þ | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) |
OF THE SECURITIES EXCHANGE ACT OF 1934 |
New Jersey | 13-1086010 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
|
6363 Main Street
Williamsville, New York (Address of principal executive offices) |
14221
(Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $1 Par Value, and
Common Stock Purchase Rights |
New York Stock Exchange |
National Fuel Gas Companies |
Regulatory Agencies |
Other |
1
2
Item 1 | Business |
3
| Horizon Energy Development, Inc. (Horizon), a New York corporation engaged in foreign and domestic energy projects through investments as a sole or substantial owner in various business entities. These entities include Horizons wholly-owned subsidiary, Horizon Energy Holdings, Inc., a New York corporation, which owns 100% of Horizon Energy Development B.V. (Horizon B.V.). Horizon B.V. is a Dutch company pursuing power development projects in Europe; | |
| Horizon LFG, Inc. (Horizon LFG), a New York corporation engaged through subsidiaries in the purchase, sale and transportation of landfill gas in Ohio, Michigan, Kentucky, Missouri, Maryland and Indiana. Horizon LFG and one of its wholly owned subsidiaries own all of the partnership interests in Toro Partners, LP (Toro), a limited partnership which owns and operates short-distance landfill gas pipeline companies. The Company acquired Toro in June 2003. Further information can be found in Item 8 at Note K Acquisitions; | |
| Leidy Hub, Inc. (Leidy Hub), a New York corporation formed to provide various natural gas hub services to customers in the eastern United States; | |
| Data-Track Account Services, Inc. (Data-Track), a New York corporation which provides collection services principally for the Companys subsidiaries; | |
| Horizon Power, Inc. (Horizon Power), a New York corporation which is designated as an exempt wholesale generator under the Holding Company Act and is developing or operating mid-range independent power production facilities and landfill gas electric generation facilities; and | |
| Empire Pipeline, Inc., a New York corporation formed in 2005 to be the surviving corporation of a planned future merger with Empire, which is expected to occur after construction of the Empire Connector project (described below under the heading Rates and Regulation and under Item 7, MD&A under the heading Investing Cash Flow).* |
4
5
6
7
8
9
10
Name and Age (as of | Current Company Positions and Other Material | |
September 30, 2005) | Business Experience During Past Five Years | |
Philip C. Ackerman
(61) |
Chairman of the Board of Directors since January 2002; Chief Executive Officer since October 2001; President since July 1999; and President of Horizon since September 1995. Mr. Ackerman has served as a Director since March 1994, and previously served as Senior Vice President from June 1989 to July 1999 and President of Distribution Corporation from October 1995 to July 1999. | |
David F. Smith
(52) |
President of Supply Corporation since April 2005; President of Empire since April 2005; Vice President of the Company since April 2005. Mr. Smith previously served as President of Distribution Corporation from July 1999 to April 2005; Senior Vice President of Supply Corporation from July 2000 to April 2005; and Senior Vice President of Distribution Corporation from January 1993 to July 1999. | |
Dennis J. Seeley
(62) |
President of Distribution Corporation since April 2005; Vice President of the Company since April 2005. Mr. Seeley previously served as President of Supply Corporation from March 2000 to April 2005; President of Empire from February 2003 to April 2005; and Senior Vice President of Distribution Corporation from February 1997 to April 2005. Mr. Seeley also served as Vice President of the Company from January 2000 to April 2000. | |
James A. Beck
(58) |
President of Seneca since October 1996 and President of Highland since March 1998. | |
Ronald J. Tanski
(53) |
Treasurer of the Company since April 2004; Controller of the Company from February 2003 through March 2004; Senior Vice President of Distribution Corporation since July 2001; Controller of Distribution Corporation from February 1997 through March 2004; Treasurer of Distribution Corporation since April 2004; Treasurer and Secretary of Supply Corporation since April 2004; Secretary and Treasurer of Horizon since February 1997; and Vice President of Distribution Corporation from April 1993 to July 2001. | |
Karen M. Camiolo
(46) |
Controller of the Company since April 2004; Controller of Distribution Corporation and Supply Corporation since April 2004; and Chief Auditor of the Company from July 1994 through March 2004. | |
Anna Marie Cellino
(52) |
Secretary of the Company since October 1995; Senior Vice President of Distribution Corporation since July 2001; and Vice President of Distribution Corporation from June 1994 to July 2001. | |
Paula M. Ciprich
(45) |
General Counsel of the Company since January 2005; Assistant Secretary and General Counsel of Distribution Corporation since February 1997. | |
Donna L. DeCarolis
(46) |
President of NFR since January 2005; Secretary of NFR since March 2002; Vice President of NFR from May 2001 to January 2005; and Assistant Vice President of Distribution Corporation from June 1999 to May 2001. | |
John R. Pustulka
(53) |
Senior Vice President of Supply Corporation since July 2001; and Vice President of Supply Corporation from April 1993 to July 2001. | |
James D. Ramsdell
(50) |
Senior Vice President of Distribution Corporation since July 2001; and Vice President of Distribution Corporation from June 1994 to July 2001. |
(1) | The executive officers serve at the pleasure of the Board of Directors. The information provided relates to the Company and its principal subsidiaries. Many of the executive officers have served or currently serve as officers or directors of other subsidiaries of the Company. |
11
As a holding company, National Fuel depends on its operating subsidiaries to meet its financial obligations. |
National Fuel is dependent on bank credit facilities and continued access to capital markets to successfully execute its operating strategies. |
National Fuels credit ratings may not reflect all the risks of an investment in its securities. |
National Fuels need to comply with comprehensive, complex, and sometimes unpredictable government regulations may increase its costs and limit its revenue growth, which may result in reduced earnings. |
12
National Fuels liquidity, and in certain circumstances, its earnings, could be adversely affected by the cost of purchasing natural gas during periods in which natural gas prices are rising significantly. |
Uncertain economic conditions may affect National Fuels ability to finance capital expenditures and to refinance maturing debt. |
13
Decreased oil and natural gas prices could adversely affect revenues, cash flows and profitability. |
National Fuel has significant transactions involving price hedging of its oil and natural gas production. |
14
You should not place undue reliance on reserve information because such information represents estimates. |
The amount and timing of actual future oil and natural gas production and the cost of drilling are difficult to predict and may vary significantly from reserves and production estimates, which may reduce National Fuels earnings. |
15
Financial accounting requirements regarding exploration and production activities may affect National Fuels profitability. |
Environmental regulation significantly affects National Fuels business. |
The nature of National Fuels operations presents inherent risks of loss that could adversely affect its results of operations, financial condition and cash flows. |
16
National Fuel may be adversely affected by economic conditions. |
Item 1B | Unresolved Staff Comments |
Item 2 | Properties |
17
18
For the Year Ended
September 30
2005
2004
2003
$
7.05
$
5.61
$
5.41
$
49.78
$
35.31
$
29.17
$
6.01
$
4.82
$
4.22
$
35.03
$
31.51
$
27.88
$
0.71
$
0.60
$
0.56
50
73
75
$
6.85
$
5.54
$
5.01
$
42.91
$
31.89
$
26.12
$
6.15
$
5.72
$
5.12
$
23.01
$
22.86
$
23.67
$
1.15
$
1.05
$
1.00
53
55
59
$
7.60
$
5.91
$
5.07
$
48.28
$
31.30
$
28.77
$
7.01
$
5.72
$
5.10
$
48.28
$
31.30
$
28.77
$
0.63
$
0.54
$
0.43
13
14
14
$
7.13
$
5.66
$
5.28
$
44.87
$
33.13
$
27.16
$
6.26
$
5.13
$
4.52
$
26.59
$
26.06
$
25.11
$
0.90
$
0.76
$
0.72
117
142
148
19
For the Year Ended
September 30
2005
2004
2003
$
6.15
$
4.87
$
4.67
$
42.97
$
30.94
$
26.41
$
6.14
$
4.79
$
4.20
$
42.97
$
30.94
$
15.85
$
1.29
$
1.00
$
1.65
27
22
55
$
6.86
$
5.51
$
5.18
$
44.72
$
32.98
$
26.90
$
6.23
$
5.06
$
4.47
$
27.86
$
26.40
$
21.84
$
0.98
$
0.80
$
0.97
144
164
203
United States
Gulf Coast
West Coast
Appalachian
Region
Region
Region
Total U. S.
At September 30, 2005
Gas
Oil
Gas
Oil
Gas
Oil
Gas
Oil
33
35
1,248
1,995
31
2,028
1,314
20
15
1,240
1,918
25
1,938
1,280
Canada
Total Company
At September 30, 2005
Gas
Oil
Gas
Oil
198
53
2,226
1,367
141
36
2,079
1,316
United States
Gulf
West
Coast
Coast
Appalachian
Total
Total
At September 30, 2005
Region
Region
Region
U.S.
Canada
Company
Gross
111,864
9,839
509,337
631,040
124,143
755,183
82,695
9,469
482,453
574,617
86,454
661,071
Gross
178,269
479,056
657,325
385,359
1,042,684
94,251
454,513
548,764
254,794
803,558
20
Productive | Dry | ||||||||||||||||||||||||
For the Year Ended September 30 | 2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
United States
|
|||||||||||||||||||||||||
Gulf Coast Region
|
|||||||||||||||||||||||||
Net Wells Completed
Exploratory |
1.30 | | 1.25 | 0.47 | 0.50 | | |||||||||||||||||||
Development
|
0.23 | 0.65 | 2.10 | | | | |||||||||||||||||||
West Coast Region Net Wells Completed
Exploratory |
| | | | | | |||||||||||||||||||
Development
|
116.97 | 49.00 | 30.97 | | | | |||||||||||||||||||
Appalachian Region Net Wells Completed
Exploratory |
3.00 | | 3.00 | 4.00 | 3.00 | 0.10 | |||||||||||||||||||
Development
|
45.00 | 41.00 | 58.00 | 1.00 | | | |||||||||||||||||||
Total United States Net Wells Completed
Exploratory |
4.30 | | 4.25 | 4.47 | 3.50 | 0.10 | |||||||||||||||||||
Development
|
162.20 | 90.65 | 91.07 | 1.00 | | | |||||||||||||||||||
Canada
|
|||||||||||||||||||||||||
Net Wells Completed
Exploratory |
21.14 | 52.85 | 5.00 | 2.00 | 6.08 | 2.50 | |||||||||||||||||||
Development
|
3.50 | 10.50 | 17.16 | | | 5.00 | |||||||||||||||||||
Total
|
|||||||||||||||||||||||||
Net Wells Completed
Exploratory |
25.44 | 52.85 | 9.25 | 6.47 | 9.58 | 2.60 | |||||||||||||||||||
Development
|
165.70 | 101.15 | 108.23 | 1.00 | | 5.00 |
United States | |||||||||||||||||||||||||
Gulf | West | ||||||||||||||||||||||||
Coast | Coast | Appalachian | Total | Total | |||||||||||||||||||||
At September 30, 2005 | Region | Region | Region | U.S. | Canada | Company | |||||||||||||||||||
Wells in Process of Drilling(1)
Gross |
7.00 | 5.00 | 52.00 | 64.00 | 4.00 | 68.00 | |||||||||||||||||||
Net
|
5.04 | 5.00 | 52.00 | 62.04 | 0.82 | 62.86 |
(1) | Includes wells awaiting completion. |
Item 3 | Legal Proceedings |
21
22
Item 4 | Submission of Matters to a Vote of Security Holders |
Item 5 | Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Total Number of | Maximum Number | |||||||||||||||
Shares Purchased | of Shares that May | |||||||||||||||
as Part of Publicly | Yet Be Purchased | |||||||||||||||
Total Number of | Announced Share | Under Share | ||||||||||||||
Shares | Average Price | Repurchase Plans | Repurchase Plans | |||||||||||||
Period | Purchased(a) | Paid per Share | or Programs | or Programs | ||||||||||||
July 1-31, 2005
|
147,800 | $ | 29.94 | | | |||||||||||
Aug. 1-31, 2005
|
31,878 | $ | 29.60 | | | |||||||||||
Sept. 1-30, 2005
|
105,619 | $ | 32.26 | | | |||||||||||
Total
|
285,297 | $ | 30.76 | | | |||||||||||
(a) | Represents (i) shares of common stock of the Company purchased on the open market with Company matching contributions for the accounts of participants in the Companys 401(k) plans, and (ii) shares of common stock of the Company tendered to the Company by holders of stock options or shares of restricted stock for the payment of option exercise prices and/or applicable withholding taxes. |
23
Item 6 | Selected Financial Data (1) |
Year Ended September 30 | ||||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
(Thousands) | ||||||||||||||||||||||
Summary of Operations
|
||||||||||||||||||||||
Operating Revenues
|
$ | 1,923,549 | $ | 1,907,968 | $ | 1,921,573 | $ | 1,369,869 | $ | 1,962,874 | ||||||||||||
Operating Expenses:
|
||||||||||||||||||||||
Purchased Gas
|
959,827 | 949,452 | 963,567 | 462,857 | 1,002,466 | |||||||||||||||||
Operation and Maintenance
|
404,517 | 385,519 | 361,898 | 372,063 | 348,270 | |||||||||||||||||
Property, Franchise and Other Taxes
|
69,076 | 68,978 | 79,692 | 69,837 | 81,571 | |||||||||||||||||
Depreciation, Depletion and Amortization
|
179,767 | 174,289 | 181,329 | 168,745 | 163,239 | |||||||||||||||||
Impairment of Oil and Gas Producing Properties
|
| | 42,774 | | 180,781 | |||||||||||||||||
1,613,187 | 1,578,238 | 1,629,260 | 1,073,502 | 1,776,327 | ||||||||||||||||||
Gain (Loss) on Sale of Timber Properties
|
| (1,252 | ) | 168,787 | | | ||||||||||||||||
Gain (Loss) on Sale of Oil and Gas Producing Properties
|
| 4,645 | (58,472 | ) | | | ||||||||||||||||
Operating Income
|
310,362 | 333,123 | 402,628 | 296,367 | 186,547 | |||||||||||||||||
Other Income (Expense):
|
||||||||||||||||||||||
Income from Unconsolidated Subsidiaries
|
3,362 | 805 | 535 | 224 | 1,794 | |||||||||||||||||
Impairment of Investment in Partnership
|
(4,158 | ) | | | (15,167 | ) | | |||||||||||||||
Interest Income
|
6,496 | 1,771 | 2,204 | 2,593 | 4,010 | |||||||||||||||||
Other Income
|
12,744 | 2,908 | 2,427 | 3,184 | 5,337 | |||||||||||||||||
Interest Expense on Long-Term Debt
|
(73,244 | ) | (82,989 | ) | (91,381 | ) | (88,646 | ) | (78,297 | ) | ||||||||||||
Other Interest Expense
|
(9,069 | ) | (6,763 | ) | (11,196 | ) | (15,109 | ) | (25,294 | ) | ||||||||||||
Income from Continuing Operations Before Income Taxes
|
246,493 | 248,855 | 305,217 | 183,446 | 94,097 | |||||||||||||||||
Income Tax Expense
|
92,978 | 94,590 | 124,150 | 69,944 | 33,434 | |||||||||||||||||
Income from Continuing Operations
|
153,515 | 154,265 | 181,067 | 113,502 | 60,663 | |||||||||||||||||
Discontinued Operations:
|
||||||||||||||||||||||
Income from Operations, Net of Tax
|
10,199 | 12,321 | 6,769 | 4,180 | 4,836 | |||||||||||||||||
Gain on Disposal, Net of Tax
|
25,774 | | | | | |||||||||||||||||
Income from Discontinued Operations, Net of Tax
|
35,973 | 12,321 | 6,769 | 4,180 | 4,836 | |||||||||||||||||
Income Before Cumulative Effect of Changes in Accounting
|
189,488 | 166,586 | 187,836 | 117,682 | 65,499 | |||||||||||||||||
Cumulative Effect of Changes in Accounting
|
| | (8,892 | ) | | | ||||||||||||||||
Net Income Available for Common Stock
|
$ | 189,488 | $ | 166,586 | $ | 178,944 | $ | 117,682 | $ | 65,499 | ||||||||||||
24
Year Ended September 30
2005
2004
2003
2002
2001
(Thousands)
$
1.84
$
1.88
$
2.24
$
1.42
$
0.77
$
1.81
$
1.86
$
2.23
$
1.41
$
0.76
$
2.27
$
2.03
$
2.21
$
1.47
$
0.83
$
2.23
$
2.01
$
2.20
$
1.46
$
0.82
$
1.14
$
1.10
$
1.06
$
1.03
$
0.99
$
1.13
$
1.09
$
1.05
$
1.02
$
0.97
$
1.16
$
1.12
$
1.08
$
1.04
$
1.01
18,369
19,063
19,217
20,004
20,345
$
1,064,588
$
1,048,428
$
1,028,393
$
960,015
$
945,693
680,574
696,487
705,927
487,793
483,222
974,806
923,730
925,833
1,072,200
1,081,622
97
80
171
125
262
94,826
82,838
87,600
110,624
90,453
18,098
21,172
22,042
6,797
1,209
6,311
234,029
221,082
207,191
178,252
$
2,839,300
$
3,006,764
$
2,991,048
$
2,844,745
$
2,780,713
$
3,722,652
$
3,717,603
$
3,725,414
$
3,429,163
$
3,452,566
$
1,229,583
$
1,253,701
$
1,137,390
$
1,006,858
$
1,002,655
1,119,012
1,133,317
1,147,779
1,145,341
1,046,694
$
2,348,595
$
2,387,018
$
2,285,169
$
2,152,199
$
2,049,349
(1) | Certain prior year amounts have been reclassified to conform with current year presentation. |
(2) | Includes discontinued operations and cumulative effect of changes in accounting. |
(3) | Includes net plant of the former international segment as follows: $20 for 2005, $227,905 for 2004, $219,199 for 2003, $207,191 for 2002 and $178,250 for 2001. |
Item 7 | Managements Discussion and Analysis of Financial Condition and Results of Operations |
1. | The critical accounting policies of the Company; | |
2. | Changes in revenues and earnings of the Company under the heading, Results of Operations; | |
3. | Operating, investing and financing cash flows under the heading Capital Resources and Liquidity; | |
4. | Off-Balance Sheet Arrangements; |
25
5. | Contractual Obligations; and | |
6. | Other Matters, including: a.) 2005 and 2006 funding to the Companys defined benefit retirement plan and post-retirement benefit plan, b.) disclosures and tables concerning market risk sensitive instruments, c.) rate matters in the Companys New York, Pennsylvania and FERC regulated jurisdictions, d.) environmental matters, and e.) new accounting pronouncements. |
26
27
2005 Events |
| A $25.8 million gain on the sale of U.E., which was completed in July 2005. This amount is included in earnings from discontinued operations; | |
| A $2.6 million gain in the Pipeline and Storage segment associated with a FERC approved sale of base gas; |
28
| A $3.9 million gain in the Pipeline and Storage segment associated with insurance proceeds received in prior years for which a contingency was resolved during 2005; | |
| A $3.3 million loss related to certain derivative financial instruments that no longer qualified as effective hedges; | |
| A $2.7 million impairment in the value of the Companys 50% investment in ESNE (recorded in the All Other category), a limited liability company that owns an 80-megawatt, combined cycle, natural gas-fired power plant in the town of North East, Pennsylvania; and | |
| A $1.8 million impairment of a gas-powered turbine in the All Other category that the Company had planned to use in the development of a co-generation plant. |
2004 Events |
| A $5.2 million reduction to deferred income tax expense in the International segment resulting from a change in the statutory income tax rate in the Czech Republic. This amount is included in earnings from discontinued operations; | |
| Settlement of a pension obligation which resulted in the recording of additional expense amounting to $6.4 million, allocated among the segments as follows: $2.2 million to the Utility segment ($1.2 million in the New York jurisdiction and $1.0 million in the Pennsylvania jurisdiction), $2.0 million to the Pipeline and Storage segment ($1.8 million to Supply Corporation and $0.2 million to Empire State Pipeline), $0.9 million to the Exploration and Production segment, $0.3 million to the Energy Marketing segment and $1.0 million to the Corporate and All Other categories; | |
| An adjustment to the 2003 sale of the Companys Southeast Saskatchewan oil and gas properties in the Exploration and Production segment which increased 2004 earnings by $4.6 million; and | |
| An adjustment to the Companys 2003 sale of its timber properties in the Timber segment, which reduced 2004 earnings by $0.8 million. |
2003 Events |
| The Companys Timber segment completed the sale of approximately 70,000 acres of its timber property, increasing earnings by $102.2 million; | |
| The Companys Exploration and Production segment completed the sale of its Southeast Saskatchewan oil and gas properties in Canada, reducing earnings by $39.6 million; | |
| The Companys Exploration and Production segment recorded impairment charges related to its Canadian oil and gas assets which reduced earnings by $28.9 million; | |
| An impairment in the amount of $8.3 million, representing the cumulative effect of a change in accounting for goodwill associated with the Companys operations in the Czech Republic; and |
29
| A reduction in the amount of $0.6 million, representing the cumulative effect of a change in accounting for plugging and abandonment costs in the Companys Exploration and Production segment. |
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Thousands) | |||||||||||||
Utility
|
$ | 39,197 | $ | 46,718 | $ | 56,808 | |||||||
Pipeline and Storage
|
60,454 | 47,726 | 45,230 | ||||||||||
Exploration and Production
|
50,659 | 54,344 | (31,293 | ) | |||||||||
Energy Marketing
|
5,077 | 5,535 | 5,868 | ||||||||||
Timber
|
5,032 | 5,637 | 112,450 | ||||||||||
Total Reportable Segments
|
160,419 | 159,960 | 189,063 | ||||||||||
All Other
|
(2,616 | ) | 1,530 | 193 | |||||||||
Corporate(1)
|
(4,288 | ) | (7,225 | ) | (8,189 | ) | |||||||
Total Earnings from Continuing Operations
|
$ | 153,515 | $ | 154,265 | $ | 181,067 | |||||||
Earnings from Discontinued Operations
|
35,973 | 12,321 | 6,769 | ||||||||||
Cumulative Effect of Changes in Accounting(2)
|
| | (8,892 | ) | |||||||||
Total Consolidated
|
$ | 189,488 | $ | 166,586 | $ | 178,944 | |||||||
(1) | Includes earnings from the former International segments activity other than the activity from the Czech Republic operations included in Earnings from Discontinued Operations. |
(2) | Includes $8.3 million for the cumulative effect of a change in accounting for goodwill associated with the Companys operations in the Czech Republic and $0.6 million for the cumulative effect of a change in accounting for plugging and abandonment costs in the Companys Exploration and Production segment. |
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Thousands) | |||||||||||||
Retail Revenues:
|
|||||||||||||
Residential
|
$ | 868,292 | $ | 808,740 | $ | 801,984 | |||||||
Commercial
|
145,393 | 137,092 | 137,905 | ||||||||||
Industrial
|
13,998 | 17,454 | 23,263 | ||||||||||
1,027,683 | 963,286 | 963,152 | |||||||||||
Off-System Sales
|
| 106,841 | 107,220 | ||||||||||
Transportation
|
83,669 | 80,563 | 86,374 | ||||||||||
Other
|
5,715 | 1,951 | 6,237 | ||||||||||
$ | 1,117,067 | $ | 1,152,641 | $ | 1,162,983 | ||||||||
30
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Retail Sales:
|
|||||||||||||
Residential
|
66,903 | 70,109 | 76,449 | ||||||||||
Commercial
|
11,984 | 12,752 | 14,177 | ||||||||||
Industrial
|
1,387 | 2,261 | 3,537 | ||||||||||
80,274 | 85,122 | 94,163 | |||||||||||
Off-System Sales
|
| 16,839 | 17,999 | ||||||||||
Transportation
|
59,770 | 60,565 | 64,232 | ||||||||||
140,044 | 162,526 | 176,394 | |||||||||||
Percent (Warmer) | ||||||||||||||||||
Colder Than | ||||||||||||||||||
Year Ended September 30 | Normal | Actual | Normal | Prior Year | ||||||||||||||
2005:
|
Buffalo | 6,692 | 6,587 | (1.6 | )% | 0.2 | % | |||||||||||
Erie | 6,243 | 6,247 | 0.1 | % | 2.6 | % | ||||||||||||
2004:
|
Buffalo | 6,729 | 6,572 | (2.3 | )% | (7.9 | %) | |||||||||||
Erie | 6,277 | 6,086 | (3.0 | )% | (10.1 | %) | ||||||||||||
2003:
|
Buffalo | 6,815 | 7,137 | 4.7 | % | 22.9 | % | |||||||||||
Erie | 6,135 | 6,769 | 10.3 | % | 26.9 | % |
31
32
33
Year Ended September 30
2005
2004
2003
(Thousands)
$
117,146
$
120,443
$
109,508
4,413
3,084
3,944
121,559
123,527
113,452
65,320
63,962
63,223
267
20
36
65,587
63,982
63,259
28,713
22,198
24,709
$
215,859
$
209,707
$
201,420
Year Ended September 30
2005
2004
2003
357,585
338,991
340,925
14,794
12,692
10,004
372,379
351,683
350,929
34
35
Year Ended September 30
2005
2004
2003
(Thousands)
$
181,713
$
167,127
$
150,982
107,801
119,564
147,101
36,350
28,614
28,879
(2,733
)
1,815
1,308
(29,706
)
(23,422
)
(22,956
)
$
293,425
$
293,698
$
305,314
(1) | Represents the elimination of certain West Coast gas production revenue included in Gas (after Hedging) in the table above that is sold to the gas processing plant shown in the table above. An elimination for the same dollar amount is made to reduce the gas processing plants purchased gas expense. |
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
Gas Production
(MMcf)
|
|||||||||||||
Gulf Coast
|
12,468 | 17,596 | 18,441 | ||||||||||
West Coast
|
4,052 | 4,057 | 4,467 | ||||||||||
Appalachia
|
4,650 | 5,132 | 5,123 | ||||||||||
Canada
|
8,009 | 6,228 | 5,774 | ||||||||||
29,179 | 33,013 | 33,805 | |||||||||||
Oil Production
(Mbbl)
|
|||||||||||||
Gulf Coast
|
989 | 1,534 | 1,473 | ||||||||||
West Coast
|
2,544 | 2,650 | 2,872 | ||||||||||
Appalachia
|
36 | 20 | 10 | ||||||||||
Canada
|
300 | 324 | 2,382 | ||||||||||
3,869 | 4,528 | 6,737 | |||||||||||
36
Year Ended September 30
2005
2004
2003
$
7.05
$
5.61
$
5.41
$
6.85
$
5.54
$
5.01
$
7.60
$
5.91
$
5.07
$
6.15
$
4.87
$
4.67
$
6.86
$
5.51
$
5.18
$
6.23
$
5.06
$
4.47
$
49.78
$
35.31
$
29.17
$
42.91
$
31.89
$
26.12
$
48.28
$
31.30
$
28.77
$
42.97
$
30.94
$
26.41
$
44.72
$
32.98
$
26.90
$
27.86
$
26.40
$
21.84
(1) | Refer to further discussion of hedging activities below under Market Risk Sensitive Instruments and in Note E Financial Instruments in Item 8 of this report. |
(2) | Includes low gravity oil which generally sells for a lower price. |
37
38
Year Ended September 30
2005
2004
2003
(Thousands)
$
329,560
$
283,747
$
304,390
154
602
270
$
329,714
$
284,349
$
304,660
Year Ended September 30
2005
2004
2003
40,683
41,651
45,135
39
Year Ended September 30
2005
2004
2003
(Thousands)
$
22,478
$
21,790
$
27,341
7,296
5,923
6,200
29,651
27,416
21,814
1,861
841
871
$
61,286
$
55,970
$
56,226
Year Ended September 30
2005
2004
2003
(Thousands)
7,601
6,848
8,764
10,489
9,552
11,913
15,491
15,020
13,300
33,581
31,420
33,977
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
Year Ended September 30
2005
2004
2003
(Millions)
$
317.3
$
437.1
$
325.7
(219.5
)
(172.3
)
(152.2
)
(228.8
)
(0.4
)
111.6
186.0
1.4
7.1
78.5
3.2
2.0
12.1
(115.4
)
38.6
(147.6
)
(13.3
)
(243.1
)
20.7
20.3
23.8
17.0
(94.1
)
(89.1
)
(84.5
)
(12.7
)
1.3
3.5
1.6
$
0.1
$
7.6
$
28.1
Table of Contents
Year Ended
September 30, 2005
Total Expenditures
For Long-Lived Assets
(Millions)
$
50.1
21.1
122.4
18.9
1.1
$
213.6
Table of Contents
Year Ended September 30
2006
2007
2008
(Millions)
$
56.0
$
56.0
$
55.0
34.0
157.0
52.0
155.0
110.0
115.0
2.0
1.0
1.0
2.0
$
249.0
$
324.0
$
223.0
(1)
Includes estimated expenditures for the years ended
September 30, 2006, 2007 and 2008 of approximately
$42 million, $22 million and $30 million,
respectively, to develop proved undeveloped reserves.
Table of Contents
Table of Contents
Table of Contents
Payments by Expected Maturity Dates
2006
2007
2008
2009
2010
Thereafter
Total
(Millions)
$
81.2
$
80.7
$
275.9
$
158.9
$
51.8
$
1,016.6
$
1,665.1
$
8.5
$
7.4
$
6.6
$
5.6
$
4.0
$
20.1
$
52.2
$
1.3
$
0.8
$
0.9
$
0.5
$
0.5
$
0.6
$
4.6
$
997.3
$
96.1
$
18.9
$
7.6
$
7.4
$
85.2
$
1,212.5
$
138.5
$
135.4
$
134.6
$
133.2
$
75.1
$
7.0
$
623.8
$
12.4
$
8.2
$
1.7
$
1.3
$
1.3
$
0.9
$
25.8
(1)
Gas prices are variable based on the NYMEX prices adjusted for
basis.
(2)
Refer to Note D Capitalization and Short-Term
Borrowings, as well as the table under Interest Rate Risk in the
Market Risk Sensitive Instruments section below, for the amounts
excluding interest expense.
Table of Contents
Natural Gas Price Swap Agreements
Expected Maturity Dates
2006
2007
2008
2009
Total
14.0
2.8
1.7
0.3
18.8
$
5.77
$
5.82
$
5.40
$
5.05
$
5.73
$
12.13
$
10.66
$
9.16
$
8.64
$
11.60
Table of Contents
Crude Oil Price Swap Agreements
Expected Maturity Dates
2006
2007
2008
Total
1,935,000
855,000
45,000
2,835,000
$
34.14
$
37.03
$
39.00
$
35.09
$
66.74
$
65.82
$
64.20
$
66.42
No Cost Collars
Expected Maturity Dates
2006
2007
Total
6.1
2.4
8.5
$
14.37
$
18.82
$
15.62
$
7.57
$
7.45
$
7.54
Table of Contents
Options
Expected
Maturity Dates
2006
Total
0.6
0.6
$
5.54
$
5.54
0.6
0.6
$
7.98
$
7.98
Futures Contracts
Expected Maturity Dates
2006
2007
2008
2009
Total
(2.2
)
0.1
(0.1
)
(1)
(2.2
)
$
8.72
$
7.12
$
6.95
$
6.95
$
8.63
$
14.71
$
11.33
$
9.15
$
8.14
$
14.48
(1)
The Energy Marketing segment has sold 2 futures contracts for
2009.
Table of Contents
Principal Amounts by Expected Maturity Dates
2006
2007
2008
2009
Thereafter
Total
(Dollars in millions)
$
$
$
200
$
100
$
796.2
$
1,096.2
6.3
%
6.0
%
6.5
%
6.4
%
$
9.4
$
9.4
$
9.3
$
4.1
$
32.2
4.9
%
4.9
%
4.9
%
4.9
%
4.9
%
(1)
$32.1 million is variable rate debt.
(2)
Weighted average interest rate excludes the impact of an
interest rate collar on $32.1 million of variable rate debt.
Table of Contents
Table of Contents
Table of Contents
1.
Changes in laws and regulations to which the Company is subject,
including changes in tax, environmental, safety and employment
laws and regulations, repeal of the Holding Company Act, and
changes in laws and regulations relating to repeal of the
Holding Company Act;
2.
Changes in economic conditions, including economic disruptions
caused by terrorist activities, acts of war or major accidents;
3.
Changes in demographic patterns and weather conditions,
including the occurrence of severe weather, such as hurricanes;
Table of Contents
4.
Changes in the availability and/or price of natural gas or oil
and the effect of such changes on the accounting treatment or
valuation of derivative financial instruments or the
Companys natural gas and oil reserves;
5.
Impairments under the SECs full cost ceiling test for
natural gas and oil reserves;
6.
Changes in the availability and/or price of derivative financial
instruments;
7.
Changes in the price differentials between various types of oil;
8.
Failure of the price differential between heavy sour crude oil
and light sweet crude oil to return to its historical norm;
9.
Inability to obtain new customers or retain existing ones;
10.
Significant changes in competitive factors affecting the Company;
11.
Governmental/regulatory actions, initiatives and proceedings,
including those involving acquisitions, financings, rate cases
(which address, among other things, allowed rates of return,
rate design and retained gas), affiliate relationships, industry
structure, franchise renewal, and environmental/safety
requirements;
12.
Unanticipated impacts of restructuring initiatives in the
natural gas and electric industries;
13.
Significant changes from expectations in actual capital
expenditures and operating expenses and unanticipated project
delays or changes in project costs or plans, including changes
in the plans of the sponsors of the proposed Millennium Pipeline
to proceed with that project;
14.
The nature and projected profitability of pending and potential
projects and other investments;
15.
Occurrences affecting the Companys ability to obtain funds
from operations, debt or equity to finance needed capital
expenditures and other investments, including any downgrades in
the Companys credit ratings;
16.
Uncertainty of oil and gas reserve estimates;
17.
Ability to successfully identify and finance acquisitions or
other investments and ability to operate and integrate existing
and any subsequently acquired business or properties;
18.
Ability to successfully identify, drill for and produce
economically viable natural gas and oil reserves;
19.
Significant changes from expectations in the Companys
actual production levels for natural gas or oil;
20.
Regarding foreign operations, changes in trade and monetary
policies, inflation and exchange rates, taxes, operating
conditions, laws and regulations related to foreign operations,
and political and governmental changes;
21.
Significant changes in tax rates or policies or in rates of
inflation or interest;
22.
Significant changes in the Companys relationship with its
employees or contractors and the potential adverse effects if
labor disputes, grievances or shortages were to occur;
23.
Changes in accounting principles or the application of such
principles to the Company;
24.
The cost and effects of legal and administrative claims against
the Company;
25.
Changes in actuarial assumptions and the return on assets with
respect to the Companys retirement plan and
post-retirement benefit plans;
26.
Increasing health care costs and the resulting effect on health
insurance premiums and on the obligation to provide
post-retirement benefits; or
27.
Increasing costs of insurance, changes in coverage and the
ability to obtain insurance.
Item 7A
Quantitative and Qualitative Disclosures About Market
Risk
Table of Contents
Item 8 | Financial Statements and Supplementary Data |
Index to Financial Statements |
Page | |||||
Financial Statements:
|
|||||
58 | |||||
60 | |||||
61 | |||||
62 | |||||
63 | |||||
64 | |||||
Financial Statement Schedules:
|
|||||
For the three years ended September 30, 2005
|
|||||
108 |
Supplementary Data |
57
58
PricewaterhouseCoopers LLP |
59
Year Ended September 30
2005
2004
2003
(Thousands of dollars, except per
common share amounts)
$
1,923,549
$
1,907,968
$
1,921,573
959,827
949,452
963,567
404,517
385,519
361,898
69,076
68,978
79,692
179,767
174,289
181,329
42,774
1,613,187
1,578,238
1,629,260
(1,252
)
168,787
4,645
(58,472
)
310,362
333,123
402,628
3,362
805
535
(4,158
)
6,496
1,771
2,204
12,744
2,908
2,427
(73,244
)
(82,989
)
(91,381
)
(9,069
)
(6,763
)
(11,196
)
246,493
248,855
305,217
92,978
94,590
124,150
153,515
154,265
181,067
10,199
12,321
6,769
25,774
35,973
12,321
6,769
189,488
166,586
187,836
(8,892
)
189,488
166,586
178,944
718,926
642,690
549,397
908,414
809,276
728,341
95,394
90,350
85,651
$
813,020
$
718,926
$
642,690
$
1.84
$
1.88
$
2.24
0.43
0.15
0.08
(0.11
)
$
2.27
$
2.03
$
2.21
$
1.81
$
1.86
$
2.23
0.42
0.15
0.08
(0.11
)
$
2.23
$
2.01
$
2.20
83,541,627
82,045,535
80,808,794
85,029,131
82,900,438
81,357,896
60
At September 30
2005
2004
(Thousands of dollars)
ASSETS
$
4,423,255
$
4,602,779
1,583,955
1,596,015
2,839,300
3,006,764
57,607
57,541
77,784
8,612
155,064
129,825
20,465
18,574
64,529
68,511
33,267
35,516
14,817
7,532
65,469
35,364
83,774
43,105
23
572,776
404,603
85,000
83,847
17,567
19,573
47,028
32,958
4,474
3,411
80,394
72,556
12,658
16,444
5,476
5,476
42,302
45,994
15,677
25,977
310,576
306,236
$
3,722,652
$
3,717,603
CAPITALIZATION AND LIABILITIES
$
84,357
$
82,990
529,834
506,560
813,020
718,926
1,427,211
1,308,476
(197,628
)
(54,775
)
1,229,583
1,253,701
1,119,012
1,133,317
2,348,595
2,387,018
37,048
156,800
9,393
14,260
155,485
115,979
1,158
3,154
24,445
23,210
60,404
46,952
209,072
95,099
459,957
455,454
489,720
501,200
11,009
11,065
6,796
7,498
90,396
82,020
66,339
66,488
143,687
70,410
41,411
32,292
64,742
67,110
914,100
838,083
$
3,722,652
$
3,717,603
61
Year Ended September 30
2005
2004
2003
(Thousands of dollars)
$
189,488
$
166,586
$
178,944
(27,386
)
1,252
(168,787
)
(4,645
)
58,472
42,774
193,144
189,538
195,226
40,388
40,329
78,369
8,892
(1,372
)
(19
)
703
4,158
2,645
1,933
785
7,390
9,839
11,289
(69,172
)
(7,151
)
(1,109
)
(31,246
)
4,840
(28,382
)
1,934
13,662
(13,826
)
(7,285
)
21,160
(16,261
)
(30,390
)
37,390
(12,628
)
48,089
(5,134
)
13,699
(1,996
)
2,462
692
16,085
2,082
9,343
(13,461
)
(2,525
)
(9,343
)
(3,667
)
(34,450
)
(23,124
)
317,346
437,149
325,728
(219,530
)
(172,341
)
(152,251
)
(228,814
)
(375
)
111,619
186,014
1,349
7,162
78,531
3,238
1,974
12,065
(103,324
)
(163,205
)
(104,830
)
(115,359
)
38,600
(147,622
)
248,513
(13,317
)
(243,085
)
(227,826
)
20,279
23,763
17,019
(94,159
)
(89,092
)
(84,530
)
(12,676
)
(215,232
)
(269,814
)
(194,446
)
1,276
3,451
1,644
66
7,581
28,096
57,541
49,960
21,864
$
57,607
$
57,541
$
49,960
$
84,455
$
90,705
$
104,452
$
83,542
$
30,214
$
56,146
62
Year Ended September 30
2005
2004
2003
(Thousands of dollars)
$
189,488
$
166,586
$
178,944
(83,379
)
56,612
(86,170
)
14,286
21,466
54,472
(37,793
)
(9,607
)
2,891
3,629
2,419
(651
)
(206,847
)
(129,934
)
(47,777
)
97,689
49,142
69,809
(213,804
)
915
(16,854
)
(29,183
)
19,814
(30,159
)
112
(112
)
1,012
1,270
847
(228
)
(79,059
)
(49,113
)
(18,594
)
36,507
18,182
26,953
(70,951
)
(9,847
)
(20,953
)
(142,853
)
10,762
4,099
$
46,635
$
177,348
$
183,043
63
Principles of Consolidation |
Reclassification |
Regulation |
Revenues |
Regulatory Mechanisms |
64
Property, Plant and Equipment |
Depreciation, Depletion and Amortization |
65
As of September 30
2005
2004(1)
(Thousands)
$
1,462,527
$
1,426,540
960,066
946,866
1,665,774
1,517,856
1,108
1,169
114,352
97,290
29,275
28,500
$
4,233,102
$
4,018,221
(1) | On July 18, 2005 the Company completed the sale of its majority interest in U.E., a district heating and electric generation business in the Czech Republic. With this change, the Company has discontinued reporting for an International Segment as explained further in Note 8 Business Segment Information. U. E.s depreciable plant at September 30, 2004 was $379,298 and is not included in this table. |
Year Ended September 30 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Utility
|
2.8 | % | 2.8 | % | 2.8 | % | ||||||
Pipeline and Storage
|
4.1 | % | 4.1 | % | 4.4 | % | ||||||
Exploration and Production, per Mcfe(2)
|
$ | 1.74 | $ | 1.49 | $ | 1.34 | ||||||
Energy Marketing
|
7.6 | % | 8.7 | % | 10.9 | % | ||||||
Timber
|
6.2 | % | 6.5 | % | 7.0 | % | ||||||
All Other and Corporate
|
4.3 | % | 6.2 | % | 1.8 | % |
(2) | Amounts include depletion of oil and gas producing properties as well as depreciation of fixed assets. As disclosed in Note O Supplementary Information for Oil and Gas Producing Properties, depletion of oil and gas producing properties amounted to $1.72, $1.47 and $1.30 per Mcfe of production in 2005, 2004 and 2003, respectively. |
Cumulative Effect of Changes in Accounting |
66
Year Ended September 30
2005
2004
2003
(Thousands)
$
32,292
$
27,493
$
36,090
8,343
3,510
242
(1,938
)
(831
)
(13,227
)
2,448
1,933
2,602
266
187
1,786
$
41,411
$
32,292
$
27,493
Financial Instruments |
67
Accumulated Other Comprehensive Income (Loss) |
Year Ended September 30 | ||||||||
2005 | 2004 | |||||||
(Thousands) | ||||||||
Minimum Pension Liability Adjustment
|
$ | (107,844 | ) | $ | (53,648 | ) | ||
Cumulative Foreign Currency Translation Adjustment
|
28,009 | 51,516 | ||||||
Net Unrealized Loss on Derivative Financial Instruments
|
(123,339 | ) | (56,733 | ) | ||||
Net Unrealized Gain on Securities Available for Sale
|
5,546 | 4,090 | ||||||
Accumulated Other Comprehensive Loss
|
$ | (197,628 | ) | $ | (54,775 | ) | ||
Gas Stored Underground Current |
Purchased Timber Rights |
68
Year Ended
September 30
2005
2004
(Thousands)
$
10,610
$
10,550
11,510
8,406
$
22,120
$
18,956
Unamortized Debt Expense |
Foreign Currency Translation |
Income Taxes |
Consolidated Statement of Cash Flows |
Hedging Collateral Account |
Prepayments and Other Current Assets |
Earnings Per Common Share |
69
Stock-Based Compensation |
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Thousands, except per share amounts) | |||||||||||||
Net Income Available for Common Stock As Reported
|
$ | 189,488 | $ | 166,586 | $ | 178,944 | |||||||
Add: Stock-Based Compensation Expense Included in Reported Net
Income, Net of Tax
|
336 | 543 | 677 | ||||||||||
Deduct: Stock-Based Compensation Expense Determined Based on
Fair Value at the Grant Dates, Net of Tax
|
(2,782 | ) | (1,861 | ) | (3,782 | ) | |||||||
Pro Forma Net Income Available for Common Stock
|
$ | 187,042 | $ | 165,268 | $ | 175,839 | |||||||
Earnings Per Common Share:
|
|||||||||||||
Basic As Reported
|
$ | 2.27 | $ | 2.03 | $ | 2.21 | |||||||
Basic Pro Forma
|
$ | 2.24 | $ | 2.01 | $ | 2.18 | |||||||
Diluted As Reported
|
$ | 2.23 | $ | 2.01 | $ | 2.20 | |||||||
Diluted Pro Forma
|
$ | 2.20 | $ | 1.99 | $ | 2.16 |
Year Ended September 30 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Quarterly Dividend Yield
|
1.00 | % | 1.12 | % | 1.10 | % | ||||||
Annual Standard Deviation (Volatility)
|
17.76 | % | 21.77 | % | 22.24 | % | ||||||
Risk Free Rate
|
4.46 | % | 4.61 | % | 3.33 | % | ||||||
Expected Term in Years
|
7.0 | 7.0 | 6.5 |
New Accounting Pronouncements |
70
71
Regulatory Assets and Liabilities
At September 30
2005
2004
(Thousands)
$
85,000
$
83,847
14,817
7,532
9,088
9,882
27,135
28,760
13,054
6,839
4,198
155,933
134,219
90,396
82,020
1,158
3,154
53,205
50,451
11,009
11,065
12,751
12,051
383
3,986
168,902
162,727
$
(12,969
)
$
(28,508
)
(1) | The Company recovers the cost of its regulatory assets but, with the exception of Unrecovered Purchased Gas Costs, does not earn a return on them. |
(2) | Included in Other Regulatory Assets on the Consolidated Balance Sheets. |
(3) | Included in Other Regulatory Liabilities on the Consolidated Balance Sheets. |
New York Rate Settlements |
72
Year Ended September 30 | |||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
(Thousands) | |||||||||||||||
Operating Expenses:
|
|||||||||||||||
Current Income Taxes
|
|||||||||||||||
Federal
|
$ | 40,062 | $ | 42,679 | $ | 37,401 | |||||||||
State
|
14,413 | 7,871 | 11,990 | ||||||||||||
Foreign
|
1,503 | 206 | 504 | ||||||||||||
Deferred Income Taxes
|
|||||||||||||||
Federal
|
27,412 | 29,559 | 53,311 | ||||||||||||
State
|
2,280 | 9,620 | 12,983 | ||||||||||||
Foreign
|
7,308 | 4,655 | 7,961 | ||||||||||||
92,978 | 94,590 | 124,150 | |||||||||||||
Other Income:
|
|||||||||||||||
Deferred Investment Tax Credit
|
(697 | ) | (697 | ) | (693 | ) | |||||||||
Discontinued Operations
|
|||||||||||||||
Operations
|
9,310 | (1,479 | ) | 3,445 | |||||||||||
Gain on Sale
|
1,612 | | | ||||||||||||
Cumulative Effect of Change in Accounting
|
| | (354 | ) | |||||||||||
Total Income Taxes
|
$ | 103,203 | $ | 92,414 | $ | 126,548 | |||||||||
73
Year Ended September 30
2005
2004
2003
(Thousands)
$
223,113
$
232,928
$
383,695
69,578
26,072
(78,202
)
$
292,691
$
259,000
$
305,493
Year Ended September 30 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Thousands) | |||||||||||||
Income Tax Expense, Computed at U.S. Federal Statutory Rate
of 35%
|
$ | 102,442 | $ | 90,650 | $ | 106,923 | |||||||
Increase (Reduction) in Taxes Resulting from:
|
|||||||||||||
State Income Taxes
|
10,850 | 11,369 | 16,232 | ||||||||||
Foreign Tax Differential
|
(4,845 | ) | (1,166 | ) | 3,318 | ||||||||
Foreign Tax Rate Reduction
|
| (5,174 | ) | | |||||||||
Miscellaneous
|
(5,244 | ) | (3,265 | ) | 75 | ||||||||
Total Income Taxes
|
$ | 103,203 | $ | 92,414 | $ | 126,548 | |||||||
At September 30 | |||||||||
2005 | 2004 | ||||||||
(Thousands) | |||||||||
Deferred Tax Liabilities:
|
|||||||||
Property, Plant and Equipment
|
$ | 567,850 | $ | 568,114 | |||||
Other
|
52,436 | 37,051 | |||||||
Total Deferred Tax Liabilities
|
620,286 | 605,165 | |||||||
Deferred Tax Assets:
|
|||||||||
Minimum Pension Liability Adjustment
|
(58,069 | ) | (28,887 | ) | |||||
Capital Loss Carryover
|
(9,145 | ) | (12,546 | ) | |||||
Unrealized Hedging Losses
|
(75,657 | ) | (33,890 | ) | |||||
Other
|
(74,346 | ) | (74,624 | ) | |||||
(217,217 | ) | (149,947 | ) | ||||||
Valuation Allowance
|
2,877 | 2,877 | |||||||
Total Deferred Tax Assets
|
(214,340 | ) | (147,070 | ) | |||||
Total Net Deferred Income Taxes
|
$ | 405,946 | $ | 458,095 | |||||
74
At September 30
2005
2004
(Thousands)
(83,774
)
(43,105
)
489,720
501,200
$
405,946
$
458,095
75
Summary of Changes in Common Stock Equity
Earnings
Accumulated
Common Stock
Reinvested
Other
Paid In
in the
Comprehensive
Shares
Amount
Capital
Business
Income (Loss)
(Thousands, except per share amounts)
80,265
$
80,265
$
446,832
$
549,397
$
(69,636
)
178,944
(85,651
)
4,099
(3
)
(3
)
(63
)
1,176
1,176
32,030
81,438
81,438
478,799
642,690
(65,537
)
166,586
(90,350
)
10,762
1,552
1,552
27,761
82,990
82,990
506,560
718,926
(54,775
)
189,488
(95,394
)
(142,853
)
(2
)
(2
)
(52
)
1,369
1,369
23,326
84,357
$
84,357
$
529,834
$
813,020
(2)
$
(197,628
)
(1) | Paid in Capital includes tax benefits of $3.7 million, $1.5 million and $0.2 million for September 30, 2005, 2004 and 2003, respectively, associated with the exercise of stock options. |
(2) | The availability of consolidated earnings reinvested in the business for dividends payable in cash is limited under terms of the indentures covering long-term debt. At September 30, 2005, $738.6 million of accumulated earnings was free of such limitations. |
Common Stock |
76
Shareholder Rights Plan |
77
Stock Option and Stock Award Plans |
Number of | ||||||||
Shares Subject | Weighted Average | |||||||
to Option | Exercise Price | |||||||
Outstanding at September 30, 2002
|
14,629,504 | $ | 22.12 | |||||
Granted in 2003
|
233,500 | $ | 24.61 | |||||
Exercised in 2003(1)
|
(673,866 | ) | $ | 16.56 | ||||
Forfeited in 2003
|
(123,800 | ) | $ | 23.55 | ||||
Outstanding at September 30, 2003
|
14,065,338 | $ | 22.41 | |||||
Granted in 2004
|
87,000 | $ | 24.95 | |||||
Exercised in 2004(1)
|
(1,573,794 | ) | $ | 18.29 | ||||
Forfeited in 2004
|
(84,633 | ) | $ | 25.42 | ||||
Outstanding at September 30, 2004
|
12,493,911 | $ | 22.93 | |||||
Granted in 2005
|
700,000 | $ | 28.19 | |||||
Exercised in 2005(1)
|
(2,140,518 | ) | $ | 20.21 | ||||
Forfeited in 2005
|
(56,500 | ) | $ | 25.03 | ||||
Outstanding at September 30, 2005
|
10,996,893 | $ | 23.78 | |||||
Option shares exercisable at September 30, 2005
|
10,846,727 | $ | 23.78 | |||||
Option shares exercisable at September 30, 2004
|
11,594,368 | $ | 22.83 | |||||
Option shares exercisable at September 30, 2003
|
12,420,444 | $ | 22.16 | |||||
Option shares available for future grant at September 30,
2005(2)
|
537,634 |
(1) | In connection with exercising these options, 766,946, 557,410 and 200,708 shares were surrendered and canceled during 2005, 2004 and 2003, respectively. |
(2) | Including shares available for restricted stock grants. |
78
Options Outstanding
Options Exercisable
Weighted
Number
Average
Weighted
Number
Weighted
Outstanding
Remaining
Average
Exercisable
Average
Range of Exercise Price
at 9/30/05
Contractual Life
Exercise Price
at 9/30/05
Exercise Price
759,422
1.0
$
18.38
759,422
$
18.38
3,999,974
3.7
$
21.87
3,959,974
$
21.88
3,396,665
5.0
$
23.89
3,319,664
$
23.89
2,840,832
6.3
$
27.79
2,807,667
$
27.80
Redeemable Preferred Stock |
Long-Term Debt |
At September 30 | ||||||||||
2005 | 2004 | |||||||||
(Thousands) | ||||||||||
Medium-Term Notes(1):
|
||||||||||
6.0% to 7.50% due May 2008 to June 2025
|
$ | 749,000 | $ | 749,000 | ||||||
Notes(1):
|
||||||||||
5.25% to 6.50% due March 2013 to September 2022(2)
|
347,222 | 347,272 | ||||||||
1,096,222 | 1,096,272 | |||||||||
Other Notes:
|
||||||||||
Secured(3)
|
32,100 | 41,433 | ||||||||
Unsecured
|
83 | 9,872 | ||||||||
Total Long-Term Debt
|
1,128,405 | 1,147,577 | ||||||||
Less Current Portion
|
9,393 | 14,260 | ||||||||
$ | 1,119,012 | $ | 1,133,317 | |||||||
79
(1) | These medium-term notes and notes are unsecured. |
(2) | At September 30, 2005 and 2004, $97,222,000 and $97,272,000, respectively, of these notes were callable at par at any time after September 15, 2006. The change in the amount outstanding from year to year is attributable to the estates of individual note holders exercising put options due to the death of an individual note holder. |
(3) | These notes constitute project financing and are secured by the various project documentation and natural gas transportation contracts related to the Empire State Pipeline. The interest rate on these notes is a variable rate based on LIBOR. |
Short-Term Borrowings |
Debt Restrictions |
80
Fair Values |
At September 30 | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Carrying | 2005 Fair | Carrying | 2004 Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(Thousands) | ||||||||||||||||
Long-Term Debt
|
$ | 1,128,405 | $ | 1,181,599 | $ | 1,147,577 | $ | 1,199,189 |
Other Investments |
81
Derivative Financial Instruments |
82
83
Retirement Plan | Other Post-Retirement Benefits | |||||||||||||||||||||||
Year Ended September 30 | Year Ended September 30 | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
(Thousands) | ||||||||||||||||||||||||
Change in Benefit Obligation
|
||||||||||||||||||||||||
Benefit Obligation at Beginning of Period
|
$ | 693,532 | $ | 694,960 | $ | 625,470 | $ | 422,003 | $ | 467,418 | $ | 393,851 | ||||||||||||
Service Cost
|
13,714 | 14,598 | 13,043 | 6,153 | 6,027 | 5,844 | ||||||||||||||||||
Interest Cost
|
42,079 | 40,565 | 40,967 | 25,783 | 26,393 | 26,124 | ||||||||||||||||||
Plan Participants Contributions
|
| | | 1,017 | 627 | 682 | ||||||||||||||||||
Actuarial (Gain) Loss
|
115,128 | (19,593 | ) | 51,302 | 110,663 | (62,146 | ) | 57,983 | ||||||||||||||||
Benefits Paid
|
(39,249 | ) | (36,998 | ) | (35,822 | ) | (19,346 | ) | (16,316 | ) | (17,066 | ) | ||||||||||||
Benefit Obligation at End of Period
|
$ | 825,204 | $ | 693,532 | $ | 694,960 | $ | 546,273 | $ | 422,003 | $ | 467,418 | ||||||||||||
Change in Plan Assets
|
||||||||||||||||||||||||
Fair Value of Assets at Beginning of Period
|
$ | 573,366 | $ | 491,333 | $ | 485,927 | $ | 229,484 | $ | 166,494 | $ | 150,293 | ||||||||||||
Actual Return on Plan Assets
|
56,201 | 81,946 | 6,145 | 20,578 | 38,960 | 390 | ||||||||||||||||||
Employer Contribution
|
26,144 | 37,085 | 35,083 | 39,903 | 39,720 | 32,195 | ||||||||||||||||||
Plan Participants Contributions
|
| | | 1,017 | 627 | 682 | ||||||||||||||||||
Benefits Paid
|
(39,249 | ) | (36,998 | ) | (35,822 | ) | (19,346 | ) | (16,316 | ) | (17,066 | ) | ||||||||||||
Fair Value of Assets at End of Period
|
$ | 616,462 | $ | 573,366 | $ | 491,333 | $ | 271,636 | $ | 229,485 | $ | 166,494 | ||||||||||||
Reconciliation of Funded Status
|
||||||||||||||||||||||||
Funded Status
|
$ | (208,742 | ) | $ | (120,166 | ) | $ | (203,627 | ) | $ | (274,637 | ) | $ | (192,518 | ) | $ | (300,924 | ) | ||||||
Unrecognized Net Actuarial Loss
|
257,553 | 159,554 | 222,250 | 205,423 | 108,943 | 212,242 | ||||||||||||||||||
Unrecognized Transition Obligation
|
| | | 57,017 | 64,144 | 71,272 | ||||||||||||||||||
Unrecognized Prior Service Cost
|
8,142 | 9,171 | 10,274 | 17 | 20 | 26 | ||||||||||||||||||
Net Amount Recognized at End of Period
|
$ | 56,953 | $ | 48,559 | $ | 28,897 | $ | (12,180 | ) | $ | (19,411 | ) | $ | (17,384 | ) | |||||||||
84
Retirement Plan
Other Post-Retirement Benefits
Year Ended September 30
Year Ended September 30
2005
2004
2003
2005
2004
2003
(Thousands)
$
(117,103
)
$
(43,147
)
$
(120,524
)
$
(26,584
)
$
(27,263
)
$
(23,163
)
14,404
7,852
5,779
8,142
9,171
10,274
165,914
82,535
139,147
$
56,953
$
48,559
$
28,897
$
(12,180
)
$
(19,411
)
$
(17,384
)
5.00
%
6.25
%
6.00
%
5.00
%
6.25
%*
6.00
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
8.25
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
$
13,714
$
14,598
$
13,043
$
6,153
$
6,027
$
5,844
42,079
40,565
40,967
25,783
26,393
26,124
(49,545
)
(48,281
)
(47,260
)
(18,862
)
(14,898
)
(12,268
)
1,029
1,103
1,176
4
4
4
(3,716
)
7,127
7,127
7,127
10,473
9,438
2,231
12,467
17,092
14,866
1,988
722
3,781
(410
)
(9,731
)
(15,423
)
$
19,738
$
18,145
$
10,222
$
32,262
$
32,014
$
26,274
$
83,379
$
(56,612
)
$
86,170
$
$
$
6.25
%
6.00
%
6.75
%
6.25
%
6.25
%*
6.75
%
8.25
%
8.25
%
8.50
%
8.25
%
8.25
%
8.50
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
5.00
%
* | The weighted average discount rate was 6.0% through 12/8/2003. Subsequent to 12/8/2003, the discount rate used was 6.25%. |
85
2005 | 2004 | 2003 | ||||||||||
Projected Benefit Obligation
|
$ | 825,204 | $ | 693,532 | $ | 694,960 | ||||||
Accumulated Benefit Obligation
|
$ | 733,565 | $ | 616,513 | $ | 611,858 | ||||||
Fair Value of Plan Assets
|
$ | 616,462 | $ | 573,366 | $ | 491,333 |
86
Benefit Payments | Subsidy Receipts | |||||||
First Year
|
$ | 20,987,000 | $ | (604,000 | ) | |||
Second Year
|
$ | 23,383,000 | $ | (1,398,000 | ) | |||
Third Year
|
$ | 25,438,000 | $ | (1,620,000 | ) | |||
Fourth Year
|
$ | 27,597,000 | $ | (1,847,000 | ) | |||
Fifth Year
|
$ | 29,901,000 | $ | (2,058,000 | ) | |||
Next Five Years
|
$ | 177,401,000 | $ | (13,634,000 | ) |
87
Percentage of Plan | ||||||||||||||||
Assets at | ||||||||||||||||
September 30 | ||||||||||||||||
Target Allocation | ||||||||||||||||
Asset Category | 2006 | 2005 | 2004 | 2003 | ||||||||||||
Equity Securities
|
60-70 | % | 63 | % | 61 | % | 53 | % | ||||||||
Fixed Income Securities
|
25-35 | % | 28 | % | 28 | % | 32 | % | ||||||||
Other
|
5-15 | % | 9 | % | 11 | % | 15 | % | ||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||||||
Percentage of Plan | ||||||||||||||||
Assets at | ||||||||||||||||
September 30 | ||||||||||||||||
Target Allocation | ||||||||||||||||
Asset Category | 2006 | 2005 | 2004 | 2003 | ||||||||||||
Equity Securities
|
85-95 | % | 92 | % | 91 | % | 85 | % | ||||||||
Fixed Income Securities
|
0-10 | % | 2 | % | 1 | % | 1 | % | ||||||||
Other
|
0-10 | % | 6 | % | 8 | % | 14 | % | ||||||||
Total
|
100 | % | 100 | % | 100 | % | ||||||||||
88
Environmental Matters |
(i) Former Manufactured Gas Plant Sites |
(ii) Third Party Waste Disposal Sites |
89
(iii) Other |
Other |
90
Year Ended September 30
2005
2004
2003
(Thousands)
$
124,840
$
123,425
$
113,898
103,155
112,178
102,110
21,685
11,247
11,788
2,048
1,992
2,256
(558
)
(838
)
(2,479
)
23,175
12,401
11,565
10,331
(1,853
)
4,011
2,645
1,933
785
10,199
12,321
6,769
25,774
$
35,973
$
12,321
$
6,769
91
92
Year Ended September 30, 2005
Exploration
Total
Corporate and
Pipeline
and
Energy
Reportable
Intersegment
Total
Utility
and Storage
Production
Marketing
Timber
Segments
All Other
Eliminations
Consolidated
(Thousands)
$
1,101,572
$
132,805
$
293,425
$
329,714
$
61,285
$
1,918,801
$
4,748
$
$
1,923,549
$
15,495
$
83,054
$
$
$
1
$
98,550
$
8,606
$
(107,156
)
$
$
4,111
$
76
$
4,661
$
783
$
438
$
10,069
$
19
$
(3,592
)
$
6,496
$
22,900
$
7,128
$
48,856
$
11
$
2,764
$
81,659
$
1,726
$
(1,072
)
$
82,313
$
40,159
$
38,050
$
90,912
$
41
$
6,601
$
175,763
$
3,537
$
467
$
179,767
$
23,102
$
39,068
$
28,353
$
3,210
$
2,271
$
96,004
$
(1,425
)
$
(1,601
)
$
92,978
$
$
$
$
$
$
$
3,362
$
$
3,362
$
$
$
$
$
$
$
(4,158
)(1)
$
$
(4,158
)
$
39,197
$
60,454
$
50,659
$
5,077
$
5,032
$
160,419
$
(2,616
)
$
(4,288
)
$
153,515
$
50,071
$
21,099
$
122,450
$
58
$
18,894
$
212,572
$
463
$
618
$
213,653
At September 30, 2005 | ||||||||||||||||||||||||||||||||||||
(Thousands) | ||||||||||||||||||||||||||||||||||||
Segment Assets
|
$ | 1,394,019 | $ | 789,704 | $ | 1,211,081 | $ | 91,999 | $ | 161,648 | $ | 3,648,451 | $ | 72,839 | $ | 1,362 | $ | 3,722,652 |
(1) | Amount represents the impairment in the value of the Companys 50% investment in ESNE, a partnership that owns an 80-megawatt, combined cycle, natural gas-fired power plant in the town of North East, Pennsylvania. |
93
Year Ended September 30, 2004
Exploration
Total
Corporate and
Pipeline
and
Energy
Reportable
Intersegment
Total
Utility
and Storage
Production
Marketing
Timber
Segments
All Other
Eliminations
Consolidated
(Thousands)
$
1,137,288
$
122,970
$
293,698
$
284,349
$
55,968
$
1,894,273
$
13,695
$
$
1,907,968
$
15,353
$
86,737
$
$
$
2
$
102,092
$
$
(102,092
)
$
$
552
$
217
$
1,831
$
521
$
312
$
3,433
$
15
$
(1,677
)
$
1,771
$
21,945
$
10,933
$
50,642
$
33
$
2,218
$
85,771
$
919
$
3,062
$
89,752
$
39,101
$
37,345
$
89,943
$
102
$
6,277
$
172,768
$
1,071
$
450
$
174,289
$
31,393
$
30,968
$
28,899
$
3,964
$
3,320
$
98,544
$
829
$
(4,783
)
$
94,590
$
$
$
$
$
$
$
805
$
$
805
Loss on Sale of Timber Properties
$
$
$
$
$
1,252
$
1,252
$
$
$
1,252
Gain on Sale of Oil and Gas Producing Properties
$
$
$
4,645
$
$
$
4,645
$
$
$
4,645
$
46,718
$
47,726
$
54,344
$
5,535
$
5,637
$
159,960
$
1,530
$
(7,225
)
$
154,265
$
55,449
$
23,196
$
77,654
$
10
$
2,823
$
159,132
$
200
$
5,511
$
164,843
At September 30, 2004 | ||||||||||||||||||||||||||||||||||||
(Thousands) | ||||||||||||||||||||||||||||||||||||
Segment Assets
|
$ | 1,355,964 | $ | 783,145 | $ | 1,078,217 | $ | 68,599 | $ | 140,992 | $ | 3,426,917 | $ | 77,013 | $ | 213,673 | (1) | $ | 3,717,603 |
(1) | Amount includes $268,119 of assets of the former International segment, the majority of which has been discontinued with the sale of U.E. (See Note H Discontinued Operations). |
94
Year Ended September 30, 2003
Exploration
Total
Corporate and
Pipeline
and
Energy
Reportable
Intersegment
Total
Utility
and Storage
Production
Marketing
Timber
Segments
All Other
Eliminations
Consolidated
(Thousands)
$
1,145,336
$
106,499
$
305,314
$
304,660
$
56,226
$
1,918,035
$
3,366
$
172
$
1,921,573
$
17,647
$
94,921
$
$
$
$
112,568
$
$
(112,568
)
$
$
1,630
$
77
$
1,119
$
692
$
319
$
3,837
$
25
$
(1,658
)
$
2,204
$
29,122
$
14,000
$
53,326
$
33
$
2,507
$
98,988
$
521
$
3,068
$
102,577
$
38,186
$
35,940
$
99,292
$
117
$
7,543
$
181,078
$
238
$
13
$
181,329
$
36,857
$
30,863
$
(17,537
)
$
3,350
$
72,692
$
126,225
$
279
$
(2,354
)
$
124,150
$
$
$
$
$
$
$
535
$
$
535
Gain on Sale of Timber Properties
$
$
$
$
$
168,787
$
168,787
$
$
$
168,787
Loss on Sale of Oil and Gas Producing Properties
$
$
$
58,472
$
$
$
58,472
$
$
$
58,472
Impairment of Oil and Gas Producing Properties
$
$
$
42,774
$
$
$
42,774
$
$
$
42,774
$
56,808
$
45,230
$
(31,293
)
$
5,868
$
112,450
$
189,063
$
193
$
(8,189
)
$
181,067
$
49,944
$
199,327
$
75,837
$
164
$
3,493
$
328,765
$
48,293
(1)
$
1,883
$
378,941
At September 30, 2003 | ||||||||||||||||||||||||||||||||||||
(Thousands) | ||||||||||||||||||||||||||||||||||||
Segment Assets
|
$ | 1,384,058 | $ | 815,939 | $ | 1,002,718 | $ | 54,993 | $ | 125,684 | $ | 3,383,392 | $ | 78,441 | $ | 263,581 | (2) | $ | 3,725,414 |
(1) | Amount includes the acquisition of all of the partnership interests in Toro Partners, L.P. and is disclosed in Note K Acquisitions. |
(2) | Amount includes $247,721 of assets of the former International segment, the majority of which has been discontinued with the sale of U.E. (see Note H Discontinued Operations). |
For the Year Ended September 30 | ||||||||||||
Geographic Information | 2005 | 2004 | 2003 | |||||||||
(Thousands) | ||||||||||||
Revenues from External Customers(1):
|
||||||||||||
United States
|
$ | 1,860,684 | $ | 1,867,335 | $ | 1,819,152 | ||||||
Canada
|
62,865 | 40,633 | 102,421 | |||||||||
$ | 1,923,549 | $ | 1,907,968 | $ | 1,921,573 | |||||||
95
At September 30
2005
2004
2003
(Thousands)
$
2,978,680
$
2,941,779
$
2,958,000
171,196
143,042
116,655
228,179
219,695
$
3,149,876
$
3,313,000
$
3,294,350
(1) | Revenue is based upon the country in which the sale originates. |
At September 30 | ||||||||
2005 | 2004 | |||||||
(Thousands) | ||||||||
ESNE
|
$ | 5,298 | $ | 10,045 | ||||
Seneca Energy
|
5,839 | 5,169 | ||||||
Model City
|
1,521 | 1,230 | ||||||
$ | 12,658 | $ | 16,444 | |||||
Assets Acquired (Including $5.5 million of Goodwill)
|
$ | 257,397 | ||
Liabilities Assumed
|
(68,192 | ) | ||
Cash Acquired at Acquisition
|
(8,053 | ) | ||
Cash Paid, Net of Cash Acquired
|
$ | 181,152 | ||
96
$
48,319
(497
)
(160
)
$
47,662
At September 30, 2005 | At September 30, 2004 | ||||||||||||||||
Gross Carrying | Accumulated | Net Carrying | |||||||||||||||
Amount | Amortization | Amount | Net Carrying Amount | ||||||||||||||
Intangible Assets Subject to Amortization:
|
|||||||||||||||||
Long-Term Transportation Contracts
|
$ | 8,580 | $ | (2,851 | ) | $ | 5,729 | $ | 6,798 | ||||||||
Long-Term Gas Purchase Contracts
|
31,864 | (3,433 | ) | 28,431 | 30,025 | ||||||||||||
Intangible Assets Not Subject to Amortization:
|
|||||||||||||||||
Retirement Plan Intangible Asset (see Note F)
|
8,142 | | 8,142 | 9,171 | |||||||||||||
$ | 48,586 | $ | (6,284 | ) | $ | 42,302 | $ | 45,994 | |||||||||
Aggregate Amortization Expense
|
|||||||||||||||||
For the Year Ended
September 30, 2005 |
$ | 2,663 | |||||||||||||||
For the Year Ended
September 30, 2004 |
$ | 2,567 | |||||||||||||||
For the Year Ended
September 30, 2003 |
$ | 1,054 |
97
Earnings from | ||||||||||||||||||||||||||||||||||||
Continuing | ||||||||||||||||||||||||||||||||||||
Income | Net Income | Operations per | Earnings per | |||||||||||||||||||||||||||||||||
from | Income from | Available for | Common Share | Common Share | ||||||||||||||||||||||||||||||||
Quarter | Operating | Operating | Continuing | Discontinued | Common | |||||||||||||||||||||||||||||||
Ended | Revenues | Income | Operations | Operations | Stock | Basic | Diluted | Basic | Diluted | |||||||||||||||||||||||||||
(Thousands, except per common share amounts) | ||||||||||||||||||||||||||||||||||||
2005
|
||||||||||||||||||||||||||||||||||||
9/30/2005
|
$ | 287,064 | $ | 34,926 | $ | 18,311 | (1) | $ | 30,900 | (2) | $ | 49,211 | (1)(2) | $ | 0.22 | $ | 0.21 | $ | 0.58 | $ | 0.57 | |||||||||||||||
6/30/2005
|
$ | 400,359 | $ | 63,028 | $ | 26,393 | $ | (7,237 | )(3) | $ | 19,156 | (3) | $ | 0.32 | $ | 0.31 | $ | 0.23 | $ | 0.23 | ||||||||||||||||
3/31/2005
|
$ | 735,842 | $ | 120,667 | $ | 63,981 | (4) | $ | 6,702 | $ | 70,683 | (4) | $ | 0.77 | $ | 0.75 | $ | 0.85 | $ | 0.83 | ||||||||||||||||
12/31/2004
|
$ | 500,284 | $ | 91,741 | $ | 44,830 | $ | 5,608 | $ | 50,438 | $ | 0.54 | $ | 0.53 | $ | 0.61 | $ | 0.60 | ||||||||||||||||||
2004
|
||||||||||||||||||||||||||||||||||||
9/30/2004
|
$ | 267,495 | $ | 38,364 | $ | 13,832 | $ | (6,078 | ) | $ | 7,754 | $ | 0.17 | $ | 0.16 | $ | 0.09 | $ | 0.09 | |||||||||||||||||
6/30/2004
|
$ | 396,884 | $ | 73,682 | $ | 32,821 | (5) | $ | (258 | ) | $ | 32,563 | (5) | $ | 0.40 | $ | 0.39 | $ | 0.40 | $ | 0.39 | |||||||||||||||
3/31/2004
|
$ | 753,225 | $ | 133,718 | $ | 68,078 | (6) | $ | 8,977 | $ | 77,055 | (6) | $ | 0.83 | $ | 0.82 | $ | 0.94 | $ | 0.93 | ||||||||||||||||
12/31/2003
|
$ | 490,364 | $ | 87,359 | $ | 39,534 | $ | 9,680 | (7) | $ | 49,214 | (7) | $ | 0.48 | $ | 0.48 | $ | 0.60 | $ | 0.60 |
(1) | Includes a $3.9 million gain associated with insurance proceeds received in prior years for which a contingency was resolved during the quarter, $3.3 million of expense related to certain derivative financial instruments that no longer qualified as effective hedges, $2.7 million of expense related to the impairment of an investment in a partnership, and $1.8 million of expense related to the impairment of a gas-powered turbine. |
(2) | Includes a $25.8 million gain related to the sale of U.E. and income of $6.0 million due to the reversal of deferred income taxes related to U.E. |
(3) | Includes $6.0 million of previously unrecorded deferred income tax expense related to U.E. |
(4) | Includes a $2.6 million gain on a FERC approved sale of base gas. |
(5) | Includes expense of $0.8 million related to an adjustment to the gain on sale of timber properties recognized in 2003. |
(6) | Includes expense of $6.4 million due to the recognition of a pension settlement loss and income of $4.6 million due to an adjustment to the loss on sale of oil and gas properties recognized in September 2003. |
(7) | Includes income of $5.2 million related to tax rate changes in the Czech Republic. |
98
Note N
Market for Common Stock and Related Shareholder Matters
(unaudited)
Price Range
Dividends
Quarter Ended
High
Low
Declared
$
36.00
$
27.74
$
.29
$
29.49
$
26.20
$
.29
$
29.75
$
26.66
$
.28
$
29.18
$
27.01
$
.28
$
28.43
$
24.84
$
.28
$
25.57
$
23.75
$
.28
$
26.48
$
24.26
$
.27
$
25.01
$
21.71
$
.27
Capitalized Costs Relating to Oil and Gas Producing Activities |
At September 30 | ||||||||
2005 | 2004 | |||||||
(Thousands) | ||||||||
Proved Properties(1)
|
$ | 1,650,788 | $ | 1,489,284 | ||||
Unproved Properties
|
39,084 | 27,277 | ||||||
1,689,872 | 1,516,561 | |||||||
Less Accumulated Depreciation, Depletion and
Amortization
|
721,397 | 609,469 | ||||||
$ | 968,475 | $ | 907,092 | |||||
(1) | Includes asset retirement costs of $30.8 million and $22.2 million at September 30, 2005 and 2004, respectively. |
Year Costs Incurred | ||||||||||||||||||||
Total as of | ||||||||||||||||||||
September 30, 2005 | 2005 | 2004 | 2003 | Prior | ||||||||||||||||
(Thousands) | ||||||||||||||||||||
Acquisition Costs
|
$ | 39,084 | $ | 18,691 | $ | 5,248 | $ | 6,871 | $ | 8,274 |
99
Costs Incurred in Oil and Gas Property Acquisition,
Exploration and Development Activities
Year Ended September 30
2005
2004
2003
(Thousands)
$
287
$
(8
)
$
(13
)
1,215
3,529
1,920
32,456
10,503
17,947
49,016
31,881
23,649
8,051
2,292
242
91,025
48,197
43,745
(1,551
)
29
181
4,668
3,167
6,217
22,943
22,624
6,641
12,198
5,500
17,745
292
1,218
38,550
32,538
30,784
(1,264
)
21
168
5,883
6,696
8,137
55,399
33,127
24,588
61,214
37,381
41,394
8,343
3,510
242
$
129,575
$
80,735
$
74,529
100
Results of Operations for Producing Activities
Year Ended September 30
2005
2004
2003
(Thousands, except per Mcfe amounts)
$
151,004
$
151,570
$
148,104
160,145
139,301
118,277
311,149
290,871
266,381
38,442
39,677
39,162
2,220
1,756
1,800
67,097
73,396
70,127
74,110
65,337
62,672
129,280
110,705
92,620
101
Year Ended September 30
2005
2004
2003
(Thousands, except per Mcfe amounts)
49,275
30,359
26,992
12,875
10,018
62,908
62,150
40,377
89,900
12,683
8,176
33,038
228
177
802
23,108
14,922
26,165
42,774
8,577
5,235
(3,273
)
17,554
11,867
(9,606
)
200,279
181,929
175,096
173,020
149,319
181,185
373,299
331,248
356,281
51,125
47,853
72,200
2,448
1,933
2,602
90,205
88,318
96,292
42,774
82,687
70,572
59,399
$
146,834
$
122,572
$
83,014
(1) | Exclusive of hedging gains and losses. See further discussion in Note E Financial Instruments |
(2) | See discussion of impairment in Note A Summary of Significant Accounting Policies |
Reserve Quantity Information (unaudited) |
102
Gas MMcf | ||||||||||||||||||||||||
U. S. | ||||||||||||||||||||||||
Gulf Coast | West Coast | Appalachian | Total | Total | ||||||||||||||||||||
Region | Region | Region | U.S. | Canada | Company | |||||||||||||||||||
Proved Developed and Undeveloped Reserves:
|
||||||||||||||||||||||||
September 30, 2002
|
57,864 | 73,316 | 78,274 | 209,454 | 48,767 | 258,221 | ||||||||||||||||||
Extensions and Discoveries
|
10,538 | | 5,844 | 16,382 | 11,641 | 28,023 | ||||||||||||||||||
Revisions of Previous Estimates
|
(2,278 | ) | 1,213 | 2,224 | 1,159 | (2,211 | ) | (1,052 | ) | |||||||||||||||
Production
|
(18,441 | ) | (4,467 | ) | (5,123 | ) | (28,031 | ) | (5,774 | ) | (33,805 | ) | ||||||||||||
Sales of Minerals in Place
|
| | | | (270 | ) | (270 | ) | ||||||||||||||||
September 30, 2003
|
47,683 | 70,062 | 81,219 | 198,964 | 52,153 | 251,117 | ||||||||||||||||||
Extensions and Discoveries
|
2,632 | | 3,784 | 6,416 | 15,925 | 22,341 | ||||||||||||||||||
Revisions of Previous Estimates
|
(4,984 | ) | 1,831 | (1,111 | ) | (4,264 | ) | (11,004 | ) | (15,268 | ) | |||||||||||||
Production
|
(17,596 | ) | (4,057 | ) | (5,132 | ) | (26,785 | ) | (6,228 | ) | (33,013 | ) | ||||||||||||
Sales of Minerals in Place
|
(1 | ) | (392 | ) | | (393 | ) | | (393 | ) | ||||||||||||||
September 30, 2004
|
27,734 | 67,444 | 78,760 | 173,938 | 50,846 | 224,784 | ||||||||||||||||||
Extensions and Discoveries
|
17,165 | | 5,461 | 22,626 | 4,849 | 27,475 | ||||||||||||||||||
Revisions of Previous Estimates
|
6,039 | 7,067 | 3,733 | 16,839 | (1,600 | ) | 15,239 | |||||||||||||||||
Production
|
(12,468 | ) | (4,052 | ) | (4,650 | ) | (21,170 | ) | (8,009 | ) | (29,179 | ) | ||||||||||||
Sales of Minerals in Place
|
| | (179 | ) | (179 | ) | | (179 | ) | |||||||||||||||
September 30, 2005
|
38,470 | 70,459 | 83,125 | 192,054 | 46,086 | 238,140 | ||||||||||||||||||
Proved Developed Reserves:
|
||||||||||||||||||||||||
September 30, 2002
|
57,274 | 57,286 | 78,273 | 192,833 | 39,253 | 232,086 | ||||||||||||||||||
September 30, 2003
|
45,402 | 54,180 | 81,218 | 180,800 | 42,745 | 223,545 | ||||||||||||||||||
September 30, 2004
|
25,827 | 53,035 | 78,760 | 157,622 | 46,223 | 203,845 | ||||||||||||||||||
September 30, 2005
|
23,108 | 58,692 | 83,125 | 164,925 | 43,980 | 208,905 |
103
Oil Mbbl
U.S.
Gulf Coast
West Coast
Appalachian
Total
Total
Region
Region
Region
U.S.
Canada
Company
5,117
66,909
94
72,120
27,597
99,717
104
46
150
729
879
(365
)
(185
)
8
(542
)
(4,119
)
(4,661
)
(1,473
)
(2,872
)
(10
)
(4,355
)
(2,382
)
(6,737
)
(19,434
)
(19,434
)
3,383
63,852
138
67,373
2,391
69,764
19
18
37
181
218
213
(17
)
11
207
(144
)
63
(1,534
)
(2,650
)
(20
)
(4,204
)
(324
)
(4,528
)
(1
)
(303
)
(304
)
(304
)
2,080
60,882
147
63,109
2,104
65,213
99
63
162
204
366
105
(1,253
)
3
(1,145
)
(186
)
(1,331
)
(989
)
(2,544
)
(36
)
(3,569
)
(300
)
(3,869
)
(122
)
(122
)
1,295
57,085
177
58,557
1,700
60,257
5,111
41,735
94
46,940
24,100
71,040
2,533
40,079
139
42,751
2,391
45,142
2,061
38,631
148
40,840
2,104
42,944
1,229
41,701
177
43,107
1,700
44,807
104
Year Ended September 30
2005
2004
2003
(Thousands)
$
6,138,522
$
3,728,168
$
2,684,286
777,417
676,361
579,321
188,795
124,298
116,639
1,868,548
995,327
613,893
3,303,762
1,932,182
1,374,433
1,812,230
996,813
641,185
1,491,532
935,369
733,248
601,210
343,026
279,772
136,338
111,519
85,817
12,197
13,222
9,787
137,524
60,610
58,436
315,151
157,675
125,732
108,508
46,945
40,575
206,643
110,730
85,157
6,739,732
4,071,194
2,964,058
913,755
787,880
665,138
200,992
137,520
126,426
2,006,072
1,055,937
672,329
3,618,913
2,089,857
1,500,165
105
Year Ended September 30
2005
2004
2003
(Thousands)
1,920,738
1,043,758
681,760
$
1,698,175
$
1,046,099
$
818,405
Year Ended September 30 | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(Thousands) | ||||||||||||||
United States
|
||||||||||||||
Standardized Measure of Discounted Future
|
||||||||||||||
Net Cash Flows at Beginning of Year
|
$ | 935,369 | $ | 733,248 | $ | 781,087 | ||||||||
Sales, Net of Production Costs
|
(272,707 | ) | (251,194 | ) | (227,219 | ) | ||||||||
Net Changes in Prices, Net of Production Costs
|
1,093,353 | 592,326 | 11,130 | |||||||||||
Purchases of Minerals in Place
|
| | | |||||||||||
Sales of Minerals in Place
|
(762 | ) | (5,554 | ) | | |||||||||
Extensions and Discoveries
|
100,102 | 16,638 | 29,266 | |||||||||||
Changes in Estimated Future Development Costs
|
(89,805 | ) | (40,042 | ) | (35,062 | ) | ||||||||
Previously Estimated Development Costs Incurred
|
25,038 | 32,653 | 36,423 | |||||||||||
Net Change in Income Taxes at Applicable Statutory Rate
|
(362,956 | ) | (166,055 | ) | 24,796 | |||||||||
Revisions of Previous Quantity Estimates
|
25,055 | (5,107 | ) | (3,572 | ) | |||||||||
Accretion of Discount and Other
|
38,845 | 28,456 | 116,399 | |||||||||||
Standardized Measure of Discounted Future Net Cash Flows at End
of Year
|
1,491,532 | 935,369 | 733,248 | |||||||||||
106
Year Ended September 30
2005
2004
2003
(Thousands)
110,730
85,157
245,095
(49,467
)
(32,201
)
(56,862
)
174,985
29,230
8,167
(3,751
)
(120,960
)
31,028
36,986
28,241
(11,007
)
(8,491
)
(14,045
)
12,032
5,055
29,657
(51,541
)
(2,640
)
(6,280
)
(5,990
)
(19,369
)
(41,205
)
(376
)
17,003
13,349
206,643
110,730
85,157
1,046,099
818,405
1,026,182
(322,174
)
(283,395
)
(284,081
)
1,268,338
621,556
19,297
(4,513
)
(5,554
)
(120,960
)
131,130
53,624
57,507
(100,812
)
(48,533
)
(49,107
)
37,070
37,708
66,080
(414,497
)
(168,695
)
18,516
19,065
(24,476
)
(44,777
)
38,469
45,459
129,748
$
1,698,175
$
1,046,099
$
818,405
Note P | Subsequent Event |
107
Additions | Additions | |||||||||||||||||||
Balance at | Charged to | Charged to | Balance at | |||||||||||||||||
Beginning | Costs and | Other | End of | |||||||||||||||||
Description | of Period | Expenses | Accounts(1) | Deductions(2) | Period | |||||||||||||||
(Thousands) | ||||||||||||||||||||
Year Ended September 30, 2005
|
||||||||||||||||||||
Reserve for Doubtful Accounts
|
$ | 17,440 | $ | 31,113 | $ | 2,480 | $ | 24,093 | $ | 26,940 | ||||||||||
Deferred Tax Valuation Allowance
|
$ | 2,877 | $ | | $ | | $ | | $ | 2,877 | ||||||||||
Year Ended September 30, 2004
|
||||||||||||||||||||
Reserve for Doubtful Accounts
|
$ | 17,943 | $ | 20,328 | $ | | $ | 20,831 | $ | 17,440 | ||||||||||
Deferred Tax Valuation Allowance
|
$ | 6,357 | $ | (3,480 | ) | $ | | $ | | $ | 2,877 | |||||||||
Year Ended September 30, 2003
|
||||||||||||||||||||
Reserve for Doubtful Accounts
|
$ | 17,299 | $ | 17,275 | $ | | $ | 16,631 | $ | 17,943 | ||||||||||
Deferred Tax Valuation Allowance
|
$ | | $ | 6,357 | $ | | $ | | $ | 6,357 | ||||||||||
(1) | Represents amounts reclassified from regulatory asset and regulatory liability accounts under various rate settlements ($4.5 million). Also includes amounts removed with the sale of U.E. (-$2.02 million). |
(2) | Amounts represent net accounts receivable written-off. |
Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A | Controls and Procedures |
108
Item 9B | Other Information |
Item 10 | Directors and Executive Officers of the Registrant |
Item 11 | Executive Compensation |
109
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13 | Certain Relationships and Related Transactions |
Item 14 | Principal Accountant Fees and Services |
Item 15 | Exhibits and Financial Statement Schedules |
110
Exhibit | ||||
Number | Description of Exhibits | |||
3(i) | Articles of Incorporation: | |||
| Restated Certificate of Incorporation of National Fuel Gas Company dated September 21, 1998 (Exhibit 3.1, Form 10-K for fiscal year ended September 30, 1998 in File No. 1-3880) | |||
| Certificate of Amendment of Restated Certificate of Incorporation (Exhibit 3(ii), Form 8-K dated March 14, 2005 in File No. 1-3880) | |||
3(ii) | By-Laws: | |||
| National Fuel Gas Company By-Laws as amended on December 9, 2004 (Exhibit 3(ii), Form 8-K dated December 9, 2004 in File No. 1-3880) | |||
(4) | Instruments Defining the Rights of Security Holders, Including Indentures: | |||
| Indenture, dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 2(b) in File No. 2-51796) | |||
| Third Supplemental Indenture, dated as of December 1, 1982,to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(a)(4) in File No. 33-49401) | |||
| Eleventh Supplemental Indenture, dated as of May 1, 1992, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(b), Form 8-K dated February 14, 1992 in File No. 1-3880) | |||
| Twelfth Supplemental Indenture, dated as of June 1, 1992, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(c), Form 8-K dated June 18, 1992 in File No. 1-3880) | |||
| Thirteenth Supplemental Indenture, dated as of March 1,1993, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4(a)(14) in File No. 33-49401) | |||
| Fourteenth Supplemental Indenture, dated as of July 1, 1993,to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4.1, Form 10-K for fiscal year ended September 30, 1993 in File No. 1-3880) | |||
| Fifteenth Supplemental Indenture, dated as of September 1,1996, to Indenture dated as of October 15, 1974, between the Company and The Bank of New York (formerly Irving Trust Company) (Exhibit 4.1, Form 10-K for fiscal year ended September 30, 1996 in File No. 1-3880) | |||
| Indenture dated as of October 1, 1999, between the Company and The Bank of New York (Exhibit 4.1, Form 10-K for fiscal year ended September 30, 1999 in File No. 1-3880) | |||
| Officers Certificate Establishing Medium-Term Notes, dated October 14, 1999 (Exhibit 4.2, Form 10-K for fiscal year ended September 30, 1999 in File No. 1-3880) | |||
| Amended and Restated Rights Agreement, dated as of April 30,1999, between the Company and HSBC Bank USA (Exhibit 10.2, Form 10-Q for the quarterly period ended March 31, 1999 in File No. 1-3880) | |||
| Certificate of Adjustment, dated September 7, 2001, to the Amended and Restated Rights Agreement dated as of April 30,1999, between the Company and HSBC Bank USA (Exhibit 4, Form 8-K dated September 7, 2001 in File No. 1-3880) | |||
| Officers Certificate establishing 6.50% Notes due 2022, dated September 18, 2002 (Exhibit 4, Form 8-K dated October 3, 2002 in File No. 1-3880) |
111
Exhibit
Number
Description of Exhibits
Officers Certificate establishing 5.25% Notes due 2013,
dated February 18, 2003 (Exhibit 4, Form 10-Q for
the quarterly period ended March 31, 2003 in File
No. 1-3880)
(10)
Material Contracts:
(ii)
Contracts upon which the Companys business is
substantially dependent:
10
.1
Credit Agreement, dated as of August 19, 2005, among the
Company, the Lenders Party Thereto and JPMorgan Chase Bank,
N.A., as Administrative Agent
(iii)
Compensatory plans for officers:
Form of Employment Continuation and Noncompetition Agreement,
dated as of December 11, 1998, among the Company, National
Fuel Gas Distribution Corporation and each of Philip C.
Ackerman, Anna Marie Cellino, Paula M, Ciprich, Donna L.
DeCarolis, James D. Ramsdell, Dennis J. Seeley, David F. Smith
and Ronald J. Tanski (Exhibit 10.1, Form 10-Q for the
quarterly period ended June 30, 1999 in File
No. 1-3880)
Form of Employment Continuation and Noncompetition Agreement,
dated as of December 11, 1998, among the Company, National
Fuel Gas Supply Corporation and John R. Pustulka
(Exhibit 10.2, Form 10-Q for the quarterly period
ended June 30, 1999 in File No. 1-3880)
Form of Employment Continuation and Noncompetition Agreement,
dated as of December 11, 1998, among the Company, Seneca
Resources Corporation and James A. Beck (Exhibit 10.3,
Form 10-Q for the quarterly period ended June 30, 1999
in File No. 1-3880)
National Fuel Gas Company 1993 Award and Option Plan, dated
February 18, 1993 (Exhibit 10.1, Form 10-Q for
the quarterly period ended March 31, 1993 in File
No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated October 27, 1995 (Exhibit 10.8,
Form 10-K for fiscal year ended September 30, 1995 in
File No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated December 11, 1996 (Exhibit 10.8,
Form 10-K for fiscal year ended September 30, 1996 in
File No. 1-3880)
Amendment to National Fuel Gas Company 1993 Award and Option
Plan, dated December 18, 1996 (Exhibit 10,
Form 10-Q for the quarterly period ended December 31,
1996 in File No. 1-3880)
National Fuel Gas Company 1993 Award and Option Plan, amended
through June 14, 2001 (Exhibit 10.1, Form 10-K
for fiscal year ended September 30, 2001 in File
No. 1-3880)
10
.2
National Fuel Gas Company 1993 Award and Option Plan, amended
through September 8, 2005
Administrative Rules with Respect to At Risk Awards under the
1993 Award and Option Plan (Exhibit 10.14, Form 10-K
for fiscal year ended September 30, 1996 in File
No. 1-3880)
10
.3
National Fuel Gas Company 1997 Award and Option Plan, amended
through September 8, 2005
Form of Award Notice under National Fuel Gas Company 1997 Award
and Option Plan (Exhibit 10.1, Form 8-K dated
March 28, 2005 in File No. 1-3880)
10
.4
Administrative Rules with Respect to At Risk Awards under the
1997 Award and Option Plan amended and restated as of
September 8, 2005
Description of performance goals for Chief Executive Officer
under the Companys Annual At Risk Compensation Incentive
Program (Exhibit 10, Form 10-Q for the quarterly
period ended December 31, 2004 in File No. 1-3880)
Administrative Rules of the Compensation Committee of the Board
of Directors of National Fuel Gas Company, as amended and
restated, effective March 9, 2005 (Exhibit 10.2,
Form 10-Q for the quarterly period ended March 31,
2005 in File No. 1-3880)
National Fuel Gas Company Deferred Compensation Plan, as amended
and restated through May 1, 1994 (Exhibit 10.7,
Form 10-K for fiscal year ended September 30, 1994 in
File No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated September 27, 1995 (Exhibit 10.9,
Form 10-K for fiscal year ended September 30, 1995 in
File No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated September 19, 1996 (Exhibit 10.10,
Form 10-K for fiscal year ended September 30, 1996 in
File No. 1-3880)
112
Exhibit
Number
Description of Exhibits
National Fuel Gas Company Deferred Compensation Plan, as amended
and restated through March 20, 1997 (Exhibit 10.3,
Form 10-K for fiscal year ended September 30, 1997 in
File No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated June 16, 1997 (Exhibit 10.4,
Form 10-K for fiscal year ended September 30, 1997 in
File No. 1-3880)
Amendment No. 2 to the National Fuel Gas Company Deferred
Compensation Plan, dated March 13, 1998 (Exhibit 10.1,
Form 10-K for fiscal year ended September 30, 1998 in
File No. 1-3880)
Amendment to the National Fuel Gas Company Deferred Compensation
Plan, dated February 18, 1999 (Exhibit 10.1,
Form 10-Q for the quarterly period ended March 31,
1999 in File No. 1-3880)
Amendment to National Fuel Gas Company Deferred Compensation
Plan, dated June 15, 2001 (Exhibit 10.3,
Form 10-K for fiscal year ended September 30, 2001 in
File No. 1-3880)
10
.5
Amendment to the National Fuel Gas Company Deferred Compensation
Plan, dated October 21, 2005
10
.6
Form of Letter Regarding Deferred Compensation Plan and Internal
Revenue Code Section 409A, dated July 12, 2005
National Fuel Gas Company Tophat Plan, effective March 20,
1997 (Exhibit 10, Form 10-Q for the quarterly period
ended June 30, 1997 in File No. 1-3880)
Amendment No. 1 to National Fuel Gas Company Tophat Plan,
dated April 6, 1998 (Exhibit 10.2, Form 10-K for
fiscal year ended September 30, 1998 in File
No. 1-3880)
Amendment No. 2 to National Fuel Gas Company Tophat Plan,
dated December 10, 1998 (Exhibit 10.1, Form 10-Q
for the quarterly period ended December 31, 1998 in File
No. 1-3880)
10
.7
Form of Letter Regarding Tophat Plan and Internal Revenue Code
Section 409A, dated July 12, 20055
Amended Restated Split Dollar Insurance Agreement, effective
June 15, 2000, among the Company, Bernard J. Kennedy, and
Joseph B. Kennedy, as Trustee of the Trust under the Agreement
dated January 9, 1998 (Exhibit 10.1, Form 10-Q
for the quarterly period ended June 30, 2000 in File
No. 1- 3880)
Contingent Benefit Agreement effective June 15, 2000,
between the Company and Bernard J. Kennedy (Exhibit 10.2,
Form 10-Q for the quarterly period ended June 30, 2000
in File No. 1-3880
Amended and Restated Split Dollar Insurance and Death Benefit
Agreement, dated September 17, 1997 between the Company and
Philip C. Ackerman (Exhibit 10.5, Form 10-K for fiscal
year ended September 30, 1997 in File No. 1-3880)
Amendment Number 1 to Amended and Restated Split Dollar
Insurance and Death Benefit Agreement by and between the Company
and Philip C. Ackerman, dated March 23, 1999
(Exhibit 10.3, Form 10-K for fiscal year ended
September 30, 1999 in File No. 1-3880)
Amended and Restated Split Dollar Insurance and Death Benefit
Agreement, dated September 15, 1997, between the Company
and Dennis J. Seeley (Exhibit 10.9, Form 10-K for
fiscal year ended September 30, 1999 in File No. 1-3880)
Amendment Number 1 to Amended and Restated Split Dollar
Insurance and Death Benefit Agreement by and between the Company
and Dennis J. Seeley, dated March 29, 1999
(Exhibit 10.10, Form 10-K for fiscal year ended
September 30, 1999 in File No. 1-3880)
Split Dollar Insurance and Death Benefit Agreement dated
September 15, 1997, between the Company and Bruce H. Hale
(Exhibit 10.11, Form 10-K for fiscal year ended
September 30, 1999 in File No. 1-3880)
Amendment Number 1 to Split Dollar Insurance and Death
Benefit Agreement by and between the Company and Bruce H. Hale,
dated March 29, 1999 (Exhibit 10.12, Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
Split Dollar Insurance and Death Benefit Agreement, dated
September 15, 1997, between the Company and David F. Smith
(Exhibit 10.13, Form 10-K for fiscal year ended
September 30, 1999 in File No. 1-3880)
113
Exhibit
Number
Description of Exhibits
Amendment Number 1 to Split Dollar Insurance and Death
Benefit Agreement by and between the Company and David F. Smith,
dated March 29, 1999 (Exhibit 10.14, Form 10-K
for fiscal year ended September 30, 1999 in File
No. 1-3880)
National Fuel Gas Company Parameters for Executive Life
Insurance Plan (Exhibit 10.1, Form 10-K for fiscal
year ended September 30, 2004 in File No. 1-3880)
National Fuel Gas Company and Participating Subsidiaries
Executive Retirement Plan as amended and restated through
November 1, 1995 (Exhibit 10.10, Form 10-K for
fiscal year ended September 30, 1995 in File
No. 1-3880)
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, dated September 18,
1997 (Exhibit 10.9, Form 10-K for fiscal year ended
September 30, 1997 in File No. 1-3880)
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, dated December 10,
1998 (Exhibit 10.2, Form 10-Q for the quarterly period
ended December 31, 1998 in File No. 1-3880)
Amendments to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, effective
September 16, 1999 (Exhibit 10.15, Form 10-K for
fiscal year ended September 30, 1999 in File No. 1-3880)
Amendment to National Fuel Gas Company and Participating
Subsidiaries Executive Retirement Plan, effective
September 5, 2001 (Exhibit 10.4, Form 10-K/A for
fiscal year ended September 30, 2001, in File
No. 1-3880)
National Fuel Gas Company and Participating Subsidiaries 1996
Executive Retirement Plan Trust Agreement (II), dated
May 10, 1996 (Exhibit 10.13, Form 10-K for fiscal
year ended September 30, 1996 in File No. 1-3880)
National Fuel Gas Company Participating Subsidiaries Executive
Retirement Plan 2003 Trust Agreement (I), dated
September 1, 2003 (Exhibit 10.2, Form 10-K for
fiscal year ended September 30, 2004 in File
No. 1-3880)
National Fuel Gas Company Performance Incentive Program
(Exhibit 10.1, Form 8-K dated June 3, 2005 in
File No. 1-3880)
Excerpts of Minutes from the National Fuel Gas Company Board of
Directors Meeting of March 20, 1997 regarding the Retainer
Policy for Non-Employee Directors (Exhibit 10.11,
Form 10-K for fiscal year ended September 30, 1997 in
File No. 1-3880)
Retirement Benefit Agreement for David F. Smith, dated
September 22, 2003,between the Company and David F. Smith
(Exhibit 10.2, Form 10-K for fiscal year ended
September 30, 2003 in File No. 1-3880)
10
.8
Amendment No. 1 to the Retirement Benefit Agreement for
David F. Smith, dated September 8, 2005, between the
Company and David F. Smith
Description of performance goals for certain executive officers
(Exhibit 10.1, Form 10-Q for the quarterly period
ended March 31, 2005 in File No. 1-3880)
Retirement and Consulting Agreement, dated September 5,
2001, between the Company and Bernard J. Kennedy
(Exhibit 10.4, Form 10-K for fiscal year ended
September 30, 2004 in File No. 1-3880)
Retirement Supplement Agreement, dated January 11, 2002,
between the Company and Joseph P. Pawlowski (Exhibit 10.6,
Form 10-K/A for fiscal year ended September 30, 2001
in File No. 1-3880)
Amendment No. 1 to Retirement Supplement Agreement, dated
March 11, 2004, between the Company and Joseph P. Pawlowski
(Exhibit 10(iii), Form 10-Q for the quarterly period
ended March 31, 2004 in File No. 1-3880)
10
.9
Retirement Agreement, dated August 1, 2005, between the
Company and Bruce H. Hale
10
.10
Commission Agreement, dated August 1, 2005, between the
Company and Bruce H. Hale
(12
)
Statements regarding Computation of Ratios: Ratio of Earnings to
Fixed Charges for the fiscal years ended September 30, 2001
through 2005
(21
)
Subsidiaries of the Registrant: See Item 1 of Part I
of this Annual Report on Form 10-K
114
Exhibit
Number
Description of Exhibits
(23
)
Consents of Experts:
23
.1
Consent of Ralph E. Davis Associates, Inc. regarding Seneca
Resources Corporation
23
.2
Consent of Ralph E. Davis Associates, Inc. regarding Seneca
Energy Canada, Inc.
23
.3
Consent of Independent Registered Public Accounting Firm
(31
)
Rule 13a-15(e)/15d-15(e) Certifications
31
.1
Written statements of Chief Executive Officer pursuant to
Rule 13a-15(e)/15d-15(e) of the Exchange Act.
31
.2
Written statements of Principal Financial Officer pursuant to
Rule 13a-15(e)/15d-15(e) of the Exchange Act.
(32
)
Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
(99
)
Additional Exhibits:
99
.1
Report of Ralph E. Davis Associates, Inc. regarding Seneca
Resources Corporation
99
.2
Report of Ralph E. Davis Associates, Inc. regarding Seneca
Energy Canada, Inc.
99
.3
Company Maps
The Company agrees to furnish to the SEC upon request the
following instruments with respect to long-term debt that the
Company has not filed as an exhibit pursuant to the exemption
provided by Item 601(b)(4)(iii)(A):
Secured Credit Agreement, dated as of June 5, 1997, among
the Empire State Pipeline, as borrower, Empire State Pipeline,
Inc., the Lenders party thereto, JPMorgan Chase Bank (f/k/a The
Chase Manhattan Bank), as administrative agent, and Chase
Securities, as arranger.
First Amendment to Secured Credit Agreement, dated as of
May 28, 2002, among Empire State Pipeline, as borrower,
Empire State Pipeline, Inc., St. Clair Pipeline Company, Inc.,
the Lenders party to the Secured Credit Agreement, and JPMorgan
Chase Bank, as administrative agent.
Second Amendment to Secured Credit Agreement, dated as of
February 6, 2003, among Empire State Pipeline, as borrower,
Empire State Pipeline, Inc., St. Clair Pipeline Company, Inc.,
the Lenders party to the Secured Credit Agreement, as amended,
and JPMorgan Chase Bank, as administrative agent.
Incorporated herein by reference as indicated. All other
exhibits are omitted because they are not applicable or the
required information is shown elsewhere in this Annual Report on
Form 10-K.
115
National Fuel Gas Company | |
(Registrant) | |
|
By | /s/ P. C. Ackerman |
|
|
P. C. Ackerman | |
Chairman of the Board, President | |
and Chief Executive Officer |
Signature | Title | Date | ||||
/s/
P. C. Ackerman
|
Chairman of the Board, President, Chief Executive Officer and Director | December 8, 2005 | ||||
/s/
R. T. Brady
|
Director | December 8, 2005 | ||||
/s/
R. D. Cash
|
Director | December 8, 2005 | ||||
/s/
R. E. Kidder
|
Director | December 8, 2005 | ||||
/s/
C. G. Matthews
|
Director | December 8 2005 | ||||
/s/
G. L. Mazanec
|
Director | December 8, 2005 | ||||
/s/
R. G. Reiten
|
Director | December 8, 2005 | ||||
/s/
J. F. Riordan
|
Director | December 8, 2005 | ||||
/s/
R. J. Tanski
|
Treasurer and Principal Financial Officer | December 8, 2005 | ||||
/s/
K. M. Camiolo
|
Controller and Principal Accounting Officer | December 8, 2005 |
116
ARTICLE I Definitions | 1 | |||||||
|
SECTION 1.01. | Defined Terms | 1 | |||||
|
SECTION 1.02. | Classification of Loans and Borrowings | 12 | |||||
|
SECTION 1.03. | Terms Generally | 12 | |||||
|
SECTION 1.04. | Accounting Terms; GAAP | 12 | |||||
|
||||||||
ARTICLE II The Credits | 12 | |||||||
|
SECTION 2.01. | Commitments | 12 | |||||
|
SECTION 2.02. | Loans and Borrowings | 13 | |||||
|
SECTION 2.03. | Requests for Borrowings | 13 | |||||
|
SECTION 2.04. | Funding of Borrowings | 14 | |||||
|
SECTION 2.05. | Interest Elections | 14 | |||||
|
SECTION 2.06. | Termination and Reduction of Commitments | 15 | |||||
|
SECTION 2.07. | Repayment of Loans; Evidence of Debt | 16 | |||||
|
SECTION 2.08. | Prepayment of Loans | 17 | |||||
|
SECTION 2.09. | Fees | 17 | |||||
|
SECTION 2.10. | Interest | 18 | |||||
|
SECTION 2.11. | Alternate Rate of Interest | 18 | |||||
|
SECTION 2.12. | Increased Costs | 19 | |||||
|
SECTION 2.13. | Break Funding Payments | 20 | |||||
|
SECTION 2.14. | Taxes | 20 | |||||
|
SECTION 2.15. | Payments Generally; Pro Rata Treatment; Sharing of Set-offs | 21 | |||||
|
SECTION 2.16. | Mitigation Obligations; Replacement of Lenders | 23 | |||||
|
||||||||
ARTICLE III Representations and Warranties | 24 | |||||||
|
SECTION 3.01. | Corporate Existence | 24 | |||||
|
SECTION 3.02. | Financial Condition | 24 | |||||
|
SECTION 3.03. | Litigation | 24 | |||||
|
SECTION 3.04. | No Breach | 25 | |||||
|
SECTION 3.05. | Action | 25 | |||||
|
SECTION 3.06. | Approvals | 25 | |||||
|
SECTION 3.07. | Use of Credit | 25 | |||||
|
SECTION 3.08. | ERISA | 25 | |||||
|
SECTION 3.09. | Taxes | 26 | |||||
|
SECTION 3.10. | Investment Company Act | 26 | |||||
|
SECTION 3.11. | Public Utility Holding Company Act | 26 | |||||
|
SECTION 3.12. | Environmental Matters | 27 | |||||
|
SECTION 3.13. | Subsidiaries, Etc | 27 | |||||
|
SECTION 3.14. | True and Complete Disclosure | 27 | |||||
|
||||||||
ARTICLE IV Conditions | 27 | |||||||
|
SECTION 4.01. | Effective Date | 27 | |||||
|
SECTION 4.02. | Each Credit Event | 29 |
- i -
ARTICLE V Covenants of the Borrower | 29 | |||||||
|
SECTION 5.01. | Financial Statements, Etc | 29 | |||||
|
SECTION 5.02. | Existence, Etc | 31 | |||||
|
SECTION 5.03. | Insurance | 32 | |||||
|
SECTION 5.04. | Prohibition of Fundamental Changes | 32 | |||||
|
SECTION 5.05. | Limitation on Liens | 33 | |||||
|
SECTION 5.06. | Use of Proceeds | 34 | |||||
|
SECTION 5.07. | Financial Condition | 34 | |||||
|
||||||||
ARTICLE VI Events of Default | 34 | |||||||
|
||||||||
ARTICLE VII The Administrative Agent | 37 | |||||||
|
||||||||
ARTICLE VIII Miscellaneous | 39 | |||||||
|
SECTION 8.01. | Notices | 39 | |||||
|
SECTION 8.02. | Waivers; Amendments | 40 | |||||
|
SECTION 8.03. | Expenses; Indemnity; Damage Waiver | 41 | |||||
|
SECTION 8.04. | Successors and Assigns | 42 | |||||
|
SECTION 8.05. | Survival | 45 | |||||
|
SECTION 8.06. | Counterparts: Integration; Effectiveness | 45 | |||||
|
SECTION 8.07. | Severability | 45 | |||||
|
SECTION 8.08. | Right of Setoff | 46 | |||||
|
SECTION 8.09. | Governing Law; Jurisdiction; Consent to Service of Process | 46 | |||||
|
SECTION 8.10. | WAIVER OF JURY TRIAL | 46 | |||||
|
SECTION 8.11. | Headings | 47 | |||||
|
SECTION 8.12. | Confidentiality | 47 |
- ii -
- 2 -
Ratings of Index | ABR | Eurodollar Rate | Facility | |||
Debt | Applicable Margin | Applicable Margin | Fee Rate | |||
Category 1
|
||||||
A/A2/A
|
0.000% | 0.180% | 0.0700% | |||
Category 2
|
||||||
A-/A3/A-
|
0.000% | 0.270% | 0.0800% | |||
Category 3
|
||||||
BBB+/Baal/BBB+
|
0.000% | 0.350% | 0.1000% | |||
Category 4
|
||||||
BBB/Baa2/BBB
|
0.000% | 0.425% | 0.1250% | |||
Category 5
|
||||||
BBB-/Baa3/BBB-
|
0.050% | 0.575% | 0.1750% | |||
Category 6
|
||||||
<BBB-/Baa3/BBB-
|
0.500% | 0.750% | 0.2500% |
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S-1
NATIONAL FUEL GAS COMPANY
|
||||
By: | /s/ R. J. Tanski | |||
Name: | R. J. Tanski | |||
Title: | Treasurer |
S-2
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent |
||||
By: | /s/ Thomas C. Lillis | |||
Name: | Thomas C. Lillis | |||
Title: | Senior Vice President |
S-3
JPMORGAN CHASE BANK, N.A.,
as Lender |
||||
By: | /s/ Thomas C. Lillis | |||
Name: | Thomas C. Lillis | |||
Title: | Senior Vice President |
S-4
HSBC BANK USA, NATIONAL ASSOCIATION,
as Lender |
||||
By: | /s/ John G. Tierney | |||
Name: | John G. Tierney | |||
Title: | Vice President |
S-5
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Lender |
||||
By: | /s/ Susan Freed-Oestreicher | |||
Name: | Susan Freed-Oestreicher | |||
Title: | Vice President |
S-6
BANK OF TOKYO-MITSUBISHI TRUST COMPANY,
as Lender |
||||
By: | /s/ James A. Profesta | |||
Name: | James A. Profesta | |||
Title: | Assistant Vice President |
S-7
THE NORTHERN TRUST COMPANY,
as Lender |
||||
By: | /s/ Chris McKean | |||
Name: | Chris McKean | |||
Title: | Vice President |
S-8
NATIONAL CITY BANK OF PENNSYLVANIA,
as Lender |
||||
By: | /s/ William A. Feldmann | |||
Name: | William A. Feldmann | |||
Title: | Vice President |
S-9
PNC BANK, NATIONAL ASSOCIATION,
as Lender |
||||
By: | /s/ James F. Stevenson | |||
Name: | James F. Stevenson | |||
Title: | Vice President |
S-10
BANK OF AMERICA, N.A.
as Lender |
||||
By: | /s/ Colleen OBrien | |||
Name: | Colleen OBrien | |||
Title: | Vice President |
S-11
THE BANK OF NEW YORK,
as Lender |
||||
By: | /s/ John N. Watt | |||
Name: | John N. Watt | |||
Title: | Vice President |
Multi-Year
Facility
Institution
Commitment
$
45,000,000.00
$
45,000,000.00
$
45,000,000.00
$
40,000,000.00
$
25,000,000.00
$
25,000,000.00
$
25,000,000.00
$
25,000,000.00
$
25,000,000.00
$
300,000,000.00
1 | SEC Financing Order (SEC Rel. No. 35-27600), subject to the information in paragraph 2 of this Schedule 3.06. | |
2 | Section 1271 of the Energy Policy Act of 2005 (the Energy Policy Act) provides that nothing in Subtitle F of Title XII of the Energy Policy Act, or otherwise in PUHCA, or rules, regulations, or orders thereunder, prohibits a person from engaging in or continuing to engage in activities or transactions in which it is legally engaged or authorized to engage on the date of enactment of the Energy Policy Act, if that person continues to comply with the terms (other than an expiration date or termination date) of any such authorization, whether by rule or by order. Upon the effective date of the repeal of PUHCA, the Governmental Approval set forth above will not be necessary for the performance by the Borrower of this Agreement or for the legality, validity or enforceability thereof. |
1. | Indebtedness of the Borrower under the Credit Agreement dated as of September 30, 2002 among the Borrower, JP Morgan Chase Bank, as Administrative Agent, and the Lenders party thereto (as amended). |
B-2
Percentage Assigned
of Loan/Commitment
(set forth, to at least 8 decimals, as a
percentage of the
Loan and the
aggregate
Principal Amount
Commitments of all
Facility
Assigned
Lenders thereunder)
$
%
[
Name of Assignor
],
as Assignor
By:
Title:
[Name of Assignee],
as Assignee
By:
Title:
National Fuel Gas Company | JPMorgan Chase Bank, N.A., | |||||||||
|
as Administrative Agent | |||||||||
|
||||||||||
By:
|
By: | |||||||||
|
|
|
||||||||
|
Title: | Title: |
1 | Consents to be included to the extent required by Section 8.04(b) of the Credit Agreement. |
1. | Purpose |
2. | Definitions |
2
3. | Administration |
3
4. | Eligibility |
5. | Shares Available |
6. | Term |
4
7. | Participation |
8. | Stock Options |
5
9. | Stock Appreciation Rights |
6
10. | Restricted Stock |
11. | Performance Units |
12. | Performance Shares |
7
13. | Payment of Awards |
14. | Dividends and Dividend Equivalents |
15. | Termination of Employment |
8
16. | Nonassignability |
17. | Adjustment of Shares Available |
9
18. | Withholding Taxes |
19. | Noncompetition Provision |
20. | Amendments to Awards |
21. | Regulatory Approvals and Listings |
10
22. | No Right to Continued Employment or Grants |
23. | Amendment |
24. | Change in Control and Change in Ownership |
11
25. | No Right, Title or Interest in Company Assets |
12
2
3
4
5
6
7
8
9
10
11
1. | DEFINITIONS |
2. | ADMINISTRATION |
3. | GRANT OF AT RISK AWARDS |
2
4. | PAYMENT OF AT RISK AWARDS |
5. | TERMINATION OF EMPLOYMENT, RETIREMENT, OR DEATH OF PARTICIPANT |
6. | AMENDMENTS TO AT RISK AWARDS |
7. | AMENDMENT TO RULES |
3
8. | CHANGE IN CONTROL AND CHANGE IN OWNERSHIP |
9. | SAVINGS PROVISION |
10. | EFFECTIVE DATE |
4
5
NATIONAL FUEL GAS COMPANY | ||||||
|
||||||
|
By: | /s/ A. M. Cellino | ||||
|
||||||
|
Name: | A. M. Cellino | ||||
|
||||||
|
Title: | Secretary | ||||
|
|
Very truly yours, | |
|
||
|
/s/ Philip C. Ackerman |
|
Very truly yours, | |
|
||
|
/s/ Philip C. Ackerman |
2
3
NATIONAL FUEL GAS COMPANY | ||||||
|
||||||
|
By: | /s/ P. C. Ackerman | ||||
|
||||||
|
Name: | P. C. Ackerman | ||||
|
Title: | Chairman of the Board, | ||||
|
President & Chief Executive | |||||
|
Officer | |||||
|
||||||
NATIONAL FUEL GAS
DISTRIBUTION CORPORATION |
||||||
|
||||||
|
By: | /s/ P. C. Ackerman | ||||
|
||||||
|
Name: | P. C. Ackerman | ||||
|
Title: | Chairman of the Board | ||||
|
||||||
EXECUTIVE | ||||||
|
||||||
/s/ David F. Smith | ||||||
DAVID F. SMITH |
4
1. | As used within this Agreement, the terms Company, we, our or us collectively refer to National Fuel Gas Company and its subsidiary and affiliated companies, other related entities, and successors or assigns. As used within this Agreement, the terms Mr. Hale, employee, you or your refers to Bruce H. Hale. | |
2. | You have voluntarily decided to apply for retirement, effective August 1, 2005. |
3. | Consistent with your decision to retire, you hereby resign, effective August 1, 2005, any and all positions as an officer, director, employee or equivalent of any Company entity. Your separation from employment is by mutual agreement between you and the Company. Your employment with the Company will terminate on July 31, 2005. |
4. | The Company agrees to pay you, minus all applicable taxes and withholdings, your regular pay and benefits up to and including July 31, 2005. |
5. | (a) | You are entitled to certain accrued pension benefits, effective August 1, 2005, as provided under the terms of the National Fuel Gas Company Retirement Plan (the Retirement Plan), payable upon such dates and in such amounts determined in accordance with the terms and conditions of the Retirement Plan. Notwithstanding the foregoing, the benefit for the month of August 2005, only, may be paid at any time during the month of August 2005 and is dependent on your timely providing the Retirement Plan Administrator with a benefit option choice under the Retirement Plan. |
(b) | You are entitled to certain supplemental pension benefits, effective August 1, 2005, as provided under the terms of the National Fuel Gas Company Executive Retirement Plan (the ERP) payable upon such dates and in such amounts |
determined in accordance with the terms and conditions of the ERP, provided, that any amounts that would otherwise have been payable to you under the ERP in January 2006 shall be paid to you in full in December 2005. Notwithstanding the foregoing, the benefit for the month of August 2005, only, may be paid at any time during the month of August 2005 and is dependent on your timely providing the ERP Plan Administrator with a benefit option choice under the ERP. |
6. | Your Split Dollar Agreement and the related Collateral Assignment, and any and all rights you may have under National Fuel ERISA benefit plans not mentioned in this Agreement, including but not limited to the National Fuel Gas Company Deferred Compensation Plan and the National Fuel Gas Company Tophat Plan, shall remain in effect in accordance with their terms, as the same may be amended to comply with the requirements of Section 409A of the Internal Revenue Code and are not affected by this Agreement The Company hereby consents to any automatic borrowing by you of money from the insurance policy underlying that Split Dollar Agreement that would be applied directly to the payment of any premiums on that policy when and if the dividends on that policy are insufficient to fund the entire premium while you are not in breach of this Agreement. The Company shall not borrow money from such insurance policy. |
7. | (a) | Beginning August 1, 2005, you will be entitled to retiree health coverage in the same manner and form as is available to any supervisory employee who retires in 2005, which is any and all family medical coverage offered under (i) the Companys Traditional Indemnity Plan for non-bargaining unit retirees, and (ii) the Prescription Drug Plan. The Company will withhold the retiree medical contribution of $71 per month from your monthly benefit under the Retirement Plan, beginning August 1, 2005, which contribution rate will remain in effect for the duration of your coverage. |
(b) | Commencing August 1, 2005, you may elect COBRA continuation coverage for a period of 18 months under the Company Dental Plan, at your expense. Assuming you elect COBRA continuation coverage beginning August 1, 2005, in the event of your death prior to the expiration of the 18-month COBRA continuation period, your spouse will be entitled to continue such coverage under COBRA at her election, at her cost based on the COBRA continuation rate in effect from time to time and for the duration provided under COBRA. | ||
(c) | Commencing August 1, 2005, you may elect COBRA continuation coverage for a period of 18 months under the Companys Executive Medical Plan at your expense. Assuming you elect COBRA continuation coverage, beginning August 1, 2005, in the event of your death prior to the expiration of the 18-month COBRA continuation period, your spouse will be entitled to continue such coverage under COBRA at her election, at her cost based on the COBRA continuation rate in effect from time to time and for the duration provided under COBRA. |
2
8. | National Fuel will pay you a supplemental annual pension benefit equivalent to one hundred twenty thousand dollars ($120,000) expressed as a single life annuity, minus any and all applicable taxes and withholding. You have been offered the choices of forms of payment of this benefit from among the benefit option choices available to retirees under the Retirement Plan, and you hereby elect the Period Certain and Life Annuity form of payment for this benefit, which yields a pre-tax annual benefit of one hundred twelve thousand eight hundred dollars ($112,800). This amount, minus any and all applicable taxes and withholding, will be paid in equal monthly installments beginning August 2005 and continuing in the same manner and for the same duration as if it were payable under the Retirement Plan, for your life but for at least fifteen (15) years to your designated beneficiary, and otherwise as provided in the Retirement Plan. Notwithstanding the foregoing, the benefit for the month of August 2005, only, may be paid at any time during the month of August, 2005, and any payment scheduled to be made to you pursuant to this paragraph 8 that would otherwise have been payable to you in January 2006 shall be paid to you in full in December 2005. The Company will make such payment by a check mailed to your then-current home address or via direct deposit to an account so designated, in writing, by you . |
9. | The Company agrees to pay you by check mailed to your then-current home address or via direct deposit to an account so designated, in writing, by you, an additional supplemental pension payment in a lump sum of six hundred fifty thousand dollars ($650,000), less any and all applicable taxes and withholding. Said lump sum payment shall be made on or about October 15, 2005. In the event of your death prior to October 15, 2005 , this payment will be payable to your Estate when due. For the avoidance of doubt, no portion of this payment is intended to constitute any bonus for the fiscal year ending September 30, 2005, and none has been included in the calculation of your pension benefits provided in paragraph 5 of this Agreement. |
10. | In consideration for the promises set forth in paragraphs 8 and 9 of this Agreement, you hereby knowingly and voluntarily release, unconditionally waive and forever discharge the Company and National Fuel Gas Supply Corporation, their successors and assigns, heirs, executors and administrators, of and from all, and all manner of action and actions, cause and causes of actions, suits, debts, dues, sums of money, accounts, reckoning, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law or in equity, based on the Employment Continuation and Noncompetition Agreement, dated December 11, 1998 and entered into among Mr. Hale, National Fuel Gas Supply Corporation and National Fuel. |
11. | In further consideration for the promises set forth in paragraphs 8 and 9 of this Agreement, you hereby knowingly and voluntarily release and unconditionally waive any and all demands, claims and causes of action, of whatever kind or nature, which you ever had, now have or which you, your successors, assigns, heirs, executors or administrators can, shall or may have for any reason as of the date you execute this Agreement against the Company or any of the Companys predecessors, successors, assigns, executors, |
3
administrators, directors, officers, employees and agents (collectively Releasees) regarding your employment and its termination, including, but not limited to: |
(a) | all demands, claims and causes of action for wages, benefits (including benefits under the ERP), bonuses, severance pay, perquisites, or back wages, benefits or bonuses other than those set forth in this Agreement or in any benefit plan, program or policy of the Company not specifically referred to in this Agreement; | ||
(b) | all demands, claims and causes of action under state or federal civil rights and anti-discrimination laws, regulations or orders, including Executive Order 11246, Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990 and the New York Human Rights Law; | ||
(c) | all demands, claims and causes of action that your employment or its termination violated any alleged contractual relationship with the Company or was in any way unreasonable, wrongful, or in violation of any Company policy; and | ||
(d) | all demands, claims and causes of action for mental, physical or emotional distress or harm, or defamation relating in any way to your employment or its termination. |
12. | In conjunction with the provisions of paragraph 11 herein, the Company and you specifically acknowledge and agree that: |
(a) | you do not waive any claim which may arise after the execution of this Agreement; | ||
(b) | you do not waive any claim with respect to performance by the Company of its obligations under this Agreement. | ||
(c) | you do not waive any right of indemnification by or contribution from the Company which arises under the provisions of paragraph 18 of this Agreement, under the Companys by-laws or under the corporate laws of New York or New Jersey regarding the relationship between a corporation and its officers;. | ||
(d) | but for this Agreement, you would not be entitled to the benefits set forth in paragraphs 8 and 9 of this Agreement; | ||
(e) | the Company has advised you to review the Agreement, and specifically the release contained in paragraph 11 herein, with your attorney prior to signing this Agreement; | ||
(f) | you were given this Agreement on July 27, 2005, and you understand you may review this Agreement for up to twenty-one (21) days before being required to execute this Agreement. You and the Company agree that the time period for you |
4
to consider this Agreement before signing it will not be restarted if any changes, material or non-material, are made to the Agreement after the date you first received it. You and the Company also agree that, other than the accrued pension benefits provided under the Retirement Plan and the ERP, no benefits provided under this Agreement shall be payable unless and until the time periods referenced herein and in paragraph (e) hereof expire and this Agreement becomes effective. | |||
(g) | you may terminate this Agreement at any time within seven (7) days after your execution of this Agreement. This Agreement shall not become effective until the time to terminate it has expired. |
13. | As a part of the consideration for the compensation provided in this Agreement and for the other covenants made by National Fuel in this Agreement, you agree to the following confidentiality provisions: |
(a) | You agree that the contents of this Agreement are confidential and will not be disclosed to any third party, other than your attorney, your wife, tax advisor, financial advisor(s), the Internal Revenue Service, the New York State Tax Department or the tax authority of any state or locality in which you are, or may be, subject to income tax, unless you are compelled to do so by a court having jurisdiction over such matter (in which case you will notify the Company as soon as possible of the activity and cooperate with the Company in seeking relief from such compulsion) or as may be necessary in connection with the enforcement of this Agreement. Notwithstanding the previous sentence, you may disclose the provisions of this paragraph 13 and paragraphs 14 and 16 hereof to any prospective employer or any other person or entity for whom you propose to provide services. | ||
(b) | Notwithstanding anything to the contrary contained in this Agreement, or any other express or implied agreement, arrangement or understanding, the parties and their respective affiliates, employees, representatives and other agents may disclose to any and all persons the tax structure and any of the tax aspects of the transaction(s) contemplated by this Agreement, which are necessary to describe or support any United States federal income tax benefits that may result therefrom or any materials necessary to comply with United States federal or state securities laws. For the purposes of this provision, tax structure is limited to facts relevant to the U.S. federal income tax treatment of the transaction(s) and does not include information relating to the identity of the parties, their affiliates, agents or advisors. | ||
(c) | You hereby represent that you have returned to the Company any and all corporate documents, records or copies of the same, information or property in your possession of which you are aware, except those relating to either your own employment, such as payroll stubs and benefits statements, or your shareholdings in the Company. You agree to return to the Company any and all such |
5
documents, records, copies, information and property which are or become subject to your control in the future. The Company acknowledges receipt from you of corporate documents and information you left behind on the Companys premises. Your performance of the obligations set forth in this paragraph 13(c) is a condition precedent to your receipt of any benefits under paragraphs 8 and 9 of this Agreement; however, upon a change of control of the Company (within the meaning of Section 409A of the U.S. Internal Revenue Code as in effect on the date of this Agreement), your performance of this condition shall no longer be such a condition precedent, and any subsequent breach by you of this paragraph 13(c) would render you subject only to the same remedies the Company would have for any other material breach of this Agreement. | |||
(d) | You shall hold in a fiduciary capacity for the benefit of National Fuel any and all of the Companys trade secrets and confidential and proprietary information in your possession. You shall not, without the prior written consent of National Fuel, unless compelled pursuant to an order of a court or other body having jurisdiction over such matter (in which case you will notify the Company as soon as possible of the activity and cooperate with the Company in seeking relief from such compulsion), at any time, utilize or communicate or divulge to anyone other than the Company and those designated by it, any of the Companys trade secrets and confidential and proprietary information. | ||
(e) | The prohibition against your use of the Companys trade secrets and confidential and proprietary information, other than for the benefit of National Fuel, includes but is not limited to the exploitation of any products or services that embody or are derived from the Companys trade secrets or confidential and proprietary information. | ||
(f) | You agree to comply with (i) any and all applicable laws and regulations regarding your actions and omissions while in possession of any material nonpublic information about the Company which you may have at any time; and (ii) any and all confidentiality agreements that the Company entered into with third parties, of which you were made aware during your employment by the Company, under which the Company promised that its Representatives (including you) would keep confidential certain information described in those confidentiality agreements. | ||
(g) | You represent, warrant and agree that you have no proprietary or ownership rights or title to any of the Companys trade secrets or confidential and proprietary information and no legal right to use, disclose, disseminate, or publish any of the Companys trade secrets or confidential and proprietary information in any locality. You acknowledge that if you were to work for or advise any entity in connection with a potential acquisition of or merger with the Company, you would in the course of that work inevitably use or disclose some of the Companys trade secrets or confidential and proprietary information. |
6
(h) | The Companys trade secrets and confidential and proprietary information include, but are not limited to, any and all memoranda, software, data bases, computer programs, interface systems, pricing and client information, records and writings as hereinafter defined pertaining to the Companys methods or practices of doing business and marketing its services and products, whether or not developed or prepared by you during the term of your employment with the Company. As used in the preceding sentence, the term writings shall mean and include all works, expressed in words, numbers or other verbal or numerical symbols, regardless of the physical manner in which they are embodied, including, but not limited, to books, articles, manuscripts, memoranda, computer programs, computer software systems, maps, charts, diagrams, technical drawings, manuals, video and audio tape recordings, and photographs. Notwithstanding the foregoing, the Companys trade secrets and confidential and proprietary information shall mean only such information or material not generally known to the public (other than by act of you or your representatives in breach of this Agreement). |
14. | In order to protect and safeguard the Companys trade secrets and confidential information, you agree that, during the period beginning August 1, 2005 and ending July 31, 2008: |
(a) | you will not, directly or indirectly and without the prior written consent of National Fuel, engage in or be interested in (as owner, partner, shareholder, employee, director, agent, consultant or otherwise), any business which is a competitor of the Company, as hereafter defined, except as otherwise permitted under paragraph 14(c) below; | ||
(b) | for purposes of this Agreement, a competitor of the Company is any corporation, sole proprietorship, partnership, joint venture, syndicate, trust or any other form of organization or parent, subsidiary or division of any of the foregoing, which, during such period or the immediately preceding fiscal year of such entity, was engaged in (i) the transportation, distribution, purchase, brokering, marketing, or trading of natural gas, electricity or other energy products or services which are competitive to the Companys products or services, or in any energy related project that is competitive to the Companys products, services or projects, provided that such entity was engaged in such competitive business within 50 miles of the geographic area in which the Company is engaged in business, or (ii) the development of cogeneration facilities in Italy or Bulgaria; | ||
(c) | the terms of this paragraph 14 shall not apply to: |
(i) | your present or future investments in the securities of companies listed on a national securities exchange or traded on the over-the-counter market to the extent such investments do not exceed 2% of the total outstanding shares of such company, |
7
(ii) | your engagement in or interest in any business with the prior written consent of National Fuel. |
(d) | The parties acknowledge and agree that the foregoing restrictions contain reasonable limitations as to the time, geographical area, and scope of activity to be restrained and these restrictions do not impose any greater restraint than is necessary to protect the goodwill and other legitimate business interests of the Company. |
15. | In consideration for your promises set forth in this Agreement, the Company agrees that: |
(a) | any inquiries by prospective employers or third parties will be handled as per Company policy; that is, the dates of your employment and job title will be the only information released by the Company; | ||
(b) | the contents of this Agreement are confidential; the Company shall not disclose the contents of this Agreement to anyone other than the directors, officers, employees and agents of the Company or its affiliates who need to know except as required, in the opinion of counsel, to comply with applicable law, regulation or order; | ||
(c) | the Company hereby knowingly and voluntarily releases and unconditionally waives any and all demands, claims and causes of action against you, of whatever kind or nature, which the Company ever had, now has or which it or its successors can, shall or may have for any reason as of the date you execute this Agreement, except for claims for fraud or other intentional misconduct discovered by the Companys officers after the execution of this Agreement; the Company does not release or waive any claim which may arise after the execution of this Agreement; and | ||
(d) | the Company shall not publicly or privately disparage you, either personally or professionally; the parties agree that nothing in this paragraph shall be construed to prevent any officer of the Company or any subsidiary or affiliate from discussing your performance internally in the ordinary course of business. |
16. | In further consideration for the promises set forth in this Agreement, you agree that: |
(a) | you will not publicly or privately disparage the Company, or any of its subsidiaries, affiliates, directors, officers or employees including any aspect of their respective business, products, employees, management or Board of Directors, in any manner, including but not limited to in any way which could materially adversely affect the business of the Company or such subsidiaries or affiliates; and | ||
(b) | you will not, directly or indirectly, take any action with the intended purpose of interfering with, damaging or disrupting the assets or business operations or |
8
affairs of the Company or its subsidiaries or affiliates; without limiting the foregoing in any way, it shall be conclusively presumed that you have breached this subparagraph 16(b) if, without the prior written consent of National Fuel or other than at National Fuels written request, you |
(i) | voluntarily participate in any of the following, collectively referred to as a Proceeding: any rate case, claim, litigation, arbitration, mediation or administrative proceeding affecting the revenue, expenses, assets or liabilities of the Company other than any claim, litigation, arbitration, mediation or administrative proceeding that does not relate to a rate matter; | ||
(ii) | voluntarily render any assistance in the preparation or development of any position in a Proceeding; or | ||
(iii) | submit any shareholder proposal, motion or resolution to the Company to be discussed or voted upon by the Companys shareholders. You hereby grant the Secretary of National Fuel an irrevocable power of attorney to withdraw for all purposes any such shareholder proposal. |
(c) | you will not, directly or indirectly and without the prior written consent of National Fuel , work for, consult with, advise or represent (as employee, agent, consultant or otherwise), any business which is a customer of the Company, as hereafter defined, with respect to any matter or activity which would tend to reduce the quantity or price of services or commodities provided by the Company to that business; | ||
(d) | for purposes of this Agreement, a customer of the Company is any corporation, sole proprietorship, partnership, joint venture, syndicate, trust or any other form of organization or parent, subsidiary or division of any of the foregoing, which, during such period or the immediately preceding fiscal year of such entity, purchased commodities, goods or services from the Company; and | ||
(e) | you will not induce or otherwise entice, directly or indirectly, any employee or officer of the Company to leave the Company, nor shall you attempt to hire any of the Companys employees or officers. |
17. | You waive any and all rights to employment at the Company, agree not to knowingly apply for, solicit, seek or otherwise attempt to obtain employment with the Company, and further agree that the Company is not or will not be at any time under any obligation to employ you. You further agree that if you should apply for employment at the Company, the Company will have no obligation to process your employment application or to hire you and that the failure to process your employment application or to hire you shall not constitute a violation of any federal, state or local law, regulation or order. Nothing in this Agreement shall preclude you, however, from soliciting, seeking or otherwise attempting to obtain consulting work with the Company as an independent contractor, or |
9
from actually performing consulting services for the Company if retained by the Company, it being understood that the Company is not and will not be under any obligation to engage you as a consultant. |
18. | National Fuel shall indemnify you to the fullest extent permitted and in the manner provided by the laws of the State of New Jersey including, without limitation, the indemnification permitted by N.J.S. 14A:3-5(8), against all liabilities (including amounts paid or incurred in satisfaction of settlements, judgments, fines and penalties) and expenses (including, without limitation, attorneys fees and disbursements) imposed upon or incurred by you in connection with any pending, threatened or completed civil, criminal, administrative or arbitrative action, suit or proceeding (Proceeding) in which you may become involved by reason of your being or having been a director or officer of the Company, or of serving or having served at the request of the Company as a director, officer, trustee, employee or agent of, or in any other capacity with, another foreign or domestic corporation, or any partnership, joint venture, sole proprietorship, employee benefit plan, trust or other enterprise, whether or not for profit. During the pendency of any such proceeding, the Company shall, to the fullest extent permitted by law, promptly advance expenses (including, without limitation, attorneys fees and disbursements) that are incurred, from time to time, in connection therewith by you, subject to the receipt by the Company of an undertaking of you as required by law. Unless otherwise required by applicable law at that time, this undertaking shall be in the form of a writing signed by you promising to immediately repay the advanced amounts if it shall ultimately be determined that you are not entitled to indemnification under this section or under applicable law at that time. The indemnification provided by this paragraph 18 shall extend to your estate or personal representative. |
19. | This Agreement is made subject to approval and ratification by the Board of Directors of National Fuel, to whom it will be presented and favorably recommended by management at the next meeting of that Board, scheduled for September 8, 2005. If this Agreement is not so approved and ratified, then the parties will negotiate in good faith to restore the parties as nearly as possible to the positions in which they would have been if this Agreement had never been executed, or to reach some other mutually agreeable arrangement. |
20. | The parties agree that the legal invalidity of any provision of this Agreement shall not make this Agreement void or unenforceable, and that in such case this Agreement shall be construed so as to preserve as much as possible of the parties respective interests which motivated them to execute this Agreement. It is also agreed that this Agreement shall be construed and enforced in accordance with the laws of the State of New York. The parties acknowledge that they have mutually negotiated all provisions of this Agreement with the assistance of counsel. The provisions of this Agreement shall be interpreted and construed in accordance with their fair meanings, and not strictly for or against either party, regardless of which party may have drafted this Agreement or any specific provisions. |
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21. | This Agreement constitutes the final, complete and exclusive agreement between Horizon and you regarding your employment and its termination. You do not rely upon any oral promises in signing this Agreement, and the only promises you rely on are those set forth in writing herein. This Agreement may be modified or amended only by a written instrument signed by Horizon and you. |
22. | This Agreement is personal to Mr. Hale and without the prior written consent of National Fuel shall not be assignable by him other than by will or the laws of descent and distribution. During his life Mr. Hale may also make inter vivos transfers of some or all of his rights under this Agreement to members of his family or entities established for their benefit, but Mr. Hale shall remain fully responsible for performance of all his obligations under this Agreement, and the quantity and nature of all obligations of the Company and Horizon under this Agreement shall be interpreted as though such transfer had not occurred. This Agreement shall inure to the benefit of and be enforceable by Mr. Hales legal representatives. |
23. | This Agreement shall inure to the benefit of and be binding upon National Fuel and its successors. |
By:
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/s/ P. C. Ackerman | Date: 8/12/05 | ||
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P. C. Ackerman | |||
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President | |||
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HORZON ENERGY DEVELOPMENT, INC. | ||||
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By:
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/s/ P. C. Ackerman | Date: 8/12/05 | ||
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P. C. Ackerman | |||
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President | |||
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BRUCE H. HALE | ||||
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/s/ Bruce H. Hale | Date: 8/12/05 | ||
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(a) | The development of a new combined cycle gas turbine electric generating facility, with a nominal capacity of 400 Mwe, to be located on a site in the area of Montenero di Bisaccia, Regione Molise, Italy, and developed through Montenero Energia S.r.l. which Horizon established with ACEA spa, an Italian electric utility, (the Italian Project); and | ||
(b) | The development of new combined cycle gas turbine cogeneration facilities with a nominal capacity of 160 Mwe to be located on sites adjacent to the existing Sofia and Sofia East cogeneration plants in Sofia, Bulgaria, and developed through Sofia Energy EAD, a Bulgarian joint stock company, which Horizon established with Toplofikacia Sofia EAD , (the Bulgarian Project); |
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(a) | The Total Net Sale Proceeds from the sale of the Projects shall be equal to the gross sales proceeds actually received, converted into U.S. dollars as of the date funds are received by Horizon, less: |
(i) | all expenses of sale, including, but not limited to, attorney fees, consultant fees and government fees, other than expenses for which Agent is entitled to reimbursement pursuant to Section 6 below; | ||
(ii) | all foreign or domestic income taxes, excise taxes, and other taxes which Horizon or its affiliates are required to pay related to the sale of the Projects; and | ||
(iii) | the Post 8/1/05 Net Project Development Costs defined as follows: for purposes of this Agreement, the Post 8/1/05 Net Project Development Costs consist of all expenses related to the Italian Project and the Bulgarian Project first accrued by Horizon or its affiliates in connection with the Projects on or after August 1, 2005 after reduction by the amount of any such expenses for which Horizon or its affiliates are reimbursed by any unaffiliated party. |
(b) | the Commission will be calculated as follows: |
(i) | one percent (1%) of the Total Net Sales Proceeds up to Total Net Sales Proceeds of one million dollars ($1,000,000); plus | ||
(ii) | two percent (2%) of the Total Net Sales Proceeds greater than one million dollars ($1,000,000) up to Total Net Sales Proceeds of two million dollars ($2,000,000); plus | ||
(iii) | three percent (3%) of the Total Net Sales Proceeds greater than two million dollars ($2,000,000) up to Total Net Sales Proceeds of three million dollars ($3,000,000); plus | ||
(iv) | an additional similarly increasing percentage of the Total Net Sales Proceeds from each successive increment of one million dollars ($1,000,000) of Total Net Sales Proceeds up to a maximum of 50 percent of the Total Net Sales Proceeds greater than forty-nine million dollars ($49,000,000) up to the Total Net Sales Proceeds of fifty million dollars ($50,000,000); plus | ||
(v) | if any proceeds from the sale of one of the Projects are received by Horizon more than three months after the closing of the sale of a Project, |
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such as pursuant to an earn-out or similar provision, those sale proceeds shall be discounted by a prorated annual percentage rate of eight percent (8%) per year, and then added to the Net Sales Proceeds as of the Closing, and the Commission shall then be increased by applying the above formula to the Net Sales Proceeds as so increased; less | |||
(vi) | one-half (1/2) of the total expenses for which Horizon has reimbursed Agent pursuant to Section 6 below. |
(c) | If the sale of one of the Projects is consummated before the sale of the other Project, then a portion of the Commission shall be paid based on the formula set out in paragraphs 5(a) and 5(b) above, provided that the Net Sales Proceeds from that project exceed the Accumulated Net Project Development Costs related to both projects. Upon the closing of the sale of the other Project, the remainder of the Commission shall be calculated and paid as though both closings had occurred at the same time (except as otherwise provided in paragraph 5(b)(v) above). |
(a) | Agent shall be responsible for the payment of any and all local, state and federal taxes, or other fees, imposed on the amounts made payable to Agent as a result of the services rendered hereunder. |
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(b) | Agent shall be responsible for the withholding and/or payment of any and all applicable local, state and federal employment, payroll and/or income taxes associated with any and all of Agents employees, provided that Agent shall not use any employees on any of the work to be performed under this Agreement without the prior written consent of Horizon. Agent agrees to indemnify and hold harmless National Fuel for or from any failure, on the part of Agent, to withhold or remit such applicable taxes. | ||
(c) | Upon request by Horizon, Agent shall provide documented proof that the above-referenced taxes were paid, as required. |
(a) | Agent will indemnify and hold National Fuel harmless from and against any and all loss, damage, injury, suits, penalties, costs, liabilities and expenses (including, but not limited to, legal expenses) arising out of any claim for loss of or damage to property, including property of National Fuel or Agent, liability to, injury to, or death of any person, including Agent, or an employee of National Fuel or Agent, caused by the grossly negligent, reckless or intentionally tortious acts of Agent, or his officers, employees, subcontractors or other agents, including but not limited to failure to comply with federal, state and local laws, ordinances and regulations, both foreign and domestic, applicable to services to be performed hereunder and all other applicable local, state and federal laws, ordinances and regulations, both foreign and domestic. For purposes of this paragraph only, National Fuel shall |
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include National Fuel Gas Company and all of its direct and indirect subsidiaries, along with any officer or employee of these entities. |
(b) | Horizon will indemnify and hold Agent harmless from and against any and all loss, damage, injury, suits, penalties, costs, liabilities and expenses (including, but not limited to, legal expenses) arising out of any claim related to the services performed under this Agreement for loss of or damage to property, including property of National Fuel or Agent, liability to, injury to, or death of any person, including Agent, or an employee of National Fuel or Agent, unless caused by the grossly negligent, reckless or intentionally tortious acts of Agent, or his officers, employees, subcontractors or other agents, including but not limited to failure to comply with federal, state and local laws, ordinances and regulations, both foreign and domestic, applicable to services to be performed hereunder and all other applicable local, state and federal laws, ordinances and regulations, both foreign and domestic. |
(a) | In performing his obligations under this Agreement, Agent and his employees, officers, members and agents, if any, shall maintain all information gathered, developed or communicated to Agent by National Fuel or any of their directors, officers, employees or agents, in connection with the work performed hereunder in a confidential manner, whether or not identified as a trade secret or as proprietary and confidential by National Fuel. Agent agrees that Agent and his employees, officers, members and agents, if any, will not duplicate, distribute, disclose, or otherwise provide such information, or National Fuels trade secrets or proprietary and confidential information to anyone without prior written |
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authorization of a Horizon officer. The obligations created by this paragraph shall remain in effect indefinitely and shall survive the termination of this Agreement. |
(b) | National Fuels trade secrets and confidential and proprietary information include information and material concerning National Fuel which is not generally known to the public, including but not limited to, any and all memoranda, software, data bases, computer programs, interface systems, pricing and client information, and records pertaining to National Fuels methods or practices of doing business and marketing its services and products, whether or not developed or prepared by Agent during the term of his employment with National Fuel or in connection with his providing consulting service to National Fuel. National Fuels trade secrets and confidential and proprietary information also include writing or writings which shall mean and include all works, expressed in words, numbers or other verbal or numerical symbols, regardless of the physical manner in which they are embodied, including, but not limited to, books, articles, manuscripts, memoranda, computer programs, computer software systems, maps, charts, diagrams, technical drawings, manuals, video and audio tape recordings, and photographs, whether or not developed or prepared by Agent during the term of his employment with National Fuel or in connection with his providing consulting services to National Fuel. National Fuels trade secrets and confidential and proprietary information do not include any information or material which is or becomes generally known to the public (other than by act of Agent or his representatives in breach of this Agreement). |
(a) | With respect to Agent: |
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(b) | With respect to Horizon: |
(a) | the full legal name, address and state of organization of the Assignee; | ||
(b) | evidence of Agents sole ownership of the Assignee; and | ||
(c) | the Assignees commitments that (i) the Assignee assumes all rights and obligations under this Agreement, and (ii) all the Assignees services under this Agreement must be performed by Agent individually unless Horizon expressly consents otherwise in writing. |
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HORIZON ENERGY DEVELOPMENT, INC. | BRUCE H. HALE | |||||||
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By:
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/s/ P. C. Ackerman | /s/ Bruce H. Hale | ||||||
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Name: P. C. Ackerman | ||||||||
Title: President |
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(1) | Investment Tax Credit is included in Other Income | |
(2) | Rentals shown above represent the portion of all rentals (other than delay rentals) deemed representative of the interest factor. | |
(3) | Fiscal 2002 and 2005 include the Impairment of Investment in Partnership of $15,167 and $4,158, respectively. |
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RALPH E. DAVIS ASSOCIATES, INC.
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/s/ Larry A. Barnett | |
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Larry A. Barnett, P.E.
Senior Vice President |
RALPH E. DAVIS ASSOCIATES, INC.
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/s/ Larry A. Barnett | ||||
Larry A. Barnett, P.E. | ||||
Senior Vice President | ||||
1. | The Companys Annual Report on Form 10-K for the year ended September 30, 2005 (the Annual Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and | ||
2. | Information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Attention:
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Mr. James A. Beck | |||||
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President | |||||
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Re: | Oil, Condensate and Natural Gas Reserves, | ||||
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Seneca Resources Corporation | |||||
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As of September 30, 2005 |
Proved Developed | Proved | |||||||||||||||
Division: | Producing | Non Prod | Undeveloped | Total Proved | ||||||||||||
EAST COAST:
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Oil/Condensate: MBbls
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134.0 | 43.4 | 0.0 | 177.4 | ||||||||||||
Gas: MMcf
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81,621.3 | 1,503.8 | 0.0 | 83,125.1 | ||||||||||||
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GULF COAST:
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Oil/Condensate: MBbls
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906.0 | 322.7 | 66.4 | 1,295.1 | ||||||||||||
Gas: MMcf
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9,447.2 | 13,661.1 | 15,362.0 | 38,470.3 | ||||||||||||
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WEST COAST:
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Oil/Condensate: MBbls
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41,519.8 | 181.0 | 15,383.5 | 57,084.3 | ||||||||||||
Gas: MMcf
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58,277.8 | 414.1 | 11,766.8 | 70,458.7 | ||||||||||||
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TOTAL COMPANY:
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Oil/Condensate: MBbls
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42,559.8 | 547.1 | 15,449.9 | 58,556.8 | ||||||||||||
Gas: MMcf
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149,346.2 | 15,579.1 | 27,128.8 | 192,054.1 |
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Very truly yours, | |
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RALPH E. DAVIS ASSOCIATES, INC. | |
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Allen C. Barron, P. E. | |
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President | |
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Attention:
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Mr. Jeff Campbell | |||||
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Vice President | |||||
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Re: | Oil, Condensate and Natural Gas Reserves, | ||||
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Seneca Energy Canada, Inc. | |||||
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As of September 30, 2005 |
Proved Developed | ||||||||||||||||
Producing | Non Producing | Undeveloped | Total Proved | |||||||||||||
TOTAL COMPANY
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Oil: MBbls
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1,243.02 | 252.84 | 0.00 | 1,495.9 | ||||||||||||
NGL/Condensate: MBbls
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173.85 | 30.32 | 0.00 | 204.2 | ||||||||||||
Gas: MMcf
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37,561.12 | 6,418.34 | 2,106.30 | 46,085.8 |
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Very truly yours, | |
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RALPH E. DAVIS ASSOCIATES, INC. | |
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Allen C. Barron, P. E. | |
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President | |
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