32 In 2002, utility plant expenditures totaled $88.4 million compared to $62.0 million in 2001. The 2002 construction program included $71.6 million of Company-funded projects and $16.8 million of projects funded by funds received from developers for non-refundable contributions in aid of construction and refundable advances for construction.The Company’s 2002 projects were funded by internally-generated funds, borrowings under bank credit lines, and issuance of long-term debt senior notes.The Company’s 2001 projects were funded by internally-generated funds, borrowings under bank credit lines, and issuance of $20 million in senior notes. The 2003 Company-funded construction budget was authorized at $51.7 million. It includes $4.5 million for the fifth year of a five-year program to construct a water treatment plant to accommodate growth and meet water quality standards in the Bakersfield district. Construction of the plant is proceeding on-time and on-budget. Over the five-year period, the plant and related pumping and pipeline facilities are estimated to cost $49.0 million. Also in the 2003 budget is $10.7 million for new and replacement water mains and $12.1 million for new wells, pumping equipment and storage facilities.The budget will be funded by funds from operations, bank borrowings and long-term debt and equity financing. New subdivision con- struction will be financed by developers’ non-refundable contributions-in-aid-of-construction and refundable advances for construction. Company-funded construction budgets over the next five years are projected to be about  $330 million. Included in the estimated amount is $61 million for compliance with arsenic water quality  regulations, completion of the Bakersfield treatment plant and expansion and replacement of water plant infrastructure including the start of a program to replace certain wells that are nearing the end of their  service life. Capital Structure. In 2002, common stockholders’ equity increased $1.9 million and in 2000 increased $3.6 million by net income not paid out as dividends. In 2001, common stockholders equity was reduced by the $2.1 million that dividends paid exceeded net income. 36,180 shares of common stock were issued in 2001 for the acquisition of the Nish water systems.The long-term debt portion of the capital struc- ture increased in 2002, 2001 and 2000 primarily due to the issuance of new senior notes. It was reduced by first mortgage bond sinking fund payments. The Company’s total capitalization at December 31, 2002, was $453.1 million and at the end of 2001 was $402.7 million. Because of the decline in 2001 net income and issuance of additional senior notes, the debt component of capitalization has increased and the equity component has decreased.The Company expects that its planned issuance of common equity, and receipt of regulatory relief will add to the common equity portion of capitalization in 2003 and future years. At December 31 capitalization ratios were: The return on average common equity was 9.7% in 2002 compared to 7.6% in 2001.The low return on average common equity in 2001 was directly related to the decline in net income. Acquisitions. RIO GRANDE UTILITY CORPORATION. On July 1, 2002, after receiving state reg- ulatory commission approval, the Company acquired certain assets of Rio Grande Utility Corporation (Rio Grande) through New Mexico Water.The purchase included the water and wastewater assets of Rio Grande, which serves 2,400 water and 1,700 wastewater customers about 30 miles south of Albuquerque.The pur- chase price was $2,300,000 in cash, plus assumption of $3,100,000 in outstanding debt. Rate base for the system is approximately $5,400,000. The Rio Grande purchase price was allocated to the fair value of net assets acquired, including utility plant, water rights and assumed liabilities.The results of operations include the operating results of Rio Grande since the acquisition date.The allocation of fair value is based on management’s estimate of the fair value for purchase accounting purposes at the date of acquisition.The purchase price allocations are subject  to revision if management obtains additional information. 2002 2001 Common equity 44.0% 48.8% Preferred stock  0.7% 0.9% Long-term debt  55.3%  50.3% CALIFORNIA WATER SERVICE GROUP