Voorhees NJ, October 28, 2002 -- American Water Works Co. Inc. reported net income to common stock for the third quarter of 2002 was $55 million and resulting earnings per share (EPS) were 55 cents.
Both net income to common stock and EPS for the quarter were approximately the same as the $56 million and 56 cents per share reported during the same quarter in 2001.
Revenue Growth Continues
Revenues of $483 million recorded during the third quarter of 2002 were 22% greater than the $395 million realized during the third quarter last year. The Company attributed a major portion of this revenue gain to the addition of customers acquired as a result of its January 2002 purchase of the water and wastewater assets of Citizens Communications Company (Citizens acquisition) and revenues associated with its November 2001 acquisition of Azurix North America Corp and Azurix Industrials Corp. (Azurix acquisition).
The strict state-mandated water use restrictions that were implemented in New Jersey and portions of Pennsylvania near the mid-point of the third quarter of 2002 have been moderated but remain in effect.
Industrial Water Sales Continue Downward Trend
Water sales to industrial customers during the third quarter of 2002 were 12.2 billion gallons compared to the 12.3 billion gallons sold to that group of customers during the same quarter last year. However, industrial water sales during both periods reflect the impact of continued weakness in the general economy.
The 31.9 billion gallons of water the Company sold to its industrial customers during first nine months of 2002 was 2 billion gallons less than water sales for the same nine-month period in 2001 and the amount of water sold during both of those nine-month periods was lower than the amount of water sold to industrial customers during the first nine months of either 2000 or 1999.
Total Operating Expenses Move Higher
Consolidated operating expenses for the third quarter of 2002 increased $89 million, or 36% over costs incurred during the same period in 2001. Expenses associated with the Citizens and Azurix acquisitions contributed significantly to this increase. Since both of these acquisitions were completed after the third quarter of 2001, costs for their operation were not included in operating costs incurred during the third quarter last year. Excluding this impact the Company experienced an approximate 4% increase in total operating costs.
Non-operating Business Activities Impact Both Quarters
Activities not related to the Company's core businesses impacted financial results during the third quarters of both 2002 and 2001. Expenses associated with obtaining the necessary state regulatory approvals for the RWE transaction resulted in charges of two cents per share during the third quarter of 2002.
Charges associated with negotiating the RWE agreement announced during the third quarter of 2001 were ten cents per share. The ten cents per share charge incurred during the third quarter of 2001 was partially offset by four cents per share after-tax gains realized from the sale of water assets serving the City of Salisbury, Massachusetts, and the sale of a portion of the telecommunications stock included in the non-water investments from the National Enterprises, Inc. acquisition.
Costs to obtain the necessary regulatory approvals for the RWE transaction are expected to continue until the transaction is completed during the first six months of 2003.
Communication with Investors
Information about a conference call is available at www.amwater.com.
About American Water Works
American Water Works Company is the largest publicly traded US corporation devoted exclusively to the business of water. Its 6,600 associates provide water, wastewater and other related services to 15 million people in 27 states and three Canadian provinces. More information can be found on the Company's website.
