-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Kx+vc2sIB3PgqBmfOYAihCzmBUe5g+VRfEYO4hIS2dtOxXGmASij1YORciUAkWPO Sqtq0zJdtm4xrTiyeKfu9g== 0000091928-94-000002.txt : 19940228 0000091928-94-000002.hdr.sgml : 19940228 ACCESSION NUMBER: 0000091928-94-000002 CONFORMED SUBMISSION TYPE: U-3A-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTH JERSEY INDUSTRIES INC CENTRAL INDEX KEY: 0000091928 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 221901645 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-3A-2 SEC ACT: 35 SEC FILE NUMBER: 069-00207 FILM NUMBER: 94512834 BUSINESS ADDRESS: STREET 1: 1 SO JERSEY PLZ STREET 2: RTE 54 CITY: FOLSOM STATE: NJ ZIP: 08037 BUSINESS PHONE: 6095619000 FORMER COMPANY: FORMER CONFORMED NAME: SOUTH JERSEY GAS CO DATE OF NAME CHANGE: 19700507 FORMER COMPANY: FORMER CONFORMED NAME: ATLANTIC CITY GAS CO DATE OF NAME CHANGE: 19680301 U-3A-2 1 FILE NO. ---------- FORM U-3A-2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. STATEMENT BY HOLDING COMPANY CLAIMING EXEMPTION UNDER RULE U-2 FROM THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 TO BE FILED ANNUALLY PRIOR TO MARCH 1 SOUTH JERSEY INDUSTRIES, INC. hereby files with the Securities and Exchange Commission, pursuant to Rule U-2, its statement claiming exemption as a holding company from the provisions of the Public Utility Holding Company Act of 1935. In support of such claim for exemption, the following information is submitted: 1. Name, statement of organization, locations and nature of business of claimant and every subsidiary thereof. The claimant, South Jersey Industries, Inc. (the Company), was organized under the laws of the State of New Jersey; its principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. The Company is not a public utility company. It is primarily engaged in the business of owning and holding a majority interest in other business enterprises. The Company owns all of the outstanding common stock of South Jersey Gas Company (Gas Company or SJG), which was organized under the laws of the State of New Jersey. Gas Company's principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. Gas Company is a public utility company engaged in the purchase, transmission and sale of natural gas for residential, commercial, and industrial use in an area of approximately 2,500 square miles in the southern part of New Jersey. The Company owns all of the outstanding common stock of Energy & Minerals, Inc. (EMI), which was organized under the laws of the State of New Jersey. EMI's principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. EMI is not a public utility company. It is primarily engaged in owning and holding the stock of certain nonutility subsidiaries of the Company. The Company owns all of the outstanding common stock of South Jersey Energy Company (Energy Company), which was organized under the laws of the State of New Jersey. Energy Company's principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. Energy Company is not a public utility company. Energy Company provides services for the acquisition and transportation of natural gas for industrial and commercial users. The Company owns all of the outstanding stock of R & T Group, Inc. (R & T), which was organized under the laws of the State of New Jersey. R & T's principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. R & T is not a public utility company. It is primarily engaged in owning and holding the stock of certain nonutility subsidiaries of the Company. EMI owns all of the outstanding common stock of The Morie Company, Inc. (Morie), which was organized under the laws of the State of New Jersey. Morie's principal location is 1201 N. High Street, Millville, N.J. 08332. Morie is not a public utility company. It is engaged in the mining, processing, and marketing of commercial and industrial sands and gravels. EMI owns all of the outstanding common stock of South Jersey Fuel, Inc. (Fuel Company), which was organized under the laws of the State of New Jersey. Fuel Company's principal location is Number One South Jersey Plaza, Route 54, Folsom, New Jersey 08037. Fuel Company is not a public utility company. Fuel Company is presently inactive. R & T owns all of the outstanding common stock of R and T Castellini Company, Inc. (Castellini Company), which was organized under the laws of the State of New Jersey. Castellini Company's principal location is 805 Sheridan Avenue, Vineland, N.J. 08360. Castellini Company is not a public utility company. It is engaged in the installation of gas, water and sewer lines, plant maintenance and site work, and environmental cleanup and remediation. R & T owns all of the outstanding common stock of R & T Castellini Construction Company, Inc. (Castellini Construction), which was organized under the laws of the State of Delaware. Castellini Construction's principal location is 3865 Lincoln Avenue, Vineland, N.J. 08360. Castellini Construction Company is not a public utility company. It is engaged in the installation of gas, water and sewer lines, plant maintenance and site work, and environmental cleanup and remediation. R & T owns all of the outstanding common stock of S.W. Downer, Jr. Company, Inc. (Downer Company), which was organized under the laws of the State of New Jersey. Downer Company's principal location is Ellis & Sewell Streets, Glassboro, N.J. 08028. Downer Company is not a public utility company. It is engaged in the installation of gas, water and sewer lines, plant maintenance and site work, and environmental cleanup and remediation. R & T owns all of the outstanding common stock of Onshore Construction Company, Inc. (Onshore), which was organized under the laws of the State of New Jersey. Onshore's principal location is Ellis & Sewell Streets, Glassboro, N.J. 08028. Onshore is not a public utility company. It is engaged in the installation of large diameter pipe, sewerage plants, bridges, dams and other heavy construction projects. R & T owns all of the outstanding common stock of Cape Atlantic Crane Co., Inc. (Cape Atlantic), which was organized under the laws of the State of New Jersey. Cape Atlantic's principal location is Ellis & Sewell Streets, Glassboro, N.J. 08028. Cape Atlantic is not a public utility company. It is principally engaged in the rental of cranes. 2. A brief description of the properties of claimant and each of its subsidiary public utility companies used for the generation, transmission, and distribution of electric energy for sale, or for the production, transmission, and distribution of natural or manufactured gas, indicating the location of principal generating plants, transmission lines, producing fields, gas manufacturing plants, and electric and gas distribution facilities, including all such properties which are outside the State in which claimant and its subsidiaries are organized and all transmission or pipelines which deliver or receive electric energy or gas at the borders of such State. The Company does not own directly any properties used for the production, transmission, and distribution of natural or manufactured gas or electric energy. The properties of Gas Company used for the production, transmission, and distribution of natural or manufactured gas include mains, service connections and meters, supplemental gas storage facilities, three liquefied propane plants, and an LNG storage and vaporization facility, all of which are located in the State of New Jersey (except that certain gas owned by Gas Company is stored outside the State and is transported into the State when needed). There are 4,407 miles of distribution mains. There are 335 miles of mains in the transmission system. No pipelines of Gas Company deliver or receive gas at the borders of the State of New Jersey. 3. The following information for the last calendar year with respect to claimant and each of its subsidiary public utility companies: (a) Number of kwh of electric energy sold (at retail or wholesale) and Mcf of natural or manufactured gas distributed at retail. During 1993, Gas Company distributed at retail to residential, commercial and industrial customers 40,995,000 Mcf of natural or manufactured gas and transported 14,522,000 Mcf of natural gas purchased directly by its industrial and commercial customers. Gas Company also sold 3,563,000 Mcf of natural gas at wholesale for resale within the State of New Jersey. (b) Number of kwh of electric energy and Mcf of natural or manufactured gas distributed at retail outside the State in which each company is organized. None (c) Number of kwh of electric energy and Mcf of natural or manufactured gas sold at wholesale outside the State in which each such company is organized, or at the State line. None (d) Number of kwh of electric energy and Mcf of natural or manufactured gas purchased outside the State in which each such company is organized or at the State line. During 1993, Gas Company purchased and had delivered to it approximately 44,930,000 Mcf of natural gas. This gas was purchased from out-of-state sources for distribution by Gas Company to its customers in New Jersey. During 1993, Gas Company purchased and had delivered to it approximately 10,000 Mcf of liquefied natural gas. This entire amount was transported by over-the-road truck transport to Gas Company's LNG Storage and Vaporization facility at McKee City, Atlantic County, New Jersey. EXHIBIT A Consolidating statements of income and retained earnings of the claimant and its subsidiary companies for the last calendar year, together with a consolidating balance sheet of claimant and its subsidiary companies as of the close of such calendar year. The above-named claimant has caused this statement to be duly executed on its behalf by its authorized officer on this 25th day of February 1994. SOUTH JERSEY INDUSTRIES, INC. By /s/ Richard B. Tonielli RICHARD B. TONIELLI Treasurer CORPORATE SEAL ATTEST: /s/ George L. Baulig GEORGE L. BAULIG Secretary and Assistant Treasurer Name, title and address of officer to whom notices and correspondence concerning this statement should be addressed: Richard B. Tonielli, Treasurer South Jersey Industries, Inc. Number One South Jersey Plaza Route 54 Folsom, New Jersey 08037 SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
South Jersey Energy & South Jersey Industries, South Jersey Minerals, Inc. Energy Inc. Gas Company Consolidated Company Sub-Total ------------- ------------- ------------- ------------- ------------- OPERATING REVENUES Utility $0 $277,581,210 $0 $0 $277,581,210 Nonutility 240,830 0 28,712,463 24,471,978 53,425,271 ------------- ------------- ------------- ------------- ------------- Total Operating Revenues 240,830 277,581,210 28,712,463 24,471,978 331,006,481 ------------- ------------- ------------- ------------- ------------- OPERATING EXPENSE Gas Purchased for Resale 0 154,651,584 0 0 154,651,584 Operation - Utility 0 35,103,787 0 0 35,103,787 Operation - Nonutility 1,325,525 0 19,791,164 23,666,122 44,782,811 Maintenance 22,104 5,047,920 2,890,701 2,100 7,962,825 Depreciation & Depletion 13,195 11,887,874 2,737,742 2,428 14,641,239 Current Federal Income Taxes (208,554) 2,124,786 475,373 250,327 2,641,932 Def. and Non-Current Fed. Income Taxes (422,549) 5,707,499 (354,858) (8,751) 4,921,341 State Gross Receipts & Franchise Taxes 0 31,346,446 0 0 31,346,446 Other Taxes 53,976 2,155,920 1,179,154 83,355 3,472,405 ------------- ------------- ------------- ------------- ------------- Total Operating Expenses 783,697 248,025,816 26,719,276 23,995,581 299,524,370 ------------- ------------- ------------- ------------- ------------- Operating Income (542,867) 29,555,394 1,993,187 476,397 31,482,111 OTHER INCOME Dividends from Subsidiaries 3,317,002 0 0 0 3,317,002 Equity in Undistributed Earnings of Subs 13,630,719 0 0 0 13,630,719 ------------- ------------- ------------- ------------- ------------- Income Before Interest Charges 16,404,854 29,555,394 1,993,187 476,397 48,429,832 ------------- ------------- ------------- ------------- ------------- INTEREST CHARGES Long-Term Debt 531,000 10,770,831 655,372 0 11,957,203 Short- Term Debt 60,399 2,594,704 24,144 937 2,680,184 Other 14,779 570,169 0 0 584,948 ------------- ------------- ------------- ------------- ------------- Total Interest Charges 606,178 13,935,704 679,516 937 15,222,335 ------------- ------------- ------------- ------------- ------------- Income from Continuing Operations Before Pref. Stock Dividend Requirements of Subsidiary 15,798,676 15,619,690 1,313,671 475,460 33,207,497 Pref Stock Dividend Requirements of Subsidiary 0 186,895 0 0 186,895 ------------- ------------- ------------- ------------- ------------- Income Before Cumulative Effect of a Change in Accounting Principle 15,798,676 15,432,795 1,313,671 475,460 33,020,602 Cumulative Effect of a Change in Accting Principle (168,617) 1,234,998 (582,578) (2,116) 481,687 ------------- ------------- ------------- ------------- ------------- Income Applicable to Common Stock from Continuing Operations 15,630,059 16,667,793 731,093 473,344 33,502,289 Equity in Undistributed Earnings of Discontinued Subsidiaries (278,321) 0 0 0 (278,321) Loss from Discontinued Operations (Net of Current and Deferred Income Tax Credits of $14,525 and $6,653, respectively) 0 0 (41,106) 0 (41,106) ------------- ------------- ------------- ------------- ------------- Net Income Applicable to Common Stock $15,351,738 $16,667,793 $689,987 $473,344 $33,182,862 ============= ============= ============= ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
Sub-Total R & T Eliminations From Prior Group, Inc. & Consolidated Page Consolidated Adjustments Total ------------- ------------- ------------- ------------- OPERATING REVENUES Utility $277,581,210 $0 [C] ($9,039,992) $268,541,218 Nonutility 53,425,271 12,941,124 [C] (966,620) 65,399,775 ------------- ------------- ------------- ------------- Total Operating Revenues 331,006,481 12,941,124 (10,006,612) 333,940,993 ------------- ------------- ------------- ------------- OPERATING EXPENSE Gas Purchased for Resale 154,651,584 0 [C] (8,865,032) 145,786,552 Operation - Utility 35,103,787 0 [C] (174,960) 34,928,827 Operation - Nonutility 44,782,811 11,565,541 [C] (284,893) 56,063,459 Maintenance 7,962,825 562,700 0 8,525,525 Depreciation & Depletion 14,641,239 740,112 [D] (1,920) 15,379,431 Current Federal Income Taxes 2,641,932 (237,003) 0 2,404,929 Def. and Non-Current Fed. Income Taxes 4,921,341 (250,582) 0 4,670,759 State Gross Receipts & Franchise Taxes 31,346,446 0 0 31,346,446 Other Taxes 3,472,405 575,817 0 4,048,222 ------------- ------------- ------------- ------------- Total Operating Expenses 299,524,370 12,956,585 (9,326,805) 303,154,150 ------------- ------------- ------------- ------------- Operating Income 31,482,111 (15,461) (679,807) 30,786,843 OTHER INCOME Dividends from Subsidiaries 3,317,002 0 [A] (3,317,002) 0 Equity in Undistributed Earnings of Subs 13,630,719 0 [A] (13,630,719) 0 ------------- ------------- ------------- ------------- Income Before Interest Charges 48,429,832 (15,461) (17,627,528) 30,786,843 ------------- ------------- ------------- ------------- INTEREST CHARGES Long-Term Debt 11,957,203 974,048 [C] (531,000) 12,400,251 Short- Term Debt 2,680,184 72,653 [C] (150,727) 2,602,110 Other 584,948 0 0 584,948 ------------- ------------- ------------- ------------- Total Interest Charges 15,222,335 1,046,701 (681,727) 15,587,309 ------------- ------------- ------------- ------------- Income from Continuing Operations Before Pref. Stock Dividend Requirements of Subsidiary 33,207,497 (1,062,162) (16,945,801) 15,199,534 Pref Stock Dividend Requirements of Subsidiary 186,895 0 0 186,895 ------------- ------------- ------------- ------------- Income Before Cumulative Effect of a Change in Accounting Principle 33,020,602 (1,062,162) (16,945,801) 15,012,639 Cumulative Effect of a Change in Accting Principle 481,687 (99,562) 0 382,125 ------------- ------------- ------------- ------------- Income Applicable to Common Stock from Continuing Operations 33,502,289 (1,161,724) (16,945,801) 15,394,764 Equity in Undistributed Earnings of Discontinued Subsidiaries (278,321) 0 [A] 278,321 0 Loss from Discontinued Operations (Net of Current and Deferred Income Tax Credits of $14,525 and $6,653, respectively) (41,106) 0 0 (41,106) ------------- ------------- ------------- ------------- Net Income Applicable to Common Stock $33,182,862 ($1,161,724) ($16,667,480) $15,353,658 ============= ============= ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING STATEMENT OF RETAINED EARNINGS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
South Jersey Energy & South Jersey Industries, South Jersey Minerals, Inc. Energy Inc. Gas Company Consolidated Company Sub-Total ------------- ------------- ------------- ------------- ------------- Balance at Beginning of Period $32,485,049 $35,904,747 $6,736,468 $120,910 $75,247,174 Net Income Applicable to Common Stock 15,351,738 16,667,793 689,987 473,344 33,182,862 ------------- ------------- ------------- ------------- ------------- 47,836,787 52,572,540 7,426,455 594,254 108,430,036 Dividends Declared - Cash 13,873,097 2,501,475 395,527 420,000 17,190,099 ------------- ------------- ------------- ------------- ------------- Balance at End of Period $33,963,690 $50,071,065 $7,030,928 $174,254 $91,239,937 ============= ============= ============= ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING STATEMENT OF RETAINED EARNINGS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993
R & T Group, Eliminations Inc. & Consolidated Sub-Total Consolidated Adjustments Total ------------- ------------- ------------- ------------- Balance at Beginning of Period $75,247,174 ($1,163,572) ($41,674,262) $32,409,340 Net Income Applicable to Common Stock 33,182,862 (1,161,724) (16,667,480) 15,353,658 ------------- ------------- ------------- ------------- 108,430,036 (2,325,296) (58,341,742) 47,762,998 Dividends Declared - Cash 17,190,099 0 (3,317,002) 13,873,097 ------------- ------------- ------------- ------------- Balance at End of Period $91,239,937 ($2,325,296) ($55,024,740) $33,889,901 ============= ============= ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS STATEMENT OF INCOME AND RETAINED EARNINGS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1993 [A] Dividends from Subsidiaries $3,317,002 Equity in Undistributed Earnings of Subsidiaries 13,630,719 Retained Earnings - Dividends Paid - Cash $3,317,002 Investment in Subsidiaries 13,352,398 Equity in Undistributed Earnings of Discontinued Subsidiaries 278,321 To eliminate intercompany dividends paid and equity in undistributed earnings recorded by South Jersey Industries, Inc. [B] Retained Earnings - 1/1/93 $41,674,262 Deferred Federal Income Taxes 59,539 Accumulated Depreciation & Depletion - 1/1/93 8,480 Investment in Subsidiaries $41,598,553 Non-Utility Property $143,728 To eliminate prior inter-company gain and retained earnings of subsidiaries at 1/1/93 previously recorded by South Jersey Industries, Inc. under the equity method of accounting. [C] Operating Revenues - Utility $9,039,992 Operating Revenues - Nonutility 966,620 Gas Purchased for Resale $8,865,032 Operating Expense - Utility 174,960 Operating Expense - Nonutility 284,893 Interest Expense - Short-Term Debt 150,727 Interest Expense - Long-Term Debt 531,000 To eliminate intercompany revenue and expense. [D] Accumulated Depreciation & Depletion $1,920 Depreciation, Depletion & Amortization $1,920 To eliminate South Jersey Industries, Inc. depreciation on Millville property gain.
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1993
South Jersey Energy & South Jersey Industries, South Jersey Minerals, Inc. Energy Inc. Gas Company Consolidated Company Sub-Total ------------- ------------- -------------- ------------- ------------- ASSETS PROPERTY, PLANT & EQUIPMENT Utility Plant, original cost $0 $470,841,951 $0 $0 $470,841,951 Gas Plant Acq Adjustment 0 2,224,715 0 0 2,224,715 Accum Depre & Amortization 0 (126,722,326) 0 0 (126,722,326) Nonutil Prop & Equip., at cost 1,648,182 4,793,829 45,300,417 14,193 51,756,621 Accum Depre & Depletion (206,103) 0 (26,884,464) (10,778) (27,101,345) ------------- ------------- -------------- ------------- ------------- Prop, Plant & Equip - Net 1,442,079 351,138,169 18,415,953 3,415 370,999,616 ------------- ------------- -------------- ------------- ------------- INVESTMENTS Investments in Subsidiaries 145,710,399 0 0 0 145,710,399 Invest in Non-Assoc Companies 916,612 0 0 0 916,612 ------------- ------------- -------------- ------------- ------------- Total Investment 146,627,011 0 0 0 146,627,011 ------------- ------------- -------------- ------------- ------------- CURRENT ASSETS Cash & Temp Cash Investments 5,465,822 3,071,294 625,338 17,981 9,180,435 Notes Rec - Assoc Companies 1,344,000 0 759,000 0 2,103,000 Accounts Receivable 29,913 23,189,822 5,017,994 2,046,869 30,284,598 Unbilled Revenues 0 18,501,464 0 0 18,501,464 Provisions for Uncollectibles 0 (737,400) (269,000) (19,929) (1,026,329) Accts Rec - Assoc Companies 301,045 129,865 20,400 0 451,310 Nat Gas in Storage, Avg Cost 0 12,201,909 0 0 12,201,909 Mat & Supplies, Avg Cost 0 3,778,363 7,701,424 0 11,479,787 Assets Held for Disposal 0 0 344,654 0 344,654 Accum. Deferred Income Taxes 3,177 1,056,275 226,520 8,342 1,294,314 Prepayments & Other 11,049 1,417,973 845,444 30,737 2,305,203 ------------- ------------- -------------- ------------- ------------- Total Current Assets 7,155,006 62,609,565 15,271,774 2,084,000 87,120,345 ------------- ------------- -------------- ------------- ------------- NONCURRENT ACCTS REC - Merch 0 2,220,781 0 0 2,220,781 ------------- ------------- -------------- ------------- ------------- NONCURRENT ASSETS Gross Recpts&Franchise Taxes 0 5,668,232 0 0 5,668,232 Environmental Remediation Costs 885,845 25,283,758 53,859 0 26,223,462 Accum. Deferred Income Taxes 976,155 6,989,274 0 (249) 7,965,180 Deprec. Flowthrough Pre-1976 0 17,295,862 0 0 17,295,862 Deferred Fuel Costs 0 16,282,114 0 0 16,282,114 Other 57,624 10,699,071 371,990 0 11,128,685 ------------- ------------- -------------- ------------- ------------- Total Noncurrent Assets 1,919,624 82,218,311 425,849 (249) 84,563,535 ------------- ------------- -------------- ------------- ------------- Total $157,143,720 $498,186,826 $34,113,576 $2,087,166 $691,531,288 ============= ============= ============== ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1993
R & T Eliminations Group, Inc. & Consolidated Sub-Total Consolidated Adjustments Total ------------- ------------- -------------- ------------- ASSETS PROPERTY, PLANT & EQUIPMENT Utility Plant, original cost $470,841,951 $0 $0 $470,841,951 Gas Plant Acq Adjustment 2,224,715 0 0 2,224,715 Accum Depre & Amortization (126,722,326) 0 0 (126,722,326) Nonutil Prop & Equip., at cost 51,756,621 7,493,355 [4] (143,728) 59,106,248 Accum Depre & Depletion (27,101,345) (2,973,432) [5] 10,400 (30,064,377) ------------- ------------- -------------- ------------- Prop, Plant & Equip - Net 370,999,616 4,519,923 (133,328) 375,386,211 ------------- ------------- -------------- ------------- INVESTMENTS Investments in Subsidiaries 145,710,399 0 [1] (145,710,399) 0 Invest in Non-Assoc Companies 916,612 0 0 916,612 ------------- ------------- -------------- ------------- Total Investment 146,627,011 0 (145,710,399) 916,612 ------------- ------------- -------------- ------------- CURRENT ASSETS Cash & Temp Cash Investments 9,180,435 755,226 0 9,935,661 Notes Rec - Assoc Companies 2,103,000 6,135,000 [3] (8,238,000) 0 Accounts Receivable 30,284,598 1,787,254 [2,8] (1,045,888) 31,025,964 Unbilled Revenues 18,501,464 0 0 18,501,464 Provisions for Uncollectibles (1,026,329) 0 0 (1,026,329) Accts Rec - Assoc Companies 451,310 3,050,321 [2] (3,501,631) 0 Nat Gas in Storage, Avg Cost 12,201,909 0 0 12,201,909 Mat & Supplies, Avg Cost 11,479,787 9,173 0 11,488,960 Assets Held for Disposal 344,654 0 0 344,654 Accum. Deferred Income Taxes 1,294,314 18,370 [6] (1,312,684) 0 Prepayments & Other 2,305,203 121,351 0 2,426,554 ------------- ------------- -------------- ------------- Total Current Assets 87,120,345 11,876,695 (14,098,203) 84,898,837 ------------- ------------- -------------- ------------- NONCURRENT ACCTS REC - Merch 2,220,781 0 0 2,220,781 ------------- ------------- -------------- ------------- NONCURRENT ASSETS Gross Recpts&Franchise Taxes 5,668,232 0 0 5,668,232 Environmental Remediation Costs 26,223,462 0 0 26,223,462 Accum. Deferred Income Taxes 7,965,180 1,228,865 [7] (9,194,045) 0 Deprec. Flowthrough Pre-1976 17,295,862 0 0 17,295,862 Deferred Fuel Costs 16,282,114 0 [9] (10,937,004) 5,345,110 Other 11,128,685 2,694,593 0 13,823,278 ------------- ------------- -------------- ------------- Total Noncurrent Assets 84,563,535 3,923,458 (20,131,049) 68,355,944 ------------- ------------- -------------- ------------- Total $691,531,288 $20,320,076 ($180,072,979) $531,778,385 ============= ============= ============== =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1993
South Jersey Energy & South Jersey Industries, South Jersey Minerals, Inc. Energy Inc. Gas Company Consolidated Company Sub-Total ------------- ------------- -------------- ------------- ------------- CAPITALIZATION AND LIABILITIES COMMON EQUITY Common Stock SJI Par Value $1.25 a share Authorized - 20,000,000 shares Outstanding - 9,804,576 & 9,497,700 $12,255,720 $0 $0 $0 $12,255,720 Common Stock - Subsidiaries 0 5,847,848 13,283,453 50,000 19,181,301 Premium on Common Stock 94,380,755 61,193,882 1,584,265 0 157,158,902 Capital Stock Expense 0 0 0 0 0 Retained Earnings 33,963,690 50,071,065 7,030,928 174,254 91,239,937 ------------- ------------- -------------- ------------- ------------- Total Common Equity 140,600,165 117,112,795 21,898,646 224,254 279,835,860 ------------- ------------- -------------- ------------- ------------- CUMULATIVE PREFERRED STOCK SJG - Par Value $100 a share Authorized - 50,904 shares Outstanding: Series A, 4.70%- 6,600 shares 0 660,000 0 0 660,000 Series B, 8% -19,242 shares 0 1,924,200 0 0 1,924,200 ------------- ------------- -------------- ------------- ------------- Total Preferred Stock 0 2,584,200 0 0 2,584,200 ------------- ------------- -------------- ------------- ------------- L-T-D (less current maturities & sinking fund requirements) 0 130,445,924 5,250,000 0 135,695,924 ------------- ------------- -------------- ------------- ------------- CURRENT LIABILITIES Notes Payable to Banks 1,600,000 81,150,000 0 0 82,750,000 Current Maturities of L-T-D 0 5,570,249 1,194,102 0 6,764,351 Notes Pay - Assoc Companies 6,894,000 0 0 0 6,894,000 Accounts Payable 282,979 26,222,610 1,754,223 1,809,381 30,069,193 Accts Pay to Assoc Companies 64,461 212,149 186,291 8,144 471,045 Customer Deposits 0 5,781,422 0 0 5,781,422 Accum. Deferred Income Taxes 3,757 6,316,992 0 214 6,320,963 Gross Rects&Franchise Tx Accr 0 13,903,927 0 0 13,903,927 Environmental Remediation Costs 499,475 3,124,000 0 0 3,623,475 Interest Accrued 1,293,600 4,230,957 98,612 0 5,623,169 Dividends Declared 3,529,647 46,239 0 0 3,575,886 Other 1,608,698 (3,284,792) 1,962,838 41,415 328,159 ------------- ------------- -------------- ------------- ------------- Total Current Liabilities 15,776,617 143,273,753 5,196,066 1,859,154 166,105,590 ------------- ------------- -------------- ------------- ------------- DEF CR & NON-CURRENT LIABILITIES Pension and Other Post- Retirement Benefits Reserve 107,330 6,063,516 400,863 4,792 6,576,501 Accum. Deferred Income Taxes 230,833 65,533,069 1,298,001 (1,034) 67,060,869 Investment Tax Credit 0 7,428,135 0 0 7,428,135 Deferred Revenues 0 10,937,004 0 0 10,937,004 Environmental Remediation Costs 0 8,190,000 70,000 0 8,260,000 Other 428,775 6,618,430 0 0 7,047,205 ------------- ------------- -------------- ------------- ------------- Total Def Cr & Non-Cur Liab 766,938 104,770,154 1,768,864 3,758 107,309,714 ------------- ------------- -------------- ------------- ------------- Total $157,143,720 $498,186,826 $34,113,576 $2,087,166 $691,531,288 ============= ============= ============== ============= =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING BALANCE SHEET AS OF DECEMBER 31, 1993
R & T Eliminations Group, Inc. & Consolidated Sub-Total Consolidated Adjustments Total ------------- ------------- -------------- ------------- CAPITALIZATION AND LIABILITIES COMMON EQUITY Common Stock SJI Par Value $1.25 a share Authorized - 20,000,000 shares Outstanding - 9,804,576 & 9,497,700 $12,255,720 $0 $0 $12,255,720 Common Stock - Subsidiaries 19,181,301 1,000,000 [1] (20,181,301) 0 Premium on Common Stock 157,158,902 7,800,000 [1] (70,578,147) 94,380,755 Capital Stock Expense 0 0 0 0 Retained Earnings 91,239,937 (2,325,296)[1,4,5] (55,024,740) 33,889,901 ------------- ------------- -------------- ------------- Total Common Equity 279,835,860 6,474,704 (145,784,188) 140,526,376 ------------- ------------- -------------- ------------- CUMULATIVE PREFERRED STOCK SJG - Par Value $100 a share Authorized - 50,904 shares Outstanding: Series A, 4.70%- 6,600 shares 660,000 0 0 660,000 Series B, 8% -19,242 shares 1,924,200 0 0 1,924,200 ------------- ------------- -------------- ------------- Total Preferred Stock 2,584,200 0 0 2,584,200 ------------- ------------- -------------- ------------- L-T-D (less current maturities & sinking fund requirements) 135,695,924 8,608,597 0 144,304,521 ------------- ------------- -------------- ------------- CURRENT LIABILITIES Notes Payable to Banks 82,750,000 0 0 82,750,000 Current Maturities of L-T-D 6,764,351 1,466,345 0 8,230,696 Notes Pay - Assoc Companies 6,894,000 1,344,000 [3] (8,238,000) 0 Accounts Payable 30,069,193 481,877 [2,8] (2,736,153) 27,814,917 Accts Pay to Assoc Companies 471,045 46,721 [2] (517,766) 0 Customer Deposits 5,781,422 0 0 5,781,422 Accum. Deferred Income Taxes 6,320,963 44,233 [6] (1,312,684) 5,052,512 Gross Rects&Franchise Tx Accr 13,903,927 0 0 13,903,927 Environmental Remediation Costs 3,623,475 0 0 3,623,475 Interest Accrued 5,623,169 154,961 [2] (1,293,600) 4,484,530 Dividends Declared 3,575,886 0 0 3,575,886 Other 328,159 885,422 0 1,213,581 ------------- ------------- -------------- ------------- Total Current Liabilities 166,105,590 4,423,559 (14,098,203) 156,430,946 ------------- ------------- -------------- ------------- DEF CR & NON-CURRENT LIABILITIES Pension and Other Post- Retirement Benefits Reserve 6,576,501 25,589 0 6,602,090 Accum. Deferred Income Taxes 67,060,869 787,627 [4,7] (9,253,584) 58,594,912 Investment Tax Credit 7,428,135 0 0 7,428,135 Deferred Revenues 10,937,004 0 [9] (10,937,004) 0 Environmental Remediation Costs 8,260,000 0 0 8,260,000 Other 7,047,205 0 0 7,047,205 ------------- ------------- -------------- ------------- Total Def Cr & Non-Cur Liab 107,309,714 813,216 (20,190,588) 87,932,342 ------------- ------------- -------------- ------------- Total $691,531,288 $20,320,076 ($180,072,979) $531,778,385 ============= ============= ============== =============
SOUTH JERSEY INDUSTRIES, INC. CONSOLIDATING ADJUSTMENTS AND ELIMINATIONS BALANCE SHEET - DECEMBER 31, 1993 [1] Common Stock - Subsidiaries $20,181,301 Premium on Common Stock 70,578,147 Retained Earnings 54,950,951 Investment in Subsidiaries $145,710,399 To eliminate South Jersey Industries, Inc. investment in subsidiaries which is maintained on the equity method of accounting. [2] Accounts Payable - Associated Companies $517,766 Accounts Payable 1,703,382 Interest Accrued 1,293,600 Accounts Receivable - Associated Companies $3,501,631 Accounts Receivable 13,117 To eliminate intercompany accounts receivable and payable. [3] Notes Payable - Associated Companies $8,238,000 Notes Receivable - Associated Companies $8,238,000 To eliminate intercompany short-term notes between South Jersey Industries, Inc., Energy & Minerals, Inc. and R & T Group, Inc. [4] Retained Earnings $84,189 Deferred Federal Income Taxes 59,539 Non-Utility Property $143,728 To eliminate South Jersey Gas Company gain and related deferred taxes on sale of Millville property to South Jersey Industries, Inc. [5] Accumulated Depreciation & Depletion $10,400 Retained Earnings $10,400 To eliminate South Jersey Industries, Inc. depreciation on Millville property gain. [6] Accumulated Deferred Income Taxes - - Current Liability $1,312,684 Accumulated Deferred Income Taxes - - Current Asset $1,312,684 To reclassify FASB 109 current liability. [7] Accumulated Deferred Income Taxes - - Noncurrent Liability $9,194,045 Accumulated Deferred Income Taxes - - Noncurrent Asset $9,194,045 To reclassify FASB 109 noncurrent asset. [8] Accounts Payable $1,032,771 Accounts Receivable $1,032,771 To eliminate intercompany sales between South Jersey Gas Company and South Jersey Energy Company. [9] Deferred Revenues $10,937,004 Deferred Fuel Costs $10,937,004 To reclassify deferred revenues.
SOUTH JERSEY INDUSTRIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATING FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES: Consolidation -- The consolidated financial statements include the accounts of South Jersey Industries, Inc. (the Company) and all of its subsidiaries. Certain intercompany transactions, amounting to approximately $6.1 million in 1993, were not eliminated. Such amounts were capitalized to utility plant or environmental remediation costs on the South Jersey Gas Company (SJG) books of account (See Note 9). All other significant intercompany accounts and transactions have been eliminated. Regulation -- The Company's principal subsidiary, SJG, is subject to the rules and regulations of the New Jersey Board of Regulatory Commissioners (BRC) and maintains its accounts in accordance with the prescribed Uniform System of Accounts of that Board. On August 10, 1992, the BRC granted SJG a rate increase of $3.35 million based on an overall rate of return of 10.34 percent, including a 12.1 percent return on equity. As part of this increase, SJG is allowed to retain the first $3.9 million of base revenues generated by interruptible sales and 20 percent of base revenues generated from such sales above that level until it reaches a 12.1 percent return on equity. In addition to the rate increase, the BRC approved a temperature adjustment clause (TAC), which is being implemented on a trial basis. This is a mechanism designed to reduce the impact of extreme fluctuations in temperature on SJG and its customers. The BRC also permitted SJG to recover from ratepayers the carrying costs associated with the acceleration of gross receipts and franchise tax payments through 1993, and SJG is permitted to petition the BRC solely for the impact of the accelerated payment in 1994. In addition, the BRC order provides that the effect of SJG's adoption of FASB No. 106 will be addressed in its next rate petition (See Note 10). A combined filing for the amortization of environmental remediation costs and Levelized Gas Adjustment Clause (LGAC) recovery became effective in January 1993 as approved by the BRC. As future environmental remediation costs are incurred, SJG will recover these costs over subsequent 7-year periods (See Note 9). Utility Revenues -- SJG, in accordance with industry practices, bills most of its customers on a monthly cycle basis, although certain large industrial customers are billed at or near the end of each month. An accrual is made to recognize the unbilled revenues from the date of the last bill to the end of period. In accordance with a BRC order, SJG is allowed to recover the excess cost of gas sold over the cost thereof included in the base rates through the LGAC. Such collection is made on a forecasted basis, after a hearing, upon BRC order. Under and over recoveries of gas costs are deferred and included in the determination of the following year's LGAC. Interest is paid on overcollected LGAC balances based on SJG's return on rate base as determined in its last base rate proceeding. During December 1993, the BRC approved a net increase in SJG's annual adjustment clauses, which include the LGAC, TAC and Remediation Adjustment Clause, in the amount of $23.8 million. This increase was necessary primarily as a result of increases anticipated in the cost of gas and does not provide a profit to SJG. Property, Plant & Equipment -- Utility plant is stated at original cost as defined for regulatory purposes; nonutility plant is stated at cost. The cost of additions, replacements and renewals of units of property is charged to the appropriate plant account. Depreciation and Amortization -- Depreciation of gas utility plant is provided on a straight-line basis over the estimated remaining lives of the various classes of property. These estimates are periodically reviewed and adjustments are made as required after approval by the BRC. The composite rate per annum for all depreciable utility property was approximately 2.8 percent in 1993. Generally, with the exception of extraordinary retirements, accumulated depreciation is charged with the cost of depreciable utility property retired, together with removal costs less salvage. The gas plant acquisition adjustment, in the initial amount of approximately $3.0 million, is being amortized on a straight-line basis over a 40-year period. The unamortized balance amounting to $2.2 million at December 31, 1993, is not included in rate base. Depreciation of nonutility property is computed generally on a straight-line basis over the estimated useful lives of the property, ranging up to 45 years. Any gain or loss realized upon the disposition of nonutility property is recognized in determining net income. Federal Income and Other Taxes -- Deferred Federal Income Taxes are provided for all significant temporary differences between book and taxable income. In February 1992, the Financial Accounting Standards Board issued FASB No. 109 entitled "Accounting for Income Taxes". The Company adopted this statement in 1993. Its adoption resulted in the recording on the balance sheet of additional assets and liabilities, with the difference being credited to earnings as a cumulative effect of a change in accounting principle (See Note 4). The primary asset created as a result of adopting FASB No. 109 is income taxes - flowthrough depreciation in the amount of $17.6 million as of January 1, 1993. This amount represents the recording of the net tax effect of excess liberalized depreciation over book depreciation on utility plant because of temporary differences for which, prior to FASB No. 109, deferred taxes had not previously been provided. These tax benefits were previously flowed through in rates and management believes that as the amortization of the asset occurs, it will be recoverable through rates. Management is seeking such recovery as part of its January 7, 1994, petition for a general base rate increase (See Note 10). The cumulative effect of this change as of January 1, 1993, was to increase income by $382,000, or $0.04 per share. The investment tax credits (ITC) attributable to SJG were deferred and continue to be amortized at the annual rate of 3 percent, which approximates the life of the related assets. SJG, effective March 1, 1978, began accruing Gross Receipts and Franchise Taxes on current revenues, the basis for such taxes through 1991, rather than on the previous basis of taxes paid. The one-time increase resulting from this change has been deferred and is being amortized on a straight-line basis to operations over a 30-year period. Pensions -- The Company and its subsidiaries have several defined benefit retirement plans that provide annuity payments to substantially all full-time regular employees upon retirement. Approximately 76 percent of the plans' assets are invested in securities which, under their terms, provide for fixed income and a return of principal. The remaining assets of the plans are invested in professionally managed common stock portfolios. The companies pay the entire cost of the plans and the total provision made for such plans in 1993 aggregated approximately $1.8 million, including the amortization of the cost of past service benefits over a period of approximately 30 years. Net periodic pension cost for 1993 included the following components (in thousands): Service cost - benefits earned during the period $1,351 Interest cost on projected benefit obligation 2,723 Actual return on plan assets (3,184) Net amortization and deferral 903 ------ Net periodic pension cost $1,793 ====== Assumptions as of December 31 were: Discount rate 7.25% Rate of increase in compensation levels 4.6% Expected long-term rate of return on assets 8.5%-9.5% The following table sets forth the plans' funded status at December 31, 1993 (in thousands): Actuarial present value of benefit obligations: Vested benefit obligation $(32,337) ======== Accumulated benefit obligation $(32,550) ======== Projected benefit obligation $(40,964) Plan assets at fair value 32,976 -------- Projected benefit obligation in excess of plan assets (7,988) Unrecognized net loss 2,871 Prior service cost not yet recognized in net periodic pension cost 2,633 Unrecognized net obligation at January 1 986 -------- Pension liability recognized in the consolidated balance sheet $ (1,498) ======== The Company and its subsidiaries also provide postretirement health care and life insurance benefits to substantially all retired employees. The aggregate amount paid for 1993 was not material. Effective January 1, 1993, the Company adopted FASB No. 106 entitled "Employers' Accounting for Postretirement Benefits Other Than Pensions". This statement requires the Company to accrue the estimated cost of retiree benefit payments during the years the employee provides services. The Company previously expensed the cost of these benefits, which are principally health care, on a pay-as-you-go basis. The Company has elected to recognize the unfunded transition obligation of approximately $27.8 million over a period of 20 years. The majority of the Company's costs apply to its utility subsidiary, SJG, which is currently recovering these costs on a pay-as-you-go basis through its rates. SJG is recording a regulatory asset pursuant to a BRC order for the amount by which the cost exceeds the current level recovered in rates. The recovery of this regulatory asset, which amounted to approximately $3.9 million at December 31, 1993, is being addressed in SJG's current base rate case proceeding and it is expected that the recovery will be included in base rates (See Note 10). The following table sets forth the life and health care plans' funded status. Actuarial present value of accumulated postretirement benefit obligations (in thousands): Retirees $ (9,260) Other active plan participants (24,953) --------- Accumulated postretirement benefit obligation (34,213) Fair value of plan assets - --------- Accumulated postretirement benefit obligation in excess of plan assets (34,213) Unrecognized loss 3,745 Unrecognized transition obligation 26,429 --------- Postretirement benefit liability recognized in the consolidated balance sheet $ (4,039) ========= Net postretirement benefit cost for the year ended December 31, 1993, consisted of the following components (in thousands): Service cost - benefits earned during the period $1,144 Actual return on plan assets - Interest cost on accumulated postretirement benefit obligation 2,196 Amortization of transition obligation 1,391 ------ Net postretirement benefit cost $4,731 ====== The assumed health care cost trend rates used in measuring the accumulated postretirement benefit obligation in 1993 ranged from 8.10 percent to 11.42 percent, decreasing linearly each successive year until each reaches 6.75 percent in 2002 and 2007, respectively, after which they remain constant. If the health care cost trend rate assumptions were increased by 1 percent, the accumulated postretirement benefit obligation as of December 31, 1993, would be increased by 17.9 percent. The effect of this change on the sum of the service cost and interest cost would be an increase of 22.3 percent. The assumed discount rate used in determining the accumulated postretirement benefit obligation as of December 31, 1993 was 7.25 percent. Statements of Cash Flows - For purposes of reporting cash flows, all highly liquid investments with original maturities of three months or less are considered cash equivalents. 2. Segments of Business: Information about the Company's operations in different industry segments is presented below (in thousands): Operating Revenues: Gas Utility Operations $277,581 Sand Mining Operations 28,435 Other Industries 37,250 -------- Total 343,266 Intersegment Sales (9,325) -------- Consolidated Operating Revenues $333,941 ======== Operating Income: Gas Utility Operations $ 37,388 Sand Mining Operations 2,517 Other Industries 204 --------- Total 40,109 Federal Income Taxes (7,055) General Corporate Expense (2,308) --------- Total Operating Income $ 30,746 ========= Depreciation, Depletion and Amortization: Gas Utility Operations $ 13,881 Sand Mining Operations 2,713 Other Industries 1,610 --------- Total $ 18,204 ========= Property Additions: Gas Utility Operations $ 33,260 Sand Mining Operations 1,732 Other Industries 1,128 --------- Total $ 36,120 ========= Identifiable Assets: Gas Utility Operations $ 479,204 Sand Mining Operations 30,841 Other Industries 15,727 --------- Total 525,772 Corporate Assets 20,495 Intersegment Assets (14,489) --------- Consolidated Identifiable Assets $ 531,778 ========= Gas utility operations consist primarily of natural gas distribution to residential, commercial and industrial customers. Sand mining operations consist primarily of mining and processing sand, gravel and clay. Other industries include the utility construction, environmental services and general contracting firms, and the natural gas acquisition service company. Total operating revenues by industry segment include both sales to unaffiliated customers, as reported in the Company's statements of consolidated income, and intercompany sales, which are accounted for generally at the fair market value of the goods or services rendered. Operating income is total revenues less operating expenses, Federal Income Taxes, and general corporate expenses, as shown on the statements of consolidated income. Identifiable assets are those assets that are used in each segment of the Company's operations. Corporate assets are principally cash and cash items, and land, buildings and equipment held for corporate use. 3. Redeemable Cumulative Preferred Stock: Purchase funds for the Cumulative Preferred Stock, Series A and Series B, require SJG to offer annually to purchase 900 and 1,500 shares, respectively, at par value thereof, plus accrued dividends. If preferred stock dividends are in arrears, no dividends may be declared or paid, or other distribution made on the SJG Common Stock; and, if four or more quarterly dividends are in arrears, the Preferred Shareholders may elect a majority of the SJG directors. The Company has 2,500,000 authorized shares of Preference Stock, no par value, none of which has been issued. 4. Federal Income Taxes: Income tax expense applicable to operations is lower than the tax that would have resulted by applying the statutory rate to income from operations before Federal Income Tax for 1993. The reasons for the differences are as follows (in thousands): Tax at Statutory Rate $7,775 Increase (Decrease) Resulting from: Additional Statutory Depletion Allowance (405) Amortization of ITC (389) BRC Order - Flow back of Excess Deferred Taxes (67) Other - Net 141 ------ Total Provision for Federal Income Taxes $7,055 ====== The provision for Federal Income Taxes is composed of the following (in thousands): Current $2,390 ------ Deferred: Repair Allowance Permitted Under the Class Life Asset Depreciation Range System 34 Excess of Tax Depreciation Over Book Depreciation - Net 2,870 Deferred Fuel Costs 5,536 Environmental Remediation Costs - Net (287) Additional Amortization of Gross Receipts Taxes (136) Advances for Construction 19 BRC Order - Flow Back of Excess Deferred Taxes (67) Premium on Bond Redemption (58) Alternative Minimum Tax (2,042) Other - Net (815) ------ Total Deferred 5,054 ------ ITC (389) ------ Total $7,055 ====== Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's net deferred tax liability are as follows (in thousands): Deferred Tax Liabilities: Tax Depreciation Over Book Depreciation $53,069 Difference Between Book and Tax Basis of Property 3,285 Deferred Fuel Costs 5,536 Environmental Remediation Costs 4,773 Excess Protected 3,726 Gross Receipts Taxes 1,927 Other 1,138 ------- Total Deferred Tax Liabilities 73,454 ------- Deferred Tax Assets: Alternative Minimum Tax 5,980 ITC Basis Gross Up 3,826 ------- Total Deferred Tax Assets 9,806 ------- Net Deferred Tax Liability $63,648 ======= The IRS has completed examinations of the Company's consolidated Federal Income Tax returns for the years ended 1982 through 1988. Adjustments resulting from these audits are not expected to have a material effect on the Company's financial position. 5. Disclosure about Fair Value of Financial Instruments: Long-Term Debt - The fair value of the Company's long-term debt, including current maturities, as of December 31, 1993 is estimated to be $165.7 million (carrying amount $152.5 million) and is estimated based on the interest rates available to the Company at year end for debt with similar terms and remaining maturities. The Company retires higher cost debt whenever it is cost effective to do so within the constraints of the respective debt covenants. Other Financial Instruments - The carrying amount of the Company's other financial instruments is a reasonable estimate of their fair value at December 31, 1993. 6. Common Stock: The Company has 20,000,000 shares of Common Stock authorized of which the following shares were issued and outstanding: Beginning of Year 9,497,700 New Issues During Year: Dividend Reinvestment and Stock Purchase Plan 281,295 Employees' Stock Ownership Plan 4,941 Stock Option & Stock Appreciation Rights Plan 20,640 --------- End of Year 9,804,576 ========= The average shares of Common Stock outstanding for 1993 was 9,680,035 shares. In 1993, approximately $6.6 million was credited to Premium on Common Stock. On January 22, 1993, the Company's Board of Directors declared a 2 percent common stock dividend, payable on March 31, 1993 to shareholders of record at the close of business on March 10, 1993. Accordingly, the Company's financial statements and related per share amounts have been restated. The Company has a Stock Option and Stock Appreciation Rights Plan under which not more than 306,000 shares in the aggregate may be issued to officers and other key employees of the Company and its subsidiaries. No options or stock appreciation rights may be granted under the plan after January 23, 1997. At December 31, 1993, the Company had 53,620 options outstanding, exercisable at prices from $17.16 to $24.69 per share. During 1993, 20,640 options were exercised at $17.89 per share. On September 16, 1993, the Company granted options on 10,000 shares exercisable at $24.69. No stock appreciation rights have been issued under the plan. The stock options outstanding at December 31, 1993 did not have a material effect on the earnings per share calculation. The Company also has a Dividend Reinvestment and Stock Purchase Plan (DRP) and Employees' Stock Ownership Plan (ESOP). As of December 31, 1993, 237,407 and 57,387 shares of authorized but unissued Common Stock were reserved for future issuance to the DRP and ESOP, respectively. 7. Unused Lines of Credit and Compensating Balances: Unused lines of credit available at December 31, 1993, were approximately $52.5 million. Borrowings under these lines of credit are at market rates which approximated 3.5 percent at December 31, 1993. Demand deposits are maintained with lending banks on an informal basis and do not constitute compensating balances. 8. Retained Earnings: There are certain restrictions under various loan agreements as to the amount of cash dividends or other distributions that may be paid on the Common Stock of certain subsidiaries. The Company's aggregate equity in its subsidiaries' retained earnings that are free of these restrictions was approximately $33.9 million at December 31, 1993. 9. Commitments and Contingencies: The estimated cost of construction and environmental remediation programs of the Company and its subsidiaries for the year 1994 aggregates $32.8 million and, in connection therewith, certain commitments have been made. In May 1990, the BRC approved the stipulation entered into by the parties which allowed SJG to collect 100 percent of its gas costs which reflect producer -supplier take-or-pay costs from ratepayers. All costs billed by pipeline suppliers on a volumetric basis are being passed through on a current basis. Costs billed on a fixed basis were paid to a pipeline over a 3-year period, but are being recovered from ratepayers over a 6-year period without interest. This recovery mechanism started in November 1990. During 1993, the amount of these costs which has been flowed through to SJG, net of refunds, was approximately $2.1 million. Based on current estimates and information available, there are no remaining fixed costs to be billed to SJG under this stipulation. SJG, in the normal course of conducting business, has entered into long-term contracts for the supply of natural gas, firm transportation, and long-term firm gas storage service. The earliest expiration of any of these contracts is 1997; however, the initial primary term of this agreement can be extended annually through October 1999. All of the transportation and storage service agreements between SJG and its interstate pipeline suppliers are provided under tariffs on file with, and approved by, the Federal Energy Regulatory Commission (FERC). SJG's cumulative obligations for demand charges paid to its suppliers for all of these services is approximately $5.0 million per month which is recovered on a current basis through the LGAC. During 1992, the FERC issued a series of orders requiring all interstate pipelines to restructure their services. Included in these orders is FERC Order No. 636 which required pipelines to separate their sales and transportation services and change their rate design. Also, as a result of these orders, SJG will incur certain transition costs, which have yet to be determined, that are associated with its pipeline suppliers unbundling their services. SJG expects to recover any costs resulting from these orders through its LGAC. SJI and its subsidiaries have responded to requests from the U.S. Environmental Protection Agency and the New Jersey Department of Environmental Protection and Energy for information regarding several sites at which SJG or predecessor companies operated gas manufacturing plants or a nonutility subsidiary previously operated a fuel oil business. Manufactured gas operations were terminated at all SJG sites more than 30 years ago. Through December 31, 1993, the Company has recorded environmental remediation costs of $28.9 million, of which $17.0 million has been expended. Management's estimate of the remaining liability of approximately $11.9 million is reflected on the consolidated balance sheet under the captions "Current Liabilities" and "Deferred Credits and Non-Current Liabilities". Such amounts have not been adjusted for potential insurance recovery, which management is pursuing. Recorded amounts include estimated costs to be incurred through 1996 based on projected investigation and remediation work plans using existing technologies. Estimates beyond this time cannot be made on a reliable basis due to changing technology, government regulations and site specific requirements and, therefore, have not been recorded; however, the total costs to be incurred after 1996 may be substantial. The major portion of such costs relate to the remediation of former gas manufacturing sites of SJG, which has recorded and expended amounts of $26.8 million and $16.4 million, respectively, through December 31, 1993. SJG has established a regulatory asset for these costs and is recovering its costs as expended over 7-year amortization periods, as authorized by the BRC. SJG has recovered $2.4 million through rates as of December 31, 1993. The balance of such costs and payments, amounting to $2.1 million and $0.6 million, respectively, relates to other environmental related costs including nonutility sites previously used in fuel oil operations. In June 1991, new gross receipts and franchise tax legislation was adopted in New Jersey. The new legislation is accelerating the tax payments to a current year basis by 1994. The transition to the current year basis required SJG to make an additional annual payment of $15.4 million on April 1, 1993, and an additional payment of approximately $13.7 million is required in 1994. In 1992, SJG received a BRC rate order allowing recovery of the costs associated with the acceleration of these tax payments through 1993. SJG petitioned the BRC for the impact of the accelerated payment in 1994 as part of its current base rate filing (See Notes 1 and 10). 10. Subsequent Event: On January 7, 1994, SJG petitioned the BRC for a general base rate increase of approximately $26.6 million based on a projected overall rate of return of 10.36 percent, including a 12.75 percent return on equity. As part of this petition, SJG is seeking recovery of the carrying costs on expenditures for environmental remediation of former gas manufacturing sites and on the accelerated payment of gross receipts and franchise taxes in 1994. In addition, SJG is seeking recovery of the additional cost of providing postretirement benefits other than pensions in an effort to begin funding its increasing liability for such costs (See Note 1). -----END PRIVACY-ENHANCED MESSAGE-----