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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1994 Commission file number 1-8359
NEW JERSEY RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2376465
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
1415 Wyckoff Road, Wall, New Jersey - 07719 908-938-1480
(Address of principal executive offices)
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act
COMMON STOCK - $2.50 PAR VALUE NEW YORK STOCK EXCHANGE
(Title of each class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12 (g) of the Act
None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES: X No:
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
YES: No: X
The aggregate market value of the Registrant's Common Stock held by
non-affiliates was $395,577,803 based on the closing price of $22.875 per share
on December 1, 1994.
The number of shares outstanding of $2.50 par value Common Stock as of December
1, 1994 was 17,438,210.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's 1994 Annual Report to Stockholders are incorporated
by reference into Part I and Part II of this report.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders to be held March 8, 1995, are incorporated by reference into
Part I and Part III of this report.
TABLE OF CONTENTS
PART I Page
----
Item 1 - Business 1
Business Segments
New Jersey Natural Gas Company
General 1
Throughput 2
Seasonality of Gas Revenues 3
Gas Supply 3
Regulation and Rates 5
Environment 8
Franchises 8
Competition 9
Paradigm Power, Inc. 9
NJR Energy Corporation 9
Commercial Realty & Resources Corp. 10
Employee Relations 12
Executive Officers of the Registrant 12
Item 2 - Properties 14
Item 3 - Legal Proceedings 16
Item 4 - Submission of Matters to a Vote of Security Holders 21
PART II
Item 5 - Market for the Registrant's Common Stock and Related
Stockholder Matters 22
Item 6 - Selected Financial Data 22
Item 7 - Management's Discussion and Analysis of Financial
Condidon and Results of Operations 22
Item 8 - Financial Statements and Supplementary Data 22
Item 9 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 22
PART III
Items 10, 11, 12, and 13 22
PART IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K 23
Index to Financial Statement Schedules 24
Signatures 31
Report of Independent Public Accountants 32
Consent of Independent Public Accountants 32
Exhibit Index 33
1
PART I
ITEM 1. BUSINESS
New Jersey Resources Corporation (the Company or NJR) is a New Jersey
corporation formed in 1982 pursuant to a corporate reorganization. The Company
is an energy holding company and its subsidiaries are engaged in natural gas
distribution, natural gas-fueled cogeneration and independent power production,
oil and natural gas development, production and transportation and commercial
real estate development as follows:
New Jersey Natural Gas Company (NJNG), a public utility that distributes
natural gas to more than 340,000 residential, commercial and industrial
customers throughout virtually all of Monmouth and Ocean counties, and parts of
Morris and Middlesex counties in New Jersey;
Paradigm Resources Corporation, a sub-holding company formed in 1992 to
better segregate its non-regulated subsidiaries, which include:
Paradigm Power, Inc. (PPI), which will develop and invest in natural
gas-fueled cogeneration and independent power production projects and its
subsidiaries, Lighthouse One, Inc. and Lighthouse II, Inc.;
NJR Energy Corporation (NJR Energy), a participant in oil and natural gas
development, production, transportation, storage and other energy related
ventures in various locations in the United States through its subsidiaries, New
Jersey Natural Resources Company (NJNR), NJNR Pipeline Company (Pipeline), NJR
Storage Corporation (Storage), which was formed in December 1994, Natural
Resources Compressor Company (Compressor) and NJRE Operating Company (NJRE
Operating); and
Commercial Realty & Resources Corp. (CR&R), which develops and owns
commercial office and mixed-use commercial/industrial real estate projects
located in New Jersey.
The Company is an exempt holding company under Section 3(a)(1) of the Public
Utility Holding Company Act of 1935 (PUHCA).
BUSINESS SEGMENTS
See Note 10 to the Consolidated Financial Statements - Business Segment Data
in the Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for business
segment financial information.
NEW JERSEY NATURAL GAS COMPANY
General
NJNG provides natural gas to more than 340,000 customers. Its service
territory encompasses
2
1,436 square miles, covering 104 municipalities with an estimated population of
1.3 million.
NJNG's service territory is primarily suburban, with a wide range of cultural
and recreational activities, highlighted by approximately 100 miles of New
Jersey seacoast. NJNG's service territory is in proximity to New York,
Philadelphia and the metropolitan areas of northern New Jersey and is accessible
through a network of major roadways and mass transportation. These factors have
contributed to NJNG adding 11,222, 9,306 and 7,907 new customers in 1994, 1993
and 1992, respectively. This growth rate of more than 3% is expected to continue
with projected additions of 60,700 new customers over the next five years. See
Liquidity and Capital Resources-NJNG in the Company's 1994 Annual Report, filed
as Exhibit 13-1 hereto, for a discussion of NJNG's projected capital expenditure
program associated with this growth in 1995 and 1996.
In assessing the potential for future growth in its service area, NJNG uses
information derived from county and municipal planning boards which describes
housing development in various stages of approval. In addition, builders in
NJNG's service area are surveyed to determine their development plans for future
time periods. Finally, NJNG uses information concerning its service territory
and projected population growth rates from a study prepared by outside
consultants. In addition to customer growth through new construction, NJNG's
business strategy includes aggressively pursuing conversions from other fuels,
such as oil. It is estimated that approximately 40% of NJNG's projected customer
growth will consist of conversions.
In order to lower its overall cost of gas and balance its demand profile,
NJNG also plans to pursue off-system sales and non-peak sales, such as natural
gas-fueled electric generating projects.
Throughput
For the fiscal year ended September 30, 1994, operating revenues and
throughput by customer class were as follows:
Throughput
(Thousands) Operating Revenues (Thousands of Therms)
- - ----------- ------------------- ---------------------
Residential ............................................. $308,196 64% 385,144 37%
Commercial, industrial and other ........................ 87,958 18 119,343 11
Firm transportation ..................................... 255 1 868 1
------- -- ------- --
Total firm .............................................. 396,409 83 505,355 49
Interruptible and agency ................................ 9,431 2 58,698 5
JCP&L and PSE&G ......................................... 6,214 1 22,985 2
------- ------- --
Total system ............................................ 412,054 86 587,038 56
Off system .............................................. 68,267 14 467,275 44
------- -- ------- --
Total .................................................. $480,321 100% 1,054,313 100%
======== === ========= ===
See Results of Consolidated Operations - Utility Operations in the Company's
1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of gas and
transportation sales. Also see
3
NJNG Operating Statistics in the Company's 1994 Annual Report, filed as Exhibit
13-1 hereto, for information on operating revenues and throughput for the past
six years. During this period, no single customer represented more than 10% of
operating revenues.
Seasonality of Gas Revenues
- - ---------------------------
As a result of the heat-sensitive nature of NJNG's residential customer base,
therm sales are largely affected by weather conditions. Specifically, customer
demand substantially increases during the winter months when natural gas is used
for heating purposes. See Liquidity and Capital Resources - NJNG in the
Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of
the effect of seasonality on cash flow.
The impact of weather on the level and timing of NJNG's revenues and cash
flows is affected by a weather-normalization clause in its tariff which became
effective for two years on an experimental basis in October 1992. NJNG received
approval from the New Jersey Board of Public Utilities (the BPU) in October 1994
to continue the clause on an interim basis pending a final BPU order. The
weather-normalization clause provides for a revenue adjustment if the weather
varies by more than one-half of 1% from the ten-year average. The accumulated
adjustment from one heating season (i.e., October-April) will be billed or
credited to customers in the subsequent heating season. See Note 7 to the
Consolidated Financial Statements - Regulatory Issues in the Company's 1994
Annual Report, filed as Exhibit 13-1 hereto, for additional information with
regard to the weather-normalization clause.
Gas Supply
The following table sets forth the volumes of natural gas purchased by NJNG
for the fiscal years indicated and the average cost per therm for each fiscal
year:
Years Ended September 30,
-------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
(Thousands of Therms)
Alberta Northeast 146,927 152,498 76,612 -- --
Boundary 39,155 39,177 31,834 19,434 30,520
CNG 7,368 633 37,432 147 27,600
Columbia 159 6,346 9,938 -- --
Texas Eastern -- 15,622 131,046 144,592 183,750
Carnegie -- 91,160 60,256 30,270 26,640
National Fuel -- 1,352 3,191 8,376 8,370
Algonquin -- 2,528 2,999 7,525 7,270
-------- -------- -------- -------- --------
Federally-regulated supplies 193,609 309,316 353,308 210,344 284,150
Unbundled supplies 652,795 456,142 293,540 310,226 244,380
-------- -------- -------- -------- --------
Total 846,404 765,458 646,848 520,570 528,530
======== ======== ======== ======== ========
Average cost/therm $ .33 $ .36 $ .33 $ .35 $ .34
======== ======== ======== ======== ========
4
A) Firm Natural Gas Supplies & Capacity
Due to the results of Federal Energy Regulatory Commission (FERC) Orders 636,
636A and 636B (collectively, Order 636), NJNG's portfolio of supplies and
capacity has changed significantly. NJNG's pipeline suppliers have "unbundled"
their sales service from their transportation service. All of NJNG's past
"bundled" suppliers have made the decision to no longer provide a sales service,
but will transport only. This has required NJNG to evaluate separately gas
purchasing and transportation.
A number of NJNG's purchase contracts which were federally regulated and
executed before Order 636 became effective were separate from transportation
contracts and therefore unaffected by Order 636. These significant suppliers and
their respective contract expiration dates are as follows: Alberta Northeast Gas
Limited (2007) and Boundary Gas, Inc. (2003). See Item 3 - Legal Proceedings
Carnegie for a discussion of the early termination of a contract with Carnegie
Natural Gas Company.
In order to deliver the above supplies, NJNG maintains capacity with its
traditional pipeline connections and has also added a number of new capacity
agreements with additional pipelines through the Order 636 unbundling process.
Significant capacity agreements and their respective contract termination dates
that provide transportation from the supply area to our market area are as
follows: Texas Eastern Transmission Corporation (1999), Texas Gas Transmission
Corporation (2000), Tennessee Gas Pipeline (2003) and Iroquois Pipeline (2007).
These four pipelines have a daily deliverability of 247,000 Dths, or an annual
capacity of 90 Bcf.
In addition to the above contracts, NJNG has storage and transportation
contracts that provide additional daily deliverability of 219,000 Dths from
storage fields in Pennsylvania to our market area. The significant storage
agreements and their respective contract expiration dates are as follows: Texas
Eastern Transmission Corporation (2000) and CNG Transmission Corporation (2000).
The "Unbundled" category in the preceding table consists of gas purchased
under monthly, short-term (up to six months) and long-term (over six months)
contracts that are priced at market levels and have been delivered under
separate agreements from pipeline bundled services. These supplies have been
used to replace the more expensive "bundled" pipeline supplies and have reduced
NJNG's average cost of gas. NJNG negotiates with a number of suppliers for these
non-federally regulated gas supplies under a number of different contract terms
and durations. In 1994, NJNG purchased gas from 27 suppliers under contracts
ranging from one month to seventeen years. NJNG believes that its supply
available under long-term contracts is adequate to meet its expected firm
load over the next several years.
B) Transportation
NJNG's ability to further diversify its firm suppliers and purchase
additional supplies will be
5
dependent upon the availability of transportation on the interstate pipeline
system and the FERC regulations that govern interstate transportation.
Presently, NJNG connects with all five interstate pipelines serving New Jersey.
See Regulation and Rates - Federal below for a discussion of FERC Order 636.
C) Peaking Supply
To meet its increased winter peak day demand, NJNG purchases storage services
from various suppliers and maintains two liquefied natural gas (LNG) facilities.
See Item 2-Properties-NJNG for additional information regarding the storage
facilities. NJNG presently has LNG storage deliverability of 165,000 Dths per
day which represents approximately 26% of its peak day sendout.
D) Summary
NJNG expects to be able to meet the current level of gas requirements of its
existing and projected firm customers for the foreseeable future. Nonetheless,
NJNG's ability to provide supply for its present and projected sales will depend
upon its suppliers' ability to obtain and deliver additional supplies of natural
gas, as well as its ability to acquire supplies directly from new sources.
Factors beyond the control of NJNG and its suppliers may affect its ability to
obtain such supplies. These factors include other parties having control over
the drilling of new wells, competition for the acquisition of gas, regulatory
policies (e.g., FERC Orders 436, 451, 500, 636, 636A and 636B), priority
allocations, price limitations imposed by federal and state regulatory agencies,
as well as the availability of Canadian reserves for export to the United
States.
Regulation and Rates
- - --------------------
A) State
NJNG is subject to the jurisdiction of the BPU with respect to a wide range
of matters, such as rates, the issuance of securities, the adequacy of service,
the manner of keeping its accounts and records, sufficiency of gas supply and
the sale or encumbrance of its properties.
Over the last five years, NJNG has been granted four increases in its base
tariff rates, and three increases and one decrease in its Levelized Gas
Adjustment clause (LGA). Through its LGA, which is reviewed annually, NJNG
recovers purchased gas costs that are in excess of the level included in its
base rates. LGA recoveries do not include an element of profit and, therefore,
have no effect on earnings.
6
The following table sets forth information with respect to these rate changes:
Annualized Annualized
Amount Amount
Per Filing Granted
Date of Filing Type (000's) (000's) Effective Date
-------------- ---- ------- ------- --------------
April 1993 Base Rates $26,900 $ 7,500 January 1994
August 1991 Base Rates 15,772 2,200 June 1992
August 1990 Base Rates 14,787 8,300 February 1991
March 1989 Base Rates 26,233 17,271 March 1990
July 1994 LGA 8,800 0 December 1994
July 1993 LGA 4,800 4,800 December 1993
July 1992 LGA (15,814) (17,400)(A) January 1993
July 1991 LGA 33,407 17,100 November 1991
August 1990 LGA 0 0 October 1990
July 1989 LGA 5,471 4,306 January 1990
(A) Comprised of a $12 million billing credit and a $5.4 million reduction in
annual LGA revenues.
See Note 7 to the Consolidated Financial Statements - Regulatory Issues in
the Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for additional
information regarding NJNG's rate proceedings.
On September 25, 1991, the BPU adopted a conservation incentive rule which
provides utilities with the opportunity to recover conservation program costs
and lost revenues, and to earn a return on investments in energy efficiency
programs based upon a sharing of savings between utilities and customers. NJNG
filed its "Demand Side Management Resource Plan" addressing these issues with
the BPU in February 1992. NJNG expects a decision in this proceeding during
fiscal year 1995.
In November 1992, NJNG filed a petition with the BPU for approval of a Gas
Service Agreement (GSA) executed between NJNG and Freehold Cogeneration
Associates L.P. (Freehold) in September 1992. The gas service agreement would
provide for NJNG to supply Freehold with between 21,800 and 26,000 Dths of
natural gas per day over a twenty-year period. In February 1994, the BPU
approved the gas service agreement conditioned by a side letter agreement in
which Freehold and NJNG agree to negotiate in good faith to amend the pricing
terms of the GSA to conform it to changes, if any, in the power purchase
agreement between Freehold and Jersey Central Power and Light Company (JCP&L) if
it is renegotiated. In November 1993, the BPU ruled that Freehold and JCP&L
should attempt to reach a settlement on the power purchase agreement within 30
days of receipt of a written order. As negotiations were unsuccessful, the power
purchase agreement is presently subject to evidentiary hearings before the BPU.
7
On December 14, 1994, the BPU approved a Stipulation Agreement relating to
the 1994 Remediation Rider (RA) and LGA. The approval of the RA Stipulation
allows recovery over seven years of $2.7 million of gas remediation costs
incurred through June 1994.
The LGA Stipulation includes recovery over a two-year period of all
transition costs incurred through September 1995 associated with interstate
natural gas pipelines complying with Order 636 and continuation of NJNG's
current margin sharing formulae associated with its non-firm sales until the
effective date of the BPU Order in NJNG's 1995-96 LGA. The LGA Stipulation also
includes approval of a Financial Risk Management (FRM) Pilot Program to provide
price stability to NJNG's system supply portfolio. All of the costs and results
of the FRM program are to be recovered through the LGA.
As a result of the approval of the RA and LGA Stipulation, NJNG's rates will
not change. The reduction in the rate approved compared with the increase
requested was due primarily to a decline in the projected cost of gas.
B) Federal
Since the mid-1980's, the FERC has issued a series of orders, regulations and
policy statements (e.g., FERC Orders 380, 436, 451, 500, and 528) intended to
transform the natural gas industry from a highly regulated industry to a more
lightly regulated, market-oriented industry. The culmination of the FERC's
deregulatory effort was the issuance of Order 636 which established new rules
mandating the unbundling of interstate pipeline sales for resale and
transportation services. The FERC instituted proceedings through which NJNG's
interstate pipeline suppliers have restructured their services in response to
Order 636.
The transition to a more market-oriented interstate pipeline market may offer
long-term benefits. Order 636 should provide NJNG with increased opportunities
to purchase and manage its own, specifically tailored gas supply portfolio and
to resell its interstate pipeline capacity to other potential customers during
off-peak periods. However, these benefits may be offset by increases in
interstate pipeline demand charges required by Order 636, in addition to the
flow-through of transition costs that pipeline companies will incur as a result
of the restructuring of their existing gas purchase and sales arrangements. In
the individual pipeline restructuring proceedings, NJNG has challenged those
aspects of Order 636 which would impose additional costs upon NJNG's customers
without providing reciprocal benefits. NJNG cannot at this time predict the
ultimate outcome of these pending proceedings. However, since NJNG generally
supports the market-oriented direction in which the FERC has taken the natural
gas industry, NJNG intends to withdraw its court challenges to Order 636 in the
near future.
NJNG continuously reviews its gas supply portfolio requirements in the
post-Order 636 environment. Because of its interconnections with multiple
interstate pipelines, NJNG believes that the Order 636 proceedings will not have
a material impact on its ability to obtain adequate gas supplies at market
rates. However, no assurance can be given in this regard.
8
Environment
- - -----------
The Company and its subsidiaries are subject to legislation and regulation by
federal, state and local authorities with respect to environmental matters.
NJNG has identified eleven former manufactured gas plant (MGP) sites, dating
back to the late 1800's and early 1900's, which it acquired from predecessors,
and which contain contaminated residues from the former gas manufacturing
operations. Ten of the eleven sites in question were acquired by NJNG from a
predecessor in 1952, and the eleventh site was acquired by a predecessor of NJNG
in 1922. All of the gas manufacturing operations ceased at these sites at least
since the mid-1950's and in some cases had been discontinued many years earlier,
and all of the old gas manufacturing facilities were subsequently dismantled by
NJNG or its predecessors. NJNG is currently involved in administrative
proceedings with the New Jersey Department of Environmental Protection and
Energy (NJDEPE) and local government authorities with respect to the plant sites
in question, and is participating in various studies and investigations by
outside consultants to determine the nature and extent of any such contaminated
residues and to develop appropriate programs of remedial action, where
warranted. Since October 1989, NJNG has entered into Administrative Consent
Orders or Memoranda of Agreement with the NJDEPE covering all eleven sites.
These documents establish the procedures to be followed by NJNG in developing a
final remedial clean-up plan for each site.
Most of the cost of such studies and investigations is being shared under an
agreement with the former owner and operator of ten of the MGP sites. See Note 9
to the Consolidated Financial Statements - Commitments and Contingencies in the
Company's 1994 Annual Report, filed as Exhibit 13-1 hereto, for a discussion of
the regulatory treatment of gas remediation costs incurred and anticipated
expenditures over the next five years.
NJNG is named as a defendant in a civil action alleging environmental
contamination at three sites owned or occupied by a contractor and the
contractor's affiliated companies which removed tar emulsion from NJNG's former
MGP sites to its three sites. See Item 3 - Legal Proceedings for additional
information regarding these actions.
Other than as discussed above, the Company does not presently anticipate any
additional significant future expenditures for compliance with existing
environmental laws and regulations which would have a material effect upon the
capital expenditures, earnings or competitive position of the Company or its
subsidiaries.
Franchises
- - ----------
NJNG holds non-exclusive franchises granted by the 104 municipalities which
it serves which gives it the right to lay, maintain and operate public utility
property in order to provide natural gas service within these municipalities. Of
these franchises, 47 are perpetual and the balance expire between 1999 and 2038.
9
Competition
- - -----------
Although its franchises are non-exclusive, NJNG is not currently subject to
competition from other natural gas distribution utilities with regard to the
transportation of natural gas in its service territory. Due to significant
distances between NJNG's current large industrial customers and the nearest
interstate natural gas pipelines, as well as the availability of its
transportation tariff, NJNG currently does not believe it has significant
exposure to the risk that its system will be bypassed. Competition does exist
from suppliers of oil, coal, electricity and propane. At the present time,
natural gas enjoys an advantage over alternate fuels as the preferred choice of
fuels in over 95% of new construction due to its efficiency and reliability. As
deregulation of the natural gas industry continues, prices will be determined by
market supply and demand, and while NJNG believes natural gas will remain
competitive with alternate fuels, no assurance can be given in this regard.
In October 1994, the BPU approved a stipulation agreement that provides
NJNG's commercial and industrial customers an expanded menu of transportation
and supplier choices. As a result of the BPU approval, NJNG's sales to its
commercial and industrial customers will be subject to competition from other
suppliers of natural gas; however, NJNG would continue to provide transportation
service to these customers. Based on its rate design, NJNG's profits would not
be affected by a customer's decision to utilize a sales and transportation or
transportation only service.
PARADIGM POWER, INC.
Paradigm Power, Inc. (PPI) was formed in April 1992 to pursue investment
opportunities in natural gas-fueled cogeneration and independent power
production projects. As of September 30, 1994, PPI had no project investments.
See Results of Consolidated Operations - PPI in the Company's 1994 Annual
Report, filed as Exhibit 13-1 hereto, for a discussion of PPI's financial
results.
NJR ENERGY CORPORATION
NJR Energy and its subsidiaries: NJNR, Pipeline, Storage, Compressor and
NJRE Operating, are involved in oil and natural gas development, production,
transportation, storage and other energy-related ventures.
In April 1994, the Company announced plans to reallocate much of the
capital previously dedicated to the development of natural gas and oil reserves
to investments with closer strategic ties to the rest of its energy businesses.
No further exploration is planned. Potential investment opportunities may
include gas gathering, storage and marketing as well as other investments
designed to capitalize on the post-Order 636 environment. In connection with
this strategic shift, the Company changed the method by which it accounts for
its oil and gas operations to the successful efforts method from the full cost
method. See Note 1 to the Consolidated Financial Statements - Oil and Natural
Gas Properties in the Company's 1994 Annual Report, filed as Exhibit 13-1
hereto, for a discussion of this change in accounting method.
10
NJR Energy and NJNR are working-interest participants in oil and
natural gas production ventures located in Texas, Oklahoma, Kansas, Utah,
Arkansas, Louisiana and the Appalachian Basin.
See Results of Consolidated Operations - NJR Energy in the Company's 1994
Annual Report, filed as Exhibit 13-1 hereto, for a discussion of NJR Energy's
financial results.
NJR Energy's proved reserves since 1990 are as follows:
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
Natural gas (Bcf) 21.6 41.4 38.3 44.3 41.6
Oil (Mbbls) 1,767 2,393 1,989 1,965 2,019
NJNR owns a natural gas gathering system and is a participant in a pipeline
joint venture in Utah.
Pipeline is a 2.8% equity participant in the Iroquois Gas Transmission
System, L.P. (Iroquois) pipeline project, a 375-mile natural gas pipeline from
the Canadian border to Long Island. Initial deliveries commenced in December
1991. See Item 3-Legal Proceedings for additional information regarding the
Iroquois pipeline.
Storage, which was formed in December 1994, is a 5.66% equity participant
in the Market Hub Partners, L.P. which it is intended will develop, own and
operate a system of five natural gas market centers with high deliverability
salt cavern storage facilities in Texas, Louisiana, Mississippi, Michigan and
Pennsylvania. The facility in Texas began operations in 1990. The other
facilities are expected to be completed over the next four years.
Compressor was formed in 1990 to provide compressor and dehydration services
to producing gas properties in the Arkoma Basin. In April 1994, Compressor sold
its fleet of 41 compressors and used the $2 million in proceeds from the
earnings-neutral sale to pay down a portion of the Company's bank loans. As part
of the transaction, Compressor agreed to lease certain compressors over a fixed
period of time.
NJRE Operating was formed in 1993 to facilitate the assumption of operations
of certain oil and gas properties.
COMMERCIAL REALTY & RESOURCES CORP.
CR&R develops and owns commercial office and mixed-use commercial/industrial
real estate projects primarily in Monmouth and Atlantic Counties, New Jersey. As
of September 30, 1994, CR&R had completed 17 buildings totaling 914,200 square
feet.
This inventory of space, which at September 30, 1994 was 97% occupied, is
expected to provide a stable source of current cash flow, since the space is
supported by leases having a remaining average life of over six years. CR&R also
has 225 acres of land that is fully improved and master planned for future
development. See Item 2-Properties-CR&R for additional information regarding
CR&R's projects.
Leases accounting for approximately 10% of CR&R's total portfolio of occupied
space will expire in fiscal 1995. Management expects that a majority of these
leases will be relet to the
11
existing tenants at their existing rental rates.
CR&R's development program has concentrated on a high percentage of
build-to-suit projects which has put it in a relatively strong position with
regard to both occupancy rate and remaining lease terms. This concentration on
meeting the expressed preferences of tenants has lessened the impact on CR&R of
the downturn in the Northeast commercial real estate market, which has been
characterized by speculative development and relatively high vacancy rates. See
Results of Consolidated Operations - CR&R in the Company's 1994 Annual Report,
filed as Exhibit 13-1 hereto, for a discussion of CR&R's 1994 financial results.
Consistent with a strategic re-evaluation performed by the Company in 1992,
CR&R's capital spending will continue to be limited to the fit-up of existing
tenant space and the development of existing acreage. CR&R believes that its
high occupancy rate and stable base of current cash flow will enable it to meet
its debt service requirements as it manages its existing properties and
considers various alternatives for its real estate assets.
12
EMPLOYEE RELATIONS
The Company and its subsidiaries employed 864 and 836 employees at September
30, 1994 and 1993, respectively. NJNG had 500 and 485 union employees at
September 30, 1994 and 1993, respectively. NJNG has a collective bargaining
agreement with the union that is effective through December 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT
First Elected
Office(1) Name Age an Officer
- - -------- ---- --- -------------
Chairman, President and
Chief Executive Officer Oliver G. Richard III 42 5/91
Executive Vice President,
Law and Corporate Development Peter M. Schwolsky 48 9/91
Senior Vice President and
Chief Financial Officer Laurence M. Downes 37 1/86
Senior Vice President and
Corporate Secretary Oleta J. Harden 45 6/84
Vice President, Controller
and Chief Accounting Officer Glenn C. Lockwood 33 1/90
(1) All terms of office are one year.
There is no arrangement or understanding between the officers listed above
and any other person pursuant to which they were selected as an officer. The
following is a brief account of their business experience during the past five
years:
Oliver G. Richard III
Chairman, President and Chief Executive Officer
Mr. Richard was elected President and Chief Executive Officer and Director
of the Company in May 1991 and in January 1992 was elected Chairman of the Board
of Directors. Previously, he was President and Chief Executive Officer of
Northern Natural Gas Company, a subsidiary of Enron Corp., since 1988. Prior
thereto, beginning in 1987, Mr. Richard served a variety of executive positions
at both Northern Natural and Enron. He served as Vice President and General
Counsel of Tenngasco, a subsidiary of Tenneco Inc., from 1985 through 1987. From
1982 to 1985, Mr. Richard was a Commissioner of the Federal Energy Regulatory
Commission.
13
Peter M. Schwolsky
Executive Vice President, Law and Corporate Development
Mr. Schwolsky was elected Executive Vice President, Law and Corporate
Development in September 1991. Prior thereto, he served as a partner in the law
firm of Steptoe & Johnson, Washington, D.C. since 1990 and was Of Counsel to the
firm since 1986.
Laurence M. Downes
Senior Vice President and Chief Financial Officer
Mr. Downes has held his present position since January 1990. He joined the
Company in March 1985 and served as Treasurer and Assistant Secretary from
January 1986 through January 1988. From January 1988 through January 1990, he
served as Vice President, Treasurer and Assistant Secretary.
Oleta J. Harden
Senior Vice President and Corporate Secretary
Mrs. Harden has held her present position since January 1987. From January
1986 to January 1987, she served as Vice President, Secretary and Assistant
Treasurer and prior to that time, she served as Assistant Secretary from June
1984.
Glenn C. Lockwood
Vice President, Controller and Chief Accounting Officer
Mr. Lockwood has held his present position since January 1994. From January
1990 to January 1994, he held the position of Assistant Vice President,
Controller and Chief Accounting Officer. He joined the Company in May 1988 as
Controller. From January 1983 through May 1988, he held several positions with
the international public accounting firm, Deloitte & Touche LLP.
14
ITEM 2. PROPERTIES
NJNG (All properties are in New Jersey)
NJNG owns 10,110 miles of distribution main and services, 325 miles of
transmission main and approximately 356,000 meters. Mains are primarily located
under public roads. Where mains are located under private property, NJNG has
obtained easements from the owners of record.
In addition to mains and services, NJNG owns and operates two LNG storage
plants located in Stafford Township, Ocean County, and Howell Township, Monmouth
County. The two LNG plants have an estimated effective capacity of 19,200 and
150,000 Dths per day, respectively. These facilities are used for peaking supply
and emergencies.
NJNG owns four service centers located in Rockaway Township, Morris County;
Atlantic Highlands and Wall Township, Monmouth County; and Lakewood, Ocean
County. These service centers house storerooms, garages, gas distribution and
appliance service operations and administrative offices. NJNG leases its
headquarters facilities in Wall Township, customer service offices located in
Asbury Park and Wall Township, Monmouth County and a service center in
Manahawkin, Ocean County. These customer service offices support customer
contact, marketing and other functions.
NJNG also owns a storage facility in Long Branch, Monmouth County.
Substantially all of NJNG's properties, not expressly excepted or duly
released, are subject to the lien of an Indenture of Mortgage and Deed of Trust
to Harris Trust and Savings Bank, Chicago, Illinois, dated April 1, 1952, as
amended by twenty-three supplemental indentures, as security for NJNG's bonded
debt, which totaled approximately $184 million at September 30, 1994. In
addition, under the terms of its Indenture, NJNG could have issued approximately
$154 million of additional first mortgage bonds as of September 30, 1994. In
October 1994, NJNG issued $25 million of its Medium-Term Notes, consisting of
its 8.25% Series Z First Mortgage Bonds due 2004 under its Indenture, as amended
by the twenty-fourth supplemental indenture.
NJNG completed construction of the Monmouth-Ocean Transmission (MOT) line in
1993. The MOT line is providing service to a cogeneration plant in Lakewood
Township, Ocean County and is helping NJNG meet the future energy needs
associated with the expected customer growth in Monmouth and Ocean counties.
NJNG has entered into an agreement to provide the cogeneration project with at
least 50,000 Dths per day of pipeline capacity on the MOT line, subject to
NJNG's right to utilize this capacity for up to 30 days per year to help meet
its peak-day requirements.
NJR Energy
NJR Energy, as a working-interest participant, has interests in oil and gas
leases in Louisiana, New York, West Virginia and Texas. Additionally, NJNR has
working interests in oil and gas leases in Texas, Oklahoma, Kansas, Arkansas,
Utah and Pennsylvania, and is a participant in
15
a 21-mile natural gas transportation pipeline joint venture, located in Cambria
County and Indiana County, Pennsylvania. NJNR also owns a natural gas gathering
system and is a participant in a 16-mile natural gas pipeline joint venture
located in Utah.
Pipeline has a 2.8% equity interest in the Iroquois Gas Transmission System,
L.P. which owns and operates the Iroquois pipeline project.
Storage, which was formed in December 1994, has a 5.66% equity interest in
Market Hub Partners, L.P. which it is intended will develop, own and operate a
system of five natural gas market centers with high deliverability salt cavern
storage facilities in Texas, Louisiana, Mississippi, Michigan and Pennsylvania.
CR&R (All properties are in New Jersey)
CR&R currently owns and operates 17 buildings consisting of 914,200 square
feet of commercial office and mixed-use commercial/industrial space, of which
886,000 square feet, or 97%, are occupied. CR&R and affiliated companies,
including NJNG, occupy approximately 149,800 square feet in four of these
buildings. These properties are located in Monmouth and Atlantic Counties in
various business parks. These business parks include the Monmouth Shores
Corporate Office Park (MSCOP), Monmouth Shores Corporate Park (MSCP), Jumping
Brook Corporate Office Park (JBCOP), Central Monmouth Business Park (CMBP) and
Expressway Corporate Center (ECC). See Item 3f.--Legal Proceedings--Real Estate
Properties for a discussion of regulatory matters concerning MSCP. A summary of
these business parks with pertinent data is as follows:
MSCOP MSCP JBCOP CMBP ECC Other
----- ---- ----- ---- --- -----
Completed buildings ........... 1 9 1 3 2 1
Buildings under construction .. - - - - - -
Acres developed to date ....... 22 91 20 9 10 4
Acres undeveloped ............. 33 74 26 - 52 40
Sq. ft. developed to date ..... 160,400 417,500 181,100 69,000 82,200 4,000
Sq. ft. undeveloped ........... 235,000 645,600 300,000 - 495,000 366,400
Major tenants include:
MSCOP NJNG, NatWest Home Mortgage and Prudential Insurance
MSCP Waterford/Wedgwood, American Press, CoreStates Bank, Gertler
& Hanna and AT&T Information Systems
JBCOP USLIFE
CMBP State Farm Insurance, Motorola and NJNG.
ECC Social Security Administration and Computer Science Corporation
16
Capital Expenditure Program
See Liquidity and Capital Resources in the Company's 1994 Annual Report,
filed as Exhibit 13-1 hereto, for a discussion of the Company's anticipated 1995
and 1996 capital expenditures for each business segment.
ITEM 3. LEGAL PROCEEDINGS
a. Aberdeen
- - ------------
Since June 1993, a total of six complaints have been filed in New Jersey
Superior Court against NJNG and its contractor by persons alleging injuries
arising out of a natural gas explosion and fire on June 9, 1993, at a
residential building in Aberdeen Township, New Jersey. The plaintiffs allege in
their respective actions, among other things, that the defendants were negligent
or are strictly liable in tort in connection with their maintaining, replacing
or servicing natural gas facilities at such building. The plaintiffs separately
seek unspecified compensatory and punitive damages from NJNG and its contractor.
In May 1994, the New Jersey Superior Court ordered that all causes of action
relating to the Aberdeen Township explosion be consolidated for purposes of
discovery.
NJNG's liability insurance carriers are participating in the defense of
these matters. NJNG is unable to predict the extent to which other claims will
be asserted against, or liability imposed on, NJNG. The Company does not believe
that the ultimate resolution of these matters will have a material adverse
effect on its consolidated financial condition or results of operations.
b. Carnegie
- - ------------
In March 1993, NJNG was named a defendant in a civil action commenced by
Carnegie Natural Gas Company (Carnegie) in the U.S. District Court for the
Western District of Pennsylvania. This action challenges NJNG's decision to
terminate the June 18, 1986 "Service Agreement for Sales Service under Rate
Schedule LVWS" (LVWS Service Agreement) between Carnegie and NJNG effective
March 31, 1994, pursuant to a "market-out" clause. The LVWS Service Agreement
would otherwise have expired on March 31, 2001. Carnegie seeks, among other
things, a declaratory judgment that the contract termination was void. Claims of
tortious interference with contractual relations and abuse of process are also
asserted and unspecified damages and punitive damages are also sought. In April
1993, Carnegie filed a motion for summary judgment on the contract termination
claim. In May 1993, NJNG filed a response opposing Carnegie's motion, as well as
a cross motion for summary judgment on all claims. On January 21, 1994 a federal
magistrate issued a recommended decision denying Carnegie's motion for summary
judgment. In addition, the magistrate granted NJNG's motion for summary judgment
on Carnegie's tortious interference claim and denied NJNG's motion for summary
judgment on the contract termination and abuse of process claims. Both parties
filed objections to various aspects of the magistrate's recommended decision,
which were denied by order of a federal district court judge on March 18, 1994.
On July 14, 1994, Carnegie served a motion
17
for a preliminary injunction requiring NJNG to continue making payments pursuant
to the contract during the pendency of the litigation. On September 29, 1994,
the magistrate issued a recommended decision denying Carnegie's motion for a
preliminary injunction, stating that Carnegie had not met its burden of
establishing a likelihood of success on the merits of the lawsuit and of
establishing that it would suffer irreparable harm by NJNG's failure to make
payments. Carnegie filed an objection to the magistrate's recommended decision,
which was denied by order of a federal district court judge on November 3, 1994.
Pretrial discovery has been completed. The parties are now awaiting the
scheduling of a trial date by the court. NJNG is unable to predict the outcome
of this matter. The Company does not believe that the ultimate resolution of
this matter will have a material adverse effect on its consolidated financial
condition or results of operations.
c. South Brunswick Asphalt, L.P.
NJNG has been named a defendant in a civil action commenced in New Jersey
Superior Court by South Brunswick Asphalt, L.P. (SBA) and its affiliated
companies seeking damages arising from alleged environmental contamination at
three sites owned or occupied by SBA and its affiliated companies. Specifically,
the suit charges that tar emulsion removed from 1979 through 1983 by an
affiliate of SBA (Seal Tite, Inc.) from NJNG's former gas manufacturing plant
sites has been alleged by the NJDEPE to constitute a hazardous waste and that
the tar emulsion has contaminated the soil and ground water at the three sites
in question. In February 1991, the NJDEPE issued letters classifying the tar
emulsion/sand and gravel mixture at each site as dry industrial waste, a
non-hazardous classification. NJNG continues to explore various disposal methods
for the tar emulsion/sand and gravel mixture.
NJNG's liability insurance carrier has assumed defense of this action but has
denied coverage for SBA's claims. Although management is considering legal
action against the carrier, NJNG believes that the total cost to remove and
dispose of the tar emulsion/sand and gravel mixture from all three sites would
be immaterial. Based upon the gas remediation rider approved by the BPU in June
1992, NJNG believes that such costs should be recoverable through the ratemaking
process.
One of the SBA sites is the subject of a NJDEPE Directive and Notice
alleging that the tar emulsion/sand and gravel mixture was a contributing factor
to the contamination of ground water at a residential community. The NJDEPE is
seeking reimbursement under the New Jersey Spill Compensation and Control Act of
cleanup, remediation and related costs, estimated by the NJDEPE at approximately
$20 million. NJNG is contesting the NJDEPE directive on the grounds, among
others, that any such alleged ground water contamination was not caused by tar
emulsions removed from NJNG's former gas plant manufacturing sites. NJNG's
liability insurance carriers, which have been defending the civil action, have
denied coverage for these claims and NJNG intends to contest this position. NJNG
would attempt to seek recovery through the ratemaking process of any such
cleanup or remediation payments it might ultimately be required to make, but
recognizes that such recovery is not assured. There can be no assurance as to
the outcome of these proceedings. The Company does not believe that the ultimate
resolution of these matters will have a material adverse effect on its
consolidated
18
financial condition or results of operations.
d. Bridgeport Rental and Oil Service
- - -------------------------------------
In January 1992, NJNG was advised of allegations that certain waste oil from
its former manufactured gas plant site in Wildwood, New Jersey may have been
sent by a demolition contractor to the Bridgeport Rental and Oil Service site in
Logan Township, New Jersey. That site has been designated a Superfund site and
is currently the subject of two lawsuits pending in the U.S. District Court in
New Jersey. NJNG has notified its insurance carriers and is investigating this
matter. NJNG is currently unable to predict the extent, if any, to which it may
have cleanup or other liability with respect to this matter, but would seek
recovery of any such costs through the ratemaking process. However, no assurance
can be given as to the timing or extent of the ultimate recovery of such costs.
The Company does not believe that the ultimate resolution of these matters will
have a material adverse effect on its consolidated financial condition or
results of operations.
e. Iroquois
- - -----------
Pipeline owns a 2.8% equity interest in the Iroquois Gas Transmission System,
L.P. (Iroquois) which has constructed and is operating a 375-mile pipeline from
the Canadian border in Upstate New York to Long Island.
Iroquois has been informed by the U.S. Attorney's Offices for the Northern,
Southern and Eastern Districts of New York that an investigation is underway to
determine whether or not Iroquois committed civil violations of the Federal
Clean Water Act and/or its Corps of Engineers permit during construction of the
pipeline. No proceedings in connection with this civil investigation have been
commenced by the federal government against Iroquois.
In addition, in conjunction with the Environmental Protection Agency, a
criminal investigation has been initiated by the U.S. Attorney's Office for the
Northern District of New York. To date, no criminal charges have been filed.
In December 1993, Iroquois received notification from the Enforcement Staff
of the Federal Energy Regulatory Commission Office of the General Counsel
(Enforcement) that Enforcement has commenced a preliminary, non-public
investigation concerning matters related to Iroquois' construction of certain of
its pipeline facilities. Enforcement has requested information regarding certain
aspects of the pipeline construction. In addition, in December 1993, Iroquois
received a similar communication from the Army Corps of Engineers requesting
information regarding permit compliance in connection with certain aspects of
the pipeline construction. Iroquois is providing information to these agencies
in response to their requests.
Iroquois has publicly stated that it believes the pipeline construction and
right-of-way activities were conducted in a responsible manner and that its
environmental program complied with or exceeded applicable standards for the
industry. However, Iroquois deems it probable that the U.S. Attorney will seek
indictments and in them substantial fines and other sanctions. The
19
foregoing proceedings and investigations have not affected the pipeline's
operations.
Iroquois and its counsel expect to meet with those conducting the civil and
criminal investigations, from time to time, both to gain an informed
understanding of the focus and direction of the investigations in order to
defend itself and, if and when appropriate, to explore a range of possible
resolutions acceptable to all parties. No understandings or agreements have been
reached that have led Iroquois to make provision in its financial statements for
any dollar liability associated with these proceedings.
Pipeline is unable to predict the outcome of these proceedings and
investigations. Based upon information currently available to the Company
concerning the above matters involving Iroquois, the Company does not believe
that their ultimate resolution will have a material adverse effect on the
Company's consolidated financial condition or results of operations. Pipeline's
investment in Iroquois as of September 30, 1994 was $5.6 million.
f. Real Estate Properties
- - -------------------------
CR&R is the owner of Monmouth Shores Corporate Park (MSCP), located in
Monmouth County, New Jersey. The land comprising MSCP was exempt from the
provisions of the Freshwater Wetlands Protection Act (the Act) until assumption
of the Federal 404 freshwater wetlands program by the New Jersey Department of
Environmental Protection and Energy (NJDEPE) on March 2, 1994. MSCP is now
regulated by the provisions of the Act. The Act restricts building in areas
defined as "freshwater wetlands" and their transition areas. CR&R has hired an
environmental engineer to delineate the wetlands and transition areas of MSCP in
accordance with the provision of the Act.
Based upon the environmental engineer's delineation of the wetland and
transition areas, CR&R has filed for and received a Letter of Interpretation
(LOI) from NJDEPE on one parcel of land. CR&R has also filed for a LOI with
NJDEPE regarding a second parcel and will file additional LOI's with NJDEPE as
the remaining parcels of land are selected for development.
Based upon the environmental engineer's delineation, it is anticipated that
the developable yield of MSCP will be reduced by approximately 7% compared with
the original master plan. The actual yield achieved will be dictated by market
and other conditions. Based upon the revised estimated developable yield for
MSCP, the Company does not believe that a reserve against this property was
necessary as of September 30, 1994.
g. Bessie-8
- - ------------
NJNR and others (the Joint Venture, et al.) were named in a complaint filed
by the People's Natural Gas Company (People's) before the Pennsylvania Public
Utility Commission (PaPUC). People's sought a determination that the Joint
Venture, et al. were a public utility subject to the jurisdiction of the PaPUC
and an order prohibiting natural gas service until proper PaPUC authorization
was obtained.
20
In April 1988, an Administrative Law Judge (ALJ) issued an initial decision
denying and dismissing People's complaint, "because the demonstrated activities
of the Bessie-8 joint venture are not within the jurisdiction of the PaPUC to
regulate". An initial decision is subject to adoption, modification or rejection
by the full PaPUC. In April 1989, alternative motions to adopt the ALJ's initial
decision or to subject the Joint Venture, et al. to the jurisdiction of the
PaPUC failed due to 2-2 tie votes. In October 1992, the PaPUC, on its own
initiative and without notice to any of the parties, determined in a 3-0 vote
that the Joint Venture, et al. are a "public utility" under the Pennsylvania
Public Utility Code and granted People's exceptions to the ALJ's April 1988
initial decision. This determination would require the Joint Venture, et al. to
apply to the PaPUC for a certificate of public convenience within 30 days of the
entry of the Final Order, or to cease and desist from providing service on the
pipeline. In December 1992, the PaPUC issued a Final Order and extended the
deadline to file for a certificate of public convenience within 60 days. In
February 1993, the Joint Venture, et al. filed a motion with the Commonwealth
Court of Pennsylvania (Commonwealth Court) requesting that the effectiveness of
the Final Order be stayed pending court appeals. In February 1993, this motion
was granted.
In October 1992, the Joint Venture, et al. filed a Petition for Review in
the nature of a declaratory judgment action in the Commonwealth Court seeking
among other things, a declaratory order that the April 1989 tie vote constituted
a final action dismissing Peoples' complaint. Oral argument was held in March
1993. In January 1993, the Joint Venture, et al. filed a second Petition for
Review with the Commonwealth Court challenging the merits of the PaPUC's
determination that the Joint Venture, et al. are a "public utility" under the
Pennsylvania Public Utility Code. In February 1993, the Commonwealth Court
stayed the PaPUC's order requiring the Joint Venture, et al. to file for a
certificate of public convenience and necessity, pending the outcome of the
March 1993 oral argument. On July 2, 1993, the Commonwealth Court issued an
order denying People's motion to lift the stay pending appeal. On December 16,
1993, the Commonwealth Court granted the Joint Venture, et al. a declaratory
judgment that the April 1989 tie vote constituted a final action dismissing
Peoples' complaint. Peoples and the PaPuc have appealed this decision to the
Pennsylvania Supreme Court. The parties have submitted briefs to the
Pennsylvania Supreme Court, and the matter now awaits oral argument and final
disposition by the court.
In September 1993, Peoples instituted an action in the Court of Common Pleas
of Allegheny County against the Joint Venture, et al. by filing a Praecipe for
Writ of Summons. The Praecipe for Writ of Summons cannot and does not contain
any description of the claim being asserted by Peoples. It merely tolls the
statute of limitations and preserves any claim Peoples may have against the
defendants until resolution of the actions discussed above. This action may
concern a claim by Peoples for losses allegedly sustained as a result of the
Bessie-8 joint venture activities. However, there has been no activity in this
action and the nature of the action has not yet been determined. NJNR is unable
to predict the outcome of these matters. The Company does not believe that the
ultimate resolution of these matters will have a material adverse effect on its
consolidated financial condition or results of operations.
In January 1994, the owners of the plant previously served by the Bessie-8
pipeline entered
21
into a three-year natural gas contract with another supplier. In March 1994,
NJNR concluded that, based on meetings with its partners to discuss various
alternatives for the pipeline, the recovery of NJNR's net investment of $1
million was doubtful. Accordingly, as disclosed on Form 8-K filed by the Company
on April 27, 1994, the results for the year ended September 30, 1994 include a
pre-tax charge to earnings of $1 million, or $.04 per share.
h. Various
- - ----------
The Company is party to various other claims, legal actions and complaints
arising in the ordinary course of business. In management's opinion, the
ultimate disposition of these matters will not have a material adverse effect on
its financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
22
PART II
Information for Items 5 through 8 of this report appears in the Company's
1994 Annual Report, filed as Exhibit 13-1 hereto, as indicated on the following
table and is incorporated herein by reference, as follows:
Annual Report
Page
Item 5. Market for the Registrant's Common ----
Stock and Related Stockholder Matters
Market - Exchange 42
- Closing Prices & Dividends 23
Dividend Restrictions 35
Holders of Common Stock 22
Item 6. Selected Financial Data 22
Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations 24-28
Item 8 Financial Statements and Supplementary Data 29-40
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure - None
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Information for Items 10 through 13 of this report is incorporated herein
by reference to the Company's definitive proxy statement for the Annual Meeting
of Shareholders to be held March 8, 1995, which is expected to be filed with the
SEC pursuant to Regulation 14A not later than January 27, 1995.
23
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) The following Financial Statements of the Registrant and
Independent Auditors' Report, included in the Company's 1994 Annual Report,
are incorporated by reference in Item 8 above:
Consolidated Balance Sheets as of September 30, 1994 and 1993
Consolidated Statements of Income for the Years Ended
September 30, 1994, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1994, 1993 and 1992
Consolidated Statements of Capitalization as of September 30,
1994 and 1993
Consolidated Statements of Common Stock Equity for the Years
Ended September 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Independent Auditors' Report
(2) Financial Statement Schedules - See Index to Financial Statement
Schedules on page 24.
(3) Exhibits - See Exhibit Index on page 33.
(b) The Company did not file a Form 8-K during the quarter ended
September 30, 1994.
24
NEW JERSEY RESOURCES CORPORATION
INDEX TO FINANCIAL STATEMENT SCHEDULES
Page
----
Schedule V - Property, plant and equipment for each of the
three years in the period ended September 30, 1994 25-27
Schedule VI - Accumulated depreciation and amortization
for each of the three years in the period ended
September 30, 1994 28
Schedule VIII - Valuation and qualifying accounts and
reserves for each of the three years in the period
ended September 30, 1994 29
Schedule X - Supplementary income statement information for
each of the three years in the period ended September 30, 1994 30
Schedules other than those listed above are omitted because they are not
required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
25
Schedule V
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1994
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 216 $ 57 273
Local Storage ............. 24,989 (4) $ 5 24,980
Transmission .............. 63,225 24,216 87,441
Distribution .............. 486,238 41,693 1,356 526,575
General ................... 27,863 2,727 563 30,027
-------- ------- ------ ------ --------
602,553 68,689 1,924 669,318
Work in Progress ................ 31,045 (14,183) (B) $1,822 (C) 18,684
Property Under Capital
Leases .................... 3,982 (227) (D) 3,755
-------- ------- ------ ----- --------
Total ................... 637,580 54,506 1,924 1,595 691,757
Real Estate Properties .......... 102,369 2,619 1,188 509 (F) 104,309
Oil and Gas Properties .......... 64,576 1,517 2,851 (29) (E) 63,224
-------- ------- ------ ------ --------
$804,525 $58,642 $5,963 $2,086 $859,290
======== ======= ====== ====== ========
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
(F) Intercompany transfer of leasehold improvements.
26
Schedule V
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1993
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 1,041 $ 825 216
Local Storage ............. 24,963 $ 26 24,989
Transmission .............. 62,916 406 97 63,225
Distribution .............. 452,311 35,621 1,555 $ (139) (A) 486,238
General ................... 23,062 5,638 976 139 (A) 27,863
-------- ------- ------ ------ --------
564,315 41,691 3,453 0 602,553
Work in Progress ................ 20,586 11,729 (B) (1,270) (C) 31,045
Property Under Capital
Leases .................... 4,007 (25) (D) 3,982
-------- ------- ------ ------ --------
Total ................... 588,908 53,420 3,453 (1,295) 637,580
Real Estate Properties .......... 99,522 2,869 (22) (A) 102,369
Oil and Gas Properties .......... 57,398 9,216 (2,017) (E) 64,576
-------- ------- ------ ------- --------
$745,828 $65,505 $3,453 ($3,355) $804,525
======== ======= ====== ======= ========
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
27
Schedule V
NEW JERSEY RESOURCES CORPORATION
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED SEPTEMBER 30, 1992
- - -------------------------------------------------------------------------------------------------------------------
BALANCE BALANCE
AT ADDITIONS AT END
BEGINNING AT RETIRE- OTHER OF
CLASSIFICATION OF YEAR COST MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
Utility Plant In Service
Intangible ................ $ 22 $ 22
Manufactured Gas .......... 1,042 $ 1 1,041
Local Storage ............. 23,231 $ 1,740 8 24,963
Transmission .............. 58,232 4,687 3 62,916
Distribution .............. 423,701 29,962 1,035 $ (317)(A) 452,311
General ................... 19,851 3,190 296 317 (A) 23,062
-------- ------- ------ ------- --------
526,079 39,579 1,343 0 564,315
Work in Progress ................ 21,939 (1,715) (B) 362 (C) 20,586
Property Under Capital
Leases .................... 4,501 (494)(D) 4,007
-------- ------- ------ ------- --------
Total ................... 552,519 37,864 1,343 (132) 588,908
Real Estate Properties .......... 96,832 4,397 1,707 99,522
(4)(A)
(2,184)(E)
Oil and Gas Properties .......... 53,423 5,333 830 (F) 57,398
-------- ------- ------ ------- --------
$702,774 $47,594 $3,050 $(1,490) $745,828
======== ======= ====== ======= ========
Notes: (A) Miscellaneous adjustment.
(B) Net of transfers to Utility Plant in Service.
(C) Net change in Other Work in Progress.
(D) Net change in Property Under Capital Leases.
(E) Exploratory dry holes.
(F) Note receivable converted to Oil and Gas Properties.
28
Schedule VI
NEW JERSEY RESOURCES CORPORATION
ACCUMULATED DEPRECIATION AND AMORTIZATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
- - -------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS BALANCE
AT CHARGED AT END
BEGINNING TO RETIRE- OTHER OF
CLASSIFICATION OF YEAR EXPENSE MENTS CHANGES YEAR
- - -------------- --------- --------- ------- ------- -------
($000)
1994
Utility Plant ................. $152,150 $19,270 $1,924 $(4,875) (A) $164,621
Property Under
Capital Leases ........... 3,468 210 (B) 3,678
Real Estate Properties ........ 10,660 1,941 1 (C) 12,602
Oil and Gas Properties ........ 32,597 6,234 819 38,012
Other ......................... - 150 (150) (D) -
-------- ------- ------ ------- --------
Total ...................... $198,875 $27,595 $2,743 $(4,814) $218,913
======== ======= ====== ======= ========
1993
Utility Plant ................. $138,288 $19,070 $3,456 $(1,752) (A) $152,150
Property Under
Capital Leases ........... 3,076 392 (B) 3,468
Real Estate Properties ........ 8,758 1,924 (22) (C) 10,660
Oil and Gas Properties ........ 28,478 4,202 (83) (C) 32,597
Other ......................... - 209 (209) (D) -
-------- ------- ------ ------- --------
Total ..................... $178,600 $25,405 $3,456 $(1,674) $198,875
======== ======= ====== ======= ========
1992
Utility Plant ................. $123,945 $17,602 $1,343 $(1,916) (A) $138,288
Property Under
Capital Leases ........... 3,102 (26) (B) 3,076
Real Estate Properties ........ 7,577 1,834 653 8,758
Oil and Gas Properties ........ 24,241 4,272 (35) (C) 28,478
Other ......................... - 210 (210) (D) -
-------- ------- ------ ------- --------
Total .................... $158,865 $23,918 $1,996 $(2,187) $178,600
======== ======= ====== ======= ========
Notes: (A) Represents cost of removal, less salvage.
(B) Net amortization of leased assets reflected in other operating expenses.
(C) Miscellaneous adjustments.
(D) Reclassification.
29
Schedule VIII
NEW JERSEY RESOURCES CORPORATION
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
BALANCE ADDITIONS BALANCE
AT CHARGED AT END
BEGINNING TO OF
CLASSIFICATION OF YEAR EXPENSE DEDUCTIONS YEAR
- - -------------- --------- ----------- ------------ ----------
($000)
1994:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $684 $1,762 $1,789 (1) $657
==== ====== ========= ====
Materials and Supplies ......... $ 48 $1,181 $1,078 (2) $151
==== ====== ========= ====
1993:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $598 $1,397 $1,311 (1) $684
==== ====== ========= ====
Materials and Supplies ......... $ 48 $ - $ - $ 48
==== ====== ========= ====
1992:
Reserves deducted
from assets to which
they apply
Doubtful Accounts .............. $385 $2,233 $2,020 (1) $385
==== ====== ========= ====
Materials and Supplies ......... $295 $ 332 $ 579 (2) $ 48
==== ====== ========= ====
Notes: (1) Uncollectible accounts written off, less recoveries.
(2) Obsolete inventory written off, less salvage.
30
Schedule X
NEW JERSEY RESOURCES CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED SEPTEMBER 30, 1994, 1993 and 1992
CHARGED TO EXPENSES
ITEM 1994 1993 1992
- - --------------------------------- -------- --------- ----------
($000)
Maintenance ........................................................... $ 8,293 $ 6,438 $ 7,253
======= ======= =======
Taxes, other than income taxes
New Jersey gross receipts and franchise taxes .................... $48,308 $47,911 $48,083
Social Security and other payroll taxes .......................... 2,685 2,488 2,316
Real estate and personal property taxes .......................... 1,763 1,635 1,503
New Jersey sales and use tax...................................... 646 488 483
Other State taxes................................................. 355 197 227
------- ------- -------
Total........................................................... $53,757 $52,719 $52,612
======= ======= =======
Note: Royalties and advertising costs have been omitted since they do not
exceed 1% of total revenues.
31
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
NEW JERSEY RESOURCES CORPORATION
--------------------------------
(Registrant)
Date: December 28, 1994 By:/s/Laurence M. Downes
---------------------
Laurence M. Downes
Senior Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons, on behalf of the
Registrant in the capacities and on the dates included:
Dec. 28, 1994 /s/Oliver G. Richard, III Dec. 28, 1994 /s/Shirley A. Jackson
--------------------------- ---------------------
Oliver G. Richard, III Dr. Shirley A. Jackson
Chairman, President and Director
Chief Executive Officer
and Director
Dec. 28, 1994 /s/Dorothy K. Light
-------------------
Dorothy K. Light
Dec. 28, 1994 /s/Glenn C. Lockwood Director
--------------------
Glenn C. Lockwood
Vice President, Controller
and Chief Accounting Officer Dec. 28, 1994 /s/Donald E. O'Neill
--------------------
Donald E. O'Neill
Director
Dec. 28, 1994 /s/Roger E. Birk
----------------
Roger E. Birk
Director Dec. 28, 1994 /s/Richard S. Sambol
--------------------
Richard S. Sambol
Director
Dec. 28, 1994 /s/Bruce G. Coe
---------------
Bruce G. Coe
Director Dec. 28, 1994 /s/Charles G. Stalon
--------------------
Charles G. Stalon
Director
Dec. 28, 1994 /s/Joe B. Foster
----------------
Joe B. Foster Dec. 28, 1994 /s/Thomas B. Toohey
Director ------------------
Thomas B. Toohey
Director
Dec. 28, 1994 /s/Warren R. Haas
-----------------
Warren R. Haas Dec. 28, 1994 /s/John J. Unkles, Jr.
Director ----------------------
John J. Unkles, Jr.
Director
32
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of New Jersey Resources Corporation:
We have audited the consolidated financial statements of New Jersey Resources
Corporation as of September 30, 1994 and 1993 and for each of the three years in
the period ended September 30, 1994, and have issued our report thereon dated
October 31, 1994; such consolidated financial statements and report are included
in your 1994 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the consolidated financial statement
schedules of New Jersey Resources Corporation, listed in Item 14. These
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, such consolidated financial statement schedules, when
considered in relation to the basic consolidated financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
October 31, 1994
-------------------------------------------
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-52409 and No. 33-48192 of New Jersey Resources Corporation on Forms S-8 and
S-3, respectively, of our reports dated October 31, 1994, appearing in and
incorporated by reference in this Annual Report on Form 10-K of New Jersey
Resources Corporation for the year ended September 30, 1994.
DELOITTE & TOUCHE LLP
Parsippany, New Jersey
December 28, 1994
33
EXHIBIT INDEX
Previous Filing
Reg. S-K ---------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
3-1 3 Restated Certificate of Incorporation of the The Company's 3-1
Company, as amended Quarterly Report
on Form 10-Q for
the quarter ended
March 31, 1992
3-2 By-laws of the Company, as presently in effect The Company's 3-2
Quarterly Report
on Form 10-Q for
the quarter ended
March 31, 1992
4-1 4 Specimen Common Stock Certificates 33-21872 4-1
4-2 Indenture of Mortgage and Deed of Trust 2-9569 4(g)
with Harris Trust and Savings Bank, as
Trustee, dated April 1, 1952
4-2L Twelfth Supplemental Indenture, Note (3) 4-2L
dated as of August 1, 1984
4-2M Thirteenth Supplemental Indenture, Note (4) 4-2M
dated as of September 1, 1985
4-2N Fourteenth Supplemental Indenture, Note (5) 4-2N
dated as of May 1, 1986
4-2O Fifteenth Supplemental Indenture, Note (6) 4-2O
dated as of March 1, 1987
4-2P Sixteenth Supplemental Indenture, Note (6) 4-2P
dated as of December 1, 1987
4-2Q Seventeenth Supplemental Indenture, Note (7) 4-2Q
dated as of June 1, 1988
4-2R Eighteenth Supplemental Indenture, 33-30034 4-2R
dated as of June 1, 1989
4-2S Nineteenth Supplemental Indenture, Note (10) 4-2S
dated as of March 1, 1991
4-2T Twentieth Supplemental Indenture, Note (11) 4-2T
dated as of December 1, 1992
34
EXHIBIT INDEX
Previous Filing
Reg. S-K -----------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
4-2U Twenty-First Supplemental Indenture, Note (12) 4-2U
dated as of August 1, 1993
4-2V Twenty-Second Supplemental Indenture, Note (12) 4-2V
dated as of October 1, 1993
4-2W Twenty-Third Supplemental Indenture,
dated as of August 15, 1994
4-2X Twenty-Fourth Supplemental Indenture,
dated as of October 1, 1994
4-3 Term Loan Agreement between New Jersey Note (8) 4-3
Resources Corporation and Union Bank of
Switzerland, dated January 31, 1987
4-4 Revolving Credit Agreement between New Note (8) 4-4
Jersey Resources Corporation and Swiss
Bank Corporation, dated September 6, 1989
4-5 Amended and Restated Note and Credit The Company's 4-5
Agreement between New Jersey Resources Quarterly Report
Corporation and First Fidelity Bank, on Form 10-Q for
dated May 7, 1993 the quarter ended
June 30, 1993
4-6 Revolving Credit Agreement between New Jersey Note (10) 4-6
Resources Corporation and Union Bank of
Switzerland, dated September 28, 1990
4-7 Revolving Credit and Term Loan Agreement Note (10) 4-7
between New Jersey Resources Corporation
and Midlantic National Bank, dated December
20, 1990
4-8 Revolving Credit Agreement between New Note (10) 4-8
Jersey Resources Corporation and Union
Bank of Switzerland, dated December 31, 1990
4-9 Credit Agreement between New Jersey Note (10) 4-9
Resources Corporation and J.P. Morgan
Delaware, dated August 1, 1991
4-10 Revolving Credit Agreement between New Note (10) 4-10
Jersey Resources Corporation and Swiss
Bank Corporation, dated September 30, 1991
35
EXHIBIT INDEX
Previous Filing
Reg. S-K -----------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
10-1 10 Agreements between NJNG and Texas Eastern
Transmission Corporation:
10-1A Dated September 27, 1967 2-38344 4(c)
10-1B Dated September 27, 1967 2-73181 10.(a)(ii)
10-1C Dated September 27, 1969 2-38344 4(a)
10-1D Dated September 27, 1969 2-38344 4(b)
10-1E Dated August 11, 1989, as amended 2-73181 10.(a)(v)
10-1F Dated October 28, 1982 Note (1) 10.(a)(vi)
10-1G Dated December 24, 1984 Note (4) 10-1G
10-1H Dated September 27, 1967 33-12437 10-1H
10-1I Dated October 12, 1981 33-12437 10-1I
10-1J Dated August 22, 1986 33-12437 10-1J
10-1K Dated October 27, 1986 33-12437 10-1K
10-1L Dated October 13, 1989 Note (8) 10-1L
10-1M Dated October 13, 1989 Note (8) 10-1M
10-1N Dated October 13, 1989 Note (8) 10-1N
10-1O Dated October 13, 1989 Note (8) 10-10
10-2 Agreements between NJNG and Algonquin Gas
Transmission Company:
10-2A Dated September 8, 1967 2-38344 4(d)
10-2B Dated September 8, 1967 2-38344 4(e)
10-2C Dated June 20, 1986 33-12437 10-2C
36
EXHIBIT INDEX
Previous Filing
Reg. S-K ------------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
10-2D Dated June 20, 1986 33-12437 10-2D
10-3 Agreements between NJNG and Distrigas of 2-73181 10(d)
Massachusetts Corporation, dated
November 5, 1979
10-4 Agreements between NJNG and Consolidated
Gas Transmission Corporation:
Dated November 16, 1983 Note (3) 10-6
10-4A Dated July 12, 1985 Note (4) 10-6A
10-4B Dated January 30, 1984 33-12437 10-4L
10-5 Agreements between NJNG and National Fuel Note (3) 10-7
Gas Supply Corporation, dated February 27,
1984
10-6 Agreement between NJNG and Boundary Gas Note (3) 10-8
Inc., dated March 6, 1984
10-7 Retirement Plan for Represented Employees, 2-73181 10(f)
as amended October 1, 1984
10-8 Retirement Plan for Non-Represented 2-73181 10(g)
Employees, as amended October 1, 1985
10-9 Supplemental Retirement Plans covering all Note (5) 10-9
Executive Officers as described in the
Registrant's definitive proxy statement
incorporated herein by reference
10-10 Agreement between NJNG and Carnegie 33-12437 10-10
Natural Gas Company, dated June 18, 1986
10-11 Agreements between NJNG and Transcontinental
Gas Pipe Line Corporation:
Dated April 1, 1989 Note (9) 10-11
10-11A Dated October 30, 1989 Note (9) 10-11A
10-12 Agreement between NJNG and Steuben Gas Note (9) 10-12
Storage Company, dated June 19, 1989
10-13 Agreements between NJNG and Alberta Note (11) 10-13
Northeast
37
EXHIBIT INDEX
Previous Filing
Reg. S-K ------------------------------------
Exhibit Item 601 Registration
No. Reference Document Description Number Exhibit
- - --- --------- --------------------------------------------- ------------ -------
Gas Limited, dated February 7, 1991
10-14 Agreement between NJNG and Iroquois Note (11) 10-14
Gas Transmission System, L.P., dated
February 7, 1991
10-15 Agreement between NJNG and CNG Energy The Company's 10-15
Company, dated November 23, 1988 Quarterly Report
on Form 10-Q for
the quarter ended
December 31, 1992
13-1 13 1994 Annual Report to Stockholders.
Such Exhibit includes only those portions
thereof which are expressly incorporated
by reference in this Form 10-K.
21-1 21 Subsidiaries of the Registrant
23-1 23 Consent of Independent Accountants See page 32
27-1 27 Financial Data Schedule
Note (1) 1982 Form 10-K File No. 1-8359
Note (2) 1983 Form 10-K File No. 1-8359
Note (3) 1984 Form 10-K File No. 1-8359
Note (4) 1985 Form 10-K File No. 1-8359
Note (5) 1986 Form 10-K File No. 1-8359
Note (6) 1987 Form 10-K File No. 1-8359
Note (7) 1988 Form 10-K File No. 1-8359
Note (8) 1989 Form 10-K File No. 1-8359
Note (9) 1990 Form 10-K File No. 1-8359
Note (10) 1991 Form 10-K File No. 1-8359
Note (11) 1992 Form 10-K File No. 1-8359
Note (12) 1993 Form 10-K File No. 1-8359