Consolidated Statement of Cash Flows See accompanying Notes to Consolidated Financial Statements. CALIFORNIA WATER SERVICE GROUP In thousands For the years ended December 31, 2002, 2001 and 2000 2002 2001 2000 Operating activities: Net income $19,073 $14,965 $19,963 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 21,238 19,226 18,368 Deferred income taxes, investment tax credits, and regulatory assets and liabilities, net 786 2,919 (3,203) Gain on sale of non-utility property (2,980) (3,864) – Changes in operating assets and liabilities Receivables (1,088) (2,186) (1,503) Unbilled revenue (561) 673 235 Accounts payable (431) (2,461) (255) Other current assets and liabilities 1,287 6,642 1,093 Other changes, net (3,909) (625) 638 Net adjustments 14,342 20,324 15,373 Net cash provided by operating activities 33,415 35,289 35,336 Investing activities: Utility plant expenditures Company funded (71,553) (53,379) (33,540) Developer advances and contributions in aid of construction (16,808) (8,670) (3,621) Proceeds from sale of non-utility assets 3,006 3,999 – Acquisitions (2,300) (701) (709) Net cash used in investing activities (87,655) (58,751) (37,870) Financing activities: Net short-term borrowings 12,435 7,402 599 Issuance of common stock – – 644 Issuance of long-term debt 80,324 20,524 20,326 Advances for construction 12,545 6,498 3,846 Refunds of advances for construction (4,597) (4,166) (3,870) Contributions in aid of construction 7,740 10,868 1,883 Retirement of long-term debt (36,940) (2,881) (2,920) Dividends paid (17,157) (17,071) (16,388) Net cash provided by financing activities 54,350 21,174 4,120 Change in cash and cash equivalents 110 (2,288) 1,586 Cash and cash equivalents at beginning of year 953 3,241 1,655 Cash and cash equivalents at end of year $ 1,063 $ 953 $ 3,241 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest (net of amounts capitalized) $16,527 $14,785 $14,785 Income taxes 10,205 11,775 11,775 Non-cash financing activity - common stock issued in acquisitions – 899 – 40