Aquarion Reports Record Fourth Quarter Net Income and Earnings for 1998; 1998 Marks Second Consecutive Year of Record Performance.

BRIDGEPORT, Conn.--(BUSINESS WIRE)--Jan. 27, 1999--Aquarion Company (NYSE:WTR) today announced record net income for the quarter ended December 31, 1998, of $6,791,000, or $0.91 per share, versus a net income of $3,355,000, or $0.46 per share, for the comparable 1997 period. For the year ended December 31, 1998, net income increased 33 percent to a record high of $19,959,000, or $2.69 per share. The company's 1998 performance represents the second consecutive year of record net income. Excluding the gain of $3,510,000, or $0.47 per share, from the sale of surplus, off-watershed property to the City of Shelton, CT, earnings increased 9 percent to a record high of $16,449,000, or $2.22 per share, from $15,011,000, or $2.10 per share in 1997.

Richard K. Schmidt, president and chief executive officer, said he is delighted with last year's achievements. "1998 was a great year for Aquarion. Our record performance is a result of successful implementation of our four-pronged strategy to increase shareholder value. The strategy includes growth through infrastructure investment and acquisition, land sales, productivity enhancement and leveraging our core competencies. For the second consecutive year, we produced record results, and we remain excited about the future," Schmidt added.

Consolidated revenues for the quarter ended December 31, 1998 totaled $33,491,000, compared to $27,965,000 for the same period of 1997, representing an increase of 19.8 percent. For the year ended December 31, 1998, consolidated revenues were $115,669,000, versus $107,102,000 for the 1997 year, an 8.0 percent increase.

The increase in revenue for the year is attributed to increased land sales, higher water service rates which became effective August 1, 1997, and a dry summer, partially offset by the reduction in rates associated with the July 1, 1997 elimination of the Connecticut Gross Earnings Tax. The increase in revenue was partially offset by decreased revenues from Aquarion's Timco timber processing subsidiary which was affected by a very competitive market and lower sales volume. Despite these pressures, Timco was still profitable.

Revenues from the sale of surplus, off-watershed land for the quarter ending December 31, 1998 were $7,090,000, compared to $2,102,000 in the 1997 period. In the fourth quarter of 1998, BHC sold 417 acres of surplus, off-watershed land to the City of Shelton, CT for approximately $6.8 million. For the year ended December 31, 1998, total land sale revenues were $9,971,000 versus $3,224,000 for 1997.

The net after-tax income from the sale of BHC's surplus, off-watershed land was $3,573,000, or $0.47 per share in the 1998 fourth quarter, compared with $357,000, or $0.05 per share for the same period of 1997. For the year ended December 31, 1998, the net after-tax gain from land sales was $4,336,000, or $0.58 per share, compared to $743,000, or $0.10 per share for 1997. Excluding all land sale income, earnings in the fourth quarter of 1998 were $0.44 per share, compared to $0.41 per share for the comparable quarter in 1997.

Operating expenses of $20,692,000 in the fourth quarter of 1998 increased 3.9 percent from $19,904,000 for the comparable 1997 period. For the year ended December 31, 1998, operating expenses of $71,792,000 increased 2.1 percent from $70,301,000 in 1997. Schmidt noted that the increase in expenses was primarily attributed to increased land sale activity and higher depreciation and other expenses associated with the operation of BHC's state-of-the-art Warner Water Treatment Plant, which was placed into service on July 1, 1997. These increased expenses were offset by lower costs at the timber processing business.

Aquarion Company's principal business is public water supply. Through its BHC and Sea Cliff Water Company subsidiaries, it is one of the 10 largest investor-owned water utilities in the U.S. and serves a population of more than 500,000 in 30 Connecticut and Long Island, NY communities. Its other businesses consist of timber processing, real estate through the sale of surplus water company land, and contract management of municipal water systems.

Note to Reporters and Editors:

For more information on Aquarion Company and its subsidiaries, please contact us on the internet at www.aquarion.com or www.bhcco.com. -0-

                   Aquarion Company and Subsidiaries
              Condensed Consolidated Statements of Income
                   Twelve Months Ended December 31,
                   (In thousands, except share data)

                             Unaudited


                                         1998                    1997
                                         ----                    ----


Operating revenues                    $115,669               $107,102
Operating expenses                      71,792                 70,301
                             ------------------      -----------------
Operating income                        43,877                 36,801
Other income and (expense):
 Interest expense                      (10,507)               (11,187)
 Allowance for funds
 used during construction                  200                    759
 Other, net                                484                    554
                            ------------------      -----------------
Income before income taxes              34,054                 26,927
Income taxes                            14,095                 11,916
                            ------------------      -----------------

Net income                              19,959                 15,011
                            ==================      =================

Basic earnings per share (1)             $2.69                  $2.10
                            ==================      =================

Weighted average common
 shares outstanding                  7,423,460              7,139,894
                            ==================      =================


Diluted earnings per share (1)           $2.62                  $2.08
                            ==================      =================

Weighted average common
 shares outstanding                  7,611,723              7,215,626
                            ==================      =================


(1)   Quarterly earnings per share are based on weighted average
      shares outstanding during each quarter and the sum of the
      quarters may not equal annual earnings per share.


                   Aquarion Company and Subsidiaries
              Condensed Consolidated Statements of Income
                      Quarter Ended December 31,
                   (In thousands, except share data)

                               Unaudited


                                         1998                    1997
                                         ----                    ----

Operating revenues                     $33,491                $27,965
Operating expenses                      20,692                 19,904
                            ------------------      -----------------
Operating income                        12,799                  8,061
Other income and (expense):
  Interest expense                     (2,544)                (2,350)
  Allowance for funds
   used during construction                 47                     71
  Other, net                                64                    283
                            ------------------      -----------------
Income before income taxes              10,366                  6,065
Income taxes                             3,575                  2,710
                            ------------------      -----------------

Net income                               6,791                  3,355
                            ==================      =================

Basic earnings per share (1)             $0.91                  $0.46
                            ==================      =================

Weighted average common
 shares outstanding                  7,476,148              7,253,761
                            ==================      =================


Diluted earnings per share (1)           $0.88                  $0.46
                            ==================      =================

Weighted average common
 shares outstanding                  7,688,315              7,329,493
                            ==================      =================


(1)   Quarterly earnings per share are based on weighted average
      shares outstanding during each quarter and the sum of the
      quarters may not equal annual earnings per share.