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$2.7 million for the year ended December 31, 2015, and approximately $2.5 million for the
year ended December 31, 2014.

Rate Stabilization Fund — Restricted Cash

As a part of the acquisition, Pennichuck agreed to contribute $5,000,000 of the proceeds
from the settlement transaction to PWW, which was used to establish a Rate Stabilization
Fund (“RSF”), allowing for the maintenance of stable water utility rates and providing a
mechanism to ensure the Company’s continued ability to meet its obligations under the
promissory note to the City, in the event of adverse revenue developments. Restricted cash
consists of amounts set aside in the RSF account, and is adjusted monthly as required in the
PUC Order, as discussed in Note 1 of these financial statements.

Municipal Acquisition Regulatory Asset (“MARA”)

Pursuant to the PUC Order, Pennichuck established a new Regulatory asset (MARA) which
represents the amount that the Acquisition Price exceeded the net book assets of Pennichuck’s
regulated subsidiaries (PWW, PEU, and PAC) at December 31, 2011. The initial amount of the
MARA was approximately $89 million for the regulated companies, offset by a non-regulated
amount of approximately $4.8 million. The MARA is to be amortized over a thirty (30) year
period in the same manner as the repayment of debt service for the City’s acquisition bonds.
The balance in the MARA at December 31, 2015 was approximately $81.5 million, reduced by
the non-regulated credit of approximately $4.5 million.

Aggregate amortization expense for the years ended December 31, 2015 and 2014 totaled
approximately $1,857,000 and $1,835,000, respectively.

The following table represents the total estimated amortization of MARA:

Estimated

Amortization
(in thousands) Expense
2016 $ 1,884
2017 1,917
2018 1,958
2019 2,006
2020 2,061
2021 and thereafter 67,202

35

Note 13 — Segment Reporting

The Company is comprised of Pennichuck Corporation and its five wholly-owned
subsidiaries, as described in Note | to these consolidated financial statements. For the years
ended December 31, 2015 and 2014, and as of those dates, the following financial results
were generated by the segments of the Company:

(in thousands) 2015 2014
Operating Revenues:
Pennichuck Water Works, Inc. $ 29,677 $ 28,193
Pennichuck East Utility, Inc. 7,229 6,992
Pittsfield Aqueduct Company, Inc. 761 766
Subtotal Regulated Segment 37,667 35,951
Water Management Services 3,171 2,854
Other 2 10

Total Operating Revenues $ 40,840 $ 38,815

Depreciation and Amortization Expense:

Pennichuck Water Works, Inc. $ 5,629 $ 5,210
Pennichuck East Utility, Inc. 979 928
Pittsfield Aqueduct Company, Inc. 110 117
Subtotal Regulated Segment 6,718 6,255
Water Management Services - -
Other (108) (107)

Total Depreciation and Amortization Expense $ 6,610 § 6,148

Operating Income:

Pennichuck Water Works, Inc. $ 7,541 §$ 7,410
Pennichuck East Utility, Inc. 882 1,081
Pittsfield Aqueduct Company, Inc. 166 178

Subtotal Regulated Segment 8,589 8,669
Water Management Services 160 189
Other 42 47

Total Operating Income $ 8,791 §$ 8,905

36

(in thousands)
Interest Expense:
Pennichuck Water Works, Inc.
Pennichuck East Utility, Inc.
Pittsfield Aqueduct Company, Inc.
Subtotal Regulated Segment
Water Management Services
Other
Total Interest Expense

Income Taxes Provision (Benefit):
Pennichuck Water Works, Inc.

Pennichuck East Utility, Inc.
Pittsfield Aqueduct Company, Inc.
Subtotal Regulated Segment
Water Management Services
Other
Total Income Taxes Provision (Benefit)

Net Income (Loss):
Pennichuck Water Works, Inc.

Pennichuck East Utility, Inc.
Pittsfield Aqueduct Company, Inc.
Subtotal Regulated Segment
Water Management Services
Other
Total Net Income (Loss)

Total Net Assets:
Pennichuck Water Works, Inc.
Pennichuck East Utility, Inc.
Pittsfield Aqueduct Company, Inc.
Subtotal Regulated Segment
Water Management Services

Other
Total Net Assets

37

2015 2014
3,495 § 2,814
558 502
57 57
4,110 3,373
6,665 6,783
10,775. $ 10,156
2,254 $ 2,474
214 309
55 60
2,523 2,843
63 79
(2,278) (2,371)
308 = $ 551
1,783 $ 2,139
129 277
52 60
1,964 2,476
96 119
(4,352) (4,370)
(2,292) $ (1,775)
273,912 $ 288,349
46,338 42,521
4,376 4,418
324,626 335,288
257 286
(14,220) (11,767)

310,663

$323,807,

(in thousands) 2015 2014
Total Liabilities:

Pennichuck Water Works, Inc. $ 149,306 $ 160,535
Pennichuck East Utility, Inc. 29,415 28,391
Pittsfield Aqueduct Company, Inc. 1,322 2,107

Subtotal Regulated Segment 180,043 191,033
Water Management Services 51 56
Other 108,528 108,128

Total Liabilities $ 288,622 $ 299,217

Total Long-Term Debt (including current portion):

Pennichuck Water Works, Inc. $ 83,771 § 97,895
Pennichuck East Utility, Inc. 13,537 11,761
Pittsfield Aqueduct Company, Inc. - -
Subtotal Regulated Segment 97,308 109,656
Water Management Services - -
Other 112,864 114,651

Total Long-Term Debt $ 210,172 § 224,307

Note 14 — Subsequent Events

The Company has evaluated the events and transactions that have occurred through March
18, 2016, the date that these consolidated financial statements were available for issuance.

On March 17, 2016, the Company sold its holdings in one investment included in
“Investments — Bond Project Funds” on the Consolidated Balance Sheet as of December 31,
2015. This investment was classified as a “held to maturity” investment on that balance
sheet, but was sold prior to its maturity date in November of 2016. The value of this
investment at the time of sale was approximately $6,990,000. All of the proceeds from this
transaction were transferred into “Restricted Cash — Bond Project Funds,” which are now
available for usage to reimburse project funds during 2016, as further disclosed in Note 1 to
these consolidated financial statements. The investment was sold prior to its original maturity
date due to modifications in the drawdown schedule of funding for the underlying project
identified to these funds, as well as compliance with the manner in which these funds must
be drawdown throughout the construction period for the project, per the Loan and Trust
Agreement under which these funds were originally procured.

38

Jim Donchess
Mayor e City of Nashua

To: Board of Aldermen

From: Jim Donchess

Date: 4/8/16

Re: Contract Award for Amherst St Improvements-Charron Ave to Diesel Road

Pursuant to NRO § 5-90 (E} which states that approval by the Finance Committee of a contract award in
excess of $1,000,000 shall be submitted to the full Board of Aldermen at its next regularly scheduled
meeting for final approval prior to award of the contract, please consider the following. The Finance
Committee approved the purchase of the below referenced contract at their April 6, 2016 meeting. |
request the Board of Aldermen’s concurrence and approval for this purchase.

Amherst St Improvements-Charron Ave to Diesel Road — Attached please find Purchasing Manager’s Memo
# 16-123 regarding this contract.

229 Main Street « PO Box 2019 * Nashua, New Hampshire 03061-2019
603.589.3260 + fax 603.594.3450 + NashuaMayor'd:NashuaNH.gzov
www. NashuaNl gov

gen) THE CITY OF NASHUA ‘The Cate City”

Financial Services

Purchasiae Departotent

March 31, 2016
Memo #16-123

TO: MAYOR DONCHESS
FINANCE COMMITTEE

SUBJECT: AMHERST STREET IMPROVEMENTS — CHARRON AVENUE TO DIESEL ROAD
(VALUE: $1,537,096)
DEPARTMENT: 160 ADMIN/ENGINEERING; FUND: BOND & CONTRIBUTIONS
ACTIVITY: AMHERST STREET ROAD & TRAFFIC IMPROVEMENTS ($1,392,477)
DEPARTMENT: 160 ADMIN/ENGINEERING, FUND: TRUST
ACCOUNT CATEGORY: 61 SUPPLIES & MATERIALS ($69,619)
DEPARTMENT: 161 STREET; FUND: GENERAL
ACTIVITY: PAVING ($75,000)

Please see the attached communication from Steven Dookran, P.E., City Engineer, dated March 24, 2016
for information related to this purchase.

Pursuant to § 5-78 Major purchases (greater than $10,000) A. All supplies and contractual services,
except as otherwise provided herein, when the estimated cost thereof shall exceed $10,000 shall be
purchased by formal, written contract from the lowest responsible bidder, after due notice inviting bids.

RFP0851-121715 was sent to 19 potential vendors. 4 vendors attended the Mandatory Pre-Bid Meeting
on held at 12/1/16 at 1:00PM. Two (2) bids were received and opened on December 18, 2015 with
summary results shown below:

Continental Paving, Inc. Londonderry, NH Base Bid- $1,561,475 night closures
Alt 1- $1,397,360 day & night closures
Brox Industries, Inc, Dracut, MA $1,376,465

The City Engineer, Board of Public Works (March 24, 2016) and the Purchasing Department recommend
the award of this contract to Continental Paving, Inc. of Londonderry, NH in an amount of $1,537,096.

Respectfully,

Dan Kooken
Purchasing Manager

Ce: S. Dookran L. Fauteux

229 Main Street « Nashua, New Hampshire 03061 * Phone (603) 589-3330 « Fax (603) 589-3344

Jim Donchess
Mayor e City of Nashua

To: Board of Aldermen
From: Jim Donchess
Date: 4/8/16

Re: 2016 Sewer Program

Pursuant to NRO § 5-90 (E) which states that approval by the Finance Committee of a contract award in
excess of $1,000,000 shall be submitted to the full Board of Aldermen at its next regularly scheduled
meeting for final approval prior to award of the contract, please consider the following. The Finance
Committee approved the purchase of the below referenced contract at their April 6, 2016 meeting. |
request the Board of Aldermen’s concurrence and approval for this purchase.

2016 Sewer Program — Attached please find Purchasing Manager's Memo # 16-126 regarding this contract.

229 Main Street + PO Box 2019 »° Nashua, New Hampshire 03061-2019
603.589.3260 + fax 603.594.3450 * NashuaMayor@NashuaNH.gov
www. NashuaNH.gov

sen THE CITY OF NASHUA “The Gate City’

FPinanetal Servicer

Purchasing Department

March 31, 2016
Memo #16-126

TO: MAYOR DONCHESS
FINANCE COMMITTEE

SUBJECT: 2016 SEWER PROGRAM (VALUE: $1,10B,975)
DEPARTMENT: 169 WASTEWATER; FUND: WASTEWATER
ACTIVITY: SEWER REHAB
DEPARTMENT: 169 WASTEWATER; FUND: WASTEWATER
ACTIVITY: SEWER STRUCTURES

Please see the attached communication from Steven Dookran, P.E., City Engineer, dated March 24, 2016
for information related to this purchase.

Pursuant to § 5-78 Major purchases (greater than $10,000) A. All supplies and contractual services,
except as otherwise provided herein, when the estimated cost thereof shall exceed $10,000 shall be
purchased by formal, written contract from the lowest responsible bidder, after due notice inviting bids.
Several of the néighborhcod streets are very narrow and many underground conflicts are expected.
Therefore, a contingency of $50,000 or approximately 5% is included in this award to be used on an as
needed basis for unforeseen circumstances.

The City Engineer, Board of Public Works (March 24, 2016) and the Purchasing Department recommend
the award of this contract to Park Construction Corporation of Fitzwilliam, NH in an amount of
$1,108,975.

Respectfully,

Dan Kooken
Purchasing Manager

Cc: § Dookran L Fauteux

229 Main Street « Nashua, New Hampshire 03061 ¢ Phone (603) 589-3330 « Fax (603) 589-3344

Jim Donchess
Mayor e City of Nashua

To: Board of Aldermen
From: Jim Donchess
Date: 4/8/16

Re: Headworks Upgrade

Pursuant to NRO § 5-90 (E) which states that approval by the Finance Committee of a contract award in
excess of $1,000,000 shall be submitted to the full Board of Aldermen at its next regularly scheduled
meeting for final approval prior to award of the contract, please consider the following. The Finance
Committee approved the purchase of the below referenced contract at thelr April 6, 2016 meeting. |
request the Board of Aldermen’s concurrence and approval for thls purchase.

Headworks Upgrade — Attached please find Purchasing Manager’s Memo # 16-127 regarding this contract.

229 Main Street * PO Box 2019 * Nashua, New Hampshire 03061-2019
603.589.3260 © fax 603.594.3450 » NashuaMayor@@NashuaNH. gov
www. NashuaN H.gov

THE CITY OF NASHUA “The Gate City

Financial Services

Purchasing Departenent

March 31, 2016
Memo #16-127

TO: MAYOR DONCHESS
FINANCE COMMITTEE

SUBJECT: HEADWORKS UPGRADE (VALUE: $2,848,222)
DEPARTMENT: 169 WASTEWATER; FUND: SRF LOAN
ACTIVITY: HEADWORKS UPGRADE

Please see the attached communication from David Simmons, Wastewater Department Superintendent
dated March 24, 2016 for the information related to this purchase.

Pursuant to § 5-78 Major purchases (greater than $10,000) A. All supplies and contractual services,
except as otherwise provided herein, when the estimated cost thereof shall exceed $10,000 shall be
purchased by formal, written contract from the lowest responsible bidder, after due notice inviting bids.

The Wastewater Department Superintendent, Board of Public Works (March 24, 2016) and the
Purchasing Department recommend the award of this contract in the amount of $2,848,222 to T Buck

Construction of Turner, ME.

Respectfully,

Dan Kooken
Purchasing Manager

Ce: D Simmons L Fauteux

229 Main Street « Nashua, New Hampshire 03061 © Phone (603) 589-3330 « Fax (603) 589-3344