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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____.
Commission File Number 0-18552
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Pennichuck Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Hampshire 02-0177370
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Four Water Street, Nashua, New Hampshire 03061
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(603) 882-5191
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
----- -----
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
YES NO X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Common Stock, $1 Par Value-2,394,439 shares were outstanding as of November
10, 2003
1
PENNICHUCK CORPORATION AND SUBSIDIARIES
FORM 10-Q
September 30, 2003
INDEX
PART I. FINANCIAL INFORMATION PAGE NUMBER
- ------------------------------ -----------
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets--
September 30, 2003 and December 31, 2002 3
Condensed Consolidated Statements of Income--
Three and nine months ended September 30, 2003
and 2002 4
Condensed Consolidated Statements of Cash Flows--
Nine months ended September 30, 2003 and 2002 5
Notes to Condensed Consolidated Financial Statements--
September 30, 2003 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 20
Item 4. Controls and Procedures 21
PART II. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings Not Applicable
Item 2. Changes in Securities and Use of Proceeds Not Applicable
Item 3. Defaults upon Senior Securities Not Applicable
Item 4. Submission of Matters to a Vote
of Security Holders Not Applicable
Item 5. Other Information Not Applicable
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
- ----------
2
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2003 December 31,
(Unaudited) 2002
------------- ------------
(In thousands, except share and per share data)
ASSETS
Property, plant and equipment $112,727 $106,951
Less accumulated depreciation (29,520) (27,279)
-------- --------
Net property, plant and equipment 83,207 79,672
Current Assets
Cash and cash equivalents 1,435 2,444
Restricted cash -- 151
Accounts receivable, net 3,563 2,853
Notes receivable -- 605
Refundable income taxes 345 334
Inventory 756 590
Prepaid expenses and other current assets 159 490
-------- --------
6,258 7,467
Other Assets
Deferred land costs 837 791
Deferred charges and other assets 3,579 3,052
Long term note receivable 1,224 --
-------- --------
5,640 3,843
TOTAL ASSETS $ 95,105 $ 90,982
======== ========
STOCKHOLDERS' EQUITY AND LIABILITIES
Stockholders' Equity
Common stock-par value $1 per share
(authorized 11,500,000 shares; issued
2,393,391 shares) $ 2,393 $ 2,393
Paid in capital 15,170 15,170
Retained earnings 14,006 13,941
Accumulated other comprehensive income (856) (927)
Less treasury stock, at cost (1,952 shares) (138) (144)
-------- --------
30,575 30,433
Minority Interest 34 --
Long term debt, less current portion 28,167 26,860
Current Liabilities
Current portion of long term debt 354 354
Accounts payable 1,009 673
Accrued interest payable 289 370
Other accrued expenses 1,345 1,534
-------- --------
2,997 2,931
Deferred Credits and Other Reserves
Contributions in aid of construction 20,687 20,261
Deferred income taxes 7,692 6,634
Deferred gain on land sale 1,224 --
Other liabilities and deferred credits 3,729 3,863
-------- --------
TOTAL STOCKHOLDERS' EQUITY & LIABILITIES $ 95,105 $ 90,982
======== ========
See notes to condensed consolidated financial statements
3
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----
(In thousands, except share and per share amounts)
Revenues
Water utility operations $ 5,713 $ 5,900 $ 14,333 $ 14,314
Real estate operations 147 267 876 3,039
Contract operations 519 358 1,253 1,065
Other 15 12 40 37
--------- --------- --------- ---------
6,394 6,537 16,502 18,455
Operating expenses
Water utility operations 3,722 3,100 10,589 9,500
Real estate operations 25 38 65 1,820
Contract operations 438 454 1,086 998
Other -- 35 -- 96
--------- --------- --------- ---------
4,185 3,627 11,740 12,414
Operating income 2,209 2,910 4,762 6,041
Merger and other expenses (51) (95) (740) (1,666)
Other income 9 7 51 84
Interest expense (493) (493) (1,473) (1,486)
--------- --------- --------- ---------
Income before income taxes and
minority interest 1,674 2,329 2,600 2,973
Provision for income taxes 652 952 1,006 1,675
--------- --------- --------- ---------
Net income before minority interest 1,022 1,377 1,594 1,298
Minority interest in (earnings)
of Westwood Park LLC, net of tax -- -- (34) --
--------- --------- --------- ---------
Net income $ 1,022 $ 1,377 $ 1,560 $ 1,298
========= ========= ========= =========
Basic earnings per common share: $ .43 $ .58 $ .65 $ .54
Diluted earnings per common share: $ .43 $ .57 $ .65 $ .54
Weighted average common shares:
Basic 2,391,439 2,391,439 2,391,439 2,390,303
Diluted 2,403,107 2,402,998 2,399,961 2,397,762
Dividends paid per common share $ .215 $ .195 $ .625 $ .585
See notes to condensed consolidated financial statements
4
PENNICHUCK CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended
September 30,
2003 2002
---- ----
(In thousands)
Operating Activities
Net income $1,560 $1,298
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,132 2,098
Gain on sale of land (257)
Allocation of land cost -- 1,662
Deferred income taxes 1,058 67
Change in other assets and liabilities 145 (180)
------ ------
Net cash provided by operating activities 4,638 4,945
Investing Activities:
Purchase of property, plant and
equipment and other assets (5,637) (3,813)
Proceeds from sale of land, net 257 --
Increase in contributions in aid of
construction 144 400
Increase (decrease) in other (229) (285)
------ ------
Net cash used in investing activities (5,465) (3,698)
Financing Activities:
Payments on long-term debt (92) (82)
Proceeds from issuance of debt 1,399 92
Payment of common dividends (1,495) (1,477)
Proceeds from dividend reinvestment plan & other 6 61
------ ------
Net cash used in financing activities (182) (1,406)
DECREASE IN CASH AND CASH EQUIVALENTS (1,009) (159)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,444 3,272
------ ------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $1,435 $3,113
====== ======
Supplemental Cash Flow Information: Interest paid was $1,518,000 and
$1,520,000 for the nine months ended September 30, 2003 and 2002,
respectively. Income taxes paid were $129,000 and $309,000 for the nine
months ended September 30, 2003 and 2002, respectively. Non-cash
items for the nine months ended September 30, 2003 include the deferred
gain on a land sale of $1.224 million and the related long-term note
receivable as discussed in Note E of the Notes to Condensed Consolidated
Financial Statements and Contributions in Aid of Construction totaling
$619,000 and $377,000 for the nine months ended September 30, 2003 and
2002, respectively.
See notes to condensed consolidated financial statements.
5
PENNICHUCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2003
NOTE A -- BACKGROUND
The financial statements include the accounts of Pennichuck
Corporation (the "Company") and its wholly-owned subsidiaries, Pennichuck
Water Works, Inc. ("Pennichuck"), Pittsfield Aqueduct Company, Inc.
("Pittsfield"), Pennichuck East Utility, Inc. ("Pennichuck East"), The
Southwood Corporation ("Southwood") and Pennichuck Water Service
Corporation (the "Service Corporation"). The financial statements also
include the accounts of Westwood Park LLC ("Westwood") in which Southwood
owns a 60% majority interest. All significant intercompany accounts have
been eliminated in consolidation.
Certain amounts for the three and nine months ended September 30,
2002 have been reclassified to conform with the 2003 financial statement
presentation. These reclassifications had no effect on net income and
relate primarily to the disclosure of "other revenues" and "other expenses"
as separate line items in the Condensed Consolidated Statements of Income.
NOTE B -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
statements and with the instructions to Form 10-Q and Regulation S-X
pertaining to interim financial statements. Accordingly, they do not
include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a
fair presentation have been included. Operating results for the three and
nine months ended September 30, 2003 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2003. The
Balance Sheet amounts shown under the December 31, 2002 column have been
derived from the audited financial statements of the Company as contained
in its Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
NOTE C -- NEW ACCOUNTING PRONOUNCEMENTS
In December 2002, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards No. 148, "Accounting for
Stock-Based Compensation- Transition and Disclosure- an amendment to FASB
Statement No. 123" ("SFAS 148") which provides for alternative methods of
transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, SFAS 148
requires prominent disclosures in both interim and annual financial
statements about the method of accounting for stock-based employee
compensation. At this time, the Company does not intend to change to the
fair value based method of accounting for stock-based compensation. On a
pro forma basis, the Company's net income and earnings per share for the
three and nine months ended
6
PENNICHUCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2003
NOTE C -- NEW ACCOUNTING PRONOUNCEMENTS (Continued)
September 30, 2003 and 2002 would have been reduced to the following
amounts had compensation cost for the plan been determined consistent with
SFAS No. 123, "Accounting for Stock Based Compensation."
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
---- ---- ---- ----
(In thousands, except per share data)
Net income:
As reported $1,022 $1,377 $1,560 $1,298
Deduct total stock-based employee
compensation expense determined under
fair value method for all awards, net of
related tax effects (8) (---) (8) (87)
------ ------ ------ ------
Pro forma $1,014 $1,377 $1,552 $1,211
Basic earnings per share:
As reported $ .43 $ .58 $ .65 $ .54
Pro forma $ .42 $ .58 $ .65 $ .51
Diluted earnings per share:
As reported $ .43 $ .57 $ .65 $ .54
Pro forma $ .42 $ .57 $ .65 $ .51
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity".
SFAS 150 establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS 150 applies specifically to a number of financial instruments
that companies have historically presented with their financial statements
either as equity or between the liabilities section and the equity section,
rather than as liabilities. SFAS 150 is generally effective for financial
instruments entered into or modified after May 31, 2003, and otherwise is
effective at the beginning of the first interim period beginning after June
15, 2003. The Company does not believe that SFAS 150 will have a material
effect on its combined financial statements.
NOTE D - COMMITMENTS AND CONTINGENCIES
Termination of Merger Agreement
- -------------------------------
On April 29, 2002, the Company entered into a definitive agreement
with Philadelphia Suburban Corporation ("PSC") to merge into a wholly-owned
subsidiary of PSC with shareholders of the Company receiving shares of PSC
in the merger. Under the terms of the agreement, the Company's stockholders
would have received a number of shares of PSC common stock based upon the
average closing price of PSC common stock for a 20-trading day period
ending shortly before the closing of the merger.
7
PENNICHUCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2003
Termination of Merger Agreement (Continued)
- -------------------------------------------
The merger was subject to several conditions, including, among other
things, the satisfaction of the applicable requirements under the Hart-
Scott-Rodino Antitrust Improvements Act, approval by the shareholders of
the Company and approval by the New Hampshire Public Utilities Commission
("NHPUC"). The review of the merger by the NHPUC and approval by the
Company's shareholders was expected to occur in the first half of 2003.
However, on November 26, 2002, the Board of Aldermen of the City of
Nashua, New Hampshire adopted a resolution calling for a referendum on
January 14, 2003 that, if passed, would authorize Nashua to pursue the
acquisition, by an eminent domain proceeding or otherwise, of all or a
portion of Pennichuck's water system serving the residents of Nashua and
others. The voters of Nashua passed the referendum on January 14, 2003.
Subsequently, on February 4, 2003, the Company announced that it had
reached an agreement with PSC to terminate PSC's pending acquisition of the
Company. The decision to terminate the merger agreement resulted from the
ongoing efforts by the City of Nashua (the "City") to acquire Pennichuck's
utility plant and property by eminent domain. Expenses associated with the
PSC merger transaction and related issues totaled approximately $231,000
(or approximately $139,000 on an after-tax basis) for the nine months ended
September 30, 2003.
Pending Municipalization
- ------------------------
The City formally notified the Company's utility subsidiaries on
February 5, 2003 of its intention to acquire all or a portion of their
plant and property. The notification letters from the City stated that the
City was acting pursuant to New Hampshire's utility municipalization
statute. On March 25, 2003, the Company's three utilities notified the City
of their decision not to sell their plant and property. Under New Hampshire
statutes, a municipality may seek the NHPUC's authorization to compel the
sale of utility assets through an eminent domain proceeding if the utility
does not agree to sell the assets voluntarily. By letter dated March 26,
2003, the City indicated its intent to pursue such an eminent domain
proceeding. The City and the Company have had discussions since that time
regarding the City's desire to acquire the Company's assets, the particular
assets that the City is interested in acquiring and the price that the City
would be willing to pay for those assets.
On April 8, 2003, the Town of Pittsfield formally notified Pittsfield
Aqueduct Company, Inc. that it wished to acquire the plant and property of
that company. The letter indicated that the Town was providing its
notification pursuant to the New Hampshire utility municipalization
statute. By letter dated May 28, 2003, Pittsfield Aqueduct Company, Inc.
notified the Town of Pittsfield of its decision not to sell its plant and
property.
To date, neither the City of Nashua nor the Town of Pittsfield has
commenced an eminent domain proceeding at the NHPUC. If such a proceeding
were commenced, it is not certain whether either the City or the Town would
ultimately choose to complete the acquisition of any portion of the
property of the Company's utility subsidiaries even if the NHPUC ultimately
approved such an acquisition and established a price for it. The Company
cannot predict the ultimate outcome of these matters. It is possible that,
if the acquisition efforts of the City and/or the Town of Pittsfield are
successful, the financial position of the Company would be materially
impacted. No adjustments have been recorded in the accompanying condensed
consolidated financial statements for these uncertainties.
8
PENNICHUCK CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2003
Pending Governmental Investigations
- -----------------------------------
The Company has been informed by the Securities and Exchange
Commission and the New Hampshire Bureau of Securities Regulation that it is
the subject of related investigations by each regulator. The Company
understands that the scope of those investigations relates to various real
estate development joint ventures, all of which involved the same
developer. One aspect of the investigations relates to a 1998 real estate
transaction between one of the joint ventures and Maurice L. Arel, the
Company's former President, and, in particular, the Company's previous
public disclosure regarding that transaction. The regulators also are
questioning whether the Company should have disclosed in its Annual Reports
on Form 10-K the aggregate dollar amount of transactions between the joint
ventures and a landscaping company with which one of Mr. Arel's sons was
involved. The Company has received subpoenas from each regulator, seeking
the production of documents in connection with their investigations. The
Company believes that it has cooperated fully with both investigations, and
it intends to continue to do so.
The Company's board of directors has retained legal counsel to
conduct an independent review, under the direction of the Company's Audit
Committee, of Mr. Arel's 1998 real estate transaction and other matters
that the Company believes are within the scope of the regulatory
investigations. The Company's board of directors believes that independent
review is substantially complete, and at the board's direction, counsel has
briefed the regulators on the board's findings.
As reported in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, Note A to the Company's 1998 financial
statements, which were included in the Company's annual report to
shareholders and incorporated into its Annual Report on Form 10-KSB for
that year, disclosed that an executive officer had purchased a home in 1998
from a joint venture between a Pennichuck subsidiary and a real estate
developer. Note A stated that the terms of the home purchase "were the same
as the terms which would be given to any independent third-party
purchaser." Mr. Arel is the executive referenced in that disclosure. Based
upon the findings of the internal review, the board of directors of the
Company has determined that Mr. Arel's 1998 home purchase in fact was not
on terms that would have been available then to any independent third-party
purchaser.
During the seven-year period from 1996 to 2002, six of the Company's
joint ventures engaged for various landscaping projects a company with
which one of Mr. Arel's sons was involved. The joint ventures' payments to
that landscaping company totaled approximately $517,600 during that period.
In three of those years, the aggregate payments for a year exceeded
$60,000. In 1999, the joint ventures paid the landscaping company a total
of $259,000, the greatest amount that the joint ventures paid to the
landscaping company during a single year.
The SEC and the New Hampshire Bureau of Securities Regulation could
seek to impose fines, penalties or other sanctions upon the Company as a
result of their respective investigations. The Company cannot predict the
ultimate outcome of this matter and accordingly, no adjustments have been
made in the accompanying condensed financial statements for these
uncertainties.
The board is continuing to consider what action the Company should
take against Mr. Arel in light of the terms of his 1998 home purchase, any
other issue arising out of the ongoing regulatory investigations, and the
related expenses incurred by the Company, among other factors.
Guarantee of Subsidiary Indebtedness
- ------------------------------------
Southwood holds a 50% interest in three limited liability companies
known as HECOP I, HECOP II and HECOP III, each of which owns land and a
commercial office building, subject to a mortgage note with a local bank.
The mortgage notes, totaling $9.26 million, which are not included in the
accompanying Condensed Consolidated Balance Sheets, are each secured by the
underlying real property. In addition, Southwood is contigently liable on
one-half of the outstanding balance, and as such, it has issued a guarantee
to the mortgagee for its share of the guaranteed indebtedness. At September
30, 2003, Southwood was contingently liable on approximately $4.63 million
of mortgage indebtedness associated with the limited liability companies.
NOTE E - DEFERRED GAIN ON LAND SALE
In January 2003, Southwood sold a tract of land to a regional
developer for approximately $1.5 million. Under the terms of that sale,
Southwood conveyed approximately 66.8 acres of land in exchange for
approximately $260,000 in cash and a long-term note receivable of
$1,223,990. The note, which matures in October 2005, carries a floating
interest rate of prime plus 1.5% and is secured by a first mortgage on the
property. The pretax gain on that sale was approximately $1.48 million, of
which $260,000, representing the net cash received at closing, is included
in "Revenues-Real estate operations." The remaining gain of $1,223,990,
represented by the note receivable, has been deferred until payment of the
note since the requirements established under Statement of Financial
Accounting Standards No. 66, " Accounting for Sales of Real Estate," for
recognition of all of the profit from this sale have not yet been met.
9
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
- --------------------------
This quarterly report, including management's discussion and
analysis, contains forward looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 regarding the Company's
results of operations and financial condition. Any statements contained
herein that do not describe historical facts are forward looking
statements. These forward looking statements are based on current
information and expectations available to management at the time the
statements are made, and are subject to factors and uncertainties that
could cause the Company's actual results to differ materially from those
expressed or implied by such forward looking statements. Such statements
address the following subjects, among others: likely commencement of
eminent domain proceedings before the NHPUC to acquire all or a portion of
the Company's water utility assets, and impact thereof on the Company's
consolidated business operations and planning; timeliness and extent of
water utility rate increases, if any; future operating results in the water
utility and real estate sectors; earnings growth and expectations; and
corporate spending and liquidity. The following factors, among others,
could cause actual results to differ materially from those described in the
forward looking statements: with respect to eminent domain proceedings, the
timeframe in which proceedings occur, if commenced, and the results thereof
or negotiated alternatives thereto; with respect to regulated water utility
rate relief, the timing and amount of rate increases as well as general
regulatory lag in realizing changes; with respect to water utility
operations, the impact of weather, such as the amount of rainfall and
temperature; with respect to real estate development, the impact of overall
economic conditions in the local and national economy; with respect to
corporate spending and liquidity, changes in capital projects that may
affect the Company's level of capital expenditures, any enhanced security
measures required to be implemented by water utility companies as a result
of September 11th concerns, and expenses related to the pending
municipalization efforts by the City of Nashua and others and the ongoing
governmental investigations. We undertake no obligation to update or revise
forward looking statements, whether as a result of new information, future
events or otherwise.
Results of Operations -- Three Months Ended September 30, 2003 Compared to
Three Months Ended September 30, 2002
For the three months ended September 30, 2003, the Company's
consolidated net income was $1,022,000, or $.43 per share, compared to net
income of $1,377,000, or $.58 per share, for the same period in 2002.
Consolidated revenues for the third quarter of 2003 decreased to $6.39
million from $6.54 million for the same period in 2002. As discussed in
greater detail below, the $143,000 decrease in consolidated revenues
occurred principally in the Company's regulated water businesses reflecting
lower consumption in the third quarter of 2003 compared to the third
quarter of 2002.
Our consolidated revenues are generally seasonal due to the overall
significance of the water sales of Pennichuck, Pennichuck East and
Pittsfield as a percentage of consolidated revenues. Water revenues are
typically at their lowest point during the first and fourth quarters of the
calendar year while water revenues in the second and third quarters tend to
be greater as a result of increased water consumption during the late
spring and summer months. In addition, the Company's consolidated revenues
may be significantly affected by sales of major real estate parcels, which
may occur from time to time (See discussion below under "Real Estate
Operations").
10
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Water Utility Operations
- ------------------------
The Company's water utility operations include the combined
activities of Pennichuck, Pennichuck East and Pittsfield, each of which is
regulated by the New Hampshire Public Utilities Commission (the "NHPUC").
The contribution percentage of each utility in 2003 did not materially
change from the same quarter last year. For the three months ended
September 30, 2003, approximately 80%, 18% and 2% of the total utility
operating revenues of $5,713,000 were generated by Pennichuck, Pennichuck
East and Pittsfield, respectively. The following table provides a breakout
of quarterly revenues for each of our utilities:
Quarter Ended September 30,
2003 2002 Change
---- ---- ------
Pennichuck $4,599,000 $4,770,000 $(171,000)
Pennichuck East 1,004,000 1,022,000 (18,000)
Pittsfield 110,000 108,000 2,000
---------- ---------- ---------
Total $5,713,000 $5,900,000 $(187,000)
========== ========== =========
Despite a 2.1% increase in the combined utilities' customer base,
there was an overall decline in water revenues reflecting significantly
more precipitation experienced during the summer of 2003. Total rainfall
for the third quarter of 2003 was 13.9" compared to 7.3" in the third
quarter of 2002. As a result, billed consumption in Pennichuck was 1.5%
lower for the quarter ended September 30, 2003 compared to the same period
last year.
In May 2003, Pittsfield filed a Notice of Intent to File for Rate
Relief in which it is seeking an increase of approximately $67,000, or
16.3%, in its annual water revenues. As of September 30, 2003, it was still
uncertain whether or not this rate case would be concluded by the end of
2003 or the amount of rate increase which will ultimately be granted by the
NHPUC, if any. Currently, there are no pending rate filings for either
Pennichuck or Pennichuck East.
Total utility operating expenses, which include production,
distribution system maintenance, administration, depreciation and taxes
other than income taxes, were $3.72 million for the three months ended
September 30, 2003, an increase of $622,000 from the same period last year.
The increase in utility operating expenses was principally due to:
* a $159,000 increase in local and state property taxes as a result
of a $115,000 tax abatement recorded in the third quarter of 2002
from the State of New Hampshire;
* $143,000 of increased administrative and general expenses
reflecting additional fees incurred in connection with compliance
with the Sarbanes-Oxley Act of 2002, costs incurred with the
change in the Company's senior executive position and increased
health benefit costs for employees;
* an increase of $46,000 for allocable intercompany charges from the
Company and an $82,000 decrease in intercompany charges allocated
by Pennichuck to the Company's non-regulated, water business; and
* $81,000 of increased depreciation and amortization expense
reflecting additional assets placed in service during the past
year.
11
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Water Utility Operations (Continued)
- ------------------------------------
For the quarter ended September 30, 2003, the combined operating
income of our three water utilities was $1,991,000, a decrease of $809,000
over the same quarter in 2002 reflecting the changes in water operating
revenues and expenses discussed above.
Real Estate Operations
- ----------------------
For the three months ended September 30, 2003, revenues from real
estate activities were $147,000, or $120,000 less than in the same period
last year. The third quarter revenues in 2003 were comprised principally of
$128,000 in net rental income from Southwood's 50% interest in three office
buildings located in Merrimack, New Hampshire compared to $167,000 in 2002.
In addition to this decrease in net rental income, the overall decline in
Southwood revenues resulted from interest income and other fees of $80,000
recognized in last year's third quarter earned on certain mortgage notes
receivable due from a local developer as explained in "Liquidity and
Financial Condition" below. There were no major land sales by Southwood in
either the third quarter of 2003 or the third quarter of 2002.
Southwood holds a 50% interest in three limited liability companies
known as HECOP I, HECOP II and HECOP III, each of which owns land and a
commercial office building, subject to a mortgage note with a local bank.
The mortgage notes, totaling $9.26 million, which are not included in the
accompanying Condensed Consolidated Balance Sheets, are each secured by the
underlying real property. In addition, Southwood is contingently liable on
one-half of the outstanding balance, or $4.63 million, and as such, it has
issued a guarantee to the mortgagee for its share of the guaranteed
indebtedness.
Contract Operations
- -------------------
The Service Corporation's revenues consist chiefly of fees charged
under (i) various operations and billing contracts with the Town of Hudson,
New Hampshire and the Town of Salisbury, Massachusetts and (ii)
approximately 50 non-transient, non-community water systems ("NTNCWS")
throughout southern and central New Hampshire. Revenues from contract
operations were $519,000 for the three months ended September 30, 2003,
compared to $358,000 for the same period in 2002. The $161,000 increase in
contract revenues over the same period last year is principally due to
increased fees for additional work conducted under its two major municipal
operating contracts as well as standard CPI adjustments to its contract fees
contained in Service Corporation's service agreements. For the three months
ended September 30, 2003, revenues from contract operations also include
approximately $59,000 from its Watertight program compared to $46,000 in
the same period of 2002.
Operating expenses associated with contract operations were $438,000
for the third quarter of 2003 as compared to $454,000 for the same period
in 2002. The decrease in contract operations expenses resulted from $35,000
of deferred assets written off in 2002, offset partially by approximately
$19,000 in increased direct costs associated with the Service Corporation's
various operating contracts.
12
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations -- Nine Months Ended September 30, 2003 Compared to
Nine Months Ended September 30, 2002
For the nine months ended September 30, 2003, the Company's
consolidated net income was $1,560,000, compared to consolidated net income
of $1,298,000 for the same period in 2002. On a per share basis, basic
income per share was $.65 for the nine months ended September 30, 2003, an
$.11 per share increase from the same period last year. Net income in 2003
and 2002 has been adversely affected by expenses relating to the terminated
merger with PSC as well as the pending regulatory investigations and
municipalization efforts discussed in Note D to the Notes to Condensed
Consolidated Financial Statements. Excluding the effect of those expenses,
however, consolidated net income would have been approximately $2.04
million, or $.85 per share for the nine months ended September 30, 2003 and
$2.83 million, or $1.18 per share, for the nine months ended September 30,
2002.
Year-to-date consolidated revenues in 2003 were $16.50 million
compared to $18.46 million last year. As discussed below, the decline in
consolidated revenues occurred primarily in the Company's real estate
business segment due to the sale of a major tract of land in the first
quarter of 2002.
Water Utility Operations
- ------------------------
Utility operating revenues for the nine months ended September 30,
2003 did not materially change from the same period in 2002 as shown in the
table below broken out by each of our regulated water utilities:
Nine Months Ended
September 30,
2003 2002 Change
---- ---- ------
Pennichuck $11,632,000 $11,651,000 $(19,000)
Pennichuck East 2,358,000 2,354,000 4,000
Pittsfield 343,000 309,000 34,000
----------- ----------- --------
Total $14,333,000 $14,314,000 $ 19,000
=========== =========== ========
For the nine months ended September 30, 2003, 81%, 16% and 3% of the
combined utilities' operating income was provided by Pennichuck, Pennichuck
East and Pittsfield, respectively, which was comparable to 2002.
Year-to-date billed consumption within the core system of Pennichuck
declined 1.95% from the same period last year, although that negative
impact on water revenues was partially offset by the positive effect of the
5.76% rate increase implemented by Pennichuck in April 2002. The decline in
consumption reflects significantly more precipitation experienced in the
regions served by our water utilities during the third quarter of 2003 as
discussed previously. Accordingly, water revenues for Pennichuck's core
system, as well as Pennichuck East, for the first nine months of 2003
remained relatively flat over the same period last year despite a 2.1%
increase in the combined utilities' customer base from September 30, 2002
to September 30, 2003.
13
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Water Utility Operations (Continued)
- ------------------------------------
For the nine months ended September 30, 2003, utility operating
expenses increased by $1,089,000, or 11.6%, to $10,589,000. That combined
increase in the utilities' operating expenses over the first nine months of
2002 was chiefly the result of the following:
* $181,000 of increased purification, power and purchased water
costs in our core Pennichuck system;
* an increase of approximately $173,000 in distribution system
expenses as a result of colder temperatures experienced in the
first quarter of 2003 and the utilities' aggressive distribution
system flushing program undertaken in the second and third
quarters of 2003;
* $118,000 of increased administrative and general costs,
principally relating to non-union salaries and compliance
requirements of the Sarbanes-Oxley Act of 2002;
* $137,000 of increased expenses associated with various insurance
coverages, including property and casualty, health and other
employee benefits;
* an increase in local and state property taxes totaling $238,000 as
a result of increased additional plant assets placed in service
during the past year and taxable by local and state authorities
and a $115,000 tax abatement recorded in the third quarter of 2002
from the State of New Hampshire.
For the nine months ended September 30, 2003, the combined operating
income of our three water utilities was $3,744,000, a decrease of
$1,070,000 over the same period in 2002 as a result of the changes in water
operating revenues and expenses discussed above.
Real Estate Operations
- ----------------------
For the nine months ended September 30, 2003, revenues from
Southwood's real estate activities were $876,000 compared to $3,039,000 for
the same period last year. This decrease resulted primarily from the sale
of the remaining 40 acres in Southwood Corporate Park in January 2002 for
$2.43 million. The remaining infrastructure costs allocable to that sale of
approximately $1.66 million are included in "Operating Expenses - Real
estate operations" in the accompanying Condensed Consolidated Statements of
Income for 2002.
Southwood's revenues for the first nine months of 2003 include
approximately $367,000 representing its 50% share of the pretax profits
from the office leasing activities of the three LLCs discussed earlier. For
the same period in 2002, Southwood's share of pretax operating income from
the LLCs was approximately $291,000. The increased net operating income
reflects the benefit of a lower interest rate on the mortgage indebtedness
which was refinanced in the past year.
Revenue from real estate activities in 2003 also reflects the sale of
land to a regional developer in January 2003. Under the terms of that sale,
Southwood conveyed approximately 66.8 acres of land in exchange for
approximately $260,000 in cash and a long-term note receivable of
$1,223,990. The note, which matures in October 2005, carries a floating
interest rate of prime plus 1.5% and is secured by a first mortgage on the
property. The pretax gain on that sale was approximately $1.48 million, of
which $260,000, representing the net cash received at closing, is included
in "Revenues-Real estate operations." The remaining gain of $1,223,990,
represented by the note receivable, has been deferred since the
requirements established under Statement of Financial Accounting Standards
No. 66, "Accounting for Sales of Real Estate," for recognition of all of
the
14
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Real Estate Operations (Continued)
- ----------------------------------
profit from this sale have not yet been met. The Company anticipates
recognizing the deferred gain on this transaction upon final payment of
principal on the note in October 2005.
Operating expenses associated with our real estate activities for the
first nine months of 2003 totaled $65,000, comprised chiefly of allocated
intercompany charges and property taxes on the remaining Southwood
landholdings.
Contract Operations
- -------------------
Revenues from contract operations totaled $1,253,000 for the nine
months ended September 30, 2003, representing a $188,000 increase, or
17.7%, over the same period last year. The increase over last year includes
(i) the addition of 9 new NTNCWS contracts from September 30, 2002, (ii)
$158,000 of contract fees charged for additional work performed under our
operating contracts with two municipalities and (iii) CPI increases in
contract fees earned in the first nine months of 2003, partially offset by
lower revenues from sundry consulting services performed during 2002
compared to 2003.
Operating expenses associated with our contract operations were
$1,086,000 and $998,000 for the first nine months of 2003 and 2002,
respectively. The net increase in operating expenses associated with our
contract operations resulted primarily from increased direct costs of
$146,000 associated with additional contract services performed in 2003,
partially offset by $53,000 of deferred assets written off during the first
nine months of 2002.
Other Expenses
- --------------
Merger and other expenses for the nine months ended September 30,
2003 totaled $740,000 compared to $1,666,000 during the same period last
year. Other expenses in the current year include (i) approximately $231,000
of merger-related fees, (ii) $136,000 of legal and other fees incurred in
connection with the pending municipalization process and (iii) $374,000 of
legal and other fees relating to the pending regulatory investigations. See
Note D to the Notes to Condensed Consolidated Financial Statements. The
Company currently expects that the legal and other costs associated with
both the current municipalization offer and the ongoing regulatory
investigations are likely to continue until the resolution of such matters.
For the nine months ended September 30, 2002, merger and other
expenses was comprised chiefly of costs associated with the Company's
subsequently terminated merger with Philadelphia Suburban Corporation as
discussed in Note D to the Notes to Condensed Consolidated Financial
Statements.
Pending Governmental Investigations
- -----------------------------------
The Company has been informed by the Securities and Exchange
Commission and the New Hampshire Bureau of Securities Regulation that it is
the subject of related investigations by each regulator. The Company
understands that the scope of those investigations relates to various real
estate development joint ventures, all of which involved the same
developer. One aspect of the investigations relates to a 1998 real estate
transaction between one of the joint ventures and Maurice L. Arel, the
Company's former President, and, in particular, the Company's previous
public disclosure regarding that transaction. The regulators also are
questioning whether the Company should have disclosed in its Annual Reports
on Form 10-K the aggregate dollar amount of transactions between the joint
ventures and a landscaping company with which one of Mr. Arel's sons was
involved. The Company has received subpoenas from each regulator, seeking
the production of documents in connection with their investigations. The
Company believes that it has cooperated fully with both investigations, and
it intends to continue to do so.
15
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pending Governmental Investigations (Continued)
- -----------------------------------------------
The Company's board of directors has retained legal counsel to
conduct an independent review, under the direction of the Company's Audit
Committee, of Mr. Arel's 1998 real estate transaction and other matters
that the Company believes are within the scope of the regulatory
investigations. The Company's board of directors believes that independent
review is substantially complete, and at the board's direction, counsel has
briefed the regulators on the board's findings.
As reported in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2002, Note A to the Company's 1998 financial
statements, which were included in the Company's annual report to
shareholders and incorporated into its Annual Report on Form 10-KSB for
that year, disclosed that an executive officer had purchased a home in 1998
from a joint venture between a Pennichuck subsidiary and a real estate
developer. Note A stated that the terms of the home purchase "were the same
as the terms which would be given to any independent third-party
purchaser." Mr. Arel is the executive referenced in that disclosure. Based
upon the findings of the internal review, the board of directors of the
Company has determined that Mr. Arel's 1998 home purchase in fact was not
on terms that would have been available then to any independent third-party
purchaser.
During the seven-year period from 1996 to 2002, six of the Company's
joint ventures engaged for various landscaping projects a company with
which one of Mr. Arel's sons was involved. The joint ventures' payments to
that landscaping company totaled approximately $517,600 during that period.
In three of those years, the aggregate payments for a year exceeded
$60,000. In 1999, the joint ventures paid the landscaping company a total
of $259,000, the greatest amount that the joint ventures paid to the
landscaping company during a single year.
The SEC and the New Hampshire Bureau of Securities Regulation could
seek to impose fines, penalties or other sanctions upon the Company as a
result of their respective investigations. The Company cannot predict the
ultimate outcome of this matter and accordingly, no adjustments have been
made in the accompanying condensed financial statements for these
uncertainties.
The board is continuing to consider what action the Company should
take against Mr. Arel in light of the terms of his 1998 home purchase, any
other issue arising out of the ongoing regulatory investigations, and the
related expenses incurred by the Company, among other factors.
Liquidity and Capital Resources
For the first nine months of 2003, the cash required to fund the
Company's normal operating activities and its capital improvements program
was derived from a combination of operating cash flow; available short-term
investments; low interest, state revolving loan funds; and the Company's
line of credit. Typically, our cash needs are at their lowest point of the
year during the first quarter and early second quarter since construction
activity for our water utilities and the related capital expenditures do
not normally begin until the second quarter and continue through the fourth
quarter.
The Company maintains a revolving line of credit agreement (the "line
of credit") with Fleet National Bank which allows the Company and its
subsidiaries to borrow up to $2.5 million at interest rates tied to the
bank's cost of funds or LIBOR, whichever is lower. As of September 30,
2003, the Company has borrowed $1 million under this line of credit.
The Company's cash and cash equivalents at September 30, 2003
decreased by $1,009,000 to $1,435,000. Thus far in 2003, our consolidated
capital expenditures totaled approximately $5.0 million, net of
contributions in aid of construction totaling $144,000. It is anticipated
that any additional cash required to fund the Company's remaining $2.5
million of planned capital expenditures, relating principally to utility
projects, will be provided by operating cash flow and short-term borrowings
under the line of credit.
16
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Cash flow from operating activities for the nine months ended
September 30, 2003 was approximately $4.64 million, of which nearly $3.5
million was provided by the Company's water utility operations. The
Company's consolidated cash flow and earnings continue to be adversely
affected by the continuing costs associated with the pending regulatory
investigations and the municipalization efforts by the City of Nashua which
totaled $374,000 and $136,000, respectively, through September 30, 2003.
The "Long-term note receivable" balance of $1.2 million at September
30, 2003 represents a note received by Southwood from the sale of a 66.8
acre tract of land to a regional developer in January 2003. Under the terms
of that sale, Southwood conveyed approximately 66.8 acres of land in
exchange for approximately $260,000 in cash and a long-term note receivable
of $1,223,990. The note, which matures in October 2005, carries a floating
interest rate of prime plus 1.5% and is secured by a first mortgage on the
property. The pretax gain on that sale was approximately $1.48 million, of
which $260,000, representing the net cash received at closing, is included
in "Revenues-Real Estate Operations." The remaining gain of approximately
$1.22 million, represented by the note receivable, has been deferred until
payment of the note since the requirements established under Statement of
Financial Accounting Standards No. 66, "Accounting for Sales of Real
Estate," for recognition of all of the profit from this sale has not yet
been met.
The following is a discussion of other major changes in the Company's
consolidated financial position from December 31, 2002 to September 30,
2003.
* "Notes receivable" included under Current Assets decreased by
$605,000 reflecting the net payments received on a development and
construction loan to a local developer which were repaid in full
in May 2003.
* The $710,000 increase in "Accounts receivable" from December 31,
2002 to September 30, 2003 reflects summer consumption which
typically exceeds consumption in the fourth quarter.
* "Prepaid and other current assets" decreased by $331,000 from the
end of 2002 primarily due to the amortization of certain prepaid
property taxes during the nine months ended September 30, 2003.
* Consolidated "Accounts payable" at September 30, 2003 was $1.01
million, compared to $673,000 at December 31, 2002. This increase
principally reflects additional vendor invoices associated with
inventory purchases and additional retainage amounts with
contractors for repairs, improvements, and certain capital
projects.
* "Deferred income taxes" increased $1,058,000 to $7,692,000 as of
September 30, 2003. The increase reflects the tax impact of
certain major timing differences, principally increased
accelerated depreciation resulting from greater bonus depreciation
allowances, which are expected to be realized for the year ending
December 31, 2003.
* Retained earnings increased from $13,941,000 at the end of 2002 to
$14,006,000 at September 30, 2003 as a result of net income earned
of $1,560,000 for the first nine months of 2003 offset by common
dividends paid of $1,495,000.
17
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Critical Accounting Policies, Significant Estimates and Judgments
The Company has identified the accounting policies below as those
policies critical to the business operations and the understanding of the
results of operations. The preparation of financial statements requires
management to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. The Company bases its estimates on
historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. However, future events are subject
to change and the best estimates and judgments routinely require
adjustment. Accounting principles generally accepted in the United States
require us to make estimates and judgments in several areas. Our critical
accounting policies are as follows:
The use of regulatory assets and liabilities as permitted by
Statement of Financial Accounting Standards ("SFAS") No 71, "Accounting for
the Effects of Certain Types of Regulation" stipulates generally accepted
accounting principles for companies whose rates are established by or are
subject to approval by an independent third-party regulator. In accordance
with SFAS No. 71, we defer costs and credits on the balance sheet as
regulatory assets and liabilities when it is probable that these costs and
credits will be recognized in the rate-making process in the period
different from when the costs and credits were incurred. These deferred
amounts, both assets and liabilities, are then recognized in the income
statement in the same period that they are reflected in our rates charged
for water utility operations. In the event that our assessment as to the
probability of the inclusion in the rate-making process is incorrect, the
associated regulatory asset or liability would be adjusted to reflect the
change in our assessment or change in regulatory approval.
Accrued unbilled revenue - We read our customer meters on a cyclical
basis and record our revenue based on our meter reading results. Revenues
from the meter-reading date to the end of the accounting period are
estimated based on historical usage patterns and the effective tariff
rates. The estimate of the unbilled revenue is a management estimate
utilizing certain sets of assumptions and conditions. Actual results could
differ from those estimates.
PART I. FINANCIAL INFORMATION
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has entered into two interest rate swap agreements at a
fixed rate of 6.5% in order to mitigate interest rate risks associated with
its floating-rate loans. The agreements provide for the exchange of fixed
interest rate payments for floating interest rate payment obligations on
notional amounts of principal totaling $6,000,000. The Company has
designated these interest rate swaps as a cash flow hedge against the
variable future cash flows associated with the interest payments due on
$6,000,000 of notes. As of September 30, 2002, the Company has recorded a
liability of $546,000 in "Other liabilities and deferred credits"
associated with these swap agreements with the offsetting amount in
"Accumulated Other Comprehensive Income" in the accompanying Condensed
Consolidated Balance Sheets.
The fair market value of the Company's interest rate swaps represents
the estimated unrealized loss to terminate these agreements based upon
current interest rates.
18
PART I. FINANCIAL INFORMATION
Item 4: CONTROLS AND PROCEDURES
We have established disclosure controls and procedures designed to
ensure that material information relating to the Company, including its
consolidated subsidiaries, is accumulated and communicated to the Company's
management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding
required disclosure by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934 ("Exchange Act").
Based on an evaluation of the Company's disclosure controls and
procedures (as defined in Rules 13a-15(e) under the Exchange Act) required
by Rule 13a-15(b) as of September 30, 2003, the end of the period covered
by this Quarterly Report on Form 10-Q, the principal executive officer and
principal financial officer have concluded that such disclosure controls
and procedures are effective to provide reasonable assurance that the
information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the applicable
Securities and Exchange Commission's rules and forms.
There were no changes in the Company's internal control over
financial reporting that occurred during the last fiscal quarter that has
materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following exhibits are filed as part of this report:
Exhibit
Number Exhibit Description
------- -------------------
10.14 Employment Agreement between Donald L. Correll and
Pennichuck Corporation dated August 4, 2003 (Filed as
Exhibit 10.14 to this report on Form 10-Q)
31.1 Rule 13a-14(a) Certification of Chief Executive Officer of
the Company in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed as Exhibit 31.1 to this
report on Form 10-Q)
31.2 Rule 13a-14(a) Certification of Chief Financial Officer of
the Company in accordance with Section 302 of the
Sarbanes-Oxley Act of 2002 (Filed as Exhibit 31.2 to this
report on Form 10-Q)
32 Section 1350 Certification of Chief Executive Officer and
Chief Financial Officer of the Company in accordance with
Section 906 of the Sarbanes-Oxley Act of 2002 (Filed as
Exhibit 32 to this report on Form 10-Q)
19
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K:
(b) The following report on Form 8-K was filed during the third quarter
of 2003:
1. Current Report on Form 8-K dated August 4, 2003 under the caption
"Item 5. Other Events and Regulation FD Disclosure."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Pennichuck Corporation
----------------------
(Registrant)
Date: November 13, 2003 /s/ Donald L. Correll
----------------- ---------------------
Donald L. Correll, President and
Principal Executive Officer
Date: November 13, 2003 /s/ Charles J. Staab
----------------- --------------------
Charles J. Staab, Vice President,
Treasurer and Principal Financial Officer
20