What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-11-21 compared with 2022-11-17 · 60 added, 10 removed, 108 unchanged (39% of the section changed)

23 unchanged sentences

ONE Gas, Inc.;

South Jersey Industries, Inc.;

Southwest Gas Corporation;

and Spire Inc.

South Jersey Industries was removed from the Peer Group since the company is no longer a publicly held entity.

This performance graph and accompanying information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of the Company’s filings under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

In 1996, the Board of Directors authorized the Company to implement a share repurchase program, which has been expanded seven times since the inception of the program, authorizing a total of 19.5 million shares of common stock for repurchase.

The share repurchase plan allows us to purchase our outstanding shares on the open market or in negotiated transactions, based on market and other conditions.

17 unchanged sentences

Regulatory Accounting

NJNG and Adelphia Gateway maintain their accounts in accordance with the FERC Uniform System of Accounts and recognize the impact of regulatory decisions on their financial statements.

As a result of the ratemaking process, NJNG and Adelphia Gateway are required to apply the accounting principles in ASC 980, Regulated Operations , which differ in certain respects from those applied by unregulated businesses.

Specifically, NJNG and Adelphia Gateway record regulatory assets when it is probable that certain operating costs will be recoverable from customers in future periods and record regulatory liabilities associated with probable future obligations to customers.

NJNG and Adelphia are subject to accounting requirements resulting from the effects of rate regulation.

Specifically, NJNG and Adelphia record regulatory assets when it is considered probable that certain operating costs will be recoverable from customers in future periods and record regulatory liabilities when it is probable future obligations to customers exist.

Regulatory decisions can have an impact on the recovery of costs, the rate of return earned on investment, and the timing and amount of assets to be recovered by rates.

9 unchanged sentences

If no point within the range is more likely than any other, NJNG will accrue the lower end of the range.

Since we believe that recovery of these expenditures, as well as related litigation costs, is possible through the regulatory process, we record a regulatory asset corresponding to the related accrued liability.

Since we believe that recovery of these expenditures, as well as related litigation costs, is probable through the regulatory process, we record a regulatory asset corresponding to the related accrued liability.

Accordingly, NJNG records an MGP remediation liability and a corresponding regulatory asset on the Consolidated Balance Sheets, which is based on the most likely amount.

17 unchanged sentences

Our postemployment employee benefit plan assets consist primarily of U.S.

equity securities, international equity securities, fixed-income investments and other assets, with a targeted allocation of 34 percent, 17 percent, 33 percent and 16 percent, respectively.

equity securities, international equity securities, fixed-income investments and other assets, with a targeted allocation of 34%, 17%, 33% and 16%, respectively.

Fluctuations in actual market returns, as well as changes in interest rates, may result in increased or decreased postemployment employee benefit costs in future periods.

5 unchanged sentences

Increase/(Decrease) on PBO

(Thousands) Estimated

Increase/(Decrease) to Expense

7 unchanged sentences

Increase/(Decrease) on PBO

(Thousands) Estimated

Increase/(Decrease) to Expense

6 unchanged sentences

Increase/(Decrease) on PBO

(Thousands) Estimated

Increase/(Decrease) to Expense

1 unchanged sentence

Health care cost trend rate (1.00) % $ (25,283) $ (1,700)

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

The Company follows the guidance in ASC 805, Business Combinations, for determining the appropriate accounting treatment for acquisitions.

2 unchanged sentences

Based on the results of this analysis and conclusion on an acquisition’s classification of a business combination or an asset acquisition, the accounting treatment is derived.

If the acquisition is deemed to be a business, the acquisition method of accounting is applied.

Identifiable assets acquired and liabilities assumed at the acquisition date are recorded at fair value.

If the transaction is deemed to be an asset purchase, the cost accumulation and allocation model is used, whereby the assets and liabilities are recorded based on the purchase price and allocated to the individual assets and liabilities based on relative fair values.

The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed are based on various assumptions and valuation methodologies requiring considerable management judgment.

The most significant variables in these valuations are discount rates and the number of years on which to base the cash flow projections, as well as other assumptions and estimates used to determine the cash inflows and outflows.

Management determines discount rates based on the risk inherent in the acquired assets and related cash flows.

The valuation of an acquired business is based on available information at the acquisition date and assumptions that are believed to be reasonable.

However, a change in facts and circumstances as of the acquisition date can result in subsequent adjustments during the measurement period, but no later than one year from the acquisition date.

Investments in Equity Investees

The Company accounts for its investment in Steckman Ridge using the equity method of accounting where it is not the primary beneficiary, as defined under ASC 810, Consolidation, in that its respective ownership interests are 50% or less and/or it has significant influence over operating and management decisions.

The Company’s share of earnings is recognized as equity in earnings of affiliates on the Consolidated Statements of Operations.

Equity method investments are reviewed for impairment when changes in facts and circumstances indicate that the current fair value may be less than the asset’s carrying amount.

Factors that the Company analyzes in determining whether an impairment in its equity investments exists include reviewing the financial condition and near-term prospects of the investees, including economic conditions and trends in the general market, significant delays in or failure to complete significant projects, unfavorable regulatory or legal actions expected to substantially impact future earnings potential and lower-than-expected cash distributions from investees.

If the Company determines the decline in the value of its equity method investment is other than temporary, an impairment charge is recorded in an amount equal to the excess of the carrying value of the asset over its fair value.

When impairment indicators are present, the fair value of the Company’s investment in Steckman Ridge is determined using a discounted cash flow method and utilizes management’s best estimates and assumptions related to expected future results, including the price and capacity of firm natural gas storage contracting, operations and maintenance costs, discount rates and the nature and timing of major maintenance and capital investment.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and other factors.

As a result, it is reasonably possible that unfavorable developments, such as the failure to execute storage contracts and other services for available capacity at anticipated price levels, could result in an other-than-temporary impairment charge in the Consolidated Financial Statements.

New Jersey Resources Corporation

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS (Continued)

Impairment of Long-lived Assets

Property, plant and equipment and finite-lived intangible assets are reviewed periodically for impairment when changes in facts and circumstances indicate that the carrying amount of an asset may not be fully recoverable in accordance with the appropriate accounting guidance.

Factors that the Company analyzes in determining whether an impairment in its long-lived assets exists include determining if a significant decrease in the market price of a long-lived asset is present;

a significant adverse change in the extent to which a long-lived asset is being used in its physical condition;

legal proceedings or factors;

significant business climate changes;

accumulations of costs in significant excess of the amounts expected;

a current-period operating or cash flow loss coupled with historical negative cash flows or expected future negative cash flows;

and current expectations that more likely than not, a long-lived asset will be sold or otherwise disposed of significantly before the end of its estimated useful life.

When an impairment indicator is present, the Company determines if the carrying value of the asset is recoverable by comparing it to its expected undiscounted future cash flows.

If the carrying value of the asset is greater than the expected undiscounted future cash flows, an impairment charge is recorded in an amount equal to the excess of the carrying value of the asset over its fair value.

Derivative Instruments

We record our derivative instruments held as assets and liabilities at fair value on the Consolidated Balance Sheets.

In addition, since we choose not to designate any of our physical and financial natural gas commodity derivatives as accounting hedges, changes in the fair value of ES’s commodity derivatives are recognized in earnings, as they occur, as a component of operating revenues or natural gas purchases on the Consolidated Statements of Operations.

Changes in the fair value of foreign exchange contracts are recognized in natural gas purchases on the Consolidated Statements of Operations.

The fair value of derivative instruments is determined by reference to quoted market prices of listed exchange-traded contracts, published price quotations, pipeline tariff information or a combination of those items.

ES’s portfolio is valued using the most current and reasonable market information.

If the price underlying a physical commodity transaction does not represent a visible and liquid market, ES may utilize additional published pipeline tariff information and/or other services to determine an equivalent market price.

As of September 30, 2023, the fair value of its derivative assets and liabilities reported on the Consolidated Balance Sheets that is based on such pricing is considered immaterial.

Should there be a significant change in the underlying market prices or pricing assumptions, ES may experience a significant impact on its financial position, results of operations and cash flows.

Refer to Item 7A.

Quantitative and Qualitative Disclosures About Market Risks for a sensitivity analysis related to the impact to derivative fair values resulting from changes in commodity prices.

The valuation methods we use to determine fair values remained consistent for fiscal 2023, 2022 and 2021.

We apply a discount to our derivative assets to factor in an adjustment associated with the credit risk of its physical natural gas counterparties and to our derivative liabilities to factor in an adjustment associated with its own credit risk.

We determine this amount by using historical default probabilities corresponding to the appropriate S&P issuer ratings.

Since the majority of our counterparties are rated investment grade, this results in an immaterial credit risk adjustment.

Gains and losses associated with derivatives utilized by NJNG to manage the price risk inherent in its natural gas purchasing activities are recoverable through its BGSS, subject to BPU approval.

Accordingly, the offset to the change in fair value of these derivatives is recorded as either a regulatory asset or liability on the Consolidated Balance Sheets.

CEV hedges certain of its expected production of SRECs through forward and futures contracts.

CEV intends to physically deliver all SRECs it sells and recognizes SREC revenue as operating revenue on the Consolidated Statements of Operations upon delivery of the underlying SREC.

We have not designated any derivatives as fair value or cash flow hedges as of September 30, 2023 and 2022.

New Jersey Resources Corporation

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity