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. SJG also makes off-
system sales of natural gas on a wholesale basis to
various customers on the interstate pipeline system
and transports natural gas purchased directly from
producers or suppliers by some of its customers.
<PAGE>
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
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<PAGE>
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.
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<PAGE>
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 transported when needed). There are
4,476 miles of distribution mains. There are 343
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 1994, Gas Company distributed at
retail to residential, commercial and industrial
customers 37,377,000 Mcf of natural or manufactured
gas and transported 19,825,000 Mcf of natural gas
purchased directly by its industrial and commercial
customers. Gas Company also sold 9,471,000 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.
During 1994, Gas Company sold 7,369,000
Mcf of natural gas at wholesale to
customers outside the borders of the
State of New Jersey.
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<PAGE>
(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 1994, Gas Company purchased
approximately 55,259,000 Mcf of natural gas from
out-of-state sources.
During 1994, Gas Company purchased and
had delivered to it approximately 270,650 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.
4. Information with respect to the claimant and
each interest it holds directly or indirectly in an EWG or a
foreign utility company:
Neither the claimant holding company nor
any of its subsidiary or system companies is, or
has any direct or indirect interest or investment
of any kind in, or has any sales, service or
construction contracts of any kind with, an EWG or
a foreign utility company.
EXHIBIT C
See response to Item 4 - Exhibit C is not
applicable.
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<PAGE>
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 24th
day of February 1995.
SOUTH JERSEY INDUSTRIES, INC.
By /s/ Gerald S. Levitt
----------------------------
GERALD S. LEVITT
Vice President
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
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<PAGE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands)
<CAPTION>
South South Energy & South R & T
Jersey Jersey Minerals, Jersey Group, Elim.
Industries, Gas Inc. Energy Inc. & Consd.
Inc. Company Consd. Company Consd. Total Adjust. Total
----------- --------- ---------- -------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Utility $0 $311,459 $0 $0 $0 $311,459 [C] ($13,509) $297,950
Nonutility 331 0 31,059 31,208 14,337 76,935 [C] (926) 76,009
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Operating Revenues 331 311,459 31,059 31,208 14,337 388,394 (14,435) 373,959
----------- --------- ---------- -------- --------- --------- --------- ---------
OPERATING EXPENSES:
Gas Purchased for Resale 0 187,745 0 0 0 187,745 [C] (13,391) 174,354
Operation - Utility 0 37,859 0 0 0 37,859 [C] (117) 37,742
Operation - Nonutility 1,509 0 20,292 30,310 11,923 64,034 [C] (289) 63,745
Maintenance 22 5,090 3,213 2 665 8,992 0 8,992
Depreciation & Depletion 9 12,804 2,773 12 965 16,563 [D] (2) 16,561
Current Federal Income Taxes (785) 8,833 92 285 (688) 7,737 0 7,737
Def. and Non-Current Fed. Income Taxes 127 (1,727) 276 (9) 405 (928) 0 (928)
Gross Receipts & Franchise Taxes 0 30,376 0 0 0 30,376 0 30,376
Other Taxes 58 2,476 1,204 93 715 4,546 0 4,546
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Operating Expenses 940 283,456 27,850 30,693 13,985 356,924 (13,799) 343,125
----------- --------- ---------- -------- --------- --------- --------- ---------
Operating Income (609) 28,003 3,209 515 352 31,470 (636) 30,834
----------- --------- ---------- -------- --------- --------- --------- ---------
OTHER INCOME:
Dividends from Subsidiaries 14,775 0 0 0 0 14,775 [A] (14,775) 0
Equity in Undistributed Earnings of Subs (1,242) 0 0 0 0 (1,242) [A] 1,242 0
----------- --------- ---------- -------- --------- --------- --------- ---------
Income Before Interest & Other Charges 12,924 28,003 3,209 515 352 45,003 (14,169) 30,834
----------- --------- ---------- -------- --------- --------- --------- ---------
INTEREST AND OTHER CHARGES:
Long-Term Debt 532 11,471 577 0 841 13,421 [C] (532) 12,889
Short- Term Debt 29 2,794 13 4 125 2,965 [C] (106) 2,859
Other 17 446 0 0 0 463 0 463
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Interest and Other Charges 578 14,711 590 4 966 16,849 (638) 16,211
----------- --------- ---------- -------- --------- --------- --------- ---------
CUSTOMER REFUND OBLIGATION - NET 0 2,275 0 0 0 2,275 0 2,275
----------- --------- ---------- -------- --------- --------- --------- ---------
Income Applicable to Common Stock
from Continuing Operations 12,346 11,017 2,619 511 (614) 25,879 (13,531) 12,348
Equity in Undistributed Earnings
of Discontinued Subsidiaries 31 0 0 0 0 31 [A] (31) 0
Income from Discontinued Operations - Net 0 0 31 0 0 31 0 31
----------- --------- ---------- -------- --------- --------- --------- ---------
Net Income Applicable to Common Stock $12,377 $11,017 $2,650 $511 ($614) $25,941 ($13,562) $12,379
=========== ========= ========== ======== ========= ========= ========= =========
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands)
South South Energy & South R & T
Jersey Jersey Minerals, Jersey Group, Elim.
Industries, Gas Inc. Energy Inc. & Consd.
Inc. Company Consd. Company Consd. Total Adjust. Total
----------- --------- ---------- -------- --------- --------- --------- ---------
Balance at Beginning of Period $33,963 $50,071 $7,031 $174 ($2,325) $88,914 [B] ($55,025) $33,889
Net Income Applicable to Common Stock 12,377 11,017 2,650 511 (614) 25,941 (13,562) 12,379
----------- --------- ---------- -------- --------- --------- --------- ---------
46,340 61,088 9,681 685 (2,939) 114,855 (68,587) 46,268
Dividends Declared - Cash 14,771 13,537 925 313 0 29,546 [A] (14,775) 14,771
----------- --------- ---------- -------- --------- --------- --------- ---------
Balance at End of Period $31,569 $47,551 $8,756 $372 ($2,939) $85,309 ($53,812) $31,497
=========== ========= ========== ======== ========= ========= ========= =========
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</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands)
<S> <C> <C>
[A] Dividends from Subsidiaries $14,775
Investment in Subsidiaries 1,211
Equity in Undistributed Earnings
of Discontinued Subsidiaries 31
Retained Earnings - Dividends Paid - Cash $14,775
Equity in Undistributed Earnings of Subsidiaries 1,242
To eliminate intercompany dividends paid and
equity in undistributed earnings recorded by
South Jersey Industries, Inc.
[B] Retained Earnings - 1/1/94 $55,025
Deferred Federal Income Taxes 60
Accumulated Depreciation & Depletion - 1/1/94 10
Investment in Subsidiaries $54,951
Non-Utility Property 144
To eliminate prior inter-company gain and
retained earnings of subsidiaries at 1/1/94
previously recorded by South Jersey Industries,
Inc. under the equity method of accounting.
[C] Operating Revenues - Utility $13,509
Operating Revenues - Nonutility 926
Gas Purchased for Resale $13,391
Operating Expense - Utility 117
Operating Expense - Nonutility 289
Interest Expense - Short-Term Debt 106
Interest Expense - Long-Term Debt 532
To eliminate intercompany revenue and expense.
[D] Accumulated Depreciation & Depletion $2
Depreciation, Depletion & Amortization $2
To eliminate South Jersey Industries, Inc.
depreciation on Millville property gain.
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<PAGE>
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1994
(In Thousands)
<CAPTION>
South Energy & South R & T
South Jersey Jersey Minerals, Jersey Group, Elim.
Industries, Gas Inc. Energy Inc. & Consd.
Inc. Company Consd. Company Consd. Total Adjust. Total
----------- --------- ---------- -------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
PROPERTY, PLANT & EQUIPMENT
Utility Plant, original cost $0 $502,937 $0 $0 $0 $502,937 $0 $502,937
Gas Plant Acq Adjustment - Net 0 2,150 0 0 0 2,150 0 2,150
Gas Stored Underground 0 1,322 0 0 0 1,322 0 1,322
Accum Depre & Amortization 0 (136,112) 0 0 0 (136,112) 0 (136,112)
Nonutil Prop & Equip., at cost 1,650 4,795 47,522 45 9,744 63,756 [4] (143) 63,613
Accum Depre & Depletion (149) 0 (27,789) (13) (3,871) (31,822) [5] 12 (31,810)
----------- --------- ---------- -------- --------- --------- ---------- ---------
Prop, Plant & Equip - Net 1,501 375,092 19,733 32 5,873 402,231 (131) 402,100
----------- --------- ---------- -------- --------- --------- ---------- ---------
INVESTMENTS
Investments in Subsidiaries 154,498 0 0 0 0 154,498 [1] (154,498) 0
Available-for-Sale Securities 830 0 0 0 0 830 0 830
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Investment 155,328 0 0 0 0 155,328 (154,498) 830
----------- --------- ---------- -------- --------- --------- ---------- ---------
CURRENT ASSETS
Cash & Temp Cash Investments 8,276 3,224 1,124 422 1,162 14,208 0 14,208
Notes Rec - Assoc Companies 0 0 1,128 0 0 1,128 [3] (1,128) 0
Accounts Receivable 63 24,478 5,441 3,554 2,288 35,824 [2,7] (611) 35,213
Unbilled Revenues 0 15,154 0 0 0 15,154 0 15,154
Provisions for Uncollectibles 0 (737) (186) (48) (20) (991) 0 (991)
Accts Rec - Assoc Companies 488 212 15 0 1,278 1,993 [2] (1,993) 0
Nat Gas in Storage, Avg Cost 0 17,082 0 0 0 17,082 0 17,082
Mat & Supplies, Avg Cost 0 3,946 8,038 0 11 11,995 0 11,995
Assets Held for Disposal 0 0 339 0 0 339 0 339
Accum. Deferred Income Taxes 4 1,062 181 8 25 1,280 [6] (1,280) 0
Other Prepay and Current Assets 12 1,459 946 11 142 2,570 0 2,570
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Current Assets 8,843 65,880 17,026 3,947 4,886 100,582 (5,012) 95,570
----------- --------- ---------- -------- --------- --------- ---------- ---------
LONG-TERM NOTE RECEIVABLE -
ASSOCIATED COMPANIES 0 0 0 0 5,500 5,500 [3] (5,500) 0
----------- --------- ---------- -------- --------- --------- ---------- ---------
NONCURRENT ACCTS REC - Merch 0 2,015 0 0 0 2,015 0 2,015
----------- --------- ---------- -------- --------- --------- ---------- ---------
NONCURRENT ASSETS
Gross Recpts&Franchise Taxes 0 5,268 0 0 0 5,268 0 5,268
Environmental Remediation Costs 0 30,387 0 0 0 30,387 0 30,387
Accum. Deferred Income Taxes 760 9,371 0 (100) 761 10,792 [6] (10,792) 0
Deprec. Flowthrough Pre-1976 0 16,933 0 0 0 16,933 0 16,933
Deferred Fuel Costs - Net 0 0 0 0 0 0 0 0
Def. Postretirement Benefit Costs 0 6,567 0 0 0 6,567 0 6,567
Other 7 8,747 470 0 2,201 11,425 0 11,425
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Noncurrent Assets 767 77,273 470 (100) 2,962 81,372 (10,792) 70,580
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total $166,439 $520,260 $37,229 $3,879 $19,221 $747,028 ($175,933) $571,095
=========== ========= ========== ======== ========= ========= ========== =========
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1994
(In Thousands)
South Energy & South R & T
South Jersey Jersey Minerals, Jersey Group, Elim.
Industries, Gas Inc. Energy Inc. & Consd.
Inc. Company Consd. Company Consd. Total Adjust. Total
----------- --------- ---------- -------- --------- --------- ---------- ---------
CAPITALIZATION AND LIABILITIES
COMMON EQUITY
Common Stock SJI
Par Value $1.25 a share
Authorized - 20,000,000 shares
Outstanding - 10,715,211
& 9,804,576 $13,394 $0 $0 $0 $0 $13,394 $0 $13,394
Common Stock - Subsidiaries 0 5,848 13,283 50 1,000 20,181 [1] (20,181) 0
Premium on Common Stock 110,081 71,194 1,584 0 7,800 190,659 [1] (80,578) 110,081
Retained Earnings 31,569 47,551 8,755 372 (2,939) 85,308 (53,811) 31,497
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Common Equity 155,044 124,593 23,622 422 5,861 309,542 (154,570) 154,972
----------- --------- ---------- -------- --------- --------- ---------- ---------
CUMULATIVE PREFERRED STOCK
SJG - Par Value $100 a share
Authorized - 50,004 shares
Outstanding:
Series A, 4.70%- 5,700 shares 0 570 0 0 0 570 0 570
Series B, 8.00%- 19,242 shares 0 1,924 0 0 0 1,924 0 1,924
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Preferred Stock 0 2,494 0 0 0 2,494 0 2,494
----------- --------- ---------- -------- --------- --------- ---------- ---------
L-T-D (less current maturities
& sinking fund requirements) 0 138,594 6,375 0 8,117 153,086 0 153,086
----------- --------- ---------- -------- --------- --------- ---------- ---------
CURRENT LIABILITIES
Notes Payable to Banks 0 80,200 0 0 0 80,200 0 80,200
Current Maturities of L-T-D 0 6,852 875 0 1,728 9,455 0 9,455
Notes Pay - Assoc Companies 5,500 0 0 0 1,128 6,628 [3] (6,628) 0
Accounts Payable 300 30,812 2,364 3,402 627 37,505 [2,7] (2,268) 35,237
Accts Pay to Assoc Companies 47 82 37 17 109 292 [2] (292) 0
Customer Deposits 0 5,895 0 0 0 5,895 0 5,895
Accum. Deferred Income Taxes 3 440 0 0 47 490 [6] (490) 0
Gross Rects & Franchise Tax Accr 0 196 0 0 0 196 0 196
Environmental Remediation Costs 42 5,124 9 0 0 5,175 0 5,175
Interest Accrued 44 4,071 97 0 133 4,345 [2] (44) 4,301
Dividends Receivable 3,858 45 0 0 0 3,903 0 3,903
Other Current Liabilities 790 599 1,799 32 605 3,825 0 3,825
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Current Liabilities 10,584 134,316 5,181 3,451 4,377 157,909 (9,722) 148,187
----------- --------- ---------- -------- --------- --------- ---------- ---------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Post-
Retirement Benefits Reserve 157 9,535 563 10 64 10,329 0 10,329
Accum. Deferred Income Taxes 105 72,675 1,488 (4) 802 75,066 [4,6] (11,641) 63,425
Investment Tax Credit 0 6,807 0 0 0 6,807 0 6,807
Deferred Revenues - Net 0 12,838 0 0 0 12,838 0 12,838
Environmental Remediation Costs 0 11,902 0 0 0 11,902 0 11,902
Other 549 6,506 0 0 0 7,055 0 7,055
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Def Cr & Non-Cur Liab 811 120,263 2,051 6 866 123,997 (11,641) 112,356
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total $166,439 $520,260 $37,229 $3,879 $19,221 $747,028 ($175,933) $571,095
=========== ========= ========== ======== ========= ========= ========== =========
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</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
BALANCE SHEET - DECEMBER 31, 1994
(In Thousands)
<S> <C> <C>
[1] Common Stock - Subsidiaries $20,181
Premium on Common Stock 80,578
Retained Earnings 53,739
Investment in Subsidiaries $154,498
To eliminate South Jersey Industries, Inc. investment in subsidiaries
which is maintained on the equity method of accounting.
[2] Accounts Payable - Associated Companies $292
Accounts Payable 1,666
Interest Accrued 44
Accounts Receivable - Associated Companies $1,993
Accounts Receivable 9
To eliminate intercompany accounts receivable and payable.
[3] Notes Payable - Associated Companies $6,628
Notes Receivable - Associated Companies $6,628
To eliminate intercompany notes between
South Jersey Industries, Inc. and Subsidiaries
[4] Retained Earnings $84
Accumulated Deferred Income Taxes - Noncurrent Liability 59
Non-Utility Property $143
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 $12
Retained Earnings $12
To eliminate South Jersey Industries, Inc. depreciation on Millville property gain.
[6] Accumulated Deferred Income Taxes - Current Liability $490
Accumulated Deferred Income Taxes - Noncurrent Liability 11,582
Accumulated Deferred Income Taxes - Current Asset $1,280
Accumulated Deferred Income Taxes - Noncurrent Asset 10,792
To net current and noncurrent accumulated DFIT assets and Liabilities.
[7] Accounts Payable $602
Accounts Receivable $602
To eliminate intercompany gas receivable and payable between
South Jersey Gas Company and South Jersey Energy Company.
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</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands)
<CAPTION>
S. W. CAPE R & T
R & T DOWNER R AND T ONSHORE ATLANTIC CASTELLINI
GROUP, JR. CO., CASTELLINI CONSTRUCT CRANE CONSTRUCT
INC. INC. CO., INC. CO., INC. CO., INC. CO., INC. TOTAL ELIMIN. TOTAL
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Nonutility $532 $7,326 $2,677 $1,323 $113 $2,387 $14,358 [A] ($21) $14,337
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
OPERATING EXPENSES:
Operation - Nonutility 555 5,099 2,031 2,024 159 2,055 11,923 0 11,923
Maintenance 0 248 243 31 37 106 665 0 665
Depreciation 0 263 248 186 50 218 965 0 965
Current Federal Income Taxes (369) 392 (87) (413) (76) (135) (688) 0 (688)
Deferred Federal Income Taxes 59 90 96 50 26 84 405 0 405
Other Taxes 17 369 133 95 12 89 715 0 715
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Operating Expenses 262 6,461 2,664 1,973 208 2,417 13,985 0 13,985
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Operating Income (Loss) 270 865 13 (650) (95) (30) 373 (21) 352
OTHER INCOME (LOSS):
Dividends from Subsidiaries 0 0 0 0 0 0 0 [A] (500) (500)
Equity in Net Undistributed
Losses of Subsidiaries (17) 0 0 0 0 0 (17) [A] 517 500
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Income (Loss) Before
Interest Charges 253 865 13 (650) (95) (30) 356 (4) 352
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
INTEREST CHARGES:
Long-Term Debt 841 0 0 0 0 0 841 0 841
Short-Term Debt 25 0 0 49 0 72 146 [A] (21) 125
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Interest Charges 866 0 0 49 0 72 987 (21) 966
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Income (Loss) Applicable
to Common Stock (613) 865 13 (699) (95) (102) (631) 17 (614)
Retained Earnings (Deficit) at
Beginning of Period (2,325) 213 238 (1,911) (215) (124) (4,124) [A] 1,799 (2,325)
Dividends Declared - Cash 0 434 66 0 0 0 500 [A] (500) 0
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Retained Earnings (Deficit) at
End of Period ($2,938) $644 $185 ($2,610) ($310) ($226) ($5,255) $2,316 ($2,939)
======== ======== ========== ========== ========= ========== ======== ======== ========
-13-
<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING ADJUSTMENTS & ELIMINATIONS
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(In Thousands)
<S> <C> <C>
[A] Dividends from Subsidiaries $500
Investments in Subsidiaries 517
Equity in Undistributed Earnings of Subsidiaries $517
Dividends Paid - Cash 500
To eliminate inter-company dividends and undistributed
earnings of subsidiaries.
Investment in Subsidiaries $1,799
Deficit - January 1, 1994 $1,799
To eliminate the deficit of subsidiaries at 1/1/94
previously recorded by R&T Group, Inc. under the equity
method of accounting.
Operating Revenues - Non-Utility $21
Interest Expense - Short-Term Debt $21
To eliminate inter-company revenue and interest expense.
-14-
<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1994
(In Thousands)
<CAPTION>
S. W. CAPE R & T
R & T DOWNER R AND T ONSHORE ATLANTIC CASTELLINI
GROUP, JR. CO., CASTELLINI CONSTRUCT CRANE CONSTRUCT
INC. INC. CO., INC. CO., INC. CO., INC. CO., INC. TOTAL ELIMIN. TOTAL
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
NONUTILITY PROPERTY, PLANT
& EQUIPMENT AT COST
Land and Improvements $0 $312 $54 $255 $0 $0 $621 $0 $621
Building and Improvements 0 278 467 0 0 0 745 0 745
Machinery and Equipment 0 2,279 2,028 1,606 474 1,991 8,378 0 8,378
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total 0 2,869 2,549 1,861 474 1,991 9,744 0 9,744
Accumulated Depreciation 0 (1,202) (1,294) (856) (264) (255) (3,871) 0 (3,871)
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Property, Plant &
Equipment - Net 0 1,667 1,255 1,005 210 1,736 5,873 0 5,873
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
INVESTMENT IN SUBSIDIARIES 8,093 0 0 0 0 0 8,093 [A] (8,093) 0
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
CURRENT ASSETS:
Cash and Cash Equivalents 69 393 527 77 38 58 1,162 0 1,162
Accounts Receivable 1 874 333 364 19 677 2,268 0 2,268
Accts Rec - Assoc Companies 151 884 713 139 8 7 1,902 [A] (624) 1,278
Notes Rec - Assoc Companies 0 0 97 0 0 0 97 [B] (97) 0
5,500 0 0 0 0 0 5,500 [B] (5,500) 0
Materials and Supplies 0 11 0 0 0 0 11 0 11
Accum. Deferred Income Taxes 0 24 0 0 1 0 25 0 25
Prepayments & Other 0 41 36 27 5 33 142 0 142
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Current Assets 5,721 2,227 1,706 607 71 775 11,107 (6,221) 4,886
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
LONG-TERM NOTE RECEIVABLE - 0 225 225 0 0 0 450 [A] (450) 0
ASSOCIATED COMPANIES 0 0 0 0 0 0 0 [B] 5,500 5,500
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
NONCURRENT ASSETS:
Accumulated Def Income Taxes 352 (19) (54) 390 45 47 761 0 761
Goodwill 152 1,118 226 512 0 0 2,008 0 2,008
Other 76 30 17 9 33 28 193 0 193
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Noncurrent Assets 580 1,129 189 911 78 75 2,962 0 2,962
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total $14,394 $5,248 $3,375 $2,523 $359 $2,586 $28,485 ($9,264) $19,221
======== ======== ========== ========== ========= ========== ======== ======== ========
-15-
<PAGE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1994
(In Thousands)
S. W. CAPE R & T
R & T DOWNER R AND T ONSHORE ATLANTIC CASTELLINI
GROUP, JR. CO., CASTELLINI CONSTRUCT CRANE CONSTRUCT
INC. INC. CO., INC. CO., INC. CO., INC. CO., INC. TOTAL ELIMIN. TOTAL
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
CAPITALIZATION AND LIABILITIES
COMMON EQUITY:
Common Stock - R&T Group, Inc.
No Par Value
Authorized 1,000 shares
Outstanding 500 shares $1,000 $0 $0 $0 $0 $0 $1,000 $0 $1,000
Common Stock - Subsidiaries 0 3,639 2,576 1,387 502 0 8,104 [A] (8,104) 0
Paid in Capital - R&T Group, Inc. 7,800 0 0 0 0 0 7,800 0 7,800
Paid in Capital - Subsidiaries 0 0 0 2,015 90 200 2,305 [A] (2,305) 0
Retained Earnings (Deficit) (2,939) 645 185 (2,609) (310) (227) (5,255) [A] 2,316 (2,939)
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Common Equity 5,861 4,284 2,761 793 282 (27) 13,954 (8,093) 5,861
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
LONG-TERM DEBT:
Notes Payable 9.66% due 2000 6,875 0 0 0 0 0 6,875 0 6,875
Notes Payable Assoc. Companies 0 0 0 450 0 0 450 [A] (450) 0
Capital Lease Obligation 0 0 0 0 0 1,242 1,242 0 1,242
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Long-Term Debt 6,875 0 0 450 0 1,242 8,567 (450) 8,117
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
CURRENT LIABILITIES:
Notes Payable - Associated
Company 0 0 0 700 0 525 1,225 [A] (97) 1,128
Current Maturities of
Long-Term Debt 1,375 0 0 0 0 0 1,375 0 1,375
Current Maturities of Long-Term
Capital Lease Obligation 0 0 0 0 0 353 353 0 353
Accounts Payable 0 187 79 246 6 109 627 0 627
Accounts Payable to Associated
Companies 80 72 179 62 2 338 733 [A] (624) 109
Accum. Deferred Income Taxes 1 14 12 8 2 10 47 0 47
Interest Accrued 133 0 0 0 0 0 133 0 133
Other 23 450 154 61 (2) (81) 605 0 605
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Current Liabilities 1,612 723 424 1,077 8 1,254 5,098 (721) 4,377
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Postretirement
Benefits Reserve 64 0 0 0 0 0 64 0 64
Accumulated Deferred Income Taxes (18) 241 190 203 69 117 802 0 802
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Def Cr & Non-Cur Liab 46 241 190 203 69 117 866 0 866
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total $14,394 $5,248 $3,375 $2,523 $359 $2,586 $28,485 ($9,264) $19,221
======== ======== ========== ========== ========= ========== ======== ======== ========
-16-
<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING ADJUSTMENTS & ELIMINATIONS
BALANCE SHEET
AS OF DECEMBER 31, 1994
(In Thousands)
<S> <C> <C>
[A] Notes Payable - Associated Companies $97
Accounts Payable - Associated Companies 624
Notes Receivable - Associated Companies $97
Accounts Receivable - Associated Companies 624
To eliminate inter-company accounts receivable,
accounts payable, notes receivable and notes payable.
Notes Payable - Associated Companies $450
Long-Term Note Receivable - Assoc. Co. $450
To eliminate long-term notes payable and receivable.
Common Stock - Subsidiaries $8,104
Paid in Capital - Subsidiaries 2,305
Deficit $2,316
Investment in Subsidiaries 8,093
To eliminate R&T Group, Inc. investment in subsidiaries
which is maintained on the equity method of accounting.
[B] Long-Term Note Receivable - Associated Companies $5,500
Notes Receivable - Associated Companies $5,500
To reclassify note of South Jersey Industries, Inc. (SJI)
(eliminated in consolidation at SJI level).
-17-
<PAGE>
</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 $6.2 million in
1994 were not required to be eliminated. Such amounts were
capitalized to utility plant or environmental remediation
costs on the South Jersey Gas Company (SJG) books of account
and are recoverable by SJG through the rate-making process
(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 Public Utilities (BPU) and maintains its accounts in
accordance with the prescribed Uniform System of Accounts of
that Board.
On December 14, 1994, the BPU granted SJG a rate increase of
$12.1 million based on an overall rate of return of 9.51
percent, including an 11.5 percent return on equity. Nearly
the entire amount of the increase will come from the
residential, commercial and small industrial customer
classes. In addition, SJG is allowed to retain the first
$4.0 million of pretax interruptible and off-system margins
combined and 20 percent of such margins above that level.
In addition to the rate increase, the BPU approved a change
in SJG's Temperature Adjustment Clause (TAC), a mechanism
designed to reduce the impact of extreme fluctuations in
temperature on SJG and its customers, which will require
colder weather before an adjustment is required to customer
billings. The BPU order also provides partial recovery of
the costs associated with SJG's adoption of FASB No. 106 and
the continued deferral of all unrecovered costs. The
recovery of these additional costs will be addressed in
SJG's next rate petition and it is expected that recovery
will be included in future base rates. In addition, SJG is
recovering from ratepayers the carrying costs associated
with the accelerated gross receipts and franchise tax
payment in April 1994, which resulted from new legislation
adopted in 1991. As part of the new tariff changes approved,
SJG also implemented new tariffs which will give large
industrial and commercial customers more opportunities to
-18-
<PAGE>
manage their own gas supplies. As with past flexible rates,
these changes will not have a negative impact on SJG's net
income.
In December 1994, the BPU ordered a $3.5 million customer
refund which resulted in a $2.3 million (net of taxes), or
$0.22 per share, unfavorable impact on 1994 consolidated net
income. This refund was part of a global settlement which
expedited the resolution of a series of matters pending
before the BPU including the rate case discussed above and
SJG's 1993-1994 Levelized Gas Adjustment Clause (LGAC).
Although the BPU's decision had no finding of fault or
imprudency, SJG accepted this settlement to avoid exposure
and protracted litigation cost. Customers will receive the
$3.5 million refund through the 1994-1995 LGAC which will be
placed in effect upon the completion of that separately
pending proceeding.
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 BPU 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 BPU 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 base rate
proceedings.
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 BPU.
The composite rate per annum for all depreciable utility
property was approximately 2.8 percent in 1994. 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
-19-
<PAGE>
balance amounting to $2.2 million at December 31, 1994, 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 was income taxes - flowthrough
depreciation in the amount of $17.6 million as of January 1,
1993. This amount represented 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, as a result of
positions taken in the 1994 rate case, the amortization of
the asset will be recoverable through rates over an 18-year
period beginning December 1994.
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.
Effective March 1, 1978, SJG began accruing Gross Receipts
and Franchise Taxes (GRAFT) 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. In
June 1991, new GRAFT legislation was adopted in New Jersey
which accelerated the payments of such taxes to a current
year basis, rather than the previous basis of prior year
results, by 1994. The new legislation also imposes the tax
on the basis of the volume of gas sold beginning in 1992.
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 78 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
-20-
<PAGE>
entire cost of the plans and the total provision made for
such plans in 1994 aggregated approximately $2.2 million,
including amounts for amortization of the cost of past
service benefits over a period of approximately 30 years.
Net periodic pension cost for 1994 included the following
components (in thousands):
Service cost - benefits earned
during the period $1,738
Interest cost on projected benefit
obligation 2,932
Actual return on plan assets (1,169)
Net amortization and deferral (1,292)
------
Net periodic pension cost $2,209
======
Assumptions as of December 31 were:
Discount rate 7.25%-7.50%
Rate of increase in compensation levels 4.6%
Expected long-term rate of return on assets 8.5%
The following table sets forth the plans' funded status at
December 31, 1994 (in thousands):
Actuarial present value of benefit obligations:
Vested benefit obligation $(34,018)
========
Accumulated Benefit Obligation $(34,167)
========
Projected benefit obligation $(43,415)
Plan assets at fair value 34,003
--------
Projected benefit obligation
in excess of plan assets (9,412)
Unrecognized net loss 3,544
Prior service cost not yet recognized
in net periodic pension cost 2,725
Unrecognized net obligation
at January 1 1,013
--------
Pension liability recognized in
the consolidated balance sheet $ (2,130)
========
Postretirement Benefits Other Than Pensions - The Company
and its subsidiaries provide postretirement health care and
-21-
<PAGE>
life insurance benefits to substantially all retired
employees.
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 over a period of 20 years.
The majority of the Company's costs apply to its utility
subsidiary, SJG, which has previously recovered these costs
on a pay-as-you-go basis through its rates. As part of
SJG's 1994 base rate case settlement, SJG was granted full
recovery of the current service cost component of the annual
cost in addition to continued recovery of pay-as-you-go
costs. The BPU also approved recovery of previously
deferred 1993 and 1994 service costs totaling $2.0 million
over a 5-year period beginning December 1994. SJG is also
authorized to continue recording a regulatory asset for the
amount by which the cost exceeds the current level recovered
in rates. The recovery of this regulatory asset, which
amounted to approximately $4.6 million at December 31, 1994,
will be addressed in SJG's next base rate case proceeding
and it is expected that the recovery will be included in
base rates.
The following table sets forth the life and health care
plans' funded status at December 31, 1994. Actuarial
present value of accumulated postretirement benefit
obligations (in thousands):
Retirees $ (6,364)
Other active plan participants (16,813)
---------
Accumulated postretirement
benefit obligation (23,177)
Fair value of plan assets 0
---------
Accumulated postretirement benefit
obligation in excess of plan assets (23,177)
Unrecognized gain (673)
Unrecognized transition obligation 16,931
---------
Postretirement benefit liability recognized
in the consolidated balance sheet $ (6,919)
=========
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<PAGE>
Net postretirement benefit cost for 1994 consisted of the
following components (in thousands):
Service cost - benefits earned
during the period $ 898
Actual return on plan assets 0
Interest cost on accumulated
postretirement benefit obligation 1,594
Amortization of transition obligation 941
Unrecognized net loss 78
------
Net postretirement benefit cost $3,511
======
A majority of the net postretirement benefit cost has been
capitalized and the amount of such cost expensed in 1994 is
not material.
The decrease in the accumulated postretirement benefit
obligation, unrecognized transition obligation and net
postretirement benefit cost for 1994 resulted primarily from
a decrease in the assumed health care cost trend rates and
an increase in the assumed discount rate used in determining
the accumulated postretirement benefit obligation as of
December 31, 1994.
The assumed health care cost trend rates used in measuring
the accumulated postretirement benefit obligation as of
December 31, 1994 are as follows: Medical and Drug - Ranged
from 7.7 percent to 10.95 percent in 1994, grading to 5.75
percent in 2007; Dental - 7.97 percent in 1994, grading to
5.75 percent in 2002. If the health care cost trend rate
assumptions were increased by 1 percent, the accumulated
postretirement benefit obligation as of December 31, 1994,
would be increased by 17.5 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, 1994 was 7.50 percent.
FASB No. 112, "Employers' Accounting for Postemployment
Benefits" became effective in 1994. This statement requires
the Company to accrue the estimated cost of benefits
provided by an employer to former or inactive employees
after employment, but before retirement, during the years
the employee provides services. The adoption of this
statement did not have a material effect on the results of
operations or financial position of the Company.
-23-
<PAGE>
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 $311,459
Sand Mining Operations 30,651
Other Industries 45,647
--------
Total 387,757
Intersegment Sales (13,798)
--------
Consolidated Operating Revenues $373,959
========
Operating Income:
Gas Utility Operations $ 35,109
Sand Mining Operations 3,844
Other Industries 953
--------
Total 39,906
Federal Income Taxes (6,809)
General Corporate Expense (2,232)
--------
Total Operating Income $ 30,865
========
Depreciation, Depletion and Amortization:
Gas Utility Operations $ 14,741
Sand Mining Operations 2,756
Other Industries 1,645
--------
Total $ 19,142
========
Property Additions:
Gas Utility Operations $ 35,633
Sand Mining Operations 4,231
Other Industries 1,062
--------
Total $ 40,926
========
Identifiable Assets:
Gas Utility Operations $509,828
Sand Mining Operations 34,049
Other Industries 18,299
--------
-24-
<PAGE>
Total 562,176
Corporate Assets 19,270
Intersegment Assets (10,351)
--------
Consolidated Identifiable Assets $571,095
========
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, and the natural gas
acquisition and transportation 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.
The preferred stock dividend requirements of SJG amounting
to approximately $0.2 million for the year 1994 has been
included in the Company's statements of consolidated income
under the caption "Interest and Other Charges".
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.
-25-
<PAGE>
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
1994. The reasons for the differences are as follows (in
thousands):
Tax at Statutory Rate $7,581
Increase (Decrease) Resulting from:
Additional Statutory Depletion Allowance (606)
Amortization of ITC (377)
BPU Order - Flow back of Excess
Deferred Taxes (55)
Other - Net 266
------
Federal Income Taxes as reported on the
Statements of Consolidated Income 6,809
------
Tax on Customer Refund Obligation (1,225)
------
Net Federal Income Taxes $5,584
======
The provision for Federal Income Taxes is composed of the
following (in thousands):
Current $ 7,737
Deferred: -------
Repair Allowance Permitted Under the Class
Life Asset Depreciation Range System 0
Excess of Tax Depreciation Over
Book Depreciation - Net 3,500
Deferred Fuel Costs (5,536)
Environmental Remediation Costs - Net (207)
Amortization of Gross Receipts Taxes (136)
Advances for Construction (7)
BPU Order - Flow Back of Excess Deferred Taxes (55)
Premium on Bond Redemption (59)
Alternative Minimum Tax 1,525
Other - Net 424
-------
Total Deferred (551)
-------
ITC (377)
-------
Federal Income Taxes as reported on the
Statements of Consolidated Income 6,809
-------
Tax on Customer Refund Obligation (1,225)
-------
Net Federal Income Taxes $ 5,584
=======
-26-
<PAGE>
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 at December 31,
1994 are as follows (in thousands):
Deferred Tax Liabilities:
Tax Depreciation Over Book Depreciation $55,195
Difference Between Book and Tax
Basis of Property 4,417
Deferred Fuel Costs 0
Environmental Remediation Costs 4,539
Excess Protected 3,671
Gross Receipts Taxes 1,791
Other 2,407
-------
Total Deferred Tax Liabilities 72,020
-------
Deferred Tax Assets:
Alternative Minimum Tax 5,089
ITC Basis Gross Up 3,506
-------
Total Deferred Tax Assets 8,595
-------
Net Deferred Tax Liability $63,425
=======
The IRS completed examinations of the Company's consolidated
Federal Income Tax returns for the years ended 1982 through
1988. In 1994, the Company settled these open examinations
and the adjustments resulting from these audits did not have
a material effect on the Company's financial position.
5. Financial Instruments:
Long-Term Debt - The fair value of the Company's long-term
debt, including current maturities, as of December 31, 1994
is $160.9 million (carrying amount $162.5 million) and is
estimated based on the interest rates available to the
Company at each respective 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, 1994.
In 1994, the Company also adopted FASB No. 115, "Accounting
for Certain Investments in Debt and Equity Securities",
which requires the Company, among other things, to account
for certain of its investments at fair market value.
-27-
<PAGE>
Adoption of this statement did not have a material effect on
the results of operations or financial position of the
Company.
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 9,804,576
New Issues During Year:
Dividend Reinvestment and
Stock Purchase Plan 899,649
Employees' Stock Ownership Plan 7,926
Stock Option & Stock Appreciation
Rights Plan 3,060
----------
End of Year 10,715,211
==========
The average shares of Common Stock outstanding for 1994 was
10,257,848.
The par value ($1.25 per share) of the stock issued in 1994
has been credited to common stock and the net excess over
par value of approximately $15.7 million has been credited
to Premium on Common Stock.
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, 1994, the Company had
50,560 options outstanding, exercisable at prices from
$17.16 to $24.69 per share. During 1994, 3,060 options were
exercised, at $17.89 per share. No options were granted in
1994. No stock appreciation rights have been issued under
the plan. The stock options outstanding at December 31,
1994 did not have a material effect on the earnings per
share calculations. The Company also has a Dividend
Reinvestment and Stock Purchase Plan (DRP) and Employees'
Stock Ownership Plan (ESOP). As of December 31, 1994,
921,643 and 52,696 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, 1994, were
approximately $102.8 million. Borrowings under these lines
of credit are at market rates which approximated 6.0 percent
at December 31, 1994. Demand deposits are maintained with
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<PAGE>
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 $31.5 million at December 31,
1994.
9. Commitments and Contingencies:
The estimated cost of construction and environmental
remediation programs of the Company and its subsidiaries for
the year 1995 aggregates $35.7 million and, in connection
therewith, certain commitments have been made.
In May 1990, the BPU 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 were passed through on a
current basis through July 1993. The majority of the costs
billed on a fixed basis have been paid 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. SJG anticipates being billed additional
fixed costs of approximately $1.1 million under this
stipulation; however, the order allowing for such cost
recovery by one of SJG's pipelines has been remanded to the
Federal Energy Regulatory Commission (FERC) for further
action. The amount of these additional fixed costs which
have been flowed through to SJG, net of refunds, was
approximately $0.3 million during 1994.
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 the gas supply
contracts is 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 FERC. SJG's cumulative obligations for
demand charges paid to its suppliers for all of these
services is approximately $4.4 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
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<PAGE>
transportation services and change their rate design. Also,
as a result of these orders, SJG is incurring certain
transition costs that are associated with its pipeline
suppliers' unbundling their services. Since not all
suppliers have yet established the basis or the method of
billing transition costs, SJG's total liability cannot be
determined. A liability of approximately $0.7 million is
recorded as of December 31, 1994, representing identified
transition costs being billed to SJG by a pipeline over a
2-year period which began in April 1994. SJG expects to
recover such 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 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. The Company is currently engaged in
environmental remediation activities related to some of
these sites and, in connection therewith, certain costs have
been incurred and recorded.
Through December 31, 1994, the Company has recorded
environmental remediation costs of $37.2 million, of which
$20.1 million has been expended. Management's estimate of
the remaining liability of approximately $17.1 million is
reflected on the consolidated balance sheet under the
captions "Current Liabilities" and "Deferred Credits and
Other Non-Current Liabilities". Such amounts have not been
adjusted for future insurance recoveries, which management
is pursuing. Insurance recoveries, amounting to $1.5
million, were received by SJG in July 1994 and an additional
$1.5 million was received in January 1995. These proceeds
were first used to offset legal fees incurred in connection
with such recoveries and the excess was used to reduce the
balance of deferred environmental remediation costs.
Recorded amounts include estimated costs to be incurred
through 1997 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 1997
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 $36.0 million and
$19.5 million, respectively, through December 31, 1994. 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 BPU. SJG has recovered $4.7
million through rates as of December 31, 1994. The balance
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<PAGE>
of such costs and payments, amounting to $1.2 million and
$0.6 million, respectively, relates to other environmental
related costs including nonutility sites previously used in
fuel oil operations. As of December 31, 1994, the $0.6
million relating to nonutility sites has either been
expensed or capitalized to nonutility property on the books
of the applicable subsidiary.
As part of SJG's rate increase effective December 14, 1994
(See Note 1), a capital structure test was implemented. The
parties stipulated that by February 28, 1995, SJG's common
equity balance will increase by $6.0 million as a result of
an equity infusion; and its long-term debt balance will
increase by $45.0 million as a result of new debt issues.
SJG has already issued the $45.0 million of long-term debt
(See Note 10) and met this portion of the requirement. The
common equity component of this test is still under review.
Since the approved overall rate of return contained in the
settlement is based upon these projected increases in
capital levels, a mechanism was included that would result
in a reduction to customers' rates through the immediately
following LGAC to the extent the fundings are not in place.
SJG anticipates that these capital levels will be reached by
February 28, 1995; however, not achieving such levels will
not have a material effect on the financial position of the
Company.
10: Subsequent Event:
On January 31, 1995, SJG sold privately $30.0 million of
Unsecured Debenture Notes, 8.6% due February 1, 2010.
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<PAGE>
South Jersey Industries, Inc.
Index to Exhibits
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
(Submitted only in electronic format to the
Securities and Exchange Commission).
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<TABLE> <S> <C>
<ARTICLE> OPUR3
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 571,095
<TOTAL-OPERATING-REVENUES> 373,959
<NET-INCOME> 12,379
</TABLE>
