(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934

For the transition period from________________ to________________

Commission file number:  0-8176

Southwest Water Company

(Exact name of registrant as specified in its charter)

Delaware

95-1840947

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

225 North Barranca Avenue, Suite 200
West Covina, California

91791-1605

(Address of principal executive offices)

(Zip Code)

(626) 915-1551

(Registrant’s telephone number, including area code)

Yes

x

No

o

Page No.

Part I.

Financial Information:

Item 1.

Financial Statements:

Condensed Consolidated Statements of Income -
Three and Nine Months Ended September 30, 2002 and 2001

1

Condensed Consolidated Balance Sheets -
September 30, 2002 and December 31, 2001

2

Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 2002 and 2001

3

Notes to Condensed Consolidated Financial Statements

4

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

8

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

14

Part II.

Other Information:

Item 1.

Legal Proceedings

15

Item 4.

Submission of Matters to a Vote of Security Holders

16

Item 6.

Exhibits and Reports on Form 8-K

16

Signatures

17

Three Months Ended
September 30,

Nine Months Ended
September 30,

2002

2001

2002

2001

(in thousands except per share data)

(in thousands except per share data)

Operating Revenues

$

34,574

$

32,035

$

95,488

$

83,088

Operating Expenses:

Direct operating expenses

26,934

23,191

73,570

61,738

Selling, general and administrative expenses

3,726

4,358

13,709

12,046

30,660

27,549

87,279

73,784

Operating Income

3,914

4,486

8,209

9,304

Other Income (Expense):

Interest expense

(1,058

)

(1,046

)

(3,277

)

(2,833

)

Interest income

163

8

195

40

Water-related cost reimbursement

—  

—  

1,616

—  

Other

(128

)

104

1,016

627

(1,023

)

(934

)

(450

)

(2,166

)

Income Before Income Taxes

2,891

3,552

7,759

7,138

Provision for Income Taxes

1,011

1,279

2,715

2,641

Net Income

1,880

2,273

5,044

4,497

Dividends on Preferred Shares

6

6

20

20

Net Income Available for Common Shares

$

1,874

$

2,267

$

5,024

$

4,477

Earnings per Common Share :

Basic

$

0.20

$

0.25

$

0.54

$

0.49

Diluted

$

0.19

$

0.24

$

0.51

$

0.47

Cash Dividends per Common Share

$

0.06

$

0.05

$

0.17

$

0.16

Weighted Average Outstanding Common Shares :

Basic

9,272

9,092

9,251

9,046

Diluted

9,885

9,588

9,877

9,500

September 30,
2002

December 31,
2001

(unaudited)

(in thousands)

ASSETS

Current Assets:

Cash and cash equivalents

$

1,715

$

789

Customers’ accounts receivable, net

17,178

21,443

Other current assets

11,025

8,939

29,918

31,171

Property, Plant and Equipment:

Utility Group property, plant and equipment – at cost

233,193

218,696

Services Group property, plant and equipment – at cost

17,827

14,317

251,020

233,013

Less accumulated depreciation and amortization

65,449

61,889

185,571

171,124

Other Assets

25,975

22,891

$

241,464

$

225,186

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Current portion of long-term debt and bank lines of credit

$

2,078

$

5,029

Accounts payable

5,539

6,211

Other current liabilities

19,248

15,127

26,865

26,367

Long-Term Liabilities:

Long-term debt

53,491

44,200

Bank lines of credit

5,245

13,863

Advances for construction

7,975

7,482

66,711

65,545

Deferred Credits:

Contributions in aid of construction

66,186

53,619

Deferred income taxes

9,040

8,354

Other liabilities and deferred credits

13,493

16,346

Total Liabilities and Deferred Credits

182,295

170,231

Stockholders’ Equity:

Preferred stock

513

513

Common stock

96

92

Paid-in capital

38,543

37,663

Retained earnings

20,017

16,687

Total Stockholders’ Equity

59,169

54,955

$

241,464

$

225,186

Nine Months Ended
September 30,

2002

2001

(in thousands)

Cash Flows From Operating Activities:

Net income

$

5,044

$

4,497

Adjustments to reconcile net income to net cash provided by (used in) operating activities

6,290

(3,049

)

Net cash provided by operating activities

11,334

1,448

Cash Flows From Investing Activities:

Additions to property, plant and equipment<