FILE NO. ----------
FORM U-3A-2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION UNDER
RULE U-2 FROM THE PROVISIONS OF THE PUBLIC UTILITY
HOLDING COMPANY ACT OF 1935
TO BE FILED ANNUALLY PRIOR TO MARCH 1
SOUTH JERSEY INDUSTRIES, INC.
hereby files with the Securities and Exchange Commission, pursuant
to Rule U-2, its statement claiming exemption as a holding company
from the provisions of the Public Utility Holding Company Act of
1935. In support of such claim for exemption, the following
information is submitted:
1. Name, statement of organization, locations and
nature of business of claimant and every subsidiary thereof.
The claimant, South Jersey Industries, Inc.
(the Company), was organized under the laws of the
State of New Jersey; its principal location is
Number One South Jersey Plaza, Route 54, Folsom,
New Jersey 08037. The Company is not a public
utility company. It is primarily engaged in the
business of owning and holding a majority interest
in other business enterprises.
The Company owns all of the outstanding common
stock of South Jersey Gas Company (Gas Company or
SJG), which was organized under the laws of the
State of New Jersey. Gas Company's principal
location is Number One South Jersey Plaza, Route
54, Folsom, New Jersey 08037. Gas Company is a
public utility company engaged in the purchase,
transmission and sale of natural gas for
residential, commercial, and industrial use in an
area of approximately 2,500 square miles in the
southern part of New Jersey.
The Company owns all of the outstanding common
stock of Energy & Minerals, Inc. (EMI), which was
organized under the laws of the State of New
Jersey. EMI's principal location is Number One
South Jersey Plaza, Route 54, Folsom, New Jersey
08037. EMI is not a public utility company. It is
primarily engaged in owning and holding the stock
of certain nonutility subsidiaries of the Company.
The Company owns all of the outstanding
common stock of South Jersey Energy Company (Energy
Company), which was organized under the laws of the
State of New Jersey. Energy Company's principal
location is Number One South Jersey Plaza, Route
54, Folsom, New Jersey 08037. Energy Company is
not a public utility company. Energy Company
provides services for the acquisition and
transportation of natural gas for industrial and
commercial users.
The Company owns all of the outstanding stock
of R & T Group, Inc. (R & T), which was organized
under the laws of the State of New Jersey. R & T's
principal location is Number One South Jersey
Plaza, Route 54, Folsom, New Jersey 08037. R & T
is not a public utility company. It is primarily
engaged in owning and holding the stock of certain
nonutility subsidiaries of the Company.
EMI owns all of the outstanding common stock
of The Morie Company, Inc. (Morie), which was
organized under the laws of the State of New
Jersey. Morie's principal location is 1201 N. High
Street, Millville, N.J. 08332. Morie is not a
public utility company. It is engaged in the
mining, processing, and marketing of commercial and
industrial sands and gravels.
EMI owns all of the outstanding common stock
of South Jersey Fuel, Inc. (Fuel Company), which
was organized under the laws of the State of New
Jersey. Fuel Company's principal location is
Number One South Jersey Plaza, Route 54, Folsom,
New Jersey 08037. Fuel Company is not a public
utility company. Fuel Company is presently
inactive.
R & T owns all of the outstanding common stock
of R and T Castellini Company, Inc. (Castellini
Company), which was organized under the laws of the
State of New Jersey. Castellini Company's
principal location is 805 Sheridan Avenue,
Vineland, N.J. 08360. Castellini Company is not a
public utility company. It is engaged in the
installation of gas, water and sewer lines, plant
maintenance and site work, and environmental
cleanup and remediation.
R & T owns all of the outstanding common stock
of R & T Castellini Construction Company, Inc.
(Castellini Construction), which was organized
under the laws of the State of Delaware.
Castellini Construction's principal location is
3865 Lincoln Avenue, Vineland, N.J. 08360.
Castellini Construction Company is not a public
utility company. It is engaged in the installation
of gas, water and sewer lines, plant maintenance
and site work, and environmental cleanup and
remediation.
R & T owns all of the outstanding common stock
of S.W. Downer, Jr. Company, Inc. (Downer Company),
which was organized under the laws of the State of
New Jersey. Downer Company's principal location is
Ellis & Sewell Streets, Glassboro, N.J. 08028.
Downer Company is not a public utility company. It
is engaged in the installation of gas, water and
sewer lines, plant maintenance and site work, and
environmental cleanup and remediation.
R & T owns all of the outstanding common stock
of Onshore Construction Company, Inc. (Onshore),
which was organized under the laws of the State of
New Jersey. Onshore's principal location is Ellis
& Sewell Streets, Glassboro, N.J. 08028. Onshore
is not a public utility company. It is engaged in
the installation of large diameter pipe, sewerage
plants, bridges, dams and other heavy construction
projects.
R & T owns all of the outstanding common stock
of Cape Atlantic Crane Co., Inc. (Cape Atlantic),
which was organized under the laws of the State of
New Jersey. Cape Atlantic's principal location is
Ellis & Sewell Streets, Glassboro, N.J. 08028.
Cape Atlantic is not a public utility company. It
is principally engaged in the rental of cranes.
2. A brief description of the properties of claimant
and each of its subsidiary public utility companies used for the
generation, transmission, and distribution of electric energy for
sale, or for the production, transmission, and distribution of
natural or manufactured gas, indicating the location of principal
generating plants, transmission lines, producing fields, gas
manufacturing plants, and electric and gas distribution
facilities, including all such properties which are outside the
State in which claimant and its subsidiaries are organized and all
transmission or pipelines which deliver or receive electric energy
or gas at the borders of such State.
The Company does not own directly any
properties used for the production, transmission,
and distribution of natural or manufactured gas or
electric energy.
The properties of Gas Company used for the
production, transmission, and distribution of
natural or manufactured gas include mains, service
connections and meters, supplemental gas storage
facilities, three liquefied propane plants, and an
LNG storage and vaporization facility, all of which
are located in the State of New Jersey (except that
certain gas owned by Gas Company is stored outside
the State and is transported into the State when
needed). There are 4,407 miles of distribution
mains. There are 335 miles of mains in the
transmission system. No pipelines of Gas Company
deliver or receive gas at the borders of the State
of New Jersey.
3. The following information for the last calendar
year with respect to claimant and each of its subsidiary public
utility companies:
(a) Number of kwh of electric energy sold (at
retail or wholesale) and Mcf of natural or
manufactured gas distributed at retail.
During 1993, Gas Company distributed at
retail to residential, commercial and industrial
customers 40,995,000 Mcf of natural or manufactured
gas and transported 14,522,000 Mcf of natural gas
purchased directly by its industrial and commercial
customers. Gas Company also sold 3,563,000 Mcf of
natural gas at wholesale for resale within the
State of New Jersey.
(b) Number of kwh of electric energy and Mcf
of natural or manufactured gas distributed at
retail outside the State in which each company is
organized.
None
(c) Number of kwh of electric energy and Mcf
of natural or manufactured gas sold at wholesale
outside the State in which each such company is
organized, or at the State line.
None
(d) Number of kwh of electric energy and Mcf
of natural or manufactured gas purchased outside
the State in which each such company is organized
or at the State line.
During 1993, Gas Company purchased
and had delivered to it approximately 44,930,000
Mcf of natural gas. This gas was purchased from
out-of-state sources for distribution by Gas
Company to its customers in New Jersey.
During 1993, Gas Company purchased and
had delivered to it approximately 10,000 Mcf of
liquefied natural gas. This entire amount was
transported by over-the-road truck transport to Gas
Company's LNG Storage and Vaporization facility at
McKee City, Atlantic County, New Jersey.
EXHIBIT A
Consolidating statements of income and retained earnings
of the claimant and its subsidiary companies for the last calendar
year, together with a consolidating balance sheet of claimant and
its subsidiary companies as of the close of such calendar year.
The above-named claimant has caused this statement to be
duly executed on its behalf by its authorized officer on this 25th
day of February 1994.
SOUTH JERSEY INDUSTRIES, INC.
By /s/ Richard B. Tonielli
RICHARD B. TONIELLI
Treasurer
CORPORATE SEAL
ATTEST:
/s/ George L. Baulig
GEORGE L. BAULIG
Secretary and Assistant Treasurer
Name, title and address of officer to whom notices and
correspondence concerning this statement should be addressed:
Richard B. Tonielli, Treasurer
South Jersey Industries, Inc.
Number One South Jersey Plaza
Route 54
Folsom, New Jersey 08037
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<CAPTION>
South Jersey Energy & South Jersey
Industries, South Jersey Minerals, Inc. Energy
Inc. Gas Company Consolidated Company Sub-Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATING REVENUES
Utility $0 $277,581,210 $0 $0 $277,581,210
Nonutility 240,830 0 28,712,463 24,471,978 53,425,271
------------- ------------- ------------- ------------- -------------
Total Operating Revenues 240,830 277,581,210 28,712,463 24,471,978 331,006,481
------------- ------------- ------------- ------------- -------------
OPERATING EXPENSE
Gas Purchased for Resale 0 154,651,584 0 0 154,651,584
Operation - Utility 0 35,103,787 0 0 35,103,787
Operation - Nonutility 1,325,525 0 19,791,164 23,666,122 44,782,811
Maintenance 22,104 5,047,920 2,890,701 2,100 7,962,825
Depreciation & Depletion 13,195 11,887,874 2,737,742 2,428 14,641,239
Current Federal Income Taxes (208,554) 2,124,786 475,373 250,327 2,641,932
Def. and Non-Current Fed. Income Taxes (422,549) 5,707,499 (354,858) (8,751) 4,921,341
State Gross Receipts & Franchise Taxes 0 31,346,446 0 0 31,346,446
Other Taxes 53,976 2,155,920 1,179,154 83,355 3,472,405
------------- ------------- ------------- ------------- -------------
Total Operating Expenses 783,697 248,025,816 26,719,276 23,995,581 299,524,370
------------- ------------- ------------- ------------- -------------
Operating Income (542,867) 29,555,394 1,993,187 476,397 31,482,111
OTHER INCOME
Dividends from Subsidiaries 3,317,002 0 0 0 3,317,002
Equity in Undistributed Earnings of Subs 13,630,719 0 0 0 13,630,719
------------- ------------- ------------- ------------- -------------
Income Before Interest Charges 16,404,854 29,555,394 1,993,187 476,397 48,429,832
------------- ------------- ------------- ------------- -------------
INTEREST CHARGES
Long-Term Debt 531,000 10,770,831 655,372 0 11,957,203
Short- Term Debt 60,399 2,594,704 24,144 937 2,680,184
Other 14,779 570,169 0 0 584,948
------------- ------------- ------------- ------------- -------------
Total Interest Charges 606,178 13,935,704 679,516 937 15,222,335
------------- ------------- ------------- ------------- -------------
Income from Continuing Operations Before Pref.
Stock Dividend Requirements of Subsidiary 15,798,676 15,619,690 1,313,671 475,460 33,207,497
Pref Stock Dividend Requirements of Subsidiary 0 186,895 0 0 186,895
------------- ------------- ------------- ------------- -------------
Income Before Cumulative Effect
of a Change in Accounting Principle 15,798,676 15,432,795 1,313,671 475,460 33,020,602
Cumulative Effect of a Change in Accting Principle (168,617) 1,234,998 (582,578) (2,116) 481,687
------------- ------------- ------------- ------------- -------------
Income Applicable to Common Stock
from Continuing Operations 15,630,059 16,667,793 731,093 473,344 33,502,289
Equity in Undistributed Earnings
of Discontinued Subsidiaries (278,321) 0 0 0 (278,321)
Loss from Discontinued Operations
(Net of Current and Deferred Income Tax
Credits of $14,525 and $6,653, respectively) 0 0 (41,106) 0 (41,106)
------------- ------------- ------------- ------------- -------------
Net Income Applicable to Common Stock $15,351,738 $16,667,793 $689,987 $473,344 $33,182,862
============= ============= ============= ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<CAPTION>
Sub-Total R & T Eliminations
From Prior Group, Inc. & Consolidated
Page Consolidated Adjustments Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING REVENUES
Utility $277,581,210 $0 [C] ($9,039,992) $268,541,218
Nonutility 53,425,271 12,941,124 [C] (966,620) 65,399,775
------------- ------------- ------------- -------------
Total Operating Revenues 331,006,481 12,941,124 (10,006,612) 333,940,993
------------- ------------- ------------- -------------
OPERATING EXPENSE
Gas Purchased for Resale 154,651,584 0 [C] (8,865,032) 145,786,552
Operation - Utility 35,103,787 0 [C] (174,960) 34,928,827
Operation - Nonutility 44,782,811 11,565,541 [C] (284,893) 56,063,459
Maintenance 7,962,825 562,700 0 8,525,525
Depreciation & Depletion 14,641,239 740,112 [D] (1,920) 15,379,431
Current Federal Income Taxes 2,641,932 (237,003) 0 2,404,929
Def. and Non-Current Fed. Income Taxes 4,921,341 (250,582) 0 4,670,759
State Gross Receipts & Franchise Taxes 31,346,446 0 0 31,346,446
Other Taxes 3,472,405 575,817 0 4,048,222
------------- ------------- ------------- -------------
Total Operating Expenses 299,524,370 12,956,585 (9,326,805) 303,154,150
------------- ------------- ------------- -------------
Operating Income 31,482,111 (15,461) (679,807) 30,786,843
OTHER INCOME
Dividends from Subsidiaries 3,317,002 0 [A] (3,317,002) 0
Equity in Undistributed Earnings of Subs 13,630,719 0 [A] (13,630,719) 0
------------- ------------- ------------- -------------
Income Before Interest Charges 48,429,832 (15,461) (17,627,528) 30,786,843
------------- ------------- ------------- -------------
INTEREST CHARGES
Long-Term Debt 11,957,203 974,048 [C] (531,000) 12,400,251
Short- Term Debt 2,680,184 72,653 [C] (150,727) 2,602,110
Other 584,948 0 0 584,948
------------- ------------- ------------- -------------
Total Interest Charges 15,222,335 1,046,701 (681,727) 15,587,309
------------- ------------- ------------- -------------
Income from Continuing Operations Before Pref.
Stock Dividend Requirements of Subsidiary 33,207,497 (1,062,162) (16,945,801) 15,199,534
Pref Stock Dividend Requirements of Subsidiary 186,895 0 0 186,895
------------- ------------- ------------- -------------
Income Before Cumulative Effect
of a Change in Accounting Principle 33,020,602 (1,062,162) (16,945,801) 15,012,639
Cumulative Effect of a Change in Accting Principle 481,687 (99,562) 0 382,125
------------- ------------- ------------- -------------
Income Applicable to Common Stock
from Continuing Operations 33,502,289 (1,161,724) (16,945,801) 15,394,764
Equity in Undistributed Earnings
of Discontinued Subsidiaries (278,321) 0 [A] 278,321 0
Loss from Discontinued Operations
(Net of Current and Deferred Income Tax
Credits of $14,525 and $6,653, respectively) (41,106) 0 0 (41,106)
------------- ------------- ------------- -------------
Net Income Applicable to Common Stock $33,182,862 ($1,161,724) ($16,667,480) $15,353,658
============= ============= ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<CAPTION>
South Jersey Energy & South Jersey
Industries, South Jersey Minerals, Inc. Energy
Inc. Gas Company Consolidated Company Sub-Total
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at Beginning of Period $32,485,049 $35,904,747 $6,736,468 $120,910 $75,247,174
Net Income Applicable to Common Stock 15,351,738 16,667,793 689,987 473,344 33,182,862
------------- ------------- ------------- ------------- -------------
47,836,787 52,572,540 7,426,455 594,254 108,430,036
Dividends Declared - Cash 13,873,097 2,501,475 395,527 420,000 17,190,099
------------- ------------- ------------- ------------- -------------
Balance at End of Period $33,963,690 $50,071,065 $7,030,928 $174,254 $91,239,937
============= ============= ============= ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<CAPTION>
R & T Group, Eliminations
Inc. & Consolidated
Sub-Total Consolidated Adjustments Total
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at Beginning of Period $75,247,174 ($1,163,572) ($41,674,262) $32,409,340
Net Income Applicable to Common Stock 33,182,862 (1,161,724) (16,667,480) 15,353,658
------------- ------------- ------------- -------------
108,430,036 (2,325,296) (58,341,742) 47,762,998
Dividends Declared - Cash 17,190,099 0 (3,317,002) 13,873,097
------------- ------------- ------------- -------------
Balance at End of Period $91,239,937 ($2,325,296) ($55,024,740) $33,889,901
============= ============= ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
<S> <C> <C>
[A] Dividends from Subsidiaries $3,317,002
Equity in Undistributed Earnings
of Subsidiaries 13,630,719
Retained Earnings - Dividends Paid - Cash $3,317,002
Investment in Subsidiaries 13,352,398
Equity in Undistributed Earnings
of Discontinued Subsidiaries 278,321
To eliminate intercompany dividends paid and
equity in undistributed earnings recorded by
South Jersey Industries, Inc.
[B] Retained Earnings - 1/1/93 $41,674,262
Deferred Federal Income Taxes 59,539
Accumulated Depreciation & Depletion - 1/1/93 8,480
Investment in Subsidiaries $41,598,553
Non-Utility Property $143,728
To eliminate prior inter-company gain and
retained earnings of subsidiaries at 1/1/93
previously recorded by South Jersey Industries,
Inc. under the equity method of accounting.
[C] Operating Revenues - Utility $9,039,992
Operating Revenues - Nonutility 966,620
Gas Purchased for Resale $8,865,032
Operating Expense - Utility 174,960
Operating Expense - Nonutility 284,893
Interest Expense - Short-Term Debt 150,727
Interest Expense - Long-Term Debt 531,000
To eliminate intercompany revenue and expense.
[D] Accumulated Depreciation & Depletion $1,920
Depreciation, Depletion & Amortization $1,920
To eliminate South Jersey Industries, Inc.
depreciation on Millville property gain.
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1993
<CAPTION>
South Jersey Energy & South Jersey
Industries, South Jersey Minerals, Inc. Energy
Inc. Gas Company Consolidated Company Sub-Total
------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS
PROPERTY, PLANT & EQUIPMENT
Utility Plant, original cost $0 $470,841,951 $0 $0 $470,841,951
Gas Plant Acq Adjustment 0 2,224,715 0 0 2,224,715
Accum Depre & Amortization 0 (126,722,326) 0 0 (126,722,326)
Nonutil Prop & Equip., at cost 1,648,182 4,793,829 45,300,417 14,193 51,756,621
Accum Depre & Depletion (206,103) 0 (26,884,464) (10,778) (27,101,345)
------------- ------------- -------------- ------------- -------------
Prop, Plant & Equip - Net 1,442,079 351,138,169 18,415,953 3,415 370,999,616
------------- ------------- -------------- ------------- -------------
INVESTMENTS
Investments in Subsidiaries 145,710,399 0 0 0 145,710,399
Invest in Non-Assoc Companies 916,612 0 0 0 916,612
------------- ------------- -------------- ------------- -------------
Total Investment 146,627,011 0 0 0 146,627,011
------------- ------------- -------------- ------------- -------------
CURRENT ASSETS
Cash & Temp Cash Investments 5,465,822 3,071,294 625,338 17,981 9,180,435
Notes Rec - Assoc Companies 1,344,000 0 759,000 0 2,103,000
Accounts Receivable 29,913 23,189,822 5,017,994 2,046,869 30,284,598
Unbilled Revenues 0 18,501,464 0 0 18,501,464
Provisions for Uncollectibles 0 (737,400) (269,000) (19,929) (1,026,329)
Accts Rec - Assoc Companies 301,045 129,865 20,400 0 451,310
Nat Gas in Storage, Avg Cost 0 12,201,909 0 0 12,201,909
Mat & Supplies, Avg Cost 0 3,778,363 7,701,424 0 11,479,787
Assets Held for Disposal 0 0 344,654 0 344,654
Accum. Deferred Income Taxes 3,177 1,056,275 226,520 8,342 1,294,314
Prepayments & Other 11,049 1,417,973 845,444 30,737 2,305,203
------------- ------------- -------------- ------------- -------------
Total Current Assets 7,155,006 62,609,565 15,271,774 2,084,000 87,120,345
------------- ------------- -------------- ------------- -------------
NONCURRENT ACCTS REC - Merch 0 2,220,781 0 0 2,220,781
------------- ------------- -------------- ------------- -------------
NONCURRENT ASSETS
Gross Recpts&Franchise Taxes 0 5,668,232 0 0 5,668,232
Environmental Remediation Costs 885,845 25,283,758 53,859 0 26,223,462
Accum. Deferred Income Taxes 976,155 6,989,274 0 (249) 7,965,180
Deprec. Flowthrough Pre-1976 0 17,295,862 0 0 17,295,862
Deferred Fuel Costs 0 16,282,114 0 0 16,282,114
Other 57,624 10,699,071 371,990 0 11,128,685
------------- ------------- -------------- ------------- -------------
Total Noncurrent Assets 1,919,624 82,218,311 425,849 (249) 84,563,535
------------- ------------- -------------- ------------- -------------
Total $157,143,720 $498,186,826 $34,113,576 $2,087,166 $691,531,288
============= ============= ============== ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1993
<CAPTION>
R & T Eliminations
Group, Inc. & Consolidated
Sub-Total Consolidated Adjustments Total
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
ASSETS
PROPERTY, PLANT & EQUIPMENT
Utility Plant, original cost $470,841,951 $0 $0 $470,841,951
Gas Plant Acq Adjustment 2,224,715 0 0 2,224,715
Accum Depre & Amortization (126,722,326) 0 0 (126,722,326)
Nonutil Prop & Equip., at cost 51,756,621 7,493,355 [4] (143,728) 59,106,248
Accum Depre & Depletion (27,101,345) (2,973,432) [5] 10,400 (30,064,377)
------------- ------------- -------------- -------------
Prop, Plant & Equip - Net 370,999,616 4,519,923 (133,328) 375,386,211
------------- ------------- -------------- -------------
INVESTMENTS
Investments in Subsidiaries 145,710,399 0 [1] (145,710,399) 0
Invest in Non-Assoc Companies 916,612 0 0 916,612
------------- ------------- -------------- -------------
Total Investment 146,627,011 0 (145,710,399) 916,612
------------- ------------- -------------- -------------
CURRENT ASSETS
Cash & Temp Cash Investments 9,180,435 755,226 0 9,935,661
Notes Rec - Assoc Companies 2,103,000 6,135,000 [3] (8,238,000) 0
Accounts Receivable 30,284,598 1,787,254 [2,8] (1,045,888) 31,025,964
Unbilled Revenues 18,501,464 0 0 18,501,464
Provisions for Uncollectibles (1,026,329) 0 0 (1,026,329)
Accts Rec - Assoc Companies 451,310 3,050,321 [2] (3,501,631) 0
Nat Gas in Storage, Avg Cost 12,201,909 0 0 12,201,909
Mat & Supplies, Avg Cost 11,479,787 9,173 0 11,488,960
Assets Held for Disposal 344,654 0 0 344,654
Accum. Deferred Income Taxes 1,294,314 18,370 [6] (1,312,684) 0
Prepayments & Other 2,305,203 121,351 0 2,426,554
------------- ------------- -------------- -------------
Total Current Assets 87,120,345 11,876,695 (14,098,203) 84,898,837
------------- ------------- -------------- -------------
NONCURRENT ACCTS REC - Merch 2,220,781 0 0 2,220,781
------------- ------------- -------------- -------------
NONCURRENT ASSETS
Gross Recpts&Franchise Taxes 5,668,232 0 0 5,668,232
Environmental Remediation Costs 26,223,462 0 0 26,223,462
Accum. Deferred Income Taxes 7,965,180 1,228,865 [7] (9,194,045) 0
Deprec. Flowthrough Pre-1976 17,295,862 0 0 17,295,862
Deferred Fuel Costs 16,282,114 0 [9] (10,937,004) 5,345,110
Other 11,128,685 2,694,593 0 13,823,278
------------- ------------- -------------- -------------
Total Noncurrent Assets 84,563,535 3,923,458 (20,131,049) 68,355,944
------------- ------------- -------------- -------------
Total $691,531,288 $20,320,076 ($180,072,979) $531,778,385
============= ============= ============== =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1993
<CAPTION>
South Jersey Energy & South Jersey
Industries, South Jersey Minerals, Inc. Energy
Inc. Gas Company Consolidated Company Sub-Total
------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
COMMON EQUITY
Common Stock SJI
Par Value $1.25 a share
Authorized - 20,000,000 shares
Outstanding - 9,804,576
& 9,497,700 $12,255,720 $0 $0 $0 $12,255,720
Common Stock - Subsidiaries 0 5,847,848 13,283,453 50,000 19,181,301
Premium on Common Stock 94,380,755 61,193,882 1,584,265 0 157,158,902
Capital Stock Expense 0 0 0 0 0
Retained Earnings 33,963,690 50,071,065 7,030,928 174,254 91,239,937
------------- ------------- -------------- ------------- -------------
Total Common Equity 140,600,165 117,112,795 21,898,646 224,254 279,835,860
------------- ------------- -------------- ------------- -------------
CUMULATIVE PREFERRED STOCK
SJG - Par Value $100 a share
Authorized - 50,904 shares
Outstanding:
Series A, 4.70%- 6,600 shares 0 660,000 0 0 660,000
Series B, 8% -19,242 shares 0 1,924,200 0 0 1,924,200
------------- ------------- -------------- ------------- -------------
Total Preferred Stock 0 2,584,200 0 0 2,584,200
------------- ------------- -------------- ------------- -------------
L-T-D (less current maturities
& sinking fund requirements) 0 130,445,924 5,250,000 0 135,695,924
------------- ------------- -------------- ------------- -------------
CURRENT LIABILITIES
Notes Payable to Banks 1,600,000 81,150,000 0 0 82,750,000
Current Maturities of L-T-D 0 5,570,249 1,194,102 0 6,764,351
Notes Pay - Assoc Companies 6,894,000 0 0 0 6,894,000
Accounts Payable 282,979 26,222,610 1,754,223 1,809,381 30,069,193
Accts Pay to Assoc Companies 64,461 212,149 186,291 8,144 471,045
Customer Deposits 0 5,781,422 0 0 5,781,422
Accum. Deferred Income Taxes 3,757 6,316,992 0 214 6,320,963
Gross Rects&Franchise Tx Accr 0 13,903,927 0 0 13,903,927
Environmental Remediation Costs 499,475 3,124,000 0 0 3,623,475
Interest Accrued 1,293,600 4,230,957 98,612 0 5,623,169
Dividends Declared 3,529,647 46,239 0 0 3,575,886
Other 1,608,698 (3,284,792) 1,962,838 41,415 328,159
------------- ------------- -------------- ------------- -------------
Total Current Liabilities 15,776,617 143,273,753 5,196,066 1,859,154 166,105,590
------------- ------------- -------------- ------------- -------------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Post-
Retirement Benefits Reserve 107,330 6,063,516 400,863 4,792 6,576,501
Accum. Deferred Income Taxes 230,833 65,533,069 1,298,001 (1,034) 67,060,869
Investment Tax Credit 0 7,428,135 0 0 7,428,135
Deferred Revenues 0 10,937,004 0 0 10,937,004
Environmental Remediation Costs 0 8,190,000 70,000 0 8,260,000
Other 428,775 6,618,430 0 0 7,047,205
------------- ------------- -------------- ------------- -------------
Total Def Cr & Non-Cur Liab 766,938 104,770,154 1,768,864 3,758 107,309,714
------------- ------------- -------------- ------------- -------------
Total $157,143,720 $498,186,826 $34,113,576 $2,087,166 $691,531,288
============= ============= ============== ============= =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1993
<CAPTION>
R & T Eliminations
Group, Inc. & Consolidated
Sub-Total Consolidated Adjustments Total
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
COMMON EQUITY
Common Stock SJI
Par Value $1.25 a share
Authorized - 20,000,000 shares
Outstanding - 9,804,576
& 9,497,700 $12,255,720 $0 $0 $12,255,720
Common Stock - Subsidiaries 19,181,301 1,000,000 [1] (20,181,301) 0
Premium on Common Stock 157,158,902 7,800,000 [1] (70,578,147) 94,380,755
Capital Stock Expense 0 0 0 0
Retained Earnings 91,239,937 (2,325,296)[1,4,5] (55,024,740) 33,889,901
------------- ------------- -------------- -------------
Total Common Equity 279,835,860 6,474,704 (145,784,188) 140,526,376
------------- ------------- -------------- -------------
CUMULATIVE PREFERRED STOCK
SJG - Par Value $100 a share
Authorized - 50,904 shares
Outstanding:
Series A, 4.70%- 6,600 shares 660,000 0 0 660,000
Series B, 8% -19,242 shares 1,924,200 0 0 1,924,200
------------- ------------- -------------- -------------
Total Preferred Stock 2,584,200 0 0 2,584,200
------------- ------------- -------------- -------------
L-T-D (less current maturities
& sinking fund requirements) 135,695,924 8,608,597 0 144,304,521
------------- ------------- -------------- -------------
CURRENT LIABILITIES
Notes Payable to Banks 82,750,000 0 0 82,750,000
Current Maturities of L-T-D 6,764,351 1,466,345 0 8,230,696
Notes Pay - Assoc Companies 6,894,000 1,344,000 [3] (8,238,000) 0
Accounts Payable 30,069,193 481,877 [2,8] (2,736,153) 27,814,917
Accts Pay to Assoc Companies 471,045 46,721 [2] (517,766) 0
Customer Deposits 5,781,422 0 0 5,781,422
Accum. Deferred Income Taxes 6,320,963 44,233 [6] (1,312,684) 5,052,512
Gross Rects&Franchise Tx Accr 13,903,927 0 0 13,903,927
Environmental Remediation Costs 3,623,475 0 0 3,623,475
Interest Accrued 5,623,169 154,961 [2] (1,293,600) 4,484,530
Dividends Declared 3,575,886 0 0 3,575,886
Other 328,159 885,422 0 1,213,581
------------- ------------- -------------- -------------
Total Current Liabilities 166,105,590 4,423,559 (14,098,203) 156,430,946
------------- ------------- -------------- -------------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Post-
Retirement Benefits Reserve 6,576,501 25,589 0 6,602,090
Accum. Deferred Income Taxes 67,060,869 787,627 [4,7] (9,253,584) 58,594,912
Investment Tax Credit 7,428,135 0 0 7,428,135
Deferred Revenues 10,937,004 0 [9] (10,937,004) 0
Environmental Remediation Costs 8,260,000 0 0 8,260,000
Other 7,047,205 0 0 7,047,205
------------- ------------- -------------- -------------
Total Def Cr & Non-Cur Liab 107,309,714 813,216 (20,190,588) 87,932,342
------------- ------------- -------------- -------------
Total $691,531,288 $20,320,076 ($180,072,979) $531,778,385
============= ============= ============== =============
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
BALANCE SHEET - DECEMBER 31, 1993
<S> <C> <C>
[1] Common Stock - Subsidiaries $20,181,301
Premium on Common Stock 70,578,147
Retained Earnings 54,950,951
Investment in Subsidiaries $145,710,399
To eliminate South Jersey Industries, Inc.
investment in subsidiaries which is maintained
on the equity method of accounting.
[2] Accounts Payable - Associated Companies $517,766
Accounts Payable 1,703,382
Interest Accrued 1,293,600
Accounts Receivable - Associated Companies $3,501,631
Accounts Receivable 13,117
To eliminate intercompany accounts receivable
and payable.
[3] Notes Payable - Associated Companies $8,238,000
Notes Receivable - Associated Companies $8,238,000
To eliminate intercompany short-term notes
between South Jersey Industries, Inc.,
Energy & Minerals, Inc. and R & T Group, Inc.
[4] Retained Earnings $84,189
Deferred Federal Income Taxes 59,539
Non-Utility Property $143,728
To eliminate South Jersey Gas Company gain and
related deferred taxes on sale of Millville
property to South Jersey Industries, Inc.
[5] Accumulated Depreciation & Depletion $10,400
Retained Earnings $10,400
To eliminate South Jersey Industries, Inc.
depreciation on Millville property gain.
[6] Accumulated Deferred Income Taxes -
- Current Liability $1,312,684
Accumulated Deferred Income Taxes -
- Current Asset $1,312,684
To reclassify FASB 109 current liability.
[7] Accumulated Deferred Income Taxes -
- Noncurrent Liability $9,194,045
Accumulated Deferred Income Taxes -
- Noncurrent Asset $9,194,045
To reclassify FASB 109 noncurrent asset.
[8] Accounts Payable $1,032,771
Accounts Receivable $1,032,771
To eliminate intercompany sales between
South Jersey Gas Company and South
Jersey Energy Company.
[9] Deferred Revenues $10,937,004
Deferred Fuel Costs $10,937,004
To reclassify deferred revenues.
</TABLE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATING FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES:
Consolidation -- The consolidated financial statements
include the accounts of South Jersey Industries, Inc. (the
Company) and all of its subsidiaries. Certain intercompany
transactions, amounting to approximately $6.1 million in
1993, were not eliminated. Such amounts were capitalized to
utility plant or environmental remediation costs on the
South Jersey Gas Company (SJG) books of account (See Note
9). All other significant intercompany accounts and
transactions have been eliminated.
Regulation -- The Company's principal subsidiary, SJG, is
subject to the rules and regulations of the New Jersey Board
of Regulatory Commissioners (BRC) and maintains its accounts
in accordance with the prescribed Uniform System of Accounts
of that Board.
On August 10, 1992, the BRC granted SJG a rate increase of
$3.35 million based on an overall rate of return of 10.34
percent, including a 12.1 percent return on equity. As part
of this increase, SJG is allowed to retain the first $3.9
million of base revenues generated by interruptible sales
and 20 percent of base revenues generated from such sales
above that level until it reaches a 12.1 percent return on
equity.
In addition to the rate increase, the BRC approved a
temperature adjustment clause (TAC), which is being
implemented on a trial basis. This is a mechanism designed
to reduce the impact of extreme fluctuations in temperature
on SJG and its customers. The BRC also permitted SJG to
recover from ratepayers the carrying costs associated with
the acceleration of gross receipts and franchise tax
payments through 1993, and SJG is permitted to petition the
BRC solely for the impact of the accelerated payment in
1994. In addition, the BRC order provides that the effect of
SJG's adoption of FASB No. 106 will be addressed in its next
rate petition (See Note 10). A combined filing for the
amortization of environmental remediation costs and
Levelized Gas Adjustment Clause (LGAC) recovery became
effective in January 1993 as approved by the BRC. As future
environmental remediation costs are incurred, SJG will
recover these costs over subsequent 7-year periods (See Note
9).
Utility Revenues -- SJG, in accordance with industry
practices, bills most of its customers on a monthly cycle
basis, although certain large industrial customers are
billed at or near the end of each month. An accrual is made
to recognize the unbilled revenues from the date of the last
bill to the end of period.
In accordance with a BRC order, SJG is allowed to recover
the excess cost of gas sold over the cost thereof included
in the base rates through the LGAC. Such collection is made
on a forecasted basis, after a hearing, upon BRC order.
Under and over recoveries of gas costs are deferred and
included in the determination of the following year's LGAC.
Interest is paid on overcollected LGAC balances based on
SJG's return on rate base as determined in its last base
rate proceeding.
During December 1993, the BRC approved a net increase in
SJG's annual adjustment clauses, which include the LGAC, TAC
and Remediation Adjustment Clause, in the amount of $23.8
million. This increase was necessary primarily as a result
of increases anticipated in the cost of gas and does not
provide a profit to SJG.
Property, Plant & Equipment -- Utility plant is stated at
original cost as defined for regulatory purposes; nonutility
plant is stated at cost. The cost of additions,
replacements and renewals of units of property is charged to
the appropriate plant account.
Depreciation and Amortization -- Depreciation of gas utility
plant is provided on a straight-line basis over the
estimated remaining lives of the various classes of
property. These estimates are periodically reviewed and
adjustments are made as required after approval by the BRC.
The composite rate per annum for all depreciable utility
property was approximately 2.8 percent in 1993. Generally,
with the exception of extraordinary retirements, accumulated
depreciation is charged with the cost of depreciable utility
property retired, together with removal costs less salvage.
The gas plant acquisition adjustment, in the initial amount
of approximately $3.0 million, is being amortized on a
straight-line basis over a 40-year period. The unamortized
balance amounting to $2.2 million at December 31, 1993, is
not included in rate base.
Depreciation of nonutility property is computed generally on
a straight-line basis over the estimated useful lives of the
property, ranging up to 45 years. Any gain or loss realized
upon the disposition of nonutility property is recognized in
determining net income.
Federal Income and Other Taxes -- Deferred Federal Income
Taxes are provided for all significant temporary differences
between book and taxable income. In February 1992, the
Financial Accounting Standards Board issued FASB No. 109
entitled "Accounting for Income Taxes". The Company adopted
this statement in 1993. Its adoption resulted in the
recording on the balance sheet of additional assets and
liabilities, with the difference being credited to earnings
as a cumulative effect of a change in accounting principle
(See Note 4). The primary asset created as a result of
adopting FASB No. 109 is income taxes - flowthrough
depreciation in the amount of $17.6 million as of January 1,
1993. This amount represents the recording of the net tax
effect of excess liberalized depreciation over book
depreciation on utility plant because of temporary
differences for which, prior to FASB No. 109, deferred taxes
had not previously been provided. These tax benefits were
previously flowed through in rates and management believes
that as the amortization of the asset occurs, it will be
recoverable through rates. Management is
seeking such recovery as part of its January 7, 1994,
petition for a general base rate increase (See Note 10).
The cumulative effect of this change as of January 1, 1993,
was to increase income by $382,000, or $0.04 per share.
The investment tax credits (ITC) attributable to SJG were
deferred and continue to be amortized at the annual rate of
3 percent, which approximates the life of the related
assets.
SJG, effective March 1, 1978, began accruing Gross Receipts
and Franchise Taxes on current revenues, the basis for such
taxes through 1991, rather than on the previous basis of
taxes paid. The one-time increase resulting from this change
has been deferred and is being amortized on a straight-line
basis to operations over a 30-year period.
Pensions -- The Company and its subsidiaries have several
defined benefit retirement plans that provide annuity
payments to substantially all full-time regular employees
upon retirement. Approximately 76 percent of the plans'
assets are invested in securities which, under their terms,
provide for fixed income and a return of principal. The
remaining assets of the plans are invested in professionally
managed common stock portfolios. The companies pay the
entire cost of the plans and the total provision made for
such plans in 1993 aggregated approximately $1.8 million,
including the amortization of the cost of past service
benefits over a period of approximately 30 years. Net
periodic pension cost for 1993 included the following
components (in thousands):
Service cost - benefits earned
during the period $1,351
Interest cost on projected benefit
obligation 2,723
Actual return on plan assets (3,184)
Net amortization and deferral 903
------
Net periodic pension cost $1,793
======
Assumptions as of December 31 were:
Discount rate 7.25%
Rate of increase in compensation levels 4.6%
Expected long-term rate of return on assets 8.5%-9.5%
The following table sets forth the plans' funded status at
December 31, 1993 (in thousands):
Actuarial present value of benefit obligations:
Vested benefit obligation $(32,337)
========
Accumulated benefit obligation $(32,550)
========
Projected benefit obligation $(40,964)
Plan assets at fair value 32,976
--------
Projected benefit obligation
in excess of plan assets (7,988)
Unrecognized net loss 2,871
Prior service cost not yet recognized
in net periodic pension cost 2,633
Unrecognized net obligation
at January 1 986
--------
Pension liability recognized in
the consolidated balance sheet $ (1,498)
========
The Company and its subsidiaries also provide postretirement
health care and life insurance benefits to substantially all
retired employees. The aggregate amount paid for 1993 was
not material.
Effective January 1, 1993, the Company adopted FASB No. 106
entitled "Employers' Accounting for Postretirement Benefits
Other Than Pensions". This statement requires the Company to
accrue the estimated cost of retiree benefit payments during
the years the employee provides services. The Company
previously expensed the cost of these benefits, which are
principally health care, on a pay-as-you-go basis. The
Company has elected to recognize the unfunded transition
obligation of approximately $27.8 million over a period of
20 years.
The majority of the Company's costs apply to its utility
subsidiary, SJG, which is currently recovering these costs
on a pay-as-you-go basis through its rates. SJG is
recording a regulatory asset pursuant to a BRC order for the
amount by which the cost exceeds the current level recovered
in rates. The recovery of this regulatory asset, which
amounted to approximately $3.9 million at December 31, 1993,
is being addressed in SJG's current base rate case
proceeding and it is expected that the recovery will be
included in base rates (See Note 10). The following table
sets forth the life and health care plans' funded status.
Actuarial present value of accumulated postretirement
benefit obligations (in thousands):
Retirees $ (9,260)
Other active plan participants (24,953)
---------
Accumulated postretirement
benefit obligation (34,213)
Fair value of plan assets -
---------
Accumulated postretirement benefit
obligation in excess of plan assets (34,213)
Unrecognized loss 3,745
Unrecognized transition obligation 26,429
---------
Postretirement benefit liability
recognized in the consolidated
balance sheet $ (4,039)
=========
Net postretirement benefit cost for the year ended December
31, 1993, consisted of the following components (in
thousands):
Service cost - benefits earned
during the period $1,144
Actual return on plan assets -
Interest cost on accumulated
postretirement benefit obligation 2,196
Amortization of transition obligation 1,391
------
Net postretirement benefit cost $4,731
======
The assumed health care cost trend rates used in measuring
the accumulated postretirement benefit obligation in 1993
ranged from 8.10 percent to 11.42 percent, decreasing
linearly each successive year until each reaches 6.75
percent in 2002 and 2007, respectively, after which they
remain constant. If the health care cost trend rate
assumptions were increased by 1 percent, the accumulated
postretirement benefit obligation as of December 31, 1993,
would be increased by 17.9 percent. The effect of this
change on the sum of the service cost and interest cost
would be an increase of 22.3 percent. The assumed discount
rate used in determining the accumulated postretirement
benefit obligation as of December 31, 1993 was 7.25 percent.
Statements of Cash Flows - For purposes of reporting cash
flows, all highly liquid investments with original
maturities of three months or less are considered cash
equivalents.
2. Segments of Business:
Information about the Company's operations in different
industry segments is presented below (in thousands):
Operating Revenues:
Gas Utility Operations $277,581
Sand Mining Operations 28,435
Other Industries 37,250
--------
Total 343,266
Intersegment Sales (9,325)
--------
Consolidated Operating Revenues $333,941
========
Operating Income:
Gas Utility Operations $ 37,388
Sand Mining Operations 2,517
Other Industries 204
---------
Total 40,109
Federal Income Taxes (7,055)
General Corporate Expense (2,308)
---------
Total Operating Income $ 30,746
=========
Depreciation, Depletion and Amortization:
Gas Utility Operations $ 13,881
Sand Mining Operations 2,713
Other Industries 1,610
---------
Total $ 18,204
=========
Property Additions:
Gas Utility Operations $ 33,260
Sand Mining Operations 1,732
Other Industries 1,128
---------
Total $ 36,120
=========
Identifiable Assets:
Gas Utility Operations $ 479,204
Sand Mining Operations 30,841
Other Industries 15,727
---------
Total 525,772
Corporate Assets 20,495
Intersegment Assets (14,489)
---------
Consolidated Identifiable Assets $ 531,778
=========
Gas utility operations consist primarily of natural gas
distribution to residential, commercial and industrial
customers. Sand mining operations consist primarily of
mining and processing sand, gravel and clay. Other
industries include the utility construction, environmental
services and general contracting firms, and the natural gas
acquisition service company.
Total operating revenues by industry segment include both
sales to unaffiliated customers, as reported in the
Company's statements of consolidated income, and
intercompany sales, which are accounted for generally at the
fair market value of the goods or services rendered.
Operating income is total revenues less operating expenses,
Federal Income Taxes, and general corporate expenses, as
shown on the statements of consolidated income.
Identifiable assets are those assets that are used in each
segment of the Company's operations. Corporate assets are
principally cash and cash items, and land, buildings and
equipment held for corporate use.
3. Redeemable Cumulative Preferred Stock:
Purchase funds for the Cumulative Preferred Stock, Series A
and Series B, require SJG to offer annually to purchase 900
and 1,500 shares, respectively, at par value thereof, plus
accrued dividends.
If preferred stock dividends are in arrears, no dividends
may be declared or paid, or other distribution made on the
SJG Common Stock; and, if four or more quarterly dividends
are in arrears, the Preferred Shareholders may elect a
majority of the SJG directors.
The Company has 2,500,000 authorized shares of Preference
Stock, no par value, none of which has been issued.
4. Federal Income Taxes:
Income tax expense applicable to operations is lower than
the tax that would have resulted by applying the statutory
rate to income from operations before Federal Income Tax for
1993. The reasons for the differences are as follows (in
thousands):
Tax at Statutory Rate $7,775
Increase (Decrease) Resulting from:
Additional Statutory Depletion Allowance (405)
Amortization of ITC (389)
BRC Order - Flow back of Excess
Deferred Taxes (67)
Other - Net 141
------
Total Provision for
Federal Income Taxes $7,055
======
The provision for Federal Income Taxes is composed of the
following (in thousands):
Current $2,390
------
Deferred:
Repair Allowance Permitted
Under the Class Life Asset
Depreciation Range System 34
Excess of Tax Depreciation Over
Book Depreciation - Net 2,870
Deferred Fuel Costs 5,536
Environmental Remediation Costs - Net (287)
Additional Amortization of
Gross Receipts Taxes (136)
Advances for Construction 19
BRC Order - Flow Back of Excess
Deferred Taxes (67)
Premium on Bond Redemption (58)
Alternative Minimum Tax (2,042)
Other - Net (815)
------
Total Deferred 5,054
------
ITC (389)
------
Total $7,055
======
Deferred income taxes reflect the net tax effect of
temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
Significant components of the Company's net deferred tax
liability are as follows (in thousands):
Deferred Tax Liabilities:
Tax Depreciation Over
Book Depreciation $53,069
Difference Between Book and
Tax Basis of Property 3,285
Deferred Fuel Costs 5,536
Environmental Remediation Costs 4,773
Excess Protected 3,726
Gross Receipts Taxes 1,927
Other 1,138
-------
Total Deferred Tax Liabilities 73,454
-------
Deferred Tax Assets:
Alternative Minimum Tax 5,980
ITC Basis Gross Up 3,826
-------
Total Deferred Tax Assets 9,806
-------
Net Deferred Tax Liability $63,648
=======
The IRS has completed examinations of the Company's
consolidated Federal Income Tax returns for the years ended
1982 through 1988. Adjustments resulting from these audits
are not expected to have a material effect on the Company's
financial position.
5. Disclosure about Fair Value of Financial Instruments:
Long-Term Debt - The fair value of the Company's long-term
debt, including current maturities, as of December 31, 1993
is estimated to be $165.7 million (carrying amount $152.5
million) and is estimated based on the interest rates
available to the Company at year end for debt with similar
terms and remaining maturities. The Company retires higher
cost debt whenever it is cost effective to do so within the
constraints of the respective debt covenants.
Other Financial Instruments - The carrying amount of the
Company's other financial instruments is a reasonable
estimate of their fair value at December 31, 1993.
6. Common Stock:
The Company has 20,000,000 shares of Common Stock authorized
of which the following shares were issued and outstanding:
Beginning of Year 9,497,700
New Issues During Year:
Dividend Reinvestment and
Stock Purchase Plan 281,295
Employees' Stock Ownership Plan 4,941
Stock Option & Stock Appreciation
Rights Plan 20,640
---------
End of Year 9,804,576
=========
The average shares of Common Stock outstanding for 1993 was
9,680,035 shares.
In 1993, approximately $6.6 million was credited to Premium
on Common Stock. On January 22, 1993, the Company's Board
of Directors declared a 2 percent common stock dividend,
payable on March 31, 1993 to shareholders of record at the
close of business on March 10, 1993. Accordingly, the
Company's financial statements and related per share amounts
have been restated.
The Company has a Stock Option and Stock Appreciation Rights
Plan under which not more than 306,000 shares in the
aggregate may be issued to officers and other key employees
of the Company and its subsidiaries. No options or stock
appreciation rights may be granted under the plan after
January 23, 1997. At December 31, 1993, the Company had
53,620 options outstanding, exercisable at prices from
$17.16 to $24.69 per share. During 1993, 20,640 options
were exercised at $17.89 per share. On September 16, 1993,
the Company granted options on 10,000 shares exercisable at
$24.69. No stock appreciation rights have been issued under
the plan. The stock options outstanding at December 31, 1993
did not have a material effect on the earnings per share
calculation. The Company also has a Dividend Reinvestment
and Stock Purchase Plan (DRP) and Employees' Stock Ownership
Plan (ESOP). As of December 31, 1993, 237,407 and 57,387
shares of authorized but unissued Common Stock were reserved
for future issuance to the DRP and ESOP, respectively.
7. Unused Lines of Credit and Compensating Balances:
Unused lines of credit available at December 31, 1993, were
approximately $52.5 million. Borrowings under these lines of
credit are at market rates which approximated 3.5 percent at
December 31, 1993. Demand deposits are maintained with
lending banks on an informal basis and do not constitute
compensating balances.
8. Retained Earnings:
There are certain restrictions under various loan agreements
as to the amount of cash dividends or other distributions
that may be paid on the Common Stock of certain
subsidiaries. The Company's aggregate equity in its
subsidiaries' retained earnings that are free of these
restrictions was approximately $33.9 million at December 31,
1993.
9. Commitments and Contingencies:
The estimated cost of construction and environmental
remediation programs of the Company and its subsidiaries for
the year 1994 aggregates $32.8 million and, in connection
therewith, certain commitments have been made.
In May 1990, the BRC approved the stipulation entered into
by the parties which allowed SJG to collect 100 percent of
its gas costs which reflect producer -supplier take-or-pay
costs from ratepayers. All costs billed by pipeline
suppliers on a volumetric basis are being passed through on
a current basis. Costs billed on a fixed basis were paid to
a pipeline over a 3-year period, but are being recovered
from ratepayers over a 6-year period without interest. This
recovery mechanism started in November 1990. During 1993,
the amount of these costs which has been flowed through to
SJG, net of refunds, was approximately $2.1 million. Based
on current estimates and information available, there are no
remaining fixed costs to be billed to SJG under this
stipulation.
SJG, in the normal course of conducting business, has
entered into long-term contracts for the supply of natural
gas, firm transportation, and long-term firm gas storage
service. The earliest expiration of any of these contracts
is 1997; however, the initial primary term of this agreement
can be extended annually through October 1999. All of the
transportation and storage service agreements between SJG
and its interstate pipeline suppliers are provided under
tariffs on file with, and approved by, the Federal Energy
Regulatory Commission (FERC). SJG's cumulative obligations
for demand charges paid to its suppliers for all of these
services is approximately $5.0 million per month which is
recovered on a current basis through the LGAC.
During 1992, the FERC issued a series of orders requiring
all interstate pipelines to restructure their services.
Included in these orders is FERC Order No. 636 which
required pipelines to separate their sales and
transportation services and change their rate design. Also,
as a result of these orders, SJG will incur certain
transition costs, which have yet to be determined, that are
associated with its pipeline suppliers unbundling their
services. SJG expects to recover any costs resulting from
these orders through its LGAC.
SJI and its subsidiaries have responded to requests from the
U.S. Environmental Protection Agency and the New Jersey
Department of Environmental Protection and Energy for
information regarding several sites at which SJG or
predecessor companies operated gas manufacturing plants or a
nonutility subsidiary previously operated a fuel oil
business. Manufactured gas operations were terminated at all
SJG sites more than 30 years ago. Through December 31,
1993, the Company has recorded environmental remediation
costs of $28.9 million, of which $17.0 million has been
expended. Management's estimate of the remaining liability
of approximately $11.9 million is reflected on the
consolidated balance sheet under the captions "Current
Liabilities" and "Deferred Credits and Non-Current
Liabilities". Such amounts have not been adjusted for
potential insurance recovery, which management is pursuing.
Recorded amounts include estimated costs to be incurred
through 1996 based on projected investigation and
remediation work plans using existing technologies.
Estimates beyond this time cannot be made on a reliable
basis due to changing technology, government regulations and
site specific requirements and, therefore, have not been
recorded; however, the total costs to be incurred after 1996
may be substantial. The major portion of such costs relate
to the remediation of former gas manufacturing sites of SJG,
which has recorded and expended amounts of $26.8 million and
$16.4 million, respectively, through December 31, 1993. SJG
has established a regulatory asset for these costs and is
recovering its costs as expended over 7-year amortization
periods, as authorized by the BRC. SJG has recovered $2.4
million through rates as of December 31, 1993. The balance
of such costs and payments, amounting to $2.1 million and
$0.6 million, respectively, relates to other environmental
related costs including nonutility sites previously used in
fuel oil operations.
In June 1991, new gross receipts and franchise tax
legislation was adopted in New Jersey. The new legislation
is accelerating the tax payments to a current year basis by
1994. The transition to the current year basis required SJG
to make an additional annual payment of $15.4 million on
April 1, 1993, and an additional payment of approximately
$13.7 million is required in 1994. In 1992, SJG received a
BRC rate order allowing recovery of the costs associated
with the acceleration of these tax payments through 1993.
SJG petitioned the BRC for the impact of the accelerated
payment in 1994 as part of its current base rate filing (See
Notes 1 and 10).
10. Subsequent Event:
On January 7, 1994, SJG petitioned the BRC for a general
base rate increase of approximately $26.6 million based on a
projected overall rate of return of 10.36 percent, including
a 12.75 percent return on equity. As part of this petition,
SJG is seeking recovery of the carrying costs on
expenditures for environmental remediation of former gas
manufacturing sites and on the accelerated payment of gross
receipts and franchise taxes in 1994. In addition, SJG is
seeking recovery of the additional cost of providing
postretirement benefits other than pensions in an effort to
begin funding its increasing liability for such costs (See
Note 1).
