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 Quarter Ended December 31, 1995 Commission File # 1-8353
NUI CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1869941
(State of incorporation) (I.R.S. employer
identification no.)
550 Route 202-206, P.O. Box 760, Bedminster, New Jersey
07921-0760
(Address of principal executive offices, including zip code)
(908) 781-0500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days:
Yes x No
The number of shares outstanding of each of the registrant's
classes of common stock, as of January 31, 1996: Common Stock, No
Par Value: 9,199,586 shares outstanding.<PAGE>
NOTE:
THE PURPOSE OF THIS AMENDMENT IS TO CORRECT ERRORS TO:
1. CONSOLIDATED STATEMENT OF INCOME
2. CONSOLIDATED STATEMENT OF CASH FLOWS
3. SUMMARY CONSOLIDATED OPERATING DATA
<TABLE>
NUI Corporation and Subsidiaries
Consolidated Statement of Income (Unaudited)
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months Twelve Months
Ended Ended
December 31, December 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Operating Margins
Operating revenues $124,650 $105,852 $395,242 $402,270
Less - Purchased gas and 68,295 54,197 203,608 219,009
fuel
Gross receipts and 11,209 9,571 35,306 35,705
franchise taxes ------- ------- ------- -------
45,146 42,084 156,328 147,556
------- ------- ------- -------
Other Operating Expenses
Operations and maintenance 22,768 23,587 89,702 93,749
Depreciation and
amortization 5,566 4,949 20,367 18,211
Restructuring and other
non-recurring charges -- 1,457 7,134 2,380
Other taxes 1,855 1,751 7,762 7,523
Income taxes 3,537 1,991 4,431 912
------- ------- ------- -------
33,726 33,735 129,396 122,775
------- ------- ------- -------
Operating Income 11,420 8,349 26,932 24,781
------- ------- ------- -------
Other Income and Expense, Net 74 85 429 392
Interest Expense 5,048 4,456 19,375 16,267
------- ------- ------- -------
Net Income $ 6,446 $ 3,978 $ 7,986 $ 8,906
======= ======= ======= =======
Net Income Per Share of $0.70 $0.44 $0.87 $1.01
Common Stock
Dividends Per Share of Common $0.225 $0.225 $0.90 $1.425
Stock
Weighted Average Number of
Shares of Common Stock 9,144,932 9,137,457 9,154,788 8,845,921
Outstanding
</TABLE>
See the notes to the consolidated financial statements<PAGE>
NUI Corporation and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
December 31, September 30,
1995 1995
(Unaudited) (*)
ASSETS
Utility Plant
Utility plant, at original cost $606,043 $597,360
Accumulated depreciation and (188,851) (184,558)
amortization
Unamortized plant acquisition
adjustments 34,634 35,269
------- -------
451,826 448,071
------- -------
Funds for Construction Held by 14,438 14,405
Trustee ------- -------
Investments in Marketable Securities 2,988 2,723
------ -------
Current Assets
Cash and cash equivalents 2,199 3,601
Accounts receivable (less
allowance for doubtful
accountsof $2,323 and
$1,689,respectively) 75,119 30,293
Fuel inventories, at average cost 20,217 27,629
Prepayments and other 9,256 20,007
------- -------
106,791 81,530
------- -------
Other Assets
Regulatory assets 53,873 54,374
Deferred charges 9,430 9,062
------- -------
63,303 63,436
------- -------
$639,346 $610,165
======= =======
CAPITALIZATION AND LIABILITIES
Capitalization
Common shareholders' equity $145,454 $140,912
Preferred stock -- --
Long-term debt 222,017 222,060
------- -------
367,471 362,972
------- -------
Capital Lease Obligations 10,890 11,114
------- -------
Current Liabilities
Current portion of long-term debt 1,646 1,759
and capital lease obligations
Notes payable to banks 58,221 37,935
Accounts payable, customer deposits 69,865 63,665
and accrued liabilities
General taxes 1,707 3,054
Federal income taxes 3,386 4,664
------- -------
134,825 111,077
------- -------
Deferred Credits and Other
Liabilities
Deferred Federal income taxes 52,683 51,946
Unamortized investment tax 6,986 7,102
credits
Environmental remediation reserve 33,981 33,981
Regulatory and other liabilities 32,510 31,973
------- -------
126,160 125,002
------- -------
$639,346 $610,165
======= =======
*Derived from audited financial statements
See the notes to the consolidated financial statements<PAGE>
NUI Corporation and Subsidiaries
Consolidated Statement of Cash Flows (Unaudited)
(Dollars in thousands)
Three Months Twelve Months
Ended Ended
December 31, December 31,
1995 1994 1995 1994
Operating Activities
Net income $ 6,446 $ 3,978 $ 7,986 $ 8,906
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization 5,821 5,273 21,480 19,557
Deferred Federal income
taxes 1,135 539 2,601 7,233
Non-cash portion of
restructuring and other
other non-recurring charges -- 628 4,285 628
Amortization of deferred
investment tax credits (116) (117) (467) (461)
Other 895 1,446 4,075 4,206
Effect of changes in:
Accounts receivable,
net (44,826) (20,710) (16,193) 1,311
Fuel inventories 7,412 5,628 2,771 568
Accounts payable, 5,781 11,321 5,184 15,651
deposits and
accruals
Gross receipts and 9,713 8,160 (2,599) (11,906)
franchise taxes
Other (1,220) (6,162) (147) (7,585)
------- ------- ------- -------
Net cash (used in)
provided by operating
activities (8,959) 9,984 28,976 38,108
------- ------- ------- -------
Financing Activities
Proceeds from sales of common
stock, net of treasury
stock purchased -- 1,135 (558) 6,187
Dividends to shareholders (2,069) (2,064) (8,301) (12,616)
Proceeds from issuance of
long-term debt -- -- 70,000 66,500
Funds for construction held by
trustee, net 178 4,813 5,490 (180)
Repayments of long-term debt (44) (31) (9,915) (54,190)
Principal payments under
capital lease obligations (581) (520) (1,905) (2,078)
Net short-term borrowings
repayments) 20,286 225 (52,129) 16,318
------- ------- ------ -------
Net cash provided by financing
activities 17,770 3,558 2,682 19,941
------- ------- ------- -------
Investing Activities
Cash expenditures for utility
plant (9,828) (14,089) (33,715) (54,598)
Other (385) (312) (522) (406)
------- ------- ------- -------
Net cash used in investing
activities (10,213) (14,401) (34,237) (55,004)
------- ------- ------- -------
Net increase (decrease) in
cash and cash equivalents $(1,402) $ (859) $(2,579) $ 3,045
====== ====== ====== ======
Cash and Cash Equivalents
At beginning of period $3,601 $ 5,637 $ 4,778 $ 1,733
At end of period 2,199 4,778 2,199 4,778
Supplemental Disclosures of
Cash Flows
Income taxes paid (refunds
received), net -- $(3,097) $ 1,968 $(2,431)
Interest paid $6,085 4,812 18,709 15,959
See the notes to the consolidated financial statements<PAGE>
NUI Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
1.Basis of Presentation
The consolidated financial statements include all operating
divisions and subsidiaries of NUI Corporation (collectively referred
to as the "Company"). The Company distributes and sells natural gas
and related services in six states through its Northern and Southern
utility divisions. The Northern Division operates in New Jersey as
Elizabethtown Gas Company. The Southern Division operates in five
states as City Gas Company of Florida, North Carolina Gas Service ,
Elkton Gas Service (Maryland), Valley Cities Gas Service
(Pennsylvania) and Waverly Gas Service (New York). In addition to gas
distribution operations, the Company provides gas sales and related
services through its Natural Gas Services, Inc. subsidiary, and bill
processing and related customer services for utilities and
municipalities through its Utility Billing Services, Inc. subsidiary.
The consolidated financial statements contained herein have been
prepared without audit in accordance with the rules and regulations of
the Securities and Exchange Commission and reflect all adjustments
which, in the opinion of management, are necessary for a fair
statement of the results for interim periods. All adjustments made
were of a normal recurring nature. The preparation of financial
statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto that are included in the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1995. Certain
reclassifications have been made to the prior year financial
statements to conform with the current year presentation.
The Company is subject to regulation as an operating utility by the
public utility commissions of the states in which it operates.
Because of the seasonal nature of gas utility operations, the results
for interim periods are not necessarily indicative of the results for
an entire year.
2.Common Shareholders' Equity
The components of common shareholders' equity were as follows
(dollars in thousands):
December 31, September 30,
1995 1995
Common stock, no par value $139,353 $139,093
Shares held in treasury (1,525) (1,265)
Retained earnings 8,298 3,921
Unrealized gain on marketable
securities 397 232
Unearned employee compensation - ESOP (1,069) (1,069)
------- -------
Total common shareholders' equity $145,454 $140,912
======= =======
See the notes to the consolidated financial statements<PAGE>
3. Contingencies
Environmental Matters. The Company is subject to federal and
state laws with respect to water, air quality, solid waste disposal
and employee health and safety matters, and to environmental
regulations issued by the United States Environmental Protection
Agency (the "EPA"), the New Jersey Department of Environmental
Protection (the "NJDEP") and other federal and state agencies.
The Company owns, or previously owned, certain properties on
which manufactured gas plants ("MGP") were operated by the Company or
by other parties in the past. Coal tar residues are present on the six
MGP sites located in the Northern Division. The Company has reported
the presence of the six MGP sites to the EPA, the NJDEP and the New
Jersey Board of Public Utilities ("NJBPU"). In 1991, the NJDEP
issued an Administrative Consent Order for an MGP site located at
South Street in Elizabeth, New Jersey, wherein the Company agreed to
conduct a remedial investigation and to design and implement a
remediation plan. In 1992 and 1993, the Company entered into a
Memorandum of Agreement with the NJDEP for each of the other five
Northern Division MGP sites. Pursuant to the terms and conditions of
the Administrative Consent Order and the Memoranda of Agreement, the
Company is conducting remedial activities at all six sites with
oversight from the NJDEP.
The Southern Division owned ten former MGP facilities, only three
of which it currently owns. The former MGP sites are located in the
states of North Carolina, South Carolina, Pennsylvania, New York and
Maryland. The Company has joined with other North Carolina utilities
to form the North Carolina Manufactured Gas Plant Group (the "MGP
Group"). The MGP Group has entered into a Memorandum of Understanding
with the North Carolina Department of Environment, Health and Natural
Resources ("NCDEHNR") to develop a uniform program and framework for
the investigation and remediation of MGP sites in North Carolina. The
Memorandum of Understanding contemplates that the actual investigation
and remediation of specific sites will be addressed pursuant to
Administrative Consent Orders between the NCDEHNR and the responsible
parties. The NCDEHNR has recently sought the investigation and
remediation of sites owned by members of the MGP Group and has entered
into Administrative Consent Orders with respect to four such sites.
None of these four sites are currently or were previously owned by the
Southern Division.
The Company, with the aid of environmental consultants, regularly
assesses the potential future costs associated with conducting
investigative activities at each of the Company's sites and
implementing appropriate remedial actions, as well as the likelihood
of whether such actions will be necessary. The Company records a
reserve if it is probable that a liability will be incurred and the
amount of the liability is reasonably estimable. Based on the
Company's most recent assessment, the Company has recorded a total
reserve for environmental investigation and remediation costs of
approximately $34 million, which the Company expects to expend during
the next twenty years. The reserve, which includes remediation costs
for 7 of the Company's 16 MGP sites, is net of approximately $5
million which will be borne by a prior owner and operator of two of
the Northern Division sites in accordance with a cost sharing
agreement. Of this approximate $34 million reserve, approximately $30
million relates to Northern Division MGP sites and approximately $4
million relates to Southern Division MGP sites. The Company is not
able at this time to determine the requirement for remediation if
contamination is present at any of the other sites and, if present,
the costs associated with such remediation. The Company believes that
it is possible that costs associated with conducting investigative
activities and implementing remedial activities, if necessary, with
respect to all of its MGP sites may exceed the approximately $34
million reserve by an amount that could range up to $21 million and be
incurred during a future period of time that may range up to fifty
years. Of this $21 million in additional possible future
expenditures, approximately $10 million relates to the Northern
Division MGP sites and approximately $11 million relates to the
Southern Division MGP sites. As compared with the approximately $34
million reserve discussed above, the Company believes that it is less
likely that this additional $21 million will be incurred and therefore
has not recorded it on its books.
The Company believes that its remediation costs for the Northern
Division MGP sites will be recoverable in rates and that a portion of
such costs may be recoverable from the Company's insurance carriers.
The most recent base rate order for the Northern Division permits the
Company to utilize full deferred accounting for expenditures related
to MGP sites. The order also provides for the recovery of $130,000
annually of MGP related expenditures incurred prior to the rate order.
Accordingly, the Company has recorded a regulatory asset of
approximately $33 million as of December 31, 1995, reflecting the
future recovery of environmental remediation liabilities related to
the Northern Division MGP sites. In September 1995, the Northern
Division filed a petition with the NJBPU to establish an MGP
Remediation Adjustment Clause ("RAC"). The RAC would enable the
Company to recover actual MGP expenses over a rolling seven year
period. Other New Jersey utilities have received similar
authorization to recover MGP environmental expenditures in rates.
With respect to costs associated with the Southern Division MGP sites,
the Company intends to pursue recovery from ratepayers, former owners
and operators, and insurance carriers, although the Company is not
able to express a belief as to whether any or all of these recovery
efforts will be successful. The Company is working with the regulatory
agencies to prudently manage its MGP costs so as to mitigate the
impact of such costs on both ratepayers and shareholders.
Other. The Company is involved in various claims and litigation
incidental to its business. In the opinion of management, none of
these claims and litigation will have a material adverse effect on the
Company's results of operations or its financial condition.<PAGE>
NUI Corporation and Subsidiaries
Summary Consolidated Operating Data
Three Months Twelve Months
Ended Ended
December 31, December 31,
1995 1994 1995 1994
Operating Revenues (Dollars
in thousands)
Firm Sales:
Residential $56,609 $50,627 $179,382 $189,958
Commercial 31,494 28,713 101,254 107,409
Industrial 5,656 5,841 19,898 25,314
Interruptible Sales 11,701 12,279 47,673 54,641
Unregulated Sales 9,958 1,711 15,750 2,422
Transportation Services 5,795 4,055 19,436 12,425
Customer Service, Appliance
Leasing and Other 3,437 2,626 11,849 10,101
------ ------- ------- -------
$124,660 $105,853 $395,243 $402,270
======= ======= ======= =======
Gas Sold or Transported
(MMcf)
Firm Sales:
Residential 7,635 6,004 22,907 22,157
Commercial 5,128 4,367 16,216 15,985
Industrial 1,396 1,412 5,201 5,479
Interruptible Sales 3,755 4,336 17,636 17,591
Unregulated Sales 3,780 874 6,483 1,256
Transportation Services 7,316 4,947 24,522 16,986
------- ------- ------- -------
29,010 21,940 92,965 79,454
======= ======= ======= =======
Average Utility Customers
Served
Firm:
Residential 330,801 326,059 329,815 318,186
Commercial 24,652 24,212 24,757 23,362
Industrial 354 391 386 387
Interruptible 133 107 129 107
Transportation 427 136 263 127
------- ------- ------- -------
356,367 350,905 355,350 342,169
======= ======= ======= =======
Degree Days in New Jersey
Actual 1,886 1,352 4,867 4,663
Normal 1,725 1,725 4,978 4,978
Percentage variance from 9% 22% 2% 6%
normal colder warmer warmer warmer
Employees (period end) 1,071 1,179
Ratio of Earnings to Fixed
Charges (Twelve-months 1.52 1.48
only)
See the notes to the consolidated financial statements<PAGE>
NUI Corporation and Subsidiaries
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis refers to all operating
divisions and subsidiaries of NUI Corporation (collectively referred
to as the "Company"). The Company distributes and sells natural gas
in six states through its Northern and Southern utility divisions. The
Northern Division operates in New Jersey as Elizabethtown Gas Company.
The Southern Division operates in five states as City Gas Company of
Florida, North Carolina Gas Service, Elkton Gas Service (Maryland),
Valley Cities Gas Service (Pennsylvania) and Waverly Gas Service (New
York). The latter four companies previously comprised the operations
of Pennsylvania & Southern Gas Company ("PSGS"), which was acquired
by the Company on April 19, 1994. Because of the seasonal nature of
gas utility operations, the results for interim periods are not
necessarily indicative of the results for an entire year.
Results of Operations
Three-Month Periods Ended December 31, 1995 and 1994
Net Income. Net income for the three-month period ended
December 31, 1995 was $6.4 million, or $0.70 per share, as compared
with net income of $4.0 million, or $0.44 per share, for the three-
month period ended December 31, 1994. The increase in the current
period was primarily due to higher operating margins, lower operations
and maintenance expenses and approximately $0.9 million of after-tax
non-recurring charges incurred in the 1994 period. These increases
were partially offset by higher interest and depreciation expenses.
Operating Revenues and Operating Margins. The Company's operating
revenues include amounts billed for the cost of purchased gas pursuant
to purchased gas adjustment clauses. Such clauses enable the Company
to pass through to its customers, via periodic adjustments to
customers' bills, increased or decreased costs incurred by the Company
for purchased gas without affecting operating margins. Since the
Company's utility operations do not earn a profit on the gas commodity
element of its revenues, the Company's level of operating revenues is
not necessarily indicative of financial performance. The Company's
operating revenues increased by $18.8 million, or 18%, for the three-
month period ended December 31, 1995 as compared with the three-month
period ended December 31, 1994. The increase principally reflects the
effect of weather in New Jersey that was 9% colder than normal and 39%
colder than the prior year period. Operating revenues were also
increased by higher sales to unregulated customers, increased customer
service revenues and customer growth. The Company's total average
number of utility customers served increased by 5,462, or 2%,
including 4,407 heating customers, for the three-month period ended
December 31, 1995 as compared with the three-month period ended
December 31, 1994. Partially offsetting these increases were a
reduction in gas costs under purchased gas adjustment clauses.
The Company's operating margins increased by $3.1 million, or 7%,
for the three-month period ended December 31, 1995 as compared with
the three-month period ended December 31, 1994. The increase
principally reflects increases in the number of customers served,
higher sales to unregulated customers, increased customer service
revenues and the effect of colder-than-normal weather not fully
returned to customers through the weather normalization clauses. The
Company has weather normalization clauses in its New Jersey and North
Carolina tariffs which are designed to help stabilize the Company's
results by increasing amounts charged to customers when weather has
been warmer than normal and by decreasing amounts charged when weather
has been colder than normal. Operating margins were decreased by
approximately $1.3 million for the three-month period ended December
31, 1995 and were increased by approximately $2.6 million for the
three-month period ended December 31, 1994, under the weather
normalization clauses.
Other Operating Expenses. The Company's other operating expenses,
excluding income taxes, decreased by approximately $1.6 million, or
5%, for the three-month period ended December 31, 1995 as compared
with the three-month period ended December 31, 1994. The decrease was
primarily the result of non-recurring pre-tax charges of $1.5 million
incurred in the 1994 period associated in part with the settlement of
a rate case in Florida in December 1994 and in part with the
restructuring of the Company's operations in Florida. The decrease
also reflects lower operations and maintenance expenses primarily due
to lower labor and employee benefits costs as a result of an early
retirement plan under which 95 eligible employees retired in fiscal
1995 and other work force reductions. These decreases were partially
offset by higher depreciation expense due primarily to additional
utility plant in service.
The increase in income taxes for the three-month period ended
December 31, 1995 as compared with the three-month period ended
December 31, 1994, was due to the effects of higher pre-tax income .
Interest Expense. Interest expense increased by approximately $0.6
million for the three-month period ended December 31, 1995 as compared
with the three-month period ended December 31, 1994. The increase
principally reflects higher average outstanding borrowings and higher
short-term interest rates.
Twelve-Month Periods Ended December 31, 1995 and 1994
Net Income. Net income for the twelve-month period ended December
31, 1995 was $8.0 million, or $0.87 per share, as compared with $8.9
million, or $1.01 per share, for the twelve-month period ended
December 31, 1994. The decrease is primarily due to non-recurring
charges which, on an after-tax basis, were approximately $4.6 million,
or $0.51 per share, in the current period as compared with after-tax
non-recurring charges incurred during the prior year period of $1.5
million, or $0.17 per share, and higher interest and depreciation
expenses. The prior year period also included the reversal of $1.8
million of income tax reserves. Partially offsetting these decreases
was an increase in operating margins and lower operations and
maintenance expenses.
Net income per share for the twelve-month period ended
December 31, 1995 was also affected by the increased average number of
outstanding shares of NUI common stock as compared with the prior
twelve-month period.
Operating Revenues and Operating Margins. The Company's operating
revenues for the twelve-month period ended December 31, 1995 decreased
approximately $7.0 million, or 2%, as compared with the twelve-month
period ended December 31, 1994. The decrease was principally due to
lower gas costs which resulted in refunds totaling $14 million to
Northern Division customers and a significant decrease in revenues as
a result of the Company's purchased gas adjustment clauses. The
decrease was also attributed to lower revenues from industrial and
interruptible sales customers who were able to remain on
transportation service in the current period, due to the continuous
availability of pipeline capacity during the heating season.
Transportation revenues are significantly lower than sales revenues
due to the cost of gas included in sales revenues; however, tariffs
for transportation service are generally designed to provide the same
margins as tariffs to sell and transport gas together. Therefore, the
Company is financially indifferent as to whether it transports gas, or
sells gas and transportation together. These decreases were partially
offset by the inclusion of PSGS in the entire 1995 period results, the
effect of weather in New Jersey that was 4% colder than the prior year
period, a base rate increase in Florida, increased unregulated sales,
higher customer service revenues and increases in the number of
utility customers served. The Company's average number of utility
customers served increased by 13,181, or 4%, including 10,293 heating
customers, for the twelve-month period ended December 31, 1995 as
compared with the twelve-month period ended December 31, 1994.
Excluding the effect of a full year's inclusion of PSGS in the 1995
period, the average number of customers increased approximately 2%.
The Company's operating margins increased by $8.8 million, or 6%,
for the twelve-month period ended December 31, 1995 as compared with
the twelve-month period ended December 31, 1994. The increase was
principally the result of the inclusion of PSGS in the entire 1995
period results, a base rate increase in Florida, higher customer
service revenues and increases in the number of customers served.
Through the Company's weather normalization clauses, operating margins
were increased by approximately $0.7 million for the twelve-month
period ended December 31, 1995, and by approximately $2.1 million for
the twelve-month period ended December 31, 1994.
Other Operating Expenses. The Company's other operating expenses,
excluding income taxes, increased by approximately $3.1 million, or
3%, for the twelve-month period ended December 31, 1995 as compared
with the twelve-month period ended December 31, 1994. The increase was
primarily the result of non-recurring pre-tax charges of $7.1 million
related to an early retirement program implemented in fiscal 1995 and
the restructuring of the Company's operations in Florida, an
additional $2.6 million of other pre-tax operating expenses from the
inclusion of PSGS in the entire 1995 period results and an increase in
depreciation expense due to additional utility plant in service.
Partially offsetting these increases were lower operations and
maintenance expenses primarily due to lower labor, pension and
employee benefits costs.
Income taxes increased by $3.5 million for the twelve-month period
ended December 31, 1995 due to the reversal in the 1994 period of $1.8
million of income tax reserves no longer required as a result of
management's review of necessary reserve levels, and the effect of
higher pre-tax income in the 1995 period.
Interest Expense. Interest expense increased by $3.1 million for
the 1995 period as compared with the 1994 period primarily due to
higher average outstanding borrowings and higher short-term interest
rates.
Regulatory Matters
On November 3, 1995, the New Jersey Board of Public Utilities
approved a petition filed by the Northern Division to reduce its
annual purchased gas adjustment revenues by approximately $13.7
million and to refund to customers approximately $2.7 million, due to
lower gas costs. None of such revenue reduction and refund affect the
operating margins of the Company.
On September 20, 1995, the North Carolina Utilities Commission
approved a stipulation to increase the Company's base rates in North
Carolina by $385,000 annually. The stipulation provides for a rate
base amounting to approximately $11.9 million with an overall after-
tax rate of return of 7.89%. The rate increase became effective in
October 1995.
Financing Activities and Resources
The Company had a net use of cash from operating activities of $9.0
million for the three-month period ended December 31, 1995 as compared
with net cash provided by operating activities of $10.0 million for
the three-month period ended December 31, 1994. The decrease reflects
higher accounts receivable in the current period as a result of colder
weather. For the twelve-month period ended December 31, 1995, the
Company's net cash provided by operating activities was $29.0 million
as compared with $38.1 million for the twelve-month period ended
December 31, 1994. The decrease reflects a higher level of accounts
receivable partially offset by a lower level of payments in the 1995
period for New Jersey gross receipts and franchise taxes; the 1994 New
Jersey gross receipts and franchise tax payments included an
additional amount representing almost a half year's liability as a
result of a change in the payment schedule by the State.
Because the Company's business is highly seasonal, short-term debt
is used to meet seasonal working capital requirements. The Company
also borrows under its bank lines of credit to finance portions of its
capital expenditures, pending refinancing through the issuance of
equity or long-term indebtedness at a later date depending upon
prevailing market conditions.
Short-Term Debt. The weighted average daily amounts outstanding of
notes payable to banks and the weighted average interest rates on
those amounts were $51.8 million at 6.0% for the three-month period
ended December 31, 1995 and $111.5 million at 5.6% for the three-month
period ended December 31, 1994. The weighted average daily amounts of
notes payable to banks decreased principally due to the issuance of
$70 million of Medium-Term Notes in fiscal 1995, which were used to
repay short-term debt, partially offset by borrowings to finance
portions of the Company's construction expenditures. Notes payable to
banks increased as of December 31, 1995 as compared to the balance
outstanding at September 30, 1995, due to seasonal borrowing
requirements. At December 31, 1995, the Company had outstanding notes
payable to banks amounting to $58.2 million and available unused lines
of credit amounting to $99.8 million.
Long-Term Debt and Funds for Construction Held by Trustee. In
November 1994, the Company filed a shelf registration statement with
the Securities and Exchange Commission for an aggregate of up to $100
million of debt and equity securities. As of December 31, 1995, the
Company has issued $70 million of Medium-Term Notes subject to the
shelf registration statement while the Company has no present
intention to issue additional securities subject to the shelf
registration, such securities may be issued from time to time,
depending upon the Company's needs and prevailing market conditions.
The Company expects to issue in fiscal 1996 approximately $39 million
of tax-exempt Gas Facilities Revenue Bonds for the purpose of
financing a portion of the Northern Division's capital expenditure
program.
The Company deposits in trust the unexpended portion of the net
proceeds from its Gas Facilities Revenue Bonds until drawn upon for
eligible expenditures. As of December 31, 1995, the total unexpended
portion of all of the Company's Gas Facilities Revenue Bonds was $13.4
million and is classified on the Company's consolidated balance sheet,
including interest earned thereon, as funds for construction held by
trustee.
Common Stock. The Company periodically issues shares of common
stock in connection with NUI Direct, the Company's dividend
reinvestment and stock purchase plan, and various employee benefit
plans. The proceeds of such issuances amounted to $1.1 million for the
three-month period ended December 31, 1994, and were used primarily to
reduce outstanding short-term debt. Effective in December 1994, these
common stock plans commenced purchasing shares on the open market to
fulfill the plans' requirements, rather than purchasing the shares
directly from the Company. Under the terms of NUI Direct, the Company
may change the method of purchasing shares no more frequently than
every three months, from open market purchases to purchases directly
from the Company, or vice versa; the method of purchasing shares may
be changed no more frequently than every twelve months for the other
plans.
The Company plans to issue additional common stock in fiscal 1996
for the purpose of improving the Company's financial position by
reducing outstanding debt and funding capital requirements. The
issuances may be made under the Company's shelf registration statement
(see "Long-Term Debt and Funds for Construction Held by Trustee") or
it may be made under a separate registration statement. Regulatory
approval for such issuance, which is expected to be not more than two
million shares, is required but has not yet been sought.
Capital Expenditures and Commitments
Capital expenditures, which consist primarily of expenditures to
expand and upgrade the Company's gas distribution systems, were $9.2
million for the three-month period ended December 31, 1995 as compared
with $9.3 million for the three-month period ended December 31, 1994.
Capital expenditures are expected to be approximately $42 million for
all of fiscal 1996, as compared with a total of $37.9 million in
fiscal 1995.
The Company owns or previously owned six former manufactured gas
plant ("MGP") sites in the Northern Division and ten MGP sites in
the Southern Division. The Company, with the aid of environmental
consultants, regularly assesses the potential future costs associated
with conducting remedial actions, as well as the likelihood of
whether such actions will be necessary. The Company records a reserve
if it is probable that a liability will be incurred and the amount of
the liability is reasonably estimable. Based on the Company's most
recent assessment, the Company has recorded a total reserve for
environmental investigation and remediation costs of approximately $34
million, which the Company expects it will expend in the next twenty
years to remediate 7 of the Company's 16 MGP sites. Of this reserve,
approximately $30 million relates to Northern Division MGP sites and
approximately $4 million relates to Southern Division MGP sites. In
addition to these costs, the Company believes that it is possible
that costs associated with conducting investigative activities and
implementing remedial actions, if necessary, with respect to all of
its MGP sites may exceed the approximately $34 million reserve by an
amount that could range up to $21 million and be incurred during a
future period of time that may range up to fifty years. Of this $21
million in possible future expenditures, approximately $10 million
relates to the Northern Division MGP sites and approximately $11
million relates to the Southern Division MGP sites. As compared with
the approximately $34 million reserve discussed above, the Company
believes that it is less likely that this additional $21 million will
be incurred and therefore has not recorded it on its books. The
Company believes that all costs associated with the Northern Division
MGP sites will be recoverable in rates or from insurance carriers.
With respect to costs which may be associated with the Southern
Division MGP sites, the Company intends to pursue recovery from
ratepayers, former owners and operators of the sites and from
insurance carriers. However, the Company is not able at this time to
express a belief as to whether any or all of these recovery efforts
related to the Southern Division MGP sites will ultimately be
successful. For a further discussion of environmental matters, see
Note 3 of the Notes to the Consolidated Financial Statements.
Certain of the Company's long-term contracts for the supply,
storage and delivery of natural gas include fixed charges that amount
to approximately $78 million annually. The Company currently recovers,
and expects to continue to recover, such fixed charges through its
purchased gas adjustment clauses. The Company also is committed to
purchase, at market-related prices, minimum quantities of gas that, in
the aggregate, are approximately 9 billion cubic feet per year or to
pay certain costs in the event the minimum quantities are not taken.
The Company expects that minimum demand on its systems for the
duration of these contracts will continue to exceed these minimum
purchase obligations.
The implementation of the Federal Energy Regulatory Commission's
("FERC") Order No. 636 required the restructuring of the Company's
contracts with certain pipeline companies that together supply less
than one-third of the Company's total firm gas supply. Under Order No.
636 the pipeline companies are passing through to their customers
transition costs associated with mandated restructuring, such as costs
resulting from buying out unmarketable gas purchase contracts. The
Company has been charged approximately $7 million of such costs
through December 31, 1995, which the Company has been authorized to
recover through its purchased gas adjustment clauses. The Company
currently estimates that its remaining Order No. 636 transition
obligation will be approximately $9 million, which it expects to also
recover through the Company's purchased gas adjustment clauses as
these costs are incurred. This transition obligation is subject to
possible future FERC actions based upon filings by the Company's
pipeline suppliers.
As of December 31, 1995, the scheduled repayments of the Company's
long-term debt over the next five years were as follows: $0.1 million
for the remainder of fiscal 1996, $30.1 in fiscal 1997 and
$0.1 million in each of fiscal years 1998, 1999 and 2000.<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit
No. Description of Exhibit Reference
27 Financial Data Schedule Filed herewith
(b) Reports on Form 8-K
On October 24, 1995, the Company filed a Form 8-K, Item 5, Other
Events, reporting an amendment to the Company's By-Laws.
On December 1, 1995, the Company filed a Form 8-K, Item 5, Other
Events, reporting the establishment of a Shareholder Rights Plan.
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.
NUI CORPORATION
JOHN KEAN, JR.
February 14, 1996
President and Chief
Executive Officer
STEPHEN M. LIASKOS
February 14, 1996
Controller<PAGE>
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