Correct: Fitch Rts Lake County, IL $15MM Water & Sewer Sys Revs 'AA+'.

Business Editors

CHICAGO--(BUSINESS WIRE)--Aug. 7, 2003

(The information in the fifth paragraph has been amended.)

Fitch Ratings assigns a 'AA+' rating to Lake County, Illinois' $3.4 million water and sewer system revenue bonds, series B of 2003 and $11.6 million water and sewer system revenue bonds, series C of 2003 capital appreciation bonds. The Rating Outlook is Stable.

Both bond series are scheduled to sell on a competitive basis August 11, 2003. Dated August 15, the series B current interest bonds mature each Dec. 1, 2004-2012 and pay semiannual interest commencing Dec. 1, 2003. In addition, the series B bonds are not subject to optional redemption. Dated the date of delivery, the series C capital appreciation bonds mature each Dec. 1, 2013-2021. Interest on the series C bonds will be compounded semiannually on June 1 and Dec. 1 of each year and will be payable only at maturity or upon prior redemption. The series C bonds are subject to optional redemption as specified in the official statement.

The 'AA+' rating with a stable outlook reflects the water and sewer utility system's (the system) solid financial performance as represented by strong coverage levels, ample system capacity, and a solid environmental compliance record. Located in the northern portion of the Chicago metropolitan area, the system's service area benefits from a stable and diverse economic base with high wealth levels. Consistent internal funding of capital spending requirements combined with moderate future capital needs has helped maintain the systems low debt. Furthermore, prudent system maintenance efforts have sustained affordable user rates and facilitated stable fiscal operations and strong liquidity.

The widely dispersed system provides water and/or sewer services to approximately 81,000 residential customer equivalents throughout the county. These services are primarily provided through numerous wholesale contracts in incorporated and unincorporated communities. With long-term, exclusive use wholesale contracts and a county ordinance providing for mandatory sewer connections of all occupied premises, the system's revenue base is expected to remain strong. Currently there are no mandatory connection provisions for water services, which account for less than one-third of the system's total water and sewer revenue. With average usage totaling 14.4 million gallons per day (MGD), the system's 21.3 MGD capacity is more than sufficient to meet the demand of the service area. A portion of the bond proceeds will finance the 2MGD expansion of one of the system's facilities.

The system's financial performance is strong due to conservative budgeting. Fiscal 2001 and 2002 pledged revenues (including connection charges) provided 2.7 times (x) and 2.5x coverage, respectively. Given the financial stability of the system and moderate capital needs, it is projected that net revenues (excluding connection charges) will remain well above the 1.25x rate covenant. The system also maintains significant liquidity as unrestricted financial liquidity averaged 192 days of operating expenditures since fiscal 2000.

Management estimates $45.2 million in system capital needs through fiscal 2006. Approximately 30% of these capital costs will be funded from proceeds of the current issue which will be used to expand and upgrade the Vernon Hills Water Reclamation Facility. Connection fees for the system's designated Vernon Hills area will be increased to offset higher debt service charges related to the current financing. Other planned capital projects include various water and sewer facility upgrades and repairs. Management anticipates funding these projects from internal sources.