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 (See Note 11). 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 September 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	$	120,727	2,460	1,391		—		120,727	3,851		124,578
Operating expense	83,088		1,511	875		859		83,088	3,245		86,333
Operating income (loss)	37,639		949	516		(859	)	37,639	606		38,245
Net income (loss) before noncontrolling interest	19,866		473	305		(1,104	)	19,866	(326	)	19,540
Depreciation and amortization	11,623		143	299		—		11,623	442		12,065
Senior note, mortgage and other interest expense	4,999		—	(2	)	544		4,999	542		5,541
Income tax expense (benefit) in net income	13,242		340	178		(237	)	13,242	281		13,523
Assets	$	1,438,433	20,239	48,917		3,981		1,438,433	73,137		1,511,570



	For Three Months Ended September 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	$	108,502	2,056	1,786	—		108,502	3,842		112,344
Operating expense	73,179		1,355	1,108	356		73,179	2,819		75,998
Operating income (loss)	35,323		701	678	(356	)	35,323	1,023		36,346
Net income (loss) before noncontrolling interest	19,216		330	239	(826	)	19,216	(257	)	18,959
Depreciation and amortization	10,678		116	325	—		10,678	441		11,119
Senior note, mortgage and other interest expense	4,648		—	216	562		4,648	778		5,426
Income tax expense (benefit) in net income	12,145		247	106	14		12,145	367		12,512
Assets	$	1,359,419	18,092	75,909	921		1,359,419	94,922		1,454,341



	For Nine Months Ended September 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	$	285,781	5,634	4,281	—		285,781	9,915	295,696
Operating expense	207,026		3,565	2,765	2,475		207,026	8,805	215,831
Operating income (loss)	78,755		2,069	1,516	(2,475	)	78,755	1,110	79,865
Net income (loss) before noncontrolling interest	39,895		965	5,986	(3,051	)	39,895	3,900	43,795
Depreciation and amortization	34,875		421	921	—		34,875	1,342	36,217
Senior note, mortgage and other interest expense	15,639		—	60	1,655		15,639	1,715	17,354
Income tax expense (benefit) in net income	24,943		713	2,294	(895	)	24,943	2,112	27,055
Assets	$	1,438,433	20,239	48,917	3,981		1,438,433	73,137	1,511,570



	For Nine Months Ended September 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	$	250,389	4,802	5,209	—		250,389	10,011	260,400
Operating expense	175,967		3,275	3,161	1,270		175,967	7,706	183,673
Operating income (loss)	74,422		1,527	2,048	(1,270	)	74,422	2,305	76,727
Net income (loss) before noncontrolling interest	37,810		649	670	(17	)	37,810	1,302	39,112
Depreciation and amortization	32,027		350	1,112	—		32,027	1,462	33,489
Senior note, mortgage and other interest expense	13,929		—	706	1,695		13,929	2,401	16,330
Income tax expense (benefit) in net income	24,122		521	354	548		24,122	1,423	25,545
Assets	$	1,359,419	18,092	75,909	921		1,359,419	94,922	1,454,341

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