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INCOME TAXES
12 Months Ended
Dec. 31, 2011
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):
 
 
 
2011
 
2010
 
2009
 
 
 

 
 

 
 

Tax at Statutory Rate
 
$
39,326

 
$
33,634

 
$
32,492

Increase (Decrease) Resulting from:
 
 
 
 
 
 
   State Income Taxes
 
6,763

 
5,669

 
6,079

   ESOP
 
(1,063
)
 
(971
)
 
(894
)
   Amortization of Investment
 
 
 
 
 
 
      Tax Credits
 
(302
)
 
(310
)
 
(314
)
   Amortization of Flowthrough
 
 
 
 
 
 
      Depreciation
 
526

 
664

 
664

   Energy Tax Credits
 
(21,927
)
 
(10,107
)
 
(3,660
)
   Other - Net
 
(821
)
 
232

 
(65
)
Income Taxes:
 
 
 
 
 
 
   Continuing Operations
 
22,502

 
28,811

 
34,302

   Discontinued Operations
 
(302
)
 
(337
)
 
(224
)
Net Income Taxes
 
$
22,200

 
$
28,474

 
$
34,078

 
 
 

 
 

 
 

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

 
 

 
 

 
 
2011
 
2010
 
2009
Current:
 
 

 
 

 
 

   Federal
 
$
(844
)
 
$
(7,527
)
 
$
7,396

   State
 
345

 
7,753

 
5,303

      Total Current
 
(499
)
 
226

 
12,699

Deferred:
 
 
 
 
 
 
   Federal
 
13,244

 
27,927

 
17,867

   State
 
10,059

 
968

 
4,050

      Total Deferred
 
23,303

 
28,895

 
21,917

Investment Tax Credits
 
(302
)
 
(310
)
 
(314
)
Income Taxes:
 
 
 
 
 
 
      Continuing Operations
 
22,502

 
28,811

 
34,302

      Discontinued Operations
 
(302
)
 
(337
)
 
(224
)
Net Income Taxes
 
$
22,200

 
$
28,474

 
$
34,078


 
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):
 
 
 
2011
 
2010
Current:
 
 
 
 
   Net Operating Loss Carryforward
 
$
(14,900
)
 
$

   Derivatives / Unrealized Gain
 
2,187

 
(272
)
   Conservation Incentive Program
 
5,975

 
5,408

   Budget Billing - Customer Accounts
 
(4,261
)
 
1,552

   Provision for Uncollectibles
 
(1,554
)
 
(2,899
)
   Other
 
(226
)
 
(507
)
      Current Deferred Tax (Asset) Liability  - Net
 
$
(12,779
)
 
$
3,282

Noncurrent:
 
 
 
 
   Book versus Tax Basis of Property
 
$
338,472

 
$
263,429

   Deferred Gas Costs - Net
 
12,005

 
2,955

   Environmental
 
18,410

 
14,953

   Deferred Regulatory Costs
 
7,397

 
3,278

   Deferred State Tax
 
(14,250
)
 
(9,839
)
   Investment Tax Credit Basis Gross-Up
 
(466
)
 
(622
)
   Deferred Pension & Other Post Retirement Benefits
 
36,048

 
27,885

   Pension & Other Post Retirement Benefits
 
(30,664
)
 
(26,261
)
   Deferred Revenues
 
(8,073
)
 
(15,769
)
   Derivatives / Unrealized  Gain
 
(2,051
)
 
(1,740
)
   Net Operating Loss Carryforward
 
(65,594
)
 

   Investment Tax Credit Carryforward
 
(26,820
)
 

   Equity In Loss Of Affiliated Companies
 
28,899

 
1,817

   Other
 
2,121

 
(1,684
)
      Noncurrent Deferred Tax Liability - Net
 
$
295,434

 
$
258,402



As of December 31, 2011, SJI has total federal net operating loss carryforwards of $220.6 million and state net operating loss carryforwards of $36.7 million, both of which will expire in 2031. SJI also has federal investment tax credit carryforwards of $26.8 million, which also will expire in 2031. A valuation allowance is established when it is determined that it is more likely than not that a deferred tax asset will not be realized.

The total unrecognized tax benefits as of December 31, 2011, 2010, and 2009 were $0.7 million, $0.8 million, and $1.1 million, respectively, which excludes $0.7 million, $0.7 million, and $1.0 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):
 
 
 
2011
 
2010
 
2009
Balance at January 1,
 
$
793

 
$
1,098

 
$
1,722

Increase as a result of tax positions taken in prior years
 
119

 

 
59

Decrease due to a lapse in the statute of limitations
 
(90
)
 
(85
)
 
(683
)
Settlements
 
(86
)
 
(220
)
 

Balance at December 31,
 
$
736

 
$
793

 
$
1,098


 
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 2011, 2010 or 2009. There have been no significant changes to the unrecognized tax benefits during 2011, 2010 or 2009 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 taxes.  Federal income tax returns from 2008 forward and state income tax returns primarily from 2007 forward are open and subject to examination.