XML 81 R12.htm IDEA: XBRL DOCUMENT v2.4.1.9
INCOME TAXES
 12 Months Ended
Dec. 31, 2014
Income Tax Disclosure [Abstract]  
INCOME TAXES
INCOME TAXES:
 
SJI files a consolidated federal income tax return. State income tax returns are filed on a separate company basis in states where SJI has operations and/or a requirement to file. Total income taxes applicable to operations differ from the tax that would have resulted by applying the statutory Federal income tax rate to pre-tax income for the following reasons (in thousands):
 
 
 
2014
 
2013
 
2012
 
 
 

 
 

 
 

Tax at Statutory Rate
 
$
35,727

 
$
22,181

 
$
36,490

Increase (Decrease) Resulting from:
 
 
 
 
 
 
   State Income Taxes
 
1,960

 
971

 
5,857

   ESOP
 
(1,232
)
 
(1,176
)
 
(1,141
)
   Amortization of Investment Tax Credits - Utility
 
(211
)
 
(258
)
 
(287
)
   AFUDC
 
(1,481
)
 
(916
)
 
(1,048
)
   Investment and Other Tax Credits
 
(30,661
)
 
(38,179
)
 
(26,574
)
   Other - Net
 
347

 
(1,637
)
 
(1,818
)
Income Taxes:
 
 
 
 
 
 
   Continuing Operations
 
4,449

 
(19,014
)
 
11,479

   Discontinued Operations
 
(312
)
 
(426
)
 
(629
)
Net Income Taxes
 
$
4,137

 
$
(19,440
)
 
$
10,850

 
 
 

 
 

 
 

The provision for Income Taxes is comprised of the following (in thousands):
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 
2014
 
2013
 
2012
Current:
 
 

 
 

 
 

   Federal
 
$
(62
)
 
$
(273
)
 
$
(8,761
)
   State
 
3,052

 
3,066

 
221

      Total Current
 
2,990

 
2,793

 
(8,540
)
Deferred:
 
 
 
 
 
 
   Federal
 
1,707

 
(19,978
)
 
11,515

   State
 
(37
)
 
(1,571
)
 
8,791

      Total Deferred
 
1,670

 
(21,549
)
 
20,306

Investment Tax Credit - Utility
 
(211
)
 
(258
)
 
(287
)
Income Taxes:
 
 
 
 
 
 
      Continuing Operations
 
4,449

 
(19,014
)
 
11,479

      Discontinued Operations
 
(312
)
 
(426
)
 
(629
)
Net Income Taxes
 
$
4,137

 
$
(19,440
)
 
$
10,850



Investment Tax Credits attributable to SJG are deferred and amortized at the annual rate of 3.0%, which approximates the life of related assets.
 
The net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes resulted in the following net deferred tax liabilities (assets) at December 31 (in thousands):
 
 
 
2014
 
2013
Current:
 
 
 
 
   Net Operating Loss Carryforward
 
$
(42,839
)
 
$
(26,800
)
   Derivatives / Unrealized Gain
 
(7,965
)
 
(8,608
)
   Conservation Incentive Program
 
(2,027
)
 
4,631

   Budget Billing - Customer Accounts
 
1,138

 
1,152

   Provision for Uncollectibles
 
(6,296
)
 
(1,994
)
   Other
 
241

 
1,010

      Current Deferred Tax (Asset) Liability  - Net
 
$
(57,748
)
 
$
(30,609
)
Noncurrent:
 
 
 
 
   Book versus Tax Basis of Property
 
$
558,960

 
$
476,039

   Deferred Gas Costs - Net
 
22,959

 
1,330

   Environmental
 
12,147

 
13,017

   Deferred Regulatory Costs
 
6,333

 
13,665

   Deferred State Tax
 
(21,548
)
 
(17,949
)
   Investment Tax Credit Basis Gross-Up
 
(77
)
 
(185
)
   Deferred Pension & Other Post Retirement Benefits
 
39,891

 
24,218

   Pension & Other Post Retirement Benefits
 
(34,892
)
 
(17,777
)
   Deferred Revenues
 
(11,647
)
 
(9,593
)
   Derivatives / Unrealized  Gain
 
(4,589
)
 
2,149

   Net Operating Loss Carryforward
 
(114,335
)
 
(90,818
)
   Investment and Other Tax Credits
 
(154,805
)
 
(117,726
)
   Equity In Loss Of Affiliated Companies
 
39,230

 
37,764

   Other
 
6,893

 
5,234

      Noncurrent Deferred Tax Liability - Net
 
$
344,520

 
$
319,368



As of December 31, 2014, SJI has the following federal and state net operating loss carryforwards (in thousands):

 
 
Net Operating Loss Carryforwards
Expire in:
 
Federal
State
     2031
 
163,880

45,866

     2032
 
43,724

19,356

     2033
 
73,725

40,134

     2034
 
146,123

19,629

 
 
$
427,452

$
124,985



As of December 31, 2014, SJI has the following investment tax credit carryforwards (in thousands):

Expire in:
 
Investment Tax Credit Carryforward
     2030
 
$
11,628

     2031
 
26,613

     2032
 
32,071

     2033
 
46,179

     2034
 
37,079

 
 
$
153,570




SJI has $1.2 million of federal alternative minimum tax credits which have no expiration date. A valuation allowance is recorded when it is more likely than not that any of SJI's deferred tax assets will not be realized. SJI believes that it will generate sufficient future taxable income to realize the income tax benefits related to SJI's net deferred tax assets.

The total unrecognized tax benefits as of December 31, 2014, 2013, and 2012 were $0.6 million, $0.5 million, and $0.5 million, respectively, which excludes$0.7 million, $0.6 million, and$0.6 million of accrued interest and penalties, respectively.
 
A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, is as follows (in thousands):
 
 
 
2014
 
2013
 
2012
Balance at January 1,
 
$
547

 
$
503

 
$
736

Increase as a result of tax positions taken in prior years
 
5

 
44

 
108

Decrease due to a lapse in the statute of limitations
 
—

 
—

 
(341
)
Settlements
 
—

 
—

 
—

Balance at December 31,
 
$
552

 
$
547

 
$
503


 
The amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is not significant.  The Company's policy is to record interest and penalties related to unrecognized tax benefits as interest expense and other expense, respectively. These amounts were not significant in 2014, 2013 or 2012. There have been no significant changes to the unrecognized tax benefits during 2014, 2013 or 2012 and the Company does not anticipate any significant changes in the total unrecognized tax benefits within the next 12 months.
 
The unrecognized tax benefits are primarily related to an uncertainty of state income tax issues relating to the Company's nexus in certain states.  Federal and state income tax returns from 2011 forward and state income tax returns from 2008 forward are open and subject to examination.