
|
5,112
|
|
|
3,738
|
|
|
(1,658
|
)
|
|
7,192
|
|
|
3,851
|
|
|
822
|
|
|
2
|
|
|
4,675
|
|
||
Total revenue accounts
|
$
|
25,549
|
|
|
3,865
|
|
|
(7,786
|
)
|
|
21,628
|
|
|
$
|
21,706
|
|
|
(2,438
|
)
|
|
8
|
|
|
19,276
|
|
Cost-recovery accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Water supply costs
|
9,617
|
|
|
(1,803
|
)
|
|
(1,902
|
)
|
|
5,912
|
|
|
8,679
|
|
|
708
|
|
|
—
|
|
|
9,387
|
|
||
Pension
|
(1,843
|
)
|
|
383
|
|
|
1,227
|
|
|
(233
|
)
|
|
(2,459
|
)
|
|
322
|
|
|
—
|
|
|
(2,137
|
)
|
||
All others
|
1,090
|
|
|
6
|
|
|
(226
|
)
|
|
870
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total cost-recovery accounts
|
$
|
8,864
|
|
|
(1,414
|
)
|
|
(901
|
)
|
|
6,549
|
|
|
$
|
6,220
|
|
|
1,030
|
|
|
—
|
|
|
7,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total
|
$
|
34,413
|
|
|
2,451
|
|
|
(8,687
|
)
|
|
28,177
|
|
|
$
|
27,926
|
|
|
(1,408
|
)
|
|
8
|
|
|
26,526
|
|
Note 10.
|
Regulatory Assets and Liabilities
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|||
Regulatory assets:
|
|
|
|
|
|||
Postretirement pensions and other medical benefits
|
|
$
|
66,233
|
|
|
66,233
|
|
Balancing and memorandum accounts, net
|
|
28,177
|
|
|
34,413
|
|
|
Other, net
|
|
3,240
|
|
|
2,979
|
|
|
Total regulatory assets, net in Consolidated Balance Sheets
|
|
97,650
|
|
|
103,625
|
|
|
Less: current regulatory asset, net
|
|
15,904
|
|
|
26,910
|
|
|
Total regulatory assets, net, less current portion
|
|
$
|
81,746
|
|
|
76,715
|
|
|
|
|
|
|
|||
Regulatory liability:
|
|
|
|
|
|||
Income tax temporary differences, net
|
|
$
|
57,901
|
|
|
59,149
|
|
Total regulatory liability in Consolidated Balance Sheets
|
|
$
|
57,901
|
|
|
59,149
|
|
Note 11.
|
SJW Group and CTWS Merger
|
Note 12.
|
Legal Proceedings
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
% for Six months ended
June 30, 2019
of SJW Land Company
|
||||
Description
|
|
Location
|
|
Acreage
|
|
Square Footage
|
|
Revenue
|
|
Expense
|
||
Warehouse building
|
|
Knoxville, Tennessee
|
|
30
|
|
361,500
|
|
45
|
%
|
|
39
|
%
|
Commercial building
|
|
Knoxville, Tennessee
|
|
15
|
|
135,000
|
|
55
|
%
|
|
61
|
%
|
Undeveloped land and parking lot
|
|
Knoxville, Tennessee
|
|
10
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
Undeveloped land
|
|
San Jose, California
|
|
103
|
|
N/A
|
|
N/A
|
|
|
N/A
|
|
•
|
On December 3, 2018, the Connecticut Public Utilities Regulatory Authority (“PURA”) issued a proposed final decision denying the application by SJW Group and CTWS for approval of the Merger. On December 5, 2018, PURA conditionally granted SJW Group’s and CTWS’s motion to suspend the schedule permitting SJW Group and CTWS to file new evidence that was unavailable before the close of the record in the proceeding for PURA’s consideration. On December 14, 2018, SJW Group and CTWS filed a motion to reopen the record and extend the procedural schedule to admit new evidence that was submitted concurrent with the motion (“Motion to Reopen”). On January 4, 2019, PURA denied the Motion to Reopen, concluding that the concessions and offers of commitments did not constitute new evidence and to the extent that some of the filed material contained “new” evidence, the material was insufficient to warrant reopening. On January 9, 2019, SJW Group and CTWS withdrew their application before PURA . PURA closed the docket without issuing a final decision on January 11, 2019. After a thorough review conducted by the management and boards of both companies with the support of their respective local Connecticut regulatory counsel, on April 3, 2019, SJW Group and CTWS filed a new application with PURA for approval of the Merger.
|
•
|
In support of the new application, SJW Group has made certain regulatory commitments, which are subject to PURA approval, that are designed to demonstrate that the Merger is in the public interest, including many which go beyond those included in the previous application. In this regard, the new application includes a commitment for CTWS’s Connecticut utilities not to file a general rate case for new base rates to become effective prior to January 1, 2021, as well as to provide a bill credit for customers for CTWS’s Connecticut utilities. In addition, SJW Group has committed that CTWS’s Connecticut utilities will not seek recovery in rates, of the merger premium or other costs incurred in connection with the Merger. With respect to current CTWS's Connecticut employees, the new application provides that there will be no layoffs as a result of the Merger and that, for at least three years following completion of the Merger, CTWS’s Connecticut utilities will maintain their current combined staffing levels. To enhance the independence and local control of CTWS and its Connecticut utilities, the new application provides that each of their boards of directors will have a majority of independent directors and a majority of directors who reside in New England. SJW Group has also committed to certain “ring-fencing” measures to enhance CTWS’s separateness from SJW Group and to mitigate the risk that CTWS would be negatively impacted in the event of a bankruptcy or other
|
•
|
On December 20, 2018, the Maine Public Utilities Commission (“MPUC”) staff issued a stay in the reorganization proceeding pending resolution of the regulatory filing with PURA. On January 10, 2019, following the withdrawal of the PURA application, the Maine Water Company notified the MPUC of such withdrawal in a status report. On January 23, 2019, the Maine Water Company filed notice of its intent to voluntarily withdraw its application without prejudice, reserving the right to refile at a later date. Later that day, the MPUC acknowledged receipt of the Maine Water Company’s notice and issued notice closing the docket. After a thorough review conducted by the management and boards of both companies with the support of their respective local Maine regulatory counsel, SJW Group and CTWS announced on February 20, 2019, that they intended to file for merger approval with MPUC during the second quarter of 2019. On May 3, 2019, Maine Water Company filed a new application for the MPUC approval of the Merger. The application is consistent with the PURA Application and Maine Water Company has agreed to regulatory commitments similar and proportional to those made in the PURA application. Since May 3, 2019, the parties have engaged in discovery and preliminary settlement negotiations. On July 10, 2019, the Maine Office of Public Advocate (“OPA”) filed direct testimony stating that the Merger as proposed did not meet the statutory criteria for approval, but the OPA also noted that it might support (or not oppose) the Merger application if the Merger were subject to certain conditions, including significant protections to insulate ratepayers from financial risk associated with the Merger. The OPA further indicated that they would continue to work with the parties on conditional approval, and the OPA has continued to engage in settlement discussions. A final date for resolution of the Maine proceeding has not been set, but the parties have discussed concluding the case no later than September.
|
•
|
While SJW Group believes that no prior authorization of the California Public Utilities Commission (“CPUC”) is required for the Merger, the CPUC previously issued an Order Instituting Investigation (“OII”) to investigate the Merger, to consider whether it is subject to CPUC approval and its likely impacts within California. The assigned commissioner’s Scoping Memo issued September 7, 2018, had adopted a schedule providing for the CPUC to vote on a proposed decision in December 2018. However, as a result of unexpected delays in the CPUC’s scheduling of a planned public participation hearing, which was held January 31, 2019, issuance of a proposed decision was initially delayed. On March 4, 2019, the presiding administrative law judge suspended the CPUC investigation until a final decision is issued by PURA. We are unable to predict what action, if any, the CPUC will take with respect to the Merger upon the conclusion of the OII proceeding and the impact of any such action to the timing, completion or benefits of the Merger. For a further description of certain risk factors relating to the Merger, please see the section beginning “The CPUC has initiated an investigation into the Merger…” in Item 1A, “Risk Factors” in SJW Group’s Form 10-Q for the quarter ended June 30, 2019.
|
•
|
In addition, because the prior clearance of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) was due to expire on April 27, 2019, SJW Group withdrew its prior HSR filing and refiled for clearance under the HSR Act on April 4, 2019. The Federal Trade Commission’s Premerger Notification Office granted early termination of the new HSR Act waiting period on April 15, 2019, extending the expiration to April 15, 2020.
|
(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 Public Utilities Commission of Texas (“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,
|
|||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Water Utility Services
|
$
|
101,596
|
|
|
97,765
|
|
|
$
|
177,912
|
|
|
171,466
|
|
Real Estate Services
|
1,369
|
|
|
1,321
|
|
|
2,735
|
|
|
2,662
|
|
||
|
$
|
102,965
|
|
|
99,086
|
|
|
$
|
180,647
|
|
|
174,128
|
|
|
Three months ended
June 30,
2019 vs. 2018
|
|
Six months ended
June 30,
2019 vs. 2018
|
||||||||||
Increase/(decrease)
|
|
Increase/(decrease)
|
|||||||||||
Water Utility Services:
|
|
|
|
|
|
|
|
||||||
Consumption changes
|
$
|
(2,170
|
)
|
|
(2
|
)%
|
|
$
|
(6,023
|
)
|
|
(4
|
)%
|
Increase in customers
|
855
|
|
|
1
|
%
|
|
1,655
|
|
|
1
|
%
|
||
Rate increases
|
3,624
|
|
|
4
|
%
|
|
6,741
|
|
|
4
|
%
|
||
OII customer rate credits
|
(2,100
|
)
|
|
(2
|
)%
|
|
(2,100
|
)
|
|
(1
|
)%
|
||
Balancing and memorandum accounts:
|
|
|
|
|
|
|
|
|
|
||||
Water Conservation Memorandum Account (“WCMA”)
|
(2,661
|
)
|
|
(3
|
)%
|
|
(3,470
|
)
|
|
(2
|
)%
|
||
Cost of capital memorandum account
|
190
|
|
|
—
|
%
|
|
1,346
|
|
|
1
|
%
|
||
Tax memorandum account
|
4,523
|
|
|
4
|
%
|
|
5,415
|
|
|
3
|
%
|
||
Tax regulatory liability - Texas
|
(37
|
)
|
|
—
|
%
|
|
(130
|
)
|
|
—
|
%
|
||
All others
|
1,607
|
|
|
2
|
%
|
|
3,012
|
|
|
2
|
%
|
||
Real Estate Services
|
48
|
|
|
—
|
%
|
|
73
|
|
|
—
|
%
|
||
|
$
|
3,879
|
|
|
4
|
%
|
|
$
|
6,519
|
|
|
4
|
%
|
|
Operating Expense by Segment
|
||||||||||||
Three months ended June 30,
|
|
Six months ended June 30,
|
|||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Water Utility Services
|
$
|
76,920
|
|
|
71,920
|
|
|
$
|
138,346
|
|
|
134,509
|
|
Real Estate Services
|
1,008
|
|
|
891
|
|
|
1,899
|
|
|
1,740
|
|
||
All Other
|
3,066
|
|
|
3,476
|
|
|
6,023
|
|
|
7,749
|
|
||
|
$
|
80,994
|
|
|
76,287
|
|
|
$
|
146,268
|
|
|
143,998
|
|
|
Three months ended
June 30, 2019 vs. 2018 |
|
Six months ended
June 30, 2019 vs. 2018 |
||||||||||
Increase/(decrease)
|
|
Increase/(decrease)
|
|||||||||||
Water production expenses:
|
|
|
|
|
|
|
|
||||||
Change in surface water use
|
$
|
(3,033
|
)
|
|
(4
|
)%
|
|
$
|
(7,298
|
)
|
|
(5
|
)%
|
Change in usage and new customers
|
(600
|
)
|
|
(1
|
)%
|
|
(2,965
|
)
|
|
(2
|
)%
|
||
Purchased water and groundwater extraction charge and energy price increase
|
3,638
|
|
|
5
|
%
|
|
6,362
|
|
|
4
|
%
|
||
Balancing and memorandum accounts cost recovery
|
2,247
|
|
|
3
|
%
|
|
2,509
|
|
|
2
|
%
|
||
Total water production expenses
|
2,252
|
|
|
3
|
%
|
|
(1,392
|
)
|
|
(1
|
)%
|
||
Administrative and general
|
1,488
|
|
|
2
|
%
|
|
2,233
|
|
|
2
|
%
|
||
Balance and memorandum account cost recovery
|
(38
|
)
|
|
—
|
%
|
|
(60
|
)
|
|
—
|
%
|
||
Maintenance
|
133
|
|
|
—
|
%
|
|
(2
|
)
|
|
—
|
%
|
||
Property taxes and other non-income taxes
|
398
|
|
|
—
|
%
|
|
660
|
|
|
1
|
%
|
||
Depreciation and amortization
|
1,445
|
|
|
2
|
%
|
|
3,007
|
|
|
2
|
%
|
||
Merger related expenses
|
(971
|
)
|
|
(1
|
)%
|
|
(2,176
|
)
|
|
(2
|
)%
|
||
|
$
|
4,707
|
|
|
6
|
%
|
|
$
|
2,270
|
|
|
2
|
%
|
|
Three months ended June 30,
|
|
Increase/
(decrease)
|
|
% of Total Change
|
|
Six months ended June 30,
|
|
Increase/
(decrease)
|
|
% of Total Change
|
||||||||||||
2019
|
|
2018
|
|
|
2019
|
|
2018
|
|
|||||||||||||||
Purchased water
|
5,941
|
|
|
6,402
|
|
|
(461
|
)
|
|
(4
|
)%
|
|
9,103
|
|
|
10,258
|
|
|
(1,155
|
)
|
|
(6
|
)%
|
Groundwater
|
2,402
|
|
|
2,874
|
|
|
(472
|
)
|
|
(4
|
)%
|
|
4,235
|
|
|
5,652
|
|
|
(1,417
|
)
|
|
(8
|
)%
|
Surface water
|
1,885
|
|
|
1,167
|
|
|
718
|
|
|
7
|
%
|
|
3,462
|
|
|
1,704
|
|
|
1,758
|
|
|
10
|
%
|
Reclaimed water
|
179
|
|
|
181
|
|
|
(2
|
)
|
|
—
|
%
|
|
224
|
|
|
251
|
|
|
(27
|
)
|
|
—
|
%
|
|
10,407
|
|
|
10,624
|
|
|
(217
|
)
|
|
(1
|
)%
|
|
17,024
|
|
|
17,865
|
|
|
(841
|
)
|
|
(4
|
)%
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
having to pay certain significant costs relating to the Merger without receiving the benefits of the Merger, including, in certain circumstances, payment of a termination fee and an expense reimbursement;
|
•
|
the potential loss of key personnel during the pendency of the Merger as employees may experience uncertainty about their future roles with the combined company;
|
•
|
reputational harm due to the adverse public perception of any failure to successfully complete the Merger;
|
•
|
our management having focused on the Merger instead of on conducting its day-to-day business and operational matters and pursuing other opportunities that could have been beneficial to us; and
|
•
|
if the Merger is not completed, we are not obligated to repurchase any or all of the shares issued in our recent equity offering and such shares may remain outstanding, which could negatively impact our stock price.
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
(1)
|
Filed currently herewith.
|
|
|
|
|
SJW GROUP
|
|
|
|
|
|
DATE:
|
July 26, 2019
|
By:
|
|
/s/ JAMES P. LYNCH
|
|
|
|
|
James P. Lynch
|
|
|
|
|
Chief Financial Officer and Treasurer
(Principal financial officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of SJW Group (the “registrant”);
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a)
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date:
|
July 26, 2019
|
/s/ ERIC W. THORNBURG
|
|
|
Eric W. Thornburg
|
|
|
Chairman, President and Chief Executive Officer
|
|
|
(Principal executive officer)
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of SJW Group (the “registrant”);
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a)
|
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;
|
b)
|
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;
|
c)
|
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
|
d)
|
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
|
5.
|
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):
|
a)
|
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
|
b)
|
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.
|
Date:
|
July 26, 2019
|
/s/ JAMES P. LYNCH
|
|
|
James P. Lynch
|
|
|
Chief Financial Officer and Treasurer
|
|
|
(Principal financial officer)
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ ERIC W. THORNBURG
|
|
Eric W. Thornburg
|
|
Chairman, President and Chief Executive Officer
|
|
(Principal executive officer)
|
|
July 26, 2019
|
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ JAMES P. LYNCH
|
|
James P. Lynch
|
|
Chief Financial Officer and Treasurer
|
|
(Principal financial officer)
|
|
July 26, 2019
|
|