Segment and Non-Tariffed Business Reporting

SJW Group is a holding company with four subsidiaries: (i) San Jose Water Company, a water utility which operates both regulated and non-tariffed businesses, (ii) SJWTX, Inc. which is doing business as Canyon Lake Water Service Company (“CLWSC”), a regulated water utility located in Canyon Lake, Texas, and its consolidated non-tariffed variable interest entity, Acequia Water Supply Corporation, (iii) SJW Land Company and its consolidated variable interest entity, 444 West Santa Clara Street, L.P., which operated a commercial building rental (See Note 3), and (iv) Texas Water Alliance Limited, a non-tariffed water utility operation which has acquired permits and leases necessary to develop a water supply project in Texas. In accordance with FASB ASC Topic 280 – “Segment Reporting,” SJW Group has determined that it has two reportable business segments. The first segment is that of providing water utility and utility-related services to its customers through SJW Group’s subsidiaries, San Jose Water Company, CLWSC, and Texas Water Alliance Limited, together referred to as “Water Utility Services.” The second segment is property management and investment activity conducted by SJW Land Company, referred to as “Real Estate Services.”

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

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



	For Three Months Ended June 30, 2017
	Water Utility Services			Real Estate Services		All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed		Non-tariffed		Regulated	Non-tariffed	Total
Operating revenue	$	98,836	1,910	1,327		—		98,836	3,237	102,073
Operating expense	68,317		1,223	942		804		68,317	2,969	71,286
Operating income (loss)	30,519		687	385		(804	)	30,519	268	30,787
Net income (loss) before noncontrolling interest	16,080		320	5,321		(1,137	)	16,080	4,504	20,584
Depreciation and amortization	11,592		142	299		—		11,592	441	12,033
Senior note, mortgage and other interest expense	5,215		—	(3	)	544		5,215	541	5,756
Income tax expense (benefit) in net income	9,908		236	1,988		(168	)	9,908	2,056	11,964
Assets	$	1,398,567	19,358	49,337		3,924		1,398,567	72,619	1,471,186



	For Three Months Ended June 30, 2016
	Water Utility Services			Real Estate Services	All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed	Non-tariffed		Regulated	Non-tariffed	Total
Operating revenue	$	83,746	1,542	1,656	—		83,746	3,198	86,944
Operating expense	54,667		1,038	1,021	418		54,667	2,477	57,144
Operating income (loss)	29,079		504	635	(418	)	29,079	721	29,800
Net income (loss) before noncontrolling interest	15,023		214	178	1,360		15,023	1,752	16,775
Depreciation and amortization	10,676		118	393	—		10,676	511	11,187
Senior note, mortgage and other interest expense	4,655		—	240	574		4,655	814	5,469
Income tax expense (benefit) in net income	9,705		168	107	931		9,705	1,206	10,911
Assets	$	1,314,565	18,976	64,867	929		1,314,565	84,772	1,399,337



	For Six Months Ended June 30, 2017
	Water Utility Services			Real Estate Services	All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed	Non-tariffed		Regulated	Non-tariffed	Total
Operating revenue	$	165,054	3,174	2,890	—		165,054	6,064	171,118
Operating expense	123,938		2,054	1,890	1,616		123,938	5,560	129,498
Operating income (loss)	41,116		1,120	1,000	(1,616	)	41,116	504	41,620
Net income (loss) before noncontrolling interest	20,029		492	5,681	(1,947	)	20,029	4,226	24,255
Depreciation and amortization	23,252		278	622	—		23,252	900	24,152
Senior note, mortgage and other interest expense	10,640		—	62	1,111		10,640	1,173	11,813
Income tax expense (benefit) in net income	11,701		373	2,116	(658	)	11,701	1,831	13,532
Assets	$	1,398,567	19,358	49,337	3,924		1,398,567	72,619	1,471,186



	For Six Months Ended June 30, 2016
	Water Utility Services			Real Estate Services	All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed	Non-tariffed		Regulated	Non-tariffed	Total
Operating revenue	$	141,887	2,746	3,423	—		141,887	6,169	148,056
Operating expense	102,788		1,920	2,053	914		102,788	4,887	107,675
Operating income (loss)	39,099		826	1,370	(914	)	39,099	1,282	40,381
Net income (loss) before noncontrolling interest	18,594		319	431	809		18,594	1,559	20,153
Depreciation and amortization	21,349		234	787	—		21,349	1,021	22,370
Senior note, mortgage and other interest expense	9,281		—	490	1,133		9,281	1,623	10,904
Income tax expense (benefit) in net income	11,977		274	248	534		11,977	1,056	13,033
Assets	$	1,314,565	18,976	64,867	929		1,314,565	84,772	1,399,337

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