Notes (continued) NOTE 7. SHORT-TERM BORROWINGS As of December 31, 2001, the Company maintained a bank line of credit providing unsecured borrowings of up to $10,000,000 at the prime lending rate or lower rates as quoted by the bank. Approximately $7,562,000 of the line is committed to a contractor for construction of an office complex for combined Los Angeles South Bay operations. When completed, the office complex will be exchanged with the contractor for surplus Company- owned land on a tax-free basis. Cal Water maintained a bank line of credit for an additional $50,000,000 on the same terms as the Company. The line of credit agreements, which expire in April 2003 and which the Company expects to renew, do not require minimum or specific compensating balances. Washington Water has a $0.1 million bank line of credit with nothing outstanding at December 31, 2001. The following table represents borrowings under the bank lines of credit: As of December 31, 2001 and 2000, long-term debt outstanding was: NOTE 8. LONG-TERM DEBT 36 CALIFORNIA WATER SERVICE GROUP The first mortgage bonds are obligations of Cal Water. All bonds are held by institutional investors and secured by substantially all of Cal Water’s utility plant. The unsecured senior notes are also obligations  of Cal Water. They are held by institutional investors and require interest-only payments until maturity. The Department of Water Resources (DWR) loans were financed under the California Safe Drinking Water Bond Act. Repayment of principal and interest on the DWR loans is through a surcharge on customer bills. Other long-term debt is primarily equipment and system acquisition financing arrangements with financial institu- tions. Aggregate maturities and sinking fund requirements for each of the succeeding five years (2002 through 2006) are $5,381,000, $5,204,000, $2,579,000 $2,579,000, and $2,605,000. Income tax expense consists of the following: NOTE 9. INCOME TAXES Income tax expense computed by applying the current federal 35% tax rate to pretax book income differs from the amount shown in the Consolidated Statement of Income. The difference is reconciled in the table below: The components of deferred income tax expense were: 37 CALIFORNIA WATER SERVICE GROUP Dollars in thousands 2001 2000 1999 Maximum short-term borrowings $36,800 $26,750 $25,500 Average amount outstanding 24,453 16,810 9,093 Weighted average interest rate 5.29% 7.77% 6.52% Interest rate at December 31 3.16% 7.88% 7.11% Interest Maturity In thousands Series Rate Date 2001 2000 First Mortgage Bonds: J  8.86% 2023 $ 4,000 $ 4,000 K 6.94% 2012 5,000 5,000 P 7.875% 2002 2,565 2,580 S 8.50% 2003 2,580 2,595 BB 9.48% 2008 11,520 13,230 CC 9.86% 2020 18,500 18,600 DD 8.63% 2022 19,100 19,200 EE 7.90% 2023 19,200 19,300 FF 6.95% 2023 19,200 19,300 GG 6.98% 2023 19,200 19,300 120,865 123,105 Senior Notes: A 7.28% 2025 20,000 20,000 B 6.77% 2028 20,000 20,000 C 8.15% 2030 20,000 20,000 D 7.13% 2031 20,000 — California Department of 3.0% to Water Resources loans 8.1% 2011-32 2,886 3,176 Other long-term debt 4,230 3,698 Total long-term debt 207,981 189,979 Less current maturities 5,381 2,881 Long-term debt excluding current maturities $202,600 $187,098 In thousands 2001 2000 1999 Depreciation $2,337 $2,031 $2,974 Developer advances and contributions (783) (814) (749) Bond redemption premiums (42) (61) (62) Investment tax credits (94) (61) (94) Other (298) (4) 595 Total deferred income tax expense $1,120 $1,091 $2,664 In thousands 2001 2000 1999 Computed “expected” tax expense $8,643 $11,037 $12,420 Increase (reduction) in taxes due to: State income taxes net of federal tax benefit 1,170 1,336 1,624 Investment tax credits (156) (155) (184) Other 71 (647) (345) Total income tax $9,728 $11,571 $13,515 In thousands Federal State Total 2001 Current $ 6,472 $2,136 $ 8,608 Deferred 1,456 (336) 1,120 Total $ 7,928 $1,800 $ 9,728 2000 Current $ 7,961 $2,519 $10,480 Deferred 1,554 (463) 1,091 Total $ 9,515 $2,056 $11,571 1999 Current $ 8,291 $2,560 $10,851 Deferred 2,769 (105) 2,664 Total $11,060 $2,455 $13,515