New Jersey Resources Announces Fiscal 2007 First-Quarter Earnings; Increases Earnings Guidance.* First-quarter fiscal 2007 earnings of $1.01 per basic and diluted share * NJNG NJNG New Jersey Natural Gas first-quarter earnings increase 6.6 percent * Fiscal 2007 earnings guidance increased $.05 to a range of $2.90 to $3.00 per basic share WALL, N.J. -- New Jersey Resources (NYSE NYSE See: New York Stock Exchange : NJR NJR National Joint Registry (UK) NJR New Japan Radio Corp (Japan) NJR New Jersey Resources, Inc. (stock symbol) NJR Nonjob-Routed ) today announced first-quarter earnings for fiscal 2007 of $28.1 million, or $1.01 per basic share, versus $34.3 million, or $1.24 per basic share, last year. On a diluted basis, earnings per share were $1.01 versus $1.23 last year. Based on the company's performance to date and its view of market conditions, and subject to factors discussed below, NJR is increasing earnings guidance for fiscal 2007 by $.05 to a range of $2.90 to $3.00 per basic share. "We currently expect higher earnings at NJR for the 16th consecutive year, which we believe is the longest streak among natural gas and electric utilities in the U.S.," said Laurence M. Downes, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of NJR. New Jersey Natural Gas (NJNG), NJR's largest subsidiary, saw first-quarter earnings rise 6.6 percent over last year due primarily to the impact of the recently approved Conservation Incentive Program (CIP (1) (Common Isochronous Packet) The packet format used in time-based (real time) FireWire transmission. See FireWire, IEC 61883 and mLAN. (2) (Common Industrial P ). The CIP is designed to protect NJNG's gross margin, while helping customers to reduce their energy usage through targeted education efforts and energy efficiency programs. Reducing customer usage will also increase opportunities for NJNG to lower gas costs further. "Our Conservation Incentive Program has performed as intended, and has resulted in lower gas costs for customers and improved financial results for our shareowners. This innovative program is another example of working in partnership with our regulators to help all our stakeholders Stakeholders All parties that have an interest, financial or otherwise, in a firm-stockholders, creditors, bondholders, employees, customers, management, the community, and the government. ," Downes said. Moderating wholesale natural gas prices also allowed NJNG to lower its Basic Gas Supply Service (BGSS BGSS Bedok Green Secondary School (Singapore) BGSS Battalion Ground Surveillance Section BGSS Biomedical Graduate Student Symposium (Case Western Reserve University, Ohio) ) charge and provide a customer refund totaling $51.5 million to residential and small commercial customers in their December 2006 bills. "We were pleased to provide a refund to our customers, especially as we approached the winter heating season, when usage is typically highest," Downes said. "As always, we are constantly monitoring the natural gas market to identify ways we can provide additional savings." Financial and operating highlights during the first quarter included: -- Net Income and Basic Earnings per Share For the three months ended December 31, 2006, NJR earned $28.1 million, or $1.01 per basic share, compared with $34.3 million, or $1.24 per basic share, last year. The decrease in earnings was due primarily to lower earnings at NJR's unregulated Adj. 1. unregulated - not regulated; not subject to rule or discipline; "unregulated off-shore fishing" regulated - controlled or governed according to rule or principle or law; "well regulated industries"; "houses with regulated temperature" 2. wholesale energy services subsidiary, NJR Energy Services (NJRES), partially offset by improved results at NJNG. NJNG earned $19.9 million in the quarter, compared with $18.7 million last year. The increase in earnings was due to the impact of the CIP and continued customer growth. Gross margin at NJNG included $11.3 million accrued for future collection from customers under the CIP. NJNG's gross margin is defined as natural gas revenues less natural gas costs; sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. ; a Transitional Energy Facilities Assessment (TEFA TEFA Technology Education Federation of Australia TEFA Tube Excited Fluorescence Analysis ), which is included in Energy and other taxes on the Consolidated Statements of Income; and regulatory rider expenses. Management believes that gross margin provides a more meaningful basis for evaluating utility operations than revenue since natural gas costs, sales tax, TEFA and regulatory rider expenses are passed through to customers, and therefore, have no effect on gross margin. Natural gas costs are charged to operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. on the basis of therm therm (therm) a unit of heat. The word has been used as equivalent to (a) large calorie; (b) small calorie; (c) 1000 large calories; (d) 100,000 British thermal units. sales at the prices approved by the New Jersey Board of Public Utilities The New Jersey Board of Public Utilities (NJBPU) is a regulatory authority in New Jersey charged with the responsibility of seeing that "safe, adequate, and proper utility services are provided at reasonable rates for customers in New Jersey. through NJNG's BGSS tariff. The BGSS allows NJNG to recover natural gas costs. Sales tax is calculated at 6 percent of revenue on sales prior to July 15, 2006 and 7 percent thereafter, and excludes sales to cogeneration facilities, other utilities, off-system sales and federal accounts. TEFA is calculated on a per-therm basis and excludes sales to cogeneration facilities, other utilities and off-system sales. Regulatory rider expenses are calculated on a per-therm basis. NJNG's gross margin also includes benefits received by shareowners under its BGSS incentive programs. NJRES reported earnings of $7.8 million, compared with $14.9 million last year. First-quarter fiscal 2006 gross margin benefited from the impact of increased market volatility and greater pipeline transportation values in the wake of hurricanes Katrina and Rita. Gross margin for NJRES is defined as natural gas revenues and management fees less natural gas costs and fixed portfolio costs. -- New Customers Continue to Ensure Growth In the first quarter of fiscal 2007, NJNG added 2,614 new customers, 36 percent of which converted from other fuels. NJNG anticipates a customer growth rate of about 2 percent in fiscal 2007. About one-third of the anticipated new customers are expected to convert from other fuels. NJNG has maintained an annual customer growth rate above the national average for the past 10 years. -- Impact of Weather and Usage Weather in the first fiscal quarter was 18.3 percent warmer than normal and 18.2 percent warmer than last year. "Normal" weather is based on 20-year average temperatures. As with the weather normalization In relational database management, a process that breaks down data into record groups for efficient processing. There are six stages. By the third stage (third normal form), data are identified only by the key field in their record. clause which preceded it, the impact of weather is significantly offset by the recently approved CIP, which is designed to smooth out year-to-year fluctuations on both NJNG's gross margin and customers' bills that may result from changing weather and usage patterns. Included in the CIP accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. was $8 million associated with the warmer-than-normal weather and $3.3 million associated with non-weather factors. However, customers will realize annual savings of $10.6 million in fixed cost reductions and commodity cost savings of approximately $15 million through the first fiscal quarter. -- Incentive Programs Continue to Provide Value; Approval for Extension Sought During the first quarter, NJNG's gross margin-sharing incentive programs, which include off-system sales, capacity management, storage optimization and financial risk management programs, totaled 10.6 Billion cubic feet (Bcf) and $3.2 million of gross margin, compared with 10.2 Bcf and $3.1 million of gross margin for the same period last year. The increase in gross margin was due primarily to the financial risk management program, which was offset by a decrease in margin from the off-system sales program. NJNG shares the gross margin earned from these incentive programs with customers and shareowners according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. a gross margin-sharing formula in effect through October 2007. NJNG is seeking regulatory approval for an extension of these programs through October 2010. During the quarter, customers saved approximately $14.4 million in natural gas costs through these programs. Since the establishment of these incentive programs in 1992, NJNG customers have saved nearly $316 million on their natural gas bills, or approximately 4 percent annually. -- Wholesale Energy Services Results Decline NJRES earned $7.8 million in the first quarter of fiscal 2007, compared with $14.9 million last year. Last year's earnings benefited from the increased market volatility that included historically high transportation values in the aftermath of hurricanes Katrina and Rita. NJRES' diverse portfolio of pipeline and storage capacity continued to generate strong gross margin. This portfolio, with locations in the Gulf Coast, Mid-Continent, Appalachia, Northeast and Eastern Canada Eastern Canada (also the Eastern provinces) is the region of Canada generally considered to be east of Manitoba, consisting of the following provinces:
n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). of these assets are spread throughout the year. -- NJR Home Services and Other This business segment consists of NJR Home Services (NJRHS), which provides service, sales and installation of appliances to over 141,000 customers; Commercial Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. & Resources (CR&R), which develops commercial real estate; and NJR Energy, which consists primarily of a 5.53 percent equity investment in Iroquois Gas Transmission System, L.P. Earnings for the quarter ended December 31, 2006, were $397,000, compared with $684,000 last year. -- Increased Dividend Paid to Shareowners On November 1, 2006, NJR's board of directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a 5.6 percent increase in the company's quarterly dividend rate to $.38 per share. The new rate became effective with the January 2007 dividend payment. NJR has increased its dividend in each of the last 12 years and has paid quarterly dividends since 1952. Fiscal 2007 Earnings Guidance Assuming the continued impact of the CIP, stable economic conditions, continued customer growth at NJNG, continued volatility in the wholesale natural gas markets at NJRES and subject to the factors discussed below under "Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. ," NJR is increasing its earnings estimate by $.05 for fiscal 2007 to $2.90 to $3.00 per basic share. Forward-Looking Statements This news release contains estimates, earnings guidance and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. NJR cautions that the assumptions that form the basis for forward-looking statements regarding customer growth, customer usage, financial condition, results of operations, cash flows, capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , market risk and other matters include many factors that are beyond NJR's ability to control or estimate precisely, such as estimates of future market conditions, the behavior of other market participants The term market participant is used in United States constitutional law to describe a U.S. State which is acting as a producer or supplier of a marketable good or service. When a state is acting in such a role, it may permissibly discriminate against non-residents. and changes in the debt and equity capital markets. The factors that could cause actual results to differ materially from NJR's expectations include, but are not limited to weather and economic conditions; demographic changes in the NJNG service territory; the rate of NJNG customer growth; volatility of natural gas commodity prices and its impact on customer usage, NJRES' operations and on NJR's risk management efforts; changes in rating agency requirements and/or credit ratings and their effect on availability and cost of capital to NJR; commercial and wholesale credit risks, including creditworthiness Creditworthiness The condition in which the risk of default on a debt obligation by that entity is deemed low. Creditworthiness Eligibility of an individual or firm to borrow money. of customers and counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. ; the impact of governmental regulation (including the regulation of rates); fluctuations in energy-related commodity prices; conversion activity and other marketing efforts; actual energy usage of NJNG's customers; the pace of deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. of retail gas markets; access to adequate supplies of natural gas; the regulatory and pricing policies of federal and state regulatory agencies state regulatory agency A state body responsible for establishing professional standards, and for certifying professionals or organizations through appropriate documentation ; changes due to legislation at the federal and state level; the availability of an adequate number of appropriate counterparties in the wholesale energy trading market; sufficient liquidity in the wholesale energy trading market and continued access to the capital markets; the disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] of recovery of environmental-related expenditures and other regulatory changes; environmental-related and other litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other uncertainties; the effects and impacts of inflation on NJR and its subsidiaries operations; change in accounting pronouncements issued by the appropriate standard setting bodies; and terrorist attacks or threatened attacks on energy facilities or unrelated energy companies. More detailed information about these factors is set forth in NJR's filings with the Securities and Exchange Commission, including NJR's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on November 22, 2006 and Quarterly Report filed on Form 10-Q Form 10-Q See 10-Q. to be filed on, or about, February 7, 2007. NJR's Forms 10-K and 10-Q are available at www.sec.gov. NJR does not, by including this paragraph, assume any obligation to review or revise any particular forward-looking statement referenced herein in light of future events. Webcast Information NJR will host a live webcast to discuss its financial results today at 2 p.m. ET. A few minutes prior to the webcast, go to njliving.com and select "New Jersey Resources" from the top navigation bar A set of buttons or graphic images typically in a row or column used as a central point that link you to major topic sections on a Web site. If the navigation bar is a single graphic image with multiple selections, it is known as an imagemap. See imagemap. . Choose "Investor Relations Investor relations The process by which the corporation communicates with its investors. ," then click just below the microphone under the heading "Latest Webcast" on the Investor Relations home page. About New Jersey Resources New Jersey Resources (NYSE:NJR), a Fortune 1000 company and a member of the Forbes Platinum 400, provides reliable retail and wholesale energy services to customers in New Jersey and in states from the Gulf Coast to New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. , and Canada. Its principal subsidiary, New Jersey Natural Gas, is one of the fastest-growing local distribution companies in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , serving more than 474,000 customers in central and northern New Jersey. Other major NJR subsidiaries include NJR Energy Services and NJR Home Services. NJR Energy Services is a leader in the unregulated energy services market, providing customer service and management of natural gas storage and capacity assets. NJR Home Services offers retail customers heating, air conditioning air conditioning, mechanical process for controlling the humidity, temperature, cleanliness, and circulation of air in buildings and rooms. Indoor air is conditioned and regulated to maintain the temperature-humidity ratio that is most comfortable and healthful. and appliance services. NJR's progress is a tribute to the more than 5,000 dedicated employees who have shared their expertise and focus on quality through more than 50 years of serving customers and the community to make NJR a leader in the competitive energy marketplace. For more information, visit NJR's Web site at njliving.com.
[TABLE OMITTED]
NEW JERSEY RESOURCES > >
CONSOLIDATED STATEMENTS OF INCOME > >
> >
(Unaudited) > >
(Thousands, except per share data) > >
> > Three
> > December
> > 2006
2005
OPERATING REVENUES > > $741,465
$1,164,576
> >
OPERATING EXPENSES > >
Gas purchases > > 628,685
1,038,475
Operation and maintenance > > 28,316
27,731
Regulatory rider expenses > > 9,466
9,458
Depreciation and amortization > > 8,902
8,576
Energy and other taxes > > 13,952
18,667
Total operating expenses > > 689,321
1,102,907
> >
OPERATING INCOME > > 52,144
61,669
> >
Other income > > 1,989
1,642
> >
Interest charges, net > > 7,875
6,483
> >
INCOME BEFORE INCOME TAXES > > 46,258
56,828
> >
Income tax provision > > 18,134
22,564
> >
NET INCOME > > $28,124
$34,264
> >
EARNINGS PER COMMON SHARE > >
BASIC > > $1.01
$1.24
DILUTED > > $1.01
$1.23
> >
DIVIDENDS PER COMMON SHARE > > $0.38
$0.36
> >
AVERAGE SHARES OUTSTANDING > >
BASIC > > 27,713
27,550
DILUTED > > 27,904
27,960
[TABLE OMITTED]
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