MERRIMACK, N.H., March 13, 2008 (PRIME NEWSWIRE) -- Pennichuck Corporation (Nasdaq:PNNW) today announced that net income for its full year ended December 31, 2007 was $3.6 million, or $.85 per share (basic), up from $.6 million, or $.14 per share, for calendar 2006. This six-fold increase in net income was due to the combined effects of a $4.1 million increase in utility operating income, a $1.5 million reduction in net eminent domain defense spending for the full year and a $.8 million pre-tax increase in other income from the sale of cell tower leases. These positive factors much more than offset the effects in 2007 of a $.5 million reduction in allowance for funds used during construction ("AFUDC"), a $374,000 increase in interest expense, a $262,000 reduction in interest income, and increased income tax expense on the increased earnings. 2006 results also benefited from a $200,000 insurance settlement recovery.
Consolidated revenues for the full year 2007 were $29.5 million, up 21% from $24.5 million for 2006. This increase was due principally to rate relief granted to the Company's Pennichuck Water and Pennichuck East utility subsidiaries. Additionally, the Company experienced 3.6% combined water utility customer growth during 2007, resulting in a total combined customer base of approximately 32,900 at year-end. Consolidated operating income for 2007 more than doubled to $7.7 million as compared to $3.7 million for 2006, as higher revenues more than offset increases in utility operating expenses.
During 2007, Pennichuck Water received final orders from the New Hampshire Public Utilities Commission ("NHPUC") approving an 11.07% permanent rate increase for service rendered from July 18, 2006 (replacing a 14.41% temporary increase that had been in effect), a step increase of 20.36% for service rendered from January 5, 2007 and a further step increase of 3.07% for service rendered from June 1, 2007. This combined 34.5% rate increase, which equates to an annualized revenue increase of approximately $5.7 million, was granted principally to allow Pennichuck Water to recover a portion of the cost of the major upgrade to its water treatment plant in Nashua, New Hampshire.
In April 2007, Pennichuck East filed for a permanent rate increase with the NHPUC to recover essential infrastructure improvements and increased operating expenses. In August 2007, the NHPUC issued an order approving a temporary annualized rate increase of $501,000, or 11.99%, effective for service rendered from May 29, 2007. On February 26, 2008, Pennichuck East entered into a settlement agreement with the staff of the NHPUC regarding permanent rates. The terms of the settlement, which will not become effective unless approved by the NHPUC, provide for a permanent annualized increase in Pennichuck East's revenues of $712,000, or 17.19%, running from the same service rendered effective date. This would replace the temporary increase currently in effect. A final order from the NHPUC regarding this rate settlement is expected by April 2008. Any difference between the temporary rate increase already granted and the permanent rates ultimately approved by the NHPUC will be reconciled upon the approval of such permanent rates.
Net income for the fourth quarter ended December 31, 2007 was $457,000, or $.11 per share, on consolidated revenues of $7.1 million. This compares to $452,000, or $.11 per share, on consolidated revenues of $6.1 million for the same quarter in 2006. Consolidated revenues were higher due to the rate relief described above. Utility operating income for the fourth quarter of 2007 was up $.6 million over the same period in the prior year, as higher revenues more than offset increases in utility operating expenses. Net income was essentially unchanged because the higher operating income was offset by higher prior year fourth quarter other income of $405,000 from the sale of a cell tower lease and $200,000 from the aforementioned insurance settlement recovery. Eminent domain defense costs were lower in the fourth quarter of 2007, while interest expense, net of interest income, was higher by a similar amount. AFUDC was lower by $165,000 in the fourth quarter of 2007.
Commenting on the 2007 financial results, Duane C. Montopoli, Pennichuck's President and Chief Executive Officer, said, "The Company's reported earnings for 2007 reflect a reasonable return on in-service portions of the $40 million capital upgrade we are making to our water treatment plant and on our utilities other prudent and necessary water system infrastructure capital investments. The ultimate goal is to ensure compliance with the Federal Safe Drinking Water Act water quality standards for many years to come and to continue to supply our customers with clean, safe and reliable drinking water."
Eminent domain defense costs for the fourth quarter of 2007 were $203,000 as compared to $338,000 for the same period last year. For the full year 2007, net eminent domain defense costs totaled $897,000, down from $2.4 million in 2006. Commenting on the Company's eminent domain dispute with the City of Nashua, Mr. Montopoli said, "In January 2005, the NHPUC ruled that whether any of the assets of Pennichuck Water could be taken by the City would be dependent on a determination by the NHPUC to be made after a hearing as to what was in the public interest. That hearing was held during September 2007, and we now await a decision by the NHPUC. As we do, we remain vehemently opposed to a taking of any assets by eminent domain. We wholeheartedly believe that any such taking is not in the public interest and we are confident about the merits of our case before the NHPUC." He added that, "It should be noted that no portion of the Company's more than $7 million in cumulative eminent domain-related costs incurred since 2003 have been charged or allocated to our three water utilities and, accordingly, no portion of such costs are reflected in water rates."
The Company's annual meeting of shareholders will be held at 9:00 am on Monday, May 5, 2008 at the Nashua Courtyard by Marriott Hotel. The Board of Directors has fixed the close of business on Friday, March 7, 2008 as the record date for the determination of shareholders entitled to notice of, and to vote at, the annual meeting.
Pennichuck Corporation is a holding company involved principally in the supply and distribution of potable water in New Hampshire through its three regulated water utilities. Its non-regulated, water-related activities include operations and maintenance contracts with municipalities and private entities in New Hampshire and Massachusetts. The Company's real estate operations are involved in the ownership, management and commercialization of real estate in southern New Hampshire.
Pennichuck Corporation's common stock trades on the Nasdaq Global Market under the symbol "PNNW." The Company's website is at www.pennichuck.com.
This news release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Pennichuck Corporation. Forward-looking statements are based on current information and expectations available to management at the time the statements are made, and are subject to various factors, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the timing and results of eminent domain proceedings before the New Hampshire Public Utilities Commission; the possible impact thereof on business operations and net assets; legislation and/or regulation and accounting factors affecting Pennichuck Corporation's financial condition and results of operations; the availability and cost of capital, including the impact on our borrowing costs of changes in interest rates; and the impact of weather. Investors are encouraged to access Pennichuck Corporation's annual and quarterly periodic reports filed with the Securities and Exchange Commission for financial and business information regarding Pennichuck Corporation, including a more detailed discussion of these and other risks and uncertainties that could affect Pennichuck Corporation's forward-looking statements. We undertake no obligation to update or revise publicly any forward-looking statements.
Pennichuck Corporation
Comparative Financial Results
Quarter Ended December 31: 2007 2006
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Consolidated Revenues $ 7,057,000 $ 6,130,000
Operating Income $ 1,379,000 $ 746,000
Net Income $ 457,000 $ 452,000
Earnings Per Share:
Basic $ 0.11 $ 0.11
Diluted $ 0.11 $ 0.11
Average Shares Outstanding:
Basic 4,224,840 4,212,948
Diluted 4,279,384 4,220,997
Full Year Ended December 31: 2007 2006
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Consolidated Revenues $29,535,000 $24,481,000
Operating Income $ 7,666,000 $ 3,653,000
Net Income $ 3,581,000 $ 570,000
Earnings Per Share:
Basic $ 0.85 $ 0.14
Diluted $ 0.84 $ 0.14
Average Shares Outstanding:
Basic 4,221,652 4,204,857
Diluted 4,269,241 4,215,724