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 WEST COVINA, Calif., Jan. 3 /PRNewswire/ -- Southwest Water Co. (NASDAQ: SWWC) today announced that Suburban Water Systems, one of its principal subsidiaries, has reached out-of-court settlements of two lawsuits arising from a chlorine gas leak that occurred in October 1990 at a Suburban water facility. The two actions are being settled, without admission of liability, for an aggregate cash payment of approximately $1.437 million and are the last known claims arising out of this incident. These settlements constitute a non-recurring charge of $.36 per fully diluted share against the company's 1993 fourth quarter earnings. As previously disclosed in the company's Form 10-K and 10-Q Reports, the plaintiffs in the primary action were employees at an adjacent manufacturing plant who were allegedly exposed to the chlorine gas. The plaintiffs sought general damages in excess of $3.7 million plus unspecified punitive damages.
 The full impact of this incident on 1993 earnings is $.56 per fully diluted share, which includes defense costs of approximately $800,000 in addition to the $1.437 million settlement. In light of this charge against income, management projects earnings of $.01 to $.05 per fully diluted share for the year ended Dec. 31, 1993. Further, the company does not anticipate that its dividend rate will be affected by this settlement.
 At the time of the chlorine gas incident, the company maintained liability insurance coverage of $20 million. However, the company's primary and excess liability insurance carrier declined to defend or indemnify the company on the basis of allegedly applicable exclusions in these policies. The company believes it is entitled to defense and indemnity under these policies and has filed a lawsuit against the carrier to obtain reimbursement for the full amount of these settlements, plus associated defense costs. Suburban Water Systems is also authorized by the California Public Utilities Commission to seek recovery of defense expenses through future rate proceedings.
 Commenting on the settlement, Anton C. Garnier, Southwest Water president, stated, "With this incident behind us, we can now turn our full attention toward the opportunities of the new year. Our top priorities are the provision of high-quality service to our customers and the enhancement of shareholder value."
 Southwest Water Co. is the parent company of Suburban Water Systems (water service in parts of Los Angeles and Orange Counties); New Mexico Utilities Inc. (water supply and sewage disposal services northwest of Albuquerque); and ECO Resources Inc. (operational and maintenance services for water supply and wastewater treatment facilities across the western, southwestern and southeastern United States).
 -0- 1/3/94
 /CONTACT: R. Joseph Saunders, VP Finance and CFO, 818-915-1551/

CO: Southwest Water Co. ST: California IN: UTI SU:

JM-MF -- LA019 -- 8678 01/03/94 18:29 EST
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Publication:PR Newswire
Date:Jan 3, 1994

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