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© MELANSON

INDEPENDENT AUDITORS’ REPORT

Board of Directors and Stockholder
Pennichuck Corporation and Subsidiaries

We have audited the accompanying consolidated financial statements of Pennichuck Corporation
and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2020 and 2019,
and the related consolidated statements of income (loss), comprehensive income (loss), changes in
stockholder’s equity, and cash flows for the years then ended, and the related notes to the
consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with accounting principles generally accepted in the United
States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on
our audits. We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditors’ judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal contro! relevant to the entity’s preparation and fair
presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements.

Merrimack, New Hampshire

Andover, Massachusetts

Greenfield, Massachusetts

Ellsworth, Maine 800.282.2440 | melansoncpas.com

City of Nashua

Purchasing Department
Administrative Services Division (603) 589-3330
229 Main Street - Nashua, NH 03060 Fax (603) 594-3233

May 24, 2022
Memo #22-281

TO: Mayor Donchess
Finance Committee

SUBJECT: Wastewater Chemicals Change Order #1: Polymer & Sodium Hypochlorite in the amount
not to exceed $56,000 funded from account 61156 Chemicals/Wastewater Fund

Please see attached communications from David Boucher, Superintendent of the Wastewater Department,
dated May 25, 2022 for project specific details related to this purchase. Below please find a summary of
the purchase approval request:

Item: Wastewater Chemicals: Polymer & Sodium Hypochlorite

Value: Polymer in the amount of $28,000 and Sodium Hypochlorite in the amount of
$28,000 to total $56,000

To Date: Approved 7/7/21: $600,000 (Finance Memo 22-146)
Vendor: Polymer from Polydyne of Riceboro GA and Sodium Hypochlorite from Borden &
Remington of Fall River MA

Department: 169 Wastewater
Source Fund: 61156 Chemicals/Wastewater Fund

Ordinances: Pursuant to § 5-84 Special purchase procedures A/(3) Purchases which can be
procured through cooperative intergovernmental purchase agreements with
other governmental jurisdictions

The Board of Public Works (5/25/22 BPW meeting), Division of Public Works: Wastewater, and the
Purchasing Department respectfully request your approval of this contract.

Regards,
Kelly Parkinson

Purchasing Manager

Ce: D Boucher
C O'Connor

D MELANSON

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Pennichuck Corporation and Subsidiaries as of
December 31, 2020 and 2019, and the results of their operations and their cash flows for the

years then ended in accordance with accounting principles generally accepted in the United
States of America.

Modarsen

Merrimack, New Hampshire
March 23, 2021

800.282.2440 | melansoncpas.com

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

As of December 31, 2020 and 2019
(in thousands, except share data)

ASSETS
Property, Plant and Equipment, net

Current Assets:
Cash and cash equivalents
Restricted cash - RSF
Restricted cash - CIAC
Restricted cash - Bond Project Funds
Accounts receivable - billed, net
Accounts receivable - unbilled, net
Accounts receivable - other
Inventory
Prepaid expenses
Prepaid property taxes
Deferred and refundable income taxes

Total Current Assets

Other Assets:
Deferred charges and other assets
Acquisition premium, net

Total Other Assets
TOTAL ASSETS

$

2020

242,469

310
8,611
274
237
4,297
4,473
16
598
507
1,290

20,613

17,014

67,202
84,216
347,298

2019

$__ 237,182

4,885
1,963
3,426
3,041
2,975
16
648
418
992

8

17,972

13,727
69,263

- 82,990
$ 338,144

The accompanying notes are an integral part of these consolidated financial statements.

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets - Continued
As of December 31, 2020 and 2019
(in thousands, except share data)

2020
STOCKHOLDER'S EQUITY AND LIABILITIES
Stockholder's Equity:
Common stock; $0.01 par value; 1,000 shares
authorized, issued and outstanding S -
Additional paid in capital 30,561
Accumulated deficit (30,403)
Accumulated other comprehensive income 254
Total Stockholder's Equity 412
Long-Term Debt, Less Current Portion
and Unamortized Debt Issuance Costs 223,805
Current Liabilities:
Lines of credit 5,480
Current portion of long-term debt 6,018
Accounts payable 2,973
Deferred revenue 66
Accrued interest payable 1,304
Other accrued expenses 390
Accrued wages and payroll withholding 306
Customer deposits and other 435
Total Current Liabilities 16,972
Other Liabilities and Deferred Credits:
Deferred income taxes 14,931
Accrued pension liability 15,424
Unamortized debt premium 3,109
Deferred investment tax credits 405
Regulatory liability 9,918
Accrued post-retirement benefits 4,910
Customer advances 84
Contributions in aid of construction, net 56,536
Derivative instrument 460
Other long-term liabilities 332
Total Other Liabilities and Deferred Credits 106,109
TOTAL STOCKHOLDER'S EQUITY AND LIABILITIES S$ 347,298

$

2019

30,561
(28,140)
318

2,739

__212,296

9,283
6,582
3,529
59
1,723
898
192
322

22,588

14,427
12,971
3,162
438
9,930
3,982
84
54,770
353
404

100,521
338,144

The accompanying notes are an integral part of these consolidated financial statements.

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statements Of Income (Loss)
For the Years Ended December 31, 2020 and 2019

(in thousands)

Operating Revenues

Operating Expenses:
Operations and maintenance
Depreciation and amortization
Taxes other than income taxes

Total Operating Expenses
Operating Income

Interest Expense
Other, Net

Loss Before Provision for Income Taxes
Provision for Income Taxes

Net Loss

2020

50,091

24,768
8,549

6,445
39,762

10,329

(11,896)
90

(1,477)

(507)
(1,984)

$

2019

44,779

24,158
8,449

6,287
38,894

5,885

(11,172)
264

(5,023)

(314)
(5,337)

The accompanying notes are an integral part of these consolidated financial statements.

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)
For the Years Ended December 31, 2020 and 2019
(in thousands)

2020 2019
Net Loss S (1,984) S (5,337)
Other Comprehensive Loss:
Unrealized loss on derivatives (149) (160)
Reclassification of net income realized in net loss 42 70
Income tax provision relating to
other comprehensive loss 43 36
Other Comprehensive Loss (64) (54)
Comprehensive Loss S (2,048) $ (5,391)

The accompanying notes are an integral part of these consolidated financial statements.

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Balance as of
January 1, 2020

Common dividends declared
Net loss
Other comprehensive income:

Unrealized loss on derivatives,
net of taxes of $(60)

Reclassification of net income
realized in net loss, net of
taxes of $17

Balance as of
December 31, 2020

PENNICHUCK CORPORATION AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholder's Equity

For the Year Ended December 31, 2020
(in thousands, except per share data)

Accumulated

Additional Other
Common Stock Paid in Accumulated Comprehensive
Shares Amount Capital Deficit Income Total
1,000 $ - $ 30,561 $ (28,140) $ 318 $ 2,739
- - (279) - (279)
- - - (1,984) - (1,984)
- - - (89) (89)
- - - 25 25
1,000 $ - $30,561 $ (30,403) S 254 $ 412

The accompanying notes are an integral part of these consolidated financial statements.

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Balance as of
January 1, 2019

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statement of Changes in Stockholder's Equity

For the Year Ended December 31, 2019
(in thousands, except per share data)

Accumulated

Common dividends declared - -

Net loss

Other comprehensive income:

Unrealized gain on derivatives,

net of taxes of $(63)

Reclassification of net income
realized in net income, net of

taxes of $27

Balance as of
December 31, 2019

Additional Other
Common Stock Paid in Accumulated Comprehensive
Shares Amount Capital Deficit income Total
1,000 $ - $ 30,561 $ (22,523) $ 372 S$ 8,410
- (280) - (280)
- - - (5,337) - (5,337)
- - - - (97) (97)
- - - - 43 43
1,000 S - $ 30,561 $ (28,140) $ 318 $2,739

The accompanying notes are an integral part of these consolidated financial statements.

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2020 and 2019
(in thousands)

2020 2019
Cash Flows From Operating Activities:
Net Loss $ (1,984) $ (5,337)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,637 8,537
Amortization of deferred investment tax credits (33) (33)
Provision for deferred income tax 534 341
Undistributed loss in real estate partnership - 104
Gain on disposition of property - (150)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable billed, unbilled and other (3,154) 718
(Increase) decrease in inventory 50 (37)
(Increase) decrease in prepaid expenses (387) 221
(Increase) decrease in refundable income taxes 8 (8)
(Increase) decrease in deferred charges and other assets (2,079) (2,579)
Increase (decrease) in accounts payable and deferred revenue (549) (1,836)
Increase (decrease) in accrued interest payable (419) 41
Increase in other 3,027 3,818
Net cash provided by operating activities 3,651 3,800
Cash Flows From Investing Activities:
Purchase of property, plant and equipment including debt
component of allowance for funds used during construction (10,165) (16,843)
Proceeds from sale of property - 221
Net cash used for investing activities (10,165) (16,622)

(continued)

The accompanying notes are an integral part of these consolidated financial statements.

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