Board Of Aldermen

gen) THE CITY OF NASHUA ‘The Cate City”

Financial Services

Purchasiae Departotent

March 31, 2016
Memo #16-123

TO: MAYOR DONCHESS
FINANCE COMMITTEE

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

(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):

(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.

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:

$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

Note 12 — Transaction with the City of Nashua

Swap settlements are recorded in the statement of income with the hedged item as interest
expense. During the years ended December 31, 2015 and 2014, $144,000 and $152,000,
respectively, was reclassified pre-tax from accumulated other comprehensive income (loss)
to interest expense as a result of swap settlements. We expect to reclassify approximately
$134,000, pre-tax, from accumulated other comprehensive income (loss) to interest expense
as a result of swap settlements, over the next twelve months.

Note 11 —- Accumulated Other Comprehensive Income

The Company’s revolving credit loan facility with TD Bank contains a covenant that requires
the Company to maintain a minimum fixed charge coverage ratio of at least 1.0; at December
31, 2015 and 2014, the fixed charge coverage ratio was 1.07 and 1.12, respectively. The
Company is also required to maintain an equity capitalization ratio of not less than 35%; at
December 31, 2015 and 2014, the equity capitalization ratio was 37% and 41%, respectively.

amortized over the lives of the underlying bond obligations. The Series 2015A bonds, which
were issued at a premium, include $5.1 million to construct a new operations facility in 2016.
The $222,000 cost of issuance associated with both the Series 2015A and Series 2015B
bonds is being amortized over the 30-year and [5-year life of the debt obligations.

These bonds were issued under a new bond indenture and loan and trust agreement, which
contains certain covenant obligations upon Pennichuck Water, which are as follows: