x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
New Jersey
|
21-0398330
|
|
(State of incorporation)
|
IRS employer identification no.)
|
Large accelerated filer o
|
Accelerated filer o
|
Non-accelerated filer x (Do not check if a smaller reporting company)
|
Smaller reporting company o
|
Page No.
|
||
PART I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
3 | |
Item 2.
|
18 | |
Item 3.
|
27 | |
Item 4.
|
28 | |
PART II
|
OTHER INFORMATION
|
|
Item 1.
|
29 | |
Item 1A.
|
29 | |
Item 6.
|
29 | |
29 |
Three Months Ended
June 30, |
||||||||
2011
|
2010
|
|||||||
Operating Revenues
|
$ | 65,187 | $ | 61,344 | ||||
Operating Expenses:
|
||||||||
Cost of Sales (Excluding depreciation)
|
28,259 | 23,941 | ||||||
Operations
|
17,403 | 16,485 | ||||||
Maintenance
|
3,215 | 2,785 | ||||||
Depreciation
|
7,523 | 7,319 | ||||||
Energy and Other Taxes
|
1,722 | 1,590 | ||||||
Total Operating Expenses
|
58,122 | 52,120 | ||||||
Operating Income
|
7,065 | 9,224 | ||||||
Other Income and Expense
|
515 | 240 | ||||||
Interest Charges
|
(4,895 | ) | (4,163 | ) | ||||
Income Before Income Taxes
|
2,685 | 5,301 | ||||||
Income Taxes
|
(1,065 | ) | (2,125 | ) | ||||
Net Income
|
$ | 1,620 | $ | 3,176 |
Six Months Ended
June 30, |
||||||||
2011
|
2010
|
|||||||
Operating Revenues
|
$ | 245,510 | $ | 258,060 | ||||
Operating Expenses:
|
||||||||
Cost of Sales (Excluding depreciation)
|
116,833 | 140,816 | ||||||
Operations
|
35,676 | 34,292 | ||||||
Maintenance
|
6,224 | 5,601 | ||||||
Depreciation
|
14,983 | 14,398 | ||||||
Energy and Other Taxes
|
6,236 | 5,938 | ||||||
Total Operating Expenses
|
179,952 | 201,045 | ||||||
Operating Income
|
65,558 | 57,015 | ||||||
Other Income and Expense
|
1,393 | 473 | ||||||
Interest Charges
|
(9,924 | ) | (8,178 | ) | ||||
Income Before Income Taxes
|
57,027 | 49,310 | ||||||
Income Taxes
|
(23,111 | ) | (20,264 | ) | ||||
Net Income
|
$ | 33,916 | $ | 29,046 |
Three Months Ended
June 30, |
||||||||
2011
|
2010
|
|||||||
Net Income
|
$ | 1,620 | $ | 3,176 | ||||
Other Comprehensive Gain (Loss) - Net of Tax:
|
||||||||
Unrealized Gain (Loss) on Available-for-Sale Securities
|
50 | (265 | ) | |||||
Unrealized Gain on Derivatives - Other
|
7 | 7 | ||||||
Other Comprehensive Gain (Loss) - Net of Tax *
|
57 | (258 | ) | |||||
Comprehensive Income
|
$ | 1,677 | $ | 2,918 | ||||
Six Months Ended
June 30, |
||||||||
2011 | 2010 | |||||||
Net Income
|
$ | 33,916 | $ | 29,046 | ||||
Other Comprehensive Loss - Net of Tax:
|
||||||||
Unrealized Loss on Available-for-Sale Securities
|
(103 | ) | (121 | ) | ||||
Unrealized Gain on Derivatives - Other
|
14 | 14 | ||||||
Other Comprehensive Loss - Net of Tax *
|
(89 | ) | (107 | ) | ||||
Comprehensive Income
|
$ | 33,827 | $ | 28,939 |
Six Months Ended
June 30, |
||||||||
2011
|
2010
|
|||||||
Net Cash Provided by Operating Activities
|
$ | 51,301 | $ | 63,574 | ||||
Cash Flows from Investing Activities:
|
||||||||
Capital Expenditures
|
(55,611 | ) | (66,206 | ) | ||||
Net Proceeds from Sale of Restricted Investments in Margin Accounts
|
994 | - | ||||||
Investment in Long-Term Receivables
|
(2,390 | ) | (1,529 | ) | ||||
Proceeds from Long-Term Receivables
|
2,418 | 1,047 | ||||||
Net Cash Used in Investing Activities
|
(54,589 | ) | (66,688 | ) | ||||
Cash Flows from Financing Activities:
|
||||||||
Net Borrowing from (Repayment of) Lines of Credit
|
1,600 | (53,900 | ) | |||||
Proceeds from Issuance of Long-Term Debt
|
- | 60,000 | ||||||
Payments for Issuance of Long-Term Debt
|
(28 | ) | (623 | ) | ||||
Dividend on Common Stock
|
- | (2,500 | ) | |||||
Net Cash Provided in Financing Activities
|
1,572 | 2,977 | ||||||
Net Decrease in Cash and Cash Equivalents
|
(1,716 | ) | (137 | ) | ||||
Cash and Cash Equivalents at Beginning of Period
|
2,030 | 1,993 | ||||||
Cash and Cash Equivalents at End of Period
|
$ | 314 | $ | 1,856 |
June 30,
2011 |
December 31,
2010 |
|||||||
Assets
|
||||||||
Property, Plant and Equipment:
|
||||||||
Utility Plant, at original cost
|
$ | 1,437,113 | $ | 1,384,797 | ||||
Accumulated Depreciation
|
(346,603 | ) | (337,993 | ) | ||||
Property, Plant and Equipment - Net
|
1,090,510 | 1,046,804 | ||||||
Investments:
|
||||||||
Available-for-Sale Securities
|
7,096 | 6,700 | ||||||
Restricted Investments
|
3,308 | 4,301 | ||||||
Total Investments
|
10,404 | 11,001 | ||||||
Current Assets:
|
||||||||
Cash and Cash Equivalents
|
314 | 2,030 | ||||||
Accounts Receivable
|
71,132 | 37,619 | ||||||
Accounts Receivable - Related Parties
|
1,399 | 4,885 | ||||||
Unbilled Revenues
|
10,620 | 58,197 | ||||||
Provision for Uncollectibles
|
(4,545 | ) | (4,577 | ) | ||||
Natural Gas in Storage, average cost
|
20,533 | 20,109 | ||||||
Materials and Supplies, average cost
|
2,644 | 2,511 | ||||||
Prepaid Taxes
|
24,860 | 15,907 | ||||||
Derivatives - Energy Related Assets
|
1,858 | 5,864 | ||||||
Other Prepayments and Current Assets
|
4,284 | 2,353 | ||||||
Total Current Assets
|
133,099 | 144,898 | ||||||
Regulatory and Other Noncurrent Assets:
|
||||||||
Regulatory Assets
|
241,754 | 248,413 | ||||||
Unamortized Debt Issuance Costs
|
6,426 | 6,718 | ||||||
Long-Term Receivables
|
7,250 | 7,285 | ||||||
Derivatives - Energy Related Assets
|
119 | 1,005 | ||||||
Other
|
2,643 | 2,511 | ||||||
Total Regulatory and Other Noncurrent Assets
|
258,192 | 265,932 | ||||||
Total Assets
|
$ | 1,492,205 | $ | 1,468,635 |
June 30,
2011 |
December 31,
2010 |
|||||||
Capitalization and Liabilities
|
||||||||
Common Equity:
|
||||||||
Common Stock, Par Value $2.50 per share:
|
||||||||
Authorized - 4,000,000 shares
|
||||||||
Outstanding - 2,339,139 shares
|
$ | 5,848 | $ | 5,848 | ||||
Other Paid-In Capital and Premium on Common Stock
|
200,841 | 200,841 | ||||||
Accumulated Other Comprehensive Loss
|
(9,209 | ) | (9,120 | ) | ||||
Retained Earnings
|
263,232 | 229,316 | ||||||
Total Common Equity
|
460,712 | 426,885 | ||||||
Long-Term Debt
|
365,000 | 340,000 | ||||||
Total Capitalization
|
825,712 | 766,885 | ||||||
Current Liabilities:
|
||||||||
Notes Payable
|
60,500 | 58,900 | ||||||
Current Portion of Long-Term Debt
|
25,000 | 50,000 | ||||||
Accounts Payable - Commodity
|
9,599 | 26,915 | ||||||
Accounts Payable - Other
|
24,616 | 19,628 | ||||||
Accounts Payable - Related Parties
|
9,315 | 10,830 | ||||||
Derivatives - Energy Related Liabilities
|
4,526 | 11,406 | ||||||
Deferred Income Taxes - Net
|
1,378 | 4,982 | ||||||
Customer Deposits and Credit Balances
|
18,469 | 10,525 | ||||||
Environmental Remediation Costs
|
19,384 | 25,662 | ||||||
Taxes Accrued
|
1,870 | 1,915 | ||||||
Pension Benefits
|
1,182 | 1,182 | ||||||
Interest Accrued
|
6,943 | 7,011 | ||||||
Other Current Liabilities
|
3,502 | 5,156 | ||||||
Total Current Liabilities
|
186,284 | 234,112 | ||||||
Regulatory and Other Noncurrent Liabilities:
|
||||||||
Regulatory Liabilities
|
56,069 | 69,248 | ||||||
Deferred Income Taxes - Net
|
261,743 | 239,648 | ||||||
Environmental Remediation Costs
|
62,865 | 61,731 | ||||||
Asset Retirement Obligations
|
28,285 | 27,925 | ||||||
Pension and Other Postretirement Benefits
|
62,593 | 59,754 | ||||||
Investment Tax Credits
|
1,056 | 1,207 | ||||||
Derivatives - Energy Related Liabilities
|
185 | 430 | ||||||
Derivatives - Other
|
3,261 | 3,150 | ||||||
Other
|
4,152 | 4,545 | ||||||
Total Regulatory and Other Noncurrent Liabilities
|
480,209 | 467,638 | ||||||
Commitments and Contingencies (Note 9)
|
||||||||
Total Capitalization and Liabilities
|
$ | 1,492,205 | $ | 1,468,635 |
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
|
2.
|
STOCK-BASED COMPENSATION PLANS:
|
Grant Date
|
Shares
Outstanding
|
Fair Value
Per Share
|
Expected
Volatility
|
Risk-Free
Interest Rate
|
||||||||||||
Jan. 2009
|
8,318 | $ | 39.350 | 28.6 | % | 1.20 | % | |||||||||
Jan. 2010
|
10,024 | $ | 39.020 | 29.0 | % | 1.65 | % | |||||||||
Jan. 2011
|
7,544 | $ | 50.940 | 27.5 | % | 1.01 | % |
Shares
|
Weighted
Average
Grant Date
Fair Value
|
|||||||
Nonvested Shares Outstanding, January 1, 2011
|
18,342
|
$
|
39.170
|
|||||
Granted
|
7,544
|
$
|
50.940
|
|||||
Nonvested Shares Outstanding, June 30, 2011
|
25,886
|
$
|
42.600
|
3.
|
RATES AND REGULATORY ACTIONS:
|
4.
|
REGULATORY ASSETS AND LIABILITIES:
|
June 30,
2011 |
December 31,
2010 |
|||||||
Environmental Remediation Costs:
|
||||||||
Expended - Net
|
$
|
43,817
|
$
|
39,056
|
||||
Liability for Future Expenditures
|
82,249
|
87,393
|
||||||
Income Taxes - Flowthrough Depreciation
|
285
|
774
|
||||||
Deferred Asset Retirement Obligation Costs
|
24,550
|
24,247
|
||||||
Deferred Pension and Other Postretirement Benefit Costs
|
68,828
|
69,017
|
||||||
Conservation Incentive Program Receivable
|
2,846
|
12,291
|
||||||
Societal Benefit Costs Receivable
|
5,987
|
4,216
|
||||||
Premium for Early Retirement of Debt
|
618
|
699
|
||||||
Other Regulatory Assets
|
12,574
|
10,720
|
||||||
Total Regulatory Assets
|
$
|
241,754
|
$
|
248,413
|
June 30,
2011 |
December 31,
2010 |
|||||||
Excess Plant Removal Costs
|
$ | 47,843 | $ | 48,409 | ||||
Deferred Revenues - Net
|
4,605 | 20,179 | ||||||
Other Regulatory Liabilities
|
3,621 | 660 | ||||||
Total Regulatory Liabilities
|
$ | 56,069 | $ | 69,248 |
5.
|
RELATED PARTY TRANSACTIONS:
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Operating Revenues/Affiliates:
|
||||||||||||||||
SJRG
|
$
|
184
|
$
|
82
|
$
|
6,059
|
$
|
645
|
||||||||
Other
|
167
|
109
|
484
|
235
|
||||||||||||
Total Operating Revenue/Affiliates
|
$
|
351
|
$
|
191
|
$
|
6,543
|
$
|
880
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Costs of Sales/Affiliates (Excluding depreciation):
|
||||||||||||||||
SJRG
|
$
|
14,263
|
$
|
-
|
$
|
19,507
|
$
|
14,582
|
||||||||
Energy-Related Derivative Losses *
|
||||||||||||||||
SJRG
|
$
|
2,453
|
$
|
8,249
|
$
|
7,054
|
$
|
12,296
|
Operations Expense/Affiliates
|
||||||||||||||||
SJI
|
$
|
2,712
|
$
|
2,453
|
$
|
5,208
|
$
|
4,381
|
||||||||
SJIS
|
1,131
|
959
|
2,273
|
2,462
|
||||||||||||
Millennium
|
771
|
764
|
1,502
|
1,452
|
||||||||||||
Other
|
(104
|
)
|
(64
|
)
|
(201
|
)
|
(118
|
)
|
||||||||
Total Operations Expense/Affiliates
|
$
|
4,510
|
$
|
4,112
|
$
|
8,782
|
$
|
8,177
|
6.
|
FINANCIAL INSTRUMENTS:
|
7.
|
UNUSED LINES OF CREDIT:
|
Total Facility
|
Usage
|
Available Liquidity
|
Expiration Date
|
||||||||||
Revolving Credit Facility
|
$ | 200,000 | $ | 40,500 | $ | 159,500 |
May 2015 (A) (B)
|
||||||
Uncommitted Bank Lines
|
20,000 | 20,000 | - |
Various
|
|||||||||
Total
|
$ | 220,000 | $ | 60,500 | $ | 159,500 |
8.
|
PENSION AND OTHER POSTRETIREMENT BENEFITS:
|
Pension Benefits
|
||||||||||||||||
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service Cost
|
$
|
696
|
$
|
664
|
$
|
1,481
|
$
|
1,326
|
||||||||
Interest Cost
|
1,775
|
1,815
|
3,601
|
3,559
|
||||||||||||
Expected Return on Plan Assets
|
(1,726
|
)
|
(1,753
|
)
|
(3,541
|
)
|
(3,251
|
)
|
||||||||
Amortizations:
|
||||||||||||||||
Prior Service Cost
|
48
|
61
|
100
|
108
|
||||||||||||
Actuarial Loss
|
1,048
|
776
|
2,057
|
1,838
|
||||||||||||
Net Periodic Benefit Cost
|
1,841
|
1,563
|
3,698
|
3,580
|
||||||||||||
Capitalized Benefit Costs
|
(902
|
)
|
(766
|
)
|
(1,812
|
)
|
(1,754
|
)
|
||||||||
Total Net Periodic Benefit Expense
|
$
|
939
|
$
|
797
|
$
|
1,886
|
$
|
1,826
|
Other Postretirement Benefits
|
||||||||||||||||
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Service Cost
|
$
|
164
|
$
|
166
|
$
|
379
|
$
|
365
|
||||||||
Interest Cost
|
597
|
611
|
1,216
|
1,297
|
||||||||||||
Expected Return on Plan Assets
|
(408
|
)
|
(431
|
)
|
(854
|
)
|
(769
|
)
|
||||||||
Amortizations:
|
||||||||||||||||
Prior Service Credits
|
(64
|
)
|
(67
|
)
|
(135
|
)
|
(141
|
)
|
||||||||
Actuarial Loss
|
316
|
211
|
628
|
593
|
||||||||||||
Net Periodic Benefit Cost
|
605
|
490
|
1,234
|
1,345
|
||||||||||||
Capitalized Benefit Costs
|
(297
|
)
|
(240
|
)
|
(605
|
)
|
(659
|
)
|
||||||||
Total Net Periodic Benefit Expense
|
$
|
308
|
$
|
250
|
$
|
629
|
$
|
686
|
9.
|
COMMITMENTS AND CONTINGENCIES:
|
10.
|
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES:
|
|
●
|
Level 1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.
|
|
●
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
|
●
|
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
As of June 30, 2011
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets -
|
||||||||||||||||
Available-for-Sale Securities (A)
|
$ | 7,096 | $ | - | $ | 7,096 | $ | - | ||||||||
Derivatives – Energy Related Assets (B)
|
1,977 | 619 | 1,358 | - | ||||||||||||
$ | 9,073 | $ | 619 | $ | 8,454 | $ | - | |||||||||
Liabilities -
|
||||||||||||||||
Derivatives – Energy Related Liabilities (B)
|
$ | 4,711 | $ | 4,432 | $ | 279 | $ | - | ||||||||
Derivatives – Other (C)
|
3,261 | - | 3,261 | - | ||||||||||||
$ | 7,972 | $ | 4,432 | $ | 3,540 | $ | - |
As of December 31, 2010
|
||||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets
|
||||||||||||||||
Available-for-Sale Securities (A)
|
$
|
6,700
|
$
|
6,700
|
$
|
-
|
$
|
-
|
||||||||
Derivatives – Energy Related Assets (B)
|
6,869
|
784
|
6,085
|
-
|
||||||||||||
$
|
13,569
|
$
|
7,484
|
$
|
6,085
|
$
|
-
|
|||||||||
Liabilities
|
||||||||||||||||
Derivatives – Energy Related Liabilities (B)
|
$
|
11,836
|
$
|
10,614
|
$
|
1,222
|
$
|
-
|
||||||||
Derivatives – Other (C)
|
3,150
|
-
|
3,150
|
-
|
||||||||||||
$
|
14,986
|
$
|
10,614
|
$
|
4,372
|
$
|
-
|
11.
|
DERIVATIVE INSTRUMENTS:
|
Derivatives not designated as hedging instruments under GAAP
|
June 30, 2011
|
December 31, 2010
|
||||||||||||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
|||||||||||||
Energy related commodity contracts:
|
||||||||||||||||
Derivatives – Energy Related – Current
|
$
|
1,858
|
$
|
4,526
|
$
|
5,864
|
$
|
11,406
|
||||||||
Derivatives – Energy Related – Non-Current
|
119
|
185
|
1,005
|
430
|
||||||||||||
Interest rate contracts:
|
||||||||||||||||
Derivatives – Other
|
-
|
3,261
|
-
|
3,150
|
||||||||||||
Total derivatives not designated as hedging instruments under GAAP
|
$
|
1,977
|
$
|
7,972
|
$
|
6,869
|
$
|
14,986
|
Three months ended
June 30,
|
Six months ended
June 30,
|
|||||||||||||||
Derivatives in Cash Flow Hedging Relationships Interest Rate Contracts:
|
2011
|
2010
|
2011
|
2010
|
||||||||||||
Losses reclassified from accumulated OCI into income (a)
|
$
|
(12
|
)
|
$
|
(12
|
)
|
$
|
(24
|
)
|
$
|
(24
|
)
|
12.
|
SUBSEQUENT EVENT:
|
Three Months Ended
June 30, |
Six Months Ended
June 30, |
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Utility Throughput – dth:
|
||||||||||||||||
Firm Sales -
|
||||||||||||||||
Residential
|
2,514
|
2,309
|
13,755
|
13,740
|
||||||||||||
Commercial
|
639
|
634
|
3,434
|
3,328
|
||||||||||||
Industrial
|
27
|
24
|
182
|
172
|
||||||||||||
Cogeneration & Electric Generation
|
434
|
356
|
554
|
400
|
||||||||||||
Firm Transportation -
|
||||||||||||||||
Residential
|
317
|
207
|
1,570
|
1,189
|
||||||||||||
Commercial
|
877
|
809
|
3,636
|
3,450
|
||||||||||||
Industrial
|
3,191
|
3,254
|
6,636
|
6,343
|
||||||||||||
Cogeneration & Electric Generation
|
1,125
|
803
|
3,526
|
2,996
|
||||||||||||
Total Firm Throughput
|
9,124
|
8,396
|
33,293
|
31,618
|
||||||||||||
Interruptible Sales
|
9
|
40
|
12
|
43
|
||||||||||||
Interruptible Transportation
|
372
|
268
|
1,064
|
854
|
||||||||||||
Off-System
|
1,551
|
1,921
|
3,455
|
3,037
|
||||||||||||
Capacity Release
|
17,504
|
9,203
|
27,659
|
19,392
|
||||||||||||
Total Throughput - Utility
|
28,560
|
19,828
|
65,483
|
54,944
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Utility Operating Revenues:
|
||||||||||||||||
Firm Sales -
|
||||||||||||||||
Residential
|
$ | 34,036 | $ | 31,845 | $ | 148,888 | $ | 169,360 | ||||||||
Commercial
|
7,741 | 6,862 | 34,541 | 36,485 | ||||||||||||
Industrial
|
574 | 206 | 2,294 | 2,001 | ||||||||||||
Cogeneration & Electric Generation
|
2,692 | 2,273 | 3,501 | 2,684 | ||||||||||||
Firm Transportation -
|
||||||||||||||||
Residential
|
2,313 | 1,502 | 8,863 | 5,956 | ||||||||||||
Commercial
|
3,482 | 3,244 | 13,187 | 11,843 | ||||||||||||
Industrial
|
4,270 | 4,675 | 8,665 | 8,651 | ||||||||||||
Cogeneration & Electric Generation
|
745 | 709 | 2,487 | 2,718 | ||||||||||||
Total Firm Revenues
|
55,853 | 51,316 | 222,426 | 239,698 | ||||||||||||
Interruptible Sales
|
161 | 590 | 215 | 638 | ||||||||||||
Interruptible Transportation
|
328 | 291 | 962 | 898 | ||||||||||||
Off-System
|
7,314 | 8,622 | 17,448 | 15,546 | ||||||||||||
Capacity Release
|
1,228 | 212 | 3,899 | 730 | ||||||||||||
Other
|
303 | 313 | 560 | 550 | ||||||||||||
Total Utility Operating Revenues
|
65,187 | 61,344 | 245,510 | 258,060 | ||||||||||||
Less:
|
||||||||||||||||
Cost of Sales
|
28,259 | 23,941 | 116,833 | 140,816 | ||||||||||||
Conservation Recoveries*
|
1,447 | 1,254 | 4,702 | 4,373 | ||||||||||||
RAC Recoveries*
|
1,592 | 1,740 | 3,183 | 3,481 | ||||||||||||
EET Recoveries*
|
635 | 359 | 1,144 | 538 | ||||||||||||
Revenue Taxes
|
1,156 | 1,094 | 5,029 | 4,846 | ||||||||||||
Utility Margin
|
$ | 32,098 | $ | 32,956 | $ | 114,619 | $ | 104,006 | ||||||||
Margin:
|
||||||||||||||||
Residential
|
$ | 19,676 | $ | 14,783 | $ | 78,475 | $ | 60,083 | ||||||||
Commercial and Industrial
|
9,239 | 6,764 | 30,566 | 21,722 | ||||||||||||
Cogeneration and Electric Generation
|
765 | 679 | 1,540 | 1,388 | ||||||||||||
Interruptible
|
39 | 76 | 87 | 114 | ||||||||||||
Off-system & Capacity Release
|
233 | 68 | 928 | 377 | ||||||||||||
Other Revenues
|
386 | 755 | 642 | 991 | ||||||||||||
Margin Before Weather Normalization & Decoupling
|
30,338 | 23,125 | 112,238 | 84,675 | ||||||||||||
CIRT Mechanism
|
626 | 2,538 | 1,192 | 4,562 | ||||||||||||
CIP Mechanism
|
1,040 | 7,250 | 1,014 | 14,692 | ||||||||||||
EET Mechanism
|
94 | 43 | 175 | 77 | ||||||||||||
Utility Margin
|
$ | 32,098 | $ | 32,956 | $ | 114,619 | $ | 104,006 | ||||||||
Degree Days:
|
376 | 346 | 2,871 | 2,779 |
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||
2011
|
2010
|
2011
|
2010
|
|||||||||||||
Net Income Benefit:
|
||||||||||||||||
CIP – Weather Related
|
$
|
1.9
|
$
|
1.9
|
$
|
1.3
|
$
|
2.3
|
||||||||
CIP – Usage Related
|
(1.3
|
)
|
2.4
|
(0.7
|
)
|
6.4
|
||||||||||
Total Net Income Benefit
|
$
|
0.6
|
$
|
4.3
|
$
|
0.6
|
$
|
8.7
|
||||||||
Weather Compared to 20-Year Average
|
29.5% warmer
|
37.0% warmer
|
3.9% warmer
|
6.7% warmer
|
||||||||||||
Weather Compared to Prior Year
|
8.7% colder
|
28.1% warmer
|
3.3% colder
|
7.3% warmer
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||
2011 vs. 2010
|
2011 vs. 2010
|
|||||||
Operations
|
$
|
918
|
$
|
1,384
|
||||
Maintenance
|
430
|
623
|
||||||
Depreciation
|
204
|
585
|
||||||
Energy and Other Taxes
|
132
|
298
|
|
·
|
Spending under the New Jersey Clean Energy Program and Energy Efficiency Programs increased $0.5 million and $0.9 million for the three and six months ended June 30, 2011, respectively, as compared to 2010. Such costs are recovered on a dollar-for-dollar basis; therefore, SJG experienced an offsetting increase in revenues during the period.
|
|
·
|
Amortization of previously deferred regulatory expenses increased $0.3 million and $0.6 million during the three and six three and six months ended June 30, 2011, respectively, as compared to 2010. Recovery of these costs was approved in the Company’s September 2010 rate case settlement; therefore, such cost recognition is offset by a corresponding increase in revenue.
|
|
·
|
The Company also experienced increases in various other areas including general compensation increases and corporate support, governance and compliance costs, primarily attributable to our parent, SJI.
|
|
·
|
Finally, the reserve for uncollectible customer accounts had decreased $0.7 million during the first quarter of 2011, as compared to the first quarter of 2010, due to a $21.1 million customer refund in March 2011. However, as customer account receivable balances returned to more typical levels during the second quarter of 2011, the benefit of the first quarter reserve adjustment had to be reversed. Changes in the uncollectible reserve are the direct result of fluctuations in levels of customer account receivable balances.
|
Total
Facility
|
Usage
|
Available
Liquidity
|
Expiration Date
|
||||||||||
Revolving Credit Facility
|
$
|
200,000
|
$
|
40,500
|
$
|
159,500
|
May 2015 (A) (B)
|
||||||
Uncommitted Bank Lines
|
20,000
|
20,000
|
—
|
Various | |||||||||
Total
|
$
|
220,000
|
$
|
60,500
|
$
|
159,500
|
As of
June 30,
2011
|
As of
December 31,
2010
|
|||||||
Common Equity
|
50.6
|
%
|
48.8
|
%
|
||||
Long-Term Debt
|
42.8
|
44.5
|
||||||
Short-Term Debt
|
6.6
|
6.7
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
Twelve Months
Ended June 30,
|
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
5.0x
|
5.1x
|
4.9x
|
4.4x
|
4.1x
|
3.7x
|
Assets
|
||||||||||||
Source of Fair Value
|
Maturity
< 1 Year
|
Maturity
1 - 3 Years
|
Total
|
|||||||||
Prices Actively Quoted (NYMEX)
|
$
|
500
|
$
|
119
|
$
|
619
|
||||||
Prices Provided by Other
|
1,358
|
-
|
1,358
|
|||||||||
Total
|
$
|
1,858
|
$
|
119
|
$
|
1,977
|
Liabilities
|
||||||||||||
Maturity
|
Maturity
|
|||||||||||
Source of Fair Value
|
< 1 Year
|
1 - 3 Years
|
Total
|
|||||||||
Prices Actively Quoted (NYMEX)
|
$
|
4,247
|
$
|
185
|
$
|
4,432
|
||||||
Prices Provided by Other External Sources (Basis)
|
279
|
-
|
279
|
|||||||||
Total
|
$
|
4,526
|
$
|
185
|
$
|
4,711
|
Net Derivatives — Energy Related Liability, January 1, 2011
|
$
|
(4,967
|
)
|
|
Contracts Settled During the Six Months ended June 30, 2011, Net
|
3,477
|
|||
Other Changes in Fair Value from Continuing and New Contracts, Net
|
(1,244
|
)
|
||
Net Derivatives — Energy Related Liability, June 30, 2011
|
$
|
(2,734
|
)
|
Amount
|
Fixed
Interest Rate
|
Start Date
|
Maturity
|
Type
|
|||||||
$
|
12,500,000
|
3.430
|
%
|
12/01/2006
|
02/01/2036
|
Tax-exempt
|
|||||
$
|
12,500,000
|
3.430
|
%
|
12/01/2006
|
02/01/2036
|
Tax-exempt
|
Exhibit
No.
|
Description
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
|
||
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Exchange Act.
|
||
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
|
||
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) of the Exchange Act as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
|
||
101
|
The following financial statements from South Jersey Gas’ Quarterly Report on Form 10-Q for the three and six months ended June 30, 2011, filed with the Securities and Exchange Commission on August 8, 2011, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Statements of Income; (ii) the Condensed Statements of Comprehensive Income; (iii) the Condensed Statements of Cash Flows; (iv) the Condensed Balance Sheets and (v) the Notes to Condensed Financial Statements.
|
Dated: August 8, 2011
|
By:
|
/s/ Edward J. Graham
|
Edward J. Graham
|
||
President & Chief Executive Officer
|
||
Dated: August 8, 2011
|
By:
|
/s/ David A. Kindlick
|
David A. Kindlick
|
||
Senior Vice President & Chief Financial Officer
|
South Jersey Gas Company | ||
Date: August 8, 2011
|
By:
|
/s/ Edward J. Graham |
Edward J. Graham
|
||
President & Chief Executive Officer
|
South Jersey Gas Company | ||
Date: August 8, 2011
|
By:
|
/s/ David A. Kindlick |
David A. Kindlick
|
||
Senior Vice President & Chief Financial Officer
|
/s/ Edward J. Graham | |
Name: Edward J. Graham
|
|
Title: Chief Executive Officer | |
August 8, 2011 |
/s/ David A. Kindlick
|
|
Name: David A. Kindlick
|
|
Title: Chief Financial Officer
|
|
August 8, 2011 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) [Abstract] | Â | Â | Â | Â |
Net Income | $ 1,620 | $ 3,176 | $ 33,916 | $ 29,046 |
Other Comprehensive Gain (Loss) - Net of Tax: | Â | Â | Â | Â |
Unrealized Gain (Loss) on Available-for-Sale Securities | 50 | (265) | (103) | (121) |
Unrealized Gain on Derivatives - Other | 7 | 7 | 14 | 14 |
Other Comprehensive Gain (Loss) - Net of Tax | 57 | (258) | (89) | (107) |
Comprehensive Income | $ 1,677 | $ 2,918 | $ 33,827 | $ 28,939 |
Document And Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Aug. 01, 2011
|
|
Entity Registrant Name | SOUTH JERSEY GAS CO | Â |
Entity Central Index Key | 0001035216 | Â |
Current Fiscal Year End Date | --12-31 | Â |
Entity Well-known Seasoned Issuer | No | Â |
Entity Voluntary Filers | No | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Non-accelerated Filer | Â |
Entity Common Stock, Shares Outstanding | Â | 2,339,139 |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Document Type | 10-Q | Â |
Amendment Flag | false | Â |
Document Period End Date | Jun. 30, 2011 |
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FINANCIAL INSTRUMENTS
|
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2011
|
|||
FINANCIAL INSTRUMENTS [Abstract] | Â | ||
FINANCIAL INSTRUMENTS |
Restricted Investments - In accordance with the terms of our tax-exempt first mortgage bonds, unused proceeds are required to be escrowed pending approved construction expenditures. As of both June 30, 2011 and December 31, 2010, the escrowed proceeds, including interest earned, totaled $0.1 million. The carrying amounts of the Restricted Investments approximate their fair value at June 30, 2011 and December 31, 2010. Beginning in the third quarter of 2010, SJG established a margin account with SJRG in conjunction with SJG's risk management activities as detailed in Note 11. The funds provided by SJG will increase or decrease as the number and value of outstanding energy-related contracts held with SJRG changes. As of June 30, 2011 and December 31, 2010, the balance held with SJRG totaled $3.2 million and $4.2 million, respectively. Long-Term Receivables – SJG provides financing to customers for the purpose of attracting conversions to natural gas heating systems from competing fuel sources. The terms of these loans call for customers to make monthly payments over a period of up to five years with no interest. The carrying amounts of such loans were $10.4 million as of both June 30, 2011 and December 31, 2010. The current portion of these receivables is reflected in Accounts Receivable and the non-current portion is reflected in Long-Term Receivables on the balance sheet. The carrying amounts noted above are net of unamortized discounts resulting from imputed interest in the amount of $1.2 million as of both June 30, 2011 and December 31, 2010. The annual amortization to interest is not material to SJG's financial statements. The carrying amounts of these receivables approximate their fair value at June 30, 2011 and December 31, 2010. Long-Term Debt – SJG did not issue any long-term debt during the first six months of 2011. During the first six months of 2010, SJG issued $60.0 million aggregate principal amount of its Medium Term Notes in private placements due 2026. As of both June 30, 2011 and December 31, 2010, $35.0 million remained available under this $150.0 million Medium Term Note program that was approved by the BPU in September 2009. The estimated fair values of SJG's long-term debt, including current maturities, as of June 30, 2011 and December 31, 2010, were $456.4 million and $455.5 million, respectively. We based the estimates on interest rates available to SJG at the end of each period for debt with similar terms and maturities. Carrying amounts as of both June 30, 2011 and December 31, 2010, were $390.0 million. We retire debt when it is cost effective as permitted by the debt agreements. Our long-term debt agreements contain no financial covenants. |
DERIVATIVE INSTRUMENTS
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS |
SJG is involved in buying, selling, transporting and storing natural gas and is subject to market risk on expected future purchases and sales due to commodity price fluctuations. The Company, through its affiliate South Jersey Resources Group (SJRG), uses a variety of derivative instruments to limit this exposure to market risk in accordance with strict corporate guidelines. These derivative instruments include forward contracts, futures contracts, swap agreements and options contracts. As of June 30, 2011, SJG had outstanding derivative contracts intended to limit the exposure to market risk on 14.2 MMdts of expected future purchases of natural gas. These contracts, which do not qualify for the normal purchase and sale exemption and have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives -Energy Related Assets or Derivatives - Energy Related Liabilities on the condensed balance sheets. The costs or benefits of these short-term contracts are recoverable through SJG's Basic Gas Supply Service (BGSS) clause, subject to BPU approval. As a result, the net unrealized pre-tax gains and losses for these energy related commodity contracts are included with realized gains and losses in Regulatory Assets or Regulatory Liabilities on the condensed balance sheets. As of June 30, 2011 and December 31, 2010, SJG had $2.7 million and $5.0 million of unrealized losses, respectively, included in its BGSS related to open financial contracts. The Company has also entered into interest rate derivatives to hedge exposure to increasing interest rates and the impact of those rates on cash flows of variable-rate debt. These interest rate derivatives, which have not been designated as hedging instruments under GAAP, are measured at fair value and recorded in Derivatives-Other on the condensed balance sheets. The fair value represents the amount SJG would have to pay the counterparty to terminate these contracts as of those dates. There have been no significant changes to the Company's active interest rate swaps since December 31, 2010 which are described in Note 1 to the Financial Statements in Item 8 of SJG's Annual Report on Form 10-K as of December 31, 2010. Subject to BPU approval, the market value upon termination of these interest rate derivatives can be recovered in rates and therefore these unrealized losses have been included in Regulatory Assets on the condensed balance sheets. We previously used derivative transactions known as “Treasury Locks” to hedge against the impact on our cash flows of possible interest rate increases on debt issued in September 2005. The initial $1.4 million cost of the Treasury Locks has been included in Accumulated Other Comprehensive Loss and is being amortized over the 30 year life of the associated debt issue. As of June 30, 2011 and December 31, 2010, the unamortized balance was approximately $1.1 million. The fair values of all derivative instruments, as reflected in the condensed balance sheets as of June 30, 2011 and December 31, 2010, are as follows (in thousands):
The effect of derivative instruments on the condensed statements of income for the three and six months ended June 30, 2011 and 2010 are as follows (in thousands):
(a) Included in Interest Charges Net realized losses associated with SJG's energy-related financial commodity contracts of $2.5 million and $8.2 million for the three months ended June 30, 2011 and 2010 and $7.1 million and $12.3 million for the six months ended June 30, 2011 and 2010, respectively, are not included in the above table. These contracts are part of SJG's regulated risk management activities that serve to mitigate BGSS costs passed on to its customers. As these transactions are entered into pursuant to, and recoverable through, regulatory riders, any changes in the value of SJG's energy related financial commodity contracts are deferred in Regulatory Assets or Liabilities and there is no impact to earnings. |
STOCK
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
|
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STOCK-BASED COMPENSATION [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK |
The following table summarizes the sjg nonvested restricted stock awards pertaining to SJG outstanding at June 30, 2011, and the assumptions used to estimate the fair value of the awards:
Expected volatility is based on the actual volatility of sjg's share price over the preceding 3-year period as of the valuation date. The risk-free interest rate is based on the zero-coupon U.S. Treasury Bond, with a term equal to the 3-year term of the restricted shares. As notional dividend equivalents are credited to the holders, which are reinvested during the 3-year service period, no reduction to the fair value of the award is required. The cost for restricted stock awards during 2011 and 2010 is approximately $0.1 million per quarter. As of June 30, 2011, there was $0.6 million of total unrecognized compensation cost related to nonvested share-based compensation awards granted under the restricted stock plans. That cost is expected to be recognized over a weighted average period of 2.0 years. The following table summarizes information regarding restricted stock award activity during the six months ended June 30, 2011, excluding accrued dividend equivalents:
During the six months ended June 30, 2011, SJG awarded 15,186 shares that had vested at December 31, 2010, to its officers at a market value of $0.8 million. During the six months ended June 2010, SJG awarded 14,400 shares at a market value of $0.5 million. SJG has a policy of making cash payments to sjg to satisfy its obligations under this plan. Cash payments to sjg during both the six months ended June 30, 2011 and 2010 were approximately $0.3 million relating to stock awards. Additionally, a change in control could result in the nonvested shares becoming nonforfeitable or immediately payable in cash. |
PENSION AND OTHER POSTRETIREMENT BENEFITS
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Jun. 30, 2011
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PENSION AND OTHER POSTRETIREMENT BENEFITS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PENSION AND OTHER POSTRETIREMENT BENEFITS |
For the three and six months ended June 30, 2011 and 2010, net periodic benefit cost related to the employee and officer pension and other postretirement benefit plans consisted of the following components (in thousands):
Capitalized benefit costs reflected in the table above relate to our construction program. No contributions were made to the pension plans during the six-month periods ending June 30, 2011. During May 2010, we contributed $6.4 million to our pension plans. We expect to make no contributions to our pension plans in 2011; however, changes in future investment performance and discount rates may ultimately result in a contribution. We also have a regulatory obligation to contribute approximately $3.6 million annually to our other postretirement benefit plans' trusts, less costs incurred directly by us. See Note 11 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010 for additional information related to SJG's pension and other postretirement benefits. |
COMMITMENTS AND CONTINGENCIES
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6 Months Ended | ||
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Jun. 30, 2011
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COMMITMENTS AND CONTINGENCIES [Abstract] | Â | ||
COMMITMENTS AND CONTINGENCIES |
STANDBY LETTER OF CREDIT - SJG provided a $25.2 million letter of credit under a separate facility outside of the revolving credit facility to support variable-rate demand bonds issued through the NJEDA to finance the expansion of SJG's natural gas distribution system. As of December 31, 2010, these bonds were included in the current portion of long-term debt because this letter of credit expired in 2011. The replacement letter of credit expires in August 2015, and as a result, the related bonds are now included in long-term debt as of June 30, 2011. ENVIRONMENTAL REMEDIATION COSTS - SJG incurred and recorded costs for environmental cleanup of 12 sites where SJG or its predecessors operated gas manufacturing plants. SJG stopped manufacturing gas in the 1950s. There have been no changes to the status of SJG's environmental remediation efforts since December 31, 2010, as described in Note 12 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010. GAS SUPPLY RELATED CONTRACTS - In the normal course of conducting business, we have entered into long-term contracts for natural gas supplies, firm transportation and gas storage service. The earliest that any of these contracts expire is October 2012. The transportation and storage service agreements between us and our interstate pipeline suppliers were made under FERC approved tariffs. Our cumulative obligation for demand charges and reservation fees paid to suppliers for these services is approximately $3.6 million per month and is recovered on a current basis through the BGSS. PENDING LITIGATION - We are subject to claims arising in the ordinary course of business and other legal proceedings. We accrue liabilities related to these claims when we can reasonably estimate the amount or range of amounts of probable settlement costs or other charges for these claims. Management does not currently anticipate the disposition of any known claims to have a material adverse effect on our financial position, results of operations or liquidity. COLLECTIVE BARGAINING AGREEMENTS - Unionized personnel represent approximately 64% of our workforce at June 30, 2011. The Company has collective bargaining agreements with two unions who represent these employees: the International Brotherhood of Electrical Workers (IBEW) that operates under a collective bargaining agreement that runs through February 2013, with the option to extend until February 2014 at the union's election, and the International Association of Machinists and Aerospace Workers (IAM) that operates under a collective bargaining agreement that runs through August 2014. |
UNUSED LINES OF CREDIT
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Jun. 30, 2011
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UNUSED LINES OF CREDIT |
Credit facilities and available liquidity as of June 30, 2011 were as follows (in thousands):
(A) See Note 12 – Subsequent Event (B) A new revolving credit facility was established by SJG in May 2011. The SJG facility is a $200.0 million, four-year facility, provided by a syndicate of banks. The facility contains one financial covenant limiting the ratio of indebtedness to total capitalization (as defined in the credit agreement) to not more than 0.65 to 1 measured at the end of each fiscal quarter. SJG was in compliance with this covenant as of June 30, 2011. This facility replaces SJG's $100.0 million revolving credit facility and $40.0 million committed line of credit, both of which would otherwise have expired in August of 2011. See Note 12. Average borrowings outstanding under these credit facilities during the six months ended June 30, 2011 and 2010 were $37.6 million and $84.5 million, respectively. The maximum amount outstanding under these credit facilities during the six months ended June 30, 2011 and 2010 were $61.8 million and $112.5 million, respectively. Based upon the existing credit facilities and a regular dialogue with our banks, we believe that there will continue to be sufficient credit available to meet our business' future liquidity needs. Borrowings under these credit facilities are at market rates. The weighted average borrowing cost, which changes daily, was 1.27% and 0.70% at June 30, 2011 and 2010, respectively. |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)
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Jun. 30, 2011
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Dec. 31, 2010
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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) [Abstract] | Â | Â |
Common Stock, Par Value (in dollars per share) | $ 2.50 | $ 2.50 |
Authorized (in shares) | 4,000,000 | 4,000,000 |
Outstanding (in shares) | 2,339,139 | 2,339,139 |
RATES AND REGULATORY ACTIONS
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Jun. 30, 2011
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RATES AND REGULATORY ACTIONS [Abstract] | Â | ||
RATES AND REGULATORY ACTIONS |
SJG is subject to the rules and regulations of the New Jersey Board of Public Utilities (BPU). The Company made a filing with the BPU in October 2010 requesting an extension of the Capital Investment Recovery Tracker (CIRT II). The BPU approved a CIRT II program in March 2011, allowing the Company to accelerate an additional $60.3 million of capital spending into 2011 and 2012. Under CIRT II, the Company capitalizes our return on CIRT II investments until they are recovered in rate base as utility plant in service. On June 1, 2011 the Company filed a petition with the BPU requesting recovery of CIRT II investments through a 0.5% increase in base rates effective on October 1, 2011. This petition is currently pending. On March 29, 2011, SJG credited the accounts of our Basic Gas Supply Service (BGSS) customers with refunds totaling $21.1 million due to actual gas costs being lower than projected. On June 1, 2011, the Company filed its annual BGSS clause and Conservation Incentive Program (CIP) filings with the BPU. These petitions request a 2.9% reduction in rates for the BGSS and a 2.5% reduction in rates for the CIP, both commencing on October 1, 2011. Also on June 1, 2011, the Company filed its annual Energy Efficiency Tracker (EET) petition, requesting a 0.5% increase. These petitions are currently pending. There have been no other significant regulatory actions or changes to SJG's rate structure since December 31, 2010. See Note 3 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010. |
REGULATORY ASSETS & REGULATORY LIABILITIES
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Jun. 30, 2011
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REGULATORY ASSETS & REGULATORY LIABILITIES [Abstract] | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REGULATORY ASSETS & REGULATORY LIABILITIES |
There have been no significant changes to the nature of SJG's regulatory assets and liabilities since December 31, 2010, which are described in Notes 3 and 4 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010. Regulatory Assets consisted of the following items (in thousands):
Regulatory Liabilities consisted of the following items (in thousands):
DEFERRED REVENUES – NET – Over/under collections of gas costs are monitored through SJG's BGSS clause. Net undercollected gas costs are classified as a regulatory asset and net overcollected gas costs are classified as a regulatory liability. Derivative contracts used to hedge natural gas purchases are also included in the BGSS, subject to BPU approval. The BGSS decreased from a $20.2 million regulatory liability at December 31, 2010 to a $4.6 million regulatory liability at June 30, 2011 primarily due to the BGSS refund to customers discussed above in Note 3, partially offset by gas costs recovered from customers exceeding the actual cost of the commodity incurred during the first six months of 2011 as a result of natural gas prices remaining at very low levels. |
SUBSEQUENT EVENT
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6 Months Ended | ||
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Jun. 30, 2011
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SUBSEQUENT EVENT [Abstract] | Â | ||
SUBSEQUENT EVENT |
In July 2011, SJG began a commercial paper program under which SJG may issue short-term, unsecured promissory notes to qualified investors up to a maximum aggregate amount outstanding at any time of $200.0 million. The notes will have fixed maturities which will vary by note, but may not exceed 270 days from the date of issue. Proceeds from the notes will be used for general corporate purposes. SJG intends to use the commercial paper program in tandem with its new $200.0 million revolving credit facility and does not expect the principal amount of borrowings outstanding under the commercial paper program and the credit facility at any time to exceed an aggregate of $200.0 million. |
RELATED PARTY TRANSACTIONS
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Jun. 30, 2011
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RELATED PARTY TRANSACTIONS [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RELATED PARTY TRANSACTIONS |
There have been no significant changes in the nature of SJG's related party transactions since December 31, 2010. See Note 5 to the Financial Statements in Item 8 of SJG's Form 10-K as of December 31, 2010 for a detailed description of such transactions. A summary of related party transactions, excluding pass-through items, included in Operating Revenues were as follows, (in thousands):
Related party transactions, excluding pass-through items, included in Operating Expenses were as follows, (in thousands):
* Contracts used to hedge natural gas purchases. Included in Cost of Sales on the Condensed Statement of Income.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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6 Months Ended | ||
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Jun. 30, 2011
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | Â | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
THE ENTITY - South Jersey Industries, Inc. (sjg) owns all of the outstanding common stock of South Jersey Gas Company (SJG), a regulated natural gas utility. SJG distributes natural gas in the seven southern most counties of New Jersey. In our opinion, the condensed financial statements reflect all normal and recurring adjustments needed to fairly present our financial position and operating results at the dates and for the periods presented. SJG's business is subject to seasonal fluctuations and accordingly, this interim financial information should not be the basis for estimating the full year's operating results. As permitted by the rules and regulations of the Securities and Exchange Commission, the accompanying condensed financial statements contain certain condensed financial information and exclude certain note disclosures normally included in annual audited financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). These condensed financial statements should be read in conjunction with SJG's 2010 Form 10-K for a more complete discussion of our accounting policies and certain other information. REVENUE BASED TAXES - SJG collects certain revenue-based energy taxes from its customers. Such taxes include New Jersey State Sales Tax, Transitional Energy Facility Assessment (TEFA) and Public Utilities Assessment (PUA). State sales tax is recorded as a liability when billed to customers and is not included in revenue or operating expenses. TEFA and PUA are included in both revenues and cost of sales, and totaled $1.2 million and $1.1 million for the three months ended June 30, 2011 and 2010, and $5.0 million and $4.8 million for the six months ended June 30, 2011 and 2010, respectively. NEW ACCOUNTING PRONOUNCEMENTS - Other than as described below, no new accounting pronouncement issued or effective during 2010 and 2011 had, or is expected to have, a material impact on the condensed financial statements. The FASB has issued Accounting Standards Update (ASU) No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This ASU allows an entity the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both choices, an entity is required to present each component of net income along with a total for other comprehensive income, and a total amount for comprehensive income. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The new guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Management is currently evaluating the impact that the adoption of this guidance will have on the Company's financial statements. |
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
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Jun. 30, 2011
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FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES [Abstract] | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES |
GAAP establishes a hierarchy that prioritizes fair value measurements based on the types of inputs used for the various valuation techniques. The levels of the hierarchy are described below:
Assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. For financial assets and financial liabilities measured at fair value on a recurring basis, information about the fair value measurements for each major category is as follows (in thousands):
(A) Available-for-Sale Securities include securities that are traded in active markets and securities that are not traded publicly. The securities traded in active markets are valued using the quoted principal market close prices that are provided by the trustees and are categorized in Level 1 in the fair value hierarchy. The remaining securities consist of funds that are not publicly traded. These funds, which consist of stocks and bonds that are traded individually in active markets, are valued using quoted prices for similar assets and are categorized in Level 2 in the fair value hierarchy. (B) Derivatives – Energy Related Assets and Liabilities are traded in both exchange-based and non-exchange-based markets. Exchange-based contracts are valued using unadjusted quoted market sources in active markets and are categorized in Level 1 in the fair value hierarchy. Certain non-exchange-based contracts are valued using indicative price quotations available through brokers or over-the-counter, on-line exchanges and are categorized in Level 2. These price quotations reflect the average of the bid-ask mid-point prices and are obtained from sources that management believes provide the most liquid market. Management reviews and corroborates the price quotations to ensure the prices are observable which includes consideration of actual transaction volumes, market delivery points, bid-ask spreads and contract duration. (C) Derivatives – Other, include interest rate swaps that are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment. |
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) [Abstract] | Â | Â | Â | Â |
Operating Revenues | $ 65,187 | $ 61,344 | $ 245,510 | $ 258,060 |
Operating Expenses: | Â | Â | Â | Â |
Cost of Sales (Excluding depreciation) | 28,259 | 23,941 | 116,833 | 140,816 |
Operations | 17,403 | 16,485 | 35,676 | 34,292 |
Maintenance | 3,215 | 2,785 | 6,224 | 5,601 |
Depreciation | 7,523 | 7,319 | 14,983 | 14,398 |
Energy and Other Taxes | 1,722 | 1,590 | 6,236 | 5,938 |
Total Operating Expenses | 58,122 | 52,120 | 179,952 | 201,045 |
Operating Income | 7,065 | 9,224 | 65,558 | 57,015 |
Other Income and Expense | 515 | 240 | 1,393 | 473 |
Interest Charges | (4,895) | (4,163) | (9,924) | (8,178) |
Income Before Income Taxes | 2,685 | 5,301 | 57,027 | 49,310 |
Income Taxes | (1,065) | (2,125) | (23,111) | (20,264) |
Net Income | $ 1,620 | $ 3,176 | $ 33,916 | $ 29,046 |