Investor Info 2001

August 15, 2001

Dear Shareholder:

I am pleased to report that Pennichuck Corporation’s financial results for the six months ended June 30, 2001 showed improvement over the same period last year. Net income was $1,381,000, or $0.77 per share, compared to $1,056,000, or $0.60 per share, for the same period last year. Income for the second quarter increased to $966,000 or $0.54 per share compared to $596,000 or $0.34 per share in 2000.

For the second quarter of 2001, consolidated revenues were $5,573,000 versus $4,453,000 reported for 2000. For the six months ended June 30, 2001, consolidated revenues were $9,983,000 compared to $8,588,000 last year. Revenues from our water utilities were $8,058,000 compared to $7,581,000. The increase is attributable to higher levels of water consumption resulting from a warmer and drier summer than last year and the addition of nearly 400 new customers.

On June 8, 2001 Pennichuck Water Works, Inc., our largest utility, filed for a 20.09% increase in water rates with the New Hampshire Public Utilities Commission (NHPUC). The increase, if granted, would provide additional annual revenues of approximately $2,506,000. Pennichuck has also requested a temporary rate increase of 8.52% which would be effective while the rate case is being adjudicated. The NHPUC held a hearing at the end of July, and we are currently awaiting a decision from the Commission on this temporary rate issue.

Year-to-date revenues from real estate activities were $1,338,000 versus $661,000 last year. The revenues were derived from (i) the sale of 14 homes in Southwood’s Heron Cove joint venture, (ii) the sale of two lots in Southwood Corporate Park, (iii) the sale of one-half interest in a land parcel to a local developer for the development of a third building in our Heron Cove Office Park, and (iv) from Southwood’s share of profits in its four commercial joint ventures.

Year-to-date revenues from our contract operations and other activities increased to $587,000 compared to $346,000 last year. I am also pleased to report that Pennichuck Water Service Company (PWSCo) was preliminarily awarded the operation & maintenance contract for a water system in Massachusetts subject to the final execution of that contract agreement. It is expected that PWSCo will begin operations in the fourth quarter of this year.

The Board of Directors has declared a quarterly dividend of $0.25 per share and your dividend check is enclosed with this report. If you participate in the dividend reinvestment plan, you will receive a report from our transfer agent stating the number of new shares that have been credited to your account.

I thank you for your continued interest in our Company.

Sincerely,

Maurice L. Arel

President and Chief Executive Officer

Pennichuck Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share amounts)

Three Months Ended Six Months Ended

June 30 June 30

2001 2000 2001 2000

Revenues:

Water utility operations $4,445 $3,941 $8,058 $7,581

Real estate operations 761 345 1,338 661

Contract operations and other 367 167 587 346

5,573 4,453 9,983 8,588

Expenses:

Water utility operations 3,029 2,852 5,944 5,572

Real estate operations and other 218 77 400 120

Contract operations and other 252 141 436 316

3,499 3,070 6,780 6,008

Operating Income 2,074 1,383 3,203 2,580

Other income 70 50 132 90

Interest expense (498) (500) (993) (1,000)

Pretax Income 1,646 933 2,342 1,670

Provision for income taxes 636 347 904 630

Net income before minority interest 1,010 586 1,438 1,040

Minority interest in (loss) Westwood Park 44 (10) 57 (16)

Net Income $966 $ 596 $1,381 $1,056

Basic Earnings Per Share $ .54 $ .34 $ .77 $ .60

Dividends Per Share $ .25 $ .24 $ .50 $ .48

Condensed Consolidated Balance Sheet

(In thousands) June 30, 2001 December 31, 2000

(Unaudited)

Assets

Plant in service $ 93,346 $ 90,890

Accumulated depreciation (23,671) (22,453)

69,675 68,437

Current assets 8,853 8,453

Land development costs 2,404 2,522

Other assets 3,246 3,468

Total Assets $ 84,178 $ 82,880

Stockholders’ Equity and Liabilities

Common stock $ 1,792 $ 1,770

Paid in capital 14,956 14,667

Retained earnings 12,833 12,343

Treasury stock ( 474) (184)

29,107 28,596

Minority interest 1,207 1,150

Long-term debt 26,918 26,918

Current liabilities 2,980 2,473

Other liabilities and deferred credits 23,966 23,743

Total Stockholders’ Equity and Liabilities $ 84,718 $ 82,880

The Company's Form 10-QSB filed quarterly with the Securities and Exchange Commission is available to shareholders upon request. Shareholders who are interested in the Company's dividend reinvestment and common stock purchase plan may obtain a prospectus by writing directly to the Company. For additional information about the Company, please visit our website at www.pennichuck.com.

4370 2QTR 01