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Post-retirement medical benefits are provided for eligible retired employees through one of
two plans (collectively referred to as our “OPEB Plans”). For employees who retire on or after
the normal retirement age of 65, benefits are provided through a post-retirement plan (the
“Post-65 Plan”). For eligible non-union employees who retire prior to their normal retirement
age and who have met certain age and service requirements, benefits are provided through
a post-employment medical plan (the “Post-employment Plan”). Future benefits under the
Post-65 Plan increase annually based on the actual percentage of wage and salary increases
earned from the plan inception date to the normal retirement date. The benefits under the
Post-employment Plan allow for the continuity of medical benefits coverage at group rates
from the employee’s retirement date until the employee becomes eligible for Medicare,
which are fully funded by the retiree. The liability related to the Post-65 Plan will be funded
from the general assets of our Company.

Upon retirement, if a qualifying employee elects to receive medical benefits under our
Post-65 Plan, we pay up to a maximum monthly benefit of $382 based on years of service.

The following table sets forth information regarding our DB Plan and our OPEB Plans as of
December 31, 2021 and for the year then ended:

(in thousands) DB Plan OPEB Plans
Projected benefit obligations $ 39,455 $ 5,443
Employer contribution 1,144 11
Benefits paid, excluding expenses (839) (35)
Fair value of plan assets 27,296 695
Accumulated benefit obligation 35,558 -
Funded status (12,159) (4,748)
Net periodic benefit cost 1,950 415

Amount of the funded status recognized in the
Consolidated Balance Sheet consisted of:
Current liability - :

Non-current liability (12,159) (4,748)
Total Ss (12,159) S (4,748)

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The following table sets forth information regarding our DB Plan and our OPEB Plans as of
December 31, 2020 and for the year then ended:

{in thousands) DB Plan OPEB Plans
Projected benefit obligations $ 39,050 S 5,549
Employer contribution 1,491 11
Benefits paid, excluding expenses (1,964) (72)
Fair value of plan assets 23,626 639
Accumulated benefit obligation 35,020 -
Funded status (15,424) (4,910)
Net periodic benefit cost 1,688 345

Amount of the funded status recognized in the
Consolidated Balance Sheet consisted of:
Current liability - "
Non-current liability (15,424) (4,910)

The components of net periodic benefit cost other than the service cost component are
included in the line item operations and maintenance in the consolidated statements of
income (loss), as the amounts are immaterial.

Changes in plan assets and benefit obligations recognized in regulatory assets, for the year
ended December 31, 2021, were as follows:

(in thousands) DB Plan OPEB Plans

Regulatory asset balance, beginning of period $ 12,525 $ 1,672
Net actuarial gain incurred during the period (3,420) (510)
Prior service cost incurred during the period - 16
Recognized net actuarial gain (651) (72)
Regulatory asset balance, end of period S 8,454 S 1,106

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Changes in plan assets and benefit obligations recognized in regulatory assets, for the year
ended December 31, 2020, were as follows:

(in thousands) DB Plan OPEB Plans

Regulatory asset balance, beginning of period $ 10,269 $ 1,078
Net actuarial loss incurred during the period 2,733 621
Prior service cost incurred during the period - 16
Recognized net actuarial gain (477) (43)
Regulatory asset balance, end of period $ 12,525 $ 1,672

Amounts recognized in regulatory assets for the DB and OPEB Plans that have not yet been
recognized as components of net periodic benefit cost of the following as of December 31,
2021:

(in thousands) DB Plan OPEB Plans

Net actuarial loss $ 8,454 $ 1,205
Prior service cost - (99)
Regulatory asset $ 8,454 $ 1,106

Amounts recognized in regulatory assets for the DB and OPEB Plans that have not yet been
recognized as components of net periodic benefit cost of the following as of December 31,
2020:

(in thousands) DB Plan OPEB Plans

Net actuarial loss $ 12,525 S 1,787
Prior service cost - (115)
Regulatory asset $ 12,525 oe 1,672

The key assumptions used to value benefit obligations and calculate net periodic benefit cost
for our DB and OPEB Plans include the following:

2021 2020
Discount rate for net periodic benefit cost, beginning of year 2.39% 3.13%
Discount rate for benefit obligations, end of year (a) 2.74% 2.39%
Expected return on plan assets for the period (net of investment expenses) 7.00% 7.00%
Rate of compensation increase, beginning of year 3.00% 3.00%
Healthcare cost trend rate (applicable only to OPEB Plans) 5.50% 6.00%

An increase or decrease in the discount rate of 0.5% would result ina change in the funded status as of December
31, 2021, for the 06 Plan and the OPEB Plans of approximately $3.3 million and $515 thousand, respectively.

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The estimated net actuarial loss for our DB Plan that will be amortized in 2022 from the
regulatory assets into net periodic benefit costs is $329,000. The estimated net actuarial gain
and prior service cost for our OPEB Plans that will be amortized in 2022 from the regulatory
assets into net periodic benefit costs is $25,300.

In establishing its investment policy, the Company has considered the fact that the DB Plan is
a major retirement vehicle for its employees and the basic goal underlying the establishment
of the policy is to provide that the assets of the DB Plan are invested in accordance with the
asset allocation range targets to achieve our expected return on DB Plan assets. The
Company’s investment strategy applies to its OPEB Plans as well as the DB Plan. The expected
long-term rate of return on DB Plan and OPEB Plan assets is based on the Plans’ expected
asset allocation, expected returns on various classes of Plan assets, as well as historical
returns.

The assets of our Post-65 Plan are held in two separate Voluntary Employee Beneficiary
Association (“VEBA”) trusts. The VEBA plan assets are maintained in directed trust accounts
at a commercial bank.

The investment strategy for the Company’s DB Plan and OPEB Plans utilizes several different
asset classes with varying risk/return characteristics. The following table indicates the asset
allocation percentages of the fair value of the DB Plan and OPEB Plans’ assets for each major
type of plan asset as of December 31, 2021, as well as the targeted allocation range:

DB Plan OPEB Plans
Asset Asset
Allocation Allocation
Range Range
Equities 61% 30% - 100% 74% 30% - 100%
Fixed income 15% 20% - 70% 17% 0% - SO%
Cash and cash equivalents 24% 0% - 15% 9% 0% - 15%
Total 100% 100%

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The following table indicates the asset allocation percentages of the fair value of the DB Plan
and OPEB Plans’ assets for each major type of plan asset as of December 31, 2020, as well as
the targeted allocation range:

DB Plan OPEB Plans
Asset Asset
Allocation Allocation
Range Range
Equities 61% 30% - 100% 69% 30% - 100%
Fixed income 39% 20% - 70% 24% 0% - 50%
Cash and cash equivalents 0% 0% - 15% 7% 0% - 15%
Total 100% 100%

Management uses its best judgment in estimating the fair value of its financial instruments.
However, there are inherent weaknesses in any estimation technique. Therefore, for substan-
tially all financial instruments, the fair value estimates herein are not necessarily indicative of
the amounts that we could realize in a sales transaction for these instruments. The estimated
fair value amounts have been measured as of year-end and have not been reevaluated or
updated for purposes of these consolidated financial statements subsequent to those
respective dates.

Investments in common stock and mutual funds are stated at fair value by reference to
quoted market prices. Money market funds are valued utilizing the net asset value per unit
based on the fair value of the underlying assets as determined by the directed trustee.

The DB Plan also holds assets under an immediate participation guarantee group annuity
contract with a life insurance company. The assets under the contract are invested in pooled
separate accounts and in a general investment account. The pooled separate accounts are
valued based on net asset value (NAV) per unit of participation in the fund. The NAV is used
as a practical expedient to estimate fair values. This practical expedient is not used when it is
determined to be probable that the fund will sell the investment for an amount different than
that reported at NAV. These accounts have no unfunded commitments or significant
redemption restrictions at year-end. The value of these units is determined by the trustee
based on the current market values of the underlying assets of the pooled separate accounts.
Therefore, the value of the pooled separate accounts is deemed to be at estimated fair value.

The general investment account is not actively traded, and significant other observable inputs

are not available. The fair value of the general investment account is calculated by discounting
the related cash flows based on current yields of similar instruments with comparable durations.

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The methods described above may produce a fair value calculation that may not be indicative of
net realizable value or reflective of future fair values. Furthermore, while the Plan’s management
believes the valuation methodologies are appropriate and consistent with other market
participants, the use of different methodologies or assumptions to determine the fair value of
certain investments could result in a different fair value measurement at the reporting date.

A fair value hierarchy which prioritizes the inputs to valuation methods is used to measure
fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements).

The fair value of DB Plan and OPEB Plan assets by levels within the fair value hierarchy used
as of December 31, 2021 was as follows:

(in thousands) Fair Value Level 1 Level 2 Level 3
DB Plan:
Guaranteed Interest Accounts S 6,642 S - S - S 6,642
Total Assets in the Fair Value Hierarchy 6,642 - - 6,642
investments measured at net asset value®? 20,654 - - -
DB Plan Investments, at Fair Value 27,296 - - 6,642
OPEB Plans:
Common stocks 373 373 - -
Mutual funds 138 138 - -
Fixed income funds 120 120 - -
Money market funds 63 - 63 -
Total Assets in the Fair Value Hierarchy 694 631 63 -
Investments measured at net asset value"! - - - -
OPEB Plans Investments, at Fair Value 694 631 63 -
Totals S 27,990 $ 631 5 63 S 6,642

(a) In accordance with Subtopic 820-10, certain investments that were measured at fair value using the net asset value
per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts
presented in the statements of assets available for benefits of the Plans.

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A regular meeting of the Board of Aldermen was held Tuesday, September 27, 2016, at 7:30 p.m. in the
Aldermanic Chamber.

President Brian S. McCarthy presided; City Clerk Patricia D. Piecuch recorded.

Prayer was offered by City Clerk Patricia D. Piecuch; Alderman Sean M. McGuinness led in the Pledge
to the Flag.

The roll call was taken with 15 members of the Board of Aldermen present.
Mayor James W. Donchess and Corporation Counsel Steven A. Bolton were also present.

REMARKS BY THE MAYOR

Mayor Donchess

A number of exciting and good things happened over the last couple of weeks. We had the music
festival on Friday and Saturday which worked out really well. We had the farmer’s dinner on Sunday
night. The Legacy Playground was opened after a long period of working on that. We had the award of
being 16" as the best place to live in United States by Money Magazine. Tonight we have some very
good appointments on.

One very sad thing is that Dominick Giovinazzo, a long-time leader from the Boys and Girls Club, passed
away and his wake is tomorrow.

Because the issue of the Welcoming City is going to be voted on tonight | wanted to spend most of my
time on that. | brought this resolution to join the Welcoming America Initiative on behalf of Nashua at the
request of both the Chamber of Commerce and the United Way who have been involved in the effort to
make new residents of Nashua, both from outside the country and inside the country welcome for a long
time. | thought and still obviously think it is a very strong move for Nashua. | appreciated their
leadership in this area and so | sponsored the resolution that is before you. | think there are a number of
reasons that we should take positive action on this. If we want to build a stronger economy, a stronger
job base, a stronger tax base and a more vibrant community, we need to attract new residents; both from
within the United States and without. New Hampshire is the second oldest city in the country and there
has recently been publicity about Maine and New Hampshire facing the very serious problem of an aging
population with younger people not staying. Now Nashua, fortunately, if you really look at the numbers is
younger, still getting older but younger and more diverse by far than the State of New Hampshire as a
whole and that’s an opportunity and an asset for us. 13.5% of Nashua residents are foreign born and
that does not include the children of foreign born residents who might be school kids or older teenagers
or even adults. The biggest problem that is raised by the Chamber of Commerce and man of the
employers that we have is the inability to find qualified or any employees to fill jobs that are now open.
This is BAE and across the board. We need more people moving to Nashua. As | mentioned a couple
of weeks ago, if you look at the trends for the last four or five years, Nashua would have lost population
were it not for immigration of considerable amounts; 3,000 to 4,000 people. We need new residents,
immigrants from outside the country and elsewhere to help us start businesses to fill jobs and to provide
diversity and vitality for our community and to help us work towards a prosperous future. Take Rivier
University, last week they had a recruiter go to India to recruit Indian graduate students to come to that
university. They are one of our leading college and university level institutions. They attracted 500
students from India and they are hoping to attract that many more to be part of their computer science
program on a constant basis. This is a huge source of revenue for Rivier. Each of those students faces
$445 per credit for 36 credits so this is a major source of their recent success and one that we want to
encourage and promote. If you look to the Money Magazine article which suggests that Nashua is the
16" best to live, they sighted a number of things; low unemployment, downtown Renaissance and one of
the things that they mentioned was diversity and that we have begun to establish ourselves formally as a
Welcoming City and as part of the Welcoming America Initiative. We are trying to, in passing this, trying
to speak to a number of different groups. Number one, to the foreign born residents that we have who

2022 Pavement Preservation Streets by Ward

Ward 1

Amherst St — EB (Hampshire Dr — Turnpike W. Exp Joint)
Amherst St — WB (Turnpike W. Exp Joint - Hampshire Dr)
Capitol St

Cotton Rd

Jasper Ln

Luke St

State St

Travis Rd

Ward 2

Amherst Street (Broad St — Turnpike E. Exp Joint)

Brinton Dr

Broad St (Amherst St — 250E. of Sullivan St)

Broad St (250’E of Sullivan St — Broad Street Pkwy)

Century Rd

Dinsmore St

Nova Rd

Owls Head Dr

Somerset Pkwy NB-1 (Amherst St — 150’E of Kessler Farm Dr)
Somerset Pkwy NB-2 (150’E of Kessler Farm Dr — Southwood Dr)
Somerset Pkwy SB-1 (150’E of Kessler Farm Dr — Amherst St)
Somerset Pkwy SB-2 (Southwood Dr — 150’E of Kessler Farm Dr)

Ward 3

Burnham Ave

Damon Ave

Dow St (Summer St — Lock St)

East Stark St (Concord St — Atherton Ave)
Gettysburg Dr

Rancourt St

Santerre St

Smithfield Ter

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The fair value of DB Plan and OPEB Plan assets by levels within the fair value hierarchy used
as of December 31, 2020 was as follows:

(in thousands} Fair Value Level 1 Level 2 Level 3

DB Plan:

Guaranteed Interest Accounts S$ 5,731 $ : $ - $5,731

Total Assets in the Fair Value Hierarchy 5,731 - - 5,731

Investments measured at net asset value”! 17,895 - - -
DB Plan Investments, at Fair Value 23,626 - - 5,731

OPEB Plans:

Common stocks 349 349 -

Mutual funds 124 124 .

Fixed income funds 143 143 - -

Money market funds 23 - 23 -

Total Assets in the Fair Value Hierarchy 639 616 23 -

Investments measured at net asset value”! - - -
OPEB Plans Investments, at Fair Value 639 616 _ 23 -

Totals S 24,265 S 616 S 23 S$ 5,731

(a) in accordance with Subtopic 820-10, certain investments that were measured at fair value using the net asset value
per share {or its equivalent) practical expedient have not been classified in the fair vaiue hierarchy. The fair value
amounts presented in this table are intended to permit reconciliation of the fair value hierarchy te the amounts
presented in the statements of assets available for benefits of the Plans.

Level 1: Based on quoted prices in active markets for identical assets.
Level 2: Based on significant observable inputs.
Level 3: Based on significant unobservable inputs.

The following table summarizes investments at fair value based on NAV per share as of
December 31, 2021 and 2020, respectively:

{in thousands} Fair Value

December 31, 2021
Pooled Separate Accounts:
Equities S 16,648
Fixed Income 4,006

Total Pooled Separate Accounts S 20,654

December 31, 2020
Pooled Separate Accounts:
Equities S 14,391
Fixed Income 3,504

Total Pooled Separate Accounts $ 17,895

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The following table presents a period-end reconciliation of DB Plan assets measured and
recorded at fair value on a recurring basis, using significant unobservable inputs (Level 3):

(in thousands} 2021 2020
Balance, beginning of year S 5,731 S 5,155
Plan transfers 202 1,941
Contributions 599 373
Benefits paid - (1,844)
Return on plan assets (net of investment expenses) 110 106
Balance, end of year iS 6,642 S 5,731

In order to satisfy the minimum funding requirements of the Employee Retirement Income
Security Act of 1974, applicable to defined benefit pension plans, the Company anticipates it
will contribute approximately $0.75 million to the DB Plan in 2022.

The following maximum benefit payments, which reflect expected future service, as appro-
priate, are expected to be paid in the years indicated:

(in thousands} DB Plan OPEB Plans
2022 s 1,178 S 113
2023 1,236 119
2024 1,380 134
2025 1,500 144
2026 1,567 153
2027 and thereafter 9,803 1,001
Total $ 16,664 $ 1,664

Because the Company is subject to regulation in the state in which it operates, we are
required to maintain our accounts in accordance with the regulatory authority’s rules and
regulations. In those instances, we follow the guidance of ASC Topic 980 (“Regulated
Operations”). Based on prior regulatory practice, we recorded underfunded DB Plan and
OPEB Plan obligations as a regulatory asset, and we expect to recover those casts in rates
charged to customers.

Defined Contribution Plan

In addition to the defined benefit plan, the Company provides and maintains a defined
contribution plan covering substantially all employees. Under this plan, the Company
matches 100% of the first 3% of each participating employee’s eligible compensation
contributed to the plan. The matching employer's contributions, recorded as operating
expenses, were approximately $294,000 and $272,000 for the years ended December 31,
2021 and 2020, respectively.

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