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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets - Continued
As of December 31, 2021 and 2020
{in thousands, except share data)

2021 2020
STOCKHOLDER'S EQUITY (DEFICIT) AND LIABILITIES
Stockholder's Equity (Deficit):
Common stock; $0.01 par value; 1,000 shares
authorized, issued and outstanding S - S -
Additional paid in capital 30,561 30,561
Accumulated deficit (34,381) (30,403)
Accumulated other comprehensive income 356 254
Total Stockholder's Equity (Deficit) (3,464) 412
Long-Term Debt, Less Current Portion
and Unamortized Debt Issuance Costs 227,063 223,805
Current Liabilities:
Lines of credit 6,608 5,480
Current portion of long-term debt 9,149 6,018
Accounts payable 2,452 2,973
Accrued property taxes 142 -
Deferred revenue 67 66
Accrued interest payable 1,341 1,304
Other accrued expenses 559 380
Accrued wages and payroll withholding 387 306
Customer deposits and other 1,298 435
Total Current Liabilities 22,003 16,972
Other Liabilities and Deferred Credits:
Deferred income taxes 14,850 14,931
Accrued pension liability 12,159 15,424
Unamortized debt premium 3,660 3,109
Deferred investment tax credits 371 405
Regulatory Jiability 9,906 9,918
Accrued post-retirement benefits 4,748 4,910
Customer advances 84 84
Contributions in aid of construction, net 57,302 56,536
Derivative instrument 290 460
Other long-term liabilities 260 332
Total Other Liabilities and Deferred Credits 103,630 106,109
TOTAL STOCKHOLDER'S EQUITY (DEFICIT} AND LEABILITIES 5 349,232 S 347,298

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, 2021 and 2020
(in thousands)

2021 2020
Operating Revenues S 52,004 S 50,091
Operating Expenses:
Operations and maintenance 26,707 24,768
Depreciation and amortization 8,751 8,549
Taxes other than income taxes 6,872 6,445
Total Operating Expenses 42,330 39,762
Operating Income 9,674 10,329
Interest Expense (13,902) (11,896)
Other, Net 340 90
Loss Before Provision for Income Taxes (3,888) (1,477)
(Provision) Benefit for Income Taxes 189 (SO7)
Net Loss $ (3,699) S {1,984}

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, 2021 and 2020
(in thousands)

2021 2020

Net Loss $ (3,699) $ (1,984)
Other Comprehensive Income {Loss):

Unrealized gain (loss) on derivatives 72 (149)

Reclassification of net income (loss) realized in net loss {68) 42

Income tax provision relating to

other comprehensive income {loss) 98 43

Other Comprehensive Income (Loss) 102 (64)
Comprehensive Loss $ (3,597) $ (2,048)

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

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

For the Year Ended December 31, 2021
(in thousands, except per share data)

Accumulated

Additional Other
Common Stock Paidin Accumulated Comprehensive
Shares Amount Capital Deficit Income Total

Balance as of
January 1, 2021 1,000 S - S 30,561 S (30,403) S 254 $ 412
Common dividends declared - - (279) - (279)
Net loss - - - (3,699) - (3,699)
Other comprehensive income:

Unrealized gain on derivatives,

net of taxes of $29 - - . 43 43

Reclassification of net income

realized in net loss, net of taxes

of $39 - - - 59 59
Balance as of
December 31, 2021 1,000 S - S 30,561 S (34,381) S 356 S (3,464)

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

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City of Nashua

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

April 27, 2022
Memo #22-265

TO: Mayor Donchess
Finance Committee

SUBJECT: Pavement Preservation Program in the amount not to exceed $383,928.50 funded from
accounts 81704 Paving Bond

Please see attached communications from Daniel Hudson, City Engineer, dated April 28, 2022 for project
specific details related to this purchase. Below please find a summary of the purchase approval request:

Item: Pavement Preservation Program to include Crack Sealing on approximately 16.5
miles of roadway & asphalt rejuvenators/fog sealant to approximately 5 miles of
arterial and collector roadways

Value: not to exceed $383,928.50

Vendor: Sealcoating Inc of Braintree MA

Department: 160 Engineering

Source Fund: 81704 Paving Bond

Ordinance: Pursuant to § 5-78 Major purchases (greater than $25,000) A. All supplies and
contractual services, except as otherwise provided herein, when the estimated
cost thereof shall exceed $25,000 shall be purchased by formal, written contract
from the lowest responsible bidder, after due notice inviting bids

A competitive bidding IFB for this project was issued on 3/30/2022 and the following bids were received:

Vendor Location Amount Note
Sealcoating Inc Braintree, MA $383,929.50

We recommend this bid to be awarded to the only responding vendor to our IFB.

The Board of Public Works (4/28/22 BPW meeting), Division of Public Works: Engineering, and the
Purchasing Department respectfully request your approval of this contract.

Regards,
Kelly Parkinson

Purchasing Manager

Ce: D Hudson
C O'Connor

Balance as of
January 1, 2020

Net loss

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

Other comprehensive income:

Unrealized loss on derivatives,

net of taxes of $(63)

Reclassification of net income
realized in net loss, net of

taxes of $27

Balance as of
December 31, 2020

Additional Other
Common Stock Paid in Accumulated Comprehensive
Shares Amount Capital Deficit Income Total

1,000 $ - S 30,561 S$ (28,140) 5 318 S 2,739
Common dividends declared - - - (279) - (279)
. : . (1,984) : (1,984)
. . 2 - (89) (89)
- - - - 25 25
1,000 5 - $ 30,561 S$ (30,403) 5 254 5 412

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

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2021 and 2020
{in thousands)

2021 2020
Cash Flows From Operating Activities:
Net Loss $ (3,699) S (1,984)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 8,843 8,637
Amortization of deferred investment tax credits (33) (33)
Provision for deferred income taxes {161) 534
Gain on disposition of property {345) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable billed, unbilled and other (1,084) (3,154)
(Increase) decrease in inventory {135) 50
(Increase) decrease in prepaid expenses 365 (387)
(Increase) decrease in refundable income taxes - 8
(Increase) decrease in deferred charges and other assets 8,179 (2,079)
Increase (decrease) in accounts payable and deferred revenue (521) (549)
Increase (decrease) in accrued property taxes 145 -
Increase (decrease) in accrued interest payable 37 (419)
Increase (decrease) in other (2,387) 3,027
Net cash provided by operating activities 9,204 3,651
Cash Flows From Investing Activities:
Purchase of praperty, plant and equipment including debt
component of allowance for funds used during construction (8,816) {10,165)
Proceeds from sale of property 429 -
Net cash used far investing activities {8,387) {10,165)
(continued)

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

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows - Continued
For the Years Ended December 31, 2021 and 2020
{in thousands)

2021 2020

Cash Flows From Financing Activities:

Borrowings (payments) on lines of credit, net S 1,128 S (3,803)

Payments on long-term debt (6,046) (65,649)

Contributions in aid of construction 40 35

Proceeds from long-term borrowings 9,614 87,290

Debt issuance costs (302) (11,922)

Dividends paid (279) (279)
Net cash provided by financing activities 4,155 5,672
Increase (Decrease) in cash, cash equivalents, and restricted cash 4,972 (842)
Cash, cash equivalents, and restricted cash at beginning of period 9,432 10,274
Cash, cash equivalents, and restricted cash at end of period i) 14,404 i) 9,432

Supplemental Disclosure of Cash Flow and Non-cash Items
For the Years Ended December 31, 2021 and 2020 (in thousands)

2021 2020
Cash paid during the period for:
Interest S 10,907 S 11,207
Income taxes 105 96
Non-cash ites:
Contributions in aid of construction 2,093 3,391
Forgiveness of debt 89 89

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

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PENNICHUCK CORPORATION AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

Description of Business and Summary of Significant Accounting Policies

Description of Business

Pennichuck Corporation (“the Company,” “we,” or “our”) is a holding company head-
quartered in Nashua, New Hampshire with five wholly owned operating subsidiaries:
Pennichuck Water Works, Inc., (“Pennichuck Water”) Pennichuck East Utility, Inc.,
(“Pennichuck East”) and Pittsfield Aqueduct Company, Inc. (“PAC”) (collectively referred to as
the Company's “utility subsidiaries”), which are involved in regulated water supply and
distribution to customers in New Hampshire; Pennichuck Water Service Corporation (“Service
Corporation”) which conducts non-regulated water-related services; and The Southwood
Corporation (“Southwood”) which has historically owned several parcels of undeveloped
land.

The Company’s utility subsidiaries are engaged principally in the collection, storage,
treatment and distribution of potable water to approximately 38,394 customers throughout
the State of New Hampshire. The utility subsidiaries, which are regulated by the New
Hampshire Public Utilities Commission (the “NHPUC”), are subject to the provisions of
Accounting Standards Codification (“ASC”) Topic 980 “Regulated Operations.”

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany transactions have been
eliminated in consolidation.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

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Property, Plant and Equipment

Property, plant and equipment, which includes principally the water utility assets of the
Company’s utility subsidiaries, is recorded at cost plus an allowance for funds used during
construction on major, long-term projects and includes property funded with contributions
in aid of construction.

Maintenance, repairs and minor improvements are charged to expense as incurred. Improve-
ments which significantly increase the value of property, plant and equipment are capitalized.

Cash and Cash Equivalents
Cash and cash equivalents generally consist of cash, money market funds and other short-
term liquid investments with original maturities of three months or less.

Restricted Cash — RSF

This restricted cash balance consists of funds maintained for the Rate Stabilization Fund
(“RSF”), which was established in conformity with the requirements of NHPUC Order No.
25,292, as explained more fully in Note 14 of these financial statements. The RSF is an imprest
fund of $5 million, which is subject to funding above or below the imprest fund balance,
reflecting actual revenue performance as it relates to prescribed revenue levels supported by
the RSF. The excess or deficient amount (versus the $5 million imprest balance) is subject to
return or collection to rate payers over the succeeding three-year period of time, as of the
rate order issued with the next promulgated rate case filing. On November 7, 2017, the
NHPUC approved and issued Order No. 26,070 which established new rates for Pennichuck
Water. In addition, the rate order then authorized the reallocation of the existing $5,000,000
RSF among the Company’s utility subsidiaries. Such that, Pennichuck Water’s allocated share
of the RSF would now be $3,920,000, with the remaining balance of $1,080,000 to be
allocated between Pennichuck East and PAC. Rate order No. 26,179, under docket DW 17-
128 then allocated $980,000 of the $1,080,000 to Pennichuck East with the remaining
$100,000 to PAC (for which the approval to allocate these funds to PAC were approved in
November 2021 with rate order No. 26,544 , in docket DW 20-153). The purpose for splitting
and allocating the original RSF funds amongst the regulated subsidiary companies is to
provide additional reserves at the individual entity level, which will aid in ensuring sufficient
capital reserve funds are available to each entity Company, to support its operations. For the
years ended December 31, 2021 and 2020, the aggregated balances in the RSFs and restricted
cash accounts were approximately $11.6 million and $8.6 million, respectively.

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