<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 Commission file number 1-8359
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
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 732-938-1480
(Address of principal executive offices) (Registrant's telephone number, including area code)
</TABLE>
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:
The number of shares outstanding of $2.50 par value Common Stock as of May 8,
2000 was 17,654,389.
<PAGE> 2
PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
-------- -------- -------- --------
(Thousands, except per share data)
<S> <C> <C> <C> <C>
OPERATING REVENUES ........................ $368,988 $327,315 $632,426 $571,905
-------- -------- -------- --------
OPERATING EXPENSES
Gas purchases ........................... 268,179 229,419 462,160 405,756
Operation and maintenance ............... 22,719 20,770 43,326 41,849
Depreciation and amortization ........... 7,808 7,401 15,789 14,800
Energy and other taxes .................. 14,797 16,032 24,841 26,512
-------- -------- -------- --------
Total operating expenses ................. 313,503 273,622 546,116 488,917
-------- -------- -------- --------
OPERATING INCOME .......................... 55,485 53,693 86,310 82,988
Other income, net ......................... 119 346 564 898
Interest charges, net ..................... 4,843 5,403 10,019 10,741
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES ................ 50,761 48,636 76,855 73,145
Income tax provision ...................... 18,913 18,289 28,828 27,555
-------- -------- -------- --------
INCOME BEFORE PREFERRED STOCK DIVIDENDS ... 31,848 30,347 48,027 45,590
Preferred stock dividends ................. 7 10 15 101
-------- -------- -------- --------
INCOME FROM CONTINUING OPERATIONS ......... 31,841 30,337 48,012 45,489
Income from discontinued operations ....... 828 -- 828 --
-------- -------- -------- --------
NET INCOME ................................ $ 32,669 $ 30,337 $ 48,840 $ 45,489
======== ======== ======== ========
EARNINGS PER COMMON SHARE-BASIC
INCOME FROM CONTINUING OPERATIONS .... $ 1.80 $ 1.70 $ 2.71 $ 2.55
======== ======== ======== ========
NET INCOME ........................... $ 1.85 $ 1.70 $ 2.75 $ 2.55
======== ======== ======== ========
EARNINGS PER COMMON SHARE-DILUTED
INCOME FROM CONTINUING OPERATIONS .... $ 1.79 $ 1.69 $ 2.69 $ 2.53
======== ======== ======== ========
NET INCOME ........................... $ 1.84 $ 1.69 $ 2.74 $ 2.53
======== ======== ======== ========
DIVIDENDS PER COMMON SHARE ................ $ .43 $ .42 $ .86 $ .84
======== ======== ======== ========
AVERAGE SHARES OUTSTANDING
BASIC ................................ 17,684 17,869 17,732 17,856
======== ======== ======== ========
DILUTED .............................. 17,787 17,976 17,850 17,972
======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
1
<PAGE> 3
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
2000 1999
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income .......................................... $ 48,840 $ 45,489
Adjustments to reconcile net income to cash flows
Depreciation and amortization ...................... 15,789 14,800
Amortization of deferred charges ................... 3,722 1,653
Deferred income taxes .............................. (1,510) 2,049
Change in working capital .......................... 31,812 9,041
Other, net ......................................... (8,645) (2,314)
-------- --------
Net cash flows from operating activities ............. 90,008 70,718
-------- --------
CASH FLOWS USED IN FINANCING ACTIVITIES
Proceeds from common stock .......................... 4,058 4,576
Payments of long-term debt .......................... (2,582) (7,377)
Repurchase of treasury stock ........................ (9,634) (1,989)
Payments of common stock dividends .................. (15,114) (14,811)
Payments of preferred stock ......................... -- (20,000)
Net change in short-term debt ....................... (36,400) (6,600)
-------- --------
Net cash flows used in financing activities .......... (59,672) (46,201)
-------- --------
CASH FLOWS USED IN INVESTING ACTIVITIES
Expenditures for
Utility plant ...................................... (24,940) (22,951)
Real estate properties ............................. (281) (89)
Equity investments and other ....................... (250) --
Cost of removal .................................... (2,579) (2,008)
Proceeds from asset sales ........................... 556 --
-------- --------
Net cash flows used in investing activities .......... (27,494) (25,048)
-------- --------
Net change in cash and temporary investments ......... 2,842 (531)
Cash and temporary investments at September 30 ....... 2,123 2,476
-------- --------
Cash and temporary investments at March 31 ........... $ 4,965 $ 1,945
======== ========
CHANGES IN COMPONENTS OF WORKING CAPITAL
Receivables ......................................... $(54,070) $(94,438)
Inventories ......................................... 29,109 43,144
Deferred gas costs .................................. 17,812 42,493
Purchased gas ....................................... 19,055 19,610
Prepaid and accrued taxes, net ...................... 33,193 26,608
Customers' credit balances and deposits ............. (8,966) (8,042)
Accounts payable .................................... 974 (7,692)
Other, net .......................................... (5,295) (12,642)
-------- --------
Total ................................................ $ 31,812 $ 9,041
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION
Cash paid for
Interest (net of amounts capitalized) ............... $ 9,536 $ 10,102
Income taxes ........................................ $ 7,676 $ 10,292
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE> 4
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30, MARCH 31,
2000 1999 1999
(unaudited) (unaudited)
----------- ----------- -----------
(Thousands)
<S> <C> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Utility plant, at cost ...................... $ 965,789 $ 941,490 $ 917,713
Real estate properties and other, at cost ... 26,600 26,326 26,148
----------- ----------- -----------
992,389 967,816 943,861
Accumulated depreciation and amortization ... (274,297) (262,372) (252,739)
----------- ----------- -----------
Property, plant and equipment, net ......... 718,092 705,444 691,122
----------- ----------- -----------
CURRENT ASSETS
Cash and temporary investments .............. 4,965 2,123 1,945
Construction fund ........................... 12,100 12,100 16,000
Customer accounts receivable ................ 123,598 80,974 129,815
Unbilled revenues ........................... 15,753 2,950 17,540
Allowance for doubtful accounts ............. (3,010) (1,684) (2,189)
Gas in storage, at average cost ............. 6,717 35,718 9,579
Materials and supplies, at average cost ..... 3,609 3,717 3,920
Prepaid state taxes ......................... -- 4,749 --
Deferred gas costs .......................... -- -- 6,129
Other ....................................... 12,183 8,598 16,980
----------- ----------- -----------
Total current assets ....................... 175,915 149,245 199,719
----------- ----------- -----------
DEFERRED CHARGES AND OTHER
Equity investments .......................... 9,276 8,813 9,009
Regulatory assets ........................... 72,721 64,063 40,726
Long-term deferred gas costs ................ -- 9,744 --
Other ....................................... 24,462 22,703 30,813
----------- ----------- -----------
Total deferred charges and other ........... 106,459 105,323 80,548
----------- ----------- -----------
Total assets ......................... $ 1,000,466 $ 960,012 $ 971,389
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30, MARCH 31,
2000 1999 1999
(unaudited) (unaudited)
---------- ---------- ----------
(Thousands)
<S> <C> <C> <C>
CAPITALIZATION
Common stock equity ........................ $ 331,126 $ 302,169 $ 322,067
Redeemable preferred stock ................. 520 520 640
Long-term debt ............................. 284,980 287,723 319,364
---------- ---------- ----------
Total capitalization ...................... 616,626 590,412 642,071
---------- ---------- ----------
CURRENT LIABILITIES
Current maturities of long-term debt ....... 20,479 20,318 1,957
Short-term debt ............................ 25,300 61,700 54,100
Purchased gas .............................. 97,884 78,829 67,071
Accounts payable and other ................. 29,473 28,499 22,014
Dividends payable .......................... 7,611 7,465 7,510
Accrued taxes .............................. 31,816 2,138 6,995
Overrecovered gas costs .................... 4,739 3,369 --
Customers' credit balances and deposits .... 6,504 15,470 5,610
---------- ---------- ----------
Total current liabilities ................. 223,806 217,788 165,257
---------- ---------- ----------
DEFERRED CREDITS
Deferred income taxes ...................... 62,957 65,559 90,698
Deferred investment tax credits ............ 10,019 10,293 10,532
Deferred revenue ........................... 22,013 23,020 18,810
Long-term overrecovered gas costs .......... 6,698 -- 10,200
Other ...................................... 58,347 52,940 33,821
---------- ---------- ----------
Total deferred credits .................... 160,034 151,812 164,061
---------- ---------- ----------
Total capitalization and liabilities ... $1,000,466 $ 960,012 $ 971,389
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The preceding financial statements have been prepared without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
(the SEC). The September 30, 1999 balance sheet data is derived from the audited
financial statements of New Jersey Resources Corporation (the Company). Although
management believes that the disclosures are adequate to make the information
presented not misleading, it is recommended that these financial statements be
read in conjunction with the financial statements and the notes thereto included
in the Company's 1999 Annual Report on Form 10-K.
In the opinion of management, the information furnished reflects all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair statement of the results of the interim periods. Because of the seasonal
nature of the Company's utility operations and other factors, the results of
operations for the interim periods presented are not indicative of the results
to be expected for the entire year.
2. Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries -- New Jersey Natural Gas Company (NJNG), NJR Energy
Holdings Corporation (Energy Holdings) and NJR Development Company (NJR
Development). NJR Energy Services Company (Energy Services), New Jersey Natural
Energy Company (Natural Energy) and NJR Energy Corporation (NJR Energy) are
wholly-owned subsidiaries of Energy Holdings and Commercial Realty & Resources
Corp. (CR&R), is a wholly-owned subsidiary of NJR Development. Significant
intercompany accounts and transactions have been eliminated.
3. New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133 "Accounting for
Derivative Investments and Hedging Activities," which must be adopted by the
quarter ending December 31, 2000. The Company has created a project team to
perform a detailed evaluation of the effects of SFAS No. 133 on its financial
condition and results of operations. The impact of SFAS No. 133 on the Company's
future results will vary based on the use of derivative instruments during any
given reporting period following the time of adoption.
The Company has adopted Emerging Issues Task Force 98-10 "Accounting for
Contracts Involved in Energy Trading and Risk Management Activities," the impact
of which was immaterial to the Company's financial condition and results of
operations.
5
<PAGE> 7
4. Capitalized Interest
The Company's capitalized interest totaled $287,000 and $179,000 for the
three months ended March 31, 2000 and 1999, respectively, and $541,000 and
$361,000 for the six months ended March 31, 2000 and 1999, respectively.
5. Legal and Regulatory Proceedings
a. Energy Deregulation Legislation
In February 1999, the Electric Discount and Energy Competition Act (the
Act), which provides the framework for the restructuring of New Jersey's energy
markets, became law. In January 2000, the New Jersey Board of Public Utilities
(the BPU), verbally approved a stipulation agreement among various parties to
fully open NJNG's residential markets to competition, restructure its rates to
segregate its Basic Gas Supply (BGS) Service and Delivery service prices as
required by the Act, and expand an incentive for residential and small
commercial customers to switch to transportation service. The stipulation
agreement also extends incentives for NJNG's off-system sales and capacity
management programs through December 31, 2002. Additionally, NJNG received
approval to recover carrying costs on its expenditures associated with
remediating its former manufactured gas plants. These expenditures are recovered
over rolling seven-year periods and are subject to annual BPU review and
approval.
The Act also allows continuation of each utility's role as a gas supplier
at least until December 31, 2002. The BPU must determine the ongoing role of
each utility in providing gas supply services by January 1, 2002. The Act allows
natural gas utilities to provide competitive services (e.g., appliance
services). By December 31, 2000 the BPU is expected to decide whether certain
customer account services (i.e., meter reading, billing and collections) should
be competitive.
b. Levelized Gas Adjustment (LGA) and Other Adjustment Clauses
In September 1999, NJNG filed to reduce its LGA by less than 1%, reflecting
a proposal to decrease the Prior Gas Cost Adjustment (PGCA) and Transportation
Education and Implementation (TEI), partially offset by a minor increase to its
Remediation Adjustment (RA) factor. No change was proposed for the Gas Cost
Recovery (GCR), Demand Side Management (DSM) and Weather Normalization Clause
(WNC) factors. The rate restructuring mandated by the Act discussed in Note 5a
Energy Deregulation Legislation above, did not impact the rates of any of the
individual clauses.
In August 1999, NJNG filed a Comprehensive Resource Analysis (CRA) plan
pursuant to a BPU order. The CRA, which will replace NJNG's current DSM program,
includes funding for class I renewables (e.g., fuel cells), and has a program
cost of $2.9 million recoverable through rates. The BPU is currently evaluating
two separate stipulations filed in this proceeding.
c. Gas Remediation
NJNG has identified eleven former manufactured gas plant (MGP) sites, dating
back to the late 1800's and early 1900's, which contain contaminated residues
from the former gas manufacturing operations. Ten of the eleven sites in
question were acquired by NJNG in 1952. All of the gas manufacturing operations
ceased at these sites at least by the mid-1950's and in some cases had been
discontinued many
6
<PAGE> 8
years earlier, and all of the old gas manufacturing facilities were subsequently
dismantled by NJNG or the former owners. NJNG is currently involved in
administrative proceedings with the New Jersey Department of Environmental
Protection (NJDEP) 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 NJDEP 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. Through a
Remediation Rider approved by the BPU, NJNG is recovering its expenditures
incurred through June 30, 1998 over a seven-year period. Costs incurred
subsequent to June 30, 1998, including carrying costs on the deferred
expenditures, as noted above, will be reviewed annually and recovered over
rolling seven-year periods, subject to BPU approval.
In March 1995, NJNG filed a complaint in New Jersey Superior Court against
various insurance carriers for declaratory judgment and for damages arising from
such defendants' breach of their contractual obligations to defend and/or
indemnify NJNG against liability for claims and losses (including defense costs)
alleged against NJNG relating to environmental contamination at the former MGP
sites and other sites. NJNG is seeking (i) a declaration of the rights, duties
and liabilities of the parties under various primary and excess liability
insurance policies purchased from the defendants by NJNG from 1951 through 1985,
and (ii) compensatory and other damages, including costs and fees arising out of
defendants' obligations under such insurance policies. The complaint was amended
in July 1996 to name Kaiser-Nelson Steel & Salvage Company (Kaiser-Nelson) and
its successors as additional defendants. The Company is seeking (a) a
declaration of the rights, duties and liabilities of the parties under
agreements with respect to claims against the Company that allege property
damage caused by various substances used, handled or generated by NJNG or the
predecessor in title that were removed from several of the MGP sites by
Kaiser-Nelson, and (b) money damages or compensatory relief for the harm caused
by Kaiser-Nelson's aforementioned actions. Discovery is proceeding in this
matter. There can be no assurance as to the outcome of these proceedings.
d. South Brunswick Asphalt, L.P.
NJNG has been named as 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 to 1983 by an affiliate of
SBA (Seal Tite Corp.) from NJNG's former gas manufacturing plant sites has been
alleged by the NJDEP 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 NJDEP issued letters classifying the tar emulsion/sand and
gravel mixture at each site as dry industrial waste, a non-hazardous
classification. In April 1996, in a meeting with all parties to the litigation
and the judge assigned to the case, the NJDEP confirmed the non-hazardous
classification, which will allow for conventional disposal. In May 1997, SBA
submitted applications to NJDEP for permits to allow SBA to recycle the tar
emulsion/sand and gravel mixture at each site into asphalt, to be used as a
paving materials. In July 1998, SBA filed an amended complaint adding NJDEP to
the proceedings to facilitate the resolution of these applications. Following
service of
7
<PAGE> 9
SBA's amended complaint, NJDEP filed a motion for dismissal of the amended
complaint, but has not formally granted or denied SBA's permit applications. In
March 1999, the court granted NJDEP's motion in part and denied NJDEP's motion
in part, and directed SBA to file a more definite statement of its claims for
equitable relief against NJDEP, including its request that a mandatory
injunction be imposed compelling NJDEP to issue the subject permits. SBA has
filed a more definite statement of its claims, and NJDEP has renewed its motion
to dismiss the amended complaint. In its motion, NJDEP alleges, among other
things, that it has not acted upon SBA's applications for permits to recycle the
tar emulsion/sand and gravel mixture because SBA has not submitted completed
applications for these permits. This allegation is denied by SBA. NJDEP's motion
to dismiss is pending in the Superior Court and it is not known when the Court
will issue a decision. 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. Combe Fill South Landfill
NJNG has been joined as a third-party defendant in two civil actions
commenced in October 1998 in the U.S. District Court for the District of New
Jersey by the U.S. Environmental Protection Agency and NJDEP. These two actions
seek recovery of costs expended in connection with, and for continuation of the
cleanup of, the Combe Fill South Landfill, a Superfund site in Chester, New
Jersey. The plaintiffs claim that hazardous waste NJNG is alleged to have
generated was sent to the site. There are approximately 180 defendants and
third-party defendants in the actions thus far. Each third-party complaint seeks
damages under CERCLA Section 113 and the New Jersey Spill Act, declaratory
relief holding each third-party defendant strictly liable, and contribution and
indemnification under the common law of the United States and New Jersey. No
specific monetary demands or scope of cleanup work have been set forth to date.
NJNG is in the process of investigating the allegations, formulating its
position with respect thereto and has agreed to participate in an alternate
dispute resolution process encouraged by the Court. Its insurance carriers have
been notified and one has agreed to assume responsibility for the legal
expenses, while reserving its rights with regard to liability. NJNG is currently
unable to predict the extent, if any, to which it may have cleanup or other
liability with respect to these civil actions, but would seek recovery of any
such costs through the ratemaking process. No assurance can be given as to the
timing or extent of the ultimate recovery of any such costs.
f. 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.
6. Earnings Per Share
The Company has adopted SFAS No. 128 "Earnings per Share" which establishes
standards for computing and presenting basic and diluted earnings per share
(EPS). The incremental shares required for inclusion in the denominator for the
diluted EPS calculation were 102,588 and 107,617 for the three months ended
March 31, 2000 and 1999, respectively, and 118,098 and 116,348 for the six
months ended March 31, 2000 and 1999, respectively. These shares relate to stock
options and restricted stock and were calculated using the treasury stock
method. The numerator for each applicable basic and diluted calculation was
income from continuing operations and net income, respectively.
8
<PAGE> 10
7. Long-Term Debt
In April 1998, NJNG entered into a loan agreement whereby the New Jersey
Economic Development Authority loaned NJNG the proceeds from its $18 million
Natural Gas Facilities Revenue Bonds, Series 1998C, which were deposited into a
construction fund. NJNG may draw down on these funds in reimbursement for
certain qualified expenditures. In April 1999 and 2000, NJNG drew down $3.9
million and $4.5 million, respectively, from the construction fund and issued a
like amount of its Series GG Bonds.
8. Discontinued Operations
In May 1995, the Company adopted a plan to exit the oil and natural gas
production business and pursue the sale of the reserves and related assets of
NJR Energy and its subsidiary, New Jersey Natural Resources Company (NJNR). The
Company accounted for this segment as a discontinued operation and in fiscal
1995 recorded an after-tax charge of $8.7 million, or $.49 per share. This
charge was based on estimates of the anticipated loss from operations until the
assets were sold, the estimated loss on the sale of the remaining reserves and
other costs related to the closing of its offices in Dallas and Tulsa. Based
upon actual proceeds received from the sale of the assets and costs incurred,
net of insurance recoveries received in January 2000, the Company closed out its
reserve balance and reported income from discontinued operations of $828,000, or
$.05 per share, in the quarter ended March 31, 2000.
9. Segment Reporting
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
--------- --------- --------- ---------
(Thousands)
<S> <C> <C> <C> <C>
Operating Revenues
Natural gas distribution $ 269,817 $ 256,371 $ 470,343 $ 434,969
Energy holdings 99,179 73,743 162,466 141,862
Real estate 278 233 555 484
--------- --------- --------- ---------
Subtotal 369,274 330,347 633,364 577,315
Intersegment revenues (286) (3,032) (938) (5,410)
--------- --------- --------- ---------
Total $ 368,988 $ 327,315 $ 632,426 $ 571,905
========= ========= ========= =========
Operating Income
Natural gas distribution $ 52,480 $ 51,919 $ 81,685 $ 78,880
Energy holdings 2,060 1,278 2,886 2,087
Real estate (222) (154) (526) (227)
Other 1,167 288 2,265 1,828
--------- --------- --------- ---------
Total $ 55,485 $ 53,331 $ 86,310 $ 82,568
========= ========= ========= =========
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
As of As of As of
March 31, 2000 September 30, 1999 March 31, 1999
-------------- ------------------ --------------
(Thousands)
<S> <C> <C> <C>
Assets
Natural gas distribution $ 928,870 $ 883,072 $ 886,793
Energy holdings 37,303 46,371 44,821
Real estate 22,407 22,396 22,140
Other 11,886 8,173 17,635
---------- ---------- ----------
Total $1,000,466 $ 960,012 $ 971,389
========== ========== ==========
</TABLE>
10. Other
At March 31, 2000 there were 17,622,669 shares of common stock outstanding
and the book value per share was $18.79.
Certain reclassifications have been made of previously reported amounts to
conform with current year classifications.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 2000
A. RESULTS OF OPERATIONS
Consolidated income from continuing operations for the quarter ended March
31, 2000 increased 5% to $31.8 million, compared with $30.3 million for the same
period last year. Basic EPS from continuing operations increased 5.9% to $1.80,
compared with $1.70 last year. Diluted EPS from continuing operations also
increased 5.9% to $1.79, compared with $1.69 last year.
Consolidated income from continuing operations for the six months ended
March 31, 2000 increased 5.5% to $48 million, compared with $45.5 million for
the same period last year. Basic EPS from continuing operations increased 6.3%
to $2.71, compared with $2.55 last year. Diluted EPS from continuing operations
also increased 6.3% to $2.69, compared with $2.53 last year.
The increase in consolidated earnings from continuing operations in both
the three and six months ended March 31, 2000 was attributed primarily to
continued profitable customer growth and higher average customer usage at the
Company's principal subsidiary, NJNG, and improved overall unregulated operating
results.
Consolidated net income for the three and six months ended March 31, 2000
includes $828,000, or $.05 per share, of income from discontinued operations
representing the final true-up of the Company's reserve established in 1995 in
conjunction with exiting the gas exploration and production business. This
income represents the excess of proceeds received from the sale of the assets
and the costs incurred, net of insurance recoveries received in January 2000,
compared with the estimates made in 1995.
NJNG OPERATIONS
NJNG's financial results are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
-------- -------- -------- --------
(Thousands)
<S> <C> <C> <C> <C>
Gross margin
Residential and commercial $ 66,589 $ 64,665 $110,889 $108,344
Firm transportation 12,337 11,240 21,586 18,399
-------- -------- -------- --------
Total firm margin 78,926 75,905 132,475 126,743
Interruptible 198 150 418 298
Off-system and capacity management 1,278 1,694 2,842 3,015
-------- -------- -------- --------
Total gross margin $ 80,402 $ 77,749 $135,735 $130,056
======== ======== ======== ========
Appliance service revenues $ 3,044 $ 2,862 $ 6,130 $ 5,919
======== ======== ======== ========
Operating income $ 52,480 $ 51,919 $ 81,685 $ 78,880
======== ======== ======== ========
Net income $ 30,476 $ 29,932 $ 45,976 $ 44,050
======== ======== ======== ========
</TABLE>
11
<PAGE> 13
Gross Margin
Gross margin is defined as gas revenues less gas costs, sales tax and a
Transitional Energy Facilities Assessment (TEFA). Gross margin provides a more
meaningful basis for evaluating utility operations, since gas costs, sales tax
and TEFA 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 rates included in NJNG's tariff. The LGA clause allows NJNG to
recover gas costs that exceed the level reflected in its base rates. Sales tax
is calculated at 6% of revenue and excludes off-system sales, sales to other
utilities and federal accounts. TEFA is calculated on a per therm basis and
excludes sales to other utilities, off-system sales and federal accounts.
Firm Margin
Residential and commercial (i.e., firm) gross margin is subject to the WNC,
which provides for a revenue adjustment if the weather varies by more than
one-half of 1% from normal, or 20-year average, weather. The WNC does not fully
protect NJNG from factors such as unusually warm weather and declines in
customer usage patterns, which were set at the conclusion of NJNG's last base
rate case in January 1994. The accumulated adjustment from one heating season
(i.e., October-May) is billed or credited to customers in subsequent periods.
This mechanism reduces the variability of both customer bills and NJNG's
earnings due to weather fluctuations.
The components of gross margin from firm customers are being impacted by
customers switching from sales service to firm transportation service. NJNG's
total gross margin is not negatively impacted by customers who utilize its firm
transportation service and purchase their gas from another supplier. This is due
to NJNG's tariff which is designed such that no profit is earned on the
commodity portion of sales to firm customers, and all customers who purchase gas
from another supplier continue to utilize NJNG for transportation.
Total firm margin increased by 4% and 5% for the three and six months ended
March 31, 2000, respectively, compared with the same periods last year,
reflecting customer growth and higher average customer usage.
The weather for the six months ended March 31, 2000 was 8% warmer than
normal, which, in accordance with the WNC, resulted in $7.5 million of gross
margin being accrued for future recovery from customers. At March 31, 2000, NJNG
had $18.9 million in accrued WNC margins to be collected from its customers in
fiscal 2001 and 2002.
Gross margin from sales to firm customers increased $1.9 million, or 2.9%,
and $2.5 million, or 2.3%, for the three and six months ended March 31, 2000,
respectively, compared with the same periods last year. The increase in gross
margin for both periods was due primarily to the impact of 11,734 customer
additions during the twelve months ended March 31, 2000, and the impact of the
WNC.
Sales to firm customers were 20.5 billion cubic feet (Bcf) and 33.1 Bcf for
the three and six months ended March 31, 2000, compared with 20.4 Bcf and 32.7
Bcf for the same period last year. The increase in sales was due to continued
customer growth.
12
<PAGE> 14
Gross margin from firm transportation increased $1.1 million, or 9.8%, and
$3.2 million, or 17.3%, for the three and six months ended March 31, 2000,
respectively, compared with the same periods last year as more customers chose
this service. NJNG transported 4.7 Bcf and 7.9 Bcf for the three and six months
ended March 31, 2000, respectively, compared with 4.2 Bcf and 6.7 Bcf, in the
same periods last year.
The growth in the number of firm transportation customers is due primarily
to NJNG's participation in an open, competitive market which allows residential
customers to change natural gas suppliers. Under this program 30,120 and 27,051
residential customers and 4,176 and 4,283 commercial customers were using this
service at March 31, 2000 and 1999, respectively.
Interruptible
NJNG services 51 customers through interruptible sales and/or
transportation tariffs. Sales made under the interruptible sales tariff are
priced on market-sensitive oil and gas parity rates. Although therms sold and
transported to interruptible customers represented 3.5% and 3% of total therm
throughput in the six months ended March 31, 2000 and 1999, respectively, they
accounted for less than 1% of the total gross margin in each period due to the
regulated margin-sharing formulas that govern these sales. Under these formulas,
NJNG retains 10% of the gross margin from the interruptible sales and 5% of the
gross margin from transportation sales, with the balance credited to firm sales
customers through the LGA clause.
Off-System and Capacity Management
In order to reduce the overall cost of its gas supply commitments, NJNG has
entered into contracts to sell gas to customers outside its franchise territory
when the gas is not needed for system requirements. 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
October 1, 1998 through December 31, 2002, NJNG will retain 15% of the gross
margin from these sales with the balance credited to firm sales customers
through the LGA clause.
In order to reduce the fixed cost of NJNG's gas supply portfolio, savings
achieved through the permanent reduction or replacement of capacity or other
services will be shared between customers and shareholders. Under this program,
NJNG retains 40% of the savings for the first 12 months following any
transaction and retains 15% of the savings for the remaining period through
December 31, 2002, with the balances credited to firm sales customers through
the LGA clause.
NJNG's off-system and capacity management sales totaled 32.4 Bcf and
generated $1.3 million of gross margin, and 68.4 Bcf and $2.8 million of gross
margin, for the three and six months ended March 31, 2000, respectively,
compared with 41.7 Bcf and $1.7 million of gross margin, and 80.3 Bcf and $3
million of gross margin, in the respective periods last year. The decrease was
due primarily to the warmer-than-normal weather, which increased the
availability of supply and capacity and resulted in lower margins per therm.
13
<PAGE> 15
Operating Income
Operating income increased $561,000, or 1%, and $2.8 million or 3.6% for
the three and six months ended March 31, 2000, respectively, compared with the
same periods last year, primarily due to the increase in gross margin discussed
above and increased appliance service revenues, which more than offset an
increase in operation and maintenance and depreciation expenses.
Net Income
Net income increased $544,000, or 1.8%, and $1.9 million, or 4.4%, for the
three and six months ended March 31, 2000, respectively, compared with the same
periods last year, primarily due to the higher operating income discussed above
and lower financing costs primarily due to lower debt levels.
ENERGY HOLDINGS OPERATIONS
Energy Holdings' consolidated financial results, which include Energy
Services and Natural Energy, the Company's unregulated fuel and capacity
management and retail marketing subsidiaries, respectively, and the continuing
operations of NJR Energy, which consist primarily of its equity investment in
the Iroquois Gas Transmission System, L.P., are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
-------- -------- -------- --------
(Thousands)
<S> <C> <C> <C> <C>
Revenues $107,054 $ 84,217 $170,341 $159,623
======== ======== ======== ========
Operating income $ 2,060 $ 1,278 $ 2,886 $ 2,087
======== ======== ======== ========
Net income $ 2,168 $ 433 $ 2,866 $ 1,346
======== ======== ======== ========
</TABLE>
Energy Holdings revenues and income increased for the three and six months
ended March 31, 2000, compared to the same periods last year, reflecting
primarily increased storage management activity and higher daily gas sales
which more than offset the expiration of a fuel management contract at Energy
Services.
Energy Holdings gas sales and managed gas totaled 29.9 Bcf and 55.4 Bcf,
and retail gas sales totaled 1.2 Bcf and 2.4 Bcf for the three and six months
ended March 31, 2000, respectively, compared with gas sales and managed gas of
37.8 Bcf and 68.3 Bcf, and retail gas sales of 3.1 Bcf and 5 Bcf in the
comparable periods last year. The decline in gas under management was primarily
due to the expiration of a fuel management contract. In November 1999, Natural
Energy sold its commercial customer contracts and currently serves over 14,500
residential customers.
14
<PAGE> 16
NJR DEVELOPMENT OPERATIONS
NJR Development's consolidated financial results, which consist solely of
CR&R's operations, are summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
----- ----- ----- -----
(Thousands)
<S> <C> <C> <C> <C>
Revenues $ 278 $ 233 $ 555 $ 484
===== ===== ===== =====
Other income, net $ 103 $ 103 $ 161 $ 205
===== ===== ===== =====
Net income (loss) $ (42) $ (10) $(192) $ 17
===== ===== ===== =====
</TABLE>
In 1996, CR&R entered into a sale-leaseback transaction which generated a
pre-tax gain of $17.8 million, which is included in Deferred revenue and is
being amortized to Other income, net over 25 years in accordance with generally
accepted accounting principles. The primary tenant of the facility, NJNG, is
leasing the building under a long-term master lease agreement and continues to
occupy a majority of the space in the building.
The decrease in net income for the three and six months ended March 31,
2000 compared with the same periods last year is due primarily to marketing
costs associated with CR&R's remaining undeveloped land portfolio.
THE YEAR 2000 ISSUE
The Company developed and implemented a plan to address Year 2000 issues
facing the Company. The Company has not experienced any material incidents
during the transition to Year 2000. All computers, infrastructure and business
systems have been running smoothly following the transition to Year 2000. The
Company will continue to closely monitor the Year 2000 issue and does not
believe that there will be any future incidents.
B. LIQUIDITY AND CAPITAL RESOURCES
In order to meet the working capital and external debt financing
requirements of its unregulated subsidiaries, as well as its own working capital
needs, the Company maintains committed credit facilities with a number of banks
totaling $90 million. At March 31, 2000, $56.3 million was outstanding under
these agreements. NJNG satisfies its debt needs by issuing short-term and
long-term debt based upon its own financial profile. The Company meets the
common equity requirements of each subsidiary, if any, through new issuances of
the Company's common stock, including the proceeds from its Automatic Dividend
Reinvestment Plan (DRP). The DRP also allows for the purchase of shares in the
open market to satisfy the plan's needs. The Company can switch funding options
every 90 days.
15
<PAGE> 17
NJNG
The seasonal nature of NJNG's 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
energy tax payments, through the issuance of commercial paper and short-term
bank loans. To support the issuance of commercial paper, NJNG maintains
committed credit facilities totaling $100 million.
Remaining fiscal 2000 construction expenditures are estimated at $27.5
million. These expenditures will be incurred for services, mains and meters to
support NJNG's continued customer growth, and general system renewals and
improvements. Through March 31, 2000, NJNG has incurred $11.1 million in
remediating its former manufactured gas plants. NJNG estimates additional
remediation expenditures of approximately $14 million for the remaining six
months of fiscal 2000.
NJNG expects to finance these expenditures through internal generation,
the issuance of short-term and long-term debt and equity contributions from
NJR. The timing and mix of these issuances will be geared toward maintaining a
common equity ratio of approximately 50%, which is consistent with maintaining
its current short-term and long-term credit ratings.
ENERGY HOLDINGS
Energy Holdings does not currently expect any significant capital
expenditures or external financing requirements in fiscal 2000.
NJR DEVELOPMENT
CR&R's capital expenditures are projected to be $600,000 in 2000 and $2.9
million in 2001 in connection with the construction of a 35,000 square-foot
build-to-suit office building. CR&R is simultaneously negotiating the sale of
the building and adjacent undeveloped acreage, the terms of which would at least
recover the construction costs and land investment.
16
<PAGE> 18
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
FINANCIAL RISK MANAGEMENT
Commodity Market Risks
The regulated and unregulated natural gas businesses of the Company and its
subsidiaries are subject to market risk due to fluctuations in the price of
natural gas. To hedge against such fluctuations, the Company and its
subsidiaries have entered into futures contracts, options agreements and
over-the-counter swap agreements. The Company's natural gas businesses are
conducted through three of its operating subsidiaries. First, NJNG is a
regulated utility whose recovery of gas costs is protected by the LGA, but to
further hedge against price fluctuations, utilizes futures and options through
its financial risk management program. Second, Energy Services has also hedged
its commitments to purchase natural gas for sale to retail marketers and hedged
purchases and sales of storage gas and fixed price sales to wholesale
customers. Finally, NJR Energy has entered into a long-term, fixed-price
contract to sell approximately 23.8 Bcf of natural gas to a gas marketing
company at prices ranging from $2.73 to $4.41 per Mmbtu.
Natural gas is a nationally traded commodity, and its prices are effectively
determined by the New York Mercantile Exchange (NYMEX) and over-the-counter
markets. The prices on the NYMEX and over-the-counter markets generally reflect
the notional balance of natural gas supply and demand, but are also influenced
significantly from time to time by other events.
Summary of NJNG & NJRES commodity derivatives:
<TABLE>
<CAPTION>
Deferred
Unrealized
Volume Price per Gain
in Bcf Mmbtu in Thousands
------ ----- ------------
<S> <C> <C> <C> <C>
NJNG
Futures 9.4 $2.27-$3.01 $3,895
Swaps 3.7 $ 61
Options 1.4 $2.45-$4.25 $ 578
Energy Services
Futures 4.2 $2.10-$2.91 $5,438
Swaps 36.9 $1,673
Options 0.3 $2.25-$2.95 $ 5
</TABLE>
NJR Energy has hedged both its price and physical delivery risks associated
with its long-term, fixed-price sales contract with a gas marketing company (the
"Gas Sale Contract"). To hedge its price risk, NJR Energy entered into two swap
agreements. Under the terms of these two swap agreements, NJR Energy will pay to
the counterparties the identical fixed price it receives from the gas marketing
company in exchange for the payment by the counterparties of an index price plus
a spread per Mmbtu for the total
17
<PAGE> 19
volumes under the Gas Sale Contract. The swap agreements were effective as of
November 1995. In order to hedge its physical delivery risk, NJR Energy entered
into a purchase contract with a second gas marketing company for the identical
volumes it is obligated to sell under the Gas Sale Contract. NJR Energy has
agreed to pay this second gas marketing company the identical floating price it
receives under the swap agreements mentioned above.
To manage these instruments, the Company has well-defined risk management
policies and procedures, which include volumetric limits and monetary
guidelines.
All of the futures contracts, options and swap agreements described above
are held for hedging rather than trading purposes except for 150,000 Mmbtu of
options held by Energy Services. With respect to futures contracts, options and
swap agreements, the Company has performed a sensitivity analysis to estimate
its exposure to market risk arising from natural gas price fluctuations using
the net futures positions and the net swaps positions. Futures contracts,
options and swap agreements are substantially all settled at the NYMEX
settlement date and the related natural gas quantity is purchased or sold in the
physical market and, therefore, their notional values, which represent the
absolute sum of all outstanding natural gas futures contracts or swap
agreements, as the case may be, are not accurate measurements of risk to the
Company from those futures contracts or swap agreements.
Summary of effects of theoretical 10% change in market value:
<TABLE>
<CAPTION>
March 31,
2000 1999
------ ------
(Thousands)
<S> <C> <C>
Futures $2,603 $5,000
Swaps $2,259 $ 404
Options $ 405 $ 25
</TABLE>
However, any such additional changes in value under the futures contracts and
the swap agreements would be substantially offset by a corresponding change on
the related underlying contracts that are being hedged.
Interest Rate Risk
NJNG has total variable rate debt of $97 million, of which $56 million has
been hedged by the purchase of a 6.5% interest rate cap through the year 2003.
According to the Company's sensitivity analysis, NJNG's annual interest rate
exposure on the $56 million, based on the difference between current average
rates and the 6.5% interest rate cap, is limited to $1.1 million, net of tax. If
interest rates were to change by 100 basis points on the remaining $41 million
of variable rate debt, NJNG's interest expense, net of tax, would change by
$242,000. The Company also has variable rate debt of $56 million, if interest
rates were to change by 100 basis points, annual interest expense, net of tax,
would change by $332,000.
18
<PAGE> 20
INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
Certain of the statements contained in this report (other than the financial
statements and other statements of historical fact), including, without
limitation, expected disposition of legal and regulatory proceedings, effect of
new accounting standards, impact of the Year 2000 computer issue, and expected
sale of the office building are forward-looking statements. Forward-looking
statements can also be identified by the use of forward-looking terminology such
as "may", "intend", "expect", or "continue" or comparable terminology and are
made based upon management's expectations and beliefs concerning future
developments and their potential effect upon the Company. There can be no
assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on the Company will be
those anticipated by management.
The Company wishes to caution readers that the assumptions which form the
basis for forward-looking statements with respect to or that may impact earnings
for fiscal 2000 and thereafter include many factors that are beyond the
Company's ability to control or estimate precisely, such as estimates of future
market conditions and the behavior of other market participants. Among the
factors that could cause actual results to differ materially from estimates
reflected in such forward-looking statements are weather conditions, economic
conditions in NJNG's service territory, fluctuations in energy-related commodity
prices, conversion activity and other marketing efforts, the conservation
efforts of NJNG's customers, the pace of deregulation of retail gas markets,
competition for the acquisition of gas, the regulatory and pricing policies of
federal and state regulatory agencies, changes due to legislation at the federal
and state levels, the availability of Canada's reserves for export to the United
States and other regulatory changes.
While the Company periodically reassesses material trends and uncertainties
affecting the Company's results of operations and financial condition in
connection with its preparation of management's discussion and analysis of
results of operations and financial condition contained in its quarterly and
annual reports, the Company does not, by including this statement, assume any
obligation to review or revise any particular forward-looking statement
referenced herein in light of future events.
19
<PAGE> 21
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Information required by this Item is incorporated herein by reference
to Part I, Item 1, Note 5 - Legal and Regulatory Proceedings.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4-1 Revolving Credit and Term Loan agreement between New Jersey
Resources Corporation and PNC Bank, amended January 31, 2000
4-2 Committed Line of Credit Agreement between New Jersey Resources
Corporation and PNC Bank, dated January 31, 2000
10-1 Long-Term Incentive Compensation Plan, as amended
27-1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 2000.
20
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEW JERSEY RESOURCES CORPORATION
Date: May 12, 2000 /s/Glenn C. Lockwood
---------------------------
Glenn C. Lockwood
Senior Vice President
and Chief Financial Officer
21
<PAGE> 1
EXHIBIT 4-1
AMENDMENT TO LOAN DOCUMENTS
THIS AMENDMENT TO LOAN DOCUMENTS (this "AMENDMENT") is made as of
_____________ ___, 2000, by and between NEW JERSEY RESOURCES CORPORATION (the
"BORROWER"), and PNC BANK, NATIONAL ASSOCIATION (successor by merger to
Midlantic Bank, National Association) (the "BANK").
BACKGROUND
A. The Borrower and the Bank are parties to a certain Revolving
Credit Agreement and Term Loan Agreement, dated as of December 20, 1990, which
has heretofore been amended (as amended, the "LOAN AGREEMENT").
B. The Loan Agreement provides for certain loans to the Borrower
and, as evidence of the loans, the Borrower has delivered its Revolving Credit
Promissory Note, dated December 20, 1990 (the "NOTE") to the Bank, in original
principal amount of $20,000,000.00.
C. The Borrower and the Bank desire to amend the Loan Documents
as provided for in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Subject to the terms and conditions set forth herein, the Loan
Agreement is hereby amended as follows:
(a) Section 1.1 Definitions and Interpretation,
"Termination Date" is deemed amended to substitute as the relevant date "January
31, 2002".
(b) The Bank hereby waives the sixty (60) days notice
requirement of Section 3.4 (Extension of Termination Date).
2. Subject to the terms and conditions set forth herein, the Note
is hereby deemed amended to incorporate the amendments to the Loan Agreement as
to the term of the Note, without the necessity of replacing said Note.
3. Any and all references to the Loan Agreement or the Note in
either such document or in any document or agreement executed in connection
therewith (collectively the "LOAN DOCUMENTS") shall be deemed to refer to the
Loan Agreement or the Note, as appropriate, as amended by this Amendment. This
Amendment is deemed incorporated into each of the Loan Documents. Any initially
capitalized terms used in this Amendment without definition shall have the
meanings assigned to those terms in the Loan Documents. To the extent that any
term or provision of this Amendment is or may be inconsistent with any term or
provision in any Loan Document, the terms and provisions of this Amendment shall
control.
4. The Borrower hereby certifies that: (a) all of its
representations and warranties in the Loan Documents, as amended by this
Amendment, are, except as may otherwise be stated in this Amendment: (i) true
and correct as of the date of this Amendment, (ii) ratified and confirmed
without condition as if made anew, and (iii) incorporated into this Amendment by
<PAGE> 2
reference, (b) no Event of Default or event which, with the passage of time or
the giving of notice or both, would constitute an Event of Default, exists under
any Loan Document which will not be cured by the execution and effectiveness of
this Amendment, (c) no consent, approval, order or authorization of, or
registration or filing with, any third party is required in connection with the
execution, delivery and carrying out of this Amendment or, if required, has been
obtained, and (d) this Amendment has been duly authorized, executed and
delivered so that it constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms. The Borrower confirms that
the Indebtedness and other obligations under the Loan Agreement and the Note
remain outstanding without defense, set off, counterclaim, discount or charge of
any kind as of the date of this Amendment.
5. As a condition precedent to the effectiveness of this
Amendment, the Borrower shall comply with the following terms and conditions:
(a) Execution and delivery to the Bank of this Amendment.
(b) Payment by the Borrower of all legal fees and
expenses incurred by the Bank in connection with this Amendment.
(c) All proceedings required to be taken by the Borrower
in connection with the transactions contemplated by this Amendment shall be
satisfactory in form and substance to the Bank and its counsel, and the Bank
shall have received such counterpart originals or certified or other copies of
such documents as the Bank may reasonably request.
6. This Amendment may be signed in any number of counterpart
copies and by the parties to this Amendment on separate counterparts, but all
such copies shall constitute one and the same instrument. Delivery of an
executed counterpart of a signature page to this Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart.
Any party so executing this Amendment by facsimile transmission shall promptly
deliver a manually executed counterpart, provided that any failure to do so
shall not affect the validity of the counterpart executed by facsimile
transmission.
7. This Amendment will be binding upon and inure to the benefit
of the Borrower and the Bank and their respective heirs, executors,
administrators, successors and assigns.
8. This Amendment has been delivered to and accepted by the Bank
and will be deemed to be made in the State where the Bank's office indicated in
the Loan Documents is located. This Amendment will be interpreted and the rights
and liabilities of the parties hereto determined in accordance with the laws of
the State where the Bank's office indicated in the Loan Documents is located,
excluding its conflict of laws rules.
9. Except as amended hereby, the terms and provisions of the Loan
Documents remain unchanged, are and shall remain in full force and effect unless
and until modified or amended in writing in accordance with their terms, and are
hereby ratified and confirmed. Except as expressly provided herein, this
Amendment shall not constitute an amendment, waiver, consent or release with
respect to any provision of any Loan Document, a waiver of any default or Event
of Default under any Loan Document, or a waiver or release of any of the Bank's
rights and remedies (all of which are hereby reserved). THE BORROWER EXPRESSLY
RATIFIES AND CONFIRMS THE WAIVER OF JURY TRIAL PROVISIONS (IF ANY) CONTAINED IN
THE LOAN DOCUMENTS.
-2-
<PAGE> 3
WITNESS the due execution of this Amendment to Loan Documents as a
document under seal as of the date first written above.
<TABLE>
<S> <C>
WITNESS / ATTEST: NEW JERSEY RESOURCES
CORPORATION
By: (SEAL)
- --------------------------------------------- -------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
PNC BANK, NATIONAL ASSOCIATION
By: (SEAL)
- --------------------------------------------- -------------------------------------
Brian M. Begg
Vice President - Energy, Metals &
Mining Group
</TABLE>
-3-
<PAGE> 4
EXHIBIT 4-2
January 31, 2000
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
1415 Wyckoff Road
Wall, New Jersey 07719
Re: $10,000,000 Committed Line of Credit
Dear Mr. Lockwood:
We are pleased to inform you that PNC Bank, National Association (the
"BANK"), has approved your request for a committed line of credit (the "LOAN")
to New Jersey Resources Corporation (the "BORROWER"). We look forward to this
opportunity to help you meet the financing needs of your business. All the
details regarding your Loan are outlined in the following sections of this
letter. If these terms are satisfactory, please follow the instructions for
proceeding with your Loan provided at the end of this letter.
1. Facility and Use of Proceeds. This is a committed revolving line of
credit under which the Borrower may request and the Bank, subject to the terms
and conditions of this letter, will make advances to the Borrower from time to
time until the Expiration Date, in an amount in the aggregate at any time
outstanding not to exceed $10,000,000 (the "LINE OF CREDIT"). The "EXPIRATION
DATE" means January 31, 2001, or such later date as may be designated by the
Bank by written notice to the Borrower. Advances under the Line of Credit will
be used for working capital or other general business purposes of the Borrower.
2. Note. The obligation of the Borrower to repay advances under the Line
of Credit shall be evidenced by a promissory note (the "NOTE") in form and
content satisfactory to the Bank.
This letter (the "LETTER AGREEMENT"), the Note and the other loan
documents delivered pursuant hereto will constitute the "LOAN DOCUMENTS."
Capitalized terms not defined herein shall have the meaning ascribed to them in
the Loan Documents.
3. Interest Rate. Interest on the unpaid balance of the Line of Credit
advances will be charged at the rates, and be payable on the dates and times,
set forth in the Note evidencing the Loan.
4. Repayment. Subject to the terms and conditions of this letter, the
Borrower may borrow, repay and reborrow under the Line of Credit until the
Expiration Date, on which date the outstanding principal balance and any accrued
but unpaid interest shall be due and payable. Interest will be due and payable
on a monthly basis, and will be computed on the basis of a year of 360 days and
paid on the actual number of days elapsed.
<PAGE> 5
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
______________, 2000
Page 2
5. Covenants. Unless compliance is waived in writing by the Bank or until
payment in full of the Loan and termination of the commitment for the Line of
Credit:
(a) The Borrower will promptly submit to the Bank such information
relating to the Borrower's affairs (including but not limited to quarterly and
annual financial statements for the Borrower and any wholly-owned subsidiary) or
any security for the Loan as the Bank may reasonably request.
(b) The Borrower will not make or permit any change in the nature
of its business as carried on as of the date of this Letter Agreement or in its
senior management, board of directors or equity ownership.
(c) The Borrower will notify the Bank in writing of the occurrence
of an Event of Default or an act or condition which, with the passage of time,
the giving of notice or both might become an Event of Default.
(d) The covenants and agreements of the Borrower set forth in
Section 9 (each individually, an "INCORPORATED COVENANT"; and collectively, the
"INCORPORATED COVENANTS") of that certain Revolving Credit and Term Loan
Agreement by and between the Borrower and the Bank (by its predecessor in
interest, Midlantic National Bank) and dated as of December 20, 1990, as
heretofore amended, extended or modified (the "CREDIT AGREEMENT"), shall be
incorporated herein mutatis mutandis by this reference thereto, and shall be
deemed to have been made by the Borrower in favor of, and for the benefit of,
the Bank in connection with and for the purposes of this Letter Agreement and
the Loan; provided, however, that in the case of Section 9.11 of the Credit
Agreement, the incurrence by the Borrower of the indebtedness evidenced by the
Note provided for herein is excepted therefrom. Notwithstanding the foregoing,
(a) all capitalized terms set forth in the Incorporated Covenants and defined in
the Credit Agreement, as well as other capitalized terms set forth in any such
definitions therein, shall also be deemed to be incorporated herein mutatis
mutandis and shall have the meanings given to such terms in the Credit Agreement
for the purposes hereof, and (b) to the extent any of the Incorporated
Covenants, or any incorporated definition contains any cross-reference to, or
incorporates by reference any terms of, any provision, section, schedule or
exhibit of the Credit Agreement, such cross-reference or incorporation shall be
incorporated herein mutatis mutandis for the purposes hereof. Furthermore, for
the purposes of this paragraph, in the event that any amendment, modification or
supplement to the Credit Agreement is consented to in writing by the Bank, then
any affected Incorporated Covenant shall, upon such consent becoming effective,
be deemed to be revised for the purposes of this paragraph. The Bank shall have
the right in its sole but reasonable discretion (a) to make a determination of
the existence of any violation of an Incorporated Covenant and (b) to exercise
any remedies for such violation as provided hereunder or in the Note, in each
case without regard to any action or inaction with respect to the Credit
Agreement in connection therewith. The incorporation of the Incorporated
Covenants herein in favor of the Bank shall not be affected in any way by the
termination or expiration of the Credit Agreement. In the event of a conflict
between
<PAGE> 6
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
______________, 2000
Page 3
the express terms of this Letter Agreement or the Note and any Incorporated
Covenant, the express terms of this Letter Agreement or the Note, as applicable,
shall control.
6. Representations and Warranties. To induce the Bank to extend the Loan
and upon the making of any advance to the Borrower under the Line of Credit, the
Borrower represents and warrants as follows:
(a) The Borrower's latest financial statements provided to the
Bank are true, complete and accurate in all material respects and fairly present
the financial condition, assets and liabilities, whether accrued, absolute,
contingent or otherwise, and the results of the Borrower's operations for the
period specified therein. The Borrower's financial statements have been prepared
in accordance with generally accepted accounting principles consistently applied
from period to period subject in the case of interim statements to normal
year-end adjustments. Since the date of the latest financial statements provided
to the Bank, the Borrower has not suffered any damage, destruction or loss which
has materially adversely affected its business, assets, operations, financial
condition or results of operations.
(b) There are no actions, suits, proceedings or governmental
investigations pending or, to the knowledge of the Borrower, threatened against
the Borrower which could result in a material adverse change in its business,
assets, operations, financial condition or results of operations and there is no
basis known to the Borrower or its officers, directors or shareholders for any
such action, suit, proceedings or investigation.
(c) The Borrower has filed all returns and reports that are
required to be filed by it in connection with any federal, state or local tax,
duty or charge levied, assessed or imposed upon the Borrower or its property,
including unemployment, social security and similar taxes and all of such taxes
have been either paid or adequate reserve or other provision has been made
therefor.
(d) The Borrower is duly organized, validly existing and in good
standing under the laws of the state of its incorporation or organization and
has the power and authority to own and operate its assets and to conduct its
business as now or proposed to be carried on, and is duly qualified, licensed
and in good standing to do business in all jurisdictions where its ownership of
property or the nature of its business requires such qualification or licensing.
(e) The Borrower has full power and authority to enter into the
transactions provided for in this Letter Agreement and has been duly authorized
to do so by all necessary and appropriate action and when executed and delivered
by the Borrower, this Letter Agreement and the other Loan Documents will
constitute the legal, valid and binding obligations of the Borrower, enforceable
in accordance with their terms.
(f) There does not exist any default or violation by the Borrower
of or under any of the terms, conditions or obligations of: (i) its
organizational documents; (ii) any indenture, mortgage, deed of trust,
franchise, permit, contract, agreement, or other instrument to which it is a
party or
<PAGE> 7
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
______________, 2000
Page 4
by which it is bound; or (iii) any law, regulation, ruling, order, injunction,
decree, condition or other requirement applicable to or imposed upon the
Borrower by any law or by any governmental authority, court or agency.
(g) The Borrower has reviewed the areas within its business and
operations which could be adversely affected by, and has developed or is
developing a program to address on a timely basis the risk that certain computer
applications used by the Borrower may be unable to recognize and perform
properly date-sensitive functions involving dates prior to and after December
31, 1999 (the "Year 2000 Problem"). The Year 2000 Problem will not result, and
is not reasonably expected to result, in any material adverse effect on the
business, properties, assets, financial condition, results of operations or
prospects of the Borrower, or the ability of the Borrower to duly and punctually
pay or perform its obligations hereunder and under the other Loan Documents.
7. Fees. Beginning on the last day of the quarter after the date of the
Note and continuing on the last day of each quarter thereafter until the
Expiration Date, the Borrower shall pay a commitment fee to the Bank, in
arrears, at the rate of .125 percent (.125%) per annum on the average daily
balance of the Line of Credit which is undisbursed and uncancelled during the
preceding quarter. The commitment fee shall be computed on the basis of a year
of 360 days and paid on the actual number of days elapsed.
8. Expenses. The Borrower shall reimburse the Bank for the Bank's expenses
(including the reasonable fees and expenses of the Bank's outside and in-house
counsel) in documenting and closing this transaction, in connection with any
amendments, modifications or renewals of the Loan, and in connection with the
collection of all of the Borrower's obligations to the Bank, including but not
limited to enforcement actions relating to the Loan.
9. Events of Default. The Loan will be cross-defaulted with all other
present and future obligations of the Borrower to the Bank. Therefore, in
addition to those Events of Default set forth in the Note, and without
limitation thereof, the term "EVENT OF DEFAULT" as used herein and in the Note
and the other Loan Documents, shall include within its meaning the occurrence of
any "Event of Default" as such term is defined in the Credit Agreement.
10. Additional Provisions. Before the first advance under the Loan, the
Borrower shall execute and deliver to the Bank the Note and other required Loan
Documents and such other instruments and documents as the Bank may reasonably
request, such as certified resolutions, incumbency certificates or other
evidence of authority. The Bank will not be obligated to make any advance under
the Line of Credit if any Event of Default or event which with the passage of
time, provision of notice or both would constitute an Event of Default shall
have occurred and be continuing.
Prior to execution of the final Loan Documents, the Bank may terminate
this Letter Agreement if a material adverse change occurs with respect to the
Borrower, any guarantor, any collateral for the Loan or any other person or
entity connected in any way with the Loan, or if the
<PAGE> 8
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
______________, 2000
Page 5
Borrower fails to comply with any of the terms and conditions of this Letter
Agreement, or if the Bank reasonably determines that any of the conditions
cannot be met.
This Letter Agreement is governed by the laws of the State of New
Jersey. No modification, amendment or waiver of any of the terms of this Letter
Agreement, nor any consent to any departure by the Borrower therefrom, will be
effective unless made in a writing signed by the party to be charged, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. When accepted, this Letter Agreement and the other
Loan Documents will constitute the entire agreement between the Bank and the
Borrower concerning the Loan, and shall replace all prior understandings,
statements, negotiations and written materials relating to the Loan.
THE BORROWER AND THE BANK IRREVOCABLY WAIVE ANY AND ALL RIGHTS THEY MAY
HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE ARISING
OUT OF THIS LETTER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
If and when a loan closing occurs, this Letter Agreement (as the same
may be amended from time to time) shall survive the closing and will serve as
our loan agreement throughout the term of the Loan.
To accept these terms, please sign the enclosed copy of this Letter
Agreement as set forth below and the Loan Documents and return them to the Bank
within ten (10) days from the date of this Letter Agreement, or this Letter
Agreement may be terminated at the Bank's option without liability or further
obligation of the Bank.
Thank you for giving PNC Bank this opportunity to work with your
business. We look forward to other ways in which we may be of service to your
business or to you personally.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 9
Mr. Glenn C. Lockwood
Senior Vice President and Chief Financial Officer
New Jersey Resources Corporation
______________, 2000
Page 6
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By:
--------------------------------
Brian M. Begg
Vice President - Energy,
Metals & Mining Group
ACCEPTANCE
With the intent to be legally bound hereby, the above terms and conditions are
hereby agreed to and accepted as of this ________ day of ___________________,
2000.
BORROWER:
NEW JERSEY RESOURCES CORPORATION
By: (SEAL)
----------------------------
Print Name:
--------------------------
Title:
-------------------------------
<PAGE> 1
COMMITTED LINE OF CREDIT NOTE
$10,000,000 , 2000
------------------
FOR VALUE RECEIVED, NEW JERSEY RESOURCES CORPORATION (the "BORROWER"), with an
address at 1415 Wyckoff Road, Wall, New Jersey 07719, promises to pay to the
order of PNC BANK, NATIONAL ASSOCIATION (the "BANK"), in lawful money of the
United States of America in immediately available funds at its offices located
at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222, or at such
other location as the Bank may designate from time to time, the principal sum of
TEN MILLION DOLLARS ($10,000,000) (the "FACILITY") or such lesser amount as may
be advanced to or for the benefit of the Borrower hereunder, together with
interest accruing on the outstanding principal balance from the date hereof, all
as provided below:
1. ADVANCES. The Borrower may request advances, repay and request
additional advances hereunder until the Expiration Date, subject to the terms
and conditions of this Note and the Loan Documents (as hereinafter defined). The
"EXPIRATION DATE" shall mean January 31, 2001, or such later date as may be
designated by the Bank by written notice from the Bank to the Borrower. The
Borrower acknowledges and agrees that in no event will the Bank be under any
obligation to extend or renew the Facility or this Note beyond the Expiration
Date. The Borrower may request advances hereunder upon giving oral or written
notice to the Bank by 11:00 a.m. (Pittsburgh, Pennsylvania time) (a) on the day
of the proposed advance, in the case of advances to bear interest under the Base
Rate Option (as hereinafter defined) or the As Offered Rate Option (as
hereinafter defined) and (b) three (3) Business Days prior to the proposed
advance, in the case of advances to bear interest under the Libor-Rate Option
(as hereinafter defined), followed promptly thereafter by the Borrower's written
confirmation to the Bank of any oral notice. The aggregate unpaid principal
amount of advances under this Note shall not exceed the face amount of this
Note.
2. RATE OF INTEREST. Each advance outstanding under this Note will bear
interest at a rate or rates per annum as may be selected by the Borrower from
the interest rate options set forth below (each, an "OPTION"):
(i) BASE RATE OPTION. A rate of interest per annum which is at all
times equal to the Prime Rate ("BASE RATE"). For purposes hereof, the term
"PRIME RATE" shall mean the rate publicly announced by the Bank from time to
time as its prime rate. The Prime Rate is determined from time to time by the
Bank as a means of pricing some loans to its borrowers. The Prime Rate is not
tied to any external rate of interest or index, and does not necessarily reflect
the lowest rate of interest actually charged by the Bank to any particular class
or category of customers. If and when the Prime Rate changes, the rate of
interest with respect to any advance to which the Base Rate Option applies will
change automatically without notice to the Borrower, effective on the date of
any such change. There are no required minimum interest periods for advances
bearing interest under the Base Rate Option.
(ii) LIBOR-RATE OPTION. A rate per annum equal to the sum of (A)
the Libor-Rate plus (B) fifty (50) basis points (.5%), for the applicable
Libor-Rate Interest Period.
(iii) AS OFFERED RATE OPTION. A rate of interest per annum, as
offered from time to time by the Bank to the Borrower in its sole discretion, as
the rate at which the Bank would advance funds to the Borrower (the "AS OFFERED
RATE") for the interest period requested (the
<PAGE> 2
"AS OFFERED RATE INTEREST PERIOD") in the principal amount requested, which rate
shall not be greater than the Prime Rate (unless the Bank's cost from time to
time of borrowing funds from the Federal Reserve System exceeds the Prime Rate,
in which case the As Offered Rate will equal one-half of one percent above such
cost of funds).
For purposes hereof, the following terms shall have the following meanings:
"BUSINESS DAY" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to
be closed for business in Pittsburgh, Pennsylvania.
"LIBOR-RATE" shall mean, with respect to any advance to which the
Libor-Rate Option applies for the applicable Libor-Rate Interest
Period, the interest rate per annum determined by the Bank by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest
1/100th of 1%) (i) the rate of interest determined by the Bank in
accordance with its usual procedures (which determination shall be
conclusive absent manifest error) to be the eurodollar rate two (2)
Business Days prior to the first day of such Libor-Rate Interest Period
for an amount comparable to such advance and having a borrowing date
and a maturity comparable to such Libor-Rate Interest Period by (ii) a
number equal to 1.00 minus the Libor-Rate Reserve Percentage.
"LIBOR-RATE INTEREST PERIOD" shall mean the period of one (1), two (2),
or three (3) months selected by the Borrower commencing on the date of
disbursement of an advance (or the date of conversion of an advance to
the Libor-Rate Option, as the case may be) and each successive period
selected by the Borrower thereafter; provided, that if a Libor-Rate
Interest Period would end on a day which is not a Business Day, it
shall end on the next succeeding Business Day, unless such day falls in
the succeeding calendar month in which case the Libor-Rate Interest
Period shall end on the next preceding Business Day. In no event shall
any Libor-Rate Interest Period end on a day after the Expiration Date.
"LIBOR-RATE RESERVE PERCENTAGE" shall mean the maximum effective
percentage in effect on such day as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with respect
to eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
The Libor-Rate shall be adjusted with respect to any advance to which the
Libor-Rate Option applies on and as of the effective date of any change in the
Libor-Rate Reserve Percentage. The Bank shall give prompt notice to the Borrower
of the Libor-Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
If the Bank determines (which determination shall be final and conclusive) that,
by reason of circumstances affecting the eurodollar market generally, deposits
in dollars (in the applicable amounts) are not being offered to banks in the
eurodollar market for the selected term, or adequate means do not exist for
ascertaining the Libor-Rate, then the Bank shall give notice thereof to the
Borrower. Thereafter, until the Bank notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the
availability of the Libor-Rate Option shall be suspended, and (b) the interest
rate for all advances then bearing interest under the Libor-Rate Option shall be
converted at the expiration of the then current Libor-Rate Interest Period(s) to
the Base Rate Option.
-2-
<PAGE> 3
In addition, if, after the date of this Note, the Bank shall determine (which
determination shall be final and conclusive) that any enactment, promulgation or
adoption of or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any guideline, request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Bank to make or maintain or fund loans under the Libor-Rate Option, the Bank
shall notify the Borrower. Upon receipt of such notice, until the Bank notifies
the Borrower that the circumstances giving rise to such determination no longer
apply, (a) the availability of the Libor-Rate Option shall be suspended, and (b)
the interest rate on all advances then bearing interest under the Libor-Rate
Option shall be converted to the Base Rate Option either (i) on the last day of
the then current Libor-Rate Interest Period(s) if the Bank may lawfully continue
to maintain advances under the Libor-Rate Option to such day, or (ii)
immediately if the Bank may not lawfully continue to maintain advances under the
Libor-Rate Option.
The foregoing notwithstanding, it is understood that the Borrower may select
different Options to apply simultaneously to different portions of the advances
and may select up to five (5) different interest periods to apply simultaneously
to different portions of the advances bearing interest under the Libor-Rate
Option or As Offered Rate Option. Interest hereunder will be calculated on the
basis of a year of 360 days for the actual number of days elapsed. In no event
will the rate of interest hereunder exceed the maximum rate allowed by law.
3. INTEREST RATE ELECTION. Subject to the terms and conditions of this
Note, at the end of each interest period applicable to any advance, the Borrower
may renew the Option applicable to such advance or convert such advance to a
different Option; provided that, during any period in which any Event of Default
(as hereinafter defined) has occurred and is continuing, any advances bearing
interest under the Libor-Rate Option shall, at the Bank's sole discretion, be
converted at the end of the applicable Libor-Rate Interest Period to the Base
Rate Option and the Libor-Rate Option will not be available to Borrower with
respect to any new advances until such Event of Default has been cured by the
Borrower or waived by the Bank. The Borrower shall notify the Bank of each
election of an Option, each conversion from one Option to another, the amount of
the advances then outstanding to be allocated to each Option and where relevant
the interest periods therefor. In the case of converting to the Libor-Rate
Option, such notice shall be given at least three (3) Business Days prior to the
commencement of any Libor-Rate Interest Period. If no notice of conversion or
renewal is timely received by the Bank, the Borrower shall be deemed to have
converted such advance to the Base Rate Option. Any such election shall be
promptly confirmed in writing by such method as the Bank may require. The amount
of advances made, converted or renewed bearing interest at the Libor-Rate Option
for each Libor-Rate Interest Period shall be in integral multiples of $100,000
and not less than $1,000,000.
4. ADVANCE PROCEDURES. A request for advance made by telephone must be
promptly confirmed in writing by such method as the Bank may require. The
Borrower authorizes the Bank to accept telephonic requests for advances, and the
Bank shall be entitled to rely upon the authority of any person providing such
instructions. The Borrower hereby indemnifies and holds the Bank harmless from
and against any and all damages, losses, liabilities, costs and expenses
(including reasonable attorneys' fees and expenses) which may arise or be
created by the acceptance of such telephone requests or making such advances.
The Bank will enter on its books and records, which entry when made will be
presumed correct, the date and amount of
-3-
<PAGE> 4
each advance, the interest rate and interest period applicable thereto, as well
as the date and amount of each payment.
5. PAYMENT TERMS. The Borrower shall pay accrued interest on the unpaid
principal balance of this Note in arrears: (a) for the portion of advances
bearing interest under the Base Rate Option, on the first day of each month
during the term hereof, (b) for the portion of advances bearing interest under
the Libor-Rate Option, on the last day of the respective Libor-Rate Interest
Period for such advance, (c) for the portion of advances bearing interest under
the As Offered Rate Option, on the last day of each As Offered Rate Interest
Period, (d) if any Libor-Rate Interest Period or As Offered Rate Interest Period
is longer than three (3) months, then also on the three (3) month anniversary of
such interest period and every three (3) months thereafter, and (e) for all
advances, at maturity, whether by acceleration of this Note or otherwise, and
after maturity, on demand until paid in full. All outstanding principal and
accrued interest hereunder shall be due and payable in full on the Expiration
Date.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Bank to charge the Borrower's
deposit account at the Bank for any payment when due hereunder. Payments
received will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in any order the Bank may choose, in its
sole discretion.
6. LATE PAYMENTS; DEFAULT RATE. If the Borrower fails to make any payment
of principal, interest or other amount coming due pursuant to the provisions of
this Note by the fifth (5th) Business Day after the date on which such payments
are due and payable, the Borrower also shall pay to the Bank a late charge equal
to five percent (5%) of the amount of such payment (the "LATE CHARGE"). Such
five (5) day period shall not be construed in any way to extend the due date of
any such payment. Upon maturity, whether by acceleration, demand or otherwise,
and at the Bank's option upon the occurrence of any Event of Default (as
hereinafter defined) and during the continuance thereof, this Note shall bear
interest at a rate per annum (based on a year of 360 days and actual days
elapsed) which shall be two percentage points (2%) in excess of the interest
rate in effect from time to time under this Note but not more than the maximum
rate allowed by law (the "DEFAULT RATE"). The Default Rate shall continue to
apply whether or not judgment shall be entered on this Note. Both the Late
Charge and the Default Rate are imposed as liquidated damages for the purposes
of defraying the Bank's expenses incident to the handling of delinquent
payments, but are in addition to, and not in lieu of, the Bank's exercise of any
rights and remedies hereunder, under the other Loan Documents or under
applicable law, and any fees and expenses of any agents or attorneys which the
Bank may employ. In addition, the Default Rate reflects the increased credit
risk to the Bank of carrying a loan that is in default. The Borrower agrees that
the Late Charge and Default Rate are reasonable forecasts of just compensation
for anticipated and actual harm incurred by the Bank, and that the actual harm
incurred by the Bank cannot be estimated with certainty and without difficulty.
7. PREPAYMENT. The Borrower shall have the right to prepay at any time and
from time to time, in whole or in part, without penalty, any advance hereunder
which is accruing interest under the Base Rate Option or the As Offered Rate
Option with an interest period of 7 days or less. If the Borrower prepays
(whether voluntary, on default or otherwise) all or any part of any advance
which is accruing interest under the Libor-Rate Option or under the As Offered
Rate Option with an interest period in excess of 7 days on other than the last
day of the applicable
-4-
<PAGE> 5
Libor-Rate Interest Period or As Offered Rate Interest Period, as the case may
be, the Borrower shall pay to the Bank, on demand therefor, all amounts due
pursuant to paragraph 8 below, including the Cost of Prepayment, if any.
8. YIELD PROTECTION. The Borrower shall pay to the Bank, on written demand
therefor, together with the written evidence of the justification therefor, all
direct costs incurred, losses suffered or payments made by Bank by reason of any
change in law or regulation or its interpretation imposing any reserve, deposit,
allocation of capital, or similar requirement (including without limitation,
Regulation D of the Board of Governors of the Federal Reserve System) on the
Bank, its holding company or any of their respective assets. In addition, the
Borrower agrees to indemnify the Bank against any liabilities, losses or
expenses (including loss of margin, any loss or expense sustained or incurred in
liquidating or employing deposits from third parties, and any loss or expense
incurred in connection with funds acquired to effect, fund or maintain any
advance (or any part thereof) bearing interest under the Libor-Rate Option or
the As Offered Rate Option with an interest period in excess of 7 days) which
the Bank sustains or incurs as a consequence of either (i) the Borrower's
failure to make a payment on the due date thereof, (ii) the Borrower's
revocation (expressly, by later inconsistent notices or otherwise) in whole or
in part of any notice given to Bank to request, convert, renew or prepay any
advance, or (iii) the Borrower's payment, prepayment or conversion of any
advance bearing interest under the Libor-Rate Option or under the As Offered
Rate Option with an interest period in excess of 7 days on a day other than the
last day of the applicable Libor-Rate Interest Period or As Offered Rate
Interest Period, as the case may be, including but not limited to the Cost of
Prepayment. "COST OF PREPAYMENT" means an amount equal to the present value, if
positive, of the product of (a) the difference between (i) the yield, on the
beginning date of the applicable interest period, of a U.S. Treasury obligation
with a maturity similar to the applicable interest period minus (ii) the yield,
on the prepayment date, of a U.S. Treasury obligation with a maturity similar to
the remaining maturity of the applicable interest period, and (b) the principal
amount to be prepaid, and (c) the number of years, including fractional years
from the prepayment date to the end of the applicable interest period. The yield
on any U.S. Treasury obligation shall be determined by reference to Federal
Reserve Statistical Release H.15(519) "Selected Interest Rates". For purposes of
making present value calculations, the yield to maturity of a similar maturity
U.S. Treasury obligation on the prepayment date shall be deemed the discount
rate. The Cost of Prepayment shall also apply to any payments made after
acceleration of the maturity of this Note. The Bank's determination of an amount
payable under this paragraph shall, in the absence of manifest error, be
conclusive and shall be payable on demand.
9. OTHER LOAN DOCUMENTS. This Note is issued in connection with a letter
agreement or loan agreement between the Borrower and the Bank dated on or before
the date hereof, and the other agreements and documents executed in connection
therewith or referred to therein, the terms of which are incorporated herein by
reference (as amended, modified or renewed from time to time, collectively the
"LOAN DOCUMENTS"), and is secured by the property described in the Loan
Documents (if any) and by such other collateral as previously may have been or
may in the future be granted to the Bank to secure this Note.
10. EVENTS OF DEFAULT. The occurrence of any of the following events will
be deemed to be an "EVENT OF DEFAULT" under this Note: (i) the nonpayment of any
principal, interest or other indebtedness under this Note when due; (ii) the
occurrence of any event of default or default and the lapse of any notice or
cure period under any Loan Document or any other debt, liability or obligation
to the Bank of the Borrower; (iii) the filing by or against the Borrower of any
proceeding in bankruptcy, receivership, insolvency, reorganization, liquidation,
conservatorship or similar proceeding (and, in the case of any such proceeding
instituted against the Borrower,
-5-
<PAGE> 6
such proceeding is not dismissed or stayed within 30 days of the commencement
thereof, provided that the Bank shall not be obligated to advance additional
funds during such period); (iv) any assignment by the Borrower for the benefit
of creditors, or any levy, garnishment, attachment or similar proceeding is
instituted against any property of the Borrower held by or deposited with the
Bank; (v) a default with respect to any other indebtedness of the Borrower for
borrowed money, if the effect of such default is to cause or permit the
acceleration of such debt; (vi) the commencement of any foreclosure or
forfeiture proceeding, execution or attachment against any collateral securing
the obligations of the Borrower to the Bank; (vii) the entry of a nonappealable
final judgment against the Borrower reasonably likely to have a material adverse
effect on the Borrower's ability to perform its obligations to the Bank
hereunder or otherwise, and the failure of the Borrower to discharge the
judgment within ten days of the entry thereof; (viii) any material adverse
change in the Borrower's business, assets, operations, financial condition or
results of operations; (ix) the Borrower ceases doing business as a going
concern; (x) any representation or warranty made by the Borrower to the Bank in
any Loan Document, or any other documents now or in the future evidencing or
securing the obligations of the Borrower to the Bank, is false, erroneous or
misleading in any material respect; or (xi) the Borrower's failure to observe or
perform any covenant or other agreement with the Bank contained in any Loan
Document or any other documents now or in the future evidencing or securing the
obligations of the Borrower to the Bank.
Upon the occurrence of an Event of Default: (a) the Bank shall be under no
further obligation to make advances hereunder; (b) if an Event of Default
specified in clause (iii) or (iv) above shall occur, the outstanding principal
balance and accrued interest hereunder together with any additional amounts
payable hereunder shall be immediately due and payable without demand or notice
of any kind; (c) if any other Event of Default shall occur, the outstanding
principal balance and accrued interest hereunder together with any additional
amounts payable hereunder, at the Bank's option and without demand or notice of
any kind, may be accelerated and become immediately due and payable; (d) at the
Bank's option, this Note will bear interest at the Default Rate from the date of
the occurrence of the Event of Default; and (e) the Bank may exercise from time
to time any of the rights and remedies available under the Loan Documents or
under applicable law.
11. RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the Borrower's money, securities or other property given to the Bank by
law, the Bank shall have, with respect to the Borrower's obligations to the Bank
under this Note and to the extent permitted by law, a contractual possessory
security interest in and a contractual right of setoff against, and the Borrower
hereby assigns, conveys, delivers, pledges and transfers to the Bank all of the
Borrower's right, title and interest in and to, all of the Borrower's deposits,
moneys, securities and other property now or hereafter in the possession of or
on deposit with, or in transit to, the Bank or any other direct or indirect
subsidiary of PNC Bank Corp., whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for safekeeping
or otherwise, excluding, however, all IRA, Keogh, and trust accounts. Every such
security interest and right of setoff may be exercised without demand upon or
notice to the Borrower. Every such right of setoff shall be deemed to have been
exercised immediately upon the occurrence of an Event of Default hereunder
without any action of the Bank, although the Bank may enter such setoff on its
books and records at a later time.
12. MISCELLANEOUS. All notices, demands, requests, consents, approvals and
other communications required or permitted hereunder must be in writing (except
as may be agreed otherwise above with respect to borrowing requests) and will be
effective upon receipt. Such notices and other communications may be
hand-delivered, sent by facsimile transmission with
-6-
<PAGE> 7
confirmation of delivery and a copy sent by first-class mail, or sent by
nationally recognized overnight courier service, to the addresses for the Bank
and the Borrower set forth above or to such other address as either may give to
the other in writing for such purpose. No delay or omission on the Bank's part
to exercise any right or power arising hereunder will impair any such right or
power or be considered a waiver of any such right or power, nor will the Bank's
action or inaction impair any such right or power. No modification, amendment or
waiver of any provision of this Note nor consent to any departure by the
Borrower therefrom will be effective unless made in a writing signed by the
Bank. The Borrower agrees to pay on demand, to the extent permitted by law, all
costs and expenses incurred by the Bank in the enforcement of its rights in this
Note and in any security therefor, including without limitation reasonable fees
and expenses of the Bank's counsel. If any provision of this Note is found to be
invalid by a court, all the other provisions of this Note will remain in full
force and effect. The Borrower and all other makers and indorsers of this Note
hereby forever waive presentment, protest, notice of dishonor and notice of
non-payment. The Borrower also waives all defenses based on suretyship or
impairment of collateral. If this Note is executed by more than one Borrower,
the obligations of such persons or entities hereunder will be joint and several.
This Note shall bind the Borrower and its heirs, executors, administrators,
successors and assigns, and the benefits hereof shall inure to the benefit of
the Bank and its successors and assigns; provided, however, that the Borrower
may not assign this Note in whole or in part without the Bank's written consent
and the Bank at any time may assign this Note in whole or in part.
This Note has been delivered to and accepted by the Bank and will be deemed to
be made in the State where the Bank's office indicated above is located. THIS
NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE BANK AND THE
BORROWER DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S
OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court in the county or judicial district where the Bank's office
indicated above is located; provided that nothing contained in this Note will
prevent the Bank from bringing any action, enforcing any award or judgment or
exercising any rights against the Borrower individually, against any security or
against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Bank and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.
13. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
THE BORROWER ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE WAIVER OF JURY TRIAL, AND HAS BEEN ADVISED BY COUNSEL
AS NECESSARY OR APPROPRIATE.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE> 8
WITNESS the due execution of this Committed Line of Credit Note as a document
under seal, as of the date first written above, with the intent to be legally
bound hereby.
WITNESS / ATTEST: NEW JERSEY RESOURCES
CORPORATION
By: (SEAL)
- ----------------------------------- --------------------------
Name: Name:
------------------------------ ------------------------------
Title: Title:
----------------------------- -----------------------------
-8-
<PAGE> 1
Exhibit 10-1
NEW JERSEY RESOURCES CORPORATION
LONG-TERM INCENTIVE COMPENSATION PLAN
(AS AMENDED, EFFECTIVE OCTOBER 1, 1999)
I. GENERAL PROVISIONS
A. PURPOSES
The purpose of the Long-Term Incentive Compensation Plan (the
"Plan") of the New Jersey Resources Corporation (the "Company") is to
promote the interests of the Company and its stockholders by (1)
attracting and retaining employees of outstanding ability; (2)
strengthening the Company's capability to develop, maintain and direct
a competent management team; (3) motivating employees, by means of
performance-related incentives, to achieve long-range performance
goals; (4) providing incentive compensation opportunities which are
competitive; and (5) enabling employees to participate in the long-term
growth and financial success of the Company.
B. DEFINITIONS
Award - means a grant or award under Sections II through IV,
inclusive, of the Plan.
Board of Directors - means the Board of Directors of the
Company.
Code - means the Internal Revenue Code of 1986, as amended
from time to time.
Committee - means the Compensation and Benefits Committee of
the Board of Directors, or such other committee of the Board of
Directors as may from time to time be designated to administer the
Plan.
Common Stock - means the common stock, $2.50 par value, of the
Company.
Corporation - means the Company, its Divisions and
Subsidiaries.
Disability Date - means the date on which a Participant is
deemed totally and permanently disabled under the long-term disability
plan of the Corporation applicable to the Participant.
Disinterested Person - has the meaning set forth in Rule
16b-3(d) (3) promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, or any successor definition
adopted by the Commission.
Employee - means any full-time or part-time employee of the
Corporation.
Fair Market Value - means, as the Committee shall determine,
either (1) the average of the high and low sales prices of the Common
Stock, or (2) the closing price of the Common Stock, on the date on
which it is to be valued hereunder as reported for New York Stock
Exchange-Composite Transactions.
Participant - means an Employee who is selected by the
Committee to receive an Award under the Plan.
<PAGE> 2
Performance Cycle or Cycle - means the period of years
selected by the Committee during which the performance of the
Corporation is measured for the purpose of determining the extent to
which an award of Performance Units has been earned.
Performance Goals - means the objectives for the Corporation
established by the Committee for a Performance Cycle, for the purpose
of determining and measuring the extent to which Performance Units,
which have been contingently awarded for such Cycle, have been earned.
Performance Units - means a fixed or variable dollar or Common
Stock share denominated Unit contingently awarded under Section III of
the Plan.
Restricted Period - means the period of years selected by the
Committee during which a Service Award may be forfeited to the Company.
Retirement - means retirement on a normal, early or postponed
retirement date within the meaning of the pension plan of the
Corporation applicable to the Participant.
Service Award - means such number of shares of Common Stock
contingently granted, based on continued service for a specified
period, to a Participant under Section IV of the Plan.
Subsidiary - means any corporation in which the Company owns
directly or indirectly fifty (50%) percent or more of the total
combined voting power of all classes of its stock having voting power.
C. ADMINISTRATION
The Plan shall be administered by the Committee, which shall
at all times consist of three or more members, each of whom is a
Disinterested Person. The Committee shall have sole and complete
authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the operation of the Plan as it
shall from time to time deem advisable, and to interpret the terms and
provisions of the Plan. The Committee's decisions are binding upon all
parties.
D. ELIGIBILITY
All Employees are eligible to be Participants in the Plan.
Notwithstanding the foregoing no member of the Committee shall be
eligible to receive an Award during such member's term of membership on
the Committee.
E. SHARES RESERVED
a. There shall be reserved for issuance pursuant to the Plan a
total of 1,500,000 (One Million Five Hundred Thousand) shares of Common
Stock. In the event that (1) a stock option granted hereunder expires
or is terminated unexercised as to any shares covered thereby, or (2)
shares are forfeited for any reason under the Plan, such shares shall
thereafter be again available for issuance pursuant to the Plan.
b. In the event of any change in the outstanding shares of
Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spin-off; combination or
exchange of shares or other corporate change, or any distributions to
common shareholders other than normal cash dividends, the Committee
shall make such substitution or adjustment, if any, as it deems to be
equitable, as to the number or kind of shares of Common Stock or other
securities
<PAGE> 3
issued or reserved for issuance pursuant to the Plan, including the
number of outstanding stock options and the option price thereof, and
the number of outstanding Awards of other types.
F. CHANGE OF CONTROL
In order to maintain the Participants' rights in the event of
Change of Control of the Company, as hereinafter defined, the Board of
Directors, in its sole discretion, may, either at the time an Award is
made hereunder or at any time prior to or simultaneously with a Change
in Control (1) provide for the acceleration of any time period relating
to the exercise or realization of such Awards so that such Awards may
be exercised or realized in full on or before a date fixed by the Board
of Directors; (2) provide for the purchase of such Awards, upon the
Participant's request, for an amount of cash equal to the amount which
could have been attained upon the exercise or realization of such
rights had such Awards been currently exercisable or payable; (3) make
such adjustment to the Awards then outstanding as the Board of
Directors deems appropriate to reflect such transaction or change; or
(4) cause the Awards then outstanding to be assumed, or new rights
substituted therefor, by the surviving corporation in such change. The
Board of Directors may, in its discretion, include such further
provisions and limitations in any agreement entered into with respect
to an Award as it may deem equitable and in the best interests of the
Company.
A "Change of Control" shall be deemed to have occurred if (1)
absent prior approval by the Board of Directors, thirty (30%) percent
or more of the Company's outstanding securities entitled to vote in
elections of directors shall be beneficially owned. directly or
indirectly, by any person, entity or group; or (2) individuals
currently constituting the Board of Directors (or the successors of
such individuals nominated by a Board of Directors on which such
individuals or such successors constituted a majority) cease to
constitute a majority of the Board of Directors.
G. WITHHOLDING
The Corporation shall have the right to deduct from all
amounts paid in cash (whether under this Plan or otherwise) any taxes
required by law to be withheld with respect to an Award. In the case of
payments of Awards in the form of Common Stock, at the Committee's
discretion the Participant may be required to pay to the Corporation
the amount of any taxes required to be withheld with respect to such
Common Stock, or, in lieu thereof, the Corporation shall have the right
to retain (or the Participant may be offered the opportunity to elect
to tender) the number of shares of Common Stock whose Fair Market Value
equals the amount required to be withheld. The Committee shall require
that, with respect to any such election by a person who is an officer
or director of the Company within the meaning of Section 16 under the
Securities Exchange Act of 1934, as amended: (1) such election must be
made more than 6 months prior to the earlier of (a) the earliest date
upon which the Award vests or becomes exercisable and (b) the earliest
date on which such withholding is required to be made pursuant to the
Internal Revenue Code of 1986, as amended; (2) such election must be
irrevocable; and (3) such election shall be subject to disapproval by
the Committee.
H. NONTRANSFERABILITY
No Award shall be assignable or transferable except by will or
the laws of descent and distribution, and no right or interest of any
Participant shall be subject to any lien, pledge, encumbrance,
obligation or liability of or in favor of the Participant or any other
person or entity.
<PAGE> 4
I. NO RIGHT TO EMPLOYMENT
No person shall have any claim or right to be granted an
Award, and the grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Corporation.
Further, the Corporation expressly reserves the right at any time to
dismiss a Participant free from any liability or any claim under the
Plan, except as provided herein or in any agreement entered into with
respect to an Award.
J. CONSTRUCTION OF THE PLAN
The validity, construction, interpretation, administration and
effect of the Plan and of its rules and regulations, and rights
relating to the Plan, shall be determined solely in accordance with the
laws of New Jersey.
K. AMENDMENT
The Board of Directors may amend, alter suspend, discontinue
or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders or Participants,
except that any amendment or alteration to the Plan shall be subject to
the approval of the Corporation's shareholders not later than the
annual meeting next following such Board of Directors action if such
shareholder approval is required by any federal or state law or
regulation or the rules of any stock exchange or automated quotation
system on which the Common Stock may then be listed or quoted, and the
Board of Directors may otherwise, in its discretion, determine to
submit other such changes to the Plan to shareholders for approval;
provided that, without the consent of an affected Participant, no such
Board of Directors action may materially and adversely affect the
rights of such Participant under any previously granted and outstanding
Award. The Committee may waive any conditions or rights under, or
amend, alter, suspend, discontinue or terminate any Award theretofore
granted and any Award agreement relating thereto, except as otherwise
provided in the Plan; provided that, without the consent of an affected
Participant, no such Committee action may materially and adversely
affect the rights of such Participant under such Award. Without the
prior approval of the Company's shareholders, options issued under any
of the Company's existing stock options will not be repriced, replaced,
or regranted through cancellation, or by lowering the option exercise
price of a previously granted award other than in connection with the
customary anti-dilution adjustments.
L. DIVIDENDS, EQUIVALENTS AND VOTING RIGHTS; CASH PAYMENTS
Awards may provide the Participant with (1) dividends or
dividend equivalents and voting rights prior to either vesting or
earnout; and (2) to the extent determined by the Committee, cash
payments In lieu of all or any portion of an Award.
M. EFFECTIVE DATE
The Plan shall be effective as of October 1, 1999 (subject to
approval by vote of the Company's stockholders), and shall remain in
effect until terminated by the Board of Directors.
II. STOCK OPTIONS
A. AUTHORITY OF COMMITTEE
<PAGE> 5
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom
options shall be granted, the number of shares to be covered by each
such option, provided that in no event may the number of shares covered
by the options to be issued to any one Employee during any plan year
exceed 200,000 (Two Hundred Thousand), and the conditions and
limitations, if any, in addition to those set forth In Section II.C
hereof, applicable to the exercise of each such option. The Committee
shall have the authority to grant both incentive stock options and
non-qualified stock options, except that incentive stock options shall
only be granted to Participants who are employees of the Company or a
Subsidiary. In the case of incentive stock options, the terms and
conditions of such options shall be subject to and comply with the
grant and vesting limitations as may be prescribed by Section 422 of
the Code, as from time to time amended, and any implementing
regulations.
B. OPTION PRICE
The Committee shall establish the option price at the time
each stock option is granted, which price shall not be less than 100%
of the Fair Market Value of the Common Stock on the date of grant, The
option price shall be subject to adjustment in accordance with the
provisions of Section I.E.(b) hereof.
C. EXERCISE OF OPTIONS
a. The Committee may determine that any stock option shall
become exercisable in installments and may determine that the right to
exercise such stock option as to such installments shall expire on
different dates or on the same date; provided that no such stock option
shall be exercisable by Participants who are officers or directors of
the Company for purposes of Section 16 of the Securities Exchange Act
of 1934 prior to six (6) months following the date of grant except as
otherwise permitted under the Plan. Incentive stock options may not be
exercisable later than ten years after their date of grant.
b. In the event a Participant ceases to be an Employee with
the consent of the Committee, or upon the occurrence of a Participant's
death, Retirement or Disability Date, such Participant's Stock Options
shall be exercisable at any time during such period as may be
established by the Committee. If a Participant ceases to be an Employee
for any other reason, such Participant's rights under all stock options
shall terminate upon the expiration of ninety days next following the
effective date of such Participant's termination of employment.
c. Each Stock Option shall be confirmed by a stock option
agreement executed by the Company and by the Participant. The option
price of each share as to which an option is exercised shall be paid in
full by the Participant at the time of such exercise. Such payment
shall be made in cash, by tender of shares of Common Stock valued at
Fair Market Value as of the date of exercise, subject to such
limitations on the tender of Common Stock as the Committee may impose,
by a combination of cash and shares of Common Stock, or by such other
arrangement as the Committee may determine.
d. Each option agreement shall provide that the option shall
not be assignable or transferable by the Participant otherwise than by
will or the laws of descent and distribution, that no right or interest
of any Participant thereunder shall be subject to any lien, pledge,
encumbrance, obligation or liability of or in favor of the Participant
or any other person or entity, and that such option shall be
exercisable only by the Participant during the Participant's lifetime
or upon the Participant's death, by such Participant's estate or other
legal representative, in accordance with the terms of such option
agreement.
III. PERFORMANCE UNITS
<PAGE> 6
A. AUTHORITY OF COMMITTEE
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine (i) the Employees who
shall receive Performance Units and the number of Units awarded for
each Performance Cycle; (ii) the duration of each Performance Cycle;
and (iii) the value of or valuation methodology for each Performance
unit. Performance units may be denominated in fixed or variable dollar
amounts, or may be made equal to one or more shares of Common Stock.
There may be more than one Performance Cycle in existence at any one
time, and the duration of such Performance Cycles may differ, as
determined by the Committee.
B. OPTION PRICE
The Committee shall establish Performance Goals for each Cycle
on the basis of such criteria and to accomplish such objectives as the
Committee may from time to time select. During any Cycle, the Committee
may adjust the Performance Goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the
Corporation or changes in applicable tax laws or accounting principles.
C. TERMS AND CONDITIONS
The Committee shall determine the number of Performance Units
which have been earned on the basis of the Corporation's performance in
relation to the established Performance Goals. Performance Units may
not be sold, assigned, transferred, pledged or otherwise encumbered,
except as herein provided, during the Performance Cycle. Payment for
Performance Units shall be in (1) cash. or (2) shares of Common Stock,
in such proportions as the Committee shall determine. Prior to the time
Performance Units are earned, Participants may be offered the
opportunity to defer receipt of payment for earned Performance Units
under terms established by the Committee; provided, however, that such
election by a Participant who is an officer or director of the
Corporation within the meaning of Section 16 of the Securities Exchange
Act of 1934, as amended, must be made prior to the time such
Performance Units are earned and must be irrevocable.
D. TERMINATION OF EMPLOYMENT
A Participant must be an Employee at the end of a Performance
Cycle in order to be entitled to payment of Performance Units in
respect of such Cycle; provided, however, that in the event a
Participant ceases to be an Employee with the consent of the Committee
before the end of such Cycle, or upon the occurrence of a Participant's
death, Retirement or Disability Date prior to the end of such Cycle,
the Committee, in its discretion and after taking into consideration
the performance of such Participant and the performance of the
Corporation during the Cycle, may authorize payment to such Participant
(or the Participant's legal representative) of all or a portion of the
Performance Units deemed by the Committee to have been earned by the
Participant to the date of termination.
IV. SERVICE AWARDS
A. AUTHORITY OF COMMITTEE
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom
Service Awards shall be granted, the number of shares of Common Stock
to be granted to each Participant, the duration of the Restricted
Period during which, and the conditions under which, the Service Award
may be forfeited to the
<PAGE> 7
Company, and the terms and conditions of the Award. Such determinations
shall be made by the Committee at the time of the grant.
B. TERMS AND CONDITIONS
Shares of Common Stock subject to a Service Award may not be
sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, except as herein provided, during the Restricted Period.
Certificates issued in respect to such Awards shall be registered in
the name of the Participant and deposited by the Participant, together
with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such
certificates to the Participant. The Committee may further require that
an appropriate legend be inserted on the certificate indicating the
restrictions imposed hereunder and such other restrictions as may exist
on the transferability of the shares represented thereby.
C. TERMINATION OF EMPLOYMENT
In the event a Participant ceases to be an Employee with the
consent of the Committee during the Restricted Period, or upon the
occurrence of a Participant's death, Retirement or Disability Date
during the Restricted Period, the restrictions imposed hereunder shall
lapse with respect to such number of shares of Common Stock granted as
Service Awards, if any, shall be determined by the Committee. In the
event a Participant ceases to be an Employee for any other reason
during the Restricted Period, all shares of stock granted as Service
Awards and not yet earned shall thereupon be forfeited to the Company.
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NEW JERSEY
RESOURCES CORPORATION'S MARCH 31, 2000 FORM 10-Q, INCLUDING THE CONSOLIDATED
STATEMENTS OF INCOME, CONSOLIDATED STATEMENTS OF CASH FLOWS AND CONSOLIDATED
BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 695,390
<OTHER-PROPERTY-AND-INVEST> 22,702
<TOTAL-CURRENT-ASSETS> 175,915
<TOTAL-DEFERRED-CHARGES> 106,459
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 1,000,466
<COMMON> 46,225
<CAPITAL-SURPLUS-PAID-IN> 194,281
<RETAINED-EARNINGS> 90,620
<TOTAL-COMMON-STOCKHOLDERS-EQ> 331,126
0
520
<LONG-TERM-DEBT-NET> 254,145
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 25,300
<LONG-TERM-DEBT-CURRENT-PORT> 20,479
0
<CAPITAL-LEASE-OBLIGATIONS> 30,835
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 338,061
<TOT-CAPITALIZATION-AND-LIAB> 1,000,466
<GROSS-OPERATING-REVENUE> 632,426
<INCOME-TAX-EXPENSE> 28,828
<OTHER-OPERATING-EXPENSES> 24,841
<TOTAL-OPERATING-EXPENSES> 546,116
<OPERATING-INCOME-LOSS> 86,310
<OTHER-INCOME-NET> 564
<INCOME-BEFORE-INTEREST-EXPEN> 86,874
<TOTAL-INTEREST-EXPENSE> 10,019
<NET-INCOME> 48,027
15
<EARNINGS-AVAILABLE-FOR-COMM> 48,012
<COMMON-STOCK-DIVIDENDS> 15,114
<TOTAL-INTEREST-ON-BONDS> 11,509
<CASH-FLOW-OPERATIONS> 90,008
<EPS-BASIC> 2.75
<EPS-DILUTED> 2.74
</TABLE>
