SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994 Commission file number 1-8359
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2376465
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
1415 Wyckoff Road, Wall, New Jersey - 07719 908-938-1480
(Address of principal executive offices)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act
COMMON STOCK - $2.50 PAR VALUE NEW YORK STOCK EXCHANGE
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12 (g) of the Act
None
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
YES: No: X
The aggregate market value of the Registrant's Common Stock held by
non-affiliates was $395,577,803 based on the closing price of $22.875 per share
on December 1, 1994.
The number of shares outstanding of $2.50 par value Common Stock as of December
1, 1994 was 17,438,210.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1994 Annual Report to Stockholders are incorporated
by reference into Part I and Part II of this report.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders to be held March 8, 1995, are incorporated by reference into
Part I and Part III of this report.
<PAGE>
TABLE OF CONTENTS
PART I Page
----
Item 1 - Business 1
Business Segments
New Jersey Natural Gas Company
General 1
Throughput 2
Seasonality of Gas Revenues 3
Gas Supply 3
Regulation and Rates 5
Environment 8
Franchises 8
Competition 9
Paradigm Power, Inc. 9
NJR Energy Corporation 9
Commercial Realty & Resources Corp. 10
Employee Relations 12
Executive Officers of the Registrant 12
Item 2 - Properties 14
Item 3 - Legal Proceedings 16
Item 4 - Submission of Matters to a Vote of Security Holders 21
PART II
Item 5 - Market for the Registrant's Common Stock and Related
Stockholder Matters 22
Item 6 - Selected Financial Data 22
Item 7 - Management's Discussion and Analysis of Financial
Condidon and Results of Operations 22
Item 8 - Financial Statements and Supplementary Data 22
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22
PART III
Items 10, 11, 12, and 13 22
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K 23
Index to Financial Statement Schedules 24
Signatures 31
Report of Independent Public Accountants 32
Consent of Independent Public Accountants 32
Exhibit Index 33
<PAGE>
1
PART I
ITEM 1. BUSINESS
New Jersey Resources Corporation (the Company or NJR) is a New Jersey
corporation formed in 1982 pursuant to a corporate reorganization. The Company
is an energy holding company and its subsidiaries are engaged in natural gas
distribution, natural gas-fueled cogeneration and independent power production,
oil and natural gas development, production and transportation and commercial
real estate development as follows:
New Jersey Natural Gas Company (NJNG), a public utility that distributes
natural gas to more than 340,000 residential, commercial and industrial
customers throughout virtually all of Monmouth and Ocean counties, and parts of
Morris and Middlesex counties in New Jersey;
Paradigm Resources Corporation, a sub-holding company formed in 1992 to
better segregate its non-regulated subsidiaries, which include:
Paradigm Power, Inc. (PPI), which will develop and invest in natural
gas-fueled cogeneration and independent power production projects and its
subsidiaries, Lighthouse One, Inc. and Lighthouse II, Inc.;
NJR Energy Corporation (NJR Energy), a participant in oil and natural gas
development, production, transportation, storage and other energy related
ventures in various locations in the United States through its subsidiaries, New
Jersey Natural Resources Company (NJNR), NJNR Pipeline Company (Pipeline), NJR
Storage Corporation (Storage), which was formed in December 1994, Natural
Resources Compressor Company (Compressor) and NJRE Operating Company (NJRE
Operating); and
Commercial Realty & Resources Corp. (CR&R), which develops and owns
commercial office and mixed-use commercial/industrial real estate projects
located in New Jersey.
The Company is an exempt holding company under Section 3(a)(1) of the Public
Utility Holding Company Act of 1935 (PUHCA).
BUSINESS SEGMENTS
See Note 10 to the Consolidated Financial Statements - Business Segment Data
in the Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for business
segment financial information.
NEW JERSEY NATURAL GAS COMPANY
General
NJNG provides natural gas to more than 340,000 customers. Its service
territory encompasses
<PAGE>
2
1,436 square miles, covering 104 municipalities with an estimated population of
1.3 million.
NJNG's service territory is primarily suburban, with a wide range of cultural
and recreational activities, highlighted by approximately 100 miles of New
Jersey seacoast. NJNG's service territory is in proximity to New York,
Philadelphia and the metropolitan areas of northern New Jersey and is accessible
through a network of major roadways and mass transportation. These factors have
contributed to NJNG adding 11,222, 9,306 and 7,907 new customers in 1994, 1993
and 1992, respectively. This growth rate of more than 3% is expected to continue
with projected additions of 60,700 new customers over the next five years. See
Liquidity and Capital Resources-NJNG in the Company's 1994 Annual Report, filed
as Exhibit 13-1 hereto, for a discussion of NJNG's projected capital expenditure
program associated with this growth in 1995 and 1996.
In assessing the potential for future growth in its service area, NJNG uses
information derived from county and municipal planning boards which describes
housing development in various stages of approval. In addition, builders in
NJNG's service area are surveyed to determine their development plans for future
time periods. Finally, NJNG uses information concerning its service territory
and projected population growth rates from a study prepared by outside
consultants. In addition to customer growth through new construction, NJNG's
business strategy includes aggressively pursuing conversions from other fuels,
such as oil. It is estimated that approximately 40% of NJNG's projected customer
growth will consist of conversions.
In order to lower its overall cost of gas and balance its demand profile,
NJNG also plans to pursue off-system sales and non-peak sales, such as natural
gas-fueled electric generating projects.
Throughput
For the fiscal year ended September 30, 1994, operating revenues and
throughput by customer class were as follows:
<TABLE>
<CAPTION>
Throughput
(Thousands) Operating Revenues (Thousands of Therms)
- - ----------- ------------------- ---------------------
<S> <C> <C> <C> <C>
Residential ............................................. $308,196 64% 385,144 37%
Commercial, industrial and other ........................ 87,958 18 119,343 11
Firm transportation ..................................... 255 1 868 1
------- -- ------- --
Total firm .............................................. 396,409 83 505,355 49
Interruptible and agency ................................ 9,431 2 58,698 5
JCP&L and PSE&G ......................................... 6,214 1 22,985 2
------- ------- --
Total system ............................................ 412,054 86 587,038 56
Off system .............................................. 68,267 14 467,275 44
------- -- ------- --
Total .................................................. $480,321 100% 1,054,313 100%
======== === ========= ===
</TABLE>
See Results of Consolidated Operations - Utility Operations in the Company's
1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of gas and
transportation sales. Also see
<PAGE>
3
NJNG Operating Statistics in the Company's 1994 Annual Report, filed as Exhibit
13-1 hereto, for information on operating revenues and throughput for the past
six years. During this period, no single customer represented more than 10% of
operating revenues.
Seasonality of Gas Revenues
- - ---------------------------
As a result of the heat-sensitive nature of NJNG's residential customer base,
therm sales are largely affected by weather conditions. Specifically, customer
demand substantially increases during the winter months when natural gas is used
for heating purposes. See Liquidity and Capital Resources - NJNG in the
Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of
the effect of seasonality on cash flow.
The impact of weather on the level and timing of NJNG's revenues and cash
flows is affected by a weather-normalization clause in its tariff which became
effective for two years on an experimental basis in October 1992. NJNG received
approval from the New Jersey Board of Public Utilities (the BPU) in October 1994
to continue the clause on an interim basis pending a final BPU order. The
weather-normalization clause provides for a revenue adjustment if the weather
varies by more than one-half of 1% from the ten-year average. The accumulated
adjustment from one heating season (i.e., October-April) will be billed or
credited to customers in the subsequent heating season. See Note 7 to the
Consolidated Financial Statements - Regulatory Issues in the Company's 1994
Annual Report, filed as Exhibit 13-1 hereto, for additional information with
regard to the weather-normalization clause.
Gas Supply
The following table sets forth the volumes of natural gas purchased by NJNG
for the fiscal years indicated and the average cost per therm for each fiscal
year:
<TABLE>
<CAPTION>
Years Ended September 30,
-------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(Thousands of Therms)
<S> <C> <C> <C> <C> <C>
Alberta Northeast 146,927 152,498 76,612 -- --
Boundary 39,155 39,177 31,834 19,434 30,520
CNG 7,368 633 37,432 147 27,600
Columbia 159 6,346 9,938 -- --
Texas Eastern -- 15,622 131,046 144,592 183,750
Carnegie -- 91,160 60,256 30,270 26,640
National Fuel -- 1,352 3,191 8,376 8,370
Algonquin -- 2,528 2,999 7,525 7,270
-------- -------- -------- -------- --------
Federally-regulated supplies 193,609 309,316 353,308 210,344 284,150
Unbundled supplies 652,795 456,142 293,540 310,226 244,380
-------- -------- -------- -------- --------
Total 846,404 765,458 646,848 520,570 528,530
======== ======== ======== ======== ========
Average cost/therm $ .33 $ .36 $ .33 $ .35 $ .34
======== ======== ======== ======== ========
</TABLE>
<PAGE>
4
A) Firm Natural Gas Supplies & Capacity
Due to the results of Federal Energy Regulatory Commission (FERC) Orders 636,
636A and 636B (collectively, Order 636), NJNG's portfolio of supplies and
capacity has changed significantly. NJNG's pipeline suppliers have "unbundled"
their sales service from their transportation service. All of NJNG's past
"bundled" suppliers have made the decision to no longer provide a sales service,
but will transport only. This has required NJNG to evaluate separately gas
purchasing and transportation.
A number of NJNG's purchase contracts which were federally regulated and
executed before Order 636 became effective were separate from transportation
contracts and therefore unaffected by Order 636. These significant suppliers and
their respective contract expiration dates are as follows: Alberta Northeast Gas
Limited (2007) and Boundary Gas, Inc. (2003). See Item 3 - Legal Proceedings
Carnegie for a discussion of the early termination of a contract with Carnegie
Natural Gas Company.
In order to deliver the above supplies, NJNG maintains capacity with its
traditional pipeline connections and has also added a number of new capacity
agreements with additional pipelines through the Order 636 unbundling process.
Significant capacity agreements and their respective contract termination dates
that provide transportation from the supply area to our market area are as
follows: Texas Eastern Transmission Corporation (1999), Texas Gas Transmission
Corporation (2000), Tennessee Gas Pipeline (2003) and Iroquois Pipeline (2007).
These four pipelines have a daily deliverability of 247,000 Dths, or an annual
capacity of 90 Bcf.
In addition to the above contracts, NJNG has storage and transportation
contracts that provide additional daily deliverability of 219,000 Dths from
storage fields in Pennsylvania to our market area. The significant storage
agreements and their respective contract expiration dates are as follows: Texas
Eastern Transmission Corporation (2000) and CNG Transmission Corporation (2000).
The "Unbundled" category in the preceding table consists of gas purchased
under monthly, short-term (up to six months) and long-term (over six months)
contracts that are priced at market levels and have been delivered under
separate agreements from pipeline bundled services. These supplies have been
used to replace the more expensive "bundled" pipeline supplies and have reduced
NJNG's average cost of gas. NJNG negotiates with a number of suppliers for these
non-federally regulated gas supplies under a number of different contract terms
and durations. In 1994, NJNG purchased gas from 27 suppliers under contracts
ranging from one month to seventeen years. NJNG believes that its supply
available under long-term contracts is adequate to meet its expected firm
load over the next several years.
B) Transportation
NJNG's ability to further diversify its firm suppliers and purchase
additional supplies will be
<PAGE>
5
dependent upon the availability of transportation on the interstate pipeline
system and the FERC regulations that govern interstate transportation.
Presently, NJNG connects with all five interstate pipelines serving New Jersey.
See Regulation and Rates - Federal below for a discussion of FERC Order 636.
C) Peaking Supply
To meet its increased winter peak day demand, NJNG purchases storage services
from various suppliers and maintains two liquefied natural gas (LNG) facilities.
See Item 2-Properties-NJNG for additional information regarding the storage
facilities. NJNG presently has LNG storage deliverability of 165,000 Dths per
day which represents approximately 26% of its peak day sendout.
D) Summary
NJNG expects to be able to meet the current level of gas requirements of its
existing and projected firm customers for the foreseeable future. Nonetheless,
NJNG's ability to provide supply for its present and projected sales will depend
upon its suppliers' ability to obtain and deliver additional supplies of natural
gas, as well as its ability to acquire supplies directly from new sources.
Factors beyond the control of NJNG and its suppliers may affect its ability to
obtain such supplies. These factors include other parties having control over
the drilling of new wells, competition for the acquisition of gas, regulatory
policies (e.g., FERC Orders 436, 451, 500, 636, 636A and 636B), priority
allocations, price limitations imposed by federal and state regulatory agencies,
as well as the availability of Canadian reserves for export to the United
States.
Regulation and Rates
- - --------------------
A) State
NJNG is subject to the jurisdiction of the BPU with respect to a wide range
of matters, such as rates, the issuance of securities, the adequacy of service,
the manner of keeping its accounts and records, sufficiency of gas supply and
the sale or encumbrance of its properties.
Over the last five years, NJNG has been granted four increases in its base
tariff rates, and three increases and one decrease in its Levelized Gas
Adjustment clause (LGA). Through its LGA, which is reviewed annually, NJNG
recovers purchased gas costs that are in excess of the level included in its
base rates. LGA recoveries do not include an element of profit and, therefore,
have no effect on earnings.
<PAGE>
6
The following table sets forth information with respect to these rate changes:
<TABLE>
<CAPTION>
Annualized Annualized
Amount Amount
Per Filing Granted
Date of Filing Type (000's) (000's) Effective Date
-------------- ---- ------- ------- --------------
<S> <C> <C> <C> <C>
April 1993 Base Rates $26,900 $ 7,500 January 1994
August 1991 Base Rates 15,772 2,200 June 1992
August 1990 Base Rates 14,787 8,300 February 1991
March 1989 Base Rates 26,233 17,271 March 1990
July 1994 LGA 8,800 0 December 1994
July 1993 LGA 4,800 4,800 December 1993
July 1992 LGA (15,814) (17,400)(A) January 1993
July 1991 LGA 33,407 17,100 November 1991
August 1990 LGA 0 0 October 1990
July 1989 LGA 5,471 4,306 January 1990
</TABLE>
(A) Comprised of a $12 million billing credit and a $5.4 million reduction in
annual LGA revenues.
See Note 7 to the Consolidated Financial Statements - Regulatory Issues in
the Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for additional
information regarding NJNG's rate proceedings.
On September 25, 1991, the BPU adopted a conservation incentive rule which
provides utilities with the opportunity to recover conservation program costs
and lost revenues, and to earn a return on investments in energy efficiency
programs based upon a sharing of savings between utilities and customers. NJNG
filed its "Demand Side Management Resource Plan" addressing these issues with
the BPU in February 1992. NJNG expects a decision in this proceeding during
fiscal year 1995.
In November 1992, NJNG filed a petition with the BPU for approval of a Gas
Service Agreement (GSA) executed between NJNG and Freehold Cogeneration
Associates L.P. (Freehold) in September 1992. The gas service agreement would
provide for NJNG to supply Freehold with between 21,800 and 26,000 Dths of
natural gas per day over a twenty-year period. In February 1994, the BPU
approved the gas service agreement conditioned by a side letter agreement in
which Freehold and NJNG agree to negotiate in good faith to amend the pricing
terms of the GSA to conform it to changes, if any, in the power purchase
agreement between Freehold and Jersey Central Power and Light Company (JCP&L) if
it is renegotiated. In November 1993, the BPU ruled that Freehold and JCP&L
should attempt to reach a settlement on the power purchase agreement within 30
days of receipt of a written order. As negotiations were unsuccessful, the power
purchase agreement is presently subject to evidentiary hearings before the BPU.
<PAGE>
7
On December 14, 1994, the BPU approved a Stipulation Agreement relating to
the 1994 Remediation Rider (RA) and LGA. The approval of the RA Stipulation
allows recovery over seven years of $2.7 million of gas remediation costs
incurred through June 1994.
The LGA Stipulation includes recovery over a two-year period of all
transition costs incurred through September 1995 associated with interstate
natural gas pipelines complying with Order 636 and continuation of NJNG's
current margin sharing formulae associated with its non-firm sales until the
effective date of the BPU Order in NJNG's 1995-96 LGA. The LGA Stipulation also
includes approval of a Financial Risk Management (FRM) Pilot Program to provide
price stability to NJNG's system supply portfolio. All of the costs and results
of the FRM program are to be recovered through the LGA.
As a result of the approval of the RA and LGA Stipulation, NJNG's rates will
not change. The reduction in the rate approved compared with the increase
requested was due primarily to a decline in the projected cost of gas.
B) Federal
Since the mid-1980's, the FERC has issued a series of orders, regulations and
policy statements (e.g., FERC Orders 380, 436, 451, 500, and 528) intended to
transform the natural gas industry from a highly regulated industry to a more
lightly regulated, market-oriented industry. The culmination of the FERC's
deregulatory effort was the issuance of Order 636 which established new rules
mandating the unbundling of interstate pipeline sales for resale and
transportation services. The FERC instituted proceedings through which NJNG's
interstate pipeline suppliers have restructured their services in response to
Order 636.
The transition to a more market-oriented interstate pipeline market may offer
long-term benefits. Order 636 should provide NJNG with increased opportunities
to purchase and manage its own, specifically tailored gas supply portfolio and
to resell its interstate pipeline capacity to other potential customers during
off-peak periods. However, these benefits may be offset by increases in
interstate pipeline demand charges required by Order 636, in addition to the
flow-through of transition costs that pipeline companies will incur as a result
of the restructuring of their existing gas purchase and sales arrangements. In
the individual pipeline restructuring proceedings, NJNG has challenged those
aspects of Order 636 which would impose additional costs upon NJNG's customers
without providing reciprocal benefits. NJNG cannot at this time predict the
ultimate outcome of these pending proceedings. However, since NJNG generally
supports the market-oriented direction in which the FERC has taken the natural
gas industry, NJNG intends to withdraw its court challenges to Order 636 in the
near future.
NJNG continuously reviews its gas supply portfolio requirements in the
post-Order 636 environment. Because of its interconnections with multiple
interstate pipelines, NJNG believes that the Order 636 proceedings will not have
a material impact on its ability to obtain adequate gas supplies at market
rates. However, no assurance can be given in this regard.
<PAGE>
8
Environment
- - -----------
The Company and its subsidiaries are subject to legislation and regulation by
federal, state and local authorities with respect to environmental matters.
NJNG has identified eleven former manufactured gas plant (MGP) sites, dating
back to the late 1800's and early 1900's, which it acquired from predecessors,
and which contain contaminated residues from the former gas manufacturing
operations. Ten of the eleven sites in question were acquired by NJNG from a
predecessor in 1952, and the eleventh site was acquired by a predecessor of NJNG
in 1922. All of the gas manufacturing operations ceased at these sites at least
since the mid-1950's and in some cases had been discontinued many years earlier,
and all of the old gas manufacturing facilities were subsequently dismantled by
NJNG or its predecessors. NJNG is currently involved in administrative
proceedings with the New Jersey Department of Environmental Protection and
Energy (NJDEPE) and local government authorities with respect to the plant sites
in question, and is participating in various studies and investigations by
outside consultants to determine the nature and extent of any such contaminated
residues and to develop appropriate programs of remedial action, where
warranted. Since October 1989, NJNG has entered into Administrative Consent
Orders or Memoranda of Agreement with the NJDEPE covering all eleven sites.
These documents establish the procedures to be followed by NJNG in developing a
final remedial clean-up plan for each site.
Most of the cost of such studies and investigations is being shared under an
agreement with the former owner and operator of ten of the MGP sites. See Note 9
to the Consolidated Financial Statements - Commitments and Contingencies in the
Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of
the regulatory treatment of gas remediation costs incurred and anticipated
expenditures over the next five years.
NJNG is named as a defendant in a civil action alleging environmental
contamination at three sites owned or occupied by a contractor and the
contractor's affiliated companies which removed tar emulsion from NJNG's former
MGP sites to its three sites. See Item 3 - Legal Proceedings for additional
information regarding these actions.
Other than as discussed above, the Company does not presently anticipate any
additional significant future expenditures for compliance with existing
environmental laws and regulations which would have a material effect upon the
capital expenditures, earnings or competitive position of the Company or its
subsidiaries.
Franchises
- - ----------
NJNG holds non-exclusive franchises granted by the 104 municipalities which
it serves which gives it the right to lay, maintain and operate public utility
property in order to provide natural gas service within these municipalities. Of
these franchises, 47 are perpetual and the balance expire between 1999 and 2038.
<PAGE>
9
Competition
- - -----------
Although its franchises are non-exclusive, NJNG is not currently subject to
competition from other natural gas distribution utilities with regard to the
transportation of natural gas in its service territory. Due to significant
distances between NJNG's current large industrial customers and the nearest
interstate natural gas pipelines, as well as the availability of its
transportation tariff, NJNG currently does not believe it has significant
exposure to the risk that its system will be bypassed. Competition does exist
from suppliers of oil, coal, electricity and propane. At the present time,
natural gas enjoys an advantage over alternate fuels as the preferred choice of
fuels in over 95% of new construction due to its efficiency and reliability. As
deregulation of the natural gas industry continues, prices will be determined by
market supply and demand, and while NJNG believes natural gas will remain
competitive with alternate fuels, no assurance can be given in this regard.
In October 1994, the BPU approved a stipulation agreement that provides
NJNG's commercial and industrial customers an expanded menu of transportation
and supplier choices. As a result of the BPU approval, NJNG's sales to its
commercial and industrial customers will be subject to competition from other
suppliers of natural gas; however, NJNG would continue to provide transportation
service to these customers. Based on its rate design, NJNG's profits would not
be affected by a customer's decision to utilize a sales and transportation or
transportation only service.
PARADIGM POWER, INC.
Paradigm Power, Inc. (PPI) was formed in April 1992 to pursue investment
opportunities in natural gas-fueled cogeneration and independent power
production projects. As of September 30, 1994, PPI had no project investments.
See Results of Consolidated Operations - PPI in the Company's 1994 Annual
Report, filed as Exhibit 13-1 hereto, for a discussion of PPI's financial
results.
NJR ENERGY CORPORATION
NJR Energy and its subsidiaries: NJNR, Pipeline, Storage, Compressor and
NJRE Operating, are involved in oil and natural gas development, production,
transportation, storage and other energy-related ventures.
In April 1994, the Company announced plans to reallocate much of the
capital previously dedicated to the development of natural gas and oil reserves
to investments with closer strategic ties to the rest of its energy businesses.
No further exploration is planned. Potential investment opportunities may
include gas gathering, storage and marketing as well as other investments
designed to capitalize on the post-Order 636 environment. In connection with
this strategic shift, the Company changed the method by which it accounts for
its oil and gas operations to the successful efforts method from the full cost
method. See Note 1 to the Consolidated Financial Statements - Oil and Natural
Gas Properties in the Company's 1994 Annual Report, filed as Exhibit 13-1
hereto, for a discussion of this change in accounting method.
<PAGE>
10
NJR Energy and NJNR are working-interest participants in oil and
natural gas production ventures located in Texas, Oklahoma, Kansas, Utah,
Arkansas, Louisiana and the Appalachian Basin.
See Results of Consolidated Operations - NJR Energy in the Company's 1994
Annual Report, filed as Exhibit 13-1 hereto, for a discussion of NJR Energy's
financial results.
NJR Energy's proved reserves since 1990 are as follows:
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Natural gas (Bcf) 21.6 41.4 38.3 44.3 41.6
Oil (Mbbls) 1,767 2,393 1,989 1,965 2,019
NJNR owns a natural gas gathering system and is a participant in a pipeline
joint venture in Utah.
Pipeline is a 2.8% equity participant in the Iroquois Gas Transmission
System, L.P. (Iroquois) pipeline project, a 375-mile natural gas pipeline from
the Canadian border to Long Island. Initial deliveries commenced in December
1991. See Item 3-Legal Proceedings for additional information regarding the
Iroquois pipeline.
Storage, which was formed in December 1994, is a 5.66% equity participant
in the Market Hub Partners, L.P. which it is intended will develop, own and
operate a system of five natural gas market centers with high deliverability
salt cavern storage facilities in Texas, Louisiana, Mississippi, Michigan and
Pennsylvania. The facility in Texas began operations in 1990. The other
facilities are expected to be completed over the next four years.
Compressor was formed in 1990 to provide compressor and dehydration services
to producing gas properties in the Arkoma Basin. In April 1994, Compressor sold
its fleet of 41 compressors and used the $2 million in proceeds from the
earnings-neutral sale to pay down a portion of the Company's bank loans. As part
of the transaction, Compressor agreed to lease certain compressors over a fixed
period of time.
NJRE Operating was formed in 1993 to facilitate the assumption of operations
of certain oil and gas properties.
COMMERCIAL REALTY & RESOURCES CORP.
CR&R develops and owns commercial office and mixed-use commercial/industrial
real estate projects primarily in Monmouth and Atlantic Counties, New Jersey. As
of September 30, 1994, CR&R had completed 17 buildings totaling 914,200 square
feet.
This inventory of space, which at September 30, 1994 was 97% occupied, is
expected to provide a stable source of current cash flow, since the space is
supported by leases having a remaining average life of over six years. CR&R also
has 225 acres of land that is fully improved and master planned for future
development. See Item 2-Properties-CR&R for additional information regarding
CR&R's projects.
Leases accounting for approximately 10% of CR&R's total portfolio of occupied
space will expire in fiscal 1995. Management expects that a majority of these
leases will be relet to the
<PAGE>
11
existing tenants at their existing rental rates.
CR&R's development program has concentrated on a high percentage of
build-to-suit projects which has put it in a relatively strong position with
regard to both occupancy rate and remaining lease terms. This concentration on
meeting the expressed preferences of tenants has lessened the impact on CR&R of
the downturn in the Northeast commercial real estate market, which has been
characterized by speculative development and relatively high vacancy rates. See
Results of Consolidated Operations - CR&R in the Company's 1994 Annual Report,
filed as Exhibit 13-1 hereto, for a discussion of CR&R's 1994 financial results.
Consistent with a strategic re-evaluation performed by the Company in 1992,
CR&R's capital spending will continue to be limited to the fit-up of existing
tenant space and the development of existing acreage. CR&R believes that its
high occupancy rate and stable base of current cash flow will enable it to meet
its debt service requirements as it manages its existing properties and
considers various alternatives for its real estate assets.
<PAGE>
12
EMPLOYEE RELATIONS
The Company and its subsidiaries employed 864 and 836 employees at September
30, 1994 and 1993, respectively. NJNG had 500 and 485 union employees at
September 30, 1994 and 1993, respectively. NJNG has a collective bargaining
agreement with the union that is effective through December 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
First Elected
Office(1) Name Age an Officer
- - -------- ---- --- -------------
Chairman, President and
Chief Executive Officer Oliver G. Richard III 42 5/91
Executive Vice President,
Law and Corporate Development Peter M. Schwolsky 48 9/91
Senior Vice President and
Chief Financial Officer Laurence M. Downes 37 1/86
Senior Vice President and
Corporate Secretary Oleta J. Harden 45 6/84
Vice President, Controller
and Chief Accounting Officer Glenn C. Lockwood 33 1/90
(1) All terms of office are one year.
There is no arrangement or understanding between the officers listed above
and any other person pursuant to which they were selected as an officer. The
following is a brief account of their business experience during the past five
years:
Oliver G. Richard III
Chairman, President and Chief Executive Officer
Mr. Richard was elected President and Chief Executive Officer and Director
of the Company in May 1991 and in January 1992 was elected Chairman of the Board
of Directors. Previously, he was President and Chief Executive Officer of
Northern Natural Gas Company, a subsidiary of Enron Corp., since 1988. Prior
thereto, beginning in 1987, Mr. Richard served a variety of executive positions
at both Northern Natural and Enron. He served as Vice President and General
Counsel of Tenngasco, a subsidiary of Tenneco Inc., from 1985 through 1987. From
1982 to 1985, Mr. Richard was a Commissioner of the Federal Energy Regulatory
Commission.
<PAGE>
13
Peter M. Schwolsky
Executive Vice President, Law and Corporate Development
Mr. Schwolsky was elected Executive Vice President, Law and Corporate
Development in September 1991. Prior thereto, he served as a partner in the law
firm of Steptoe & Johnson, Washington, D.C. since 1990 and was Of Counsel to the
firm since 1986.
Laurence M. Downes
Senior Vice President and Chief Financial Officer
Mr. Downes has held his present position since January 1990. He joined the
Company in March 1985 and served as Treasurer and Assistant Secretary from
January 1986 through January 1988. From January 1988 through January 1990, he
served as Vice President, Treasurer and Assistant Secretary.
Oleta J. Harden
Senior Vice President and Corporate Secretary
Mrs. Harden has held her present position since January 1987. From January
1986 to January 1987, she served as Vice President, Secretary and Assistant
Treasurer and prior to that time, she served as Assistant Secretary from June
1984.
Glenn C. Lockwood
Vice President, Controller and Chief Accounting Officer
Mr. Lockwood has held his present position since January 1994. From January
1990 to January 1994, he held the position of Assistant Vice President,
Controller and Chief Accounting Officer. He joined the Company in May 1988 as
Controller. From January 1983 through May 1988, he held several positions with
the international public accounting firm, Deloitte & Touche LLP.
<PAGE>
14
ITEM 2. PROPERTIES
NJNG (All properties are in New Jersey)
NJNG owns 10,110 miles of distribution main and services, 325 miles of
transmission main and approximately 356,000 meters. Mains are primarily located
under public roads. Where mains are located under private property, NJNG has
obtained easements from the owners of record.
In addition to mains and services, NJNG owns and operates two LNG storage
plants located in Stafford Township, Ocean County, and Howell Township, Monmouth
County. The two LNG plants have an estimated effective capacity of 19,200 and
150,000 Dths per day, respectively. These facilities are used for peaking supply
and emergencies.
NJNG owns four service centers located in Rockaway Township, Morris County;
Atlantic Highlands and Wall Township, Monmouth County; and Lakewood, Ocean
County. These service centers house storerooms, garages, gas distribution and
appliance service operations and administrative offices. NJNG leases its
headquarters facilities in Wall Township, customer service offices located in
Asbury Park and Wall Township, Monmouth County and a service center in
Manahawkin, Ocean County. These customer service offices support customer
contact, marketing and other functions.
NJNG also owns a storage facility in Long Branch, Monmouth County.
Substantially all of NJNG's properties, not expressly excepted or duly
released, are subject to the lien of an Indenture of Mortgage and Deed of Trust
to Harris Trust and Savings Bank, Chicago, Illinois, dated April 1, 1952, as
amended by twenty-three supplemental indentures, as security for NJNG's bonded
debt, which totaled approximately $184 million at September 30, 1994. In
addition, under the terms of its Indenture, NJNG could have issued approximately
$154 million of additional first mortgage bonds as of September 30, 1994. In
October 1994, NJNG issued $25 million of its Medium-Term Notes, consisting of
its 8.25% Series Z First Mortgage Bonds due 2004 under its Indenture, as amended
by the twenty-fourth supplemental indenture.
NJNG completed construction of the Monmouth-Ocean Transmission (MOT) line in
1993. The MOT line is providing service to a cogeneration plant in Lakewood
Township, Ocean County and is helping NJNG meet the future energy needs
associated with the expected customer growth in Monmouth and Ocean counties.
NJNG has entered into an agreement to provide the cogeneration project with at
least 50,000 Dths per day of pipeline capacity on the MOT line, subject to
NJNG's right to utilize this capacity for up to 30 days per year to help meet
its peak-day requirements.
NJR Energy
NJR Energy, as a working-interest participant, has interests in oil and gas
leases in Louisiana, New York, West Virginia and Texas. Additionally, NJNR has
working interests in oil and gas leases in Texas, Oklahoma, Kansas, Arkansas,
Utah and Pennsylvania, and is a participant in
<PAGE>
15
a 21-mile natural gas transportation pipeline joint venture, located in Cambria
County and Indiana County, Pennsylvania. NJNR also owns a natural gas gathering
system and is a participant in a 16-mile natural gas pipeline joint venture
located in Utah.
Pipeline has a 2.8% equity interest in the Iroquois Gas Transmission System,
L.P. which owns and operates the Iroquois pipeline project.
Storage, which was formed in December 1994, has a 5.66% equity interest in
Market Hub Partners, L.P. which it is intended will develop, own and operate a
system of five natural gas market centers with high deliverability salt cavern
storage facilities in Texas, Louisiana, Mississippi, Michigan and Pennsylvania.
CR&R (All properties are in New Jersey)
CR&R currently owns and operates 17 buildings consisting of 914,200 square
feet of commercial office and mixed-use commercial/industrial space, of which
886,000 square feet, or 97%, are occupied. CR&R and affiliated companies,
including NJNG, occupy approximately 149,800 square feet in four of these
buildings. These properties are located in Monmouth and Atlantic Counties in
various business parks. These business parks include the Monmouth Shores
Corporate Office Park (MSCOP), Monmouth Shores Corporate Park (MSCP), Jumping
Brook Corporate Office Park (JBCOP), Central Monmouth Business Park (CMBP) and
Expressway Corporate Center (ECC). See Item 3f.--Legal Proceedings--Real Estate
Properties for a discussion of regulatory matters concerning MSCP. A summary of
these business parks with pertinent data is as follows:
<TABLE>
<CAPTION>
MSCOP MSCP JBCOP CMBP ECC Other
----- ---- ----- ---- --- -----
<S> <C> <C> <C> <C> <C> <C>
Completed buildings ........... 1 9 1 3 2 1
Buildings under construction .. - - - - - -
Acres developed to date ....... 22 91 20 9 10 4
Acres undeveloped ............. 33 74 26 - 52 40
Sq. ft. developed to date ..... 160,400 417,500 181,100 69,000 82,200 4,000
Sq. ft. undeveloped ........... 235,000 645,600 300,000 - 495,000 366,400
</TABLE>
Major tenants include:
MSCOP NJNG, NatWest Home Mortgage and Prudential Insurance
MSCP Waterford/Wedgwood, American Press, CoreStates Bank, Gertler
& Hanna and AT&T Information Systems
JBCOP USLIFE
CMBP State Farm Insurance, Motorola and NJNG.
ECC Social Security Administration and Computer Science Corporation
<PAGE>
16
Capital Expenditure Program
See Liquidity and Capital Resources in the Company's 1994 Annual Report,
filed as Exhibit 13-1 hereto, for a discussion of the Company's anticipated 1995
and 1996 capital expenditures for each business segment.
ITEM 3. LEGAL PROCEEDINGS
a. Aberdeen
- - ------------
Since June 1993, a total of six complaints have been filed in New Jersey
Superior Court against NJNG and its contractor by persons alleging injuries
arising out of a natural gas explosion and fire on June 9, 1993, at a
residential building in Aberdeen Township, New Jersey. The plaintiffs allege in
their respective actions, among other things, that the defendants were negligent
or are strictly liable in tort in connection with their maintaining, replacing
or servicing natural gas facilities at such building. The plaintiffs separately
seek unspecified compensatory and punitive damages from NJNG and its contractor.
In May 1994, the New Jersey Superior Court ordered that all causes of action
relating to the Aberdeen Township explosion be consolidated for purposes of
discovery.
NJNG's liability insurance carriers are participating in the defense of
these matters. NJNG is unable to predict the extent to which other claims will
be asserted against, or liability imposed on, NJNG. The Company does not believe
that the ultimate resolution of these matters will have a material adverse
effect on its consolidated financial condition or results of operations.
b. Carnegie
- - ------------
In March 1993, NJNG was named a defendant in a civil action commenced by
Carnegie Natural Gas Company (Carnegie) in the U.S. District Court for the
Western District of Pennsylvania. This action challenges NJNG's decision to
terminate the June 18, 1986 "Service Agreement for Sales Service under Rate
Schedule LVWS" (LVWS Service Agreement) between Carnegie and NJNG effective
March 31, 1994, pursuant to a "market-out" clause. The LVWS Service Agreement
would otherwise have expired on March 31, 2001. Carnegie seeks, among other
things, a declaratory judgment that the contract termination was void. Claims of
tortious interference with contractual relations and abuse of process are also
asserted and unspecified damages and punitive damages are also sought. In April
1993, Carnegie filed a motion for summary judgment on the contract termination
claim. In May 1993, NJNG filed a response opposing Carnegie's motion, as well as
a cross motion for summary judgment on all claims. On January 21, 1994 a federal
magistrate issued a recommended decision denying Carnegie's motion for summary
judgment. In addition, the magistrate granted NJNG's motion for summary judgment
on Carnegie's tortious interference claim and denied NJNG's motion for summary
judgment on the contract termination and abuse of process claims. Both parties
filed objections to various aspects of the magistrate's recommended decision,
which were denied by order of a federal district court judge on March 18, 1994.
On July 14, 1994, Carnegie served a motion
<PAGE>
17
for a preliminary injunction requiring NJNG to continue making payments pursuant
to the contract during the pendency of the litigation. On September 29, 1994,
the magistrate issued a recommended decision denying Carnegie's motion for a
preliminary injunction, stating that Carnegie had not met its burden of
establishing a likelihood of success on the merits of the lawsuit and of
establishing that it would suffer irreparable harm by NJNG's failure to make
payments. Carnegie filed an objection to the magistrate's recommended decision,
which was denied by order of a federal district court judge on November 3, 1994.
Pretrial discovery has been completed. The parties are now awaiting the
scheduling of a trial date by the court. NJNG is unable to predict the outcome
of this matter. The Company does not believe that the ultimate resolution of
this matter will have a material adverse effect on its consolidated financial
condition or results of operations.
c. South Brunswick Asphalt, L.P.
NJNG has been named a defendant in a civil action commenced in New Jersey
Superior Court by South Brunswick Asphalt, L.P. (SBA) and its affiliated
companies seeking damages arising from alleged environmental contamination at
three sites owned or occupied by SBA and its affiliated companies. Specifically,
the suit charges that tar emulsion removed from 1979 through 1983 by an
affiliate of SBA (Seal Tite, Inc.) from NJNG's former gas manufacturing plant
sites has been alleged by the NJDEPE to constitute a hazardous waste and that
the tar emulsion has contaminated the soil and ground water at the three sites
in question. In February 1991, the NJDEPE issued letters classifying the tar
emulsion/sand and gravel mixture at each site as dry industrial waste, a
non-hazardous classification. NJNG continues to explore various disposal methods
for the tar emulsion/sand and gravel mixture.
NJNG's liability insurance carrier has assumed defense of this action but has
denied coverage for SBA's claims. Although management is considering legal
action against the carrier, NJNG believes that the total cost to remove and
dispose of the tar emulsion/sand and gravel mixture from all three sites would
be immaterial. Based upon the gas remediation rider approved by the BPU in June
1992, NJNG believes that such costs should be recoverable through the ratemaking
process.
One of the SBA sites is the subject of a NJDEPE Directive and Notice
alleging that the tar emulsion/sand and gravel mixture was a contributing factor
to the contamination of ground water at a residential community. The NJDEPE is
seeking reimbursement under the New Jersey Spill Compensation and Control Act of
cleanup, remediation and related costs, estimated by the NJDEPE at approximately
$20 million. NJNG is contesting the NJDEPE directive on the grounds, among
others, that any such alleged ground water contamination was not caused by tar
emulsions removed from NJNG's former gas plant manufacturing sites. NJNG's
liability insurance carriers, which have been defending the civil action, have
denied coverage for these claims and NJNG intends to contest this position. NJNG
would attempt to seek recovery through the ratemaking process of any such
cleanup or remediation payments it might ultimately be required to make, but
recognizes that such recovery is not assured. There can be no assurance as to
the outcome of these proceedings. The Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on its
consolidated
<PAGE>
18
financial condition or results of operations.
d. Bridgeport Rental and Oil Service
- - -------------------------------------
In January 1992, NJNG was advised of allegations that certain waste oil from
its former manufactured gas plant site in Wildwood, New Jersey may have been
sent by a demolition contractor to the Bridgeport Rental and Oil Service site in
Logan Township, New Jersey. That site has been designated a Superfund site and
is currently the subject of two lawsuits pending in the U.S. District Court in
New Jersey. NJNG has notified its insurance carriers and is investigating this
matter. NJNG is currently unable to predict the extent, if any, to which it may
have cleanup or other liability with respect to this matter, but would seek
recovery of any such costs through the ratemaking process. However, no assurance
can be given as to the timing or extent of the ultimate recovery of such costs.
The Company does not believe that the ultimate resolution of these matters will
have a material adverse effect on its consolidated financial condition or
results of operations.
e. Iroquois
- - -----------
Pipeline owns a 2.8% equity interest in the Iroquois Gas Transmission System,
L.P. (Iroquois) which has constructed and is operating a 375-mile pipeline from
the Canadian border in Upstate New York to Long Island.
Iroquois has been informed by the U.S. Attorney's Offices for the Northern,
Southern and Eastern Districts of New York that an investigation is underway to
determine whether or not Iroquois committed civil violations of the Federal
Clean Water Act and/or its Corps of Engineers permit during construction of the
pipeline. No proceedings in connection with this civil investigation have been
commenced by the federal government against Iroquois.
In addition, in conjunction with the Environmental Protection Agency, a
criminal investigation has been initiated by the U.S. Attorney's Office for the
Northern District of New York. To date, no criminal charges have been filed.
In December 1993, Iroquois received notification from the Enforcement Staff
of the Federal Energy Regulatory Commission Office of the General Counsel
(Enforcement) that Enforcement has commenced a preliminary, non-public
investigation concerning matters related to Iroquois' construction of certain of
its pipeline facilities. Enforcement has requested information regarding certain
aspects of the pipeline construction. In addition, in December 1993, Iroquois
received a similar communication from the Army Corps of Engineers requesting
information regarding permit compliance in connection with certain aspects of
the pipeline construction. Iroquois is providing information to these agencies
in response to their requests.
Iroquois has publicly stated that it believes the pipeline construction and
right-of-way activities were conducted in a responsible manner and that its
environmental program complied with or exceeded applicable standards for the
industry. However, Iroquois deems it probable that the U.S. Attorney will seek
indictments and in them substantial fines and other sanctions. The
<PAGE>
19
foregoing proceedings and investigations have not affected the pipeline's
operations.
Iroquois and its counsel expect to meet with those conducting the civil and
criminal investigations, from time to time, both to gain an informed
understanding of the focus and direction of the investigations in order to
defend itself and, if and when appropriate, to explore a range of possible
resolutions acceptable to all parties. No understandings or agreements have been
reached that have led Iroquois to make provision in its financial statements for
any dollar liability associated with these proceedings.
Pipeline is unable to predict the outcome of these proceedings and
investigations. Based upon information currently available to the Company
concerning the above matters involving Iroquois, the Company does not believe
that their ultimate resolution will have a material adverse effect on the
Company's consolidated financial condition or results of operations. Pipeline's
investment in Iroquois as of September 30, 1994 was $5.6 million.
f. Real Estate Properties
- - -------------------------
CR&R is the owner of Monmouth Shores Corporate Park (MSCP), located in
Monmouth County, New Jersey. The land comprising MSCP was exempt from the
provisions of the Freshwater Wetlands Protection Act (the Act) until assumption
of the Federal 404 freshwater wetlands program by the New Jersey Department of
Environmental Protection and Energy (NJDEPE) on March 2, 1994. MSCP is now
regulated by the provisions of the Act. The Act restricts building in areas
defined as "freshwater wetlands" and their transition areas. CR&R has hired an
environmental engineer to delineate the wetlands and transition areas of MSCP in
accordance with the provision of the Act.
Based upon the environmental engineer's delineation of the wetland and
transition areas, CR&R has filed for and received a Letter of Interpretation
(LOI) from NJDEPE on one parcel of land. CR&R has also filed for a LOI with
NJDEPE regarding a second parcel and will file additional LOI's with NJDEPE as
the remaining parcels of land are selected for development.
Based upon the environmental engineer's delineation, it is anticipated that
the developable yield of MSCP will be reduced by approximately 7% compared with
the original master plan. The actual yield achieved will be dictated by market
and other conditions. Based upon the revised estimated developable yield for
MSCP, the Company does not believe that a reserve against this property was
necessary as of September 30, 1994.
g. Bessie-8
- - ------------
NJNR and others (the Joint Venture, et al.) were named in a complaint filed
by the People's Natural Gas Company (People's) before the Pennsylvania Public
Utility Commission (PaPUC). People's sought a determination that the Joint
Venture, et al. were a public utility subject to the jurisdiction of the PaPUC
and an order prohibiting natural gas service until proper PaPUC authorization
was obtained.
<PAGE>
20
In April 1988, an Administrative Law Judge (ALJ) issued an initial decision
denying and dismissing People's complaint, "because the demonstrated activities
of the Bessie-8 joint venture are not within the jurisdiction of the PaPUC to
regulate". An initial decision is subject to adoption, modification or rejection
by the full PaPUC. In April 1989, alternative motions to adopt the ALJ's initial
decision or to subject the Joint Venture, et al. to the jurisdiction of the
PaPUC failed due to 2-2 tie votes. In October 1992, the PaPUC, on its own
initiative and without notice to any of the parties, determined in a 3-0 vote
that the Joint Venture, et al. are a "public utility" under the Pennsylvania
Public Utility Code and granted People's exceptions to the ALJ's April 1988
initial decision. This determination would require the Joint Venture, et al. to
apply to the PaPUC for a certificate of public convenience within 30 days of the
entry of the Final Order, or to cease and desist from providing service on the
pipeline. In December 1992, the PaPUC issued a Final Order and extended the
deadline to file for a certificate of public convenience within 60 days. In
February 1993, the Joint Venture, et al. filed a motion with the Commonwealth
Court of Pennsylvania (Commonwealth Court) requesting that the effectiveness of
the Final Order be stayed pending court appeals. In February 1993, this motion
was granted.
In October 1992, the Joint Venture, et al. filed a Petition for Review in
the nature of a declaratory judgment action in the Commonwealth Court seeking
among other things, a declaratory order that the April 1989 tie vote constituted
a final action dismissing Peoples' complaint. Oral argument was held in March
1993. In January 1993, the Joint Venture, et al. filed a second Petition for
Review with the Commonwealth Court challenging the merits of the PaPUC's
determination that the Joint Venture, et al. are a "public utility" under the
Pennsylvania Public Utility Code. In February 1993, the Commonwealth Court
stayed the PaPUC's order requiring the Joint Venture, et al. to file for a
certificate of public convenience and necessity, pending the outcome of the
March 1993 oral argument. On July 2, 1993, the Commonwealth Court issued an
order denying People's motion to lift the stay pending appeal. On December 16,
1993, the Commonwealth Court granted the Joint Venture, et al. a declaratory
judgment that the April 1989 tie vote constituted a final action dismissing
Peoples' complaint. Peoples and the PaPuc have appealed this decision to the
Pennsylvania Supreme Court. The parties have submitted briefs to the
Pennsylvania Supreme Court, and the matter now awaits oral argument and final
disposition by the court.
In September 1993, Peoples instituted an action in the Court of Common Pleas
of Allegheny County against the Joint Venture, et al. by filing a Praecipe for
Writ of Summons. The Praecipe for Writ of Summons cannot and does not contain
any description of the claim being asserted by Peoples. It merely tolls the
statute of limitations and preserves any claim Peoples may have against the
defendants until resolution of the actions discussed above. This action may
concern a claim by Peoples for losses allegedly sustained as a result of the
Bessie-8 joint venture activities. However, there has been no activity in this
action and the nature of the action has not yet been determined. NJNR is unable
to predict the outcome of these matters. The Company does not believe that the
ultimate resolution of these matters will have a material adverse effect on its
consolidated financial condition or results of operations.
In January 1994, the owners of the plant previously served by the Bessie-8
pipeline entered
<PAGE>
21
into a three-year natural gas contract with another supplier. In March 1994,
NJNR concluded that, based on meetings with its partners to discuss various
alternatives for the pipeline, the recovery of NJNR's net investment of $1
million was doubtful. Accordingly, as disclosed on Form 8-K filed by the Company
on April 27, 1994, the results for the year ended September 30, 1994 include a
pre-tax charge to earnings of $1 million, or $.04 per share.
h. Various
- - ----------
The Company is party to various other claims, legal actions and complaints
arising in the ordinary course of business. In management's opinion, the
ultimate disposition of these matters will not have a material adverse effect on
its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
<PAGE>
22
PART II
Information for Items 5 through 8 of this report appears in the Company's
1994 Annual Report, filed as Exhibit 13-1 hereto, as indicated on the following
table and is incorporated herein by reference, as follows:
Annual Report
Page
Item 5. Market for the Registrant's Common ----
Stock and Related Stockholder Matters
Market - Exchange 42
- Closing Prices & Dividends 23
Dividend Restrictions 35
Holders of Common Stock 22
Item 6. Selected Financial Data 22
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations 24-28
Item 8 Financial Statements and Supplementary Data 29-40
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure - None
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Information for Items 10 through 13 of this report is incorporated herein
by reference to the Company's definitive proxy statement for the Annual Meeting
of Shareholders to be held March 8, 1995, which is expected to be filed with the
SEC pursuant to Regulation 14A not later than January 27, 1995.
<PAGE>
23
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) The following Financial Statements of the Registrant and
Independent Auditors' Report, included in the Company's 1994 Annual Report,
are incorporated by reference in Item 8 above:
Consolidated Balance Sheets as of September 30, 1994 and 1993
Consolidated Statements of Income for the Years Ended
September 30, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1994, 1993 and 1992
Consolidated Statements of Capitalization as of September 30,
1994 and 1993
Consolidated Statements of Common Stock Equity for the Years
Ended September 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
(2) Financial Statement Schedules - See Index to Financial Statement
Schedules on page 24.
(3) Exhibits - See Exhibit Index on page 33.
(b) The Company did not file a Form 8-K during the quarter ended
September 30, 1994.
<PAGE>
24
NEW JERSEY RESOURCES CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
----
Schedule V - Property, plant and equipment for each of the
three years in the period ended September 30, 1994 25-27
Schedule VI - Accumulated depreciation and amortization
for each of the three years in the period ended
September 30, 1994 28
Schedule VIII - Valuation and qualifying accounts and
reserves for each of the three years in the period
ended September 30, 1994 29
Schedule X - Supplementary income statement information for
each of the three years in the period ended September 30, 1994 30
Schedules other than those listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
<PAGE>
25
Schedule V
<TABLE>
<CAPTION>
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
<S> <C> <C> <C> <C> <C>
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 216 $ 57 273
Local Storage ............. 24,989 (4) $ 5 24,980
Transmission .............. 63,225 24,216 87,441
Distribution .............. 486,238 41,693 1,356 526,575
General ................... 27,863 2,727 563 30,027
-------- ------- ------ ------ --------
602,553 68,689 1,924 669,318
Work in Progress ................ 31,045 (14,183) (B) $1,822 (C) 18,684
Property Under Capital
Leases .................... 3,982 (227) (D) 3,755
-------- ------- ------ ----- --------
Total ................... 637,580 54,506 1,924 1,595 691,757
Real Estate Properties .......... 102,369 2,619 1,188 509 (F) 104,309
Oil and Gas Properties .......... 64,576 1,517 2,851 (29) (E) 63,224
-------- ------- ------ ------ --------
$804,525 $58,642 $5,963 $2,086 $859,290
======== ======= ====== ====== ========
</TABLE>
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
(F) Intercompany transfer of leasehold improvements.
<PAGE>
26
Schedule V
<TABLE>
<CAPTION>
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1993
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
<S> <C> <C> <C> <C> <C>
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 1,041 $ 825 216
Local Storage ............. 24,963 $ 26 24,989
Transmission .............. 62,916 406 97 63,225
Distribution .............. 452,311 35,621 1,555 $ (139) (A) 486,238
General ................... 23,062 5,638 976 139 (A) 27,863
-------- ------- ------ ------ --------
564,315 41,691 3,453 0 602,553
Work in Progress ................ 20,586 11,729 (B) (1,270) (C) 31,045
Property Under Capital
Leases .................... 4,007 (25) (D) 3,982
-------- ------- ------ ------ --------
Total ................... 588,908 53,420 3,453 (1,295) 637,580
Real Estate Properties .......... 99,522 2,869 (22) (A) 102,369
Oil and Gas Properties .......... 57,398 9,216 (2,017) (E) 64,576
-------- ------- ------ ------- --------
$745,828 $65,505 $3,453 ($3,355) $804,525
======== ======= ====== ======= ========
</TABLE>
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
<PAGE>
27
Schedule V
<TABLE>
<CAPTION>
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1992
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
<S> <C> <C> <C> <C> <C>
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 1,042 $ 1 1,041
Local Storage ............. 23,231 $ 1,740 8 24,963
Transmission .............. 58,232 4,687 3 62,916
Distribution .............. 423,701 29,962 1,035 $ (317)(A) 452,311
General ................... 19,851 3,190 296 317 (A) 23,062
-------- ------- ------ ------- --------
526,079 39,579 1,343 0 564,315
Work in Progress ................ 21,939 (1,715) (B) 362 (C) 20,586
Property Under Capital
Leases .................... 4,501 (494)(D) 4,007
-------- ------- ------ ------- --------
Total ................... 552,519 37,864 1,343 (132) 588,908
Real Estate Properties .......... 96,832 4,397 1,707 99,522
(4)(A)
(2,184)(E)
Oil and Gas Properties .......... 53,423 5,333 830 (F) 57,398
-------- ------- ------ ------- --------
$702,774 $47,594 $3,050 $(1,490) $745,828
======== ======= ====== ======= ========
</TABLE>
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
(F) Note receivable converted to Oil and Gas Properties.
<PAGE>
28
Schedule VI
<TABLE>
<CAPTION>
NEW JERSEY RESOURCES CORPORATION
ACCUMULATED DEPRECIATION AND AMORTIZATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
- - -------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
AT CHARGED AT END
BEGINNING TO RETIRE- OTHER OF
CLASSIFICATION OF YEAR EXPENSE MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
<S> <C> <C> <C> <C> <C>
1994
Utility Plant ................. $152,150 $19,270 $1,924 $(4,875) (A) $164,621
Property Under
Capital Leases ........... 3,468 210 (B) 3,678
Real Estate Properties ........ 10,660 1,941 1 (C) 12,602
Oil and Gas Properties ........ 32,597 6,234 819 38,012
Other ......................... - 150 (150) (D) -
-------- ------- ------ ------- --------
Total ...................... $198,875 $27,595 $2,743 $(4,814) $218,913
======== ======= ====== ======= ========
1993
Utility Plant ................. $138,288 $19,070 $3,456 $(1,752) (A) $152,150
Property Under
Capital Leases ........... 3,076 392 (B) 3,468
Real Estate Properties ........ 8,758 1,924 (22) (C) 10,660
Oil and Gas Properties ........ 28,478 4,202 (83) (C) 32,597
Other ......................... - 209 (209) (D) -
-------- ------- ------ ------- --------
Total ..................... $178,600 $25,405 $3,456 $(1,674) $198,875
======== ======= ====== ======= ========
1992
Utility Plant ................. $123,945 $17,602 $1,343 $(1,916) (A) $138,288
Property Under
Capital Leases ........... 3,102 (26) (B) 3,076
Real Estate Properties ........ 7,577 1,834 653 8,758
Oil and Gas Properties ........ 24,241 4,272 (35) (C) 28,478
Other ......................... - 210 (210) (D) -
-------- ------- ------ ------- --------
Total .................... $158,865 $23,918 $1,996 $(2,187) $178,600
======== ======= ====== ======= ========
<FN>
Notes: (A) Represents cost of removal, less salvage.
(B) Net amortization of leased assets reflected in other operating expenses.
(C) Miscellaneous adjustments.
(D) Reclassification.
</FN>
</TABLE>
<PAGE>
29
Schedule VIII
NEW JERSEY RESOURCES CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
<TABLE>
<CAPTION>
BALANCE ADDITIONS BALANCE
AT CHARGED AT END
BEGINNING TO OF
CLASSIFICATION OF YEAR EXPENSE DEDUCTIONS YEAR
- - -------------- --------- ----------- ------------ ----------
($000)
<S> <C> <C> <C> <C>
1994:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $684 $1,762 $1,789 (1) $657
==== ====== ========= ====
Materials and Supplies ......... $ 48 $1,181 $1,078 (2) $151
==== ====== ========= ====
1993:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $598 $1,397 $1,311 (1) $684
==== ====== ========= ====
Materials and Supplies ......... $ 48 $ - $ - $ 48
==== ====== ========= ====
1992:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $385 $2,233 $2,020 (1) $385
==== ====== ========= ====
Materials and Supplies ......... $295 $ 332 $ 579 (2) $ 48
==== ====== ========= ====
</TABLE>
Notes: (1) Uncollectible accounts written off, less recoveries.
(2) Obsolete inventory written off, less salvage.
<PAGE>
30
Schedule X
<TABLE>
<CAPTION>
NEW JERSEY RESOURCES CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
CHARGED TO EXPENSES
ITEM 1994 1993 1992
- - --------------------------------- -------- --------- ----------
($000)
<S> <C> <C> <C>
Maintenance ........................................................... $ 8,293 $ 6,438 $ 7,253
======= ======= =======
Taxes, other than income taxes
New Jersey gross receipts and franchise taxes .................... $48,308 $47,911 $48,083
Social Security and other payroll taxes .......................... 2,685 2,488 2,316
Real estate and personal property taxes .......................... 1,763 1,635 1,503
New Jersey sales and use tax...................................... 646 488 483
Other State taxes................................................. 355 197 227
------- ------- -------
Total........................................................... $53,757 $52,719 $52,612
======= ======= =======
<FN>
Note: Royalties and advertising costs have been omitted since they do not
exceed 1% of total revenues.
</FN>
</TABLE>
<PAGE>
31
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) 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.
NEW JERSEY RESOURCES CORPORATION
--------------------------------
(Registrant)
Date: December 28, 1994 By:/s/Laurence M. Downes
---------------------
Laurence M. Downes
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, on behalf of the
Registrant in the capacities and on the dates included:
Dec. 28, 1994 /s/Oliver G. Richard, III Dec. 28, 1994 /s/Shirley A. Jackson
--------------------------- ---------------------
Oliver G. Richard, III Dr. Shirley A. Jackson
Chairman, President and Director
Chief Executive Officer
and Director
Dec. 28, 1994 /s/Dorothy K. Light
-------------------
Dorothy K. Light
Dec. 28, 1994 /s/Glenn C. Lockwood Director
--------------------
Glenn C. Lockwood
Vice President, Controller
and Chief Accounting Officer Dec. 28, 1994 /s/Donald E. O'Neill
--------------------
Donald E. O'Neill
Director
Dec. 28, 1994 /s/Roger E. Birk
----------------
Roger E. Birk
Director Dec. 28, 1994 /s/Richard S. Sambol
--------------------
Richard S. Sambol
Director
Dec. 28, 1994 /s/Bruce G. Coe
---------------
Bruce G. Coe
Director Dec. 28, 1994 /s/Charles G. Stalon
--------------------
Charles G. Stalon
Director
Dec. 28, 1994 /s/Joe B. Foster
----------------
Joe B. Foster Dec. 28, 1994 /s/Thomas B. Toohey
Director ------------------
Thomas B. Toohey
Director
Dec. 28, 1994 /s/Warren R. Haas
-----------------
Warren R. Haas Dec. 28, 1994 /s/John J. Unkles, Jr.
Director ----------------------
John J. Unkles, Jr.
Director
<PAGE>
32
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of New Jersey Resources Corporation:
We have audited the consolidated financial statements of New Jersey Resources
Corporation as of September 30, 1994 and 1993 and for each of the three years in
the period ended September 30, 1994, and have issued our report thereon dated
October 31, 1994; such consolidated financial statements and report are included
in your 1994 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the consolidated financial statement
schedules of New Jersey Resources Corporation, listed in Item 14. These
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
October 31, 1994
-------------------------------------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-52409 and No. 33-48192 of New Jersey Resources Corporation on Forms S-8 and
S-3, respectively, of our reports dated October 31, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of New Jersey
Resources Corporation for the year ended September 30, 1994.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
December 28, 1994
<PAGE>
33
<TABLE>
EXHIBIT INDEX
Previous Filing
Reg. S-K ---------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
<S> <C> <C> <C> <C>
3-1 3 Restated Certificate of Incorporation of the The Company's 3-1
Company, as amended Quarterly Report
on Form 10-Q for
the quarter ended
March 31, 1992
3-2 By-laws of the Company, as presently in effect The Company's 3-2
Quarterly Report
on Form 10-Q for
the quarter ended
March 31, 1992
4-1 4 Specimen Common Stock Certificates 33-21872 4-1
4-2 Indenture of Mortgage and Deed of Trust 2-9569 4(g)
with Harris Trust and Savings Bank, as
Trustee, dated April 1, 1952
4-2L Twelfth Supplemental Indenture, Note (3) 4-2L
dated as of August 1, 1984
4-2M Thirteenth Supplemental Indenture, Note (4) 4-2M
dated as of September 1, 1985
4-2N Fourteenth Supplemental Indenture, Note (5) 4-2N
dated as of May 1, 1986
4-2O Fifteenth Supplemental Indenture, Note (6) 4-2O
dated as of March 1, 1987
4-2P Sixteenth Supplemental Indenture, Note (6) 4-2P
dated as of December 1, 1987
4-2Q Seventeenth Supplemental Indenture, Note (7) 4-2Q
dated as of June 1, 1988
4-2R Eighteenth Supplemental Indenture, 33-30034 4-2R
dated as of June 1, 1989
4-2S Nineteenth Supplemental Indenture, Note (10) 4-2S
dated as of March 1, 1991
4-2T Twentieth Supplemental Indenture, Note (11) 4-2T
dated as of December 1, 1992
</TABLE>
<PAGE>
34
<TABLE>
<CAPTION>
EXHIBIT INDEX
Previous Filing
Reg. S-K -----------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
<S> <C> <C> <C>
4-2U Twenty-First Supplemental Indenture, Note (12) 4-2U
dated as of August 1, 1993
4-2V Twenty-Second Supplemental Indenture, Note (12) 4-2V
dated as of October 1, 1993
4-2W Twenty-Third Supplemental Indenture,
dated as of August 15, 1994
4-2X Twenty-Fourth Supplemental Indenture,
dated as of October 1, 1994
4-3 Term Loan Agreement between New Jersey Note (8) 4-3
Resources Corporation and Union Bank of
Switzerland, dated January 31, 1987
4-4 Revolving Credit Agreement between New Note (8) 4-4
Jersey Resources Corporation and Swiss
Bank Corporation, dated September 6, 1989
4-5 Amended and Restated Note and Credit The Company's 4-5
Agreement between New Jersey Resources Quarterly Report
Corporation and First Fidelity Bank, on Form 10-Q for
dated May 7, 1993 the quarter ended
June 30, 1993
4-6 Revolving Credit Agreement between New Jersey Note (10) 4-6
Resources Corporation and Union Bank of
Switzerland, dated September 28, 1990
4-7 Revolving Credit and Term Loan Agreement Note (10) 4-7
between New Jersey Resources Corporation
and Midlantic National Bank, dated December
20, 1990
4-8 Revolving Credit Agreement between New Note (10) 4-8
Jersey Resources Corporation and Union
Bank of Switzerland, dated December 31, 1990
4-9 Credit Agreement between New Jersey Note (10) 4-9
Resources Corporation and J.P. Morgan
Delaware, dated August 1, 1991
4-10 Revolving Credit Agreement between New Note (10) 4-10
Jersey Resources Corporation and Swiss
Bank Corporation, dated September 30, 1991
</TABLE>
<PAGE>
35
<TABLE>
<CAPTION>
EXHIBIT INDEX
Previous Filing
Reg. S-K -----------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
<S> <C> <C> <C> <C>
10-1 10 Agreements between NJNG and Texas Eastern
Transmission Corporation:
10-1A Dated September 27, 1967 2-38344 4(c)
10-1B Dated September 27, 1967 2-73181 10.(a)(ii)
10-1C Dated September 27, 1969 2-38344 4(a)
10-1D Dated September 27, 1969 2-38344 4(b)
10-1E Dated August 11, 1989, as amended 2-73181 10.(a)(v)
10-1F Dated October 28, 1982 Note (1) 10.(a)(vi)
10-1G Dated December 24, 1984 Note (4) 10-1G
10-1H Dated September 27, 1967 33-12437 10-1H
10-1I Dated October 12, 1981 33-12437 10-1I
10-1J Dated August 22, 1986 33-12437 10-1J
10-1K Dated October 27, 1986 33-12437 10-1K
10-1L Dated October 13, 1989 Note (8) 10-1L
10-1M Dated October 13, 1989 Note (8) 10-1M
10-1N Dated October 13, 1989 Note (8) 10-1N
10-1O Dated October 13, 1989 Note (8) 10-10
10-2 Agreements between NJNG and Algonquin Gas
Transmission Company:
10-2A Dated September 8, 1967 2-38344 4(d)
10-2B Dated September 8, 1967 2-38344 4(e)
10-2C Dated June 20, 1986 33-12437 10-2C
</TABLE>
<PAGE>
36
<TABLE>
<CAPTION>
EXHIBIT INDEX
Previous Filing
Reg. S-K ------------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
<S> <C> <C> <C>
10-2D Dated June 20, 1986 33-12437 10-2D
10-3 Agreements between NJNG and Distrigas of 2-73181 10(d)
Massachusetts Corporation, dated
November 5, 1979
10-4 Agreements between NJNG and Consolidated
Gas Transmission Corporation:
Dated November 16, 1983 Note (3) 10-6
10-4A Dated July 12, 1985 Note (4) 10-6A
10-4B Dated January 30, 1984 33-12437 10-4L
10-5 Agreements between NJNG and National Fuel Note (3) 10-7
Gas Supply Corporation, dated February 27,
1984
10-6 Agreement between NJNG and Boundary Gas Note (3) 10-8
Inc., dated March 6, 1984
10-7 Retirement Plan for Represented Employees, 2-73181 10(f)
as amended October 1, 1984
10-8 Retirement Plan for Non-Represented 2-73181 10(g)
Employees, as amended October 1, 1985
10-9 Supplemental Retirement Plans covering all Note (5) 10-9
Executive Officers as described in the
Registrant's definitive proxy statement
incorporated herein by reference
10-10 Agreement between NJNG and Carnegie 33-12437 10-10
Natural Gas Company, dated June 18, 1986
10-11 Agreements between NJNG and Transcontinental
Gas Pipe Line Corporation:
Dated April 1, 1989 Note (9) 10-11
10-11A Dated October 30, 1989 Note (9) 10-11A
10-12 Agreement between NJNG and Steuben Gas Note (9) 10-12
Storage Company, dated June 19, 1989
10-13 Agreements between NJNG and Alberta Note (11) 10-13
Northeast
</TABLE>
<PAGE>
37
<TABLE>
<CAPTION>
EXHIBIT INDEX
Previous Filing
Reg. S-K ------------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
<S> <C> <C> <C> <C>
Gas Limited, dated February 7, 1991
10-14 Agreement between NJNG and Iroquois Note (11) 10-14
Gas Transmission System, L.P., dated
February 7, 1991
10-15 Agreement between NJNG and CNG Energy The Company's 10-15
Company, dated November 23, 1988 Quarterly Report
on Form 10-Q for
the quarter ended
December 31, 1992
13-1 13 1994 Annual Report to Stockholders.
Such Exhibit includes only those portions
thereof which are expressly incorporated
by reference in this Form 10-K.
21-1 21 Subsidiaries of the Registrant
23-1 23 Consent of Independent Accountants See page 32
27-1 27 Financial Data Schedule
Note (1) 1982 Form 10-K File No. 1-8359
Note (2) 1983 Form 10-K File No. 1-8359
Note (3) 1984 Form 10-K File No. 1-8359
Note (4) 1985 Form 10-K File No. 1-8359
Note (5) 1986 Form 10-K File No. 1-8359
Note (6) 1987 Form 10-K File No. 1-8359
Note (7) 1988 Form 10-K File No. 1-8359
Note (8) 1989 Form 10-K File No. 1-8359
Note (9) 1990 Form 10-K File No. 1-8359
Note (10) 1991 Form 10-K File No. 1-8359
Note (11) 1992 Form 10-K File No. 1-8359
Note (12) 1993 Form 10-K File No. 1-8359
</TABLE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
MORTGAGE
NEW JERSEY NATURAL GAS COMPANY
To
HARRIS TRUST AND SAVINGS BANK,
As Trustee
___________________________
TWENTY-THIRD SUPPLEMENTAL INDENTURE
Dated as of August 15, 1994
___________________________
Supplemental to Indenture of Mortgage and
Deed of Trust Dated April 1, 1952
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Prepared by: Rhonda M. Edwards, Esq.
LeBoeuf, Lamb, Greene & MacRae
125 West 55th Street
New York, New York 10019
<PAGE>
MORTGAGE
TWENTY-THIRD SUPPLEMENTAL INDENTURE, dated as of August 15, 1994 between
NEW JERSEY NATURAL GAS COMPANY, a corporation organized and existing under the
laws of the State of New Jersey (hereinafter called the "Company"), having its
principal office at 1415 Wyckoff Road, Wall, New Jersey, party of the first
part, and HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing
under the laws of the State of Illinois and authorized to accept and execute
trusts (hereinafter called the "Trustee"), having its principal office at 111
West Monroe Street, Chicago, Illinois, as Trustee under the Indenture of
Mortgage and Deed of Trust hereinafter mentioned, party of the second part.
WHEREAS, the Company has heretofore executed and delivered to the Trustee
its Indenture of Mortgage and Deed of Trust dated April 1, 1952 (hereinafter
sometimes called the "Original Indenture") to secure the payment of the
principal of and the interest and premium (if any) on all Bonds at any time
issued and outstanding thereunder, and to declare the terms and conditions upon
which Bonds are to be issued thereunder; and
WHEREAS, the Company thereafter executed and delivered to the Trustee its
First Supplemental Indenture dated February 1, 1958, its Second Supplemental
Indenture dated December 1, 1960, its Third Supplemental Indenture dated July 1,
1962, its Fourth Supplemental Indenture dated September 1, 1962, its Fifth
Supplemental Indenture dated December 1, 1963, its Sixth Supplemental Indenture
dated June 1, 1966, its Seventh Supplemental Indenture dated October 1, 1970,
its Eighth Supplemental Indenture dated May 1, 1975, its Ninth Supplemental
Indenture dated February 1, 1977, its Tenth Supplemental Indenture dated as of
September 1, 1980, its Eleventh Supplemental Indenture dated as of September 1,
1983, its Twelfth Supplemental Indenture dated as of August 1, 1984, its
Thirteenth Supplemental Indenture dated as of September 1, 1985, its Fourteenth
Supplemental Indenture dated as of May 1, 1986, its Fifteenth Supplemental
Indenture dated as of March 1, 1987, its Sixteenth Supplemental Indenture dated
as of December 1, 1987, its Seventeenth Supplemental Indenture dated as of June
1, 1988, its Eighteenth Supplemental Indenture dated as of June 1, 1989, its
Nineteenth Supplemental Indenture dated as of March 1, 1991, its Twentieth
Supplemental Indenture dated as of December 1, 1992, its Twenty-First
Supplemental Indenture dated as of August 1, 1993 and its Twenty-Second
Supplemental Indenture dated as of October 1, 1993, supplementing and amending
the Original Indenture; and
WHEREAS, Bonds in the aggregate principal amount of Twelve Million Five
Hundred Thousand Dollars ($12,500,000) were issued under and in accordance
with the terms of the Original Indenture, as an initial series designated
"First Mortgage Bonds, 4-1/4% Series A due 1977", herein sometimes called
"1977 Series A
<PAGE>
Bonds", which 1977 Series A Bonds have since been paid and redeemed by the
Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Two
Million Two Hundred Fifty Thousand Dollars ($2,250,000) were issued under and
in accordance with the terms of the Original Indenture, as supplemented and
amended by the First Supplemental Indenture, as a second series designated
"First Mortgage Bonds, 5% Series B due 1983", herein sometimes called "1983
Series B Bonds", which 1983 Series B Bonds have since been paid and redeemed
by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Four
Million Dollars ($4,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
Supplemental Indenture and the Second Supplemental Indenture, as a third
series designated "First Mortgage Bonds, 5-1/8% Series C due 1985", herein
sometimes called "1985 Series C Bonds", which 1985 Series C Bonds have since
been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Five
Million Dollars ($5,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Fourth Supplemental Indentures, inclusive, as a fourth series
designated "First Mortgage Bonds, 4-7/8% Series D due 1987", herein sometimes
called "1987 Series D Bonds", which 1987 Series D Bonds have since been paid
and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Four
Million Five Hundred Thousand Dollars ($4,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Fifth Supplemental Indentures, inclusive, as
a fifth series designated "First Mortgage Bonds, 4-3/4% Series E due 1988",
herein sometimes called "1988 Series E Bonds", which 1988 Series E Bonds have
since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Seventh Supplemental Indentures, inclusive, as a sixth series
designated "First Mortgage Bonds, 9-1/4% Series F due 1995", herein sometimes
called "1995 Series F Bonds", which 1995 Series F Bonds have since been paid
and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Dollars ($10,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Eighth
-2-
<PAGE>
Supplemental Indentures, inclusive, as a seventh series designated "First
Mortgage Bonds, 10% Series G due 1987", herein sometimes called "1987 Series G
Bonds", which 1987 Series G Bonds have since been paid and redeemed by the
Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten Million
Dollars ($10,000,000) were issued under and in accordance with the terms of the
Original Indenture, as supplemented and amended by the First through the Ninth
Supplemental Indentures, inclusive, as an eighth series designated "First
Mortgage Bonds, 9% Series H due 1992", herein sometimes called "1992 Series H
Bonds", which 1992 Series H Bonds have since been paid and redeemed by the
Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Nine
Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Tenth Supplemental
Indentures, inclusive, as a ninth series designated "First Mortgage Bonds,
9-1/8% Series J due 2000", herein sometimes called "2000 Series J Bonds",
which 2000 Series J Bonds have since been paid and redeemed by the Company;
and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Eleventh Supplemental Indentures, inclusive,
as a tenth series designated "First Mortgage Bonds, 10-3/8% Series K due
2013", herein sometimes called "2013 Series K Bonds", which 2013 Series K
Bonds have since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Five Hundred Thousand Dollars ($10,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twelfth Supplemental Indentures, inclusive,
as an eleventh series designated "First Mortgage Bonds, 10-1/2% Series L due
2014", herein sometimes called "2014 Series L Bonds", of which Ten Million
Five Hundred Thousand Dollars ($10,500,000) in principal amount are
outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Twelve
Million Dollars ($12,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Thirteenth Supplemental Indentures, inclusive, as a twelfth series
designated "First Mortgage Bonds, 10.85% Series M due 2000", herein sometimes
called "2000 Series M Bonds", of which Eight
-3-
<PAGE>
Million Four Hundred Thousand Dollars ($8,400,000) in principal amount
are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Dollars ($10,000,000) were issued under and in accordance with the
terms of the Original Indenture as supplemented and amended by the First
through the Fourteenth Supplemental Indentures, inclusive, as a thirteenth
series designated "First Mortgage Bonds, 10% Series N due 2001", herein
sometimes called "2001 Series N Bonds", of which Seven Million Dollars
($7,000,000) in principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Fifteenth Supplemental Indentures, inclusive, as a fourteenth
series designated "First Mortgage Bonds, 8.50% Series P due 2002", herein
sometimes called "2002 Series P Bonds", of which [Ten Million Nine Hundred
Nine Thousand Two Hundred Dollars ($10,909,200)] in principal amount are
outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Thirteen
Million Five Hundred Thousand Dollars ($13,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Sixteenth Supplemental Indentures, inclusive,
as a fifteenth series designated "First Mortgage Bonds, 9% Series Q due 2017",
herein sometimes called "2017 Series Q Bonds", of which Thirteen Million Five
Hundred Thousand Dollars ($13,500,000) in principal amount are outstanding at
the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of
Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Seventeenth Supplemental Indentures, inclusive, as a
sixteenth series designated "First Mortgage Bonds, 8.50% Series R due 2018",
herein sometimes called "2018 Series R Bonds", of which Twenty-Five Million
Dollars ($25,000,000) in principal amount are outstanding at the date hereof;
and
WHEREAS, thereafter Bonds in the aggregate principal amount of Twenty
Million Dollars ($20,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Eighteenth Supplemental Indentures, inclusive, as a seventeenth
series designated "First Mortgage Bonds, 10.10% Series S due 2009", herein
sometimes called "2009 Series S Bonds", of which Twenty
-4-
<PAGE>
Million Dollars ($20,000,000) in principal amount are outstanding at the
date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Nine
Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Nineteenth Supplemental
Indentures, inclusive, as an eighteenth series designated "First Mortgage
Bonds, 7.05% Series T due 2016", herein sometimes called "2016 Series T
Bonds", of which Nine Million Five Hundred Forty-Five Thousand Dollars
($9,545,000) in principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were authorized, of which Eleven Million Dollars
($11,000,000) have been issued under and in accordance with the terms of the
Original Indenture, as supplemented and amended by the First through the
Nineteenth Supplemental Indentures, inclusive, as a nineteenth series
designated "First Mortgage Bonds, 7.25% Series U due 2021", herein sometimes
called "2021 Series U Bonds", of which Eleven Million Dollars ($11,000,000) in
principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of
Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Twentieth Supplemental Indentures, inclusive, as a twentieth
series designated "First Mortgage Bonds, 7.50% Series V due 2002", herein
sometimes called "2002 Series V Bonds", of which Twenty-Five Million Dollars
($25,000,000) in principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twenty-First Supplemental Indentures,
inclusive, as a twenty-first series designated "First Mortgage Bonds, 5-3/8%
Series W due 2023", herein sometimes called "2023 Series W Bonds", of which
Ten Million Three Hundred Thousand Dollars ($10,300,000) in principal amount
are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Thirty
Million Dollars ($30,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Twenty-Second Supplemental Indentures, inclusive, as a
twenty-second series designated "First Mortgage Bonds, 6.27% Series X due
2008", herein sometimes called "2008 Series X Bonds", of which Thirty
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Million Dollars ($30,000,000) in principal amount are outstanding at the
date hereof; and
WHEREAS, the Original Indenture provides that, subject to certain
exceptions not presently relevant, such changes in or additions to the
provisions of the Indenture (the term "Indenture" and other terms used herein
having the meanings assigned thereto in the Original Indenture except as
herein expressly modified) may be made to add to the covenants and agreements
of the Company in the Indenture contained other covenants and agreements
thereafter to be observed by the Company; and to provide for the creation of
any series of Bonds, designating the series to be created and specifying the
form and provisions of the Bonds of such series as in the Indenture provided
or permitted; and
WHEREAS, the Indenture further provides that the Company and the Trustee
may enter into indentures supplemental to the Indenture to convey, transfer and
assign unto the Trustee and to subject to the lien of the Indenture additional
properties acquired by the Company; and
WHEREAS, the Company has duly determined to create a twenty-third series
of Bonds, to be known as "First Mortgage Bonds, 6.25% Series Y due 2024",
herein sometimes called "2024 Series Y Bonds", all as herein provided and to
add to the covenants and agreements contained in the Indenture the covenants
and agreements hereinafter set forth; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture and
pursuant to appropriate resolutions of its Board of Directors (including the
Executive Committee thereof), has duly resolved and determined to make,
execute and deliver to the Trustee a Twenty-Third Supplemental Indenture in
the form hereof for the purposes herein provided; and WHEREAS, all conditions
and requirements necessary to make this Twenty-Third Supplemental Indenture a
valid, binding and legal instrument have been done, performed and fulfilled
and the execution and delivery hereof have been in all respects duly
authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That NEW JERSEY NATURAL GAS COMPANY, by way of further assurance and in
consideration of the premises and of the acceptance by the Trustee of the
trusts hereby created and of One Dollar to it duly paid by the Trustee at or
before the ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and in order to secure the payment of principal of and
any premium which may be due and payable on and the interest on all Bonds at
any time issued and outstanding under the
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Indenture according to their tenor and effect, and the performance and
observance by the Company of all the covenants and conditions herein and
therein contained, has granted, bargained, sold, warranted, aliened, remised,
released, conveyed, assigned, transferred, mortgaged, pledged, set over and
confirmed, and by these presents does grant, bargain, sell, warrant, alien,
remise, release, convey, assign, transfer, mortgage, pledge, set over and
confirm, unto the party of the second part, and to its successors in the
trust, and to it and its assigns forever, and has granted and does hereby
grant thereunto a security interest in, all of the property, real, personal
and mixed, now owned by the Company and situated in the Counties of
Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset and Sussex
in the State of New Jersey, or wherever situate (except property specifically
excepted from the lien of the Indenture by the terms of the Indenture) and
also all of the property, real, personal and mixed, hereafter acquired by the
Company wherever situate (except property specifically excepted from the lien
of the Indenture by the terms of the Indenture), including both as to property
now owned and property hereafter acquired, without in anywise limiting or
impairing the enumeration of the same, the scope and intent of the foregoing
or of any general or specific description contained in the Indenture, the
following:
I.
FRANCHISES
All and singular, the franchises, grants, permits, immunities, privileges
and rights of the Company owned and held by it at the date of the execution
hereof or hereafter acquired for the construction, maintenance, and operation
of the gas plants and systems now or hereafter subject to the lien hereof, as
well as all certificates, franchises, grants, permits, immunities, privileges,
and rights of the Company used or useful in the operation of the property now
or hereafter mortgaged hereunder, including all and singular the franchises,
grants, permits, immunities, privileges, and rights of the Company granted by
the governing authorities of any municipalities or other political
subdivisions and all renewals, extensions and modifications of said
certificates, franchises, grants, permits, privileges, and rights or any of
them.
II.
GAS DISTRIBUTION SYSTEMS AND RELATED PROPERTY
All gas generating plants, gas storage plants and gas manufacturing
plants of the Company, all the buildings, erections, structures, generating
and purifying apparatus,
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holders, engines, boilers, benches, retorts, tanks, instruments,
appliances, apparatus, facilities, machinery, fixtures, and all other property
used or provided for use in the generation, manufacturing and purifying of
gas, together with the land on which the same are situated, and all other
lands and easements, rights-of-way, permits, privileges, and sites forming a
part of such plants or any of them or occupied, enjoyed or used in connection
therewith.
All gas distribution or gas transmission systems of the Company, all
buildings, erections, structures, generating and purifying apparatus, holders,
engines, boilers, benches, retorts, tanks, pipe lines, connections, service
pipes, meters, conduits, tools, instruments, appliances, apparatus,
facilities, machinery, fixtures, and all other property used or provided for
use in the construction, maintenance, repair or operations of such
distribution or transmission systems, together with all the certificates,
rights, privileges, rights-of-way, franchises, licenses, easements, grants,
liberties, immunities, permits of the Company, howsoever conferred or
acquired, under, over, or upon any private property or any public streets or
highways within as well as without the corporate limits of any municipal
corporation. Without limiting the generality of the foregoing, there are
expressly included the gas distribution or gas transmission systems located in
the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic,
Somerset and Sussex in the State of New Jersey, and in the following
municipalities in said State and Counties: Aberdeen Township (formerly Matawan
Township), Allenhurst Borough, City of Asbury Park, Atlantic Highlands
Borough, Avon Borough, Barnegat Light Borough, Barnegat Township (formerly
named Union Township), Bay Head Borough, Beach Haven Borough, Beachwood
Borough, Belmar Borough, Berkeley Township, Boonton Town, Boonton Township,
Bradley Beach Borough, Brick Township, Brielle Borough, Colts Neck Township,
Deal Borough, Denville Township, Dover Town, Dover Township, Eagleswood
Township, East Brunswick Township, Eatontown Borough, Englishtown Borough,
Fair Haven Borough, Farmingdale Borough, Franklin Township in Somerset County,
Freehold Borough, Freehold Township, Hanover Township, Harvey Cedars Borough,
Hazlet Township, Highlands Borough, Holmdel Township, Hopatcong Borough,
Howell Township, Interlaken Borough, Island Heights Borough, Jackson Township,
Jefferson Township, Keansburg Borough, Keyport Borough, Lacey Township,
Lakehurst Borough, Lakewood Township, Lavallette Borough, Lincoln Park
Borough, Little Egg Harbor Township, Little Silver Borough, Loch Arbour
Village, Long Beach Township, Long Branch City, Manalapan Township, Manasquan
Borough, Manchester Township, Mantoloking Borough, Marlboro Township, Matawan
Borough, Middletown Township, Milltown Borough, Mine Hill Township, Monmouth
Beach Borough, Monroe Township, Montville Township, Morris Plains Borough,
Arlington Borough, Mount Olive Township, Mountain Lakes Borough, Neptune City
Borough, Neptune Township, Netcong Borough, New Brunswick City, North Brunswick
Township, Ocean Township in Monmouth
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County, Ocean Township in Ocean County, Ocean Gate Borough, Oceanport
Borough, Old Bridge Township (formerly named Madison Township),
Parsippany-Troy Hills Township, Pine Beach Borough, Point Pleasant Borough,
Point Pleasant Beach Borough, Randolph Township, Red Bank Borough, Rockaway
Borough, Rockaway Township, Roxbury Township, Rumson Borough, Sayreville
Borough, Sea Bright Borough, Sea Girt Borough, Seaside Heights Borough,
Seaside Park Borough, Ship Bottom Borough, Shrewsbury Borough, Shrewsbury
Township, South Belmar Borough, South Brunswick Township, South River Borough,
South Toms River Borough, Spring Lake Borough, Spring Lake Heights Borough,
Stafford Township, Surf City Borough, Tinton Falls Borough (formerly named New
Shrewsbury Borough), Tuckerton Borough, Union Beach Borough, Union Township,
Victory Gardens Borough, Wall Township, Washington Township in Burlington
County, Washington Township in Morris County, West Long Branch Borough, West
Milford Township and Wharton Borough.
III.
CONTRACTS
All of the Company's right, title and interest in and under all contracts,
licenses or leases for the purchase of gas, either in effect at the date of
execution hereof or hereafter made and any extension or renewal thereof.
TOGETHER WITH ALL AND SINGULAR the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the Trust Estate, or any
part thereof, with the reversion or reversions, remainder and remainders,
rents, issues, income and profits thereof, and all the right, title, interest
and claim whatsoever, at law or in equity, which the Company now has or which
it may hereafter acquire in and to the Trust Estate and every part and parcel
thereof.
TO HAVE AND TO HOLD the Trust Estate and all and singular the lands,
properties, estates, rights, franchises, privileges and appurtenances hereby
mortgaged, conveyed, pledged or assigned, or intended so to be, together with
all the appurtenances thereto appertaining, unto the Trustee and its successors
and assigns forever;
SUBJECT, HOWEVER, as to property hereby conveyed, to Permitted
Encumbrances;
BUT IN TRUST, NEVERTHELESS, under and subject to the terms and conditions
hereafter set forth, for the equal and proportionate use, benefit, security and
protection of each and every person and corporation who may be or become the
holders of the Bonds and coupons hereby secured, if any, without preference,
priority or distinction as to the lien or otherwise of one Bond or coupon over
or from the others by reason of priority in the
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issue or negotiation thereof, or by reason of the date of maturity
thereof, or otherwise (except as any sinking, amortization, improvement,
renewal or other analogous fund, established in accordance with the provisions
of the Indenture, may afford additional security for the Bonds of any
particular series and except as provided in s.9.02 of the Indenture), and for
securing the observance and performance of all the terms, provisions and
conditions of the Indenture.
THIS INDENTURE FURTHER WITNESSETH, that the Company has agreed and
covenanted, and hereby does agree and covenant, with the Trustee and its
successors and assigns and with the respective holders from time to time of the
Bonds and coupons, or any thereof, as follows:
ARTICLE I.
CERTAIN AMENDMENTS OF INDENTURE
s.1.1. The Original Indenture, as heretofore amended, be and it hereby is
further amended in the following respects, the section numbers specified below
being the sections of the Indenture in which such amendments occur:
s.1.01. The following definition be and it hereby is added immediately
after the twenty-third sentence of s.1.01B:
" 'TWENTY-THIRD SUPPLEMENTAL INDENTURE' shall mean the Supplemental
Indenture dated as of August 15, 1994, supplemental to the Indenture."
s.1.01. The following definition be and it hereby is added immediately
after the twenty-fourth sentence of s.1.01F:
" '2024 Series Y BOND' shall mean one of the First Mortgage Bonds, 6.25%
Series Y due 2024, issued hereunder."
s.2.11. The following be and it hereby is added at the end of s.2.11:
"No charge except for taxes or governmental charges shall be made against
any holder of any 2024 Series Y Bond for the exchange, transfer or
registration of transfer thereof."
s.8.08. The period at the end of the first paragraph of s.8.08 be and it
hereby is deleted and the following words and figures be and they hereby are
added thereto:
", and the 2024 Series Y Bonds shall be redeemed at the redemption price
specified in s.10.64."
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ARTICLE II.
2024 SERIES Y BONDS
s.2.1. There shall be a twenty-third series of Bonds, known as and entitled
"First Mortgage Bonds, 6.25% Series Y due 2024" or "First Mortgage Bonds, 6.25%
Series Y" (herein and in the Indenture referred to as the "2024 Series Y
Bonds"), and the form thereof shall contain suitable provisions with respect to
the matters hereinafter in this Section specified and shall in other respects be
substantially as set forth in the preambles to the Original Indenture.
The aggregate principal amount of 2024 Series Y Bonds which may be
authenticated and delivered and outstanding under the Indenture is Ten Million
Five Hundred Thousand Dollars ($10,500,000).
The 2024 Series Y Bonds shall be payable to the trustee under an Indenture
of Trust dated as of August 15, 1994 (the "Bond Indenture") by and between the
New Jersey Economic Development Authority (the "Authority") and First Fidelity
Bank, National Association, as trustee (the "Loan Trustee"), and shall be
nontransferable except to a successor of the Loan Trustee.
The 2024 Series Y Bonds shall bear interest at the rate of six and
one-quarter percentum (6.25%) per annum, computed on the basis of a 360-day
year consisting of twelve 30-day months, and shall mature on August 1, 2024,
subject to prior redemption as described herein.
The 2024 Series Y Bonds shall be in the form of registered Bonds without
coupons of denominations of Five Thousand Dollars ($5,000) and any integral
multiple thereof which may be authorized by the Company, the issue of a
registered Bond without coupons in any such denomination to be conclusive
evidence of such authorization. The 2024 Series Y Bonds shall be dated as
provided in s.2.05 of the Indenture. All 2024 Series Y Bonds shall bear
interest from their respective dates, such interest to be payable, upon the
terms of and otherwise in accordance with the 2024 Series Y Bonds,
semiannually on the first business day preceding March 1 and September 1 in
each year, the first interest payment date being the business day preceding
March 1, 1995. Both the principal of and the premium, if any, and interest on
the 2024 Series Y Bonds shall be payable at the principal office of the
Trustee, in the City of Chicago, Illinois or, at the option of the holder, at
the office or agency of the Company in the Borough of Manhattan, the City and
State of New York, or at the principal office of the Company in the State of
New Jersey, or, at the option of the Company, at the "Principal Office" of any
"Fiduciary", as those terms are defined in the Bond Indenture, in any coin or
currency of the United
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States of America which at the time of payment shall be legal tender for
the payment of public and private debts.
Notwithstanding any other provision of the Indenture or of the 2024
Series Y Bonds, payments of the principal of and the premium, if any, and
interest on the 2024 Series Y Bonds may be made directly to the registered
holder thereof without presentation or surrender thereof or the making of any
notation thereon if there shall be filed with the Trustee a Certificate of the
Company to the effect that such registered holder (or the person for whom such
registered holder is a nominee) and the Company have entered into a written
agreement that payment shall be so made; provided, however, that before such
registered holder transfers or otherwise disposes of any 2024 Series Y Bond,
such registered holder will, at its election, either endorse thereon (or on a
paper annexed thereto) the principal amount thereof redeemed and the last date
to which interest has been paid thereon or make such Bond available to the
Company at its principal office in the State of New Jersey or at the office or
agency of the Company in the Borough of Manhattan, The City of New York or at
the principal office of the Trustee for the purpose of making such endorsement
thereon.
The 2024 Series Y Bonds shall be subject to redemption at the option of
the Company or otherwise, in the manner provided in the applicable provisions
of Article Ten of the Indenture, as amended by Article III of this
Supplemental Indenture.
The 2024 Series Y Bonds shall be excluded from the benefits of, and shall
not be subject to redemption through the operation of, a Mandatory Sinking Fund
pursuant to s.11.02 of the Indenture and shall also be excluded from the
benefits of the covenants of s.9.08 and s.11.01 of the Indenture.
Notwithstanding the provisions of s.10.04 or any other provision of the
Indenture, the selection of 2024 Series Y Bonds to be redeemed shall, in case
fewer than all of the outstanding 2024 Series Y Bonds are to be redeemed, be
made by the Trustee pro rata (to the nearest multiple of Five Thousand Dollars
($5,000)) among the registered holders of the 2024 Series Y Bonds in
proportion, as nearly as practicable, to the respective unpaid principal
amounts of 2024 Series Y Bonds registered in the names of such holders, with
adjustments, to the extent practicable, to compensate for any prior redemption
not made exactly in such proportion (or otherwise as may be specified by a
written order signed by the registered holders of all outstanding 2024 Series
Y Bonds).
The definitive 2024 Series Y Bonds may be issued in the form of engraved
Bonds or Bonds printed or lithographed on steel engraved borders or Bonds in
typed form on normal bond paper. Subject to the foregoing provisions of this
Section and the provisions of s.2.11 of the Indenture, all definitive 2024
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Series Y Bonds shall be fully exchangeable for other Bonds of the same
series, of like aggregate principal amounts, and, upon surrender to the
Trustee at its principal office, or at the option of the holder, at the office
or agency of the Company in the Borough of Manhattan, City and State of New
York, or at the principal office of the Company in the State of New Jersey,
shall be exchangeable for other Bonds of the same series of a different
authorized denomination or denominations, as requested by the holder
surrendering the same. The Company will execute, and the Trustee shall
authenticate and deliver, registered Bonds without coupons, whenever the same
shall be required for any such exchange.
s.2.2. 2024 Series Y Bonds in the aggregate principal amount of Ten
Million Five Hundred Thousand Dollars ($10,500,000) may forthwith upon the
execution and delivery of this Twenty-Third Supplemental Indenture, or from
time to time thereafter, be executed by the Company and delivered to the
Trustee, and shall thereupon be authenticated and delivered by the Trustee
upon compliance by the Company with the provisions of Articles Four, Five or
Six of the Indenture, without awaiting the filing or recording of this
Twenty-Third Supplemental Indenture. No additional 2024 Series Y Bonds shall
be issued under Articles Four, Five or Six without the consent in writing of
the holders of all the outstanding 2024 Series Y Bonds.
ARTICLE III.
REDEMPTION OF THE 2024 SERIES Y BONDS
s.3.1. The following s.10.61, s.10.62, s.10.63 and s.10.64 be and they
hereby are added to Article Ten of the Indenture:
"s.10.61. The 2024 Series Y Bonds are subject to special mandatory
redemption by the Trustee, in whole, or in part as described in (b) below, at
any time prior to maturity at the redemption price equal to the principal
amount thereof plus accrued interest thereon to the redemption date, if the
following shall have occurred, as evidenced, in the case of (a) and (b) below,
by a certificate of an authorized representative of the Company:
(a) In the event the Company shall have delivered to the Trustee and
Loan Trustee an opinion of nationally recognized bond counsel to the
effect that any payment of interest on the Refunding Bonds (as defined in
the Bond Indenture) or any amount in respect of interest on the Refunding
Bonds made on or after the date specified in said opinion is includible
for federal income tax purposes in the gross income of any holder of the
Refunding Bonds under Section 103 of the Internal Revenue Code of 1986,
as amended
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(the "Code") (other than a holder who is a "substantial user" of the 1984
Project (as defined in the Loan Agreement hereinafter referred to) or a
"related person" as provided for in Section 147(a) of the Code and the
regulations applicable thereunder); or
(b) In the event of a final determination by the Internal Revenue
Service or if a final judgment is rendered by a court of competent
jurisdiction in a proceeding, which determination or judgment is not being
contested in an appropriate proceeding brought directly by the Company or
by a holder of a Refunding Bond (provided that the Company may not contest
any such determination or judgment unless the Company provides the holder
of the Refunding Bond involved in such proceeding an opinion of nationally
recognized bond counsel that such contest has a reasonable likelihood of
success), to the effect that, as a result of the failure by the Company to
perform and observe any covenant, warranty, representation or agreement in
the Loan Agreement dated as of August 15, 1994 between the Authority and
the Company (the "Loan Agreement"), the interest payable on the Refunding
Bonds is includible for federal income tax purposes in the gross income of
any holder of the Refunding Bonds under Section 103 of the Code (other than
a holder who is a "substantial user" of the 1984 Project or a "related
person" as provided for in Section 147(a) of the Code and the regulations
applicable thereunder). A determination of taxability under (a) or (b) will
result only from the inclusion of the interest paid or to be paid on any
Refunding Bond (except to a holder who is a "substantial user" or a
"related person") in the gross income of the holder for federal income tax
purposes and not from any other federal tax consequences arising with
respect to the Refunding Bonds. The Company shall promptly (i) notify the
Authority, the Trustee and the Loan Trustee in writing of such
determination of taxability, and the date (which date shall be within 180
days from the time of such determination of taxability but not less than 35
days from the date such notice is mailed to the Authority, the Trustee and
the Loan Trustee) on which the 2024 Series Y Bonds shall be redeemed
pursuant to the Indenture; and (ii) pay to the Trustee a sum sufficient,
together with other funds deposited with the Trustee and available for such
purpose, to redeem all 2024 Series Y Bonds then outstanding under this
Indenture at the redemption price equal to the principal amount thereof
plus accrued interest thereon to the redemption date. The Company shall
also, on or prior to the redemption date, pay or provide for all reasonable
or necessary fees and expenses of the Trustee and the Loan Trustee accrued
and to accrue through final payment for the 2024 Series Y Bonds in
connection with the redemption of the Refunding Bonds; provided, however,
that if the determination of taxability under (a) or (b) shall include the
determination that the
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interest on an amount which is less than all of the
Refunding Bonds is includible in the gross income of the holders thereof
and the loss of the exclusion can be cured by a partial redemption of the
Refunding Bonds, then only such corresponding amount of the 2024 Series Y
Bonds shall be redeemed. No decree or judgment by any court or action by
the Internal Revenue Service shall be considered final unless the holder of
the Refunding Bond involved in such proceeding or action (i) has given the
Company and the Loan Trustee prompt written notice of a written
determination by the Internal Revenue Service (a 30-day or 90-day letter)
that interest on the Refunding Bonds is includible in federal gross income,
and (ii) offers the Company the opportunity to control the specific
proceeding or portion thereof relating to inclusion of interest on the
Refunding Bonds in federal gross income. The Company agrees to pay all
expenses in connection with such proceeding and to indemnify such holder of
the Refunding Bond against all liability in connection therewith, and the
Company shall be deemed to have waived its right to contest if it shall not
pay any such expenses or provide such indemnification; or
(c) In the event the Trustee or the Company is notified in writing by
the Loan Trustee that (i) an "Event of Default" under Section 5.1 of the
Loan Agreement has occurred and is continuing and (ii) the Loan Trustee has
declared the principal amount of all Refunding Bonds then outstanding
immediately due and payable under Section 602 of the Bond Indenture.
"s.10.62. The 2024 Series Y Bonds shall, upon compliance with the
provisions of this Article Ten and in the manner and upon the terms therein
provided, be redeemable at the option of the Company on or after September 1,
2004 as a whole at any time, or in part from time to time, at the respective
redemption price (expressed as a percentage of the principal amount to be
redeemed) set forth for any of the periods in the following table, together with
interest accrued thereon to the date of redemption:
Redemption Period Redemption
(Both Dates Inclusi Price
-------------------- ----------
September 1, 2004
to August 31, 2............................................... 102%
September 1, 2005
to August 31, 200............................................. 101%
September 1, 2006
and thereafter................................................ 100%
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"s.10.63. The 2024 Series Y Bonds shall, upon compliance with the
provisions of this Article Ten and in the manner and upon the terms therein
provided, be redeemable at the option of the Company in whole at any time prior
to maturity, at a redemption price equal to the principal amount thereof plus
accrued interest thereon to the redemption date if, as evidenced by a
certificate of an authorized representative of the Company, as a result of any
change in the Constitution of the United States of America or of the State of
New Jersey or as a result of legislative or executive action of the United
States of America or of the State of New Jersey or any political subdivision
thereof or by final decree, judgment or order of any court after the contest
thereof by the Company, the Loan Agreement becomes void or unenforceable or
legally impossible of performance in accordance with the intent and purpose of
the parties, or unreasonable burdens or excessive liabilities are imposed upon
the Company by reason of the operation of the 1984 Project. The Company shall
provide written notice to the Authority, the Trustee and the Loan Trustee of the
date (which date shall be within one hundred eighty (180) days from the
effective date of any such constitutional amendment, legislative or executive
action, final decree, judgment or order but not less than thirty-five (35) days
from the date such notice is mailed to the Trustee and the Loan Trustee) on
which the 2024 Series Y Bonds shall be redeemed pursuant to this paragraph.
"s.10.64. In the case of the redemption of 2024 Series Y Bonds out of
moneys deposited with the Trustee pursuant to s.8.08, such 2024 Series Y Bonds
shall, upon compliance with provisions of s.10.04, and subject to the provisions
of s.2.1 of the Twenty-Third Supplemental Indenture, be redeemable at the
principal amounts thereof, together with the interest accrued to the date fixed
for redemption."
ARTICLE IV.
MISCELLANEOUS
s.4.1. The Company is lawfully seized and possessed of all the real
estate, franchises and other property described or referred to in the
Indenture (except properties released from the lien of the Indenture pursuant
to the provisions thereof) as presently mortgaged, subject to the exceptions
stated therein, such real estate, franchises and other property are free and
clear of any lien prior to the lien of the Indenture except as set forth in
the Granting Clauses of the Indenture and the Company has good right and
lawful authority to mortgage the same as provided in and by the Indenture.
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s.4.2. The Trustee assumes no duties, responsibilities or liabilities by
reason of this Supplemental Indenture other than as set forth in the Indenture,
and this Supplemental Indenture is executed and accepted by the Trustee subject
to all the terms and conditions of its acceptance of the trust under the
Indenture, as fully as if said terms and conditions were herein set forth at
length.
s.4.3. The terms used in this Supplemental Indenture shall have the
meanings assigned thereto in the Indenture. Reference by number in this
Supplemental Indenture to Articles or Sections shall be construed as referring
to Articles or Sections contained in the Indenture, unless otherwise stated.
s.4.4. As amended and modified by this Supplemental Indenture, the
Indenture is in all respects ratified and confirmed and the Indenture and this
Supplemental Indenture shall be read, taken and construed as one and the same
instrument.
s.4.5. Neither the approval by the Board of Public Utilities of the State
of New Jersey of the execution and delivery of this Supplemental Indenture nor
the approval by said Board of the issue of any Bonds under the Indenture shall
in any way be construed as the approval by said Board of any other act, matter
or thing which requires approval of said Board under the laws of the State of
New Jersey; nor shall approval by said Board of the issue of any Bonds under
the Indenture bind said Board or any other public body or authority of the
State of New Jersey having jurisdiction in the premises in any future
application for the issue of Bonds under the Indenture or otherwise.
-17-
<PAGE>
s.4.6. This Supplemental Indenture may be executed in any number of
counterparts and all said counterparts executed and delivered each as an
original shall constitute but one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
NEW JERSEY NATURAL GAS COMPANY HEREBY DECLARES THAT IT HAS READ THIS
TWENTY-THIRD SUPPLEMENTAL INDENTURE, HAS RECEIVED A COMPLETELY FILLED-IN TRUE
COPY OF IT WITHOUT CHARGE AND HAS SIGNED THIS TWENTY-THIRD SUPPLEMENTAL
INDENTURE ON THE DATE CONTAINED IN ITS ACKNOWLEDGMENT HEREOF.
IN WITNESS WHEREOF, NEW JERSEY NATURAL GAS COMPANY, party of the first
part, has caused these presents to be signed in its corporate name by its
President or a Vice President and its corporate seal to be hereunto affixed
and attested by its Secretary or an Assistant Secretary, and HARRIS TRUST AND
SAVINGS BANK, party of the second part, in evidence of its acceptance of the
trust hereby created, has caused these presents to be signed in its corporate
name by one of its Vice Presidents and its corporate seal to be hereunto
affixed and attested by its Secretary or one of its Assistant Secretaries.
NEW JERSEY NATURAL GAS COMPANY
By
-----------------------------
Timothy C. Hearne
Vice President
[Corporate Seal]
Attest:
- - ----------------------------
Oleta J. Harden
Secretary
Signed, sealed and delivered by
NEW JERSEY NATURAL GAS COMPANY
in the presence of:
- - ----------------------------
- - ----------------------------
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<PAGE>
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
-----------------------------
Name: J. Bartolini
Title: Vice President
[Corporate Seal]
Attest:
- - ----------------------------
Name: M. Onischak
Title: Assistant Secretary
Signed, sealed and delivered by
HARRIS TRUST AND SAVINGS BANK
in the presence of:
- - ----------------------------
Name: R. Johnson
- - ----------------------------
Name: M. Cody
-20-
<PAGE>
STATE OF NEW JERSEY:
SS:
COUNTY OF MONMOUTH :
BE IT REMEMBERED that on this ______ day of ______, 1994, before me, the
subscriber, an Attorney-at-Law of the State of New Jersey, and I hereby certify
that I am such an Attorney-at-Law as witness my hand, personally appeared Oleta
J. Harden to me known who, being by me duly sworn according to law, on her oath,
does depose and make proof to my satisfaction that she is the Secretary of NEW
JERSEY NATURAL GAS COMPANY, the grantor or mortgagor in the foregoing
Supplemental Indenture named; that she well knows the seal of said corporation;
that the seal affixed to said Supplemental Indenture is the corporate seal of
said corporation, and that it was so affixed in pursuance of resolutions of the
Board of Directors (including the Executive Committee of said Board) of said
corporation; that Timothy C. Hearne is the Vice President of said corporation;
that she saw said Timothy C. Hearne, as such Vice President, affix said seal
thereto, sign and deliver said Supplemental Indenture, and heard him declare
that he signed, sealed and delivered the same as the voluntary act and deed of
said corporation, in pursuance of said resolutions, and that this deponent
signed her name thereto, at the same time, as attesting witness.
----------------------------
Oleta J. Harden
Secretary
Subscribed and sworn to before me,
an Attorney-at-Law of New Jersey,
at Wall, New Jersey the day and
year aforesaid.
- - ----------------------------
Name: Attorney-at-Law of the
State of New Jersey
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<PAGE>
STATE OF ILLINOIS:
SS:
COUNTY OF COOK :
BE IT REMEMBERED that on this ______ day of ______, 1994, before me, the
subscriber, a Notary Public of the State of Illinois, personally appeared M.
Onischak to me known who, being by me duly sworn according to law, on her oath,
does depose and make proof to my satisfaction that she is an Assistant Secretary
of HARRIS TRUST AND SAVINGS BANK, the grantee or mortgagee and trustee in the
foregoing Supplemental Indenture named; that she well knows the seal of said
corporation; that the seal affixed to said Supplemental Indenture is the
corporate seal of said corporation, and that it was so affixed in pursuance of a
resolution of the Board of Directors of said corporation; that J. Bartolini is a
Vice President of said corporation; that she saw said J. Bartolini as such Vice
President affix said seal thereto, sign and deliver said Supplemental Indenture,
and heard said J. Bartolini declare that she signed, sealed and delivered the
same as the voluntary act and deed of said corporation, in pursuance of said
resolution, and that this deponent signed her name thereto, at the same time, as
attesting witness.
-----------------------------
M. Onischak
Assistant Secretary
Subscribed and sworn to before
me, a Notary Public of the State
of Illinois at Chicago, the day
and year aforesaid.
T. Muzquiz
[Seal]
-22-
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
MORTGAGE
NEW JERSEY NATURAL GAS COMPANY
To
HARRIS TRUST AND SAVINGS BANK,
As Trustee
___________________________
TWENTY-FOURTH SUPPLEMENTAL INDENTURE
Dated as of October 1, 1994
___________________________
Supplemental to Indenture of Mortgage and
Deed of Trust Dated April 1, 1952
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Prepared by: Sheri E. Bloomberg, Esq.
LeBoeuf, Lamb, Greene & MacRae
125 West 55th Street
New York, New York 10019
<PAGE>
MORTGAGE
TWENTY-FOURTH SUPPLEMENTAL INDENTURE, dated as of October 1, 1994, between
NEW JERSEY NATURAL GAS COMPANY, a corporation organized and existing under the
laws of the State of New Jersey (hereinafter called the "Company"), having its
principal office at 1415 Wyckoff Road, Wall, New Jersey, party of the first
part, and HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing
under the laws of the State of Illinois and authorized to accept and execute
trusts (hereinafter called the "Trustee"), having its principal office at
111 West Monroe Street, Chicago, Illinois, as Trustee under the Indenture of
Mortgage and Deed of Trust hereinafter mentioned, party of the second part.
WHEREAS, the Company has heretofore executed and delivered to the Trustee
its Indenture of Mortgage and Deed of Trust dated April 1, 1952 (hereinafter
sometimes called the "Original Indenture") to secure the payment of the
principal of and the interest and premium (if any) on all Bonds at any time
issued and outstanding thereunder, and to declare the terms and conditions upon
which Bonds are to be issued thereunder; and
WHEREAS, the Company thereafter executed and delivered to the Trustee its
First Supplemental Indenture dated February 1, 1958, its Second Supplemental
Indenture dated December 1, 1960, its Third Supplemental Indenture dated July
1, 1962, its Fourth Supplemental Indenture dated September 1, 1962, its Fifth
Supplemental Indenture dated December 1, 1963, its Sixth Supplemental
Indenture dated June 1, 1966, its Seventh Supplemental Indenture dated October
1, 1970, its Eighth Supplemental Indenture dated May 1, 1975, its Ninth
Supplemental Indenture dated February 1, 1977, its Tenth Supplemental
Indenture dated as of September 1, 1980, its Eleventh Supplemental Indenture
dated as of September 1, 1983, its Twelfth Supplemental Indenture dated as of
August 1, 1984, its Thirteenth Supplemental Indenture dated as of September 1,
1985, its Fourteenth Supplemental Indenture dated as of May 1, 1986, its
Fifteenth Supplemental Indenture dated as of March 1, 1987, its Sixteenth
Supplemental Indenture dated as of December 1, 1987, its Seventeenth
Supplemental Indenture dated as of June 1, 1988, its Eighteenth Supplemental
Indenture dated as of June 1, 1989, its Nineteenth Supplemental Indenture
dated as of March 1, 1991, its Twentieth Supplemental Indenture dated as of
December 1, 1992, its Twenty-First Supplemental Indenture dated as of
August 1, 1993, its Twenty-Second Supplemental Indenture dated as of October
1, 1993 and its Twenty-Third Supplemental Indenture dated as of August 15,
1994, supplementing and amending the Original Indenture; and
WHEREAS, Bonds in the aggregate principal amount of Twelve Million Five
Hundred Thousand Dollars ($12,500,000) were issued under and in accordance with
the terms of the Original Indenture, as an initial series designated "First
Mortgage Bonds,
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<PAGE>
4-1/4% Series A due 1977", herein sometimes called "1977 Series A Bonds",
which 1977 Series A Bonds have since been paid and redeemed by the Company;
and
WHEREAS, thereafter Bonds in the aggregate principal amount of Two
Million Two Hundred Fifty Thousand Dollars ($2,250,000) were issued under and
in accordance with the terms of the Original Indenture, as supplemented and
amended by the First Supplemental Indenture, as a second series designated
"First Mortgage Bonds, 5% Series B due 1983", herein sometimes called "1983
Series B Bonds", which 1983 Series B Bonds have since been paid and redeemed
by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Four
Million Dollars ($4,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
Supplemental Indenture and the Second Supplemental Indenture, as a third
series designated "First Mortgage Bonds, 5-1/8% Series C due 1985", herein
sometimes called "1985 Series C Bonds", which 1985 Series C Bonds have since
been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Five
Million Dollars ($5,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Fourth Supplemental Indentures, inclusive, as a fourth series
designated "First Mortgage Bonds, 4-7/8% Series D due 1987", herein sometimes
called "1987 Series D Bonds", which 1987 Series D Bonds have since been paid
and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Four
Million Five Hundred Thousand Dollars ($4,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Fifth Supplemental Indentures, inclusive, as
a fifth series designated "First Mortgage Bonds, 4-3/4% Series E due 1988",
herein sometimes called "1988 Series E Bonds", which 1988 Series E Bonds have
since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Seventh Supplemental Indentures, inclusive, as a sixth series
designated "First Mortgage Bonds, 9-1/4% Series F due 1995", herein sometimes
called "1995 Series F Bonds", which 1995 Series F Bonds have since been paid
and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Dollars ($10,000,000) were issued under and in accordance with the
terms of the Original Indenture, as
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<PAGE>
supplemented and amended by the First through the Eighth Supplemental
Indentures, inclusive, as a seventh series designated "First Mortgage Bonds,
10% Series G due 1987", herein sometimes called "1987 Series G Bonds", which
1987 Series G Bonds have since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten Million
Dollars ($10,000,000) were issued under and in accordance with the terms of the
Original Indenture, as supplemented and amended by the First through the Ninth
Supplemental Indentures, inclusive, as an eighth series designated "First
Mortgage Bonds, 9% Series H due 1992", herein sometimes called "1992 Series H
Bonds", which 1992 Series H Bonds have since been paid and redeemed by the
Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Nine
Million Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued
under and in accordance with the terms of the Original Indenture, as
supplemented and amended by the First through the Tenth Supplemental
Indentures, inclusive, as a ninth series designated "First Mortgage Bonds,
9-1/8% Series J due 2000", herein sometimes called "2000 Series J Bonds",
which 2000 Series J Bonds have since been paid and redeemed by the Company;
and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Three Hundred Thousand Dollars ($10,300,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Eleventh Supplemental Indentures, inclusive,
as a tenth series designated "First Mortgage Bonds, 10-3/8% Series K due
2013", herein sometimes called "2013 Series K Bonds", which 2013 Series K
Bonds have since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Five Hundred Thousand Dollars ($10,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Twelfth Supplemental Indentures, inclusive,
as an eleventh series designated "First Mortgage Bonds, 10-1/2% Series L due
2014", herein sometimes called "2014 Series L Bonds", which 2014 Series L
Bonds have since been paid and redeemed by the Company; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Twelve
Million Dollars ($12,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Thirteenth Supplemental Indentures, inclusive, as a twelfth series
designated "First Mortgage Bonds, 10.85% Series M due 2000", herein sometimes
called "2000 Series M Bonds", of which Seven
-4-
<PAGE>
Million Two Hundred Thousand Dollars ($7,200,000) in principal amount are
outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten
Million Dollars ($10,000,000) were issued under and in accordance with the
terms of the Original Indenture as supplemented and amended by the First
through the Fourteenth Supplemental Indentures, inclusive, as a thirteenth
series designated "First Mortgage Bonds, 10% Series N due 2001", herein
sometimes called "2001 Series N Bonds", of which Seven Million Dollars
($7,000,000) in principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Fifteenth Supplemental Indentures, inclusive, as a fourteenth
series designated "First Mortgage Bonds, 8.50% Series P due 2002", herein
sometimes called "2002 Series P Bonds", of which Ten Million Nine Hundred Nine
Thousand and Two Hundred Dollars ($10,909,200) in principal amount are
outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Thirteen
Million Five Hundred Thousand Dollars ($13,500,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and
amended by the First through the Sixteenth Supplemental Indentures, inclusive,
as a fifteenth series designated "First Mortgage Bonds, 9% Series Q due 2017",
herein sometimes called "2017 Series Q Bonds", of which Thirteen Million Five
Hundred Thousand Dollars ($13,500,000) in principal amount are outstanding at
the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of
Twenty-Five Million Dollars ($25,000,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Seventeenth Supplemental Indentures, inclusive, as a
sixteenth series designated "First Mortgage Bonds, 8.50% Series R due 2018",
herein sometimes called "2018 Series R Bonds", of which Twenty Five Million
Dollars ($25,000,000) in principal amount are outstanding at the date hereof;
and
WHEREAS, thereafter Bonds in the aggregate principal amount of Twenty
Million Dollars ($20,000,000) were issued under and in accordance with the
terms of the Original Indenture, as supplemented and amended by the First
through the Eighteenth Supplemental Indentures, inclusive, as a seventeenth
series designated "First Mortgage Bonds, 10.10% Series S due 2009", herein
sometimes called "2009 Series S Bonds", of which Twenty
-5-
<PAGE>
Million Dollars ($20,000,000) in principal amount are outstanding at the date
hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Nine Million
Five Hundred Forty-Five Thousand Dollars ($9,545,000) were issued under and in
accordance with the terms of the Original Indenture, as supplemented and amended
by the First through the Nineteenth Supplemental Indentures, inclusive, as an
eighteenth series designated "First Mortgage Bonds, 7.05% Series T due 2016",
herein sometimes called "2016 Series T Bonds", of which Nine Million Five
Hundred Forty-Five Thousand Dollars ($9,545,000) in principal amount are
outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Fifteen
Million Dollars ($15,000,000) were authorized, of which Fifteen Million Dollars
($15,000,000) have been issued under and in accordance with the terms of the
Original Indenture, as supplemented and amended by the First through the
Nineteenth Supplemental Indentures, inclusive, as a nineteenth series designated
"First Mortgage Bonds, 7.25% Series U due 2021", herein sometimes called "2021
Series U Bonds", of which Fifteen Million Dollars ($15,000,000) in principal
amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Twenty-Five
Million Dollars ($25,000,000) were issued under and in accordance with the terms
of the Original Indenture, as supplemented and amended by the First through the
Twentieth Supplemental Indentures, inclusive, as a twentieth series designated
"First Mortgage Bonds, 7.50% Series V due 2002", herein sometimes called "2002
Series V Bonds", of which Twenty Five Million Dollars ($25,000,000) in
principal amount are outstanding at the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten Million
Three Hundred Thousand Dollars ($10,300,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through the Twenty-First Supplemental Indentures, inclusive, as a
twenty-first series designated "First Mortgage Bonds, 5-3/8% Series W due 2023",
herein sometimes called "2023 Series W Bonds", of which Ten Million Three
Hundred Thousand Dollars ($10,300,000) in principal amount are outstanding at
the date hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Thirty
Million Dollars ($30,000,000) were issued under and in accordance with the terms
of the Original Indenture, as supplemented and amended by the First through the
Twenty-Second Supplemental Indentures, inclusive, as a twenty-second series
designated "First Mortgage Bonds, 6.27% Series X due 2008", herein sometimes
called "2008 Series X Bonds", of which Thirty
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<PAGE>
Million Dollars ($30,000,000) in principal amount are outstanding at the date
hereof; and
WHEREAS, thereafter Bonds in the aggregate principal amount of Ten Million
Five Hundred Thousand Dollars ($10,500,000) were issued under and in accordance
with the terms of the Original Indenture, as supplemented and amended by the
First through Twenty-Third Supplemental Indentures, inclusive, as a twenty-third
series designated "First Mortgage Bonds, 6.25% Series Y due 2024", herein
sometimes called "2024 Series Y Bonds", of which Ten Million Five Hundred
Thousand Dollars ($10,500,000) in principal amount are outstanding at the date
hereof; and
WHEREAS, the Original Indenture provides that, subject to certain
exceptions not presently relevant, such changes in or additions to the
provisions of the Indenture (the term "Indenture" and other terms used herein
having the meanings assigned thereto in the Original Indenture except as herein
expressly modified) may be made to add to the covenants and agreements of the
Company in the Indenture contained other covenants and agreements thereafter to
be observed by the Company; and to provide for the creation of any series of
Bonds, designating the series to be created and specifying the form and
provisions of the Bonds of such series as in the Indenture provided or
permitted; and
WHEREAS, the Indenture further provides that the Company and the Trustee
may enter into indentures supplemental to the Indenture to convey, transfer and
assign unto the Trustee and to subject to the lien of the Indenture additional
properties acquired by the Company; and
WHEREAS, the Company has duly determined to create a twenty-fourth series
of Bonds, to be known as "First Mortgage Bonds, 8.25% Series Z due 2004",
herein sometimes called "2004 Series Z Bonds", all as herein provided, and to
add to the covenants and agreements contained in the Indenture the covenants
and agreements hereinafter set forth; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under the provisions of the Indenture and
pursuant to appropriate resolutions of its Board of Directors (including the
Executive Committee thereof), has duly resolved and determined to make,
execute and deliver to the Trustee a Twenty-Fourth Supplemental Indenture in
the form hereof for the purposes herein provided; and
WHEREAS, all conditions and requirements necessary to make this
Twenty-Fourth Supplemental Indenture a valid, binding and legal instrument
have been done, performed and fulfilled and the execution and delivery hereof
have been in all respects duly authorized.
-7-
<PAGE>
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That NEW JERSEY NATURAL GAS COMPANY, by way of further assurance and in
consideration of the premises and of the acceptance by the Trustee of the
trusts hereby created and of One Dollar to it duly paid by the Trustee at or
before the ensealing and delivery of these presents, the receipt whereof is
hereby acknowledged, and in order to secure the payment of principal of and
any premium which may be due and payable on and the interest on all Bonds at
any time issued and outstanding under the Indenture according to their tenor
and effect, and the performance and observance by the Company of all the
covenants and conditions herein and therein contained, has granted, bargained,
sold, warranted, aliened, remised, released, conveyed, assigned, transferred,
mortgaged, pledged, set over and confirmed, and by these presents does grant,
bargain, sell, warrant, alien, remise, release, convey, assign, transfer,
mortgage, pledge, set over and confirm, unto the party of the second part, and
to its successors in the trust, and to it and its assigns forever, and has
granted and does hereby grant thereunto a security interest in, all of the
property, real, personal and mixed, now owned by the Company and situated in
the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic,
Somerset and Sussex in the State of New Jersey, or wherever situate (except
property specifically excepted from the lien of the Indenture by the terms of
the Indenture) and also all of the property, real, personal and mixed,
hereafter acquired by the Company wherever situate (except property
specifically excepted from the lien of the Indenture by the terms of the
Indenture), including both as to property now owned and property hereafter
acquired, without in anywise limiting or impairing the enumeration of the
same, the scope and intent of the foregoing or of any general or specific
description contained in the Indenture, the following:
I.
FRANCHISES
All and singular, the franchises, grants, permits, immunities, privileges
and rights of the Company owned and held by it at the date of the execution
hereof or hereafter acquired for the construction, maintenance, and operation
of the gas plants and systems now or hereafter subject to the lien hereof, as
well as all certificates, franchises, grants, permits, immunities, privileges,
and rights of the Company used or useful in the operation of the property now
or hereafter mortgaged hereunder, including all and singular the franchises,
grants, permits, immunities, privileges, and rights of the Company granted by
the governing authorities of any municipalities or other political
subdivisions and all renewals, extensions and
-8-
<PAGE>
modifications of said certificates, franchises, grants, permits, privileges,
and rights or any of them.
II.
GAS DISTRIBUTION SYSTEMS AND RELATED PROPERTY
All gas generating plants, gas storage plants and gas manufacturing
plants of the Company, all the buildings, erections, structures, generating
and purifying apparatus,holders, engines, boilers, benches, retorts, tanks,
instruments, appliances, apparatus, facilities, machinery, fixtures, and all
other property used or provided for use in the generation, manufacturing and
purifying of gas, together with the land on which the same are situated, and
all other lands and easements, rights-of-way, permits, privileges, and sites
forming a part of such plants or any of them or occupied, enjoyed or used in
connection therewith.
All gas distribution or gas transmission systems of the Company, all
buildings, erections, structures, generating and purifying apparatus, holders,
engines, boilers, benches, retorts, tanks, pipe lines, connections, service
pipes, meters, conduits, tools, instruments, appliances, apparatus,
facilities, machinery, fixtures, and all other property used or provided for
use in the construction, maintenance, repair or operations of such
distribution or transmission systems, together with all the certificates,
rights, privileges, rights-of-way, franchises, licenses, easements, grants,
liberties, immunities, permits of the Company, howsoever conferred or
acquired, under, over, or upon any private property or any public streets or
highways within as well as without the corporate limits of any municipal
corporation. Without limiting the generality of the foregoing, there are
expressly included the gas distribution or gas transmission systems located in
the Counties of Burlington, Middlesex, Monmouth, Morris, Ocean, Passaic,
Somerset and Sussex in the State of New Jersey, and in the following
municipalities in said State and Counties: Aberdeen Township (formerly Matawan
Township), Allenhurst Borough, City of Asbury Park, Atlantic Highlands
Borough, Avon Borough, Barnegat Light Borough, Barnegat Township (formerly
named Union Township), Bay Head Borough, Beach Haven Borough, Beachwood
Borough, Belmar Borough, Berkeley Township, Boonton Town, Boonton Township,
Bradley Beach Borough, Brick Township, Brielle Borough, Colts Neck Township,
Deal Borough, Denville Township, Dover Town, Dover Township, Eagleswood
Township, East Brunswick Township, Eatontown Borough, Englishtown Borough,
Fair Haven Borough, Farmingdale Borough, Franklin Township in Somerset County,
Freehold Borough, Freehold Township, Hanover Township, Harvey Cedars Borough,
Hazlet Township, Highlands Borough, Holmdel Township, Hopatcong Borough,
Howell Township, Interlaken Borough, Island Heights Borough, Jackson Township,
Jefferson Township, Keansburg Borough, Keyport
-9-
<PAGE>
Borough, Lacey Township, Lakehurst Borough, Lakewood Township, Lavallette
Borough, Lincoln Park Borough, Little Egg Harbor Township, Little Silver
Borough, Loch Arbour Village, Long Beach Township, Long Branch City, Manalapan
Township, Manasquan Borough, Manchester Township, Mantoloking Borough,
Marlboro Township, Matawan Borough, Middletown Township, Milltown Borough,
Mine Hill Township, Monmouth Beach Borough, Monroe Township, Montville
Township, Morris Plains Borough, Mount Arlington Borough, Mount Olive
Township, Mountain Lakes Borough, Neptune City Borough, Neptune Township,
Netcong Borough, New Brunswick City, North Brunswick Township, Ocean Township
in Monmouth County, Ocean Township in Ocean County, Ocean Gate Borough,
Oceanport Borough, Old Bridge Township (formerly named Madison Township),
Parsippany-Troy Hills Township, Pine Beach Borough, Point Pleasant Borough,
Point Pleasant Beach Borough, Randolph Township, Red Bank Borough, Rockaway
Borough, Rockaway Township, Roxbury Township, Rumson Borough, Sayreville
Borough, Sea Bright Borough, Sea Girt Borough, Seaside Heights Borough,
Seaside Park Borough, Ship Bottom Borough, Shrewsbury Borough, Shrewsbury
Township, South Belmar Borough, South Brunswick Township, South River Borough,
South Toms River Borough, Spring Lake Borough, Spring Lake Heights Borough,
Stafford Township, Surf City Borough, Tinton Falls Borough (formerly named New
Shrewsbury Borough), Tuckerton Borough, Union Beach Borough, Union Township,
Victory Gardens Borough, Wall Township, Washington Township in Burlington
County, Washington Township in Morris County, West Long Branch Borough, West
Milford Township and Wharton Borough.
III.
CONTRACTS
All of the Company's right, title and interest in and under all contracts,
licenses or leases for the purchase of gas, either in effect at the date of
execution hereof or hereafter made and any extension or renewal thereof.
TOGETHER WITH ALL AND SINGULAR the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the Trust Estate, or any
part thereof, with the reversion or reversions, remainder and remainders,
rents, issues, income and profits thereof, and all the right, title, interest
and claim whatsoever, at law or in equity, which the Company now has or which
it may hereafter acquire in and to the Trust Estate and every part and parcel
thereof.
TO HAVE AND TO HOLD the Trust Estate and all and singular the lands,
properties, estates, rights, franchises, privileges and appurtenances hereby
mortgaged, conveyed, pledged or assigned, or intended so to be, together with
all the appurtenances thereto appertaining, unto the Trustee and its successors
and assigns forever;
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<PAGE>
SUBJECT, HOWEVER, as to property hereby conveyed, to Permitted
Encumbrances;
BUT IN TRUST, NEVERTHELESS, under and subject to the terms and conditions
hereafter set forth, for the equal and proportionate use, benefit, security and
protection of each and every person and corporation who may be or become the
holders of the Bonds and coupons hereby secured, if any, without preference,
priority or distinction as to the lien or otherwise of one Bond or coupon over
or from the others by reason of priority in the issue or negotiation thereof, or
by reason of the date of maturity thereof, or otherwise (except as any sinking,
amortization, improvement, renewal or other analogous fund, established in
accordance with the provisions of the Indenture, may afford additional security
for the Bonds of any particular series and except as provided in [section]9.02
of the Indenture), and for securing the observance and performance of all the
terms, provisions and conditions of the Indenture.
THIS INDENTURE FURTHER WITNESSETH, that the Company has agreed and
covenanted, and hereby does agree and covenant, with the Trustee and its
successors and assigns and with the respective holders from time to time of
the Bonds and coupons, or any thereof, as follows:
ARTICLE I.
CERTAIN AMENDMENTS OF INDENTURE
s.1.1. The Original Indenture, as heretofore amended, be and it hereby is
further amended in the following respects, the section numbers specified below
being the sections of the Indenture in which such amendments occur:
s.1.01. The following definition be and it hereby is added immediately
after the twenty-fourth sentence of s.1.01B:
"'TWENTY-FOURTH SUPPLEMENTAL INDENTURE' shall mean the Supplemental
Indenture dated as of October 1, 1994, supplemental to the Indenture."
s.1.01. The following definition be and it hereby is added immediately
after the twenty-fifth sentence of s.1.01F:
"'2004 SERIES Z BOND' shall mean one of the First Mortgage Bonds, 8.25%
Series Z due 2004, issued hereunder."
s.2.11. The following be and it hereby is added at the end of s.2.11:
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<PAGE>
"No charge except for taxes or governmental charges shall be made against
any holder of any 2004 Series Z Bond for the exchange, transfer or
registration of transfer thereof."
s.8.08. The period at the end of the first paragraph of s.8.08 be and it
hereby is deleted and the following words and figures be and they hereby are
added thereto:
", and the 2004 Series Z Bonds shall be redeemed at the redemption price
specified in s.10.65."
s.12.1. Article Two of the Original Indenture is amended to add a new
Section 2.13, which reads in its entirety as follows:
SECTION 2.13. Securities Issuable in the Form of Global Securities. 01 If
the Company shall establish pursuant to Section 2.02 that the Securities of a
particular series are to be issued in whole or in part as one or more Global
Securities, then the Company shall execute, and the Trustee shall, in accordance
with Section 2.08 and the Company Order delivered to the Trustee thereunder,
authenticate and make available for delivery, one or more Global Securities
which (i) shall represent an aggregate principal amount equal to the aggregate
principal amount of the Outstanding Securities of such series to be represented
by one or more Global Securities, (ii) shall be registered in the name of the
Depository or its nominee, (iii) shall be delivered by the Trustee to the
Depository or pursuant to the Depository's instruction and (iv) shall bear a
legend substantially to the following effect: "Except as otherwise provided in
Section 2.13 of the Indenture, this Security may be transferred, in whole but
not in part, only to another nominee of the Depository or to a successor
Depository or to a nominee of such successor Depository."
02 Notwithstanding any provision of Section 2.10, any Global Security of a
series may be transferred, in whole but not in part, and in the manner provided
in Section 2.10, only to another nominee of the Depository for such series, or
to a successor Depository for such series selected or approved by the Company or
to a nominee of such successor Depository.
03 If at any time the Depository for Securities of a series notifies the
Company that it is unwilling or unable to continue as Depository for Securities
of such series or if at any time the Depository shall no longer be registered or
in good standing under the Securities Exchange Act of 1934, or other applicable
statute or regulation, and a successor Depository is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such condition, as the case may be, this Section 2.13 shall no longer be
applicable to the Securities of such series and the Company will execute, and
the Trustee, upon receipt of an Company Order for the
-12-
<PAGE>
authentication and delivery of individual Securities of such series, will
authenticate and make available for delivery, Securities of such series, in
authorized denominations, and in an aggregate principal amount equal to the
aggregate principal amount of the Global Security or Global Securities of such
series in exchange for such Global Security or Global Securities.
The Company may at any time determine that Securities of any series shall
no longer be represented by one or more Global Securities and that the
provisions of this Section 2.13 shall no longer apply to the Securities of such
series. In such event the Company will execute and the Trustee, upon receipt of
an Company Order for the authentication and delivery of individual Securities of
such series, will authenticate and make available for delivery Securities of
such series, in authorized denominations, and in an aggregate principal amount
equal to the aggregate principal amount of the Global Security or Global
Securities of such series in exchange for such Global Security.
If specified by the Company pursuant to Section 2.02 with respect to a
series of Securities, the Depository for such series of Securities may surrender
a Global Security for such series of Securities in exchange in whole or in part
for individual Securities of such series on such terms as are acceptable to the
Company and such Depository. Thereupon, the Company shall execute, and the
Trustee shall authenticate and make available for delivery, without service
charge,
(a) to each person specified by such Depository a new individual
Security or Securities of the same series, of any authorized denomination
as requested by such person in aggregate principal amount equal to and in
exchange for such persons' beneficial interest in the Global Security; and
(b) to such Depository a new Global Security in a denomination equal
to the difference, if any, between the principal amount of the surrendered
Global Security and the aggregate principal amount of individual Securities
delivered to Holders thereof.
In any exchange provided for in any of the preceding paragraphs of this
Section 2.13, the Company will execute and the Trustee will authenticate and
make available for delivery individual Securities in registered form in
authorized denominations.
Upon the exchange of a Global Security for individual Securities, such
Global Security shall be cancelled by the Trustee. Individual Securities issued
in exchange for a Global Security pursuant to this Section shall be registered
in such names and in such authorized denominations as the Depository for such
Global Security, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee.
-13-
<PAGE>
The Trustee shall make such Securities available for delivery to the persons in
whose names such Securities are so registered.
ARTICLE II.
2004 SERIES Z BONDS
s.2.1. There shall be a twenty-fourth series of Bonds, known as and
entitled "First Mortgage Bonds, 8.25% Series Z due 2004" or "First Mortgage
Bonds, 8.25% Series Z" (herein and in the Indenture referred to as the "2004
Series Z Bonds"), and the form thereof shall contain suitable provisions with
respect to the matters hereinafter in this Section specified and shall in other
respects be substantially as set forth in the preambles to the Original
Indenture.
The aggregate principal amount of 2004 Series Z Bonds which may be
authenticated and delivered and outstanding under the Indenture is Twenty-Five
Million Dollars ($25,000,000).
The 2004 Series Z Bonds shall bear interest at the rate of 8.25% per annum,
computed on the basis of a 360-day year consisting of twelve 30-day months, and
shall mature on October 1, 2004, subject to prior redemption as described
herein.
The 2004 Series Z Bonds shall be in the form of registered Bonds without
coupons of denominations of Five Thousand Dollars ($5,000) and any integral
multiple thereof which may be authorized by the Company, the issue of a
registered Bond without coupons in any such denomination to be conclusive
evidence of such authorization. The 2004 Series Z Bonds shall be dated as
provided in s.2.05 of the Indenture. All 2004 Series Z Bonds shall bear interest
from their respective dates, such interest to be payable, upon the terms of and
otherwise in accordance with the 2004 Series Z Bonds, semiannually on the first
day of April and October in each year, the first interest payment date being
April 1, 1995. The principal of and the premium, if any, and interest on the
2004 Series Z Bonds shall be payable at the principal office of the Trustee, in
the City of Chicago, Illinois, in any coin or currency of the United States of
America which at the time of payment shall be legal tender for the payment of
public and private debts.
Notwithstanding any other provision of the Indenture or of the 2004 Series
Z Bonds, payments of the principal of and the premium, if any, and interest on
any 2004 Series Z Bond may be made directly to the registered holder thereof
without presentation or surrender thereof or the making of any notation thereon
if there shall be filed with the Trustee a Certificate of the Company to the
effect that such registered holder (or the person for whom such registered
holder is a nominee) and the Company have entered into a written agreement that
payment shall
-14-
<PAGE>
be so made; provided, however, that before such registered holder transfers or
otherwise disposes of any 2004 Series Z Bond, such registered holder will, at
its election, either endorse thereon (or on a paper annexed thereto) the
principal amount thereof redeemed and the last date to which interest has been
paid thereon or make such Bond available to the Company at the principal office
of the Trustee for the purpose of making such endorsement thereon.
The 2004 Series Z Bonds shall not be subject to redemption at the option of
the Company, but shall be subject to mandatory redemption pursuant to s.8.08 of
the Indenture in the manner provided in the applicable provisions of Article Ten
of the Indenture, as amended by Article III of this Supplemental Indenture.
The 2004 Series Z Bonds shall be excluded from the benefits of, and shall
not be subject to redemption through the operation of, a Mandatory Sinking Fund
pursuant to s.11.02 of the Indenture and shall also be excluded from the
benefits of the covenants of s.9.08 and s.11.01 of the Indenture. Each holder of
a 2004 Series Z Bond consents and shall be deemed to have consented to the
substance of the amendment to s.9.08 of the Indenture as set forth in Article IV
of this Supplemental Indenture. Such consent shall constitute a fundamental term
of the 2004 Series Z Bonds and this Supplemental Indenture.
Notwithstanding the provisions of s.10.04 or any other provision of the
Indenture, the selection of 2004 Series Z Bonds to be redeemed shall, in case
fewer than all of the outstanding 2004 Series Z Bonds are to be redeemed, be
made by the Trustee pro rata (to the nearest multiple of Five Thousand Dollars
($5,000)) among the registered holders of the 2004 Series Z Bonds in proportion,
as nearly as practicable, to the respective unpaid principal amounts of 2004
Series Z Bonds registered in the names of such holders, with adjustments, to the
extent practicable, to compensate for any prior redemption not made exactly in
such proportion (or otherwise as may be specified by a written order signed by
the registered holders of all outstanding 2004 Series Z Bonds).
The definitive 2004 Series Z Bonds may be issued in the form of engraved
Bonds or Bonds printed or lithographed on steel engraved borders or Bonds in
typed form on normal bond paper. Subject to the foregoing provisions of this
Section and the provisions of s.2.11 of the Indenture, all definitive 2004
Series Z Bonds shall be fully exchangeable for other Bonds of the same series,
of like aggregate principal amounts, and, upon surrender to the Trustee at its
principal office, shall be exchangeable for other Bonds of the same series of a
different authorized denomination or denominations, as requested by the holder
surrendering the same. The Company will execute, and the Trustee
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<PAGE>
shall authenticate and deliver, registered Bonds without coupons, whenever the
same shall be required for any such exchange.
s.2.2. 2004 Series Z Bonds in the aggregate principal amount of Twenty-Five
Million Dollars ($25,000,000) may forthwith upon the execution and delivery of
this Supplemental Indenture, or from time to time thereafter, be executed by the
Company and delivered to the Trustee, and shall thereupon be authenticated and
delivered by the Trustee upon compliance by the Company with the provisions of
Articles Four, Five or Six of the Indenture, without awaiting the filing or
recording of this Supplemental Indenture. No additional 2004 Series Z Bonds
shall be issued under Article Four, Five or Six without the consent in writing
of the holders of all the outstanding 2004 Series Z Bonds.
ARTICLE III.
REDEMPTION OF THE 2004 SERIES Z BONDS
s.3.1. The following s.10.65 be and it hereby is added to Article Ten of
the Indenture:
"s.10.65. In the case of the redemption of 2004 Series Z Bonds out of
moneys deposited with the Trustee pursuant to s.8.08, such 2004 Series Z Bonds
shall, upon compliance with provisions of s.10.04, and subject to the provisions
of s.2.1 of the Twenty-Fourth Supplemental Indenture, be redeemable at the
principal amounts thereof, together with interest accrued thereon to the date
fixed for redemption, without premium."
ARTICLE IV.
CONSENT TO AMENDMENT
s.4.1. Each holder of a 2004 Series Z Bond, by holding such 2004 Series Z
Bond, and as a fundamental term of the 2004 Series Z Bonds and this Supplemental
Indenture, consents and shall be deemed to have consented to the substance of
the following amendment to s.9.08 of the Indenture (the 2004 Series Z Bonds
being excluded from the benefit of the covenants in said s.9.08 by operation of
s.2.1 of this Supplemental Indenture):
"Section 9.08 of the Indenture including all indentures supplemental
thereto (in particular, but without limitation, the Thirteenth, Fourteenth,
Fifteenth and Eighteenth Supplemental Indentures) is hereby amended by
deleting subparagraph (1) thereof and inserting in its stead the following:
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<PAGE>
(1) The Company may make Stock Payments if and to the extent that, after
giving effect thereto, the aggregate amount of all Stock Payments for the
period from October 1, 1993 to and including the date of the Stock Payment
in question will not exceed the sum of (or difference between, in the event
of a loss) $50,000,000 and the Net Earnings (or loss) of the Company for
such period, taken as one accounting period."
The foregoing consent shall be irrevocable, shall be continuing and in
effect at all times and shall be deemed to be "concurrent" (within the meaning
of s.13.01 of the Indenture) with the writings relating to the foregoing
amendment by or on behalf of all other Bondholders. Further, the foregoing
consent shall survive any transfer, exchange or substitution of any 2004 Series
Z Bond and shall bind all holders thereof and such holders' transferees,
successors, assigns, heirs and legatees. Each holder of a 2004 Series Z Bond
(and such holder's transferees, successors, assigns, heirs and legatees), by
holding such 2004 Series Z Bond, authorizes and shall be deemed to have
authorized the Trustee to sign, in the name of all holders of the 2004 Series Z
Bonds, any consent or authorization deemed necessary or desirable in the
discretion of the Trustee to evidence the foregoing consent (it being understood
and agreed, however, that this s.4.1 shall constitute, for all purposes of the
Indenture, the written consent by the holders of the 2004 Series Z Bonds to the
foregoing amendment without further act or instrument).
ARTICLE V.
MISCELLANEOUS
s.5.1. The Company is lawfully seized and possessed of all the real estate,
franchises and other property described or referred to in the Indenture (except
properties released from the lien of the Indenture pursuant to the provisions
thereof) as presently mortgaged, subject to the exceptions stated therein, such
real estate, franchises and other property are free and clear of any lien prior
to the lien of the Indenture except as set forth in the Granting Clauses of the
Indenture and the Company has good right and lawful authority to mortgage the
same as provided in and by the Indenture.
s.5.2. The Trustee assumes no duties, responsibilities or liabilities by
reason of this Supplemental Indenture other than as set forth in the Indenture,
and this Supplemental Indenture is executed and accepted by the Trustee subject
to all the terms and conditions of its acceptance of the trust under the
Indenture, as fully as if said terms and conditions were herein set forth at
length.
-17-
<PAGE>
s.5.3. The terms used in this Supplemental Indenture shall have the
meanings assigned thereto in the Indenture. Reference by number in this
Supplemental Indenture to Articles or Sections shall be construed as referring
to Articles or Sections contained in the Indenture, unless otherwise stated.
s.5.4. As amended and modified by this Supplemental Indenture, the
Indenture is in all respects ratified and confirmed and the Indenture and this
Supplemental Indenture shall be read, taken and construed as one and the same
instrument.
s.5.5. Neither the approval by the Board of Public Utilities of the State
of New Jersey of the execution and delivery of this Supplemental Indenture nor
the approval by said Board of the issue of any Bonds under the Indenture shall
in any way be construed as the approval by said Board of any other act, matter
or thing which requires approval of said Board under the laws of the State of
New Jersey; nor shall approval by said Board of the issue of any Bonds under the
Indenture bind said Board or any other public body or authority of the State of
New Jersey having jurisdiction in the premises in any future application for the
issue of Bonds under the Indenture or otherwise.
s.5.6. This Supplemental Indenture may be executed in any number of
counterparts and all said counterparts executed and delivered each as an
original shall constitute but one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-18-
<PAGE>
NEW JERSEY NATURAL GAS COMPANY HEREBY DECLARES THAT IT HAS READ THIS
TWENTY-FOURTH SUPPLEMENTAL INDENTURE, HAS RECEIVED A COMPLETELY FILLED-IN TRUE
COPY OF IT WITHOUT CHARGE AND HAS SIGNED THIS TWENTY-FOURTH SUPPLEMENTAL
INDENTURE ON THE DATE CONTAINED IN ITS ACKNOWLEDGMENT HEREOF.
IN WITNESS WHEREOF, NEW JERSEY NATURAL GAS COMPANY, party of the first
part, has caused these presents to be signed in its corporate name by its
President or a Vice President and its corporate seal to be hereunto affixed and
attested by its Secretary or an Assistant Secretary, and HARRIS TRUST AND
SAVINGS BANK, party of the second part, in evidence of its acceptance of the
trust hereby created, has caused these presents to be signed in its corporate
name by one of its Vice Presidents and its corporate seal to be hereunto affixed
and attested by its Secretary or one of its Assistant Secretaries.
NEW JERSEY NATURAL GAS COMPANY
By___________________________________
Name: F.X. Colford
Title: Senior Vice President
[Corporate Seal]
Attest:
- - ----------------------------------
Oleta J. Harden
Secretary
Signed, sealed and delivered by
NEW JERSEY NATURAL GAS COMPANY
in the presence of:
- - ----------------------------------
Name:
- - ----------------------------------
Name:
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<PAGE>
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By____________________________
Name: J. Bartolini
Title: Vice President
[Corporate Seal]
Attest:
- - ----------------------------------
Name:
Title:
Signed, sealed and delivered by
HARRIS TRUST AND SAVINGS BANK
in the presence of:
- - ----------------------------------
Name:
- - ----------------------------------
Name:
-20-
<PAGE>
STATE OF NEW JERSEY:
SS:
COUNTY OF MONMOUTH :
BE IT REMEMBERED that on this ___ day of October 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, and I hereby certify
that I am such a Notary Public as witness my hand, personally appeared Oleta J.
Harden to me known who, being by me duly sworn according to law, on her oath,
does depose and make proof to my satisfaction that she is the Secretary of NEW
JERSEY NATURAL GAS COMPANY, the grantor or mortgagor in the foregoing
Supplemental Indenture named; that she well knows the seal of said corporation;
that the seal affixed to said Supplemental Indenture is the corporate seal of
said corporation, and that it was so affixed in pursuance of resolutions of the
Board of Directors (including the Executive Committee of said Board) of said
corporation; that F.X. Colford is the Senior Vice President of said corporation;
that she saw said F.X. Colford, as such Senior Vice President, affix said seal
thereto, sign and deliver said Supplemental Indenture, and heard him declare
that he signed, sealed and delivered the same as the voluntary act and deed of
said corporation, in pursuance of said resolutions, and that this deponent
signed her name thereto, at the same time, as attesting witness.
--------------------------
Oleta J. Harden
Secretary
Subscribed and sworn to before me,
a Notary Public of the State of
New Jersey, at Wall, New Jersey,
the day and year aforesaid.
- - ------------------------------------
Name: Timothy C. Hearne
Notary Public of the
State of New Jersey
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<PAGE>
STATE OF ILLINOIS:
SS:
COUNTY OF COOK :
BE IT REMEMBERED that on this ____ day of October 1994, before me, the
subscriber, a Notary Public of the State of Illinois, personally appeared M.
Onischak to me known who, being by me duly sworn according to law, on her oath,
does depose and make proof to my satisfaction that she is an Assistant Secretary
of HARRIS TRUST AND SAVINGS BANK, the grantee or mortgagee and trustee in the
foregoing Supplemental Indenture named; that she well knows the seal of said
corporation; that the seal affixed to said Supplemental Indenture is the
corporate seal of said corporation, and that it was so affixed in pursuance of a
resolution of the Board of Directors of said corporation; that J. Bartolini is a
Vice President of said corporation; that she saw said J. Bartolini as such Vice
President affix said seal thereto, sign and deliver said Supplemental Indenture,
and heard said J. Bartolini declare that she signed, sealed and delivered the
same as the voluntary act and deed of said corporation, in pursuance of said
resolution, and that this deponent signed her name thereto, at the same time, as
attesting witness.
---------------------------
Name: M. Onischak
Title: Assistant Secretary
Subscribed and sworn to before
me a Notary Public of the State
of Illinois at Chicago, the day
and year aforesaid.
- - --------------------------------------
Notary Public of the State of Illinois
[SEAL]
-22-
<TABLE>
<CAPTION>
Financial Highlights New Jersey Resources Corporation
(Thousands, except per share data)
Fiscal Years Ended September 30, 1994 1993 (A) 1992 (A)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Results
Operating Revenues ................................................................ $498,749 $454,746 $400,738
Operating Income .................................................................. $ 53,931 $ 48,900 $ 45,544
Income Before Cumulative Effect of Change in
Accounting for Income Taxes ..................................................... $ 32,274 $ 27,162 $ 22,247
Net Income ........................................................................ $ 32,995 $ 27,162 $ 22,247
Return on Average Equity .......................................................... 13.2% 11.7% 12.3%
-------- -------- --------
Common Stock Information
Earnings per Share Before Cumulative Effect of Change
in Accounting for Income Taxes .................................................. $ 1.89 $ 1.64 $ 1.55
Earnings per Share ................................................................ $ 1.93 $ 1.64 $ 1.55
Annual Dividend Rate at Year End .................................................. $ 1.52 $ 1.52 $ 1.52
Market Price at Year End .......................................................... $ 21.13 $ 29.13 $ 22.38
Book Value per Share .............................................................. $ 14.46 $ 13.69 $ 13.18
Shares Outstanding at Year End .................................................... 17,303 16,820 16,286
Average Shares Outstanding ........................................................ 17,096 16,607 14,334
-------- -------- --------
Utility Operating Data
Customers at Year End ............................................................. 340 330 321
Firm Sales (billion cubic feet) ................................................... 50.5 47.4 45.2
Total Throughput (billion cubic feet) ............................................. 105.4 75.8 64.0
Gross Margin ...................................................................... $152,323 $136,458 $128,870
-------- -------- --------
</TABLE>
(A) Restated to reflect the change in accounting principle by NJR Energy for
its oil and gas operations to the successful efforts method from the full
cost method.
[Bar Graphs Here]
1
<PAGE>
[Bar Graphs Here]
21
<PAGE>
<TABLE>
<CAPTION>
Consolidated Financial Statistics New Jersey Resources Corporation
(Thousands, except per share data)
Income Statements 1994 1993(A) 1992(A) 1991(A) 1990(A) 1989(A)
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues ..................................... $498,749 $454,746 $400,738 $335,593 $324,773 $329,881
-------- -------- -------- -------- -------- --------
Operating Expenses
Gas purchases ........................................ 279,529 252,041 205,920 168,042 165,185 178,172
Operation and maintenance ............................ 69,057 61,707 59,719 59,378 56,559 49,285
Depreciation and amortization ........................ 27,595 25,405 23,918 23,460 20,713 16,085
Exploratory dry hole costs ........................... 29 2,017 2,184 2,689 3,513 4,374
Gross receipts tax, etc. ............................. 53,757 52,719 52,612 45,489 44,273 43,743
Federal income taxes ................................. 14,851 11,957 10,841 4,295 4,379 6,422
-------- ------- -------- -------- -------- --------
Total operating expenses ............................... 444,818 405,846 355,194 303,353 294,622 298,081
-------- ------- -------- -------- -------- --------
Operating Income ....................................... 53,931 48,900 45,544 32,240 30,151 31,800
Other Income, Net ...................................... 2,208 713 574 (316) 43 392
Interest Charges, Net .................................. 22,203 20,429 21,407 22,518 20,174 17,728
--------- -------- -------- -------- -------- --------
Income Before Preferred Stock Dividends ................ 33,936 29,184 24,711 9,406 10,020 14,464
Preferred stock dividends .............................. 1,662 2,022 2,464 1,012 948 962
--------- -------- -------- -------- -------- --------
Income Before Cumulative Effect of Change in Accounting
for Income Taxes ..................................... 32,274 27,162 22,247 8,394 9,072 13,502
Cumulative effect of change in accounting
for income taxes ..................................... 721 - - - - -
-------- -------- -------- -------- -------- --------
Net Income ............................................. $ 32,995 $ 27,162 $ 22,247 $ 8,394 $ 9,072 $ 13,502
======== ======== ======== ======== ======== ========
Common Stock Data
Earnings per share before cumulative effect of
change in accounting for income taxes ............... $ 1.89 $ 1.64 $ 1.55 $ .61 $ .68 $ 1.19
Earnings per share ................................... $ 1.93 $ 1.64 $ 1.55 $ .61 $ .68 $ 1.19
Dividends declared per share ......................... $ 1.52 $ 1.52 $ 1.52 $ 1.50 $ 1.44 $ 1.36
Payout ratio ......................................... 79% 93% 98% 246% 212% 114%
Market price at year end ............................. $ 21.13 $ 29.13 $ 22.38 $ 19.75 $ 18.00 $ 19.50
Dividend yield at year end ........................... 7.2% 5.2% 6.8% 7.7% 8.2% 7.2%
Price-earnings ratio ................................. 11 18 14 32 27 16
Book value per share ................................. $ 14.46 $ 13.69 $ 13.18 $ 11.80 $ 12.41 $ 12.95
Market-to-book ratio at year end ..................... 1.5 2.1 1.7 1.7 1.5 1.5
Shares outstanding at year end (thousands) ........... 17,303 16,820 16,286 13,965 13,520 13,181
Average shares outstanding (thousands) ............... 17,096 16,607 14,334 13,750 13,378 11,343
Number of shareholder accounts ....................... 19,218 19,319 18,521 17,585 16,175 15,759
======== ======== ======== ======== ======== ========
Return on Average Equity ............................. 13.2% 11.7% 12.3% 4.9% 5.2% 9.4%
======== ======== ======== ======== ======== ========
Capitalization
Common stock equity .................................. $250,163 $230,313 $214,703 $164,731 $167,723 $170,649
Redeemable preferred stock ........................... 22,070 22,340 32,610 32,880 13,150 13,420
Long-term debt ....................................... 323,590 310,996 251,955 262,737 227,782 208,655
-------- -------- -------- -------- -------- --------
Total .................................................. $595,823 $563,649 $499,268 $460,348 $408,655 $392,724
======== ======== ======== ======== ======== ========
Property, Plant and Equipment
Utility plant ........................................ $691,757 $637,580 $588,908 $552,519 $514,457 $457,812
Accumulated depreciation ............................. (168,299) (155,618) (141,364) (127,047) (114,153) (103,005)
Real estate properties ............................... 104,309 102,369 99,522 96,832 90,979 81,261
Accumulated depreciation ............................. (12,602) (10,660) (8,758) (7,577) (5,847) (4,236)
Oil and gas properties ............................... 63,224 64,576 57,398 53,423 48,097 32,898
Accumulated amortization ............................. (38,012) (32,597) (28,478) (24,241) (18,863) (14,372)
-------- -------- -------- -------- -------- --------
Property, plant and equipment, net ..................... $640,377 $605,650 $567,228 $543,909 $514,670 $450,358
======== ======== ======== ======== ======== ========
Capital Expenditures
Utility plant ........................................ $ 54,506 $ 53,420 $ 37,864 $ 43,014 $ 54,776 $ 57,869
Real estate properties ............................... 2,619 2,869 4,397 6,321 9,727 19,782
Oil and gas properties ............................... 1,517 9,216 5,333 8,016 18,712 7,162
-------- -------- -------- -------- --------- --------
Total .................................................. $ 58,642 $ 65,505 $ 47,594 $ 57,351 $ 83,215 $ 84,813
======== ======== ======== ======== ========= ========
Total Assets ........................................... $797,347 $738,662 $668,605 $651,861 $603,857 $528,382
======== ======== ======== ======== ========= ========
(A) Restated to reflect the change in accounting principle by NJR Energy for
its oil and gas operations to the successful efforts method from the full
cost method.
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Operating Statistics New Jersey Natural Gas Company
1994 1993 1992 1991 1990 1989
- - --------------------------------------------------------------------------------------------------------------------------------
Operating Revenues (Thousands)
<S> <C> <C> <C> <C> <C> <C>
Residential .......................................... $ 308,196 $ 284,638 $ 263,108 $220,752 $ 221,575 $ 222,548
Commercial, industrial and other ..................... 87,958 81,285 73,809 65,048 62,027 60,002
Firm transportation .................................. 255 - - - - -
--------- --------- --------- -------- --------- ---------
Total firm ............................................. 396,409 365,923 336,917 285,800 283,602 282,550
Interruptible and agency ............................... 9,431 7,817 11,671 14,539 16,727 15,788
JCP&L and PSE&G ........................................ 6,214 13,298 7,799 15,709 9,544 19,336
--------- --------- --------- -------- --------- ---------
Total system ........................................... 412,054 387,038 356,387 316,048 309,873 317,674
Off system ............................................. 68,267 49,549 26,716 1,744 1,727 1,222
--------- --------- --------- -------- --------- ---------
Total .................................................. $ 480,321 $ 436,587 $ 383,103 $317,792 $ 311,600 $ 318,896
========= ========= ========= ======== ========= =========
Throughput (Thousands of Therms)
Residential .......................................... 385,144 363,440 347,859 297,106 336,245 331,245
Commercial, industrial and other ..................... 119,343 110,468 104,175 90,047 96,224 91,891
Firm transportation .................................. 868 - - - - -
--------- --------- --------- -------- --------- ---------
Total firm ............................................. 505,355 473,908 452,034 387,153 432,469 423,136
Interruptible and agency ............................... 58,698 50,146 51,079 56,734 52,694 51,034
JCP&L and PSE&G ........................................ 22,985 25,410 18,232 65,169 36,589 69,217
--------- --------- --------- -------- --------- ---------
Total system throughput ................................ 587,038 549,464 521,345 509,056 521,752 543,387
Off system and capacity release ........................ 467,275 208,369 118,198 3,880 4,250 6,280
--------- --------- --------- -------- --------- ---------
Total throughput ....................................... 1,054,313 757,833 639,543 512,936 526,002 549,667
========= ========= ========= ======== ========= =========
Customers at Year End
Residential .......................................... 318,003 309,215 300,327 292,551 286,862 281,244
Commercial, industrial and other ..................... 21,938 21,112 20,307 19,605 19,287 18,266
Firm transportation .................................. 27 - - - - -
--------- --------- --------- -------- --------- ---------
Total firm ............................................. 339,968 330,327 320,634 312,156 306,149 299,510
Interruptible and agency ............................... 35 33 33 39 36 32
JCP&L and PSE&G ........................................ 2 3 3 2 2 1
Off system ............................................. 9 4 4 1 1 1
--------- --------- --------- -------- --------- ---------
Total .................................................. 340,014 330,367 320,674 312,198 306,188 299,544
========= ========= ========= ======== ========= =========
Interest Coverage Ratio ................................ 3.63 3.50 3.23 2.08 2.33 2.85
========= ========= ========= ======== ========= =========
Average Therm Use per Customer
Residential .......................................... 1,211 1,175 1,158 1,016 1,172 1,178
Commercial ........................................... 5,287 5,013 4,899 4,245 4,663 4,691
========= ========= ========= ======== ========= =========
Degree Days ............................................ 5,064 5,048 4,965 4,208 4,937 5,107
Weather as a Percent of Normal ......................... 102% 103% 97% 79% 92% 95%
Maximum Day System Sendout (Thousands of therms) ....... 5,320 4,203 3,971 3,707 4,109 3,639
Number of Employees .................................... 814 796 771 774 766 774
========= ========= ========= ======== ========= =========
</TABLE>
Two-Year Stock History
The range of high and low sales prices as reported in The Wall Street Journal
and dividends paid per share were as follows:
<TABLE>
<CAPTION>
1994 1993 Dividends Paid
--------------------- ------------------- --------------------
Fiscal Quarter High Low High Low 1994 1993
- - --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
First .................................................. $ 29 1/4 $ 24 $ 25 1/8 $ 22 $ .38 $ .38
Second ................................................. 27 3/8 24 1/4 28 1/8 24 .38 .38
Third .................................................. 25 21 5/8 28 1/8 25 1/8 .38 .38
Fourth ................................................. 22 7/8 20 5/8 29 1/2 26 3/8 .38 .38
========= ========= ========= ======== ========= =========
</TABLE>
23
<PAGE>
Management's Discussion and Analysis of Financial
Conditions and Results of Operations New Jersey Resources Corporation
Results of Consolidated Operations
Consolidated Net income increased to a record $33 million during 1994,
compared with $27.2 million in 1993 and $22.2 million in 1992. The earnings
increase in each year was primarily the result of the impact of customer growth,
base rate increases, higher margins from non-core markets and colder weather on
New Jersey Natural Gas Company (NJNG), the principal subsidiary of New Jersey
Resources Corporation (the Company). Fiscal 1994 results include earnings of
$2.1 million, or $.13 per share, associated with the termination of a power
purchase agreement, non-cash earnings of $721,000, or $.04 per share, due to the
adoption of Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" (SFAS 109) and an after-tax charge of $650,000, or $.04 per share,
due to a write-off of a pipeline investment. Prior years' results have been
restated to reflect a change in accounting principle by NJR Energy Corporation
(NJR Energy) for its oil and gas operations to the successful efforts method
from the full cost method.
Earnings per share increased to $1.93 during 1994, compared with $1.64 in
1993 and $1.55 in 1992, reflecting the increased net income, which more than
offset a 3% increase in the average number of shares outstanding in 1994. The
Company's return on average equity was 13.2% in 1994, compared with 11.7% in
1993 and 12.3% in 1992.
Dividends declared per share were $1.52 in 1994, 1993 and 1992. The earnings
improvement resulted in the payout ratio being lowered to 79% in 1994, compared
with 93% in 1993 and 98% in 1992.
Utility Operations As a result of Federal Energy Regulatory Commission Order No.
636 (Order 636), which is designed to increase competition in the natural gas
industry, interstate pipeline companies were required to unbundle their sales
and transportation services. The transition to a more deregulated interstate
pipeline market has provided NJNG the opportunity to purchase and manage its
own, specifically tailored gas supply portfolio, and to resell its pipeline
capacity to other customers during off-peak periods. The recovery of costs
incurred by the interstate pipeline companies in connection with implementing
Order 636, which have been passed through to NJNG, is discussed in Note 7 to the
Consolidated Financial Statements.
NJNG's financial results are summarized as follows:
(Thousands) 1994 1993 1992
- - ----------------------------------------------------------------
Gross margin
Residential and commercial $ 147,028 $ 133,773 $ 126,840
Interruptible and agency 1,844 932 441
Off system and capacity
release 3,451 1,753 1,589
---------- ---------- ----------
Total gross margin $ 152,323 $ 136,458 $ 128,870
========== ========== ==========
Operating income before
income taxes $ 65,663 $ 56,773 $ 51,384
========== ========== ==========
Net income $ 32,142 $ 27,551 $ 23,199
========== ========== ==========
Gross Margin Gross margin, defined as gas revenues less gas costs and gross
receipts and franchise taxes (GRFT), provides a more meaningful basis for
evaluating utility operations since gas costs and GRFT are passed through to
customers and, therefore, have no effect on earnings. Gas costs are charged to
operating expenses on the basis of therm sales at the base and Levelized Gas
Adjustment (LGA) cost rates included in NJNG's tariff. The LGA clause allows
NJNG to recover gas costs that exceed the level reflected in its base rates.
GRFT are also calculated on a per-therm basis and exclude sales to other
utilities.
Residential and Commercial Through fiscal 1992, gross margin from firm (i.e.,
residential and commercial) customers was weathersensitive. In NJNG's June 1992
base rate order, the New Jersey Board of Public Utilities (the BPU) approved a
weather-normalization clause on a two-year experimental basis effective October
1, 1992. This clause provides for a revenue adjustment if the weather varies by
more than one-half of one percent from normal, or 10-year average, weather. The
accumulated adjustment from one heating season (i.e., October-April) is billed
or credited to customers in the subsequent heating season. In October 1994, NJNG
received approval from the BPU to continue the clause on an interim basis
pending a final BPU order.
The increases in gross margin of $13.3 million, or 10%, in 1994 and $6.9
million, or 5%, in 1993 from sales to firm customers were due primarily to the
impact of customer growth, base rate increases and colder weather.
Therm sales to firm customers increased by 6% to 504 million in 1994,
compared with 474 million in 1993 and 452 million in 1992. The increase in therm
sales was due to continued customer growth and the weather, which was slightly
colder in 1994 and 4% colder in 1993, compared with the respective prior year.
NJNG added 11,222 and 9,306 new customers in 1994 and 1993, and converted the
heating systems of another 798 and 1,305 existing customers in each year,
respectively. The growth in 1994 represents an annual increase of approximately
21 million therms, or 4%, in sales to firm customers. NJNG expects to maintain a
customer growth rate of more than 3% in the future.
NJNG received base rate increases of $7.5 million in January 1994 and $2.2
million in June 1992, which increased gross margin by $5.5 million in 1994 and
by $2.2 million in 1993.
In 1995 and 1996, NJNG expects to add 11,500 and 11,700 new customers,
respectively, and convert to natural gas heat an additional 1,000 existing
customers each year. This would result in a sales increase of approximately 18
million therms per year, assuming normal weather and average use, and would
increase gross margin under present rates by approximately $5.3 million per
year. Future therm sales will continue to be affected by weather, the economic
conditions in NJNG's service territory, con-
24
<PAGE>
New Jersey Resources Corporation
version activity and other marketing efforts, as well as the conservation
efforts of NJNG's customers.
The weather in 1994 was 2% colder than normal which, due to the
aforementioned weather-normalization clause, resulted in $2.7 million of gross
margin being deferred for credit to customers in fiscal 1995. In 1993, $1.5
million of gross margin was deferred and credited to customers in 1994.
If the weather had been normal in 1992, net income would have been higher by
approximately $3 million, or $.21 cents per share.
Firm Transportation As of September 30, 1994, NJNG provided firm transportation
service to 27 customers. Effective November 1, 1994, the firm transportation
tariffs were revised and expanded to enable additional commercial and industrial
customers to choose this service. NJNG's gross margin will not be negatively
impacted by customers choosing to utilize the firm transportation service and
purchasing their gas from another supplier, as NJNG's tariffs are designed such
that no profit is earned on the commodity portion of sales to firm customers.
Interruptible and Agency NJNG services 35 customers through interruptible sales
and/or transportation tariffs and serves certain of these customers through
agency sales agreements. Sales made under the interruptible sales tariff are
priced on market-sensitive oil and gas parity rates. Interruptible therm sales
were 42 million in 1994, compared with 38 million in 1993 and 47 million in
1992. In addition, NJNG transported 38 million therms in 1994, 37 million in
1993 and 22 million in 1992 for its interruptible customers. Margin from agency
sales agreements totalled $1.4 million in 1994 and $790,000 in 1993.
Although therms sold and transported to interruptible customers represented
8% of total therm throughput in 1994 and 10% in 1993, they accounted for less
than 1% of the total gross margin in each year due primarily to the regulated
margin-sharing formulas that govern these sales. Under these formulas, NJNG
retained none of the gross margin from transportation sales through April 1992,
and 5% thereafter, and 10% of the gross margin from the interruptible sales,
with the balance credited to residential and commercial customers through the
LGA clause.
Off System and Capacity Release In order to reduce the overall cost of its
gas supply commitments, NJNG has entered into contracts to sell gas to customers
who are outside of its franchise territory. These sales enable NJNG to spread
its fixed demand costs, which are charged by pipelines to access their supplies
year-round, over a larger and more diverse customer base. NJNG also participates
in the capacity release market on the interstate pipeline network when the
capacity is not needed for its own system requirements. Effective January 1994,
NJNG retains 20% of the gross margin from off-system sales and capacity release.
NJNG's off-system sales totaled 260 million therms and generated $2.2 million of
gross margin in 1994, compared with 208 million therms and $1.8 million of gross
margin in 1993 and 118 million therms and $1.6 million of gross margin in 1992.
Off-system sales improved each year due primarily to increased marketing
efforts, while the margin per therm declined in 1994 due to a change in the
regulated margin-sharing formula and increased competition. The capacity release
program generated $1.2 million of gross margin in 1994.
Operating Income Before Income Taxes Operating income before income taxes
increased by 16% to $66 million in 1994 and by 10% to $56.8 million in 1993 as
the increased gross margin more than offset higher operation and maintenance
expenses associated primarily with the impact of growth on operations.
Summary The 17% increase in NJNG's earnings in 1994 reflected a base rate
increase, continued customer growth and higher margins from non-core markets.
NJNG realizes that continuous base rate increases cannot be relied upon for
future earnings growth. NJNG expects to continue to generate incremental margins
from growth in its core markets and aggressively pursue new markets to diversify
and improve its demand profile while continuing its cost containment programs,
as it remains committed to providing a proper return to its investors. Also, the
continuation of the weather-normalization clause will reduce the variability of
both customer bills and NJNG's earnings due to weather fluctuations.
Non-Utility Operations
Paradigm Resources Corporation (PRC) In 1992, PRC was formed as a sub-holding
company to better segregate the Company's utility and non-utility operations.
PRC includes the accounts of Commercial Realty & Resources Corp. (CR&R), NJR
Energy and Paradigm Power, Inc. (PPI).
The financial results of PRC are summarized as follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------
Revenues $ 21,906 $ 21,572 $ 21,590
Operating income before
income taxes $ 2,758 $ 3,850 $ 4,595
Income before SFAS 109 $ 104 $ (806) $ (864)
Net income $ 843 $ (806) $ (864)
========= ========= =========
Non-utility income before SFAS 109 improved to $104,000 in 1994 compared with a
loss of $806,000 in 1993 due primarily to the positive impact of the termination
of a power purchase agreement on the results of PPI.
CR&R The financial results of CR&R are summarized as follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------
Revenues $ 12,466 $ 12,554 $ 12,530
Operating income before
income taxes $ 5,426 $ 5,976 $ 6,187
Income before SFAS 109 $ 349 $ 464 $ 1,105
Net income $ 1,009 $ 464 $ 1,105
========= ========= =========
25
<PAGE>
New Jersey Resources Corporation
CR&R's earnings before SFAS 109 decreased by $115,000 in 1994 as expenses
associated with evaluating CR&R's strategic alternatives more than offset lower
interest costs realized from re-financing activity.
CR&R's 1992 results include an after-tax gain of $467,000 related to the sale
of a construction and lease contract.
CR&R's completed space totaled 914,200 square feet in each of the past three
years. The occupancy rate of CR&R's total portfolio at year end totaled 97% in
1994 and 1993 compared with 93% in 1992. In addition, the occupied space at
September 30, 1994 was supported by leases having a remaining average term of
six years.
CR&R believes that its high occupancy rate and current base of cash flow will
enable it to meet its debt service requirements as it manages its existing
properties and considers various alternatives for its real estate assets. CR&R's
future earnings will be negatively impacted by carrying costs associated with
its undeveloped land inventory. CR&R's ability to maintain its current earnings
and cash flow levels is dependent on several factors, including changes in
interest rates and maintaining occupancy and rental rates as its portfolio of
leases is scheduled to roll-over.
NJR Energy The financial results of NJR Energy are summarized as follows:
(Thousands) 1994 1993 1992
- - -------------------------------------------------------------------------------
Revenues $ 9,440 $ 9,018 $ 9,060
Operating loss
before income taxes $ (2,335) $ (1,871) $ (1,509)
Loss before SFAS 109 $ (2,189) $ (1,008) $ (1,886)
Net loss $ (2,110) $ (1,008) $ (1,886)
========= ========= =========
In April 1994, the Company announced its plans to reallocate much of the capital
previously dedicated to the development of natural gas and oil reserves to
investments with closer strategic ties to the rest of its energy businesses. No
further exploration is planned. Potential investment opportunities may include
gas gathering, storage and marketing, as well as other investments designed to
capitalize on the post-Order 636 investment environment. In connection with this
strategic shift, as discussed in Note 1 to the Consolidated Financial
Statements, the Company has changed the method by which it accounts for its oil
and gas operations to the successful efforts method from the full cost method.
NJR Energy's loss before SFAS 109 increased to $2.2 million in 1994, compared
with a loss of $1 million in 1993, due primarily to the $1 million pre-tax
write-off of its investment in the Bessie-8 pipeline, which was determined to be
impaired, and higher depreciation, depletion and amortization which more than
offset lower exploratory dry hole costs.
Production in 1994 increased to 3.5 billion cubic feet (Bcf) of natural gas
and 112,000 barrels of oil compared with 3 Bcf and 97,000 barrels in 1993 and
3.7 Bcf and 99,000 barrels in 1992. The increase in production in 1994 was due
primarily to a $5 million acquisition of 56 properties from Marathon Oil Company
which was completed in August 1993. Average natural gas prices improved to $1.80
per thousand cubic feet (Mcf) in 1994, compared with $1.68 in 1993 and $1.54 in
1992. The average price of oil decreased to $15.70 per barrel in 1994 from
$19.16 in 1993 and $19.68 in 1992. NJR Energy's ability to improve its earnings
in the future is dependent on several factors including changes in oil and gas
prices and interest rates, the performance of reserve acquisitions and the
results of development activity and other investments in areas such as gas
gathering, storage and marketing, the amount and timing of which will be
determined by market and other conditions.
PPI In 1992, PPI was formed to pursue investment opportunities in natural
gas-fueled cogeneration and independent power production projects. In July 1993,
a subsidiary of PPI entered into an agreement with an affiliate of Destec
Energy, Inc. (Harriman Energy) to jointly develop a proposed 57-megawatt,
natural gas-fired cogeneration project in Harriman, New York (the Northway
Project). Harriman Energy had agreed to sell electricity to Orange & Rockland
Utilities, Inc. (Orange & Rockland) pursuant to a 25-year power purchase
agreement entered into in May 1991, as supplemented. The Northway Project had
entered into a 20-year gas supply agreement with NJNG. In June 1994, Harriman
Energy agreed to terminate the power purchase agreement with Orange & Rockland.
PPI's share of the net proceeds from this transaction is estimated at $4.2
million, to be received over three years, plus interest. Accordingly, after
related taxes and expenses, a gain of $2.1 million, or $.13 per share, is
included in Other Income, Net in the Consolidated Income Statements.
Liquidity and Capital Resources
Consolidated The Company is responsible for meeting the common equity
requirements of each subsidiary through new issuances, including the proceeds
from its Dividend Reinvestment and Customer Stock Purchase Plan (DRP). During
1994, the Company raised $12.1 million from its DRP compared with $13.2 million
in 1993 and $12 million in 1992. In September 1992, the Company also raised $37
million from a public offering. The Company provides the debt requirements for
its non-regulated companies, while NJNG issues short-term and long-term debt
based upon its own financial profile.
It is the Company's objective to maintain a consolidated capital structure
that reflects the different characteristics of each business segment and
provides adequate financial flexibility for accessing capital markets as
required. Based upon its existing mix of investments, it is the Company's goal
to maintain a common equity ratio in a range of 40% to 45%.
In order to meet the working capital and external debt financing requirements
of the non-regulated companies, as well as its own working capital needs, the
Company maintains committed credit facilities totaling $145 million with a
number of banks and
26
<PAGE>
New Jersey Resources Corporation
has a $10 million credit facility available on an offering basis. At September
30, 1994, a total of $118.2 million was outstanding under these agreements.
At September 30, the Company's consolidated capital structure was as follows:
1994 1993
- - -------------------------------------------------------------------------------
Common stock equity 42% 41%
Preferred stock 4 4
Long-term debt 54 55
------ ------
Total 100% 100%
====== ======
NJNG The seasonal nature of the Company's utility operations creates large
short-term cash requirements, primarily to finance gas purchases and customer
accounts receivable. NJNG obtains working capital for these requirements, as
well as for the temporary financing of construction expenditures, sinking fund
needs and accelerated GRFT payments mandated by New Jersey law, through the
issuance of commercial paper and short-term bank loans. To support the issuance
of commercial paper, NJNG maintains committed credit facilities totaling $71
million with a number of commercial banks and has an additional $15 million in
lines of credit available on an offering basis. NJNG's lines of credit are
adjusted quarterly based upon its projected cash needs.
Capital Requirements NJNG's capital requirements for 1992 through 1994 and
projected amounts through 1996 are as follows:
Maturities and
Construction redemption of Redemption of
(Thousands) expenditures long-term debt preferred stock Total
- - -------------------------------------------------------------------------------
1992 $ 37,864 $ 5,189 $ 270 $ 43,323
1993 53,420 21,379 10,270 85,069
1994 54,506 14,064 270 68,840
1995 44,400 9,560 270 54,230
1996 43,500 7,360 270 51,130
The level of construction expenditures has resulted primarily from the need for
services, mains and meters to support NJNG's continued customer growth, and
general system renewals and improvements. NJNG also had additional capital
requirements in 1993 and 1994 of approximately $25 million annually resulting
from the acceleration of GRFT payments to the State of New Jersey. Optional
redemption activity included $10.5 million of First Mortgage Bonds in 1994 and
$17.4 million of First Mortgage Bonds and $10 million of preferred stock in
1993. Based on current market conditions, NJNG expects to optionally redeem the
remaining $6 million balance of its 10.85% Series M Bonds in 1995 and the
remaining $4 million balance of its 10% Series N Bonds in 1996.
Financing
(Thousands) 1994 1993 1992
- - -------------------------------------------------------------------------------
Cash flow $ 65,619 $ 48,389 $ 48,714
External financing
Common stock $ 10,887 $ 13,218 $ 40,010
Long-term debt $ 44,500 $ 39,300 $ 4,000
========= ======== ========
Cash flow, defined as net cash flows from operating activities before the change
in working capital and other, net, represents the cash generated from operations
available for capital expenditures, dividends, working capital and other
requirements. Cash flow increased by 31% in 1994 due primarily to higher
earnings and higher deferred tax benefits. Cash flow decreased by 1% in 1993 due
to the reversal of certain deferred tax benefits, which more than offset higher
earnings.
Common equity financing each year consisted of proceeds from the Company's
DRP and $28 million of the proceeds from the Company's public offering in
September 1992.
NJNG's external financing requirements in 1995 and 1996 are expected to
average about $35 million annually, which will be met through additional
issuances of short-term and long-term debt and common equity contributions by
the Company. In October 1993, NJNG received approval from the BPU to issue up to
$75 million of First Mortgage Bonds under a Medium-Term Note (MTN) program, of
which $30 million was issued in November 1993 and $25 million of 8.25% Series Z
First Mortgage Bonds due 2004 were issued in October 1994. The timing and mix of
these issuances will be geared toward achieving a common equity ratio of 53% for
NJNG, which is consistent with maintaining NJNG's current short-term and
long-term credit ratings and providing access to external capital.
PRC Capital requirements and financing activity for PRC from 1992 through 1994
were as follows:
(Thousands) 1994 1993 1992
- - -------------------------------------------------------------------------------
Capital expenditures $ 4,136 $ 12,085 $ 9,730
Maturities and redemption of
long-term debt $ 13,842 $ 2,241 $ 126
Cash flow $ 11,764 $ 5,885 $ 8,369
External financing
Common stock $ 1,200 - $ 8,730
Long-term debt $ 7,225 $ 8,509 $ (5,306)
======== ========== ==========
27
<PAGE>
New Jersey Resources Corporation
CR&R Capital requirements and financing activity for CR&R from 1992 through
1994 were as follows:
(Thousands) 1994 1993 1992
- - -------------------------------------------------------------------------------
Capital expenditures $ 2,619 $ 2,869 $ 4,397
Maturities and redemption of
long-term debt $ 13,842 $ 2,241 $ 126
Cash flow $ 3,987 $ 2,883 $ 3,724
External financing
Long-term debt $ 12,108 $ 2,091 $ 1,538
======== ========= =========
As a result of the strategic re-evaluation conducted by the Company in 1992,
CR&R's construction program has been limited to the fit-up of existing tenant
space and the development of previously committed projects.
External financing activity in 1994 included the refinancing of its remaining
11 5/8%, $13.8 million mortgage and in 1993 included the refinancing of its
remaining 12 3/4%, $2.1 million mortgage. Funds for both refinancings were
obtained from the Company's bank credit facilities.
Capital expenditures are projected to be $9.3 million in 1995 and $3 million
in 1996 in connection with the fit-up of existing tenant space and development
of existing acreage. Such expenditures are expected to be funded through
internal generation and bank loans obtained by the Company.
NJR Energy NJR Energy's capital requirements and financing activity for 1992
through 1994 were as follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
Capital expenditures and
investments $ 1,979 $ 9,512 $ 6,208
Cash flow $ 4,783 $ 3,323 $ 4,746
External financing
Common stock $ 1,200 - $ 8,730
Long-term debt $ (5,179) $ 6,143 $ (6,885)
========= ========= =========
NJR Energy's 1994 capital spending was devoted primarily to development
activity. During 1993, NJR Energy's capital spending included participation in
the drilling of 10 wells to develop existing properties, of which 8 were
completed as commercially productive, and 4 exploratory wells, none of which
were commercially successful. NJR Energy's 1993 capital expenditures included
the August 1993 acquisition of 56 oil and gas properties for $5 million. This
acquisition added proved reserves of 6.9 Bcf of natural gas and 295,000 barrels
of oil, and included the assumption of operations on 45 of the properties.
In connection with the strategic shift in capital allocation away from the
exploration for reserves, NJR Energy removed a total of 16.3 Bcf and 515,000
barrels of oil from its base of proved reserves. Accordingly, NJR Energy's base
of proved natural gas reserves at September 30, 1994 decreased to 21.6 Bcf,
compared with 41.4 Bcf at September 30, 1993 and proved oil reserves decreased
to 1.8 million barrels at September 30, 1994, compared with 2.4 million barrels
a year ago.
Cash flow increased to $4.8 million in 1994 compared with $3.3 million in
1993 and $4.7 million in 1992 due primarily to higher revenues from increased
production and the utilization of federal alternative minimum tax (AMT) credits.
Cash flow declined in 1993 due primarily to higher federal AMT.
NJR Energy received $1.2 million of DRP proceeds in 1994 and $8.7
million of proceeds from the Company's public offering in September 1992.
Capital expenditures in 1995 and 1996 are projected to be $3.8 million
annually for the development of proved undeveloped reserves and approximately
$10 million over the next two years for investments in areas such as gas
gathering, marketing and storage. Such expenditures are expected to be funded
through internal generation and the issuance of additional debt and equity by
the Company, the timing and mix of which will be decided by market and other
conditions.
PPI No capital investments were made as of September 30, 1994. External
financing for PPI's future capital investments is expected to be initially
provided by the Company, the timing and mix of which will be determined by
market and other conditions.
Effects of Inflation Under the ratemaking process, the recovery of plant costs
through depreciation and the allowed return on plant investment are limited to
levels based upon the historical cost of utility plant, which is significantly
less than current replacement costs. The Company believes, based on past
practices, that NJNG will be allowed to earn on the increased cost of its
investment when replacement of the facilities is included in rate base. The
Company's other operations have not been significantly affected by inflation.
Summary The Company is confident that it will have adequate cash flow and proper
access to both the short-term and long-term capital needed to meet the projected
capital and dividend requirements of each subsidiary. The Company and NJNG will
continue to explore various alternatives to reduce its overall cost of capital.
In addition, NJNG remains committed to providing quality service to its
customers and a fair return to the Company's shareholders, without the need of
continuous base rate increases. Non-regulated investments are expected to
generate improved earnings and cash flow in the future.
28
<PAGE>
Financial Statement Responsibility New Jersey Resources Corporation
The management of New Jersey Resources Corporation and its subsidiaries is
responsible for the integrity and objectivity of the financial statements and
related disclosures of the Company. These statements and disclosures have been
prepared using management's best judgment and are in conformity with generally
accepted accounting principles applied on a consistent basis. The financial
statements have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report.
To meet its responsibilities with respect to financial information,
management maintains and enforces a system of financial accounting controls,
which is designed to give reasonable assurance as to the reliability of the
financial records and the protection of assets. This system is augmented by
written policies and procedures, an organizational structure that provides for
appropriate division of responsibility and careful selection and training of
personnel. This system is also tested by the Company's Internal Audit
Department. Management believes the system is effective and provides reasonable
assurance that all transactions are properly recorded.
In addition, the Company has a Code of Conduct that requires all employees
to maintain the highest level of ethical standards and requires key management
personnel to formally declare their compliance with the Code annually.
The Board of Directors, through its Audit Committee, which is currently
composed of six outside directors, oversees management's responsibilities for
accounting, internal controls and financial reporting. The Audit Committee meets
periodically with management, the internal auditors and independent auditors to
discuss auditing and financial matters and to assure that each is carrying out
its responsibilities. Both the internal and independent auditors have access to
the Audit Committee at any time.
Independent Auditors' Report
To the Shareholders and Board of Directors of New Jersey Resources Corporation:
We have audited the accompanying consolidated balance sheets and consolidated
statements of capitalization of New Jersey Resources Corporation and its
subsidiaries as of September 30, 1994 and 1993 and the related consolidated
statements of income, common stock equity and cash flows for each of the three
years in the period ended September 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statments based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at September 30,
1994 and 1993 and the results of their operations and their cash flows for each
of the three years in the period ended September 30, 1994 in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1994
the Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109, changed its method of
accounting for the costs of postretirement benefits other than pensions to
conform with Statement of Financial Accounting Standards No. 106, and changed
the method of accounting for oil and gas activities from the full cost method to
the successful efforts method and restated the 1993 and 1992 consolidated
financial statements for the change.
Parsippany, New Jersey
October 31, 1994
29
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income New Jersey Resources Corporation
(Thousands, except per share data)
For the Years Ended September 30, 1994 1993(A) 1992(A)
- - -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Revenues ..................................................... $ 498,749 $ 454,746 $ 400,738
--------- --------- ---------
Operating Expenses
Gas purchases ........................................................ 279,529 252,041 205,920
Operation and maintenance ............................................ 69,057 61,707 59,719
Depreciation and amortization ........................................ 27,595 25,405 23,918
Exploratory dry hole costs ........................................... 29 2,017 2,184
Gross receipts tax, etc .............................................. 53,757 52,719 52,612
Federal income taxes ................................................. 14,851 11,957 10,841
--------- --------- ---------
Total operating expenses ............................................... 444,818 405,846 355,194
--------- --------- ---------
Operating Income ....................................................... 53,931 48,900 45,544
Other Income, Net ...................................................... 2,208 713 574
--------- --------- ---------
Interest Charges, Net
Long-term debt ....................................................... 20,997 19,952 19,742
Short-term debt and other ............................................ 1,206 477 1,665
--------- --------- ---------
Total interest charges, net ............................................ 22,203 20,429 21,407
--------- --------- ---------
Income Before Preferred Stock Dividends ................................ 33,936 29,184 24,711
Preferred stock dividends .............................................. 1,662 2,022 2,464
--------- --------- ---------
Income Before Cumulative Effect of Change in Accounting for Income Taxes 32,274 27,162 22,247
Cumulative effect of change in accounting for income taxes ............. 721 -- --
--------- --------- ---------
Net Income ............................................................. $ 32,995 $ 27,162 $ 22,247
========= ========= =========
Earnings per Common Share Before Cumulative Effect of Change
in Accounting for Income Taxes ....................................... $ 1.89 $ 1.64 $ 1.55
Cumulative effect of change in accounting for income taxes ............. .04 -- --
--------- --------- ---------
Earnings per Common Share .............................................. $ 1.93 $ 1.64 $ 1.55
========= ========= =========
Dividends per Common Share ............................................. $ 1.52 $ 1.52 $ 1.52
========= ========= =========
Average Shares Outstanding ............................................. 17,096 16,607 14,334
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statements of Common Stock Equity
Number of Common Premium on ESOP Term Retained
(Thousands) Shares Stock Common Stock Loan and Other Earnings (A)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1991 ........................ 13,965 $ 34,913 $128,381 $(2,234) $ 3,671
Net income ........................................... 22,247
Public sale of common stock .......................... 1,725 4,313 32,417
Common stock issued under stock plans ................ 596 1,489 10,555
Cash dividends declared .............................. (21,780)
Reduction of ESOP term loan and other ................ 731
------ -------- -------- -------- --------
Balance at September 30, 1992 ........................ 16,286 40,715 171,353 (1,503) 4,138
Net income ........................................... 27,162
Common stock issued under stock plans ................ 534 1,335 11,643
Cash dividends declared .............................. (25,283)
Reduction of ESOP term loan and other ................ 753
Balance at September 30, 1993 ........................ 16,820 42,050 182,996 (750) 6,017
Net income ........................................... 32,995
Common stock issued under stock plans ................ 483 1,206 10,918
Cash dividends declared .............................. (26,019)
Reduction of ESOP term loan and other ................ 750
------ -------- -------- -------- --------
Balance at September 30, 1994 ........................ 17,303 $ 43,256 $193,914 $ - $ 12,993
====== ======== ======== ======== ========
</TABLE>
(A) Restated to reflect the change in accounting principle by NJR Energy for its
oil and gas operations to the successful efforts method from the full cost
method. The accompanying notes are an integral part of these statements.
30
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows New Jersey Resources Corporation
(Thousands)
For the Years Ended September 30, 1994 1993(A) 1992(A)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net income ........................................................................ $ 32,995 $ 27,162 $ 22,247
Adjustments to reconcile net income to cash flows
Depreciation and amortization ................................................... 27,595 25,405 23,918
Amortization of deferred charges ................................................ 2,701 1,381 1,319
Deferred income taxes ........................................................... 14,075 (980) 8,115
Exploratory dry hole costs ...................................................... 29 2,017 2,184
Cumulative effect of change in accounting for income taxes ...................... (721) - -
Change in working capital ....................................................... (30,711) (44,399) (4,482)
Other, net ...................................................................... (4,523 (1,616) (3,299)
--------- -------- ---------
Net cash flows from operating activities ............................................ 41,440 8,970 50,002
--------- -------- ---------
Cash Flows from Financing Activities
Proceeds from long-term debt ...................................................... 50,250 49,200 4,000
Proceeds from common stock ........................................................ 12,087 13,218 48,740
Payments of long-term debt ........................................................ (28,580 (24,295 (11,569
Payments of preferred stock ....................................................... (270) (10,270) (270)
Payments of common stock dividends ................................................ (25,836) (24,426) (21,553)
Net change in short-term debt ..................................................... 12,100 54,900 (21,400)
--------- -------- ---------
Net cash flows from financing activities ............................................ 19,751 58,327 (2,052)
--------- -------- ---------
Cash Flows used in Investing Activities
Expenditures for
Utility plant ................................................................... (54,506) (58,270) (37,864)
Contribution from cogeneration developer ........................................ - 4,850 -
Real estate properties .......................................................... (2,619) (2,869) (4,397)
Oil and gas properties .......................................................... (1,517) (9,216) (5,333)
Cost of removal and other ......................................................... (5,337) (2,048) (1,043)
Proceeds from sale of assets ...................................................... 3,184 - -
--------- --------- ---------
Net cash flows used in investing activities ......................................... (60,795) (67,553) (48,637)
--------- ---------- ---------
Net change in cash and temporary investments ........................................ 396 (256) (687)
Cash and temporary investments at beginning of the year ............................. 1,555 1,811 2,498
--------- -------- ---------
Cash and temporary investments at end of the year ................................... $ 1,951 $ 1,555 $ 1,811
========= ======== =========
Changes in Components of Working Capital
Receivables ....................................................................... $ (4,055) $ (1,473) $ (3,283)
Inventories ....................................................................... 3,747 (8,374) 47
Deferred gas costs ................................................................ (6,560) (19,566) 5,729
Purchased gas ..................................................................... (9,865) 4,958 1,879
Accrued and prepaid taxes, net .................................................... (19,193) (20,879) (3,349)
Customers' credit balances and deposits ........................................... 2,841 (1,582 (8,601)
Other, net ........................................................................ 2,374 2,51 3,096
--------- ------- ---------
Total ............................................................................... $ (30,711) $(44,99) $ (4,482)
========= ======= =========
Supplemental Disclosures of Cash Flows Information
Cash paid during the year for
Interest (net of amount capitalized) .............................................. $ 19,455 $ 18,725 $ 20,905
Income taxes ...................................................................... $ 6,734 $ 9,930 $ 2,710
Non-cash investing and financing activities
Note receivable converted to oil and gas properties ............................... - - $ 830
========= ======== =========
</TABLE>
(A) Restated to reflect the change in accounting principle by NJR Energy for
its oil and gas operations to the successful efforts method from the full
cost method. The accompanying notes are an integral part of these
statements.
31
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets New Jersey Resources Corporation
(Thousands)
September 30, 1994 1993(A)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Property, Plant and Equipment
Utility plant, at original cost ................................................................. $691,757 $ 637,580
Real estate properties, at cost ................................................................. 104,309 102,369
Oil and gas properties .......................................................................... 63,224 64,576
859,290 804,525
Accumulated depreciation and amortization ......................................................... (218,913) (198,875)
-------- ---------
Property, plant and equipment, net ................................................................ 640,377 605,650
-------- ---------
Current Assets
Cash and temporary investments .................................................................. 1,951 1,555
Customer accounts receivable .................................................................... 18,805 16,719
Unbilled revenues ............................................................................... 9,136 10,037
Allowance for doubtful accounts ................................................................. (657) (684)
Gas in storage, at average cost ................................................................. 33,483 37,282
Materials and supplies, at average cost ......................................................... 7,143 7,091
Prepaid state taxes ............................................................................. 11,077 -
Deferred gas costs .............................................................................. 16,008 22,891
Other ........................................................................................... 6,285 6,250
-------- ---------
Total current assets .............................................................................. 103,231 101,141
-------- ---------
Deferred Charges and Other ........................................................................ 53,739 31,871
-------- ---------
Total Assets ...................................................................................... $797,347 $ 738,662
======== =========
Capitalization and Liabilities
Capitalization
Common stock equity ............................................................................. $250,163 $ 230,313
Redeemable preferred stock ...................................................................... 22,070 22,340
Long-term debt .................................................................................. 323,590 310,996
-------- ---------
Total capitalization ............................................................................ 595,823 563,649
-------- ---------
Current Liabilities
Current maturities of long-term debt ............................................................ 4,315 4,650
Short-term debt ................................................................................. 42,000 20,900
Purchased gas ................................................................................... 14,950 24,815
Accounts payable and other ...................................................................... 36,163 33,571
Accrued taxes ................................................................................... 3,130 11,246
Customers' credit balances and deposits ......................................................... 14,480 11,639
-------- ---------
Total current liabilities ......................................................................... 115,038 106,821
-------- ---------
Deferred Credits
Deferred income taxes ........................................................................... 52,698 39,344
Deferred investment tax credits ................................................................. 12,025 12,419
Other ........................................................................................... 21,763 16,429
-------- ---------
Total deferred credits ............................................................................ 86,486 68,192
-------- ---------
Commitments and Contingent Liabilities (Note 9)
Total Capitalization and Liabilities .............................................................. $797,347 $ 738,662
======== =========
</TABLE>
(A) Restated to reflect the change in accounting principle by NJR Energy for
its oil and gas operations to the successful efforts method from the full
cost method. The accompanying notes are an integral part of these
statements.
32
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Capitalization New Jersey Resources Corporation
(Thousands)
September 30, 1994 1993(A)
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stock Equity
Common stock, $2.50 par value; authorized 25,000,000 shares;
outstanding shares 1994, 17,302,584; 1993, 16,819,826 $ 43,256 $ 42,050
Premium on common stock 193,914 182,996
Term loan of Employee Stock Ownership Plan and other - (750
Retained earnings 12,993 6,017
-------- --------
Total common stock equity 250,163 230,313
-------- --------
Redeemable Preferred Stock
New Jersey Natural Gas Company
$100 par value, cumulative; authorized shares
1994, 530,700; 1993, 533,400; outstanding shares
4-3/4% series - 1994, 9,500; 1993, 11,000 950 1,100
5.65% series - 1994, 11,200; 1993, 12,400 1,120 1,240
7.72% series - 1994 and 1993, 200,000 20,000 20,000
-------- --------
Total redeemable preferred stock 22,070 22,340
-------- --------
Long-Term Debt
New Jersey Natural Gas Company
First Mortgage Bonds Maturity date
10-1/2% Series L August 1, 2014 - 10,500
10.85% Series M September 1, 2000 6,000 7,200
10% Series N May 1, 2001 6,000 7,000
8.5% Series P March 1, 2002 9,545 10,908
9% Series Q December 1, 2017 13,500 13,500
8-1/2% Series R June 1, 2018 25,000 25,000
10.10% Series S June 1, 2009 20,000 20,000
7.05% Series T March 1, 2016 9,545 9,545
7.25% Series U March 1, 2021 15,000 11,000
7.50% Series V December 1, 2002 25,000 25,000
5-3/8% Series W August 1, 2023 10,300 10,300
6.27% Series X November 1, 2008 30,000 -
6.25% Series Y August 1, 2024 10,500 -
Short-term debt refinanced 25,000 34,000
Capital lease obligations - 77
-------- --------
Total 205,390 184,030
-------- --------
New Jersey Resources Corporation
Revolving Credit Agreements, at floating rates October 1, 1995-October 1, 1996 118,200 126,292
7.9% Term loan of Employee Stock Ownership Plan May 1, 1995 - 674
-------- --------
Total 118,200 126,966
-------- --------
Total long-term debt 323,590 310,996
-------- --------
Total Capitalization $595,823 $563,649
======== ========
</TABLE>
(A) Restated to reflect the change in accounting principle by NJR Energy for
its oil and gas operations to the successful efforts method from the full
cost method. The accompanying notes are an integral part of these
statements.
33
<PAGE>
New Jersey Resources Corporation
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation The Consolidated Financial Statements include the
accounts of New Jersey Resources Corporation (the Company) and its subsidiaries
- - --New Jersey Natural Gas Company (NJNG) and Paradigm Resources Corporation
(PRC). Commercial Realty & Resources Corp. (CR&R), NJR Energy Corporation (NJR
Energy) and Paradigm Power, Inc. (PPI) are wholly owned subsidiaries of PRC.
Significant intercompany accounts and transactions have been eliminated.
Regulatory Accounting The Company's largest subsidiary, NJNG, maintains its
accounts in accordance with the Uniform System of Accounts as prescribed by the
New Jersey Board of Public Utilities (the BPU). As a result of the ratemaking
process, the accounting principles applied by NJNG differ in certain respects
from those applied by nonregulated businesses.
Utility Plant and Depreciation Depreciation is computed on a straight-line basis
for financial statement purposes, using rates based on the estimated average
lives of the various classes of depreciable property. The composite rate of
depreciation was 3% of average depreciable property in 1994, 3.27% in 1993 and
3.24% in 1992. When depreciable properties are retired, the original cost
thereof, plus cost of removal less salvage, is charged to accumulated
depreciation.
Oil and Natural Gas Properties As disclosed on Form 10-K/A, filed in April 1994,
NJR Energy changed the method of accounting for its oil and gas operations to
the successful efforts method from the full cost method.
Under the successful efforts method of accounting, proved leasehold costs are
capitalized and amortized over the proved developed and undeveloped reserves on
a units-of-production basis. Successful drilling costs and developmental dry
holes are capitalized and amortized over the proved developed reserves on a
units-of-production basis. Unproved leasehold costs are capitalized and are not
amortized, pending an evaluation of their exploration potential. Unproved
leasehold costs are assessed periodically to determine if an impairment of the
cost of significant individual properties has occurred. The cost of an
impairment is charged to expense in the period in which it occurs. Costs
incurred for exploratory dry holes, geological and geophysical work and delay
rentals are charged to expense as incurred.
The Consolidated Balance Sheets as of September 30, 1993 and 1992, and the
related Consolidated Statements of Income, Common Stock Equity and Cash Flows
for each of the two years in the period ended September 30, 1993 and related
notes to the Consolidated Financial Statements have been restated to show the
effects of NJR Energy's change in accounting principle for its oil and gas
properties to the successful efforts method of accounting from the full cost
method. The change to the successful efforts method of accounting resulted in a
decrease of $17.2 million and $15.9 million in retained earnings as of September
30, 1993 and 1992, respectively, by restating previously issued financial
statements. The effect of this change was to decrease previously reported net
income and earnings per share of common stock by the following amounts:
(Thousands, except per share data) 1993 1992
- - --------------------------------------------------------------------------------
Net income, as previously reported $ 28,497 $ 23,459
Effect of change in accounting (1,335) (1,212)
-------- --------
Net income, as restated $ 27,162 $ 22,247
======== ========
Earnings per common share,
as previously reported $ 1.72 $ 1.64
Effect of change in accounting (.08) (.09)
-------- --------
Earnings per common share, as restated $ 1.64 $ 1.55
======== ========
Utility Revenues Customers are billed through monthly cycle billings on the
basis of one month's actual or estimated usage. Revenues are based upon service
rendered.
Gas Purchases NJNG's tariff includes a Levelized Gas Adjustment (LGA) clause,
which is normally revised on an annual basis. Under this clause, NJNG projects
its cost of gas, net of supplier refunds and credits from non-firm sales and
transportation activities, over the subsequent 12 months and recovers the
excess, if any, of such projected costs over those included in its base rates
through monthly levelized charges to customers. Any under-or over-recoveries are
deferred and reflected in the LGA clause in the subsequent year.
Gross Receipts Tax, Etc. Gross receipts tax, etc. consists principally of New
Jersey gross receipts and franchise taxes (GRFT), which are eventually paid to
the municipalities in which NJNG has utility plant facilities, and a surtax paid
to the state. These taxes are calculated on a per-therm basis and are paid in
lieu of personal property and state income taxes. Such amounts represent
approximately 90% of the Gross receipts tax, etc. figures.
Federal Income Taxes Through September 30, 1993, deferred federal income taxes
were provided for timing differences between book and taxable income, except
that NJNG provided such taxes only to the extent permitted for ratemaking
purposes. Effective October 1, 1993, deferred federal income taxes are
calculated in conformance with Statement of Financial Accounting Standards
(SFAS) No. 109, (See Note 6: Federal Income Taxes).
Investment tax credits have been deferred and are being amortized as a
reduction to the tax provision over the average lives of the related property.
34
<PAGE>
New Jersey Resources Corporation
Capitalized Interest The Company's capitalized interest totaled $2.6 million in
1994, $3.2 million in 1993 and $3.3 million in 1992.
Deferred Charges Included in Deferred Charges and Other is $8 million related to
items that are being amortized through rates over remaining time periods ranging
from 1 to 9 years. No return is being earned on the unamortized balance. See
Note 9: Commitments and Contingent Liabilities for a discussion of manufactured
gas plant (MGP) remediation costs.
Statements of Cash Flows For purposes of reporting cash flows, all temporary
investments with maturities of three months or less are considered cash
equivalents.
New Accounting Standards See Note 6: Federal Income Taxes and Note 8: Employee
Benefit Plans for a discussion of the impact of SFAS No. 109, "Accounting for
Income Taxes" and SFAS 106, "Employees Accounting for Postretirement Benefits
Other Than Pensions", respectively, both of which were adopted by the Company
effective October 1, 1993.
2. Common Stock
At September 30, 1994, there were 517,033 shares reserved for issuance under the
Company's Dividend Reinvestment and Customer Stock Purchase, Employee Stock
Ownership and Retirement Savings Plans.
In January 1994, shareholders approved an amendment to the Executive
Long-Term Incentive Compensation Plan (the Plan) increasing the number of shares
reserved for issuance to key employees at the discretion of the Board of
Directors from 250,000 to 750,000. In 1994, a total of 1,209 shares were issued
and, at September 30, 1994, there were 584,120 shares reserved for issuance or
grant under the plan. All options granted under the Plan have been non-qualified
stock options, allow for the purchase of common stock at prices equal to the
average market value for the 20 trading days preceding the date of grant, vest
over four years and must be exercised within ten years.
The following table summarizes the stock option activity for the past three
years:
Shares Price Range
- - --------------------------------------------------------------
Outstanding at
September 30, 1991 and 1992 23,672 $ 19.01
Granted 67,264 $ 22.25
--------- --------------------
Outstanding at
September 30, 1993 90,936 $ 19.01 - $ 22.25
Granted 57,222 $ 6.00
Exercised (1,220 $ 22.25
Forfeited (8,449 $ 22.25 - $ 26.00
--------- --------------------
Outstanding at
September 30, 1994 138,489 $ 19.01 - $ 26.00
========= ====================
Exercisable at
September 30, 1994 32,804 $ 19.01 - $ 22.25
========= ====================
3. Redeemable Preferred Stock
Under the terms of its preferred stock agreements, NJNG purchases 1,500 shares
of the 4-3/4% series and 1,200 shares of the 5.65% series annually, at par plus
accumulated dividends. Both series are redeemable at NJNG's option for $102 per
share plus accumulated dividends at any time. The 7.72% series is subject to
mandatory redemption in 2001 and optional redemption from 1998 to 2000 at prices
declining from $101.72 to $100 per share plus accumulated dividends.
Preferred stockholders are entitled to one vote per share on all NJNG matters
and have priority as to dividends. The agreements prohibit the distribution of
common stock dividends unless NJNG is in compliance with all their provisions.
In addition, whenever preferred dividends are in arrears in an amount equal to
four quarterly dividends, preferred stockholders may elect a number of directors
necessary to constitute one less than a majority of NJNG's Board of Directors,
until such dividends are paid in full.
The Company has 200,000 shares of authorized and unissued $100 par value
preferred stock.
4. Long-Term Debt, Dividends and Retained Earnings Restrictions
Annual redemption requirements for the next five years are as follows: 1995,
$4.3 million; 1996, $91.8 million; 1997, $33.6 million; 1998, $3.6 million and
1999, $5.4 million.
NJNG's mortgage secures its first mortgage bonds and represents a lien on
substantially all its property, including gas supply contracts. Certain
indentures supplemental to the mortgage include restrictions as to cash
dividends and other distributions on NJNG's common stock, which restrictions
apply so long as certain series of first mortgage bonds are outstanding. Under
the most restrictive provision, approximately $19.9 million of NJNG's retained
earnings was available at September 30, 1994.
In March 1994, under its loan agreement with the New Jersey Economic
Development Authority (the Authority), NJNG received the final $4 million of the
proceeds from the Authority's 7.25% Series 1991B Bonds and issued a like amount
of its 7.25% Series U Bonds. In March 1991, NJNG entered into a loan agreement
with the Authority under which the Authority issued $15 million of its 7.25%
Series 1991B Bonds due March 2021 and deposited the proceeds into a construction
fund with an indenture trustee. NJNG issues first mortgage bonds, with interest
rates and maturity dates matching those of the revenue bonds, as it receives
funds from the indenture trustee in reimbursement of qualified expenditures up
to the principal amount of the bonds issued by the Authority. Any remaining
balance in the construction fund, together with the first mortgage bonds issued
by NJNG, are held by the indenture trustee as security for the Authority's
revenue bonds. NJNG is obligated at all times to secure all payments on the
Authority's revenue bonds.
35
<PAGE>
New Jersey Resources Corporation
In September 1994, NJNG entered into a loan agreement with the Authority under
which the Authority issued $10.5 million of its 6.25% Series 1994A Bonds due
2024 and NJNG issued a like amount of its 6.25% Series Y First Mortgage Bonds.
NJNG used the proceeds from its Series Y Bonds to redeem the $10.5 million, 10
1/2% Series L Bonds due 2014.
In October 1993, NJNG received approval from the BPU to issue up to $75
million of First Mortgage Bonds under a Medium-Term Note (MTN) Program. In
November 1993, NJNG issued $30 million of its 6.27% Series X First Mortgage
Bonds due 2008 under the MTN Program. In October 1994, NJNG issued $25 million
of its 8.25% Series Z First Mortgage Bonds due 2004 under the MTN Program and
used the proceeds to reduce its outstanding short-term debt. Accordingly, at
September 30, 1994, $25 million of short-term debt has been reclassified as
long-term debt for financial reporting purposes.
In October 1993, CR&R used proceeds from floating rate bank loans obtained by
the Company under its revolving credit facilities to optionally redeem the
remaining $13.8 million outstanding principal amount of its 11 5/8% mortgage.
At September 30, 1994, the Company had seven committed revolving credit
agreements totaling $145 million which provide for bank loans at negotiable
rates at or below the prime rate. At September 30, 1994, a total of $118.2
million was outstanding under these agreements of which $88.2 million matures in
1996 and $30 million matures in 1997.
The Company has entered into two interest rate swap agreements, having an
aggregate notional amount of $45 million, to eliminate the impact of changes in
interest rates on a portion of its floating rate long-term debt. These
agreements effectively fix the Company's interest rate on $30 million of its
floating rate revolving credit facilities at 9% through 1996, and on $15 million
of its floating rate revolving credit facilities at 9.5% through 1999. In the
event of nonperformance by the counterparties, the Company's interest cost on
the $45 million of long-term debt would revert to a floating rate based on a
three- or six-month LIBOR. However, the Company does not anticipate
nonperformance by the counterparties. The differential to be paid or received is
accrued as interest rates change and is recognized over the life of the interest
rate swap agreements.
The Company's remaining long-term debt outstanding under revolving credit
agreements at September 30, 1994 and 1993 totaled $73.2 million and $67.5
million, with a weighted average interest rate of 5.3% and 3.7%, respectively.
SFAS 107, "Fair Value of Financial Instruments", requires disclosure of the
estimated fair value of an entity's financial instrument assets and liabilities.
The fair value of cash and temporary investments, accounts receivable, accounts
payable, commercial paper and borrowings under revolving credit facilities are
estimated to equal their carrying amounts due to the short maturity of those
instruments. The estimated fair value of long-term debt is based on quoted
market prices for similar issues and the fair value of interest rate swap
agreements is based on the estimated amount the Company would receive or pay to
terminate the agreements. At September 30, 1994, the carrying amount of
long-term debt was $303 million with a fair market value of $304 million and the
Company would have to pay approximately $1.2 million to terminate its interest
rate swap agreements.
5. Short-Term Debt and Credit Facilities
Committed credit facilities of NJNG support the issuance of commercial paper and
provide for bank loans at negotiable rates at or below the prime rate. These
credit facilities total $71 million, and require commitment fees on the unused
amounts. In addition, the Company has $10 million and NJNG has $15 million in
lines of credit that are available on an offering basis without payment of a
commitment fee. NJNG's lines of credit are adjusted quarterly based upon its
projected cash needs.
A comparison of pertinent data follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------
Bank credit facilities $ 71,000 $ 71,000 $ 65,000
Maximum amount outstanding $ 74,000 $ 56,600 $ 49,200
Average daily amount outstanding
Notes payable to banks $ 9,200 $ 3,900 $ 2,700
Commercial paper $ 30,300 $ 7,900 $ 17,000
Weighted average interest rate
Notes payable to banks 4.00 3.34 4.75
Commercial paper 3.88% 3.24% 4.61%
Amount outstanding at year end
Notes payable to banks $ 5,000 $ 5,000 -
Commercial paper $ 62,000 $ 49,900 -
Interest rate at year end
Notes payable to banks 4.88% 3.22% -
Commercial paper 4.93% 3.22% -
======== ======== =======
6. Federal Income Taxes
The Company's federal income tax returns have been examined by the Internal
Revenue Service (IRS) through 1991 and all significant matters have been
settled.
Effective October 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes" which requires the implementation of a liability method for the
financial reporting of income taxes, as compared with the deferred method. Under
the liability method, deferred tax balances must be recorded for all temporary
differences and are adjusted to reflect changes in tax rates. Previously,
deferred tax balances were not recorded for certain ratemaking items and were
not adjusted to reflect changes in tax rates. The cumulative effect of adopting
SFAS 109 on the Company's nonregulated operations was a credit to net income of
$721,000, or $.04 per
36
<PAGE>
New Jersey Resources Corporation
share. The effect on NJNG was to decrease its deferred tax liability by $375,000
with an offsetting regulatory liability as the Company believes it is probable
that the effects of SFAS 109 on NJNG will be payable to customers in the future.
Federal income tax expense applicable to current operations differs from the
amount computed by applying the statutory rate to pre-tax income as follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
Tax expense at statutory rate (35% in 1994,
34.75% in 1993 and 34% in 1992) $17,490 $14,394 $12,247
Increase (reduction) resulting from
Depreciation and cost of removal (1,032) (234) 145
Amortization of investment tax credits (394) (411) (427)
Section 29 tax credits (398) (616) (110)
Other 372 (829) (667)
------- ------- -------
Provision for Federal income taxes $16,038 $12,304 $11,188
======= ======= =======
The provision for federal income taxes is composed of the following:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
Current $ 7,610 $ 7,685 $ 2,153
------- ------- -------
Deferred
Excess tax depreciation 5,723 5,405 6,026
Gross receipts and franchise taxes (3,580) (3,555) 6,956
Alternative minimum tax 1,057 (367) (1,371)
Contributions 1,943 (1,593) 38
Deferred gas costs 2,322 6,645 (2,253)
Installment sale 1,327 - -
Deferred charges and other 30 (1,505) 66
------- ------- -------
Total deferred 8,822 5,030 9,462
------- ------- -------
Amortization of investment
tax credits (394) (411) (427)
------- ------- -------
Total provision $16,038 $12,304 $11,188
======= ======= =======
Charged to: Operating expenses $14,851 $11,957 $10,841
Other income, net 1,187 347 347
------- ------- -------
Total provision $16,038 $12,304 $11,188
======= ======= =======
At September 30, 1994, the Company had an alternative minimum tax (AMT) credit
of $6.8 million available for an indefinite carryforward period against future
federal income taxes payable to the extent that regular federal income taxes
payable exceeds AMT payable.
The tax effects of significant temporary differences comprising the
Company's net deferred income tax liability at September 30, 1994 and 1993, were
as follows:
(Thousands) 1994 1993
- - -------------------------------------------------------------------------------
Current (assets) liabilities
Deferred gas costs $ 5,603 $ 7,853
Gross receipts and franchise taxes - 3,580
Other (1,598) (1,799)
------- -------
Current deferred tax liability, net $ 4,005 $ 9,634
======= =======
Non-current (assets) liabilities
Property-related items $65,708 $55,526
Installment sale 1,327 -
Customer contributions (4,399) (4,589)
Capitalized overhead and interest (4,400) (4,649)
Alternative minimum tax (6,825 (7,882)
Unamortized investment tax credits (4,341) -
Deferred charges and other 5,628 938
------- -------
Non-current deferred tax liability, net $52,698 $39,344
======= =======
7. Regulatory Issues
In April 1993, NJNG filed a petition with the BPU seeking additional annual
revenues of approximately $26.9 million, or 7.1%, in base rates. The filing
reflected primarily the incremental capital and operating costs associated with
NJNG's continued customer growth, general system expansion and New Jersey tax
law changes. The filing included a 12.5% return on equity and a rate base of
$541 million, compared with a 12.2% return on equity and a $389 million rate
base previously reflected in its base rates. On January 5, 1994, the BPU
approved a stipulated agreement which authorized a $7.5 million base rate
increase and included a 11.5% return on common equity and a rate base of $492
million. Also included in the stipulation was a continuation of NJNG's
margin-sharing formula for sales to JCP&L and other interruptible customers and
transportation services and, effective January 5, 1994, the margin-sharing
formula for off-system sales and capacity release was established to credit 80%
to firm customers and 20% to be retained by NJNG.
In May 1993, NJNG filed an incentive-ratemaking petition with the BPU which
was designed to avoid the need for frequent base rate filings while improving
overall service to its customers. It included measurable benchmarks in areas
such as construction costs, operation and maintenance expenses, gas purchases
and customer service. In connection with the January 1994 base rate case
stipulation, NJNG withdrew its incentive-ratemaking petition.
37
<PAGE>
New Jersey Resources Corporation
In July 1993, NJNG filed a petition with the BPU to increase its annual LGA
revenues by $4.8 million, or 1.3%, reflecting primarily higher-than-expected
natural gas prices. In November 1993, the BPU approved the $4.8 million increase
effective December 1, 1993, which included recovery of NJNG's share of
transition costs paid through September 1993 associated with interstate natural
gas pipelines complying with Order 636, over two years.
In July 1994, NJNG filed a petition with the BPU to increase its annual LGA
revenues by $8.8 million, or 2%, reflecting primarily additional transition
costs and costs associated with demand side management programs. A decision is
expected in the first quarter of fiscal 1995. NJNG has incurred a total of $19.1
million of transition costs through September 30, 1994, of which $11.6 million
is being recovered over a two-year period pursuant to NJNG's November 1993 LGA
order. As a result of these and other gas costs expected to be recovered in
excess of one year, $13.5 million of deferred gas costs has been classified as
Deferred Charges and Other in the Consolidated Balance Sheet at September 30,
1994.
In October 1994, the BPU approved a $2.7 million credit to customers,
reflecting the second year's results of its weather-normalization clause and the
continuation of the clause on an interim basis pending a final BPU order. The
weather-normalization clause provides for a revenue adjustment if the weather
varies by more than one-half of one percent from the 10-year average, or normal,
weather. The accumulated adjustment from one heating season (i.e., October
April) is billed or credited to customers in the subsequent heating season. The
weather in 1994 was 2% colder than normal. At September 30, 1994, the $2.7
million credit is included in Customers' credit balances and deposits in the
Consolidated Balance Sheet. During 1994, $1.5 million was credited to customers
representing the fiscal 1993 weather-normalization adjustment.
8. Employee Benefit Plans
Pension Plans The Company has two trusteed, noncontributory defined benefit
retirement plans covering all regular, full-time employees with more than one
year of service. Plan benefits are based on years of service and average
compensation during the last five years of employment. The Company makes annual
contributions to the plans consistent with the funding requirements of federal
law and regulations.
The components of the net pension cost are as follows:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
Service cost - benefits earned
during the period $1,733 $1,550 $1,440
Interest cost on projected
benefit obligation 2,812 2,662 2,441
Return on plan assets (3,160) (2,910) (2,711)
Net amortization and deferral (159) (183) (229)
------ ------ ------
Net cost $1,226 $1,119 $ 941
====== ====== ======
Plan assets consist primarily of corporate equities and obligations, U.S.
Government obligations and cash equivalents. A reconciliation of the funded
status of the plans to the amounts recognized in the Consolidated Balance Sheets
is presented below:
(Thousands) 1994 1993
- - --------------------------------------------------------------------------------
Plan assets at fair value $37,070 $37,747
------- -------
Actuarial present value of plan benefits
Vested benefits 25,060 26,202
Non vested benefits 1,565 1,724
Impact of estimated future
compensation changes 8,850 10,618
------- -------
Projected plan benefits 35,475 38,544
------- -------
Plan assets in excess of projected
plan benefits 1,595 (797)
Unrecognized net assets at
beginning of the year (2,975) (3,282)
Unrecognized prior service costs 1,733 1,478
Unrecognized net (gain) loss (1,655) 2,064
------- -------
Net pension liability recognized in the
Consolidated Balance Sheets $(1,302) $ (537)
======= =======
The assumptions used in determining the actuarial present value of the projected
benefit obligation were as follows:
1994 1993
- - --------------------------------------------------------------------------------
Discount rate 8.5% 7.5%
Compensation increase 5.0% 5.0%
Long-term rate of return on plan assets 9.0% 9.0%
=== ===
Employee Stock Ownership Plan The Company established an Employee Stock
Ownership Plan (ESOP) in September 1985 that purchased 488,376 shares of common
stock for allocation to employees over a 10-year period. To finance this
purchase, the trustee of the ESOP borrowed $6.7 million through a 10-year term
loan that is secured by the unallocated shares and guaranteed by the Company.
The Company accrued $659,000 in 1994, $648,000 in 1993 and $578,000 in 1992 for
contribution to the ESOP.
Other Postretirement Benefits Effective October 1, 1993, the Company adopted
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (SFAS 106). SFAS 106 requires an accrual method of accounting for
postretirement benefits, similar to that presently in effect for pension
plans.
38
<PAGE>
New Jersey Resources Corporation
Previously, certain health care and life insurance benefits were charged
to expense when paid. Under the accrual method, the cost of providing
postretirement benefits will be recognized over the employee's service period.
The Company's transition obligation associated with SFAS 106 is $8.6 million,
which is being amortized over 20 years, and its annual expense has increased
from approximately $400,000 to $1.5 million, of which over 95% relates to NJNG.
As part of its January 1994 base rate order, NJNG is permitted to recover
approximately 50% of its SFAS 106 expense currently and defer the balance with
ultimate recovery of the deferred portion no later than that prescribed by
generally accepted accounting principles. At September 30, 1994, $766,000 of
SFAS 106 expenses were deferred and are included in Deferred Charges and Other
in the Consolidated Balance Sheet.
The components of the accumulated postretirement benefit obligation (APBO) as of
September 30, 1994 and October 1, 1993 are as follows:
(Thousands) September 30, 1994 October 1, 1993
- - --------------------------------------------------------------------------------
Retirees $(1,459) $(1,648)
Fully eligible participants (2,707) (2,648)
Other active participants (4,815) (4,304)
------- -------
Total APBO (8,981) (8,600)
Plan assets 177 -
Unrecognized net gain (170) -
Unrecognized transition obligation 8,170 8,600
------- -------
Net liability recognized in the
Consolidated Balance Sheets $ (804) $ -
======= =======
The annual net postretirement benefit cost, effective with the January 1994 base
rate order, is comprised of the following:
(Thousands)
- - --------------------------------------------------------------------------------
Service Cost $369
Interest Cost 678
Amortization of transition obligation 430
Deferral of current expense (708)
----
Total annual net expense $769
====
The assumed health care cost trend rate used in measuring the APBO as of
September 30, 1994 was 13% in 1995 declining 1% each year to 7% in 1999 and then
remaining constant at 6.5% in 2000 and thereafter for participants under age 65.
For participants age 65 and older the trend rate was 10% in 1995 declining 1%
each year to 7% in 1996 and then remaining constant at 6.5% in 1997 and
thereafter. A 1% increase in the trend rates would increase the APBO as of
September 30, 1994 by $1.4 million and would increase the annual service and
interest costs by $200,000. The assumed discount rate used in determining the
APBO was 8% at October 1, 1993 and 8.5% at September 30, 1994.
9. Commitments and Contingent Liabilities
Capital expenditures are estimated at $68 million and $59 million in fiscal 1995
and 1996, respectively, and primarily consist of NJNG's construction program to
support its customer growth and maintain its distribution system. Over the next
two years, the Company's non-utility capital expenditures are expected to be
focused on investment opportunities designed to capitalize on the post-Order 636
investment environment such as gas gathering, storage and marketing, as well as
development costs and equity investments in natural gas-fired cogeneration
plants. Real estate capital expenditures will be limited to the fit-up of
existing tenant space, the development of existing acreage and additional
investments, approved by the Board of Directors, made for the purpose of
preserving the value of particular real estate holdings.
NJNG is participating in environmental investigations and the preparation
of proposals for remedial action at 11 former manufactured gas plants (MGP)
sites. Through a remediation rider which was approved in its June 1992 base rate
order, NJNG is recovering $3 million of expenditures incurred through June 1993
over a seven-year period. Additional costs of $2.7 million have been incurred
through June 1994, which are also expected to be recovered over seven years,
subject to BPU approval. At September 30, 1994, NJNG estimates that it will
incur additional expenditures of approximately $14 million over the next five
years for further investigation and remedial action at these sites. Accordingly,
this amount is reflected in both Deferred Charges and Other and Other Deferred
Credits in the Consolidated Balance Sheets.
In March 1992, NJR Energy and the Company entered into long-term,
fixed-price contracts to sell natural gas to a gas marketing company. In
conjunction with the shift in capital allocation policy as discussed in
Management's Discussion and Analysis, NJR Energy entered into a swap agreement
in October 1994 which hedges its risk for sales volumes under the contract which
are in excess of the estimated production from existing reserves. Under the swap
agreement, commencing in November 1995 until the expiration of the contract, NJR
Energy will pay to the counterparty the identical fixed price it receives from
the gas marketing company in exchange for the payment by the counterparty of an
index price plus a spread per mmbtu for the excess volumes. The respective
obligations of NJR Energy and counterparty under the swap agreement are
guaranteed, subject to a maximum amount, by the Company and counterparty's
parent corporation, respectively. In the event of nonperformance by the
counterparty and its parent corporation, NJR Energy's revenues would be impacted
by the difference between the fixed price it is receiving under the gas contract
compared with the price of natural gas in the spot market for the volumes it
does not produce. However, the Company does not anticipate nonperformance by the
counterparty.
39
<PAGE>
New Jersey Resources Corporation
NJNR Pipeline Company, a wholly owned subsidiary of NJR Energy, owns a 2.8%
equity interest in the Iroquois Gas Transmission System, L.P. (Iroquois) which
has constructed and is operating a 375-mile, natural gas pipeline from the
Canadian border to Long Island. The Company has guaranteed a pro-rata share of a
debt service letter of credit obtained by Iroquois which totalled $1 million at
September 30, 1994. The Company does not expect to incur any cash requirements
under the guarantee.
The Company is party to various claims, legal actions and complaints arising
in the ordinary course of business. In management's opinion, the ultimate
disposition of these matters will not have a material adverse effect on either
its financial condition or results of operations.
10. Business Segment Data
Information related to the Company's various business segments, excluding
capital expenditures, which are presented in the Consolidated Statements of Cash
Flows, is detailed below:
(Thousands) 1994 1993 1992
- - --------------------------------------------------------------------------------
Operating revenues
Natural gas distribution $480,321 $436,587 $383,103
Real estate 12,466 12,554 12,530
Oil and gas 9,440 9,018 9,060
-------- -------- --------
Total before eliminations 502,227 458,159 404,693
Eliminations (intersegment revenues) (3,478) (3,413) (3,955)
-------- -------- --------
Total $498,749 $454,746 $400,738
======== ======== ========
Depreciation and amortization
Natural gas distribution $ 19,270 $ 19,070 $ 17,602
Real estate 1,941 1,924 1,834
Oil and gas 6,234 4,202 4,272
PPI and other 150 209 210
-------- -------- --------
Total $ 27,595 $ 25,405 $ 23,918
======== ======== ========
Operating income before income taxes
Natural gas distribution $ 65,663 $ 56,773 $ 51,384
Real estate 5,426 5,976 6,187
Oil and gas (2,335) (1,871) (1,509)
PPI and other 28 (21) 323
-------- -------- --------
Total $ 68,782 $ 60,857 $ 56,385
======== ======== ========
Assets at year end
Natural gas distribution $660,166 $597,508 $531,902
Real estate 94,516 94,608 93,817
Oil and gas 33,506 41,391 38,706
PPI and other 9,159 5,155 4,180
-------- -------- --------
Total $797,347 $738,662 $668,605
======== ======== ========
11. Selected Quarterly Data (Unaudited)
A summary of financial data for each fiscal quarter of 1994 and 1993 follows.
Due to the seasonal nature of the Company's utility business, quarterly amounts
vary significantly during the year. In the opinion of management, the
information furnished reflects all adjustments necessary for a fair presentation
of the results of the interim periods.
(Thousands, First Second Third Fourth
except per share data) Quarter Quarter Quarter Quarter
- - --------------------------------------------------------------------------------
1994
Operating revenues $136,145 $222,784 $75,605 $64,215
Operating income 15,917 29,136 7,219 1,659
Net income before SFAS 109 10,521 23,274 3,302 (4,823)
Net income 11,242 23,274 3,302 (4,823)
Earnings per common share
before SFAS 109 .62 1.37 .19 (.28)
Earnings per common share .66 1.37 .19 (.28)
======== ======== ======= =======
1993
Operating revenues $132,647 $189,465 $75,734 $56,900
Operating income 15,445 27,759 5,912 (216)
Net income 9,740 21,973 861 (5,412)
Earnings per common share .59 1.33 .05 (.32)
======== ======== ======= =======
40
<PAGE>
Directors and Senior Officers New Jersey Resources Corporation
New Jersey Resources Corporation
Directors
Roger E. Birk, 64 (C,E)
President (retired)
Federal National Mortgage Association (1986)
Bruce G. Coe, 64 (A,C,D,E)
President
New Jersey Business and Industry
Association (1984)
Joe B. Foster, 60 (C)
Chairman and Chief Executive Officer
Newfield Exploration Company (1994)
Warren R. Haas, 67 (B,D)
Vice President (retired)
Merrill Lynch Specialists, Inc. (1987)
Dr. Shirley A. Jackson, 48 (A,B,C,E)
Professor of Physics
Rutgers University (1982)
Dorothy K. Light, 57 (B,E)
Corporate Vice President and Secretary
The Prudential Insurance
Company of America (1990)
Donald E. O'Neill, 68 (A,D,E)
Chairman, International Division
and Executive Vice President (retired)
Warner-Lambert Company (1982)
Oliver G. Richard III, 42 (A)
Chairman of the Board and
Chief Executive Officer
New Jersey Resources Corporation (1991)
Richard S. Sambol, 68 (A,C,D)
President
Sambol Construction Corporation (1990)
Charles G. Stalon, 65 (B)
Independent Consultant
on Energy Regulation (1994)
Thomas B. Toohey, 70 (B,C)
President, Chief Operating Officer and
Chief Financial Officer (retired)
New Jersey Resources Corporation (1986)
John J. Unkles, Jr., 64 (B,D)
Managing Director (retired)
Tucker Anthony, Inc. (1982)
Duncan Thecker, 79
President
Duncan Thecker Associates
Director Emeritus (1982)
Senior Officers
Oliver G. Richard III, 42
Chairman of the Board
and Chief Executive Officer (1991)
Peter M. Schwolsky, 48
Executive Vice President, Law and
Corporate Development (1991)
Laurence M. Downes, 37
Senior Vice President
and Chief Financial Officer (1985)
Oleta J. Harden, 45
Senior Vice President and Corporate
Secretary (1984)
Glenn C. Lockwood, 33
Vice President and Controller (1988)
41
<PAGE>
New Jersey Resources Corporation
New Jersey Natural Gas Company
Directors
Bruce G. Coe
Laurence M. Downes
Warren R. Haas
Dorothy K. Light
Donald E. O'Neill
Oliver G. Richard III
Richard S. Sambol
Peter M. Schwolsky
Senior Officers
Oliver G. Richard III, 42
President and Chief Executive Officer (1991)
Laurence M. Downes, 37
Executive Vice President, Finance (1985)
Francis X. Colford, 42
Senior Vice President,
Accounting and Financial Control (1978)
Gary A. Edinger, 44
Senior Vice President, Gas Supply (1972)
Oleta J. Harden, 45
Senior Vice President, Corporate Secretary
and General Counsel (1984)
Thomas J. Kononowitz, 52
Senior Vice President, Marketing and
Consumer Services (1963)
Carl W. Porter, 45
Senior Vice President, Operations (1992)
Hugo C. Bottino, 43
Vice President, Human Resources (1981)
Timothy C. Hearne, 38
Vice President and Treasurer (1985)
John Huff, 51
Vice President, Information Systems (1979)
David M. Klucsik, 39
Vice President, Government Affairs (1984)
Mary Ann Martin, 59
Vice President, Consumer and Community Relations (1959)
Paradigm Power, Inc.
Dr. Michael J. Gluckman, 57
President and Chief Executive Officer (1992)
Peter F. McEwan, 53
Vice President, Project Development (1993)
NJR Energy Corporation
Stephen J. Harvey, 34
President and Chief Executive Officer (1993)
Tommy L. Sprinkle, 56
Vice President, Engineering (1994)
Commercial Realty & Resources Corp.
James M. Bollerman, 40
President and Chief Executive Officer (1981)
John Lishak, Jr., 54
Senior Vice President, Marketing (1981)
Brian FitzPatrick, 39
Vice President and Treasurer (1980)
New Jersey Resources Corporation congratulates
Bruce G. Coe, NJR Director and 1994 recipient of the New Jersey Alliance for
Action President's Award. The Alliance for Action annually recognizes
individuals who make outstanding contributions to New Jersey's quality of life
and economic well-being.
(A) Member of Executive Committee
(B) Member of Audit Committee
(C) Member of Finance and Pension Investment Committee
(D) Member of Compensation and Benefits Committee
(E) Member of Nominating Committee
Date represents year of affiliation.
41--(continued)
<PAGE>
Shareholder Information New Jersey Resources Corporation
Annual Meeting
The annual meeting of New Jersey Resources Corporation shareholders will be
held at 10:30 a.m. on Wednesday, March 8, 1995, at the Garden State Arts
Reception Center. The Garden State Arts Center is located at Exit 116 of the
Garden State Parkway in Holmdel, New Jersey.
Stock Listing
New Jersey Resources Corporation common stock is traded on the New York
Stock Exchange under the symbol NJR. The stock appears as NewJerRes or NJRsc in
the stock tables found in many daily newspapers and business publications.
Investor and Media Information
Members of the financial community who would like information about the
Company are invited to contact Timothy C. Hearne, Vice President and Treasurer,
at 908. 938. 1098, or Dennis R. Puma, Manager, Investor Relations, at 908. 938.
1229. Members of the media are invited to contact Catherine M. Downey, Manager,
Corporate Communications, at 908. 938. 7866.
Employee Environmental Committee
The Company has a dedicated Employee Environmental Committee. Many thanks
to Adele Tresten (Chairperson, 1993) and Joyce Notte (Chairperson, 1994).
Stock Transfer Agent and Registrar
The Transfer Agent and Registrar for New Jersey Resources Corporation's
common stock is The First National Bank of Boston (Bank of Boston). Shareholders
with questions about account activity such as cash contributions or stock
transfers should contact the Bank's investor relations representatives between
the hours of 8 a.m. and 7 p.m. eastern time by calling toll-free: 800. 736. 3001
or 800. 952. 9245 TTY/TDD service for the hearing impaired.
Correspondence with the Bank should be addressed to:
The First National Bank of Boston
Investor Relations
Mail Stop 45-02-09
P.O. Box 644
Boston, MA 02102 0644
Dividends
Dividends on common stock are declared quarterly by the Board of Directors.
Shareholders of record will receive their dividend checks directly from the Bank
of Boston unless they have elected to re-invest their dividends through our
Automatic Dividend Reinvestment Plan.
New Jersey Resources now offers DIRECT DEPOSIT of dividends into your bank
account so the funds are available the same day they are paid. This eliminates
the worry of lost, stolen, or mail-delayed checks. Contact the Bank of Boston at
800. 736. 3001 for details and an authorization form.
Automatic Dividend Reinvestment Plan
New Jersey Resources Corporation offers an Automatic Dividend Reinvestment
and Customer Stock Purchase Plan. It provides shareholders, eligible employees
of the Company and residential customers of New Jersey Natural Gas Company and
their eligible family members the convenient opportunity to reinvest their
common stock dividends, plus an additional amount not exceeding $30,000 per
year, in additional common stock without payment of any brokerage or other fees.
Highlights of the Plan include:
* No fee to join the Plan.
* Cash contributions of as little as $25, to a maximum of $30,000
annually.
* Investments of cash contributions are made on the first and fifteenth
day of each month. A "safekeeping" feature which allows shareholders
to have the Bank of Boston hold their certificates.
Details are contained in the Plan prospectus, which may be obtained from the
Bank of Boston or from the Investor Relations Department, New Jersey Resources
Corporation, 1415 Wyckoff Road, P.O. Box 1468, Wall, New Jersey 07719. The
telephone number is 908.938.1230.
Non-customer authorization forms to join the Plan must be obtained from the
Bank of Boston. Customers of New Jersey Natural Gas Company desiring to join the
Plan must obtain authorization forms directly from the Company at the address
and/or telephone number above.
10-K Annual Report
New Jersey Resources Corporation files its annual report on Form 10-K with the
Securities and Exchange Commission. The report is available to shareholders upon
written request to the Investor Relations Department, New Jersey Resources
Corporation, 1415 Wyckoff Road, P.O. Box 1468, Wall, New Jersey 07719.
This annual report was printed on recycled paper.
42
EXHIBIT 21-1
SUBSIDIARIES OF THE REGISTRANT
SUBSIDIARY STATE OF INCORPORATION
New Jersey Natural Gas Company New Jersey
Paradigm Resources Corporation New Jersey
Subsidiaries:
Commercial Realty & Resources Corp. New Jersey
NJR Energy Corporation New Jersey
Subsidiaries:
New Jersey Natural Resources Company New Jersey
NJNR Pipeline Company New Jersey
NJR Storage Corporation Delaware
Natural Resources Compressor Company New Jersey
NJRE Operating Company Oklahoma
Paradigm Power, Inc. New Jersey
Subsidiary:
Lighthouse One, Inc. New York
Lighthouse II, Inc. Delaware
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
New Jersey Resources Corporation Exhibit 27-1
Financial Data Schedule UT
For the Fiscal Year Ended September 30, 1994
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW JERSEY
RESOURCES CORPORATION'S 1994 ANNUAL REPORT TO STOCKHOLDERS INCLUDING THE
CONSOLIDATED STATEMENTS OF INCOME, CONSOLIDATED STATEMENTS OF CASH FLOWS,
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF COMMON STOCK EQUITY
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1994
<PERIOD-START> OCT-01-1993
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 523,458
<OTHER-PROPERTY-AND-INVEST> 167,533
<TOTAL-CURRENT-ASSETS> 103,231
<TOTAL-DEFERRED-CHARGES> 53,739
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20,000
2,070
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0
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<OPERATING-INCOME-LOSS> 53,931
<OTHER-INCOME-NET> 2,208
<INCOME-BEFORE-INTEREST-EXPEN> 56,139
<TOTAL-INTEREST-EXPENSE> 22,203
<NET-INCOME> 33,936
1,662
<EARNINGS-AVAILABLE-FOR-COMM> 32,995
<COMMON-STOCK-DIVIDENDS> 26,019
<TOTAL-INTEREST-ON-BONDS> 14,841
<CASH-FLOW-OPERATIONS> 41,440
<EPS-PRIMARY> 1.93
<EPS-DILUTED> 1.93
</TABLE>
