Page 1 of 26
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1996
Commission File Number 1-6364
SOUTH JERSEY INDUSTRIES, INC.
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1901645
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(State or other jurisdiction of (I.R.S. Employer's
incorporation of organization) Identification No.)
Number One South Jersey Plaza, Route 54, Folsom, NJ 08037
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(Address of principal executive offices) (Zip Code)
(609) 561-9000
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(Registrant's telephone number, including area code)
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Former name, former address, and former fiscal year, if changed
since last report
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
As of August 13, 1996, there were 10,730,832 shares of the
registrant's common stock outstanding.
Exhibit Index on page 26
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements -- See Pages 3 through 13
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<PAGE>
<TABLE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
- -------------------------------------------------------------------------------
(In Thousands Except for Share Data)
<CAPTION>
Three Months Ended
June 30
-------------------------
1996 1995
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<S> <C> <C>
Operating Revenues:
Utility. . . . . . . . . . . . . . . . . . . . . $53,531 $49,246
Nonutility . . . . . . . . . . . . . . . . . . . 9,720 10,273
----------- -----------
Total Operating Revenues . . . . . . . . . . 63,251 59,519
----------- -----------
Operating Expenses:
Gas Purchased for Resale . . . . . . . . . . . . 30,266 25,888
Operations - Utility . . . . . . . . . . . . . . 10,230 10,187
Nonutility. . . . . . . . . . . . . 9,191 9,625
Maintenance. . . . . . . . . . . . . . . . . . . 1,496 1,564
Depreciation . . . . . . . . . . . . . . . . . . 4,055 3,743
Federal Income Taxes . . . . . . . . . . . . . . (917) (593)
Gross Receipts & Franchise Taxes . . . . . . . . 4,897 4,446
Other Taxes. . . . . . . . . . . . . . . . . . . 843 881
----------- -----------
Total Operating Expenses . . . . . . . . . . 60,061 55,741
----------- -----------
Operating Income . . . . . . . . . . . . . . . . . 3,190 3,778
Interest and Other Charges . . . . . . . . . . . . 5,093 5,269
----------- -----------
Loss from Continuing Operations. . . . . . . . . . (1,903) (1,491)
----------- -----------
Discontinued Operations, Net of Taxes:
Income from Discontinued Operations. . . . . . . 1,135 1,332
----------- -----------
Net Loss Applicable to Common Stock. . . . . . . . (768) (159)
=========== ===========
Average Shares of Common Stock Outstanding . . . . 10,728,294 10,718,712
=========== ===========
Income(Loss) Per Common Share:
Continuing Operations. . . . . . . . . . . . . . ($0.18) ($0.14)
Discontinued Operations. . . . . . . . . . . . . 0.11 0.13
----------- -----------
Loss Per Common Share . . . . . . . . . . . . ($0.07) ($0.01)
=========== ===========
Dividends Declared Per Common Share. . . . . . . . $0.36 $0.36
=========== ===========
See notes to condensed consolidated financial statements.
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
- -------------------------------------------------------------------------------
(In Thousands Except for Share Data)
<CAPTION>
Six Months Ended
June 30
-------------------------
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenues:
Utility. . . . . . . . . . . . . . . . . . . . . $192,876 $141,803
Nonutility . . . . . . . . . . . . . . . . . . . 23,486 20,566
----------- -----------
Total Operating Revenues . . . . . . . . . . 216,362 162,369
----------- -----------
Operating Expenses:
Gas Purchased for Resale . . . . . . . . . . . . 109,031 65,382
Operations - Utility . . . . . . . . . . . . . . 19,848 20,014
Nonutility. . . . . . . . . . . . . 23,707 19,417
Maintenance. . . . . . . . . . . . . . . . . . . 2,954 2,976
Depreciation . . . . . . . . . . . . . . . . . . 8,049 7,408
Federal Income Taxes . . . . . . . . . . . . . . 7,670 6,658
Gross Receipts & Franchise Taxes . . . . . . . . 19,370 16,829
Other Taxes. . . . . . . . . . . . . . . . . . . 1,871 1,830
----------- -----------
Total Operating Expenses . . . . . . . . . . 192,500 140,515
----------- -----------
Operating Income . . . . . . . . . . . . . . . . . 23,863 21,854
Interest and Other Charges . . . . . . . . . . . . 10,075 10,217
----------- -----------
Income from Continuing Operations. . . . . . . . . 13,787 11,637
----------- -----------
Discontinued Operations, Net of Taxes:
Income from Discontinued Operations. . . . . . . 672 1,422
----------- -----------
Net Income Applicable to Common Stock. . . . . . . $14,459 $13,059
=========== ===========
Average Shares of Common Stock Outstanding . . . . 10,726,346 10,718,172
=========== ===========
Earnings Per Common Share:
Continuing Operations. . . . . . . . . . . . . . $1.29 $1.09
Discontinued Operations. . . . . . . . . . . . . 0.06 0.13
----------- -----------
Earnings Per Common Share . . . . . . . . . . $1.35 $1.22
=========== ===========
Dividends Declared Per Common Share. . . . . . . . $0.72 $0.72
=========== ===========
See notes to condensed consolidated financial statements.
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
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(In Thousands)
<CAPTION>
June 30, December 31,
--------------------------------------
1996 1995 1995
- --------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
ASSETS
Property, Plant & Equipment:
Utility Plant, at original cost. . . . . . . . . . . $557,944 $527,806 $542,724
Accumulated Depreciation & Amortization. . . . . . (151,536) (141,003) (145,954)
Nonutility Property & Equipment, at cost . . . . . . 13,975 60,768 60,665
Accumulated Depreciation & Depletion . . . . . . . (5,625) (33,301) (34,736)
----------- ----------- ------------
Property, Plant & Equipment - Net. . . . . . . 414,758 414,270 422,699
----------- ----------- ------------
Investments:
Available-for-Sale Securities. . . . . . . . . . . . 42 830 830
Investment in Limited Liability Company. . . . . . . 1034 0 0
----------- ----------- ------------
Total Investments. . . . . . . . . . . . . . . 1,076 830 830
----------- ----------- ------------
Current Assets:
Cash and Cash Equivalents. . . . . . . . . . . . . . 2,218 960 5,587
Accounts Receivable. . . . . . . . . . . . . . . . . 40,043 35,477 44,909
Unbilled Revenues. . . . . . . . . . . . . . . . . . 3,629 3,418 20,860
Provision for Uncollectibles . . . . . . . . . . . . (1,102) (1,003) (982)
Natural Gas in Storage, average cost . . . . . . . . 11,581 11,549 14,763
Materials and Supplies, average cost . . . . . . . . 3,935 11,811 12,017
Assets Held for Disposal . . . . . . . . . . . . . . 28,811 0 0
Prepaid Gross Receipts & Franchise Taxes . . . . . . 13,217 15,518 3,649
Prepayments and Other Current Assets . . . . . . . . 3,121 3,885 3,054
----------- ----------- ------------
Total Current Assets . . . . . . . . . . . . . 105,453 81,615 103,857
----------- ----------- ------------
Accounts Receivable - Merchandise. . . . . . . . . . . 2,296 2,377 2,305
----------- ----------- ------------
Deferred Debits:
Gross Receipts and Franchise Taxes . . . . . . . . . 4,668 5,068 4,868
Environmental Remediation Costs:
Expended - Net . . . . . . . . . . . . . . . . . . 13,516 11,244 11,773
Liability for Future Expenditures. . . . . . . . . 23,099 17,065 24,823
Income Taxes - Flowthrough Depreciation. . . . . . . 15,466 16,444 15,955
Deferred Postretirement Benefit Costs. . . . . . . . 5,000 7,721 4,726
Other. . . . . . . . . . . . . . . . . . . . . . . . 9,162 10,348 12,473
----------- ----------- ------------
Total Deferred Debits. . . . . . . . . . . . . 70,911 67,890 74,618
----------- ----------- ------------
Total. . . . . . . . . . . . . . . . . . $594,494 $566,982 $604,309
=========== =========== ============
See notes to condensed consolidated financial statements.
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
- -----------------------------------------------------------------------------------------------
(In Thousands)
<CAPTION>
June 30, December 31,
--------------------------------------
1996 1995 1995
- --------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
CAPITALIZATION AND LIABILITIES
Common Equity:
Common Stock . . . . . . . . . . . . . . . . . . . . $13,413 $13,400 $13,403
Premium on Common Stock. . . . . . . . . . . . . . . 110,358 110,152 110,189
Retained Earnings. . . . . . . . . . . . . . . . . . 13,413 13,400 33,705
----------- ----------- ------------
Total Common Equity. . . . . . . . . . . . . . 164,212 160,391 157,297
----------- ----------- ------------
Redeemable Cumulative Preferred Stock:
South Jersey Gas Company, Par Value
$100 a share:
Authorized - 48,204, 49,104
and 49,104 shares
Outstanding -
Series A, 4.70% -- 3,900, 4,800
and 4,800 shares. . . . . . . 390 480 480
Series B, 8.00% -- 19,242 shares . . . . . . . . 1,924 1,924 1,924
----------- ----------- ------------
Total Preferred Stock. . . . . . . . . . . . . 2,314 2,404 2,404
----------- ----------- ------------
Long-Term Debt . . . . . . . . . . . . . . . . . . . . 150,733 178,390 168,721
----------- ----------- ------------
Current Liabilities:
Notes Payable to Banks . . . . . . . . . . . . . . . 92,775 41,850 76,300
Current Maturities of Long-Term Debt . . . . . . . . 20,276 9,393 14,532
Accounts Payable . . . . . . . . . . . . . . . . . . 25,543 26,765 44,472
Customer Deposits. . . . . . . . . . . . . . . . . . 5,545 5,733 5,707
Environmental Remediation Costs. . . . . . . . . . . 6,999 6,933 7,032
Interest Accrued and
Other Current Liabilities . . . . . . . . . . . . . 11,990 11,680 11,433
----------- ----------- ------------
Total Current Liabilities. . . . . . . . . . . 163,128 102,354 159,476
----------- ----------- ------------
Deferred Credits and Other Non-Current Liabilities:
Pension and Other Postretirement Benefits. . . . . . 9,487 11,649 9,293
Accumulated Deferred Income Taxes - Net. . . . . . . 69,217 66,004 68,353
Investment Tax Credits . . . . . . . . . . . . . . . 6,222 6,612 6,417
Deferred Revenues. . . . . . . . . . . . . . . . . . 6,636 21,672 7,315
Environmental Remediation Costs. . . . . . . . . . . 16,103 10,151 17,798
Other. . . . . . . . . . . . . . . . . . . . . . . . 6,442 7,355 7,235
----------- ----------- ------------
Total Deferred Credits
and Other Non-Current Liabilities. . . . . . 114,107 123,443 116,411
----------- ----------- ------------
Commitments and Contingencies (Note 5)
Total. . . . . . . . . . . . . . . . . . $594,494 $566,982 $604,309
=========== =========== ============
See notes to condensed consolidated financial statements.
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS (UNAUDITED)
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(In Thousands)
<CAPTION>
Six Months Ended
June 30,
-------------------
1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income Applicable to Common Stock. . . . . . . . . . . 14,459 13,059
Adjustments to Reconcile Net Income to Cash Flows:
Depreciation, Depletion and Amortization . . . . . . . . 9,592 10,162
Provision for Losses on Accounts Receivable. . . . . . . 665 467
Revenues and Fuel Costs Deferred - Net . . . . . . . . . (679) 8,834
Deferred and Non-Current Federal Income Taxes
and Credits - Net . . . . . . . . . . . . . . . . . . . 517 1,912
Environmental Remediation Costs - Net. . . . . . . . . . (1,747) 2,085
Write-Down of Impaired Asset . . . . . . . . . . . . . . 1,291 0
Changes in:
Accounts Receivable. . . . . . . . . . . . . . . . . . 16,498 11,017
Inventories. . . . . . . . . . . . . . . . . . . . . . 3,103 5,717
Prepayments and Other Current Assets . . . . . . . . . (1,371) (977)
Gross Receipts & Franchise Taxes . . . . . . . . . . . (9,568) (15,714)
Accounts Payable and Other Accrued Liabilities . . . . (14,876) (8,983)
Assets Held for Disposal . . . . . . . . . . . . . . . (701) 0
Other - Net. . . . . . . . . . . . . . . . . . . . . . . 1,001 1,358
-------- --------
Net Cash Provided by Operating Activities . . . . . . . . . . 18,184 28,937
-------- --------
Cash Flows from Investing Activities:
Investment in Limited Liability Company. . . . . . . . . . (1,034) 0
Proceeds from Sale of Available-for-Sale Securities. . . . 795 0
Capital Expenditures, Cost of Removal and Salvage. . . . . (17,590) (21,301)
-------- --------
Net Cash Used in Investing Activities . . . . . . . . . . . . (17,829) (21,301)
-------- --------
Cash Flows from Financing Activities:
Proceeds from Sale of Long-Term Debt . . . . . . . . . . . 0 30,000
Net Borrowings from (Repayments of) Lines of Credit. . . . 16,475 (38,350)
Principal Repayments of Long-Term Debt . . . . . . . . . . (12,565) (4,804)
Dividends on Common Stock. . . . . . . . . . . . . . . . . (7,723) (7,717)
Repurchase of Preferred Stock. . . . . . . . . . . . . . . (90) (90)
-------- --------
Net Cash Used in Financing Activities . . . . . . . . . . . . (3,724) (20,884)
-------- --------
Net Decrease in Cash and Cash Equivalents . . . . . . . . . . (3,369) (13,248)
Cash and Cash Equivalents at Beginning of Period. . . . . . . 5,587 14,208
-------- --------
Cash and Cash Equivalents at End of Period. . . . . . . . . . $2,218 $960
======== ========
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
During 1996 and 1995, a capital lease obligation of $321 and $46 was
incurred by R & T Group, Inc. in connection with its Master Lease Agreement
for various items of construction equipment.
See notes to condensed consolidated financial statements.
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</TABLE>
<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1.
The condensed consolidated financial statements include
the accounts of South Jersey Industries, Inc. (the Company
or SJI) and all of its subsidiaries. Certain intercompany
transactions, amounting to approximately $1.6 million and
$1.9 million for the three-month periods and $2.6 million and
$3.7 million for the six-month periods ended June 30, 1996
and 1995, respectively, 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 Notes 5 & 6). All other
significant intercompany accounts and transactions have been
eliminated. Certain reclassifications have been made of
previously reported amounts to conform with classifications
used in the current year. In the opinion of management, the
condensed consolidated financial statements reflect all
adjustments (which include only normal recurring adjustments
and the adjustments described below) necessary for a fair
presentation of the financial position and operating results
of the Company at the dates and for the periods presented.
The businesses of the Company are subject to seasonal
fluctuations and, accordingly, this interim financial
information should not be considered a basis for estimating
the results of operations for the full year.
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.
On July 10, 1996, the Company entered into a non-binding
letter of intent to sell its sand mining and processing
subsidiary, The Morie Company, Inc. (Morie). At this time,
negotiations for the sale are in the initial stages and no
binding agreement is in place. The Company is reporting
Morie as a discontinued operation in accordance with
Accounting Principles Board (APB) Opinion No. 30, "Reporting
the Results of Operations - Reporting the Results of Disposal
of a Segment of a Business and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions".
Accordingly, the condensed consolidated financial statements
have been reclassified to report separately the operating
results and net assets of Morie. The Company's prior year
operating results have been reclassified to reflect
continuing operations.
The assets held for sale, net of applicable liabilities,
have been reclassified as "Assets Held for Disposal" in the
current asset section of the condensed consolidated balance
sheet. These net assets consist primarily of net working
capital and net property, plant and equipment. Also, the
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Note 1. (Continued)
long-term debt of Energy & Minerals, Inc. (EMI), Morie's
parent company, and the senior notes of R & T Group, Inc.
(R & T) have been reclassified to current debt in the
condensed consolidated balance sheet. EMI's debt is
collateralized by Morie's assets to be sold. R & T's notes,
by contract, are required to be paid off when Morie is sold.
Operating results of the discontinued operation were as
follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------- ------- ------- -------
Total Revenues $ 9,327 $ 9,416 $15,855 $17,108
------- ------- ------- -------
Income before Taxes 1,727 1,895 1,034 2,093
Income Taxes 592 563 362 671
------- ------- ------- -------
Income from
Operations $ 1,135 $ 1,332 $ 672 $ 1,422
======= ======= ======= =======
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". The Company adopted this statement in 1996. There was
no cumulative effect of its adoption on the financial
statements of the Company.
The Company is exploring the potential fair market value
of its utility construction and environmental remediation
subsidiary, R & T Group, Inc. (R & T). At this time, no
definite plan for disposal is in place. Management may
develop a formal plan if the results of this process produce
a potential purchase at a price considered adequate by the
management and Board of Directors of the Company. The
Company is required by the adoption of FASB 121 to review the
carrying value of its assets. As a result, R & T wrote
down a portion of the value of goodwill associated with the
original purchase by SJI. The goodwill was established based
on the market conditions at the time of purchase. The write
down amounted to $1.3 million, and is included in the
Company's condensed consolidated statement of income as a
component of operation expense, nonutility for the six-month
period ended June 30, 1996. If it is determined that a sale
is feasible, the resulting gain or loss from such sale will
be recorded at that time. R & T's results of operations are
not significant to the Company's results of operations.
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Note 2.
The Company has 20,000,000 shares of Common Stock
authorized of which the following shares were issued and
outstanding:
1996 1995
---- ----
Beginning Balance January 1, 10,722,171 10,715,211
Issued during period:
Employees' Stock Ownership Plan 4,601 5,025
Stock Option & Stock
Appreciation Rights Plan 4,060 0
---------- ----------
Ending Balance June 30, 10,730,832 10,720,236
========== ==========
The par value ($1.25 share) of the stock issued in 1996
and 1995 has been credited to Common Stock and the net excess
over par value of $169,114 and $70,597 received for such
stock for the six months ended June 30, 1996 and 1995,
respectively, 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 June 30, 1996 and 1995, the Company had
46,500 and 50,560 options outstanding, respectively,
exercisable at prices from $17.16 to $24.69 per share.
During the six-month period ended June 30, 1996, 4,060
options were exercised at a price of $17.89 per share. No
options were exercised in 1995. No options were granted in
1996 or 1995. No stock appreciation rights have been issued
under the plan. The stock options outstanding at June 30,
1996 and 1995 did not have a material effect on the earnings
per share calculations.
Effective January 1, 1996, the Company adopted FASB
No. 123, "Accounting for Stock-Based Compensation". FASB No.
123 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". Accordingly,
there was no impact of the adoption of FASB No. 123 on the
Company's financial position or results of operations.
The Company also has a Dividend Reinvestment and Stock
Purchase Plan and an Employees' Stock Ownership Plan. Shares
of common stock offered through the Plan are currently
purchased in the open market.
- 10 -
<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Note 3.
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. At the consolidated level, however, there were
no restrictions on the Company's aggregate equity in its
subsidiaries' retained earnings which totaled approximately
$40.4 million at June 30, 1996.
Note 4.
The Company and its subsidiaries provide postretirement
health care and life insurance benefits to certain retired
employees. The aggregate amounts paid during the three-month
and six-month periods ended June 30, 1996 and 1995 were not
material.
In 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 (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 Board of
Public Utilities (BPU) also approved recovery of previously
deferred 1993 and 1994 service costs over a 5-year period
beginning December 1994. Beginning in 1995, an external
trust was established for the purpose of contributing costs
recovered from the ratepayers as a result of the settlement
with the BPU. Gross contributions to this trust totaled
$3.2 million as of June 30, 1996. 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 $5.0 million at June 30, 1996, is being
addressed in SJG's current base rate case proceeding and it
is expected that the recovery will be included in base rates.
Note 5.
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
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<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Note 5. (Continued)
service agreements between SJG and its interstate pipeline
suppliers are provided under Federal Energy Regulatory
Commission (FERC) approved tariffs. SJG's cumulative
obligation for demand charges paid to its suppliers for all
of these services is approximately $5.0 million per month
which is recovered on a current basis through the Levelized
Gas Adjustment Clause (LGAC).
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 $10.0 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 of results
of operations of the Company.
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 1980's, the Company has recorded
environmental remediation costs of $49.6 million, of which
$26.5 million has been expended as of June 30, 1996.
Management's estimate of the remaining liability of
approximately $23.1 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 $4.2 million were received through
June 30, 1996. These proceeds were first used to offset
legal fees incurred in connection with such recovery 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 be recorded. The total
costs to be incurred after this 3-year period may be
substantial.
- 12 -
<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(CONTINUED)
Note 5. (Continued)
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 $48.7 million and $25.7 million, respectively,
through June 30, 1996. 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 $8.0 million through rates as of June 30,
1996.
Note 6.
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 April 10, 1996, SJG received approval from the BPU to
increase its rates by approximately $8.0 million, or 2.9%,
through its LGAC. The primary reason for the LGAC increase
was higher natural gas costs incurred by the Company during
November and December 1995 due to weather that was colder
than normal. The BPU also approved an agreement among the
parties to the case that the renegotiations of its gas supply
agreements were reasonable and that the parties will not
challenge the reasonableness or prudence of the agreements as
originally made or as renegotiated.
On June 20, 1996, SJG received approval from the BPU to
recover environmental remediation costs incurred during the
two-year period ended July 31, 1995 totaling $1.5 million,
net of insurance recoveries (See Note 5).
Note 7.
On January 31, 1996, SJG redeemed $1,998,000 of its
8 1/4% Series First Mortgage Bonds due 1996, without premium,
and $3,260,000 of its 8 1/4% Series First Mortgage Bonds due
1998, with a premium of $22,168.
On April 1, 1996, SJG redeemed $2,666,668 of its 9.2%
Series First Mortgage Bonds due 1998, with a premium of
$62,874.
- 13 -
<PAGE>
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Overview
South Jersey Industries has direct ownership of four wholly
owned subsidiaries, South Jersey Gas Company (SJG), Energy &
Minerals, Inc. (EMI), South Jersey Energy Company (SJE) and R & T
Group, Inc. (R & T). SJG is a natural gas distribution company
serving 250,721 customers at June 30, 1996 compared to 244,955
customers at June 30, 1995. EMI is a holding company engaged in
the mining and processing of industrial and commercial sands
through its principal subsidiary, The Morie Company, Inc. (Morie)
and the wholesale marketing of gas through its energy service
subsidiary, South Jersey Fuel, Inc. (SJF). SJE provides services
for the acquisition and transportation of natural gas for
industrial and commercial users. R & T companies are engaged in
utility construction and environmental remediation through five
operating subsidiaries.
SJI has reached an agreement in principle for the sale of
Morie. The accompanying financial statements, in accordance with
Accounting Principles Board Opinion No. 30, report assets and
results of operations under the classification of discontinued
operations. Should such sale be consummated, the proceeds to be
received are expected to exceed the net carrying value of the
assets to be sold.
The Company is exploring the potential fair market value of
R & T. At this time, no definite plan for disposal is in place.
Management may develop a formal plan if the results of this
process produce a potential purchase at a price considered
adequate to the management and Board of Directors of the Company.
The Company is required by the adoption of FASB 121 to review the
carrying value of its assets. As a result, R & T wrote down a
portion of the value of goodwill associated with the original
purchase by SJI in the first quarter of 1996. The goodwill was
established based on the market conditions at the time SJI
purchased R & T. The write down amounted to $1.3 million and is
included in the Company's condensed consolidated statement of
income as a component of operation expense, nonutility for the
six-month period ended June 30, 1996. If it is determined that a
sale is feasible, the resulting gain or loss from such sale will
be recorded at that time. The write down of the carrying value of
assets did not impact cash flow. R & T's results of operations
are not significant to the Company's results of operations.
SJG comprised the following percentages of SJI's assets and
revenues:
1996 1995
Assets at June 30 94% 93%
Revenues:
Three month period ended June 30 85% 83%
Six month period ended June 30 90% 88%
- 14 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Overview (Continued)
Seasonal aspects affect reported revenues, operating expenses
and cash flows of SJI's subsidiaries. Utility operations are
usually greater during the first and fourth quarters of the year,
while sand mining operations are usually greater during the second
and third quarters of the year.
Competition
SJG franchises are non-exclusive and none of its service
territory is presently served by any other natural gas public
utility. Competition does exist, however, from suppliers of oil,
propane and electricity for residential, commercial and industrial
users. Also, the market for natural gas services is becoming
increasingly subject to competition due to the unbundling of
industry services, as well as policies by federal and state
agencies designed to promote competition and reduce regulation.
SJG believes it has been a leader in addressing the changing
marketplace and maintains its focus on being a lower-cost provider
of natural gas in retail distribution of gas and energy services.
At the same time, SJI has aimed at increasing its operations in
the area of non-jurisdictional gas sales in what has proved to be
a highly competitive marketplace. SJG, SJE and SJF are each
active participants in arranging energy services. The SJI
companies will continue to develop creative initiatives and
propose meaningful regulatory and tax reforms designed to benefit
customers and its shareholders.
Morie competes with a number of other sand and gravel mining
companies in the eastern part of the United States. Competition,
transportation costs and the economic conditions affecting its
customers are each matters that impact Morie's financial results.
Accordingly, Morie, through its top quality product lines, cost
controls and strategic planning, maintains its ability to compete
effectively in this marketplace. In addition, Morie continues to
develop new quality commercial and recreational product lines
designed to generate additional revenues.
Energy Adjustment Clauses
SJG's tariff structure includes a Levelized Gas Adjustment
Clause (LGAC), a Temperature Adjustment Clause (TAC) and a
Remediation Adjustment Clause (RAC). Such clauses are designed
to: permit adjustments for changes in gas supply costs; reduce the
impact of extreme fluctuations in temperatures on SJG and its
customers; and recover costs incurred in the remediation of former
gas manufacturing plants over seven-year periods. Under the
clauses, if actual costs differ from the costs recovered or if
temperatures are below or above the standards as determined in the
rate tariff structure, amounts are deferred for pass-through to
the customers, normally over projected twelve-month periods, as
approved by the Board of Public Utilities (BPU). LGAC and RAC
adjustments do not directly affect earnings because such costs are
- 15 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Energy Adjustment Clauses (Continued)
adjusted to match corresponding amounts recovered through
revenues. TAC adjustments may affect revenue and income since
extremely cold weather can generate credits to customers, while
extremely warm weather during the winter season can result in
additional billings to customers.
Results of Operations:
Operating Revenues - Utility
Revenues increased $4.3 million for the three month period
ended June 30, 1996 compared to the same period in 1995 and
increased $51.1 million for the six month period ended June 30,
1996 compared to the corresponding period in 1995. The sales
volume changes that underlie these changes for the three and six
month periods ended June 30 are as follows (in dekatherms [dt]):
Period Ended June 30,
---------------------------------
Three Months Six Months
1996 vs. 1995 1996 vs. 1995
------------- -------------
Firm Sales:
Residential 529,678 2,538,139
Commercial 196,866 1,241,868
Other (13,644) 293,124
Interruptible 157,312 (113,367)
Transportation (332,746) (1,422,915)
Nonjurisdictional Sales (1,234,045) 2,191,139
---------- ----------
(696,579) 4,727,988
========== ==========
Although gas sales volume decreased in the three-month period
ended June 30, 1996, revenues increased for that period
principally due to the effect of an LGAC increase in April 1996
and the impact of higher commodity costs as described below.
Utility revenue changes also reflect the impact of commodity
prices for purchased gas as implemented through the LGAC. Average
commodity prices in 1996 and 1995 were as follows (per dt):
1996 1995
Three month period ended June 30 $2.58 $1.81
Six month period ended June 30 $2.88 $1.74
- 16 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Operating Revenues - Utility (Continued)
The increases in firm volumes sold was principally due to
weather which, for the three and six month periods ended June 30,
1996, were 17.4% and 14.8% colder than in 1995, respectively.
Operating Revenues - Nonutility
Revenues decreased by $0.5 million in the second quarter of
1996 compared to the same period in 1995 principally due to lower
sales by R & T, partially offset by increased sales by SJE.
Revenues increased by $2.9 million for the six months ended June
30, 1996 compared to the same period in 1995. This increase
reflects increased energy related sales by SJF, partially offset
by lower R & T sales.
Gas Purchased for Resale
Gas supply costs increased approximately $4.4 and $43.6,
respectively, for the three and six months ended June 30, 1996
over the same periods in 1995. The principal causes for such
increases are based on price and volume changes as described under
"Operating Revenues - Utility".
SJG is responsible for securing and maintaining its own gas
supplies from producers and other suppliers which are necessary to
provide base volumes necessary to serve its customers and provide
other services in the conduct of its business.
SJG has entered into long-term contracts for the supply of
natural gas, firm transportation, and long-term firm gas storage
service. The earliest expiration of any of these contracts is
1998. All of the transportation and storage service agreements
between SJG and its interstate pipeline suppliers are provided
under tariffs approved by the Federal Energy Regulatory
Commission. SJG's cumulative obligations for demand charges for
all of these services is approximately $5.0 million per month
which is recovered on a current basis through its LGAC.
Certain supply agreements are entered into with third parties
under which SJG has no responsibility except to store natural gas
and permit withdrawals by such third parties. A fee is charged
for this service by SJG; however, SJG may, at its option, withdraw
gas for its own use at pre-defined amounts and unit rates.
Operations - Utility
A summary of net changes in operation expense for the three
and six month periods ended June 30, 1996 compared to the same
periods in 1995 is as follows (in thousands):
- 17 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Operations - Utility (Continued)
Three Months Six Months
1996 vs. 1995 1996 vs. 1995
------------- -------------
Other Production Expense $ 9 $ 24
Transmission 4 9
Distribution 42 92
Customer Accounts and Services 184 151
Sales (33) (73)
Administration and General (104) (309)
Other (59) (60)
------ ------
$ 43 $(166)
====== ======
The 1996 changes principally reflect the impact of decreased
advertising, salary and salary related costs and increases in
delinquencies and outside consulting costs.
Other Operating Expenses
A summary of principal changes in other expenses for the
three and the six month periods ended June 30, 1996 compared to
the same periods in 1995 is as follows (in thousands):
Three Months Six Months
1996 vs. 1995 1996 vs. 1995
------------- -------------
Operations - Nonutility $ (434) $4,290
Depreciation and Depletion 312 641
Federal Income Taxes (324) 1,012
Gross Receipts and
Franchise Taxes 451 2,541
Nonutility operations expense decreased in the three month
period ended June 30, 1996 due to lower product costs associated
with lower sales by R & T, partially offset by the impact of
increased product sales by SJE. Nonutility operations expense
increased in the six month period ended June 30, 1996 due to
higher product sales by SJF and SJE and the effect of the write
down of R & T's goodwill (see "Overview").
Depreciation and Depletion is higher principally due to
increased investment in property, plant and equipment by SJG.
Federal Income Tax changes reflect the impact of changes in
net income.
The changes in Gross Receipts and Franchise Taxes are due to
changes in volumes of gas sold, which are subject to such taxes.
- 18 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Interest and Other Charges
Interest charges decreased by $176,000 and $142,000 for the
three and six month periods ended June 30, 1996 compared to the
same periods in 1995, respectively. The decreases are principally
due to lower levels of long-term debt outstanding and lower levels
of LGAC overcollections, partially offset by the effects of higher
levels of short-term debt outstanding and higher short-term
interest rates.
Income from Discontinued Operations
As discussed under the caption "Overview", Morie's operating
results are reported as discontinued operations. Morie's net
income decreased for the three and six month periods ended June
30, 1996 compared to the same periods in 1995 by approximately
$209,500 and $777,000, respectively. Morie attributes such
decrease principally to adverse weather conditions experienced in
1996.
Net Income
A summary of changes in net income (loss) and average shares
of common stock outstanding for the three and six month periods
ended June 30, 1996 compared to the same periods in 1995, is as
follows:
Three Months Six Months
1996 vs. 1995 1996 vs. 1995
------------- -------------
Net Income Increase (Decrease)
(in thousands) $ (609) $1,400
====== ======
Average Shares of Common
Stock Outstanding 9,582 8,174
====== ======
The details affecting net income are discussed under the
appropriate captions above. The decrease in net income for the
three month period ended June 30, 1996 is principally due to
increases in utility expense and lower margins from gas sales
other than firm sales. The increase in net income for the six
month period ended June 30, 1996 is principally due to increased
utility revenues from firm sales, partially offset by decreases in
net income from nonutility operations.
Liquidity
The changes in cash flows from operating activities for the
six month period ended June 30, 1996 compared to the same period
in 1995 is as follows (in thousands):
- 19 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Liquidity (Continued)
Six Months
1996 vs. 1995
-------------
Increases/(Decreases)
Net Income $ 1,400
Depreciation, Depletion and Amortization (570)
Write Down of Impaired Assets 1,291
Provision for Losses on Accounts Receivable 198
Revenues and Fuel Costs Deferred (9,513)
Deferred and Non-Current Federal Income Taxes (1,395)
Environmental Remediation Costs - Net (3,832)
Accounts Receivable 5,481
Inventories (2,614)
Prepayments and Other Current Assets (394)
Gross Receipts & Franchise Taxes 6,146
Accounts Payable and Other Accrued Liabilities (5,893)
Assets Held for Disposal (701)
Other - Net (357)
--------
$(10,753)
========
Depreciation, depletion and amortization are non-cash charges
to income and therefore do not impact cash flow.
Increases in Revenues and Fuel Costs Deferred reflect the
impact of overcollection of fuel costs while decreases reflect the
impact of payments or credits to customers for amounts previously
overcollected and the undercollection of fuel costs resulting from
increases in natural gas costs.
Increases in Deferred and Non-Current Federal Income Taxes
reflect the impact of the excess of taxes accrued over amounts
paid while decreases reflect the impact of taxes paid in excess of
amounts accrued.
Changes in Environmental Remediation Costs - Net represent
the impact of the difference between amounts collected under the
RAC clause and through insurance recoveries, and remediation
expenditures.
Changes in Accounts Receivable balances are generally weather
related with such balances being higher during the winter months
and lower in other months. Increases generate cash flows when
collected in subsequent periods.
Changes in inventory levels reflect the impact of seasonal
requirements and price changes. SJG gas inventory levels are
usually built up in anticipation of winter season requirements
while Morie inventory levels are usually built up during the
winter months in order to service customers during the months when
sand mining operations are curtailed. Increases in inventory
accounts reflect the outlays for inventory build up while
decreases reflect the recovery of such costs through sales.
- 20 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Liquidity (Continued)
Changes in Gross Receipts & Franchise Taxes reflect the
impact of the excess of taxes paid over taxes accrued. However,
there are significant timing differences in cash flows during the
year since SJG must pay the full year's tax on April 1 of each
year and amortize any prepaid tax over the remainder of the year,
generally on the basis of gas volumes sold. SJG uses short-term
borrowings to make such tax payments and, accordingly, this
results in a temporary increase in the level of short-term debt.
The carrying costs for such timing differences are recognized in
base utility rates.
Changes in Accounts Payable and Other Current Liabilities
reflect the impact of timing differences between when costs are
incurred and accrued and when they are paid. Accounts Payable
balances are generally higher during the first and last quarters
of the year principally reflecting the impact of increased gas
purchases related to winter sales. Accounts Payable balances and
cash flows are also influenced by construction expenditures.
Decreases in Accounts Payable balances represent cash outlays
towards amounts previously accrued.
Cash flow from nonutility operations is generally retained in
the nonutility companies with amounts in excess of cash
requirements being passed up to the company either as dividends or
as temporary short-term loans. Such activities are not considered
material in relation to the financial statements taken as a whole.
Working capital is expected to increase in 1996 should the
sale of Morie be consummated.
Short-Term Lines of Credit
Short-term bank lines of credit aggregate $155.0 million of
which $62.225 million was unused at June 30, 1996. The credit
lines are uncommitted and unsecured, with borrowings thereunder
being effected for various terms of less than one year at interest
rates below the prime rate of interest, in effect at the time of
borrowing.
Regulatory Assets
The adoption of FASB No. 109, "Accounting for Income Taxes"
in 1993 primarily resulted in the creation of a regulatory asset
and a deferred income tax liability. As the amortization of the
asset occurs, it will be recovered through rates over an 18-year
period. Also, FASB No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", adopted by the
company in 1993, requires an accrual basis of accounting for
retiree benefit payments during the years of employment. The
actuarially computed unfunded transition obligation, as measured
in accordance with the statement, is estimated at $15.9 million.
The company has elected to recognize the unfunded transition
obligation over a 20-year period which began in 1993. The
majority of the postretirement benefit costs apply to SJG, which
- 21 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Regulatory Assets (Continued)
had previously recovered these costs through rates on a pay-as-
you-go basis. The BPU order of December 1994 provides for partial
recovery of costs associated with FASB No. 106 and prescribes
continued deferral of unrecovered costs amounting to $5.0 million
at June 30, 1996. Any remaining balance is being addressed in
SJG's pending rate case (See Note 4). Also, beginning in 1995, an
external trust was established for the purpose of contributing
costs recovered from ratepayers resulting from the settlement with
the BPU. Gross contributions to the trust were $3.2 million as of
June 30, 1996. It is estimated that an additional $1.0 million
will be contributed to the trust in 1996.
Since the early 1980's, the company has recorded
environmental remediation costs of $49.6 million, of which $26.5
million has been expended as of June 30, 1996. The remaining
liability of approximately $23.1 million is reflected in the
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. SJG has realized insurance
recoveries of $4.2 million which were offset against legal costs
and deferred 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; however, the total costs to be incurred 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 amount of $48.7 million and $25.7 million,
respectively, through June 30, 1996. SJG has established a
regulatory asset for these costs and is recovering such costs over
seven-year amortization periods, as authorized by the BPU. SJG
has recovered $8.0 million through rates as of June 30, 1996.
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 its charges were made in
accordance with its approved tariff, and, as such, it will prevail
in this litigation.
Capital Resources
The company has a continuing need for cash resources and
capital, primarily to invest in new and replacement equipment and
facilities for its utility subsidiary. Total construction
expenditures for 1996 are estimated at $48.9 million and the
company expended approximately $17.6 million for the six months
ended June 30, 1996. Construction expenditures for 1997 and 1998
are estimated at approximately $53.5 million and $50.3 million,
respectively. Such investments are expected to be funded from
several sources, including cash generated by operations, temporary
use of short-term debt, sale of first mortgage bonds, sale of
- 22 -
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition
Capital Resources (Continued)
common stock and capital leases. Part of the proceeds from the
expected sale of Morie will be used to pay off the balance of
senior notes of EMI and R & T and an EMI bank loan. The balance
of such outstanding debt amounted to approximately $11.0 million
at June 30, 1996, which amount is included in the balance sheet
under the caption "Current Maturities of Long-Term Debt".
On January 16, 1996, SJG petitioned the BPU for a general
base rate increase of approximately $26.5 million based on an
overall rate of return of 10.4 percent and 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 (see
Note 6).
On January 31, 1996, SJG redeemed a total of $5,258,000 of
its 8 1/4% Series First Mortgage Bonds maturing in 1996 and 1998
(see Note 7). On April 1, 1996, SJG redeemed the remaining
balance of its 9.20% Series First Mortgage Bonds due 1998,
amounting to $2,667,000.
In January 1995, SJG issued $30.0 million of 8.6% Debenture
Notes maturing February 1, 2010.
Summary
The company is confident it will have sufficient cash flow to
meet its operating, capital and dividend needs and is taking and
will take such actions necessary to employ its resources
carefully.
- 23 -
<PAGE>
PART II -- OTHER INFORMATION
Item l. Legal Proceedings
Information required by this Item is incorporated by
reference to Part I, Item 1, Note 5, on pages 10 and 11
regarding contingent liabilities related to remediation and
clean-up of certain sites which included manufactured gas
operations.
Item 5. Other Information
The Company continues to explore the potential fair
market value of its utility construction and environmental
remediation subsidiary, R & T Group, Inc. and, at this time,
no plan for disposal is in place. Management may develop a
formal plan if the results of this process produce a
potential purchase at a price considered adequate to the
management and Board of Directors of the Company (See Note 1,
page 9). SJI has reached an agreement in principle for the
sale of Morie. See Note 1 on pages 8 and 9 and Item 2.,
Management's Discussion and Analysis of Results of Operations
and Financial Condition, including: "Overview", page 14;
"Liquidity", page 21; and "Capital Resources, page 23.
Item 6. Exhibits and Reports on Form 8-K
b. No reports on Form 8-K were filed during the quarter for
which this report is filed.
- 24 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
SOUTH JERSEY INDUSTRIES, INC.
(Registrant)
Dated: August 13, 1996 By: /s/ Gerald S. Levitt
-------------------------------
Gerald S. Levitt
Vice President and
Chief Financial Officer
Dated: August 13, 1996 By: /s/ William J. Smethurst, Jr.
-------------------------------
William J. Smethurst, Jr.
Assistant Treasurer and Acting
Chief Accounting Officer
- 25 -
<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).
- 26 -
<TABLE> <S> <C>
<ARTICLE> UT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 406,408
<OTHER-PROPERTY-AND-INVEST> 8,350
<TOTAL-CURRENT-ASSETS> 105,453
<TOTAL-DEFERRED-CHARGES> 70,911
<OTHER-ASSETS> 3,372
<TOTAL-ASSETS> 594,494
<COMMON> 13,413
<CAPITAL-SURPLUS-PAID-IN> 110,358
<RETAINED-EARNINGS> 40,441
<TOTAL-COMMON-STOCKHOLDERS-EQ> 164,212
0
2,314
<LONG-TERM-DEBT-NET> 150,733
<SHORT-TERM-NOTES> 92,775
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 20,276
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 164,184
<TOT-CAPITALIZATION-AND-LIAB> 594,494
<GROSS-OPERATING-REVENUE> 216,362
<INCOME-TAX-EXPENSE> 7,670
<OTHER-OPERATING-EXPENSES> 184,830
<TOTAL-OPERATING-EXPENSES> 192,500
<OPERATING-INCOME-LOSS> 23,863
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 23,863
<TOTAL-INTEREST-EXPENSE> 10,075
<NET-INCOME> 14,459
0
<EARNINGS-AVAILABLE-FOR-COMM> 14,459
<COMMON-STOCK-DIVIDENDS> 7,723
<TOTAL-INTEREST-ON-BONDS> 6,877
<CASH-FLOW-OPERATIONS> 18,184
<EPS-PRIMARY> 1.35
<EPS-DILUTED> 1.35
</TABLE>
