Agenda

Pennichuck Corporation and Subsidiaries
Consolidated Financial Statements
December 31, 2018 and 2017

(With Independent Auditors’ Report Thereon)

-ll-

¢ Implementation of the new Revenue Recognition standard (ASU No. 2014-09), including
new accounting methodology and reporting.

e Complete the evaluation, design and negotiations relating to the potential move of the
Company’s headquarters facilities to a new location in the City during 2020.

¢ Continued participation in multiple educational outreach efforts within the Company’s
customer coverage radius.

Other detailed information is included in the Company’s financial statements.

Sincerely,

-10-

Other Events

PFOA Contamination Issues

-8-

final permanent rate increase, with the intention that this temporary rate increase would be
approved in early 2018, and with permanent rates being set in the summer or fall of 2018.

Notes to Balance Sheet

Note | (Other Current Assets) — At December 31, 2018, approximately $1.0 million of this
balance is comprised of prepaid property taxes, which will be expensed in the first quarter of
2019, relating to taxes paid in November and December of 2018 for the second half of the
property tax year ended March 31, 2019.

Note 2 (Acquisition Premium) — In accordance with GAAP, the Acquisition Premium is being
written-off over the 30-year life of the principal of the City Acquisition Debt.

Balance Sheet ($000’s)
As of As of
December 31, 2018 December 31, 2017
(Audited) (Audited)
Assets
Property, Plant & Equipment, Net $ 221,860 $ 210,498

Current Assets:

Unaudited Cash Flow Statement

Cash Flow on a GAAP basis for the fourth quarter of 2018 as compared to the fourth quarter of
2017, and the year-to-date 2018 versus 2017, are as follows:

-4.

Consolidated operating expenses increased by $2.7 million, or 7.6%, for the full year,
from 2017 to 2018, mainly due to higher maintenance related costs, production costs,
increased depreciation costs, and labor related costs.

Interest expense increased slightly in 2018 when compared to 2017 due to interest costs
associated with the additional financed amounts for capital projects which have been
incurred for ongoing infrastructure replacement, in conformity with the Company’s key
mission objectives.

-3-

national origin, ancestry, age, marital status, pregnancy, disability or veteran status. All
employment and promotion decisions are based solely on valid requirements, in accordance with
the principles of equal employment opportunity and affirmative action.

Financial Performance During the Last Year. The Company’s audited consolidated financial
statements for the year ended December 31, 2018 are attached to this report.

($ Millions)
4 Quarter Year-to-Date
2018 2017 2018 2017