Segment and Non-Tariffed Business Reporting

SJW Group is a holding company with four subsidiaries: (i) San Jose Water Company, a water utility operation with 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 commercial building rentals, and (iv) Hydro Sub, Inc., a Connecticut corporation that was formed on March 9, 2018 for the sole purpose of effecting the SJW Group and Connecticut Water Service, Inc. (“CTWS”) proposed merger (see discussion on the proposed merger at 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 and CLWSC, 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 March 31, 2019
	Water Utility Services			Real Estate Services	All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed	Non-tariffed		Regulated	Non-tariffed		Total
Operating revenue	$	75,147	1,169	1,366	—		75,147	2,535		77,682
Operating expense	60,585		841	891	2,957		60,585	4,689		65,274
Operating income (loss)	14,562		328	475	(2,957	)	14,562	(2,154	)	12,408
Net income (loss)	6,100		236	318	(781	)	6,100	(227	)	5,873
Depreciation and amortization	14,749		97	299	—		14,749	396		15,145
Senior note and other interest expense	5,220		—	—	571		5,220	571		5,791
Income tax expense (benefit) in net income	2,076		92	130	(253	)	2,076	(31	)	2,045
Assets	$	1,492,643	5,825	46,862	413,477		1,492,643	466,164		1,958,807



	For Three Months Ended March 31, 2018
	Water Utility Services			Real Estate Services	All Other*		SJW Group
	Regulated		Non-tariffed	Non-tariffed	Non-tariffed		Regulated	Non-tariffed		Total
Operating revenue	$	72,353	1,348	1,341	—		72,353	2,689		75,042
Operating expense	61,701		888	849	4,273		61,701	6,010		67,711
Operating income (loss)	10,652		460	492	(4,273	)	10,652	(3,321	)	7,331
Net income (loss)	4,795		331	356	(4,197	)	4,795	(3,510	)	1,285
Depreciation and amortization	13,201		83	299	—		13,201	382		13,583
Senior note and other interest expense	5,508		—	—	544		5,508	544		6,052
Income tax expense (benefit) in net income	492		129	94	(1,295	)	492	(1,072	)	(580	)
Assets	$	1,413,300	3,690	47,380	(496	)	1,413,300	50,574		1,463,874

* The “All Other” category includes the accounts of SJW Group and Hydro Sub, Inc. on a stand-alone basis. For the three months ended March 31, 2019, and 2018, Hydro Sub, Inc. had no recorded revenue or expenses and as of March 31, 2019, and 2018, held no assets and has incurred no liabilities.