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EX-31.1 - EXHIBIT 31.1 - CALIFORNIA WATER SERVICE GROUPcws-03312016xex311.htm
EX-32 - EXHIBIT 32 - CALIFORNIA WATER SERVICE GROUPcws-03312016xex32.htm
EX-31.2 - EXHIBIT 31.2 - CALIFORNIA WATER SERVICE GROUPcws-03312016xex312.htm

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-Q
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2016
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from               to              
Commission file number 1-13883
CALIFORNIA WATER SERVICE GROUP
(Exact name of registrant as specified in its charter)
Delaware
 
77-0448994
(State or other jurisdiction
 
(I.R.S. Employer identification No.)
of incorporation or organization)
 
 
1720 North First Street, San Jose, CA.
 
95112
(Address of principal executive offices)
 
(Zip Code)
408-367-8200
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ý  No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ý  No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated Filer x
 
Accelerated filer o
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
(Do not check if a smaller reporting company)
 
 
 
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act)  Yes o  No ý
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common shares outstanding as of April 27, 2016 — 47,973,799
 



TABLE OF CONTENTS
 


2


PART I FINANCIAL INFORMATION
Item 1.

FINANCIAL STATEMENTS

The condensed consolidated financial statements presented in this filing on Form 10-Q have been prepared by management and are unaudited.

CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited (In thousands, except per share data)
 
March 31,
2016
 
December 31,
2015
ASSETS
 

 
 

Utility plant:
 

 
 

Utility plant
$
2,560,787

 
$
2,506,946

Less accumulated depreciation and amortization
(821,108
)
 
(805,178
)
Net utility plant
1,739,679

 
1,701,768

Current assets:
 

 
 

Cash and cash equivalents
30,878

 
8,837

Receivables:
 

 
 

Customers
31,397

 
31,512

Regulatory balancing accounts
31,554

 
35,052

Other
12,741

 
14,760

Unbilled revenue
25,522

 
23,181

Materials and supplies at weighted average cost
6,321

 
6,339

Taxes, prepaid expense, and other assets
10,108

 
7,897

Total current assets
148,521

 
127,578

Other assets:
 

 
 

Regulatory assets
361,249

 
361,893

Goodwill
2,615

 
2,615

Other assets
47,741

 
47,399

Total other assets
411,605

 
411,907

TOTAL ASSETS
$
2,299,805

 
$
2,241,253

CAPITALIZATION AND LIABILITIES
 

 
 

Capitalization:
 

 
 

Common stock, $.01 par value; 68,000 shares authorized, 47,974 and 47,875 outstanding in 2016 and 2015, respectively
$
480

 
$
479

Additional paid-in capital
333,002

 
333,135

Retained earnings
299,485

 
308,541

Total common stockholders’ equity
632,967

 
642,155

Long-term debt, less current maturities
557,849

 
508,002

Total capitalization
1,190,816

 
1,150,157

Current liabilities:
 

 
 

Current maturities of long-term debt
6,113

 
6,043

Short-term borrowings
34,500

 
33,615

Accounts payable
65,354

 
66,380

Regulatory balancing accounts
1,075

 
2,227

Accrued interest
11,611

 
5,088

Accrued expenses and other liabilities
39,490

 
34,545

Total current liabilities
158,143

 
147,898

Unamortized investment tax credits
1,872

 
1,872

Deferred income taxes
264,153

 
264,897

Pension and postretirement benefits other than pensions
239,164

 
236,266

Regulatory liabilities and other
88,018

 
82,414

Advances for construction
180,210

 
180,172

Contributions in aid of construction
177,429

 
177,577

Commitments and contingencies (Note 10)

 

TOTAL CAPITALIZATION AND LIABILITIES
$
2,299,805

 
$
2,241,253

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements

3


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Unaudited (In thousands, except per share data)
For the three months ended
 
March 31,
2016
 
March 31,
2015
Operating revenue
 
$
121,727

 
$
121,985

Operating expenses:
 
 

 
 

Operations:
 
 

 
 

Water production costs
 
41,069

 
45,202

Administrative and general
 
27,827

 
27,695

Other operations
 
19,302

 
15,843

Maintenance
 
6,063

 
4,457

Depreciation and amortization
 
16,046

 
15,319

Income tax (benefit) expense
 
(925
)
 
613

Property and other taxes
 
6,075

 
5,359

Total operating expenses
 
115,457

 
114,488

Net operating income
 
6,270

 
7,497

Other income and expenses:
 
 

 
 

Non-regulated revenue
 
3,428

 
3,247

Non-regulated expenses
 
(2,980
)
 
(2,243
)
Income tax (expense) on other income and expenses
 
(181
)
 
(403
)
Net other income
 
267

 
601

Interest expense:
 
 

 
 

Interest expense
 
8,065

 
7,069

Less: capitalized interest
 
(730
)
 
(546
)
Net interest expense
 
7,335

 
6,523

Net (loss) income
 
$
(798
)
 
$
1,575

Net (loss) income per share
 
 

 
 

Basic
 
$
(0.02
)
 
$
0.03

Diluted
 
(0.02
)
 
0.03

Weighted average shares outstanding:
 
 

 
 

Basic
 
47,905

 
47,825

Diluted
 
47,905

 
47,854

Dividends declared per share of common stock
 
$
0.1725

 
$
0.1675

 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements


4


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited (In thousands)
For the three months ended:
 
March 31,
2016
 
March 31,
2015
Operating activities:
 
 

 
 

Net (loss) income
 
$
(798
)
 
$
1,575

Adjustments to reconcile net (loss) income to net cash:
 
 

 
 

Depreciation and amortization
 
16,454

 
15,736

Change in value of life insurance contracts
 
43

 
(161
)
Changes in operating assets and liabilities:
 
 

 
 

Receivables and unbilled revenue
 
7,127

 
600

Accounts payable
 
(5,129
)
 
(419
)
Other current assets
 
(1,728
)
 
(4,604
)
Other current liabilities
 
10,453

 
7,627

Other changes in noncurrent assets and liabilities
 
4,604

 
6,535

Net cash provided by operating activities
 
31,026

 
26,889

Investing activities:
 
 

 
 

Utility plant expenditures
 
(56,463
)
 
(35,047
)
Life insurance proceeds
 
495

 

Purchase of life insurance contracts
 
(960
)
 

Change in restricted cash
 
(465
)
 
(26
)
Net cash used in investing activities
 
(57,393
)
 
(35,073
)
Financing activities:
 
 

 
 

Short-term borrowings
 
54,500

 
30,000

Repayment of short-term borrowings
 
(53,615
)
 

Proceeds of long-term debt, net of expenses of $177 for 2016, none for 2015
 
50,039

 
50

Repayment of long-term debt
 
(254
)
 
(338
)
Advances and contributions in aid of construction
 
7,608

 
1,777

Refunds of advances for construction
 
(1,612
)
 
(1,574
)
Dividends paid
 
(8,258
)
 
(8,007
)
Net cash provided by financing activities
 
48,408

 
21,908

Change in cash and cash equivalents
 
22,041

 
13,724

Cash and cash equivalents at beginning of period
 
8,837

 
19,587

Cash and cash equivalents at end of period
 
$
30,878

 
$
33,311

Supplemental information:
 
 

 
 

Cash paid for interest (net of amounts capitalized)
 
$
481

 
$
749

Supplemental disclosure of non-cash activities:
 
 

 
 

Accrued payables for investments in utility plant
 
$
22,904

 
$
14,374

Utility plant contribution by developers
 
2,490

 
1,823

 See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements


5


CALIFORNIA WATER SERVICE GROUP
Notes to Unaudited Condensed Consolidated Financial Statements
March 31, 2016
Dollar amounts in thousands unless otherwise stated
 
Note 1. Organization and Operations and Basis of Presentation
 
California Water Service Group (the Company) is a holding company that provides water utility and other related services in California, Washington, New Mexico and Hawaii through its wholly-owned subsidiaries. California Water Service Company (Cal Water), Washington Water Service Company (Washington Water), New Mexico Water Service Company (New Mexico Water), and Hawaii Water Service Company, Inc. (Hawaii Water) provide regulated utility services under the rules and regulations of their respective state’s regulatory commissions (jointly referred to herein as the Commissions). CWS Utility Services and HWS Utility Services LLC provide non-regulated water utility and utility-related services.
 
The Company operates in one reportable segment, providing water and related utility services.
 
Basis of Presentation
 
The unaudited interim financial information has been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X promulgated by the Securities and Exchange Commission (SEC) and therefore do not contain all of the information and footnotes required by GAAP and the SEC for annual financial statements. The condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2015, included in its annual report on Form 10-K as filed with the SEC on February 25, 2016.
 
The preparation of the Company’s condensed consolidated unaudited interim financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses for the periods presented. These include, but are not limited to, estimates and assumptions used in determining the Company’s regulatory asset and liability balances based upon probability assessments of regulatory recovery, revenues earned but not yet billed, asset retirement obligations, allowance for doubtful accounts, pension and other employee benefit plan liabilities, and income tax-related assets and liabilities.  Actual results could differ from these estimates.
 
In the opinion of management, the accompanying condensed consolidated unaudited interim financial statements reflect all adjustments, consisting of normal recurring transactions that are necessary to provide a fair presentation of the results for the periods covered. The results for interim periods are not necessarily indicative of the results for any future period.
 
Due to the seasonal nature of the water business, the results for interim periods are not indicative of the results for a 12-month period. Revenue and income are generally higher in the warm, dry summer months when water usage and sales are greater. Revenue and income are generally lower in the winter months when cooler temperatures and rainfall curtail water usage and sales.
 
Note 2. Summary of Significant Accounting Policies
 
Revenue
 
Revenue generally includes monthly cycle customer billings for regulated water and wastewater services at rates authorized by regulatory commissions (plus an estimate for water used between the customer's last meter reading and the end of the accounting period) and billings to certain non-regulated customers at rates authorized by contract with government agencies.
 
The Company’s regulated water and waste water revenue requirements are authorized by the Commissions in the states in which they operate. The revenue requirements are intended to provide the Company a reasonable opportunity to recover its operating costs and earn a return on investments.
 
For metered customers, Cal Water recognizes revenue from rates which are designed and authorized by the California Public Utilities Commission (CPUC). Under the Water Revenue Adjustment Mechanism (WRAM), Cal Water records the adopted level of volumetric revenues, which would include recovery of cost of service and a return on investments, as

6


established by the CPUC for metered accounts (adopted volumetric revenues). In addition to volumetric-based revenues, the revenue requirements approved by the CPUC include service charges, flat rate charges, and other items not subject to the WRAM. The adopted volumetric revenue considers the seasonality of consumption of water based upon historical averages. The variance between adopted volumetric revenues and actual billed volumetric revenues for metered accounts is recorded as a component of revenue with an offsetting entry to a regulatory asset or liability balancing account (tracked individually for each Cal Water district) subject to certain criteria under the accounting for regulated operations being met. The variance amount may be positive or negative and represents amounts that will be billed or refunded to customers in the future.

Cost-recovery rates are designed to permit full recovery of certain costs allowed to be recovered by the Commissions. Cost-recovery rates such as the Modified Cost Balancing Account (MCBA) provide for recovery of adopted expense levels for purchased water, purchased power and pump taxes, as established by the CPUC. In addition, cost-recovery rates include recovery of costs related to water conservation programs and certain other operating expenses adopted by the CPUC. Variances (which include the effects of changes in both rates and volumes for the MCBA) between adopted and actual costs are recorded as a component of revenue, as the amount of such variances will be recovered from or refunded to our customers at a later date. Cost-recovery expenses are generally recognized when expenses are incurred with no markup for return or profit.
 
The balances in the WRAM and MCBA asset and liability accounts will fluctuate on a monthly basis depending upon the variance between adopted and actual results. The recovery or refund of WRAM is netted against the recovery or refund of MCBA for the corresponding district. The recovery or refund of net WRAM and MCBA balances are interest bearing at the current 90 day commercial paper rate. At the end of any calendar year, Cal Water files with the CPUC to refund or collect the balance in the accounts. Undercollected net WRAM and MCBA receivable balances are collected over 12, 18, or 20+ months. Cal Water defers net WRAM and MCBA operating revenues and associated costs whenever the net receivable balances are estimated to be collected more than 24 months after the respective reporting periods in which they were recognized. The deferred net WRAM and MCBA revenues and associated costs were determined using forecasts of customer consumption trends in future reporting periods and the timing of when the CPUC will authorize Cal Water’s filings to recover the undercollected balances. Deferred net WRAM and MCBA revenues and associated costs will be recognized as revenues and costs in future periods when collections are within 24 months of the respective reporting period.

Customers meter reads occur on various business days throughout the month. As a result, there are unmetered or unbilled customer usage each month. The estimated unbilled revenue for monthly unmetered customer usage is recorded using the number of unbilled days for that month and average daily customer billing rate for the previous month. The average daily customer billing rate for the previous month fluctuates depending on customer usage. Estimated unbilled revenue is not included in the WRAM until it is billed.
 
Flat rate customers are billed in advance at the beginning of the service period. The revenue is prorated so that the portion of revenue applicable to the current period is included in that period’s revenue, with the balance recorded as unearned revenue on the balance sheet and recognized as revenue when earned in the subsequent accounting period. The unearned revenue liability was $1.1 million and $1.3 million as of March 31, 2016 and December 31, 2015, respectively. This liability is included in “accrued expenses and other liabilities” on the condensed consolidated balance sheets.
 
Cash and Cash Equivalents
 
Cash equivalents include highly liquid investments with maturities of three months or less.  Cash and cash equivalents was $30.9 million and $8.8 million as of March 31, 2016 and December 31, 2015, respectively.  Restricted cash was presented on the condensed consolidated balance sheet in “taxes, prepaid expenses and other assets” and was $1.0 million and $0.5 million as of March 31, 2016 and December 31, 2015.
 
Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which amends the existing guidance relating to the presentation of debt issuance costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The Company adopted this guidance effective January 1, 2016 and applied the requirements retrospectively for all periods presented. The adoption of this guidance did not have a material impact on the Company's condensed consolidated financial statements. The long term debt unamortized

7


debt issuance costs were $4.9 million and $4.8 million as of March 31, 2016 and December 31, 2015, respectively. The following table shows the effect of the accounting change to the condensed consolidated balance sheet as of December 31, 2015:
 
December 31, 2015
Balance Sheet Classification
As Reported on Form 10-K
 
Adjusted Balance on Form 10-Q
 
Decrease from Retrospective Adoption
Other Assets
$
52,241

 
$
47,399

 
$
4,842

Long-term debt, less current maturities
512,287

 
508,002

 
4,285

Current maturities of long-term debt
6,600

 
6,043

 
557


In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers. This update creates a single, principles based framework for revenue recognition and is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when goods or services are transferred to customers.  In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, deferring the effective date of this amendment for public companies by one year to January 1, 2018, with early adoption permitted as of the original effective date of January 1, 2017.  In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies guidance relating to principal-versus-agent implementation contained in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies guidance relating to identifying performance obligations and licensing implementation contained in ASU 2014-09. The effective dates of ASU 2016-08 and ASU 2016-10 are the same as ASU 2015-14 discussed above. The Company is currently evaluating the impact of adopting the new revenue standard on its consolidated financial statements and related disclosures. 

In February 2016, the FASB issued ASU 2016-02, Leases. This update changes the accounting treatment of operating leases for lessees and related disclosure requirements. ASU 2016-2 is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of adopting the new lease standard on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendments in ASU 2016-09 involve multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the Statement of Cash Flows. ASU 2016-09 is effective for annual periods beginning after December 15, 2016 and early adoption is permitted. The Company is currently evaluating the impact on its consolidated financial statements and related disclosures.

Note 3. Stock-based Compensation
 
Equity Incentive Plan

During the three months ended March 31, 2016 and 2015, the Company granted annual Restricted Stock Awards (RSAs) of 72,317 and 59,151 shares, respectively, of common stock to officers and directors of the Company and 7,731 and 5,193 shares of RSAs were canceled during the three months ended March 31, 2016 and March 31, 2015, respectively. Employee RSAs granted in 2016 and 2015 vest over 36 months.  Director RSAs generally vest at the end of 12 months. During the first three months of 2016 and 2015, the RSAs granted were valued at $25.17 and $24.30 per share, respectively, based upon the fair market value of the Company’s common stock on the date of grant.

During the three months ended March 31, 2016 and 2015, the Company granted performance-based Restricted Stock Unit Awards (RSUs) of 43,659 shares and 37,137 shares of common stock, respectively, to officers.  Each award reflects a target number of shares that may be issued to the award recipient.  The 2016 and 2015 awards may be earned upon the completion of the 3 year performance period ending on March 1, 2019 and March 3, 2018, respectively.  During the three months ended March 31, 2016, the Company issued 28,424 of RSU shares and canceled 6,602 shares. There were no RSU shares issued or canceled during the three months ended March 31, 2015. The 2016 and 2015 RSUs are recognized as expense ratably over the 3 year performance period using a fair market value of $25.17 per share and $24.30 per share, respectively, and an estimate of RSUs earned during the performance period.
 

8


The Company has recorded compensation costs for the RSAs and RSUs in administrative and general operating expenses in the amount of $0.7 million and $0.6 million for the three months ended March 31, 2016 and March 31, 2015 respectively.

Note 4. Equity
 
The Company’s changes in total common stockholders’ equity for the three months ended March 31, 2016 were as follows:
 
Total Common
Stockholders’ Equity
Balance at December 31, 2015
$
642,155

Common stock issued
1

Share-based compensation expense
333

Shares purchased back
(466
)
Common stock dividends declared
(8,258
)
Net loss
(798
)
Balance at March 31, 2016
$
632,967

 
Note 5. Net (Loss) Income Per Share Calculations
 
The computations of basic and diluted net loss or income per weighted average common share are noted below. Basic net loss or income per share is computed by dividing the net loss or income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss or income per share reflects the potential dilution that could occur if securities or other contracts were exercised or converted into common stock. RSAs are included in the weighted average common shares outstanding because the shares have all the same voting and dividend rights as issued and unrestricted common stock. RSUs are not included in diluted shares for financial reporting until authorized by the Compensation & Organization Committee of the Board of Directors.
 
There were no vested and outstanding Stock Appreciation Rights (SARs) as of March 31, 2016 and 65,436 shares of SARs vested and outstanding as of March 31, 2015. All SARs were dilutive, as shown in the table below.
 
Three Months Ended March 31
 
2016
 
2015
 
(In thousands, except per share data)
Net (loss) income available to common stockholders
$
(798
)

$
1,575

Weighted average common shares outstanding, basic
47,905


47,825

Dilutive SARs (treasury method)


29

Weighted average common shares outstanding, dilutive
47,905


47,854

Net (loss) income per share - basic
$
(0.02
)

$
0.03

Net (loss) income per share - diluted
$
(0.02
)

$
0.03

 
Note 6. Pension Plan and Other Postretirement Benefits
 
The Company provides a qualified, defined-benefit, non-contributory pension plan for substantially all employees. The Company makes annual contributions to fund the amounts accrued for in the qualified pension plan. The Company also maintains an unfunded, non-qualified, supplemental executive retirement plan. The costs of the plans are charged to expense or are capitalized in utility plant as appropriate.
 
The Company offers medical, dental, vision, and life insurance benefits for retirees and their spouses and dependents. Participants are required to pay a premium, which offsets a portion of the cost.
 
Cash contributions by the Company related to pension plans were $7.3 million and $5.5 million for the three months ended March 31, 2016 and March 31, 2015, respectively. There were no contributions to the other postretirement benefit plans for the three months ended March 31, 2016 and March 31, 2015, respectively. The 2016 estimated cash contribution to the pension plans is $27.3 million and to the other postretirement benefit plans is $13.4 million.

9


The following table lists components of net periodic benefit costs for the pension plans and other postretirement benefits. The data listed under “pension plan” includes the qualified pension plan and the non-qualified supplemental executive retirement plan. The data listed under “other benefits” is for all other postretirement benefits.
 
Three Months Ended March 31
 
Pension Plan
 
Other Benefits
 
2016
 
2015
 
2016
 
2015
Service cost
$
5,067

 
$
5,632

 
$
2,304

 
$
2,500

Interest cost
5,453

 
5,003

 
1,800

 
1,614

Expected return on plan assets
(5,454
)
 
(4,792
)
 
(1,046
)
 
(876
)
Amortization of prior service cost
1,555

 
1,502

 
11

 
11

Recognized net actuarial loss
1,293

 
2,400

 
1,261

 
1,458

Net periodic benefit cost
$
7,914

 
$
9,745

 
$
4,330

 
$
4,707

 
Note 7. Short-term and Long-term Borrowings

On October 13, 2015, Cal Water agreed to sell $150.0 million in aggregate principal amount of first mortgage bonds in a private placement. Pursuant to the agreement, Cal Water sold $100.0 million of the first mortgage bonds on October 13, 2015, consisting of $50.0 million of 3.33% series QQQ maturing October 15, 2025 and $50.0 million of 4.31% series RRR maturing October 16, 2045.

In March 2016, Cal Water sold the remaining $50.0 million of the first mortgage bonds, consisting of $40.0 million of 4.41% series SSS maturing April 16, 2046 and $10.0 million of 4.61% series TTT maturing April 14, 2056. Cash proceeds of approximately $49.7 million, net of $0.3 million debt issuance costs, were received. Cal Water used a portion of the net proceeds from the offering to repay outstanding borrowings on the Company and Cal Water lines of credit of $48.6 million.
 
Both short-term unsecured credit agreements contain affirmative and negative covenants and events of default customary for credit facilities of this type including, among other things, limitations and prohibitions relating to additional indebtedness, liens, mergers, and asset sales. Also, these unsecured credit agreements contain financial covenants governing the Company and its subsidiaries’ consolidated total capitalization ratio and interest coverage ratio.
 
The outstanding borrowings on the Company lines of credit were $34.5 million and $33.6 million as of March 31, 2016 and December 31, 2015, respectively. There were no borrowings on the Cal Water lines of credit as of March 31, 2016 and as of December 31, 2015.  The average borrowing rate for borrowings on the Company and Cal Water lines of credit during the three months ended March 31, 2016 was 1.27% compared to 1.09% for the same period last year.
 
Note 8. Income Taxes
 
As of March 31, 2016 and December 31, 2015, the Company had unrecognized tax benefits of approximately $10.3 million. Included in the balance of unrecognized tax benefits as of March 31, 2016 and December 31, 2015 was approximately $2.1 million of tax benefits that if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next 12 months.

The Company’s fiscal year 2016 effective tax rate is estimated to be 37%.
 

10


Note 9. Regulatory Assets and Liabilities
 
Regulatory assets and liabilities were comprised of the following as of March 31, 2016 and December 31, 2015:
 
 
March 31, 2016
 
December 31, 2015
Regulatory Assets
 

 
 

Pension and retiree group health
$
205,449

 
$
205,614

Property-related temporary differences (tax benefits flowed through to ratepayers)
81,522

 
81,522

Other accrued benefits
28,314

 
27,327

Net WRAM and MCBA long-term accounts receivable
12,873

 
15,410

Asset retirement obligations, net
15,003

 
14,682

Interim rates long-term accounts receivable
4,852

 
5,238

Tank coating
7,341

 
6,829

Health care balancing account
3,948

 
3,503

Other regulatory assets
1,947

 
1,768

Total Regulatory Assets
$
361,249

 
$
361,893

Regulatory Liabilities
 

 
 

Future tax benefits due ratepayers
$
29,505

 
$
29,505

Conservation program
2,454

 
2,317

Pension balancing account
1,646

 
792

Other regulatory liabilities
7,160

 
2,650

Total Regulatory Liabilities
$
40,765

 
$
35,264

 
Short-term regulatory assets and liabilities are excluded from the above table. The short-term regulatory assets were $31.6 million as of March 31, 2016 and $35.1 million as of December 31, 2015. The short-term regulatory assets were primarily interim rate memorandum account receivable and net WRAM and MCBA accounts receivable as of March 31, 2016 and December 31, 2015. The short-term portions of regulatory liabilities were $1.1 million as of March 31, 2016 and $2.2 million as of December 31, 2015. The short-term regulatory liabilities were primarily short term net WRAM payables as of March 31, 2016 and December 31, 2015.


11


Note 10. Commitment and Contingencies
 
Commitments
 
The Company has significant commitments to lease certain office spaces and water systems and to purchase water from water wholesalers. These commitments are described in Form 10-K for the year ended December 31, 2015.  As of March 31, 2016, there were no significant changes from December 31, 2015.
 
Contingencies
 
Groundwater Contamination
 
The Company has undertaken litigation against third parties to recover past and anticipated costs related to groundwater contamination in our service areas. The cost of litigation is expensed as incurred and any settlement is first offset against such costs. The CPUC’s general policy requires all proceeds from groundwater contamination litigation to be used first to pay transactional expenses, then to make ratepayers whole for water treatment costs to comply with the CPUC’s water quality standards. The CPUC allows for a risk-based consideration of contamination proceeds which exceed the costs of the remediation described above and may result in some sharing of proceeds with the shareholder, determined on a case by case basis. The CPUC has authorized various memorandum accounts that allow the Company to track significant litigation costs to request recovery of these costs in future filings and uses of proceeds to comply with CPUC’s general policy.

LEGAL PROCEEDINGS
 
From time to time, the Company is involved in various disputes and litigation matters that arise in the ordinary course of business. The status of each significant matter is reviewed and assessed for potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and the amount of the range of loss can be estimated, a liability is accrued for the estimated loss in accordance with the accounting standards for contingencies. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based on the best information available at the time. While the outcome of these disputes and litigation matters cannot be predicted with any certainty, management does not believe when taking into account existing reserves the ultimate resolution of these matters will materially affect the Company’s financial position, results of operations, or cash flows.  The Company recognized a liability of $3.4 million and $3.5 million for known legal matters as of March 31, 2016 and December 31, 2015, respectively. The cost of litigation is expensed as incurred and any settlement is first offset against such costs.  Any settlement in excess of the cost to litigate is accounted for on a case by case basis, dependent on the nature of the settlement.


12


Note 11. Fair Value of Financial Assets and Liabilities
 
The accounting guidance for fair value measurements and disclosures provides a single definition of fair value and requires certain disclosures about assets and liabilities measured at fair value. A hierarchical framework for disclosing the observability of the inputs utilized in measuring assets and liabilities at fair value is established by this guidance. The three levels in the hierarchy are as follows:
 
Level 1 -  Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access.
 
Level 2 -  Inputs to the valuation methodology include:
Quoted market prices for similar assets or liabilities in active markets;
Quoted prices for identical or similar assets or liabilities in inactive markets;
Inputs other than quoted prices that are observable for the asset or liability; and
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 -  Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
 
Specific valuation methods include the following:
 
Accounts receivable and accounts payable carrying amounts approximated the fair value because of the short-term maturity of the instruments.
 
Long-term debt fair values were estimated using the published quoted market price, if available, or the discounted cash flow analysis, based on the current rates available using a risk-free rate (a U.S. Treasury securities yield curve) plus a risk premium of 1.70%.
 
Advances for construction fair values were estimated using broker quotes from companies that frequently purchase these investments.
 
 
March 31, 2016
 
 
 
Fair Value
 
Cost
 
Level 1
 
Level 2
 
Level 3
 
Total
Long-term debt, including current maturities
$
563,962

 


 
$
673,972

 


 
$
673,972

Advances for construction
180,210

 


 
74,539

 


 
74,539

Total
$
744,172

 
$

 
$
748,511

 
$

 
$
748,511

 
 
December 31, 2015
 
 
 
Fair Value
 
Cost
 
Level 1
 
Level 2
 
Level 3
 
Total
Long-term debt, including current maturities
$
514,045

 
$

 
$
600,440

 
$

 
$
600,440

Advances for construction
180,172

 

 
72,866

 

 
72,866

Total
$
694,217

 

 
$
673,306

 
$

 
$
673,306

 

13


Note 12. Condensed Consolidating Financial Statements
 
On April 17, 2009, Cal Water issued $100.0 million aggregate principal amount of 5.875% First Mortgage Bonds due 2019, and on November 17, 2010, Cal Water issued $100.0 million aggregate principal amount of 5.500% First Mortgage Bonds due 2040, all of which are fully and unconditionally guaranteed by the Company.  As a result of these guarantee arrangements, the Company is required to present the following condensed consolidating financial information.  The investments in affiliates are accounted for and presented using the “equity method” of accounting.
 
The following tables present the condensed consolidating balance sheets as of March 31, 2016 and December 31, 2015, the condensed consolidating statements of income for the three months ended March 31, 2016 and 2015, and the condensed consolidating statements of cash flows for the three months ended March 31, 2016 and 2015 of (i) California Water Service Group, the guarantor of the first mortgage bonds and the parent company; (ii) California Water Service Company, the issuer of the first mortgage bonds and a 100% owned consolidated subsidiary of California Water Service Group; and (iii) the other 100% owned non-guarantor consolidated subsidiaries of California Water Service Group. The condensed consolidating balance sheet as of December 31, 2015 reflects the retrospective adoption of ASU 2015-03 (refer to Note 2. Summary of Significant Accounting Policies for more details).



14


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING BALANCE SHEET
As of March 31, 2016
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
ASSETS
 

 
 

 
 

 
 

 
 

Utility plant:
 

 
 

 
 

 
 

 
 

Utility plant
$
1,318

 
$
2,366,430

 
$
200,236

 
$
(7,197
)
 
$
2,560,787

Less accumulated depreciation and amortization
(662
)
 
(772,988
)
 
(49,305
)
 
1,847

 
(821,108
)
Net utility plant
656

 
1,593,442

 
150,931

 
(5,350
)
 
1,739,679

Current assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
707

 
26,512

 
3,659

 

 
30,878

Receivables and unbilled revenue

 
97,211

 
4,003

 

 
101,214

Receivables from affiliates
19,902

 
23,851

 
78

 
(43,831
)
 

Other current assets
367

 
15,004

 
1,058

 

 
16,429

Total current assets
20,976

 
162,578

 
8,798

 
(43,831
)
 
148,521

Other assets:
 

 
 

 
 

 
 

 
 

Regulatory assets

 
357,586

 
3,663

 

 
361,249

Investments in affiliates
642,254

 

 

 
(642,254
)
 

Long-term affiliate notes receivable
24,806

 

 

 
(24,806
)
 

Other assets
564

 
46,009

 
4,699

 
(916
)
 
50,356

Total other assets
667,624

 
403,595

 
8,362

 
(667,976
)
 
411,605

TOTAL ASSETS
$
689,256

 
$
2,159,615

 
$
168,091

 
$
(717,157
)
 
$
2,299,805

CAPITALIZATION AND LIABILITIES
 

 
 

 
 

 
 

 
 

Capitalization:
 

 
 

 
 

 
 

 
 

Common stockholders’ equity
$
632,967

 
$
572,846

 
$
74,761

 
$
(647,607
)
 
$
632,967

Affiliate long-term debt

 

 
24,806

 
(24,806
)
 

Long-term debt, less current maturities

 
556,813

 
1,036

 

 
557,849

Total capitalization
632,967

 
1,129,659

 
100,603

 
(672,413
)
 
1,190,816

Current liabilities:
 

 
 

 
 

 
 

 
 

Current maturities of long-term debt

 
5,655

 
458

 

 
6,113

Short-term borrowings
34,500

 

 

 

 
34,500

Payables to affiliates
20,600

 
568

 
22,663

 
(43,831
)
 

Accounts payable

 
62,276

 
3,078

 

 
65,354

Accrued expenses and other liabilities
109

 
49,313

 
2,754

 

 
52,176

Total current liabilities
55,209

 
117,812

 
28,953

 
(43,831
)
 
158,143

Unamortized investment tax credits

 
1,872

 

 

 
1,872

Deferred income taxes
1,080

 
263,986

 

 
(913
)
 
264,153

Pension and postretirement benefits other than pensions

 
239,164

 

 

 
239,164

Regulatory liabilities and other

 
85,035

 
2,983

 

 
88,018

Advances for construction

 
179,653

 
557

 

 
180,210

Contributions in aid of construction

 
142,434

 
34,995

 

 
177,429

TOTAL CAPITALIZATION AND LIABILITIES
$
689,256

 
$
2,159,615

 
$
168,091

 
$
(717,157
)
 
$
2,299,805


15


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2015
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
ASSETS
 

 
 

 
 

 
 

 
 

Utility plant:
 

 
 

 
 

 
 

 
 

Utility plant
$
1,318

 
$
2,313,704

 
$
199,121

 
$
(7,197
)
 
$
2,506,946

Less accumulated depreciation and amortization
(605
)
 
(758,362
)
 
(48,034
)
 
1,823

 
(805,178
)
Net utility plant
713

 
1,555,342

 
151,087

 
(5,374
)
 
1,701,768

Current assets:
 

 
 

 
 

 
 

 
 

Cash and cash equivalents
582

 
4,270

 
3,985

 

 
8,837

Receivables and unbilled revenue

 
100,777

 
3,728

 

 
104,505

Receivables from affiliates
19,677

 
26,219

 

 
(45,896
)
 

Other current assets
79

 
13,077

 
1,080

 

 
14,236

Total current assets
20,338

 
144,343

 
8,793

 
(45,896
)
 
127,578

Other assets:
 

 
 

 
 

 
 

 
 

Regulatory assets

 
358,254

 
3,639

 

 
361,893

Investments in affiliates
651,449

 

 

 
(651,449
)
 

Long-term affiliate notes receivable
25,099

 

 

 
(25,099
)
 

Other assets
758

 
45,544

 
4,616

 
(904
)
 
50,014

Total other assets
677,306

 
403,798

 
8,255

 
(677,452
)
 
411,907

TOTAL ASSETS
$
698,357

 
$
2,103,483

 
$
168,135

 
$
(728,722
)
 
$
2,241,253

CAPITALIZATION AND LIABILITIES
 

 
 

 
 

 
 

 
 

Capitalization:
 

 
 

 
 

 
 

 
 

Common stockholders’ equity
$
642,155

 
$
581,792

 
75,024

 
$
(656,816
)
 
$
642,155

Affiliate long-term debt

 

 
25,099

 
(25,099
)
 

Long-term debt, less current maturities

 
507,034

 
968

 

 
508,002

Total capitalization
642,155

 
1,088,826

 
101,091

 
(681,915
)
 
1,150,157

Current liabilities:
 

 
 

 
 

 
 

 
 

Current maturities of long-term debt

 
5,654

 
389

 

 
6,043

Short-term borrowings
33,615

 

 

 

 
33,615

Payables to affiliates
21,500

 
667

 
23,729

 
(45,896
)
 

Accounts payable

 
63,814

 
2,566

 

 
66,380

Accrued expenses and other liabilities
102

 
40,173

 
1,585

 

 
41,860

Total current liabilities
55,217

 
110,308

 
28,269

 
(45,896
)
 
147,898

Unamortized investment tax credits

 
1,872

 

 

 
1,872

Deferred income taxes
985

 
264,823

 

 
(911
)
 
264,897

Pension and postretirement benefits other than pensions

 
236,266

 

 

 
236,266

Regulatory and other liabilities

 
79,477

 
2,937

 

 
82,414

Advances for construction

 
179,630

 
542

 

 
180,172

Contributions in aid of construction

 
142,281

 
35,296

 

 
177,577

TOTAL CAPITALIZATION AND LIABILITIES
$
698,357

 
$
2,103,483

 
$
168,135

 
$
(728,722
)
 
$
2,241,253



16


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended March 31, 2016
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Operating revenue
$

 
$
113,027

 
$
8,700

 
$

 
$
121,727

Operating expenses:
 

 
 

 
 

 
 

 
 

Operations:
 

 
 

 
 

 
 

 
 

Water production costs

 
39,245

 
1,824

 

 
41,069

Administrative and general

 
24,943

 
2,884

 

 
27,827

Other operations

 
17,726

 
1,702

 
(126
)
 
19,302

Maintenance

 
5,840

 
223

 

 
6,063

Depreciation and amortization
57

 
14,915

 
1,098

 
(24
)
 
16,046

Income tax benefit
(94
)
 
(1,037
)
 
(51
)
 
257

 
(925
)
Property and other taxes

 
5,390

 
685

 

 
6,075

Total operating (income) expenses
(37
)
 
107,022

 
8,365

 
107

 
115,457

Net operating income
37

 
6,005

 
335

 
(107
)
 
6,270

Other Income and Expenses:
 

 
 

 
 

 
 

 
 

Non-regulated revenue
464

 
3,196

 
374

 
(606
)
 
3,428

Non-regulated expenses

 
(2,705
)
 
(275
)
 

 
(2,980
)
Income tax (expense) on other income and expense
(189
)
 
(200
)
 
(39
)
 
247

 
(181
)
Total other income
275

 
291

 
60

 
(359
)
 
267

Interest:
 

 
 

 
 

 
 

 
 

Interest expense
173

 
7,899

 
473

 
(480
)
 
8,065

Less: capitalized interest

 
(714
)
 
(16
)
 

 
(730
)
Net interest expense
173

 
7,185

 
457

 
(480
)
 
7,335

Equity loss of subsidiaries
(937
)
 

 

 
937

 

Net loss
$
(798
)
 
$
(889
)
 
$
(62
)
 
$
951

 
$
(798
)

17


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF INCOME
For the three months ended March 31, 2015
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Operating revenue
$

 
$
114,507

 
$
7,478

 
$

 
$
121,985

Operating expenses:
 

 
 

 
 

 
 

 
 

Operations:
 

 
 

 
 

 
 

 
 

Water production costs

 
43,376

 
1,826

 

 
45,202

Administrative and general

 
24,855

 
2,840

 

 
27,695

Other

 
14,270

 
1,699

 
(126
)
 
15,843

Maintenance

 
4,264

 
193

 

 
4,457

Depreciation and amortization
57

 
14,203

 
1,084

 
(25
)
 
15,319

Income tax (benefit) expense
(68
)
 
930

 
(453
)
 
204

 
613

Taxes other than income taxes

 
4,750

 
609

 

 
5,359

Total operating expenses
(11
)
 
106,648

 
7,798

 
53

 
114,488

Net operating income (loss)
11

 
7,859

 
(320
)
 
(53
)
 
7,497

Other Income and Expenses:
 

 
 

 
 

 
 

 
 

Non-regulated revenue
454

 
2,873

 
398

 
(478
)
 
3,247

Non-regulated expenses, net

 
(2,032
)
 
(211
)
 

 
(2,243
)
Income tax (expense) on other income and expense
(185
)
 
(343
)
 
(69
)
 
194

 
(403
)
Net other income
269

 
498

 
118

 
(284
)
 
601

Interest:
 

 
 

 
 

 
 

 
 

Interest expense
110

 
6,860

 
451

 
(352
)
 
7,069

Less: capitalized interest

 
(533
)
 
(13
)
 

 
(546
)
Net interest expense
110

 
6,327

 
438

 
(352
)
 
6,523

Equity earnings of subsidiaries
1,405

 

 

 
(1,405
)
 

Net income (loss)
$
1,575

 
$
2,030

 
$
(640
)
 
$
(1,390
)
 
$
1,575



18


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2016
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Operating activities:
 

 
 

 
 

 
 

 
 

Net loss
$
(798
)
 
$
(889
)
 
$
(62
)
 
$
951

 
$
(798
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 

 
 

 
 

 
 

 
 

Equity loss of subsidiaries
937

 

 

 
(937
)
 

Dividends received from affiliates
8,258

 

 

 
(8,258
)
 

Depreciation and amortization
57

 
15,277

 
1,144

 
(24
)
 
16,454

Changes in value of life insurance contracts

 
43

 

 

 
43

Changes in operating assets and liabilities
(280
)
 
9,414

 
1,589

 

 
10,723

Other changes in noncurrent assets and liabilities
155

 
4,432

 
7

 
10

 
4,604

Net cash provided by operating activities
8,329

 
28,277

 
2,678

 
(8,258
)
 
31,026

Investing activities:
 

 
 

 
 

 
 

 
 

Utility plant expenditures

 
(54,944
)
 
(1,519
)
 

 
(56,463
)
Changes in affiliate advances
40

 
1,468

 
(140
)
 
(1,368
)
 

Reduction of affiliate short-term borrowings

 
21,500

 

 
(21,500
)
 

Issuance of affiliate short-term borrowings
(250
)
 
(20,600
)
 

 
20,850

 

Reduction of affiliate long-term debt
279

 

 

 
(279
)
 

Life insurance proceeds

 
495

 

 

 
495

Purchase of life insurance contracts

 
(960
)
 

 

 
(960
)
Changes in restricted cash

 
(465
)
 

 

 
(465
)
Net cash provided by (used in) investing activities
69

 
(53,506
)
 
(1,659
)
 
(2,297
)
 
(57,393
)
Financing Activities:
 

 
 

 
 

 
 

 
 

Short-term borrowings
21,500

 
33,000

 

 

 
54,500

Repayment of short-term borrowings
(20,615
)
 
(33,000
)
 

 

 
(53,615
)
Changes in affiliate advances

 
(98
)
 
(1,270
)
 
1,368

 

Proceeds from affiliate short-term borrowings
20,600

 

 
250

 
(20,850
)
 


Repayment of affiliate short-term borrowings
(21,500
)
 

 

 
21,500

 


Repayment of affiliate long-term borrowings

 

 
(279
)
 
279

 

Proceeds from long-term debt, net of expenses

 
49,823

 
216

 

 
50,039

Repayment of long-term debt

 
(175
)
 
(79
)
 

 
(254
)
Advances and contributions in aid for construction

 
7,590

 
18

 

 
7,608

Refunds of advances for construction

 
(1,611
)
 
(1
)
 

 
(1,612
)
Dividends paid to non-affiliates
(8,258
)
 

 

 

 
(8,258
)
Dividends paid to affiliates

 
(8,058
)
 
(200
)
 
8,258

 

Net cash (used in) provided by financing activities
(8,273
)
 
47,471

 
(1,345
)
 
10,555

 
48,408

Change in cash and cash equivalents
125

 
22,242

 
(326
)
 

 
22,041

Cash and cash equivalents at beginning of period
582

 
4,270

 
3,985

 

 
8,837

Cash and cash equivalents at end of period
$
707

 
$
26,512

 
$
3,659

 
$

 
$
30,878


19


CALIFORNIA WATER SERVICE GROUP
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the three months ended March 31, 2015
(In thousands)
 
 
Parent
Company
 
Cal Water
 
All Other
Subsidiaries
 
Consolidating
Adjustments
 
Consolidated
Operating activities:
 

 
 

 
 

 
 

 
 

Net income (loss)
$
1,575

 
$
2,030

 
$
(640
)
 
$
(1,390
)
 
$
1,575

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 

 
 

 
 

 
 

 
 

Equity earnings of subsidiaries
(1,405
)
 

 

 
1,405

 

Dividends received from affiliates
8,007

 

 

 
(8,007
)
 

Depreciation and amortization
57

 
14,575

 
1,129

 
(25
)
 
15,736

Change in value of life insurance contracts

 
(161
)
 

 

 
(161
)
Changes in operating assets and liabilities
(1,151
)
 
(2,185
)
 
6,624

 
(84
)
 
3,204

Other changes in noncurrent assets and liabilities
1,109

 
10,717

 
(5,385
)
 
94

 
6,535

Net cash provided by operating activities
8,192

 
24,976

 
1,728

 
(8,007
)
 
26,889

Investing activities:
 

 
 

 
 

 
 

 
 

Utility plant expenditures

 
(33,793
)
 
(1,254
)
 

 
(35,047
)
Investment in affiliates
(1,000
)
 

 

 
1,000

 

Changes in affiliate advances
(3,220
)
 
2,725

 
(172
)
 
667

 

Proceeds from affiliates long-term debt
243

 

 

 
(243
)
 

Changes in restricted cash

 
(26
)