First-Quarter Net Income Increases 24 Percent

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For Immediate Release

First-Quarter Net Income Increases 24 Percent

Revenues Rise 13 Percent at Southwest Water

CALIFORNIA, WEST COVINA, Apr. 27 -/E-Wire/-- Southwest Water Co. (Nasdaq:SWWC - news) today reported increases in first-quarter revenues, income and earnings per share.

For the three months ended March 31, 2001, as compared with the same period in 2000, revenues rose 13 percent to $23,215,000, net income increased 24 percent to $535,000, and earnings per common share achieved a 20 percent gain to $0.06.

Anton C. Garnier, Southwest Water president and CEO, said: "The results of this quarter demonstrate our successful integration of the operations of three acquisitions made in 2000. These acquisitions helped us offset lower revenue resulting from cooler, wet weather and the impact of higher energy costs experienced in our California operations during the first quarter of 2001.

Also during the first quarter, the acquisitions helped the company replace revenue and income enjoyed last year with the sale of a large water treatment project in El Paso, Texas.

"We will continue to focus on developing opportunities in our existing business lines: contract operations, submetering and regulated utility operations. We also remain attentive to potential acquisitions that would meet our strategic goals and may consider various capital financing alternatives to help us achieve these goals. We are excited about the company's prospects and look forward to continued growth in shareholder value,' Garnier said.

Southwest Water provides a broad range of services, including water production and distribution, wastewater collection and treatment, and utility submetering. The company owns regulated public utilities and also serves utility districts and private companies under contract. More than a million people in 30 states from coast to coast depend on Southwest Water for high-quality, reliable service.

Statements contained in this news release that are not based on historical fact are "forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. (These statements are only predictions.) Actual events or results may differ materially from those expressed or implied by such forward-looking statements as a result of known and unknown risks and uncertainties facing the company. Although the company believes that its expectations are based on reasonable assumptions, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include: (i) the ability to increase rates; (ii) the ability to renew existing contracts and enter into new contracts; (iii) contract terminations; (iv) the ability to recover water quality maintenance expenses; (v) the effect of weather conditions on water conservation and the company's ability to perform billable work; (vi) environmental regulations and contamination testing and removal requirements; (vii) capital expenditures and (viii) other factors referenced in Securities and Exchange Commission filings of the company.

FINANCIAL HIGHLIGHTS SOUTHWEST WATER COMPANY (unaudited and in thousands, except per share amounts)

Three Months Ended 12 Months Ended March 31, March 31, 2001 2000 2001 2000

Operating revenues $23,215 $20,557 $107,399 $84,757 Income before gain on land sale $ 535 $ 430 $ 5,486 $ 4,247 Gain on land sale, net of taxes -- -- -- $ 1,648 Net income $ 535 $ 430 $ 5,486 $ 5,895 Net income available for common shares $ 528 $ 423 $ 5,458 $ 5,868

Earnings per common share: Basic, before gain on land sale $0.06 $0.05 $0.66 $0.53 Gain on land sale, net of taxes -- -- -- $0.20 Basic $0.06 $0.05 $0.66 $0.73

Diluted, before gain on land sale $0.06 $0.05 $0.63 $0.51 Gain on land sale, net of taxes -- -- -- $0.20 Diluted $0.06 $0.05 $0.63 $0.71

Weighted average outstanding common shares: Basic 8,580 8,079 8,330 8,026 Diluted 8,994 8,436 8,715 8,282

Southwest Water Company

http://www.southwestwater.com

http://www.coffincg.com

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