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, state of organization, location and nature of
business of claimant and every subsidiary thereof other than any
exempt wholesale generator (EWG) or foreign utility company in
which claimant directly or indirectly holds an interest.
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 for its own sales and for
some of its customers. SJG also assigns or buys
capacity for the purchase or transportation of
natural gas.
<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, sale 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 was inactive for
several years, however, in 1995, Fuel Company began
providing services for the marketing of natural gas
services in the wholesale market to other
marketers, local distribution companies, electric
generation and large industrial users.
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
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<PAGE>
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.
Cape Atlantic sold its cranes in 1996 and is now an
inactive company.
Neither the claimant or any of its
subsidiaries is an EWG nor do they hold a direct or
indirect interest in a foreign utility company.
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<PAGE>
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 transported when needed). There are
4,538 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 1995, Gas Company distributed at
retail to residential, commercial and industrial
customers 36,237,000 Mcf. of natural or
manufactured gas and transported 20,305,000 Mcf. of
natural gas purchased directly by its industrial
and commercial customers. Gas Company also sold
5,609,000 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
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<PAGE>
(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 1995, Gas Company sold 3,981,000 Mcf.
of natural gas at wholesale to customers outside the
borders of the State of New Jersey.
(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 1995, Gas Company purchased
approximately 46,099,000 Mcf. of natural gas from out-
of-state sources.
During 1995, Gas Company purchased and had
delivered to it approximately 484,000 Mcf. of liquefied
natural gas for transport by over-the-road truck
transport to Gas Company's LNG Storage and Vaporization
facility at McKee City, Atlantic County, New Jersey.
4. The following information for the reporting period
with respect to claimant and each interest it holds directly or
indirectly in an EWG or a foreign utility company stating monetary
amounts in United States dollars:
a) Name, location, business address and
description of the facilities used by the EWG or foreign
utility company for the generation, transmission and
distribution of electric energy for sale or for the
distribution at retail of natural or manufactured gas.
The claimant has no 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.
b) Name of each system company that holds an
interest in such EWG or foreign utility company; and
description of the interest held.
No system company holds any direct or indirect
interest in an EWG or foreign utility company.
c) Type and amount of capital invested, directly
or indirectly, by the holding company claiming exemption; any
direct or indirect guarantee of the security of the EWG or
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<PAGE>
foreign utility company by the holding company claiming
exemption; and any debt or other financial obligation for
which there is recourse, directly or indirectly, to the
holding company claiming exemption or another system company,
other than the EWG or foreign utility company.
The claimant holding company has no capital
invested, directly or indirectly; nor does it directly
or indirectly guarantee any security debt of an EWG or
foreign utility company; nor debt or other financial
obligation for which there is recourse, directly or
indirectly, to the holding company claiming exemption on
another system company.
d) Capitalization and earnings of the EWG or
foreign utility company during the reporting period.
None
e) Identify any service, sales or construction
contract(s) between the EWG or foreign utility company and a
system company, and describe the services to be rendered or
goods sold and fees or revenues under such agreement(s).
None
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<PAGE>
EXHIBIT A
A consolidating statement 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 26th
day of February 1996.
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>
EXHIBIT B
FINANCIAL DATA SCHEDULE
Consolidated Financial Data Schedule filed via EDGAR as part
of this report on Form U-3A-2.
-8(a)-
<PAGE>
EXHIBIT C
EWG ORGANIZATIONAL CHART
Not Applicable - See response to Item 4.
-8(b)-
<PAGE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(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 $282,719 $0 $0 $0 $282,719 [C] ($2,542) $280,177
Nonutility 208 0 35,350 20,672 18,335 74,565 [C] (934) 73,631
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Operating Revenues 208 282,719 35,350 20,672 18,335 357,284 (3,476) 353,808
----------- --------- ---------- -------- --------- --------- --------- ---------
OPERATING EXPENSES:
Gas Purchased for Resale 0 146,238 0 0 0 146,238 [C] (2,505) 143,733
Operation - Utility 0 41,256 0 0 0 41,256 [C] (36) 41,220
Operation - Nonutility 1,155 0 24,198 20,034 14,564 59,951 [C] (211) 59,740
Maintenance 22 5,158 3,364 3 817 9,364 0 9,364
Depreciation 4 13,820 2,643 13 1,303 17,783 [D] (2) 17,781
Current Federal Income Taxes (671) 5,238 278 202 2 5,049 0 5,049
Def. and Non-Curr. Fed. Income Taxes 29 4,040 225 (15) 46 4,325 0 4,325
Gross Receipts & Franchise Taxes 0 29,114 0 0 0 29,114 0 29,114
Other Taxes 68 2,417 1,281 80 779 4,625 0 4,625
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Operating Expenses 607 247,281 31,989 20,317 17,511 317,705 (2,754) 314,951
----------- --------- ---------- -------- --------- --------- --------- ---------
Operating Income (399) 35,438 3,361 355 824 39,579 (722) 38,857
OTHER INCOME:
Dividends from Subsidiaries 17,311 0 0 0 0 17,311 [A] (17,311) 0
Equity in Undistrib. Earnings of Subs 1,490 0 0 0 0 1,490 [A] (1,490) 0
----------- --------- ---------- -------- --------- --------- --------- ---------
Income Before Interest Charges 18,402 35,438 3,361 355 824 58,380 (19,523) 38,857
----------- --------- ---------- -------- --------- --------- --------- ---------
INTEREST AND OTHER CHARGES:
Long-Term Debt 531 14,490 591 0 709 16,321 [C] (531) 15,790
Short- Term Debt 203 3,328 4 7 233 3,775 [C] (193) 3,582
Other 27 1,807 8 0 0 1,842 0 1,842
----------- --------- ---------- -------- --------- --------- --------- ---------
Total Interest and Other Charges 761 19,625 603 7 942 21,938 (724) 21,214
----------- --------- ---------- -------- --------- --------- --------- ---------
Net Income Applic. to Common Stock $17,641 $15,813 $2,758 $348 ($118) $36,442 ($18,799) $17,643
=========== ========= ========== ======== ========= ========= ========= =========
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(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 $31,569 $47,551 $8,756 $372 ($2,939) $85,309 [B] ($53,812) $31,497
Net Income Applicable to Common Stock 17,641 15,813 2,758 348 (118) 36,442 (18,799) 17,643
----------- --------- ---------- -------- --------- --------- --------- ---------
49,210 63,364 11,514 720 (3,057) 121,751 (72,611) 49,140
Dividends Declared - Cash 15,435 16,000 975 336 0 32,746 [A] (17,311) 15,435
----------- --------- ---------- -------- --------- --------- --------- ---------
Balance at End of Period $33,775 $47,364 $10,539 $384 ($3,057) $89,005 ($55,300) $33,705
=========== ========= ========== ======== ========= ========= ========= =========
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<PAGE>
</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(In Thousands)
<S> <C> <C>
[A] Dividends from Subsidiaries $17,311
Equity in Undistributed Earnings
of Subsidiaries 1,490
Retained Earnings - Dividends Paid - Cash $17,311
Investment in Subsidiaries 1,490
To eliminate intercompany dividends paid and
equity in undistributed earnings recorded by
South Jersey Industries, Inc.
[B] Retained Earnings - 1/1/95 $53,812
Deferred Federal Income Taxes 60
Accumulated Depreciation & Depletion - 1/1/95 12
Investment in Subsidiaries $53,740
Non-Utility Property 144
To eliminate prior inter-company gain and
retained earnings of subsidiaries at 1/1/95
previously recorded by South Jersey Industries,
Inc. under the equity method of accounting.
[C] Operating Revenues - Utility $2,542
Operating Revenues - Nonutility 934
Gas Purchased for Resale $2,505
Operating Expense - Utility 36
Operating Expense - Nonutility 211
Interest Expense - Short-Term Debt 193
Interest Expense - Long-Term Debt 531
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, 1995
(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>
ASSETS
PROPERTY, PLANT & EQUIPMENT
Utility Plant, original cost $0 $539,327 $0 $0 $0 $539,327 $0 $539,327
Gas Plant Acq Adjustment 0 2,075 0 0 0 2,075 0 2,075
Gas Stored Underground 0 1,322 0 0 0 1,322 0 1,322
Accum Depre & Amortization 0 (145,954) 0 0 0 (145,954) 0 (145,954)
Nonutil Prop & Equip., at cost 1,629 1 47,992 47 11,140 60,809 [4] (144) 60,665
Accum Depre & Depletion (153) 0 (29,698) (26) (4,873) (34,750) [5] 14 (34,736)
----------- --------- ---------- -------- --------- --------- ---------- ---------
Prop, Plant & Equip - Net 1,476 396,771 18,294 21 6,267 422,829 (130) 422,699
----------- --------- ---------- -------- --------- --------- ---------- ---------
INVESTMENTS
Investments in Subsidiaries 161,989 0 0 0 0 161,989 [1] (161,989) 0
Invest in Non-Assoc Companies 830 0 0 0 0 830 0 830
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Investment 162,819 0 0 0 0 162,819 (161,989) 830
----------- --------- ---------- -------- --------- --------- ---------- ---------
CURRENT ASSETS
Cash & Temp Cash Investments 2,540 2,193 504 41 309 5,587 0 5,587
Notes Rec - Assoc Companies 3,520 0 2,655 260 6,588 13,023 [3] (13,023) 0
Accounts Receivable 564 32,637 7,360 2,797 2,340 45,698 [2,8] (789) 44,909
Unbilled Revenues 0 20,860 0 0 0 20,860 0 20,860
Provisions for Uncollectibles 0 (737) (186) (40) (19) (982) 0 (982)
Accts Rec - Assoc Companies 439 82 33 15 960 1,529 [2] (1,529) 0
Nat Gas in Storage, Avg Cost 0 14,763 0 0 0 14,763 0 14,763
Mat & Supplies, Avg Cost 0 3,842 8,161 0 14 12,017 0 12,017
Assets Held for Disposal 0 0 0 0 0 0 0 0
Accum. Deferred Income Taxes 4 1,093 272 (1) 46 1,414 [6] (1,414) 0
Prepd Gross Recpts&Franchise Tax 0 3,649 0 0 0 3,649 0 3,649
Other Prepay and Current Assets 15 1,557 1,311 17 154 3,054 0 3,054
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Current Assets 7,082 79,939 20,110 3,089 10,392 120,612 (16,755) 103,857
----------- --------- ---------- -------- --------- --------- ---------- ---------
NONCURRENT ACCTS REC - Merch 0 2,305 0 0 0 2,305 0 2,305
----------- --------- ---------- -------- --------- --------- ---------- ---------
NONCURRENT ASSETS
Gross Recpts&Franchise Taxes 0 4,868 0 0 0 4,868 0 4,868
Environmental Remediation Costs 0 36,596 0 0 0 36,596 0 36,596
Accum. Deferred Income Taxes 868 8,748 0 30 890 10,536 [7] (10,536) 0
Deprec. Flowthrough Pre-1976 0 15,955 0 0 0 15,955 0 15,955
Def. Postretirement Benefit Costs 0 4,726 0 0 0 4,726 0 4,726
Other 4 9,391 1,033 0 2,045 12,473 0 12,473
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Noncurrent Assets 872 80,284 1,033 30 2,935 85,154 (10,536) 74,618
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total $172,249 $559,299 $39,437 $3,140 $19,594 $793,719 ($189,410) $604,309
=========== ========= ========== ======== ========= ========= ========== =========
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1995
(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
CAPITALIZATION AND LIABILITIES ----------- --------- ---------- -------- --------- --------- ---------- ---------
COMMON EQUITY
Common Stock SJI
Par Value $1.25 a share
Authorized - 20,000,000 shares
Outstanding - 10,722,171
& 10,715,211 $13,403 $0 $0 $0 $0 $13,403 $0 $13,403
Common Stock - Subsidiaries 0 5,848 13,283 50 1,000 20,181 [1] (20,181) 0
Premium on Common Stock 110,189 77,194 1,584 0 7,800 196,767 [1] (86,578) 110,189
Capital Stock Expense 0 0 0 0 0 0 0 0
Retained Earnings 33,775 47,364 10,539 384 (3,057) 89,005 [1,4,5] (55,300) 33,705
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Common Equity 157,367 130,406 25,406 434 5,743 319,356 (162,059) 157,297
----------- --------- ---------- -------- --------- --------- ---------- ---------
CUMULATIVE PREFERRED STOCK
SJG - Par Value $100 a share
Authorized - 49,104 shares
Outstanding:
Series A, 4.70%- 4,800 shares 0 480 0 0 0 480 0 480
Series B, 8% -19,242 shares 0 1,924 0 0 0 1,924 0 1,924
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Preferred Stock 0 2,404 0 0 0 2,404 0 2,404
----------- --------- ---------- -------- --------- --------- ---------- ---------
L-T-D (less current maturities
& sinking fund requirements) 0 156,784 5,416 0 6,521 168,721 0 168,721
----------- --------- ---------- -------- --------- --------- ---------- ---------
CURRENT LIABILITIES
Notes Payable to Banks 0 76,300 0 0 0 76,300 0 76,300
Current Maturities of L-T-D 0 11,811 959 0 1,762 14,532 0 14,532
Notes Pay - Assoc Companies 9,503 0 0 0 3,520 13,023 [3] (13,023) 0
Accounts Payable 411 39,053 3,944 2,595 373 46,376 [2,8] (1,904) 44,472
Accts Pay to Assoc Companies 80 137 40 12 99 368 [2] (368) 0
Customer Deposits 0 5,707 0 0 0 5,707 0 5,707
Accum. Deferred Income Taxes 2 1,834 0 2 54 1,892 [6,9] (1,892) 0
Environmental Remediation Costs 7 7,025 0 0 0 7,032 0 7,032
Interest Accrued 46 4,965 70 0 111 5,192 [2] (46) 5,146
Dividends Declared 3,860 44 0 0 0 3,904 0 3,904
Other Current Liabilities 236 175 1,445 59 468 2,383 0 2,383
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Current Liabilities 14,145 147,051 6,458 2,668 6,387 176,709 (17,233) 159,476
----------- --------- ---------- -------- --------- --------- ---------- ---------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Post-
Retirement Benefits Reserve 153 8,367 625 40 108 9,293 0 9,293
Accum. Deferred Income Taxes 90 76,016 1,532 (2) 835 78,471 [4,7,9] (10,118) 68,353
Investment Tax Credit 0 6,417 0 0 0 6,417 0 6,417
Deferred Revenues - Net 0 7,315 0 0 0 7,315 0 7,315
Environmental Remediation Costs 0 17,798 0 0 0 17,798 0 17,798
Other 494 6,741 0 0 0 7,235 0 7,235
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total Def Cr & Non-Cur Liab 737 122,654 2,157 38 943 126,529 (10,118) 116,411
----------- --------- ---------- -------- --------- --------- ---------- ---------
Total $172,249 $559,299 $39,437 $3,140 $19,594 $793,719 ($189,410) $604,309
=========== ========= ========== ======== ========= ========= ========== =========
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</TABLE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC.
CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS
BALANCE SHEET - DECEMBER 31, 1995
(In Thousands)
<S> <C> <C>
[1] Common Stock - Subsidiaries $20,181
Premium on Common Stock 86,578
Retained Earnings 55,230
Investment in Subsidiaries $161,989
To eliminate South Jersey Industries, Inc. investment in subsidiaries
which is maintained on the equity method of accounting.
[2] Accounts Payable - Associated Companies $368
Accounts Payable 1,117
Interest Accrued 46
Accounts Receivable - Associated Companies $1,529
Accounts Receivable 2
To eliminate intercompany accounts receivable and payable.
[3] Notes Payable - Associated Companies $13,023
Notes Receivable - Associated Companies $13,023
To eliminate intercompany short-term notes between
South Jersey Industries, Inc. and Subsidiaries
[4] Retained Earnings $84
Accumulated Deferred Income Taxes - Noncurrent Liability $60
Non-Utility Property $144
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 $14
Retained Earnings $14
To eliminate South Jersey Industries, Inc. depreciation on Millville property
gain.
[6] Accumulated Deferred Income Taxes - Current Liability $1,414
Accumulated Deferred Income Taxes - Current Asset $1,414
To net current accumulated DFIT asset and liability
[7] Accumulated Deferred Income Taxes - Noncurrent Liability $10,536
Accumulated Deferred Income Taxes - Noncurrent Asset $10,536
To net noncurrent accumulated DFIT asset and liability
[8] Accounts Payable $787
Accounts Receivable $787
To eliminate intercompany gas receivable and payable between
South Jersey Gas Company and South Jersey Energy Company.
[9] Accumulated Deferred Income Taxes - Current Liability $478
Accumulated Deferred Income Taxes - Noncurrent Liability $478
To net current and noncurrent DFIT liability.
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<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(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 $534 $6,167 $5,078 $1,901 $218 $4,485 $18,383 [A] ($48) $18,335
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
OPERATING EXPENSES:
Operation - Nonutility 155 4,844 3,785 1,956 104 3,720 14,564 0 14,564
Maintenance 0 236 246 36 53 246 817 0 817
Depreciation 0 362 295 182 43 421 1,303 0 1,303
Current Federal Income Taxes (129) 160 208 (141) 26 (122) 2 0 2
Deferred Federal Income Taxes (2) 1 (12) 19 (22) 62 46 0 46
Other Taxes 16 311 219 79 14 140 779 0 779
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Operating Expenses 40 5,914 4,741 2,131 218 4,467 17,511 0 17,511
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Operating Income (Loss) 494 253 337 (230) 0 18 872 (48) 824
OTHER INCOME (LOSS):
Dividends from Subsidiaries 532 0 0 0 0 0 532 [A] (532) 0
Equity in Net Undistributed
Losses of Subsidiaries (392) 0 0 0 0 0 (392) [A] 392 0
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Income (Loss) Before
Interest Charges 634 253 337 (230) 0 18 1,012 (188) 824
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
INTEREST CHARGES:
Long-Term Debt 709 0 0 0 0 0 709 0 709
Short-Term Debt 44 7 0 80 0 150 281 [A] (48) 233
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Interest Charges 753 7 0 80 0 150 990 (48) 942
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Net Income (Loss) Applicable
to Common Stock (119) 246 337 (310) 0 (132) 22 (140) (118)
Retained Earnings (Deficit) at
Beginning of Period (2,938) 644 185 (2,610) (310) (226) (5,255) [A] 2,316 (2,939)
Dividends Declared - Cash 0 446 86 0 0 0 532 [A] (532) 0
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Retained Earnings (Deficit) at
End of Period ($3,057) $444 $436 ($2,920) ($310) ($358) ($5,765) $2,708 ($3,057)
======== ======== ========== ========== ========= ========== ======== ======== ========
-15-
<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 $532
Investments in Subsidiaries 392
Equity in Undistributed Earnings of Subsidiaries $392
Dividends Declared - Cash 532
To eliminate inter-company dividends and undistributed
earnings of subsidiaries.
Investment in Subsidiaries $2,316
Deficit - January 1, 1995 $2,316
To eliminate the deficit of subsidiaries at 1/1/95
previously recorded by R&T Group, Inc. under the equity
method of accounting.
Operating Revenues - Nonutility $48
Interest Expense - Short-Term Debt $48
To eliminate inter-company revenue and interest expense.
-16-
<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1995
(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 $0 $0 $0 $0 $0 $0 $0 $0 $0
Land and Improvements 0 313 53 255 0 0 621 0 621
Building and Improvements 0 278 481 0 0 1 760 0 760
Machinery and Equipment 0 3,098 2,301 1,601 422 2,337 9,759 0 9,759
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total 0 3,689 2,835 1,856 422 2,338 11,140 0 11,140
Accumulated Depreciation 0 (1,482) (1,408) (1,028) (277) (678) (4,873) 0 (4,873)
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Property, Plant &
Equipment - Net 0 2,207 1,427 828 145 1,660 6,267 0 6,267
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
INVESTMENT IN SUBSIDIARIES 7,701 0 0 0 0 0 7,701 [A] (7,701) 0
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
CURRENT ASSETS:
Cash and Cash Equivalents 55 66 12 2 7 167 309 0 309
Accounts Receivable 0 771 57 748 16 729 2,321 0 2,321
Accts Rec - Assoc Companies 89 468 726 27 6 11 1,327 [A] (367) 960
Notes Rec - Assoc Companies 0 50 925 0 113 0 1,088 0 1,088
5,500 0 0 0 0 0 5,500 [B] (5,500) 0
Materials and Supplies 0 14 0 0 0 0 14 0 14
Accum. Deferred Income Taxes 0 41 0 0 1 4 46 0 46
Prepayments & Other 2 48 36 31 3 34 154 0 154
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Current Assets 5,646 1,458 1,756 808 146 945 10,759 (5,867) 4,892
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
LONG-TERM NOTE RECEIVABLE -
ASSOCIATED COMPANIES 0 0 0 0 0 0 0 [B] 5,500 5,500
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
NONCURRENT ASSETS:
Accumulated Def Income Taxes 339 48 49 354 49 51 890 0 890
Goodwill 147 1,086 219 498 0 0 1,950 0 1,950
Other 62 0 0 (1) 27 7 95 0 95
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Noncurrent Assets 548 1,134 268 851 76 58 2,935 0 2,935
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total $13,895 $4,799 $3,451 $2,487 $367 $2,663 $27,662 ($8,068) $19,594
======== ======== ========== ========== ========= ========== ======== ======== ========
-17-
<PAGE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING BALANCE SHEET
AS OF DECEMBER 31, 1995
(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) (3,057) 444 436 (2,920) (310) (358) (5,765) [A] 2,708 (3,057)
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Common Equity 5,743 4,083 3,012 482 282 (158) 13,444 (7,701) 5,743
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
LONG-TERM DEBT:
Notes Payable 9.66% due 2000 5,500 0 0 0 0 0 5,500 0 5,500
Capital Lease Obligation 0 0 0 0 0 1,021 1,021 0 1,021
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Long-Term Debt 5,500 0 0 0 0 1,021 6,521 0 6,521
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
CURRENT LIABILITIES:
Notes Payable - Associated
Company 997 0 0 1,740 0 783 3,520 0 3,520
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 0 387 387 0 387
Accounts Payable 0 205 31 37 4 96 373 0 373
Accounts Payable to Associated
Companies 31 73 55 51 2 254 466 [A] (367) 99
Accum. Deferred Income Taxes 1 17 12 11 1 12 54 0 54
Interest Accrued 111 0 0 0 0 0 111 0 111
Other 52 173 153 (26) 28 88 468 0 468
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Current Liabilities 2,567 468 251 1,813 35 1,620 6,754 (367) 6,387
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
DEF CR & NON-CURRENT LIABILITIES
Pension and Other Postretirement
Benefits Reserve 108 0 0 0 0 0 108 0 108
Accumulated Deferred Income Taxes (23) 248 188 192 50 180 835 0 835
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total Def Cr & Non-Cur Liab 85 248 188 192 50 180 943 0 943
-------- -------- ---------- ---------- --------- ---------- -------- -------- --------
Total $13,895 $4,799 $3,451 $2,487 $367 $2,663 $27,662 ($8,068) $19,594
======== ======== ========== ========== ========= ========== ======== ======== ========
-18-
<PAGE>
</TABLE>
<TABLE>
R & T GROUP, INC. AND SUBSIDIARIES
CONSOLIDATING ADJUSTMENTS & ELIMINATIONS
BALANCE SHEET
AS OF DECEMBER 31, 1995
(In Thousands)
<S> <C> <C>
[A] Accounts Payable - Associated Companies $367
Accounts Receivable - Associated Companies $367
To eliminate inter-company accounts receivable
and accounts payable.
Common Stock - Subsidiaries $8,104
Paid in Capital - Subsidiaries 2,305
Deficit $2,708
Investment in Subsidiaries 7,701
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).
-19-
<PAGE>
</TABLE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATING FINANCIAL STATEMENTS
1. Summary of Significant Accounting Practices:
Consolidation - The consolidating financial statements
include the accounts of South Jersey Industries, Inc. (the
Company) and all of its subsidiaries. Certain intercompany
transactions, amounting to approximately $6.9 million in
1995, 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 12). All other significant intercompany accounts
and transactions have been eliminated.
Estimates and Assumptions - The preparation of financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the amounts reported in the
financial statements and related disclosures and, therefore,
actual results could differ from those estimates.
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 (See Notes 2 & 13).
Utility Revenues - SJG 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 base rates through the Levelized Gas Adjustment Clause
(LGAC). Such collection is made on a forecasted basis, after
a hearing, upon BPU order. Under-recoveries 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 property is charged to the appropriate plant
account.
-20-
<PAGE>
New Accounting Pronouncements - In March 1995, the Financial
Accounting Standards Board (FASB) issued FASB No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", which will become
effective in 1996. This statement requires that long-lived
assets be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an
asset may not be recoverable. The resultant impairment, if
any, would be measured based on the fair value of the asset.
The Company believes that the adoption of FASB No. 121 will
not have a material effect on the Company's results of
operations or financial position. See Note 8 for discussion
of FASB No. 123.
Depreciation and Amortization - Depreciation of 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 1995. 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 is being amortized on a
straight-line basis over a 40-year period. The unamortized
balance amounting to $2.1 million at December 31, 1995, 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 (See Note 5). The Company
adopted FASB No. 109, "Accounting for Income Taxes", 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.
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. Recent Regulatory Actions:
On December 14, 1994, the BPU granted SJG a rate increase of
$12.1 million based on a 9.51 percent overall rate of return
on rate base, which included an 11.5 percent return on
equity. Nearly the entire amount of the increase comes from
the residential, commercial and small industrial customer
-21-
<PAGE>
classes. In addition, SJG is allowed to retain the first
$4.0 million of pre-tax 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,
"Employers' Accounting for Postretirement Benefits Other
Than Pensions", and the continued deferral of all
unrecovered costs. The recovery of these additional costs
is being addressed in SJG's current rate petition filed in
January 1996; and it is expected that recovery will be
included in future base rates (See Note 13). 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 legislation
adopted in 1991. As part of the tariff changes approved,
SJG also implemented tariffs which give large industrial and
commercial customers more opportunities to manage their own
gas supplies. These changes do 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 reduction of $2.3 million (net of
taxes), or $0.22 per share, in 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
LGAC. Customers received the $3.5 million refund through the
1994-1995 LGAC.
3. Segments of Business:
Information about the Company's operations in different
industry segments is presented below (in thousands):
Operating Revenues:
Gas Utility Operations $282,719
Sand Mining Operations 32,249
Other Industries 41,593
--------
Total 356,561
Intersegment Sales (2,753)
--------
Consolidated Operating Revenues $353,808
========
-22-
<PAGE>
Operating Income:
Gas Utility Operations $ 44,716
Sand Mining Operations 4,061
Other Industries 1,229
--------
Total 50,006
Federal Income Taxes (9,374)
General Corporate Expense (1,775)
--------
Total Operating Income $ 38,857
========
Depreciation, Depletion and Amortization:
Gas Utility Operations $ 16,672
Sand Mining Operations 2,630
Other Industries 1,420
--------
Total $ 20,722
========
Property Additions:
Gas Utility Operations $ 40,078
Sand Mining Operations 2,111
Other Industries 1,518
--------
Total $ 43,707
========
Identifiable Assets:
Gas Utility Operations $549,458
Sand Mining Operations 33,797
Other Industries 18,871
--------
Total 602,126
Corporate Assets 17,837
Intersegment Assets (15,654)
--------
Consolidated Identifiable Assets $604,309
========
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 companies.
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.
-23-
<PAGE>
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.
4. Redeemable Cumulative Preferred Stock:
SJG is required to offer annually to purchase 900 and 1,500
shares of its Cumulative Preferred Stock, Series A and
Series B, respectively, at par value thereof, plus accrued
dividends.
The preferred stock dividend requirement of SJG amounting to
approximately $0.2 million for the year 1995 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.
5. 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
1995. The reasons for the differences are as follows (in
thousands):
Tax at Statutory Rate $ 9,520
Increase (Decrease) Resulting from:
Additional Statutory Depletion Allowance (592)
Amortization of Investment Tax Credits (ITC) (390)
Liberalized Depreciation Under Book
Depreciation on Utility Plant 664
Other - Net 172
-------
Federal Income Taxes as reported on the
Statements of Consolidated Income 9,374
-------
Net Federal Income Taxes $ 9,374
=======
-24-
<PAGE>
The provision for Federal Income Taxes is composed of the
following (in thousands):
Current $5,048
------
Deferred:
Excess of Tax Depreciation Over
Book Depreciation - Net 3,912
Deferred Fuel Costs 1,380
Environmental Remediation Costs - Net (556)
Amortization of Gross Receipts Taxes (136)
BPU Order - Flow Back of Excess
Deferred Taxes (39)
Premium on Bond Redemption (61)
Alternative Minimum Tax 0
Other - Net 216
------
Total Deferred 4,716
------
ITC (390)
------
Net Federal Income Taxes $9,374
======
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,
1995 are as follows (in thousands):
Deferred Tax Liabilities:
Tax Depreciation Over Book Depreciation $59,793
Difference Between Book and Tax Basis
of Property 4,756
Deferred Fuel Costs 1,380
Environmental Remediation Costs 4,118
Excess Protected 3,632
Gross Receipts Taxes 1,704
Other 1,851
-------
Total Deferred Tax Liabilities 77,234
-------
Deferred Tax Assets:
Alternative Minimum Tax 5,472
ITC Basis Gross Up 3,409
-------
Total Deferred Tax Assets 8,881
-------
Net Deferred Tax Liability $68,353
=======
-25-
<PAGE>
6. Deferred Debits and Credits - Federal and Other Taxes
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 is being recovered
through rates over an 18-year period which began in December
1994.
The 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, GRAFT legislation was adopted in New Jersey
accelerating tax payments. The legislation also changed the
basis to gas volumes rather than percentage of revenue.
7. Financial Instruments:
Long-Term Debt - The fair value of the Company's long-term
debt, including current maturities, as of December 31, 1995,
is estimated to be $204.6 million (carrying amount $183.3
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 (See Note 13).
Other Financial Instruments - The carrying amount of the
Company's other financial instruments approximate their fair
value at December 31, 1995.
In 1994, the Company 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. Adoption
of this statement did not have a material effect on the
Company's results of operations or financial position.
-26-
<PAGE>
8. 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 10,715,211
New Issues During Year:
Employees' Stock Ownership Plan 6,960
----------
End of Year 10,722,171
==========
The average shares of Common Stock outstanding for 1995 was
10,719,609.
The par value ($1.25 per share) of the stock issued in 1995
has been credited to common stock and the net excess over
par value of approximately $0.1 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, 1995, the Company had
50,560 options outstanding, exercisable at prices from
$17.16 to $24.69 per share. No options were exercised or
granted in 1995. No stock appreciation rights have been
issued under the plan. The stock options outstanding at
December 31, 1995, did not have a material effect on the
earnings per share calculations.
FASB No. 123, "Accounting for Stock-Based Compensation"
which will be adopted by the Company in 1996, includes
certain elective provisions which, if followed, would
significantly change the way the Company measures
compensation under its stock based compensation plans.
However, the Company has elected to continue to measure
compensation using the method prescribed by APB Opinion No.
25, "Accounting for Stock Issued to Employees". FASB No.
123, when adopted will not have a significant effect on the
Company's financial position or results of operations, but
will require expanded disclosure regarding the Company's
stock based compensation plans.
The Company also has a Dividend Reinvestment and Stock
Purchase Plan (DRP) and Employees' Stock Ownership Plan
(ESOP). Shares of common stock offered through the Plan are
currently purchased in the open market. Prior to 1995,
shares offered pursuant to the Plan were purchased directly
from the Company. As of December 31, 1995, 633,121 and
46,086 shares of authorized but unissued Common Stock were
-27-
<PAGE>
reserved for future issuance to the DRP and ESOP,
respectively.
9. Unused Lines of Credit and Compensating Balances:
Unused lines of credit available at December 31, 1995, were
approximately $74.7 million. Borrowings under these lines of
credit are at market rates which approximated 6.0 percent at
December 31, 1995. Demand deposits are maintained with
lending banks on an informal basis and do not constitute
compensating balances.
10. 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 $33.7 million at December 31,
1995.
11. Retirement Benefit Plans:
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. Additionally, the companies pay the entire
cost of the plans. Approximately 75 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. Net periodic pension cost
for 1995, including the amortization of the cost of past
service benefits over a period of approximately 30 years,
included the following components (in thousands):
Service cost - benefits earned
during the period $1,736
Interest cost on projected
benefit obligation 3,183
Actual return on plan assets (3,245)
Net amortization and deferral 730
------
Net periodic pension cost $2,404
======
-28-
<PAGE>
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, 1995.
Actuarial present value of benefit obligations (in
thousands):
Vested benefit obligation $(37,608)
========
Accumulated benefit obligation $(37,899)
========
Projected benefit obligation $(48,198)
Plan assets at fair value 37,831
--------
Projected benefit obligation
in excess of plan assets (10,367)
Unrecognized net loss 4,903
Prior service cost not yet recognized
in net periodic pension cost 2,415
Unrecognized net obligation at January 1 958
--------
Pension liability recognized in
the consolidated balance sheet $ (2,091)
========
Postretirement Benefits Other Than Pensions - The Company
and its subsidiaries provide postretirement health care and
life insurance benefits to certain retired employees.
Effective January 1, 1993, the Company adopted FASB No. 106,
"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 (PAYGO) 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 PAYGO 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 PAYGO costs. The BPU also
approved recovery of previously deferred 1993 and 1994
service costs over a 5-year period beginning in December
1994. Beginning in 1995, an external trust was established
for the purpose of contributing costs recovered from the
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ratepayers as a result of the settlement with the BPU.
Gross contributions to this trust totaled $2.1 million as of
December 31, 1995; however, due to the timing of
contributions to the trust, the return stated in the table
below does not reflect a full year's return. 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 $4.7 million at December 31, 1995,
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 13). Net postretirement
benefit cost for 1995 consisted of the following components
(in thousands):
Service cost - benefits earned during the period $ 878
Actual return on plan assets (26)
Interest cost on accumulated
postretirement benefit obligation 1,320
Amortization of transition obligation 796
------
Subtotal 2,968
Other Adjustments (2,690)
------
Net postretirement benefit costs
as reported in the Consolidated
Financial Statements $ 278
======
A majority of the postretirement benefit cost has been
capitalized and the amount of such cost expensed in 1995 was
$1.7 million.
The following table sets forth the life and health care
plans' funded status at December 31, 1995.
Actuarial present value of accumulated postretirement
benefit obligations (in thousands):
Retirees $(4,606)
Other active plan participants (15,322)
-------
Accumulated postretirement benefit obligation (19,928)
Fair value of plan assets 1,433
-------
Accumulated postretirement benefit
obligation in excess of plan assets (18,495)
Unrecognized net gain (56)
Unrecognized transition obligation 13,540
-------
Postretirement benefit liability recognized
in the consolidated balance sheet $(5,011)
=======
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<PAGE>
During 1995, the Company discovered that data underlying its
assumption for health care costs for 1994 and 1993 was
inappropriate. The Company recalculated the net
postretirement benefit cost and present value of accumulated
postretirement benefit for the years 1994 and 1993 utilizing
assumptions based on appropriate data. The Company has
determined that the impact would not have materially changed
previously reported net income or retained earnings.
Therefore, effects of the above data revision were recorded
in 1995. The above tables have been revised to provide
information based upon the recalculated amounts and are
reconciled to amounts recorded on the books of SJI under the
caption "Other Adjustments".
The assumed health care cost trend rates used in measuring
the accumulated postretirement benefit obligation as of
December 31, 1995 are as follows: Medical and Drug - 7.7
percent for participants age 65 or older and 10.95 percent
for participants under age 65 in 1995, both grading to 5.75
percent in 2008. Dental - 7.97 percent in 1995, grading to
5.75 percent in 2003. If the health care cost trend rate
assumptions were increased by 1 percent, the accumulated
postretirement benefit obligation as of December 31, 1995,
would be increased by $2.7 million. The effect of this
change on the sum of the service cost and interest cost
would be an increase of $0.4 million. The assumed discount
rate used in determining the accumulated postretirement
benefit obligation as of December 31, 1995, was 7.5 percent.
12. Commitments and Contingencies:
Construction Commitments - The estimated cost of
construction and environmental remediation programs of the
Company and its subsidiaries for the year 1996 aggregates
$55.9 million and, in connection therewith, certain
commitments have been made.
Gas Supply Contracts - 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 1998. All of the
transportation and storage service agreements between SJG
and its interstate pipeline suppliers are provided under
Federal Energy Regulatory Commission approved tariffs.
SJG's cumulative obligation for demand charges paid to its
suppliers for all of these services is approximately $4.9
million per month which is recovered on a current basis
through the LGAC.
Levelized Gas Adjustment Clause filed August 31, 1994 - The
Company's LGAC filing for 1994-1995 remains open. The
parties for this proceeding continue to question the
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<PAGE>
Company's gas purchasing practices (See Note 2). The Company
believes that such practices were proper and that it will
prevail in this proceeding.
Pending Litigation - The Company is subject to claims which
arise in the ordinary course of its business and other legal
proceedings. Included therewith, a group of Atlantic City
casinos filed a petition with the BPU on January 16, 1996
alleging overcharges of over $10 million including interest.
Management believes that the ultimate liability with respect
to these actions, including the situation set forth above,
will not materially affect the financial position or results
of operations of the Company.
Environmental Remediation Costs - The Company has incurred
and recorded certain costs for environmental remediation of
sites where 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.
Since the early 1980s, the Company has recorded
environmental remediation costs of $48.4 million, of which
$23.6 million has been expended as of December 31, 1995.
Management's estimate of the remaining liability of
approximately $24.8 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 $2.7 million and $1.5 million were
received in 1995 and 1994, respectively. 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 over
the next three years 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. The total costs to be incurred after this 3-year
period may be substantial.
The major portion of the recorded environmental remediation
costs relate to the remediation of former gas manufacturing
sites of SJG, which has recorded and expended amounts of
$47.3 million and $22.9 million, respectively, through
December 31, 1995. 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 $6.9 million through rates as of December 31,
1995.
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<PAGE>
13. Subsequent Events:
On January 16, 1996, SJG petitioned the BPU for a general
base rate increase of approximately $26.5 million based on a
proposed rate of return of 10.4 percent, including a 13.0
percent return on equity. As part of this petition, SJG is
seeking recovery of its increased expenditures for
construction and the additional cost of providing
postretirement benefits other than pensions. SJG is also
seeking to modify the existing sharing formula for pre-tax
interruptible and off-system margins.
On January 31, 1996, SJG redeemed $1,998,000 of the 8 1/4%
Series due 1996, without premium, and $3,260,000 of the 8
1/4% Series due 1998, with a premium of $22,168.
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<PAGE>
South Jersey Industries, Inc.
Index to Exhibits
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule (Exhibit B)
(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-31-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-ASSETS> 604,309
<TOTAL-OPERATING-REVENUES> 353,808
<NET-INCOME> 17,643
</TABLE>
