UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to____________
Commission File Number 1-8353
NUI CORPORATION
(Exact name of registrant as specified in its charter)
New Jersey 22-1869941
(State of incorporation) (IRS employer identification
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)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
Common Stock, No Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 of 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:
X
Indicate by check mark if disclosure of delinquent filers, pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive
proxy or information statements incorporated by reference to Part III
of this Form 10-K or any amendment to the Form 10-K:
X
The aggregate market value of 12,261,910 shares of common stock held
by non-affiliates of the registrant calculated using the $25.1875 per
share closing price on November 30, 1999 was $308,846,858.
The number of shares outstanding for each of the registrant's classes
of common stock, as of November 30, 1999:
Common Stock, No Par Value: 12,837,811 shares outstanding.
Documents incorporated by reference: NUI Corporation's definitive
Proxy Statement for the Company's Annual Meeting of Stockholders,
filed with the Securities and Exchange Commission on December 27,
1999.
NUI Corporation
Annual Report on Form 10-K For The
Fiscal Year Ended September 30, 1999
TABLE OF CONTENTS
PART I
Page
Item 1. Business................................................1
Item 2. Properties..............................................9
Item 3. Legal Proceedings.......................................9
Item 4. Submission of Matters to a Vote of Security Holders.....9
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ....................................10
Item 6. Selected Financial Data................................11
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ....................13
Item 8. Financial Statements and Supplementary Data............20
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ....................20
PART III
Item 10. Directors and Executive Officers of the Registrant....20
Item 11. Executive Compensation................................20
Item 12. Security Ownership of Certain Beneficial
Owners and Management ................................20
Item 13. Certain Relationships and Related Transactions........20
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K ..................................21
NUI Corporation
Annual Report on Form 10-K for the
Fiscal Year Ended September 30, 1999
PART I
Item 1. Business
NUI Corporation (NUI or the Company) was incorporated in New Jersey in
1969. NUI is a multi-state energy sales, services and distribution
company. Its utility operations distribute natural gas and related
services in six states along the eastern seaboard and comprise
Elizabethtown Gas (New Jersey), City Gas Company of Florida, North
Carolina Gas, Elkton Gas (Maryland), Valley Cities Gas (Pennsylvania)
and Waverly Gas (New York). The Company's subsidiaries include NUI
Energy, Inc. (NUI Energy), an energy retailer; NUI Energy Brokers,
Inc. (NUI Energy Brokers), an energy wholesaler; NUI Energy Solutions,
Inc., an energy project development and consulting entity; NUI
Environmental Group, Inc., an environmental project development
subsidiary; Utility Business Services, Inc. (UBS), a customer and
geographic information systems and services subsidiary; and
International Telephone Group, Inc. (ITG), a telecommunications
services subsidiary (see Note 2 of the Notes to the Consolidated
Financial Statements). The Company also provides sales and marketing
outsourcing through its 49% equity interest in TIC Enterprises, LLC
(TIC).
The principal executive offices of the Company are located at
550 Route 202-206, Box 760, Bedminster, NJ 07921-0760; telephone:
(908) 781-0500.
The Company's operations are organized and managed under three primary
segments: Distribution Services, Energy Sales and Services and
Customer Services. The Company also has corporate operations that do
not currently generate operating revenues. Reference is made to Note
10, "Business Segment Information" of the "Notes to the Consolidated
Financial Statements" for a discussion regarding financial information
about the business segments of the Company. See also Item 6-"Selected
Financial Data-Summary Consolidated Operating Data" for summary
information by customer class with respect to operating revenues, gas
volumes sold or transported and average number of utility customers
served. A discussion of the business of each segment follows.
Distribution Services Segment
Products and Services
The Distribution Services segment distributes natural gas in six
states through the Company's regulated utility divisions. Such
distribution services are regulated as to price, safety and return by
the regulatory commissions of the states in which in the Company
operates (see Regulation). The Distribution Services segment serves
approximately 372,000 customers, of which 67% are in New Jersey and
33% are in other states. Most of the Company's utility customers are
residential and commercial customers who purchase gas primarily for
space heating. Distribution Services' operating revenues for fiscal
1999 amounted to approximately $378.1 million, of which 78% was
generated by utility operations in New Jersey and 22% was generated by
utility operations in other states. Gas volumes sold or transported in
fiscal 1999 amounted to 83.7 million Mcf, of which approximately 79%
was sold or transported in New Jersey and 21% was sold or transported
in other states. An Mcf is a basic unit of measurement for natural gas
comprising 1,000 cubic feet of gas. A description of each of the
Company's utility divisions follows.
Elizabethtown Gas. The Company, through Elizabethtown Gas
(Elizabethtown), provides gas service to approximately 248,000
customers in franchised territories within seven counties in central
and northwestern New Jersey. Elizabethtown's 1,300 square-mile service
territory has a total population of approximately 950,000. Most of the
state's customers are located in densely-populated central New Jersey,
where increases in the number of customers are primarily from
conversions to gas heating from alternative forms of heating.
Elizabethtown's regulated gas volumes sold or transported and
customers served for the past three fiscal years were as follows:
Regulated Gas Volumes Sold or Transported (in thousands of Mcf)
1999 1998 1997
Firm Sales:
Residential 18,818 18,299 19,485
Commercial 6,802 7,587 9,333
Industrial 732 3,903 4,085
Interruptible Sales 15,477 11,927 12,886
Transportation Sales 24,586 23,367 22,510
------ ------ ------
Total 66,415 65,083 68,299
====== ====== ======
Utility Customers Served (twelve-month average)
1999 1998 1997
Firm Sales:
Residential - Heating 172,406 168,475 165,305
Residential - Non-heating 55,946 56,358 57,380
Commercial 15,821 15,907 16,922
Industrial 208 229 262
Interruptible Sales 25 72 72
Transportation Services 3,155 2,773 1,373
------- ------- -------
Total 247,561 243,814 241,314
======= ======= =======
Gas volumes sold to the Company's firm customers are sensitive to the
weather in New Jersey. In fiscal 1999, the weather in New Jersey was
16% warmer than normal and 1% colder than the prior year.
Additionally, weather in fiscal 1998 was 17% warmer than normal and 9%
warmer than fiscal 1997. While the effect of the warm weather has
caused sales of gas to decline, Elizabethtown's tariff contains a
weather normalization clause that is designed to help stabilize the
Company's results by increasing amounts charged to customers when
weather has been warmer than normal and decreasing amounts charged
when weather has been colder than normal. As a result of weather
normalization clauses, operating margins were approximately $5.4
million and $5.6 million higher in fiscal 1999 and 1998, respectively,
than they would have been without such clauses. For a further
discussion on variations in revenues, see Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations".
The growth in the number of residential heating customers principally
reflects the Company's marketing emphasis to convert residential non-
heating customers to full gas heating service. Approximately 70% of
the residential heating customers added in New Jersey since 1991
represented homes that were converted to gas heating from other forms
of space heating and the remainder consisted of new homes.
The Company's commercial and industrial customers currently have the
ability to utilize transportation service and purchase their gas from
other suppliers. The rate charged to transportation customers remains
regulated as to price and returns. Tariffs for transportation service
have been designed to provide the same margins as bundled sales
tariffs. Therefore, except for the regulatory risk of full recovery
of gas costs, the Company is financially indifferent as to whether it
transports gas or sells gas and transportation together.
On April 30, 1999, the Company made a filing with the New Jersey Board
of Public Utilities (NJBPU) which will enable all customers in New
Jersey (including residential customers) to choose an alternative
supplier of natural gas. This filing was a result of the "Electric
Discount and Energy Competition Act" legislation, which was signed
into law in New Jersey on February 9, 1999. The legislation has
several provisions that affect gas utilities. It provides all gas
customers with the ability to choose an alternate natural gas supplier
by December 31, 1999. At the same time, the utility will continue to
provide basic gas service through December 2002 when the NJBPU will
decide if the gas supply function should be made competitive. The
NJBPU will also conduct proceedings to determine whether customers
should be afforded the option of contracting with an alternative
provider of billing, meter reading and other customer account services
that may be deemed competitive by December 31, 2000. A NJBPU decision
on the Company's April 30th filing is expected in early fiscal 2000.
Elizabethtown's "interruptible" customers have alternative energy
sources and use gas on an "as available" basis. Variations in the
volume of gas sold or transported to these customers do not have a
significant effect on the Company's earnings because in accordance
with New Jersey regulatory requirements, 80% of the margins that
otherwise would be realized on gas sold or transported to
interruptible customers are used to reduce gas costs charged to firm
sales customers.
City Gas Company of Florida. City Gas Company of Florida (City Gas)
is the second largest natural gas utility in Florida, supplying gas to
over 99,000 customers in Dade and Broward Counties in south Florida,
and in Brevard, Indian River and St. Lucie Counties in central
Florida. City Gas' service areas cover approximately 3,000 square
miles and have a population of approximately 1.7 million.
City Gas' regulated gas volumes sold or transported and customers
served for the past three fiscal years were as follows:
Regulated Gas Volumes Sold or Transported (in
thousands of Mcf)
1999 1998 1997
Firm Sales:
Residential 1,738 1,880 1,850
Commercial 3,353 3,572 3,944
Interruptible Sales 111 461 1,162
Transportation Sales 4,174 3,388 2,277
----- ----- -----
Total 9,376 9,301 9,233
===== ===== =====
Utility Customers Served (twelve-month average)
1999 1998 1997
Firm Sales:
Residential 94,784 93,227 92,724
Commercial 4,699 4,748 4,706
Interruptible Sales 4 10 16
Transportation Services 315 125 51
------ ------ ------
Total 99,802 98,110 97,497
====== ====== ======
City Gas' residential customers purchase gas primarily for water
heating, clothes drying and cooking. Some customers, principally in
central Florida, also purchase gas to provide space heating during the
relatively mild winter season. Year-to-year growth in the average
number of residential customers primarily reflects new construction.
On March 31, 1998, City Gas purchased a city-owned and operated
propane distribution system from Port St. Lucie. The system was
converted to natural gas during the year and added 1,200 residential
homes and one major commercial property.
City Gas' commercial business consists primarily of schools,
businesses and public facilities, of which the number of customers
tends to increase concurrently with the continuing growth in
population within its service areas. As with its residential markets,
the Company is seeking to maximize the utilization of its existing
mains by emphasizing marketing efforts toward potential commercial
business along these lines.
Certain commercial and industrial customers have converted their
natural gas service from a sales basis to a transportation basis.
City Gas' transportation tariff provides margins on transportation
services that are substantially the same as margins earned on gas
sales. In November 1997, the Florida Public Service Commission (FPSC)
approved City Gas' proposal to offer unbundled gas service to certain
small commercial customers, in a manner similar to that currently in
place in the Company's New Jersey service territory.
North Carolina Gas. The Company, through North Carolina Gas, provides
gas service to approximately 13,800 customers in Rockingham and Stokes
Counties in North Carolina, which territories comprise approximately
560 square miles. During fiscal 1999, the regulated operations of
North Carolina Gas sold or transported approximately 3.8 million Mcf
of gas as follows: 20% sold to residential customers, 13% sold to
commercial customers, 28% sold to industrial customers and 39%
transported to commercial and industrial customers.
Elkton Gas Service ("Elkton"). The Company, through Elkton, provides
gas service to approximately 4,000 customers in franchised territories
comprising approximately 14 square miles within Cecil County,
Maryland. During fiscal 1999, Elkton sold approximately 849,000 Mcf of
gas as follows: 22% sold to residential customers, 18% sold to
commercial customers and 60% sold to industrial customers.
Valley Cities Gas Service ("VCGS") and Waverly Gas Service ("WGS").
VCGS and WGS provide gas service to approximately 6,300 customers in
franchised territories comprising 104 square miles within Bradford
County, Pennsylvania and the Village of Waverly, New York and
surrounding areas, respectively. During fiscal 1999, the regulated
operations of VCGS and WGS sold or transported approximately 3.3
million Mcf of gas as follows: 17% sold to residential customers, 8%
sold to commercial customers, 3% sold to industrial customers and 72%
transported to commercial and industrial customers.
Gas Supply and Operations
In recent years, the gas industry has been undergoing structural
changes in response to policies of the Federal Energy Regulatory
Commission (FERC) and local regulatory commissions designed to
increase competition. Traditionally, interstate pipelines were
wholesalers of natural gas to local distribution companies and
generally did not provide separate transportation or other services
for specific customers. In 1992, the FERC issued Order No. 636 that,
among other things, mandated the separation or "unbundling" of
interstate pipeline sales, transportation and storage services and
established guidelines for capacity management effective in 1993. In
fiscal 1995, the NJBPU unbundled the services provided and the rates
charged to New Jersey commercial and small industrial customers as
well. The transition to more competitive rates and services has the
effect of increasing the opportunity for local gas distribution
companies, and industrial and commercial customers to purchase natural
gas from alternative sources, while increasing the potential business
and regulatory risk borne by a local gas distribution company with
respect to the acquisition and management of natural gas services.
The Company endeavors to utilize its pipeline capacity efficiently by
matching capacity to its load profile to the extent feasible. To this
end, the Company has had a broad unbundled service tariff for certain
of its customers since 1987. The Company continues to avail itself of
opportunities to improve the utilization of its pipeline capacity by
pursuing broad based customer growth, including off-peak markets and
utilizing capacity release and off-system sales opportunities afforded
by Order No. 636 when operationally feasible.
The Company's gas supply during fiscal 1999 came from the following
sources: approximately 18% from purchases under contracts with primary
pipeline suppliers and additional purchases under their filed tariffs;
approximately 82% from purchases from various producers and gas
marketers, and purchases under long-term contracts with independent
producers and less than 1% from propane and liquefied natural gas
("LNG"). The Company manages its gas supply portfolio to assure a
diverse, reliable and secure supply of natural gas at the lowest
reasonable cost. In fiscal 1999, the Company's largest single supplier
accounted for approximately 10% of the Company's total gas purchases.
The Company has long-term gas delivery contracts with seven interstate
pipeline companies. Under these contracts, the Company has a right to
deliver, on a firm year-round basis, of up to 93.7 million Mcf of
natural gas annually with a maximum of approximately 277,000 Mcf per
day. Both the price and conditions of service under these contracts
are regulated by the FERC.
The Company has long-term gas purchase contracts for the supply of
natural gas for its system with six suppliers, including one
interstate pipeline company and five gas marketers. Under these
contracts, the Company has a right to purchase, on a firm year-round
basis, up to 18.8 million Mcf of natural gas annually with a maximum
of approximately 70,000 Mcf per day. In order to achieve greater
supply flexibility, and to more closely match its gas supply portfolio
to changes in the market it serves, the Company recently allowed a
long-term gas supply contract to expire at the conclusion of its
primary terms. As a result, the Company has reduced its fixed gas cost
obligations. The Company has replaced the supply with both spot market
gas and shorter-term, seasonal firm supply, thus reducing the average
term of its long-term obligations. In addition, the Company has access
to spot market gas through the interstate pipeline system to
supplement or replace, on a short-term basis, portions of its long-
term gas purchase contracts when such actions can reduce overall gas
costs or are necessary to supply interruptible customers. In fiscal
1995, the Company, along with seven other Northeastern and Mid-
Atlantic gas distribution companies, formed the East Coast Natural Gas
Cooperative LLC (the "Co-op"). The Co-op was formed with the goal of
jointly managing certain portions of the members' gas supply
portfolios, to increase reliability and reduce costs of service to
customers, and to improve the competitive position of the member
companies. Participation in and reliance upon certain contractual
arrangements among Co-op members has allowed the Company to reduce
costs associated with winter services.
In order to have available sufficient quantities of gas during the
heating season, the Company stores gas during non-peak periods and
purchases supplemental gas, including propane, LNG and gas available
under contracts with certain large cogeneration customers, as it deems
necessary. The storage contracts provide the Company with an aggregate
of 14 million Mcf of natural gas storage capacity and provide the
Company with the right to receive a maximum daily quantity of 162,462
Mcf. The contracts with cogeneration customers provide 26,200 Mcf of
daily gas supply to meet peak loads by allowing the Company to take
back capacity and supply that otherwise is dedicated to serve those
customers.
The Company has an LNG storage and vaporization facility in New Jersey
for handling peak gas demand. It has a daily delivery capacity of
29,800 Mcf and storage capacity of 131,000 Mcf.
The Company's maximum daily sendout in fiscal 1999 was approximately
409,300 Mcf in New Jersey and 97,242 Mcf in the other service
territories combined. The Company maintains sufficient gas supply and
delivery capacity for a maximum daily sendout capacity for New Jersey
of approximately 408,140 Mcf and approximately 128,000 Mcf for the
other service territories combined.
Certain of the Company's long-term contracts for the supply, storage
and delivery of natural gas include fixed charges that amount to
approximately $68.6 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 2.7 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 Company distributes gas through approximately 6,200 miles of
steel, cast iron and plastic mains. The Company has physical
interconnections with five interstate pipelines in New Jersey and one
interstate pipeline in Florida. In addition, the Company has physical
interconnections in North Carolina and Pennsylvania with interstate
pipelines, which also connect to New Jersey. Common interstate
pipelines along the Company's operating system provide the Company
with greater flexibility in managing pipeline capacity and supply, and
thereby optimizing system utilization.
Regulation
The Company is subject to regulation with respect to, among other
matters, rates, service, accounting and the issuance of securities.
The Company is subject to regulation as an operating utility by the
public utility commissions of the states in which it operates. The
Company is also subject to regulation by the United States Department
of Transportation under the Natural Gas Pipeline Safety Act of 1968,
with respect to the design, installation, testing, construction and
maintenance of pipeline facilities. Natural gas purchases,
transportation service and storage service provided to the Company by
interstate pipeline companies are subject to regulation by the FERC
(see "Gas Supply and Operations"). In addition, the Company is subject
to federal and state legislation 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 New Jersey Department of Environmental
Protection and other federal and state agencies.
The Company's current rates and tariffs for New Jersey reflect a rate
case that was settled in October 1991, under which the Company
obtained a weather normalization clause - see "Elizabethtown Gas". In
December 1994, the NJBPU authorized new tariffs which are designed to
provide for unbundling of natural gas transportation and sales
services for Elizabethtown's commercial and industrial customers. The
new tariffs became effective on January 1, 1995 and are designed to be
neutral as to the operating margins of the Company. On April 30, 1999,
the Company made a filing with the NJBPU which will enable all
customers in New Jersey to choose an alternative supplier of natural
gas. This filing was a result of the "Electric Discount and Energy
Competition Act" legislation, which was signed into law in New Jersey
on February 9, 1999 (see Item 7- "Management's Discussion and Analysis
- Regulatory Matters" for a further discussion of this filing).
The current rates and tariffs for the Florida operations were
authorized on October 29, 1996. The FPSC voted to authorize the
Company to increase its base rates in Florida by $3.75 million
annually. The rate increase reflected a rate base amounting to $91.9
million, which includes the addition of investments in system
improvements and expansion projects. Under the approval, the allowed
return on equity is 11.3% with an overall after-tax rate of return of
7.9%. The increase became effective on November 28, 1996. The FPSC
order also gives the Company the flexibility to negotiate rates with
certain business customers that have access to other energy sources.
The current rates and tariffs for the North Carolina, Maryland,
Pennsylvania and New York operations were authorized between October
1988 and September 1995. These operations serve approximately 20,000
customers in aggregate. The tariff for NCGS reflects a weather
normalization clause for its temperature sensitive residential and
commercial customers.
The Company's tariffs for each state in which it operates contain
adjustment clauses that enable the Company to recover purchased gas
costs. The adjustment clauses provide for periodic reconciliations of
actual recoverable gas costs with the estimated amounts that have been
billed. Under or over recoveries at the reconciliation date are
recovered from or refunded to customers in subsequent periods.
Franchises
The Company holds non-exclusive municipal franchises and other
consents which enable it to provide natural gas in the territories it
serves. The Company intends to seek to renew these franchises and
consents as they expire.
Seasonal Aspects
Sales of gas to some classes of customers are affected by variations
in demand due to changes in weather conditions, including normal
seasonal variations throughout the year. The demand for gas for
heating purposes is closely related to the severity of the winter
heating season. Seasonal variations affect short-term cash
requirements.
Competition
The Company competes with distributors of other fuels and forms of
energy, including electricity, fuel oil and propane, in all portions
of the territories in which it has distribution mains. In addition, in
1992, the FERC issued Order No. 636 (see "Gas Supply and Operations").
Subsequently, initiatives were sponsored in various states, the
purposes of which were to "unbundle" or separate into distinct
transactions, the purchase of the gas commodity from the purchase of
transportation services for the gas. To that end, as discussed under
"Regulation", several of the Company's operating divisions have
unbundled commercial and industrial gas purchase and transportation
rates.
The unbundled sale of gas to customers is subject to competition from
unregulated marketers and brokers, which generally do not bear the
obligations or costs related to operating a regulated utility. Tariffs
for transportation service have generally been designed to provide the
same margins as bundled sales tariffs. Therefore, except for the
regulatory risk of full recovery of gas costs, the Company is
financially indifferent as to whether it transports gas, or sells gas
and transportation together. The Company also faces the risk of loss
of transportation service for large industrial customers which may
have the ability to build connections to interstate gas pipelines and
bypass the Company's distribution system. Gas distributors can also
expect increased competition from electricity as deregulation in that
industry decreases prices and increases supply sources. Alternatively,
opportunities may increase for gas service to fuel generators for
large industrial customers, replacing electric utility service.
Environment
Reference is made to Item 7- "Management's Discussion and Analysis of
Financial Condition and Results of Operations- Capital Expenditures
and Commitments" and Note 11, "Commitments and Contingencies" of the
"Notes to the Consolidated Financial Statements" for information
regarding environmental matters affecting the Company.
Energy Sales & Services Segment
Products and Services
The Energy Sales and Services segment reflects the operations of the
Company's NUI Energy, NUI Energy Brokers and NUI Energy Solutions
subsidiaries, as well as off-system sales by the utility divisions.
Together, this segment offers wholesale and retail energy sales,
energy portfolio management, risk management, utility asset
management, project development and energy consulting services.
NUI Energy, Inc. (NUI Energy) provides retail energy sales and related
services to unbundled retail commercial and industrial customers. NUI
Energy's operating margins were $4.1 million in fiscal 1999 as
compared with $2.5 million in fiscal 1998 and $2.4 million in fiscal
1997.
NUI Energy Brokers, Inc. (NUI Energy Brokers) was formed in 1996 to
provide the wholesale energy trading, brokering, and risk management
activities of the Company. In addition to providing these services to
third parties, NUI Energy Brokers is also responsible for the supply
acquisition activity for NUI's Distribution Services segment. NUI
Energy Brokers trades physical natural gas in four geographic regions:
the Northeast, Southeast, Gulf Coast, and Mid Continent. In addition,
NUI Energy Brokers trades futures and options contracts on the New
York Mercantile Exchange. The risk associated with trading activities
is closely monitored on a daily basis and controlled in accordance
with the Company's Risk Management Policy. As in any commodity
brokerage activity, however, there are risks pertaining to market
changes and credit exposure that can be managed but not eliminated.
Therefore, the earnings from NUI Energy Brokers are likely to be more
volatile than the Company's utility distribution business (see Item 7,
_Management's Discussion and Analysis-Market Risk Exposure_). NUI
Energy Brokers generated margins of $8.3 million in fiscal 1999, $2.8
million in fiscal 1998 and $3.6 million in fiscal 1997.
NUI Energy Solutions, Inc. (NUI Energy Solutions) was formed by the
Company in fiscal 1998 to provide energy management and consulting
services to existing and new customers. Due to start-up costs
associated with this business, NUI Energy Solutions recorded a loss in
both fiscal 1999 and 1998.
Another business line within Energy Sales and Services is off-system
sales, or the use of utility-owned gas assets to make sales to
customers outside of NUI's service areas. Such assets include pipeline
capacity and gas storage facilities. These assets are managed
separately from non-utility assets, and their use is monitored and
regulated by state regulatory commissions. Pursuant to regulatory
agreements in some states in which the Company operates, the Company
is able to retain a portion of the margins from these sales in varying
percentages depending on the state in which the assets are owned. Off-
system sales margins totaled $771,000 in fiscal 1999, $453,000 in
fiscal 1998 and $681,000 in fiscal 1997.
Customer Services Segment
Products and Services
The Customer Services segment is comprised of the Company's Utility
Business Service subsidiary and the appliance business operations.
Together this segment provides appliance repair, maintenance,
installation and leasing; customer information system services
including bill printing, mailing, collection and payment processing;
network analysis; facilities database management; and operations
mapping and field computing for other utilities.
During fiscal 1999, the Company completed the separation of its
appliance servicing and leasing business from its Distribution
Services segment. This group performed more than 74,000 revenue-
producing appliance service jobs in fiscal 1999. The appliance group
generated revenues of $15.5 million in fiscal 1999, $14.0 million in
fiscal 1998 and $12.8 million in fiscal 1997.
Utility Business Services, Inc. (UBS) provides customer information
systems and geographic information system services to investor-owned
and municipal utilities, as well as third-party providers in the gas,
water and wastewater markets. WINS CIS, the premiere customer
information system developed and maintained by UBS, is presently
serving approximately 30 clients with state-of-the-art capabilities in
support of more than 620,000 customers. In addition to generating over
three million bills each year, UBS assists clients in allied areas
such as automatic meter reading, payment processing, and account
recovery. In fiscal 1999, UBS introduced a natural gas version of WINS
CIS by converting three of the Company's Distribution Services utility
divisions to the new system. UBS is currently working on a web-enabled
version of WINS CIS and plans to address the needs of the electric
industry in the near term. Geographic information services are
currently provided to nine clients. UBS had margins of $3.7 million in
fiscals 1999 and 1998 and $2.4 million in fiscal 1997.
Other NUI Operations
NUI Environmental Group, Inc. (NUI Environmental) was formed by the
Company in fiscal 1996 to develop a solution to the rapidly decreasing
accessibility of the New York/New Jersey harbor to international
commercial shipping traffic. On December 23, 1998, NUI Environmental
was selected from a group of sixteen firms that responded to a request
for proposal by the State of New Jersey to participate in a Sediment
Decontamination Demonstration Project designed to identify new
technologies for the productive dredging of the harbor. NUI
Environmental must demonstrate the effectiveness of its technology
through the pilot scale project, in which it must treat 200 gallons of
dredged material from the harbor. If successful in the pilot program,
NUI Environmental will contract with the State of New Jersey to treat
between 30,000 and 150,000 cubic yards of material.
On May 18, 1997, the Company closed on its acquisition of a 49%
interest in TIC Enterprises, LLC (TIC), a newly formed limited
liability company, for a purchase price of $22 million. The
acquisition was effective as of January 1, 1997 and is being accounted
for under the equity method. TIC engages in the business of
recruiting, training and managing sales professionals and serving as
sales and marketing representatives for various businesses. Among
these businesses are Lucent Technologies, Nextel Communications, Qwest
Communications, AT&T and the United States Postal Service. In early
December 1999, TIC was awarded a national contract from the United
States Postal Service (USPS) to market its expedited delivery
services. TIC contributed $1.2 million of equity earnings in fiscal
1999, was flat in fiscal 1998, and contributed $1.3 million in fiscal
1997.
On November 12, 1999, the Company closed on its acquisition of
International Telephone Group, Inc. The acquisition was treated as a
merger whereby ITG merged with and into a subsidiary of the Company.
The purchase price totaled $3.8 million and included the issuance of
113,200 shares of NUI common stock, with the remainder paid in cash.
ITG is a full service telephone company that provides its customers
with a single service solution for all their telecommunication
requirements including local, long distance, cellular, internet, and
data communications services (see Note 2 of the Notes to the
Consolidated Financial Statements).
Persons Employed
As of September 30, 1999, the Company employed a total of 1,049
persons, of which 269 employees in New Jersey were represented by the
Utility Workers Union of America (Local 424); 87 employees in Florida
(Locals 769 and 385) and 14 employees in Pennsylvania (Local 529) were
represented by the Teamsters Union; and 36 employees in North Carolina
were represented by the International Brotherhood of Electrical
Workers (Local 2291). The current collective bargaining agreement with
the New Jersey union was negotiated effective December 10, 1998 and
expires on November 20, 2001. The North Carolina union collective
bargaining agreement was negotiated on August 20, 1998, and expires on
August 20, 2001. The collective bargaining agreement in Pennsylvania
is currently being negotiated. The union is currently working without
a contract. A final resolution is expected shortly. The collective
bargaining agreement in Florida was negotiated on March 31, 1998 and
expires on March 31, 2001.
Persons employed by segment are as follows: Distribution Services
segment- 673; Energy Sales and Services- 37; and Customer Services-
181 persons. In addition, the Corporate office of NUI employed a total
of 158 persons, which employees primarily work in shared services for
the entire corporation.
Available Information
The Company files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange
Commission. Any document the Company files with the Commission may be
read or copied at the Commission's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the Commission at
1-800-SEC-0330 for further information on the public reference room.
The Company's Commission filings are also available at the
Commission's Web site at http://www.sec.gov or the Company's Web site
at http://www.nui.com.
Item 2. Properties
The Company owns approximately 6,200 miles of steel, cast iron and
plastic gas mains, together with gate stations, meters and other gas
equipment. In addition, the Company owns peak shaving plants,
including a LNG storage facility in Elizabeth, New Jersey.
The Company also owns real property in Union, Middlesex, Warren,
Sussex and Hunterdon counties in New Jersey, and in Dade, Broward,
Brevard and St. Lucie counties in Florida, portions of which are under
lease to others. The Company's properties include office buildings in
Hialeah and Rockledge, Florida that serve as the principal operating
offices for the Florida operations; and office buildings in both
Reidsville, North Carolina and Sayre, Pennsylvania that serve as
operating offices for the North Carolina and the Pennsylvania and New
York operations, respectively. The Company also owns various service
centers in New Jersey, Florida, North Carolina, Maryland and
Pennsylvania from which the Company dispatches service crews and
conducts construction and maintenance activities.
The Company leases office space in Bedminster, New Jersey that serves
as its corporate headquarters, and leases certain other facilities in
New Jersey and Florida that are operated as customer business offices
or operating offices. The Company also leases approximately 160,000
square feet in an office building in Union, New Jersey.
Subject to minor exceptions and encumbrances, all other property
materially important to the Company and all principal plants are owned
in fee simple, except that most of the mains and pipes are installed
in public streets under franchise or statutory rights or are
constructed on rights of way acquired from the apparent owner of the
fee.
Item 3. Legal Proceedings
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.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was presented for submission to a vote of security holders
through the solicitation of proxies or otherwise during the last
quarter of fiscal 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
NUI common stock is listed on the New York Stock Exchange and is
traded under the symbol "NUI". The quarterly cash dividends paid and
the reported price range per share of NUI common stock for the two
years ended September 30, 1999 were as follows:
Quarterly Price Range
Cash
Dividend
High Low
Fiscal 1999:
First Quarter $0.245 $27.00 $21.563
Second Quarter 0.245 27.06 20.375
Third Quarter 0.245 25.62 20.813
Fourth Quarter 0.245 28.06 24.625
Fiscal 1998:
First Quarter $0.245 $29.62 $21.375
Second Quarter 0.245 28.62 25.188
Third Quarter 0.245 29.43 23.313
Fourth Quarter 0.245 25.93 20.313
There were 6,045 shareholders of record of NUI common stock at
November 30, 1999.
It is the Company's intent to continue to pay quarterly dividends in
the foreseeable future. NUI's dividend policy is reviewed on an
ongoing basis and is dependent upon the Company's expectation of
future earnings, cash flow, financial condition, capital requirements
and other factors.
The Company's long-term debt agreements include, among other things,
restrictions as to the payment of cash dividends. Under the most
restrictive of these provisions, the Company was permitted to pay $54
million of cash dividends at September 30, 1999.
Item 6. Selected Financial Data
Selected Consolidated Financial Data
(in thousands, except per share amounts)
Fiscal Years Ended September 30,
1999 1998 1997 1996 1995
Operating Revenues $828,174 $828,036 $608,596 $469,499 $376,884
Net Income $ 24,560 $ 12,314 $ 19,649 $ 14,896 $ 5,517
Net Income Per Share $ 1.93 $0.98 $1.75 $1.52 $0.60
Dividends Paid Per Share $0.98 $0.98 $0.94 $0.90 $0.90
Total Assets $844,226 $776,847 $803,665 $677,662 $610,165
Capital Lease
Obligations $ 2,599 $ 8,566 $ 9,679 $ 10,503 $ 11,114
Long-Term Debt $268,911 $229,098 $229,069 $230,100 $222,060
Common Shareholders' $237,318 $222,992 $218,291 $179,107 $140,912
Equity
Common Shares 12,750 12,680 12,429 11,086 9,201
Outstanding
Notes to the Selected Consolidated Financial Data:
Net income for fiscal 1999 includes a pension settlement gain and
other non-recurring items. The effect of these items increased net
income by $2.3 million (after tax), or $0.18 per share.
Net income for fiscal 1998 includes restructuring and other non-
recurring charges amounting to $5.9 million (after tax), or $0.47 per
share.
Net income for fiscal 1995 includes restructuring and other non-
recurring charges amounting to $5.6 million (after tax), or $0.61 per
share.
Summary Consolidated Operating Data
Fiscal Years Ended September 30,
1999 1998 1997 1996 1995
Operating Revenues
(Dollars
in thousands)
Firm Sales:
Residential $197,868 $198,072 $201,757 $194,332 $173,395
Commercial 83,409 91,970 106,234 107,067 98,541
Industrial 8,694 19,684 23,263 25,321 20,083
Interruptible Sales 49,138 45,594 55,844 50,539 48,282
Unregulated Sales 432,810 421,751 177,881 55,678 7,498
Transportation Services 37,634 33,338 28,617 23,085 17,696
Customer Service,
Appliance
Leasing and Other 18,621 17,627 15,000 13,477 11,389
------- ------- ------ ------ ------
$828,174 $828,036 $608,596 $469,499 $376,884
======= ======= ======= ======= =======
Gas Sold or Transported
(MMcf)
Firm Sales:
Residential 22,064 21,771 22,956 24,810 21,276
Commercial 11,058 12,076 14,254 16,575 15,455
Industrial 1,584 4,463 4,819 5,407 5,217
Interruptible Sales 16,420 13,183 15,074 16,003 18,365
Unregulated Sales 168,748 163,418 62,819 17,804 3,398
Transportation Services 32,601 30,831 28,294 25,051 22,154
------- ------- ------ ------ ------
252,475 245,742 148,216 105,650 85,865
======= ======= ======= ======= ======
Average Utility
Customers
Served
Firm Sales:
Residential 344,448 338,958 335,632 332,440 328,644
Commercial 23,320 23,407 24,312 24,484 24,519
Industrial 254 275 306 338 43
Interruptible Sales 56 111 121 120 118
Transportation Services 3,535 2,948 1,460 668 184
------- ------- ------ ------ ------
371,613 365,699 361,831 358,050 353,895
======= ======= ======= ======= =======
Degree Days in New
Jersey 4,381 4,356 4,772 5,343 4,333
Employees (year end) 1,049 1,081 1,126 1,086 1,079
Ratio of Earnings to
Fixed Charges 2.64 1.85 2.11 2.00 1.37
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis refers to NUI Corporation and
all its operating divisions and subsidiaries (collectively referred to
as the Company). The Company is a multi-state energy sales, services
and distribution, and telecommunications company. Its utility
operations distribute natural gas and related services in six states
along the eastern seaboard and comprise Elizabethtown Gas (New
Jersey), City Gas Company of Florida, North Carolina Gas, Elkton Gas
(Maryland), Valley Cities Gas (Pennsylvania) and Waverly Gas (New
York). The Company's non-regulated subsidiaries include NUI Energy,
Inc. (NUI Energy), an energy retailer; NUI Energy Brokers, Inc. (NUI
Energy Brokers), an energy wholesaler; NUI Energy Solutions, Inc., an
energy project development and consulting entity; NUI Environmental
Group, Inc., an environmental project development subsidiary; Utility
Business Services, Inc. (UBS), a customer and geographic information
systems and services subsidiary; and International Telephone Group,
Inc. (ITG), a telecommunications services subsidiary (see Note 2 of
the Notes to the Consolidated Financial Statements). The Company also
provides sales outsourcing through its 49 percent equity interest in
TIC Enterprises, LLC (TIC).
Results of Operations
The results for the 1999 and 1998 fiscal years reflect changes in the
New Jersey tax law, which resulted in variations in certain line items
on the consolidated statement of income. Effective January 1, 1998,
New Jersey Gross Receipts and Franchise Taxes (GRAFT) were replaced by
a combination of a New Jersey Sales and Use Tax (Sales Tax), a New
Jersey Corporate Business Tax (CBT) and a temporary Transitional
Energy Facilities Assessment (TEFA). In prior periods, GRAFT was
recorded as a single line item as a reduction of operating margins.
Effective January 1, 1998, TEFA is recorded in the energy taxes line
item as a reduction of operating margins, CBT is recorded in the
income taxes line item and Sales Tax is recorded as a reduction of
operating revenues. The legislation was designed to be net income
neutral over a 12-month period, however, variations of certain line
items on the consolidated statement of income exist. For fiscal 1999
as compared to fiscal 1998, the three new taxes had the effect of
reducing operating revenues by approximately $3.4 million, reducing
energy taxes by approximately $4.1 million and increasing income tax
expense by approximately $1.2 million. For fiscal 1998 as compared to
fiscal 1997, these changes had the effect of reducing operating
revenues by approximately $9.9 million, reducing energy taxes by
approximately $11.8 million and increasing income tax expense by
approximately $1.9 million.
Fiscal Years Ended September 30, 1999 and 1998
Net Income. Net income for fiscal 1999 was $24.6 million, or $1.93
per share, as compared with net income of $12.3 million, or $0.98 per
share in fiscal 1998. Net income in both fiscal periods includes non-
recurring items incurred mainly as a result of the Company's 1998
reorganization (see Note 3 of the Notes to the Consolidated Financial
Statements). The after-tax non-recurring items in fiscal 1999 resulted
in a net gain of approximately $2.3 million, or $0.18 per share, as
compared to after-tax charges of approximately $5.9 million, or $0.47
per share, incurred during fiscal 1998. Absent these non-recurring
items, net income would have been $22.2 million, or $1.75 per share in
fiscal 1999 as compared to $18.2 million, or $1.45 per share in fiscal
1998. The increase in recurring earnings was mainly attributed to
higher operating margins, other income and lower other taxes,
partially offset by higher operations and maintenance expenses,
depreciation and interest expense.
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 utility 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 sale of the
gas commodity, the Company's level of regulated operating revenues is
not necessarily indicative of financial performance.
The Company's operating revenues remained relatively flat between
fiscal 1999 and fiscal 1998, despite fluctuations within the Company's
operating segments. Energy Sales and Services revenue increased by
approximately $10.7 million mainly due to increased operations by NUI
Energy Brokers, while Customer Services revenue increased $1.4 million
primarily due to increases in the Company's appliance leasing
business. These increases were partially offset by a decrease of
approximately $11.9 million in the Company's Distribution Services
revenue primarily resulting from changes in the New Jersey tax law
noted earlier as well as a refund to New Jersey customers of
approximately $4.4 million in September 1999 (see Regulatory Matters).
Weather in New Jersey was approximately 16 percent warmer than normal
in fiscal 1999 and relatively flat compared to the 1998 period.
The Company's operating margins increased by $13.1 million, or 7
percent, in fiscal 1999 as compared with fiscal 1998. The increase was
primarily attributable to an increase of approximately $3.9 million in
the Company's Distribution Services segment as a result of customer
growth, the effects of changes in the New Jersey tax law previously
described and the recovery of previously deferred post-retirement
benefit expenses through rates (see Regulatory Matters). These
increases were partially offset by the effect of warmer weather in
fiscal 1999 in several of the Company's service territories, part of
which was not fully recovered from customers under 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. As a result
of weather normalization clauses, operating margins were approximately
$5.4 million and $5.6 million higher in fiscal 1999 and 1998,
respectively, than they would have been without such clauses.
Operating margins increased in the Customer Services segment by
approximately $1.4 million due to an increase in the appliance leasing
rates in Florida and increased customer service activity in New
Jersey. Operating margins from the Company's Energy Sales and Services
segment increased by approximately $7.9 million primarily due to
increases in the Company's wholesale trading and retail energy
operations.
Other Operating Expenses. Operations and maintenance expenses
increased by approximately $4.6 million, or 5 percent, in fiscal 1999
as compared with fiscal 1998. The increase was primarily the result of
previously deferred post-retirement benefit expenses which are being
expensed and recovered through rates, higher levels of accrued
incentives associated with the improved performance of the Company's
unregulated wholesale trading and retail energy businesses and a lower
pension credit in the current year. These increases were partially
offset by labor and benefit savings from the Company's reorganization
efforts over the past year.
The Company recognized approximately $4.0 million of pre-tax, non-
recurring income in fiscal 1999, as compared to non-recurring expenses
of approximately $9.7 million recognized in fiscal 1998. These items
are mainly the result of the Company's 1998 reorganization. (See Note
3 of the Notes to the Consolidated Financial Statements for a further
description of these items.)
Depreciation and amortization increased approximately $2.0 million in
fiscal 1999 as compared to the prior year, primarily due to additional
plant in service.
The decrease in other general taxes of approximately $0.6 million was
primarily due to a decrease in the average number of employees during
fiscal 1999.
Income tax expense increased by approximately $8.2 million in fiscal
1999 as compared to fiscal 1998 as a result of higher pre-tax income
and the change in the New Jersey tax law noted earlier.
Interest Expense. Interest expense increased by approximately $0.7
million in fiscal 1999 as compared to fiscal 1998. This increase was
primarily due to interest on the Company's $40 million bond issuance
in December 1998. These increases were partially offset by an increase
in interest income on funds held by trustee as a result of the $40
million issuance noted above being put into trust for use on qualified
expenditures (see Financing Activities and Resources - Long-Term Debt
and Funds for Construction Held by Trustee).
Other Income and (Expense), Net. Other income and expense, net,
increased by approximately $0.4 million in fiscal 1999 as compared to
fiscal 1998. The increase reflects improved results from TIC of
approximately $1.3 million as a result of higher revenues from TIC's
various sales programs as well as contributions from additional
product lines. This increase was partially offset by a gain of
approximately $0.7 million recognized in the prior year period due to
the sale of marketable securities.
Fiscal Years Ended September 30, 1998 and 1997
Net Income. Net income for fiscal 1998 was $12.3 million, or $.98 per
share, as compared with net income of $19.6 million, or $1.75 per
share in fiscal 1997. The decrease in 1998 was primarily due to
after-tax, non-recurring charges of approximately $5.9 million, or
$.47 per share, associated with the Company's reorganization efforts
which included an early retirement program and other workforce
reductions (see Note 3 of the Notes to the Consolidated Financial
Statements). Absent these non-recurring charges, net income would have
been $18.2 million, or $1.45 per share. The decrease in recurring
earnings was mainly attributed to higher depreciation, operations and
maintenance expenses, other taxes and lower other income, partially
offset by higher operating margins.
Net income per share in the current year was also affected by the
increased average number of outstanding shares of common stock over
the prior year, principally reflecting the Company's issuance of 1.0
million additional shares in September 1997 (see Financing Activities
and Resources-Common Stock).
Operating Revenues and Operating Margins. The Company's operating
revenues increased by $219.4 million, or 36 percent, in fiscal 1998 as
compared with fiscal 1997. The increase was principally due to an
increase in the Company's Energy Sales and Services segment of
approximately $247.2 million, mainly due to increased operations by
NUI Energy Brokers, and increased activity in the Customer Services
segment. These increases were partially offset by lower revenues from
the Company's Distribution Services segment mainly due to the effect
of warmer weather in fiscal 1998 in all of the Company's service
territories, primarily in New Jersey where it was 17 percent warmer
than normal and 9 percent warmer than the prior year, as well as the
effect of the New Jersey tax law changes previously described.
The Company's operating margins increased by $6.7 million, or 4
percent, in fiscal 1998 as compared with fiscal 1997. The increase was
primarily attributable to an increase of approximately $5.3 million in
the Company's Distribution Services segment as a result of customer
growth and the effects of changes in the New Jersey tax law previously
described. These increases were partially offset by the effect of
warmer weather in fiscal 1998 in all of the Company's Distribution
Services territories, part of which was not fully recovered from
customers under weather normalization clauses. As a result of weather
normalization clauses, operating margins were approximately $5.6
million and $2.0 million higher in fiscals 1998 and 1997,
respectively, than they would have been without such clauses.
Operating margins increased in the Customer Services segment by
approximately $2.4 million due to customer additions by UBS and
related increases in system conversion revenues, an increase in the
appliance leasing rates in Florida and increased customer service
activity in New Jersey. Operating margins from the Company's Energy
Sales and Services segment decreased by approximately $1.0 million
primarily due to a lack of market volatility, which negatively
impacted margins, and lower off-system sales associated with warm
temperatures of the 1998 heating season.
Other Operating Expenses. Operations and maintenance expenses
increased by approximately $1.1 million, or 1 percent, in fiscal 1998
as compared with fiscal 1997. The increase was primarily due to
expenses associated with the continued growth of the Company's
unregulated operations. These increases were partially offset by a
higher pension credit due to the investment performance of pension
plan assets.
The Company incurred approximately $9.7 million of non-recurring
charges in the fourth quarter of fiscal 1998 associated with the
reorganization of the Company's operations which included an early
retirement program for non-bargaining unit personnel and other
workforce reductions (see Note 3 of the Notes to the Consolidated
Financial Statements).
Depreciation and amortization increased approximately $1.9 million in
fiscal 1998 as compared to 1997, primarily due to additional plant in
service.
The increase in other general taxes of approximately $0.5 million was
primarily due to higher payroll-related taxes as a result of a higher
average number of employees in fiscal 1998 as compared to fiscal 1997.
Income tax expense decreased by approximately $1.0 million in fiscal
1998 as compared to fiscal 1997 as a result of lower pre-tax income,
partially offset by the change in the New Jersey tax law noted above.
Other Income and (Expense), Net. Other income and expense, net,
decreased by approximately $1.5 million in fiscal 1998 as compared to
fiscal 1997. The decrease was primarily due to the lower results from
TIC in 1998 as a result of additional investments made by TIC to grow
its sales programs and increase its product lines. Additionally, the
fiscal 1997 results reflected a pre-tax gain of approximately $0.7
million from the sale of certain property in Florida.
Regulatory Matters
On April 30, 1999, the Company made a filing with the New Jersey Board
of Public Utilities (NJBPU) which will enable all customers in New
Jersey to choose an alternative supplier of natural gas. This filing
was a result of the "Electric Discount and Energy Competition Act"
legislation, which was signed into law in New Jersey on February 9,
1999. The legislation has several provisions that affect gas
utilities. It provides all gas customers with the ability to choose an
alternate natural gas supplier by December 31, 1999. At the same time,
the utility will continue to provide basic gas service through
December 2002 when the NJBPU will decide if the gas supply function
should be made competitive. The NJBPU will also conduct proceedings to
determine whether customers should be afforded the option of
contracting with an alternative provider of billing, meter reading and
other customer account services that may be deemed competitive by
December 31, 2000. A NJBPU decision on the Company's April 30 filing
is expected in early fiscal 2000.
On July 7, 1999, the NJBPU approved a final stipulation on the
Company's New Jersey Purchased Gas Adjustment Clause filing in which
the Company would continue to charge rates approved in an interim
stipulation and approved by the NJBPU on March 3, 1999. In addition,
the stipulation provided that the Company would refund to customers
$10 million of previously over-recovered gas costs. Of this amount,
$5.6 million was applied against a Weather Normalization Clause under-
recovery and the balance was credited to customer bills in late fiscal
1999. The stipulation also allows the Company to defer the costs of
its undepreciated propane-air plant, presently not in use, for rate
recovery in its next base rate case.
On September 23, 1998, the NJBPU issued an order approving the
Company's petition to increase base rates in New Jersey by
approximately $2.4 million to recover postretirement benefits computed
under Statement of Financial Accounting Standards No. 106, _Employers'
Accounting for Postretirement Benefits Other than Pensions_ (SFAS
106). The rate increase was effective October 1, 1998 and allows for
previously deferred costs, as well as future SFAS 106 costs, to be
recovered over a rolling 15-year period.
Financing Activities and Resources
The Company's net cash provided by operating activities was $59.0
million in fiscal 1999, $20.9 million in fiscal 1998 and $40.5 million
in fiscal 1997. The increase in fiscal 1999 as compared with fiscal
1998 was primarily due to additional collections of gas costs through
the Company's purchased gas adjustment clauses and the timing of
payment to gas suppliers. The decrease in fiscal 1998 as compared with
fiscal 1997 was primarily due to the timing of payments to gas
suppliers, as well as the timing of payments relating to energy taxes.
Because the Company's primary 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 $68.2 million at 5.3 percent in fiscal 1999, $66.8
million at 5.7 percent in fiscal 1998 and $66.0 million at 5.5 percent
in fiscal 1997.
At September 30, 1999, the Company had outstanding notes payable to
banks amounting to $73.6 million and available unused lines of credit
amounting to $62.4 million.
Long-Term Debt and Funds for Construction Held by Trustee. On December
8, 1998, the Company issued $40 million of tax-exempt Gas Facilities
Revenue Bonds at an interest rate of 5.25 percent. These bonds will
mature in November 2033 and the proceeds will be used to finance a
portion of the Company's capital expenditure program in New Jersey.
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 September 30, 1999 and September 30,
1998, the total unexpended portions of all of the Company's Gas
Facilities Revenue Bonds were $32.0 million and $7.1 million,
respectively, and are 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
from such issuances amounted to approximately $0.7 million, $4.0
million and $5.7 million in fiscals 1999, 1998 and 1997, respectively,
and were used primarily to reduce outstanding short-term debt.
Effective May 26, 1998, several of these plans commenced purchasing
shares on the open market to fulfill the plans' requirements. Under
the terms of these plans, the Company may periodically change the
method of purchasing shares from open market purchases to purchases
directly from the Company, or vice versa. The decrease in proceeds
received in fiscal 1999 as compared to fiscals 1998 and 1997 reflects
that the plans commenced purchasing shares directly in the open market
rather than from Company.
The Company's long-term debt agreements include, among other things,
restrictions as to the payment of cash dividends. Under the most
restrictive of these provisions, the Company is permitted to pay
approximately $54 million of cash dividends at September 30, 1999.
On September 25, 1997, the Company issued an additional 1.0 million
shares of common stock. The net proceeds from the offering totaled
$22.6 million and were used to reduce outstanding short-term debt
incurred to finance the Company's acquisition of a 49 percent interest
in TIC and for other general corporate purposes.
Capital Expenditures and Commitments
Capital expenditures, which consist primarily of expenditures to
expand and upgrade the Company's gas distribution systems, were $47.9
million in fiscal 1999, $60.9 million in fiscal 1998 and $52.3 million
in fiscal 1997. The decrease in fiscal 1999 was primarily due to
special projects in fiscal 1998 to expand operations of two large
industrial customers in New Jersey. The Company's capital expenditures
are expected to be approximately $51 million in fiscal 2000.
The Company owns or previously owned six former manufactured gas plant
(MGP) sites in the state of New Jersey and ten former MGP sites in the
states of North Carolina, South Carolina, Pennsylvania, New York and
Maryland. 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 is the minimum
amount that the Company expects it will expend in the next 20 years to
remediate the Company's MGP sites. Of this reserve, approximately $30
million relates to New Jersey MGP sites and approximately $4 million
relates to the MGP sites located outside New Jersey. However, 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 this
reserve by an amount that could range up to an additional $24 million
and be incurred during a future period of time that may range up to 50
years. Of this $24 million in possible additional expenditures,
approximately $12 million relates to the New Jersey MGP sites and
approximately $12 million relates to the remaining MGP sites. As
compared with the $34 million reserve currently recorded on the
Company's books as discussed above, the Company believes that it is
less likely that this additional $24 million will be incurred and
therefore has not recorded it on its books. The Company believes that
all costs associated with the New Jersey MGP sites will be recoverable
in rates or from insurance carriers. In New Jersey, the Company is
currently recovering environmental costs on an annual basis through
base rates and over a rolling seven-year period through its MGP
Remediation Adjustment Clause. As a result, the Company has begun rate
recovery of approximately $5.5 million of environmental costs incurred
through June 30, 1998. Recovery of an additional $2.0 million in
environmental costs incurred between July 1, 1998 and June 30, 1999 is
currently pending NJBPU approval. With respect to costs that may be
associated with the MGP sites located outside the state of New Jersey,
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 will ultimately be successful.
Certain of the Company's long-term contracts for the supply, storage
and delivery of natural gas include fixed charges that amount to
approximately $68.6 million annually. The Company currently recovers,
and expects to continue to recover, such fixed charges through its
purchased gas adjustment clauses. As a result of the forthcoming
unbundling of natural gas services in New Jersey, these contracts may
result in the realization of stranded costs by the Company.
Management believes the outcome of these actions will not have a
material adverse effect on the Company's results. The Company also is
committed to purchase, at market-related prices, minimum quantities of
gas that, in the aggregate, are approximately 2.7 billion cubic feet
(Bcf) 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 Company is scheduled to repay $20 million of Medium-Term Notes in
August 2002.
Market Risk Exposure
The Company's wholesale trading subsidiary, NUI Energy Brokers, uses
derivatives for multiple purposes: i) to hedge price commitments and
minimize the risk of fluctuating gas prices, ii) to take advantage of
market information and opportunities in the marketplace, and iii) to
fulfill its trading strategies and, therefore, ensure favorable prices
and margins. These derivative instruments include forwards, futures,
options and swaps.
The risk associated with uncovered derivative positions is closely
monitored on a daily basis, and controlled in accordance with NUI
Energy Brokers' Risk Management Policy. This policy has been approved
by the Company's Board of Directors and dictates policies and
procedures for all trading activities. The policy defines both value-
at-risk (VaR) and loss limits, and all traders are required to read
and follow this policy. At the end of each day, all trading positions
are marked-to-market and a VaR is calculated. This information, as
well as the status of all limits, is disseminated to senior management
daily.
NUI Energy Brokers utilizes the variance/covariance VaR methodology.
Using a 95 percent confidence interval and a one day time horizon, as
of September 30, 1999, NUI Energy Brokers' VaR was $295,000.
Year 2000
Many existing computer programs and systems with embedded digital
microcontrollers, use only two digits to identify a year in the date
field, or were not designed in other ways to provide for the upcoming
change in the century. If not corrected, many systems that use digital
technology could fail or create errors that may result in a
significant adverse impact on NUI's ability to provide service, its
regulatory relations and financial condition.
NUI has developed a Risk Mitigation Plan (the Plan) as an internal
guide to its systems readiness program. The purpose of the program is
to mitigate the risks associated with Year 2000 technology issues. The
Plan includes the following phases: (i) development of a detailed
inventory of all information technology (IT) and non-IT systems that
incorporate any technology component including embedded
microprocessors and microcontrollers (Inventory Phase); (ii)
assessment of those systems for Year 2000 vulnerability (Assessment
Phase); (iii) remediation of the affected systems (Remediation Phase);
and (iv) testing of sub-systems, hardware, operating and application
software running as integrated systems (Testing Phase). In addition,
the Plan requires (v) an analysis of the risk of system failure and
the consequences of failure in order to focus testing resources and
prioritization of resources under contingency plans (Risk Analysis).
The Inventory, Assessment and the Risk Analysis Phases include
material direct third-party suppliers and vendors. The final phase is
(vi) contingency planning, which is described below.
Under the Plan, NUI has established an executive level Year 2000
Committee (the Committee) to monitor the Company's Year 2000 progress.
The Committee is chaired by NUI's Senior Vice President, Chief
Operating Officer and Chief Financial Officer, and includes the senior
management of all NUI's business units, the Chief Information Officer,
Chief Administrative Officer, General Counsel and Secretary and the
Vice President of Corporate Development and Treasurer. The Committee
receives monthly reports from a project coordinator and team. Members
of the team are responsible for NUI gas distribution system controls,
computer hardware, operating and communication systems, and for
critical suppliers. The Chairman of the Committee reports to NUI's
Board of Directors on Year 2000 issues on a periodic basis.
The Company has largely completed the first five phases referred to
above. In addition, contingency plans, supplementing existing disaster
recovery and business continuity plans, have been developed as
necessary for the Company's own systems and its third-party
relationships, in response to its assessments, remediation and testing
activities. The specific actions identified include measures such as
manual workarounds, deployment of backup or secondary technologies,
rearranging work schedules, and substitution of suppliers, as
appropriate.
NUI's systems and customers are vulnerable to systems operated by
third parties that may not be Year 2000 ready. NUI has identified its
critical direct suppliers and vendors and relies on its business
partners/third parties to be responsible for the Year 2000 readiness
of their offerings. These include, at the very highest level of
importance, interstate pipeline suppliers, telecommunications carriers
and electric suppliers. Interstate pipeline suppliers must
appropriately schedule and control gas supplies to NUI's own
distribution systems. Telecommunications carriers' digital circuits
are used to control and monitor NUI's gas distribution system with
voice circuits as emergency backup and for customers' reporting of
emergencies. Electricity supplies are critical to NUI's customers for
natural gas heating equipment and industrial process control.
NUI is assessing the Year 2000 readiness of its critical suppliers
through face-to-face meetings and correspondence. Although numerous
third parties have indicated to the Company in writing that they are
addressing their Year 2000 issues on a timely basis, NUI will continue
to work with these suppliers through the remainder of 1999 to gain
greater assurance that appropriate steps are being taken to ensure
security of supply and the continued accurate exchange of critical
data.
The total estimated costs of assessing, remediating and testing NUI's
systems for Year 2000 readiness is approximately $3.5 million, of
which approximately $3.1 million has been incurred through September
30, 1999. Approximately 50 percent of these costs will relate to
capital projects. The Company has and will continue to fund these
costs from the operations of the Company.
Customers are dependent on NUI's reliable and secure gas supply,
emergency response and billing services. Each of these services relies
on the Company's computer systems. A failure in these systems could
materially interrupt the normal flow of these services and
significantly impact human safety and physical property and have a
significant adverse financial impact on NUI, its customers and
suppliers. NUI and third-party critical suppliers are also
interdependent, and failure of third-party suppliers to be Year 2000
ready could significantly impact the Company's ability to serve its
customers. Due to the general uncertainty of the Year 2000 problem,
resulting in part from the uncertainty of the Year 2000 readiness of
third-parties, the Company is unable to determine at this time whether
the consequences of Year 2000 failures will have a material impact on
the Company's results of operations or financial condition. The Plan
is expected to significantly reduce the Company's level of uncertainty
about the Year 2000 problem and the readiness of third parties. The
Company believes that due to its Plan, the likelihood of major
consequences should be reduced.
Effects of Inflation
The Company's tariffs provide purchased gas adjustment clauses through
which rates charged to customers are adjusted for changes in the cost
of gas on a reasonably current basis. Increases in other utility
costs and expenses not otherwise offset by increases in revenues or
reductions in other expenses could have an adverse effect on earnings
due to the time lag associated with obtaining regulatory approval to
recover such increased costs and expenses, and the uncertainty of
whether regulatory commissions will allow full recovery of such
increased costs and expenses.
Forward-Looking Statements
This document contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended.
The Company cautions that, while it believes such statements to be
reasonable and are made in good faith, such forward-looking statements
almost always vary from actual results, and the differences between
assumptions made in making such statements and actual results can be
material, depending upon the circumstances. Factors, which may make
the actual results differ from anticipated results include, but are
not limited to, economic conditions; unforeseen competition; weather
conditions; fluctuations in the price of natural gas and other forms
of energy; the outcome of certain assumptions made in regard to Year
2000 issues; and other uncertainties, all of which are difficult to
predict and many of which are beyond the control of the Company.
Accordingly, investors should not rely upon these forward-looking
statements in making investment decisions.
Item 8. Financial Statements and Supplementary Data
Consolidated financial statements of the Company as of September 30,
1999 and 1998 and for each of the three years in the period ended
September 30, 1999, the auditors' report thereon, and the unaudited
quarterly financial data for the two-year period ended September 30,
1999, are included herewith as indicated on "Index to Financial
Statements and Schedule" on page F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors and officers of the Company is
included in the definitive Proxy Statement for the Company's Annual
Meeting of Stockholders, which is incorporated herein by reference.
Such Proxy Statement was filed with the Securities and Exchange
Commission on December 27, 1999.
Item 11. Executive Compensation
Information concerning executive compensation is included in the
definitive Proxy Statement for the Company's Annual Meeting of
Stockholders, which is incorporated herein by reference. Such Proxy
Statement was filed with the Securities and Exchange Commission on
December 27, 1999.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Information concerning security ownership of certain beneficial owners
and management is included in the definitive Proxy Statement for the
Company's Annual Meeting of Stockholders, which is incorporated herein
by reference. Such Proxy Statement was filed with the Securities and
Exchange Commission on December 27, 1999.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions
is included in the definitive Proxy Statement for the Company's Annual
Meeting of Stockholders, which is incorporated herein by reference.
Such Proxy Statement was filed with the Securities and Exchange
Commission on December 27, 1999.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form
8-K
(a) (1) Consolidated financial statements of the Company as of
September 30, 1999 and 1998 and for each of the three years in the
period ended September 30, 1999 and the auditors' report thereon, and
the unaudited quarterly financial data for the two-year period ended
September 30, 1999 are included herewith as indicated on the "Index to
Financial Statements and Schedule" on page F-1.
(2) The applicable financial statement schedule for the fiscal
years 1999, 1998 and 1997 is included herewith as indicated on the
"Index to Financial Statements and Schedule" on page F-1.
(3) Exhibits:
Exhibit Description Reference
No.
2(i) Letter Agreement, dated June Incorporated by
29, 1993, by and between NUI reference to Exhibit
Corporation and Pennsylvania & 2(i) to Registration
Southern Gas Company Statement No. 33-50561
2(ii) Agreement and Plan of Merger, Incorporated by
dated as of July 27, 1993, by reference to Exhibit
and between NUI Corporation 2(ii) to Registration
and Pennsylvania & Southern Statement No. 33-50561
Gas Company
3(i) Certificate of Incorporation, Incorporated by
amended and restated as of reference to Exhibit
December 1, 1995 3(i) of NUI's Form 10-
K Report for Fiscal
1995
3(ii) By-Laws, amended and restated Incorporated by
as of September 23, 1997 reference to Exhibit
3(ii) of NUI's Form
10-K Report for Fiscal
1997
4(i) Rights Agreement between NUI Incorporated by
Corporation and Mellon reference to NUI's
Securities Trust Company dated Form 8-K dated
November 28, 1995 December 1, 1995
10(i) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and 10(i) to Registration
Elizabethtown Gas Company Statement No. 33-
("EGC"), dated February 1, 50561
1992 (#3686)
10(ii) Service Agreement under Rate Incorporated by
Schedule GSS by and between reference to Exhibit
Transcontinental Gas Pipe Line 10(ii) of NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
July 1, 1996 1997
10(iii) Service Agreement under Rate Filed herewith.
Schedule LG-A by and between
Transcontinental Gas Pipe Line
Corporation and EGC, dated
Exhibit Description Reference
No.
January 12, 1971, as amended
5/15/96
10(iv) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and EGC, 10(iv) of NUI's Form
dated November 1, 1995 10-K Report for Fiscal
(Contract #1.1997) 1996
10(v) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Corporation and EGC, 10(v) of NUI's Form
dated November 1, 1995 10-K Report for Fiscal
(Contract #1.1995) 1996
10(vi) Firm Gas Transportation Incorporated by
Agreement by and among reference to Exhibit
Transcontinental Gas Pipe Line 10(vi) to Registration
Corporation, EGC and National Statement No. 33-
Fuel Gas Supply Corporation, 50561
dated November 1, 1984
10(vii) Service Agreement by and among Incorporated by
Transcontinental Gas Pipe Line reference to Exhibit
Corporation and EGC, dated 10(vii) of NUI's Form
November 1, 1995 (Contract 10-K Report for Fiscal
#1.1998) 1996
10(viii) Service Agreement for Rate Incorporated by
Schedule CDS by and between reference to Exhibit
Texas Eastern Transmission 10(viii) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
December 1, 1993 (Contract 1994
#800361)
10(ix) Service Agreement under Rate Incorporated by
Schedule FTS-7 by and between reference to Exhibit
Texas Eastern Transmission 10(ix) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
October 25, 1994 (Contract 1994
#331720)
10(x) Service Agreement for Rate Incorporated by
Schedule FTS-5 by and between reference to Exhibit
Texas Eastern Transmission 10(x) of NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
March 18, 1996 (Contract 1997
#331501)
10(xi) Service Agreement under Rate Incorporated by
Schedule FTS-8 by and between reference to Exhibit
Texas Eastern Transmission 10(xi) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
June 28, 1994 (Contract 1994
#331013)
10(xii) Firm Transportation Service Incorporated by
Agreement under FTS-2 Rate reference to Exhibit
Schedule by and between City 10(xii) of NUI's Form
Gas and Florida Gas 10-K Report for Fiscal
Transmission, dated August 12, 1997
1993
10(xiii) Service Agreement for Rate Incorporated by
Schedule FTS-2 by and between reference to Exhibit
Texas Eastern Transmission 10(xiii) to
Corporation and EGC, dated Registration Statement
June 1, 1993 (Contract No. 33-50561
Exhibit Description Reference
No.
#330788)
10(xiv) Service Agreement under NTS Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xiv) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
November 1, 1993 (Contract 1993
#39275)
10(xv) Service Agreement under SST Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xv) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
November 1, 1993 (Contract 1993
#38045)
10(xvi) Service Agreement under FTS Incorporated by
Rate Schedule by and between reference to Exhibit
Columbia Gas Transmission 10(xvi) to NUI's Form
Corporation and EGC, dated 10-K Report for Fiscal
November 1, 1993 (Contract 1993
#37882)
10(xvii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by reference to Exhibit
and between Tennessee Gas 10(xvii) to NUI's Form
Pipeline Company and EGC 10-K Report for Fiscal
(Contract #597), dated 1993
September 1, 1993
10(xviii) Gas Transportation Agreement Incorporated by
under FT-G Rate Schedule by reference to Exhibit
and between Tennessee Gas 10(xviii) to NUI's
Pipeline Company and EGC Form 10-K Report for
(Contract #603), dated Fiscal 1993
September 1, 1993
10(xix) Service Agreement by and Incorporated by
between Transcontinental Gas reference to Exhibit
Pipe Line Company and EGC, 10(xix) of NUI's Form
dated November 1, 1995 10-K Report for Fiscal
(Contract #3832) 1996
10(xx) Firm Transportation Service Incorporated by
Agreement under FTS-1 Rate reference to Exhibit
Schedule by and between City 10(xx) of NUI's Form
Gas and Florida Gas 10-K Report for Fiscal
Transmission dated October 1, 1993
1993 (Contract # 5034)
10(xxi) Lease Agreement between EGC Incorporated by
and Liberty Hall Joint reference to Exhibit
Venture, dated August 17, 1987 10(vi) of EGC's Form
10-K Report for Fiscal
1987
10(xxii) 1988 Stock Plan Incorporated by
reference to Exhibit
10(viii) to
Registration Statement
No. 33-21525
10(xxii) First Amendment to 1988 Stock Incorporated by
Plan reference to Exhibit
10(xxxiii) to
Registration Statement
No. 33-46162
10(xxiii) Form of Termination of Incorporated by
Exhibit Description Reference
No.
Employment and Change in reference to Exhibit
Control Agreements 10(xxiii) of NUI's
Form 10-K Report for
Fiscal 1995
10(xxiv) Firm Transportation Service Incorporated by
Agreement under FTS-2 Rate reference to Exhibit
Schedule by and between City 10(xxiv) of NUI's Form
Gas and Florida Gas 10-K Report for Fiscal
Transmission, dated December 1994
12, 1991 and Amendment dated
November 12, 1993 (Contract
#3608)
10(xxv) Service Agreement under Rate Incorporated by
Schedule LG-A by and between reference to Exhibit
Transcontinental Gas Pipeline 10(xxv) of NUI's Form
and North Carolina Gas Service 10-K Report for Fiscal
Division of Pennsylvania & 1994
Southern Gas Company, dated
August 5, 1971
10(xxvi) Service Agreement under Rate Incorporated by
Schedule GSS by and between reference to Exhibit
Transcontinental Gas Pipeline 10(xxvi) of NUI's Form
and North Carolina Gas 10-K Report for Fiscal
Service, dated July 1, 1996 1997
10(xxvii) 1996 Employee Stock Purchase Incorporated by
Plan reference to Exhibit
10(xxvii) of NUI's
Form 10-K Report for
Fiscal 1996
10(xxviii) Service Agreement under Rate Incorporated by
Schedule FT by and between reference to Exhibit
Transcontinental Gas Pipeline 10(xxviii) of NUI's
and North Carolina Gas Service Form 10-K Report for
Division of Pennsylvania & Fiscal 1994
Southern Gas Company, dated
February 1, 1992 (Contract #
0.3922)
10(xxix) 1996 Directors Stock Purchase Incorporated by
Plan reference to Exhibit
10(xxix) of NUI's Form
10-K Report for Fiscal
1996
10(xxx) Gas Storage Contract under Incorporated by
Rate Schedule FS by and reference to Exhibit
between Tennessee Gas Pipeline 10(xxx) of NUI's Form
Company and Pennsylvania & 10-K Report for Fiscal
Southern Gas Company, dated 1994
September 1, 1993 (Contract
#2277)
10(xxxi) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxi) of NUI's Form
Pipeline Co. and Pennsylvania 10-K Report for Fiscal
& Southern Gas Company, dated 1994
September 1, 1993 (Contract
#935)
10(xxxii) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
Exhibit Description Reference
No.
and between Tennessee Gas 10(xxxii) of NUI's
Pipeline Co. and Pennsylvania Form 10-K Report for
& Southern Gas Company, dated Fiscal 1994
September 1, 1993 (Contract
#936)
10(xxxiii) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxiii) of NUI's
Pipeline Co. and Pennsylvania Form 10-K Report for
& Southern Gas Company, dated Fiscal 1994
September 1, 1993 (Contract
#959)
10(xxxiv) Gas Transportation Agreement Incorporated by
under Rate Schedule FT-A by reference to Exhibit
and between Tennessee Gas 10(xxxiv) of NUI's
Pipeline Co. and Pennsylvania Form 10-K Report for
& Southern Gas Company, dated Fiscal 1994
September 1, 1993 (Contract
#2157)
10(xxxv) Employment Agreement, dated as Incorporated by
of July 29, 1988, between NUI reference to Exhibit
Corporation and Jack Langer 10(xxxv) of NUI's Form
10-K Report for Fiscal
1994
10(xxxvi) Service Agreement for Rate Incorporated by
Schedule FT by and reference to Exhibit
between Transcontinental Gas 10(xxxvi) of NUI's
Pipe Line Corporation and EGC Form 10-K Report for
(Contract #1.0431) dated April Fiscal 1995
1, 1995
10(xxxvii) Service Agreement for Rate Incorporated by
Schedule FT by and reference to Exhibit
between Transcontinental Gas 10(xxxvii) of NUI's
Pipe Line Corporation and EGC Form 10-K Report for
(Contract #1.0445) dated April Fiscal 1995
1, 1995
10(xxxviii) Service Agreement for Rate Incorporated by
Schedule SS-1 by and between reference to Exhibit
Texas Eastern Transmission 10(xxxviii) of NUI's
Corporation and EGC (Contract Form 10-K Report for
(#400196) dated September 23, Fiscal 1995
1994
10(xxxix) Gas Storage Agreement Incorporated by reference
under Rate Schedule FS by to Exhibit 10(xxxix) of
and between Tennessee Gas NUI's Form 10-K Report for
Pipeline Company and EGC Fiscal 1995
(Contract #8703) dated
November 1, 1994
10(xl) Consulting Agreement, Incorporated by reference
dated as of March 24, to Exhibit 10(xl) of NUI's
1995, between NUI Form 10-K Report for Fiscal
Corporation and John Kean 1995
10(xli) Form of Deferred Filed herewith.
Compensation Agreement
10(xlii) 1996 Stock Option and Incorporated by reference
Stock Award Plan to Exhibit 10(xlii) of
NUI's Form 10-K Report for
Fiscal 1996
Exhibit Description Reference
No.
10(xliii) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xliii) of
between Elkton Gas and NUI's Form 10-K Report for
Eastern Shore Natural Gas Fiscal 1997
Company, dated as of
November 1, 1997
(Contract #010003)
10(xliv) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xliv) of
between Elkton Gas and NUI's Form 10-K Report for
Eastern Shore Natural Gas Fiscal 1997
Company, dated as of
November 1, 1997
(Contract #010011)
10(xlv) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xlv) of NUI's
between Elkton Gas and Form 10-K Report for Fiscal
Eastern Shore Natural Gas 1997
Company, dated as of
November 1, 1997
(Contract #010012)
10(xlvi) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xlvi) of
between Elkton Gas and NUI's Form 10-K Report for
Eastern Shore Natural Gas Fiscal 1997
Company, dated as of
November 1, 1997
(Contract #010013)
10(xlvii) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xlvii) of
between Elkton Gas and NUI's Form 10-K Report for
Eastern Shore Natural Gas Fiscal 1997
Company, dated as of
November 1, 1997
(Contract #020003)
10(xlviii) Service Agreement under Incorporated by reference
Rate Schedule FT by and to Exhibit 10(xlviii) of
between Elkton Gas and NUI's Form 10-K Report for
Eastern Shore Natural Gas Fiscal 1997
Company, dated as of
November 1, 1997
(Contract #020005)
10(xlix) Service Agreement under Filed herewith
Rate Schedule FT by and
between Elkton Gas and
Eastern Shore Natural Gas
Company, dated as of
November 1, 1998
(Contract #010032)
10(l) Agreement between T.I.C. Incorporated by reference
Enterprises, L.L.C and to Exhibit 10(i) of NUI's
United States Postal Form 8-K filed 12/15/99.
Service
12 Consolidated Ratio of Filed herewith
Earnings to Fixed Charges
21 Subsidiaries of NUI Filed herewith
Corporation
23 Consent of Independent Filed herewith
Exhibit Description Reference
No.
Public Accountants
27 Financial Data Schedule Filed herewith
Exhibits listed above which have heretofore been filed with the
Securities and Exchange Commission pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934, and which were designated
as noted above and have not been amended, are hereby incorporated by
reference and made a part hereof with the same effect as if filed
herewith.
The Company is a party to various agreements with respect to long-term
indebtedness to which the total amount of indebtedness authorized
under each agreement, respectively, does not exceed 10% of the total
assets of the Company on a consolidated basis. The Company hereby
agrees to furnish to the Securities and Exchange Commission copies of
such agreements upon request.
(b) Reports on Form 8-K:
On December 15, 1999, the Company filed a Form 8-k, Item 5, Other
Events, reporting an agreement between its affiliate T.I.C.
Enterprises, L. L. C and the United States Postal Service.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Consolidated Financial Statements of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants F-2
Consolidated Financial Statements as of
September 30, 1999 and 1998 and for each
of the Three Years in the Period
Ended September 30, 1999 F-3
Unaudited Quarterly Financial Data for
the Two-Year Period Ended September 30, 1999
(Note 12 of the Notes to the Company's Consolidated
Financial Statements) F-18
Financial Statement Schedule of NUI Corporation and Subsidiaries:
Report of Independent Public Accountants F-2
Schedule II - Valuation and Qualifying Accounts
for each of the Three Years in the
Period Ended September 30, 1999 F-20
All other schedules are omitted because they are not required, are
inapplicable or the information is otherwise shown in the financial
statements or notes thereto.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To NUI Corporation:
We have audited the accompanying consolidated balance sheet and
statement of consolidated capitalization of NUI Corporation (a New
Jersey corporation) and Subsidiaries as of September 30, 1999 and
1998, and the related consolidated statements of income, cash flows
and shareholders' equity, for each of the three years in the period
ended September 30, 1999. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the consolidated financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of NUI Corporation and Subsidiaries as of September 30, 1999 and 1998,
and the results of their operations and their cash flows for each of
the three years in the period ended September 30, 1999, in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed in
Item 14(a)(2) is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial
statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements
and, in our opinion, fairly states in all material respects the
financial data required to be set forth therein in relation to the
basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
November 9, 1999
NUI Corporation and Subsidiaries
Consolidated Statement of Income
(Dollars in thousands, except per share amounts)
Years Ended September 30,
1999 1998 1997
Operating Margins
Operating revenues $828,174 $828,036 $608,596
Less- Purchased gas and 621,363 629,608 402,160
fuel
Energy taxes 14,148 18,852 33,598
-------- -------- --------
192,663 179,576 172,838
-------- -------- --------
Other Operating Expenses
Operations and 100,490 95,881 94,799
maintenance
Depreciation and 26,939 24,952 23,032
amortization
Restructuring and other (3,954) 9,686 --
non-recurring items
Other taxes 9,101 9,733 9,189
Income taxes 16,604 8,390 9,377
-------- -------- --------
149,180 148,642 136,397
-------- -------- --------
Operating Income 43,483 30,934 36,441
-------- -------- --------
Other Income and Expense,
Net
Equity in earnings 1,223 (56) 1,334
(losses) of TIC
Enterprises, LLC, net
Other 360 969 1,940
Income taxes (554) (320) (1,146)
------- ------- -------
1,029 593 2,128
------- ------- -------
Interest Expense 19,952 19,213 18,920
------- ------- -------
Net Income $24,560 $12,314 $19,649
------- ------- -------
Net Income Per Share of
Common Stock $ 1.93 $ .98 $ 1.75
======== ======== ========
Dividends Per Share of
Common Stock $ .98 $ .98 $ .94
======== ======== ========
Weighted Average Number of
Shares of Common Stock 12,715,300 12,584,335 11,253,513
Outstanding
========== ========== ==========
See the notes to the consolidated financial statements.
NUI Corporation and Subsidiaries
Consolidated Balance Sheet
(Dollars in thousands)
September 30,
1999 1998
ASSETS
Utility Plant
Utility plant, at original cost $779,131 $737,323
Accumulated depreciation and (256,898) (234,484)
amortization
Unamortized plant acquisition 30,242 30,904
adjustments, net
------- -------
552,475 533,743
------- -------
Funds for Construction Held by Trustee 37,413 12,254
------- -------
Investment in TIC Enterprises, LLC 24,905 23,874
------- -------
Other Investments 1,385 1,687
------- -------
Current Assets
Cash and cash equivalents 1,561 929
Accounts receivable (less allowance for
doubtful accounts of $1,697 in 1999 85,056 62,673
and $1,714 in 1998)
Fuel inventories, at average cost 28,573 34,937
Unrecovered purchased gas costs 901 8,061
Prepayments and other 50,108 37,790
-------- --------
166,199 144,390
Other Assets -------- --------
Regulatory assets 51,615 50,475
Deferred assets 10,234 10,424
-------- --------
61,849 60,899
-------- --------
$844,226 $776,847
======= =======
CAPITALIZATION AND LIABILITIES
Capitalization (See accompanying
statements)
Common shareholders' equity $237,318 $222,992
Preferred stock -- --
Long-term debt 268,911 229,098
------- -------
506,229 452,090
------- -------
Capital Lease Obligations 2,599 8,566
------- -------
Current Liabilities
Notes payable to banks 73,615 87,630
Current portion of capital lease 7,776 1,810
obligations
Accounts payable, customer deposits and
accrued liabilities 108,023 87,158
Federal income and other taxes 4,359 5,635
------- -------
193,773 182,233
Other Liabilities ------- -------
Deferred Federal income taxes 69,951 62,497
Unamortized investment tax credits 5,251 5,710
Environmental remediation reserve 33,981 33,981
Regulatory and other liabilities 32,442 31,770
------- -------
141,625 133,958
------- -------
$844,226 $776,847
======= =======
See the notes to the consolidated financial statements.
NUI Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(Dollars in thousands)
Years Ended September 30,
1999 1998 1997
Operating Activities
Net Income $24,560 $12,314 $19,649
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 28,914 26,050 24,040
Deferred Federal income taxes 7,454 357 3,246
Non-cash portion of restructuring (4,726) 7,301 -
and other non-recurring items
Amortization of deferred
investment tax credits (459) (461) (464)
Other 3,237 1,743 1,020
Effects of changes in:
Accounts receivable, net (22,383) 1,826 (20,911)
Fuel inventories 6,364 (3,869) (1,877)
Accounts payable, deposits and
accruals 20,865 (7,347) 28,133
Over (under) recovered purchased
gas costs 7,160 1,541 (2,614)
Other (12,030) (18,604) (9,707)
------ ------ ------
Net cash provided by operating
activities 58,956 20,851 40,515
------ ------ ------
Financing Activities
Proceeds from sales of common stock,
net of treasury stock purchased 340 3,658 28,204
Dividends to shareholders (12,443) (12,311) (10,575)
Proceeds from issuance of long-term 39,813 -- 53,569
debt
Funds for construction held by
trustee, net (24,871) 16,670 18,784
Repayments of long-term debt -- (54,600) (950)
Principal payments under capital lease
obligations (1,810) (1,792) (1,730)
Net short-term (repayments) borrowings (14,015) 33,202 (467)
------ ------ ------
Net cash (used for) provided by
financing activities (12,986) (15,173) 86,835
------ ------ ------
Investing Activities
Cash expenditures for utility plant (47,213) (59,969) (51,366)
Investment in TIC Enterprises, LLC -- -- (22,584)
Other 1,875 (3,573) 1,657
------ ------ ------
Net cash used in investing (45,338) (63,542) (72,293)
activities
------ ------ ------
Net Increase (Decrease) in Cash
and Cash Equivalents $ 632 $(57,864) $55,057
======= ======= ======
Cash and Cash Equivalents
At beginning of period $ 929 $58,793 $ 3,736
At end of period $1,561 $ 929 $58,793
Supplemental Disclosures of Cash Flows
Income taxes paid, net $7,695 $ 6,482 $ 5,008
Interest paid 20,732 $22,094 $19,760
See the notes to the consolidated financial statements.
NUI Corporation and Subsidiaries
Consolidated Statement of Capitalization
(Dollars in thousands)
September 30,
1999 1998
Long-Term Debt
Gas facilities revenue bonds
6.35% due October 1, 2022 $46,500 $46,500
6.40% due October 1, 2024* 20,000 20,000
Variable rate due June 1, 2026* 39,000 39,000
5.70% due June 1, 2032 54,600 54,600
5.25% due November 1, 2033* 40,000 --
Medium-term notes
7.125% due August 1, 2002 20,000 20,000
8.35% due February 1, 2005 50,000 50,000
------- -------
270,100 230,100
Unamortized debt discount (1,189) (1,002)
------- -------
268,911 229,098
Preferred Stock, 5,000,000 shares
authorized; none issued -- --
Common Shareholders' Equity
Common Stock, no par value; shares
authorized: 30,000,000; shares outstanding:
12,750,270 in 1999 and 12,680,398 in 1998 209,984 207,356
Shares held in treasury: 122,219 in 1999
and 106,739 in 1998 (2,311) (1,932)
Retained earnings 31,380 19,263
Unearned employee compensation (1,735) (1,695)
------- -------
237,318 222,992
------- -------
Total Capitalization $506,229 $452,090
======= =======
* The total unexpended portions of the net proceeds from these bonds,
amounting to $32.0 million and $7.1 million as of September 30, 1999
and September 30, 1998, respectively, are carried on the Company's
consolidated balance sheet as funds for construction held by trustee,
including interest earned thereon, until drawn upon for eligible
construction expenditures.
See the notes to the consolidated financial statements.
<TABLE>
NUI Corporation and Subsidiaries
Consolidated Statement of Shareholders' Equity
(Dollars in thousands)
<CAPTION>
Common Stock
Unrealized Unearned
Gain (Loss)-
Shares Paid-in Held in Retained Marketable Employee
Outstanding Amount Treasury Earnings Securities Compensation Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
September 30, 11,085,876 $171,968 $(1,564) $10,117 $ $(1,803) $179,107
1996
Common stock
issued:
Public
offering 1,011,400 22,610 22,610
Other* 337,420 6,971 6,971
Treasury stock
transactions (5,744) (51) (51)
Net income 19,649 19,649
Cash dividends (10,575) (10,575)
Unrealized (269) (269)
(loss)
Unearned (288) (288)
compensation
ESOP 69 1,068 1,137
_________ _______ ______ ________ _______ _______ _______
Balance,
September 30,
1997 12,428,952 $201,549 $ (1,615) $19,260 $ 120 $(1,023) $218,291
Common stock 259,710 5,807 5,807
issued*
Treasury stock
transaction (8,264) (317) (317)
Net income 12,314 12,314
Cash dividends (12,311) (12,311)
Unrealized (120) (120)
(loss)
Unearned (672) (672)
compensation
___________ ________ ______ _______ _______ _______ _______
Balance,
September 30,
1998 12,680,398 $207,356 $(1,932) $19,263 $ - $(1,695) $222,992
Common stock 85,352 2,628 2,628
issued*
Treasury stock
transactions (15,480) (379) (379)
Net income 24,560 24,560
Cash dividends (12,443) (12,443)
Unearned (40) (40)
compensation
__________ ________ _______ _______ _______ _______ ______
Balance,
September 30,
1999 12,750,270 $209,984 $(2,311) $31,380 $ - $(1,735) $237,318
========== ======== ====== ====== ======= ======== ========
</TABLE>
* Represents common stock issued in connection with NUI Direct and
various employee benefit plans.
See the notes to the consolidated financial statements.
NUI Corporation and Subsidiaries
Notes to the Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Principles of Consolidation. The consolidated financial statements
include all operating divisions and subsidiaries of NUI Corporation
(collectively referred to as the Company). The Company is a multi-
state energy sales, services and distribution, and telecommunications
company. Its utility operations distribute natural gas and related
services in six states along the eastern seaboard and comprise
Elizabethtown Gas (New Jersey), City Gas Company of Florida, North
Carolina Gas, Elkton Gas (Maryland), Valley Cities Gas (Pennsylvania)
and Waverly Gas (New York). The Company's non-regulated subsidiaries
include NUI Energy, Inc. (NUI Energy), an energy retailer; NUI Energy
Brokers, Inc. (NUI Energy Brokers), an energy wholesaler; NUI Energy
Solutions, Inc., an energy project development and consulting entity;
NUI Environmental Group, Inc., an environmental project development
subsidiary; Utility Business Services, Inc. (UBS), a customer and
geographic information systems and services subsidiary; and
International Telephone Group, Inc. (ITG), a telecommunications
services subsidiary (see Note 2). The Company also provides sales
outsourcing through its 49 percent equity interest in TIC Enterprises,
LLC (TIC). All intercompany accounts and transactions have been
eliminated in consolidation.
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.
Certain reclassifications have been made to the prior year financial
statements to conform with the current year presentation.
Regulation. The Company is subject to regulation as an operating
utility by the public utility commissions of the states in which it
operates.
Utility Plant. Utility plant is stated at its original cost.
Depreciation is provided on a straight-line basis over the remaining
estimated lives of depreciable property by applying rates as approved
by the state commissions. The composite average annual depreciation
rate was 3 percent in fiscal 1999, fiscal 1998, and fiscal 1997. At
the time properties are retired, the original cost plus the cost of
retirement, less salvage, is charged to accumulated depreciation.
Repairs of all utility plant and replacements and renewals of minor
items of property are charged to maintenance expense as incurred.
The net unamortized plant acquisition adjustments represent the
remaining portion of the excess of the purchase price over the book
value of net assets acquired. The excess is being amortized on a
straight-line basis over 30 years from the date of acquisition. The
results of operations of acquired entities have been included in the
accompanying consolidated financial statements for the periods
subsequent to their acquisition.
Operating Revenues and Purchased Gas and Fuel Costs. Operating
revenues include accrued unbilled revenues through the end of each
accounting period. Operating revenues also reflect adjustments
attributable to weather normalization clauses that are accrued during
the winter heating season and billed or credited to customers in the
following year.
Costs of purchased gas and fuel for the Company's regulated utilities
are recognized as expenses in accordance with the purchased gas
adjustment clause applicable in each state. Such clauses provide for
periodic reconciliations of actual recoverable gas costs and the
estimated amounts that have been billed to customers. Under- or over-
recoveries are deferred when they arise and are recovered from or
refunded to customers in subsequent periods.
The Company's subsidiaries, NUI Energy Brokers and NUI Energy, mark-
to-market through the income statement all trading positions,
including forward sales and purchase commitments. (See Note 7 for a
further description of the Company's use of derivative financial
instruments.)
Environmental Reserve. 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 can be reasonably estimated.
Stock Compensation. The Company follows the accounting prescribed by
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", and related interpretations in accounting for
its employee stock-based compensation. The Company has elected to
adopt the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock Based
Compensation" (SFAS 123), which requires proforma disclosure of the
effect of adopting the accounting under SFAS 123. If the Company had
adopted SFAS 123, there would not have been a material effect on the
results of operations or financial position.
Income Taxes. The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes", which requires the liability method to be used to
account for deferred income taxes. Under this method, deferred income
taxes related to tax and accounting basis differences are recognized
at the statutory income tax rates in effect when the tax is expected
to be paid.
Investment tax credits, which were generated principally in connection
with additions to utility plant made prior to January 1, 1986, are
being amortized over the estimated service lives of the properties
that gave rise to the credits.
Regulatory Assets and Liabilities. The Company's utility operations
follow the accounting for regulated enterprises prescribed by
Statement of Financial Accounting Standards No. 71, "Accounting for
the Effects of Certain Types of Regulation" (SFAS 71). In general,
SFAS 71 requires deferral of certain costs and obligations, based upon
orders received from regulators, to be recovered from or refunded to
customers in future periods. The following represents the Company's
regulatory assets and liabilities deferred in the accompanying
consolidated balance sheet as of September 30, 1999 and 1998 (in
thousands):
1999 1998
Regulatory Assets
Environmental investigation and $35,950 $34,686
remediation costs
Unrecovered gas costs 1,082 2,265
Postretirement and other
employee 8,877 10,663
benefits
Deferred piping allowances 1,692 2,108
Other 4,014 753
------- -------
$51,615 $50,475
======= =======
Regulatory Liabilities
Net overcollection of income
taxes $5,183 $5,425
Refunds to customers 2,928 2,478
Other 426 302
------- -------
$8,537 $8,205
======= =======
In the event that the provisions of SFAS 71 were no longer applicable,
the Company would recognize a write-off of net regulatory assets
(regulatory assets less regulatory liabilities) that would result in a
charge to net income, which would be classified as an extraordinary
item. However, although the gas distribution industry is becoming
increasingly competitive, the Company's utility operations continue to
recover their costs through cost-based rates established by the public
utility commissions. As a result, the Company believes that the
accounting prescribed under SFAS 71 remains appropriate.
Cash Equivalents. Cash equivalents consist of a money market account
which invests in securities with original maturities of three months
or less.
Net Income Per Share of Common Stock. Net income per share of common
stock is based on the weighted average number of shares of NUI common
stock outstanding. The Company follows the provisions of Statement of
Financial Accounting Standards No. 128, "Earnings per Share", which
requires computing and presenting basic and diluted earnings per
share. The Company does not have other classes of stock or dilutive
common stock equivalents. As such, there is no difference between
basic and diluted earnings per share.
New Accounting Standards. In June 1999, the Financial Accounting
Standards Board (FASB) issued Statement of Financial Accounting
Standards No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of Effective Date of FASB Statement No. 133".
The Statement defers for one year the effective date of FASB Statement
No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (SFAS 133). The rule requires that the Company adopt SFAS
133 in fiscal 2001. SFAS 133 was issued in June 1998 and establishes
accounting and reporting standards regarding derivative instruments.
SFAS 133 requires that all derivative instruments be recorded on the
balance sheet at their fair value as either an asset or liability, and
that changes in the fair value be recognized currently in earnings
unless certain criteria are met. At this time, the Company has
elected not to adopt SFAS 133 prior to its effective date. Since both
NUI Energy Brokers and NUI Energy currently utilize mark-to-market
accounting, it is not anticipated that the adoption of SFAS 133 will
have a material impact on net income when adopted.
2. Purchase of ITG
On November 12, 1999, the Company closed on its acquisition of
International Telephone Group, Inc. (ITG). The acquisition was
treated as a merger whereby ITG merged with and into a subsidiary of
the Company. The purchase price totaled $3.8 million and included the
issuance of 113,200 shares of NUI common stock, with the remainder
paid in cash. ITG is a full service telephone company that provides
its customers with a single service solution for all their
telecommunication requirements including local, long distance,
cellular, internet, and data communications services. The Agreement
and Plan of Merger contains a provision whereby the previous
shareholders of ITG will receive an additional $1.0 million in NUI
common stock if ITG achieves certain revenue targets no later than
December 31, 2003.
The acquisition is being accounted for as a purchase. The excess of
the purchase price over the net assets of ITG is estimated to be
approximately $4.5 million, which includes the additional earnings
contingency noted above, and is expected to be amortized on a
straight-line basis over a 20-year period.
3. Restructuring and Other Non-Recurring Items
In 1998, the Company commenced a reorganization effort that included
early retirement programs for both non-bargaining and bargaining unit
employees, as well as other workforce reductions. The reorganization
efforts resulted in accounting charges and gains that were incurred in
both fiscal 1999 and 1998. In fiscal 1999, the Company recognized
approximately $4.0 million of pre-tax, non-recurring gains primarily
relating to these reorganization efforts. In fiscal 1998, the Company
incurred approximately $9.7 million of pre-tax, non-recurring charges
primarily related to the reorganization effort. Specific detail on
these non-recurring items follows.
In June 1998, the Company offered an early retirement program to its
non-bargaining unit personnel. The program was accepted by 74 of the
eligible 77 employees. In accordance with Statement of Financial
Accounting Standards No. 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination
Benefits" (SFAS 88), the Company recorded a special termination charge
of approximately $7.3 million during fiscal 1998 when the cost was
recognizable. In March 1999, the Company recorded a settlement gain of
approximately $6.8 million as a result of satisfaction of all future
liabilities associated with these employees.
In January 1999, the Company offered an early retirement program to
its bargaining unit employees in New Jersey. The program was accepted
by 32 of the eligible 35 employees. In accordance with SFAS 88, the
Company recorded a special termination charge of approximately $1.8
million in the second quarter of fiscal 1999 associated with these
retirements. In June 1999, the Company recorded a settlement gain of
approximately $3.2 million as the result of satisfaction of all future
liabilities associated with these employees. Also in June 1999, the
Company recorded an additional $0.6 million of other benefit expenses
associated with these employees.
In fiscal 1999, the Company also recorded approximately $1.8 million
of charges relating to the write-off of certain regulatory assets
which will not be recovered through rates, as well as $1.8 million of
charges relating to other items which were deemed to be separate from
recurring earnings.
In fiscal 1998, the Company also recorded approximately $1.5 million
of other benefit expenses associated with employees that accepted the
early retirement program and approximately $0.9 million of other
charges associated with the reorganization of the Company.
4.Capitalization
Long-Term Debt. On December 8, 1998, the Company issued $40 million of
tax-exempt Gas Facilities Revenue Bonds at an interest rate of 5.25
percent. These bonds will mature in November 2033 and the proceeds
will be used to finance a portion of the Company's capital expenditure
program in New Jersey.
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 September 30, 1999 and September 30,
1998, the total unexpended portions of all of the Company's Gas
Facilities Revenue Bonds were $32.0 million and $7.1 million,
respectively, and are classified on the Company's consolidated balance
sheet, including interest earned thereon, as funds for construction
held by trustee.
The Company is scheduled to repay $20 million of Medium-Term Notes in
August 2002.
Preferred Stock. The Company has 5,000,000 shares of authorized but
unissued preferred stock. Shares of Series A Junior Participating
Preferred Stock have been reserved for possible future issuance in
connection with the Company's Shareholder Rights Plan, described
below.
Shareholder Rights Plan. In November 1995, the Company's Board of
Directors adopted a Shareholder Rights Plan under which shareholders
of NUI common stock were issued as a dividend one right to buy one
one-hundredth of a share of Series A Junior Participating Preferred
Stock at a purchase price of $50 (Right) for each share of common
stock held. The Rights initially attach to the shares of NUI common
stock and can be exercised or transferred only if a person or group
(an Acquirer), with certain exceptions, acquires, or commences a
tender offer to acquire beneficial ownership of 15 percent or more of
NUI common stock. Each Right, except those held by the Acquirer, may
be used by the non-acquiring shareholders to purchase, at the Right's
exercise price, shares of NUI common stock having a market value
equivalent to twice the Right's exercise price, thus substantially
reducing the Acquirer's ownership percentage.
The Company may redeem the Rights at $0.001 per Right at any time
prior to the occurrence of any such event. All Rights expire on
November 27, 2005.
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. Effective May
26, 1998, several of these plans commenced purchasing shares on the
open market to fulfill the plans' requirements. Under the terms of
these plans, the Company may periodically change the method of
purchasing shares from open market purchases to purchases directly
from the Company, or vice versa.
At September 30, 1999, shares reserved for issuance under the
Company's common stock plans were: NUI Direct, 62,855; Savings and
Investment Plan, 122,135; 1996 Stock Option and Stock Award Plan,
383,004; 1996 Employee Stock Purchase Plan, 122,253; and the 1996
Director Stock Purchase Plan, 23,083.
Stock Plans. The Company's Board of Directors believes that the
interests of both directors and management should be closely aligned
with those of shareholders. As a result, under the 1996 Stock Option
and Stock Award Plan, and the 1996 Director Stock Purchase Plan, the
Company has a long-term compensation program for directors, executive
officers and key employees involving shares of NUI common stock.
Restricted shares of stock granted as long-term compensation for
executive officers and key employees amounted to 75,900 in fiscal
1999, 74,600 in fiscal 1998 and 69,800 shares in fiscal 1997. As of
September 30, 1999, a total of 147,809 shares of restricted stock that
have been granted as long-term compensation are subject to future
vesting requirements, and are restricted from resale.
Executive officers and key employees are eligible to be granted
options for the purchase of NUI common stock at prices equal to the
market price per share on the date of grant. The option must be
exercised within 10 years from the date of grant. As of September 30,
1999 there were 5,000 options outstanding and exercisable at a price
of $17.625 per share. During fiscal 1998, 4,800 options were exercised
at a price of $15.77 per share. There were no other transactions
during the last three fiscal years.
Dividend Restrictions. The Company's long-term debt agreements
include, among other things, restrictions as to the payment of cash
dividends. Under the most restrictive of these provisions, the Company
was permitted to pay approximately $54 million of cash dividends at
September 30, 1999.
5. Notes Payable to Banks
At September 30, 1999, the Company's outstanding notes payable to
banks were $73.6 million with a combined weighted average interest
rate of 5.8 percent. Unused lines of credit at September 30, 1999 were
approximately $62.4 million.
The weighted average daily amounts outstanding of notes payable to
banks and the weighted average interest rates on those amounts were
$68.2 million at 5.3 percent in fiscal 1999, $66.8 million at 5.7
percent in fiscal 1998 and $66.0 million at 5.5 percent in fiscal
1997.
6. Leases
Utility plant held under capital leases amounted to $24.3 million at
September 30, 1999 and $24.6 million at September 30, 1998, with
related accumulated amortization of $15.6 million and $14.3 million,
respectively. These properties consist principally of leasehold
improvements and office furniture and fixtures. A summary of future
minimum payments for properties held under capital leases follows (in
thousands):
2000 $7,981
2001 1,316
2002 1,093
2003 574
2004 126
2005 and thereafter --
-----
Total future minimum
payments 11,090
Amount representing
interest (715)
Current portion of
capital lease
obligations (7,776)
------
Capital lease
obligations $2,599
======
Minimum payments under noncancelable operating leases, which relate
principally to office space, are approximately $3.3 million in each of
fiscal years 2000 through 2004. Rents charged to operations expense
were $5.1 million in fiscal 1999, $5.8 million in fiscal 1998 and $5.5
million in fiscal 1997.
7. Financial Instruments
Derivatives. The Company's wholesale trading subsidiary, NUI Energy
Brokers, utilizes the following financial instruments to provide
competitive energy supplies and enhance the Company's profitability:
forward contracts, which commit the Company to purchase or sell
physical natural gas in the future; swap agreements, which require
payments to (or receipt of payments from) counterparties based on the
differential between a fixed price and an index price of natural gas;
and futures and options contracts, bought on the New York Mercantile
Exchange (NYMEX), to buy or sell natural gas at a fixed price in the
future.
NUI Energy Brokers accounts for its risk management activities by
marking-to-market all trading positions, and calculating a value-at-
risk, on a daily basis. The values used for these calculations reflect
NYMEX settlement prices, established pricing models, and quoted market
volatilities. The Company manages open positions with a strict Risk
Management Policy that limits its exposure to market risks and
requires that any breach of policy be reported to senior management.
Margin requirements for natural gas futures contracts are recorded in
other current assets. Realized and unrealized gains and losses are
recorded in the consolidated statement of income under purchased gas
and fuel. At September 30, 1999, NUI Energy Brokers' futures positions
consisted of 2,793 long contracts and 2,715 short contracts at prices
ranging from $2.080 to $3.223 per Mcf, none of which extend beyond
December 2001, representing 55,080 MMcf of natural gas. Their options
positions consisted of 1,339 puts and calls at varying strike prices,
none of which extend beyond August 2000. In addition, NUI Energy
Brokers has forward sales and purchase commitments associated with
contracts totaling approximately 192,000 MMcf of natural gas, with
terms extending through December 2005. During fiscal 1999, NUI Energy
Brokers reduced their margin deposits with brokers by approximately
$1.2 million to $4.3 million. Net realized and unrealized gains on
derivative trading for fiscals 1999 and 1998 totaled $9.0 million and
$2.8 million, respectively, which have been included in income.
The Company is exposed to credit risk in the event of default or non-
performance by one of its trading partners. The Company adheres to
credit policies that management believes minimizes overall credit
risk.
Other Financial Instruments. The fair value of the Company's cash
equivalents, funds for construction held by trustee and notes payable
to banks are approximately equivalent to their carrying value. The
carrying value of the Company's long-term debt exceeded its fair value
by approximately $2 million as of September 30, 1999, while the
carrying value was lower than its fair value by approximately $19
million as of September 30, 1998. The fair value of long-term debt was
estimated based on quoted market prices for the same or similar
issues.
8. Consolidated Taxes
The provision for Federal and State income taxes was comprised of the
following (in thousands):
1999 1998 1997
Currently payable -
Federal $5,759 $6,747 $7,205
State 4,265 2,166 595
Deferred -
Federal 7,454 357 3,246
State 139 (99) (59)
Amortization of investment
tax credits (459) (461) (464)
------ ------ ------
Total provision for income $17,158 $8,710 $10,523
======= ====== =======
The components of the Company's net deferred Federal tax liability
(asset) as of September 30, 1999 and 1998 are as follows (in
thousands):
1999 1998
Depreciation and other utility
plant differences $59,434 $55,093
Plant acquisition adjustments 9,627 10,023
Alternative minimum tax credit (3,614) (5,008)
Unamortized investment tax credit (2,140) (1,823)
Deferred charges and regulatory
assets 3,948 5,522
Energy taxes 580 1,953
Pension 4,723 2,491
Other (2,607) (5,754)
------- -------
$69,951 $62,497
======= =======
The alternative minimum tax credit can be carried forward indefinitely
to reduce the Company's future tax liability.
The Company's effective income tax rates differ from the statutory
Federal income tax rates due to the following (in thousands):
1999 1998 1997
Pre-tax income $41,718 $21,024 $30,172
------- ------- -------
Federal income taxes computed at
Federal statutory tax rate of 35% 14,601 7,358 10,560
Increase (reduction) resulting from:
Excess of book over tax
depreciation 341 357 354
Amortization of investment tax
credits (459) (461) (464)
Federal benefit of state tax
provision (1,541) (723) (188)
Other, net (188) 112 (275)
------- ----- --------
Total provision for Federal income 12,754 6,643 9,987
Provision for State income taxes 4,404 2,067 536
------- ------ -------
Total provision for income taxes 17,158 8,710 10,523
(Less) provision included in other (554) (320) (1,146)
------- ----- -------
Provision for income taxes included $16,604 $8,390 $9,377
======= ====== =======
9. Retirement Benefits
During the current year, the Company was required to adopt Statement
of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pension and Other Postretirement Benefits" (SFAS 132). SFAS 132
amended the disclosure requirements of the Company's pension and
postretirement benefits information, while not changing the manner in
which these items are recorded.
Pension Benefits. The Company has non-contributory defined benefit
retirement plans which cover all of its employees other than the City
Gas of Florida union employees who participate in a union-sponsored
multi-employer plan. The Company funds its plans in accordance with
the requirements of the Employee Retirement Income Security Act of
1974 and makes contributions to the union sponsored plan in accordance
with its contractual obligations. Benefits paid under the Company's
plans are based on years of service and levels of compensation. The
Company's actuarial calculation of pension expense is based on the
projected unit cost method.
The changes in the pension benefit obligation for the Company's plans
were as follows (in thousands):
1999 1998
Benefit obligation at beginning
of year $114,233 $ 88,942
Service cost 2,446 2,370
Interest cost 6,281 6,459
Amendments 5,990 8,583
Actuarial (gain) loss (9,603) 14,797
Benefits paid (38,502) (6,918)
-------- --------
Benefit obligation at end of
year $80,845 $114,233
======== ========
The change in the Company's plan assets were as follows (in
thousands):
1999 1998
Fair value of plan assets at
beginning of year $140,975 $137,290
Actual return on plan assets 46,450 10,603
Benefits paid (38,502) (6,918)
------- -------
Fair value of plan assets at
end of year $148,923 $140,975
======== ========
The reconciliation of the funded status of the Company's funded plans
as of September 30, 1999 and 1998 was as follows (in thousands):
1999 1998
Funded status $ 80,845 $114,233
Market value of plan assets 148,923 140,975
-------- --------
Plan assets in excess of
projected benefit obligation 68,078 26,742
Unrecognized net gain (52,484) (20,973)
Unrecognized prior service cost 3,361 543
Unrecognized net transition (967) (1,967)
asset
-------- --------
Pension prepayment $ 17,988 $ 4,345
======== ========
The projected benefit obligation was calculated using a discount rate
of 7.5 percent in fiscal 1999 and 6.5 percent in fiscal 1998, and an
assumed annual increase in compensation levels of 4 percent in both
fiscal 1999 and fiscal 1998. The expected long-term rate of return on
assets was calculated at 9.75 percent in both fiscal 1999 and 1998.
The assets of the Company's funded plans are invested primarily in
publicly traded fixed income and equity securities.
The components of pension expense for the Company's plans were as
follows (in thousands):
1999 1998 1997
Service cost $2,446 $2,370 $1,849
Interest cost 6,281 6,459 6,480
Expected return on plan
assets (13,048) (13,111) (36,984)
Net amortization and
deferral (1,069) (2,407) 26,089
Special termination
benefits 1,799 7,301 1,150
Settlement gain (10,051) - -
------- ------- -------
Pension (credit) $(13,642) $ 612 $(1,416)
expense
======== ======= =======
Certain key employees also participate in an unfunded supplemental
retirement plan. The projected benefit obligation under this plan was
$6.5 million as of September 30, 1999 and $5.8 million as of September
30, 1998, and the expense for this plan was approximately $0.7 million
in both fiscals 1999 and 1998, and $0.6 million in fiscal 1997.
Postretirement Benefits Other Than Pensions. The Company provides
certain health care benefits to all retirees receiving benefits under
a Company pension plan other than the City Gas Company of Florida
plan, who reach retirement age while working for the Company.
The Company accounts for these plans under Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" (SFAS 106), which, among
other things, requires companies to accrue the expected cost of
providing other postretirement benefits to employees and their
beneficiaries during the years that eligible employees render the
necessary service. The Company does not currently fund these future
benefits.
The changes in the postretirement benefit obligation for the Company's
plans were as follows (in thousands):
1999 1998
Benefit obligation at
beginning of year $31,421 $22,933
Service cost 1,243 813
Interest cost 2,087 1,683
Actuarial (gain) loss (4,174) 6,997
Benefits paid (1,345) (1,035)
Other 15 30
------- -------
Benefit obligation at
end of year $29,247 $31,421
======= =======
The change in the Company's plan assets were as follows (in
thousands):
1999 1998
Fair value of plan assets at $ - $ -
beginning of year
Employer contributions 2,830 1,014
Plan participants' 15
contributions 21
Benefits paid (1,345) (1,035)
--------- --------
Fair value of plan assets
at end of year $ 1,500 $ -
========= ========
The reconciliation of the funded status of the Company's
postretirement plans other than pensions as of September 30, 1999 and
1998, was as follows (in thousands):
1999 1998
Funded status $27,747 $31,421
Unrecognized transition obligation (9,616) (11,603)
Unrecognized net (loss) (3,568) (8,204)
-------- --------
Accrued postretirement benefit
obligation $14,563 $11,614
======= =======
The components of postretirement benefit expense other than pensions
for the years ended September 30, 1999 and 1998, were as follows (in
thousands):
1999 1998
Service cost $1,242 $ 813
Interest cost 2,089 1,683
Amortization of transition
obligation 730 774
Other 217 8
------ ------
Net postretirement expense $4,278 $3,278
====== ======
The health care trend rate assumption is 9.4 percent in 2000 gradually
decreasing to 5.5 percent for the year 2006 and later. The discount
rate used to compute the accumulated postretirement benefit obligation
was 7.5 percent in fiscal 1999 and 6.5 percent in fiscal 1998. An
increase in the health care trend rate assumption by one percentage
point in all years would increase the accumulated postretirement
benefit obligation by approximately $4.7 million and the aggregate
annual service and interest costs by approximately $0.8 million.
On September 23, 1998, the New Jersey Board of Public Utilities
(NJBPU) issued an order approving the Company's petition to increase
its base rates in New Jersey by approximately $2.4 million annually to
recover postretirement benefits computed under SFAS 106. The rate
increase was effective October 1, 1998 and allows for previously
deferred costs, as well as future SFAS 106 costs, to be recovered over
a rolling 15-year period. The Company has previously received an
order from the North Carolina Utilities Commission to include in rates
the amount of postretirement benefit expense other than pensions
computed under SFAS 106.
The Company continually evaluates alternative ways to manage these
benefits and control their costs. Any changes in the plan or
revisions to assumptions that affect the amount of expected future
benefit may have a significant effect on the amount of the reported
obligation and the annual deferral and expense.
10. Business Segment Information
During the current fiscal year, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of
an Enterprise and Related Information" (SFAS 131). SFAS 131 is based
on disclosing information under the "management approach" which
relates to the way management uses information to evaluate
performance, make operating decisions and allocate resources among the
various segments. The adoption of SFAS 131 did not affect the results
of operations or financial position of the Company, but did affect the
disclosure of segment information for each of the fiscal years
presented.
The Company's operations are organized and managed by three primary
segments: Distribution Services, Energy Sales and Services and
Customer Services. The Distribution Services segment distributes
natural gas in six states through the Company's regulated utility
divisions. The Energy Sales and Services segment reflects the
operations of the Company's NUI Energy, NUI Energy Brokers and NUI
Energy Solutions subsidiaries, as well as off-system sales by the
utility divisions. The Customer Services segment provides appliance
repair and maintenance, mapping services to outside utilities and
payment processing and collections primarily for water and waste-water
usage. The Company also has corporate operations that do not generate
any revenues or operating margins.
The following table provides information concerning the major segments
of the Company for each of the three fiscal years ended September 30,
1999, 1998 and 1997. Revenues and operating margins include
intersegment sales to affiliated entities, which are eliminated in
consolidation. Identifiable assets include only those attributable to
the operations of each segment. All of the Company's operations are
in the United States and therefore do not need separate disclosure by
geographic region. Certain reclassifications have been made to prior
year segment data to conform with the current year's presentation.
(Dollars in thousands) 1999 1998 1997
Revenues:
Distribution Services $378,099 $390,046 $417,422
Energy Sales & Services 462,415 427,300 180,111
Customer Services 19,112 17,696 15,209
Intersegment Revenues (31,452) (7,006) (4,146)
-------- -------- --------
Total Revenues $828,174 $828,036 $608,596
======== ======== ========
Operating Margins:
Distribution Services $162,264 $158,412 $153,115
Energy Sales & Services 13,319 5,441 6,429
Customer Services 19,112 17,696 15,209
Intersegment Operating
Margins (2,032) (1,973) (1,915)
-------- -------- --------
Total Operating Margins $192,663 $179,576 $172,838
Pre-Tax Operating Income:
Distribution Services $ 49,551 $ 50,704 $ 45,646
Energy Sales & Services 6,585 (1,744) 1,081
Customer Services 1,404 726 (1,032)
-------- ------- --------
Total Pre-Tax Operating
Income $ 57,540 $ 49,686 $ 45,695
======== ======== ========
Depreciation &
Amortization:
Distribution Services $ 22,577 $ 20,904 $ 20,024
Energy Sales & Services 238 243 50
Customer Services 2,140 2,221 2,006
-------- -------- --------
Total Depreciation &
Amortization $ 24,955 $ 23,368 $ 22,080
======== ======== ========
Identifiable Assets:
Distribution Services $710,743 $678,776 $714,161
Energy Sales & Services 70,220 39,849 28,638
Customer Services 14,976 14,866 14,885
-------- -------- --------
Total Identifiable Assets $795,939 $733,491 $757,684
Capital Expenditures:
Distribution Services $ 39,471 $ 54,809 $ 41,223
Energy Sales & Services 495 457 506
Customer Services 2,440 1,682 1,289
-------- -------- --------
Total Capital $ 42,406 $ 56,948 $ 43,018
Expenditures
======== ======== ========
A reconciliation of the Company's segment pre-tax operating income,
depreciation and amortization, identifiable assets and capital
expenditures to amounts reported on the consolidated financial
statements is as follows:
(Dollars in thousands) 1999 1998 1997
Segment Pre-Tax Operating $57,540 $49,686 $45,695
Income
Non-segment pre-tax
operating (loss) income (1,407) (676) 123
Non-recurring items 3,954 (9,686) -
Operating income taxes (16,604) (8,390) (9,377)
------- ------ ------
Operating income $43,483 $30,934 $36,441
======= ======= =======
Segment Depreciation &
Amortization $24,955 $23,368 $22,080
Non-segment depreciation
& amortization 1,984 1,584 952
------- ------- -------
Depreciation &
Amortization $26,939 $24,952 $23,032
======= ======= =======
Segment Identifiable
Assets $795,939 $733,491 $757,684
Non-segment identifiable
assets 48,287 43,356 45,981
------- ------- -------
Total Assets $844,226 $776,847 $803,665
======== ======== ========
Segment Capital
Expenditures $42,406 $56,948 $43,018
Non-segment capital
expenditures 5,523 3,918 9,261
------- ------- -------
Total Capital
Expenditures $47,929 $60,866 $52,279
======= ======= =======
11. Commitments and Contingencies
Commitments. Capital expenditures are expected to be approximately $51
million in fiscal 2000.
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 (EPA), the
New Jersey Department of Environmental Protection (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. In New Jersey, 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 the 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 New Jersey 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 Company also owns, or previously owned, 10 former MGP facilities
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 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 Company.
Based on the most recent assessment, the Company has recorded a total
reserve for environmental investigation and remediation costs of
approximately $34 million, which is the minimum amount that the
Company expects to expend during the next 20 years. The reserve is net
of approximately $4 million, which will be borne by a prior owner and
operator of two of the New Jersey sites in accordance with a cost
sharing agreement. Of this reserve, approximately $30 million relates
to the six New Jersey MGP sites and approximately $4 million relates
to the 10 sites located outside New Jersey. However, 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 this
reserve by an amount that could range up to an additional $24 million
and be incurred during a future period of time that may range up to 50
years. Of this additional $24 million in possible future expenditures,
approximately $12 million relates to the New Jersey MGP sites and
approximately $12 million relates to the sites located outside New
Jersey. As compared with the $34 million reserve currently recorded on
the Company's books as discussed above, the Company believes that it
is less likely that this additional $24 million will be incurred and
therefore has not recorded it on its books.
The Company's prudently incurred remediation costs for the New Jersey
MGP sites have been authorized by the NJBPU to be recoverable in
rates. The most recent NJBPU base rate order permits the Company to
utilize full deferred accounting for expenditures related to its New
Jersey sites and provides for the recovery of $130,000 annually. As of
July 1996, the Company is also able to recover MGP expenditures over a
rolling seven-year period through its NJBPU approved MGP Remediation
Adjustment Clause. As a result, the Company has begun rate recovery of
approximately $5.5 million of environmental costs incurred through
June 30, 1998. Recovery of an additional $2.0 million in environmental
costs incurred between July 1, 1998 and June 30, 1999 is currently
pending NJBPU approval. Accordingly, the Company has recorded a
regulatory asset of approximately $34 million as of September 30,
1999, reflecting the future recovery of environmental remediation
liabilities related to New Jersey MGP sites. The Company has also
been successful in recovering a portion of MGP remediation costs
incurred for the New Jersey sites from the Company's insurance
carriers and continues to pursue additional recovery. With respect to
costs associated with the remaining MGP sites located outside New
Jersey, 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.
Gas Procurement Contracts. Certain of the Company's long-term
contracts for the supply, storage and delivery of natural gas include
fixed charges that amount to approximately $68.6 million annually. The
Company currently recovers, and expects to continue to recover, such
fixed charges through its purchased gas adjustment clauses. As a
result of the forthcoming unbundling of natural gas services in New
Jersey, these contracts may result in the realization of stranded
costs by the Company. Management believes the outcome of these
actions will not have a material adverse effect on the Company's
results. The Company also is committed to purchase, at market-related
prices, minimum quantities of gas that, in the aggregate, are
approximately 2.7 billion cubic feet (Bcf) 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.
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.
12. Unaudited Quarterly Financial Data
The quarterly financial data presented below reflects the seasonal
nature of the Company's operations which normally results in higher
earnings during the heating season, which is primarily in the first
two fiscal quarters. (in thousands, except per share amounts):
Fiscal Quarters
First Second Third Fourth
1999:
Operating Revenues $229,598 $254,562 $160,678 $183,336
Operating Income 12,416 22,556 6,575 1,936
Net Income (Loss) 6,918 17,762 2,424 (2,544)
Net Income (Loss) Per
Share 0.55 1.40 0.19 (0.20)
1998:
Operating Revenues $235,938 $258,798 $169,004 $164,296
Operating Income
(Loss) 11,907 19,673 4,009 (4,655)
Net Income (Loss) 7,421 15,063 (432) (9,738)
Net Income (Loss) Per
Share 0.60 1.20 (0.03) (0.77)
During the second quarter of fiscal 1999, the company recorded after-
tax non-recurring income and other non-recurring items totaling $1.3
million ($2.1 million before income taxes), or $0.10 per share (see
Note 3).
During the third quarter of fiscal 1999, the company recorded after-
tax non-recurring income and other non-recurring items totaling $1.1
million ($1.9 million before income taxes), or $0.08 per share (see
Note 3).
During the fourth quarter of fiscal 1998, the Company recorded after-
tax restructuring and other non-recurring charges totaling $5.9
million ($9.7 million before income taxes), or $0.47 per share (see
Note 3).
Quarterly net income (loss) per share in both fiscal 1999 and fiscal
1998 does not total to the annual amounts due to rounding and to
changes in the average common shares outstanding.
SCHEDULE II
NUI Corporation and Subsidiaries
Valuation and Qualifying Accounts
For each of the Three Years in the
Period Ended September 30, 1999
(Dollars in thousands)
Additions
Balance, Charged to Balance,
Beginning Costs and End of
Description of Period Expenses Other Deductions Period
1999
Allowance for doubtful
accounts $1,714 $1,832 $699(a) $2,514(b) $1,697
Environmental
remediation
reserve $33,981 -- -- -- $33,981
Restructuring reserve $ 556 $ 149 -- 705 $ 0
1998
Allowance for doubtful
accounts $2,318 $ 2,942 $224(a) $3,770(b) $ 1,714
Environmental
remediation
reserve $33,981 -- -- -- $33,981
Restructuring reserve $ 0 $ 1,008 -- 452 $ 556
1997
Allowance for doubtful
accounts $ 2,288 $ 2,30 $1,088(a) $3,363(b) $ 2,318
Environmental
remediation $33,981 -- -- -- $33,981
reserve
(a) Recoveries
(b) Uncollectible
amounts written off.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in
the Township of Bedminster, State of New Jersey, on the day of
December 20, 1999
NUI CORPORATION
By: JAMES R. VAN HORN
Chief Administrative Officer,
General Counsel and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
JOHN KEAN, JR. President, Chief December 20 , 1999
Executive Officer and
Director (Principal
executive officer)
JOHN KEAN Chairman and Director December 20, 1999
A. MARK ABRAMOVIC Senior Vice December 20, 1999
President, Chief
Operating Officer and
Chief Financial
Officer (Principal
financial and
accounting officer)
JAMES J. FORESE Director December 20 , 1999
DR. VERA KING FARRIS Director December 20, 1999
J. RUSSELL HAWKINS Director December 20, 1999
BERNARD S. LEE Director December 20, 1999
R. V. WHISNAND Director December 20, 1999
JOHN WINTHROP Director December 20, 1999
EXHIBIT 10-3
AMENDMENT TO SERVICE AGREEMENT
THIS AMENDMENT ("Amendment") is entered into this 15th day
of May, 1996, by and between TRANSCONTINENTAL GAS PIPE LINE
CORPORATION, a Delaware corporation, hereinafter referred to
as "Seller" and NUI CORPORATION (formerly Elizabethtown Gas
Company), hereinafter referred to as "Buyer", second party.
WITNESSETH:
WHEREAS, Seller and Buyer entered into that certain Service
Agreement, dated January 12, 1971, under Seller's Rate
Schedule LG-A ("Service Agreement") pursuant to which Seller
provides liquefied natural gas storage service for Buyer up
to a total volume of 94,770 Mcf of natural gas which is
Buyer's Liquefaction Capacity volume; and
WHEREAS, Seller and Buyer now desire to review and extend
the primary term of the Service Agreement.
NOW THEREFORE, Seller and Buyer hereby agree to renew and
amend the Service Agreement as follows:
1. Article IV of the Service Agreement is hereby deleted in
its entirety and replaced by the following:
"ARTICLE IV
TERM OF AGREEMENT
This agreement shall be effective as of November 1,
1971 and shall remain in force and effect until 8:00
a.m. Eastern Standard Time October 31, 2002, and
thereafter until terminated by Seller or Buyer upon at
least one hundred eighty (180) days prior written
notice; provided, however, this agreement shall
terminate immediately and, subject to the receipt of
necessary authorizations, if any, Seller may
discontinue service hereunder if (a) Buyer, in Seller's
reasonable judgement fails to demonstrate
creditworthiness, and (b) Buyer fails to provide
adequate security in accordance with Section 32 of the
General Terms and Conditions of Seller's Volume No. 1
Tariff".
2. As herein amended, the Service Agreement is hereby
renewed in full force and effect pursuant to the terms
thereof.
3. This Amendment shall be effective as of the date first
above written.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be signed by their respective officers or
representatives thereunto duly authorized.
TRANSCONTINENTAL GAS PIPE NUI CORPORATION
LINE CORPORATION ("Seller") ("Buyer")
By: /s/ Frank J. Ferazzi By: /s/ Thomas E. Smith
Vice President Director, Energy
Customer Service & Rates Planning
EXHIBIT 10.41
NUI Corporation
Deferred Compensation Plan
Master Plan Document
Effective November 1, 1999
Copyright (c) 1999
By Compensation Resource Group, Inc.
All Rights Reserved
TABLE OF CONTENTS
Page
Purpose 1
ARTICLE 1 Definitions 1
ARTICLE 2 Selection, Enrollment, Eligibility 8
2.1 Selection by Committee 8
2.2 Enrollment Requirements 8
2.3 Eligibility; Commencement of Participation 8
2.4 Termination of Participation and/or Deferrals 9
ARTICLE 3 Deferral Commitments/Company Matching/
Crediting/Taxes 9
3.1 Minimum Deferrals 9
3.2 Maximum Deferrals 10
3.3 Election to Defer; Effect of Election Form 11
3.4 Withholding of Annual Deferral Amounts 12
3.5 Annual Company Contribution Amount 12
3.6 Annual Company Matching Amount 12
3.7 Stock Option Amount 13
3.8 Restricted Stock Amount 13
3.9 Investment of Trust Assets 13
3.10 Sources of Company Stock 13
3.11 Vesting 13
3.12 Crediting/Debiting of Account Balances 14
3.13 FICA and Other Taxes 17
3.14 Distribution 18
ARTICLE 4 Short-Term Payout; Unforeseeable Financial
Emergencies; Withdrawal Election 19
4.1 Short-Term Payout 19
4.2 Other Benefits Take Precedence over Short-Term 19
4.3 Withdrawal Payout/Suspensions for Unforseeable
Financial Emergencies 19
4.4 Withdrawal Election 20
ARTICLE 5 Retirement Benefit 20
5.1 Retirement Benefit 20
5.2 Payment of Retirement Benefit 20
5.3 Death Prior to Completion of Retirement Benefit 21
ARTICLE 6 Pre-Retirement Survivor Benefit 21
6.1 Pre-Retirement Survivor Benefit 21
6.2 Payment of Pre-Retirement Survivor Benefit 21
ARTICLE 7 Termination Benefit 22
7.1 Termination Benefit 22
7.2 Payment of Termination Benefit 22
ARTICLE 8 Disability Waiver and Benefit 22
8.1 Disability Waiver 22
8.2 Continued Eligibility; Disability Benefit 23
ARTICLE 9 Beneficiary Designation 23
9.1 Beneficiary 23
9.2 Beneficiary Designation; Change; Spousal Consent 24
9.3 Acknowledgement 24
9.4 No Beneficiary Designation 24
9.5 Doubt as to Beneficiary 24
9.6 Discharge of Obligations 24
ARTICLE 10 Leave of Absence 25
10.1 Paid Leave of Absence 25
10.2 Unpaid Leave of Absence 25
ARTICLE 11 Termination, Amendment or Modification 25
11.1 Termination 25
11.2 Amendment 26
11.3 Plan Agreement 26
11.4 Effect of Payment 26
ARTICLE 12 Administration 27
12.1 Committee Duties 27
12.2 Administration Upon Change in Control 27
12.3 Agents 28
12.4 Binding Effect of Decisions 28
12.5 Indemnity of Committee 28
12.6 Employer Information 28
ARTICLE 13 Other Benefits and Agreements 29
13.1 Coordination with Other Benefits 29
ARTICLE 14 Claims Procedures 29
14.1 Presentation of Claims 29
14.2 Notification of Decision 29
14.3 Review of a Denied Claim 30
14.4 Decision on Review 30
14.5 Legal Action 30
ARTICLE 15 Trust 31
15.1 Establishment of the Trust 31
15.2 Interrelationship of the Plan and the Trust 31
15.3 Distributions From the Trust 31
15.4 Company Stock Transferred to the Trust 31
ARTICLE 16 Miscellaneous 32
16.1 Status of Plan 32
16.2 Unsecured General Creditor 32
16.3 Employer's Liability 32
16.4 Nonassignability 32
16.5 Not a Contract of Employment 32
16.6 Furnishing Information 33
16.7 Terms 33
16.8 Captions 33
16.9 Governing Law 33
16.10 Notice 33
16.11 Successors 34
16.12 Spouse's Interest 34
16.13 Validity 34
16.14 Incompetent 34
16.15 Court Order 34
16.16 Distribution in the Event of Taxation 34
16.17 Insurance 35
16.18 Legal Fees to Enforce Rights After Change
in Control 35
NUI CORPORATION
DEFERRED COMPENSATION PLAN
Effective November 1, 1999
Purpose
The purpose of this Plan is to provide specified benefits to a
select group of management and highly compensated Employees who
contribute materially to the continued growth, development and
future business success of NUI Corporation, a New Jersey
corporation, and its subsidiaries, if any, that sponsor this Plan.
This Plan shall be unfunded for tax purposes and for purposes of
Title I of ERISA.
ARTICLE 1
Definitions
For purposes of this Plan, unless otherwise clearly apparent from
the context, the following phrases or terms shall have the
following indicated meanings:
1.1 "Account Balance" shall mean, with respect to a Participant, a
credit on the records of the Employer equal to the sum of (i) the
Deferral Account balance, (ii) the vested Company Contribution
Account balance, (iii) the vested Company Matching Account balance,
(iv) the Stock Option Account balance and (v) the Restricted Stock
Account balance. The Account Balance, and each other specified
account balance, shall be a bookkeeping entry only and shall be
utilized solely as a device for the measurement and determination
of the amounts to be paid to a Participant, or his or her
designated Beneficiary, pursuant to this Plan.
1.2 "Annual Bonus" shall mean any compensation, in addition to
Base Annual Salary relating to services performed during any
calendar year, whether or not paid in such calendar year or
included on the Federal Income Tax Form W-2 for such calendar year,
payable to a Participant as an Employee under any Employer's annual
bonus and cash incentive plans, excluding stock options and
restricted stock.
1.3 "Annual Company Contribution Amount" shall mean, for any one
Plan Year, the amount determined in accordance with Section 3.5.
1.4 "Annual Company Matching Amount" for any one Plan Year shall
be the amount determined in accordance with Section 3.6.
1.5 "Annual Deferral Amount" shall mean that portion of a
Participant's Base Annual Salary, Annual Bonus, and Annual
Commission that a Participant elects to have, and is deferred, in
accordance with Article 3, for any one Plan Year. In the event of
a Participant's Retirement, Disability (if deferrals cease in
accordance with Section 8.1), death or a Termination of Employment
prior to the end of a Plan Year, such year's Annual Deferral Amount
shall be the actual amount withheld prior to such event.
1.6 "Annual Restricted Stock Amount" shall mean, with respect to a
Participant for any one Plan Year, the value of unvested restricted
stock under any Company stock incentive plan, deferred in
accordance with Section 3.8 of this Plan.
1.7 "Annual Stock Option Amount" shall mean, with respect to a
Participant for any one Plan Year, the amount of Qualifying Gains
deferred on Eligible Stock Option exercise in accordance with
Section 3.7 of this Plan, calculated using the closing price of
Company Stock as of the end of the business day closest to the date
of such Eligible Stock Option exercise
1.8 "Base Annual Salary" shall mean the annual cash compensation
relating to services performed during any calendar year, whether or
not paid in such calendar year or included on the Federal Income
Tax Form W-2 for such calendar year, excluding bonuses,
commissions, overtime, fringe benefits, stock options, relocation
expenses, incentive payments, non-monetary awards, directors fees
and other fees, automobile and other allowances paid to a
Participant for employment services rendered (whether or not such
allowances are included in the Employee's gross income). Base
Annual Salary shall be calculated before reduction for compensation
voluntarily deferred or contributed by the Participant pursuant to
all qualified or non-qualified plans of any Employer and shall be
calculated to include amounts not otherwise included in the
Participant's gross income under Code Sections 125, 402(e)(3),
402(h), or 403(b) pursuant to plans established by any Employer;
provided, however, that all such amounts will be included in
compensation only to the extent that, had there been no such plan,
the amount would have been payable in cash to the Employee.
1.9 "Beneficiary" shall mean one or more persons, trusts, estates
or other entities, designated in accordance with Article 9, that
are entitled to receive benefits under this Plan upon the death of
a Participant.
1.10 "Beneficiary Designation Form" shall mean the form
established from time to time by the Committee that a Participant
completes, signs and returns to the Committee to designate one or
more Beneficiaries.
1.11 "Board" shall mean the board of directors of the Company.
1.12 "Change in Control" shall mean the first to occur of any of
the following events:
(a) Any "person" (as that term is used in Section 13 and 14(d)(2)
of the Securities Exchange Act of 1934 ("Exchange Act")) becomes
the beneficial owner (as that term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of 50% or more of the
Company's capital stock entitled to vote in the election of
directors;
(b) During any period of not more than two consecutive years, not
including any period prior to the adoption of this Plan,
individuals who at the beginning of such period constitute the
board of directors of the Company, and any new director (other than
a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (a),
(c), (d) or (e) of this Section 1.13) whose election by the board
of directors or nomination for election by the Company's
stockholders was approved by a vote of at least three-fourths
(3/4ths) of the directors then still in office who either were
directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) The shareholders of the Company approve any consolidation or
merger of the Company, other than a consolidation or merger of the
Company in which the holders of the common stock of the Company
immediately prior to the consolidation or merger hold more than 50%
of the common stock of the surviving corporation immediately after
the consolidation or merger;
(d) The shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company; or
(e) The shareholders of the Company approve the sale or transfer
of all or substantially all of the assets of the Company to parties
that are not within a "controlled group of corporations" (as
defined in Code Section 1563) in which the Company is a member.
1.13 "Claimant" shall have the meaning set forth in Section 14.1.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as it
may be amended from time to time.
1.15 "Committee" shall mean the committee described in Article 12.
1.16 "Company" shall mean NUI Corporation, a New Jersey
corporation, and any successor to all or substantially all of the
Company's assets or business.
1.17 "Company Contribution Account" shall mean (i) the sum of the
Participant's Annual Company Contribution Amounts, plus (ii)
amounts credited in accordance with all the applicable crediting
provisions of this Plan that relate to the Participant's Company
Contribution Account, less (iii) all distributions made to the
Participant or his or her Beneficiary pursuant to this Plan that
relate to the Participant's Company Contribution Account.
1.18 "Company Matching Account" shall mean (i) the sum of all of a
Participant's Annual Company Matching Amounts, plus (ii) amounts
credited in accordance with all the applicable crediting provisions
of this Plan that relate to the Participant's Company Matching
Account, less (iii) all distributions made to the Participant or
his or her Beneficiary pursuant to this Plan that relate to the
Participant's Company Matching Account.
1.19 "Company Stock" shall mean NUI Corporation common stock,
$1.00 par value, or any other equity securities of the Company
designated by the Committee.
1.20 "Deduction Limitation" shall mean the following described
limitation on a benefit that may otherwise be distributable
pursuant to the provisions of this Plan. Except as otherwise
provided, this limitation shall be applied to all distributions
that are "subject to the Deduction Limitation" under this Plan. If
an Employer determines in good faith prior to a Change in Control
that there is a reasonable likelihood that any compensation paid to
a Participant for a taxable year of the Employer would not be
deductible by the Employer solely by reason of the limitation under
Code Section 162(m), then to the extent deemed necessary by the
Employer to ensure that the entire amount of any distribution to
the Participant pursuant to this Plan prior to the Change in
Control is deductible, the Employer may defer all or any portion of
a distribution under this Plan. Any amounts deferred pursuant to
this limitation shall continue to be credited/debited with
additional amounts in accordance with Section 3.12 below, even if
such amount is being paid out in installments. The amounts so
deferred and amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the
Participant's death) at the earliest possible date, as determined
by the Employer in good faith, on which the deductibility of
compensation paid or payable to the Participant for the taxable
year of the Employer during which the distribution is made will not
be limited by Section 162(m), or if earlier, the effective date of
a Change in Control. Notwithstanding anything to the contrary in
this Plan, the Deduction Limitation shall not apply to any
distributions made after a Change in Control.
1.21 "Deferral Account" shall mean (i) the sum of all of a
Participant's Annual Deferral Amounts, plus (ii) amounts credited
in accordance with all the applicable crediting provisions of this
Plan that relate to the Participant's Deferral Account, less (iii)
all distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to his or her Deferral Account.
1.22 "Disability" shall mean a period of disability during which a
Participant qualifies for permanent disability benefits under the
Participant's Employer's long-term disability plan, or, if a
Participant does not participate in such a plan, a period of
disability during which the Participant would have qualified for
permanent disability benefits under such a plan had the Participant
been a participant in such a plan, as determined in the sole
discretion of the Committee. If the Participant's Employer does
not sponsor such a plan, or discontinues to sponsor such a plan,
Disability shall be determined by the Committee in its sole
discretion.
1.23 "Disability Benefit" shall mean the benefit set forth in
Article 8.
1.24 "Election Form" shall mean the form established from time to
time by the Committee that a Participant completes, signs and
returns to the Committee to make an election under the Plan.
1.25 "Eligible Stock Option" shall mean one or more non-qualified
stock option(s) selected by the Committee in its sole discretion
and exercisable under a plan or arrangement of any Employer
permitting a Participant under this Plan to defer gain with respect
to such option.
1.26 "Employee" shall mean a person who is an employee of any
Employer.
1.27 "Employer(s)" shall mean the Company and/or any of its
subsidiaries (now in existence or hereafter formed or acquired)
that have been selected by the Board to participate in the Plan and
have adopted the Plan as a sponsor.
1.28 "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as it may be amended from time to time.
1.29 "First Plan Year" shall mean the period beginning November 1,
1999 and ending December 31, 2000.
1.30 "401(k) Plan" shall be that certain NUI Corporation Savings
and Investment Plan, dated May 1, 1978, adopted by the Company, as
amended from time to time.
1.31 "Participant" shall mean any Employee (i) who is selected to
participate in the Plan, (ii) who elects to participate in the
Plan, (iii) who signs a Plan Agreement, an Election Form and a
Beneficiary Designation Form, (iv) whose signed Plan Agreement,
Election Form and Beneficiary Designation Form are accepted by the
Committee, (v) who commences participation in the Plan, and (vi)
whose Plan Agreement has not terminated. A spouse or former spouse
of a Participant shall not be treated as a Participant in the Plan
or have an account balance under the Plan, even if he or she has an
interest in the Participant's benefits under the Plan as a result
of applicable law or property settlements resulting from legal
separation or divorce.
1.32 "Plan" shall mean the Company's Deferred Compensation Plan,
which shall be evidenced by this instrument and by each Plan
Agreement, as they may be amended from time to time.
1.33 "Plan Agreement" shall mean a written agreement, as may be
amended from time to time, which is entered into by and between an
Employer and a Participant. Each Plan Agreement executed by a
Participant and the Participant's Employer shall provide for the
entire benefit to which such Participant is entitled under the
Plan; should there be more than one Plan Agreement, the Plan
Agreement bearing the latest date of acceptance by the Employer
shall supersede all previous Plan Agreements in their entirety and
shall govern such entitlement. The terms of any Plan Agreement may
be different for any Participant, and any Plan Agreement may
provide additional benefits not set forth in the Plan or limit the
benefits otherwise provided under the Plan; provided, however, that
any such additional benefits or benefit limitations must be agreed
to by both the Employer and the Participant.
"Plan Year" shall, except for the First Plan Year, mean a period
beginning on January 1 of each calendar year and continuing through
December 31 of such calendar year.
"Pre-Retirement Survivor Benefit" shall mean the benefit set forth
in Article 6.
1.36 "Qualifying Gain" shall mean the value accrued upon exercise
of an Eligible Stock Option (i) using a Company Stock-for-Company
Stock payment method and (ii) having an aggregate fair market value
in excess of the total Company Stock purchase price necessary to
exercise the option. In other words, the Qualifying Gain upon
exercise of an Eligible Stock Option equals the total market value
of the shares (or share equivalent units) acquired minus the total
stock purchase price. For example, assume a Participant elects to
defer the Qualifying Gain accrued upon exercise of an Eligible
Stock Option to purchase 1000 shares of Company Stock at an
exercise price of $20 per share, when Company Stock has a current
fair market value of $25 per share. Using the Company Stock-for-
Company Stock payment method, the Participant would deliver 800
shares of Company Stock (worth $20,000) to exercise the Eligible
Stock Option and receive, in return, 800 shares of Company Stock
plus a Qualifying Gain (in this case, in the form of an unfunded
and unsecured promise to pay money or property in the future) equal
to $5,000 (i.e., the current value of the remaining 200 shares of
Company Stock).
1.37 "Quarterly Installment Method" shall be a quarterly
installment payment over the number of quarters selected by the
Participant in accordance with this Plan, calculated as follows:
The Account Balance of the Participant shall be calculated as of
the close of business on the last business day of the quarter. The
quarterly installment shall be calculated by multiplying this
balance by a fraction, the numerator of which is one, and the
denominator of which is the remaining number of quarterly payments
due the Participant. By way of example, if the Participant elects
a 40 quarter Quarterly Installment Method, the first payment shall
be 1/40 of the Account Balance, calculated as described in this
definition. The following quarter, the payment shall be 1/39 of
the Account Balance, calculated as described in this definition.
Each quarterly installment shall be paid on or as soon as
practicable after the last business day of the applicable quarter.
1.38 "Restricted Stock" shall mean unvested shares of restricted
stock selected by the Committee in its sole discretion and awarded
to the Participant under any Company stock incentive plan.
1.39 "Restricted Stock Account" shall mean (i) the sum of the
Participant's Annual Restricted Stock Amounts, plus (ii) amounts
credited/debited in accordance with all the applicable
crediting/debiting provisions of this Plan that relate to the
Participant's Restricted Stock Account, less (iii) all
distributions made to the Participant or his or her Beneficiary
pursuant to this Plan that relate to the Participant's Restricted
Stock Account.
1.40 "Restricted Stock Amount" shall mean, for any grant of
Restricted Stock, the amount of such Restricted Stock deferred in
accordance with Section 3.8 of this Plan, calculated using the
closing price of Company Stock as of the end of the business day
closest to the date such Restricted Stock would otherwise vest, but
for the election to defer.
1.41 "Retirement", "Retire(s)" or "Retired" shall mean, with
respect to an Employee, severance from employment from all
Employers for any reason other than a leave of absence, death or
Disability on or after the earlier of the attainment of (a) age
sixty-five (65) or (b) age fifty-five (55) with ten (10) Years of
Service.
1.42 "Retirement Benefit" shall mean the benefit set forth in
Article 5.
1.43 "Short-Term Payout" shall mean the payout set forth in
Section 4.1.
1.44 "Stock Option Account" shall mean the sum of (i) the
Participant's Annual Stock Option Amounts, plus (ii) amounts
credited/debited in accordance with all the applicable
crediting/debiting provisions of this Plan that relate to the
Participant's Stock Option Account, less (iii) all distributions
made to the Participant or his or her Beneficiary pursuant to this
Plan that relate to the Participant's Stock Option Account.
1.45 "Stock Option Amount" shall mean, for any Eligible Stock
Option, the amount of Qualifying Gains deferred in accordance with
Section 3.7 of this Plan, calculated using the closing price of
Company Stock as of the end of the business day closest to the date
of exercise of such Eligible Stock Option.
1.46 "Termination Benefit" shall mean the benefit set forth in
Article 7.
1.47 "Termination of Employment" shall mean the severing of
employment with all Employers, voluntarily or involuntarily, for
any reason other than Retirement, Disability, death or an
authorized leave of absence.
1.48 "Trust" shall mean one or more trusts established pursuant to
that certain Master Trust Agreement, dated as of ________ 1, 199_
between the Company and the trustee named therein, as amended from
time to time.
1.49 "Unforeseeable Financial Emergency" shall mean an
unanticipated emergency that is caused by an event beyond the
control of the Participant that would result in severe financial
hardship to the Participant resulting from (i) a sudden and
unexpected illness or accident of the Participant or a dependent of
the Participant, (ii) a loss of the Participant's property due to
casualty, or (iii) such other extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of
the Participant, all as determined in the sole discretion of the
Committee.
1.50 "Years of Service" shall mean the total number of full years
in which a Participant has been employed by one or more Employers.
For purposes of this definition, a year of employment shall be a
365 day period (or 366 day period in the case of a leap year) that,
for the first year of employment, commences on the Employee's date
of hiring and that, for any subsequent year, commences on an
anniversary of that hiring date. Any partial year of employment
shall not be counted.
ARTICLE 2
Selection, Enrollment, Eligibility
2.1 Selection by Committee. Participation in the Plan shall be
limited to a select group of management and highly compensated
Employees of the Employers, as determined by the Committee in its
sole discretion. From that group, the Committee shall select, in
its sole discretion, Employees to participate in the Plan.
Enrollment Requirements.
2.2 Enrollment Requirements. As a condition to participation,
each selected Employee shall complete, execute and return to the
Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form, all within 30 days after he or she is selected to
participate in the Plan. In addition, the Committee shall
establish from time to time such other enrollment requirements as
it determines in its sole discretion are necessary.
Eligibility; Commencement of Participation.
2.3 Eligibility; Commencement of Participation. Provided an
Employee selected to participate in the Plan has met all enrollment
requirements set forth in this Plan and required by the Committee,
including returning all required documents to the Committee within
the specified time period, that Employee shall commence
participation in the Plan on the first day of the month following
the month in which the Employee completes all enrollment
requirements. If an Employee fails to meet all such requirements
within the period required, in accordance with Section 2.2, that
Employee shall not be eligible to participate in the Plan until the
first day of the Plan Year following the delivery to and acceptance
by the Committee of the required documents.
Termination of Participation and/or Deferrals.
2.4 Termination of Participation and/or Deferrals. If the
Committee determines in good faith that a Participant no longer
qualifies as a member of a select group of management or highly
compensated employees, as membership in such group is determined in
accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
the Committee shall have the right, in its sole discretion, to
(i) terminate any deferral election the Participant has made for
the remainder of the Plan Year in which the Participant's
membership status changes, (ii) prevent the Participant from making
future deferral elections and/or (iii) immediately distribute the
Participant's then Account Balance as a Termination Benefit and
terminate the Participant's participation in the Plan.
ARTICLE 3
Deferral Commitments/Company Matching/Crediting/Taxes
3.1 Minimum Deferrals.
(a) Base Annual Salary and Annual Bonus. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Base Annual Salary and Annual Bonus in the following
minimum amounts for each deferral elected:
Deferral Minimum Amount
Base Annual Salary $2,000
Annual Bonus $2,000
Annual Commission $2,000
If an election is made for less than stated minimum amounts, or if
no election is made, the amount deferred shall be zero.
(b) Short Plan Year. Notwithstanding the foregoing, if a
Participant first becomes a Participant after the first day of a
Plan Year, or in the case of the first Plan Year of the Plan
itself, the minimum Base Annual Salary deferral shall be an amount
equal to the minimum set forth above, multiplied by a fraction, the
numerator of which is the number of complete months remaining in
the Plan Year and the denominator of which is 12.
(c) Stock Option Amount. For each Eligible Stock Option, a
Participant may elect to defer, as his or her Stock Option Amount,
the following minimum percentage of Qualifying Gain with respect to
exercise of the Eligible Stock Option:
Deferral Minimum
Percentage
Qualifying Gain 10%
provided, however, that such Stock Option Amount shall be no less
than the lesser of $20,000 or 100% of such Qualifying Gain.
Restricted Stock Amount. For Restricted Stock, a Participant may
elect to defer, as his or her Restricted Stock Amount, the
following minimum percentage of the Participant's Restricted Stock:
Deferral Minimum
Percentage
Restricted Stock 10%
3.2 Maximum Deferral.
(a) Base Annual Salary and Annual Bonus. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral
Amount, Base Annual Salary, Annual Bonus, and Annual Commission up
to the following maximum percentages for each deferral elected:
Deferral Maximum
Percentage
Base Annual Salary 75%
Annual Bonus 100%
Annual Commission 100%
(b) Notwithstanding the foregoing, if a Participant first becomes
a Participant after the first day of a Plan Year, or in the case of
the first Plan Year of the Plan itself, the maximum Annual Deferral
Amount, with respect to Base Annual Salary, Annual Bonus, and
Annual Commission shall be limited to the amount of compensation
not yet earned by the Participant as of the date the Participant
submits a Plan Agreement and Election Form to the Committee for
acceptance.
(c) For each Eligible Stock Option, a Participant may elect to
defer, as his or her Stock Option Amount, Qualifying Gain up to the
following maximum percentage with respect to exercise of the
Eligible Stock Option:
Deferral Maximum
Percentage
Qualifying Gain 100%
(d) Stock Option Amounts may also be limited by other terms or
conditions set forth in the stock option plan or agreement under
which such options are granted.
(e) A Participant may elect to defer up to 100% of his or her
Restricted Stock
3.3 Election to Defer; Effect of Election Form.
(a) First Plan Year. In connection with a Participant's
commencement of participation in the Plan, the Participant shall
make an irrevocable deferral election for the Plan Year in which
the Participant commences participation in the Plan, along with
such other elections as the Committee deems necessary or desirable
under the Plan. For these elections to be valid, the Election Form
must be completed and signed by the Participant, timely delivered
to the Committee (in accordance with Section 2.2 above) and
accepted by the Committee.
(b) Subsequent Plan Years. For each succeeding Plan Year, an
irrevocable deferral election for that Plan Year, and such other
elections as the Committee deems necessary or desirable under the
Plan, shall be made by timely delivering to the Committee, in
accordance with its rules and procedures, before the end of the
Plan Year preceding the Plan Year for which the election is made, a
new Election Form. If no such Election Form is timely delivered for
a Plan Year, the Annual Deferral Amount shall be zero for that Plan
Year.
(c) Stock Option Deferral. For an election to defer gain upon an
Eligible Stock Option exercise to be valid: (i) a separate Election
Form must be completed and signed by the Participant with respect
to the Eligible Stock Option; (ii) the Election Form must be timely
delivered to the Committee and accepted by the Committee at least
six (6) months prior to the date the Participant elects to exercise
the Eligible Stock Option; (iii) the Eligible Stock Option must be
exercised using an actual or phantom Company Stock-for-Company
Stock payment method; and (iv) the Company Stock actually or
constructively delivered by the Participant to exercise the
Eligible Stock Option must have been owned by the Participant
during the entire six (6) month period prior to its delivery.
(d) Restricted Stock. For an election to defer Restricted Stock
Amounts to be valid: (i) a separate irrevocable Election Form must
be completed and signed by the Participant, with respect to such
Restricted Stock; and (ii) such Election Form must be timely
delivered to the Committee and accepted by the Committee at least
six (6) months prior to the date such Restricted Stock vests under
the terms of the Company's stock incentive plan.
Withholding of Annual Deferral Amounts.
3.4 Withholding of Annual Deferral Amounts. For each Plan Year,
the Base Annual Salary portion of the Annual Deferral Amount shall
be withheld from each regularly scheduled Base Annual Salary
payroll in equal amounts, as adjusted from time to time for
increases and decreases in Base Annual Salary. The Annual Bonus
and Annual Commission portion of the Annual Deferral Amount shall
be withheld at the time the Annual Bonus and Annual Commission is
or otherwise would be paid to the Participant, whether or not this
occurs during the Plan Year itself.
3.5 Annual Company Contribution Amount. For each Plan Year, an
Employer, in its sole discretion, may, but is not required to,
credit any amount it desires to any Participant's Company
Contribution Account under this Plan, which amount shall be for
that Participant the Annual Company Contribution Amount for that
Plan Year. The amount so credited to a Participant may be smaller
or larger than the amount credited to any other Participant, and
the amount credited to any Participant for a Plan Year may be zero,
even though one or more other Participants receive an Annual
Company Contribution Amount for that Plan Year. The Annual Company
Contribution Amount, if any, shall be credited as of the last day
of the Plan Year. If a Participant is not employed by an Employer
as of the last day of a Plan Year other than by reason of his or
her Retirement or death while employed, the Annual Company
Contribution Amount for that Plan Year shall be zero.
3.6 Annual Company Matching Amount. A Participant's Annual
Company Matching Amount for any Plan Year shall be equal to 50 % of
the Participant's Annual Deferral Amount for such Plan Year, up to
an amount that does not exceed 6 % of the Participant's Base
Annual Salary, reduced by the amount of any matching contributions
made to the 401(k) Plan on his or her behalf for the plan year of
the 401(k) Plan that corresponds to the Plan Year. If a
Participant is not employed by an Employer as of the last business
day of a Plan Year other than by reason of his or her Retirement or
death, the Annual Company Matching Amount for such Plan Year shall
be zero. In the event of Retirement or death, a Participant shall
be credited with the Annual Company Matching Amount for the Plan
Year in which he or she Retires or dies.
3.7 Stock Option Amount. Subject to any terms and conditions
imposed by the Committee, Participants may elect to defer, under
the Plan, Qualifying Gains attributable to an Eligible Stock Option
exercise. Stock Option Amounts shall be credited/debited to the
Participant on the books of the Employer at the time Company Stock
would otherwise have been delivered to the Participant pursuant to
the Eligible Stock Option exercise, but for the election to defer.
3.8 Restricted Stock Amount. Subject to any terms and conditions
imposed by the Committee, Participants may elect to defer, under
the Plan, Restricted Stock Amounts. Restricted Stock Amounts shall
be credited/debited to the Participant on the books of the Employer
in connection with such an election at the time the Restricted
Stock would otherwise vest under the terms of the Company's stock
incentive plan, but for the election to defer.
3.9 Investment of Trust Assets. The Trustee of the Trust shall be
authorized, upon written instructions received from the Committee
or investment manager appointed by the Committee, to invest and
reinvest the assets of the Trust in accordance with the applicable
Trust Agreement, including the disposition of Company Stock and
reinvestment of the proceeds in one or more investment vehicles
designated by the Committee.
3.10 Sources of Company Stock. If Company Stock is credited under
the Plan in the Trust in connection with an Eligible Stock Option
exercise or in connection with a deferral of Restricted Stock, the
shares so credited shall be deemed to have originated, and shall be
counted against the number of shares reserved, under such other
plan, program or arrangement.
3.11 Vesting.
(a) A Participant shall at all times be 100% vested in his or her
Deferral Account, Stock Option Account and Restricted Stock
Account.
(b) A Participant shall be vested in his or her Company
Contribution Account in accordance with the schedule, if any, set
forth in the Participant's Plan Agreement.
(c) A Participant shall be vested in his or her Company Matching
Account as follows: (i) with respect to all benefits under this
Plan other than the Termination Benefit, a Participant's vested
Company Matching Account shall equal 100% of such Participant's
Company Matching Account; and (ii) with respect to the Termination
Benefit, a Participant's Company Matching Account shall vest on the
basis of the Participant's Years of Service at the time the
Participant experiences a Termination of Employment, in accordance
with the following schedule:
Years of Service at Date of Vested Percentage of
Termination of Employment Company Matching Account
Less than 3 years 0%
3 years or more, but less 50%
than 4
4 years or more, but less 75%
than 5
5 years or more 100%
(d) Notwithstanding anything to the contrary contained in this
Section 3.11, in the event of a Change in Control, a Participant's
Company Contribution Account and Company Matching Account shall
immediately become 100% vested (if it is not already vested in
accordance with the above vesting schedules).
(e) Notwithstanding subsection (d), the vesting schedule for a
Participant's Company Contribution Account and Company Matching
Account shall not be accelerated to the extent that the Committee
determines that such acceleration would cause the deduction
limitations of Section 280G of the Code to become effective. In
the event that all of a Participant's Company Contribution Account
and/or Company Matching Account is not vested pursuant to such a
determination, the Participant may request independent verification
of the Committee's calculations with respect to the application of
Section 280G. In such case, the Committee must provide to the
Participant within 15 business days of such a request an opinion
from a nationally recognized accounting firm selected by the
Participant (the _Accounting Firm_). The opinion shall state the
Accounting Firm's opinion that any limitation in the vested
percentage hereunder is necessary to avoid the limits of Section
280G and contain supporting calculations. The cost of such opinion
shall be paid for by the Company.
3.12 Crediting/Debiting of Account Balances. Subject to Section
3.12(f) below, and in accordance with, and subject to, the rules
and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or
debited to a Participant's Account Balance in accordance with the
following rules:
(a) Election of Measurement Funds. Subject to Section 3.12(f)
below, a Participant, in connection with his or her initial
deferral election in accordance with Section 3.3(a) above, shall
elect, on the Election Form, one or more Measurement Fund(s) (as
described in Section 3.12(c) below) to be used to determine the
additional amounts to be credited to his or her Account Balance for
the first calendar quarter or portion thereof in which the
Participant commences participation in the Plan and continuing
thereafter for each subsequent calendar quarter in which the
Participant participates in the Plan, unless changed in accordance
with the next sentence. Subject to Section 3.12(f) below,
commencing with the first calendar quarter that follows the
Participant's commencement of participation in the Plan and
continuing thereafter for each subsequent calendar quarter in which
the Participant participates in the Plan, no later than the next to
last business day of the calendar quarter, the Participant may
(but is not required to) elect, by submitting an Election Form to
the Committee that is accepted by the Committee, to add or delete
one or more Measurement Fund(s) to be used to determine the
additional amounts to be credited to his or her Account Balance, or
to change the portion of his or her Account Balance allocated to
each previously or newly elected Measurement Fund; provided,
however, in accordance with Section 3.12(f) below, the
Participant's Stock Option Account and Restricted Stock Account
must be allocated to the Company Stock Fund (as described in
Section 3.12(c) below) at all times prior to distribution and may
never be reallocated to any other Measurement Fund under this Plan.
If an election is made in accordance with the previous sentence, it
shall apply to the next calendar quarter and continue thereafter
for each subsequent calendar quarter in which the Participant
participates in the Plan, unless changed in accordance with the
previous sentence.
(b) Proportionate Allocation. In making any election described in
Section 3.12(a) above, the Participant shall specify on the
Election Form, in increments of five percentage points (5%), the
percentage of his or her Account Balance to be allocated to a
Measurement Fund (as if the Participant was making an investment in
that Measurement Fund with that portion of his or her Account
Balance).
(c) Measurement Funds. Subject to Section 3.12(f) below, the
Participant may elect one or more of the following measurement
funds, based on certain mutual funds (the "Measurement Funds"), for
the purpose of crediting additional amounts to his or her Account
Balance:
(1) Income Accumulation Fund;
(2) Asset Allocation Fund;
(3) Growth Stock Fund;
(4) Company Stock Fund.
Subject to Section 3.12(f) below, as necessary, the Committee may,
in its sole discretion, discontinue, substitute or add a
Measurement Fund. Each such action will take effect as of the
first day of the calendar quarter that follows by thirty (30) days
the day on which the Committee gives Participants advance written
notice of such change.
(d) Crediting or Debiting Method. The performance of each elected
Measurement Fund (either positive or negative) will be determined
by the Committee, in its reasonable discretion, based on the
performance of the Measurement Funds themselves. A Participant's
Account Balance shall be credited or debited on a daily basis based
on the performance of each Measurement Fund selected by the
Participant, as determined by the Committee in its sole discretion,
as though (i) a Participant's Account Balance were invested in the
Measurement Fund(s) selected by the Participant, in the percentages
applicable to such calendar quarter, as of the close of business on
the first business day of such calendar quarter, at the closing
price on such date; (ii) the portion of the Annual Deferral Amount
that was actually deferred during any calendar quarter were
invested in the Measurement Fund(s) selected by the Participant, in
the percentages applicable to such calendar quarter, no later than
the close of business on the first business day after the day on
which such amounts are actually deferred from the Participant's
Base Annual Salary through reductions in his or her payroll, at the
closing price on such date; and (iii) any distribution made to a
Participant that decreases such Participant's Account Balance
ceased being invested in the Measurement Fund(s), in the
percentages applicable to such calendar quarter, no earlier than
one business day prior to the distribution, at the closing price on
such date. The Participant's Annual Company Matching Amount shall
be credited to his or her Company Matching Account for purposes of
this Section 3.12(d) as of the close of business on the first
business day in February of the Plan Year following the Plan Year
to which it relates. The Participant's Annual Company Contribution
Amount shall be credited to his or her Company Contribution Account
as of the last day of the Plan Year to which it relates. The
Participant's Annual Stock Option Amount(s) shall be credited to
his or her Stock Option Account no later than the close of business
on the first business day after the day on which the Eligible Stock
Option was exercised or otherwise disposed of. The Participant's
Annual Restricted Stock Amount(s) shall be credited to his or her
Restricted Stock Account no later than the close of business on the
first business day after the day the Restricted Stock would
otherwise vest under the terms of the Company Stock incentive plan,
but for the election to defer.
(e) No Actual Investment. Notwithstanding any other provision of
this Plan that may be interpreted to the contrary, the Measurement
Funds are to be used for measurement purposes only, and a
Participant's election of any such Measurement Fund, the allocation
to his or her Account Balance thereto, the calculation of
additional amounts and the crediting or debiting of such amounts to
a Participant's Account Balance shall not be considered or
construed in any manner as an actual investment of his or her
Account Balance in any such Measurement Fund. In the event that
the Company or the Trustee (as that term is defined in the Trust),
in its own discretion, decides to invest funds in any or all of the
Measurement Funds, no Participant shall have any rights in or to
such investments themselves. Without limiting the foregoing, a
Participant's Account Balance shall at all times be a bookkeeping
entry only and shall not represent any investment made on his or
her behalf by the Company or the Trust; the Participant shall at
all times remain an unsecured creditor of the Company.
(f) No Diversification for Stock Option Account and Restricted
Stock Account. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, a Participant's Stock
Option Account and Restricted Stock Account must be deemed invested
in the Company Stock Fund at all times prior to distribution and,
therefore, may never be reallocated to any other Measurement Fund
under this Plan.
(g) Special Rule for Dividends Paid on Company Stock Fund.
Notwithstanding any other provision of this Plan that may be
interpreted to the contrary, for purposes of the Company Stock
Fund, all dividends declared on Company Stock must be distributed
in the form of cash to the Participant within 60 days of the
dividend payment date and, therefore, may never be deemed
reinvested in additional shares of Company Stock and distributed in
accordance with Article 4, 5, 6, 7 or 8.
3.13 FICA and Other Taxes.
(a) Annual Deferral Amounts. For each Plan Year in which an
Annual Deferral Amount is being withheld from a Participant, the
Participant's Employer(s) shall withhold from that portion of the
Participant's Base Annual Salary, Annual Bonus, and Annual
Commission that is not being deferred, in a manner determined by
the Employer(s), the Participant's share of FICA and other
employment taxes on such Annual Deferral Amount. If necessary, the
Committee may reduce the Annual Deferral Amount in order to comply
with this Section 3.13.
(b) Company Matching Amounts. When a participant becomes vested
in a portion of his or her Company Matching Account, the
Participant's Employer(s) shall withhold from the Participant's
Base Annual Salary, Annual Bonus, and Annual Commission that is not
deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes. If
necessary, the Committee may reduce the vested portion of the
Participant's Company Matching Account in order to comply with this
Section 3.13.
(c) Annual Stock Option Amounts and Annual Restricted Stock
Amounts. For each Plan Year in which an Annual Stock Option Amount
or Annual Restricted Stock Amount is being first withheld from a
Participant, the Participant's Employer(s) shall withhold from that
portion of the Participant's Base Annual Salary, Annual Bonus,
Annual Commission, Qualifying Gains and Restricted Stock that is
not being deferred, in a manner determined by the Employer(s), the
Participant's share of FICA and other employment taxes on such
Annual Stock Option Amount or Annual Restricted Stock Amount. If
necessary, the Committee may reduce the Annual Stock Option Amount
or Annual Restricted Stock Amount in order to comply with this
Section 3.13.
3.14 Distributions. The Participant's Employer(s), or the trustee
of the Trust, shall withhold from any payments made to a
Participant under this Plan all federal, state and local income,
employment and other taxes required to be withheld by the
Employer(s), or the trustee of the Trust, in connection with such
payments, in amounts and in a manner to be determined in the sole
discretion of the Employer(s) and the trustee of the Trust.
ARTICLE 4
Short-Term Payout; Unforeseeable Financial Emergencies; Withdrawal
Election; 401(k) Roll-Over
4.1 Short-Term Payout. In connection with each election to defer
an Annual Deferral Amount, a Participant may irrevocably elect to
receive a future "Short-Term Payout" from the Plan with respect to
such Annual Deferral Amount. Subject to the Deduction Limitation,
the Short-Term Payout shall be a lump sum payment in an amount that
is equal to the Annual Deferral Amount plus amounts credited or
debited in the manner provided in Section 3.12 above on that
amount, determined at the time that the Short-Term Payout becomes
payable (rather than the date of a Termination of Employment).
Subject to the Deduction Limitation and the other terms and
conditions of this Plan, each Short-Term Payout elected shall be
paid out during a 60 day period commencing immediately after the
last day of any Plan Year designated by the Participant that is at
least three Plan Years after the Plan Year in which the Annual
Deferral Amount is actually deferred. By way of example, if a
three year Short-Term Payout is elected for Annual Deferral Amounts
that are deferred in the Plan Year commencing January 1, 2001, the
three year Short-Term Payout would become payable during a 60 day
period commencing January 1, 2005.
4.2 Other Benefits Take Precedence Over Short-Term. Should an
event occur that triggers a benefit under Article 5, 6, 7 or 8, any
Annual Deferral Amount, plus amounts credited or debited thereon,
that is subject to a Short-Term Payout election under Section 4.1
shall not be paid in accordance with Section 4.1 but shall be paid
in accordance with the other applicable Article.
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial
Emergencies. If the Participant experiences an Unforeseeable
Financial Emergency, the Participant may petition the Committee to
(i) suspend any deferrals required to be made by a Participant
and/or (ii) receive a partial or full payout from the Plan. The
payout shall not exceed the lesser of the Participant's Account
Balance, calculated as if such Participant were receiving a
Termination Benefit, or the amount reasonably needed to satisfy the
Unforeseeable Financial Emergency. If, subject to the sole
discretion of the Committee, the petition for a suspension and/or
payout is approved, suspension shall take effect upon the date of
approval and any payout shall be made within 60 days of the date of
approval. The payment of any amount under this Section 4.3 shall
not be subject to the Deduction Limitation.
4.4 Withdrawal Election. A Participant (or, after a Participant's
death, his or her Beneficiary) may elect, at any time, to withdraw
all of his or her Account Balance, calculated as if there had
occurred a Termination of Employment as of the day of the election,
less a withdrawal penalty equal to 10% of such amount (the net
amount shall be referred to as the "Withdrawal Amount"). This
election can be made at any time, before or after Retirement,
Disability, death or Termination of Employment, and whether or not
the Participant (or Beneficiary) is in the process of being paid
pursuant to an installment payment schedule. If made before
Retirement, Disability or death, a Participant's Withdrawal Amount
shall be his or her Account Balance calculated as if there had
occurred a Termination of Employment as of the day of the election.
No partial withdrawals of the Withdrawal Amount shall be allowed.
The Participant (or his or her Beneficiary) shall make this
election by giving the Committee advance written notice of the
election in a form determined from time to time by the Committee.
The Participant (or his or her Beneficiary) shall be paid the
Withdrawal Amount within 60 days of his or her election. Once the
Withdrawal Amount is paid, the Participant's participation in the
Plan shall terminate and the Participant shall not be eligible to
participate in the Plan for the remainder of the Plan Year of such
election and the next Plan Year. The payment of this Withdrawal
Amount shall not be subject to the Deduction Limitation.
ARTICLE 5
Retirement Benefit
5.1 Retirement Benefit. Subject to the Deduction Limitation, a
Participant who Retires shall receive, as a Retirement Benefit, his
or her Account Balance.
5.2 Payment of Retirement Benefit. A Participant, in connection
with his or her commencement of participation in the Plan, shall
elect on an Election Form to receive the Retirement Benefit in a
lump sum or pursuant to an Quarterly Installment Method of 20, 40
or 60 quarters. The Participant may annually change his or her
election to an allowable alternative payout period by submitting a
new Election Form to the Committee, provided that any such Election
Form is submitted at least 1 year prior to the Participant's
Retirement and is accepted by the Committee in its sole discretion.
The Election Form most recently accepted by the Committee shall
govern the payout of the Retirement Benefit. If a Participant does
not make any election with respect to the payment of the Retirement
Benefit, then such benefit shall be payable in a lump sum. The
lump sum payment shall be made, or installment payments shall
commence, no later than 60 days after the last day of the Plan Year
which the Participant Retires. Any payment made shall be subject
to the Deduction Limitation.
5.3 Death Prior to Completion of Retirement Benefit. If a
Participant dies after Retirement but before the Retirement Benefit
is paid in full, the Participant's unpaid Retirement Benefit
payments shall continue and shall be paid to the Participant's
Beneficiary (a) over the remaining number of quarters and in the
same amounts as that benefit would have been paid to the
Participant had the Participant survived, or (b) in a lump sum, if
requested by the Beneficiary and allowed in the sole discretion of
the Committee, that is equal to the Participant's unpaid remaining
Account Balance.
ARTICLE 6
Pre-Retirement Survivor Benefit
6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction
Limitation, the Participant's Beneficiary shall receive a Pre-
Retirement Survivor Benefit equal to the Participant's Account
Balance if the Participant dies before he or she Retires,
experiences a Termination of Employment or suffers a Disability.
6.2 Payment of Pre-Retirement Survivor Benefit. A Participant, in
connection with his or her commencement of participation in the
Plan, shall elect on an Election Form whether the Pre-Retirement
Survivor Benefit shall be received by his or her Beneficiary in a
lump sum or pursuant to an Quarterly Installment Method of 20, 40
or 60 quarters. The Participant may annually change this election
to an allowable alternative payout period by submitting a new
Election Form to the Committee, which form must be accepted by the
Committee in its sole discretion. The Election Form most recently
accepted by the Committee prior to the Participant's death shall
govern the payout of the Participant's Pre-Retirement Survivor
Benefit. If a Participant does not make any election with respect
to the payment of the Pre-Retirement Survivor Benefit, then such
benefit shall be paid in a lump sum. Despite the foregoing, if the
Participant's Account Balance at the time of his or her death is
less than $25,000, payment of the Pre-Retirement Survivor Benefit
may be made, in the sole discretion of the Committee, in a lump sum
or pursuant to an Quarterly Installment Method of not more than 20
quarters. The lump sum payment shall be made, or installment
payments shall commence, no later than 60 days after the last day
of the Plan Year in which the Committee is provided with proof that
is satisfactory to the Committee of the Participant's death. Any
payment made shall be subject to the Deduction Limitation.
ARTICLE 7
Termination BenefitTermination Benefit
7.1 Termination Benefit. Subject to the Deduction Limitation, the
Participant shall receive a Termination Benefit, which shall be
equal to the Participant's Account Balance if a Participant
experiences a Termination of Employment prior to his or her
Retirement, death or Disability.
7.2 Payment of Termination Benefit. If the Participant's Account
Balance at the time of his or her Termination of Employment is less
than $25,000, payment of his or her Termination Benefit shall be
paid in a lump sum. If his or her Account Balance at such time is
equal to or greater than that amount, the Committee, in its sole
discretion, may cause the Termination Benefit to be paid in a lump
sum or pursuant to an Quarterly Installment Method of 20 quarters.
The lump sum payment shall be made, or installment payments shall
commence, no later than 60 days after the last day of the Plan
Quarter in which the Participant experiences the Termination of
Employment. Any payment made shall be subject to the Deduction
Limitation.
ARTICLE 8
Disability Waiver and Benefit
8.1 Disability Waiver and Benefit
(a) Waiver of Deferral. A Participant who is determined by the
Committee to be suffering from a Disability shall be (i) excused
from fulfilling that portion of the Annual Deferral Amount
commitment that would otherwise have been withheld from a
Participant's Base Annual Salary, Annual Bonus, and Annual
Commission for the Plan Year during which the Participant first
suffers a Disability and (ii) excused from fulfilling any existing
unvested Restricted Stock Amount or unexercised Stock Option Amount
commitments. During the period of Disability, the Participant
shall not be allowed to make any additional deferral elections, but
will continue to be considered a Participant for all other purposes
of this Plan.
(b) Return to Work. If a Participant returns to employment with
an Employer after a Disability ceases, the Participant may elect to
defer an Annual Deferral Amount, Stock Option Amount and Restricted
Stock Amount for the Plan Year following his or her return to
employment or service and for every Plan Year thereafter while a
Participant in the Plan; provided such deferral elections are
otherwise allowed and an Election Form is delivered to and accepted
by the Committee for each such election in accordance with
Section 3.3 above.
8.2 Continued Eligibility; Disability Benefit. A Participant
suffering a Disability shall, for benefit purposes under this Plan,
continue to be considered to be employed and shall be eligible for
the benefits provided for in Articles 4, 5, 6 or 7 in accordance
with the provisions of those Articles. Notwithstanding the above,
the Committee shall have the right to, in its sole and absolute
discretion and for purposes of this Plan only, and must in the case
of a Participant who is otherwise eligible to Retire, deem the
Participant to have experienced a Termination of Employment, or in
the case of a Participant who is eligible to Retire, to have
Retired, at any time (or in the case of a Participant who is
eligible to Retire, as soon as practicable) after such Participant
is determined to be suffering a Disability, in which case the
Participant shall receive a Disability Benefit equal to his or her
Account Balance at the time of the Committee's determination;
provided, however, that should the Participant otherwise have been
eligible to Retire, he or she shall be paid in accordance with
Article 5. The Disability Benefit shall be paid in a lump sum
within 60 days of the Committee's exercise of such right. Any
payment made shall be subject to the Deduction Limitation.
ARTICLE 9
Beneficiary Designation
9.1 Beneficiary Designation
Each Participant shall have the right, at any time, to designate
his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon
the death of a Participant. The Beneficiary designated under this
Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the
Participant participates.
9.2 Beneficiary Designation; Change; Spousal Consent. A
Participant shall designate his or her Beneficiary by completing
and signing the Beneficiary Designation Form, and returning it to
the Committee or its designated agent. A Participant shall have
the right to change a Beneficiary by completing, signing and
otherwise complying with the terms of the Beneficiary Designation
Form and the Committee's rules and procedures, as in effect from
time to time. If the Participant names someone other than his or
her spouse as a Beneficiary, a spousal consent, in the form
designated by the Committee, must be signed by that Participant's
spouse and returned to the Committee. Upon the acceptance by the
Committee of a new Beneficiary Designation Form, all Beneficiary
designations previously filed shall be canceled. The Committee
shall be entitled to rely on the last Beneficiary Designation Form
filed by the Participant and accepted by the Committee prior to his
or her death.
9.3 Acknowledgment. No designation or change in designation of a
Beneficiary shall be effective until received and acknowledged in
writing by the Committee or its designated agent.
9.4 No Beneficiary Designation. If a Participant fails to
designate a Beneficiary as provided in Sections 9.1, 9.2 and 9.3
above or, if all designated Beneficiaries predecease the
Participant or die prior to complete distribution of the
Participant's benefits, then the Participant's designated
Beneficiary shall be deemed to be his or her surviving spouse. If
the Participant has no surviving spouse, the benefits remaining
under the Plan to be paid to a Beneficiary shall be payable to the
executor or personal representative of the Participant's estate.
9.5 Doubt as to Beneficiary. If the Committee has any doubt as to
the proper Beneficiary to receive payments pursuant to this Plan,
the Committee shall have the right, exercisable in its discretion,
to cause the Participant's Employer to withhold such payments until
this matter is resolved to the Committee's satisfaction.
9.6 Discharge of Obligations. The payment of benefits under the
Plan to a Beneficiary shall fully and completely discharge all
Employers and the Committee from all further obligations under this
Plan with respect to the Participant, and that Participant's Plan
Agreement shall terminate upon such full payment of benefits.
ARTICLE 10
Leave of Absence
10.1 Paid Leave of Absence. If a Participant is authorized by the
Participant's Employer for any reason to take a paid leave of
absence from the employment of the Employer, the Participant shall
continue to be considered employed by the Employer and the Annual
Deferral Amount shall continue to be withheld during such paid
leave of absence in accordance with Section 3.3.
10.2 Unpaid Leave of Absence. If a Participant is authorized by
the Participant's Employer for any reason to take an unpaid leave
of absence from the employment of the Employer, the Participant
shall continue to be considered employed by the Employer and the
Participant shall be excused from making deferrals until the
earlier of the date the leave of absence expires or the Participant
returns to a paid employment status. Upon such expiration or
return, deferrals shall resume for the remaining portion of the
Plan Year in which the expiration or return occurs, based on the
deferral election, if any, made for that Plan Year. If no election
was made for that Plan Year, no deferral shall be withheld.
ARTICLE 11
Termination, Amendment or Modification
11.1 Termination. Although each Employer anticipates that it will
continue the Plan for an indefinite period of time, there is no
guarantee that any Employer will continue the Plan or will not
terminate the Plan at any time in the future. Accordingly, each
Employer reserves the right to discontinue its sponsorship of the
Plan and/or to terminate the Plan at any time with respect to any
or all of its participating Employees by action of its board of
directors. Upon the termination of the Plan with respect to any
Employer, the Plan Agreements of the affected Participants who are
employed by that Employer shall terminate and their Account
Balances, determined as if they had experienced a Termination of
Employment on the date of Plan termination or, if Plan termination
occurs after the date upon which a Participant was eligible to
Retire, then with respect to that Participant as if he or she had
Retired on the date of Plan termination, shall be paid to the
Participants as follows: Prior to a Change in Control, if the Plan
is terminated with respect to all of its Participants, an Employer
shall have the right, in its sole discretion, and notwithstanding
any elections made by the Participant, to pay such benefits in a
lump sum or pursuant to an Quarterly Installment Method of up to
60 quarters, with amounts credited and debited during the
installment period as provided herein. If the Plan is terminated
with respect to less than all of its Participants, an Employer
shall be required to pay such benefits in a lump sum. After a
Change in Control, the Employer shall be required to pay such
benefits in a lump sum. The termination of the Plan shall not
adversely affect any Participant or Beneficiary who has become
entitled to the payment of any benefits under the Plan as of the
date of termination; provided however, that the Employer shall have
the right to accelerate installment payments without a premium or
prepayment penalty by paying the Account Balance in a lump sum or
pursuant to an Quarterly Installment Method using fewer quarters
(provided that the present value of all payments that will have
been received by a Participant at any given point of time under the
different payment schedule shall equal or exceed the present value
of all payments that would have been received at that point in time
under the original payment schedule).
11.2 Amendment. Any Employer may, at any time, amend or modify
the Plan in whole or in part with respect to that Employer by the
action of its board of directors; provided, however, that: (i) no
amendment or modification shall be effective to decrease or
restrict the value of a Participant's Account Balance in existence
at the time the amendment or modification is made, calculated as if
the Participant had experienced a Termination of Employment as of
the effective date of the amendment or modification or, if the
amendment or modification occurs after the date upon which the
Participant was eligible to Retire, the Participant had Retired as
of the effective date of the amendment or modification, and (ii) no
amendment or modification of this Section 11.2 or Section 12.2 of
the Plan shall be effective. The amendment or modification of the
Plan shall not affect any Participant or Beneficiary who has become
entitled to the payment of benefits under the Plan as of the date
of the amendment or modification; provided, however, that the
Employer shall have the right to accelerate installment payments by
paying the Account Balance in a lump sum or pursuant to an
Quarterly Installment Method using fewer quarters (provided that
the present value of all payments that will have been received by a
Participant at any given point of time under the different payment
schedule shall equal or exceed the present value of all payments
that would have been received at that point in time under the
original payment schedule).
11.3 Plan Agreement. Despite the provisions of Sections 11.1 and
11.2 above, if a Participant's Plan Agreement contains benefits or
limitations that are not in this Plan document, the Employer may
only amend or terminate such provisions with the consent of the
Participant.
11.4 Effect of Payment. The full payment of the applicable
benefit under Articles 4, 5, 6, 7 or 8 of the Plan shall completely
discharge all obligations to a Participant and his or her
designated Beneficiaries under this Plan and the Participant's Plan
Agreement shall terminate.
ARTICLE 12
Administration
12.1 Committee Duties. Except as otherwise provided in this
Article 12, this Plan shall be administered by a Committee which
shall consist of the Board, or such committee as the Board shall
appoint. Members of the Committee may be Participants under this
Plan. The Committee shall also have the discretion and authority
to (i) make, amend, interpret, and enforce all appropriate rules
and regulations for the administration of this Plan and (ii) decide
or resolve any and all questions including interpretations of this
Plan, as may arise in connection with the Plan. Any individual
serving on the Committee who is a Participant shall not vote or act
on any matter relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to
rely on information furnished by a Participant or the Company.
12.2 Administration Upon Change In Control. For purposes of this
Plan, the Company shall be the "Administrator" at all times prior
to the occurrence of a Change in Control. Upon and after the
occurrence of a Change in Control, the "Administrator" shall be an
independent third party selected by the Trustee and approved by the
individual who, immediately prior to such event, was the Company's
Chief Executive Officer or, if not so identified, the Company's
highest ranking officer (the "Ex-CEO"). The Administrator shall
have the discretionary power to determine all questions arising in
connection with the administration of the Plan and the
interpretation of the Plan and Trust including, but not limited to
benefit entitlement determinations; provided, however, upon and
after the occurrence of a Change in Control, the Administrator
shall have no power to direct the investment of Plan or Trust
assets or select any investment manager or custodial firm for the
Plan or Trust. Upon and after the occurrence of a Change in
Control, the Company must: (1) pay all reasonable administrative
expenses and fees of the Administrator; (2) indemnify the
Administrator against any costs, expenses and liabilities
including, without limitation, attorney's fees and expenses arising
in connection with the performance of the Administrator hereunder,
except with respect to matters resulting from the gross negligence
or willful misconduct of the Administrator or its employees or
agents; and (3) supply full and timely information to the
Administrator or all matters relating to the Plan, the Trust, the
Participants and their Beneficiaries, the Account Balances of the
Participants, the date of circumstances of the Retirement,
Disability, death or Termination of Employment of the Participants,
and such other pertinent information as the Administrator may
reasonably require. Upon and after a Change in Control, the
Administrator may be terminated (and a replacement appointed) by
the Trustee only with the approval of the Ex-CEO. Upon and after a
Change in Control, the Administrator may not be terminated by the
Company.
12.3 Agents. In the administration of this Plan, the Committee
may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit (including acting through a
duly appointed representative) and may from time to time consult
with counsel who may be counsel to any Employer.
12.4 Binding Effect of Decisions. The decision or action of the
Administrator with respect to any question arising out of or in
connection with the administration, interpretation and application
of the Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all persons having
any interest in the Plan.
12.5 Indemnity of Committee. All Employers shall indemnify and
hold harmless the members of the Committee, and any Employee to
whom the duties of the Committee may be delegated, and the
Administrator against any and all claims, losses, damages, expenses
or liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct by
the Committee, any of its members, any such Employee or the
Administrator.
12.6 Employer Information. To enable the Committee and/or
Administrator to perform its functions, the Company and each
Employer shall supply full and timely information to the Committee
and/or Administrator, as the case may be, on all matters relating
to the compensation of its Participants, the date and circumstances
of the Retirement, Disability, death or Termination of Employment
of its Participants, and such other pertinent information as the
Committee or Administrator may reasonably require.
ARTICLE 13
Other Benefits and Agreements
13.1 Coordination with Other Benefits. The benefits provided for a
Participant and Participant's Beneficiary under the Plan are in
addition to any other benefits available to such Participant under
any other plan or program for employees of the Participant's
Employer. The Plan shall supplement and shall not supersede,
modify or amend any other such plan or program except as may
otherwise be expressly provided.
ARTICLE 14
Claims Procedures
14.1 Presentation of Claim. Any Participant or Beneficiary of a
deceased Participant (such Participant or Beneficiary being
referred to below as a "Claimant") may deliver to the Committee a
written claim for a determination with respect to the amounts
distributable to such Claimant from the Plan. If such a claim
relates to the contents of a notice received by the Claimant, the
claim must be made within 60 days after such notice was received by
the Claimant. All other claims must be made within 180 days of the
date on which the event that caused the claim to arise occurred.
The claim must state with particularity the determination desired
by the Claimant.
14.2 Notification of Decision. The Committee shall consider a
Claimant's claim within a reasonable time, and shall notify the
Claimant in writing:
(a) that the Claimant's requested determination has been made, and
that the claim has been allowed in full; or
(b) that the Committee has reached a conclusion contrary, in whole
or in part, to the Claimant's requested determination, and such
notice must set forth in a manner calculated to be understood by
the Claimant:
(i) the specific reason(s) for the denial of the claim, or any part
of it;
(ii) specific reference(s) to pertinent provisions of the Plan upon
which such denial was based;
(iii) a description of any additional material or information
necessary for the Claimant to perfect the claim, and an explanation
of why such material or information is necessary; and
(iv) an explanation of the claim review procedure set forth in
Section 14.3 below.
14.3 Review of a Denied Claim. Within 60 days after receiving a
notice from the Committee that a claim has been denied, in whole or
in part, a Claimant (or the Claimant's duly authorized
representative) may file with the Committee a written request for a
review of the denial of the claim. Thereafter, but not later than
30 days after the review procedure began, the Claimant (or the
Claimant's duly authorized representative):
(c) may review pertinent documents;
(d) may submit written comments or other documents; and/or
(e) may request a hearing, which the Committee, in its sole
discretion, may grant.
14.4 Decision on Review. The Committee shall render its decision
on review promptly, and not later than 60 days after the filing of
a written request for review of the denial, unless a hearing is
held or other special circumstances require additional time, in
which case the Committee's decision must be rendered within
120 days after such date. Such decision must be written in a
manner calculated to be understood by the Claimant, and it must
contain:
(f) specific reasons for the decision;
(g) specific reference(s) to the pertinent Plan provisions upon
which the decision was based; and
(h) such other matters as the Committee deems relevant.
14.5 Legal Action. A Claimant's compliance with the foregoing
provisions of this Article 14 is a mandatory prerequisite to a
Claimant's right to commence any legal action with respect to any
claim for benefits under this Plan.
ARTICLE 15
Trust
15.1 Establishment of the Trust. The Company shall establish the
Trust, and each Employer shall at least annually transfer over to
the Trust such assets as the Employer determines, in its sole
discretion, are necessary to provide, on a present value basis, for
its respective future liabilities created with respect to the
Annual Deferral Amounts, Annual Company Contribution Amounts,
Company Matching Amounts, Annual Stock Option Amounts and Annual
Restricted Stock Amounts for such Employer's Participants for all
periods prior to the transfer, as well as any debits and credits to
the Participants' Account Balances for all periods prior to the
transfer, taking into consideration the value of the assets in the
trust at the time of the transfer.
15.2 Interrelationship of the Plan and the Trust. The provisions
of the Plan and the Plan Agreement shall govern the rights of a
Participant to receive distributions pursuant to the Plan. The
provisions of the Trust shall govern the rights of the Employers,
Participants and the creditors of the Employers to the assets
transferred to the Trust. Each Employer shall at all times remain
liable to carry out its obligations under the Plan.
15.3 Distributions From the Trust. Each Employer's obligations
under the Plan may be satisfied with Trust assets distributed
pursuant to the terms of the Trust, and any such distribution shall
reduce the Employer's obligations under this Plan.
15.4 Company Stock Transferred to the Trust. Notwithstanding any
other provision of this Plan or the Trust: (i) if Trust assets are
distributed to a Participant in a distribution which reduces the
Participant's Stock Option Account balance under this Plan, such
distribution must be made in the form of Company Stock; and (ii)
any Company Stock transferred to the Trust in accordance with
Sections 3.7 or 3.8 may not be otherwise distributed or disposed of
by the Trustee until at least 6 months after the date such Company
Stock is transferred to the Trust.
ARTICLE 16
Miscellaneous
16.1 Status of Plan. The Plan is intended to be a plan that is
not qualified within the meaning of Code Section 401(a) and that
"is unfunded and is maintained by an employer primarily for the
purpose of providing deferred compensation for a select group of
management or highly compensated employee" within the meaning of
ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan shall be
administered and interpreted to the extent possible in a manner
consistent with that intent.
16.2 Unsecured General Creditor. Participants and their
Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interests or claims in any property or assets of
an Employer. For purposes of the payment of benefits under this
Plan, any and all of an Employer's assets shall be, and remain, the
general, unpledged unrestricted assets of the Employer. An
Employer's obligation under the Plan shall be merely that of an
unfunded and unsecured promise to pay money in the future.
16.3 Employer's Liability. An Employer's liability for the
payment of benefits shall be defined only by the Plan and the Plan
Agreement, as entered into between the Employer and a Participant.
An Employer shall have no obligation to a Participant under the
Plan except as expressly provided in the Plan and his or her Plan
Agreement.
16.4 Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, transfer, hypothecate,
alienate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all
rights to which are expressly declared to be, unassignable and non-
transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure, attachment, garnishment or
sequestration for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, be
transferable by operation of law in the event of a Participant's or
any other person's bankruptcy or insolvency or be transferable to a
spouse as a result of a property settlement or otherwise.
16.5 Not a Contract of Employment. The terms and conditions of
this Plan shall not be deemed to constitute a contract of
employment between any Employer and the Participant. Such
employment is hereby acknowledged to be an "at will" employment
relationship that can be terminated at any time for any reason, or
no reason, with or without cause, and with or without notice,
unless expressly provided in a written employment agreement.
Nothing in this Plan shall be deemed to give a Participant the
right to be retained in the service of any Employer as an Employee
or to interfere with the right of any Employer to discipline or
discharge the Participant at any time.
16.6 Furnishing Information. A Participant or his or her
Beneficiary will cooperate with the Committee by furnishing any and
all information requested by the Committee and take such other
actions as may be requested in order to facilitate the
administration of the Plan and the payments of benefits hereunder,
including but not limited to taking such physical examinations as
the Committee may deem necessary.
16.7 Terms. Whenever any words are used herein in the masculine,
they shall be construed as though they were in the feminine in all
cases where they would so apply; and whenever any words are used
herein in the singular or in the plural, they shall be construed as
though they were used in the plural or the singular, as the case
may be, in all cases where they would so apply.
16.8 Captions. The captions of the articles, sections and
paragraphs of this Plan are for convenience only and shall not
control or affect the meaning or construction of any of its
provisions.
16.9 Governing Law. Subject to ERISA, the provisions of this Plan
shall be construed and interpreted according to the internal laws
of the State of New Jersey without regard to its conflicts of laws
principles.
16.10 Notice. Any notice or filing required or permitted to be
given to the Committee under this Plan shall be sufficient if in
writing and hand-delivered, or sent by registered or certified
mail, to the address below:
NUI Corporation
One Elizabethtown Plaza
Union, New Jersey 07083
Attn: Bob Holley
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark on
the receipt for registration or certification.
Any notice or filing required or permitted to be given to a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by mail, to the last known address of the
Participant.
16.11 Successors. The provisions of this Plan shall bind and
inure to the benefit of the Participant's Employer and its
successors and assigns and the Participant and the Participant's
designated Beneficiaries.
16.2 Spouse's Interest. The interest in the benefits hereunder of
a spouse of a Participant who has predeceased the Participant shall
automatically pass to the Participant and shall not be transferable
by such spouse in any manner, including but not limited to such
spouse's will, nor shall such interest pass under the laws of
intestate succession.
16.13 Validity. In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or invalidity
shall not affect the remaining parts hereof, but this Plan shall be
construed and enforced as if such illegal or invalid provision had
never been inserted herein.
16.4 Incompetent. If the Committee determines in its discretion
that a benefit under this Plan is to be paid to a minor, a person
declared incompetent or to a person incapable of handling the
disposition of that person's property, the Committee may direct
payment of such benefit to the guardian, legal representative or
person having the care and custody of such minor, incompetent or
incapable person. The Committee may require proof of minority,
incompetence, incapacity or guardianship, as it may deem
appropriate prior to distribution of the benefit. Any payment of a
benefit shall be a payment for the account of the Participant and
the Participant's Beneficiary, as the case may be, and shall be a
complete discharge of any liability under the Plan for such payment
amount.
16.15 Court Order. The Committee is authorized to make any
payments directed by court order in any action in which the Plan or
the Committee has been named as a party. In addition, if a court
determines that a spouse or former spouse of a Participant has an
interest in the Participant's benefits under the Plan in connection
with a property settlement or otherwise, the Committee, in its sole
discretion, shall have the right, notwithstanding any election made
by a Participant, to immediately distribute the spouse's or former
spouse's interest in the Participant's benefits under the Plan to
that spouse or former spouse.
16.6 Distribution in the Event of Taxation.
(a) In General. If, for any reason, all or any portion of a
Participant's benefits under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the
Committee before a Change in Control, or the trustee of the Trust
after a Change in Control, for a distribution of that portion of
his or her benefit that has become taxable. Upon the grant of such
a petition, which grant shall not be unreasonably withheld (and,
after a Change in Control, shall be granted), a Participant's
Employer shall distribute to the Participant immediately available
funds in an amount equal to the taxable portion of his or her
benefit (which amount shall not exceed a Participant's unpaid
Account Balance under the Plan). If the petition is granted, the
tax liability distribution shall be made within 90 days of the date
when the Participant's petition is granted. Such a distribution
shall affect and reduce the benefits to be paid under this Plan.
(b) Trust. If the Trust terminates in accordance with Section
3.6(e) of the Trust and benefits are distributed from the Trust to
a Participant in accordance with that Section, the Participant's
benefits under this Plan shall be reduced to the extent of such
distributions.
16.17 Insurance. The Employers, on their own behalf or on behalf
of the trustee of the Trust, and, in their sole discretion, may
apply for and procure insurance on the life of the Participant, in
such amounts and in such forms as the Trust may choose. The
Employers or the trustee of the Trust, as the case may be, shall be
the sole owner and beneficiary of any such insurance. The
Participant shall have no interest whatsoever in any such policy or
policies, and at the request of the Employers shall submit to
medical examinations and supply such information and execute such
documents as may be required by the insurance company or companies
to whom the Employers have applied for insurance.
16.18 Legal Fees To Enforce Rights After Change in Control. The
Company and each Employer is aware that upon the occurrence of a
Change in Control, the Board or the board of directors of a
Participant's Employer (which might then be composed of new
members) or a shareholder of the Company or the Participant's
Employer, or of any successor corporation might then cause or
attempt to cause the Company, the Participant's Employer or such
successor to refuse to comply with its obligations under the Plan
and might cause or attempt to cause the Company or the
Participant's Employer to institute, or may institute, litigation
seeking to deny Participants the benefits intended under the Plan.
In these circumstances, the purpose of the Plan could be
frustrated. Accordingly, if, following a Change in Control, it
should appear to any Participant that the Company, the
Participant's Employer or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement
thereunder or, if the Company, such Employer or any other person
takes any action to declare the Plan void or unenforceable or
institutes any litigation or other legal action designed to deny,
diminish or to recover from any Participant the benefits intended
to be provided, then the Company and the Participant's Employer
irrevocably authorize such Participant to retain counsel of his or
her choice at the expense of the Company and the Participant's
Employer (who shall be jointly and severally liable) to represent
such Participant in connection with the initiation or defense of
any litigation or other legal action, whether by or against the
Company, the Participant's Employer or any director, officer,
shareholder or other person affiliated with the Company, the
Participant's Employer or any successor thereto in any
jurisdiction.
IN WITNESS WHEREOF, the Company has signed this Plan document as of
__________, 199_.
"Company"
NUI Corporation, a New Jersey corporation
By: __________________________________
Title: __________________________________
EX-10.49
Contract No.010032
FT SERVICE AGREEMENT
THIS AGREEMENT entered into this 1st day of November, 1998,
by and between Eastern Shore Natural Gas Company, a corporation of
the State of Delaware (herein called "Seller"), and Elkton Gas
Division of NUI Corporation (herein called "Buyer").
WITNESSETH
WHEREAS, Buyer desires to obtain Firm Transportation Service
from Seller and Seller is willing to provide Firm Transportation
Service for Buyer; and
WHEREAS, such service will be provided by Seller for Buyer in
accordance with the terms hereof.
NOW THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the sufficiency
of which is hereby acknowledged, Seller and Buyer do covenant and
agree as follows:
ARTICLE I
Definitions
In addition to the definitions incorporated herein through
Seller's Rate Schedule FT, the following terms when used herein
shall have the meanings set forth below:
1.1 The term "FERC" shall mean the Federal Energy Regulatory
Commission or any successor regulatory agency or body which has
authority to regulate the rates and/or services of Seller.
1.2 The term "Rate Schedule FT" shall mean Seller's Rate
Schedule FT and the General Terms and Conditions of Seller's FERC
Gas Tariff, as filed with the FERC and as changed and adjusted
from time to time by Seller in accordance with Section 4.2 hereof
or in compliance with any final FERC order affecting such Rate
Schedule and/or General Terms and Conditions.
ARTICLE II
Quantity
2.1 The Maximum Daily Transportation Quantity ("MDTQ") shall
be set forth on Exhibit "B" attached hereto. The applicable MDTQ
shall be the largest daily quantity of gas, expressed in
dekatherms ("dt"), that Seller is obligated to transport and make
available for delivery for the account of Buyer under this Service
Agreement on any one Gas Day.
2.2 Buyer may tender natural gas for transportation to Seller
on any Gas Day up to the MDTQ, plus the Fuel Retention Quantity as
defined in Section 31 of the General Terms and Conditions of
Seller's FERC Gas Tariff. Seller agrees to receive the aggregate
of the quantities of natural gas that Buyer tenders for
transportation, plus the Fuel Retention Quantity, at the Point(s)
of Receipt, up to the Maximum Daily Receipt Obligation ("MDRO")
specified for each Point of Receipt as set forth on Exhibit "A"
attached hereto, and to transport and make available for delivery
for the account of Buyer at each Delivery Point Area ("DPA")
specified on Exhibit "B" attached hereto, quantities of natural
gas up to the amount scheduled by Seller, less the Fuel Retention
Quantity, and Buyer agrees to accept or cause acceptance of such
delivery by Seller.
ARTICLE III
Payment and Rights of Termination
3.1 Upon the commencement of service hereunder, Buyer shall
pay Seller, for all service rendered hereunder, the rates
established under Buyer's Rate Schedule FT as filed with the FERC
and as said Rate Schedule may hereafter be legally amended or
superseded.
3.2 In the event Buyer fails to pay for the service provided
under this Agreement or otherwise fails to meet Seller's standards
for creditworthiness, Seller shall have the right to terminate
this Agreement pursuant to the conditions set forth in Section 11,
Section 18 and Section 19 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
3.3 In the event Buyer and Seller mutually agree to a
negotiated rate(s) and/or terms of service hereunder (if
authorized by the Commission), provisions governing such
negotiated rate (including surcharges) and terms shall be set
forth on Exhibit C to this Agreement.
ARTICLE IV
Rights to Amend Rates and Terms and Conditions of Service
4.1 This Agreement in all respects shall be and remain
subject to the provisions of said Rate Schedule FT and the
provisions of the General Terms and Conditions of Seller's FERC
Gas Tariff (as the same may hereafter be legally amended or
superseded), all of which are made a part hereof by this
reference.
4.2 Seller shall have the unilateral right to file with the
appropriate regulatory authority and seek to make changes in: (a)
the rates and charges applicable to its Rate Schedule FT; (b) Rate
Schedule FT including the Form of Service Agreement and the
existing Service Agreement pursuant to which this service is
rendered; and/or (c) any provisions of the General Terms and
Conditions of Seller's FERC Gas Tariff applicable to Rate Schedule
FT, provided however, Seller shall not have the right, without the
consent of Buyer, unless required to do so pursuant to applicable
laws or regulations, to make any filing pursuant to Section 4 of
the Natural Gas Act to reduce the firm nature of the service
provided under said Rate Schedule or the provisions of Exhibits
"A", "B" and "C". Seller agrees that Buyer may protest or contest
the aforementioned filings, or seek authorization from duly
constituted regulatory authorities for such adjustment of Seller's
existing FERC Gas Tariff as may be found necessary in order to
assure that the provisions in (a), (b), or (c) above are just and
reasonable.
ARTICLE V
Term of Agreement and Commencement of Service
5.1 The primary term of this Agreement shall commence on
November 1, 1998 and shall continue in effect until October 31,
2008. Termination or renewal of this Agreement shall occur in
accordance with the provisions of Section 13 of the General Terms
and Conditions of Seller's FERC Gas Tariff.
5.2 Any portion of this Agreement necessary to correct or
"cash out" imbalances under this Agreement, pursuant to the
General Terms and Conditions of Seller's FERC Gas Tariff, shall
survive the other parts of this Agreement until such time as such
balancing has been accomplished.
ARTICLE VI
Point(s) of Receipt and Delivery and Maximum Daily Quantities
6.1 The Primary Point(s) of Receipt and MDRO for each
Primary Point of Receipt, for all gas delivered for the account of
Buyer into Seller's pipeline system under this Agreement, shall be
at the Point(s) of Receipt on Seller's pipeline system as set
forth on Exhibit "A" attached hereto.
6.2 The Primary Delivery Point Area(s) ("DPA") and Maximum
Daily Delivery Obligation ("MDDO") for each DPA for all gas made
available for delivery by Seller to Buyer, or for the account of
Buyer, under this Agreement shall be as set forth on Exhibit "B"
attached hereto. Exhibit "B" also includes the Maximum Hourly
Quantity ("MHQ") for each DPA as defined in Section 20 of the
General Terms and Conditions of Seller's FERC Gas Tariff.
ARTICLE VII
Notices and Payments
7.1 All notices and communications with respect to this
Agreement shall be in writing and shall be considered as duly
conveyed when sent to the addresses stated below or at any other
such address as either Seller or 8uyer may hereafter designate in
writing in accordance with the applicable provisions of Section 8
of the General Terms and Conditions of Seller's FERC Gas Tariff.
Seller: Eastern Shore Natural Gas Company
Post Office Box 1769
Dover, Delaware 19903-1769
Attention: Director of Customer Services
Buyer: Elkton Gas Division of NUI Corporation
550 Route 202-206
P.O. Box 760
Bedminster, New Jersey 07921-0760
Attention: Contract Administration
7.2 All payments for service provided under this Agreement
shall be by wire transfer of funds and shall be directed to the
address stated below:
Eastern Shore Natural Gas Company
PNC Bank - Wilmington, DE
Account No. 5684278110
ABA No. 031100089
ARTICLE VIII
Facilities
8.1 To the extent that construction of facilities is
necessary to provide service under this Service Agreement, such
construction, including payment for the facilities, shall occur in
accordance with Section 12 of the General Terms and Conditions of
Seller's FERC Gas Tariff.
ARTICLE IX
Regulatory Authorizations and Approvals
9.1 Seller's obligation to provide service is conditioned
upon receipt and acceptance of any necessary regulatory
authorization to provide Firm Transportation Service for Buyer in
accordance with the terms of Rate Schedule FT, this Service
Agreement and the General Terms and Conditions of Seller's FERC
Gas Tariff. Buyer agrees to reimburse Seller for all reporting
and/or filing fees incurred by Seller in providing service under
this Service Agreement.
ARTICLE X
Pressures
10.1 The quantities of gas delivered or caused to be
delivered by Buyer to Seller hereunder shall be delivered into
Seller's pipeline system at a pressure sufficient to enter
Seller's system, but in no event shall such gas be delivered at a
pressure exceeding the maximum authorized operating pressure or
such other pressure as Seller permits at the Point(s) of Receipt.
ARTICLE XI
Miscellaneous
11.1 This Agreement shall bind and benefit the successors and
assigns of the respective parties hereto; provided however,
neither party shall assign this Agreement or any of its rights or
obligations hereunder without first obtaining the written consent
of the other party.
11.2 No waiver by either party of any one or more defaults by
the other in the performance of any provisions of this Agreement
shall operate or be construed as a waiver of any future defaults
of a like or different character.
11.3 This Agreement includes Exhibits "A", "B" and "C", which
are incorporated fully herein and made a part hereof.
11.4 Modifications to this Agreement shall not become
effective except by execution of an amendment thereto.
11.5 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without
recourse to the law governing conflicts of laws, and to all
present and future valid laws with respect to the subject matter,
including present and future orders, rules and regulations of duly
constituted governmental authorities.
ARTICLE XII
Superseding Prior Service Agreements
12.1 This Agreement, on its effective date, supersedes and
cancels the following Service Agreement(s) between Seller and
Buyer: None
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers or
representatives effective as of the date first written above.
SELLER BUYER
EASTERN SHORE NATURAL GAS COMPANY ELKTON GAS DIVISION OF
NUI CORPORATION
By: /S/ STEPHEN C. THOMPSON By: /S/ THOMAS E. SMITH
Title: President Title: Director, Energy
Planning
(To be attested by the Corporate Secretary
if not signed by an officer of the company)
Attested By: Attested By:Lorraine Gayga
Title: Title: Assistant Corporate
Secretary
Date: Date:
EXHIBIT NO. 12
NUI CORPORATION AND SUBSIDIARIES
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in thousands)
Year Ended September 30,
1999 1998 1997 1996 1995
Income from
continuing
operations before $41,718 $21,024 $30,172 $23,040 $ 8,644
income taxes
Less:
Adjustment related
to equity (631) (402) (2,317) -- --
investments
Add:
Interest element of
rentals charged to
income (a) 3,144 3,239 3,299 2,930 3,220
Interest expense 21,836 20,496 21,374 19,808 20,032
------- ------- ------- ------- -------
Earnings as defined $66,067 $44,357 $52,528 $45,782 $31,896
======= ======= ======= ======= =======
Interest expense 21,836 20,496 21,374 19,808 19,814
Capitalized 83 272 186 150 218
interest
Interest element of
rentals charged to
income (a) 3,144 3,239 3,299 2,930 3,220
------- ------- ------- ------- -------
Fixed charges as
defined $25,063 $24,007 $24,859 $22,888 $23,252
======= ======= ======= ======= =======
Consolidated ratio
of 2.64 1.85 2.11 2.00 1.37
earnings to fixed
charges
------- ------- ------- ------- -------
(a) Includes the interest element of rentals where
determinable plus 1/3 of rental expense where no readily
defined interest element can be determined.
EXHIBIT NO. 21
SUBSIDIARIES OF NUI CORPORATION
NUI Capital Corp. (a Florida Corporation) is a wholly-
owned subsidiary of NUI Corporation.
NUI Energy, Inc. (a Delaware Corporation), NUI Energy
Brokers, Inc. (a Delaware Corporation), Utility Business
Services, Inc. (a New Jersey Corporation), NUI Environmental
Group, Inc. (a New Jersey Corporation), NUI Energy Solutions
Inc. (a New Jersey Corporation), NUI Sales Management, Inc.
(a Delaware Corporation), NUI International, Inc. (a
Delaware Corporation) and International Telephone Group,
Inc. (a New Jersey Corporation) are wholly-owned
subsidiaries of NUI Capital Corp.
NUI/Caritrade International, L.L.C. (a Delaware Limited
Liability Company) is a wholly-owned subsidiary of NUI
International, Inc.
EXHIBIT NO. 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference of our report dated November 9,
1999, included in the Form 10-K, into the Company's
previously filed Registration Statements File No. 33-56509
relating to Amendment No. 1 to Form S-3 Registration
Statement, File No. 33-51459 relating to NUI Direct, File
No. 33-57183 relating to the Savings and Investment Plan,
File No. 33-24169 relating to the 1988 Stock Plan, File No.
333-02425 relating to the 1996 Stock Option and Stock Award
Plan, File No. 333-02421 relating to the Employee Stock
Purchase Plan, File No. 333-02423 relating to the 1996
Director Stock Purchase Plan, and File No. 333-92817
relating to Form S-3 Registration Statement.
ARTHUR ANDERSEN LLP
New York, New York
December 20, 1999
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